UMB Financial Corporation Reports First Quarter Income from Continuing Operations of $57.7 Million or $1.18 per Diluted Share

KANSAS CITY, Mo.--(BUSINESS WIRE)--UMB Financial Corporation (Nasdaq: UMBF), a financial services company, announced income from continuing operations for the first quarter of 2019 of $57.7 million, or $1.18 per diluted share, compared to $25.5 million, or $0.52 per diluted share, in the fourth quarter 2018 (linked quarter) and $57.5 million, or $1.15 per diluted share, in the first quarter 2018. The reported GAAP income from continuing operations represents an increase of 126.9 percent on a linked-quarter basis and a 0.4 percent increase compared to the first quarter 2018.

Net operating income from continuing operations, a non-GAAP financial measure reconciled to income from continuing operations, the nearest comparable GAAP measure, later in this release, was $58.2 million, or $1.19 per diluted share, for the first quarter 2019, compared to $27.6 million, or $0.56 per diluted share, for the linked quarter and $59.1 million, or $1.18 per diluted share, for the first quarter 2018. These results represent an increase of 111.1 percent on a linked-quarter basis and a decrease of 1.4 percent compared to first quarter 2018.

Summary of quarterly financial results	UMB Financial Corporation
(unaudited, dollars in thousands, except per share data)
	Q1			Q4			Q1
	2019			2018			2018
Income from continuing operations	$	57,744		$	25,454		$	57,533
Loss from discontinued operations		—			—			(747	)
Net income		57,744			25,454			56,786
Earnings per share from continuing operations (diluted)		1.18			0.52			1.15
Losses per share from discontinued operations (diluted)		—			—			(0.01	)
Earnings per share (diluted)		1.18			0.52			1.14
Net operating income from continuing operations		58,208			27,578			59,062
Operating earnings per share from continuing operations (diluted)		1.19			0.56			1.18
GAAP - continuing operations
Return on average assets		1.02	%		0.46	%		1.12	%
Return on average equity		10.48			4.57			10.80
Efficiency ratio		70.00			71.26			68.82
Non-GAAP - continuing operations
Operating return on average assets		1.03	%		0.50	%		1.15	%
Operating return on average equity		10.56			4.95			11.09
Operating efficiency ratio		69.78			70.19			68.04

“2019 is off to a good start, and I’m pleased with the first quarter’s results,” said Mariner Kemper, chairman, president and chief executive officer. “We posted strong balance sheet growth, with average loan balances increasing 2.8 percent, or 11.2 percent on a linked-quarter annualized basis, and average deposits growing by 3.0 percent. Additionally, noninterest income represented 39.6 percent of our revenue for the quarter, and we saw positive trends in several of our lines of business.”

Discussion of results from continuing operations

Summary of revenue	UMB Financial Corporation
(unaudited, dollars in thousands)
	Q1			Q4			Q1			CQ vs.		CQ vs.
	2019			2018			2018			LQ		PY
Net interest income	$	163,868		$	161,808		$	147,922		$	2,060	$	15,946
Noninterest income:
Trust and securities processing		41,957			41,891			44,002			66		(2,045	)
Trading and investment banking		5,581			3,119			4,101			2,462		1,480
Service charges on deposit accounts		21,281			20,733			21,905			548		(624	)
Insurance fees and commissions		338			312			301			26		37
Brokerage fees		7,243			6,761			6,353			482		890
Bankcard fees		17,067			16,375			18,123			692		(1,056	)
Gains on sales of securities available for sale, net		809			—			139			809		670
Other		13,106			5,808			10,601			7,298		2,505
Total noninterest income	$	107,382		$	94,999		$	105,525		$	12,383	$	1,857
Total revenue	$	271,250		$	256,807		$	253,447		$	14,443	$	17,803
Net interest margin		3.20	%		3.24	%		3.19	%
Total noninterest income as a % of total revenue		39.59			36.99			41.64

