UMB Financial Corporation Reports Second Quarter 2013 Earnings of $29.9 million, $0.74 per Diluted S

UMB Financial Corporation Reports Second Quarter 2013 Earnings of $29.9 million, $0.74 per Diluted Share

Selected second quarter financial highlights:

  • Net loans at June 30, 2013 increased 19.5 percent to $6.3 billion; marks the thirteenth consecutive quarter of loan growth

  • Total company assets under management increased by 18.3 percent to $36.6 billion

  • Revenue from fee-based businesses represents 58 percent of total revenue

  • Tier 1 capital ratio remains strong at 10.72 percent

KANSAS CITY, Mo.--(BUSINESS WIRE)-- UMB Financial Corporation (NAS: UMBF) , a diversified financial holding company, announced earnings for the three months ended June 30, 2013 of $29.9 million or $0.75 per share ($0.74 diluted). This is an increase of $0.8 million, or 2.6 percent, compared to second quarter 2012 earnings of $29.2 million or $0.73 per share ($0.72 diluted). Earnings for the six months ended June 30, 2013 were $64.9 million or $1.62 per share ($1.61 diluted). This is a decrease of $10.7 million, or 14.1 percent, compared to the prior year-to-date earnings of $75.5 million or $1.89 per share ($1.87 diluted).


"We are pleased to report that actual period-end loan balances increased 19.5 percent year-over-year, representing our thirteenth consecutive quarter of loan growth. This demonstrates our commitment to serving the needs of our customers and partnering with our communities," said Mariner Kemper, Chairman and Chief Executive Officer. "For comparison, the more than 1,500 depositories that have announced results as of July 22 reported median loan growth of just 1.4 percent. In addition, trust and securities processing revenue increased 13.9 percent compared to the same period in the prior year and noninterest expense was $150.3 million, an increase of under four percent compared to the same period a year ago, evidence that our focus on expense control is paying off."

Net Interest Income and Margin

Net interest income for the second quarter of 2013 increased $2.0 million, or 2.4 percent, compared to the same period in 2012. Average earning assets increased by $1.6 billion, or 13.2 percent, compared to the second quarter of 2013. This increase was due to a $661.2 million, or 10.2 percent, increase in average total securities, including trading securities and a $942.3 million, or 18.1 percent, increase in average loans. Net interest margin decreased 26 basis points to 2.56 percent for the three months ended June 30, 2013, compared to the same quarter in 2012.

Noninterest Income and Expense

Noninterest income increased $3.4 million, or 3.0 percent, for the three months ended June 30, 2013, compared to the same period in 2012. This increase is primarily attributed to increased trust and securities processing income of $7.7 million, or 13.9 percent, for the three months ended June 30, 2013 compared to the same period in 2012. The increase in trust and securities processing income was primarily due to a $4.2 million, or 23.7 percent increase, in advisory fee income from the Scout Funds and a $2.4 million, or 13.9 percent, increase in fees related to institutional and personal investment management services. Gains of $1.5 million on securities available for sale were recognized in the second quarter of 2013 compared to $3.2 million during the same period in 2012. Other noninterest income decreased $2.5 million, or 54.4 percent, primarily driven by decreased fair value adjustments on interest rate swap transactions of $1.9 million compared to the same period in 2012.

Noninterest expense increased $5.6 million, or 3.9 percent, for the three months ended June 30, 2013, compared to the same period in 2012. This increase is driven by higher salary and benefits expense of $5.6 million, or 7.1 percent. This increase is due to increases in salaries and wages of $2.6 million, or 5.2 percent, a $1.7 million, or 10.6 percent, increase in commissions and bonuses, and a $1.3 million, or 10.6 percent, increase in employee benefits expense. Processing fees increased $1.7 million, or 13.5 percent, due primarily to fees paid by the advisor to third-party distributors of the Scout Funds. These increases were offset by a decrease in other expense of $3.1 million, or 39.3 percent, primarily due to decreased fair value adjustments on interest rate swap transactions of $1.9 million.

"Once again, our fee businesses posted strong quarterly results and noninterest income represented 58 percent of our total revenue," said Peter deSilva, President and Chief Operating Officer. "Net inflows in our Institutional Investment Management segment were $902 million, propelling Scout assets under management to $26.3 billion at quarter end, an increase of 17.5 percent compared to a year ago. Our wealth management platform for individuals ended the quarter with assets under management of $10.3 billion, which when combined with Scout, brought total company assets under management to $36.6 billion at the end of the quarter, an increase of 18.3 percent compared second quarter 2012. Our Asset Servicing business has added $20.7 billion in assets under administration during the past year, and finally, in our Payment Solutions segment, total quarterly debit and credit card purchase volume increased by 16.5 percent to $1.7 billion."

