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EX-32.2 - EX-32.2 - UMB FINANCIAL CORPumbf-ex322_7.htm
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EX-31.2 - EX-31.2 - UMB FINANCIAL CORPumbf-ex312_8.htm
EX-31.1 - EX-31.1 - UMB FINANCIAL CORPumbf-ex311_9.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(MARK ONE)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to         

Commission file number000-04887

 

UMB FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

 

 

Missouri

 

43-0903811

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer
Identification Number)

 

1010 Grand Boulevard, Kansas City, Missouri

 

64106

(Address of principal executive offices)

 

(Zip Code)

(Registrant's telephone number, including area code): (816) 860-7000

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes      No  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer

 

Accelerated filer

Non- accelerated filer

(Do not check if a smaller reporting company)

Smaller reporting company

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes      No  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes      No  

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

As of October 26, 2017, UMB Financial Corporation had 49,867,273 shares of common stock outstanding.

 

 

 


 

UMB FINANCIAL CORPORATION

FORM 10-Q

INDEX

 

PART I – FINANCIAL INFORMATION

3

 

 

 

ITEM 1.

FINANCIAL STATEMENTS (UNAUDITED)

3

CONSOLIDATED BALANCE SHEETS

3

CONSOLIDATED STATEMENTS OF INCOME

4

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

6

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

7

CONSOLIDATED STATEMENTS OF CASH FLOWS

8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

37

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

53

ITEM 4.

CONTROLS AND PROCEDURES

58

 

 

 

PART II - OTHER INFORMATION

59

 

 

 

ITEM 1.

LEGAL PROCEEDINGS

59

ITEM 1A.

RISK FACTORS

59

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

59

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

59

ITEM 4.

MINE SAFETY DISCLOSURES

59

ITEM 5.

OTHER INFORMATION

59

ITEM 6.

EXHIBITS

60

SIGNATURES

61

 

2


 

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UMB FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(unaudited, dollars in thousands, except share and per share data)

 

 

 

September 30,

 

 

December 31,

 

 

 

2017

 

 

2016

 

ASSETS

 

 

 

 

 

 

 

 

Loans:

 

$

10,997,028

 

 

$

10,540,383

 

Allowance for loan losses

 

 

(98,389

)

 

 

(91,649

)

Net loans

 

 

10,898,639

 

 

 

10,448,734

 

Loans held for sale

 

 

4,525

 

 

 

5,279

 

Investment securities:

 

 

 

 

 

 

 

 

Available for sale

 

 

5,848,960

 

 

 

6,466,334

 

Held to maturity (fair value of $1,181,747 and $1,106,027, respectively)

 

 

1,276,252

 

 

 

1,115,932

 

Trading securities

 

 

60,660

 

 

 

39,536

 

Other securities

 

 

63,543

 

 

 

68,306

 

Total investment securities

 

 

7,249,415

 

 

 

7,690,108

 

Federal funds sold and securities purchased under agreements to resell

 

 

244,436

 

 

 

324,327

 

Interest-bearing due from banks

 

 

221,856

 

 

 

715,823

 

Cash and due from banks

 

 

366,169

 

 

 

422,117

 

Premises and equipment, net

 

 

277,454

 

 

 

289,007

 

Accrued income

 

 

103,076

 

 

 

99,045

 

Goodwill

 

 

180,867

 

 

 

180,867

 

Other intangibles, net

 

 

23,477

 

 

 

26,630

 

Other assets

 

 

655,846

 

 

 

425,205

 

Discontinued assets – goodwill and other intangibles, net

 

 

53,743

 

 

 

55,390

 

Total assets

 

$

20,279,503

 

 

$

20,682,532

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

$

5,812,117

 

 

$

6,654,584

 

Interest-bearing demand and savings

 

 

9,063,079

 

 

 

8,780,309

 

Time deposits under $250,000

 

 

576,035

 

 

 

613,589

 

Time deposits of $250,000 or more

 

 

548,373

 

 

 

522,132

 

Total deposits

 

 

15,999,604

 

 

 

16,570,614

 

Federal funds purchased and repurchase agreements

 

 

1,856,837

 

 

 

1,856,937

 

Long-term debt

 

 

76,071

 

 

 

76,772

 

Accrued expenses and taxes

 

 

193,978

 

 

 

172,967

 

Other liabilities

 

 

51,470

 

 

 

42,858

 

Total liabilities

 

 

18,177,960

 

 

 

