KANSAS CITY, Mo.--(BUSINESS WIRE)-- UMB Financial Corporation (Nasdaq: UMBF), a financial services company, announced results for the fourth quarter and year ended December 31, 2018.

“Results for the fourth quarter 2018 included 8.5 percent annualized average loan growth, 9.9 percent deposit growth and margin expansion of six basis points on a linked-quarter basis,” said Mariner Kemper, chairman and chief executive officer. “However, our results for the quarter were significantly impacted by the charge off of a single $48.1 million factoring relationship. Strong asset quality has long been a hallmark of UMB and this event is certainly not typical for us. After a thorough review, we believe that the issues specific to this credit were isolated and that this charge-off does not point to deterioration in any particular sector. We will continue to evaluate our internal controls.”

Income from continuing operations for the fourth quarter 2018 was $25.5 million, or $0.52 per diluted share, compared to $57.8 million, or $1.16 per diluted share, in the third quarter 2018 (linked quarter) and $47.4 million, or $0.95 per diluted share, in the fourth quarter 2017. The reported GAAP income from continuing operations represents decreases of 56.0 percent on a linked-quarter basis and 46.3 percent compared to the fourth quarter 2017. For the year ended December�31, 2018, income from continuing operations was $196.3�million, or $3.94 per diluted share, which is an increase of 7.3�percent compared to $183.0 million, or $3.67 per diluted share, for the year ended December�31, 2017.

Net operating income from continuing operations, a non-GAAP financial measure reconciled to income from continuing operations, the nearest comparable GAAP measure, later in this release, was $27.6 million, or $0.56 per diluted share, for the fourth quarter 2018, compared to $58.0 million, or $1.16 per diluted share, for the linked quarter and $47.5 million, or $0.95 per diluted share, for the fourth quarter 2017. These results represent decreases of 52.5 percent on a linked-quarter basis and 42.0 percent compared to the fourth quarter 2017. For the year ended December�31, 2018, net operating income from continuing operations was $200.7�million, or $4.03 per diluted share, compared to $183.7�million, or $3.69 per diluted share, for the year ended December�31, 2017.

�
Summary of quarterly financial results	�	�	UMB Financial Corporation
(unaudited, dollars in thousands, except per share data)
	�	�	Q4			�	�	Q3			�	�	Q4
			2018					2018					2017
Income from continuing operations			$	25,454				$	57,849				$	47,357
Income from discontinued operations			�	—	�			�	—	�			�	64,604	�
Net income				25,454					57,849					111,961
															�
Earnings per share from continuing operations (diluted)				0.52					1.16					0.95
Earnings per share from discontinued operations (diluted)			�	—	�			�	—	�			�	1.30	�
Earnings per share (diluted)				0.52					1.16					2.25
															�
Net operating income from continuing operations				27,578					58,024					47,533
Operating earnings per share from continuing operations (diluted)				0.56					1.16					0.95
															�
GAAP - continuing operations
Return on average assets				0.46	%				1.11	%				0.91	%
Return on average equity				4.57					10.32					8.72
Efficiency ratio				71.26					71.27					71.70
															�
Non-GAAP - continuing operations
Operating return on average assets				0.50	%				1.11	%				0.91	%
Operating return on average equity				4.95					10.35					8.75
Operating efficiency ratio				70.19					71.18					71.59
															�

Summary of year-to-date financial results	�	�	�	�	UMB Financial Corporation
(unaudited, dollars in thousands, except per share data)	�	�	�	�	December			�	�	December
					YTD					YTD
					2018					2017
Income from continuing operations					$	196,260				$	182,976
(Loss) income from discontinued operations					�	(747	)			�	64,129	�
Net income						195,513					247,105
												�
Earnings per share from continuing operations (diluted)						3.94					3.67
(Losses) earnings per share from discontinued operations (diluted)					�	(0.01	)			�	1.29	�
Earnings per share (diluted)						3.93					4.96
												�
Net operating income from continuing operations						200,743					183,688
Operating earnings per share from continuing operations (diluted)						4.03					3.69
												�
GAAP - continuing operations
Return on average assets						0.93	%				0.90	%
Return on average equity						8.94					8.79
Efficiency ratio						70.39					71.33
												�
Non-GAAP - continuing operations
Operating return on average assets						0.96	%				0.90	%
Operating return on average equity						9.15					8.83
Operating efficiency ratio						69.82					71.22
												�

Discussion of results from continuing operations

Summary of revenue	�	�	UMB Financial Corporation
(unaudited, dollars in thousands)
	�	�	Q4			�	�	Q3			�	�	Q4			�	�	CQ vs.			�	�	CQ vs.
			2018					2018					2017					LQ					PY
Net interest income			$	161,808				$	150,490				$	146,346				$	11,318				$	15,462
Noninterest income:
Trust and securities processing				41,891					43,425					44,234					(1,534	)				(2,343	)
Trading and investment banking				3,119					3,711					5,015					(592	)				(1,896	)
Service charges on deposit accounts				20,733					20,927					21,364					(194	)				(631	)
Insurance fees and commissions				312					339					388					(27	)				(76	)
Brokerage fees				6,761					6,402					6,127					359					634
Bankcard fees				16,375					16,838					17,617					(463	)				(1,242	)
Gains on sales of securities available for sale, net				—					211					54					(211	)				(54	)
Other			�	5,808	�			�	9,032	�			�	11,234	�			�	(3,224	)			�	(5,426	)
Total noninterest income			$	94,999	�			$	100,885	�			$	106,033	�			$	(5,886	)			$	(11,034	)
Total revenue			$	256,807	�			$	251,375	�			$	252,379	�			$	5,432	�			$	4,428	�
Net interest margin				3.24	%				3.18	%				3.21	%
Total noninterest income as a % of total revenue				36.99					40.13					42.01

Following the enactment of the Tax Cuts and Jobs Act, beginning in the first quarter of 2018, net interest margin is computed using net interest income adjusted to a fully taxable equivalent (FTE) basis assuming a statutory federal income tax rate of 21 percent and, where applicable, state income taxes; prior period net interest margins are computed using the then-statutory federal income tax rate of 35 percent and, where applicable, state income taxes.

