UMB Financial Corporation Reports Fourth Quarter Net Income of $156.3 Million and Record Full-Year Earnings of $286.5 Million

Fourth Quarter 2020 Financial Highlights (all comparisons to prior year)

• GAAP net income of $156.3 million, or $3.24 per diluted share; net operating income of $157.4 million, or $3.26 per diluted share.
• Pre-tax, pre-provision (PTPP) income of $196.1 million, an increase of $116.8 million.
• Quarterly average loan balances increased $2.8 billion, or 21.2%.
• Quarterly average deposits grew 22.5% to $25.0 billion.
• Noninterest income increased 106.9% and comprised 54.0% of revenue.
• Credit quality remained strong, with net charge-offs of just 0.04% of average loans, consistent with the company’s historical performance.

KANSAS CITY, Mo.--(BUSINESS WIRE)--UMB Financial Corporation (Nasdaq: UMBF), a financial services company, announced net income for the fourth quarter of 2020 of $156.3 million, or $3.24 per diluted share, compared to $73.1 million, or $1.52 per diluted share, in the third quarter of 2020 (linked quarter) and $66.5 million, or $1.35 per diluted share, in the fourth quarter of 2019. For the year ended December 31, 2020, net income was $286.5 million, or $5.93 per diluted share, which is an increase of 17.6% compared to $243.6 million, or $4.96 per diluted share, for the year ended December 31, 2019. Results for the fourth quarter and full-year 2020 include a pre-tax gain of $108.8 million on the company’s investment in Tattooed Chef, Inc.

Net operating income, a non-GAAP financial measure reconciled to net income, the nearest comparable GAAP measure, later in this release, was $157.4 million, or $3.26 per diluted share, for the fourth quarter of 2020, compared to $76.4 million, or $1.59 per diluted share, for the linked quarter and $67.0 million, or $1.36 per diluted share, for the fourth quarter of 2019. Pre-tax, pre-provision income on a fully tax equivalent basis (PTPP-FTE), a non-GAAP measure reconciled to the components of net income before taxes, the nearest comparable GAAP measure, later in this release, was $202.9 million, or $4.20 per diluted share, for the fourth quarter of 2020, compared to $106.2 million, or $2.21 per diluted share, for the linked quarter, and $85.7 million, or $1.74 per diluted share, for the fourth quarter of 2019. These PTPP-FTE results represent increases of 91.1% on a linked-quarter basis and 136.7% compared to the fourth quarter of 2019.

Summary of quarterly financial results	UMB Financial Corporation
(unaudited, dollars in thousands, except per share data)
	Q4			Q3			Q4
	2020			2020			2019
Net income (GAAP)	$	156,320		$	73,092		$	66,515
Earnings per share (diluted)		3.24			1.52			1.35
Pre-tax, pre-provision income (Non-GAAP)		196,107			99,385			79,268
Pre-tax, pre-provision earnings per share (diluted)		4.06			2.07		1.61
Pre-tax, pre-provision income - FTE (Non-GAAP)		202,946			106,182			85,723
Pre-tax, pre-provision earnings per share - FTE (diluted)		4.20			2.21		1.74
Net operating income (Non-GAAP)		157,405			76,434			67,038
Operating earnings per share (diluted)		3.26			1.59		1.36
GAAP
Return on average assets		2.03	%		0.99	%		1.05	%
Return on average equity		21.18			10.23			10.15
Efficiency ratio		53.44			66.14			71.59
Non-GAAP
Operating return on average assets		2.05	%		1.03	%		1.06	%
Operating return on average equity		21.33			10.70			10.23
Operating efficiency ratio		53.11			64.69			71.35

Summary of year-to-date financial results	UMB Financial Corporation
(unaudited, dollars in thousands, except per share data)	December			December
	YTD			YTD
	2020			2019
Net income (GAAP)	$	286,502		$	243,600
Earnings per share (diluted)		5.93			4.96
Pre-tax, pre-provision income (Non-GAAP)		469,390			318,815
Pre-tax, pre-provision earnings per share (diluted)		9.71		6.49
Pre-tax, pre-provision income - FTE (Non-GAAP)		496,108			342,791
Pre-tax, pre-provision earnings per share - FTE (diluted)		10.26		6.98
Net operating income (Non-GAAP)		295,793			245,016
Operating earnings per share (diluted)		6.12			4.99
GAAP
Return on average assets		1.00	%		1.02	%
Return on average equity		10.21			9.94
Efficiency ratio		63.49			70.66
Non-GAAP
Operating return on average assets		1.04	%		1.03	%
Operating return on average equity		10.55			9.99
Operating efficiency ratio		62.56			70.49

“2020 was a testament to the spirit of UMB’s consistent priorities—delivering the Unparalleled Customer Experience (TUCE), caring for our communities and managing through the adversity of an uncertain and unprecedented operating environment,” said Mariner Kemper, chairman, president and chief executive officer. “Credit quality remains solid, with net charge-offs of just 0.13% of average loans for 2020, while average loan balances, excluding Paycheck Protection Program (PPP) loans, increased 10.4% from 2019. For the full year, our pre-tax, pre-provision income was $469.4 million, an increase of 47.2% compared to 2019. The biggest driver of this outperformance was a gain of $108.8 million in the fourth quarter from our successful investment in Tattooed Chef, Inc.”