Balance Sheet

Average total assets for the three months ended June 30, 2013 were $14.9 billion compared to $13.2 billion for the same period in 2012, an increase of $1.7 billion, or 12.7 percent. Average earning assets increased by $1.6 billion for the period, or 13.2 percent.

Average loan balances for the three months ended June 30, 2013 increased $942.3 million, or 18.1 percent, to $6.2 billion compared to the same period in 2012. Actual loan balances on June 30, 2013 were $6.3 billion, an increase of $1.0 billion, or 19.3 percent, compared to June 30, 2012. This increase was primarily driven by an increase in commercial loans of $695.8 million, or 26.4 percent, and a $216.8 million, or 16.0 percent, increase in commercial real estate loans. Nonperforming loans decreased to $25.5 million on June 30, 2013 from $30.6 million on June 30, 2012. As a percentage of loans, nonperforming loans decreased to 0.40 percent as of June 30, 2013, compared to 0.58 percent on June 30, 2012. Nonperforming loans are defined as nonaccrual loans and restructured loans. The company's allowance for loan losses totaled $71.6 million, or 1.13 percent of loans, as of June 30, 2013, compared to $72.7 million, or 1.37 percent of loans, as of June 30, 2012.

For the three months ended June 30, 2013, average securities, including trading securities, totaled $7.2 billion. This is an increase of $661.2 million, or 10.2 percent, from the same period in 2012.

Average total deposits increased $1.3 billion, or 12.2 percent, to $11.6 billion for the three months ended June 30, 2013, compared to the same period in 2012. Average noninterest-bearing demand deposits increased $510.1 million, or 12.4 percent, compared to 2012. Average interest-bearing deposits increased by $749.3 million, or 12.1 percent, in 2013 as compared to 2012. Total deposits as of June 30, 2013 were $11.7 billion, compared to $10.3 billion as of June 30, 2012, a 13.6 percent increase. Also, as of June 30, 2013, noninterest-bearing demand deposits were 41.7 percent of total deposits.

"Growth in earning assets and improved pricing on deposits drove a modest lift in our net interest income for the second quarter," said Mike Hagedorn, Chief Financial Officer. "Loan growth represented nearly sixty percent of the year-over-year increase in average earnings assets and we expect the shift in earning asset mix to continue. However, without an increase in the Federal Funds rate, our loan yields, which are largely tied to indices, will remain under pressure."

As of June 30, 2013, UMB had total shareholders' equity of $1.2 billion, which is flat as compared to the same period in 2012.

Year-to-Date

Earnings for the six months ended June 30, 2013 were $64.9 million or $1.62 per share ($1.61 diluted). This is a decrease of $10.7 million, or 14.1 percent, compared to the prior year-to-date earnings of $75.5 million or $1.89 per share ($1.87 diluted).

Net interest income for the six months ended June 30, 2013 increased $2.3 million, or 1.5 percent, compared to the same period in 2012. Net interest margin decreased to 2.53 percent for the six months ended June 30, 2013 as compared to 2.79 percent for the same period in 2012.

Noninterest income decreased $7.9 million, or 3.3 percent, to $234.6 million for the six months ended June 30, 2013 as compared to the same period in 2012. Gains of $7.4 million on securities available for sale were recognized in the first six months of 2013 compared to $19.8 million during the same period in 2012. Other noninterest income decreased $11.8 million, or 66.5 percent, primarily driven by an $8.2 million adjustment in contingent consideration liabilities on acquisitions recognized in 2012. These adjustments were due to the adoption of new accounting guidance in 2012 related to fair value measurements and changes in cash flow projections. These decreases are offset by increased trust and securities processing income of $15.3 million, or 13.9 percent, for the six months ended June 30, 2013, compared to the same period in 2012. The increase in trust and securities processing income was primarily due to a $9.0 million, or 26.6 percent, increase in advisory fee income from the Scout Funds; a $1.3 million, or 3.4 percent, increase in fund administration and custody services; and a $4.5 million, or 12.9 percent, increase in fees related to institutional and personal investment management services.