Net interest income

• Net interest income totaled $161.8 million, an increase of $11.3 million, or 7.5 percent, from linked quarter levels, impacted by a $249.4 million, or 2.1 percent, increase in average loans, as well as a six-basis-point improvement in net interest margin.
• Earning asset yields improved 14 basis points from the linked quarter, primarily due to improved loan yields of 24 basis points to 5.11 percent, in part driven by favorable re-pricing from recent increases in short-term interest rates. The cost of interest-bearing liabilities increased 14 basis points to 1.21 percent, driven by a 19-basis point increase in cost of interest-bearing deposits. Total cost of deposits, including noninterest-bearing deposits, was 75 basis points, an increase of 13 basis points from the linked quarter.
• On a year-over-year basis, the increase in net interest income was driven by an 8.0 percent, or $883.2 million, increase in average loans, as well as higher average loan yields, which increased 71 basis points from 2017, primarily driven by higher short-term interest rates, volume, and asset mix changes.
• For the fourth quarter 2018, average earning assets stood at $20.5 billion, an increase of 5.8 percent over the fourth quarter 2017.

Noninterest income

• Fourth quarter 2018 noninterest income decreased $5.9 million, or 5.8 percent, on a linked quarter basis, largely due to:
  • Decreases of $5.7 million and $1.3 million in company-owned life insurance income and derivative income, respectively, both of which are recorded in other income. These decreases were partially offset by $2.9 million in gains on sales of assets and $0.9 million in loss recoveries.
  • A decrease in trust and securities processing due to a $1.5 million decline in alternative investment revenue.
  • A $0.6 million decrease in trading and investment banking due to decreased bond trading income.
• Compared to prior year, noninterest income in the fourth quarter of 2018 decreased $11.0 million, or 10.4 percent, primarily driven by:
  • Decreases of $6.6 million and $0.9 million in company-owned life insurance and derivative income, respectively, both of which are recorded in other income. These decreases were partially offset by $2.9 million in gains on sales of assets.
  • A $3.5 million decline in fund servicing revenue due to customer repricing and losses, which was partially offset by an increase of $1.4 million in corporate trust income, both recorded in trust and securities processing.
  • A $1.9 million decrease in trading and investment banking income due to decreased trading volume.
  • A $1.7 million increase in rewards and rebates expense recorded as an offset to bankcard fees driven by increased purchase volume, partially offset by a $0.4 million increase in interchange income.
  • A $0.6 million decrease in service charges on deposits primarily due to customer repricing.

Noninterest expense

Summary of noninterest expense	�	�	UMB Financial Corporation
(unaudited, dollars in thousands)
	�	�	Q4		�	�	Q3		�	�	Q4		�	�	CQ vs.			�	�	CQ vs.
			2018				2018				2017				LQ					PY
Salaries and employee benefits			$	103,992			$	102,956			$	107,656			$	1,036				$	(3,664	)
Occupancy, net				11,845				11,628				11,148				217					697
Equipment				18,983				18,533				18,690				450					293
Supplies and services				3,669				4,528				4,211				(859	)				(542	)
Marketing and business development				6,483				6,671				6,540				(188	)				(57	)
Processing fees				11,948				12,331				11,238				(383	)				710
Legal and consulting				11,085				8,470				6,045				2,615					5,040
Bankcard				4,316				4,407				4,405				(91	)				(89	)
Amortization of other intangible assets				1,332				1,385				1,641				(53	)				(309	)
Regulatory fees				2,681				3,337				3,825				(656	)				(1,144	)
Other			�	7,987			�	6,139			�	7,160			�	1,848	�			�	827	�
Total noninterest expense			$	184,321			$	180,385			$	182,559			$	3,936	�			$	1,762	�

• GAAP noninterest expense for the fourth quarter of 2018 was $184.3 million, an increase of $3.9 million, or 2.2 percent, from the linked quarter and an increase of $1.8 million, or 1.0 percent, from the fourth quarter of 2017.
• On a non-GAAP basis, operating noninterest expense (as reconciled later in this release) was $181.6 million for the fourth quarter 2018, an increase of $1.4 million, or 0.8 percent, compared to the linked quarter, and a decrease of $0.7 million, or 0.4 percent, compared to the fourth quarter 2017.
• The linked quarter increase in noninterest expense was driven by:
  • A $1.8 million increase in other noninterest expense, largely driven by a $0.9 million contribution made to the UMB Financial Corporation Charitable Foundation and an increase of $0.7 million in derivative expense.
  • A $1.7 million increase in consulting expense incurred in conjunction with the company’s ongoing investments in digital channel and integrated platform solutions to support business growth and the continued modernization of its core systems.
  • A $1.0 million increase in salaries and employee benefits, largely due to increased severance during the fourth quarter of 2018 and increased salary and wage expense driven by one additional business day in the fourth quarter compared to the third quarter. These increases were offset by a decrease in deferred compensation expense.
• The year-over-year increase in noninterest expense was driven by:
  • A $5.0 million increase in legal and consulting expense due to investments in digital channel and integrated platform solutions to support business growth and the continued ongoing modernization of the company’s core systems.
  • An increase of $0.7 million in derivative expense recorded in other noninterest expense.
  • These increases were partially offset by a decrease of $3.7 million in salaries and employee benefits, largely due to decreased deferred compensation expense and bonus expense.

