UMB Financial Corporation Reports Second Quarter Net Income of $137.6 Million

Second Quarter 2022 Financial Highlights

• GAAP net income of $137.6 million, or $2.83 per diluted share.
• Operating pre-tax, pre-provision income (Operating PTPP, a non-GAAP financial measure) of $187.1 million, an increase of 56.7% compared to the first quarter of 2022.
• Average loan balances increased $1.5 billion, or 8.9% compared to the second quarter of 2021.
• Excluding Paycheck Protection Program (PPP) balances, average loans increased 23.3% on a linked-quarter, annualized basis.
• Average deposits grew 13.7% compared to the second quarter of 2021.
• Net interest margin expanded 25 basis points from the linked quarter.
• Noninterest income increased 34.0% as compared to the second quarter of 2021, equal to 44.0% of total revenue.

KANSAS CITY, Mo.--(BUSINESS WIRE)--UMB Financial Corporation (Nasdaq: UMBF), a financial services company, announced net income for the second quarter of 2022 of $137.6 million, or $2.83 per diluted share, compared to $106.0 million, or $2.17 per diluted share, in the first quarter of 2022 (linked quarter) and $87.4 million, or $1.79 per diluted share, in the second quarter of 2021. The results for the second quarter of 2022 include a pre-tax gain of $66.2 million on the sale of the company’s entire investment in Visa Inc. Class B common shares, and a pre-tax $5.0 million contribution to the company’s charitable foundation.

Net operating income, a non-GAAP financial measure reconciled later in this release to net income, the nearest comparable GAAP measure, was $137.6 million, or $2.83 per diluted share, for the second quarter of 2022, compared to $106.1 million, or $2.17 per diluted share, for the linked quarter and $87.6 million, or $1.80 per diluted share, for the second quarter of 2021. 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 $187.1 million, or $3.84 per diluted share, for the second quarter of 2022, compared to $119.4 million, or $2.44 per diluted share, for the linked quarter, and $131.6 million, or $2.71 per diluted share, for the second quarter of 2021. These operating PTPP results represent increases of 56.7% on a linked-quarter basis and 42.1%, compared to the second quarter of 2021, and include the benefit from the aforementioned gain on the sale of the company’s Visa Inc. Class B common shares net of the contribution to the company’s charitable foundation.

“Our strong financial results for the second quarter of 2022 were driven by a 23.3% linked-quarter annualized increase in average loans excluding PPP, strong net interest margin expansion, and continued momentum in our fee income businesses,” said Mariner Kemper, chairman, president and chief executive officer. “Our strong loan growth, coupled with the benefits from higher short and long-term interest rates drove a 6.9% linked-quarter increase in net interest income. Our net charge-offs were elevated this quarter driven entirely by a $27.7 million write-down related to one commercial relationship. Nonperforming loans declined 83.6% from the prior quarter as the portfolio continues to perform well. During the quarter, we made a $5.0 million contribution to the UMB Financial Corporation Charitable Foundation to continue our support of diverse and impactful philanthropic organizations within the communities we serve.”

Summary of quarterly financial results	UMB Financial Corporation
(unaudited, dollars in thousands, except per share data)
	Q2			Q1			Q2
	2022			2022			2021
Net income (GAAP)	$	137,556		$	105,963		$	87,412
Earnings per share (diluted)		2.83			2.17			1.79
Operating pre-tax, pre-provision income (Non-GAAP)		187,051			119,400			131,607
Operating pre-tax, pre-provision earnings per share (diluted)		3.84			2.44			2.71
Operating pre-tax, pre-provision income - FTE (Non-GAAP)		193,329			125,799			138,236
Operating pre-tax, pre-provision earnings per share - FTE (diluted)		3.97			2.57			2.84
Net operating income (Non-GAAP)		137,596			106,073			87,634
Operating earnings per share (diluted)		2.83			2.17			1.80
GAAP
Return on average assets		1.47	%		1.10	%		1.02	%
Return on average equity		20.83			14.65			11.43
Efficiency ratio		53.08			63.98			60.41
Non-GAAP
Operating return on average assets		1.47	%		1.10	%		1.03	%
Operating return on average equity		20.84			14.67			11.46
Operating efficiency ratio		53.06			63.93			60.33

Summary of year-to-date financial results	UMB Financial Corporation
(unaudited, dollars in thousands, except per share data)	June			June
	YTD			YTD
	2022			2021
Net income (GAAP)	$	243,519		$	180,055
Earnings per share (diluted)		4.99			3.70
Operating pre-tax, pre-provision income (Non-GAAP)		306,451			233,849
Operating pre-tax, pre-provision earnings per share (diluted)		6.29			4.81
Operating pre-tax, pre-provision income - FTE (Non-GAAP)		319,128			247,156
Operating pre-tax, pre-provision earnings per share - FTE (diluted)		6.55			5.09
Net operating income (Non-GAAP)		243,669			180,414
Operating earnings per share (diluted)		4.99			3.71
GAAP
Return on average assets		1.28	%		1.08	%
Return on average equity		17.60			11.98
Efficiency ratio		58.03			63.29
Non-GAAP
Operating return on average assets		1.28	%		1.08	%
Operating return on average equity		17.61			12.01
Operating efficiency ratio		58.00			63.21

