Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries UMB Financial Corporation Reports Second Quarter Net Income of $90.1 Million By: UMB Financial Corporation via Business Wire July 25, 2023 at 16:30 PM EDT Second Quarter 2023 Financial Highlights GAAP net income of $90.1 million, or $1.85 per diluted share. Net operating income of $93.8 million, or $1.93 per diluted share. Average loans increased 17.3% on a linked-quarter, annualized basis. Deposit balances at June 30, 2023 totaled $33.5 billion, up from $31.9 billion at March 31, 2023. At June 30, 2023, total estimated uninsured deposits represented approximately 65.5% of total deposits. When adjusted to exclude affiliate (company-owned) and collateralized deposits, estimated uninsured deposits were approximately 40.9% of total deposits. Noninterest income increased 6.1% as compared to the linked quarter, equal to 38.0% of total revenue. Credit quality remained strong, with net recoveries of $0.1 million and nonperforming loans of 0.09% of total loans. UMB Financial Corporation (Nasdaq: UMBF), a financial services company, announced net income for the second quarter of 2023 of $90.1 million, or $1.85 per diluted share, compared to $92.4 million, or $1.90 per diluted share, in the first quarter of 2023 (linked quarter) and $137.6 million, or $2.83 per diluted share, in the second quarter of 2022. The results for the second quarter of 2022 include a pre-tax gain of $66.2 million on the sale of the company's entire investment in Visa Inc. Class B common shares, and a pre-tax $5.0 million contribution to the company's charitable foundation. Net operating income, a non-GAAP financial measure reconciled later in this release to net income, the nearest comparable GAAP measure, was $93.8 million, or $1.93 per diluted share, for the second quarter of 2023, compared to $92.8 million, or $1.91 per diluted share, for the linked quarter and $137.6 million, or $2.83 per diluted share, for the second quarter of 2022. Operating pre-tax, pre-provision income (operating PTPP), a non-GAAP measure reconciled later in this release to the components of net income before taxes, the nearest comparable GAAP measure, was $127.9 million, or $2.63 per diluted share, for the second quarter of 2023, compared to $135.4 million, or $2.78 per diluted share, for the linked quarter, and $187.1 million, or $3.84 per diluted share, for the second quarter of 2022. These operating PTPP results represent decreases of 5.5% on a linked-quarter basis and 31.6%, compared to the second quarter of 2022. “In the second quarter of 2023, the positive impacts of fee income trends, a double-digit annualized increase in average loan balances, excellent asset quality metrics and expense management were masked by higher interest expense driven by the Federal Reserve’s monetary tightening actions as well as expected increases in funding costs in this high interest rate environment,” said Mariner Kemper, chairman, president and chief executive officer. “Average loans increased 17.3% on a linked-quarter annualized basis with nearly half of the increase driven by commercial & industrial loan balances. Credit metrics remain strong as evidenced by net recoveries this quarter and nine basis points of non-performing loans to total loans. Noninterest income was $138.1 million for the quarter. It's important to note that noninterest income for the same quarter in 2022 included a pre-tax gain of $66.2 million on the sale of our Visa Inc. Class B common shares. Finally, period-end deposit balances at quarter end were $33.5 billion, an increase of $1.6 billion, or 5.0%, as compared to March 31, 2023.” Second Quarter 2023 earnings discussion Summary of quarterly financial results UMB Financial Corporation (unaudited, dollars in thousands, except per share data) Q2 Q1 Q2 2023 2023 2022 Net income (GAAP) $ 90,110 $ 92,437 $ 137,556 Earnings per share (diluted) 1.85 1.90 2.83 Operating pre-tax, pre-provision income (Non-GAAP)(i) 127,929 135,369 187,051 Operating pre-tax, pre-provision earnings per share (diluted) 2.63 2.78 3.84 Operating pre-tax, pre-provision income - FTE (Non-GAAP)(i) 134,504 141,924 193,329 Operating pre-tax, pre-provision earnings per share - FTE (diluted) 2.77 2.91 3.97 Net operating income (Non-GAAP)(i) 93,841 92,836 137,596 Operating earnings per share (diluted) 1.93 1.91 2.83 GAAP Return on average assets 0.90 % 0.97 % 1.47 % Return on average equity 12.56 13.76 20.83 Efficiency ratio 65.59 63.12 53.08 Non-GAAP (i) Operating return on average assets 0.93 % 0.98 % 1.47 % Operating return on average equity 13.08 13.82 20.84 Operating return on average tangible equity excluding AOCI 11.63 12.21 18.65 Operating efficiency ratio 64.24 62.98 53.06 (i) See reconciliation of Non-GAAP measures to their nearest comparable GAAP measures later in this release. Summary of year-to-date financial results UMB Financial Corporation (unaudited, dollars in thousands, except per share data) June June YTD YTD 2023 2022 Net income (GAAP) $ 182,547 $ 243,519 Earnings per share (diluted) 3.75 4.99 Operating pre-tax, pre-provision income (Non-GAAP)(i) 263,298 306,451 Operating pre-tax, pre-provision earnings per share (diluted) 5.41 6.29 Operating pre-tax, pre-provision income - FTE (Non-GAAP)(i) 276,428 319,128 Operating pre-tax, pre-provision earnings per share - FTE (diluted) 5.68 6.55 Net operating income (Non-GAAP)(i) 186,677 243,669 Operating earnings per share (diluted) 3.83 4.99 GAAP Return on average assets 0.93 % 1.28 % Return on average equity 13.14 17.60 Efficiency ratio 64.34 58.03 Non-GAAP (i) Operating return on average assets 0.95 % 1.28 % Operating return on average equity 13.44 17.61 Operating return on average tangible equity excluding AOCI 11.91 16.86 Operating efficiency ratio 63.61 58.00 (i) See reconciliation of Non-GAAP measures to their nearest comparable GAAP measures later in this release. Summary of revenue UMB Financial Corporation (unaudited, dollars in thousands) Q2 Q1 Q2 CQ vs. CQ vs. 2023 2023 2022 LQ PY Net interest income $ 225,611 $ 241,696 $ 224,791 $ (16,085 ) $ 820 Noninterest income: Trust and securities processing 61,589 62,359 58,886 (770 ) 2,703 Trading and investment banking 4,800 5,308 7,123 (508 ) (2,323 ) Service charges on deposit accounts 21,381 21,159 20,835 222 546 Insurance fees and commissions 225 274 245 (49 ) (20 ) Brokerage fees 13,604 13,676 12,391 (72 ) 1,213 Bankcard fees 18,579 18,172 17,840 407 739 Investment securities gains (losses), net 900 (5,324 ) 60,720 6,224 (59,820 ) Other 17,004 14,576 (1,705 ) 2,428 18,709 Total noninterest income $ 138,082 $ 130,200 $ 176,335 $ 7,882 $ (38,253 ) Total revenue $ 363,693 $ 371,896 $ 401,126 $ (8,203 ) $ (37,433 ) Net interest income (FTE) $ 232,186 $ 248,251 $ 231,069 Net interest margin (FTE) 2.44 % 2.76 % 2.60 % Total noninterest income as a % of total revenue 38.0 35.0 44.0 Net interest income Second quarter 2023 net interest income totaled $225.6 million, a decrease of $16.1 million, or 6.7% from the linked quarter, driven by higher interest expense primarily due to unfavorable mix shift in the composition of liabilities, combined with higher interest rates. This decrease was partially offset by continued growth in average loans and higher liquidity balances, coupled with increased yields. Average earning assets increased $1.8 billion, or 4.9% from the linked quarter, largely driven by an increase of $1.2 billion in interest-bearing due from banks and an increase of $920.0 million in average loans, partially offset by decreases of $174.7 million in federal funds sold and resell agreements and $143.4 million in average securities. Average interest-bearing liabilities increased $3.1 billion, or 13.3% from the linked quarter, primarily driven by increases of $1.9 billion in borrowed funds, primarily short-term borrowings, and $1.3 billion in interest-bearing deposits. Average noninterest-bearing deposits decreased $1.4 billion, or 11.6% as compared to the linked quarter. Net interest margin for the second quarter was 2.44%, a decrease of 32 basis points from the linked quarter, driven by increased cost and mix of interest-bearing liabilities, partially offset by improved loan yields, the benefit of free funds, and earning asset mix changes. The cost of interest-bearing liabilities increased 67 basis points to 3.58%. Total cost of funds increased 64 basis points from the linked quarter to 2.56%. Average loan yields increased 32 basis points while earning asset yields increased 29 basis points from the linked quarter. On a year-over-year basis, net interest income increased $0.8 million, or 0.4%, driven by a $3.9 billion, or 21.1%, increase in average loans, partially offset by higher interest costs due to unfavorable mix shift in the composition of liabilities as well as the impact of higher short-term interest rates. Compared to the second quarter of 2022, average earning assets increased $2.5 billion, or 7.1%, largely driven by the increase in average loans noted above, partially offset by a decrease of $824.5 million in federal funds sold and resell agreements and a decrease of $589.2 million in average securities. Average deposits decreased 0.4% compared to the second quarter of 2022. Average noninterest-bearing demand deposit balances decreased 25.9% compared to the second quarter of 2022, driven by expected migration to rate-bearing deposit categories in a higher interest rate environment. Demand deposit balances comprised 33.5% of total deposits, compared to 37.8% in the linked quarter and 45.0% in the second quarter of 2022. Average borrowed funds increased $1.9 billion as compared to the linked quarter and $2.9 billion as compared to the second quarter of 2022, driven by short-term borrowings with the Federal Home Loan Bank and the Federal Reserve Discount Window. Noninterest income Second quarter 2023 noninterest income increased $7.9 million, or 6.1%, on a linked-quarter basis, largely due to: An increase of $6.2 million in investment securities gains, largely driven by an impairment loss on an available-for-sale subordinated debt security recorded in the first quarter and increased valuation of the company's equity investments in the second quarter. An increase of $2.4 million in other income, primarily related to a $4.0 million gain on sale of other assets recorded in the second quarter, partially offset by a decrease of $1.3 million in derivative income. These increases were partially offset by a decrease of $0.9 million in corporate trust income, recorded in trust and securities processing. Compared to the prior year, noninterest income in the second quarter of 2023 decreased $38.3 million, or 21.7%, primarily driven by: A decrease of $59.8 million in investment securities gains, primarily driven by the $66.2 million gain on sale of the company's investment in Visa Inc. Class B common shares in the second quarter of 2022. This was partially offset by an increase of $5.3 million in the valuation of the company's marketable securities. A decrease of $2.3 million in trading and investment banking due to decreased trading volume. These decreases were partially offset by the following increases: An increase of $18.7 million in other income, driven by an increase of $13.8 million in company-owned life insurance income and a gain of $4.0 million on the sale of other assets recorded in the second quarter of 2023. The increase in company-owned life insurance is offset by a proportionate increase in deferred compensation expense as noted below. Increases of $1.9 million and $1.1 million in fund services income and corporate trust income, both recorded in trust and securities processing. An increase of $1.2 million in brokerage income, largely driven by increased 12b-1 fee income. Noninterest expense Summary of noninterest expense UMB Financial Corporation (unaudited, dollars in thousands) Q2 Q1 Q2 CQ vs. CQ vs. �� 2023 2023 2022 LQ PY Salaries and employee benefits $ 143,312 $ 142,498 $ 121,390 $ 814 $ 21,922 Occupancy, net 11,746 12,177 11,976 (431 ) (230 ) Equipment 17,086 17,849 18,315 (763 ) (1,229 ) Supplies and services 4,195 3,875 3,492 320 703 Marketing and business development 7,124 5,335 5,308 1,789 1,816 Processing fees 26,572 23,240 19,338 3,332 7,234 Legal and consulting 7,059 7,285 11,265 (226 ) (4,206 ) Bankcard 8,307 7,133 5,880 1,174 2,427 Amortization of other intangible assets 2,117 2,298 1,225 (181 ) 892 Regulatory fees 6,123 5,551 3,464 572 2,659 Other 7,032 9,811 12,474 (2,779 ) (5,442 ) Total noninterest expense $ 240,673 $ 237,052 $ 214,127 $ 3,621 $ 26,546 Noninterest expense for the second quarter of 2023 was $240.7 million, an increase of $3.6 million, or 1.5%, from the linked quarter and an increase of $26.5 million, or 12.4%, from the second quarter of 2022. Operating noninterest expense, a non-GAAP financial measure reconciled later in this release to noninterest expense, the nearest comparable GAAP measure, was $235.8 million for the second quarter of 2023, a decrease of $0.8 million, or 0.3%, from the linked quarter and an increase of $21.7 million, or 10.1%, from the second quarter of 2022. The linked-quarter increase in GAAP noninterest expense was driven by: Increases of $3.3 million in processing fees and $1.8 million in marketing and business development expense due to the ongoing modernization of the company's core systems and timing of multiple projects, respectively. The increase in marketing and business development expense was also partially driven by an increase in advertising for various projects and an increase in travel and entertainment expense. An increase of $0.8 million in salaries and employee benefits expense driven by an increase of $7.4 million in salary and bonus expense, partially offset by a decrease of $6.6 million in employee benefits. The increase in salary and bonus expense was due to an increase of $4.4 million in severance expense and higher salary expense related to annual merit increases beginning in the second quarter. The decrease in employee benefits was driven by the seasonal decrease of $8.0 million in payroll taxes, insurance, and 401(k) expense, offset by an increase in other employee benefits recorded in the second quarter. These increases were partially offset by a decrease of $2.0 million in operational losses as compared to the linked quarter. The year-over-year increase in GAAP noninterest expense was driven by: An increase of $21.9 million in salaries and employee benefits expense, driven primarily by increases of $14.5 in employee benefits expense and $7.4 million in salaries and bonus expense. The increase in employee benefits expense is due to increases of $12.5 million in deferred compensation plan expense and $1.3 million in payroll taxes, insurance, and 401(k) expense. The increase in deferred compensation expense was offset by the increase in company-owned life insurance income noted above. The increase in salaries and bonus expense is due to an increase of $4.8 million in severance expense and higher employee salaries as compared to the second quarter of 2022. An increase of $7.2 million in processing fees expense due to the ongoing modernization of the company’s core systems and the timing of multiple software projects. An increase of $2.7 million in regulatory fees expense driven by higher deposit insurance expense. These increases were offset by a decrease of $5.4 million in other expense primarily due to the $5.0 million charitable contribution recorded in the second quarter of 2022 mentioned above. Income taxes The company’s effective tax rate was 17.6% for the six months ended June 30, 2023, compared to 18.7% for the same period in 2022. The decrease in the effective tax rate in 2023 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 2023 were $40.4 billion compared to $38.5 billion for the linked quarter and $37.6 billion for the same period in 2022. Summary of average loans and leases - QTD Average UMB Financial Corporation (unaudited, dollars in thousands) Q2 Q1 Q2 CQ vs. CQ vs. 2023 2023 2022 LQ PY Commercial and industrial $ 9,724,300 $ 9,287,319 $ 7,918,552 $ 436,981 $ 1,805,748 Specialty lending 574,220 564,633 518,575 9,587 55,645 Commercial real estate 8,178,463 7,812,140 6,569,784 366,323 1,608,679 Consumer real estate 2,833,739 2,738,184 2,458,815 95,555 374,924 Consumer 139,705 136,571 148,412 3,134 (8,707 ) Credit cards 485,749 453,704 428,167 32,045 57,582 Leases and other 255,425 279,049 275,638 (23,624 ) (20,213 ) Total loans $ 22,191,601 $ 21,271,600 $ 18,317,943 $ 920,001 $ 3,873,658 Average loans for the second quarter of 2023 increased $920.0 million, or 4.3%, on a linked-quarter basis and $3.9 billion, or 21.1%, compared to the second quarter of 2022. Summary of average securities - QTD Average UMB Financial Corporation (unaudited, dollars in thousands) Q2 Q1 Q2 CQ vs. CQ vs. 2023 2023 2022 LQ PY Securities available for sale: U.S. Treasury $ 797,104 $ 783,170 $ 639,161 $ 13,934 $ 157,943 U.S. Agencies 189,091 171,825 172,798 17,266 16,293 Mortgage-backed 3,813,234 3,938,137 4,764,452 (124,903 ) (951,218 ) State and political subdivisions 1,319,398 1,356,785 1,891,377 (37,387 ) (571,979 ) Corporates 349,318 364,854 377,586 (15,536 ) (28,268 ) Collateralized loan obligations 348,078 348,477 247,639 (399 ) 100,439 Total securities available for sale $ 6,816,223 $ 6,963,248 $ 8,093,013 $ (147,025 ) $ (1,276,790 ) Securities held to maturity: U.S. Agencies $ 123,135 $ 123,106 $ 65,964 $ 29 $ 57,171 Mortgage-backed 2,878,657 2,934,113 2,892,986 (55,456 ) (14,329 ) State and political subdivisions 2,822,218 2,814,912 2,240,018 7,306 582,200 Total securities held to maturity $ 5,824,010 $ 5,872,131 $ 5,198,968 $ (48,121 ) $ 625,042 Trading securities $ 12,538 $ 9,258 $ 10,190 $ 3,280 $ 2,348 Other securities 407,754 359,238 347,527 48,516 60,227 Total securities $ 13,060,525 $ 13,203,875 $ 13,649,698 $ (143,350 ) $ (589,173 ) Average total securities decreased 1.1% on a linked-quarter basis and decreased 4.3% compared to the second quarter of 2022. At June 30, 2023, the unrealized pre-tax net loss on the available-for-sale securities portfolio was $765.9 million, or 10.3% of the $7.4 billion amortized cost value. At June 30, 2023, the unrealized pre-tax net loss on the securities designated as held to maturity was $576.4 million, or 9.9% of the $5.8 billion amortized cost value. During 2022, the company transferred securities with an amortized cost balance of $4.1 billion and a fair value of $3.8 billion from the available-for-sale category to the held-to-maturity category. The remaining balance of unrealized