Full year 2018 financial discussion

• The 9.2 percent year-over-year increase in net interest income was driven by benefits from higher short-term interest rates, favorable pricing and increased loan balances. In 2018, average loan balances increased $762.9 million and average loan yields increased 57 basis points. Average interest-bearing liabilities increased $620.4 million, while the cost of interest-bearing liabilities increased 47 basis points.
• Full-year noninterest income decreased $21.9 million, or 5.2 percent, due to:
  • An $8.1 million increase in rewards and rebates expense recorded as an offset to bankcard fees driven by increased purchase volume, partially offset by a $4.8 million increase in interchange income.
  • A $7.6 million decrease in trading and investment banking due to decreased bond trading income and due to market adjustments from the company’s seed investments in certain Scout funds following the liquidation of such investments in 2017.
  • A $7.5 million decrease in fund servicing revenue and a $1.0 million decrease in wealth management revenue, partially offset by a $4.0 million increase in corporate trust revenue, all recorded in trust and securities processing.
  • A $3.6 million decrease in gains on sales of available-for-sale securities.
  • A $3.4 million decrease in service charges on deposits, primarily due to repricing.
  • These decreases were partially offset by an increase of $2.6 million in brokerage fees, primarily driven by higher 12b-1 income.
• Full-year noninterest expense increased $12.7 million, or 1.8 percent, primarily due to:
  • A $5.3 million increase in salary and employee benefit expense driven by increased bonus and sales commission expense and one additional business day in 2018 as compared to 2017, partially offset by a decrease in deferred compensation expense.
  • A $6.5 million increase in legal and consulting expense and a $4.6 million increase in processing fees expense due to investments in digital channel and integrated platform solutions to support business growth and the continued ongoing modernization of the company’s core systems.
  • These increases were partially offset by a decrease of $3.1 million in other noninterest expense due to lower operational losses during 2018 as compared to 2017.
• On a non-GAAP basis, operating noninterest expense, which excludes the impact of acquisition expenses and other items as reconciled later in this release, was $712.0 million for full-year 2018, an increase of $8.0 million, or 1.1 percent, compared to the full-year 2017.

Income taxes

• The company’s effective tax rate was 12.2 percent for the year ended December 31, 2018, compared to 22.6 percent for the same period in 2017.�The decrease is primarily a result of the Tax Cuts and Jobs Act, which lowered the federal corporate income tax rate to 21 percent from 35 percent, effective January 1, 2018. The decrease is also attributable to a discrete tax benefit of $5.1 million related to provision-to-return adjustments.

Balance sheet

• Average total assets for the fourth quarter 2018 were $21.9 billion compared to $20.7 billion for both the linked quarter and the same period in 2017.

Summary of average loans and leases - QTD Average	UMB Financial Corporation
(unaudited, dollars in thousands)					�
	�	�	Q4		�	�	Q3			�	Q4		�	�	CQ vs.			�	�	CQ vs.
			2018				2018				2017				LQ					PY
Commercial			$	4,977,907			$	4,717,530			$	4,438,241			$	260,377				$	539,666
Asset-based loans				381,477				382,672				326,845				(1,195	)				54,632
Factoring loans				300,265				264,414				212,123				35,851					88,142
Commercial credit card				178,772				199,730				172,193				(20,958	)				6,579
Real estate - construction				826,310				814,053				835,715				12,257					(9,405	)
Real estate - commercial				3,663,610				3,701,072				3,394,232				(37,462	)				269,378
Real estate - residential				697,927				688,097				619,985				9,830					77,942
Real estate - HELOC				555,161				566,460				649,268				(11,299	)				(94,107	)
Consumer credit card				248,309				222,223				247,284				26,086					1,025
Consumer other				132,812				152,894				164,667				(20,082	)				(31,855	)
Leases			�	5,386			�	9,407			�	24,163			�	(4,021	)			�	(18,777	)
Total loans			$	11,967,936			$	11,718,552			$	11,084,716			$	249,384	�			$	883,220	�

• Average loans for the fourth quarter 2018 increased 2.1 percent on a linked-quarter basis and 8.0 percent compared to fourth quarter 2017.

Summary of average securities - QTD Average	�	�	UMB Financial Corporation
(unaudited, dollars in thousands)
	�	�	Q4		�	�	Q3		�	�	Q4		�	�	CQ vs.			�	�	CQ vs.
			2018				2018				2017				LQ					PY
Securities available for sale:
U.S. Treasury			$	105,509			$	38,044			$	38,776			$	67,465				$	66,733
U.S. Agencies				198				198				14,753				-					(14,555	)
Mortgage-backed				3,703,212				3,590,703				3,484,304				112,509					218,908
State and political subdivisions				2,353,816				2,290,906				2,555,462				62,910					(201,646	)
Corporates			�	—			�	718			�	15,880			�	(718	)			�	(15,880	)
Total securities available for sale			$	6,162,735			$	5,920,569			$	6,109,175			$	242,166	�			$	53,560	�
Securities held to maturity:
State and political subdivisions				1,180,061				1,205,007				1,269,058				(24,946	)				(88,997	)
Trading securities				61,629				45,476				43,388				16,153					18,241
Other securities			�	66,760			�	65,962			�	63,543			�	798	�			�	3,217	�
Total securities			$	7,471,185			$	7,237,014			$	7,485,164			$	234,171	�			$	(13,979	)

• Average securities available for sale increased 4.1 percent on a linked-quarter basis and remained flat compared to the fourth quarter of 2017.