Summary of revenue	UMB Financial Corporation
(unaudited, dollars in thousands)
	Q2			Q1			Q2			CQ vs.			CQ vs.
	2022			2022			2021			LQ			PY
Net interest income	$	224,791		$	210,355		$	201,071		$	14,436		$	23,720
Noninterest income:
Trust and securities processing		58,886			59,528			53,863			(642	)		5,023
Trading and investment banking		7,123			5,440			8,670			1,683			(1,547	)
Service charges on deposit accounts		20,835			24,642			22,592			(3,807	)		(1,757	)
Insurance fees and commissions		245			259			245			(14	)		—
Brokerage fees		12,391			3,456			2,592			8,935			9,799
Bankcard fees		17,840			16,635			16,063			1,205			1,777
Investment securities gains (losses), net		60,720			(522	)		15,455			61,242			45,265
Other		(1,705	)		14,240			12,109			(15,945	)		(13,814	)
Total noninterest income	$	176,335		$	123,678		$	131,589		$	52,657		$	44,746
Total revenue	$	401,126		$	334,033		$	332,660		$	67,093		$	68,466
Net interest income (FTE)	$	231,069		$	216,754		$	207,700
Net interest margin (FTE)		2.60	%		2.35	%		2.56	%
Total noninterest income as a % of total revenue		44.0			37.0			39.6

Net interest income

• Net interest income totaled $224.8 million, an increase of $14.4 million, or 6.9% from the linked quarter, driven by an increase of $956.9 million in average loans and the impact from increased short-term and long-term interest rates.
• Average earning assets decreased $1.8 billion, or 4.7%, largely driven by a decrease of $2.7 billion in interest-bearing due from banks, partially offset by the increase of $956.9 million in average loans noted above. Average interest-bearing liabilities declined $1.5 billion, or 6.8%, primarily driven by a decrease of $1.2 billion in interest-bearing deposits.
• Net interest margin for the second quarter was 2.60%, an increase of 25 basis points from the linked quarter, driven by an increase in loan yields of 23 basis points. Earning asset yields increased 39 basis points from the linked quarter, driven by the recent increases in short-term and long-term interest rates, mix changes, and the benefit of free funds. The cost of interest-bearing liabilities increased 26 basis points to 0.47%. Net interest spread increased 13 basis points to 2.39% from the linked quarter but was eight basis points lower than the second quarter of 2021.
• On a year-over-year basis, net interest income increased $23.7 million, or 11.8%, driven by a $2.3 billion, or 20.7% increase in average securities, coupled with a $1.5 billion, or 8.9%, increase in average loans. These increases were driven by organic loan growth and excess liquidity.
• Average deposits decreased 3.0% on a linked-quarter basis and increased 13.7% compared to the second quarter of 2021. Average noninterest-bearing demand deposit balances increased 1.3% on a linked-quarter basis and 32.8% compared to the second quarter of 2021.

Noninterest income

• Second quarter 2022 noninterest income increased $52.7 million on a linked-quarter basis, largely due to:
  • A gain of $66.2 million realized on the sale of the company’s Visa Inc. Class B common shares, partially offset by a decline of $3.7 million in mark-to-market gains on marketable securities, both recorded in investment securities gains, net.
  • An increase of $8.9 million in brokerage income, largely driven by increases in 12b-1 fees and money market income.
  • These increases were partially offset by decreases of $10.5 million in company-owned life insurance income and $4.2 million in derivative income, both recorded in other income, and a decrease of $3.8 million in service charges on deposits. The decrease in company-owned life insurance is offset by a proportionate decrease in deferred compensation expense as noted below. The decrease in service charges on deposits was primarily due to lower healthcare income related to customer transfer and conversion fees.
• Compared to the prior year, noninterest income in the second quarter of 2022 increased $44.7 million, or 34.0%, primarily driven by:
  • An increase of $45.3 million in investment securities gains, primarily due to the $66.2 million gain realized on the sale of the company’s Visa Inc. Class B common shares, partially offset by declines of $14.1 million and $5.5 million in mark-to-market gains on marketable securities and non-marketable securities, respectively.
  • An increase of $9.8 million in brokerage income, largely driven by increases in 12b-1 fees and money market income.
  • Increases of $3.7 million and $1.7 million in fund services income and corporate trust income, respectively, both recorded in trust and securities processing.
  • These increases were partially offset by decreases of $11.6 million in company-owned life insurance income and $2.6 million in derivative income, both recorded in other income, and a decrease of $1.8 million in service charges on deposits. The decrease in company-owned life insurance is offset by a proportionate decrease in deferred compensation expense as noted below. The decrease in service charges on deposits was primarily due to lower healthcare income related to customer transfer and conversion fees.

Noninterest expense

Summary of noninterest expense	UMB Financial Corporation
(unaudited, dollars in thousands)
	Q2		Q1		Q2		CQ vs.			CQ vs.
	2022		2022		2021		LQ			PY
Salaries and employee benefits	$	121,390	$	130,634	$	120,415	$	(9,244	)	$	975
Occupancy, net		11,976		12,232		12,296		(256	)		(320	)
Equipment		18,315		18,164		19,196		151			(881	)
Supplies and services		3,492		3,262		3,469		230			23
Marketing and business development		5,308		4,932		4,797		376			511
Processing fees		19,338		18,443		16,501		895			2,837
Legal and consulting		11,265		6,911		8,147		4,354			3,118
Bankcard		5,880		6,567		4,529		(687	)		1,351
Amortization of other intangible assets		1,225		1,071		1,157		154			68
Regulatory fees		3,464		3,482		2,769		(18	)		695
Other		12,474		9,080		8,062		3,394			4,412
Total noninterest expense	$	214,127	$	214,778	$	201,338	$	(651	)	$	12,789