pre-tax net losses related to transferred securities was $226.7 million as of June 30, 2023 and was included in the amortized cost balance of held-to-maturity securities. At June 30, 2023, an after-tax gain of $56.9 million was included in accumulated other comprehensive income (AOCI) related to the company’s fair value hedges of municipal securities. During 2021, the company entered into ten of these hedge transactions, nine of which have since been terminated. The gain on the terminated hedges is being amortized over the remaining life of the underlying bonds. Summary of average deposits - QTD Average UMB Financial Corporation (unaudited, dollars in thousands) Q2 Q1 Q2 CQ vs. CQ vs. 2023 2023 2022 LQ PY Deposits: Noninterest-bearing demand $ 10,535,325 $ 11,919,277 $ 14,209,159 $ (1,383,952 ) $ (3,673,834 ) Interest-bearing demand and savings 17,463,022 18,427,662 16,808,998 (964,640 ) 654,024 Time deposits 3,476,616 1,215,506 570,812 2,261,110 2,905,804 Total deposits $ 31,474,963 $ 31,562,445 $ 31,588,969 $ (87,482 ) $ (114,006 ) Noninterest bearing deposits as % of total 33.5 % 37.8 % 45.0 % Average deposits decreased 0.3% on a linked-quarter basis and decreased 0.4% compared to the second quarter of 2022. As of June 30, 2023, the total estimated uninsured deposits were $22.0 billion or approximately 65.5% of total deposits. Estimated uninsured deposits, when adjusted to exclude affiliate (company-owned) and collateralized deposits, were $13.7 billion and represented approximately 40.9% of total deposits. Capital Capital information UMB Financial Corporation (unaudited, dollars in thousands, except per share data) June 30, 2023 March 31, 2023 June 30, 2022 Total equity $ 2,831,628 $ 2,814,659 $ 2,642,888 Accumulated other comprehensive loss, net (685,831 ) (626,776 ) (564,803 ) Book value per common share 58.36 58.03 54.71 Tangible book value per common share (Non-GAAP)(i) 52.54 52.17 50.64 Regulatory capital: Common equity Tier 1 capital $ 3,273,841 $ 3,196,111 $ 3,055,747 Tier 1 capital 3,273,841 3,196,111 3,055,747 Total capital 3,870,101 3,776,407 3,473,040 Regulatory capital ratios: Common equity Tier 1 capital ratio 10.65 % 10.57 % 11.44 % Tier 1 risk-based capital ratio 10.65 10.57 11.44 Total risk-based capital ratio 12.59 12.49 13.00 Tier 1 leverage ratio 8.16 8.35 8.17 (i) See reconciliation of Non-GAAP measures to their nearest comparable GAAP measures later in this release. At June 30, 2023, the regulatory capital ratios presented in the foregoing table exceeded all “well-capitalized” regulatory thresholds. Asset Quality Credit quality UMB Financial Corporation (unaudited, dollars in thousands) Q2 Q1 Q4 Q3 Q2 2023 2023 2022 2022 2022 Net (recoveries) charge-offs - total loans $ (139 ) $ 4,643 $ 2,189 $ 1,173 $ 28,128 Net loan (recoveries) charge-offs as a % of total average loans (0.00 )% 0.09 % 0.04 % 0.02 % 0.62 % Loans over 90 days past due $ 10,861 $ 1,723 $ 1,617 $ 2,513 $ 3,446 Loans over 90 days past due as a % of total loans 0.05 % 0.01 % 0.01 % 0.01 % 0.02 % Nonaccrual and restructured loans $ 19,347 $ 15,480 $ 19,269 $ 19,817 $ 18,117 Nonaccrual and restructured loans as a % of total loans 0.09 % 0.07 % 0.09 % 0.10 % 0.10 % Provision for credit losses $ 13,000 $ 23,250 $ 9,000 $ 22,000 $ 13,400 Provision for credit losses for the second quarter totaled $13.0 million, a decrease of $10.3 million from the linked quarter and a decrease of $0.4 million from the second quarter of 2022. These changes are driven largely by loan growth and changes in macro-economic variables in the current period as compared to the prior periods. Net recoveries for the second quarter totaled $0.1 million, compared to net charge-offs of $4.6 million, or 0.09%, of average loans in the linked quarter, and $28.1 million, or 0.62%, of average loans for the second quarter of 2022. Dividend Declaration and Share Repurchase Authorization At the company’s quarterly board meeting, the Board of Directors declared a $0.38 per share quarterly cash dividend, payable on October 2, 2023, to shareholders of record at the close of business on September 11, 2023. The Board also approved the repurchase of up to 1,000,000 shares of the company's common stock. Share repurchases may occur from time to time at any point until the regular meeting of the Board that immediately follows the 2024 annual meeting of the company’s shareholders. Shares acquired under the repurchase program may be available for reissuance or resale, including in connection with the company's compensation plans and dividend reinvestment plan. Under the repurchase program, the company may acquire the shares from time to time in open market or privately negotiated transactions, at the discretion of management. Conference Call The company plans to host a conference call to discuss its second quarter 2023 earnings results on Wednesday, July 26, 2023, at 9:30 a.m. (CT). Interested parties may access the call by dialing (toll-free) 833-470-1428 or (international) 404-975-4839 and requesting to join the UMB Financial call with access code 835446. The live call may also be accessed by visiting investorrelations.umb.com or by using the following link: UMB Financial 2Q 2023 Conference Call A replay of the conference call may be heard through August 9, 2023, by calling (toll-free) 866-813-9403 or (international) 929-458-6194. The replay access code required for playback is 506453. The call replay may also be accessed at investorrelations.umb.com. Non-GAAP Financial Information In this release, we may provide information about net operating income, operating earnings per share – diluted (operating EPS), operating return on average equity (operating ROE), operating return on average assets (operating ROA), operating noninterest expense, operating efficiency ratio, operating pre-tax, pre-provision income (operating PTPP), operating pre-tax, pre-provision earnings per share – diluted (operating PTPP EPS), operating pre-tax, pre-provision income on a fully tax equivalent basis (operating PTPP-FTE), operating pre-tax, pre-provision FTE earnings per share – diluted (operating PTPP-FTE EPS), tangible shareholders’ equity, tangible book value per share, and operating return on average tangible equity excluding AOCI, all of which are non-GAAP financial measures. This information supplements the results that are reported according to generally accepted accounting principles in the United States (GAAP) and should not be viewed in isolation from, or as a substitute for, GAAP results. The differences between the non-GAAP financial measures – net operating income, operating EPS, operating ROE, operating ROA, operating noninterest expense, operating efficiency ratio, operating PTPP, operating PTPP EPS, operating PTPP-FTE, operating PTPP-FTE EPS, tangible shareholders’ equity, tangible book value per share, and operating return on average tangible equity excluding AOCI – and the nearest comparable GAAP financial measures are reconciled later in this release. The company believes that these non-GAAP financial measures and the reconciliations may be useful to investors because they adjust for acquisition- and severance-related items that management does not believe reflect the company’s fundamental operating performance. Net operating income for the relevant period is defined as GAAP net income, adjusted to reflect the impact of excluding expenses related to acquisitions, severance expense, and the cumulative tax impact of these adjustments. Operating EPS (diluted) is calculated as earnings per share as reported, adjusted to reflect, on a per share basis, the impact of excluding the non-GAAP adjustments described above for the relevant period. Operating ROE is calculated as net operating income, divided by the company’s average total shareholders’ equity for the relevant period. Operating ROA is calculated as net operating income, divided by the company’s average assets for the relevant period. Operating noninterest expense for the relevant period is defined as GAAP noninterest expense, adjusted to reflect the pre-tax impact of non-GAAP adjustments described above. Operating efficiency ratio is calculated as the company’s operating noninterest expense, net of amortization of other intangibles, divided by the company’s total non-GAAP revenue (calculated as net interest income plus noninterest income, less gains on sales of securities available for sale, net). Operating PTPP income for the relevant period is defined as GAAP net interest income plus GAAP noninterest income, less noninterest expense, adjusted to reflect the impact of excluding expenses related to acquisitions and severance expense. Operating PTPP-FTE for the relevant period is defined as GAAP net interest income on a fully tax equivalent basis plus GAAP noninterest income, less noninterest expense, adjusted to reflect the impact of excluding expenses related to acquisitions and severance expense. Tangible shareholders’ equity for the relevant period is defined as GAAP shareholders’ equity, net of intangible assets. Tangible book value per share is defined as tangible shareholders’ equity divided by the Company’s total shares outstanding. Operating return on average tangible equity excluding AOCI is calculated as net operating income, divided by the company’s average tangible shareholders’ equity exclusive of AOCI for the relevant period. Forward-Looking Statements: This press release contains, and our other communications may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “outlook,” “forecast,” “target,” “trend,” “plan,” “goal,” or other words of comparable meaning or future-tense or conditional verbs such as “may,” “will,” “should,” “would,” or “could.” Forward-looking statements convey our expectations, intentions, or forecasts about future events, circumstances, results, or aspirations. All forward-looking statements are subject to assumptions, risks, and uncertainties, which may change over time and many of which are beyond our control. You should not rely on any forward-looking statement as a prediction or guarantee about the future. Our actual future objectives, strategies, plans, prospects, performance, condition, or results may differ materially from those set forth in any forward-looking statement. Some of the factors that may cause actual results or other future events, circumstances, or aspirations to differ from those in forward-looking statements are described in our Annual Report on Form 10-K for the year ended December 31, 2022, our subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, or other applicable documents that are filed or furnished with the U.S. Securities and Exchange Commission (SEC). In addition to such factors that have been disclosed previously: macroeconomic and adverse developments and uncertainties related to the collateral effects of the collapse of, and challenges for, domestic and international banks, including the impacts to the U.S. and global economies; sustained levels of high inflation and the potential for an economic recession on the heels of aggressive quantitative tightening by the Federal Reserve, and impacts related to or resulting from Russia’s military action in Ukraine, such as the broader impacts to financial markets and the global macroeconomic and geopolitical environments, may also cause actual results or other future events, circumstances, or aspirations to differ from our forward-looking statements. Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except to the extent required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K, or other applicable document that is filed or furnished with the SEC. About UMB: UMB Financial Corporation (Nasdaq: UMBF) is a financial services company headquartered in Kansas City, Missouri. UMB offers commercial banking, which includes comprehensive deposit, lending and investment services, personal banking, which includes wealth management and financial planning services, and institutional banking, which includes asset servicing, corporate trust solutions, investment banking, and healthcare services. UMB operates branches throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas. As the company’s reach continues to grow, it also serves business clients nationwide and institutional clients in several countries. For more information, visit UMB.com, UMB Blog, UMB Facebook and UMB LinkedIn. Consolidated Balance Sheets UMB Financial Corporation (unaudited, dollars in thousands) June 30, 2023 2022 ASSETS Loans $ 22,483,542 $ 18,972,158 Allowance for credit losses on loans (222,161 ) (164,346 ) Net loans 22,261,381 18,807,812 Loans held for sale 3,819 750 Securities: Available for sale 6,668,615 7,739,216 Held to maturity, net of allowance for credit losses 5,807,763 5,707,282 Trading securities 28,887 9,646 Other securities 428,149 342,543 Total securities 12,933,414 13,798,687 Federal funds sold and resell agreements 319,838 1,055,459 Interest-bearing due from banks 3,369,911 1,825,295 Cash and due from banks 431,527 360,242 Premises and equipment, net 255,127 257,729 Accrued income 190,387 144,874 Goodwill 207,385 182,225 Other intangibles, net 75,184 14,465 Other assets 1,195,069 1,060,303 Total assets $ 41,243,042 $ 37,507,841 LIABILITIES Deposits: Noninterest-bearing demand $ 12,142,906 $ 14,925,555 Interest-bearing demand and savings 18,184,063 16,007,087 Time deposits under $250,000 2,665,166 383,832 Time deposits of $250,000 or more 528,326 169,550 Total deposits 33,520,461 31,486,024 Federal funds purchased and repurchase agreements 2,050,583 2,661,283 Short-term debt 1,800,000 — Long-term debt 382,280 272,505 Accrued expenses and taxes 256,845 182,185 Other liabilities 401,245 262,956 Total liabilities 38,411,414 34,864,953 SHAREHOLDERS' EQUITY Common stock 55,057 55,057 Capital surplus 1,124,977 1,115,504 Retained earnings 2,681,448 2,384,454 Accumulated other comprehensive loss, net (685,831 ) (564,803 ) Treasury stock (344,023 ) (347,324 ) Total shareholders' equity 2,831,628 2,642,888 Total liabilities and shareholders' equity $ 41,243,042 $ 37,507,841 Consolidated Statements of Income UMB Financial Corporation (unaudited, dollars in thousands except share and per share data) Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 INTEREST INCOME Loans $ 342,994 $ 169,919 $ 651,435 $ 319,389 Securities: Taxable interest 54,587 47,295 107,636 90,677 Tax-exempt interest 25,550 23,538 50,856 47,393 Total securities income 80,137 70,833 158,492 138,070 Federal funds and resell agreements 3,889 3,497 9,540 5,947 Interest-bearing due from banks 34,206 4,207 50,372 6,664 Trading securities 154 114 288 299 Total interest income 461,380 248,570 870,127 470,369 INTEREST EXPENSE Deposits 170,550 15,439 298,449 21,612 Federal funds and repurchase agreements 24,745 4,998 48,047 7,146 Other 40,474 3,342 56,324 6,465 Total interest expense 235,769 23,779 402,820 35,223 Net interest income 225,611 224,791 467,307 435,146 Provision for credit losses 13,000 13,400 36,250 6,900 Net interest income after provision for credit losses 212,611 211,391 431,057 428,246 NONINTEREST INCOME Trust and securities processing 61,589 58,886 123,948 118,414 Trading and investment banking 4,800 7,123 10,108 12,563 Service charges on deposit accounts 21,381 20,835 42,540 45,477 Insurance fees and commissions 225 245 499 504 Brokerage fees 13,604 12,391 27,280 15,847 Bankcard fees 18,579 17,840 36,751 34,475 Investment securities gains (losses), net 900 60,720 (4,424 ) 60,198 Other 17,004 (1,705 ) 31,580 12,535 Total noninterest income 138,082 176,335 268,282 300,013 NONINTEREST EXPENSE Salaries and employee benefits 143,312 121,390 285,810 252,024 Occupancy, net 11,746 11,976 23,923 24,208 Equipment 17,086 18,315 34,935 36,479 Supplies and services 4,195 3,492 8,070 6,754 Marketing and business development 7,124 5,308 12,459 10,240 Processing fees 26,572 19,338 49,812 37,781 Legal and consulting 7,059 11,265 14,344 18,176 Bankcard 8,307 5,880 15,440 12,447 Amortization of other intangible assets 2,117 1,225 4,415 2,296 Regulatory fees 6,123 3,464 11,674 6,946 Other 7,032 12,474 16,843 21,554 Total noninterest expense 240,673 214,127 477,725 428,905 Income before income taxes 110,020 173,599 221,614 299,354 Income tax expense 19,910 36,043 39,067 55,835 NET INCOME $ 90,110 $ 137,556 $ 182,547 $ 243,519 PER SHARE DATA Net income – basic $ 1.86 $ 2.85 $ 3.77 $ 5.03 Net income – diluted 1.85 2.83 3.75 4.99 Dividends 0.38 0.37 0.76 0.74 Weighted average shares outstanding – basic 48,514,277 48,347,226 48,474,865 48,376,868 Weighted average shares outstanding – diluted 48,668,413 48,673,964 48,707,487 48,755,059 Consolidated Statements of Comprehensive Income UMB Financial Corporation (unaudited, dollars in thousands) Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Net income $ 90,110 $ 137,556 $ 182,547 $ 243,519 Other comprehensive (loss) income, before tax: Unrealized gains and losses on debt securities: Change in unrealized holding gains and losses, net (87,505 ) (308,352 ) 6,152 (931,262 ) Less: Reclassification adjustment for net losses included in net income — — 433 — Amortization of net unrealized loss on securities transferred from available-for-sale to held-to-maturity 10,312 12,539 20,295 13,121 Change in unrealized gains and losses on debt securities (77,193 ) (295,813 ) 26,880 (918,141 ) Unrealized gains and losses on derivative hedges: Change in unrealized gains and losses on derivative hedges, net 1,848 4,437 321 9,117 Less: Reclassification adjustment for net gains included in net income (2,660 ) (1,090 ) (5,221 ) (1,941 ) Change in unrealized gains and losses on derivative hedges (812 ) 3,347 (4,900 ) 7,176 Other comprehensive (loss) income, before tax (78,005 ) (292,466 ) 21,980 (910,965 ) Income tax benefit (expense) 18,950 70,791 (5,076 ) 219,848 Other comprehensive (loss) income (59,055 ) (221,675 ) 16,904 (691,117 ) Comprehensive income (loss) $ 31,055 $ (84,119 ) $ 199,451 $ (447,598 ) Consolidated Statements of Shareholders' Equity UMB Financial Corporation (unaudited, dollars in thousands except per share data) Common Stock Capital Surplus Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Balance - January 1, 2022 $ 55,057 $ 1,110,520 $ 2,176,998 $ 126,314 $ (323,465 ) $ 3,145,424 Total comprehensive income (loss) — — 243,519 (691,117 ) — (447,598 ) Dividends ($0.74 per share) — — (36,063 ) — — (36,063 ) Purchase of treasury stock — — — — (31,806 ) (31,806 ) Issuances of equity awards, net of forfeitures — (6,630 ) — — 7,309 679 Recognition of equity-based compensation — 11,223 — — — 11,223 Sale of treasury stock — 174 — — 111 285 Exercise