Net interest income

• Net interest income totaled $163.9 million, an increase of $2.1 million, or 1.3 percent, from linked quarter levels, impacted by a $335.2 million, or 2.8 percent, increase in average loans and higher short-term interest rates.
• Earning asset yields improved seven basis points from the linked quarter, due to improved loan yields of seven basis points to 5.18 percent, in part driven by favorable re-pricing from higher short-term interest rates and improved yields in the securities portfolio. The cost of interest-bearing liabilities increased 13 basis points to 1.34 percent, driven by an increase of $348.4 million in federal funds and repurchase agreements, and a nine-basis point increase in cost of interest-bearing deposits.
• On a year-over-year basis, the increase in net interest income was driven by a 9.0 percent, or $1.0 billion, increase in average loans, as well as higher average loan yields, which increased 65 basis points compared to 2018, primarily driven by higher short-term interest rates, volume and asset mix changes.
• For the first quarter 2019, average earning assets stood at $21.5 billion, an increase of 10.4 percent over the first quarter 2018.

Noninterest income

• First quarter 2019 noninterest income increased $12.4 million, or 13.0 percent, on a linked quarter basis, largely due to:
  • Increases of $9.4 million and $2.0 million in company-owned life insurance income and derivative income, respectively, both of which are recorded in other income. These increases were partially offset by decreases of $2.6 million in gains on sales of assets and $0.9 million in loss recoveries, as compared to the fourth quarter 2018.
  • An increase of $2.5 million in trading and investment banking due to increased trading volume and increased market values of trading assets held.
  • An increase of $0.7 million in bankcard fees due to a decrease of $0.9 million in rebates expense recorded as contra-revenues.
  • An increase of $0.8 million in gains on sales of available-for-sale securities.
• Compared to the prior year, noninterest income in the first quarter of 2019 increased $1.9 million, or 1.8 percent, primarily driven by:
  • Increases of $3.1 million and $1.1 million in company-owned life insurance and derivative income, respectively, both of which are recorded in other income. These increases were partially offset by a decrease of $1.8 million in equity earnings on alternative investments.
  • A $1.5 million increase in trading and investment banking income due to increased trading volume.
  • A $0.8 million increase in money market revenue recorded in brokerage fees.
  • These increases were offset by a decrease of $2.5 million in fund servicing revenue due to previously announced customer repricing and losses, which was partially offset by an increase of $1.2 million in corporate trust income, both recorded in trust and securities processing.
  • A $1.1 million decrease in bankcard fees primarily driven by an increase of $0.4 million in rewards expense recorded as contra-revenues, coupled with a decrease of $0.4 million in interchange income.

Noninterest expense

Summary of noninterest expense	UMB Financial Corporation
(unaudited, dollars in thousands)
	Q1		Q4		Q1		CQ vs.			CQ vs.
	2019		2018		2018		LQ			PY
Salaries and employee benefits	$	116,032	$	103,992	$	107,968	$	12,040		$	8,064
Occupancy, net		11,743		11,845		10,953		(102	)		790
Equipment		19,684		18,983		18,826		701			858
Supplies and services		3,873		3,669		3,760		204			113
Marketing and business development		4,913		6,483		5,034		(1,570	)		(121	)
Processing fees		12,132		11,948		11,161		184			971
Legal and consulting		5,633		11,085		3,844		(5,452	)		1,789
Bankcard		4,345		4,316		4,626		29			(281	)
Amortization of other intangible assets		1,327		1,332		1,562		(5	)		(235	)
Regulatory fees		2,890		2,681		2,905		209			(15	)
Other		8,054		7,987		5,237		67			2,817
Total noninterest expense	$	190,626	$	184,321	$	175,876	$	6,305		$	14,750

