UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): 4/24/2018
UMB FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Commission File Number: 000-04887
MO | 43-0903811 | |
(State or other jurisdiction of incorporation) |
(IRS Employer Identification No.) |
1010 Grand Blvd., Kansas City, MO 64106
(Address of principal executive offices, including zip code)
(816) 860-7000
(Registrants telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act ( 17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13c-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
Item 7.01 | Regulation FD Disclosure |
On April 24, 2018, UMB Financial Corporation (the Company) issued a press release announcing that the Board of Directors of the Company (the Board) declared a regular quarterly dividend of $0.29 per share payable on July 2, 2018 to shareholders of record of the Company on June 11, 2018. A copy of the press release is attached as Exhibit 99.1 and the information is hereby incorporated by reference herein.
The April 24, 2018 press release that is attached as Exhibit 99.1 also announced that the Board has authorized the repurchase of up to two million shares of the Companys common stock from time to time until the meeting of the Board that immediately follows the 2019 annual meeting of the Companys shareholders.
In addition, the Company is furnishing a copy of materials that will be used in the Companys shareholder conference call on April 25, 2018, at 8:30 a.m. (CT). A copy of the materials is attached as Exhibit 99.2 and will be available on the Companys website at www.umb.com. The materials are dated April 24, 2018, and the Company disclaims any obligation to correct or update any of the materials in the future.
The information contained in Item 7.01 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 hereto, is being furnished and shall not be deemed to be filed with the Securities and Exchange Commission for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act) or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference to this Current Report on Form 8-K in such a filing.
Item 9.01 | Financial Statements and Exhibits |
Exhibit 99.1 |
Press release announcing dividend and share repurchase authorization. | |
Exhibit 99.2 |
Investor Presentation Materials, dated April 24, 2018. |
EXHIBIT INDEX
Exhibit No. |
Description | |
Exhibit 99.1 |
Press release announcing dividend and share repurchase authorization. | |
Exhibit 99.2 |
Investor Presentation Materials, dated April 24, 2018. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
UMB FINANCIAL CORPORATION | ||
By: | /s/ Ram Shankar | |
Ram Shankar Chief Financial Officer |
Date: April 24, 2018
Exhibit 99.1
UMB Financial Corporation 1010 Grand Boulevard Kansas City, MO 64106 816.860.7000 umb.com |
News Release |
//FOR IMMEDIATE RELEASE//
Media Contact: Rachael Crocker: 816.860.7775
Investor Relations Contact: Kay Gregory: 816.860.7106
UMB Financial Corporation Announces $0.29 Quarterly Cash Dividend and
Common Stock Repurchase Authorization
Kansas City, Mo. (April 24, 2018) During a meeting of the Board of Directors (the Board) of UMB Financial Corporation (Nasdaq: UMBF) held today, the Board declared a $0.29 per share quarterly cash dividend, payable on July 2, 2018 to the companys shareholders of record as of the close of business on June 11, 2018.
As in prior years, the Board also approved the repurchase of up to 2,000,000 shares of the companys common stock from time to time at any point until the regular meeting of the Board that immediately follows the 2019 annual meeting of the companys shareholders. Shares acquired under the repurchase program may be available for reissuance or resale by the company, including under the companys compensation plans and dividend reinvestment plan. Under the repurchase program, the company may acquire the shares from time to time in the open market or privately negotiated transactions, at the discretion of management, and on terms (including quantity, timing, and price) that management determines to be necessary, appropriate, or advisable, and in accordance with the limitations set forth in Rule 10b-18 of the Securities and Exchange Act of 1934, as amended, and other applicable securities laws and regulations.
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.
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UMB Financial First Quarter 2018 April 24, 2018 Exhibit 99.2
Cautionary Notice about Forward-Looking Statements This presentation of UMB Financial Corporation (the “company,” “our,” “us,” or “we”) 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 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.