• Noninterest expense for the second quarter of 2022 was $214.1 million, a decrease of $0.7 million, or 0.3%, from the linked quarter and an increase of $12.8 million, or 6.4%, from the second quarter of 2021.
• The linked-quarter decrease in noninterest expense was driven by:
  • A decrease of $16.4 million in employee benefits expense, recorded in salaries and employee benefits, driven primarily by a decrease of $10.7 million in deferred compensation expense and a seasonal decrease of $6.2 million in payroll taxes, insurance, and 401(k) expense recognized in the second quarter. The decrease in deferred compensation expense was offset by the decrease in company-owned life insurance income noted above.
  • These decreases were offset by an increase of $7.2 million in bonus and salary expense, recorded in salaries and employee benefits, driven by increased company performance, an increase of $4.4 million in legal and consulting expense due to the timing of multiple projects, and an increase of $4.4 million in charitable contributions expense, recorded in other expense.
• The year-over-year increase in noninterest expense was driven by:
  • An increase of $9.8 million in salaries and bonus expense, recorded in salaries and employee benefits, driven by increased company performance.
  • An increase of $4.4 million in charitable contributions expense, recorded in other expense.
  • Increases of $3.1 million in legal and consulting expense and $2.8 million in processing fees due to the timing of multiple projects.
  • An increase of $1.4 million in bankcard expense primarily due to higher processing expense.
  • These increases were partially offset by a decrease of $8.8 million in employee benefits expense, recorded in salaries and employee benefits, primarily due to a decrease of $10.4 million in deferred compensation expense. The decrease in deferred compensation expense was offset by the decrease in company-owned life insurance income noted above.

Income taxes

• The company’s effective tax rate was 18.7% for the six months ended June 30, 2022, compared to 17.0% for the same period in 2021. The increase in the effective rate in 2022 is primarily attributable to a smaller portion of income being earned from tax-exempt municipal securities.

Balance sheet

• Average total assets for the second quarter of 2022 were $37.6 billion compared to $39.2 billion for the linked quarter and $34.3 billion for the same period in 2021.

Summary of average loans and leases - QTD Average					UMB Financial Corporation
(unaudited, dollars in thousands)
	Q2		Q1		Q2		CQ vs.		CQ vs.
	2022		2022		2021		LQ		PY
Commercial and industrial	$	7,918,552	$	7,409,623	$	7,402,653	$	508,929	$	515,899
Specialty lending		518,575		463,793		505,687		54,782		12,888
Commercial real estate		6,569,784		6,338,160		6,165,780		231,624		404,004
Consumer real estate		2,458,815		2,339,050		2,068,663		119,765		390,152
Consumer		148,412		135,942		122,439		12,470		25,973
Credit cards		428,167		399,857		386,032		28,310		42,135
Leases and other		275,638		274,652		166,420		986		109,218
Total loans	$	18,317,943	$	17,361,077	$	16,817,674	$	956,866	$	1,500,269

• Average loans for the second quarter of 2022 increased 5.5% on a linked-quarter basis and 8.9% compared to the second quarter of 2021. Excluding PPP balances, average loans increased 5.8% on a linked-quarter basis and 16.8% as compared to the second quarter of 2021.

Summary of average securities - QTD Average	UMB Financial Corporation
(unaudited, dollars in thousands)
	Q2		Q1		Q2		CQ vs.			CQ vs.
	2022		2022		2021		LQ			PY
Securities available for sale:
U.S. Treasury	$	639,161	$	176,476	$	40,013	$	462,685		$	599,148
U.S. Agencies		172,798		125,017		94,794		47,781			78,004
Mortgage-backed		4,764,452		7,317,968		6,096,099		(2,553,516	)		(1,331,647	)
State and political subdivisions		1,891,377		3,170,757		3,565,443		(1,279,380	)		(1,674,066	)
Corporates		377,586		337,526		127,581		40,060			250,005
Collateralized loan obligations		247,639		150,134		—		97,505			247,639
Total securities available for sale	$	8,093,013	$	11,277,878	$	9,923,930	$	(3,184,865	)	$	(1,830,917	)
Securities held to maturity:
U.S. Agencies	$	65,964	$	133	$	—	$	65,831		$	65,964
Mortgage-backed		2,892,986		708,075		—		2,184,911			2,892,986
State and political subdivisions		2,240,018		1,185,609		1,057,091		1,054,409			1,182,927
Total securities held to maturity	$	5,198,968	$	1,893,817	$	1,057,091	$	3,305,151		$	4,141,877
Trading securities		10,190		20,836		21,409		(10,646	)		(11,219	)
Other securities		347,527		329,611		302,981		17,916			44,546
Total securities	$	13,649,698	$	13,522,142	$	11,305,411	$	127,556		$	2,344,287

• Average total securities increased 0.9% on a linked-quarter basis and 20.7% compared to the second quarter of 2021.

Summary of average deposits - QTD Average				UMB Financial Corporation
(unaudited, dollars in thousands)
	Q2			Q1			Q2			CQ vs.			CQ vs.
	2022			2022			2021			LQ			PY
Deposits:
Noninterest-bearing demand	$	14,209,159		$	14,025,585		$	10,701,656		$	183,574		$	3,507,503
Interest-bearing demand and savings		16,808,998			17,852,721			16,421,742			(1,043,723	)		387,256
Time deposits		570,812			701,973			659,228			(131,161	)		(88,416	)
Total deposits	$	31,588,969		$	32,580,279		$	27,782,626		$	(991,310	)	$	3,806,343
Noninterest bearing deposits as % of total		44.98	%		43.05	%		38.52	%

• Average deposits decreased 3.0% on a linked-quarter basis and increased 13.7% compared to the second quarter of 2021.
• Average noninterest-bearing demand deposits increased 1.3% on a linked-quarter basis to $14.2 billion.