• GAAP noninterest expense for the first quarter of 2019 was $190.6 million, an increase of $6.3 million, or 3.4 percent, from the linked quarter and an increase of $14.8 million, or 8.4 percent, from the first quarter of 2018.
• On a non-GAAP basis, operating noninterest expense (as reconciled later in this release) was $190.0 million for the first quarter 2019, an increase of $8.4 million, or 4.6 percent, compared to the linked quarter and an increase of $16.1 million, or 9.3 percent, compared to the first quarter 2018.
• The linked quarter increase in noninterest expense was driven by:
  • A $12.0 million increase in salaries and employee benefits, largely due to increased deferred compensation expense of $9.9 million and higher payroll taxes and 401(k) expense recognized in the first quarter of 2019.
  • A $0.7 million increase in equipment expense driven by higher software expense in the first quarter of 2019.
  • These increases were partially offset by decreases of $5.5 million in legal and consulting expense and $1.6 million in marketing and business development expense due to the timing of multiple projects.
• The year-over-year increase in noninterest expense was driven by:
  • An $8.1 million increase in salaries and employee benefits, largely due to increased deferred compensation expense of $3.3 million, and increases of $1.8 million in bonus and incentives expense and $1.7 million in salaries and wages expense.
  • An increase in other noninterest expense of $2.8 million primarily driven by an operational loss of $1.5 million and an increase of $1.2 million in derivative expense.
  • A $1.8 million increase in legal and consulting expense and an increase of $1.0 million in processing fees expense due to investments in digital channel and integrated platform solutions to support business growth and the continued ongoing modernization of the company’s core systems.
  • An increase of $0.9 million in equipment expense primarily driven by higher equipment maintenance and software expense in the first quarter of 2019.

Income taxes

• The company’s effective tax rate was 15.4 percent for the quarter ended March 31, 2019, compared to 14.9 percent for the same period in 2018. This increase was primarily a result of a decrease in excess tax benefits associated with stock compensation recorded in the first quarter of 2019 as compared to the same period in 2018.

Balance sheet

• Average total assets for the first quarter 2019 were $22.9 billion compared to $21.9 billion for the linked quarter and $20.7 billion for the same period in 2018.

Summary of average loans and leases - QTD Average					UMB Financial Corporation
(unaudited, dollars in thousands)
	Q1		Q4		Q1		CQ vs.			CQ vs.
	2019		2018		2018		LQ			PY
Commercial	$	5,270,130	$	4,977,907	$	4,456,176	$	292,223		$	813,954
Asset-based loans		378,508		381,477		336,146		(2,969	)		42,362
Factoring loans		263,093		300,265		223,031		(37,172	)		40,062
Commercial credit card		195,872		178,772		189,891		17,100			5,981
Real estate - construction		787,483		826,310		763,867		(38,827	)		23,616
Real estate - commercial		3,797,206		3,663,610		3,635,455		133,596			161,751
Real estate - residential		714,534		697,927		645,803		16,607			68,731
Real estate - HELOC		528,468		555,161		630,617		(26,693	)		(102,149	)
Consumer credit card		217,570		248,309		223,725		(30,739	)		(6,155	)
Consumer other		145,100		132,812		158,131		12,288			(13,031	)
Leases		5,190		5,386		23,680		(196	)		(18,490	)
Total loans	$	12,303,154	$	11,967,936	$	11,286,522	$	335,218		$	1,016,632

• Average loans for the first quarter 2019 increased 2.8 percent on a linked-quarter basis and 9.0 percent compared to the first quarter of 2018.

Summary of average securities - QTD Average	UMB Financial Corporation
(unaudited, dollars in thousands)
	Q1		Q4		Q1		CQ vs.			CQ vs.
	2019		2018		2018		LQ			PY
Securities available for sale:
U.S. Treasury	$	256,672	$	105,509	$	38,197	$	151,163		$	218,475
U.S. Agencies		53,458		198		10,360		53,260			43,098
Mortgage-backed		3,841,449		3,703,212		3,645,891		138,237			195,558
State and political subdivisions		2,534,438		2,353,816		2,453,334		180,622			81,104
Corporates		6,424		—		8,482		6,424			(2,058	)
Commercial Paper		—		—		30,955		—			(30,955	)
Total securities available for sale	$	6,692,441	$	6,162,735	$	6,187,219	$	529,706		$	505,222
Securities held to maturity:
State and political subdivisions		1,157,126		1,180,061		1,251,771		(22,935	)		(94,645	)
Trading securities		46,408		61,629		44,592		(15,221	)		1,816
Other securities		74,718		66,760		65,560		7,958			9,158
Total securities	$	7,970,693	$	7,471,185	$	7,549,142	$	499,508		$	421,551