Fourth Quarter 2020 earnings discussion

Summary of revenue	UMB Financial Corporation
(unaudited, dollars in thousands)
	Q4			Q3			Q4			CQ vs.			CQ vs.
	2020			2020			2019			LQ			PY
Net interest income	$	194,675		$	184,384		$	172,363		$	10,291		$	22,312
Noninterest income:
Trust and securities processing		50,773			50,552			46,835			221			3,938
Trading and investment banking		9,693			8,678			6,720			1,015			2,973
Service charges on deposit accounts		20,074			19,650			20,100			424			(26	)
Insurance fees and commissions		318			259			511			59			(193	)
Brokerage fees		3,918			4,819			8,839			(901	)		(4,921	)
Bankcard fees		15,788			15,295			16,326			493			(538	)
Investment securities gains (losses), net		113,010			(475	)		(308	)		113,485			113,318
Other		14,716			14,218			11,332			498			3,384
Total noninterest income	$	228,290		$	112,996		$	110,355		$	115,294		$	117,935
Total revenue	$	422,965		$	297,380		$	282,718		$	125,585		$	140,247
Net interest income (FTE)	$	201,514		$	191,181		$	178,818
Net interest margin (FTE)		2.78	%		2.73	%		3.02	%
Total noninterest income as a % of total revenue		53.97			38.00			39.03

Net interest income

• Net interest income totaled $194.7 million, an increase of $10.3 million, or 5.6%, from the linked quarter, driven by an increase of $1.0 billion, or 3.7%, in average earning assets and the acceleration of PPP loan origination fees from payoffs. The increase in average earning assets was driven by an increase of $356 million in investment securities and an increase of $309 million in loan balances.
• Net interest margin for the fourth quarter was 2.78%, an increase of five basis points from the linked quarter. Earning asset yields increased four basis points from the linked quarter, driven by origination fee income from the payoff of PPP loan balances during the fourth quarter. The cost of interest-bearing liabilities decreased one basis point to 0.27%, driven by a three-basis-point decline in the cost of interest-bearing deposits and lower borrowing costs. Net interest spread increased five basis points to 2.68% from the linked quarter and was two basis points higher than the fourth quarter of 2019.
• On a year-over-year basis, net interest income increased $22.3 million, or 12.9%, driven by a $2.8 billion, or 21.2%, increase in average loans, and a $1.5 billion, or 17.6%, increase in average securities. These increases were driven by organic loan growth, excess liquidity, and the company’s PPP participation.
• Average deposits increased 3.5% on a linked-quarter basis and 22.5% compared to the fourth quarter of 2019. Average noninterest-bearing demand deposit balances increased 8.3% on a linked-quarter basis and 39.8% compared to the fourth quarter of 2019.

Noninterest income

• Fourth quarter 2020 noninterest income increased $115.3 million, or 102.0%, on a linked-quarter basis, largely due to:
  • An increase of $113.5 million in investment securities gains, primarily due to the $108.8 million gain on the company’s investment in Tattooed Chef, Inc., recorded in the fourth quarter of 2020, an increase of $2.4 million in equity earnings on alternative investments, and an increase of $1.1 million in gains on sales of available for sale securities.

• Compared to the prior year, noninterest income in the fourth quarter of 2020 increased $117.9 million, or 106.9%, primarily driven by:
  • An increase of $113.3 million in investment securities gains, primarily due to the $108.8 million gain on the company’s investment in Tattooed Chef, Inc., an increase of $1.1 million in equity earnings on alternative investments, and an increase of $0.7 million on sales of available for sale securities.
  • Increases of $2.5 million in fund services income and $1.4 million in corporate trust revenue, both recorded in trust and securities processing.
  • An increase of $3.0 million in trading and investment banking due to increased trading volume.
  • Increases of $2.8 million in company-owned life insurance and $0.5 million in bank-owned life insurance, both recorded in other income. The increase in company-owned life insurance is offset by a proportionate increase in deferred compensation expense as noted below.
  • These increases were partially offset by a decrease of $4.9 million in brokerage fees, primarily driven by lower 12b-1 income.

Noninterest expense

Summary of noninterest expense	UMB Financial Corporation
(unaudited, dollars in thousands)
	Q4		Q3		Q4		CQ vs.			CQ vs.
	2020		2020		2019		LQ			PY
Salaries and employee benefits	$	129,272	$	124,194	$	120,806	$	5,078		$	8,466
Occupancy, net		11,858		12,027		12,249		(169	)		(391	)
Equipment		22,008		20,968		20,803		1,040			1,205
Supplies and services		4,125		3,442		6,280		683			(2,155	)
Marketing and business development		3,717		3,038		8,385		679			(4,668	)
Processing fees		14,408		12,812		13,351		1,596			1,057
Legal and consulting		10,191		7,244		10,001		2,947			190
Bankcard		4,711		4,834		4,061		(123	)		650
Amortization of other intangible assets		1,601		1,524		1,593		77			8
Regulatory fees		2,393		2,309		2,940		84			(547	)
Other		22,574		5,603		2,981		16,971			19,593
Total noninterest expense	$	226,858	$	197,995	$	203,450	$	28,863		$	23,408

• GAAP noninterest expense for the fourth quarter of 2020 was $226.9 million, an increase of $28.9 million, or 14.6%, from the linked quarter and an increase of $23.4 million, or 11.5%, from the fourth quarter of 2019.
• The linked-quarter increase in noninterest expense was driven by:
  • Increases of $14.3 million in operational losses, $1.2 million in charitable contributions expense, and $0.9 million in losses on other real estate owned, all recorded in other noninterest expense.
  • An increase of $5.1 million in salaries and employee benefits, largely driven by increased bonus expense due to higher company performance.
  • Increases of $1.8 million in consulting expense and $1.1 million in legal expense, both recorded in legal and professional expense, due to timing of multiple technology initiatives and legal work performed on various matters.
  • An increase of $1.6 million in processing fees, $1.0 million in equipment expense, and $0.7 million in supplies and services expense, due to investments in the digital channel and integrated platform solutions to support business growth and the ongoing modernization of the company’s core systems.
• The year-over-year increase in noninterest expense was driven by:
  • A $13.1 million increase in operational losses, $1.2 million in charitable contributions expense, and $4.4 million in derivative expense, all recorded in other noninterest expense.
  • An $8.5 million increase in salaries and employee benefits, primarily due to increased bonus expense due to higher company performance and an increase of $1.8 million in deferred compensation expense. 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 a decrease of $4.7 million in marketing and development expense, primarily due to a decline in travel and entertainment expense due to the pandemic.

