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 Corp Reports Fourth Quarter Net Income of $70.9 Million, or $1.45 Per Diluted Share & Net Operating Income of $112.0 Million, or $2.29 Per Diluted Share. Full-Year 2023 Earnings of $350.0 Million; Net Operating Income of $397.1 Million. By: UMB Financial Corporation via Business Wire January 30, 2024 at 16:01 PM EST Fourth Quarter 2023 Financial Highlights GAAP net income of $70.9 million, or $1.45 per diluted share. Net operating income(i) of $112.0 million, or $2.29 per diluted share. Average loans increased 6.3% on a linked-quarter, annualized basis, to $23.1 billion. Average loans increased $2.8 billion, or 13.9%, as compared to the fourth quarter of 2022. Average deposits increased 17.2% on a linked-quarter, annualized basis, to $32.7 billion. Net interest income increased 3.7% from the linked quarter. Noninterest income increased 11.8% from the fourth quarter of 2022, equal to 37.8% of total revenue. Net interest margin was 2.46%, an increase of three basis points from the linked quarter. Credit quality remained strong, with net charge-offs of just 0.02% of average loans. UMB Financial Corporation (Nasdaq: UMBF), a financial services company, announced net income for the fourth quarter of 2023 of $70.9 million, or $1.45 per diluted share, compared to $96.6 million, or $1.98 per diluted share, in the third quarter of 2023 (linked quarter) and $100.2 million, or $2.06 per diluted share, in the fourth quarter of 2022. The results for the fourth quarter of 2023 include a pre-tax expense of $52.8 million for the industry-wide FDIC special assessment. Net operating income, a non-GAAP financial measure reconciled later in this release to net income, the nearest comparable GAAP measure, was $112.0 million, or $2.29 per diluted share, for the fourth quarter of 2023, compared to $98.4 million, or $2.02 per diluted share, for the linked quarter and $101.1 million, or $2.07 per diluted share, for the fourth 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 $134.9 million, or $2.76 per diluted share, for the fourth quarter of 2023, compared to $126.6 million, or $2.60 per diluted share, for the linked quarter, and $134.1 million, or $2.75 per diluted share, for the fourth quarter of 2022. These operating PTPP results represent increases of 6.6% on a linked-quarter basis and 0.6% compared to the fourth quarter of 2022. “We closed 2023 with strong fourth quarter performance, demonstrating the power and resilience of our diversified business model. Results were accentuated by continued loan and deposit growth, expanding net interest margin and net interest income, solid fee income growth and exceptional asset quality,” said Mariner Kemper, chairman, president and chief executive officer. “Our strong business performance and financial results were unfortunately muted by our share of the FDIC special assessment levied on banks to recoup the losses related to two of the bank failures in March 2023. I am incredibly proud of our associates who drove this performance, and deeply grateful for our loyal client base that grew with us through the much-exaggerated industry noise following the bank failures. While this was a challenging time for the industry, it was extremely rewarding to see how our company and customers came together to support each other, and the resulting positive growth and performance.” Mr. Kemper continued, “Key highlights from our fourth quarter results included a 3.7% increase in net interest income from the linked quarter, facilitated by a 6.3% annualized increase in average loans, three basis points of net interest margin expansion, a 4.3% linked-quarter increase in average deposits, a 5.2% increase in fee income, and just 0.02% in net charge-offs. At December 31, 2023, our total deposits – which we describe as our raw material for growth – increased $3.2 billion to $35.8 billion compared to year-end 2022, and were $2.4 billion above September 30, 2023 balances. Looking ahead into 2024, we see a muted but resilient macro-economic environment, and we remain well-positioned with an attractive average loan-to-deposit ratio of 70.7%, strong capital levels, and a high-quality loan portfolio.” (i) A non-GAAP financial measure reconciled later in this release to net income, the nearest comparable GAAP measure. Fourth Quarter 2023 earnings discussion Summary of quarterly financial results UMB Financial Corporation (unaudited, dollars in thousands, except per share data) Q4 Q3 Q4 2023 2023 2022 Net income (GAAP) $ 70,923 $ 96,554 $ 100,173 Earnings per share - diluted (GAAP) 1.45 1.98 2.06 Operating pre-tax, pre-provision income (Non-GAAP)(i) 134,901 126,592 134,054 Operating pre-tax, pre-provision earnings per share - diluted (Non-GAAP)(i) 2.76 2.60 2.75 Operating pre-tax, pre-provision income - FTE (Non-GAAP)(i) 141,571 133,151 140,717 Operating pre-tax, pre-provision earnings per share - FTE - diluted (Non-GAAP)(i) 2.90 2.73 2.89 Net operating income (Non-GAAP)(i) 112,038 98,400 101,092 Operating earnings per share - diluted (Non-GAAP)(i) 2.29 2.02 2.07 GAAP Return on average assets 0.69 % 0.97 % 1.06 % Return on average equity 9.52 13.25 15.16 Efficiency ratio 77.65 64.51 63.72 Non-GAAP(i) Operating return on average assets 1.10 % 0.99 % 1.07 % Operating return on average equity 15.04 13.50 15.30 Operating return on average tangible equity excluding AOCI 13.05 11.77 12.85 Operating efficiency ratio 63.06 63.83 63.39 (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) Q4 Q3 Q4 CQ vs. CQ vs. 2023 2023 2022 LQ PY Net interest income $ 230,522 $ 222,287 $ 245,166 $ 8,235 $ (14,644 ) Noninterest income: Trust and securities processing 66,584 66,668 59,207 (84 ) 7,377 Trading and investment banking 5,751 3,771 5,251 1,980 500 Service charges on deposit accounts 21,330 21,080 19,758 250 1,572 Insurance fees and commissions 238 272 459 (34 ) (221 ) Brokerage fees 13,439 13,400 13,332 39 107 Bankcard fees 18,672 19,296 19,597 (624 ) (925 ) Investment securities gains (losses), net 1,014 271 (409 ) 743 1,423 Other 13,226 8,559 8,302 4,667 4,924 Total noninterest income $ 140,254 $ 133,317 $ 125,497 $ 6,937 $ 14,757 Total revenue $ 370,776 $ 355,604 $ 370,663 $ 15,172 $ 113 Net interest income (FTE) $ 237,192 $ 228,846 $ 251,829 Net interest margin (FTE) 2.46 % 2.43 % 2.83 % Total noninterest income as a % of total revenue 37.8 37.5 33.9 Net interest income Fourth quarter 2023 net interest income totaled $230.5 million, an increase of $8.2 million, or 3.7%, from the linked quarter, driven primarily by continued growth in average loans and higher levels of liquidity, partially offset by higher interest expense. Average earning assets increased $933.7 million, or 2.5%, from the linked quarter, largely driven by an increase of $823.9 million in interest-bearing due from banks and $357.6 million in average loans, partially offset by a decrease of $179.2 million in average securities. Average interest-bearing liabilities increased $777.1 million, or 3.0%, from the linked quarter, primarily driven by an increase of $1.2 billion in interest-bearing deposits, partially offset by decreases of $319.6 million in borrowed funds and $144.0 million in federal funds and repurchase agreements. Average noninterest-bearing demand deposits increased $104.1 million, or 1.0%, as compared to the linked quarter. Net interest margin for the fourth quarter was 2.46%, an increase of three basis points from the linked quarter, driven by increased loan yields, the benefit of free funds, and earning asset mix changes, partially offset by the increased cost of interest-bearing liabilities. The cost of interest-bearing liabilities increased 13 basis points to 3.95%. Total cost of funds increased 12 basis points from the linked quarter to 2.87%. Both average loan yields and earning asset yields increased 13 basis points from the linked quarter. On a year-over-year basis, net interest income decreased $14.6 million, or 6.0%, driven by higher interest expense primarily due to an unfavorable mix shift in the composition of liabilities, as well as the impact of higher short-term interest rates on deposit costs. This decrease was partially offset by a $2.8 billion, or 13.9%, increase in average loans as well as the benefit from higher short-term interest rates on loan pricing and yields. Compared to the fourth quarter of 2022, average earning assets increased $3.0 billion, or 8.6%, largely driven by the increase in average loans noted above and an increase of $1.2 billion in interest-bearing due from banks, partially offset by a decrease of $611.9 million in average securities. Average deposits increased 4.1% compared to the fourth quarter of 2022. Average noninterest-bearing demand deposit balances decreased 18.8% compared to the fourth quarter of 2022, driven by migration to rate-bearing deposit categories, as expected in a higher interest rate environment. Average demand deposit balances comprised 31.0% of total deposits, compared to 32.0% in the linked quarter and 39.7% in the fourth quarter of 2022. Average borrowed funds decreased $319.6 million as compared to the linked quarter and increased $1.9 billion as compared to the fourth quarter of 2022, driven by short-term borrowings with the Federal Home Loan Bank and the Federal Reserve. Noninterest income Fourth quarter 2023 noninterest income increased $6.9 million, or 5.2%, on a linked-quarter basis, largely due to: Increases of $3.7 million in company-owned life insurance income and $0.6 million in derivative income, both recorded in other income. The increase in company-owned life insurance was offset by a proportionate increase in deferred compensation expense as noted below. An increase of $2.0 million in trading and investment banking due to increased trading volume. Compared to the prior year, noninterest income in the fourth quarter of 2023 increased $14.8 million, or 11.8%, primarily driven by: Increases of $4.9 million in fund services income, $2.0 million in corporate trust income, and $0.5 million in trust servicing income, all recorded in trust and securities processing. Increases of $3.3 million in company-owned life insurance income and $0.6 million in bank-owned life insurance income, both recorded in other income. The increase in company-owned life insurance was offset by a proportionate increase in deferred compensation expense as noted below. An increase of $1.6 million in service charges on deposits primarily due to increased corporate service charge income. An increase of $1.4 million in investment securities gains, primarily driven by increased valuations in the company's non-marketable securities. Noninterest expense Summary of noninterest expense UMB Financial Corporation (unaudited, dollars in thousands) Q4 Q3 Q4 CQ vs. CQ vs. 2023 2023 2022 LQ PY Salaries and employee benefits $ 134,231 $ 133,380 $ 135,940 $ 851 $ (1,709 ) Occupancy, net 12,296 12,283 12,409 13 (113 ) Equipment 16,579 17,204 18,969 (625 ) (2,390 ) Supplies and services 5,546 3,213 3,697 2,333 1,849 Marketing and business development 6,659 6,631 8,788 28 (2,129 ) Processing fees 27,271 26,016 23,545 1,255 3,726 Legal and consulting 8,424 7,230 10,664 1,194 (2,240 ) Bankcard 8,677 8,852 7,369 (175 ) 1,308 Amortization of other intangible assets 2,048 2,124 1,649 (76 ) 399 Regulatory fees 59,183 6,153 4,232 53,030 54,951 Other 9,060 8,355 10,556 705 (1,496 ) Total noninterest expense $ 289,974 $ 231,441 $ 237,818 $ 58,533 $ 52,156 GAAP Noninterest expense for the fourth quarter of 2023 was $290.0 million, an increase of $58.5 million, or 25.3%, from the linked quarter and an increase of $52.2 million, or 21.9% from the fourth 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 $235.9 million for the fourth quarter of 2023, an increase of $6.9 million, or 3.0%, from the linked quarter and a decrease of $0.7 million, or 0.3%, from the fourth quarter of 2022. The linked-quarter increase in GAAP noninterest expense was driven by: An increase of $53.0 million in regulatory fees expense, primarily driven by the $52.8 million FDIC special assessment in the fourth quarter of 2023. An increase of $2.7 million in deferred compensation expense, recorded in salaries and employee benefits. The increase in deferred compensation expense was offset by the increase in company-owned life insurance income noted above. An increase of $2.3 million in supplies driven by purchases of computers during the fourth quarter. An increase of $1.5 million in charitable contribution expense, recorded in other expense. An increase of $1.3 million in processing fees expense due to the ongoing modernization of the company’s core systems and the timing of multiple software projects. These increases were partially offset by decreases of $1.6 million in payroll taxes, insurance, and 401(k) expense and $0.5 million in bonus and commission expense, both recorded in salaries and employee benefits. The year-over-year increase in GAAP noninterest expense was driven by: An increase of $55.0 million in regulatory fees, primarily driven by the $52.8 million FDIC special assessment recorded in the fourth quarter of 2023. An increase of $3.7 million in processing fees expense due to the ongoing modernization of the company’s core systems and the timing of multiple software projects. Increases of $2.4 million in deferred compensation expense and $0.7 million in salary and wage expense, both recorded in salaries and employee benefits. The increase in deferred compensation expense was offset by the increase in company-owned life insurance income noted above. These increases were partially offset by the following decreases: A decrease of $5.1 million in bonus and commission expense, recorded in salaries and employee benefits. A decrease of $2.4 million in equipment expense driven by reduced software expense. A decrease of $2.2 million in legal and consulting expense due to the timing of multiple projects. Full Year 2023 earnings discussion Net income for the year ended December 31, 2023 was $350.0 million, or $7.18 per diluted share, compared to $431.7 million, or $8.86 per diluted share in 2022. The results for 2023 include $52.8 million in pre-tax expense for the FDIC special assessment. Net operating income, a non-GAAP financial measure reconciled to net income, the nearest comparable GAAP measure, later in this release, was $397.1 million, or $8.14 per diluted share, compared to $433.0 million, or $8.88 per diluted share in 2022. The decrease in net income from the prior year was driven by the pre-tax gain of $66.2 million recognized in 2022 on the sale of the company's Visa Inc. Class B common shares. Operating PTPP, a non-GAAP financial measure reconciled later in this release to the components of net income before taxes, the nearest comparable GAAP measure, was $524.8 million, or $10.76 per diluted share, compared to $571.7 million, or $11.73 per diluted share in 2022. These results represent a decrease of 8.2% as compared to 2022. Summary of year-to-date financial results UMB Financial Corporation (unaudited, dollars in thousands, except per share data) December December YTD YTD 2023 2022 Net income (GAAP) $ 350,024 $ 431,682 Earnings per share - diluted (GAAP) 7.18 8.86 Operating pre-tax, pre-provision income (Non-GAAP)(i) 524,791 571,671 Operating pre-tax, pre-provision earnings per share - diluted (Non-GAAP)(i) 10.76 11.73 Operating pre-tax, pre-provision income - FTE (Non-GAAP)(i) 551,150 597,465 Operating pre-tax, pre-provision earnings per share - FTE - diluted (Non-GAAP)(i) 11.30 12.26 Net operating income (Non-GAAP)(i) 397,115 433,020 Operating earnings per share - diluted (Non-GAAP)(i) 8.14 8.88 GAAP Return on average assets 0.88 % 1.15 % Return on average equity 12.23 15.83 Efficiency ratio 67.76 60.84 Non-GAAP (i) Operating return on average assets 1.00 % 1.15 % Operating return on average equity 13.87 15.88 Operating return on average tangible equity excluding AOCI 12.17 14.38 Operating efficiency ratio 63.52 60.72 (i) See reconciliation of Non-GAAP measures to their nearest comparable GAAP measures later in this release. Net interest income increased $6.3 million, or 0.7%, year-over-year due to a $1.9 billion, or 5.3%, increase in average earning assets, coupled with the impacts from increased short-term and long-term interest rates. The increase in earning assets was driven by an increase of $3.5 billion, or 18.7%, in average loans, partially offset by decreases of $649.8 million in federal funds and resell agreements and $611.9 million in average securities from 2022. Average interest-bearing liabilities increased $4.5 billion, or 21.1%, while noninterest-bearing demand deposits decreased $2.6 billion, or 19.8%, as expected in a higher interest rate environment. The yield on earning assets increased 170 basis points, while the cost of interest-bearing liabilities increased 253 basis points. Net interest margin for 2023 was 2.52%, compared to 2.63% in 2022. Full-year noninterest income decreased $12.4 million, or 2.2%, due to: A decrease of $61.6 million in investment securities gains, largely driven by the gain on the sale of the company's Visa Inc. Class B common shares during the second quarter of 2022, partially offset by an increase in valuation of the company's marketable securities. A decrease of $3.6 million in trading and investment banking due to decreased trading volume. These decreases were offset by the following increases: Increases of $18.4 million in company-owned life insurance and $1.7 million in bank-owned life insurance income, both recorded in other income. The increase in company-owned life insurance was offset by a proportionate increase in deferred compensation expense as noted below. Increases of $12.2 million in fund services income and $7.7 million in corporate trust income, both recorded in trust and securities processing. An increase of $11.1 million in brokerage income, primarily driven by higher 12b-1 fees and money market income. An increase of $1.3 million in bankcard income, driven by increased interchange income, partially offset