UMB Financial Corporation Reports Record Full-Year 2012 Earnings of $122.7 Million

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UMB Financial Corporation Reports Record Full-Year 2012 Earnings of $122.7 Million

Selected fourth quarter financial highlights:

  • Average net loans increased 11.6 percent to $5.4 billion
  • Eleventh consecutive quarter of loan growth
  • Average deposits increased 12.0 percent to $11.1 billion
  • Total credit and debit card purchase volume increased 8.4 percent to $1.4 billion
  • Total company assets under management increased by 18.4 percent to $33.1 billion
  • Tier 1 capital ratio remains strong at 11.05 percent

KANSAS CITY, Mo--(BUSINESS WIRE)-- UMB Financial Corporation (NAS: UMBF) , a diversified financial holding company, announced earnings for the three months ended December 31, 2012 of $21.1 million or $0.53 per share ($0.52 diluted). This is a decrease of $2.2 million, or 9.5 percent, compared to fourth quarter 2011 earnings of $23.3 million or $0.58 per share ($0.58 diluted). Earnings for the year ended December 31, 2012 were $122.7 million or $3.07 per share ($3.04 diluted). This is an increase of $16.2 million, or 15.3 percent, compared to the prior year-to-date earnings of $106.5 million or $2.66 per share ($2.64 diluted).

"Earnings grew 15.3 percent to $122.7 million in 2012, making it our third record year in the last five for UMB as we close out our first century in business," said Mariner Kemper, Chairman and Chief Executive Officer. "2013 marks our 100th anniversary and we believe our diverse business model will continue to serve us well for the next century. I am pleased to report the eleventh consecutive quarter of loan growth, with average loan balances reaching $5.4 billion, or an increase of 11.6 percent over the same period a year ago. Compared to the industry, the nearly 1,000 regulated depositories that had announced fourth quarter results as of January 21 reported a median increase in loan balances of just 1.5 percent. Noninterest income increased $11.5 million or 11.8 percent during the fourth quarter. Negatively impacting our expenses for the quarter was a non-cash accounting entry of $4.2 million, compared to an entry of $1.8 million in the fourth quarter of 2011, related to the contingent consideration liabilities on acquisitions."

Net Interest Income and Margin

Net interest income for the fourth quarter of 2012 increased $0.7 million, or 0.9 percent, compared to the same period in 2011. Average earning assets increased by $1.3 billion, or 11.4 percent, compared to the fourth quarter of 2011. This increase was due to a $915.7 million, or 15.3 percent, increase in average total securities, including trading securities and a $565.1 million, or 11.6 percent, increase in average loans offset by a $156.5 million decrease in average interest bearing due from banks. Net interest margin decreased 27 basis points to 2.64 percent for the three months ended December 31, 2012 compared to the same quarter in 2011.

Noninterest Income and Expense

Noninterest income increased $11.5 million, or 11.8 percent, for the three months ended December 31, 2012 compared to the same period in 2011. This increase is primarily attributed to an increase in trust and securities processing income of $7.2 million, or 14.2 percent, for the three months ended December 31, 2012 compared to the same period in 2011. The increase in trust and securities processing income was primarily due to a $4.3 million, or 28.5 percent, in advisory fee income from the Scout Funds and a $1.3 million, or 7.9 percent, increase in fund administration and custody services and a $1.4 million, or 8.5 percent, increase in fees related to institutional and personal investment management services.

Noninterest expense increased $15.7 million, or 11.1 percent, for the three months ended December 31, 2012 compared to the same period in 2011. This increase is driven by higher salary and benefits expense in 2012 of $9.1 million, or 12.3 percent. The higher salaries and benefits expense is due to increases in salaries and wages of $4.4 million, or 9.4 percent and a $2.8 million, or 25.8 percent, increase in employee benefits expense. Other expense increased $2.3 million, or 24.6 percent, due to fair value adjustments to the contingent consideration liabilities on acquisitions. In the fourth quarter of 2012, these adjustments totaled $4.2 million compared to $1.8 million for the same period in 2011.

"We continue to see momentum in our diversified fee businesses and are pleased with the 58 percent contribution to revenue they provided in the fourth quarter," said Peter deSilva, President and Chief Operating Officer. "Institutional Investment Management, which is our Scout Investments business, grew assets under management to $23.5 billion at year-end, an increase of 19.6 percent from a year ago. In our Payment Solutions segment, spending in all of our card products increased by 8.4 percent versus the fourth quarter of 2011. Spending on commercial credit cards grew 16 percent, and this business continues to be a solid contributor to our fee income. Our wealth management platform for individuals ended the quarter with assets under management of $9.6 billion, which when combined with Scout, brought total company assets under management to $33.1 billion at the end of the quarter, an increase of 18.4 percent compared to year-end 2011."