• Average securities available for sale increased 8.6 percent on a linked-quarter basis and increased 8.2 percent compared to the first quarter of 2018.

Summary of average deposits - QTD Average				UMB Financial Corporation
(unaudited, dollars in thousands)
	Q1			Q4			Q1			CQ vs.			CQ vs.
	2019			2018			2018			LQ			PY
Deposits:
Noninterest-bearing demand	$	5,989,215		$	6,052,011		$	6,050,997		$	(62,796	)	$	(61,782	)
Interest-bearing demand and savings		11,698,351			11,057,273			9,660,150			641,078			2,038,201
Time deposits		1,034,763			1,060,838			1,047,700			(26,075	)		(12,937	)
Total deposits	$	18,722,329		$	18,170,122		$	16,758,847		$	552,207		$	1,963,482
Noninterest bearing deposits as % of total		31.99	%		33.31	%		36.11	%

• Average deposits increased 3.0 percent on a linked-quarter basis and 11.7 percent compared to the first quarter of 2018.

Capital

Capital information	UMB Financial Corporation
(unaudited, dollars in thousands, except per share data)
	March 31, 2019			December 31, 2018			March 31, 2018
Total equity	$	2,350,843		$	2,228,470		$	2,167,386
Book value per common share		47.92			45.37			43.31
Regulatory capital:
Common equity Tier 1 capital	$	2,188,521		$	2,142,469		$	2,097,691
Tier 1 capital		2,188,521			2,142,469			2,097,691
Total capital		2,364,465			2,318,145			2,269,315
Regulatory capital ratios:
Common equity Tier 1 capital ratio		12.70	%		12.89	%		13.36	%
Tier 1 risk-based capital ratio		12.70			12.89			13.36
Total risk-based capital ratio		13.72			13.95			14.45
Tier 1 leverage ratio		9.65			9.87			10.20

• At March 31, 2019, 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)
	Q1			Q4			Q3			Q2			Q1
	2019			2018			2018			2018			2018
Net charge-offs - Commercial loans	$	10,537		$	44,010		$	624		$	6,137		$	6,847
Net charge-offs - Real estate loans		41			28			408			1,035			1,512
Net charge-offs - Consumer credit card loans		1,676			1,606			1,632			1,786			1,849
Net charge-offs - Consumer other loans		70			23			82			46			94
Net charge-offs - Total loans		12,324			45,667			2,746			9,004			10,302
Net loan charge-offs as a % of total average loans		0.41	%		1.51	%		0.09	%		0.32	%		0.37	%
Loans over 90 days past due	$	1,874		$	6,009		$	1,927		$	2,883		$	5,650
Loans over 90 days past due as a % of total loans		0.01	%		0.05	%		0.02	%		0.02	%		0.05	%
Nonaccrual and restructured loans	$	63,270		$	43,018		$	50,568		$	56,030		$	67,604
Nonaccrual and restructured loans as a % of total loans		0.50	%		0.35	%		0.42	%		0.48	%		0.59	%
Provision for loan losses	$	12,350		$	48,000		$	5,750		$	7,000		$	10,000

• Nonperforming loans, defined as restructured loans on nonaccrual and all other nonaccrual loans, increased $20.3 million from the linked quarter and decreased $4.3 million from the prior year.
• Net charge-offs were $12.3 million, or 0.41 percent, of average loans, compared to $45.7 million, or 1.51 percent, of average loans in the linked quarter, and $10.3 million, or 0.37 percent, of average loans in the first quarter of 2018.
• Provision for loan losses decreased $35.7 million from the linked quarter, and increased $2.4 million from the first quarter of 2018. This decrease was driven by higher provision during the linked quarter to cover the loss related to a $48.1 million factoring credit relationship, as well as other qualitative factors, such as macroeconomic conditions, loan growth, loan impairment changes, loan risk grading changes and net charge-off levels.