by increased rewards and rebates expense. Full-year GAAP noninterest expense increased $101.0 million, or 11.2%, due to: An increase of $61.6 million in regulatory fees, primarily driven by the $52.8 million industry-wide FDIC special assessment recorded in the fourth quarter of 2023. An increase of $29.0 million in salaries and employee benefits, driven by increases of $23.8 million in salary and wage expense, $14.7 million in deferred compensation expense, and $6.5 million in payroll taxes, insurance, and 401(k) expense, partially offset by a decrease of $15.3 million in bonus and commission expense. The increase in deferred compensation expense was offset by the increase in company-owned life insurance income noted above. An increase of $20.9 million in processing fees due to the ongoing modernization of the company’s core systems and the timing of multiple software projects. These increases were partially offset by a decrease of $9.1 million in legal and consulting expense due to the timing of multiple projects. Income taxes The company’s effective tax rate was 17.0% for the year ended December 31, 2023, compared to 18.9% 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 and excludable life insurance policy gains. Balance sheet Average total assets for the fourth quarter of 2023 were $40.5 billion compared to $39.5 billion for the linked quarter and $37.3 billion for the same period in 2022. Summary of average loans and leases - QTD Average UMB Financial Corporation (unaudited, dollars in thousands) Q4 Q3 Q4 CQ vs. CQ vs. 2023 2023 2022 LQ PY Commercial and industrial $ 9,825,043 $ 9,852,335 $ 8,891,356 $ (27,292 ) $ 933,687 Specialty lending 496,816 526,711 559,200 (29,895 ) (62,384 ) Commercial real estate 8,890,057 8,545,206 7,323,877 344,851 1,566,180 Consumer real estate 2,945,114 2,922,753 2,678,771 22,361 266,343 Consumer 153,791 139,384 145,811 14,407 7,980 Credit cards 495,502 477,904 457,043 17,598 38,459 Leases and other 302,740 287,174 238,603 15,566 64,137 Total loans $ 23,109,063 $ 22,751,467 $ 20,294,661 $ 357,596 $ 2,814,402 Average loans for the fourth quarter of 2023 increased $357.6 million, or 1.6%, on a linked-quarter basis and $2.8 billion, or 13.9%, compared to the fourth quarter of 2022. Summary of average securities - QTD Average UMB Financial Corporation (unaudited, dollars in thousands) Q4 Q3 Q4 CQ vs. CQ vs. 2023 2023 2022 LQ PY Securities available for sale: U.S. Treasury $ 859,114 $ 786,136 $ 752,339 $ 72,978 $ 106,775 U.S. Agencies 169,723 172,832 171,171 (3,109 ) (1,448 ) Mortgage-backed 3,466,152 3,611,305 4,027,120 (145,153 ) (560,968 ) State and political subdivisions 1,218,176 1,275,591 1,353,307 (57,415 ) (135,131 ) Corporates 345,634 345,026 366,131 608 (20,497 ) Collateralized loan obligations 349,149 346,426 328,475 2,723 20,674 Total securities available for sale $ 6,407,948 $ 6,537,316 $ 6,998,543 $ (129,368 ) $ (590,595 ) Securities held to maturity: U.S. Agencies $ 123,195 $ 123,165 $ 123,077 $ 30 $ 118 Mortgage-backed 2,756,528 2,814,467 2,983,489 (57,939 ) (226,961 ) State and political subdivisions 2,825,138 2,828,029 2,765,717 (2,891 ) 59,421 Total securities held to maturity $ 5,704,861 $ 5,765,661 $ 5,872,283 $ (60,800 ) $ (167,422 ) Trading securities $ 16,880 $ 17,327 $ 11,799 $ (447 ) $ 5,081 Other securities 456,758 445,380 315,748 11,378 141,010 Total securities $ 12,586,447 $ 12,765,684 $ 13,198,373 $ (179,237 ) $ (611,926 ) Average total securities decreased 1.4% on a linked-quarter basis and 4.6% compared to the fourth quarter of 2022. At December 31, 2023, the unrealized pre-tax net loss on the available-for-sale securities portfolio was $624.2 million, or 8.1% of the $7.7 billion amortized cost balance. At December 31, 2023, the unrealized pre-tax net loss on the securities designated as held to maturity was $508.5 million, or 8.9% of the $5.7 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 $207.2 million as of December 31, 2023 and was included in the amortized cost balance of held-to-maturity securities. At December 31, 2023, an after-tax gain of $55.0 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, all 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) Q4 Q3 Q4 CQ vs. CQ vs. 2023 2023 2022 LQ PY Deposits: Noninterest-bearing demand $ 10,118,748 $ 10,014,686 $ 12,454,413 $ 104,062 $ (2,335,665 ) Interest-bearing demand and savings 19,457,878 18,142,212 17,952,568 1,315,666 1,505,310 Time deposits 3,098,636 3,173,549 966,969 (74,913 ) 2,131,667 Total deposits $ 32,675,262 $ 31,330,447 $ 31,373,950 $ 1,344,815 $ 1,301,312 Noninterest bearing deposits as % of total 31.0 % 32.0 % 39.7 % Average deposits increased 4.3% on a linked-quarter basis and 4.1% compared to the fourth quarter of 2022. As of December 31, 2023, total estimated uninsured deposits were $24.4 billion, or approximately 68.2% of total deposits. Estimated uninsured deposits, when adjusted to exclude affiliate (company-owned) and collateralized deposits, were $16.2 billion, and represented approximately 45.3% of total deposits. Capital Capital information UMB Financial Corporation (unaudited, dollars in thousands, except per share data) December 31, 2023 September 30, 2023 December 31, 2022 Total equity $ 3,100,419 $ 2,806,659 $ 2,667,093 Accumulated other comprehensive loss, net (556,935 ) (792,371 ) (702,735 ) Book value per common share 63.85 57.83 55.20 Tangible book value per common share (Non-GAAP)(i) 58.12 52.06 49.28 Regulatory capital: Common equity Tier 1 capital $ 3,418,676 $ 3,357,986 $ 3,129,030 Tier 1 capital 3,418,676 3,357,986 3,129,030 Total capital 4,014,910 3,955,093 3,682,619 Regulatory capital ratios: Common equity Tier 1 capital ratio 10.94 % 10.77 % 10.62 % Tier 1 risk-based capital ratio 10.94 10.77 10.62 Total risk-based capital ratio 12.85 12.68 12.50 Tier 1 leverage ratio 8.49 8.55 8.43 (i) See reconciliation of Non-GAAP measures to their nearest comparable GAAP measures later in this release. At December 31, 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) Q4 Q3 Q2 Q1 Q4 2023 2023 2023 2023 2022 Net charge-offs (recoveries) - total loans $ 1,352 $ 4,618 $ (139 ) $ 4,643 $ 2,189 Net loan charge-offs (recoveries) as a % of total average loans 0.02 % 0.08 % (0.00 )% 0.09 % 0.04 % Loans over 90 days past due $ 3,111 $ 3,044 $ 10,675 $ 1,723 $ 1,617 Loans over 90 days past due as a % of total loans 0.01 % 0.01 % 0.05 % 0.01 % 0.01 % Nonaccrual and restructured loans $ 13,212 $ 17,042 $ 19,347 $ 15,480 $ 19,269 Nonaccrual and restructured loans as a % of total loans 0.06 % 0.07 % 0.09 % 0.07 % 0.09 % Provision for credit losses $ — $ 4,977 $ 13,000 $ 23,250 $ 9,000 Provision for credit losses for the fourth quarter decreased $5.0 million from the linked quarter and $9.0 million from the fourth quarter of 2022. These decreases were driven largely by favorable changes in macro-economic variables and credit metrics in the current period as compared to the prior periods, partially offset by loan growth. Net charge-offs for the fourth quarter totaled $1.4 million, or 0.02%, of average loans, compared to $4.6 million, or 0.08% of average loans in the linked quarter, and $2.2 million, or 0.04% of average loans for the fourth quarter of 2022. On a year-to-date basis, net charge-offs totaled $10.5 million, or 0.05% of average loans, compared to $39.9 million, or 0.21% of average loans, for the same period in 2022. Dividend Declaration At the company’s quarterly board meeting, the Board of Directors declared a $0.39 per share quarterly cash dividend, payable on April 1, 2024, to shareholders of record at the close of business on March 11, 2024. Conference Call The company plans to host a conference call to discuss its fourth quarter 2023 earnings results on Wednesday, January 31, 2024, at 8:30 a.m. (CT). Interested parties may access the call by dialing (toll-free) 833-470-1428 or (international) 404-975-4839 and requesting to join the UMB Financial call with access code 269364. The live call may also be accessed by visiting investorrelations.umb.com or by using the following link: UMB Financial 4Q 2023 Conference Call A replay of the conference call may be heard through February 14, 2024, by calling (toll-free) 866-813-9403 or (international) 929-458-6194. The replay access code required for playback is 190379. 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, and the FDIC special assessment that management does not believe reflect the company’s fundamental operating performance. Net operating income for the relevant period is defined as GAAP net income, adjusted to reflect the impact of excluding expenses related to acquisitions, severance expense, the FDIC special assessment, and the cumulative tax impact of these adjustments. Operating EPS (diluted) is calculated as earnings per share as reported, adjusted to reflect, on a per share basis, the impact of excluding the non-GAAP adjustments described above for the relevant period. Operating ROE is calculated as net operating income, divided by the company’s average total shareholders’ equity for the relevant period. Operating ROA is calculated as net operating income, divided by the company’s average assets for the relevant period. Operating noninterest expense for the relevant period is defined as GAAP noninterest expense, adjusted to reflect the pre-tax impact of non-GAAP adjustments described above. Operating efficiency ratio is calculated as the company’s operating noninterest expense, net of amortization of other intangibles, divided by the company’s total non-GAAP revenue (calculated as net interest income plus noninterest income, less gains on sales of securities available for sale, net). Operating PTPP income for the relevant period is defined as GAAP net interest income plus GAAP noninterest income, less noninterest expense, adjusted to reflect the impact of excluding expenses related to acquisitions, severance expense, and the FDIC special assessment. Operating PTPP-FTE for the relevant period is defined as GAAP net interest income on a fully tax equivalent basis plus GAAP noninterest income, less noninterest expense, adjusted to reflect the impact of excluding expenses related to acquisitions, severance expense, and the FDIC special assessment. Tangible shareholders’ equity for the relevant period is defined as GAAP shareholders’ equity, net of intangible assets. Tangible book value per share is defined as tangible shareholders’ equity divided by the Company’s total shares outstanding. 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 instability in the Middle East and Russia’s military action in Ukraine, such as the broader impacts to financial markets and the global macroeconomic and geopolitical environments, may also cause actual results or other future events, circumstances, or aspirations to differ from our forward-looking statements. Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except to the extent required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K, or other applicable document that is filed or furnished with the SEC. About UMB: UMB Financial Corporation (Nasdaq: UMBF) is a financial services company headquartered in Kansas City, Missouri. UMB offers commercial banking, which includes comprehensive deposit, lending and investment services, personal banking, which includes wealth management and financial planning services, and institutional banking, which includes asset servicing, corporate trust solutions, investment banking, and healthcare services. UMB operates branches throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas. As the company’s reach continues to grow, it also serves business clients nationwide and institutional clients in several countries. For more information, visit UMB.com, UMB Blog, UMB Facebook and UMB LinkedIn. Consolidated Balance Sheets UMB Financial Corporation (dollars in thousands) December 31, 2023 2022 (unaudited) (audited) ASSETS Loans $ 23,172,484 $ 21,031,189 Allowance for credit losses on loans (219,738 ) (191,836 ) Net loans 22,952,746 20,839,353 Loans held for sale 4,420 1,978 Securities: Available for sale 7,068,613 7,006,347 Held to maturity, net of allowance for credit losses 5,688,610 5,859,192 Trading securities 18,093 17,980 Other securities 492,935 349,758 Total securities 13,268,251 13,233,277 Federal funds sold and resell agreements 245,344 958,597 Interest-bearing due from banks 5,159,802 1,179,105 Cash and due from banks 447,201 500,682 Premises and equipment, net 241,700 263,649 Accrued income 220,306 189,231 Goodwill 207,385 207,385 Other intangibles, net 71,012 78,724 Other assets 1,193,507 1,060,480 Total assets $ 44,011,674 $ 38,512,461 LIABILITIES Deposits: Noninterest-bearing demand $ 12,130,662 $ 13,260,363 Interest-bearing demand and savings 20,588,606 18,461,632 Time deposits under $250,000 2,292,899 379,087 Time deposits of $250,000 or more 780,692 538,051 Total deposits 35,792,859 32,639,133 Federal funds purchased and repurchase agreements 2,119,644 2,222,167 Short-term debt 1,800,000 — Long-term debt 383,247 381,311 Accrued expenses and taxes 389,860 239,624 Other liabilities 425,645 363,133 Total liabilities 40,911,255 35,845,368 SHAREHOLDERS' EQUITY Common stock 55,057 55,057 Capital surplus 1,134,363 1,125,949 Retained earnings 2,810,824 2,536,086 Accumulated other comprehensive loss, net (556,935 ) (702,735 ) Treasury stock (342,890 ) (347,264 ) Total shareholders' equity 3,100,419 2,667,093 Total liabilities and shareholders' equity $ 44,011,674 $ 38,512,461 Consolidated Statements of Income UMB Financial Corporation (dollars in thousands except share and per share data) Three Months Ended Year Ended December 31, December 31, 2023 2022 2023 2022 (unaudited) (unaudited) (unaudited) (audited) INTEREST INCOME Loans $ 381,041 $ 273,648 $ 1,399,961 $ 810,007 Securities: Taxable interest 53,890 51,441 214,981 192,121 Tax-exempt interest 25,637 25,105 102,197 97,190 Total securities income 79,527 76,546 317,178 289,311 Federal funds and resell agreements 3,540 7,106 17,647 19,109 Interest-bearing due from banks 32,267 9,373 103,190 18,582 Trading securities 227 139 729 511 Total interest income 496,602 366,812 1,838,705 1,137,520 INTEREST EXPENSE Deposits 213,842 97,484 704,210 167,553 Federal funds and repurchase agreements 21,903 18,848 93,026 40,703 Other 30,335 5,314 121,353 15,467 Total interest expense 266,080 121,646 918,589 223,723 Net interest income 230,522 245,166 920,116 913,797 Provision for credit losses — 9,000 41,227 37,900 Net interest income after provision for credit losses 230,522 236,166 878,889 875,897 NONINTEREST INCOME Trust and securities processing 66,584 59,207 257,200 237,207 Trading and investment banking 5,751 5,251 19,630 23,201 Service charges on deposit accounts 21,330 19,758 84,950 85,167 Insurance fees and commissions 238 459 1,009 1,338 Brokerage fees 13,439 13,332 54,119 43,019 Bankcard fees 18,672 19,597 74,719 73,451 Investment securities gains (losses), net 1,014 (409 ) (3,139 ) 58,444 Other 13,226 8,302 53,365 32,406 Total noninterest income 140,254 125,497 541,853 554,233 NONINTEREST EXPENSE Salaries and employee benefits 134,231 135,940 553,421 524,431 Occupancy, net 12,296 12,409 48,502 48,848 Equipment 16,579 18,969 68,718 74,259 Supplies and services 5,546 3,697 16,829 13,590 Marketing and business development 6,659 8,788 25,749 25,699 Processing fees 27,271 23,545 103,099 82,227 Legal and consulting 8,424 10,664 29,998 39,095 Bankcard 8,677 7,369 32,969 26,367 Amortization of other intangible assets 2,048 1,649 8,587 5,037 Regulatory fees 59,183 4,232 77,010 15,378 Other 9,060 10,556 34,258 43,188 Total noninterest expense 289,974 237,818 999,140 898,119 Income before income taxes 80,802 123,845 421,602 532,011 Income tax expense 9,879 23,672 71,578 100,329 NET INCOME $ 70,923 $ 100,173 $ 350,024 $ 431,682 PER SHARE DATA Net income – basic $ 1.46 $ 2.07 $ 7.22 $ 8.93 Net income – diluted 1.45 2.06 7.18 8.86 Dividends 0.39 0.38 1.53 1.49 Weighted average shares outstanding – basic 48,538,127 48,310,993 48,503,643 48,340,922 Weighted average shares outstanding – diluted 48,860,020 48,735,088 48,763,820 48,747,399 Consolidated Statements of Comprehensive Income UMB Financial Corporation (dollars in thousands) Three Months Ended Year Ended December 31, December 31, 2023 2022 2023 2022 (unaudited) (unaudited) (unaudited) (audited) Net income $ 70,923 $ 100,173 $ 350,024 $ 431,682 Other comprehensive income (loss), before tax: Unrealized gains and losses on debt securities: Change in unrealized holding gains and losses, net 293,578 64,924 147,977 (1,137,417 ) Less: Reclassification adjustment for net losses included in net income — — 279 — Amortization of net unrealized loss on securities transferred from available-for-sale to held-to-maturity 9,288 11,186 39,851 36,894 Change in unrealized gains and losses on debt securities 302,866 76,110 188,107 (1,100,523 ) Unrealized gains and losses on derivative hedges: Change in unrealized gains and losses on derivative hedges, net 10,767 170 15,015 12,608 Less: Reclassification adjustment for net gains included in net income (2,589 ) (1,942 ) (10,654 ) (5,353 ) Change in unrealized gains and losses on derivative hedges 8,178 (1,772 ) 4,361 7,255 Other comprehensive income (loss), before tax 311,044 74,338 192,468 (1,093,268 ) Income tax (expense) benefit (75,608 ) (17,813 ) (46,668 ) 264,219 Other comprehensive income (loss) 235,436 56,525 145,800 (829,049 ) Comprehensive income (loss) $ 306,359 $ 156,698 $ 495,824 $ (397,367 ) Consolidated Statements of Shareholders' Equity UMB Financial Corporation (dollars in thousands except per share data) (audited) Common Stock Capital Surplus Retained Earnings Accumulated Other Comprehensive 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) — — 431,682 (829,049 ) — (397,367 ) Dividends ($1.49 per share) — — (72,594 ) — — (72,594 ) Purchase of treasury stock — — — — (31,997 ) (31,997 ) Issuances of equity awards, net of forfeitures — (6,143 ) — — 6,822 679 Recognition of equity-based compensation — 20,812 — — — 20,812 Sale of treasury stock — 351 — — 245 596 Exercise of stock options — 409 — — 1,131 1,540 Balance - December 31, 2022 $ 55,057 $ 1,125,949 $ 2,536,086 $ (702,735 ) $ (347,264 ) $ 2,667,093 (unaudited) Balance - January 1, 2023 $ 55,057 $ 1,125,949 $ 2,536,086 $ (702,735 ) $ (347,264 ) $ 2,667,093 Total comprehensive income — — 350,024 145,800 — 495,824 Dividends ($1.53 per share) — — (75,286 ) — — (75,286 ) Purchase of treasury stock — — — — (8,367 ) (8,367 ) Issuances of equity awards, net of forfeitures — (10,385 ) — — 11,104 719 Recognition of equity-based compensation — 17,975 — — — 17,975 Sale of treasury stock — 220 — — 296 516 Exercise of stock options — 604 — — 1,341 1,945 Balance - December 31, 2023 $ 55,057 $ 1,134,363 $ 2,810,824 $ (556,935 ) $ (342,890 ) $ 3,100,419 Average Balances / Yields and Rates UMB Financial Corporation (tax - equivalent basis) (unaudited, dollars in thousands) Three Months Ended December 31, 2023 2022 Average Average Average Average Balance Yield/Rate Balance Yield/Rate Assets Loans, net of unearned interest $ 23,109,063 6.54 % $ 20,294,661 5.35 % Securities: Taxable 8,853,426 2.41 9,382,837 2.18 Tax-exempt 3,716,141 3.44 3,803,737 3.31 Total securities 12,569,567 2.72 13,186,574 2.50 Federal funds and resell agreements 235,284 5.97 656,092 4.30 Interest bearing due from banks 2,372,767 5.40 1,135,356 3.28 Trading securities 16,880 5.83 11,799 5.31 Total earning assets 38,303,561 5.21 35,284,482 4.20 Allowance for credit losses (223,668 ) (188,299 ) Other assets 2,435,687 2,243,437 Total assets $ 40,515,580 $ 37,339,620 Liabilities and Shareholders' Equity Interest-bearing deposits $ 22,556,514 3.76 % $ 18,919,537 2.04 % Federal funds and repurchase agreements 1,883,392 4.61 2,424,171 3.08 Borrowed funds 2,286,271 5.26 396,874 5.31 Total interest-bearing liabilities 26,726,177 3.95 21,740,582 2.22 Noninterest-bearing demand deposits 10,118,748 12,454,413 Other liabilities 715,688 522,932 Shareholders' equity 2,954,967 2,621,693 Total liabilities and shareholders' equity $ 40,515,580 $ 37,339,620 Net interest spread 1.26 % 1.98 % Net interest margin 2.46 2.83 Average Balances / Yields and Rates UMB Financial Corporation (tax - equivalent basis) (unaudited, dollars in thousands) Year Ended December 31, 2023 2022 Average Average Average Average Balance Yield/Rate Balance Yield/Rate Assets Loans, net of unearned interest $ 22,337,119 6.27 % $ 18,823,810 4.30 % Securities: Taxable 9,097,110 2.36 9,616,691 2.00 Tax-exempt 3,790,921 3.38 3,885,153 3.16 Total securities 12,888,031 2.66 13,501,844 2.33 Federal funds and resell agreements 316,072 5.58 965,911 1.98 Interest bearing due from banks 2,046,349 5.04 2,408,468 0.77 Trading securities 14,030 5.65 12,076 4.96 Total earning assets 37,601,601 4.96 35,712,109 3.26 Allowance for credit losses (216,245 ) (184,072 ) Other assets 2,344,911 2,050,976 Total assets $ 39,730,267 $ 37,579,013 Liabilities and Shareholders' Equity Interest-bearing deposits $ 21,122,305 3.33 % $ 18,063,498 0.93 % Federal funds and repurchase agreements 2,175,415 4.28 2,777,089 1.47 Borrowed funds 2,311,238 5.25 309,204 5.00 Total interest-bearing liabilities 25,608,958 3.59 21,149,791 1.06 Noninterest-bearing demand deposits 10,640,344 13,264,146 Other liabilities 618,230 438,772 Shareholders' equity 2,862,735 2,726,304 Total liabilities and shareholders' equity $ 39,730,267 $ 37,579,013 Net interest spread 1.37 % 2.20 % Net interest margin 2.52 2.63 Business Segment Information UMB Financial Corporation (unaudited, dollars in thousands) Three Months Ended December 31, 2023 Commercial Banking Institutional Banking Personal Banking Total Net interest income $ 154,289 $ 44,150 $ 32,083 $ 230,522 Provision for credit losses (1,926 ) 653 1,273 — Noninterest income 25,956 90,361 23,937 140,254 Noninterest expense 114,190 114,306 61,478 289,974 Income (loss) before taxes 67,981 19,552 (6,731 ) 80,802 Income tax expense 5,321 2,913 1,645 9,879 Net income (loss) $ 62,660 $ 16,639 $ (8,376 ) $ 70,923 Three Months Ended December 31, 2022 Commercial Banking Institutional Banking Personal Banking Total Net interest income $ 151,856 $ 55,063 38,247 $ 245,166 Provision for credit losses 7,668 93 1,239 9,000 Noninterest income 22,233 80,055 23,209 125,497 Noninterest expense 86,682 86,791 64,345 237,818 Income (loss) before taxes 79,739 48,234 (4,128 ) 123,845 Income tax expense (benefit) 15,176 9,264 (768 ) 23,672 Net income (loss) $ 64,563 $ 38,970 $ (3,360 ) $ 100,173 Year Ended December 31, 2023 Commercial Banking Institutional Banking Personal Banking Total Net interest income $ 598,371 $ 192,765 $ 128,980 $ 920,116 Provision for credit losses 33,184 1,406 6,637 41,227 Noninterest income 97,614 347,933 96,306 541,853 Noninterest expense 365,856 382,770 250,514 999,140 Income (loss) before taxes 296,945 156,522 (31,865 ) 421,602 Income tax expense (benefit) 48,403 26,838 (3,663 ) 71,578 Net income (loss) $ 248,542 $ 129,684 $ (28,202 ) $ 350,024 Year Ended December 31, 2022 Commercial Banking Institutional Banking Personal Banking Total Net interest income $ 596,031 $ 159,679 $ 158,087 $ 913,797 Provision for credit losses 32,851 495 4,554 37,900 Noninterest income 122,614 323,794 107,825 554,233 Noninterest expense 332,912 320,976 244,231 898,119 Income before taxes 352,882 162,002 17,127 532,011 Income tax expense 67,134 31,889 1,306 100,329 Net income $ 285,748 $ 130,113 $ 15,821 $ 431,682 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 December 31, 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 December 31, Year Ended December 31, 2023 2022 2023 2022 Net income (GAAP) $ 70,923 $ 100,173 $ 350,024 $ 431,682 Adjustments: Acquisition expense 52 851 179 922 Severance expense 1,207 358 8,943 838 FDIC special assessment 52,840 — 52,840 — Tax-impact of adjustments (i) (12,984 ) (290 ) (14,871 ) (422 ) Total Non-GAAP adjustments (net of tax) 41,115 919 47,091 1,338 Net operating income (Non-GAAP) $ 112,038 $ 101,092 $ 397,115 $ 433,020 Earnings per share - diluted (GAAP) $ 1.45 $ 2.06 $ 7.18 $ 8.86 Acquisition expense — 0.02 — 0.02 Severance expense 0.02 0.01 0.18 0.02 FDIC special assessment 1.08 — 1.08 — Tax-impact of adjustments (i) (0.26 ) (0.02 ) (0.30 ) (0.02 ) Operating earnings per share - diluted (Non-GAAP) $ 2.29 $ 2.07 $ 8.14 $ 8.88 GAAP Return on average assets 0.69 % 1.06 % 0.88 % 1.15 % Return on average equity 9.52 15.16 12.23 15.83 Non-GAAP Operating return on average assets 1.10 % 1.07 % 1.00 % 1.15 % Operating return on average equity 15.04 15.30 13.87 15.88 (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 December 31, Year Ended December 31, 2023 2022 2023 2022 Noninterest expense $ 289,974 $ 237,818 $ 999,140 $ 898,119 Adjustments to arrive at operating noninterest expense (pre-tax): Acquisition expense 52 851 179 922 Severance expense 1,207 358 8,943 838 FDIC special assessment 52,840 — 52,840 — Total Non-GAAP adjustments (pre-tax) 54,099 1,209 61,962 1,760 Operating noninterest expense (Non-GAAP) $ 235,875 $ 236,609 $ 937,178 $ 896,359 Noninterest expense $ 289,974 $ 237,818 $ 999,140 $ 898,119 Less: Amortization of other intangibles 2,048 1,649 8,587 5,037 Noninterest expense, net of amortization of other intangibles (Non-GAAP) (numerator A) $ 287,926 $ 236,169 $ 990,553 $ 893,082 Operating noninterest expense $ 235,875 $ 236,609 $ 937,178 $ 896,359 Less: Amortization of other intangibles 2,048 1,649 8,587 5,037 Operating expense, net of amortization of other intangibles (Non-GAAP) (numerator B) $ 233,827 $ 234,960 $ 928,591 $ 891,322 Net interest income $ 230,522 $ 245,166 $ 920,116 $ 913,797 Noninterest income 140,254 125,497 541,853 554,233 Less: Gains on sales of securities available for sale, net — — 152 — Total Non-GAAP Revenue (denominator A) $ 370,776 $ 370,663 $ 1,461,817 $ 1,468,030 Efficiency ratio (numerator A/denominator A) 77.65 % 63.72 % 67.76 % 60.84 % Operating efficiency ratio (Non-GAAP) (numerator B/denominator A) 63.06 63.39 63.52 60.72 Operating pre-tax, pre-provision income non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands except per share data) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Net interest income (GAAP) $ 230,522 $ 245,166 $ 920,116 $ 913,797 Noninterest income (GAAP) 140,254 125,497 541,853 554,233 Noninterest expense (GAAP) 289,974 237,818 999,140 898,119 Adjustments to arrive at operating noninterest expense: Acquisition expense 52 851 179 922 Severance expense 1,207 358 8,943 838 FDIC special assessment 52,840 — 52,840 — Total Non-GAAP adjustments 54,099 1,209 61,962 1,760 Operating noninterest expense (Non-GAAP) 235,875 236,609 937,178 896,359 Operating pre-tax, pre-provision income (Non-GAAP) $ 134,901 $ 134,054 $ 524,791 $ 571,671 Net interest income earnings per share - diluted (GAAP) $ 4.72 $ 5.03 $ 18.87 $ 18.75 Noninterest income (GAAP) 2.87 2.57 11.11 11.37 Noninterest expense (GAAP) 5.93 4.88 20.48 18.43 Acquisition expense — 0.02 — 0.02 Severance expense 0.02 0.01 0.18 0.02 FDIC special assessment 1.08 — 1.08 — Operating pre-tax, pre-provision earnings per share - diluted (Non-GAAP) $ 2.76 $ 2.75 $ 10.76 $ 11.73 Operating pre-tax, pre-provision income - FTE Non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands except per share data) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Net interest income (GAAP) $ 230,522 $ 245,166 $ 920,116 $ 913,797 Adjustments to arrive at net interest income - FTE: Tax equivalent interest 6,670 6,663 26,359 25,794 Net interest income - FTE (Non-GAAP) 237,192 251,829 946,475 939,591 Noninterest income (GAAP) 140,254 125,497 541,853 554,233 Noninterest expense (GAAP) 289,974 237,818 999,140 898,119 Adjustments to arrive at operating noninterest expense: Acquisition expense 52 851 179 922 Severance expense 1,207 358 8,943 838 FDIC special assessment 52,840 — 52,840 — Total Non-GAAP adjustments 54,099 1,209 61,962 1,760 Operating noninterest expense (Non-GAAP) 235,875 236,609 937,178 896,359 Operating pre-tax, pre-provision income - FTE (Non-GAAP) $ 141,571 $ 140,717 $ 551,150 $ 597,465 Net interest income earnings per share - diluted (GAAP) $ 4.72 $ 5.03 $ 18.87 $ 18.75 Tax equivalent interest 0.14 0.14 0.54 0.53 Net interest income - FTE (Non-GAAP) 4.86 5.17 19.41 19.28 Noninterest income (GAAP) 2.87 2.57 11.11 11.37 Noninterest expense (GAAP) 5.93 4.88 20.48 18.43 Acquisition expense — 0.02 — 0.02 Severance expense 0.02 0.01 0.18 0.02 FDIC special assessment 1.08 — 1.08 — Operating pre-tax, pre-provision income - FTE earnings per share - diluted (Non-GAAP) $ 2.90 $ 2.89 $ 11.30 $ 12.26 Tangible book value non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands except share and per share data) As of December 31, 2023 2022 Total shareholders' equity (GAAP) $ 3,100,419 $ 2,667,093 Less: Intangible assets Goodwill 207,385 207,385 Other intangibles, net 71,012 78,724 Total intangibles, net 278,397 286,109 Total tangible shareholders' equity (Non-GAAP) $ 2,822,022 $ 2,380,984 Total shares outstanding 48,554,127 48,319,404 Ratio of total shareholders' equity (book value) per share $ 63.85 $ 55.20 Ratio of total tangible shareholders' equity (tangible book value) per share (Non-GAAP) 58.12 49.28 Operating return on average tangible equity excluding AOCI non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Average total shareholders' equity (GAAP) $ 2,954,967 $ 2,621,693 $ 2,862,735 $ 2,726,304 Less: Average intangible assets Average goodwill 207,385 194,805 207,385 183,512 Average other intangibles, net 72,322 46,243 74,868 22,414 Average total intangibles, net 279,707 241,049 282,254 205,926 Average total tangible shareholders' equity (Non-GAAP) 2,675,260 2,380,644 2,580,481 2,520,378 Less: Average accumulated other comprehensive loss (AOCI) (730,891 ) (741,438 ) (681,436 ) (490,058 ) Average total tangible shareholders' equity excluding AOCI (Non-GAAP) $ 3,406,151 $ 3,122,082 $ 3,261,918 $ 3,010,436 Net operating income (Non-GAAP) $ 112,038 $ 101,092 $ 397,115 $ 433,020 Operating return on average tangible equity excluding AOCI (Non-GAAP) 13.05 % 12.85 % 12.17 % 14.38 % View source version on businesswire.com: https://www.businesswire.com/news/home/20240125163449/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 Corp Reports Fourth Quarter Net Income of $70.9 Million, or $1.45 Per Diluted Share & Net Operating Income of $112.0 Million, or $2.29 Per Diluted Share. Full-Year 2023 Earnings of $350.0 Million; Net Operating Income of $397.1 Million. By: UMB Financial Corporation via Business Wire January 30, 2024 at 16:01 PM EST Fourth Quarter 2023 Financial Highlights GAAP net income of $70.9 million, or $1.45 per diluted share. Net operating income(i) of $112.0 million, or $2.29 per diluted share. Average loans increased 6.3% on a linked-quarter, annualized basis, to $23.1 billion. Average loans increased $2.8 billion, or 13.9%, as compared to the fourth quarter of 2022. Average deposits increased 17.2% on a linked-quarter, annualized basis, to $32.7 billion. Net interest income increased 3.7% from the linked quarter. Noninterest income increased 11.8% from the fourth quarter of 2022, equal to 37.8% of total revenue. Net interest margin was 2.46%, an increase of three basis points from the linked quarter. Credit quality remained strong, with net charge-offs of just 0.02% of average loans. UMB Financial Corporation (Nasdaq: UMBF), a financial services company, announced net income for the fourth quarter of 2023 of $70.9 million, or $1.45 per diluted share, compared to $96.6 million, or $1.98 per diluted share, in the third quarter of 2023 (linked quarter) and $100.2 million, or $2.06 per diluted share, in the fourth quarter of 2022. The results for the fourth quarter of 2023 include a pre-tax expense of $52.8 million for the industry-wide FDIC special assessment. Net operating income, a non-GAAP financial measure reconciled later in this release to net income, the nearest comparable GAAP measure, was $112.0 million, or $2.29 per diluted share, for the fourth quarter of 2023, compared to $98.4 million, or $2.02 per diluted share, for the linked quarter and $101.1 million, or $2.07 per diluted share, for the fourth 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 $134.9 million, or $2.76 per diluted share, for the fourth quarter of 2023, compared to $126.6 million, or $2.60 per diluted share, for the linked quarter, and $134.1 million, or $2.75 per diluted share, for the fourth quarter of 2022. These operating PTPP results represent increases of 6.6% on a linked-quarter basis and 0.6% compared to the fourth quarter of 2022. “We closed 2023 with strong fourth quarter performance, demonstrating the power and resilience of our diversified business model. Results were accentuated by continued loan and deposit growth, expanding net interest margin and net interest income, solid fee income growth and exceptional asset quality,” said Mariner Kemper, chairman, president and chief executive officer. “Our strong business performance and financial results were unfortunately muted by our share of the FDIC special assessment levied on banks to recoup the losses related to two of the bank failures in March 2023. I am incredibly proud of our associates who drove this performance, and deeply grateful for our loyal client base that grew with us through the much-exaggerated industry noise following the bank failures. While this was a challenging time for the industry, it was extremely rewarding to see how our company and customers came together to support each other, and the resulting positive growth and performance.” Mr. Kemper continued, “Key highlights from our fourth quarter results included a 3.7% increase in net interest income from the linked quarter, facilitated by a 6.3% annualized increase in average loans, three basis points of net interest margin expansion, a 4.3% linked-quarter increase in average deposits, a 5.2% increase in fee income, and just 0.02% in net charge-offs. At December 31, 2023, our total deposits – which we describe as our raw material for growth – increased $3.2 billion to $35.8 billion compared to year-end 2022, and were $2.4 billion above September 30, 2023 balances. Looking ahead into 2024, we see a muted but resilient macro-economic environment, and we remain well-positioned with an attractive average loan-to-deposit ratio of 70.7%, strong capital levels, and a high-quality loan portfolio.” (i) A non-GAAP financial measure reconciled later in this release to net income, the nearest comparable GAAP measure. Fourth Quarter 2023 earnings discussion Summary of quarterly financial results UMB Financial Corporation (unaudited, dollars in thousands, except per share data) Q4 Q3 Q4 2023 2023 2022 Net income (GAAP) $ 70,923 $ 96,554 $ 100,173 Earnings per share - diluted (GAAP) 1.45 1.98 2.06 Operating pre-tax, pre-provision income (Non-GAAP)(i) 134,901 126,592 134,054 Operating pre-tax, pre-provision earnings per share - diluted (Non-GAAP)(i) 2.76 2.60 2.75 Operating pre-tax, pre-provision income - FTE (Non-GAAP)(i) 141,571 133,151 140,717 Operating pre-tax, pre-provision earnings per share - FTE - diluted (Non-GAAP)(i) 2.90 2.73 2.89 Net operating income (Non-GAAP)(i) 112,038 98,400 101,092 Operating earnings per share - diluted (Non-GAAP)(i) 2.29 2.02 2.07 GAAP Return on average assets 0.69 % 0.97 % 1.06 % Return on average equity 9.52 13.25 15.16 Efficiency ratio 77.65 64.51 63.72 Non-GAAP(i) Operating return on average assets 1.10 % 0.99 % 1.07 % Operating return on average equity 15.04 13.50 15.30 Operating return on average tangible equity excluding AOCI 13.05 11.77 12.85 Operating efficiency ratio 63.06 63.83 63.39 (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) Q4 Q3 Q4 CQ vs. CQ vs. 2023 2023 2022 LQ PY Net interest income $ 230,522 $ 222,287 $ 245,166 $ 8,235 $ (14,644 ) Noninterest income: Trust and securities processing 66,584 66,668 59,207 (84 ) 7,377 Trading and investment banking 5,751 3,771 5,251 1,980 500 Service charges on deposit accounts 21,330 21,080 19,758 250 1,572 Insurance fees and commissions 238 272 459 (34 ) (221 ) Brokerage fees 13,439 13,400 13,332 39 107 Bankcard fees 18,672 19,296 19,597 (624 ) (925 ) Investment securities gains (losses), net 1,014 271 (409 ) 743 1,423 Other 13,226 8,559 8,302 4,667 4,924 Total noninterest income $ 140,254 $ 133,317 $ 125,497 $ 6,937 $ 14,757 Total revenue $ 370,776 $ 355,604 $ 370,663 $ 15,172 $ 113 Net interest income (FTE) $ 237,192 $ 228,846 $ 251,829 Net interest margin (FTE) 2.46 % 2.43 % 2.83 % Total noninterest income as a % of total revenue 37.8 37.5 33.9 Net interest income Fourth quarter 2023 net interest income totaled $230.5 million, an increase of $8.2 million, or 3.7%, from the linked quarter, driven primarily by continued growth in average loans and higher levels of liquidity, partially offset by higher interest expense. Average earning assets increased $933.7 million, or 2.5%, from the linked quarter, largely driven by an increase of $823.9 million in interest-bearing due from banks and $357.6 million in average loans, partially offset by a decrease of $179.2 million in average securities. Average interest-bearing liabilities increased $777.1 million, or 3.0%, from the linked quarter, primarily driven by an increase of $1.2 billion in interest-bearing deposits, partially offset by decreases of $319.6 million in borrowed funds and $144.0 million in federal funds and repurchase agreements. Average noninterest-bearing demand deposits increased $104.1 million, or 1.0%, as compared to the linked quarter. Net interest margin for the fourth quarter was 2.46%, an increase of three basis points from the linked quarter, driven by increased loan yields, the benefit of free funds, and earning asset mix changes, partially offset by the increased cost of interest-bearing liabilities. The cost of interest-bearing liabilities increased 13 basis points to 3.95%. Total cost of funds increased 12 basis points from the linked quarter to 2.87%. Both average loan yields and earning asset yields increased 13 basis points from the linked quarter. On a year-over-year basis, net interest income decreased $14.6 million, or 6.0%, driven by higher interest expense primarily due to an unfavorable mix shift in the composition of liabilities, as well as the impact of higher short-term interest rates on deposit costs. This decrease was partially offset by a $2.8 billion, or 13.9%, increase in average loans as well as the benefit from higher short-term interest rates on loan pricing and yields. Compared to the fourth quarter of 2022, average earning assets increased $3.0 billion, or 8.6%, largely driven by the increase in average loans noted above and an increase of $1.2 billion in interest-bearing due from banks, partially offset by a decrease of $611.9 million in average securities. Average deposits increased 4.1% compared to the fourth quarter of 2022. Average noninterest-bearing demand deposit balances decreased 18.8% compared to the fourth quarter of 2022, driven by migration to rate-bearing deposit categories, as expected in a higher interest rate environment. Average demand deposit balances comprised 31.0% of total deposits, compared to 32.0% in the linked quarter and 39.7% in the fourth quarter of 2022. Average borrowed funds decreased $319.6 million as compared to the linked quarter and increased $1.9 billion as compared to the fourth quarter of 2022, driven by short-term borrowings with the Federal Home Loan Bank and the Federal Reserve. Noninterest income Fourth quarter 2023 noninterest income increased $6.9 million, or 5.2%, on a linked-quarter basis, largely due to: Increases of $3.7 million in company-owned life insurance income and $0.6 million in derivative income, both recorded in other income. The increase in company-owned life insurance was offset by a proportionate increase in deferred compensation expense as noted below. An increase of $2.0 million in trading and investment banking due to increased trading volume. Compared to the prior year, noninterest income in the fourth quarter of 2023 increased $14.8 million, or 11.8%, primarily driven by: Increases of $4.9 million in fund services income, $2.0 million in corporate trust income, and $0.5 million in trust servicing income, all recorded in trust and securities processing. Increases of $3.3 million in company-owned life insurance income and $0.6 million in bank-owned life insurance income, both recorded in other income. The increase in company-owned life insurance was offset by a proportionate increase in deferred compensation expense as noted below. An increase of $1.6 million in service charges on deposits primarily due to increased corporate service charge income. An increase of $1.4 million in investment securities gains, primarily driven by increased valuations in the company's non-marketable securities. Noninterest expense Summary of noninterest expense UMB Financial Corporation (unaudited, dollars in thousands) Q4 Q3 Q4 CQ vs. CQ vs. 2023 2023 2022 LQ PY Salaries and employee benefits $ 134,231 $ 133,380 $ 135,940 $ 851 $ (1,709 ) Occupancy, net 12,296 12,283 12,409 13 (113 ) Equipment 16,579 17,204 18,969 (625 ) (2,390 ) Supplies and services 5,546 3,213 3,697 2,333 1,849 Marketing and business development 6,659 6,631 8,788 28 (2,129 ) Processing fees 27,271 26,016 23,545 1,255 3,726 Legal and consulting 8,424 7,230 10,664 1,194 (2,240 ) Bankcard 8,677 8,852 7,369 (175 ) 1,308 Amortization of other intangible assets 2,048 2,124 1,649 (76 ) 399 Regulatory fees 59,183 6,153 4,232 53,030 54,951 Other 9,060 8,355 10,556 705 (1,496 ) Total noninterest expense $ 289,974 $ 231,441 $ 237,818 $ 58,533 $ 52,156 GAAP Noninterest expense for the fourth quarter of 2023 was $290.0 million, an increase of $58.5 million, or 25.3%, from the linked quarter and an increase of $52.2 million, or 21.9% from the fourth 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 $235.9 million for the fourth quarter of 2023, an increase of $6.9 million, or 3.0%, from the linked quarter and a decrease of $0.7 million, or 0.3%, from the fourth quarter of 2022. The linked-quarter increase in GAAP noninterest expense was driven by: An increase of $53.0 million in regulatory fees expense, primarily driven by the $52.8 million FDIC special assessment in the fourth quarter of 2023. An increase of $2.7 million in deferred compensation expense, recorded in salaries and employee benefits. The increase in deferred compensation expense was offset by the increase in company-owned life insurance income noted above. An increase of $2.3 million in supplies driven by purchases of computers during the fourth quarter. An increase of $1.5 million in charitable contribution expense, recorded in other expense. An increase of $1.3 million in processing fees expense due to the ongoing modernization of the company’s core systems and the timing of multiple software projects. These increases were partially offset by decreases of $1.6 million in payroll taxes, insurance, and 401(k) expense and $0.5 million in bonus and commission expense, both recorded in salaries and employee benefits. The year-over-year increase in GAAP noninterest expense was driven by: An increase of $55.0 million in regulatory fees, primarily driven by the $52.8 million FDIC special assessment recorded in the fourth quarter of 2023. An increase of $3.7 million in processing fees expense due to the ongoing modernization of the company’s core systems and the timing of multiple software projects. Increases of $2.4 million in deferred compensation expense and $0.7 million in salary and wage expense, both recorded in salaries and employee benefits. The increase in deferred compensation expense was offset by the increase in company-owned life insurance income noted above. These increases were partially offset by the following decreases: A decrease of $5.1 million in bonus and commission expense, recorded in salaries and employee benefits. A decrease of $2.4 million in equipment expense driven by reduced software expense. A decrease of $2.2 million in legal and consulting expense due to the timing of multiple projects. Full Year 2023 earnings discussion Net income for the year ended December 31, 2023 was $350.0 million, or $7.18 per diluted share, compared to $431.7 million, or $8.86 per diluted share in 2022. The results for 2023 include $52.8 million in pre-tax expense for the FDIC special assessment. Net operating income, a non-GAAP financial measure reconciled to net income, the nearest comparable GAAP measure, later in this release, was $397.1 million, or $8.14 per diluted share, compared to $433.0 million, or $8.88 per diluted share in 2022. The decrease in net income from the prior year was driven by the pre-tax gain of $66.2 million recognized in 2022 on the sale of the company's Visa Inc. Class B common shares. Operating PTPP, a non-GAAP financial measure reconciled later in this release to the components of net income before taxes, the nearest comparable GAAP measure, was $524.8 million, or $10.76 per diluted share, compared to $571.7 million, or $11.73 per diluted share in 2022. These results represent a decrease of 8.2% as compared to 2022. Summary of year-to-date financial results UMB Financial Corporation (unaudited, dollars in thousands, except per share data) December December YTD YTD 2023 2022 Net income (GAAP) $ 350,024 $ 431,682 Earnings per share - diluted (GAAP) 7.18 8.86 Operating pre-tax, pre-provision income (Non-GAAP)(i) 524,791 571,671 Operating pre-tax, pre-provision earnings per share - diluted (Non-GAAP)(i) 10.76 11.73 Operating pre-tax, pre-provision income - FTE (Non-GAAP)(i) 551,150 597,465 Operating pre-tax, pre-provision earnings per share - FTE - diluted (Non-GAAP)(i) 11.30 12.26 Net operating income (Non-GAAP)(i) 397,115 433,020 Operating earnings per share - diluted (Non-GAAP)(i) 8.14 8.88 GAAP Return on average assets 0.88 % 1.15 % Return on average equity 12.23 15.83 Efficiency ratio 67.76 60.84 Non-GAAP (i) Operating return on average assets 1.00 % 1.15 % Operating return on average equity 13.87 15.88 Operating return on average tangible equity excluding AOCI 12.17 14.38 Operating efficiency ratio 63.52 60.72 (i) See reconciliation of Non-GAAP measures to their nearest comparable GAAP measures later in this release. Net interest income increased $6.3 million, or 0.7%, year-over-year due to a $1.9 billion, or 5.3%, increase in average earning assets, coupled with the impacts from increased short-term and long-term interest rates. The increase in earning assets was driven by an increase of $3.5 billion, or 18.7%, in average loans, partially offset by decreases of $649.8 million in federal funds and resell agreements and $611.9 million in average securities from 2022. Average interest-bearing liabilities increased $4.5 billion, or 21.1%, while noninterest-bearing demand deposits decreased $2.6 billion, or 19.8%, as expected in a higher interest rate environment. The yield on earning assets increased 170 basis points, while the cost of interest-bearing liabilities increased 253 basis points. Net interest margin for 2023 was 2.52%, compared to 2.63% in 2022. Full-year noninterest income decreased $12.4 million, or 2.2%, due to: A decrease of $61.6 million in investment securities gains, largely driven by the gain on the sale of the company's Visa Inc. Class B common shares during the second quarter of 2022, partially offset by an increase in valuation of the company's marketable securities. A decrease of $3.6 million in trading and investment banking due to decreased trading volume. These decreases were offset by the following increases: Increases of $18.4 million in company-owned life insurance and $1.7 million in bank-owned life insurance income, both recorded in other income. The increase in company-owned life insurance was offset by a proportionate increase in deferred compensation expense as noted below. Increases of $12.2 million in fund services income and $7.7 million in corporate trust income, both recorded in trust and securities processing. An increase of $11.1 million in brokerage income, primarily driven by higher 12b-1 fees and money market income. An increase of $1.3 million in bankcard income, driven by increased interchange income, partially offset by increased rewards and rebates expense. Full-year GAAP noninterest expense increased $101.0 million, or 11.2%, due to: An increase of $61.6 million in regulatory fees, primarily driven by the $52.8 million industry-wide FDIC special assessment recorded in the fourth quarter of 2023. An increase of $29.0 million in salaries and employee benefits, driven by increases of $23.8 million in salary and wage expense, $14.7 million in deferred compensation expense, and $6.5 million in payroll taxes, insurance, and 401(k) expense, partially offset by a decrease of $15.3 million in bonus and commission expense. The increase in deferred compensation expense was offset by the increase in company-owned life insurance income noted above. An increase of $20.9 million in processing fees due to the ongoing modernization of the company’s core systems and the timing of multiple software projects. These increases were partially offset by a decrease of $9.1 million in legal and consulting expense due to the timing of multiple projects. Income taxes The company’s effective tax rate was 17.0% for the year ended December 31, 2023, compared to 18.9% 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 and excludable life insurance policy gains. Balance sheet Average total assets for the fourth quarter of 2023 were $40.5 billion compared to $39.5 billion for the linked quarter and $37.3 billion for the same period in 2022. Summary of average loans and leases - QTD Average UMB Financial Corporation (unaudited, dollars in thousands) Q4 Q3 Q4 CQ vs. CQ vs. 2023 2023 2022 LQ PY Commercial and industrial $ 9,825,043 $ 9,852,335 $ 8,891,356 $ (27,292 ) $ 933,687 Specialty lending 496,816 526,711 559,200 (29,895 ) (62,384 ) Commercial real estate 8,890,057 8,545,206 7,323,877 344,851 1,566,180 Consumer real estate 2,945,114 2,922,753 2,678,771 22,361 266,343 Consumer 153,791 139,384 145,811 14,407 7,980 Credit cards 495,502 477,904 457,043 17,598 38,459 Leases and other 302,740 287,174 238,603 15,566 64,137 Total loans $ 23,109,063 $ 22,751,467 $ 20,294,661 $ 357,596 $ 2,814,402 Average loans for the fourth quarter of 2023 increased $357.6 million, or 1.6%, on a linked-quarter basis and $2.8 billion, or 13.9%, compared to the fourth quarter of 2022. Summary of average securities - QTD Average UMB Financial Corporation (unaudited, dollars in thousands) Q4 Q3 Q4 CQ vs. CQ vs. 2023 2023 2022 LQ PY Securities available for sale: U.S. Treasury $ 859,114 $ 786,136 $ 752,339 $ 72,978 $ 106,775 U.S. Agencies 169,723 172,832 171,171 (3,109 ) (1,448 ) Mortgage-backed 3,466,152 3,611,305 4,027,120 (145,153 ) (560,968 ) State and political subdivisions 1,218,176 1,275,591 1,353,307 (57,415 ) (135,131 ) Corporates 345,634 345,026 366,131 608 (20,497 ) Collateralized loan obligations 349,149 346,426 328,475 2,723 20,674 Total securities available for sale $ 6,407,948 $ 6,537,316 $ 6,998,543 $ (129,368 ) $ (590,595 ) Securities held to maturity: U.S. Agencies $ 123,195 $ 123,165 $ 123,077 $ 30 $ 118 Mortgage-backed 2,756,528 2,814,467 2,983,489 (57,939 ) (226,961 ) State and political subdivisions 2,825,138 2,828,029 2,765,717 (2,891 ) 59,421 Total securities held to maturity $ 5,704,861 $ 5,765,661 $ 5,872,283 $ (60,800 ) $ (167,422 ) Trading securities $ 16,880 $ 17,327 $ 11,799 $ (447 ) $ 5,081 Other securities 456,758 445,380 315,748 11,378 141,010 Total securities $ 12,586,447 $ 12,765,684 $ 13,198,373 $ (179,237 ) $ (611,926 ) Average total securities decreased 1.4% on a linked-quarter basis and 4.6% compared to the fourth quarter of 2022. At December 31, 2023, the unrealized pre-tax net loss on the available-for-sale securities portfolio was $624.2 million, or 8.1% of the $7.7 billion amortized cost balance. At December 31, 2023, the unrealized pre-tax net loss on the securities designated as held to maturity was $508.5 million, or 8.9% of the $5.7 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 $207.2 million as of December 31, 2023 and was included in the amortized cost balance of held-to-maturity securities. At December 31, 2023, an after-tax gain of $55.0 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, all 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) Q4 Q3 Q4 CQ vs. CQ vs. 2023 2023 2022 LQ PY Deposits: Noninterest-bearing demand $ 10,118,748 $ 10,014,686 $ 12,454,413 $ 104,062 $ (2,335,665 ) Interest-bearing demand and savings 19,457,878 18,142,212 17,952,568 1,315,666 1,505,310 Time deposits 3,098,636 3,173,549 966,969 (74,913 ) 2,131,667 Total deposits $ 32,675,262 $ 31,330,447 $ 31,373,950 $ 1,344,815 $ 1,301,312 Noninterest bearing deposits as % of total 31.0 % 32.0 % 39.7 % Average deposits increased 4.3% on a linked-quarter basis and 4.1% compared to the fourth quarter of 2022. As of December 31, 2023, total estimated uninsured deposits were $24.4 billion, or approximately 68.2% of total deposits. Estimated uninsured deposits, when adjusted to exclude affiliate (company-owned) and collateralized deposits, were $16.2 billion, and represented approximately 45.3% of total deposits. Capital Capital information UMB Financial Corporation (unaudited, dollars in thousands, except per share data) December 31, 2023 September 30, 2023 December 31, 2022 Total equity $ 3,100,419 $ 2,806,659 $ 2,667,093 Accumulated other comprehensive loss, net (556,935 ) (792,371 ) (702,735 ) Book value per common share 63.85 57.83 55.20 Tangible book value per common share (Non-GAAP)(i) 58.12 52.06 49.28 Regulatory capital: Common equity Tier 1 capital $ 3,418,676 $ 3,357,986 $ 3,129,030 Tier 1 capital 3,418,676 3,357,986 3,129,030 Total capital 4,014,910 3,955,093 3,682,619 Regulatory capital ratios: Common equity Tier 1 capital ratio 10.94 % 10.77 % 10.62 % Tier 1 risk-based capital ratio 10.94 10.77 10.62 Total risk-based capital ratio 12.85 12.68 12.50 Tier 1 leverage ratio 8.49 8.55 8.43 (i) See reconciliation of Non-GAAP measures to their nearest comparable GAAP measures later in this release. At December 31, 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) Q4 Q3 Q2 Q1 Q4 2023 2023 2023 2023 2022 Net charge-offs (recoveries) - total loans $ 1,352 $ 4,618 $ (139 ) $ 4,643 $ 2,189 Net loan charge-offs (recoveries) as a % of total average loans 0.02 % 0.08 % (0.00 )% 0.09 % 0.04 % Loans over 90 days past due $ 3,111 $ 3,044 $ 10,675 $ 1,723 $ 1,617 Loans over 90 days past due as a % of total loans 0.01 % 0.01 % 0.05 % 0.01 % 0.01 % Nonaccrual and restructured loans $ 13,212 $ 17,042 $ 19,347 $ 15,480 $ 19,269 Nonaccrual and restructured loans as a % of total loans 0.06 % 0.07 % 0.09 % 0.07 % 0.09 % Provision for credit losses $ — $ 4,977 $ 13,000 $ 23,250 $ 9,000 Provision for credit losses for the fourth quarter decreased $5.0 million from the linked quarter and $9.0 million from the fourth quarter of 2022. These decreases were driven largely by favorable changes in macro-economic variables and credit metrics in the current period as compared to the prior periods, partially offset by loan growth. Net charge-offs for the fourth quarter totaled $1.4 million, or 0.02%, of average loans, compared to $4.6 million, or 0.08% of average loans in the linked quarter, and $2.2 million, or 0.04% of average loans for the fourth quarter of 2022. On a year-to-date basis, net charge-offs totaled $10.5 million, or 0.05% of average loans, compared to $39.9 million, or 0.21% of average loans, for the same period in 2022. Dividend Declaration At the company’s quarterly board meeting, the Board of Directors declared a $0.39 per share quarterly cash dividend, payable on April 1, 2024, to shareholders of record at the close of business on March 11, 2024. Conference Call The company plans to host a conference call to discuss its fourth quarter 2023 earnings results on Wednesday, January 31, 2024, at 8:30 a.m. (CT). Interested parties may access the call by dialing (toll-free) 833-470-1428 or (international) 404-975-4839 and requesting to join the UMB Financial call with access code 269364. The live call may also be accessed by visiting investorrelations.umb.com or by using the following link: UMB Financial 4Q 2023 Conference Call A replay of the conference call may be heard through February 14, 2024, by calling (toll-free) 866-813-9403 or (international) 929-458-6194. The replay access code required for playback is 190379. 