UMB Financial Corporation Reports Third Quarter Income from Continuing Operations of $57.8 Million or $1.16 per Diluted Share

UMB Financial Corporation (Nasdaq: UMBF), a financial holding company, announced income from continuing operations for the third quarter 2018 of $57.8 million, or $1.16 per diluted share, compared to $55.4 million, or $1.11 per diluted share, in the second quarter 2018 (linked quarter) and $48.9 million, or $0.98 per diluted share, in the third quarter 2017. The reported GAAP income from continuing operations represents increases of 4.4 percent on a linked-quarter basis and 18.4 percent compared to the third quarter 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 $58.0 million, or $1.16 per diluted share, for the third quarter 2018, compared to $56.1 million, or $1.12 per diluted share, for the linked quarter and $48.9 million, or $0.98 per diluted share, for the third quarter 2017. These results represent increases of 3.5 percent on a linked-quarter basis and 18.6 percent compared to the third quarter 2017.

Summary of quarterly financial results			UMB Financial Corporation
(unaudited, dollars in thousands, except per share data)
			Q3					Q2					Q3
			2018					2018					2017
Income from continuing operations			$	57,849				$	55,424				$	48,872
Loss from discontinued operations				—					—					(730	)
Net income				57,849					55,424					48,142
Earnings per share from continuing operations (diluted)				1.16					1.11					0.98
Losses per share from discontinued operations (diluted)				—					—					(0.01	)
Earnings per share (diluted)				1.16					1.11					0.97
Net operating income from continuing operations				58,024					56,079					48,927
Operating earnings per share from continuing operations (diluted)			1.16					1.12						0.98
GAAP - continuing operations
Return on average assets				1.11	%				1.08	%				0.95	%
Return on average equity				10.32					10.18					9.17
Efficiency ratio				71.27					70.21					70.07
Non-GAAP - continuing operations
Operating return on average assets				1.11	%				1.09	%				0.96	%
Operating return on average equity				10.35					10.30					9.18
Operating efficiency ratio				71.18					69.88					70.03

Summary of year-to-date financial results					UMB Financial Corporation
(unaudited, dollars in thousands, except per share data)					September					September
					YTD					YTD
					2018					2017
Income from continuing operations					$	170,806				$	135,619
Loss from discontinued operations						(747	)				(475	)
Net income						170,059					135,144
Earnings per share from continuing operations (diluted)						3.41					2.72
Losses per share from discontinued operations (diluted)						(0.01	)				(0.01	)
Earnings per share (diluted)						3.40					2.71
Net operating income from continuing operations						173,165					136,155
Operating earnings per share from continuing operations (diluted)						3.47				2.73
GAAP - continuing operations
Return on average assets						1.10	%				0.89	%
Return on average equity						10.43					8.82
Efficiency ratio						70.09					71.20
Non-GAAP - continuing operations
Operating return on average assets						1.12	%				0.90	%
Operating return on average equity						10.57					8.85
Operating efficiency ratio						69.69					71.09

“Highlights for the third quarter 2018 included strong loan growth, with average balances increasing 9.6 percent on a linked-quarter annualized basis, and 7.4 percent compared to the third quarter 2017,” said Mariner Kemper, chairman and chief executive officer. “This compares to 4.0 percent growth on a linked-quarter annualized basis for the industry, per Federal Reserve data. In addition, average deposits for the quarter increased 5.4 percent compared to the third quarter of 2017, driven by continued growth in asset servicing and healthcare balances, and our recent deposit campaigns.”