Capital

Capital information	UMB Financial Corporation
(unaudited, dollars in thousands, except per share data)
	June 30, 2022			March 31, 2022			June 30, 2021
Total equity	$	2,642,888		$	2,748,405		$	3,090,244
Book value per common share		54.71			56.78			63.92
Tangible book value per common share (Non-GAAP)		50.64			52.69			59.96
Regulatory capital:
Common equity Tier 1 capital	$	3,055,747		$	2,938,100		$	2,730,062
Tier 1 capital		3,055,747			2,938,100			2,730,062
Total capital		3,473,040			3,369,866			3,172,878
Regulatory capital ratios:
Common equity Tier 1 capital ratio		11.44	%		11.81	%		11.91	%
Tier 1 risk-based capital ratio		11.44			11.81			11.91
Total risk-based capital ratio		13.00			13.55			13.84
Tier 1 leverage ratio		8.17			7.53			8.00

• At June 30, 2022, the regulatory capital ratios presented in the foregoing table exceeded all “well-capitalized” regulatory thresholds.

Asset Quality

Credit quality	UMB Financial Corporation
(unaudited, dollars in thousands)
	Q2			Q1			Q4			Q3			Q2
	2022			2022			2021			2021			2021
Net charge-offs - Total loans	$	28,128		$	8,378		$	8,061		$	3,127		$	28,374
Net loan charge-offs as a % of total average loans		0.62	%		0.20	%		0.19	%		0.07	%		0.68	%
Loans over 90 days past due	$	3,446		$	3,600		$	2,633		$	2,319		$	1,265
Loans over 90 days past due as a % of total loans		0.02	%		0.02	%		0.02	%		0.01	%		0.01	%
Nonaccrual and restructured loans	$	18,117		$	110,356		$	92,300		$	96,536		$	58,219
Nonaccrual and restructured loans as a % of total loans		0.10	%		0.62	%		0.54	%		0.59	%		0.34	%
Provision for credit losses	$	13,400		$	(6,500	)	$	8,500		$	(5,000	)	$	24,000

• Provision for credit losses for the second quarter increased $19.9 million from the linked quarter and decreased $10.6 million from the second quarter of 2021. Provision expense in the first quarter of 2022 represented a release of the Allowance for Credit Losses (ACL) based on positive macro-economic data and portfolio credit metrics.
• Net charge-offs for the second quarter totaled $28.1 million, or 0.62%, of average loans, compared to $8.4 million, or 0.20%, of average loans in the linked quarter, and $28.4 million, or 0.68%, of average loans for the second quarter of 2021.
• The increase in net charge-offs in the second quarter of 2022 is due to a $27.7 million write-down on a single commercial relationship.
• Nonaccrual loans decreased 83.6% from the linked quarter to 0.10% of total loans.

Dividend Declaration

At the company’s quarterly board meeting, the Board of Directors declared a $0.37 per share quarterly cash dividend, payable on October 3, 2022, to shareholders of record at the close of business on September 12, 2022.

Conference Call

The company plans to host a conference call to discuss its second quarter 2022 earnings results on Wednesday, July 27, 2022, at 9:30 a.m. (CT).

Interested parties may access the call by dialing (toll-free) 844-200-6205 or (international) 929-526-1599 and requesting to join the UMB Financial call with access code 636921. The live call may also be accessed by visiting investorrelations.umb.com or by using the following link:

UMB Financial 2Q 2022 Conference Call

A replay of the conference call may be heard through August 10, 2022 by calling (toll-free) 866-813-9403 or (international) 929-458-6194. The replay access code required for playback is 826164. 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, 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, operating PTPP, operating PTPP EPS, operating PTPP-FTE, operating 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, 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 COVID-19 related expense.

Operating PTPP-FTE for the relevant period is defined as GAAP net interest income on a fully tax equivalent basis plus GAAP noninterest income, less noninterest expense, adjusted to reflect the impact of excluding expenses related to acquisitions, severance expense and COVID-19 related 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, 2021, 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 other challenges and uncertainties related to the COVID-19 pandemic, such as the impacts to the U.S. and global economies; and impacts related to or resulting from Russia’s military action in Ukraine, such as the broader impacts to financial markets and the global macroeconomic and geopolitical environments, may also cause actual results or other future events, circumstances, or aspirations to differ from our forward-looking statements. Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except to the extent required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K, or other applicable document that is filed or furnished with the SEC.

About UMB:

UMB Financial Corporation (Nasdaq: UMBF) is a financial services company headquartered in Kansas City, Missouri. UMB offers commercial banking, which includes comprehensive deposit, lending and investment services, personal banking, which includes wealth management and financial planning services, and institutional banking, which includes asset servicing, corporate trust solutions, investment banking, and healthcare services. UMB operates branches throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas. As the company’s reach continues to grow, it also serves business clients nationwide and institutional clients in several countries. For more information, visit UMB.com, UMB Blog, UMB Facebook and UMB LinkedIn, or follow us on Twitter at @UMBBank.