Noninterest expense increased $14.1 million, or 4.9 percent, for the six months ended June 30, 2013 compared to the same period in 2012. This increase is primarily driven by an increase in salary and employee benefit expense of $9.4 million, or 5.9 percent, and a $3.0 million, or 11.7 percent, increase in processing fees primarily driven by fees paid by the advisor to third-party distributors of the Scout Funds.

Dividend Declaration

The Board of Directors declared during the company's quarterly board meeting a $0.215 quarterly cash dividend, payable on October 1, 2013, to shareholders of record at the close of business on September 10, 2013.

Conference Call

The company plans to host a conference call to discuss its 2013 second quarter earnings results on July 24, 2013, at 8:30 a.m. (CDT). Interested parties may access the call by dialing (toll-free) 877-941-0844 or (U.S.) 480-629-9835. 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=654062&s=1&k=435304C67C8622B493E635DE3B5B7582

A replay of the conference call may be heard until August 8, 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 4628244. 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 interest rates, changes in general economic conditions, changes in the securities markets, legislative or regulatory changes, changes in operations, changes in competition, technology 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, blog.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)

June 30,

Assets

2013

2012

Loans

$

6,338,921

$

5,315,609

Allowance for loan losses

(71,647)

(72,652)

Net loans

6,267,274

5,242,957

Loans held for sale

6,693

11,027

Investment securities:

Available for sale

6,944,358

6,329,724

Held to maturity

160,328

96,250

Trading securities

47,996

56,844

Federal Reserve Bank Stock and other

25,955

21,705

Total investment securities

7,178,637

6,504,523

Federal funds and resell agreements

66,973

30,733

Interest-bearing due from banks

607,470

295,499

Cash and due from banks

415,489

402,893

Bank premises and equipment, net

246,300

234,754

Accrued income

71,817

71,396

Goodwill

209,758

211,114

Other intangibles

61,994

76,604

Other assets

120,812

101,162

Total assets

$

15,253,217

$

13,182,662

Liabilities

Deposits:

Noninterest-bearing demand

$

4,887,643

$

4,217,487

Interest-bearing demand and savings

5,801,388

4,920,957

Time deposits under $100,000

509,412

575,714

Time deposits of $100,000 or more

531,307

615,692

Total deposits

11,729,750

10,329,850

Federal funds and repurchase agreements

2,157,979

1,400,566

Short-term debt

514

10,000

Long-term debt

4,063

5,260

Accrued expenses and taxes

117,916

169,812

Other liabilities

16,523

15,176

Total liabilities

14,026,745

11,930,664

Shareholders' Equity

Common stock

55,057

55,057

Capital surplus

736,456

726,708

Retained earnings

834,445

756,835

Accumulated other comprehensive income

(22,227)

81,244

Treasury stock

(377,259)

(367,846)

Total shareholders' equity

1,226,472

1,251,998

Total liabilities and shareholders' equity

$

15,253,217

$

13,182,662

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,

Interest Income

2013

2012

2013

2012

Loans

$

56,615

$

54,000

$

111,335

$

108,055

Securities:

Taxable interest

18,841

21,178

37,305

41,307

Tax-exempt interest

10,118

9,468

19,877

18,843

Total securities income

28,959

30,646

57,182

60,150

Federal funds and resell agreements

40

25

64

41

Interest-bearing due from banks

330

362

1,000

1,197

Trading securities

268

317

533

640

Total interest income

86,212

85,350

170,114

170,083

Interest Expense

Deposits

3,333

4,376

7,125

9,364

Federal funds and repurchase agreements

491

508

1,058

948

Other

61

93

121

309

Total interest expense

3,885

4,977

8,304

10,621

Net interest income

82,327

80,373

161,810

159,462

Provision for loan losses

5,000

4,500

7,000

9,000

Net interest income after provision for loan losses

77,327

75,873

154,810

150,462

Noninterest Income

Trust and securities processing

63,486

55,755

125,798

110,465

Trading and investment banking

5,423

7,140

12,532

16,818

Service charges on deposits

20,882

19,009

42,405

39,020

Insurance fees and commissions

1,236

913

2,198

1,922

Brokerage fees

2,886

2,705

5,832

5,219

Bankcard fees

16,032

16,830

32,470

31,565

Gains on sale of securities available for sale, net

1,519

3,222

7,412

19,763

Other

2,121

4,652

5,954

17,755

Total noninterest income

113,585

110,226

234,601

242,527

Noninterest Expense

Salaries and employee benefits

83,566

78,001

167,268

157,915

Occupancy, net

9,273

9,211

19,160

18,489

Equipment

11,873

11,004