Discussion of results from continuing operations

Summary of revenue			UMB Financial Corporation
(unaudited, dollars in thousands)
			Q3					Q2					Q3					CQ vs.					CQ vs.
			2018					2018					2017					LQ					PY
Net interest income			$	150,490				$	150,226				$	140,858				$	264				$	9,632
Noninterest income:
Trust and securities processing				43,425					42,845					45,060					580					(1,635	)
Trading and investment banking				3,711					4,653					4,453					(942	)				(742	)
Service charges on deposit accounts				20,927					20,722					21,510					205					(583	)
Insurance fees and commissions				339					340					425					(1	)				(86	)
Brokerage fees				6,402					6,291					5,815					111					587
Bankcard fees				16,838					17,184					17,427					(346	)				(589	)
Gains on sales of securities available for sale, net				211					228					2,390					(17	)				(2,179	)
Other				9,032					8,026					7,226					1,006					1,806
Total noninterest income			$	100,885				$	100,289				$	104,306				$	596				$	(3,421	)
Total revenue			$	251,375				$	250,515				$	245,164				$	860				$	6,211
Net interest margin				3.18	%				3.24	%				3.16	%
Total noninterest income as a % of total revenue				40.13					40.03					42.55

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 $150.5 million and increased modestly from linked quarter levels, impacted by a 2.4 percent, or $274.1 million, increase in average loans and one additional day of net interest income. These impacts were offset by increases in cost of certain interest-bearing deposits driven by the cumulative effect of recent increases in short-term rates and recent deposit campaigns.
• Earning asset yields improved 10 basis points from the linked quarter primarily due to earning asset mix changes and improved loan yields of 13 basis points to 4.87 percent, in part driven by favorable re-pricing from recent increases in short-term interest rates. The cost of interest-bearing liabilities increased 24 basis points to 1.07 percent, driven by a 25-basis point increase in cost of interest-bearing deposits. Total cost of deposits, including noninterest-bearing deposits, was 62 basis points, an increase of 17 basis points from the linked quarter.
• On a year-over-year basis, the increase in net interest income was driven by a 7.4 percent, or $807.4 million, increase in average loans as well as higher average loan yields, which increased 54 basis points from one year ago, primarily driven by higher short-term interest rates, volume, and mix changes.

Noninterest income

• Third quarter 2018 noninterest income increased $0.6 million, or 0.6 percent, on a linked quarter basis, largely due to:
  • A $1.0 million increase in derivative income recorded in other income.
  • An increase in trust and securities processing due to a $0.4 million increase in wealth management revenue.
  • These impacts were partially offset by a decrease of $0.9 million in trading and investment banking due to decreased bond trading volume.
• Noninterest income in the third quarter of 2018 decreased $3.4 million, or 3.3 percent, compared to the same quarter in 2017 primarily driven by:
  • A $2.2 million decrease in gains on available-for-sale securities.
  • A $2.3 million decline in fund servicing revenue due to customer repricing and losses, which was partially offset by an increase of $1.0 million in corporate trust income, both recorded in trust and securities processing.
  • A $0.7 million decrease in trading and investment banking income due to decreased trading volume.
  • These impacts were partially offset by an increase of $0.7 million in 12b-1 fees recorded in brokerage fee income, and an increase of $0.7 million in derivative income recorded in other income.

Noninterest expense

Summary of Noninterest expense			UMB Financial Corporation
(unaudited, dollars in thousands)
			Q3				Q2				Q3				CQ vs.					CQ vs.
			2018				2018				2017				LQ					PY
Salaries and employee benefits			$	102,956			$	104,175			$	99,749			$	(1,219	)			$	3,207
Occupancy, net				11,628				10,813				11,285				815					343
Equipment				18,533				18,842				17,880				(309	)				653
Supplies and services				4,528				4,146				4,076				382					452
Marketing and business development				6,671				6,184				5,056				487					1,615
Processing fees				12,331				11,537				11,151				794					1,180
Legal and consulting				8,470				6,460				5,844				2,010					2,626
Bankcard				4,407				4,165				5,130				242					(723	)
Amortization of other intangible assets				1,385				1,485				1,715				(100	)				(330	)
Regulatory fees				3,337				3,772				3,798				(435	)				(461	)
Other				6,139				5,639				6,137				500					2
Total noninterest expense			$	180,385			$	177,218			$	171,821			$	3,167				$	8,564