Consolidated Balance Sheets	UMB Financial Corporation
(unaudited, dollars in thousands)
	June 30,
	2022			2021
ASSETS
Loans	$	18,972,158		$	16,910,790
Allowance for credit losses on loans		(164,346	)		(200,563	)
Net loans		18,807,812			16,710,227
Loans held for sale		750			5,303
Securities:
Available for sale		7,739,216			10,347,531
Held to maturity, net of allowance for credit losses		5,707,282			1,081,173
Trading securities		9,646			40,552
Other securities		342,543			254,315
Total securities		13,798,687			11,723,571
Federal funds sold and resell agreements		1,055,459			1,146,521
Interest-bearing due from banks		1,825,295			5,059,098
Cash and due from banks		360,242			469,883
Premises and equipment, net		257,729			281,011
Accrued income		144,874			131,188
Goodwill		182,225			174,518
Other intangibles, net		14,465			16,636
Other assets		1,060,303			901,059
Total assets	$	37,507,841		$	36,619,015
LIABILITIES
Deposits:
Noninterest-bearing demand	$	14,925,555		$	12,513,031
Interest-bearing demand and savings		16,007,087			16,857,127
Time deposits under $250,000		383,832			430,713
Time deposits of $250,000 or more		169,550			247,600
Total deposits		31,486,024			30,048,471
Federal funds purchased and repurchase agreements		2,661,283			2,783,389
Long-term debt		272,505			270,558
Accrued expenses and taxes		182,185			254,589
Other liabilities		262,956			171,764
Total liabilities		34,864,953			33,528,771
SHAREHOLDERS' EQUITY
Common stock		55,057			55,057
Capital surplus		1,115,504			1,098,139
Retained earnings		2,384,454			2,040,134
Accumulated other comprehensive (loss) income, net		(564,803	)		223,107
Treasury stock		(347,324	)		(326,193	)
Total shareholders' equity		2,642,888			3,090,244
Total liabilities and shareholders' equity	$	37,507,841		$	36,619,015

Consolidated Statements of Income	UMB Financial Corporation
(unaudited, dollars in thousands except share and per share data)
	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2022			2021		2022		2021
INTEREST INCOME
Loans	$	169,919		$	154,537	$	319,389	$	304,707
Securities:
Taxable interest		47,295			29,780		90,677		56,942
Tax-exempt interest		23,538			24,743		47,393		49,707
Total securities income		70,833			54,523		138,070		106,649
Federal funds and resell agreements		3,497			2,552		5,947		5,373
Interest-bearing due from banks		4,207			833		6,664		1,536
Trading securities		114			189		299		348
Total interest income		248,570			212,634		470,369		418,613
INTEREST EXPENSE
Deposits		15,439			6,574		21,612		13,372
Federal funds and repurchase agreements		4,998			1,779		7,146		3,665
Other		3,342			3,210		6,465		6,390
Total interest expense		23,779			11,563		35,223		23,427
Net interest income		224,791			201,071		435,146		395,186
Provision for credit losses		13,400			24,000		6,900		16,500
Net interest income after provision for credit losses		211,391			177,071		428,246		378,686
NONINTEREST INCOME
Trust and securities processing		58,886			53,863		118,414		108,697
Trading and investment banking		7,123			8,670		12,563		18,026
Service charges on deposit accounts		20,835			22,592		45,477		44,568
Insurance fees and commissions		245			245		504		665
Brokerage fees		12,391			2,592		15,847		5,926
Bankcard fees		17,840			16,063		34,475		30,736
Investment securities gains, net		60,720			15,455		60,198		7,119
Other		(1,705	)		12,109		12,535		24,749
Total noninterest income		176,335			131,589		300,013		240,486
NONINTEREST EXPENSE
Salaries and employee benefits		121,390			120,415		252,024		248,096
Occupancy, net		11,976			12,296		24,208		24,231
Equipment		18,315			19,196		36,479		38,811
Supplies and services		3,492			3,469		6,754		6,961
Marketing and business development		5,308			4,797		10,240		7,142
Processing fees		19,338			16,501		37,781		31,918
Legal and consulting		11,265			8,147		18,176		13,902
Bankcard		5,880			4,529		12,447		9,485
Amortization of other intangible assets		1,225			1,157		2,296		2,537
Regulatory fees		3,464			2,769		6,946		5,315
Other		12,474			8,062		21,554		13,886
Total noninterest expense		214,127			201,338		428,905		402,284
Income before income taxes		173,599			107,322		299,354		216,888
Income tax expense		36,043			19,910		55,835		36,833
NET INCOME	$	137,556		$	87,412	$	243,519	$	180,055
PER SHARE DATA
Net income – basic	$	2.85		$	1.81	$	5.03	$	3.74
Net income – diluted		2.83			1.79		4.99		3.70
Dividends		0.37			0.32		0.74		0.64
Weighted average shares outstanding – basic		48,347,226			48,294,952		48,376,868		48,196,345
Weighted average shares outstanding – diluted		48,673,964			48,698,319		48,755,059		48,604,140