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, and the FDIC special assessment that management does not believe reflect the company’s fundamental operating performance. Net operating income for the relevant period is defined as GAAP net income, adjusted to reflect the impact of excluding expenses related to acquisitions, severance expense, the FDIC special assessment, and the cumulative tax impact of these adjustments. Operating EPS (diluted) is calculated as earnings per share as reported, adjusted to reflect, on a per share basis, the impact of excluding the non-GAAP adjustments described above for the relevant period. Operating ROE is calculated as net operating income, divided by the company’s average total shareholders’ equity for the relevant period. Operating ROA is calculated as net operating income, divided by the company’s average assets for the relevant period. Operating noninterest expense for the relevant period is defined as GAAP noninterest expense, adjusted to reflect the pre-tax impact of non-GAAP adjustments described above. Operating efficiency ratio is calculated as the company’s operating noninterest expense, net of amortization of other intangibles, divided by the company’s total non-GAAP revenue (calculated as net interest income plus noninterest income, less gains on sales of securities available for sale, net). Operating PTPP income for the relevant period is defined as GAAP net interest income plus GAAP noninterest income, less noninterest expense, adjusted to reflect the impact of excluding expenses related to acquisitions, severance expense, and the FDIC special assessment. Operating PTPP-FTE for the relevant period is defined as GAAP net interest income on a fully tax equivalent basis plus GAAP noninterest income, less noninterest expense, adjusted to reflect the impact of excluding expenses related to acquisitions, severance expense, and the FDIC special assessment. Tangible shareholders’ equity for the relevant period is defined as GAAP shareholders’ equity, net of intangible assets. Tangible book value per share is defined as tangible shareholders’ equity divided by the Company’s total shares outstanding. 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 instability in the Middle East and Russia’s military action in Ukraine, such as the broader impacts to financial markets and the global macroeconomic and geopolitical environments, may also cause actual results or other future events, circumstances, or aspirations to differ from our forward-looking statements. Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except to the extent required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K, or other applicable document that is filed or furnished with the SEC. About UMB: UMB Financial Corporation (Nasdaq: UMBF) is a financial services company headquartered in Kansas City, Missouri. UMB offers commercial banking, which includes comprehensive deposit, lending and investment services, personal banking, which includes wealth management and financial planning services, and institutional banking, which includes asset servicing, corporate trust solutions, investment banking, and healthcare services. UMB operates branches throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas. As the company’s reach continues to grow, it also serves business clients nationwide and institutional clients in several countries. For more information, visit UMB.com, UMB Blog, UMB Facebook and UMB LinkedIn. Consolidated Balance Sheets UMB Financial Corporation (dollars in thousands) December 31, 2023 2022 (unaudited) (audited) ASSETS Loans $ 23,172,484 $ 21,031,189 Allowance for credit losses on loans (219,738 ) (191,836 ) Net loans 22,952,746 20,839,353 Loans held for sale 4,420 1,978 Securities: Available for sale 7,068,613 7,006,347 Held to maturity, net of allowance for credit losses 5,688,610 5,859,192 Trading securities 18,093 17,980 Other securities 492,935 349,758 Total securities 13,268,251 13,233,277 Federal funds sold and resell agreements 245,344 958,597 Interest-bearing due from banks 5,159,802 1,179,105 Cash and due from banks 447,201 500,682 Premises and equipment, net 241,700 263,649 Accrued income 220,306 189,231 Goodwill 207,385 207,385 Other intangibles, net 71,012 78,724 Other assets 1,193,507 1,060,480 Total assets $ 44,011,674 $ 38,512,461 LIABILITIES Deposits: Noninterest-bearing demand $ 12,130,662 $ 13,260,363 Interest-bearing demand and savings 20,588,606 18,461,632 Time deposits under $250,000 2,292,899 379,087 Time deposits of $250,000 or more 780,692 538,051 Total deposits 35,792,859 32,639,133 Federal funds purchased and repurchase agreements 2,119,644 2,222,167 Short-term debt 1,800,000 — Long-term debt 383,247 381,311 Accrued expenses and taxes 389,860 239,624 Other liabilities 425,645 363,133 Total liabilities 40,911,255 35,845,368 SHAREHOLDERS' EQUITY Common stock 55,057 55,057 Capital surplus 1,134,363 1,125,949 Retained earnings 2,810,824 2,536,086 Accumulated other comprehensive loss, net (556,935 ) (702,735 ) Treasury stock (342,890 ) (347,264 ) Total shareholders' equity 3,100,419 2,667,093 Total liabilities and shareholders' equity $ 44,011,674 $ 38,512,461 Consolidated Statements of Income UMB Financial Corporation (dollars in thousands except share and per share data) Three Months Ended Year Ended December 31, December 31, 2023 2022 2023 2022 (unaudited) (unaudited) (unaudited) (audited) INTEREST INCOME Loans $ 381,041 $ 273,648 $ 1,399,961 $ 810,007 Securities: Taxable interest 53,890 51,441 214,981 192,121 Tax-exempt interest 25,637 25,105 102,197 97,190 Total securities income 79,527 76,546 317,178 289,311 Federal funds and resell agreements 3,540 7,106 17,647 19,109 Interest-bearing due from banks 32,267 9,373 103,190 18,582 Trading securities 227 139 729 511 Total interest income 496,602 366,812 1,838,705 1,137,520 INTEREST EXPENSE Deposits 213,842 97,484 704,210 167,553 Federal funds and repurchase agreements 21,903 18,848 93,026 40,703 Other 30,335 5,314 121,353 15,467 Total interest expense 266,080 121,646 918,589 223,723 Net interest income 230,522 245,166 920,116 913,797 Provision for credit losses — 9,000 41,227 37,900 Net interest income after provision for credit losses 230,522 236,166 878,889 875,897 NONINTEREST INCOME Trust and securities processing 66,584 59,207 257,200 237,207 Trading and investment banking 5,751 5,251 19,630 23,201 Service charges on deposit accounts 21,330 19,758 84,950 85,167 Insurance fees and commissions 238 459 1,009 1,338 Brokerage fees 13,439 13,332 54,119 43,019 Bankcard fees 18,672 19,597 74,719 73,451 Investment securities gains (losses), net 1,014 (409 ) (3,139 ) 58,444 Other 13,226 8,302 53,365 32,406 Total noninterest income 140,254 125,497 541,853 554,233 NONINTEREST EXPENSE Salaries and employee benefits 134,231 135,940 553,421 524,431 Occupancy, net 12,296 12,409 48,502 48,848 Equipment 16,579 18,969 68,718 74,259 Supplies and services 5,546 3,697 16,829 13,590 Marketing and business development 6,659 8,788 25,749 25,699 Processing fees 27,271 23,545 103,099 82,227 Legal and consulting 8,424 10,664 29,998 39,095 Bankcard 8,677 7,369 32,969 26,367 Amortization of other intangible assets 2,048 1,649 8,587 5,037 Regulatory fees 59,183 4,232 77,010 15,378 Other 9,060 10,556 34,258 43,188 Total noninterest expense 289,974 237,818 999,140 898,119 Income before income taxes 80,802 123,845 421,602 532,011 Income tax expense 9,879 23,672 71,578 100,329 NET INCOME $ 70,923 $ 100,173 $ 350,024 $ 431,682 PER SHARE DATA Net income – basic $ 1.46 $ 2.07 $ 7.22 $ 8.93 Net income – diluted 1.45 2.06 7.18 8.86 Dividends 0.39 0.38 1.53 1.49 Weighted average shares outstanding – basic 48,538,127 48,310,993 48,503,643 48,340,922 Weighted average shares outstanding – diluted 48,860,020 48,735,088 48,763,820 48,747,399 Consolidated Statements of Comprehensive Income UMB Financial Corporation (dollars in thousands) Three Months Ended Year Ended December 31, December 31, 2023 2022 2023 2022 (unaudited) (unaudited) (unaudited) (audited) Net income $ 70,923 $ 100,173 $ 350,024 $ 431,682 Other comprehensive income (loss), before tax: Unrealized gains and losses on debt securities: Change in unrealized holding gains and losses, net 293,578 64,924 147,977 (1,137,417 ) Less: Reclassification adjustment for net losses included in net income — — 279 — Amortization of net unrealized loss on securities transferred from available-for-sale to held-to-maturity 9,288 11,186 39,851 36,894 Change in unrealized gains and losses on debt securities 302,866 76,110 188,107 (1,100,523 ) Unrealized gains and losses on derivative hedges: Change in unrealized gains and losses on derivative hedges, net 10,767 170 15,015 12,608 Less: Reclassification adjustment for net gains included in net income (2,589 ) (1,942 ) (10,654 ) (5,353 ) Change in unrealized gains and losses on derivative hedges 8,178 (1,772 ) 4,361 7,255 Other comprehensive income (loss), before tax 311,044 74,338 192,468 (1,093,268 ) Income tax (expense) benefit (75,608 ) (17,813 ) (46,668 ) 264,219 Other comprehensive income (loss) 235,436 56,525 145,800 (829,049 ) Comprehensive income (loss) $ 306,359 $ 156,698 $ 495,824 $ (397,367 ) Consolidated Statements of Shareholders' Equity UMB Financial Corporation (dollars in thousands except per share data) (audited) Common Stock Capital Surplus Retained Earnings Accumulated Other Comprehensive 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) — — 431,682 (829,049 ) — (397,367 ) Dividends ($1.49 per share) — — (72,594 ) — — (72,594 ) Purchase of treasury stock — — — — (31,997 ) (31,997 ) Issuances of equity awards, net of forfeitures — (6,143 ) — — 6,822 679 Recognition of equity-based compensation — 20,812 — — — 20,812 Sale of treasury stock — 351 — — 245 596 Exercise of stock options — 409 — — 1,131 1,540 Balance - December 31, 2022 $ 55,057 $ 1,125,949 $ 2,536,086 $ (702,735 ) $ (347,264 ) $ 2,667,093 (unaudited) Balance - January 1, 2023 $ 55,057 $ 1,125,949 $ 2,536,086 $ (702,735 ) $ (347,264 ) $ 2,667,093 Total comprehensive income — — 350,024 145,800 — 495,824 Dividends ($1.53 per share) — — (75,286 ) — — (75,286 ) Purchase of treasury stock — — — — (8,367 ) (8,367 ) Issuances of equity awards, net of forfeitures — (10,385 ) — — 11,104 719 Recognition of equity-based compensation — 17,975 — — — 17,975 Sale of treasury stock — 220 — — 296 516 Exercise of stock options — 604 — — 1,341 1,945 Balance - December 31, 2023 $ 55,057 $ 1,134,363 $ 2,810,824 $ (556,935 ) $ (342,890 ) $ 3,100,419 Average Balances / Yields and Rates UMB Financial Corporation (tax - equivalent basis) (unaudited, dollars in thousands) Three Months Ended December 31, 2023 2022 Average Average Average Average Balance Yield/Rate Balance Yield/Rate Assets Loans, net of unearned interest $ 23,109,063 6.54 % $ 20,294,661 5.35 % Securities: Taxable 8,853,426 2.41 9,382,837 2.18 Tax-exempt 3,716,141 3.44 3,803,737 3.31 Total securities 12,569,567 2.72 13,186,574 2.50 Federal funds and resell agreements 235,284 5.97 656,092 4.30 Interest bearing due from banks 2,372,767 5.40 1,135,356 3.28 Trading securities 16,880 5.83 11,799 5.31 Total earning assets 38,303,561 5.21 35,284,482 4.20 Allowance for credit losses (223,668 ) (188,299 ) Other assets 2,435,687 2,243,437 Total assets $ 40,515,580 $ 37,339,620 Liabilities and Shareholders' Equity Interest-bearing deposits $ 22,556,514 3.76 % $ 18,919,537 2.04 % Federal funds and repurchase agreements 1,883,392 4.61 2,424,171 3.08 Borrowed funds 2,286,271 5.26 396,874 5.31 Total interest-bearing liabilities 26,726,177 3.95 21,740,582 2.22 Noninterest-bearing demand deposits 10,118,748 12,454,413 Other liabilities 715,688 522,932 Shareholders' equity 2,954,967 2,621,693 Total liabilities and shareholders' equity $ 40,515,580 $ 37,339,620 Net interest spread 1.26 % 1.98 % Net interest margin 2.46 2.83 Average Balances / Yields and Rates UMB Financial Corporation (tax - equivalent basis) (unaudited, dollars in thousands) Year Ended December 31, 2023 2022 Average Average Average Average Balance Yield/Rate Balance Yield/Rate Assets Loans, net of unearned interest $ 22,337,119 6.27 % $ 18,823,810 4.30 % Securities: Taxable 9,097,110 2.36 9,616,691 2.00 Tax-exempt 3,790,921 3.38 3,885,153 3.16 Total securities 12,888,031 2.66 13,501,844 2.33 Federal funds and resell agreements 316,072 5.58 965,911 1.98 Interest bearing due from banks 2,046,349 5.04 2,408,468 0.77 Trading securities 14,030 5.65 12,076 4.96 Total earning assets 37,601,601 4.96 35,712,109 3.26 Allowance for credit losses (216,245 ) (184,072 ) Other assets 2,344,911 2,050,976 Total assets $ 39,730,267 $ 37,579,013 Liabilities and Shareholders' Equity Interest-bearing deposits $ 21,122,305 3.33 % $ 18,063,498 0.93 % Federal funds and repurchase agreements 2,175,415 4.28 2,777,089 1.47 Borrowed funds 2,311,238 5.25 309,204 5.00 Total interest-bearing liabilities 25,608,958 3.59 21,149,791 1.06 Noninterest-bearing demand deposits 10,640,344 13,264,146 Other liabilities 618,230 438,772 Shareholders' equity 2,862,735 2,726,304 Total liabilities and shareholders' equity $ 39,730,267 $ 37,579,013 Net interest spread 1.37 % 2.20 % Net interest margin 2.52 2.63 Business Segment Information UMB Financial Corporation (unaudited, dollars in thousands) Three Months Ended December 31, 2023 Commercial Banking Institutional Banking Personal Banking Total Net interest income $ 154,289 $ 44,150 $ 32,083 $ 230,522 Provision for credit losses (1,926 ) 653 1,273 — Noninterest income 25,956 90,361 23,937 140,254 Noninterest expense 114,190 114,306 61,478 289,974 Income (loss) before taxes 67,981 19,552 (6,731 ) 80,802 Income tax expense 5,321 2,913 1,645 9,879 Net income (loss) $ 62,660 $ 16,639 $ (8,376 ) $ 70,923 Three Months Ended December 31, 2022 Commercial Banking Institutional Banking Personal Banking Total Net interest income $ 151,856 $ 55,063 38,247 $ 245,166 Provision for credit losses 7,668 93 1,239 9,000 Noninterest income 22,233 80,055 23,209 125,497 Noninterest expense 86,682 86,791 64,345 237,818 Income (loss) before taxes 79,739 48,234 (4,128 ) 123,845 Income tax expense (benefit) 15,176 9,264 (768 ) 23,672 Net income (loss) $ 64,563 $ 38,970 $ (3,360 ) $ 100,173 Year Ended December 31, 2023 Commercial Banking Institutional Banking Personal Banking Total Net interest income $ 598,371 $ 192,765 $ 128,980 $ 920,116 Provision for credit losses 33,184 1,406 6,637 41,227 Noninterest income 97,614 347,933 96,306 541,853 Noninterest expense 365,856 382,770 250,514 999,140 Income (loss) before taxes 296,945 156,522 (31,865 ) 421,602 Income tax expense (benefit) 48,403 26,838 (3,663 ) 71,578 Net income (loss) $ 248,542 $ 129,684 $ (28,202 ) $ 350,024 Year Ended December 31, 2022 Commercial Banking Institutional Banking Personal Banking Total Net interest income $ 596,031 $ 159,679 $ 158,087 $ 913,797 Provision for credit losses 32,851 495 4,554 37,900 Noninterest income 122,614 323,794 107,825 554,233 Noninterest expense 332,912 320,976 244,231 898,119 Income before taxes 352,882 162,002 17,127 532,011 Income tax expense 67,134 31,889 1,306 100,329 Net income $ 285,748 $ 130,113 $ 15,821 $ 431,682 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 December 31, 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 December 31, Year Ended December 31, 2023 2022 2023 2022 Net income (GAAP) $ 70,923 $ 100,173 $ 350,024 $ 431,682 Adjustments: Acquisition expense 52 851 179 922 Severance expense 1,207 358 8,943 838 FDIC special assessment 52,840 — 52,840 — Tax-impact of adjustments (i) (12,984 ) (290 ) (14,871 ) (422 ) Total Non-GAAP adjustments (net of tax) 41,115 919 47,091 1,338 Net operating income (Non-GAAP) $ 112,038 $ 101,092 $ 397,115 $ 433,020 Earnings per share - diluted (GAAP) $ 1.45 $ 2.06 $ 7.18 $ 8.86 Acquisition expense — 0.02 — 0.02 Severance expense 0.02 0.01 0.18 0.02 FDIC special assessment 1.08 — 1.08 — Tax-impact of adjustments (i) (0.26 ) (0.02 ) (0.30 ) (0.02 ) Operating earnings per share - diluted (Non-GAAP) $ 2.29 $ 2.07 $ 8.14 $ 8.88 GAAP Return on average assets 0.69 % 1.06 % 0.88 % 1.15 % Return on average equity 9.52 15.16 12.23 15.83 Non-GAAP Operating return on average assets 1.10 % 1.07 % 1.00 % 1.15 % Operating return on average equity 15.04 15.30 13.87 15.88 (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 December 31, Year Ended December 31, 2023 2022 2023 2022 Noninterest expense $ 289,974 $ 237,818 $ 999,140 $ 898,119 Adjustments to arrive at operating noninterest expense (pre-tax): Acquisition expense 52 851 179 922 Severance expense 1,207 358 8,943 838 FDIC special assessment 52,840 — 52,840 — Total Non-GAAP adjustments (pre-tax) 54,099 1,209 61,962 1,760 Operating noninterest expense (Non-GAAP) $ 235,875 $ 236,609 $ 937,178 $ 896,359 Noninterest expense $ 289,974 $ 237,818 $ 999,140 $ 898,119 Less: Amortization of other intangibles 2,048 1,649 8,587 5,037 Noninterest expense, net of amortization of other intangibles (Non-GAAP) (numerator A) $ 287,926 $ 236,169 $ 990,553 $ 893,082 Operating noninterest expense $ 235,875 $ 236,609 $ 937,178 $ 896,359 Less: Amortization of other intangibles 2,048 1,649 8,587 5,037 Operating expense, net of amortization of other intangibles (Non-GAAP) (numerator B) $ 233,827 $ 234,960 $ 928,591 $ 891,322 Net interest income $ 230,522 $ 245,166 $ 920,116 $ 913,797 Noninterest income 140,254 125,497 541,853 554,233 Less: Gains on sales of securities available for sale, net — — 152 — Total Non-GAAP Revenue (denominator A) $ 370,776 $ 370,663 $ 1,461,817 $ 1,468,030 Efficiency ratio (numerator A/denominator A) 77.65 % 63.72 % 67.76 % 60.84 % Operating efficiency ratio (Non-GAAP) (numerator B/denominator A) 63.06 63.39 63.52 60.72 Operating pre-tax, pre-provision income non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands except per share data) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Net interest income (GAAP) $ 230,522 $ 245,166 $ 920,116 $ 913,797 Noninterest income (GAAP) 140,254 125,497 541,853 554,233 Noninterest expense (GAAP) 289,974 237,818 999,140 898,119 Adjustments to arrive at operating noninterest expense: Acquisition expense 52 851 179 922 Severance expense 1,207 358 8,943 838 FDIC special assessment 52,840 — 52,840 — Total Non-GAAP adjustments 54,099 1,209 61,962 1,760 Operating noninterest expense (Non-GAAP) 235,875 236,609 937,178 896,359 Operating pre-tax, pre-provision income (Non-GAAP) $ 134,901 $ 134,054 $ 524,791 $ 571,671 Net interest income earnings per share - diluted (GAAP) $ 4.72 $ 5.03 $ 18.87 $ 18.75 Noninterest income (GAAP) 2.87 2.57 11.11 11.37 Noninterest expense (GAAP) 5.93 4.88 20.48 18.43 Acquisition expense — 0.02 — 0.02 Severance expense 0.02 0.01 0.18 0.02 FDIC special assessment 1.08 — 1.08 — Operating pre-tax, pre-provision earnings per share - diluted (Non-GAAP) $ 2.76 $ 2.75 $ 10.76 $ 11.73 Operating pre-tax, pre-provision income - FTE Non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands except per share data) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Net interest income (GAAP) $ 230,522 $ 245,166 $ 920,116 $ 913,797 Adjustments to arrive at net interest income - FTE: Tax equivalent interest 6,670 6,663 26,359 25,794 Net interest income - FTE (Non-GAAP) 237,192 251,829 946,475 939,591 Noninterest income (GAAP) 140,254 125,497 541,853 554,233 Noninterest expense (GAAP) 289,974 237,818 999,140 898,119 Adjustments to arrive at operating noninterest expense: Acquisition expense 52 851 179 922 Severance expense 1,207 358 8,943 838 FDIC special assessment 52,840 — 52,840 — Total Non-GAAP adjustments 54,099 1,209 61,962 1,760 Operating noninterest expense (Non-GAAP) 235,875 236,609 937,178 896,359 Operating pre-tax, pre-provision income - FTE (Non-GAAP) $ 141,571 $ 140,717 $ 551,150 $ 597,465 Net interest income earnings per share - diluted (GAAP) $ 4.72 $ 5.03 $ 18.87 $ 18.75 Tax equivalent interest 0.14 0.14 0.54 0.53 Net interest income - FTE (Non-GAAP) 4.86 5.17 19.41 19.28 Noninterest income (GAAP) 2.87 2.57 11.11 11.37 Noninterest expense (GAAP) 5.93 4.88 20.48 18.43 Acquisition expense — 0.02 — 0.02 Severance expense 0.02 0.01 0.18 0.02 FDIC special assessment 1.08 — 1.08 — Operating pre-tax, pre-provision income - FTE earnings per share - diluted (Non-GAAP) $ 2.90 $ 2.89 $ 11.30 $ 12.26 Tangible book value non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands except share and per share data) As of December 31, 2023 2022 Total shareholders' equity (GAAP) $ 3,100,419 $ 2,667,093 Less: Intangible assets Goodwill 207,385 207,385 Other intangibles, net 71,012 78,724 Total intangibles, net 278,397 286,109 Total tangible shareholders' equity (Non-GAAP) $ 2,822,022 $ 2,380,984 Total shares outstanding 48,554,127 48,319,404 Ratio of total shareholders' equity (book value) per share $ 63.85 $ 55.20 Ratio of total tangible shareholders' equity (tangible book value) per share (Non-GAAP) 58.12 49.28 Operating return on average tangible equity excluding AOCI non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Average total shareholders' equity (GAAP) $ 2,954,967 $ 2,621,693 $ 2,862,735 $ 2,726,304 Less: Average intangible assets Average goodwill 207,385 194,805 207,385 183,512 Average other intangibles, net 72,322 46,243 74,868 22,414 Average total intangibles, net 279,707 241,049 282,254 205,926 Average total tangible shareholders' equity (Non-GAAP) 2,675,260 2,380,644 2,580,481 2,520,378 Less: Average accumulated other comprehensive loss (AOCI) (730,891 ) (741,438 ) (681,436 ) (490,058 ) Average total tangible shareholders' equity excluding AOCI (Non-GAAP) $ 3,406,151 $ 3,122,082 $ 3,261,918 $ 3,010,436 Net operating income (Non-GAAP) $ 112,038 $ 101,092 $ 397,115 $ 433,020 Operating return on average tangible equity excluding AOCI (Non-GAAP) 13.05 % 12.85 % 12.17 % 14.38 % View source version on businesswire.com: https://www.businesswire.com/news/home/20240125163449/en/Contacts Media Contact: Stephanie Hague: 816.860.5088 Investor Relations Contact: Kay Gregory: 816.860.7106
Fourth Quarter 2023 Financial Highlights GAAP net income of $70.9 million, or $1.45 per diluted share. Net operating income(i) of $112.0 million, or $2.29 per diluted share. Average loans increased 6.3% on a linked-quarter, annualized basis, to $23.1 billion. Average loans increased $2.8 billion, or 13.9%, as compared to the fourth quarter of 2022. Average deposits increased 17.2% on a linked-quarter, annualized basis, to $32.7 billion. Net interest income increased 3.7% from the linked quarter. Noninterest income increased 11.8% from the fourth quarter of 2022, equal to 37.8% of total revenue. Net interest margin was 2.46%, an increase of three basis points from the linked quarter. Credit quality remained strong, with net charge-offs of just 0.02% of average loans.
UMB Financial Corporation (Nasdaq: UMBF), a financial services company, announced net income for the fourth quarter of 2023 of $70.9 million, or $1.45 per diluted share, compared to $96.6 million, or $1.98 per diluted share, in the third quarter of 2023 (linked quarter) and $100.2 million, or $2.06 per diluted share, in the fourth quarter of 2022. The results for the fourth quarter of 2023 include a pre-tax expense of $52.8 million for the industry-wide FDIC special assessment. Net operating income, a non-GAAP financial measure reconciled later in this release to net income, the nearest comparable GAAP measure, was $112.0 million, or $2.29 per diluted share, for the fourth quarter of 2023, compared to $98.4 million, or $2.02 per diluted share, for the linked quarter and $101.1 million, or $2.07 per diluted share, for the fourth 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 $134.9 million, or $2.76 per diluted share, for the fourth quarter of 2023, compared to $126.6 million, or $2.60 per diluted share, for the linked quarter, and $134.1 million, or $2.75 per diluted share, for the fourth quarter of 2022. These operating PTPP results represent increases of 6.6% on a linked-quarter basis and 0.6% compared to the fourth quarter of 2022. “We closed 2023 with strong fourth quarter performance, demonstrating the power and resilience of our diversified business model. Results were accentuated by continued loan and deposit growth, expanding net interest margin and net interest income, solid fee income growth and exceptional asset quality,” said Mariner Kemper, chairman, president and chief executive officer. “Our strong business performance and financial results were unfortunately muted by our share of the FDIC special assessment levied on banks to recoup the losses related to two of the bank failures in March 2023. I am incredibly proud of our associates who drove this performance, and deeply grateful for our loyal client base that grew with us through the much-exaggerated industry noise following the bank failures. While this was a challenging time for the industry, it was extremely rewarding to see how our company and customers came together to support each other, and the resulting positive growth and performance.” Mr. Kemper continued, “Key highlights from our fourth quarter results included a 3.7% increase in net interest income from the linked quarter, facilitated by a 6.3% annualized increase in average loans, three basis points of net interest margin expansion, a 4.3% linked-quarter increase in average deposits, a 5.2% increase in fee income, and just 0.02% in net charge-offs. At December 31, 2023, our total deposits – which we describe as our raw material for growth – increased $3.2 billion to $35.8 billion compared to year-end 2022, and were $2.4 billion above September 30, 2023 balances. Looking ahead into 2024, we see a muted but resilient macro-economic environment, and we remain well-positioned with an attractive average loan-to-deposit ratio of 70.7%, strong capital levels, and a high-quality loan portfolio.” (i) A non-GAAP financial measure reconciled later in this release to net income, the nearest comparable GAAP measure. Fourth Quarter 2023 earnings discussion Summary of quarterly financial results UMB Financial Corporation (unaudited, dollars in thousands, except per share data) Q4 Q3 Q4 2023 2023 2022 Net income (GAAP) $ 70,923 $ 96,554 $ 100,173 Earnings per share - diluted (GAAP) 1.45 1.98 2.06 Operating pre-tax, pre-provision income (Non-GAAP)(i) 134,901 126,592 134,054 Operating pre-tax, pre-provision earnings per share - diluted (Non-GAAP)(i) 2.76 2.60 2.75 Operating pre-tax, pre-provision income - FTE (Non-GAAP)(i) 141,571 133,151 140,717 Operating pre-tax, pre-provision earnings per share - FTE - diluted (Non-GAAP)(i) 2.90 2.73 2.89 Net operating income (Non-GAAP)(i) 112,038 98,400 101,092 Operating earnings per share - diluted (Non-GAAP)(i) 2.29 2.02 2.07 GAAP Return on average assets 0.69 % 0.97 % 1.06 % Return on average equity 9.52 13.25 15.16 Efficiency ratio 77.65 64.51 63.72 Non-GAAP(i) Operating return on average assets 1.10 % 0.99 % 1.07 % Operating return on average equity 15.04 13.50 15.30 Operating return on average tangible equity excluding AOCI 13.05 11.77 12.85 Operating efficiency ratio 63.06 63.83 63.39 (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) Q4 Q3 Q4 CQ vs. CQ vs. 2023 2023 2022 LQ PY Net interest income $ 230,522 $ 222,287 $ 245,166 $ 8,235 $ (14,644 ) Noninterest income: Trust and securities processing 66,584 66,668 59,207 (84 ) 7,377 Trading and investment banking 5,751 3,771 5,251 1,980 500 Service charges on deposit accounts 21,330 21,080 19,758 250 1,572 Insurance fees and commissions 238 272 459 (34 ) (221 ) Brokerage fees 13,439 13,400 13,332 39 107 Bankcard fees 18,672 19,296 19,597 (624 ) (925 ) Investment securities gains (losses), net 1,014 271 (409 ) 743 1,423 Other 13,226 8,559 8,302 4,667 4,924 Total noninterest income $ 140,254 $ 133,317 $ 125,497 $ 6,937 $ 14,757 Total revenue $ 370,776 $ 355,604 $ 370,663 $ 15,172 $ 113 Net interest income (FTE) $ 237,192 $ 228,846 $ 251,829 Net interest margin (FTE) 2.46 % 2.43 % 2.83 % Total noninterest income as a % of total revenue 37.8 37.5 33.9 Net interest income Fourth quarter 2023 net interest income totaled $230.5 million, an increase of $8.2 million, or 3.7%, from the linked quarter, driven primarily by continued growth in average loans and higher levels of liquidity, partially offset by higher interest expense. Average earning assets increased $933.7 million, or 2.5%, from the linked quarter, largely driven by an increase of $823.9 million in interest-bearing due from banks and $357.6 million in average loans, partially offset by a decrease of $179.2 million in average securities. Average interest-bearing liabilities increased $777.1 million, or 3.0%, from the linked quarter, primarily driven by an increase of $1.2 billion in interest-bearing deposits, partially offset by decreases of $319.6 million in borrowed funds and $144.0 million in federal funds and repurchase agreements. Average noninterest-bearing demand deposits increased $104.1 million, or 1.0%, as compared to the linked quarter. Net interest margin for the fourth quarter was 2.46%, an increase of three basis points from the linked quarter, driven by increased loan yields, the benefit of free funds, and earning asset mix changes, partially offset by the increased cost of interest-bearing liabilities. The cost of interest-bearing liabilities increased 13 basis points to 3.95%. Total cost of funds increased 12 basis points from the linked quarter to 2.87%. Both average loan yields and earning asset yields increased 13 basis points from the linked quarter. On a year-over-year basis, net interest income decreased $14.6 million, or 6.0%, driven by higher interest expense primarily due to an unfavorable mix shift in the composition of liabilities, as well as the impact of higher short-term interest rates on deposit costs. This decrease was partially offset by a $2.8 billion, or 13.9%, increase in average loans as well as the benefit from higher short-term interest rates on loan pricing and yields. Compared to the fourth quarter of 2022, average earning assets increased $3.0 billion, or 8.6%, largely driven by the increase in average loans noted above and an increase of $1.2 billion in interest-bearing due from banks, partially offset by a decrease of $611.9 million in average securities. Average deposits increased 4.1% compared to the fourth quarter of 2022. Average noninterest-bearing demand deposit balances decreased 18.8% compared to the fourth quarter of 2022, driven by migration to rate-bearing deposit categories, as expected in a higher interest rate environment. Average demand deposit balances comprised 31.0% of total deposits, compared to 32.0% in the linked quarter and 39.7% in the fourth quarter of 2022. Average borrowed funds decreased $319.6 million as compared to the linked quarter and increased $1.9 billion as compared to the fourth quarter of 2022, driven by short-term borrowings with the Federal Home Loan Bank and the Federal Reserve. Noninterest income Fourth quarter 2023 noninterest income increased $6.9 million, or 5.2%, on a linked-quarter basis, largely due to: Increases of $3.7 million in company-owned life insurance income and $0.6 million in derivative income, both recorded in other income. The increase in company-owned life insurance was offset by a proportionate increase in deferred compensation expense as noted below. An increase of $2.0 million in trading and investment banking due to increased trading volume. Compared to the prior year, noninterest income in the fourth quarter of 2023 increased $14.8 million, or 11.8%, primarily driven by: Increases of $4.9 million in fund services income, $2.0 million in corporate trust income, and $0.5 million in trust servicing income, all recorded in trust and securities processing. Increases of $3.3 million in company-owned life insurance income and $0.6 million in bank-owned life insurance income, both recorded in other income. The increase in company-owned life insurance was offset by a proportionate increase in deferred compensation expense as noted below. An increase of $1.6 million in service charges on deposits primarily due to increased corporate service charge income. An increase of $1.4 million in investment securities gains, primarily driven by increased valuations in the company's non-marketable securities. Noninterest expense Summary of noninterest expense UMB Financial Corporation (unaudited, dollars in thousands) Q4 Q3 Q4 CQ vs. CQ vs. 2023 2023 2022 LQ PY Salaries and employee benefits $ 134,231 $ 133,380 $ 135,940 $ 851 $ (1,709 ) Occupancy, net 12,296 12,283 12,409 13 (113 ) Equipment 16,579 17,204 18,969 (625 ) (2,390 ) Supplies and services 5,546 3,213 3,697 2,333 1,849 Marketing and business development 6,659 6,631 8,788 28 (2,129 ) Processing fees 27,271 26,016 23,545 1,255 3,726 Legal and consulting 8,424 7,230 10,664 1,194 (2,240 ) Bankcard 8,677 8,852 7,369 (175 ) 1,308 Amortization of other intangible assets 2,048 2,124 1,649 (76 ) 399 Regulatory fees 59,183 6,153 4,232 53,030 54,951 Other 9,060 8,355 10,556 705 (1,496 ) Total noninterest expense $ 289,974 $ 231,441 $ 237,818 $ 58,533 $ 52,156 GAAP Noninterest expense for the fourth quarter of 2023 was $290.0 million, an increase of $58.5 million, or 25.3%, from the linked quarter and an increase of $52.2 million, or 21.9% from the fourth 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 $235.9 million for the fourth quarter of 2023, an increase of $6.9 million, or 3.0%, from the linked quarter and a decrease of $0.7 million, or 0.3%, from the fourth quarter of 2022. The linked-quarter increase in GAAP noninterest expense was driven by: An increase of $53.0 million in regulatory fees expense, primarily driven by the $52.8 million FDIC special assessment in the fourth quarter of 2023. An increase of $2.7 million in deferred compensation expense, recorded in