of stock options — 217 — — 527 744 Balance - June 30, 2022 $ 55,057 $ 1,115,504 $ 2,384,454 $ (564,803 ) $ (347,324 ) $ 2,642,888 Balance - January 1, 2023 $ 55,057 $ 1,125,949 $ 2,536,086 $ (702,735 ) $ (347,264 ) $ 2,667,093 Total comprehensive income — — 182,547 16,904 — 199,451 Dividends ($0.76 per share) — — (37,185 ) — — (37,185 ) Purchase of treasury stock — — — — (7,902 ) (7,902 ) Issuances of equity awards, net of forfeitures — (9,764 ) — — 10,483 719 Recognition of equity-based compensation — 8,455 — — — 8,455 Sale of treasury stock — 115 — — 140 255 Exercise of stock options — 222 — — 520 742 Balance - June 30, 2023 $ 55,057 $ 1,124,977 $ 2,681,448 $ (685,831 ) $ (344,023 ) $ 2,831,628 Average Balances / Yields and Rates UMB Financial Corporation (tax - equivalent basis) (unaudited, dollars in thousands) Three Months Ended June 30, 2023 2022 Average Average Average Average Balance Yield/Rate Balance Yield/Rate Assets Loans, net of unearned interest $ 22,191,601 6.20 % $ 18,317,943 3.72 % Securities: Taxable 9,228,103 2.37 9,825,114 1.93 Tax-exempt 3,819,884 3.36 3,814,394 3.13 Total securities 13,047,987 2.66 13,639,508 2.27 Federal funds and resell agreements 276,459 5.64 1,100,918 1.27 Interest bearing due from banks 2,707,740 5.07 2,632,307 0.64 Trading securities 12,538 5.37 10,190 5.35 Total earning assets 38,236,325 4.91 35,700,866 2.86 Allowance for credit losses (216,876 ) (182,118 ) Other assets 2,345,714 2,043,977 Total assets $ 40,365,163 $ 37,562,725 Liabilities and Shareholders' Equity Interest-bearing deposits $ 20,939,638 3.27 % $ 17,379,810 0.36 % Federal funds and repurchase agreements 2,336,929 4.25 2,658,219 0.75 Borrowed funds 3,137,267 5.17 272,254 4.92 Total interest-bearing liabilities 26,413,834 3.58 20,310,283 0.47 Noninterest-bearing demand deposits 10,535,325 14,209,159 Other liabilities 539,172 394,923 Shareholders' equity 2,876,832 2,648,360 Total liabilities and shareholders' equity $ 40,365,163 $ 37,562,725 Net interest spread 1.33 % 2.39 % Net interest margin 2.44 2.60 Average Balances / Yields and Rates UMB Financial Corporation (tax - equivalent basis) (unaudited, dollars in thousands) Six Months Ended June 30, 2023 2022 Average Average Average Average Balance Yield/Rate Balance Yield/Rate Assets Loans, net of unearned interest $ 21,734,142 6.05 % $ 17,842,153 3.61 % Securities: Taxable 9,288,392 2.34 9,644,345 1.90 Tax-exempt 3,832,505 3.36 3,926,444 3.08 Total securities 13,120,897 2.64 13,570,789 2.24 Federal funds and resell agreements 363,341 5.29 1,182,891 1.01 Interest bearing due from banks 2,127,343 4.77 3,965,267 0.34 Trading securities 10,907 5.77 15,484 4.70 Total earning assets 37,356,630 4.77 36,576,584 2.66 Allowance for credit losses (206,559 ) (190,123 ) Other assets 2,292,479 1,966,176 Total assets $ 39,442,550 $ 38,352,637 Liabilities and Shareholders' Equity Interest-bearing deposits $ 20,294,984 2.97 % $ 17,964,006 0.24 % Federal funds and repurchase agreements 2,399,090 4.04 2,815,130 0.51 Borrowed funds 2,174,157 5.22 271,994 4.79 Total interest-bearing liabilities 24,868,231 3.27 21,051,130 0.34 Noninterest-bearing demand deposits 11,223,478 14,117,879 Other liabilities 549,787 393,732 Shareholders' equity 2,801,054 2,789,896 Total liabilities and shareholders' equity $ 39,442,550 $ 38,352,637 Net interest spread 1.50 % 2.32 % Net interest margin 2.59 2.47 Business Segment Information UMB Financial Corporation (unaudited, dollars in thousands) Three Months Ended June 30, 2023 Commercial Banking Institutional Banking Personal Banking Total Net interest income $ 144,389 $ 50,397 $ 30,825 $ 225,611 Provision for credit losses 11,055 234 1,711 13,000 Noninterest income 25,666 86,813 25,603 138,082 Noninterest expense 85,896 91,591 63,186 240,673 Income (loss) before taxes 73,104 45,385 (8,469 ) 110,020 Income tax expense (benefit) 13,230 8,213 (1,533 ) 19,910 Net income (loss) $ 59,874 $ 37,172 $ (6,936 ) $ 90,110 Three Months Ended June 30, 2022 Commercial Banking Institutional Banking Personal Banking Total Net interest income $ 149,094 $ 34,981 40,716 $ 224,791 Provision for credit losses 12,067 89 1,244 13,400 Noninterest income 56,894 81,082 38,359 176,335 Noninterest expense 79,521 76,511 58,095 214,127 Income before taxes 114,400 39,463 19,736 173,599 Income tax expense 23,752 8,193 4,098 36,043 Net income $ 90,648 $ 31,270 $ 15,638 $ 137,556 Six Months Ended June 30, 2023 Commercial Banking Institutional Banking Personal Banking Total Net interest income $ 295,416 $ 105,482 $ 66,409 $ 467,307 Provision for credit losses 32,099 331 3,820 36,250 Noninterest income 48,568 171,051 48,663 268,282 Noninterest expense 169,900 180,962 126,863 477,725 Income (loss) before taxes 141,985 95,240 (15,611 ) 221,614 Income tax expense (benefit) 25,030 16,789 (2,752 ) 39,067 Net income (loss) $ 116,955 $ 78,451 $ (12,859 ) $ 182,547 Six Months Ended June 30, 2022 Commercial Banking Institutional Banking Personal Banking Total Net interest income $ 294,096 $ 61,233 $ 79,817 $ 435,146 Provision for credit losses 5,027 240 1,633 6,900 Noninterest income 83,594 154,354 62,065 300,013 Noninterest expense 159,110 152,112 117,683 428,905 Income before taxes 213,553 63,235 22,566 299,354 Income tax expense 39,831 11,795 4,209 55,835 Net income $ 173,722 $ 51,440 $ 18,357 $ 243,519 The company has strategically aligned its operations into the following three reportable segments: Commercial Banking, Institutional Banking, and Personal Banking. Senior executive officers regularly evaluate business segment financial results produced by the company’s internal reporting system in deciding how to allocate resources and assess performance for individual business segments. The company’s reportable segments include certain corporate overhead, technology and service costs that are allocated based on methodologies that are applied consistently between periods. For comparability purposes, amounts in all periods are based on methodologies in effect at June 30, 2023. Non-GAAP Financial Measures Net operating income Non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands except per share data) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net income (GAAP) $ 90,110 $ 137,556 $ 182,547 $ 243,519 Adjustments: Acquisition expense 18 — 57 — Severance expense 4,891 52 5,377 197 Tax-impact of adjustments (i) (1,178 ) (12 ) (1,304 ) (47 ) Total Non-GAAP adjustments (net of tax) 3,731 40 4,130 150 Net operating income (Non-GAAP) $ 93,841 $ 137,596 $ 186,677 $ 243,669 Earnings per share - diluted (GAAP) $ 1.85 $ 2.83 $ 3.75 $ 4.99 Acquisition expense — — — — Severance expense 0.10 — 0.11 — Tax-impact of adjustments (i) (0.02 ) — (0.03 ) — Operating earnings per share - diluted (Non-GAAP) $ 1.93 $ 2.83 $ 3.83 $ 4.99 GAAP Return on average assets 0.90 % 1.47 % 0.93 % 1.28 % Return on average equity 12.56 20.83 13.14 17.60 Non-GAAP Operating return on average assets 0.93 % 1.47 % 0.95 % 1.28 % Operating return on average equity 13.08 20.84 13.44 17.61 (i) Calculated using the company’s marginal tax rate of 24.0%. Operating noninterest expense and operating efficiency ratio Non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Noninterest expense $ 240,673 $ 214,127 $ 477,725 $ 428,905 Adjustments to arrive at operating noninterest expense (pre-tax): Acquisition expense 18 — 57 — Severance expense 4,891 52 5,377 197 Total Non-GAAP adjustments (pre-tax) 4,909 52 5,434 197 Operating noninterest expense (Non-GAAP) $ 235,764 $ 214,075 $ 472,291 $ 428,708 Noninterest expense $ 240,673 $ 214,127 $ 477,725 $ 428,905 Less: Amortization of other intangibles 2,117 1,225 4,415 2,296 Noninterest expense, net of amortization of other intangibles (Non-GAAP) (numerator A) $ 238,556 $ 212,902 $ 473,310 $ 426,609 Operating noninterest expense $ 235,764 $ 214,075 $ 472,291 $ 428,708 Less: Amortization of other intangibles 2,117 1,225 4,415 2,296 Operating expense, net of amortization of other intangibles (Non-GAAP) (numerator B) $ 233,647 $ 212,850 $ 467,876 $ 426,412 Net interest income $ 225,611 $ 224,791 $ 467,307 $ 435,146 Noninterest income 138,082 176,335 268,282 300,013 Less: Losses on sales of securities available for sale, net — — (2 ) — Total Non-GAAP Revenue (denominator A) $ 363,693 $ 401,126 $ 735,591 $ 735,159 Efficiency ratio (numerator A/denominator A) 65.59 % 53.08 % 64.34 % 58.03 % Operating efficiency ratio (Non-GAAP) (numerator B/denominator A) 64.24 53.06 63.61 58.00 Operating pre-tax, pre-provision income non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands except per share data) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net interest income (GAAP) $ 225,611 $ 224,791 $ 467,307 $ 435,146 Noninterest income (GAAP) 138,082 176,335 268,282 300,013 Noninterest expense (GAAP) 240,673 214,127 477,725 428,905 Adjustments to arrive at operating noninterest expense: Acquisition expense 18 — 57 — Severance expense 4,891 52 5,377 197 Total Non-GAAP adjustments 4,909 52 5,434 197 Operating noninterest expense (Non-GAAP) 235,764 214,075 472,291 428,708 Operating pre-tax, pre-provision income (Non-GAAP) $ 127,929 $ 187,051 $ 263,298 $ 306,451 Net interest income earnings per share - diluted (GAAP) $ 4.64 $ 4.62 $ 9.60 $ 8.93 Noninterest income (GAAP) 2.84 3.62 5.51 6.16 Noninterest expense (GAAP) 4.95 4.40 9.81 8.80 Acquisition expense — — — — Severance expense 0.10 — 0.11 — Operating pre-tax, pre-provision earnings per share - diluted (Non-GAAP) $ 2.63 $ 3.84 $ 5.41 $ 6.29 Operating pre-tax, pre-provision income - FTE Non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands except per share data) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net interest income (GAAP) $ 225,611 $ 224,791 $ 467,307 $ 435,146 Adjustments to arrive at net interest income - FTE: Tax equivalent interest 6,575 6,278 13,130 12,677 Net interest income - FTE (Non-GAAP) 232,186 231,069 480,437 447,823 Noninterest income (GAAP) 138,082 176,335 268,282 300,013 Noninterest expense (GAAP) 240,673 214,127 477,725 428,905 Adjustments to arrive at operating noninterest expense: Acquisition expense 18 — 57 — Severance expense 4,891 52 5,377 197 Total Non-GAAP adjustments 4,909 52 5,434 197 Operating noninterest expense (Non-GAAP) 235,764 214,075 472,291 428,708 Operating pre-tax, pre-provision income - FTE (Non-GAAP) $ 134,504 $ 193,329 $ 276,428 $ 319,128 Net interest income earnings per share - diluted (GAAP) $ 4.64 $ 4.62 $ 9.60 $ 8.93 Tax equivalent interest 0.14 0.13 0.27 0.26 Net interest income - FTE (Non-GAAP) 4.78 4.75 9.87 9.19 Noninterest income (GAAP) 2.84 3.62 5.51 6.16 Noninterest expense (GAAP) 4.95 4.40 9.81 8.80 Acquisition expense — — — — Severance expense 0.10 — 0.11 — Operating pre-tax, pre-provision income - FTE earnings per share - diluted (Non-GAAP) $ 2.77 $ 3.97 $ 5.68 $ 6.55 Tangible book value non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands except share and per share data) As of June 30, 2023 2022 Total shareholders' equity (GAAP) $ 2,831,628 $ 2,642,888 Less: Intangible assets Goodwill 207,385 182,225 Other intangibles, net 75,184 14,465 Total intangibles, net 282,569 196,690 Total tangible shareholders' equity (Non-GAAP) $ 2,549,059 $ 2,446,198 Total shares outstanding 48,517,750 48,305,286 Ratio of total shareholders' equity (book value) per share $ 58.36 $ 54.71 Ratio of total tangible shareholders' equity (tangible book value) per share (Non-GAAP) 52.54 50.64 Operating return on average tangible equity excluding AOCI non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Average total shareholders' equity (GAAP) $ 2,876,832 $ 2,648,360 $ 2,801,054 $ 2,789,896 Less: Average intangible assets Average goodwill 207,385 182,225 207,385 178,478 Average other intangibles, net 75,685 15,261 76,954 14,686 Average total intangibles, net 283,070 197,486 284,339 193,164 Average total tangible shareholders' equity (Non-GAAP) 2,593,762 2,450,874 2,516,715 2,596,732 Less: Average accumulated other comprehensive loss (AOCI) (644,003 ) (507,740 ) (643,782 ) (318,119 ) Average total tangible shareholders' equity excluding AOCI (Non-GAAP) $ 3,237,765 $ 2,958,614 $ 3,160,497 $ 2,914,851 Net operating income (Non-GAAP) $ 93,841 $ 137,596 $ 186,677 $ 243,669 Non-GAAP Operating return on average tangible equity excluding AOCI 11.63 % 18.65 % 11.91 % 16.86 % View source version on businesswire.com: https://www.businesswire.com/news/home/20230725886576/en/Contacts Media Contact: Stephanie Hague: 816.860.5088 Investor Relations Contact: Kay Gregory: 816.860.7106 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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UMB Financial Corporation Reports Second Quarter Net Income of $90.1 Million By: UMB Financial Corporation via Business Wire July 25, 2023 at 16:30 PM EDT Second Quarter 2023 Financial Highlights GAAP net income of $90.1 million, or $1.85 per diluted share. Net operating income of $93.8 million, or $1.93 per diluted share. Average loans increased 17.3% on a linked-quarter, annualized basis. Deposit balances at June 30, 2023 totaled $33.5 billion, up from $31.9 billion at March 31, 2023. At June 30, 2023, total estimated uninsured deposits represented approximately 65.5% of total deposits. When adjusted to exclude affiliate (company-owned) and collateralized deposits, estimated uninsured deposits were approximately 40.9% of total deposits. Noninterest income increased 6.1% as compared to the linked quarter, equal to 38.0% of total revenue. Credit quality remained strong, with net recoveries of $0.1 million and nonperforming loans of 0.09% of total loans. UMB Financial Corporation (Nasdaq: UMBF), a financial services company, announced net income for the second quarter of 2023 of $90.1 million, or $1.85 per diluted share, compared to $92.4 million, or $1.90 per diluted share, in the first quarter of 2023 (linked quarter) and $137.6 million, or $2.83 per diluted share, in the second quarter of 2022. The results for the second quarter of 2022 include a pre-tax gain of $66.2 million on the sale of the company's entire investment in Visa Inc. Class B common shares, and a pre-tax $5.0 million contribution to the company's charitable foundation. Net operating income, a non-GAAP financial measure reconciled later in this release to net income, the nearest comparable GAAP measure, was $93.8 million, or $1.93 per diluted share, for the second quarter of 2023, compared to $92.8 million, or $1.91 per diluted share, for the linked quarter and $137.6 million, or $2.83 per diluted share, for the second quarter of 2022. Operating pre-tax, pre-provision income (operating PTPP), a non-GAAP measure reconciled later in this release to the components of net income before taxes, the nearest comparable GAAP measure, was $127.9 million, or $2.63 per diluted share, for the second quarter of 2023, compared to $135.4 million, or $2.78 per diluted share, for the linked quarter, and $187.1 million, or $3.84 per diluted share, for the second quarter of 2022. These operating PTPP results represent decreases of 5.5% on a linked-quarter basis and 31.6%, compared to the second quarter of 2022. “In the second quarter of 2023, the positive impacts of fee income trends, a double-digit annualized increase in average loan balances, excellent asset quality metrics and expense management were masked by higher interest expense driven by the Federal Reserve’s monetary tightening actions as well as expected increases in funding costs in this high interest rate environment,” said Mariner Kemper, chairman, president and chief executive officer. “Average loans increased 17.3% on a linked-quarter annualized basis with nearly half of the increase driven by commercial & industrial loan balances. Credit metrics remain strong as evidenced by net recoveries this quarter and nine basis points of non-performing loans to total loans. Noninterest income was $138.1 million for the quarter. It's important to note that noninterest income for the same quarter in 2022 included a pre-tax gain of $66.2 million on the sale of our Visa Inc. Class B common shares. Finally, period-end deposit balances at quarter end were $33.5 billion, an increase of $1.6 billion, or 5.0%, as compared to March 31, 2023.” Second Quarter 2023 earnings discussion Summary of quarterly financial results UMB Financial Corporation (unaudited, dollars in thousands, except per share data) Q2 Q1 Q2 2023 2023 2022 Net income (GAAP) $ 90,110 $ 92,437 $ 137,556 Earnings per share (diluted) 1.85 1.90 2.83 Operating pre-tax, pre-provision income (Non-GAAP)(i) 127,929 135,369 187,051 Operating pre-tax, pre-provision earnings per share (diluted) 2.63 2.78 3.84 Operating pre-tax, pre-provision income - FTE (Non-GAAP)(i) 134,504 141,924 193,329 Operating pre-tax, pre-provision earnings per share - FTE (diluted) 2.77 2.91 3.97 Net operating income (Non-GAAP)(i) 93,841 92,836 137,596 Operating earnings per share (diluted) 1.93 1.91 2.83 GAAP Return on average assets 0.90 % 0.97 % 1.47 % Return on average equity 12.56 13.76 20.83 Efficiency ratio 65.59 63.12 53.08 Non-GAAP (i) Operating return on average assets 0.93 % 0.98 % 1.47 % Operating return on average equity 13.08 13.82 20.84 Operating return on average tangible equity excluding AOCI 11.63 12.21 18.65 Operating efficiency ratio 64.24 62.98 53.06 (i) See reconciliation of Non-GAAP measures to their nearest comparable GAAP measures later in this release. Summary of year-to-date financial results UMB Financial Corporation (unaudited, dollars in thousands, except per share data) June June YTD YTD 2023 2022 Net income (GAAP) $ 182,547 $ 243,519 Earnings per share (diluted) 3.75 4.99 Operating pre-tax, pre-provision income (Non-GAAP)(i) 263,298 306,451 Operating pre-tax, pre-provision earnings per share (diluted) 5.41 6.29 Operating pre-tax, pre-provision income - FTE (Non-GAAP)(i) 276,428 319,128 Operating pre-tax, pre-provision earnings per share - FTE (diluted) 5.68 6.55 Net operating income (Non-GAAP)(i) 186,677 243,669 Operating earnings per share (diluted) 3.83 4.99 GAAP Return on average assets 0.93 % 1.28 % Return on average equity 13.14 17.60 Efficiency ratio 64.34 58.03 Non-GAAP (i) Operating return on average assets 0.95 % 1.28 % Operating return on average equity 13.44 17.61 Operating return on average tangible equity excluding AOCI 11.91 16.86 Operating efficiency ratio 63.61 58.00 (i) See reconciliation of Non-GAAP measures to their nearest comparable GAAP measures later in this release. Summary of revenue UMB Financial Corporation (unaudited, dollars in thousands) Q2 Q1 Q2 CQ vs. CQ vs. 2023 2023 2022 LQ PY Net interest income $ 225,611 $ 241,696 $ 224,791 $ (16,085 ) $ 820 Noninterest income: Trust and securities processing 61,589 62,359 58,886 (770 ) 2,703 Trading and investment banking 4,800 5,308 7,123 (508 ) (2,323 ) Service charges on deposit accounts 21,381 21,159 20,835 222 546 Insurance fees and commissions 225 274 245 (49 ) (20 ) Brokerage fees 13,604 13,676 12,391 (72 ) 1,213 Bankcard fees 18,579 18,172 17,840 407 739 Investment securities gains (losses), net 900 (5,324 ) 60,720 6,224 (59,820 ) Other 17,004 14,576 (1,705 ) 2,428 18,709 Total noninterest income $ 138,082 $ 130,200 $ 176,335 $ 7,882 $ (38,253 ) Total revenue $ 363,693 $ 371,896 $ 401,126 $ (8,203 ) $ (37,433 ) Net interest income (FTE) $ 232,186 $ 248,251 $ 231,069 Net interest margin (FTE) 2.44 % 2.76 % 2.60 % Total noninterest income as a % of total revenue 38.0 35.0 44.0 Net interest income Second quarter 2023 net interest income totaled $225.6 million, a decrease of $16.1 million, or 6.7% from the linked quarter, driven by higher interest expense primarily due to unfavorable mix shift in the composition of liabilities, combined with higher interest rates. This decrease was partially offset by continued growth in average loans and higher liquidity balances, coupled with increased yields. Average earning assets increased $1.8 billion, or 4.9% from the linked quarter, largely driven by an increase of $1.2 billion in interest-bearing due from banks and an increase of $920.0 million in average loans, partially offset by decreases of $174.7 million in federal funds sold and resell agreements and $143.4 million in average securities. Average interest-bearing liabilities increased $3.1 billion, or 13.3% from the linked quarter, primarily driven by increases of $1.9 billion in borrowed funds, primarily short-term borrowings, and $1.3 billion in interest-bearing deposits. Average noninterest-bearing deposits decreased $1.4 billion, or 11.6% as compared to the linked quarter. Net interest margin for the second quarter was 2.44%, a decrease of 32 basis points from the linked quarter, driven by increased cost and mix of interest-bearing liabilities, partially offset by improved loan yields, the benefit of free funds, and earning asset mix changes. The cost of interest-bearing liabilities increased 67 basis points to 3.58%. Total cost of funds increased 64 basis points from the linked quarter to 2.56%. Average loan yields increased 32 basis points while earning asset yields increased 29 basis points from the linked quarter. On a year-over-year basis, net interest income increased $0.8 million, or 0.4%, driven by a $3.9 billion, or 21.1%, increase in average loans, partially offset by higher interest costs due to unfavorable mix shift in the composition of liabilities as well as the impact of higher short-term interest rates. Compared to the second quarter of 2022, average earning assets increased $2.5 billion, or 7.1%, largely driven by the increase in average loans noted above, partially offset by a decrease of $824.5 million in federal funds sold and resell agreements and a decrease of $589.2 million in average securities. Average deposits decreased 0.4% compared to the second quarter of 2022. Average noninterest-bearing demand deposit balances decreased 25.9% compared to the second quarter of 2022, driven by expected migration to rate-bearing deposit categories in a higher interest rate environment. Demand deposit balances comprised 33.5% of total deposits, compared to 37.8% in the linked quarter and 45.0% in the second quarter of 2022. Average borrowed funds increased $1.9 billion as compared to the linked quarter and $2.9 billion as compared to the second quarter of 2022, driven by short-term borrowings with the Federal Home Loan Bank and the Federal Reserve Discount Window. Noninterest income Second quarter 2023 noninterest income increased $7.9 million, or 6.1%, on a linked-quarter basis, largely due to: An increase of $6.2 million in investment securities gains, largely driven by an impairment loss on an available-for-sale subordinated debt security recorded in the first quarter and increased valuation of the company's equity investments in the second quarter. An increase of $2.4 million in other income, primarily related to a $4.0 million gain on sale of other assets recorded in the second quarter, partially offset by a decrease of $1.3 million in derivative income. These increases were partially offset by a decrease of $0.9 million in corporate trust income, recorded in trust and securities processing. Compared to the prior year, noninterest income in the second quarter of 2023 decreased $38.3 million, or 21.7%, primarily driven by: A decrease of $59.8 million in investment securities gains, primarily driven by the $66.2 million gain on sale of the company's investment in Visa Inc. Class B common shares in the second quarter of 2022. This was partially offset by an increase of $5.3 million in the valuation of the company's marketable securities. A decrease of $2.3 million in trading and investment banking due to decreased trading volume. These decreases were partially offset by the following increases: An increase of $18.7 million in other income, driven by an increase of $13.8 million in company-owned life insurance income and a gain of $4.0 million on the sale of other assets recorded in the second quarter of 2023. The increase in company-owned life insurance is offset by a proportionate increase in deferred compensation expense as noted below. Increases of $1.9 million and $1.1 million in fund services income and corporate trust income, both recorded in trust and securities processing. An increase of $1.2 million in brokerage income, largely driven by increased 12b-1 fee income. Noninterest expense Summary of noninterest expense UMB Financial Corporation (unaudited, dollars in thousands) Q2 Q1 Q2 CQ vs. CQ vs. �� 2023 2023 2022 LQ PY Salaries and employee benefits $ 143,312 $ 142,498 $ 121,390 $ 814 $ 21,922 Occupancy, net 11,746 12,177 11,976 (431 ) (230 ) Equipment 17,086 17,849 18,315 (763 ) (1,229 ) Supplies and services 4,195 3,875 3,492 320 703 Marketing and business development 7,124 5,335 5,308 1,789 1,816 Processing fees 26,572 23,240 19,338 3,332 7,234 Legal and consulting 7,059 7,285 11,265 (226 ) (4,206 ) Bankcard 8,307 7,133 5,880 1,174 2,427 Amortization of other intangible assets 2,117 2,298 1,225 (181 ) 892 Regulatory fees 6,123 5,551 3,464 572 2,659 Other 7,032 9,811 12,474 (2,779 ) (5,442 ) Total noninterest expense $ 240,673 $ 237,052 $ 214,127 $ 3,621 $ 26,546 Noninterest expense for the second quarter of 2023 was $240.7 million, an increase of $3.6 million, or 1.5%, from the linked quarter and an increase of $26.5 million, or 12.4%, from the second quarter of 2022. Operating noninterest expense, a non-GAAP financial measure reconciled later in this release to noninterest expense, the nearest comparable GAAP measure, was $235.8 million for the second quarter of 2023, a decrease of $0.8 million, or 0.3%, from the linked quarter and an increase of $21.7 million, or 10.1%, from the second quarter of 2022. The linked-quarter increase in GAAP noninterest expense was driven by: Increases of $3.3 million in processing fees and $1.8 million in marketing and business development expense due to the ongoing modernization of the company's core systems and timing of multiple projects, respectively. The increase in marketing and business development expense was also partially driven by an increase in advertising for various projects and an increase in travel and entertainment expense. An increase of $0.8 million in salaries and employee benefits expense driven by an increase of $7.4 million in salary and bonus expense, partially offset by a decrease of $6.6 million in employee benefits. The increase in salary and bonus expense was due to an increase of $4.4 million in severance expense and higher salary expense related to annual merit increases beginning in the second quarter. The decrease in employee benefits was driven by the seasonal decrease of $8.0 million in payroll taxes, insurance, and 401(k) expense, offset by an increase in other employee benefits recorded in the second quarter. These increases were partially offset by a decrease of $2.0 million in operational losses as compared to the linked quarter. The year-over-year increase in GAAP noninterest expense was driven by: An increase of $21.9 million in salaries and employee benefits expense, driven primarily by increases of $14.5 in employee benefits expense and $7.4 million in salaries and bonus expense. The increase in employee benefits expense is due to increases of $12.5 million in deferred compensation plan expense and $1.3 million in payroll taxes, insurance, and 401(k) expense. The increase in deferred compensation expense was offset by the increase in company-owned life insurance income noted above. The increase in salaries and bonus expense is due to an increase of $4.8 million in severance expense and higher employee salaries as compared to the second quarter of 2022. An increase of $7.2 million in processing fees expense due to the ongoing modernization of the company’s core systems and the timing of multiple software projects. An increase of $2.7 million in regulatory fees expense driven by higher deposit insurance expense. These increases were offset by a decrease of $5.4 million in other expense primarily due to the $5.0 million charitable contribution recorded in the second quarter of 2022 mentioned above. Income taxes The company’s effective tax rate was 17.6% for the six months ended June 30, 2023, compared to 18.7% for the same period in 2022. The decrease in the effective tax rate in 2023 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 2023 were $40.4 billion compared to $38.5 billion for the linked quarter and $37.6 billion for the same period in 2022. Summary of average loans and leases - QTD Average UMB Financial Corporation (unaudited, dollars in thousands) Q2 Q1 Q2 CQ vs. CQ vs. 2023 2023 2022 LQ PY Commercial and industrial $ 9,724,300 $ 9,287,319 $ 7,918,552 $ 436,981 $ 1,805,748 Specialty lending 574,220 564,633 518,575 9,587 55,645 Commercial real estate 8,178,463 7,812,140 6,569,784 366,323 1,608,679 Consumer real estate 2,833,739 2,738,184 2,458,815 95,555 374,924 Consumer 139,705 136,571 148,412 3,134 (8,707 ) Credit cards 485,749 453,704 428,167 32,045 57,582 Leases and other 255,425 279,049 275,638 (23,624 ) (20,213 ) Total loans $ 22,191,601 $ 21,271,600 $ 18,317,943 $ 920,001 $ 3,873,658 Average loans for the second quarter of 2023 increased $920.0 million, or 4.3%, on a linked-quarter basis and $3.9 billion, or 21.1%, compared to the second quarter of 2022. Summary of average securities - QTD Average UMB Financial Corporation (unaudited, dollars in thousands) Q2 Q1 Q2 CQ vs. CQ vs. 2023 2023 2022 LQ PY Securities available for sale: U.S. Treasury $ 797,104 $ 783,170 $ 639,161 $ 13,934 $ 157,943 U.S. Agencies 189,091 171,825 172,798 17,266 16,293 Mortgage-backed 3,813,234 3,938,137 4,764,452 (124,903 ) (951,218 ) State and political subdivisions 1,319,398 1,356,785 1,891,377 (37,387 ) (571,979 ) Corporates 349,318 364,854 377,586 (15,536 ) (28,268 ) Collateralized loan obligations 348,078 348,477 247,639 (399 ) 100,439 Total securities available for sale $ 6,816,223 $ 6,963,248 $ 8,093,013 $ (147,025 ) $ (1,276,790 ) Securities held to maturity: U.S. Agencies $ 123,135 $ 123,106 $ 65,964 $ 29 $ 57,171 Mortgage-backed 2,878,657 2,934,113 2,892,986 (55,456 ) (14,329 ) State and political subdivisions 2,822,218 2,814,912 2,240,018 7,306 582,200 Total securities held to maturity $ 5,824,010 $ 5,872,131 $ 5,198,968 $ (48,121 ) $ 625,042 Trading securities $ 12,538 $ 9,258 $ 10,190 $ 3,280 $ 2,348 Other securities 407,754 359,238 347,527 48,516 60,227 Total securities $ 13,060,525 $ 13,203,875 $ 13,649,698 $ (143,350 ) $ (589,173 ) Average total securities decreased 1.1% on a linked-quarter basis and decreased 4.3% compared to the second quarter of 2022. At June 30, 2023, the unrealized pre-tax net loss on the available-for-sale securities portfolio was $765.9 million, or 10.3% of the $7.4 billion amortized cost value. At June 30, 2023, the unrealized pre-tax net loss on the securities designated as held to maturity was $576.4 million, or 9.9% of the $5.8 billion amortized cost value. During 2022, the company transferred securities with an amortized cost balance of $4.1 billion and a fair value of $3.8 billion from the available-for-sale category to the held-to-maturity category. The remaining balance of unrealized pre-tax net losses related to transferred securities was $226.7 million as of June 30, 2023 and was included in the amortized cost balance of held-to-maturity securities. At June 30, 2023, an after-tax gain of $56.9 million was included in accumulated other comprehensive income (AOCI) related to the company’s fair value hedges of municipal securities. During 2021, the company entered into ten of these hedge transactions, nine of which have since been terminated. The gain on the terminated hedges is being amortized over the remaining life of the underlying bonds. Summary of average deposits - QTD Average UMB Financial Corporation (unaudited, dollars in thousands) Q2 Q1 Q2 CQ vs. CQ vs. 2023 2023 2022 LQ PY Deposits: Noninterest-bearing demand $ 10,535,325 $ 11,919,277 $ 14,209,159 $ (1,383,952 ) $ (3,673,834 ) Interest-bearing demand and savings 17,463,022 18,427,662 16,808,998 (964,640 ) 654,024 Time deposits 3,476,616 1,215,506 570,812 2,261,110 2,905,804 Total deposits $ 31,474,963 $ 31,562,445 $ 31,588,969 $ (87,482 ) $ (114,006 ) Noninterest bearing deposits as % of total 33.5 % 37.8 % 45.0 % Average deposits decreased 0.3% on a linked-quarter basis and decreased 0.4% compared to the second quarter of 2022. As of June 30, 2023, the total estimated uninsured deposits were $22.0 billion or approximately 65.5% of total deposits. Estimated uninsured deposits, when adjusted to exclude affiliate (company-owned) and collateralized deposits, were $13.7 billion and represented approximately 40.9% of total deposits. Capital Capital information UMB Financial Corporation (unaudited, dollars in thousands, except per share data) June 30, 2023 March 31, 2023 June 30, 2022 Total equity $ 2,831,628 $ 2,814,659 $ 2,642,888 Accumulated other comprehensive loss, net (685,831 ) (626,776 ) (564,803 ) Book value per common share 58.36 58.03 54.71 Tangible book value per common share (Non-GAAP)(i) 52.54 52.17 50.64 Regulatory capital: Common equity Tier 1 capital $ 3,273,841 $ 3,196,111 $ 3,055,747 Tier 1 capital 3,273,841 3,196,111 3,055,747 Total capital 3,870,101 3,776,407 3,473,040 Regulatory capital ratios: Common equity Tier 1 capital ratio 10.65 % 10.57 % 11.44 % Tier 1 risk-based capital ratio 10.65 10.57 11.44 Total risk-based capital ratio 12.59 12.49 13.00 Tier 1 leverage ratio 8.16 8.35 8.17 (i) See reconciliation of Non-GAAP measures to their nearest comparable GAAP measures later in this release. At June 30, 2023, the regulatory capital ratios presented in the foregoing table exceeded all “well-capitalized” regulatory thresholds. Asset Quality Credit quality UMB Financial Corporation (unaudited, dollars in thousands) Q2 Q1 Q4 Q3 Q2 2023 2023 2022 2022 2022 Net (recoveries) charge-offs - total loans $ (139 ) $ 4,643 $ 2,189 $ 1,173 $ 28,128 Net loan (recoveries) charge-offs as a % of total average loans (0.00 )% 0.09 % 0.04 % 0.02 % 0.62 % Loans over 90 days past due $ 10,861 $ 1,723 $ 1,617 $ 2,513 $ 3,446 Loans over 90 days past due as a % of total loans 0.05 % 0.01 % 0.01 % 0.01 % 0.02 % Nonaccrual and restructured loans $ 19,347 $ 15,480 $ 19,269 $ 19,817 $ 18,117 Nonaccrual and restructured loans as a % of total loans 0.09 % 0.07 % 0.09 % 0.10 % 0.10 % Provision for credit losses $ 13,000 $ 23,250 $ 9,000 $ 22,000 $ 13,400 Provision for credit losses for the second quarter totaled $13.0 million, a decrease of $10.3 million from the linked quarter and a decrease of $0.4 million from the second quarter of 2022. These changes are driven largely by loan growth and changes in macro-economic variables in the current period as compared to the prior periods. Net recoveries for the second quarter totaled $0.1 million, compared to net charge-offs of $4.6 million, or 0.09%, of average loans in the linked quarter, and $28.1 million, or 0.62%, of average loans for the second quarter of 2022. Dividend Declaration and Share Repurchase Authorization At the company’s quarterly board meeting, the Board of Directors declared a $0.38 per share quarterly cash dividend, payable on October 2, 2023, to shareholders of record at the close of business on September 11, 2023. The Board also approved the repurchase of up to 1,000,000 shares of the company's common stock. Share repurchases may occur from time to time at any point until the regular meeting of the Board that immediately follows the 2024 annual meeting of the company’s shareholders. Shares acquired under the repurchase program may be available for reissuance or resale, including in connection with the company's compensation plans and dividend reinvestment plan. Under the repurchase program, the company may acquire the shares from time to time in open market or privately negotiated transactions, at the discretion of management. Conference Call The company plans to host a conference call to discuss its second quarter 2023 earnings results on Wednesday, July 26, 2023, at 9:30 a.m. (CT). Interested parties may access the call by dialing (toll-free) 833-470-1428 or (international) 404-975-4839 and requesting to join the UMB Financial call with access code 835446. The live call may also be accessed by visiting investorrelations.umb.com or by using the following link: UMB Financial 2Q 2023 Conference Call A replay of the conference call may be heard through August 9, 2023, by calling (toll-free) 866-813-9403 or (international) 929-458-6194. The replay access code required for playback is 506453. The call replay may also be accessed at investorrelations.umb.com. Non-GAAP Financial Information In this release, we may provide information about net operating income, operating earnings per share – diluted (operating EPS), operating return on average equity (operating ROE), operating return on average assets (operating ROA), operating noninterest expense, operating efficiency ratio, operating pre-tax, pre-provision income (operating PTPP), operating pre-tax, pre-provision earnings per share – diluted (operating PTPP EPS), operating pre-tax, pre-provision income on a fully tax equivalent basis (operating PTPP-FTE), operating pre-tax, pre-provision FTE