Full year 2020 earnings discussion

• Net interest income increased $60.3 million, or 9.0%, year-over-year due to a $4.7 billion increase in earning assets, primarily driven by organic loan growth and the company’s PPP participation, partially offset by the impact of lower short-term and long-term interest rates. In 2020, average loan balances increased $2.4 billion and average securities increased $1.2 billion. Average interest-bearing liabilities increased $2.6 billion, while the cost of interest-bearing liabilities declined 85 basis points.
• Full-year noninterest income increased $133.4 million, or 31.3%, due to:
  • An increase of $118.4 million in investment securities gains, primarily driven by the $108.8 million gain on the company’s investment in Tattooed Chef, Inc., an increase in gains on sales of available for sale securities of $3.8 million, and a $3.1 million increase in equity earnings on alternative investments.
  • Increases of $10.6 million in fund services income and $7.2 million in corporate trust revenue, both recorded in trust and securities processing.
  • An increase of $9.5 million in trading and investment banking due to increased trading volume.
  • These increases were partially offset by the following decreases:
    • A $6.9 million decline in brokerage fees, primarily driven by lower 12b-1 income.
    • A $6.2 million decrease in bankcard income, due to lower interchange revenue.
• Full-year noninterest expense increased $43.1 million, or 5.5%, primarily due to:
  • A $34.0 million increase in salary and employee benefit expense driven primarily by increased bonus and sales commission expense tied to business volumes, revenue growth, and overall company performance, as well as increased compensation expense tied to the company’s COVID-19 response.
  • A $12.9 million increase in operational losses, an increase of $1.3 million in charitable contributions expense, and an increase of $1.2 million in derivative expense, all recorded in other noninterest expense.
  • An increase of $6.6 million in equipment expense, primarily due to investments in digital channel and integrated platform solutions to support business growth and the ongoing modernization of the company’s core systems.
  • These increases were partially offset by a decrease of $11.6 million in marketing and development expense primarily due to a decline in travel and entertainment expense due to the pandemic.

Income taxes

• The company’s effective tax rate was 15.5% for the year ended December 31, 2020, compared to 14.8% for the same period in 2019. The increase in the effective tax rate for 2020 is primarily attributable to a smaller portion of pre-tax income being earned from tax-exempt municipal securities.

Balance sheet

• Average total assets for the fourth quarter of 2020 were $30.6 billion compared to $29.5 billion for the linked quarter and $25.1 billion for the same period in 2019.

Summary of average loans and leases - QTD Average					UMB Financial Corporation
(unaudited, dollars in thousands)
	Q4		Q3		Q4		CQ vs.			CQ vs.
	2020		2020		2019		LQ			PY
Commercial and industrial	$	7,079,646	$	7,043,780	$	5,451,880	$	35,866		$	1,627,766
Specialty lending		506,225		456,847		576,091		49,378			(69,866	)
Commercial real estate		5,847,439		5,744,344		5,121,794		103,095			725,645
Consumer real estate		1,903,892		1,755,249		1,353,544		148,643			550,348
Consumer		128,350		150,814		135,526		(22,464	)		(7,176	)
Credit cards		382,166		371,444		438,473		10,722			(56,307	)
Leases and other		193,363		209,238		154,576		(15,875	)		38,787
Total loans	$	16,041,081	$	15,731,716	$	13,231,884	$	309,365		$	2,809,197

• Average loans for the fourth quarter of 2020 increased 2.0% on a linked-quarter basis and 21.2% compared to the fourth quarter of 2019 due to increased commercial real estate and consumer real estate loans and the company’s PPP participation, which had an average balance of $1.4 billion in the fourth quarter.

Summary of average securities - QTD Average	UMB Financial Corporation
(unaudited, dollars in thousands)
	Q4		Q3		Q4		CQ vs.			CQ vs.
	2020		2020		2019		LQ			PY
Securities available for sale:
U.S. Treasury	$	30,778	$	30,881	$	220,830	$	(103	)	$	(190,052	)
U.S. Agencies		96,082		242,504		93,258		(146,422	)		2,824
Mortgage-backed		5,053,821		4,829,586		3,967,051		224,235			1,086,770
State and political subdivisions		3,600,704		3,407,508		2,968,305		193,196			632,399
Commercial Paper		—		3,478		—		(3,478	)		—
Corporates		76,870		58,866		184,503		18,004			(107,633	)
Total securities available for sale	$	8,858,255	$	8,572,823	$	7,433,947	$	285,432		$	1,424,308
Securities held to maturity:
State and political subdivisions	$	1,045,640	$	1,085,297	$	1,117,268	$	(39,657	)	$	(71,628	)
Trading securities		29,659		32,894		56,653		(3,235	)		(26,994	)
Other securities		267,445		156,816		96,994		110,629			170,451
Total securities	$	10,200,999	$	9,847,830	$	8,704,862	$	353,169		$	1,496,137

• Average securities available for sale increased 3.3% on a linked-quarter basis and 19.2% compared to the fourth quarter of 2019.