Conference Call

The company plans to host a conference call to discuss its first quarter 2019 earnings results on Wednesday, April 24, 2019, at 8:30 a.m. (CT).

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

UMB Financial 1Q 2019 Conference Call

A replay of the conference call may be heard through May 10, 2019 by calling (toll-free) 877-344-7529 or (international) 412-317-0088. The replay access code required for playback is 10130187. The call replay may also be accessed at investorrelations.umb.com.

Non-GAAP Financial Information

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

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

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

Forward-Looking Statements:

This press release contains, and our other communications may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “outlook,” “forecast,” “target,” “trend,” “plan,” “goal,” or other words of comparable meaning or future-tense or conditional verbs such as “may,” “will,” “should,” “would,” or “could.” Forward-looking statements convey our expectations, intentions, or forecasts about future events, circumstances, results, or aspirations. All forward-looking statements are subject to assumptions, risks, and uncertainties, which may change over time and many of which are beyond our control. You should not rely on any forward-looking statement as a prediction or guarantee about the future. Our actual future objectives, strategies, plans, prospects, performance, condition, or results may differ materially from those set forth in any forward-looking statement. Some of the factors that may cause actual results or other future events, circumstances, or aspirations to differ from those in forward-looking statements are described in our Annual Report on Form 10-K for the year ended December 31, 2018, our subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, or other applicable documents that are filed or furnished with the U.S. Securities and Exchange Commission (SEC). Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except to the extent required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K, or other applicable document that is filed or furnished with the SEC.

About UMB:

UMB Financial Corporation (Nasdaq: UMBF) is a financial services company headquartered in Kansas City, Mo. UMB offers personal banking, commercial banking, healthcare services and institutional banking, which includes services to mutual funds and alternative-investment entities and registered investment advisors. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas. For more information, visit UMB.com, UMB Blog or follow us on Twitter at @UMBBank, UMB Facebook and UMB LinkedIn.

Consolidated Balance Sheets	UMB Financial Corporation
(unaudited, dollars in thousands)
	March 31,
	2019			2018
ASSETS
Loans	$	12,549,732		$	11,458,794
Allowance for loan losses		(103,661	)		(100,302	)
Net loans		12,446,071			11,358,492
Loans held for sale		1,267			4,586
Investment Securities:
Available for sale		6,891,869			6,139,346
Held to maturity		1,147,947			1,246,466
Trading securities		56,025			65,389
Other securities		75,357			67,408
Total investment securities		8,171,198			7,518,609
Federal funds sold and resell agreements		264,772			127,208
Interest-bearing due from banks		1,113,470			671,163
Cash and due from banks		399,387			279,838
Premises and equipment, net		279,000			272,632
Accrued income		117,007			97,632
Goodwill		180,867			180,867
Other intangibles, net		13,676			18,695
Other assets		570,045			458,182
Total assets	$	23,556,760		$	20,987,904
LIABILITIES
Deposits:
Noninterest-bearing demand	$	6,448,422		$	6,042,719
Interest-bearing demand and savings		12,018,580			10,188,367
Time deposits under $250,000		591,405			553,692
Time deposits of $250,000 or more		306,808			433,487
Total deposits		19,365,215			17,218,265
Federal funds purchased and repurchase agreements		1,494,048			1,354,615
Long-term debt		81,608			78,687
Accrued expenses and taxes		142,483			129,753
Other liabilities		122,563			39,198
Total liabilities		21,205,917			18,820,518
SHAREHOLDERS' EQUITY
Common stock		55,057			55,057
Capital surplus		1,060,630			1,046,673
Retained earnings		1,531,396			1,393,485
Accumulated other comprehensive loss, net		(17,639	)		(117,391	)
Treasury stock		(278,601	)		(210,438	)
Total shareholders' equity		2,350,843			2,167,386
Total liabilities and shareholders' equity	$	23,556,760		$	20,987,904