earnings per share – diluted (operating PTPP-FTE EPS), tangible shareholders’ equity, tangible book value per share, and operating return on average tangible equity excluding AOCI, all of which are non-GAAP financial measures. This information supplements the results that are reported according to generally accepted accounting principles in the United States (GAAP) and should not be viewed in isolation from, or as a substitute for, GAAP results. The differences between the non-GAAP financial measures – net operating income, operating EPS, operating ROE, operating ROA, operating noninterest expense, operating efficiency ratio, operating PTPP, operating PTPP EPS, operating PTPP-FTE, operating PTPP-FTE EPS, tangible shareholders’ equity, tangible book value per share, and operating return on average tangible equity excluding AOCI – and the nearest comparable GAAP financial measures are reconciled later in this release. The company believes that these non-GAAP financial measures and the reconciliations may be useful to investors because they adjust for acquisition- and severance-related items that management does not believe reflect the company’s fundamental operating performance. Net operating income for the relevant period is defined as GAAP net income, adjusted to reflect the impact of excluding expenses related to acquisitions, severance expense, and the cumulative tax impact of these adjustments. Operating EPS (diluted) is calculated as earnings per share as reported, adjusted to reflect, on a per share basis, the impact of excluding the non-GAAP adjustments described above for the relevant period. Operating ROE is calculated as net operating income, divided by the company’s average total shareholders’ equity for the relevant period. Operating ROA is calculated as net operating income, divided by the company’s average assets for the relevant period. Operating noninterest expense for the relevant period is defined as GAAP noninterest expense, adjusted to reflect the pre-tax impact of non-GAAP adjustments described above. Operating efficiency ratio is calculated as the company’s operating noninterest expense, net of amortization of other intangibles, divided by the company’s total non-GAAP revenue (calculated as net interest income plus noninterest income, less gains on sales of securities available for sale, net). Operating PTPP income for the relevant period is defined as GAAP net interest income plus GAAP noninterest income, less noninterest expense, adjusted to reflect the impact of excluding expenses related to acquisitions and severance expense. Operating PTPP-FTE for the relevant period is defined as GAAP net interest income on a fully tax equivalent basis plus GAAP noninterest income, less noninterest expense, adjusted to reflect the impact of excluding expenses related to acquisitions and severance expense. Tangible shareholders’ equity for the relevant period is defined as GAAP shareholders’ equity, net of intangible assets. Tangible book value per share is defined as tangible shareholders’ equity divided by the Company’s total shares outstanding. Operating return on average tangible equity excluding AOCI is calculated as net operating income, divided by the company’s average tangible shareholders’ equity exclusive of AOCI for the relevant period. Forward-Looking Statements: This press release contains, and our other communications may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “outlook,” “forecast,” “target,” “trend,” “plan,” “goal,” or other words of comparable meaning or future-tense or conditional verbs such as “may,” “will,” “should,” “would,” or “could.” Forward-looking statements convey our expectations, intentions, or forecasts about future events, circumstances, results, or aspirations. All forward-looking statements are subject to assumptions, risks, and uncertainties, which may change over time and many of which are beyond our control. You should not rely on any forward-looking statement as a prediction or guarantee about the future. Our actual future objectives, strategies, plans, prospects, performance, condition, or results may differ materially from those set forth in any forward-looking statement. Some of the factors that may cause actual results or other future events, circumstances, or aspirations to differ from those in forward-looking statements are described in our Annual Report on Form 10-K for the year ended December 31, 2022, our subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, or other applicable documents that are filed or furnished with the U.S. Securities and Exchange Commission (SEC). In addition to such factors that have been disclosed previously: macroeconomic and adverse developments and uncertainties related to the collateral effects of the collapse of, and challenges for, domestic and international banks, including the impacts to the U.S. and global economies; sustained levels of high inflation and the potential for an economic recession on the heels of aggressive quantitative tightening by the Federal Reserve, and impacts related to or resulting from Russia’s military action in Ukraine, such as the broader impacts to financial markets and the global macroeconomic and geopolitical environments, may also cause actual results or other future events, circumstances, or aspirations to differ from our forward-looking statements. Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except to the extent required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K, or other applicable document that is filed or furnished with the SEC. About UMB: UMB Financial Corporation (Nasdaq: UMBF) is a financial services company headquartered in Kansas City, Missouri. UMB offers commercial banking, which includes comprehensive deposit, lending and investment services, personal banking, which includes wealth management and financial planning services, and institutional banking, which includes asset servicing, corporate trust solutions, investment banking, and healthcare services. UMB operates branches throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas. As the company’s reach continues to grow, it also serves business clients nationwide and institutional clients in several countries. For more information, visit UMB.com, UMB Blog, UMB Facebook and UMB LinkedIn. Consolidated Balance Sheets UMB Financial Corporation (unaudited, dollars in thousands) June 30, 2023 2022 ASSETS Loans $ 22,483,542 $ 18,972,158 Allowance for credit losses on loans (222,161 ) (164,346 ) Net loans 22,261,381 18,807,812 Loans held for sale 3,819 750 Securities: Available for sale 6,668,615 7,739,216 Held to maturity, net of allowance for credit losses 5,807,763 5,707,282 Trading securities 28,887 9,646 Other securities 428,149 342,543 Total securities 12,933,414 13,798,687 Federal funds sold and resell agreements 319,838 1,055,459 Interest-bearing due from banks 3,369,911 1,825,295 Cash and due from banks 431,527 360,242 Premises and equipment, net 255,127 257,729 Accrued income 190,387 144,874 Goodwill 207,385 182,225 Other intangibles, net 75,184 14,465 Other assets 1,195,069 1,060,303 Total assets $ 41,243,042 $ 37,507,841 LIABILITIES Deposits: Noninterest-bearing demand $ 12,142,906 $ 14,925,555 Interest-bearing demand and savings 18,184,063 16,007,087 Time deposits under $250,000 2,665,166 383,832 Time deposits of $250,000 or more 528,326 169,550 Total deposits 33,520,461 31,486,024 Federal funds purchased and repurchase agreements 2,050,583 2,661,283 Short-term debt 1,800,000 — Long-term debt 382,280 272,505 Accrued expenses and taxes 256,845 182,185 Other liabilities 401,245 262,956 Total liabilities 38,411,414 34,864,953 SHAREHOLDERS' EQUITY Common stock 55,057 55,057 Capital surplus 1,124,977 1,115,504 Retained earnings 2,681,448 2,384,454 Accumulated other comprehensive loss, net (685,831 ) (564,803 ) Treasury stock (344,023 ) (347,324 ) Total shareholders' equity 2,831,628 2,642,888 Total liabilities and shareholders' equity $ 41,243,042 $ 37,507,841 Consolidated Statements of Income UMB Financial Corporation (unaudited, dollars in thousands except share and per share data) Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 INTEREST INCOME Loans $ 342,994 $ 169,919 $ 651,435 $ 319,389 Securities: Taxable interest 54,587 47,295 107,636 90,677 Tax-exempt interest 25,550 23,538 50,856 47,393 Total securities income 80,137 70,833 158,492 138,070 Federal funds and resell agreements 3,889 3,497 9,540 5,947 Interest-bearing due from banks 34,206 4,207 50,372 6,664 Trading securities 154 114 288 299 Total interest income 461,380 248,570 870,127 470,369 INTEREST EXPENSE Deposits 170,550 15,439 298,449 21,612 Federal funds and repurchase agreements 24,745 4,998 48,047 7,146 Other 40,474 3,342 56,324 6,465 Total interest expense 235,769 23,779 402,820 35,223 Net interest income 225,611 224,791 467,307 435,146 Provision for credit losses 13,000 13,400 36,250 6,900 Net interest income after provision for credit losses 212,611 211,391 431,057 428,246 NONINTEREST INCOME Trust and securities processing 61,589 58,886 123,948 118,414 Trading and investment banking 4,800 7,123 10,108 12,563 Service charges on deposit accounts 21,381 20,835 42,540 45,477 Insurance fees and commissions 225 245 499 504 Brokerage fees 13,604 12,391 27,280 15,847 Bankcard fees 18,579 17,840 36,751 34,475 Investment securities gains (losses), net 900 60,720 (4,424 ) 60,198 Other 17,004 (1,705 ) 31,580 12,535 Total noninterest income 138,082 176,335 268,282 300,013 NONINTEREST EXPENSE Salaries and employee benefits 143,312 121,390 285,810 252,024 Occupancy, net 11,746 11,976 23,923 24,208 Equipment 17,086 18,315 34,935 36,479 Supplies and services 4,195 3,492 8,070 6,754 Marketing and business development 7,124 5,308 12,459 10,240 Processing fees 26,572 19,338 49,812 37,781 Legal and consulting 7,059 11,265 14,344 18,176 Bankcard 8,307 5,880 15,440 12,447 Amortization of other intangible assets 2,117 1,225 4,415 2,296 Regulatory fees 6,123 3,464 11,674 6,946 Other 7,032 12,474 16,843 21,554 Total noninterest expense 240,673 214,127 477,725 428,905 Income before income taxes 110,020 173,599 221,614 299,354 Income tax expense 19,910 36,043 39,067 55,835 NET INCOME $ 90,110 $ 137,556 $ 182,547 $ 243,519 PER SHARE DATA Net income – basic $ 1.86 $ 2.85 $ 3.77 $ 5.03 Net income – diluted 1.85 2.83 3.75 4.99 Dividends 0.38 0.37 0.76 0.74 Weighted average shares outstanding – basic 48,514,277 48,347,226 48,474,865 48,376,868 Weighted average shares outstanding – diluted 48,668,413 48,673,964 48,707,487 48,755,059 Consolidated Statements of Comprehensive Income UMB Financial Corporation (unaudited, dollars in thousands) Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Net income $ 90,110 $ 137,556 $ 182,547 $ 243,519 Other comprehensive (loss) income, before tax: Unrealized gains and losses on debt securities: Change in unrealized holding gains and losses, net (87,505 ) (308,352 ) 6,152 (931,262 ) Less: Reclassification adjustment for net losses included in net income — — 433 — Amortization of net unrealized loss on securities transferred from available-for-sale to held-to-maturity 10,312 12,539 20,295 13,121 Change in unrealized gains and losses on debt securities (77,193 ) (295,813 ) 26,880 (918,141 ) Unrealized gains and losses on derivative hedges: Change in unrealized gains and losses on derivative hedges, net 1,848 4,437 321 9,117 Less: Reclassification adjustment for net gains included in net income (2,660 ) (1,090 ) (5,221 ) (1,941 ) Change in unrealized gains and losses on derivative hedges (812 ) 3,347 (4,900 ) 7,176 Other comprehensive (loss) income, before tax (78,005 ) (292,466 ) 21,980 (910,965 ) Income tax benefit (expense) 18,950 70,791 (5,076 ) 219,848 Other comprehensive (loss) income (59,055 ) (221,675 ) 16,904 (691,117 ) Comprehensive income (loss) $ 31,055 $ (84,119 ) $ 199,451 $ (447,598 ) Consolidated Statements of Shareholders' Equity UMB Financial Corporation (unaudited, dollars in thousands except per share data) Common Stock Capital Surplus Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Balance - January 1, 2022 $ 55,057 $ 1,110,520 $ 2,176,998 $ 126,314 $ (323,465 ) $ 3,145,424 Total comprehensive income (loss) — — 243,519 (691,117 ) — (447,598 ) Dividends ($0.74 per share) — — (36,063 ) — — (36,063 ) Purchase of treasury stock — — — — (31,806 ) (31,806 ) Issuances of equity awards, net of forfeitures — (6,630 ) — — 7,309 679 Recognition of equity-based compensation — 11,223 — — — 11,223 Sale of treasury stock — 174 — — 111 285 Exercise of stock options — 217 — — 527 744 Balance - June 30, 2022 $ 55,057 $ 1,115,504 $ 2,384,454 $ (564,803 ) $ (347,324 ) $ 2,642,888 Balance - January 1, 2023 $ 55,057 $ 1,125,949 $ 2,536,086 $ (702,735 ) $ (347,264 ) $ 2,667,093 Total comprehensive income — — 182,547 16,904 — 199,451 Dividends ($0.76 per share) — — (37,185 ) — — (37,185 ) Purchase of treasury stock — — — — (7,902 ) (7,902 ) Issuances of equity awards, net of forfeitures — (9,764 ) — — 10,483 719 Recognition of equity-based compensation — 8,455 — — — 8,455 Sale of treasury stock — 115 — — 140 255 Exercise of stock options — 222 — — 520 742 Balance - June 30, 2023 $ 55,057 $ 1,124,977 $ 2,681,448 $ (685,831 ) $ (344,023 ) $ 2,831,628 Average Balances / Yields and Rates UMB Financial Corporation (tax - equivalent basis) (unaudited, dollars in thousands) Three Months Ended June 30, 2023 2022 Average Average Average Average Balance Yield/Rate Balance Yield/Rate Assets Loans, net of unearned interest $ 22,191,601 6.20 % $ 18,317,943 3.72 % Securities: Taxable 9,228,103 2.37 9,825,114 1.93 Tax-exempt 3,819,884 3.36 3,814,394 3.13 Total securities 13,047,987 2.66 13,639,508 2.27 Federal funds and resell agreements 276,459 5.64 1,100,918 1.27 Interest bearing due from banks 2,707,740 5.07 2,632,307 0.64 Trading securities 12,538 5.37 10,190 5.35 Total earning assets 38,236,325 4.91 35,700,866 2.86 Allowance for credit losses (216,876 ) (182,118 ) Other assets 2,345,714 2,043,977 Total assets $ 40,365,163 $ 37,562,725 Liabilities and Shareholders' Equity Interest-bearing deposits $ 20,939,638 3.27 % $ 17,379,810 0.36 % Federal funds and repurchase agreements 2,336,929 4.25 2,658,219 0.75 Borrowed funds 3,137,267 5.17 272,254 4.92 Total interest-bearing liabilities 26,413,834 3.58 20,310,283 0.47 Noninterest-bearing demand deposits 10,535,325 14,209,159 Other liabilities 539,172 394,923 Shareholders' equity 2,876,832 2,648,360 Total liabilities and shareholders' equity $ 40,365,163 $ 37,562,725 Net interest spread 1.33 % 2.39 % Net interest margin 2.44 2.60 Average Balances / Yields and Rates UMB Financial Corporation (tax - equivalent basis) (unaudited, dollars in thousands) Six Months Ended June 30, 2023 2022 Average Average Average Average Balance Yield/Rate Balance Yield/Rate Assets Loans, net of unearned interest $ 21,734,142 6.05 % $ 17,842,153 3.61 % Securities: Taxable 9,288,392 2.34 9,644,345 1.90 Tax-exempt 3,832,505 3.36 3,926,444 3.08 Total securities 13,120,897 2.64 13,570,789 2.24 Federal funds and resell agreements 363,341 5.29 1,182,891 1.01 Interest bearing due from banks 2,127,343 4.77 3,965,267 0.34 Trading securities 10,907 5.77 15,484 4.70 Total earning assets 37,356,630 4.77 36,576,584 2.66 Allowance for credit losses (206,559 ) (190,123 ) Other assets 2,292,479 1,966,176 Total assets $ 39,442,550 $ 38,352,637 Liabilities and Shareholders' Equity Interest-bearing deposits $ 20,294,984 2.97 % $ 17,964,006 0.24 % Federal funds and repurchase agreements 2,399,090 4.04 2,815,130 0.51 Borrowed funds 2,174,157 5.22 271,994 4.79 Total interest-bearing liabilities 24,868,231 3.27 21,051,130 0.34 Noninterest-bearing demand deposits 11,223,478 14,117,879 Other liabilities 549,787 393,732 Shareholders' equity 2,801,054 2,789,896 Total liabilities and shareholders' equity $ 39,442,550 $ 38,352,637 Net interest spread 1.50 % 2.32 % Net interest margin 2.59 2.47 Business Segment Information UMB Financial Corporation (unaudited, dollars in thousands) Three Months Ended June 30, 2023 Commercial Banking Institutional Banking Personal Banking Total Net interest income $ 144,389 $ 50,397 $ 30,825 $ 225,611 Provision for credit losses 11,055 234 1,711 13,000 Noninterest income 25,666 86,813 25,603 138,082 Noninterest expense 85,896 91,591 63,186 240,673 Income (loss) before taxes 73,104 45,385 (8,469 ) 110,020 Income tax expense (benefit) 13,230 8,213 (1,533 ) 19,910 Net income (loss) $ 59,874 $ 37,172 $ (6,936 ) $ 90,110 Three Months Ended June 30, 2022 Commercial Banking Institutional Banking Personal Banking Total Net interest income $ 149,094 $ 34,981 40,716 $ 224,791 Provision for credit losses 12,067 89 1,244 13,400 Noninterest income 56,894 81,082 38,359 176,335 Noninterest expense 79,521 76,511 58,095 214,127 Income before taxes 114,400 39,463 19,736 173,599 Income tax expense 23,752 8,193 4,098 36,043 Net income $ 90,648 $ 31,270 $ 15,638 $ 137,556 Six Months Ended June 30, 2023 Commercial Banking Institutional Banking Personal Banking Total Net interest income $ 295,416 $ 105,482 $ 66,409 $ 467,307 Provision for credit losses 32,099 331 3,820 36,250 Noninterest income 48,568 171,051 48,663 268,282 Noninterest expense 169,900 180,962 126,863 477,725 Income (loss) before taxes 141,985 95,240 (15,611 ) 221,614 Income tax expense (benefit) 25,030 16,789 (2,752 ) 39,067 Net income (loss) $ 116,955 $ 78,451 $ (12,859 ) $ 182,547 Six Months Ended June 30, 2022 Commercial Banking Institutional Banking Personal Banking Total Net interest income $ 294,096 $ 61,233 $ 79,817 $ 435,146 Provision for credit losses 5,027 240 1,633 6,900 Noninterest income 83,594 154,354 62,065 300,013 Noninterest expense 159,110 152,112 117,683 428,905 Income before taxes 213,553 63,235 22,566 299,354 Income tax expense 39,831 11,795 4,209 55,835 Net income $ 173,722 $ 51,440 $ 18,357 $ 243,519 The company has strategically aligned its operations into the following three reportable segments: Commercial Banking, Institutional Banking, and Personal Banking. Senior executive officers regularly evaluate business segment financial results produced by the company’s internal reporting system in deciding how to allocate resources and assess performance for individual business segments. The company’s reportable segments include certain corporate overhead, technology and service costs that are allocated based on methodologies that are applied consistently between periods. For comparability purposes, amounts in all periods are based on methodologies in effect at June 30, 2023. Non-GAAP Financial Measures Net operating income