Summary of average deposits - QTD Average				UMB Financial Corporation
(unaudited, dollars in thousands)
	Q4			Q3			Q4			CQ vs.		CQ vs.
	2020			2020			2019			LQ		PY
Deposits:
Noninterest-bearing demand	$	8,947,389		$	8,260,170		$	6,398,309		$	687,219	$	2,549,080
Interest-bearing demand and savings		15,250,236			15,125,267			12,959,948			124,969		2,290,288
Time deposits		767,755			741,750			1,028,293			26,005		(260,538	)
Total deposits	$	24,965,380		$	24,127,187		$	20,386,550		$	838,193	$	4,578,830
Noninterest bearing deposits as % of total		35.84	%		34.24	%		31.38	%

• Average deposits increased 3.5% on a linked-quarter basis and 22.5% compared to the fourth quarter of 2019.
• Average noninterest-bearing demand deposits increased 8.3% on a linked-quarter basis to $8.9 billion.

Capital

Capital information	UMB Financial Corporation
(unaudited, dollars in thousands, except per share data)
	December 31, 2020			September 30, 2020			December 31, 2019
Total equity	$	3,016,948		$	2,854,180		$	2,606,440
Book value per common share		62.84			59.43			53.09
Tangible book value per common share		58.64			55.19			48.84
Regulatory capital:
Common equity Tier 1 capital	$	2,547,634		$	2,402,785		$	2,330,533
Tier 1 capital		2,547,634			2,402,785			2,330,533
Total capital		3,002,545			2,854,598			2,505,397
Regulatory capital ratios:
Common equity Tier 1 capital ratio		12.10	%		11.93	%		12.33	%
Tier 1 risk-based capital ratio		12.10			11.93			12.33
Total risk-based capital ratio		14.26			14.17			13.26
Tier 1 leverage ratio		8.37			8.19			9.37

• At December 31, 2020, 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
	2020			2020			2020			2020			2019
Net charge-offs - Total loans	$	1,801		$	5,111		$	5,541		$	7,672		$	7,618
Net loan charge-offs as a % of total average loans		0.04	%		0.13	%		0.15	%		0.23	%		0.23	%
Loans over 90 days past due	$	1,952		$	1,372		$	4,588		$	2,211		$	2,069
Loans over 90 days past due as a % of total loans		0.01	%		0.01	%		0.03	%		0.02	%		0.02	%
Nonaccrual and restructured loans	$	87,823		$	93,695		$	82,245		$	97,029		$	56,347
Nonaccrual and restructured loans as a % of total loans		0.55	%		0.59	%		0.54	%		0.70	%		0.42	%
Provision for credit losses	$	5,000		$	16,000		$	21,500		$	88,000		$	2,000

• Provision for credit losses for the fourth quarter totaled $5.0 million, a decrease of $11.0 million from the linked quarter, and an increase of $3.0 million from the fourth quarter of 2019.
• Net charge-offs for the fourth quarter totaled $1.8 million, or 0.04%, of average loans, compared to $5.1 million, or 0.13%, of average loans in the linked quarter.

Dividend Declaration

At the company’s quarterly board meeting, the Board of Directors declared a $0.32 per share quarterly cash dividend, payable on April 1, 2021, to shareholders of record at the close of business on March 10, 2021.

Conference Call

The company plans to host a conference call to discuss its fourth quarter and full-year 2020 earnings results on Wednesday, January 27, 2021, 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 4Q 2020 Conference Call

A replay of the conference call may be heard through February 10, 2021 by calling (toll-free) 877-344-7529 or (international) 412-317-0088. The replay access code required for playback is 10150814. 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, 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, pre-tax, pre-provision income, pre-tax, pre-provision earnings per share – diluted (PTPP EPS), pre-tax, pre-provision income on a fully tax equivalent basis (PTPP-FTE), pre-tax, pre-provision FTE earnings per share – diluted (PTPP-FTE EPS), tangible shareholders’ equity, and tangible book value per share, all of which are non-GAAP financial measures. This information supplements the results that are reported according to generally accepted accounting principles in the United States (GAAP) and should not be viewed in isolation from, or as a substitute for, GAAP results. The differences between the non-GAAP financial measures – net operating income, operating EPS, operating ROE, operating ROA, operating noninterest expense, operating efficiency ratio, PTPP, PTPP EPS, PTPP-FTE, PTPP-FTE EPS, tangible shareholders’ equity, and tangible book value per share – and the nearest comparable GAAP financial measures are reconciled later in this release. The company believes that these non-GAAP financial measures and the reconciliations may be useful to investors because they adjust for acquisition-, severance-, and COVID-19 related items that management does not believe reflect the company’s fundamental operating performance. COVID-19 related expense includes hazard pay for branch associates, computer hardware expense to support associates working remotely, and additional equipment, cleaning, and janitorial supplies to protect the well-being of our associates and customers while on the company’s premises.

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

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

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

Pre-tax, pre-provision income on a fully tax equivalent basis for the relevant period is defined as GAAP net interest income on a fully tax equivalent basis plus noninterest income, less noninterest expense.