Consolidated Statements of Income	UMB Financial Corporation
(unaudited, dollars in thousands except share and per share data)
	Three Months Ended
	March 31,
	2019		2018
INTEREST INCOME
Loans	$	157,261	$	126,134
Securities:
Taxable interest		25,391		19,780
Tax-exempt interest		20,697		18,703
Total securities income		46,088		38,483
Federal funds and resell agreements		3,625		1,038
Interest-bearing due from banks		3,899		1,580
Trading securities		434		430
Total interest income		211,307		167,665
INTEREST EXPENSE
Deposits		37,834		13,835
Federal funds and repurchase agreements		8,264		4,732
Other		1,341		1,176
Total interest expense		47,439		19,743
Net interest income		163,868		147,922
Provision for loan losses		12,350		10,000
Net interest income after provision for loan losses		151,518		137,922
NONINTEREST INCOME
Trust and securities processing		41,957		44,002
Trading and investment banking		5,581		4,101
Service charges on deposit accounts		21,281		21,905
Insurance fees and commissions		338		301
Brokerage fees		7,243		6,353
Bankcard fees		17,067		18,123
Gains on sales of securities available for sale, net		809		139
Other		13,106		10,601
Total noninterest income		107,382		105,525
NONINTEREST EXPENSE
Salaries and employee benefits		116,032		107,968
Occupancy, net		11,743		10,953
Equipment		19,684		18,826
Supplies and services		3,873		3,760
Marketing and business development		4,913		5,034
Processing fees		12,132		11,161
Legal and consulting		5,633		3,844
Bankcard		4,345		4,626
Amortization of other intangible assets		1,327		1,562
Regulatory fees		2,890		2,905
Other		8,054		5,237
Total noninterest expense		190,626		175,876
Income before income taxes		68,274		67,571
Income tax expense		10,530		10,038
Income from continuing operations		57,744		57,533
Discontinued Operations
Loss from discontinued operations before income taxes		—		(917	)
Income tax benefit		—		(170	)
Loss from discontinued operations		—		(747	)
NET INCOME	$	57,744	$	56,786
PER SHARE DATA
Basic:
Income from continuing operations	$	1.19	$	1.16
Loss from discontinued operations		—		(0.01	)
Net income – basic		1.19		1.15
Diluted:
Income from continuing operations		1.18		1.15
Loss from discontinued operations		—		(0.01	)
Net income - diluted		1.18		1.14
Dividends		0.300		0.290
Weighted average shares outstanding - basic		48,712,153		49,420,606
Weighted average shares outstanding - diluted		48,998,571		49,917,454

Consolidated Statements of Comprehensive Income	UMB Financial Corporation
(unaudited, dollars in thousands)
	Three Months Ended
	March 31,
	2019			2018
Net income	$	57,744		$	56,786
Other comprehensive income (loss), net of tax:
Unrealized gains and losses on debt securities:
Change in unrealized holding gains and losses, net		106,434			(80,662	)
Less: Reclassification adjustment for gains included in net income		(809	)		(139	)
Change in unrealized gains and losses on debt securities during the period		105,625			(80,801	)
Change in unrealized gains and losses on derivative hedges		(2,093	)		2,202
Income tax (expense) benefit		(25,389	)		19,782
Other comprehensive income (loss) before reclassifications		78,143			(58,817	)
Amounts reclassified from accumulated other comprehensive income		—			(13,049	)
Net current-period other comprehensive income (loss)		78,143			(71,866	)
Comprehensive income (loss)	$	135,887		$	(15,080	)