18,720,148

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Common stock, $1.00 par value; 80,000,000 shares authorized; 55,056,730

   shares issued; and 49,862,453 and 49,673,056 shares outstanding, respectively

 

 

55,057

 

 

 

55,057

 

Capital surplus

 

 

1,042,022

 

 

 

1,033,419

 

Retained earnings

 

 

1,239,865

 

 

 

1,142,887

 

Accumulated other comprehensive loss, net

 

 

(22,668

)

 

 

(57,542

)

Treasury stock, 5,194,277 and 5,383,674 shares, at cost, respectively

 

 

(212,733

)

 

 

(211,437

)

Total shareholders' equity

 

 

2,101,543

 

 

 

1,962,384

 

Total liabilities and shareholders' equity

 

$

20,279,503

 

 

$

20,682,532

 

 

See Notes to Consolidated Financial Statements.

3


 

UMB FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(unaudited, dollars in thousands, except share and per share data)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

119,132

 

 

$

98,820

 

 

$

338,416

 

 

$

283,313

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable interest

 

 

17,720

 

 

 

17,012

 

 

 

55,351

 

 

 

55,221

 

Tax-exempt interest

 

 

18,893

 

 

 

14,797

 

 

 

54,372

 

 

 

41,377

 

Total securities income

 

 

36,613

 

 

 

31,809

 

 

 

109,723

 

 

 

96,598

 

Federal funds and resell agreements

 

 

1,008

 

 

 

790

 

 

 

2,638

 

 

 

1,939

 

Interest-bearing due from banks

 

 

753

 

 

 

445

 

 

 

1,884

 

 

 

1,772

 

Trading securities

 

 

389

 

 

 

174

 

 

 

1,135

 

 

 

399

 

Total interest income

 

 

157,895

 

 

 

132,038

 

 

 

453,796

 

 

 

384,021

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

10,181

 

 

 

4,626

 

 

 

23,982

 

 

 

12,817

 

Federal funds and repurchase agreements

 

 

5,811

 

 

 

1,894

 

 

 

14,274

 

 

 

4,750

 

Other

 

 

1,045

 

 

 

753

 

 

 

2,973

 

 

 

2,587

 

Total interest expense

 

 

17,037

 

 

 

7,273

 

 

 

41,229

 

 

 

20,154

 

Net interest income

 

 

140,858

 

 

 

124,765

 

 

 

412,567

 

 

 

363,867

 

Provision for loan losses

 

 

11,500

 

 

 

13,000

 

 

 

35,000

 

 

 

25,000

 

Net interest income after provision for loan losses

 

 

129,358

 

 

 

111,765

 

 

 

377,567

 

 

 

338,867

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trust and securities processing

 

 

45,060

 

 

 

41,812

 

 

 

132,412

 

 

 

123,984

 

Trading and investment banking

 

 

4,453

 

 

 

6,114

 

 

 

18,168

 

 

 

16,382

 

Service charges on deposit accounts

 

 

21,510

 

 

 

21,832

 

 

 

66,316

 

 

 

65,713

 

Insurance fees and commissions

 

 

425

 

 

 

698

 

 

 

1,584

 

 

 

3,355

 

Brokerage fees

 

 

5,815

 

 

 

4,712

 

 

 

17,081

 

 

 

13,159

 

Bankcard fees

 

 

17,427

 

 

 

17,086

 

 

 

55,413

 

 

 

52,636

 

Gain on sales of securities available for sale, net

 

 

2,390

 

 

 

2,978

 

 

 

4,138

 

 

 

8,509

 

Equity (losses) earnings on alternative investments

 

 

(584

)

 

 

1,594

 

 

 

(1,393

)

 

 

2,191

 

Other

 

 

7,810

 

 

 

6,716

 

 

 

23,810

 

 

 

18,352

 

Total noninterest income

 

 

104,306

 

 

 

103,542

 

 

 

317,529

 

 

 

304,281

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

99,749

 

 

 

99,403

 

 

 

306,174

 

 

 

293,294

 

Occupancy, net

 

 

11,285

 

 

 

11,224

 

 

 

33,314

 

 

 

32,996

 

Equipment

 

 

17,880

 

 

 

16,029

 

 

 

53,318

 

 

 

48,807

 

Supplies and services

 

 

4,076

 

 

 

4,472

 

 

 

12,962

 

 

 

13,875

 

Marketing and business development

 

 

5,056

 

 

 

5,090

 

 

 

14,929

 

 

 

15,273

 

Processing fees

 