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

Forward-Looking Statements:

This press release contains, and our other communications may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “outlook,” “forecast,” “target,” “trend,” “plan,” “goal,” or other words of comparable meaning or future-tense or conditional verbs such as “may,” “will,” “should,” “would,” or “could.” Forward-looking statements convey our expectations, intentions, or forecasts about future events, circumstances, results, or aspirations. All forward-looking statements are subject to assumptions, risks, and uncertainties, which may change over time and many of which are beyond our control. You should not rely on any forward-looking statement as a prediction or guarantee about the future. Our actual future objectives, strategies, plans, prospects, performance, condition, or results may differ materially from those set forth in any forward-looking statement. Some of the factors that may cause actual results or other future events, circumstances, or aspirations to differ from those in forward-looking statements are described in our Annual Report on Form 10-K for the year ended December 31, 2019, our subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, or other applicable documents that are filed or furnished with the U.S. Securities and Exchange Commission (SEC). In addition to such factors that have been disclosed previously, the COVID-19 pandemic (the pandemic) may also cause actual results or other future events, circumstances, or aspirations to differ from our forward-looking statements. The pandemic has created a global public-health crisis that has resulted in widespread volatility and deteriorations in household, business, economic, and market conditions. It is currently adversely affecting the company and its customers, counterparties, employees, and fourth-party service providers, and the continued adverse impacts on our business, financial position, results of operations, and prospects could be significant. We are not able to accurately predict the extent of the impact of the pandemic on our capital, liquidity, and other financial positions and on our business, results of operations, and prospects at this time, and we believe it will depend on a number of evolving factors, including: (i) the duration, extent and severity of the pandemic; (ii) the response of governmental and non-governmental authorities to the pandemic, which is rapidly changing and not always coordinated or consistent across jurisdictions; (iii) the effect of the pandemic on our customers, counterparties, employees and fourth-party service providers, which may vary widely, and which is generally expected to increase our credit, counterparty, operational, and other risks; and (iv) the effect of the pandemic on economies and markets, which in turn could adversely affect, among other things, the origination of new loans and the performance of our existing loans. The pandemic is also expected to have a significant impact on our CECL calculation and related provision under a new accounting standard that we were required to adopt in January 2020. The CECL calculation includes periodic estimates of the net amount expected to be collected over the contractual term of certain financial assets, and requires us to take into account, among other things, economic conditions forecasted over the life of the financial asset, including the current and anticipated effects of the pandemic. Any forward-looking statement should be evaluated in light of these considerations. Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except to the extent required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K, or other applicable document that is filed or furnished with the SEC.

About UMB:

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

Consolidated Balance Sheets	UMB Financial Corporation
(dollars in thousands)
	December 31,
	2020			2019
	(unaudited)			(audited)
ASSETS
Loans	$	16,103,651		$	13,431,722
Allowance for credit losses on loans		(215,973	)		(101,788	)
Net loans		15,887,678			13,329,934
Loans held for sale		6,708			7,803
Securities:
Available for sale		9,299,688			7,447,362
Held to maturity, net of allowance for credit losses		1,012,004			1,116,102
Trading securities		35,020			45,618
Other securities		296,053			108,420
Total securities		10,642,765			8,717,502
Federal funds sold and resell agreements		1,650,335			1,578,345
Interest-bearing due from banks		3,110,042			1,225,491
Cash and due from banks		430,638			472,958
Premises and equipment, net		293,095			300,334
Accrued income		139,892			124,508
Goodwill		180,867			180,867
Other intangibles, net		21,056			27,597
Other assets		764,428			596,016
Total assets	$	33,127,504		$	26,561,355
LIABILITIES
Deposits:
Noninterest-bearing demand	$	9,879,970		$	6,944,465
Interest-bearing demand and savings		16,295,186			13,432,415
Time deposits under $250,000		477,748			611,587
Time deposits of $250,000 or more		398,347			614,777
Total deposits		27,051,251			21,603,244
Federal funds purchased and repurchase agreements		2,315,497			1,896,508
Long-term debt		269,595			70,372
Accrued expenses and taxes		319,676			232,200
Other liabilities		154,537			152,591
Total liabilities		30,110,556			23,954,915
SHAREHOLDERS' EQUITY
Common stock		55,057			55,057
Capital surplus		1,090,450			1,073,764
Retained earnings		1,891,246			1,672,438
Accumulated other comprehensive income, net		318,340			83,180
Treasury stock		(338,145	)		(277,999	)
Total shareholders' equity		3,016,948			2,606,440
Total liabilities and shareholders' equity	$	33,127,504		$	26,561,355