Summary of average deposits - QTD Average						UMB Financial Corporation
(unaudited, dollars in thousands)						�	�
	�	�	Q4					Q3			�	�	Q4			�	�	CQ vs.		�	�	CQ vs.
			2018					2018					2017					LQ				PY
Deposits:
Noninterest-bearing demand			$	6,052,011				$	5,547,880				$	6,180,293				$	504,131			$	(128,282	)
Interest-bearing demand and savings				11,057,273					9,954,008					9,439,202					1,103,265				1,618,071
Time deposits			�	1,060,838	�			�	1,030,411	�			�	1,230,303	�			�	30,427			�	(169,465	)
Total deposits			$	18,170,122	�			$	16,532,299	�			$	16,849,798	�			$	1,637,823			$	1,320,324	�
Noninterest bearing deposits as % of total				33.31	%				33.56	%				36.68	%

• Average deposits increased 9.9 percent on a linked-quarter basis and 7.8 percent as compared to the fourth quarter of 2017, primarily driven by the seasonal influx of public fund deposits as well as recent deposit campaigns.

Capital

Capital information	�	�	UMB Financial Corporation
(unaudited, dollars in thousands, except per share data)
	�	�	December 31, 2018			�	�	September 30, 2018			�	�	December 31, 2017
Total equity			$	2,228,470				$	2,203,464				$	2,181,531
Book value per common share				45.37					44.20					43.72
															�
Regulatory capital:
Common equity Tier 1 capital			$	2,142,469				$	2,175,700				$	2,041,504
Tier 1 capital				2,142,469					2,175,700					2,041,504
Total capital				2,318,145					2,348,731					2,213,050
															�
Regulatory capital ratios:
Common equity Tier 1 capital ratio				12.89	%				13.47	%				12.95	%
Tier 1 risk-based capital ratio				12.89					13.47					12.95
Total risk-based capital ratio				13.95					14.54					14.04
Tier 1 leverage ratio				9.87					10.58					9.94

• On December 17, 2018, the company completed its previously announced accelerated share repurchase (ASR) program with Bank of America Merrill Lynch.
• Under the ASR, the company repurchased a total of 780,321 shares of its common stock (or approximately 1.6 percent of its outstanding common stock on October 23, 2018, the date the agreement governing the ASR was entered into) for an aggregate purchase price of $50.0 million.
• At December 31, 2018, the regulatory capital ratios presented in the foregoing table reflect the impact of this ASR, and exceeded all “well-capitalized” regulatory thresholds.

Asset Quality

Credit quality	�	�	UMB Financial Corporation
(unaudited, dollars in thousands)
	�	�	Q4			�	�	Q3			�	�	Q2			�	�	Q1			�	�	Q4
			2018					2018					2018					2018					2017
Net charge-offs - Commercial loans			$	44,010				$	624				$	6,137				$	6,847				$	2,248
Net charge-offs (recoveries) - Real estate loans				28					408					1,035					1,512					(242	)
Net charge-offs - Consumer credit card loans				1,606					1,632					1,786					1,849					1,612
Net charge-offs - Consumer other loans				23					82					46					94					167
Net charge-offs - Total loans				45,667					2,746					9,004					10,302					3,785
Net loan charge-offs as a % of total average loans				1.51	%				0.09	%				0.32	%				0.37	%				0.14	%
Loans over 90 days past due			$	6,009				$	1,927				$	2,883				$	5,650				$	3,091
Loans over 90 days past due as a % of total loans				0.05	%				0.02	%				0.02	%				0.05	%				0.03	%
Nonaccrual and restructured loans			$	43,018				$	50,568				$	56,030				$	67,604				$	59,142
Nonaccrual and restructured loans as a % of total loans				0.35	%				0.42	%				0.48	%				0.59	%				0.52	%
Provision for loan losses			$	48,000				$	5,750				$	7,000				$	10,000				$	6,000

• Nonperforming loans, defined as restructured loans on nonaccrual and all other nonaccrual loans, decreased $7.6 million from the linked quarter and $16.1 million from the prior year.
• Net charge-offs were $45.7 million, or 1.51 percent, of average loans, compared to $2.7 million, or 0.09 percent, of average loans in the linked quarter, and $3.8 million, or 0.14 percent, of average loans in the fourth quarter of 2017. Charge-offs in the fourth quarter of 2018 included a $48.1 million loss recognized on a single factoring credit relationship, which has since entered into bankruptcy. The company intends to pursue its rights both in and outside the bankruptcy proceedings.
• Provision for loan losses increased $42.3 million from the linked quarter, and $42.0 million from the fourth quarter of 2017. This increase was driven by higher provision to cover the loss related to the single factoring credit relationship noted above, as well as other qualitative factors, such as macroeconomic conditions, loan growth, loan impairment changes, loan risk grading changes, and net charge-off levels.

Dividend Declaration

At the company’s quarterly board meeting, the board of directors declared a $0.30 per share quarterly cash dividend, payable on April 1, 2019, to shareholders of record at the close of business on March 11, 2019.

Conference Call

The company plans to host a conference call to discuss its fourth quarter and full year 2018 earnings results on Wednesday, January 30, 2019, at 8:30 a.m. (CT).

Interested parties may access the call by dialing (toll-free) 877-267-8760 or (international) 412-542-4148 and requesting to join the UMB Financial call. The live call may also be accessed by visiting the investor relations area of umbfinancial.com or by using the following the link:

UMB Financial 4Q 2018 Conference Call

A replay of the conference call may be heard through February 13, 2019 by calling (toll-free) 877-344-7529 or (international) 412-317-0088. The replay access code required for playback is 10127436. The call replay may also be accessed at umbfinancial.com by visiting the investor relations area.

Non-GAAP Financial Information

In this release, we provide information about net operating income from continuing operations (net operating income), operating earnings per share from continuing operations - diluted (operating EPS), operating return on average equity (operating ROE), operating return on average assets (operating ROA), operating noninterest expense, and operating efficiency ratio, 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, and operating efficiency ratio – 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-, divestiture-, and severance-related items that management does not believe reflect the company’s fundamental operating performance.