Non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands except per share data) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net income (GAAP) $ 90,110 $ 137,556 $ 182,547 $ 243,519 Adjustments: Acquisition expense 18 — 57 — Severance expense 4,891 52 5,377 197 Tax-impact of adjustments (i) (1,178 ) (12 ) (1,304 ) (47 ) Total Non-GAAP adjustments (net of tax) 3,731 40 4,130 150 Net operating income (Non-GAAP) $ 93,841 $ 137,596 $ 186,677 $ 243,669 Earnings per share - diluted (GAAP) $ 1.85 $ 2.83 $ 3.75 $ 4.99 Acquisition expense — — — — Severance expense 0.10 — 0.11 — Tax-impact of adjustments (i) (0.02 ) — (0.03 ) — Operating earnings per share - diluted (Non-GAAP) $ 1.93 $ 2.83 $ 3.83 $ 4.99 GAAP Return on average assets 0.90 % 1.47 % 0.93 % 1.28 % Return on average equity 12.56 20.83 13.14 17.60 Non-GAAP Operating return on average assets 0.93 % 1.47 % 0.95 % 1.28 % Operating return on average equity 13.08 20.84 13.44 17.61 (i) Calculated using the company’s marginal tax rate of 24.0%. Operating noninterest expense and operating efficiency ratio Non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Noninterest expense $ 240,673 $ 214,127 $ 477,725 $ 428,905 Adjustments to arrive at operating noninterest expense (pre-tax): Acquisition expense 18 — 57 — Severance expense 4,891 52 5,377 197 Total Non-GAAP adjustments (pre-tax) 4,909 52 5,434 197 Operating noninterest expense (Non-GAAP) $ 235,764 $ 214,075 $ 472,291 $ 428,708 Noninterest expense $ 240,673 $ 214,127 $ 477,725 $ 428,905 Less: Amortization of other intangibles 2,117 1,225 4,415 2,296 Noninterest expense, net of amortization of other intangibles (Non-GAAP) (numerator A) $ 238,556 $ 212,902 $ 473,310 $ 426,609 Operating noninterest expense $ 235,764 $ 214,075 $ 472,291 $ 428,708 Less: Amortization of other intangibles 2,117 1,225 4,415 2,296 Operating expense, net of amortization of other intangibles (Non-GAAP) (numerator B) $ 233,647 $ 212,850 $ 467,876 $ 426,412 Net interest income $ 225,611 $ 224,791 $ 467,307 $ 435,146 Noninterest income 138,082 176,335 268,282 300,013 Less: Losses on sales of securities available for sale, net — — (2 ) — Total Non-GAAP Revenue (denominator A) $ 363,693 $ 401,126 $ 735,591 $ 735,159 Efficiency ratio (numerator A/denominator A) 65.59 % 53.08 % 64.34 % 58.03 % Operating efficiency ratio (Non-GAAP) (numerator B/denominator A) 64.24 53.06 63.61 58.00 Operating pre-tax, pre-provision income non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands except per share data) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net interest income (GAAP) $ 225,611 $ 224,791 $ 467,307 $ 435,146 Noninterest income (GAAP) 138,082 176,335 268,282 300,013 Noninterest expense (GAAP) 240,673 214,127 477,725 428,905 Adjustments to arrive at operating noninterest expense: Acquisition expense 18 — 57 — Severance expense 4,891 52 5,377 197 Total Non-GAAP adjustments 4,909 52 5,434 197 Operating noninterest expense (Non-GAAP) 235,764 214,075 472,291 428,708 Operating pre-tax, pre-provision income (Non-GAAP) $ 127,929 $ 187,051 $ 263,298 $ 306,451 Net interest income earnings per share - diluted (GAAP) $ 4.64 $ 4.62 $ 9.60 $ 8.93 Noninterest income (GAAP) 2.84 3.62 5.51 6.16 Noninterest expense (GAAP) 4.95 4.40 9.81 8.80 Acquisition expense — — — — Severance expense 0.10 — 0.11 — Operating pre-tax, pre-provision earnings per share - diluted (Non-GAAP) $ 2.63 $ 3.84 $ 5.41 $ 6.29 Operating pre-tax, pre-provision income - FTE Non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands except per share data) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net interest income (GAAP) $ 225,611 $ 224,791 $ 467,307 $ 435,146 Adjustments to arrive at net interest income - FTE: Tax equivalent interest 6,575 6,278 13,130 12,677 Net interest income - FTE (Non-GAAP) 232,186 231,069 480,437 447,823 Noninterest income (GAAP) 138,082 176,335 268,282 300,013 Noninterest expense (GAAP) 240,673 214,127 477,725 428,905 Adjustments to arrive at operating noninterest expense: Acquisition expense 18 — 57 — Severance expense 4,891 52 5,377 197 Total Non-GAAP adjustments 4,909 52 5,434 197 Operating noninterest expense (Non-GAAP) 235,764 214,075 472,291 428,708 Operating pre-tax, pre-provision income - FTE (Non-GAAP) $ 134,504 $ 193,329 $ 276,428 $ 319,128 Net interest income earnings per share - diluted (GAAP) $ 4.64 $ 4.62 $ 9.60 $ 8.93 Tax equivalent interest 0.14 0.13 0.27 0.26 Net interest income - FTE (Non-GAAP) 4.78 4.75 9.87 9.19 Noninterest income (GAAP) 2.84 3.62 5.51 6.16 Noninterest expense (GAAP) 4.95 4.40 9.81 8.80 Acquisition expense — — — — Severance expense 0.10 — 0.11 — Operating pre-tax, pre-provision income - FTE earnings per share - diluted (Non-GAAP) $ 2.77 $ 3.97 $ 5.68 $ 6.55 Tangible book value non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands except share and per share data) As of June 30, 2023 2022 Total shareholders' equity (GAAP) $ 2,831,628 $ 2,642,888 Less: Intangible assets Goodwill 207,385 182,225 Other intangibles, net 75,184 14,465 Total intangibles, net 282,569 196,690 Total tangible shareholders' equity (Non-GAAP) $ 2,549,059 $ 2,446,198 Total shares outstanding 48,517,750 48,305,286 Ratio of total shareholders' equity (book value) per share $ 58.36 $ 54.71 Ratio of total tangible shareholders' equity (tangible book value) per share (Non-GAAP) 52.54 50.64 Operating return on average tangible equity excluding AOCI non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Average total shareholders' equity (GAAP) $ 2,876,832 $ 2,648,360 $ 2,801,054 $ 2,789,896 Less: Average intangible assets Average goodwill 207,385 182,225 207,385 178,478 Average other intangibles, net 75,685 15,261 76,954 14,686 Average total intangibles, net 283,070 197,486 284,339 193,164 Average total tangible shareholders' equity (Non-GAAP) 2,593,762 2,450,874 2,516,715 2,596,732 Less: Average accumulated other comprehensive loss (AOCI) (644,003 ) (507,740 ) (643,782 ) (318,119 ) Average total tangible shareholders' equity excluding AOCI (Non-GAAP) $ 3,237,765 $ 2,958,614 $ 3,160,497 $ 2,914,851 Net operating income (Non-GAAP) $ 93,841 $ 137,596 $ 186,677 $ 243,669 Non-GAAP Operating return on average tangible equity excluding AOCI 11.63 % 18.65 % 11.91 % 16.86 % View source version on businesswire.com: https://www.businesswire.com/news/home/20230725886576/en/Contacts Media Contact: Stephanie Hague: 816.860.5088 Investor Relations Contact: Kay Gregory: 816.860.7106
Second Quarter 2023 Financial Highlights GAAP net income of $90.1 million, or $1.85 per diluted share. Net operating income of $93.8 million, or $1.93 per diluted share. Average loans increased 17.3% on a linked-quarter, annualized basis. Deposit balances at June 30, 2023 totaled $33.5 billion, up from $31.9 billion at March 31, 2023. At June 30, 2023, total estimated uninsured deposits represented approximately 65.5% of total deposits. When adjusted to exclude affiliate (company-owned) and collateralized deposits, estimated uninsured deposits were approximately 40.9% of total deposits. Noninterest income increased 6.1% as compared to the linked quarter, equal to 38.0% of total revenue. Credit quality remained strong, with net recoveries of $0.1 million and nonperforming loans of 0.09% of total loans.
UMB Financial Corporation (Nasdaq: UMBF), a financial services company, announced net income for the second quarter of 2023 of $90.1 million, or $1.85 per diluted share, compared to $92.4 million, or $1.90 per diluted share, in the first quarter of 2023 (linked quarter) and $137.6 million, or $2.83 per diluted share, in the second quarter of 2022. The results for the second quarter of 2022 include a pre-tax gain of $66.2 million on the sale of the company's entire investment in Visa Inc. Class B common shares, and a pre-tax $5.0 million contribution to the company's charitable foundation. Net operating income, a non-GAAP financial measure reconciled later in this release to net income, the nearest comparable GAAP measure, was $93.8 million, or $1.93 per diluted share, for the second quarter of 2023, compared to $92.8 million, or $1.91 per diluted share, for the linked quarter and $137.6 million, or $2.83 per diluted share, for the second quarter of 2022. Operating pre-tax, pre-provision income (operating PTPP), a non-GAAP measure reconciled later in this release to the components of net income before taxes, the nearest comparable GAAP measure, was $127.9 million, or $2.63 per diluted share, for the second quarter of 2023, compared to $135.4 million, or $2.78 per diluted share, for the linked quarter, and $187.1 million, or $3.84 per diluted share, for the second quarter of 2022. These operating PTPP results represent decreases of 5.5% on a linked-quarter basis and 31.6%, compared to the second quarter of 2022. “In the second quarter of 2023, the positive impacts of fee income trends, a double-digit annualized increase in average loan balances, excellent asset quality metrics and expense management were masked by higher interest expense driven by the Federal Reserve’s monetary tightening actions as well as expected increases in funding costs in this high interest rate environment,” said Mariner Kemper, chairman, president and chief executive officer. “Average loans increased 17.3% on a linked-quarter annualized basis with nearly half of the increase driven by commercial & industrial loan balances. Credit metrics remain strong as evidenced by net recoveries this quarter and nine basis points of non-performing loans to total loans. Noninterest income was $138.1 million for the quarter. It's important to note that noninterest income for the same quarter in 2022 included a pre-tax gain of $66.2 million on the sale of our Visa Inc. Class B common shares. Finally, period-end deposit balances at quarter end were $33.5 billion, an increase of $1.6 billion, or 5.0%, as compared to March 31, 2023.” Second Quarter 2023 earnings discussion Summary of quarterly financial results UMB Financial Corporation (unaudited, dollars in thousands, except per share data) Q2 Q1 Q2 2023 2023 2022 Net income (GAAP) $ 90,110 $ 92,437 $ 137,556 Earnings per share (diluted) 1.85 1.90 2.83 Operating pre-tax, pre-provision income (Non-GAAP)(i) 127,929 135,369 187,051 Operating pre-tax, pre-provision earnings per share (diluted) 2.63 2.78 3.84 Operating pre-tax, pre-provision income - FTE (Non-GAAP)(i) 134,504 141,924 193,329 Operating pre-tax, pre-provision earnings per share - FTE (diluted) 2.77 2.91 3.97 Net operating income (Non-GAAP)(i) 93,841 92,836 137,596 Operating earnings per share (diluted) 1.93 1.91 2.83 GAAP Return on average assets 0.90 % 0.97 % 1.47 % Return on average equity 12.56 13.76 20.83 Efficiency ratio 65.59 63.12 53.08 Non-GAAP (i) Operating return on average assets 0.93 % 0.98 % 1.47 % Operating return on average equity 13.08 13.82 20.84 Operating return on average tangible equity excluding AOCI 11.63 12.21 18.65 Operating efficiency ratio 64.24 62.98 53.06 (i) See reconciliation of Non-GAAP measures to their nearest comparable GAAP measures later in this release. Summary of year-to-date financial results UMB Financial Corporation (unaudited, dollars in thousands, except per share data) June June YTD YTD 2023 2022 Net income (GAAP) $ 182,547 $ 243,519 Earnings per share (diluted) 3.75 4.99 Operating pre-tax, pre-provision income (Non-GAAP)(i) 263,298 306,451 Operating pre-tax, pre-provision earnings per share (diluted) 5.41 6.29 Operating pre-tax, pre-provision income - FTE (Non-GAAP)(i) 276,428 319,128 Operating pre-tax, pre-provision earnings per share - FTE (diluted) 5.68 6.55 Net operating income (Non-GAAP)(i) 186,677 243,669 Operating earnings per share (diluted) 3.83 4.99 GAAP Return on average assets 0.93 % 1.28 % Return on average equity 13.14 17.60 Efficiency ratio 64.34 58.03 Non-GAAP (i) Operating return on average assets 0.95 % 1.28 % Operating return on average equity 13.44 17.61 Operating return on average tangible equity excluding AOCI 11.91 16.86 Operating efficiency ratio 63.61 58.00 (i) See reconciliation of Non-GAAP measures to their nearest comparable GAAP measures later in this release. Summary of revenue UMB Financial Corporation (unaudited, dollars in thousands) Q2 Q1 Q2 CQ vs. CQ vs. 2023 2023 2022 LQ PY Net interest income $ 225,611 $ 241,696 $ 224,791 $ (16,085 ) $ 820 Noninterest income: Trust and securities processing 61,589 62,359 58,886 (770 ) 2,703 Trading and investment banking 4,800 5,308 7,123 (508 ) (2,323 ) Service charges on deposit accounts 21,381 21,159 20,835 222 546 Insurance fees and commissions 225 274 245 (49 ) (20 ) Brokerage fees 13,604 13,676 12,391 (72 ) 1,213 Bankcard fees 18,579 18,172 17,840 407 739 Investment securities gains (losses), net 900 (5,324 ) 60,720 6,224 (59,820 ) Other 17,004 14,576 (1,705 ) 2,428 18,709 Total noninterest income $ 138,082 $ 130,200 $ 176,335 $ 7,882 $ (38,253 ) Total revenue $ 363,693 $ 371,896 $ 401,126 $ (8,203 ) $ (37,433 ) Net interest income (FTE) $ 232,186 $ 248,251 $ 231,069 Net interest margin (FTE) 2.44 % 2.76 % 2.60 % Total noninterest income as a % of total revenue 38.0 35.0 44.0 Net interest income Second quarter 2023 net interest income totaled $225.6 million, a decrease of $16.1 million, or 6.7% from the linked quarter, driven by higher interest expense primarily due to unfavorable mix shift in the composition of liabilities, combined with higher interest rates. This decrease was partially offset by continued growth in average loans and higher liquidity balances, coupled with increased yields. Average earning assets increased $1.8 billion, or 4.9% from the linked quarter, largely driven by an increase of $1.2 billion in interest-bearing due from banks and an increase of $920.0 million in average loans, partially offset by decreases of $174.7 million in federal funds sold and resell agreements and $143.4 million in average securities. Average interest-bearing liabilities increased $3.1 billion, or 13.3% from the linked quarter, primarily driven by increases of $1.9 billion in borrowed funds, primarily short-term borrowings, and $1.3 billion in interest-bearing deposits. Average noninterest-bearing deposits decreased $1.4 billion, or 11.6% as compared to the linked quarter. Net interest margin for the second quarter was 2.44%, a decrease of 32 basis points from the linked quarter, driven by increased cost and mix of interest-bearing liabilities, partially offset by improved loan yields, the benefit of free funds, and earning asset mix changes. The cost of interest-bearing liabilities increased 67 basis points to 3.58%. Total cost of funds increased 64 basis points from the linked quarter to 2.56%. Average loan yields increased 32 basis points while earning asset yields increased 29 basis points from the linked quarter. On a year-over-year basis, net interest income increased $0.8 million, or 0.4%, driven by a $3.9 billion, or 21.1%, increase in average loans, partially offset by higher interest costs due to unfavorable mix shift in the composition of liabilities as well as the impact of higher short-term interest rates. Compared to the second quarter of 2022, average earning assets increased $2.5 billion, or 7.1%, largely driven by the increase in average loans noted above, partially offset by a decrease of $824.5 million in federal funds sold and resell agreements and a decrease of $589.2 million in average securities. Average deposits decreased 0.4% compared to the second quarter of 2022. Average noninterest-bearing demand deposit balances decreased 25.9% compared to the second quarter of 2022, driven by expected migration to rate-bearing deposit categories in a higher interest rate environment. Demand deposit balances comprised 33.5% of total deposits, compared to 37.8% in the linked quarter and 45.0% in the second quarter of 2022. Average borrowed funds increased $1.9 billion as compared to the linked quarter and $2.9 billion as compared to the second quarter of 2022, driven by short-term borrowings with the Federal Home Loan Bank and the Federal Reserve Discount Window. Noninterest income Second quarter 2023 noninterest income increased $7.9 million, or 6.1%, on a linked-quarter basis, largely due to: An increase of $6.2 million in investment securities gains, largely driven by an impairment loss on an available-for-sale subordinated debt security recorded in the first quarter and increased valuation of the company's equity investments in the second quarter. An increase of $2.4 million in other income, primarily related to a $4.0 million gain on sale of other assets recorded in the second quarter, partially offset by a decrease of $1.3 million in derivative income. These increases were partially offset by a decrease of $0.9 million in corporate trust income, recorded in trust and securities processing. Compared to the prior year, noninterest income in the second quarter of 2023 decreased $38.3 million, or 21.7%, primarily driven by: A decrease of $59.8 million in investment securities gains, primarily driven by the $66.2 million gain on sale of the company's investment in Visa Inc. Class B common shares in the second quarter of 2022. This was partially offset by an increase of $5.3 million in the valuation of the company's marketable securities. A decrease of $2.3 million in trading and investment banking due to decreased trading volume. These decreases were partially offset by the following increases: An increase of $18.7 million in other income, driven by an increase of $13.8 million in company-owned life insurance income and a gain of $4.0 million on the sale of other assets recorded in the second quarter of 2023. The increase in company-owned life insurance is offset by a proportionate increase in deferred compensation expense as noted below. Increases of $1.9 million and $1.1 million in fund services income and corporate trust income, both recorded in trust and securities processing. An increase of $1.2 million in brokerage income, largely driven by increased 12b-1 fee income. Noninterest expense Summary of noninterest expense UMB Financial Corporation (unaudited, dollars in thousands) Q2 Q1 Q2 CQ vs. CQ vs. �� 2023 2023 2022 LQ PY Salaries and employee benefits $ 143,312 $ 142,498 $ 121,390 $ 814 $ 21,922 Occupancy, net 11,746 12,177 11,976 (431 ) (230 ) Equipment 17,086 17,849 18,315 (763 ) (1,229 ) Supplies and services 4,195 3,875 3,492 320 703 Marketing and business development 7,124 5,335 5,308 1,789 1,816 Processing fees 26,572 23,240 19,338 3,332 7,234 Legal and consulting 7,059 7,285 11,265 (226 ) (4,206 ) Bankcard 8,307 7,133 5,880 1,174 2,427 Amortization of other intangible assets 