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,
	2020		2019			2020		2019
	(unaudited)		(unaudited)			(unaudited)		(audited)
INTEREST INCOME
Loans	$	152,486	$	156,503		$	585,957	$	637,845
Securities:
Taxable interest		26,226		26,996			105,701		106,053
Tax-exempt interest		25,427		24,177			99,820		90,064
Total securities income		51,653		51,173			205,521		196,117
Federal funds and resell agreements		2,567		4,875			11,840		13,843
Interest-bearing due from banks		384		2,765			3,744		12,882
Trading securities		202		504			1,427		2,205
Total interest income		207,292		215,820			808,489		862,892
INTEREST EXPENSE
Deposits		7,955		35,698			58,214		154,192
Federal funds and repurchase agreements		1,726		6,629			11,787		32,553
Other		2,936		1,130			7,259		5,242
Total interest expense		12,617		43,457			77,260		191,987
Net interest income		194,675		172,363			731,229		670,905
Provision for credit losses		5,000		2,000			130,500		32,850
Net interest income after provision for credit losses		189,675		170,363			600,729		638,055
NONINTEREST INCOME
Trust and securities processing		50,773		46,835			194,646		176,913
Trading and investment banking		9,693		6,720			32,945		23,466
Service charges on deposit accounts		20,074		20,100			83,879		82,748
Insurance fees and commissions		318		511			1,369		1,634
Brokerage fees		3,918		8,839			24,350		31,261
Bankcard fees		15,788		16,326			60,544		66,727
Investment securities gains (losses), net		113,010		(308	)		120,634		2,245
Other		14,716		11,332			41,799		41,776
Total noninterest income		228,290		110,355			560,166		426,770
NONINTEREST EXPENSE
Salaries and employee benefits		129,272		120,806			495,464		461,445
Occupancy, net		11,858		12,249			47,476		47,771
Equipment		22,008		20,803			85,719		79,086
Supplies and services		4,125		6,280			15,537		18,699
Marketing and business development		3,717		8,385			14,679		26,257
Processing fees		14,408		13,351			54,213		52,198
Legal and consulting		10,191		10,001			29,765		31,504
Bankcard		4,711		4,061			18,954		17,750
Amortization of other intangible assets		1,601		1,593			6,517		5,506
Regulatory fees		2,393		2,940			10,279		11,489
Other		22,574		2,981			43,402		27,155
Total noninterest expense		226,858		203,450			822,005		778,860
Income before income taxes		191,107		77,268			338,890		285,965
Income tax expense		34,787		10,753			52,388		42,365
NET INCOME	$	156,320	$	66,515		$	286,502	$	243,600
PER SHARE DATA
Net income – basic	$	3.26	$	1.36		$	5.95	$	4.99
Net income – diluted		3.24		1.35			5.93		4.96
Dividends		0.32		0.31			1.25		1.21
Weighted average shares outstanding – basic		47,927,358		48,828,509			48,137,791		48,779,263
Weighted average shares outstanding – diluted		48,264,097		49,187,291			48,343,750		49,089,877

Consolidated Statements of Comprehensive Income	UMB Financial Corporation
(dollars in thousands)
	Three Months Ended						Year Ended
	December 31,						December 31,
	2020			2019			2020			2019
	(unaudited)			(unaudited)			(unaudited)			(audited)
Net income	$	156,320		$	66,515		$	286,502		$	243,600
Other comprehensive income (loss), before tax:
Unrealized gains and losses on debt securities:
Change in unrealized holding gains and losses, net		25,576			(14,209	)		295,552			253,891
Less: Reclassification adjustment for gains included in net income		(1,436	)		(755	)		(6,980	)		(3,218	)
Change in unrealized gains and losses on debt securities		24,140			(14,964	)		288,572			250,673
Unrealized gains and losses on derivative hedges:
Change in unrealized gains and losses on derivative hedges, net		1,964			(2,700	)		20,979			(15,318	)
Less: Reclassification adjustment for (gains) losses included in net income		(1,036	)		728			(1,905	)		1,023
Change in unrealized gains and losses on derivative hedges		928			(1,972	)		19,074			(14,295	)
Other comprehensive income (loss), before tax		25,068			(16,936	)		307,646			236,378
Income tax (expense) benefit		(5,831	)		4,095			(72,486	)		(57,416	)
Other comprehensive income (loss)		19,237			(12,841	)		235,160			178,962
Comprehensive income	$	175,557		$	53,674		$	521,662		$	422,562

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 (Loss) Income			Treasury Stock			Total
Balance - January 1, 2019	$	55,057	$	1,054,601	$	1,488,421		$	(95,782	)	$	(273,827	)	$	2,228,470
Total comprehensive income		—		—		243,600			178,962			—			422,562
Dividends ($1.21 per share)		—		—		(59,583	)		—			—			(59,583	)
Purchase of treasury stock		—		—		—			—			(4,496	)		(4,496	)
Forfeitures of equity awards, net of issuances		—		3,820		—			—			(3,204	)		616
Recognition of equity-based compensation		—		14,234		—			—			—			14,234
Sale of treasury stock		—		344		—			—			487			831
Exercise of stock options		—		765		—			—			3,041			3,806
Balance - December 31, 2019	$	55,057	$	1,073,764	$	1,672,438		$	83,180		$	(277,999	)	$	2,606,440
(unaudited)
Balance - January 1, 2020	$	55,057	$	1,073,764	$	1,672,438		$	83,180		$	(277,999	)	$	2,606,440
Total comprehensive income		—		—		286,502			235,160			—			521,662
Dividends ($1.25 per share)		—		—		(60,655	)		—			—			(60,655	)
Purchase of treasury stock		—		616		—			—			(64,382	)		(63,766	)
Forfeitures of equity awards, net of issuances		—		624		—			—			(16	)		608
Recognition of equity-based compensation		—		14,512		—			—			—			14,512
Sale of treasury stock		—		201		—			—			414			615
Exercise of stock options		—		733		—			—			3,838			4,571
Cumulative effect adjustment		—		—		(7,039	)		—			—			(7,039	)
Balance - December 31, 2020	$	55,057	$	1,090,450	$	1,891,246		$	318,340		$	(338,145	)	$	3,016,948