1Q 2018 Highlights
Earnings Summary – 1Q 2018 $ in thousands, except share and per share data; unaudited Non-GAAP adjustments include acquisition expenses, severance expense and the tax impact of these adjustments. See the non-GAAP reconciliations and additional information on these items on slides 32 and 33.
Key Performance Metrics See slides 32 and 33 for additional disclosures and reconciliations related to these non-GAAP financial measures. Beginning in Q1 2018, the Company revised the denominator of its Efficiency Ratio and Operating Efficiency Ratio calculations to use “Net Interest Income” in place of “Tax Equivalent Net Interest Income”. All prior periods presented here were updated using this revised formula. For first quarter 2018, net interest margin is computed using net interest income adjusted to a fully taxable equivalent ('FTE") basis assuming a federal income tax rate of 21 percent; prior period net interest margins are computed using a federal income tax rate of 35 percent.
Consistent Loan Growth Average Total Loans 5 Year CAGR 13.8%
Net Charge-Off History (1) Commercial Loans includes commercial and industrial, commercial credit card, asset-based and factoring loans. (2) Other includes all real-estate related loans (commercial, residential and HELOC) plus consumer loans and DDA charge-offs.
Loan Classification Trends % of total loans 0.0% 1.0% 2.0% 3.0%
1Q 2018 Financials
Noninterest Income – 1Q 2018 Noninterest income decreased $508 thousand, or 0.5%, compared to 4Q’17, primarily driven by: a $900k decrease in trading and investment banking income, driven by lower market-related municipal trading volumes and unfavorable fair value adjustments; and a decrease of $600k in other income primarily due to reduced company-owned life insurance revenue and decreased foreign currency valuations; which were partially offset by improved income from deposit service charges in our HSA accounts and stronger bankcard fees. 1st Quarter ‘18 Drivers Beginning in Q1 2018, “Other” includes “Equity Earnings on Alternative Investments” which was previously separately disclosed.
Bankcard Fees Noninterest Income Composition – 1Q 2018 Service Charges on Deposit Accounts Trust & Securities Processing Insurance Fees & Commissions Other Brokerage Fees Trading & Investment Banking Trust & Securities Processing Composition: ($ in millions) Gains on Sales of Securities Source of Income: 1Q’18 4Q’17 1Q’17 Personal Banking – Private Wealth & Prairie Capital $ 16.3 $ 16.8 $ 16.0 Institutional Banking – Fund Services 22.5 22.6 22.2 Institutional Banking – Corp. Trust & other 5.2 4.9 4.3 $ 44.0 $ 44.2 $ 42.5
Noninterest Expense – 1Q 2018 Operating noninterest expense, which excludes the impact of acquisition and divestiture expenses and severance expense, was $173.9 million for the first quarter 2018, a decrease of $8.4 million, or 4.6 percent, compared to the linked quarter, and an increase of $0.6 million, or 0.3 percent, compared to the first quarter 2017. See slides 32 and 33 for a reconciliation of this non-GAAP financial measure. 1st Quarter ‘18 Drivers Noninterest expense decreased $6.7 million, or 3.7%, compared to 4Q’17, driven by: a $2.2MM decrease in legal and consulting expense partially due to timing of various corporate projects; a $1.9MM decrease in other expense driven by a $1.0 million charitable donation made in 4Q17 and lower derivative expense; a $1.4MM decrease in salaries and benefits due to lower incentive compensation, offset by seasonally higher FICA and medical expense; and decreased business development expense related to timing of multiple projects and lower regulatory assessments
Select Balance Sheet Items $ in thousands, average balances; unaudited Three Months Ended For first quarter 2018, securities yields, earning asset yields, net interest spread and net interest margin are computed using net interest income adjusted to a fully taxable equivalent ('FTE") basis assuming a federal income tax rate of 21 percent; in prior periods, these metrics are computed using a federal income tax rate of 35 percent.