Consolidated Statements of Comprehensive Income	UMB Financial Corporation
(unaudited, dollars in thousands)
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Net income	$	137,556		$	87,412		$	243,519		$	180,055
Other comprehensive (loss) income, before tax:
Unrealized gains and losses on debt securities:
Change in unrealized holding gains and losses, net		(308,352	)		76,335			(931,262	)		(122,703	)
Less: Reclassification adjustment for gains included in net income		—			(1,300	)		—			(4,020	)
Amortization of net unrealized loss on securities transferred from available-for-sale to held-to-maturity		12,539			—			13,121			—
Change in unrealized gains and losses on debt securities		(295,813	)		75,035			(918,141	)		(126,723	)
Unrealized gains and losses on derivative hedges:
Change in unrealized gains and losses on derivative hedges, net		4,437			(3,422	)		9,117			3,081
Less: Reclassification adjustment for gains included in net income		(1,090	)		(877	)		(1,941	)		(1,719	)
Change in unrealized gains and losses on derivative hedges		3,347			(4,299	)		7,176			1,362
Other comprehensive (loss) income, before tax		(292,466	)		70,736			(910,965	)		(125,361	)
Income tax benefit (expense)		70,791			(16,826	)		219,848			30,128
Other comprehensive (loss) income		(221,675	)		53,910			(691,117	)		(95,233	)
Comprehensive (loss) income	$	(84,119	)	$	141,322		$	(447,598	)	$	84,822

Consolidated Statements of Shareholders' Equity			UMB Financial Corporation
(unaudited, dollars in thousands except per share data)
	Common Stock		Capital Surplus			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
Balance - January 1, 2021	$	55,057	$	1,090,450		$	1,891,246		$	318,340		$	(338,145	)	$	3,016,948
Total comprehensive income (loss)		—		—			180,055			(95,233	)		—			84,822
Dividends ($0.64 per share)		—		—			(31,167	)		—			—			(31,167	)
Purchase of treasury stock		—		—			—			—			(4,088	)		(4,088	)
Issuances of equity awards, net of forfeitures		—		(4,122	)		—			—			4,817			695
Recognition of equity-based compensation		—		8,609			—			—			—			8,609
Sale of treasury stock		—		148			—			—			153			301
Exercise of stock options		—		3,054			—			—			11,070			14,124
Balance - June 30, 2021	$	55,057	$	1,098,139		$	2,040,134		$	223,107		$	(326,193	)	$	3,090,244
Balance - January 1, 2022	$	55,057	$	1,110,520		$	2,176,998		$	126,314		$	(323,465	)	$	3,145,424
Total comprehensive income (loss)		—		—			243,519			(691,117	)		—			(447,598	)
Dividends ($0.74 per share)		—		—			(36,063	)		—			—			(36,063	)
Purchase of treasury stock		—		—			—			—			(31,806	)		(31,806	)
Issuances of equity awards, net of forfeitures		—		(6,630	)		—			—			7,309			679
Recognition of equity-based compensation		—		11,223			—			—			—			11,223
Sale of treasury stock		—		174			—			—			111			285
Exercise of stock options		—		217			—			—			527			744
Balance - June 30, 2022	$	55,057	$	1,115,504		$	2,384,454		$	(564,803	)	$	(347,324	)	$	2,642,888

Average Balances / Yields and Rates	UMB Financial Corporation
(tax - equivalent basis)
(unaudited, dollars in thousands)
	Three Months Ended June 30,
	2022						2021
	Average			Average			Average			Average
	Balance			Yield/Rate			Balance			Yield/Rate
Assets
Loans, net of unearned interest	$	18,317,943			3.72	%	$	16,817,674			3.69	%
Securities:
Taxable		9,825,114			1.93			6,994,559			1.71
Tax-exempt		3,814,394			3.13			4,289,443			2.93
Total securities		13,639,508			2.27			11,284,002			2.17
Federal funds and resell agreements		1,100,918			1.27			1,110,433			0.92
Interest bearing due from banks		2,632,307			0.64			3,343,311			0.10
Trading securities		10,190			5.35			21,409			4.27
Total earning assets		35,700,866			2.86			32,576,829			2.70
Allowance for credit losses		(182,118	)					(199,379	)
Other assets		2,043,977						1,886,774
Total assets	$	37,562,725					$	34,264,224
Liabilities and Shareholders' Equity
Interest-bearing deposits	$	17,379,810			0.36	%	$	17,080,970			0.15	%
Federal funds and repurchase agreements		2,658,219			0.75			2,744,516			0.26
Borrowed funds		272,254			4.92			270,305			4.76
Total interest-bearing liabilities		20,310,283			0.47			20,095,791			0.23
Noninterest-bearing demand deposits		14,209,159						10,701,656
Other liabilities		394,923						398,319
Shareholders' equity		2,648,360						3,068,458
Total liabilities and shareholders' equity	$	37,562,725					$	34,264,224
Net interest spread					2.39	%					2.47	%
Net interest margin					2.60						2.56

Average Balances / Yields and Rates	UMB Financial Corporation
(tax - equivalent basis)
(unaudited, dollars in thousands)
	Six Months Ended June 30,
	2022						2021
	Average			Average			Average			Average
	Balance			Yield/Rate			Balance			Yield/Rate
Assets
Loans, net of unearned interest	$	17,842,153			3.61	%	$	16,533,463			3.72	%
Securities:
Taxable		9,644,345			1.90			6,698,020			1.71
Tax-exempt		3,926,444			3.08			4,295,317			2.95
Total securities		13,570,789			2.24			10,993,337			2.20
Federal funds and resell agreements		1,182,891			1.01			1,375,689			0.79
Interest bearing due from banks		3,965,267			0.34			3,079,684			0.10
Trading securities		15,484			4.70			19,485			4.28
Total earning assets		36,576,584			2.66			32,001,658			2.72
Allowance for credit losses		(190,123	)					(209,469	)
Other assets		1,966,176						1,862,036
Total assets	$	38,352,637					$	33,654,225
Liabilities and Shareholders' Equity
Interest-bearing deposits	$	17,964,006			0.24	%	$	17,076,681			0.16	%
Federal funds and repurchase agreements		2,815,130			0.51			2,632,567			0.28
Borrowed funds		271,994			4.79			269,942			4.77
Total interest-bearing liabilities		21,051,130			0.34			19,979,190			0.24
Noninterest-bearing demand deposits		14,117,879						10,230,287
Other liabilities		393,732						414,535
Shareholders' equity		2,789,896						3,030,213
Total liabilities and shareholders' equity	$	38,352,637					$	33,654,225
Net interest spread					2.32	%					2.48	%
Net interest margin					2.47						2.57