Average Balances / Yields and Rates	UMB Financial Corporation
(tax - equivalent basis)
(unaudited, dollars in thousands)
	Three Months Ended December 31,
	2020						2019
	Average			Average			Average			Average
	Balance			Yield/Rate			Balance			Yield/Rate
Assets
Loans, net of unearned interest	$	16,041,081			3.78	%	$	13,231,884			4.69	%
Securities:
Taxable		5,776,606			1.81			4,654,669			2.30
Tax-exempt		4,394,734			2.91			3,993,540			3.04
Total securities		10,171,340			2.28			8,648,209			2.64
Federal funds and resell agreements		1,186,939			0.86			893,954			2.16
Interest bearing due from banks		1,443,979			0.11			633,328			1.73
Trading securities		29,659			3.21			56,653			4.09
Total earning assets		28,872,998			2.95			23,464,028			3.76
Allowance for credit losses		(217,923	)					(109,967	)
Other assets		1,930,559						1,716,962
Total assets	$	30,585,634					$	25,071,023
Liabilities and Shareholders' Equity
Interest-bearing deposits	$	16,017,991			0.20	%	$	13,988,241			1.01	%
Federal funds and repurchase agreements		1,963,865			0.35			1,661,285			1.58
Borrowed funds		274,279			4.26			70,225			6.38
Total interest-bearing liabilities		18,256,135			0.27			15,719,751			1.10
Noninterest-bearing demand deposits		8,947,389						6,398,309
Other liabilities		446,572						353,848
Shareholders' equity		2,935,538						2,599,115
Total liabilities and shareholders' equity	$	30,585,634					$	25,071,023
Net interest spread					2.68	%					2.66	%
Net interest margin					2.78						3.02

Average Balances / Yields and Rates	UMB Financial Corporation
(tax - equivalent basis)
(unaudited, dollars in thousands)
	Year Ended December 31,
	2020						2019
	Average			Average			Average			Average
	Balance			Yield/Rate			Balance			Yield/Rate
Assets
Loans, net of unearned interest	$	15,126,110			3.87	%	$	12,764,623			5.00	%
Securities:
Taxable		5,256,715			2.01			4,524,955			2.34
Tax-exempt		4,226,363			2.99			3,796,983			3.00
Total securities		9,483,078			2.45			8,321,938			2.64
Federal funds and resell agreements		1,099,447			1.08			535,393			2.59
Interest bearing due from banks		1,218,919			0.31			584,756			2.20
Trading securities		37,086			4.28			52,306			4.79
Total earning assets		26,964,640			3.10			22,259,016			3.98
Allowance for credit losses		(184,482	)					(107,422	)
Other assets		1,787,979						1,633,031
Total assets	$	28,568,137					$	23,784,625
Liabilities and Shareholders' Equity
Interest-bearing deposits	$	15,336,492			0.38	%	$	13,172,181			1.17	%
Federal funds and repurchase agreements		2,023,813			0.58			1,657,283			1.96
Borrowed funds		136,957			5.30			69,809			7.51
Total interest-bearing liabilities		17,497,262			0.44			14,899,273			1.29
Noninterest-bearing demand deposits		7,845,667						6,132,187
Other liabilities		420,247						301,318
Shareholders' equity		2,804,961						2,451,847
Total liabilities and shareholders' equity	$	28,568,137					$	23,784,625
Net interest spread					2.66	%					2.69	%
Net interest margin					2.81						3.12

Business Segment Information	UMB Financial Corporation
(unaudited, dollars in thousands)
	Three Months Ended December 31, 2020
	Commercial Banking		Institutional Banking		Personal Banking			Total
Net interest income	$	133,019	$	22,322	$	39,334		$	194,675
Provision for credit losses		3,891		116		993			5,000
Noninterest income		131,630		63,746		32,914			228,290
Noninterest expense		85,942		71,562		69,354			226,858
Income before taxes		174,816		14,390		1,901			191,107
Income tax expense		31,821		2,620		346			34,787
Net income	$	142,995	$	11,770	$	1,555		$	156,320
	Three Months Ended December 31, 2019
	Commercial Banking		Institutional Banking		Personal Banking			Total
Net interest income	$	105,479	$	33,734	$	33,150		$	172,363
Provision for credit losses		558		251		1,191			2,000
Noninterest income		19,167		62,326		28,862			110,355
Noninterest expense		65,567		71,552		66,331			203,450
Income (loss) before taxes		58,521		24,257		(5,510	)		77,268
Income tax expense (benefit)		8,144		3,376		(767	)		10,753
Net income (loss)	$	50,377	$	20,881	$	(4,743	)	$	66,515
	Year Ended December 31, 2020
	Commercial Banking		Institutional Banking		Personal Banking			Total
Net interest income	$	475,425	$	106,856	$	148,948		$	731,229
Provision for credit losses		119,424		882		10,194			130,500
Noninterest income		189,412		254,874		115,880			560,166
Noninterest expense		272,283		286,635		263,087			822,005
Income (loss) before taxes		273,130		74,213		(8,453	)		338,890
Income tax expense (benefit)		42,223		11,472		(1,307	)		52,388
Net income (loss)	$	230,907	$	62,741	$	(7,146	)	$	286,502
	Year Ended December 31, 2019
	Commercial Banking		Institutional Banking		Personal Banking			Total
Net interest income	$	412,232	$	126,591	$	132,082		$	670,905
Provision for credit losses		26,159		975		5,716			32,850
Noninterest income		81,609		232,444		112,717			426,770
Noninterest expense		267,345		268,423		243,092			778,860
Income (loss) before taxes		200,337		89,637		(4,009	)		285,965
Income tax expense (benefit)		29,679		13,280		(594	)		42,365
Net income (loss)	$	170,658	$	76,357	$	(3,415	)	$	243,600

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. Prior to 2020, the company had the following four business segments: Commercial Banking, Institutional Banking, Personal Banking, and Healthcare Services. 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, 2020.