Loan Paydowns, Payoffs, and Line Changes
Loan Composition Diverse Loan Book (Average Loan Balances for the three months ended March 31 of the indicated year) Commercial Credit Card Commercial & Industrial HELOC Residential Real Estate Real Estate Construction Commercial Real Estate Consumer Credit Card Consumer Other $6.7B $7.5B $9.5B $10.6B $11.3B Factoring Loans Asset-Based Loans Percentages less than 5% have been omitted. Includes leases. (1) (2)
Colorado Kansas City Kansas Greater MO St. Louis Arizona Texas Oklahoma Marquette Transportation Fin (Natl. Sales) Nebraska Marquette Business Credit (Natl. Sales) Geographic Diversity Loans by Region (Average Loan Balances for the three months ended March 31 of the indicated year) High Growth Regions 1Q’18 vs. 1Q’17 Nebraska +33.8% Factoring (national platform) +50.3% Asset Based (national platform) +56.0% Percentages less than 5% have been omitted. $6.7B $7.5B $9.5B $10.6B $11.3B (1)
Securities Held to Maturity $1.2 billion at March 31, 2018 Securities Available for Sale $6.1 billion at March 31, 2018 High Quality Investment Portfolio Agencies Corporates Municipals Mortgage-Backed Securities Treasuries Governmental Other Higher Education Healthcare Utility Social Service Industrial Cultural Civic K-12 Education NFP - Other Average Balance: $6.2 billion Average Yield: 2.13% Duration: 45 months Average Balance: $1.3 billion Average Yield: 3.23% Duration: 75 months Total Portfolio Average Yield: 2.36% Duration: 50 months For first quarter 2018, securities yields are computed using net interest income adjusted to a fully taxable equivalent ('FTE") basis assuming a federal income tax rate of 21 percent; in prior periods, these metrics are computed using a federal income tax rate of 35 percent.
Securities and Loan Statistics (1) Roll off includes cash flow from maturities, calls or amortizations of securities and is presented net of sales. (2) Purchased amount is presented net of purchases made related to sales. Loan Portfolio Statistics at March 31, 2018 Variable Rate Loans: $7.1 billion or 62% of loan book ~41% of variable loans are tied to Prime for the next quarter ~58% of variable loans are tied to LIBOR for the next quarter Loan Repricing/Maturity Schedule 58% in 2nd quarter 2018 68% in the next 12 months AFS Portfolio Activity For first quarter 2018, securities yields are computed using net interest income adjusted to a fully taxable equivalent ('FTE") basis assuming a federal income tax rate of 21 percent; in prior periods, these metrics are computed using a federal income tax rate of 35 percent.
Diverse Sources of Deposits (Average Deposits for the three months ended March 31 of the indicated year) Deposit Composition $13.1B $13.3B $15.4B $15.6B $16.8B Personal Banking - Consumer Commercial Institutional Banking Personal Banking - Private Wealth Institutional Banking - Asset Servicing Healthcare Personal Banking - Small Business Other Percentages less than 5% have been omitted. (1)
Strong Capital Position Capital Ratio Trends (%) 2015 - 2018 ratios calculated under Basel III requirements. Total Risk-Based Capital Tier 1 Risk-Based Capital Tier 1 Leverage Common Equity Tier 1
Business Segment Updates
Commercial Banking Commercial Banking Loans $ in billions Commercial Banking Deposits $ in billions $5.5B $6.3B $8.1B $9.0B $9.7B Demand Deposits Interest-Bearing Deposits $4.3B $4.5B $4.7B $5.3B $5.5B
Commercial Real Estate Portfolio CRE & Construction Lending (Average Loan Balances for the three months ended March 31 of the indicated year) $4.4B $4.0B $3.2B $2.2B $1.9B Investment CRE Owner Occ. CRE Construction Farmland Multi-Family CRE Residential Construction (1) Percentages less than 5% have been omitted.