 

11,151

 

 

 

9,084

 

 

 

31,093

 

 

 

27,118

 

Legal and consulting

 

 

5,844

 

 

 

4,437

 

 

 

17,361

 

 

 

14,107

 

Bankcard

 

 

5,130

 

 

 

5,015

 

 

 

15,066

 

 

 

16,199

 

Amortization of other intangible assets

 

 

1,715

 

 

 

2,088

 

 

 

5,685

 

 

 

6,644

 

Regulatory fees

 

 

3,798

 

 

 

3,370

 

 

 

11,702

 

 

 

10,491

 

Other

 

 

6,137

 

 

 

4,999

 

 

 

20,966

 

 

 

20,094

 

Total noninterest expense

 

 

171,821

 

 

 

165,211

 

 

 

522,570

 

 

 

498,898

 

Income before income taxes

 

 

61,843

 

 

 

50,096

 

 

 

172,526

 

 

 

144,250

 

Income tax expense

 

 

12,971

 

 

 

10,674

 

 

 

36,907

 

 

 

34,016

 

Income from continuing operations

 

 

48,872

 

 

 

39,422

 

 

 

135,619

 

 

 

110,234

 

Discontinued Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income from discontinued operations before income taxes

 

 

(1,030

)

 

 

3,834

 

 

 

(722

)

 

 

8,792

 

Income tax (benefit) expense

 

 

(300

)

 

 

1,310

 

 

 

(247

)

 

 

3,159

 

(Loss) income from discontinued operations

 

 

(730

)

 

 

2,524

 

 

 

(475

)

 

 

5,633

 

NET INCOME

 

$

48,142

 

 

$

41,946

 

 

$

135,144

 

 

$

115,867

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4


 

PER SHARE DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.99

 

 

$

0.81

 

 

$

2.76

 

 

$

2.26

 

(Loss) income from discontinued operations

 

 

(0.01

)

 

 

0.05

 

 

 

(0.01

)

 

 

0.11

 

Net income – basic

 

 

0.98

 

 

 

0.86

 

 

 

2.75

 

 

 

2.37

 

Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

 

0.98

 

 

 

0.80

 

 

 

2.72

 

 

 

2.24

 

(Loss) income from discontinued operations

 

 

(0.01

)

 

 

0.05

 

 

 

(0.01

)

 

 

0.12

 

Net income - diluted

 

 

0.97

 

 

 

0.85

 

 

 

2.71

 

 

 

2.36

 

Dividends

 

 

0.255

 

 

 

0.245

 

 

 

0.765

 

 

 

0.735

 

Weighted average shares outstanding - basic

 

 

49,283,322

 

 

 

48,849,251

 

 

 

49,221,629

 

 

 

48,792,419

 

Weighted average shares outstanding - diluted

 

 

49,833,141

 

 

 

49,284,280

 

 

 

49,838,619

 

 

 

49,162,200

 

 

See Notes to Consolidated Financial Statements.

5


 

UMB FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, dollars in thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net Income

 

$

48,142

 

 

$

41,946

 

 

$

135,144

 

 

$

115,867

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) on securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized holding gains (losses), net

 

 

5,064

 

 

 

(16,946

)

 

 

62,646

 

 

 

90,639

 

Less: Reclassification adjustment for gains

   included in net income

 

 

(2,390

)

 

 

(2,978

)

 

 

(4,138

)

 

 

(8,509

)

Change in unrealized gains (losses) on securities during the period

 

 

2,674

 

 

 

(19,924

)

 

 

58,508

 

 

 

82,130

 

Change in unrealized losses on derivative hedges

 

 

(169

)

 

 

(643

)

 

 

(1,080

)

 

 

(7,677

)

Income tax (expense) benefit

 

 

(1,548

)

 

 

7,784

 

 

 

(22,554

)

 

 

(28,223

)

Other comprehensive income (loss)

 

 

957

 

 

 

(12,783

)

 

 

34,874

 

 

 

46,230

 

Comprehensive income

 

$

49,099

 

 

$

29,163

 

 

$

170,018

 

 

$

162,097

 

 

See Notes to Consolidated Financial Statements.