2,117 2,298 1,225 (181 ) 892 Regulatory fees 6,123 5,551 3,464 572 2,659 Other 7,032 9,811 12,474 (2,779 ) (5,442 ) Total noninterest expense $ 240,673 $ 237,052 $ 214,127 $ 3,621 $ 26,546 Noninterest expense for the second quarter of 2023 was $240.7 million, an increase of $3.6 million, or 1.5%, from the linked quarter and an increase of $26.5 million, or 12.4%, from the second quarter of 2022. Operating noninterest expense, a non-GAAP financial measure reconciled later in this release to noninterest expense, the nearest comparable GAAP measure, was $235.8 million for the second quarter of 2023, a decrease of $0.8 million, or 0.3%, from the linked quarter and an increase of $21.7 million, or 10.1%, from the second quarter of 2022. The linked-quarter increase in GAAP noninterest expense was driven by: Increases of $3.3 million in processing fees and $1.8 million in marketing and business development expense due to the ongoing modernization of the company's core systems and timing of multiple projects, respectively. The increase in marketing and business development expense was also partially driven by an increase in advertising for various projects and an increase in travel and entertainment expense. An increase of $0.8 million in salaries and employee benefits expense driven by an increase of $7.4 million in salary and bonus expense, partially offset by a decrease of $6.6 million in employee benefits. The increase in salary and bonus expense was due to an increase of $4.4 million in severance expense and higher salary expense related to annual merit increases beginning in the second quarter. The decrease in employee benefits was driven by the seasonal decrease of $8.0 million in payroll taxes, insurance, and 401(k) expense, offset by an increase in other employee benefits recorded in the second quarter. These increases were partially offset by a decrease of $2.0 million in operational losses as compared to the linked quarter. The year-over-year increase in GAAP noninterest expense was driven by: An increase of $21.9 million in salaries and employee benefits expense, driven primarily by increases of $14.5 in employee benefits expense and $7.4 million in salaries and bonus expense. The increase in employee benefits expense is due to increases of $12.5 million in deferred compensation plan expense and $1.3 million in payroll taxes, insurance, and 401(k) expense. The increase in deferred compensation expense was offset by the increase in company-owned life insurance income noted above. The increase in salaries and bonus expense is due to an increase of $4.8 million in severance expense and higher employee salaries as compared to the second quarter of 2022. An increase of $7.2 million in processing fees expense due to the ongoing modernization of the company’s core systems and the timing of multiple software projects. An increase of $2.7 million in regulatory fees expense driven by higher deposit insurance expense. These increases were offset by a decrease of $5.4 million in other expense primarily due to the $5.0 million charitable contribution recorded in the second quarter of 2022 mentioned above. Income taxes The company’s effective tax rate was 17.6% for the six months ended June 30, 2023, compared to 18.7% for the same period in 2022. The decrease in the effective tax rate in 2023 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 2023 were $40.4 billion compared to $38.5 billion for the linked quarter and $37.6 billion for the same period in 2022. Summary of average loans and leases - QTD Average UMB Financial Corporation (unaudited, dollars in thousands) Q2 Q1 Q2 CQ vs. CQ vs. 2023 2023 2022 LQ PY Commercial and industrial $ 9,724,300 $ 9,287,319 $ 7,918,552 $ 436,981 $ 1,805,748 Specialty lending 574,220 564,633 518,575 9,587 55,645 Commercial real estate 8,178,463 7,812,140 6,569,784 366,323 1,608,679 Consumer real estate 2,833,739 2,738,184 2,458,815 95,555 374,924 Consumer 139,705 136,571 148,412 3,134 (8,707 ) Credit cards 485,749 453,704 428,167 32,045 57,582 Leases and other 255,425 279,049 275,638 (23,624 ) (20,213 ) Total loans $ 22,191,601 $ 21,271,600 $ 18,317,943 $ 920,001 $ 3,873,658 Average loans for the second quarter of 2023 increased $920.0 million, or 4.3%, on a linked-quarter basis and $3.9 billion, or 21.1%, compared to the second quarter of 2022. Summary of average securities - QTD Average UMB Financial Corporation (unaudited, dollars in thousands) Q2 Q1 Q2 CQ vs. CQ vs. 2023 2023 2022 LQ PY Securities available for sale: U.S. Treasury $ 797,104 $ 783,170 $ 639,161 $ 13,934 $ 157,943 U.S. Agencies 189,091 171,825 172,798 17,266 16,293 Mortgage-backed 3,813,234 3,938,137 4,764,452 (124,903 ) (951,218 ) State and political subdivisions 1,319,398 1,356,785 1,891,377 (37,387 ) (571,979 ) Corporates 349,318 364,854 377,586 (15,536 ) (28,268 ) Collateralized loan obligations 348,078 348,477 247,639 (399 ) 100,439 Total securities available for sale $ 6,816,223 $ 6,963,248 $ 8,093,013 $ (147,025 ) $ (1,276,790 ) Securities held to maturity: U.S. Agencies $ 123,135 $ 123,106 $ 65,964 $ 29 $ 57,171 Mortgage-backed 2,878,657 2,934,113 2,892,986 (55,456 ) (14,329 ) State and political subdivisions 2,822,218 2,814,912 2,240,018 7,306 582,200 Total securities held to maturity $ 5,824,010 $ 5,872,131 $ 5,198,968 $ (48,121 ) $ 625,042 Trading securities $ 12,538 $ 9,258 $ 10,190 $ 3,280 $ 2,348 Other securities 407,754 359,238 347,527 48,516 60,227 Total securities $ 13,060,525 $ 13,203,875 $ 13,649,698 $ (143,350 ) $ (589,173 ) Average total securities decreased 1.1% on a linked-quarter basis and decreased 4.3% compared to the second quarter of 2022. At June 30, 2023, the unrealized pre-tax net loss on the available-for-sale securities portfolio was $765.9 million, or 10.3% of the $7.4 billion amortized cost value. At June 30, 2023, the unrealized pre-tax net loss on the securities designated as held to maturity was $576.4 million, or 9.9% of the $5.8 billion amortized cost value. During 2022, the company transferred securities with an amortized cost balance of $4.1 billion and a fair value of $3.8 billion from the available-for-sale category to the held-to-maturity category. The remaining balance of unrealized pre-tax net losses related to transferred securities was $226.7 million as of June 30, 2023 and was included in the amortized cost balance of held-to-maturity securities. At June 30, 2023, an after-tax gain of $56.9 million was included in accumulated other comprehensive income (AOCI) related to the company’s fair value hedges of municipal securities. During 2021, the company entered into ten of these hedge transactions, nine of which have since been terminated. The gain on the terminated hedges is being amortized over the remaining life of the underlying bonds. Summary of average deposits - QTD Average UMB Financial Corporation (unaudited, dollars in thousands) Q2 Q1 Q2 CQ vs. CQ vs. 2023 2023 2022 LQ PY Deposits: Noninterest-bearing demand $ 10,535,325 $ 11,919,277 $ 14,209,159 $ (1,383,952 ) $ (3,673,834 ) Interest-bearing demand and savings 17,463,022 18,427,662 16,808,998 (964,640 ) 654,024 Time deposits 3,476,616 1,215,506 570,812 2,261,110 2,905,804 Total deposits $ 31,474,963 $ 31,562,445 $ 31,588,969 $ (87,482 ) $ (114,006 ) Noninterest bearing deposits as % of total 33.5 % 37.8 % 45.0 % Average deposits decreased 0.3% on a linked-quarter basis and decreased 0.4% compared to the second quarter of 2022. As of June 30, 2023, the total estimated uninsured deposits were $22.0 billion or approximately 65.5% of total deposits. Estimated uninsured deposits, when adjusted to exclude affiliate (company-owned) and collateralized deposits, were $13.7 billion and represented approximately 40.9% of total deposits. Capital Capital information UMB Financial Corporation (unaudited, dollars in thousands, except per share data) June 30, 2023 March 31, 2023 June 30, 2022 Total equity $ 2,831,628 $ 2,814,659 $ 2,642,888 Accumulated other comprehensive loss, net (685,831 ) (626,776 ) (564,803 ) Book value per common share 58.36 58.03 54.71 Tangible book value per common share (Non-GAAP)(i) 52.54 52.17 50.64 Regulatory capital: Common equity Tier 1 capital $ 3,273,841 $ 3,196,111 $ 3,055,747 Tier 1 capital 3,273,841 3,196,111 3,055,747 Total capital 3,870,101 3,776,407 3,473,040 Regulatory capital ratios: Common equity Tier 1 capital ratio 10.65 % 10.57 % 11.44 % Tier 1 risk-based capital ratio 10.65 10.57 11.44 Total risk-based capital ratio 12.59 12.49 13.00 Tier 1 leverage ratio 8.16 8.35 8.17 (i) See reconciliation of Non-GAAP measures to their nearest comparable GAAP measures later in this release. At June 30, 2023, the regulatory capital ratios presented in the foregoing table exceeded all “well-capitalized” regulatory thresholds. Asset Quality Credit quality UMB Financial Corporation (unaudited, dollars in thousands) Q2 Q1 Q4 Q3 Q2 2023 2023 2022 2022 2022 Net (recoveries) charge-offs - total loans $ (139 ) $ 4,643 $ 2,189 $ 1,173 $ 28,128 Net loan (recoveries) charge-offs as a % of total average loans (0.00 )% 0.09 % 0.04 % 0.02 % 0.62 % Loans over 90 days past due $ 10,861 $ 1,723 $ 1,617 $ 2,513 $ 3,446 Loans over 90 days past due as a % of total loans 0.05 % 0.01 % 0.01 % 0.01 % 0.02 % Nonaccrual and restructured loans $ 19,347 $ 15,480 $ 19,269 $ 19,817 $ 18,117 Nonaccrual and restructured loans as a % of total loans 0.09 % 0.07 % 0.09 % 0.10 % 0.10 % Provision for credit losses $ 13,000 $ 23,250 $ 9,000 $ 22,000 $ 13,400 Provision for credit losses for the second quarter totaled $13.0 million, a decrease of $10.3 million from the linked quarter and a decrease of $0.4 million from the second quarter of 2022. These changes are driven largely by loan growth and changes in macro-economic variables in the current period as compared to the prior periods. Net recoveries for the second quarter totaled $0.1 million, compared to net charge-offs of $4.6 million, or 0.09%, of average loans in the linked quarter, and $28.1 million, or 0.62%, of average loans for the second quarter of 2022. Dividend Declaration and Share Repurchase Authorization At the company’s quarterly board meeting, the Board of Directors declared a $0.38 per share quarterly cash dividend, payable on October 2, 2023, to shareholders of record at the close of business on September 11, 2023. The Board also approved the repurchase of up to 1,000,000 shares of the company's common stock. Share repurchases may occur from time to time at any point until the regular meeting of the Board that immediately follows the 2024 annual meeting of the company’s shareholders. Shares acquired under the repurchase program may be available for reissuance or resale, including in connection with the company's compensation plans and dividend reinvestment plan. Under the repurchase program, the company may acquire the shares from time to time in open market or privately negotiated transactions, at the discretion of management. Conference Call The company plans to host a conference call to discuss its second quarter 2023 earnings results on Wednesday, July 26, 2023, at 9:30 a.m. (CT). Interested parties may access the call by dialing (toll-free) 833-470-1428 or (international) 404-975-4839 and requesting to join the UMB Financial call with access code 835446. The live call may also be accessed by visiting investorrelations.umb.com or by using the following link: UMB Financial 2Q 2023 Conference Call A replay of the conference call may be heard through August 9, 2023, by calling (toll-free) 866-813-9403 or (international) 929-458-6194. The replay access code required for playback is 506453. The call replay may also be accessed at investorrelations.umb.com. Non-GAAP Financial Information In this release, we may provide information about net operating income, operating earnings per share – diluted (operating EPS), operating return on average equity (operating ROE), operating return on average assets (operating ROA), operating noninterest expense, operating efficiency ratio, operating pre-tax, pre-provision income (operating PTPP), operating pre-tax, pre-provision earnings per share – diluted (operating PTPP EPS), operating pre-tax, pre-provision income on a fully tax equivalent basis (operating PTPP-FTE), operating pre-tax, pre-provision FTE earnings per share – diluted (operating PTPP-FTE EPS), tangible shareholders’ equity, tangible book value per share, and operating return on average tangible equity excluding AOCI, all of which are non-GAAP financial measures. This information supplements the results that are reported according to generally accepted accounting principles in the United States (GAAP) and should not be viewed in isolation from, or as a substitute for, GAAP results. The differences between the non-GAAP financial measures – net operating income, operating EPS, operating ROE, operating ROA, operating noninterest expense, operating efficiency ratio, operating PTPP, operating PTPP EPS, operating PTPP-FTE, operating PTPP-FTE EPS, tangible shareholders’ equity, tangible book value per share, and operating return on average tangible equity excluding AOCI – and the nearest comparable GAAP financial measures are reconciled later in this release. The company believes that these non-GAAP financial measures and the reconciliations may be useful to investors because they adjust for acquisition- and severance-related items that management does not believe reflect the company’s fundamental operating performance. Net operating income for the relevant period is defined as GAAP net income, adjusted to reflect the impact of excluding expenses related to acquisitions, severance expense, and the cumulative tax impact of these adjustments. Operating EPS (diluted) is calculated as earnings per share as reported, adjusted to reflect, on a per share basis, the impact of excluding the non-GAAP adjustments described above for the relevant period. Operating ROE is calculated as net operating income, divided by the company’s average total shareholders’ equity for the relevant period. Operating ROA is calculated as net operating income, divided by the company’s average assets for the relevant period. Operating noninterest expense for the relevant period is defined as GAAP noninterest expense, adjusted to reflect the pre-tax impact of non-GAAP adjustments described above. Operating efficiency ratio is calculated as the company’s operating noninterest expense, net of amortization of other intangibles, divided by the company’s total non-GAAP revenue (calculated as net interest income plus noninterest income, less gains on sales of securities available for sale, net). Operating PTPP income for the relevant period is defined as GAAP net interest income plus GAAP noninterest income, less noninterest expense, adjusted to reflect the impact of excluding expenses related to acquisitions and severance expense. Operating PTPP-FTE for the relevant period is defined as GAAP net interest income on a fully tax equivalent basis plus GAAP noninterest income, less noninterest expense, adjusted to reflect the impact of excluding expenses related to acquisitions and severance expense. Tangible shareholders’ equity for the relevant period is defined as GAAP shareholders’ equity, net of intangible assets. Tangible book value per share is defined as tangible shareholders’ equity divided by the Company’s total shares outstanding. Operating return on average tangible equity excluding AOCI is calculated as net operating income, divided by the company’s average tangible shareholders’ equity exclusive of AOCI for the relevant period. Forward-Looking Statements: This press release contains, and our other communications may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “outlook,” “forecast,” “target,” “trend,” “plan,” “goal,” or other words of comparable meaning or future-tense or conditional verbs such as “may,” “will,” “should,” “would,” or “could.” Forward-looking statements convey our expectations, intentions, or forecasts about future events, circumstances, results, or aspirations. All forward-looking statements are subject to assumptions, risks, and uncertainties, which may change over time and many of which are beyond our control. You should not rely on any forward-looking statement as a prediction or guarantee about the future. Our actual future objectives, strategies, plans, prospects, performance, condition, or results may differ materially from those set forth in any forward-looking statement. Some of the factors that may cause actual results or other future events, circumstances, or aspirations to differ from those in forward-looking statements are described in our Annual Report on Form 10-K for the year ended December 31, 2022, our subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, or other applicable documents that are filed or furnished with the U.S. Securities and Exchange Commission (SEC). In addition to such factors that have been disclosed previously: macroeconomic and adverse developments and uncertainties related to the collateral effects of the collapse of, and challenges for, domestic and international banks, including the impacts to the U.S. and global economies; sustained levels of high inflation and the potential for an economic recession on the heels of aggressive quantitative tightening by the Federal Reserve, and impacts related to or resulting from Russia’s military action in Ukraine, such as the broader impacts to financial markets and the global macroeconomic and geopolitical environments, may also cause actual results or other future events, circumstances, or aspirations to differ from our forward-looking statements. Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except to the extent required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K, or other applicable document that is filed or furnished with the SEC. About UMB: UMB Financial Corporation (Nasdaq: UMBF) is a financial services company headquartered in Kansas City, Missouri. UMB offers commercial banking, which includes comprehensive deposit, lending and investment services, personal banking, which includes wealth management and financial planning services, and institutional banking, which includes asset servicing, corporate trust solutions, investment banking, and healthcare services. UMB operates branches throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas. As the company’s reach continues to grow, it also serves business clients nationwide and institutional clients in several countries. For more information, visit UMB.com, UMB Blog, UMB Facebook and UMB LinkedIn. Consolidated Balance Sheets UMB Financial Corporation (unaudited, dollars in thousands) June 30, 2023 2022 ASSETS Loans $ 22,483,542 $ 18,972,158 Allowance for credit losses on loans (222,161 ) (164,346 ) Net loans 22,261,381 18,807,812 Loans held for sale 3,819 750 Securities: Available for sale 6,668,615 7,739,216 Held to maturity, net of allowance for credit losses 5,807,763 5,707,282 Trading securities 28,887 9,646 Other securities 428,149 342,543 Total securities 12,933,414 13,798,687 Federal funds sold and resell agreements 319,838 1,055,459 Interest-bearing due from banks 3,369,911 1,825,295 Cash and due from banks 431,527 360,242 Premises and equipment, net 255,127 257,729 Accrued income 190,387 144,874 Goodwill 207,385 182,225 Other intangibles, net 75,184 14,465 Other assets 1,195,069 1,060,303 Total assets $ 41,243,042 $ 37,507,841 LIABILITIES Deposits: Noninterest-bearing demand $ 12,142,906 $ 14,925,555 Interest-bearing demand and savings 18,184,063 16,007,087 Time deposits under $250,000 2,665,166 383,832 Time deposits of $250,000 or more 528,326 169,550 Total deposits 33,520,461 31,486,024 Federal funds purchased and repurchase agreements 2,050,583 2,661,283 Short-term debt 1,800,000 — Long-term debt 382,280 272,505 Accrued expenses and taxes 256,845 182,185 Other liabilities 401,245 262,956 Total liabilities 38,411,414 34,864,953 SHAREHOLDERS' EQUITY Common stock 55,057 55,057 Capital surplus 1,124,977 1,115,504 Retained earnings 2,681,448 2,384,454 Accumulated other comprehensive loss, net (685,831 ) (564,803 ) Treasury stock (344,023 ) (347,324 ) Total shareholders' equity 2,831,628 2,642,888 Total liabilities and shareholders' equity $ 41,243,042 $ 37,507,841 Consolidated Statements of Income UMB Financial Corporation (unaudited, dollars in thousands except share and per share data) Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 INTEREST INCOME Loans $ 342,994 $ 169,919 $ 651,435 $ 319,389 Securities: Taxable interest 54,587 47,295 107,636 90,677 Tax-exempt interest 25,550 23,538 50,856 47,393 Total securities income 80,137 70,833 158,492 138,070 Federal funds and resell agreements 3,889 3,497 9,540 5,947 Interest-bearing due from banks 34,206 4,207 50,372 6,664 Trading securities 154 114 288 299 Total interest income 461,380 248,570 870,127 470,369 INTEREST EXPENSE Deposits 170,550 15,439 298,449 21,612 Federal funds and repurchase agreements 24,745 4,998 48,047 7,146 Other 40,474 3,342 56,324 6,465 Total interest expense 235,769 23,779 402,820 35,223 Net interest income 225,611 224,791 467,307 435,146 Provision for credit losses 13,000 13,400 36,250 6,900 Net interest income after provision for credit losses 212,611 211,391 431,057 428,246 NONINTEREST INCOME Trust and securities processing 61,589 58,886 123,948 118,414 Trading and investment banking 4,800 7,123 10,108 12,563 Service charges on deposit accounts 21,381 20,835 42,540 45,477 Insurance fees and commissions 225 245 499 504 Brokerage fees 13,604 12,391 27,280 15,847 Bankcard fees 18,579 17,840 36,751 34,475 Investment securities gains (losses), net 900 60,720 (4,424 ) 60,198 Other 17,004 (1,705 ) 31,580 12,535 Total noninterest income 138,082 176,335 268,282 300,013 NONINTEREST EXPENSE Salaries and employee benefits 143,312 121,390 285,810 252,024 Occupancy, net 11,746 11,976 23,923 24,208 Equipment 17,086 18,315 34,935 36,479 Supplies and services 4,195 3,492 8,070 6,754 Marketing and business development 7,124 5,308 12,459 10,240 Processing fees 26,572 19,338 49,812 37,781 Legal and consulting 7,059 11,265 14,344 18,176 Bankcard 8,307 5,880 15,440 12,447 Amortization of other intangible assets 2,117 1,225 4,415 2,296 Regulatory fees 6,123 3,464 11,674 6,946 Other 7,032 12,474 16,843 21,554 Total noninterest expense 240,673 214,127 477,725 428,905 Income before income taxes 110,020 173,599 221,614 299,354 Income tax expense 19,910 36,043 39,067 55,835 NET INCOME $ 90,110 $ 137,556 $ 182,547 $ 243,519 PER SHARE DATA Net income – basic $ 1.86 $ 2.85 $ 3.77 $ 5.03 Net income – diluted 1.85 2.83 3.75 4.99 Dividends 0.38 0.37 0.76 0.74 Weighted average shares outstanding – basic 48,514,277 48,347,226 48,474,865 48,376,868 Weighted average shares outstanding – diluted 48,668,413 48,673,964 48,707,487 48,755,059 Consolidated Statements of Comprehensive Income UMB Financial Corporation (unaudited, dollars in thousands) Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Net income $ 90,110 $ 137,556 $ 182,547 $ 243,519 Other comprehensive (loss) income, before tax: Unrealized gains and losses on debt securities: Change in unrealized holding gains and losses, net (87,505 ) (308,352 ) 6,152 (931,262 ) Less: Reclassification adjustment for net losses included in net income — — 433 — Amortization of net unrealized loss on securities transferred from available-for-sale to held-to-maturity 10,312 12,539 20,295 13,121 Change in unrealized gains and losses on debt securities (77,193 ) (295,813 ) 26,880 (918,141 ) Unrealized gains and losses on derivative hedges: Change in unrealized gains and losses on derivative hedges, net 1,848 4,437 321 9,117 Less: Reclassification adjustment for net gains included in net income (2,660 ) (1,090 ) (5,221 ) (1,941 ) Change in unrealized gains and losses on derivative hedges (812 ) 3,347 (4,900 ) 7,176 Other comprehensive (loss) income, before tax (78,005 ) (292,466 ) 21,980 (910,965 ) Income tax benefit (expense) 18,950 70,791 (5,076 ) 219,848 Other comprehensive (loss) income (59,055 ) (221,675 ) 16,904 (691,117 ) Comprehensive income (loss) $ 31,055 $ (84,119 ) $ 199,451 $ (447,598 ) Consolidated Statements of Shareholders' Equity UMB Financial Corporation (unaudited, dollars in thousands except per share data) Common Stock Capital Surplus Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Balance - January 1, 2022 $ 55,057 $ 1,110,520 $ 2,176,998 $ 126,314 $ (323,465 ) $ 3,145,424 Total comprehensive income (loss) — — 243,519 (691,117 ) — (447,598 ) Dividends ($0.74 per share) — — (36,063 ) — — (36,063 ) Purchase of treasury stock — — — — (31,806 ) (31,806 ) Issuances of equity awards, net of forfeitures — (6,630 ) — — 7,309 679 Recognition of equity-based compensation — 11,223 — — — 11,223 Sale of treasury stock — 174 — — 111 285 Exercise of stock options — 217 — — 527 744 Balance - June 30, 2022 $ 55,057 $ 1,115,504 $ 2,384,454 $ (564,803 ) $ (347,324 ) $ 2,642,888 Balance - January 1, 2023 $ 55,057 $ 1,125,949 $ 2,536,086 $ (702,735 ) $ (347,264 ) $ 2,667,093 Total comprehensive income — — 182,547 16,904 — 199,451 Dividends ($0.76 per share) — — (37,185 ) — — (37,185 ) Purchase of treasury stock — — — — (7,902 ) (7,902 ) Issuances of equity awards, net of forfeitures — (9,764 ) — — 10,483 719 Recognition of equity-based compensation — 8,455 — — — 8,455 Sale of treasury stock — 115 — — 140 255 Exercise of stock options — 222 — — 520 742 Balance - June 30, 2023 $ 55,057 $ 1,124,977 $ 2,681,448 $ (685,831 ) $ (344,023 ) $ 2,831,628 Average Balances / Yields and Rates UMB Financial Corporation (tax - equivalent basis) (unaudited, dollars in thousands) Three Months Ended June 30, 2023 2022 Average Average Average Average Balance Yield/Rate Balance Yield/Rate Assets Loans, net of unearned interest $ 22,191,601 6.20 % $ 18,317,943 3.72 % Securities: Taxable 9,228,103 2.37 9,825,114 1.93 Tax-exempt 3,819,884 3.36 3,814,394 3.13 Total securities 13,047,987 2.66 13,639,508 2.27 Federal funds and resell agreements 276,459 5.64 1,100,918 1.27 Interest bearing due from banks 2,707,740 5.07 2,632,307 0.64 Trading securities 12,538 5.37 10,190 5.35 Total earning assets 38,236,325 4.91 35,700,866 2.86 Allowance for credit losses (216,876 ) (182,118 ) Other assets 2,345,714 2,043,977 Total assets $ 40,365,163 $ 37,562,725 Liabilities and Shareholders' Equity Interest-bearing deposits $ 20,939,638 3.27 % $ 17,379,810 0.36 % Federal funds and repurchase agreements 2,336,929 4.25 2,658,219 0.75 Borrowed funds 3,137,267 5.17 272,254 4.92 Total interest-bearing liabilities 26,413,834 3.58 20,310,283 0.47 Noninterest-bearing demand deposits 10,535,325 14,209,159 Other liabilities 539,172 394,923 Shareholders' equity 2,876,832 2,648,360 Total liabilities and shareholders' equity $ 40,365,163 $ 37,562,725 Net interest spread 1.33 % 2.39 % Net interest margin 2.44 2.60 Average Balances / Yields and Rates UMB Financial Corporation (tax - equivalent basis) (unaudited, dollars in thousands) Six Months Ended June 30, 2023 2022 Average Average Average Average Balance Yield/Rate Balance Yield/Rate Assets Loans, net of unearned interest $ 21,734,142 6.05 % $ 17,842,153 3.61 % Securities: Taxable 9,288,392 2.34 9,644,345 1.90 Tax-exempt 3,832,505 3.36 3,926,444 3.08 Total securities 13,120,897 2.64 13,570,789 2.24 Federal funds and resell agreements 363,341 5.29 1,182,891 1.01 Interest bearing due from banks 2,127,343 4.77 3,965,267 0.34 Trading securities 10,907 5.77 15,484 4.70 Total earning assets 37,356,630 4.77 36,576,584 2.66 Allowance for credit losses (206,559 ) (190,123 ) Other assets 2,292,479 1,966,176 Total assets $ 39,442,550 $ 38,352,637 Liabilities and Shareholders' Equity Interest-bearing deposits $ 20,294,984 2.97 % $ 17,964,006 0.24 % Federal funds and repurchase agreements 2,399,090 4.04 2,815,130 0.51 Borrowed funds 2,174,157 5.22 271,994 4.79 Total interest-bearing liabilities 24,868,231 3.27 21,051,130 0.34 Noninterest-bearing demand deposits 11,223,478 14,117,879 Other liabilities 549,787 393,732 Shareholders' equity 2,801,054 2,789,896 Total liabilities and shareholders' equity $ 39,442,550 $ 38,352,637 Net interest spread 1.50 % 2.32 % Net interest margin 2.59 2.47 Business Segment Information UMB Financial Corporation (unaudited, dollars in thousands) Three Months Ended June 30, 2023 Commercial Banking Institutional Banking Personal Banking Total Net interest income $ 144,389 $ 50,397 $ 30,825 $ 225,611 Provision for credit losses 11,055 234 1,711 13,000 Noninterest income 25,666 86,813 25,603 138,082 Noninterest expense 85,896 91,591 63,186 240,673 Income (loss) before taxes 73,104 45,385 (8,469 ) 110,020 Income tax expense (benefit) 13,230 8,213 (1,533 ) 19,910 Net income (loss) $ 59,874 $ 37,172 $ (6,936 ) $ 90,110 Three Months Ended June 30, 2022 Commercial Banking Institutional Banking Personal Banking Total Net interest income $ 149,094 $ 34,981 40,716 $ 224,791 Provision for credit losses 12,067 89 1,244 13,400 Noninterest income 56,894 81,082 38,359 176,335 Noninterest expense 79,521 76,511 58,095 214,127 Income before taxes 114,400 39,463 19,736 173,599 Income tax expense 23,752 8,193 4,098 36,043 Net income $ 90,648 $ 31,270 $ 15,638 $ 137,556 Six Months Ended June 30, 2023 Commercial Banking Institutional Banking Personal Banking Total Net interest income $ 295,416 $ 105,482 $ 66,409 $ 467,307 Provision for credit losses 32,099 331 3,820 36,250 Noninterest income 48,568 171,051 48,663 268,282 Noninterest expense 169,900 180,962 126,863 477,725 Income (loss) before taxes 141,985 95,240 (15,611 ) 221,614 Income tax expense (benefit) 25,030 16,789 (2,752 ) 39,067 Net income (loss) $ 116,955 $ 78,451 $ (12,859 ) $ 182,547 Six Months Ended June 30, 2022 Commercial Banking Institutional Banking Personal Banking Total Net interest income $ 294,096 $ 61,233 $ 79,817 $ 435,146 Provision for credit losses 5,027 240 1,633 6,900 Noninterest income 83,594 154,354 62,065 300,013 Noninterest expense 159,110 152,112 117,683 428,905 Income before taxes 213,553 63,235 22,566 299,354 Income tax expense 39,831 11,795 4,209 55,835 Net income $ 173,722 $ 51,440 $ 18,357 $ 243,519 The company has strategically aligned its operations into the following three reportable segments: Commercial Banking, Institutional Banking, and Personal Banking. Senior executive officers regularly evaluate business segment financial results produced by the company’s internal reporting system in deciding how to allocate resources and assess performance for individual business segments. The company’s reportable segments include certain corporate overhead, technology and service costs that are allocated based on methodologies that are applied consistently between periods. For comparability purposes, amounts in all periods are based on methodologies in effect at June 30, 2023. Non-GAAP Financial Measures Net operating income Non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands except per share data) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net income (GAAP) $ 90,110 $ 137,556 $ 182,547 $ 243,519 Adjustments: Acquisition expense 18 — 57 — Severance expense 4,891 52 5,377 197 Tax-impact of adjustments (i) (1,178 ) (12 ) (1,304 ) (47 ) Total Non-GAAP adjustments (net of tax) 3,731 40 4,130 150 Net operating income (Non-GAAP) $ 93,841 $ 137,596 $ 186,677 $ 243,669 Earnings per share - diluted (GAAP) $ 1.85 $ 2.83 $ 3.75 $ 4.99 Acquisition expense — — — — Severance expense 0.10 — 0.11 — Tax-impact of adjustments (i) (0.02 ) — (0.03 ) — Operating earnings per share - diluted (Non-GAAP) $ 1.93 $ 2.83 $ 3.83 $ 4.99 GAAP Return on average assets 0.90 % 1.47 % 0.93 % 1.28 % Return on average equity 12.56 20.83 13.14 17.60 Non-GAAP Operating return on average assets 0.93 % 1.47 % 0.95 % 1.28 % Operating return on average equity 13.08 20.84 13.44 17.61 (i) Calculated using the company’s marginal tax rate of 24.0%. Operating noninterest expense and operating efficiency ratio Non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Noninterest expense $ 240,673 $ 214,127 $ 477,725 $ 428,905 Adjustments to arrive at operating noninterest expense (pre-tax): Acquisition expense 18 — 57 — Severance expense 4,891 52 5,377 197 Total Non-GAAP adjustments (pre-tax) 4,909 52 5,434 197 Operating noninterest expense (Non-GAAP) $ 235,764 $ 214,075 $ 472,291 $ 428,708 Noninterest expense $ 240,673 $ 214,127 $ 477,725 $ 428,905 Less: Amortization of other intangibles 2,117 1,225 4,415 2,296 Noninterest expense, net of amortization of other intangibles (Non-GAAP) (numerator A) $ 238,556 $ 212,902 $ 473,310 $ 426,609 Operating noninterest expense $ 235,764 $ 214,075 $ 472,291 $ 428,708 Less: Amortization of other intangibles 2,117 1,225 4,415 2,296 Operating expense, net of amortization of other intangibles (Non-GAAP) (numerator B) $ 233,647 $ 212,850 $ 467,876 $ 426,412 Net interest income $ 225,611 $ 224,791 $ 467,307 $ 435,146 Noninterest income 138,082 176,335 268,282 300,013 Less: Losses on sales of securities available for sale, net — — (2 ) — Total Non-GAAP Revenue (denominator A) $ 363,693 $ 401,126 $ 735,591 $ 735,159 Efficiency ratio (numerator A/denominator A) 65.59 % 53.08 % 64.34 % 58.03 % Operating efficiency ratio (Non-GAAP) (numerator B/denominator A) 64.24 53.06 63.61 58.00 Operating pre-tax, pre-provision income non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands except per share data) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net interest income (GAAP) $ 225,611 $ 224,791 $ 467,307 $ 435,146 Noninterest income (GAAP) 138,082 176,335 268,282 300,013 Noninterest expense (GAAP) 240,673 214,127 477,725 428,905 Adjustments to arrive at operating noninterest expense: Acquisition expense 18 — 57 — Severance expense 4,891 52 5,377 197 Total Non-GAAP adjustments 4,909 52 5,434 197 Operating noninterest expense (Non-GAAP) 235,764 214,075 472,291 428,708 Operating pre-tax, pre-provision income (Non-GAAP) $ 127,929 $ 187,051 $ 263,298 $ 306,451 Net interest income earnings per share - diluted (GAAP) $ 4.64 $ 4.62 $ 9.60 $ 8.93 Noninterest income (GAAP) 2.84 3.62 5.51 6.16 Noninterest expense (GAAP) 4.95 4.40 9.81 8.80 Acquisition expense — — — — Severance expense 0.10 — 0.11 — Operating pre-tax, pre-provision earnings per share - diluted (Non-GAAP) $ 2.63 $ 3.84 $ 5.41 $ 6.29 Operating pre-tax, pre-provision income - FTE Non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands except per share data) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net interest income (GAAP) $ 225,611 $ 224,791 $ 467,307 $ 435,146 Adjustments to arrive at net interest income - FTE: Tax equivalent interest 6,575 6,278 13,130 12,677 Net interest income - FTE (Non-GAAP) 232,186 231,069 480,437 447,823 Noninterest income (GAAP) 138,082 176,335 268,282 300,013 Noninterest expense (GAAP) 240,673 214,127 477,725 428,905 Adjustments to arrive at operating noninterest expense: Acquisition expense 18 — 57 — Severance expense 4,891 52 5,377 197 Total Non-GAAP adjustments 4,909 52 5,434 197 Operating noninterest expense (Non-GAAP) 235,764 214,075 472,291 428,708 Operating pre-tax, pre-provision income - FTE (Non-GAAP) $ 134,504 $ 193,329 $ 276,428 $ 319,128 Net interest income earnings per share - diluted (GAAP) $ 4.64 $ 4.62 $ 9.60 $ 8.93 Tax equivalent interest 0.14 0.13 0.27 0.26 Net interest income - FTE (Non-GAAP) 4.78 4.75 9.87 9.19 Noninterest income (GAAP) 2.84 3.62 5.51 6.16 Noninterest expense (GAAP) 4.95 4.40 9.81 8.80 Acquisition expense — — — — Severance expense 0.10 — 0.11 — Operating pre-tax, pre-provision income - FTE earnings per share - diluted (Non-GAAP) $ 2.77 $ 3.97 $ 5.68 $ 6.55 Tangible book value non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands except share and per share data) As of June 30, 2023 2022 Total shareholders' equity (GAAP) $ 2,831,628 $ 2,642,888 Less: Intangible assets Goodwill 207,385 182,225 Other intangibles, net 75,184 14,465 Total intangibles, net 282,569 196,690 Total tangible shareholders' equity (Non-GAAP) $ 2,549,059 $ 2,446,198 Total shares outstanding 48,517,750 48,305,286 Ratio of total shareholders' equity (book value) per share $ 58.36 $ 54.71 Ratio of total tangible shareholders' equity (tangible book value) per share (Non-GAAP) 52.54 50.64 Operating return on average tangible equity excluding AOCI non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Average total shareholders' equity (GAAP) $ 2,876,832 $ 2,648,360 $ 2,801,054 $ 2,789,896 Less: Average intangible assets Average goodwill 207,385 182,225 207,385 178,478 Average other intangibles, net 75,685 15,261 76,954 14,686 Average total intangibles, net 283,070 197,486 284,339 193,164 Average total tangible shareholders' equity (Non-GAAP) 2,593,762 2,450,874 2,516,715 2,596,732 Less: Average accumulated other comprehensive loss (AOCI) (644,003 ) (507,740 ) (643,782 ) (318,119 ) Average total tangible shareholders' equity excluding AOCI (Non-GAAP) $ 3,237,765 $ 2,958,614 $ 3,160,497 $ 2,914,851 Net operating income (Non-GAAP) $ 93,841 $ 137,596 $ 186,677 $ 243,669 Non-GAAP Operating return on average tangible equity excluding AOCI 11.63 % 18.65 % 11.91 % 16.86 % View source version on businesswire.com: https://www.businesswire.com/news/home/20230725886576/en/