Balance Sheet

Average total assets for the three months ended December 31, 2012 were $13.9 billion compared to $12.5 billion for the same period in 2011, an increase of $1.3 billion, or 10.6 percent. Average earning assets increased by $1.3 billion for the period, or 11.4 percent.

Average loan balances for the three months ended December 31, 2012 increased $565.1 million, or 11.6 percent, to $5.4 billion compared to the same period in 2011. Actual loan balances on December 31, 2012 were $5.7 billion, an increase of $726.4 million, or 14.6 percent, compared to December 31, 2011. This increase was primarily driven by an increase in commercial loans of $638.9 million, or 28.6 percent.

Nonperforming loans increased to $28.1 million on December 31, 2012 from $25.6 million on December 31, 2011. As a percentage of loans, nonperforming loans decreased to 0.49 percent as of December 31, 2012 compared to 0.52 percent on December 31, 2011. Nonperforming loans are defined as nonaccrual loans and restructured loans. The company's allowance for loan losses totaled $71.4 million, or 1.26 percent of loans, as of December 31, 2012 compared to $72.0 million, or 1.45 percent of loans, as of December 31, 2011.

For the three months ended December 31, 2012, average securities, including trading securities, totaled $6.9 billion. This is an increase of $915.7 million, or 15.3 percent, from the same period in 2011.

Average total deposits increased $1.2 billion, or 12.0 percent, to $11.1 billion for the three months ended December 31, 2012 compared to the same period in 2011. Average noninterest-bearing demand deposits increased $848.3 million, or 22.0 percent, compared to 2011. Average interest-bearing deposits increased by $342.8 million, or 5.7 percent, in 2012 as compared to 2011. Total deposits as of December 31, 2012 were $11.7 billion, compared to $10.2 billion as of December 31, 2011, a 14.6 percent increase. Also, as of December 31, 2012, noninterest-bearing demand deposits were 42.2 percent of total deposits.

"We believe the strength of our balance sheet allows us to be nimble as the economic climate changes," said Mike Hagedorn, Chief Financial Officer. "Our balance sheet grew 10.6 percent and average earning assets increased 11.4 percent compared to the fourth quarter of 2011. Our long-term strategy is to reduce our overall interest rate risk and evaluate our mix of earning assets in order to diminish our reliance on the securities portfolio. Additionally, our capital position increased 7.4 percent. We believe that a strong balance sheet, sound capital levels and low-cost funding are all essential to our continued success."

As of December 31, 2012, UMB had total shareholders' equity of $1.3 billion, an increase of 7.4 percent as compared to the same period in 2011.

Dividend Declaration

The Board of Directors declared during the company's quarterly board meeting a $0.215 quarterly cash dividend, payable on April 1, 2013, to shareholders of record at the close of business on March 8, 2013.

Year-to-Date

Earnings for the year ended December 31, 2012 were $122.7 million or $3.07 per share ($3.04 diluted). This is an increase of $16.2 million, or 15.3 percent, compared to the prior year-to-date earnings of $106.5 million or $2.66 per share ($2.64 diluted).

Net interest income for the year ended December 31, 2012 increased $3.1 million, or 1.0 percent, compared to the same period in 2011. Net interest margin decreased to 2.75 percent for the year ended December 31, 2012 as compared to 2.94 percent for the same period in 2011.

Noninterest income increased $43.8 million, or 10.6 percent, to $458.1 million for the year ended December 31, 2012 as compared to the same period in 2011. Trust and securities processing income increased $16.7 million, or 8.0 percent, for year ended December 31, 2012 as compared to the same period in 2011. Gains from the sale of securities available for sale of $20.2 million were recognized during 2012 compared to $16.1 million for 2011. Other noninterest income increased $14.6 million, or 109.7 percent, primarily driven by an $8.7 million adjustment decreasing the contingent consideration liabilities on acquisitions. These adjustments were due to the adoption of new accounting guidance related to fair value measurements and additional changes in cash flow projections. Fair value adjustments on interest rate swap transactions increased $2.4 million compared to 2011. Gains of $0.6 million were recognized on the sale of two branches during 2012.

Noninterest expense increased $27.7 million, or 4.9 percent, for the year ended December 31, 2012 compared to the same period in 2011. Salary and employee benefit expense increased by $25.1 million, or 8.5 percent, offset by a $7.8 million escrow fund established during the second quarter of 2011 to settle a class action lawsuit. Marketing and business development increased $4.5 million compared to 2011 driven by increased advertising campaigns and business development. Other noninterest expense increased $3.0 million, or 10.2 percent, primarily driven by an increase in contingent consideration liabilities on acquisitions of $3.5 million compared to 2011.