6


 

UMB FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(unaudited, dollars in thousands, except per share data)

 

 

 

Common

Stock

 

 

Capital

Surplus

 

 

Retained

Earnings

 

 

Accumulated

Other

Comprehensive

(Loss) Income

 

 

Treasury

Stock

 

 

Total

 

Balance - January 1, 2016

 

$

55,057

 

 

$

1,019,889

 

 

$

1,033,990

 

 

$

(3,718

)

 

$

(211,524

)

 

$

1,893,694

 

Total comprehensive income

 

 

 

 

 

 

 

 

115,867

 

 

 

46,230

 

 

 

 

 

 

162,097

 

Cash dividends ($0.735 per share)

 

 

 

 

 

 

 

 

(36,388

)

 

 

 

 

 

 

 

 

(36,388

)

Purchase of treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,189

)

 

 

(14,189

)

Issuance of equity awards

 

 

 

 

 

(3,373

)

 

 

 

 

 

 

 

 

3,802

 

 

 

429

 

Recognition of equity-based

   compensation

 

 

 

 

 

8,253

 

 

 

 

 

 

 

 

 

 

 

 

8,253

 

Sale of treasury stock

 

 

 

 

 

362

 

 

 

 

 

 

 

 

 

474

 

 

 

836

 

Exercise of stock options

 

 

 

 

 

2,400

 

 

 

 

 

 

 

 

 

7,014

 

 

 

9,414

 

Cumulative effect adjustment (1)

 

 

 

 

 

1,338

 

 

 

(856

)

 

 

 

 

 

 

 

 

482

 

Balance - September 30, 2016

 

$

55,057

 

 

$

1,028,869

 

 

$

1,112,613

 

 

$

42,512

 

 

$

(214,423

)

 

$

2,024,628

 

Balance - January 1, 2017

 

$

55,057

 

 

$

1,033,419

 

 

$

1,142,887

 

 

$

(57,542

)

 

$

(211,437

)

 

$

1,962,384

 

Total comprehensive income

 

 

 

 

 

 

 

 

135,144

 

 

 

34,874

 

 

 

 

 

 

170,018

 

Cash dividends ($0.765 per share)

 

 

 

 

 

 

 

 

(38,166

)

 

 

 

 

 

 

 

 

(38,166

)

Purchase of treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,369

)

 

 

(14,369

)

Issuance of equity awards

 

 

 

 

 

(3,364

)

 

 

 

 

 

 

 

 

3,835

 

 

 

471

 

Recognition of equity-based

   compensation

 

 

 

 

 

9,576

 

 

 

 

 

 

 

 

 

 

 

 

9,576

 

Sale of treasury stock

 

 

 

 

 

468

 

 

 

 

 

 

 

 

 

381

 

 

 

849

 

Exercise of stock options

 

 

 

 

 

1,923

 

 

 

 

 

 

 

 

 

8,857

 

 

 

10,780

 

Balance - September 30, 2017

 

$

55,057

 

 

$

1,042,022

 

 

$

1,239,865

 

 

$

(22,668

)

 

$

(212,733

)

 

$

2,101,543

 

 

(1)

See Note 3, “New Accounting Pronouncements,” for a discussion of the adoption of Accounting Standards Update (ASU) 2016-09.

See Notes to Consolidated Financial Statements.

7


 

UMB FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, dollars in thousands)

 

 

 

For the Nine Months Ended

 

 

 

September 30,

 

 

 

2017

 

 

2016

 

Operating Activities

 

 

 

 

 

 

 

 

Net income

 

$

135,144

 

 

$

115,867

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Provision for loan losses

 

 

35,000

 

 

 

25,000

 

Net accretion of premiums and discounts from acquisition

 

 

(1,810

)

 

 

(1,711

)

Depreciation and amortization

 

 

41,538

 

 

 

40,949

 

Deferred income tax expense

 

 

1,555

 

 

 

911

 

Net increase in trading securities

 

 

(17,680

)

 

 

(30,635

)

Gains on sales of securities available for sale, net

 

 

(4,138

)

 

 

(8,509

)

Gains on sales of assets

 

 

(484

)

 

 

(136

)

Amortization of securities premiums, net of discount accretion

 

 

36,571

 

 

 

43,467

 

Originations of loans held for sale

 

 

(53,207

)

 

 

(71,726

)

Gains on sales of loans held for sale, net

 

 

(1,188

)

 

 

(1,281

)

Proceeds from sales of loans held for sale

 

 

55,149

 

 

 

61,716

 

Equity-based compensation

 

 

10,047

 

 

 

8,682

 

Net tax benefit (expense) related to equity compensation plans

 

 

3,149

 

 

 

(261

)

Changes in:

 

 

 

 

 

 

 

 

Accrued income

 

 

(4,031

)