Consolidated Statements of Shareholders' Equity			UMB Financial Corporation
(unaudited, dollars in thousands except per share data)
	Common Stock		Capital Surplus			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total
Balance - January 1, 2018	$	55,057	$	1,046,095		$	1,338,110		$	(45,525	)	$	(212,206	)	$	2,181,531
Total comprehensive income (loss)		—		—			56,786			(71,866	)		—			(15,080	)
Reclassification of certain tax effects		—		—			12,917			—			—			12,917
Dividends ($0.290 per share)		—		—			(14,473	)		—			—			(14,473	)
Purchase of treasury stock		—		—			—			—			(5,951	)		(5,951	)
Issuance of equity awards, net of forfeitures		—		(2,959	)		—			—			3,454			495
Recognition of equity-based compensation		—		2,270			—			—			—			2,270
Sale of treasury stock		—		145			—			—			140			285
Exercise of stock options		—		1,122			—			—			4,125			5,247
Cumulative effect adjustments		—		—			145			—			—			145
Balance - March 31, 2018	$	55,057	$	1,046,673		$	1,393,485		$	(117,391	)	$	(210,438	)	$	2,167,386
Balance - January 1, 2019	$	55,057	$	1,054,601		$	1,488,421		$	(95,782	)	$	(273,827	)	$	2,228,470
Total comprehensive income		—		—			57,744			78,143			—			135,887
Dividends ($0.300 per share)		—		—			(14,769	)		—			—			(14,769	)
Purchase of treasury stock		—		—			—			—			(4,086	)		(4,086	)
Issuance of equity awards, net of forfeitures		—		2,383			—			—			(1,779	)		604
Recognition of equity-based compensation		—		3,289			—			—			—			3,289
Sale of treasury stock		—		100			—			—			161			261
Exercise of stock options		—		257			—			—			930			1,187
Balance - March 31, 2019	$	55,057	$	1,060,630		$	1,531,396		$	(17,639	)	$	(278,601	)	$	2,350,843

Average Balances / Yields and Rates	UMB Financial Corporation
(tax - equivalent basis)
(unaudited, dollars in thousands)
	Three Months Ended March 31,
	2019					2018
	Average			Average		Average			Average
	Balance			Yield/Rate		Balance			Yield/Rate
Assets
Loans, net of unearned interest	$	12,303,154		5.18	%	$	11,286,522		4.53	%
Securities:
Taxable		4,301,121		2.39			3,868,977		2.07
Tax-exempt		3,623,164		2.93			3,635,573		2.64
Total securities		7,924,285		2.64			7,504,550		2.35
Federal funds and resell agreements		521,422		2.82			160,972		2.62
Interest bearing due from banks		662,050		2.39			431,638		1.48
Trading securities		46,408		4.40			44,592		4.44
Total earning assets		21,457,319		4.10			19,428,274		3.61
Allowance for loan losses		(105,444	)				(101,502	)
Other assets		1,502,277					1,420,251
Total assets	$	22,854,152				$	20,747,023
Liabilities and Shareholders' Equity
Interest-bearing deposits	$	12,733,114		1.21	%	$	10,707,850		0.52	%
Federal funds and repurchase agreements		1,554,570		2.16			1,561,158		1.23
Borrowed funds		82,416		6.60			78,965		6.04
Total interest-bearing liabilities		14,370,100		1.34			12,347,973		0.65
Noninterest-bearing demand deposits		5,989,215					6,050,997
Other liabilities		259,244					188,456
Shareholders' equity		2,235,593					2,159,597
Total liabilities and shareholders' equity	$	22,854,152				$	20,747,023
Net interest spread				2.76	%				2.96	%
Net interest margin				3.20					3.19