Conference Call

The company plans to host a conference call to discuss its 2012 fourth quarter and year-end earnings results on January 23, 2013, at 8:30 a.m. (CDT).

Interested parties may access the call by dialing (toll-free) 877-941-9205 or (U.S.) 480-629-9771. The live call can also be accessed by visiting the investor relations area of umb.com or by using the following the link:

http://event.on24.com/r.htm?e=563113&s=1&k=844A2E5EA0BE866C7D426841E92F4343

A replay of the conference call may be heard until February 6, 2013 by calling (toll-free) 800-406-7325 or (U.S.) 303-590-3030. The replay pass code required for playback is conference identification number 4589273. The call replay may also be accessed via the company's website, umb.com, by visiting the investor relations area.

Forward-Looking Statements:

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements rely on a number of assumptions concerning future events and are subject to risks and uncertainties, which could cause actual results to differ materially from those contemplated by the forward-looking statements in this Current Report on Form 8-K, any exhibits to this Current Report and other public statements the company may make. While management of UMB believes their assumptions are reasonable, UMB cautions that changes in general economic conditions, changes in interest rates, changes in the securities markets, changes in operations, changes in competition, technology changes, legislative or regulatory changes, the ability of customers to repay loans, changes in loan demand, increases in employee costs, its ability to integrate acquisitions and other risks and uncertainties detailed in UMB's filings with the Securities and Exchange Commission, may cause actual results to differ materially from those discussed in this release. UMB has no duty to update such statements, and undertakes no obligation to update or supplement forward-looking statements that become untrue because of new information, future events or otherwise.

About UMB:

UMB Financial Corporation (NAS: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers. For more information, visit umb.com or follow us on Twitter at @UMBBank, Facebook at facebook.com/UMBBank and LinkedIn at linkedin.com/company/umb-bank.

  
CONSOLIDATED BALANCE SHEETS   

UMB Financial Corporation

(unaudited, dollars in thousands)  
December 31,

Assets

 2012    2011 
 
Loans$5,686,749$4,960,343
Allowance for loan losses (71,426)   (72,017)
Net loans 5,615,323    4,888,326 
Loans held for sale3,87710,215
Investment securities:
Available for sale6,937,4636,107,882
Held to maturity114,75689,246
Trading securities55,76458,142
Federal Reserve Bank Stock and other 26,333    22,212 
Total investment securities 7,134,316    6,277,482 
Federal funds and resell agreements89,86866,078
Interest-bearing due from banks720,5001,164,007
Cash and due from banks667,774446,580
Bank premises and equipment, net244,600227,936
Accrued income69,74975,997
Goodwill209,758211,114
Other intangibles68,80384,331
Other assets 102,628    89,332 
Total assets$14,927,196   $13,541,398 
 
 

Liabilities

Deposits:
Noninterest-bearing demand$4,920,581$3,941,372
Interest-bearing demand and savings5,450,4504,680,125
Time deposits under $100,000540,269615,475
Time deposits of $100,000 or more 742,065    932,939 
Total deposits 11,653,365    10,169,911 
Federal funds and repurchase agreements1,787,2701,950,827
Short-term debt-12,000
Long-term debt5,8796,529
Accrued expenses and taxes182,468186,380
Other liabilities 18,869    24,619 
Total liabilities 13,647,851    12,350,266 
 

Shareholders' Equity

Common stock55,05755,057
Capital surplus732,069723,299
Retained earnings787,015697,923
Accumulated other comprehensive income85,58881,099
Treasury stock (380,384)   (366,246)
Total shareholders' equity 1,279,345    1,191,132 
Total liabilities and shareholders' equity$14,927,196   $13,541,398 
 
     
Consolidated Statements of Income          UMB Financial Corporation
(unaudited, dollars in thousands except share and per share data)  
Three Months EndedYear Ended
December 31,December 31,

Interest Income

2012    2011   2012   2011
Loans$54,778$54,557$217,391$219,076
Securities:
Taxable interest19,09020,22381,01385,120
Tax-exempt interest9,779    9,422   38,224   34,766
Total securities income28,86929,645119,237119,886
Federal funds and resell agreements3228121102
Interest-bearing due from banks3676521,7893,284
Trading securities577    623   1,147   1,305
Total interest income84,623    85,505   339,685   343,653
 

Interest Expense

Deposits3,9735,66017,41624,628
Federal funds and repurchase agreements4823071,8841,712
Other(61)   5   329   340
Total interest expense4,394    5,972   19,629   26,680
Net interest income80,22979,533320,056316,973
Provision for loan losses4,000    5,000   17,500   22,200
Net interest income after provision for loan losses76,229    74,533   302,556   294,773
 

Noninterest Income

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