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,
	2020			2019			2020			2019
Net income (GAAP)	$	156,320		$	66,515		$	286,502		$	243,600
Adjustments:
Acquisition expense		—			100			324			268
Severance expense		109			572			4,757			1,552
COVID-19 related expense		1,286			—			6,861			—
Tax-impact of adjustments (i)		(310	)		(149	)		(2,651	)		(404	)
Total Non-GAAP adjustments (net of tax)		1,085			523			9,291			1,416
Net operating income (Non-GAAP)	$	157,405		$	67,038		$	295,793		$	245,016
Earnings per share - diluted (GAAP)	$	3.24		$	1.35		$	5.93		$	4.96
Acquisition expense		—			—			0.01			—
Severance expense		—			0.01			0.10			0.03
COVID-19 related expense		0.03			—			0.14			—
Tax-impact of adjustments (i)		(0.01	)		—			(0.06	)		—
Operating earnings per share - diluted (Non-GAAP)	$	3.26		$	1.36		$	6.12		$	4.99
GAAP
Return on average assets		2.03	%		1.05	%		1.00	%		1.02	%
Return on average equity		21.18			10.15			10.21			9.94
Non-GAAP
Operating return on average assets		2.05	%		1.06	%		1.04	%		1.03	%
Operating return on average equity		21.33			10.23			10.55			9.99
(i) Calculated using the company’s marginal tax rate of 22.2%.

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,
	2020			2019			2020			2019
Noninterest expense	$	226,858		$	203,450		$	822,005		$	778,860
Adjustments to arrive at operating noninterest expense (pre-tax):
Acquisition expense		—			100			324			268
Severance expense		109			572			4,757			1,552
COVID-19 related expense		1,286			—			6,861			—
Total Non-GAAP adjustments (pre-tax)		1,395			672			11,942			1,820
Operating noninterest expense (Non-GAAP)	$	225,463		$	202,778		$	810,063		$	777,040
Noninterest expense	$	226,858		$	203,450		$	822,005		$	778,860
Less: Amortization of other intangibles		1,601			1,593			6,517			5,506
Noninterest expense, net of amortization of other intangibles (Non-GAAP) (numerator A)	$	225,257		$	201,857		$	815,488		$	773,354
Operating noninterest expense	$	225,463		$	202,778		$	810,063		$	777,040
Less: Amortization of other intangibles		1,601			1,593			6,517			5,506
Operating expense, net of amortization of other intangibles (Non-GAAP) (numerator B)	$	223,862		$	201,185		$	803,546		$	771,534
Net interest income	$	194,675		$	172,363		$	731,229		$	670,905
Noninterest income		228,290			110,355			560,166			426,770
Less: Gains on sales of securities available for sale, net		1,436			755			6,980			3,218
Total Non-GAAP Revenue (denominator A)	$	421,529		$	281,963		$	1,284,415		$	1,094,457
Efficiency ratio (numerator A/denominator A)		53.44	%		71.59	%		63.49	%		70.66	%
Operating efficiency ratio (Non-GAAP) (numerator B/denominator A)		53.11			71.35			62.56			70.49

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,
	2020		2019		2020		2019
Net income before taxes (GAAP)	$	191,107	$	77,268	$	338,890	$	285,965
Adjustments:
Provision for credit losses		5,000		2,000		130,500		32,850
Pre-tax, pre-provision income (Non-GAAP)	$	196,107	$	79,268	$	469,390	$	318,815
Pre-tax earnings per share - diluted (GAAP)	$	3.96	$	1.57	$	7.01	$	5.82
Provision for credit losses		0.10		0.04		2.70		0.67
Pre-tax, pre-provision earnings per share - diluted (Non-GAAP)	$	4.06	$	1.61	$	9.71	$	6.49

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,		September 30,		December 31,		Year Ended December 31,
	2020		2020		2019		2020		2019
Net interest income	$	194,675	$	184,384	$	172,363	$	731,229	$	670,905
Adjustments to arrive at net interest income - FTE:
Tax equivalent interest		6,839		6,797		6,455		26,718		23,976
Net interest income - FTE	$	201,514	$	191,181	$	178,818	$	757,947	$	694,881
Noninterest income		228,290		112,996		110,355		560,166		426,770
Less: Noninterest expense		226,858		197,995		203,450		822,005		778,860
Pre-tax, pre-provision income - FTE (Non-GAAP)	$	202,946	$	106,182	$	85,723	$	496,108	$	342,791
Net interest income earnings per share - diluted	$	4.03	$	3.84	$	3.51	$	15.12	$	13.67
Tax equivalent interest		0.14		0.14		0.13		0.55		0.49
Net interest income - FTE		4.17		3.98		3.64		15.67		14.16
Noninterest income		4.73		2.35		2.24		11.59		8.69
Less: Noninterest expense		4.70		4.12		4.14		17.00		15.87
Pre-tax, pre-provision income - FTE earnings per share - diluted (Non-GAAP)	$	4.20	$	2.21	$	1.74	$	10.26	$	6.98

Tangible book value non-GAAP reconciliations:	UMB Financial Corporation
(unaudited, dollars in thousands except share and per share data)
	As of
	December 31, 2020		December 31, 2019
Total shareholders' equity (GAAP)	$	3,016,948	$	2,606,440
Less: Intangible assets
Goodwill		180,867		180,867
Other intangibles, net		21,056		27,597
Total intangibles, net		201,923		208,464
Total tangible shareholders' equity (Non-GAAP)	$	2,815,025	$	2,397,976
Total shares outstanding		48,006,386		49,097,606
Ratio of total shareholders' equity (book value) per share	$	62.84	$	53.09
Ratio of total tangible shareholders' equity (tangible book value) per share (Non-GAAP)		58.64		48.84