Business Segment Information	UMB Financial Corporation
(unaudited, dollars in thousands)
	Three Months Ended March 31, 2019
	Commercial Banking		Institutional Banking		Personal Banking		Healthcare Services		Total
Net interest income	$	99,814	$	20,709	$	32,302	$	11,043	$	163,868
Provision for loan losses		10,329		286		1,735		—		12,350
Noninterest income		23,181		45,787		28,351		10,063		107,382
Noninterest expense		66,820		52,613		58,408		12,785		190,626
Income before taxes		45,846		13,597		510		8,321		68,274
Income tax benefit		7,071		2,097		79		1,283		10,530
Income from continuing operations	$	38,775	$	11,500	$	431	$	7,038	$	57,744
	Three Months Ended March 31, 2018
	Commercial Banking		Institutional Banking		Personal Banking		Healthcare Services		Total
Net interest income	$	91,917	$	15,763	$	30,944	$	9,298	$	147,922
Provision for loan losses		7,978		350		1,672		—		10,000
Noninterest income		20,596		45,419		30,715		8,795		105,525
Noninterest expense		62,125		46,879		55,054		11,818		175,876
Income before taxes		42,410		13,953		4,933		6,275		67,571
Income tax expense		6,300		2,073		733		932		10,038
Income from continuing operations	$	36,110	$	11,880	$	4,200	$	5,343	$	57,533

The company has strategically aligned its operations into the following four reportable segments: Commercial Banking, Institutional Banking, Personal Banking, and Healthcare Services. Senior executive officers regularly evaluate business segment financial results produced by the company’s internal reporting system in deciding how to allocate resources and assess performance for individual business segments. 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 March 31, 2019.

Non-GAAP Financial Measures	UMB Financial Corporation
Net operating income Non-GAAP reconciliations:
(unaudited, dollars in thousands except per share data)
	Three Months Ended March 31,
	2019			2018
Income from continuing operations (GAAP)	$	57,744		$	57,533
Adjustments:
Acquisition and divestiture expense		27			18
Severance expense		570			1,947
Tax-impact of adjustments (i)		(133	)		(436	)
Total Non-GAAP adjustments (net of tax)		464			1,529
Net operating income from continuing operations (Non-GAAP)	$	58,208		$	59,062
Earnings per share from continuing operations - diluted (GAAP)	$	1.18		$	1.15
Acquisition and divestiture expense		—			—
Severance expense		0.01			0.04
Tax-impact of adjustments (i)		—			(0.01	)
Operating earnings per share from continuing operations - diluted (Non-GAAP)	$	1.19		$	1.18
GAAP
Return on average assets		1.02	%		1.12	%
Return on average equity		10.48			10.80
Non-GAAP
Operating return on average assets		1.03	%		1.15	%
Operating return on average equity		10.56			11.09
^(i) Calculated using the company’s marginal tax rate of 22.2 percent.

Operating noninterest expense and operating efficiency ratio Non-GAAP reconciliations:	UMB Financial Corporation
(unaudited, dollars in thousands)
	Three Months Ended March 31,
	2019			2018
Noninterest expense	$	190,626		$	175,876
Adjustments to arrive at operating noninterest expense (pre-tax):
Acquisition and divestiture expense		27			18
Severance expense		570			1,947
Total Non-GAAP adjustments (pre-tax)		597			1,965
Operating noninterest expense (Non-GAAP)	$	190,029		$	173,911
Noninterest expense	$	190,626		$	175,876
Less: Amortization of other intangibles		1,327			1,562
Noninterest expense, net of amortization of other intangibles (Non-GAAP) (numerator A)	$	189,299		$	174,314
Operating noninterest expense	$	190,029		$	173,911
Less: Amortization of other intangibles		1,327			1,562
Operating expense, net of amortization of other intangibles (Non-GAAP) (numerator B)	$	188,702		$	172,349
Net interest income	$	163,868		$	147,922
Noninterest income		107,382			105,525
Less: Gains on sales of securities available for sale, net		809			139
Total Non-GAAP Revenue (denominator A)	$	270,441		$	253,308
Efficiency ratio (numerator A/denominator A)		70.00	%		68.82	%
Operating efficiency ratio (Non-GAAP) (numerator B/denominator A)		69.78			68.04