Business Segment Information	UMB Financial Corporation
(unaudited, dollars in thousands)
	Three Months Ended June 30, 2022
	Commercial Banking		Institutional Banking		Personal Banking		Total
Net interest income	$	149,094	$	34,981	$	40,716	$	224,791
Provision for credit losses		12,067		89		1,244		13,400
Noninterest income		56,894		81,082		38,359		176,335
Noninterest expense		79,521		76,511		58,095		214,127
Income before taxes		114,400		39,463		19,736		173,599
Income tax expense		23,752		8,193		4,098		36,043
Net income	$	90,648	$	31,270	$	15,638	$	137,556
	Three Months Ended June 30, 2021
	Commercial Banking		Institutional Banking		Personal Banking		Total
Net interest income	$	142,878	$	21,258	$	36,935	$	201,071
Provision for credit losses		21,993		147		1,860		24,000
Noninterest income		37,106		68,745		25,738		131,589
Noninterest expense		73,472		72,575		55,291		201,338
Income before taxes		84,519		17,281		5,522		107,322
Income tax expense		15,679		3,206		1,025		19,910
Net income	$	68,840	$	14,075	$	4,497	$	87,412
	Six Months Ended June 30, 2022
	Commercial Banking		Institutional Banking		Personal Banking		Total
Net interest income	$	294,096	$	61,233	$	79,817	$	435,146
Provision for credit losses		5,027		240		1,633		6,900
Noninterest income		83,594		154,354		62,065		300,013
Noninterest expense		159,110		152,112		117,683		428,905
Income before taxes		213,553		63,235		22,566		299,354
Income tax expense		39,831		11,795		4,209		55,835
Net income	$	173,722	$	51,440	$	18,357	$	243,519
	Six Months Ended June 30, 2021
	Commercial Banking		Institutional Banking		Personal Banking		Total
Net interest income	$	279,287	$	43,397	$	72,502	$	395,186
Provision for credit losses		13,816		367		2,317		16,500
Noninterest income		45,281		137,166		58,039		240,486
Noninterest expense		143,196		143,857		115,231		402,284
Income before taxes		167,556		36,339		12,993		216,888
Income tax expense		28,455		6,171		2,207		36,833
Net income	$	139,101	$	30,168	$	10,786	$	180,055

The company has strategically aligned its operations into the following three reportable segments: Commercial Banking, Institutional Banking, and Personal Banking. Senior executive officers regularly evaluate business segment financial results produced by the company’s internal reporting system in deciding how to allocate resources and assess performance for individual business segments. The company’s reportable segments include certain corporate overhead, technology and service costs that are allocated based on methodologies that are applied consistently between periods. For comparability purposes, amounts in all periods are based on methodologies in effect at June 30, 2022.

Non-GAAP Financial Measures

Net operating income Non-GAAP reconciliations:	UMB Financial Corporation
(unaudited, dollars in thousands except per share data)
	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Net income (GAAP)	$	137,556		$	87,412		$	243,519		$	180,055
Adjustments:
Acquisition expense		—			—			—			—
Severance expense		52			103			197			124
COVID-19 related expense		—			182			—			337
Tax-impact of adjustments (i)		(12	)		(63	)		(47	)		(102	)
Total Non-GAAP adjustments (net of tax)		40			222			150			359
Net operating income (Non-GAAP)	$	137,596		$	87,634		$	243,669		$	180,414
Earnings per share - diluted (GAAP)	$	2.83		$	1.79		$	4.99		$	3.70
Acquisition expense		—			—			—			—
Severance expense		—			—			—			—
COVID-19 related expense		—			0.01			—			0.01
Tax-impact of adjustments (i)		—			—			—			—
Operating earnings per share - diluted (Non-GAAP)	$	2.83		$	1.80		$	4.99		$	3.71
GAAP
Return on average assets		1.47	%		1.02	%		1.28	%		1.08	%
Return on average equity		20.83			11.43			17.60			11.98
Non-GAAP
Operating return on average assets		1.47	%		1.03	%		1.28	%		1.08	%
Operating return on average equity		20.84			11.46			17.61			12.01

(i) Calculated using the company’s marginal tax rate of 24.0% in 2022 and 22.2% in 2021.