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

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

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, 2017, 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). 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, Mo. UMB offers personal banking, commercial banking, healthcare services and institutional banking, which includes services to mutual funds and alternative-investment entities and registered investment advisors. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas. For more information, visit UMB.com, UMB Financial.com, UMB Blog or follow us on Twitter at @UMBBank, UMB Facebook and UMB LinkedIn.

�
Consolidated Balance Sheets	�	�	�	�	UMB Financial Corporation
(dollars in thousands)
	�	�	�	�	December 31,
					2018			�	�	2017
					(unaudited)					(audited)
ASSETS
Loans					$	12,178,150				$	11,280,513
Allowance for loan losses					�	(103,635	)			�	(100,604	)
Net loans						12,074,515					11,179,909
Loans held for sale						3,192					1,460
Investment Securities:
Available for sale						6,542,800					6,258,577
Held to maturity						1,170,646					1,261,014
Trading securities						61,011					54,055
Other securities					�	73,692	�			�	65,897	�
Total investment securities						7,848,149					7,639,543
Federal funds sold and resell agreements						627,001					191,601
Interest-bearing due from banks						1,047,830					1,351,760
Cash and due from banks						645,123					392,723
Premises and equipment, net						283,879					275,942
Accrued income						110,168					98,863
Goodwill						180,867					180,867
Other intangibles, net						15,003					20,257
Other assets					�	515,392	�			�	438,658	�
Total assets					$	23,351,119	�			$	21,771,583	�
												�
LIABILITIES
Deposits:
Noninterest-bearing demand					$	6,680,070				$	6,839,171
Interest-bearing demand and savings						11,454,442					9,903,565
Time deposits under $250,000						593,904					547,990
Time deposits of $250,000 or more					�	552,844	�			�	732,274	�
Total deposits						19,281,260					18,023,000
Federal funds purchased and repurchase agreements						1,518,920					1,260,704
Long-term debt						82,671					79,281
Accrued expenses and taxes						177,731					191,464
Other liabilities					�	62,067	�			�	35,603	�
Total liabilities					�	21,122,649	�			�	19,590,052	�
												�
SHAREHOLDERS' EQUITY
Common stock						55,057					55,057
Capital surplus						1,054,601					1,046,095
Retained earnings						1,488,421					1,338,110
Accumulated other comprehensive loss, net						(95,782	)				(45,525	)
Treasury stock					�	(273,827	)			�	(212,206	)
Total shareholders' equity					�	2,228,470	�			�	2,181,531	�
Total liabilities and shareholders' equity					$	23,351,119	�			$	21,771,583	�
												�
												�

Consolidated Statements of Income	�	�	UMB Financial Corporation
(dollars in thousands except share and per share data)
	�	�	Three Months Ended						�	�	Year Ended
			December 31,								December 31,
			2018			�	2017				2018			�	2017
			(unaudited)				(unaudited)				(unaudited)				(audited)
INTEREST INCOME
Loans			$	154,120			$	122,885			$	559,351			$	461,301
Securities:
Taxable interest				22,767				17,774				83,333				73,125
Tax-exempt interest			�	19,137	�		�	19,047			�	74,411	�		�	73,419
Total securities income				41,904				36,821				157,744				146,544
Federal funds and resell agreements				2,353				1,062				4,808				3,700
Interest-bearing due from banks				3,761				1,987				7,910				3,871
Trading securities			�	581	�		�	361			�	2,148	�		�	1,496
Total interest income			�	202,719	�		�	163,116			�	731,961	�		�	616,912
INTEREST EXPENSE
Deposits				34,140				12,372				92,101				36,354
Federal funds and repurchase agreements				5,815				3,632				24,737				17,906
Other			�	956	�		�	766			�	4,677	�		�	3,739
Total interest expense			�	40,911	�		�	16,770			�	121,515	�		�	57,999
Net interest income				161,808				146,346				610,446				558,913
Provision for loan losses			�	48,000	�		�	6,000			�	70,750	�		�	41,000
Net interest income after provision for loan losses			�	113,808	�		�	140,346			�	539,696	�		�	517,913
NONINTEREST INCOME
Trust and securities processing				41,891				44,234				172,163				176,646
Trading and investment banking				3,119				5,015				15,584				23,183
Service charges on deposit accounts				20,733				21,364				84,287				87,680
Insurance fees and commissions				312				388				1,292				1,972
Brokerage fees				6,761				6,127				25,807				23,208
Bankcard fees				16,375				17,617				68,520				73,030
Gains on sales of securities available for sale, net				—				54				578				4,192
Other			�	5,808	�		�	11,234			�	33,467	�		�	33,651
Total noninterest income			�	94,999	�		�	106,033			�	401,698	�		�	423,562
NONINTEREST EXPENSE
Salaries and employee benefits				103,992				107,656				419,091				413,830
Occupancy, net				11,845				11,148				45,239				44,462
Equipment				18,983				18,690				75,184				72,008
Supplies and services				3,669				4,211				16,103				17,173
Marketing and business development				6,483				6,540				24,372				21,469
Processing fees				11,948				11,238				46,977				42,331
Legal and consulting				11,085				6,045				29,859				23,406
Bankcard				4,316				4,405				17,514				19,471
Amortization of other intangible assets				1,332				1,641				5,764				7,326
Regulatory fees				2,681				3,825				12,695				15,527
Other			�	7,987	�		�	7,160			�	25,002	�		�	28,126
Total noninterest expense			�	184,321	�		�	182,559			�	717,800	�		�	705,129
Income before income taxes				24,486				63,820				223,594				236,346
Income tax (benefit) expense			�	(968	)		�	16,463			�	27,334	�		�	53,370
Income from continuing operations			�	25,454	�		�	47,357			�	196,260	�		�	182,976
Discontinued Operations
Loss from discontinued operations before income taxes				—				101,948				(917	)			101,226
Income tax expense (benefit)			�	—	�		�	37,344			�	(170	)		�	37,097
Income (loss) from discontinued operations			�	—	�		�	64,604			�	(747	)		�	64,129
NET INCOME			$	25,454	�		$	111,961			$	195,513	�		$	247,105
																�
PER SHARE DATA
Basic:
Income from continuing operations			$	0.52			$	0.96			$	3.98			$	3.72
Income (loss) from discontinued operations			�	—	�		�	1.31			�	(0.01	)		�	1.30
Net income – basic				0.52				2.27				3.97				5.02
Diluted:
Income from continuing operations				0.52				0.95				3.94				3.67
Income (loss) from discontinued operations			�	—	�		�	1.30			�	(0.01	)		�	1.29
Net income - diluted				0.52				2.25				3.93				4.96
Dividends				0.300				0.275				1.170				1.040
Weighted average shares outstanding - basic				48,898,286				49,229,693				49,334,937				49,223,661
Weighted average shares outstanding - diluted				49,230,321				49,840,529				49,770,737				49,839,290
																�
																�

Consolidated Statements of Comprehensive Income	�	�	UMB Financial Corporation
(dollars in thousands)
	�	�	Three Months Ended							�	�	Year Ended
			December 31,									December 31,
			2018			�	2017					2018			�	2017
			(unaudited)				(unaudited)					(unaudited)				(audited)
Net income			$	25,454			$	111,961				$	195,513			$	247,105
Other comprehensive income (loss), net of tax:
Unrealized gains and losses on debt securities:
Change in unrealized holding gains and losses, net				81,742				(41,507	)				(51,271	)			21,139
Less: Reclassification adjustment for gains included in net income			�	—	�		�	(54	)			�	(578	)		�	(4,192	)
Change in unrealized gains and losses on debt securities during the period				81,742				(41,561	)				(51,849	)			16,947
Change in unrealized gains and losses on derivative hedges				(2,368	)			30					1,906				(1,050	)
Income tax (expense) benefit			�	(19,515	)		�	18,674	�			�	12,735	�		�	(3,880	)
Other comprehensive income (loss) before reclassifications				59,859				(22,857	)				(37,208	)			12,017
Amounts reclassified from accumulated other comprehensive income			�	—	�		�	—	�			�	(13,049	)		�	—	�
Net current-period other comprehensive income (loss)			�	59,859	�		�	(22,857	)			�	(50,257	)		�	12,017	�
Comprehensive income			$	85,313	�		$	89,104	�			$	145,256	�		$	259,122	�
																		�
																		�

Consolidated Statements of Shareholders' Equity							UMB Financial Corporation
(dollars in thousands except per share data)
(audited)	�	�	Common Stock		�		Capital Surplus			�	�	Retained Earnings			�	�	Accumulated Other Comprehensive Loss			�	�	Treasury Stock			�	�	Total
Balance - January 1, 2017			$	55,057			$	1,033,419				$	1,142,887				$	(57,542	)			$	(211,437	)			$	1,962,384
Total comprehensive income				—				—					247,105					12,017					—					259,122
Cash dividends ($1.04 per share)				—				—					(51,882	)				—					—					(51,882	)
Purchase of treasury stock				—				—					—					—					(15,276	)				(15,276	)
Issuance of equity awards				—				(2,871	)				—					—					3,343					472
Recognition of equity-based compensation				—				12,844					—					—					—					12,844
Sale of treasury stock				—				608					—					—					512					1,120
Exercise of stock options			�	—			�	2,095	�			�	—	�			�	—	�			�	10,652	�			�	12,747	�
Balance - December 31, 2017			$	55,057			$	1,046,095	�			$	1,338,110	�			$	(45,525	)			$	(212,206	)			$	2,181,531	�
(unaudited)
Balance - January 1, 2018			$	55,057			$	1,046,095				$	1,338,110				$	(45,525	)			$	(212,206	)			$	2,181,531
Total comprehensive income (loss)				—				—					195,513					(50,257	)				—					145,256
Reclassification of certain tax effects				—				—					12,917					—					—					12,917
Cash dividends ($1.17 per share)				—				—					(58,264	)				—					—					(58,264	)
Purchase of treasury stock				—				(2,807	)				—					—					(73,700	)				(76,507	)
Issuance of equity awards				—				(2,004	)				—					—					2,499					495
Recognition of equity-based compensation				—				10,579					—					—					—					10,579
Sale of treasury stock				—				524					—					—					538					1,062
Exercise of stock options				—				2,214					—					—					9,042					11,256
Cumulative effect adjustments			�	—			�	—	�			�	145	�			�	—	�			�	—	�			�	145	�
Balance - December 31, 2018			$	55,057			$	1,054,601	�			$	1,488,421	�			$	(95,782	)			$	(273,827	)			$	2,228,470	�
																													�
																													�

Average Balances / Yields and Rates	�	�	UMB Financial Corporation
(tax - equivalent basis)
(unaudited, dollars in thousands)
	�	�	Three Months Ended December 31,
			2018							�	�	2017
			Average			�	�	Average				Average			�	�	Average
			Balance					Yield/Rate				Balance					Yield/Rate
Assets
Loans, net of unearned interest			$	11,967,936				5.11	%			$	11,084,716				4.40	%
Securities:
Taxable				3,943,891				2.29					3,688,202				1.91
Tax-exempt			�	3,465,665	�			2.77	�			�	3,753,574	�			3.08	�
Total securities				7,409,556				2.51					7,441,776				2.50
Federal funds and resell agreements				344,502				2.71					181,933				2.32
Interest bearing due from banks				672,916				2.22					587,181				1.34
Trading securities			�	61,629	�			4.44	�			�	43,388	�			4.21	�
Total earning assets				20,456,539				4.03					19,338,994				3.56
Allowance for loan losses				(101,221	)								(100,344	)
Other assets			�	1,523,434	�							�	1,485,075	�
Total assets			$	21,878,752	�							$	20,723,725	�
																		�
Liabilities and Shareholders' Equity
Interest-bearing deposits			$	12,118,111				1.12	%			$	10,669,505				0.46	%
Federal funds and repurchase agreements				1,206,152				1.91					1,424,380				1.01
Borrowed funds			�	80,442	�			4.71	�			�	76,626	�			3.97	�
Total interest-bearing liabilities				13,404,705				1.21					12,170,511				0.55
Noninterest-bearing demand deposits				6,052,011									6,180,293
Other liabilities				213,107									217,721
Shareholders' equity			�	2,208,929	�							�	2,155,200	�
Total liabilities and shareholders' equity			$	21,878,752	�							$	20,723,725	�
Net interest spread								2.82	%								3.01	%
Net interest margin								3.24									3.21
																		�
																		�

Average Balances / Yields and Rates			UMB Financial Corporation
(tax - equivalent basis)
(unaudited, dollars in thousands)
	�		Year Ended December 31,
			2018							�	�	2017
			Average			�	�	Average				Average			�	�	Average
			Balance					Yield/Rate				Balance					Yield/Rate
Assets
Loans, net of unearned interest			$	11,606,544				4.82	%			$	10,843,642				4.25	%
Securities:
Taxable				3,858,829				2.16					3,918,001				1.87
Tax-exempt			�	3,505,602	�			2.68	�			�	3,657,951	�			3.08	�
Total securities				7,364,431				2.41					7,575,952				2.45
Federal funds and resell agreements				178,801				2.69					190,074				1.95
Interest bearing due from banks				419,768				1.88					351,293				1.10
Trading securities			�	49,345	�			4.97	�			�	57,013	�			3.28	�
Total earning assets				19,618,889				3.83					19,017,974				3.45
Allowance for loan losses				(100,948	)								(97,231	)
Other assets			�	1,481,936	�							�	1,475,685	�
Total assets			$	20,999,877	�							$	20,396,428	�
																		�
Liabilities and Shareholders' Equity
Interest-bearing deposits			$	11,156,002				0.83	%			$	10,002,497				0.36	%
Federal funds and repurchase agreements				1,559,149				1.59					2,095,111				0.85
Borrowed funds			�	79,191	�			5.91	�			�	76,301	�			4.90	�
Total interest-bearing liabilities				12,794,342				0.95					12,173,909				0.48
Noninterest-bearing demand deposits				5,828,545									5,936,172
Other liabilities				182,202									205,500
Shareholders' equity			�	2,194,788	�							�	2,080,847	�
Total liabilities and shareholders' equity			$	20,999,877	�							$	20,396,428	�
Net interest spread								2.88	%								2.97	%
Net interest margin								3.21									3.15
																		�
																		�

Business Segment Information	�	�	UMB Financial Corporation
(unaudited, dollars in thousands)
	�	�	Three Months Ended December 31, 2018
			Commercial Banking			�	Institutional Banking			�	Personal Banking			�	Healthcare Services			�	Total
Net interest income			$	100,423			$	19,361			$	31,988			$	10,036			$	161,808
Provision for loan losses				46,662				308				1,030				—				48,000
Noninterest income				14,689				41,569				30,310				8,431				94,999
Noninterest expense			�	65,037	�		�	48,175	�		�	59,112	�		�	11,997	�		�	184,321	�
Income before taxes				3,413				12,447				2,156				6,470				24,486
Income tax benefit			�	(135	)		�	(492	)		�	(85	)		�	(256	)		�	(968	)
Income from continuing operations			$	3,548	�		$	12,939	�		$	2,241	�		$	6,726	�		$	25,454	�
Average assets			$	10,061,000			$	4,291,000			$	5,272,000			$	2,255,000			$	21,879,000
																					�
			Three Months Ended December 31, 2017
			Commercial Banking				Institutional Banking				Personal Banking				Healthcare Services				Total
Net interest income			$	92,130			$	15,245			$	30,821			$	8,150			$	146,346
Provision for loan losses				4,437				360				1,203				—				6,000
Noninterest income				20,921				46,771				30,250				8,091				106,033
Noninterest expense			�	65,196	�		�	48,532	�		�	57,162	�		�	11,669	�		�	182,559	�
Income before taxes				43,418				13,124				2,706				4,572				63,820
Income tax expense			�	11,199	�		�	3,385	�		�	699	�		�	1,180	�		�	16,463	�
Income from continuing operations			$	32,219	�		$	9,739	�		$	2,007	�		$	3,392	�		$	47,357	�
Average assets			$	9,710,000			$	4,101,000			$	4,953,000			$	1,960,000			$	20,724,000
																					�
			Year Ended December 31, 2018
			Commercial Banking				Institutional Banking				Personal Banking				Healthcare Services				Total
Net interest income			$	380,266			$	66,585			$	125,045			$	38,550			$	610,446
Provision for loan losses				63,841				1,335				5,574				—				70,750
Noninterest income				74,931				173,591				118,344				34,832				401,698
Noninterest expense			�	253,740	�		�	189,708	�		�	225,406	�		�	48,946	�		�	717,800	�
Income before taxes				137,616				49,133				12,409				24,436				223,594
Income tax expense			�	16,824	�		�	6,007	�		�	1,517	�		�	2,986	�		�	27,334	�
Income from continuing operations			$	120,792	�		$	43,126	�		$	10,892	�		$	21,450	�		$	196,260	�
Average assets			$	9,856,000			$	3,995,000			$	4,959,000			$	2,190,000			$	21,000,000
																					�
			Year Ended December 31, 2017
			Commercial Banking				Institutional Banking				Personal Banking				Healthcare Services				Total
Net interest income			$	353,627			$	51,977			$	122,304			$	31,005			$	558,913
Provision for loan losses				32,937				1,461				6,602				—				41,000
Noninterest income				82,221				187,003				118,896				35,442				423,562
Noninterest expense			�	250,308	�		�	184,618	�		�	226,634	�		�	43,569	�		�	705,129	�
Income before taxes				152,603				52,901				7,964				22,878				236,346
Income tax expense			�	34,460	�		�	11,946	�		�	1,798	�		�	5,166	�		�	53,370	�
Income from continuing operations			$	118,143	�		$	40,955	�		$	6,166	�		$	17,712	�		$	182,976	�
Average assets			$	9,717,000			$	3,622,000			$	5,160,000			$	1,897,000			$	20,396,000
																					�

The company has strategically aligned its operations into the following four reportable segments: Commercial Banking, Institutional Banking, Personal Banking, and Healthcare Services. 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. Previously, the company had the following two business segments: Bank and Asset Servicing. The company’s reportable segments include certain corporate overhead, technology and service costs that are allocated based on methodologies that are applied consistently between periods. For comparability purposes, amounts in all periods are based on methodologies in effect at December 31, 2018.

Non-GAAP Financial Measures			UMB Financial Corporation
Net operating income Non-GAAP reconciliations:
(unaudited, dollars in thousands except per share data)
	�		Three Months Ended December 31,								�	�	Year Ended December 31,
			2018			�	�	2017					2018			�	�	2017
Income from continuing operations (GAAP)			$	25,454				$	47,357				$	196,260				$	182,976
Adjustments:
Acquisition and divestiture expense				5					52					2					74
Severance expense				2,725					224					5,760					1,039
Tax-impact of adjustments (i)			�	(606	)			�	(100	)			�	(1,279	)			�	(401	)
Total Non-GAAP adjustments (net of tax)			�	2,124	�			�	176	�			�	4,483	�			�	712	�
Net operating income from continuing operations (Non-GAAP)			$	27,578	�			$	47,533	�			$	200,743	�			$	183,688	�
																				�
Earnings per share from continuing operations - diluted (GAAP)			$	0.52				$	0.95				$	3.94				$	3.67
Acquisition and divestiture expense (income)				—					—					—					—
Severance expense				0.05					—					0.12					0.02
Tax-impact of adjustments (i)			�	(0.01	)			�	—	�			�	(0.03	)			�	—	�
Operating earnings per share from continuing operations - diluted (Non-GAAP)			$	0.56	�			$	0.95	�			$	4.03	�			$	3.69	�
																				�
GAAP
Return on average assets				0.46	%				0.91	%				0.93	%				0.90	%
Return on average equity				4.57					8.72					8.94					8.79
																				�
Non-GAAP
Operating return on average assets				0.50	%				0.91	%				0.96	%				0.90	%
Operating return on average equity				4.95					8.75					9.15					8.83

(i) Calculated using the company’s marginal tax rate of 22.2 percent for periods beginning after December 31, 2017 as a result of the Tax Cuts and Jobs Act. The prior periods were calculated using the company’s marginal tax rate of 36.0 percent.

�
Operating noninterest expense and operating efficiency ratio Non-GAAP reconciliations:	�	�	UMB Financial Corporation
(unaudited, dollars in thousands)
	�	�	Three Months Ended December 31,								�	�	Year Ended December 31,
			2018			�	�	2017					2018			�	�	2017
Noninterest expense			$	184,321				$	182,559				$	717,800				$	705,129
Adjustments to arrive at operating noninterest expense (pre-tax):
Acquisition and divestiture expense				5					52					2					74
Severance expense			�	2,725	�			�	224	�			�	5,760	�			�	1,039	�
Total Non-GAAP adjustments (pre-tax)			�	2,730	�			�	276	�			�	5,762	�			�	1,113	�
Operating noninterest expense (Non-GAAP)			$	181,591	�			$	182,283	�			$	712,038	�			$	704,016	�
																				�
Noninterest expense			$	184,321				$	182,559				$	717,800				$	705,129
Less: Amortization of other intangibles			�	1,332	�			�	1,641	�			�	5,764	�			�	7,326	�
Noninterest expense, net of amortization of other intangibles (Non-GAAP) (numerator A)			$	182,989	�			$	180,918	�			$	712,036	�			$	697,803	�
																				�
Operating noninterest expense			$	181,591				$	182,283				$	712,038				$	704,016
Less: Amortization of other intangibles			�	1,332	�			�	1,641	�			�	5,764	�			�	7,326	�
Operating expense, net of amortization of other intangibles (Non-GAAP) (numerator B)			$	180,259	�			$	180,642	�			$	706,274	�			$	696,690	�
																				�
Net interest income			$	161,808				$	146,346				$	610,446				$	558,913
Noninterest income				94,999					106,033					401,698					423,562
Less: Gains on sales of securities available for sale, net			�	—	�			�	54	�			�	578	�			�	4,192	�
Total Non-GAAP Revenue (denominator A)			$	256,807	�			$	252,325	�			$	1,011,566	�			$	978,283	�
																				�
Efficiency ratio (numerator A/denominator A)				71.26	%				71.70	%				70.39	%				71.33	%
Operating efficiency ratio (Non-GAAP) (numerator B/denominator A)				70.19					71.59					69.82					71.22

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UMB Financial Corporation

Media Contact:

Stephanie Hague, 816-860-5088



Investor Relations Contact:

Kay Gregory, 816-860-7106

Source: UMB Financial Corporation