Institutional Banking Institutional Banking Deposits $ in billions Demand Deposits Interest-Bearing Deposits $3.4B $3.2B $4.2B $3.2B $3.8B
Institutional Banking – Business Description Banking services for broker-dealers FDIC sweep solutions; liquidity alternative to overnight funds Fixed income services for banks, institutional & corporate clients Underwriting for healthcare, municipalities, educational institutions & corporate clients Fund accounting & administration Alternative Investments Workout defaulted bond deals on behalf of holders Investor Solutions Corporate Trust Investment Banking Public Finance Distressed Debt Asset Servicing Bond trustee and agency services to municipal and corporate issuers Escrow-related and custodial services
Personal Banking Personal Banking Deposits $ in billions Personal Banking Loans $ in billions Consumer & Small Business Private Banking $4.7B $4.5B $5.1B $5.3B $5.2B $1.4B $1.4B $1.5B $1.2B $1.2B
Home Equity Lines of Credit $ in billions $11.6B $12.8B $13.6B $14.8B $14.2B $1.2B $1.4B $1.6B $1.7B $1.6B Assets Under Management $ in billions Personal Banking
Healthcare Services Healthcare Deposits & Assets End-of-period balances; $ in billions 2014 2015 2016 2017 1Q’18 HSA deposits as % of total UMB deposits 6.2% 7.8% 9.7% 11.4% 13.2% HSA Deposits HSA Investment Assets $2.6 $2.4 $1.8 $1.3 $0.9
Multi-Channel Healthcare Strategy UMB offers a modular and configurable platform of applications and services that deliver the underlying core banking functionality to our healthcare partners Broker/Employer TPAs Health Plans Technology Firms Payment Aggregators Healthcare Partners HCS Applications SSO Web Services Contributions Enrollment BIN Sponsor HCS Saver Partner Portal Core Banking Systems
Healthcare Services – Growth & Potential Industry information source: Devenir Research 2017 Year-End HSA Market Statistics & Trends report dated February 22, 2018. Rankings as of December 31, 2017. Deposit and asset growth rates on an annual basis as of December 31st of each respective year. HCS represents a unique asset as one of the top 5 leaders in a high growth, niche market. Growth Rates – Deposits and Assets
Card Purchase Volumes Purchase Volume & Interchange Revenue Commercial Credit Consumer Credit Consumer Debit Healthcare Debit Institutional Banking – IBIS Debit Interchange ($ in millions) $2.8B $2.1B $2.3B $2.7B $2.8B Percentages less than 5% have been omitted. (1)
Net Operating Income Non-GAAP Reconciliation In this presentation, we provide information about net operating income, operating earnings per share-diluted (operating EPS-diluted), 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 and the nearest comparable GAAP financial measures are reconciled in the tables below and on the next slide. The Company believes that these non-GAAP financial measures and the reconciliations may be useful to investors because they adjust for acquisition- and severance-related items and divestiture costs 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. The Company believes that the financial impact of excluding severance expense will be immaterial in the near future. It is excluded from certain non-GAAP financial measures as it has an unusually large impact on the Company’s financial statements. (continued on next page)
(i) Calculated using the Company's marginal tax rate of 22.2% for periods beginning after December 31,2017, as a result of the Tax Cuts and Jobs Act. All prior periods were calculated using the Company’s marginal tax rate of 36.0%. Operating Noninterest Expense & Efficiency Ratio Non-GAAP Reconciliation Operating EPS-diluted is calculated as diluted earnings per share as reported, adjusted to reflect, on a per share basis, the impact of excluding the non-GAAP adjustments described in clause (i) above for the relevant period. Operating ROE is calculated as net operating income, divided by the Company’s average total shareholders’ equity for the relevant period. Operating ROA is calculated as net operating income, divided by the Company’s average assets for the relevant period. Operating noninterest expense for the relevant period is defined as GAAP noninterest expense, adjusted to reflect the pre-tax impact of non-GAAP adjustments described above. Operating efficiency ratio is calculated as the Company’s operating noninterest expense, net of amortization of other intangibles, divided by the Company’s total non-GAAP revenue (which is calculated as net interest income plus noninterest income, less gains on sales of securities available for sale, net).
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