Operating noninterest expense and operating efficiency ratio Non-GAAP reconciliations:							UMB Financial Corporation
(unaudited, dollars in thousands)
	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Noninterest expense	$	214,127		$	201,338		$	428,905		$	402,284
Adjustments to arrive at operating noninterest expense (pre-tax):
Acquisition expense		—			—			—			—
Severance expense		52			103			197			124
COVID-19 related expense		—			182			—			337
Total Non-GAAP adjustments (pre-tax)		52			285			197			461
Operating noninterest expense (Non-GAAP)	$	214,075		$	201,053		$	428,708		$	401,823
Noninterest expense	$	214,127		$	201,338		$	428,905		$	402,284
Less: Amortization of other intangibles		1,225			1,157			2,296			2,537
Noninterest expense, net of amortization of other intangibles (Non-GAAP) (numerator A)	$	212,902		$	200,181		$	426,609		$	399,747
Operating noninterest expense	$	214,075		$	201,053		$	428,708		$	401,823
Less: Amortization of other intangibles		1,225			1,157			2,296			2,537
Operating expense, net of amortization of other intangibles (Non-GAAP) (numerator B)	$	212,850		$	199,896		$	426,412		$	399,286
Net interest income	$	224,791		$	201,071		$	435,146		$	395,186
Noninterest income		176,335			131,589			300,013			240,486
Less: Gains on sales of securities available for sale, net		—			1,300			—			4,020
Total Non-GAAP Revenue (denominator A)	$	401,126		$	331,360		$	735,159		$	631,652
Efficiency ratio (numerator A/denominator A)		53.08	%		60.41	%		58.03	%		63.29	%
Operating efficiency ratio (Non-GAAP) (numerator B/denominator A)		53.06			60.33			58.00			63.21

Operating pre-tax, pre-provision income non-GAAP reconciliations:							UMB Financial Corporation
(unaudited, dollars in thousands except per share data)
	Three Months Ended						Six Months Ended
	June 30,		March 31,		June 30,		June 30,
	2022		2022		2021		2022		2021
Net interest income (GAAP)	$	224,791	$	210,355	$	201,071	$	435,146	$	395,186
Noninterest income (GAAP)		176,335		123,678		131,589		300,013		240,486
Noninterest expense (GAAP)		214,127		214,778		201,338		428,905		402,284
Adjustments to arrive at operating noninterest expense:
Acquisition expense		—		—		—		—		—
Severance expense		52		145		103		197		124
COVID-19 related expense		—		—		182		—		337
Total Non-GAAP adjustments		52		145		285		197		461
Operating noninterest expense (Non-GAAP)		214,075		214,633		201,053		428,708		401,823
Operating pre-tax, pre-provision income (Non-GAAP)	$	187,051	$	119,400	$	131,607	$	306,451	$	233,849
Net interest income earnings per share - diluted (GAAP)	$	4.62	$	4.31	$	4.13	$	8.93	$	8.13
Noninterest income (GAAP)		3.62		2.53		2.70		6.16		4.95
Noninterest expense (GAAP)		4.40		4.40		4.13		8.80		8.28
Acquisition expense		—		—		—		—		—
Severance expense		—		—		—		—		—
COVID-19 related expense		—		—		0.01		—		0.01
Operating pre-tax, pre-provision earnings per share - diluted (Non-GAAP)	$	3.84	$	2.44	$	2.71	$	6.29	$	4.81

Operating pre-tax, pre-provision income - FTE Non-GAAP reconciliations:							UMB Financial Corporation
(unaudited, dollars in thousands except per share data)
	Three Months Ended						Six Months Ended
	June 30,		March 31,		June 30,		June 30,
	2022		2022		2021		2022		2021
Net interest income (GAAP)	$	224,791	$	210,355	$	201,071	$	435,146	$	395,186
Adjustments to arrive at net interest income - FTE:
Tax equivalent interest		6,278		6,399		6,629		12,677		13,307
Net interest income - FTE (Non-GAAP)	$	231,069	$	216,754	$	207,700	$	447,823	$	408,493
Noninterest income (GAAP)		176,335		123,678		131,589		300,013		240,486
Noninterest expense (GAAP)		214,127		214,778		201,338		428,905		402,284
Adjustments to arrive at operating noninterest expense:
Acquisition expense		—		—		—		—		—
Severance expense		52		145		103		197		124
COVID-19 related expense		—		—		182		—		337
Total Non-GAAP adjustments		52		145		285		197		461
Operating noninterest expense (Non-GAAP)		214,075		214,633		201,053		428,708		401,823
Operating pre-tax, pre-provision income - FTE (Non-GAAP)	$	193,329	$	125,799	$	138,236	$	319,128	$	247,156
Net interest income earnings per share - diluted (GAAP)	$	4.62	$	4.31	$	4.13	$	8.93	$	8.13
Tax equivalent interest		0.13		0.13		0.13		0.26		0.28
Net interest income - FTE (Non-GAAP)		4.75		4.44		4.26		9.19		8.41
Noninterest income (GAAP)		3.62		2.53		2.70		6.16		4.95
Noninterest expense (GAAP)		4.40		4.40		4.13		8.80		8.28
Acquisition expense		—		—		—		—		—
Severance expense		—		—		—		—		—
COVID-19 related expense		—		—		0.01		—		0.01
Operating pre-tax, pre-provision income - FTE earnings per share - diluted (Non-GAAP)	$	3.97	$	2.57	$	2.84	$	6.55	$	5.09

Tangible book value non-GAAP reconciliations:	UMB Financial Corporation
(unaudited, dollars in thousands except share and per share data)
	As of June 30,
	2022		2021
Total shareholders' equity (GAAP)	$	2,642,888	$	3,090,244
Less: Intangible assets
Goodwill		182,225		174,518
Other intangibles, net		14,465		16,636
Total intangibles, net		196,690		191,154
Total tangible shareholders' equity (Non-GAAP)	$	2,446,198	$	2,899,090
Total shares outstanding		48,305,286		48,346,371
Ratio of total shareholders' equity (book value) per share	$	54.71	$	63.92
Ratio of total tangible shareholders' equity (tangible book value) per share (Non-GAAP)		50.64		59.96