salaries and employee benefits. The increase in deferred compensation expense was offset by the increase in company-owned life insurance income noted above. An increase of $2.3 million in supplies driven by purchases of computers during the fourth quarter. An increase of $1.5 million in charitable contribution expense, recorded in other expense. An increase of $1.3 million in processing fees expense due to the ongoing modernization of the company’s core systems and the timing of multiple software projects. These increases were partially offset by decreases of $1.6 million in payroll taxes, insurance, and 401(k) expense and $0.5 million in bonus and commission expense, both recorded in salaries and employee benefits. The year-over-year increase in GAAP noninterest expense was driven by: An increase of $55.0 million in regulatory fees, primarily driven by the $52.8 million FDIC special assessment recorded in the fourth quarter of 2023. An increase of $3.7 million in processing fees expense due to the ongoing modernization of the company’s core systems and the timing of multiple software projects. Increases of $2.4 million in deferred compensation expense and $0.7 million in salary and wage expense, both recorded in salaries and employee benefits. The increase in deferred compensation expense was offset by the increase in company-owned life insurance income noted above. These increases were partially offset by the following decreases: A decrease of $5.1 million in bonus and commission expense, recorded in salaries and employee benefits. A decrease of $2.4 million in equipment expense driven by reduced software expense. A decrease of $2.2 million in legal and consulting expense due to the timing of multiple projects. Full Year 2023 earnings discussion Net income for the year ended December 31, 2023 was $350.0 million, or $7.18 per diluted share, compared to $431.7 million, or $8.86 per diluted share in 2022. The results for 2023 include $52.8 million in pre-tax expense for the FDIC special assessment. Net operating income, a non-GAAP financial measure reconciled to net income, the nearest comparable GAAP measure, later in this release, was $397.1 million, or $8.14 per diluted share, compared to $433.0 million, or $8.88 per diluted share in 2022. The decrease in net income from the prior year was driven by the pre-tax gain of $66.2 million recognized in 2022 on the sale of the company's Visa Inc. Class B common shares. Operating PTPP, a non-GAAP financial measure reconciled later in this release to the components of net income before taxes, the nearest comparable GAAP measure, was $524.8 million, or $10.76 per diluted share, compared to $571.7 million, or $11.73 per diluted share in 2022. These results represent a decrease of 8.2% as compared to 2022. Summary of year-to-date financial results UMB Financial Corporation (unaudited, dollars in thousands, except per share data) December December YTD YTD 2023 2022 Net income (GAAP) $ 350,024 $ 431,682 Earnings per share - diluted (GAAP) 7.18 8.86 Operating pre-tax, pre-provision income (Non-GAAP)(i) 524,791 571,671 Operating pre-tax, pre-provision earnings per share - diluted (Non-GAAP)(i) 10.76 11.73 Operating pre-tax, pre-provision income - FTE (Non-GAAP)(i) 551,150 597,465 Operating pre-tax, pre-provision earnings per share - FTE - diluted (Non-GAAP)(i) 11.30 12.26 Net operating income (Non-GAAP)(i) 397,115 433,020 Operating earnings per share - diluted (Non-GAAP)(i) 8.14 8.88 GAAP Return on average assets 0.88 % 1.15 % Return on average equity 12.23 15.83 Efficiency ratio 67.76 60.84 Non-GAAP (i) Operating return on average assets 1.00 % 1.15 % Operating return on average equity 13.87 15.88 Operating return on average tangible equity excluding AOCI 12.17 14.38 Operating efficiency ratio 63.52 60.72 (i) See reconciliation of Non-GAAP measures to their nearest comparable GAAP measures later in this release. Net interest income increased $6.3 million, or 0.7%, year-over-year due to a $1.9 billion, or 5.3%, increase in average earning assets, coupled with the impacts from increased short-term and long-term interest rates. The increase in earning assets was driven by an increase of $3.5 billion, or 18.7%, in average loans, partially offset by decreases of $649.8 million in federal funds and resell agreements and $611.9 million in average securities from 2022. Average interest-bearing liabilities increased $4.5 billion, or 21.1%, while noninterest-bearing demand deposits decreased $2.6 billion, or 19.8%, as expected in a higher interest rate environment. The yield on earning assets increased 170 basis points, while the cost of interest-bearing liabilities increased 253 basis points. Net interest margin for 2023 was 2.52%, compared to 2.63% in 2022. Full-year noninterest income decreased $12.4 million, or 2.2%, due to: A decrease of $61.6 million in investment securities gains, largely driven by the gain on the sale of the company's Visa Inc. Class B common shares during the second quarter of 2022, partially offset by an increase in valuation of the company's marketable securities. A decrease of $3.6 million in trading and investment banking due to decreased trading volume. These decreases were offset by the following increases: Increases of $18.4 million in company-owned life insurance and $1.7 million in bank-owned life insurance income, both recorded in other income. The increase in company-owned life insurance was offset by a proportionate increase in deferred compensation expense as noted below. Increases of $12.2 million in fund services income and $7.7 million in corporate trust income, both recorded in trust and securities processing. An increase of $11.1 million in brokerage income, primarily driven by higher 12b-1 fees and money market income. An increase of $1.3 million in bankcard income, driven by increased interchange income, partially offset by increased rewards and rebates expense. Full-year GAAP noninterest expense increased $101.0 million, or 11.2%, due to: An increase of $61.6 million in regulatory fees, primarily driven by the $52.8 million industry-wide FDIC special assessment recorded in the fourth quarter of 2023. An increase of $29.0 million in salaries and employee benefits, driven by increases of $23.8 million in salary and wage expense, $14.7 million in deferred compensation expense, and $6.5 million in payroll taxes, insurance, and 401(k) expense, partially offset by a decrease of $15.3 million in bonus and commission expense. The increase in deferred compensation expense was offset by the increase in company-owned life insurance income noted above. An increase of $20.9 million in processing fees due to the ongoing modernization of the company’s core systems and the timing of multiple software projects. These increases were partially offset by a decrease of $9.1 million in legal and consulting expense due to the timing of multiple projects. Income taxes The company’s effective tax rate was 17.0% for the year ended December 31, 2023, compared to 18.9% 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 and excludable life insurance policy gains. Balance sheet Average total assets for the fourth quarter of 2023 were $40.5 billion compared to $39.5 billion for the linked quarter and $37.3 billion for the same period in 2022. Summary of average loans and leases - QTD Average UMB Financial Corporation (unaudited, dollars in thousands) Q4 Q3 Q4 CQ vs. CQ vs. 2023 2023 2022 LQ PY Commercial and industrial $ 9,825,043 $ 9,852,335 $ 8,891,356 $ (27,292 ) $ 933,687 Specialty lending 496,816 526,711 559,200 (29,895 ) (62,384 ) Commercial real estate 8,890,057 8,545,206 7,323,877 344,851 1,566,180 Consumer real estate 2,945,114 2,922,753 2,678,771 22,361 266,343 Consumer 153,791 139,384 145,811 14,407 7,980 Credit cards 495,502 477,904 457,043 17,598 38,459 Leases and other 302,740 287,174 238,603 15,566 64,137 Total loans $ 23,109,063 $ 22,751,467 $ 20,294,661 $ 357,596 $ 2,814,402 Average loans for the fourth quarter of 2023 increased $357.6 million, or 1.6%, on a linked-quarter basis and $2.8 billion, or 13.9%, compared to the fourth quarter of 2022. Summary of average securities - QTD Average UMB Financial Corporation (unaudited, dollars in thousands) Q4 Q3 Q4 CQ vs. CQ vs. 2023 2023 2022 LQ PY Securities available for sale: U.S. Treasury $ 859,114 $ 786,136 $ 752,339 $ 72,978 $ 106,775 U.S. Agencies 169,723 172,832 171,171 (3,109 ) (1,448 ) Mortgage-backed 3,466,152 3,611,305 4,027,120 (145,153 ) (560,968 ) State and political subdivisions 1,218,176 1,275,591 1,353,307 (57,415 ) (135,131 ) Corporates 345,634 345,026 366,131 608 (20,497 ) Collateralized loan obligations 349,149 346,426 328,475 2,723 20,674 Total securities available for sale $ 6,407,948 $ 6,537,316 $ 6,998,543 $ (129,368 ) $ (590,595 ) Securities held to maturity: U.S. Agencies $ 123,195 $ 123,165 $ 123,077 $ 30 $ 118 Mortgage-backed 2,756,528 2,814,467 2,983,489 (57,939 ) (226,961 ) State and political subdivisions 2,825,138 2,828,029 2,765,717 (2,891 ) 59,421 Total securities held to maturity $ 5,704,861 $ 5,765,661 $ 5,872,283 $ (60,800 ) $ (167,422 ) Trading securities $ 16,880 $ 17,327 $ 11,799 $ (447 ) $ 5,081 Other securities 456,758 445,380 315,748 11,378 141,010 Total securities $ 12,586,447 $ 12,765,684 $ 13,198,373 $ (179,237 ) $ (611,926 ) Average total securities decreased 1.4% on a linked-quarter basis and 4.6% compared to the fourth quarter of 2022. At December 31, 2023, the unrealized pre-tax net loss on the available-for-sale securities portfolio was $624.2 million, or 8.1% of the $7.7 billion amortized cost balance. At December 31, 2023, the unrealized pre-tax net loss on the securities designated as held to maturity was $508.5 million, or 8.9% of the $5.7 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 $207.2 million as of December 31, 2023 and was included in the amortized cost balance of held-to-maturity securities. At December 31, 2023, an after-tax gain of $55.0 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, all 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) Q4 Q3 Q4 CQ vs. CQ vs. 2023 2023 2022 LQ PY Deposits: Noninterest-bearing demand $ 10,118,748 $ 10,014,686 $ 12,454,413 $ 104,062 $ (2,335,665 ) Interest-bearing demand and savings 19,457,878 18,142,212 17,952,568 1,315,666 1,505,310 Time deposits 3,098,636 3,173,549 966,969 (74,913 ) 2,131,667 Total deposits $ 32,675,262 $ 31,330,447 $ 31,373,950 $ 1,344,815 $ 1,301,312 Noninterest bearing deposits as % of total 31.0 % 32.0 % 39.7 % Average deposits increased 4.3% on a linked-quarter basis and 4.1% compared to the fourth quarter of 2022. As of December 31, 2023, total estimated uninsured deposits were $24.4 billion, or approximately 68.2% of total deposits. Estimated uninsured deposits, when adjusted to exclude affiliate (company-owned) and collateralized deposits, were $16.2 billion, and represented approximately 45.3% of total deposits. Capital Capital information UMB Financial Corporation (unaudited, dollars in thousands, except per share data) December 31, 2023 September 30, 2023 December 31, 2022 Total equity $ 3,100,419 $ 2,806,659 $ 2,667,093 Accumulated other comprehensive loss, net (556,935 ) (792,371 ) (702,735 ) Book value per common share 63.85 57.83 55.20 Tangible book value per common share (Non-GAAP)(i) 58.12 52.06 49.28 Regulatory capital: Common equity Tier 1 capital $ 3,418,676 $ 3,357,986 $ 3,129,030 Tier 1 capital 3,418,676 3,357,986 3,129,030 Total capital 4,014,910 3,955,093 3,682,619 Regulatory capital ratios: Common equity Tier 1 capital ratio 10.94 % 10.77 % 10.62 % Tier 1 risk-based capital ratio 10.94 10.77 10.62 Total risk-based capital ratio 12.85 12.68 12.50 Tier 1 leverage ratio 8.49 8.55 8.43 (i) See reconciliation of Non-GAAP measures to their nearest comparable GAAP measures later in this release. At December 31, 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) Q4 Q3 Q2 Q1 Q4 2023 2023 2023 2023 2022 Net charge-offs (recoveries) - total loans $ 1,352 $ 4,618 $ (139 ) $ 4,643 $ 2,189 Net loan charge-offs (recoveries) as a % of total average loans 0.02 % 0.08 % (0.00 )% 0.09 % 0.04 % Loans over 90 days past due $ 3,111 $ 3,044 $ 10,675 $ 1,723 $ 1,617 Loans over 90 days past due as a % of total loans 0.01 % 0.01 % 0.05 % 0.01 % 0.01 % Nonaccrual and restructured loans $ 13,212 $ 17,042 $ 19,347 $ 15,480 $ 19,269 Nonaccrual and restructured loans as a % of total loans 0.06 % 0.07 % 0.09 % 0.07 % 0.09 % Provision for credit losses $ — $ 4,977 $ 13,000 $ 23,250 $ 9,000 Provision for credit losses for the fourth quarter decreased $5.0 million from the linked quarter and $9.0 million from the fourth quarter of 2022. These decreases were driven largely by favorable changes in macro-economic variables and credit metrics in the current period as compared to the prior periods, partially offset by loan growth. Net charge-offs for the fourth quarter totaled $1.4 million, or 0.02%, of average loans, compared to $4.6 million, or 0.08% of average loans in the linked quarter, and $2.2 million, or 0.04% of average loans for the fourth quarter of 2022. On a year-to-date basis, net charge-offs totaled $10.5 million, or 0.05% of average loans, compared to $39.9 million, or 0.21% of average loans, for the same period in 2022. Dividend Declaration At the company’s quarterly board meeting, the Board of Directors declared a $0.39 per share quarterly cash dividend, payable on April 1, 2024, to shareholders of record at the close of business on March 11, 2024. Conference Call The company plans to host a conference call to discuss its fourth quarter 2023 earnings results on Wednesday, January 31, 2024, at 8:30 a.m. (CT). Interested parties may access the call by dialing (toll-free) 833-470-1428 or (international) 404-975-4839 and requesting to join the UMB Financial call with access code 269364. The live call may also be accessed by visiting investorrelations.umb.com or by using the following link: UMB Financial 4Q 2023 Conference Call A replay of the conference call may be heard through February 14, 2024, by calling (toll-free) 866-813-9403 or (international) 929-458-6194. The replay access code required for playback is 190379. 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, and the FDIC special assessment that management does not believe reflect the company’s fundamental operating performance. Net operating income for the relevant period is defined as GAAP net income, adjusted to reflect the impact of excluding expenses related to acquisitions, severance expense, the FDIC special assessment, and the cumulative tax impact of these adjustments. Operating EPS (diluted) is calculated as earnings per share as reported, adjusted to reflect, on a per share basis, the impact of excluding the non-GAAP adjustments described above for the relevant period. Operating ROE is calculated as net operating income, divided by the company’s average total shareholders’ equity for the relevant period. Operating ROA is calculated as net operating income, divided by the company’s average assets for the relevant period. Operating noninterest expense for the relevant period is defined as GAAP noninterest expense, adjusted to reflect the pre-tax impact of non-GAAP adjustments described above. Operating efficiency ratio is calculated as the company’s operating noninterest expense, net of amortization of other intangibles, divided by the company’s total non-GAAP revenue (calculated as net interest income plus noninterest income, less gains on sales of securities available for sale, net). Operating PTPP income for the relevant period is defined as GAAP net interest income plus GAAP noninterest income, less noninterest expense, adjusted to reflect the impact of excluding expenses related to acquisitions, severance expense, and the FDIC special assessment. Operating PTPP-FTE for the relevant period is defined as GAAP net interest income on a fully tax equivalent basis plus GAAP noninterest income, less noninterest expense, adjusted to reflect the impact of excluding expenses related to acquisitions, severance expense, and the FDIC special assessment. Tangible shareholders’ equity for the relevant period is defined as GAAP shareholders’ equity, net of intangible assets. Tangible book value per share is defined as tangible shareholders’ equity divided by the Company’s total shares outstanding. 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 instability in the Middle East and Russia’s military action in Ukraine, such as the broader impacts to financial markets and the global macroeconomic and geopolitical environments, may also cause actual results or other future events, circumstances, or aspirations to differ from our forward-looking statements. Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except to the extent required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K, or other applicable document that is filed or furnished with the SEC. About UMB: UMB Financial Corporation (Nasdaq: UMBF) is a financial services company headquartered in Kansas City, Missouri. UMB offers commercial banking, which includes comprehensive deposit, lending and investment services, personal banking, which includes wealth management and financial planning services, and institutional banking, which includes asset servicing, corporate trust solutions, investment banking, and healthcare services. UMB operates branches throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas. As the company’s reach continues to grow, it also serves business clients nationwide and institutional clients in several countries. For more information, visit UMB.com, UMB Blog, UMB Facebook and UMB LinkedIn. Consolidated Balance Sheets UMB Financial Corporation (dollars in thousands) December 31, 2023 2022 (unaudited) (audited) ASSETS Loans $ 23,172,484 $ 21,031,189 Allowance for credit losses on loans (219,738 ) (191,836 ) Net loans 22,952,746 20,839,353 Loans held for sale 4,420 1,978 Securities: Available for sale 7,068,613 7,006,347 Held to maturity, net of allowance for credit losses 5,688,610 5,859,192 Trading securities 18,093 17,980 Other securities 492,935 349,758 Total securities 13,268,251 13,233,277 Federal funds sold and resell agreements 245,344 958,597 Interest-bearing due from banks 5,159,802 1,179,105 Cash and due from banks 447,201 500,682 Premises and equipment, net 241,700 263,649 Accrued income 220,306 189,231 Goodwill 207,385 207,385 Other intangibles, net 71,012 78,724 Other assets 1,193,507 1,060,480 Total assets $ 44,011,674 $ 38,512,461 LIABILITIES Deposits: Noninterest-bearing demand $ 12,130,662 $ 13,260,363 Interest-bearing demand and savings 20,588,606 18,461,632 Time deposits under $250,000 2,292,899 379,087 Time deposits of $250,000 or more 780,692 538,051 Total deposits 35,792,859 32,639,133 Federal funds purchased and repurchase agreements 2,119,644 2,222,167 Short-term debt 1,800,000 — Long-term debt 383,247 381,311 Accrued expenses and taxes 389,860 239,624 Other liabilities 425,645 363,133 Total liabilities 40,911,255 35,845,368 SHAREHOLDERS' EQUITY Common stock 55,057 55,057 Capital surplus 1,134,363 1,125,949 Retained earnings 2,810,824 2,536,086 Accumulated other comprehensive loss, net (556,935 ) (702,735 ) Treasury stock (342,890 ) (347,264 ) Total shareholders' equity 3,100,419 2,667,093 Total liabilities and shareholders' equity $ 44,011,674 $ 38,512,461 Consolidated Statements of Income UMB Financial Corporation (dollars in thousands except share and per share data) Three Months Ended Year Ended December 31, December 31, 2023 2022 2023 2022 (unaudited) (unaudited) (unaudited) (audited) INTEREST INCOME Loans $ 381,041 $ 273,648 $ 1,399,961 $ 810,007 Securities: Taxable interest 53,890 51,441 214,981 192,121 Tax-exempt interest 25,637 25,105 102,197 97,190 Total securities income 79,527 76,546 317,178 289,311 Federal funds and resell agreements 3,540 7,106 17,647 19,109 Interest-bearing due from banks 32,267 9,373 103,190 18,582 Trading securities 227 139 729 511 Total interest income 496,602 366,812 1,838,705 1,137,520 INTEREST EXPENSE Deposits 213,842 97,484 704,210 167,553 Federal funds and repurchase agreements 21,903 18,848 93,026 40,703 Other 30,335 5,314 121,353 15,467 Total interest expense 266,080 121,646 918,589 223,723 Net interest income 230,522 245,166 920,116 913,797 Provision for credit losses — 9,000 41,227 37,900 Net interest income after provision for credit losses 230,522 236,166 878,889 875,897 NONINTEREST INCOME Trust and securities processing 66,584 59,207 257,200 237,207 Trading and investment banking 5,751 5,251 19,630 23,201 Service charges on deposit accounts 21,330 19,758 84,950 85,167 Insurance fees and commissions 238 459 1,009 1,338 Brokerage fees 13,439 13,332 54,119 43,019 Bankcard fees 18,672 19,597 74,719 73,451 Investment securities gains (losses), net 1,014 (409 ) (3,139 ) 58,444 Other 13,226 8,302 53,365 32,406 Total noninterest income 140,254 125,497 541,853 554,233 NONINTEREST EXPENSE Salaries and employee benefits 134,231 135,940 553,421 524,431 Occupancy, net 12,296 12,409 48,502 48,848 Equipment 16,579 18,969 68,718 74,259 Supplies and services 5,546 3,697 16,829 13,590 Marketing and business development 6,659 8,788 25,749 25,699 Processing fees 27,271 23,545 103,099 82,227 Legal and consulting 8,424 10,664 29,998 39,095 Bankcard 8,677 7,369 32,969 26,367 Amortization of other intangible assets 2,048 1,649 8,587 5,037 Regulatory fees 59,183 4,232 77,010 15,378 Other 9,060 10,556 34,258 43,188 Total noninterest expense 289,974 237,818 999,140 898,119 Income before income taxes 80,802 123,845 421,602 532,011 Income tax expense 9,879 23,672 71,578 100,329 NET INCOME $ 70,923 $ 100,173 $ 350,024 $ 431,682 PER SHARE DATA Net income – basic $ 1.46 $ 2.07 $ 7.22 $ 8.93 Net income – diluted 1.45 2.06 7.18 8.86 Dividends 0.39 0.38 1.53 1.49 Weighted average shares outstanding – basic 48,538,127 48,310,993 48,503,643 48,340,922 Weighted average shares outstanding – diluted 48,860,020 48,735,088 48,763,820 48,747,399 Consolidated Statements of Comprehensive Income UMB Financial Corporation (dollars in thousands) Three Months Ended Year Ended December 31, December 31, 2023 2022 2023 2022 (unaudited) (unaudited) (unaudited) (audited) Net income $ 70,923 $ 100,173 $ 350,024 $ 431,682 Other comprehensive income (loss), before tax: Unrealized gains and losses on debt securities: Change in unrealized holding gains and losses, net 293,578 64,924 147,977 (1,137,417 ) Less: Reclassification adjustment for net losses included in net income — — 279 — Amortization of net unrealized loss on securities transferred from available-for-sale to held-to-maturity 9,288 11,186 39,851 36,894 Change in unrealized gains and losses on debt securities 302,866 76,110 188,107 (1,100,523 ) Unrealized gains and losses on derivative hedges: Change in unrealized gains and losses on derivative hedges, net 10,767 170 15,015 12,608 Less: Reclassification adjustment for net gains included in net income (2,589 ) (1,942 ) (10,654 ) (5,353 ) Change in unrealized gains and losses on derivative hedges 8,178 (1,772 ) 4,361 7,255 Other comprehensive income (loss), before tax 311,044 74,338 192,468 (1,093,268 ) Income tax (expense) benefit (75,608 ) (17,813 ) (46,668 ) 264,219 Other comprehensive income (loss) 235,436 56,525 145,800 (829,049 ) Comprehensive income (loss) $ 306,359 $ 156,698 $ 495,824 $ (397,367 ) Consolidated Statements of Shareholders' Equity UMB Financial Corporation (dollars in thousands except per share data) (audited) Common Stock Capital Surplus Retained Earnings Accumulated Other Comprehensive 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) — — 431,682 (829,049 ) — (397,367 ) Dividends ($1.49 per share) — — (72,594 ) — — (72,594 ) Purchase of treasury stock — — — — (31,997 ) (31,997 ) Issuances of equity awards, net of forfeitures — (6,143 ) — — 6,822 679 Recognition of equity-based compensation — 20,812 — — — 20,812 Sale of treasury stock — 351 — — 245 596 Exercise of stock options — 409 — — 1,131 1,540 Balance - December 31, 2022 $ 55,057 $ 1,125,949 $ 2,536,086 $ (702,735 ) $ (347,264 ) $ 2,667,093 (unaudited) Balance - January 1, 2023 $ 55,057 $ 1,125,949 $ 2,536,086 $ (702,735 ) $ (347,264 ) $ 2,667,093 Total comprehensive income — — 350,024 145,800 — 495,824 Dividends ($1.53 per share) — — (75,286 ) — — (75,286 ) Purchase of treasury stock — — — — (8,367 ) (8,367 ) Issuances of equity awards, net of forfeitures — (10,385 ) — — 11,104 719 Recognition of equity-based compensation — 17,975 — — — 17,975 Sale of treasury stock — 220 — — 296 516 Exercise of stock options — 604 — — 1,341 1,945 Balance - December 31, 2023 $ 55,057 $ 1,134,363 $ 2,810,824 $ (556,935 ) $ (342,890 ) $ 3,100,419 Average Balances / Yields and Rates UMB Financial Corporation (tax - equivalent basis) (unaudited, dollars in thousands) Three Months Ended December 31, 2023 2022 Average Average Average Average Balance Yield/Rate Balance Yield/Rate Assets Loans, net of unearned interest $ 23,109,063 6.54 % $ 20,294,661 5.35 % Securities: Taxable 8,853,426 2.41 9,382,837 2.18 Tax-exempt 3,716,141 3.44 3,803,737 3.31 Total securities 12,569,567 2.72 13,186,574 2.50 Federal funds and resell agreements 235,284 5.97 656,092 4.30 Interest bearing due from banks 2,372,767 5.40 1,135,356 3.28 Trading securities 16,880 5.83 11,799 5.31 Total earning assets 38,303,561 5.21 35,284,482 4.20 Allowance for credit losses (223,668 ) (188,299 ) Other assets 2,435,687 2,243,437 Total assets $ 40,515,580 $ 37,339,620 Liabilities and Shareholders' Equity Interest-bearing deposits $ 22,556,514 3.76 % $ 18,919,537 2.04 % Federal funds and repurchase agreements 1,883,392 4.61 2,424,171 3.08 Borrowed funds 2,286,271 5.26 396,874 5.31 Total interest-bearing liabilities 26,726,177 3.95 21,740,582 2.22 Noninterest-bearing demand deposits 10,118,748 12,454,413 Other liabilities 715,688 522,932 Shareholders' equity 2,954,967 2,621,693 Total liabilities and shareholders' equity $ 40,515,580 $ 37,339,620 Net interest spread 1.26 % 1.98 % Net interest margin 2.46 2.83 Average Balances / Yields and Rates UMB Financial Corporation (tax - equivalent basis) (unaudited, dollars in thousands) Year Ended December 31, 2023 2022 Average Average Average Average Balance Yield/Rate Balance Yield/Rate Assets Loans, net of unearned interest $ 22,337,119 6.27 % $ 18,823,810 4.30 % Securities: Taxable 9,097,110 2.36 9,616,691 2.00 Tax-exempt 3,790,921 3.38 3,885,153 3.16 Total securities 12,888,031 2.66 13,501,844 2.33 Federal funds and resell agreements 316,072 5.58 965,911 1.98 Interest bearing due from banks 2,046,349 5.04 2,408,468 0.77 Trading securities 14,030 5.65 12,076 4.96 Total earning assets 37,601,601 4.96 35,712,109 3.26 Allowance for credit losses (216,245 ) (184,072 ) Other assets 2,344,911 2,050,976 Total assets $ 39,730,267 $ 37,579,013 Liabilities and Shareholders' Equity Interest-bearing deposits $ 21,122,305 3.33 % $ 18,063,498 0.93 % Federal funds and repurchase agreements 2,175,415 4.28 2,777,089 1.47 Borrowed funds 2,311,238 5.25 309,204 5.00 Total interest-bearing liabilities 25,608,958 3.59 21,149,791 1.06 Noninterest-bearing demand deposits 10,640,344 13,264,146 Other liabilities 618,230 438,772 Shareholders' equity 2,862,735 2,726,304 Total liabilities and shareholders' equity $ 39,730,267 $ 37,579,013 Net interest spread 1.37 % 2.20 % Net interest margin 2.52 2.63 Business Segment Information UMB Financial Corporation (unaudited, dollars in thousands) Three Months Ended December 31, 2023 Commercial Banking Institutional Banking Personal Banking Total Net interest income $ 154,289 $ 44,150 $ 32,083 $ 230,522 Provision for credit losses (1,926 ) 653 1,273 — Noninterest income 25,956 90,361 23,937 140,254 Noninterest expense 114,190 114,306 61,478 289,974 Income (loss) before taxes 67,981 19,552 (6,731 ) 80,802 Income tax expense 5,321 2,913 1,645 9,879 Net income (loss) $ 62,660 $ 16,639 $ (8,376 ) $ 70,923 Three Months Ended December 31, 2022 Commercial Banking Institutional Banking Personal Banking Total Net interest income $ 151,856 $ 55,063 38,247 $ 245,166 Provision for credit losses 7,668 93 1,239 9,000 Noninterest income 22,233 80,055 23,209 125,497 Noninterest expense 86,682 86,791 64,345 237,818 Income (loss) before taxes 79,739 48,234 (4,128 ) 123,845 Income tax expense (benefit) 15,176 9,264 (768 ) 23,672 Net income (loss) $ 64,563 $ 38,970 $ (3,360 ) $ 100,173 Year Ended December 31, 2023 Commercial Banking Institutional Banking Personal Banking Total Net interest income $ 598,371 $ 192,765 $ 128,980 $ 920,116 Provision for credit losses 33,184 1,406 6,637 41,227 Noninterest income 97,614 347,933 96,306 541,853 Noninterest expense 365,856 382,770 250,514 999,140 Income (loss) before taxes 296,945 156,522 (31,865 ) 421,602 Income tax expense (benefit) 48,403 26,838 (3,663 ) 71,578 Net income (loss) $ 248,542 $ 129,684 $ (28,202 ) $ 350,024 Year Ended December 31, 2022 Commercial Banking Institutional Banking Personal Banking Total Net interest income $ 596,031 $ 159,679 $ 158,087 $ 913,797 Provision for credit losses 32,851 495 4,554 37,900 Noninterest income 122,614 323,794 107,825 554,233 Noninterest expense 332,912 320,976 244,231 898,119 Income before taxes 352,882 162,002 17,127 532,011 Income tax expense 67,134 31,889 1,306 100,329 Net income $ 285,748 $ 130,113 $ 15,821 $ 431,682 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 December 31, 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 December 31, Year Ended December 31, 2023 2022 2023 2022 Net income (GAAP) $ 70,923 $ 100,173 $ 350,024 $ 431,682 Adjustments: Acquisition expense 52 851 179 922 Severance expense 1,207 358 8,943 838 FDIC special assessment 52,840 — 52,840 — Tax-impact of adjustments (i) (12,984 ) (290 ) (14,871 ) (422 ) Total Non-GAAP adjustments (net of tax) 41,115 919 47,091 1,338 Net operating income (Non-GAAP) $ 112,038 $ 101,092 $ 397,115 $ 433,020 Earnings per share - diluted (GAAP) $ 1.45 $ 2.06 $ 7.18 $ 8.86 Acquisition expense — 0.02 — 0.02 Severance expense 0.02 0.01 0.18 0.02 FDIC special assessment 1.08 — 1.08 — Tax-impact of adjustments (i) (0.26 ) (0.02 ) (0.30 ) (0.02 ) Operating earnings per share - diluted (Non-GAAP) $ 2.29 $ 2.07 $ 8.14 $ 8.88 GAAP Return on average assets 0.69 % 1.06 % 0.88 % 1.15 % Return on average equity 9.52 15.16 12.23 15.83 Non-GAAP Operating return on average assets 1.10 % 1.07 % 1.00 % 1.15 % Operating return on average equity 15.04 15.30 13.87 15.88 (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 December 31, Year Ended December 31, 2023 2022 2023 2022 Noninterest expense $ 289,974 $ 237,818 $ 999,140 $ 898,119 Adjustments to arrive at operating noninterest expense (pre-tax): Acquisition expense 52 851 179 922 Severance expense 1,207 358 8,943 838 FDIC special assessment 52,840 — 52,840 — Total Non-GAAP adjustments (pre-tax) 54,099 1,209 61,962 1,760 Operating noninterest expense (Non-GAAP) $ 235,875 $ 236,609 $ 937,178 $ 896,359 Noninterest expense $ 289,974 $ 237,818 $ 999,140 $ 898,119 Less: Amortization of other intangibles 2,048 1,649 8,587 5,037 Noninterest expense, net of amortization of other intangibles (Non-GAAP) (numerator A) $ 287,926 $ 236,169 $ 990,553 $ 893,082 Operating noninterest expense $ 235,875 $ 236,609 $ 937,178 $ 896,359 Less: Amortization of other intangibles 2,048 1,649 8,587 5,037 Operating expense, net of amortization of other intangibles (Non-GAAP) (numerator B) $ 233,827 $ 234,960 $ 928,591 $ 891,322 Net interest income $ 230,522 $ 245,166 $ 920,116 $ 913,797 Noninterest income 140,254 125,497 541,853 554,233 Less: Gains on sales of securities available for sale, net — — 152 — Total Non-GAAP Revenue (denominator A) $ 370,776 $ 370,663 $ 1,461,817 $ 1,468,030 Efficiency ratio (numerator A/denominator A) 77.65 % 63.72 % 67.76 % 60.84 % Operating efficiency ratio (Non-GAAP) (numerator B/denominator A) 63.06 63.39 63.52 60.72 Operating pre-tax, pre-provision income non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands except per share data) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Net interest income (GAAP) $ 230,522 $ 245,166 $ 920,116 $ 913,797 Noninterest income (GAAP) 140,254 125,497 541,853 554,233 Noninterest expense (GAAP) 289,974 237,818 999,140 898,119 Adjustments to arrive at operating noninterest expense: Acquisition expense 52 851 179 922 Severance expense 1,207 358 8,943 838 FDIC special assessment 52,840 — 52,840 — Total Non-GAAP adjustments 54,099 1,209 61,962 1,760 Operating noninterest expense (Non-GAAP) 235,875 236,609 937,178 896,359 Operating pre-tax, pre-provision income (Non-GAAP) $ 134,901 $ 134,054 $ 524,791 $ 571,671 Net interest income earnings per share - diluted (GAAP) $ 4.72 $ 5.03 $ 18.87 $ 18.75 Noninterest income (GAAP) 2.87 2.57 11.11 11.37 Noninterest expense (GAAP) 5.93 4.88 20.48 18.43 Acquisition expense — 0.02 — 0.02 Severance expense 0.02 0.01 0.18 0.02 FDIC special assessment 1.08 — 1.08 — Operating pre-tax, pre-provision earnings per share - diluted (Non-GAAP) $ 2.76 $ 2.75 $ 10.76 $ 11.73 Operating pre-tax, pre-provision income - FTE Non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands except per share data) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Net interest income (GAAP) $ 230,522 $ 245,166 $ 920,116 $ 913,797 Adjustments to arrive at net interest income - FTE: Tax equivalent interest 6,670 6,663 26,359 25,794 Net interest income - FTE (Non-GAAP) 237,192 251,829 946,475 939,591 Noninterest income (GAAP) 140,254 125,497 541,853 554,233 Noninterest expense (GAAP) 289,974 237,818 999,140 898,119 Adjustments to arrive at operating noninterest expense: Acquisition expense 52 851 179 922 Severance expense 1,207 358 8,943 838 FDIC special assessment 52,840 — 52,840 — Total Non-GAAP adjustments 54,099 1,209 61,962 1,760 Operating noninterest expense (Non-GAAP) 235,875 236,609 937,178 896,359 Operating pre-tax, pre-provision income - FTE (Non-GAAP) $ 141,571 $ 140,717 $ 551,150 $ 597,465 Net interest income earnings per share - diluted (GAAP) $ 4.72 $ 5.03 $ 18.87 $ 18.75 Tax equivalent interest 0.14 0.14 0.54 0.53 Net interest income - FTE (Non-GAAP) 4.86 5.17 19.41 19.28 Noninterest income (GAAP) 2.87 2.57 11.11 11.37 Noninterest expense (GAAP) 5.93 4.88 20.48 18.43 Acquisition expense — 0.02 — 0.02 Severance expense 0.02 0.01 0.18 0.02 FDIC special assessment 1.08 — 1.08 — Operating pre-tax, pre-provision income - FTE earnings per share - diluted (Non-GAAP) $ 2.90 $ 2.89 $ 11.30 $ 12.26 Tangible book value non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands except share and per share data) As of December 31, 2023 2022 Total shareholders' equity (GAAP) $ 3,100,419 $ 2,667,093 Less: Intangible assets Goodwill 207,385 207,385 Other intangibles, net 71,012 78,724 Total intangibles, net 278,397 286,109 Total tangible shareholders' equity (Non-GAAP) $ 2,822,022 $ 2,380,984 Total shares outstanding 48,554,127 48,319,404 Ratio of total shareholders' equity (book value) per share $ 63.85 $ 55.20 Ratio of total tangible shareholders' equity (tangible book value) per share (Non-GAAP) 58.12 49.28 Operating return on average tangible equity excluding AOCI non-GAAP reconciliations: UMB Financial Corporation (unaudited, dollars in thousands) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Average total shareholders' equity (GAAP) $ 2,954,967 $ 2,621,693 $ 2,862,735 $ 2,726,304 Less: Average intangible assets Average goodwill 207,385 194,805 207,385 183,512 Average other intangibles, net 72,322 46,243 74,868 22,414 Average total intangibles, net 279,707 241,049 282,254 205,926 Average total tangible shareholders' equity (Non-GAAP) 2,675,260 2,380,644 2,580,481 2,520,378 Less: Average accumulated other comprehensive loss (AOCI) (730,891 ) (741,438 ) (681,436 ) (490,058 ) Average total tangible shareholders' equity excluding AOCI (Non-GAAP) $ 3,406,151 $ 3,122,082 $ 3,261,918 $ 3,010,436 Net operating income (Non-GAAP) $ 112,038 $ 101,092 $ 397,115 $ 433,020 Operating return on average tangible equity excluding AOCI (Non-GAAP) 13.05 % 12.85 % 12.17 % 14.38 % View source version on businesswire.com: https://www.businesswire.com/news/home/20240125163449/en/