• GAAP noninterest expense for the third quarter of 2018 was $180.4 million, an increase of $3.2 million, or 1.8 percent, from the linked quarter and $8.6 million, or 5.0 percent, from the third quarter of 2017.
• On a non-GAAP basis, operating noninterest expense (as reconciled later in this release) was $180.2 million for the third quarter 2018, an increase of $3.8 million, or 2.1 percent, compared to the linked quarter, and $8.4 million, or 4.9 percent, compared to the third quarter 2017.
• The linked quarter increase in noninterest expense was driven by:
  • A $1.9 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.
  • Increased processing fees expense of $0.8 million, primarily related to larger asset servicing transaction volumes as new customers were added.
  • These impacts were partially offset by a $1.2 million decline in salaries and employee benefits, largely driven by lower medical insurance expense as compared the second quarter of 2018.
• The year-over-year increase in noninterest expense was driven by:
  • A $3.2 million increase in salaries and employee benefits, comprised of a $1.9 million increase in salary and wage expense and a $1.2 million increase in bonus and commission expense.
  • A $2.9 million increase in 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.
  • A $1.3 million increase in advertising expense related to timing of multiple projects and campaigns, including recent deposit promotions.
  • Increased processing fees expense of $1.2 million partially attributed to larger asset servicing transaction volumes as new customers were added.

Income Taxes

• The company’s effective tax rate was 14.2 percent for the nine months ended September 30, 2018, compared to 21.4 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 $3.0 million related to provision-to-return adjustments.

Balance Sheet

• Average total assets for the third quarter 2018 were $20.7 billion compared to $20.6 billion for the linked quarter, and $20.3 billion for the same period in 2017.

Summary of average loans and leases - QTD Average			UMB Financial Corporation
(unaudited, dollars in thousands)
			Q3				Q2				Q3				CQ vs.					CQ vs.
			2018				2018				2017				LQ					PY
Commercial			$	4,717,530			$	4,478,829			$	4,539,302			$	238,701				$	178,228
Asset-based loans				382,672				336,710				278,479				45,962					104,193
Factoring loans				264,414				231,035				173,876				33,379					90,538
Commercial credit card				199,730				191,009				174,892				8,721					24,838
Real estate - construction				814,053				823,169				782,898				(9,116	)				31,155
Real estate - commercial				3,701,072				3,711,417				3,284,871				(10,345	)				416,201
Real estate - residential				688,097				669,177				603,865				18,920					84,232
Real estate - HELOC				566,460				596,025				668,340				(29,565	)				(101,880	)
Consumer credit card				222,223				230,971				239,529				(8,748	)				(17,306	)
Consumer other				152,894				153,427				140,344				(533	)				12,550
Leases				9,407				22,679				24,758				(13,272	)				(15,351	)
Total loans			$	11,718,552			$	11,444,448			$	10,911,154			$	274,104				$	807,398

• Average loans for the third quarter 2018 increased 2.4 percent on a linked-quarter basis and 7.4 percent compared to third quarter 2017.

Summary of average securities - QTD Average			UMB Financial Corporation
(unaudited, dollars in thousands)
			Q3				Q2				Q3				CQ vs.					CQ vs.
			2018				2018				2017				LQ					PY
Securities available for sale:
U.S. Treasury			$	38,044			$	37,982			$	47,216			$	62				$	(9,172	)
U.S. Agencies				198				2,946				22,743				(2,748	)				(22,545	)
Mortgage-backed				3,590,703				3,679,835				3,564,974				(89,132	)				25,729
State and political subdivisions				2,290,906				2,330,454				2,536,281				(39,548	)				(245,375	)
Corporates				718				1,476				21,848				(758	)				(21,130	)
Commercial Paper				—				7,138				—				(7,138	)				—
Total securities available for sale			$	5,920,569			$	6,059,831			$	6,193,062			$	(139,262	)			$	(272,493	)
Securities held to maturity:
State and political subdivisions				1,205,007				1,228,849				1,283,258				(23,842	)				(78,251	)
Trading securities				45,476				45,538				49,396				(62	)				(3,920	)
Other securities				65,962				66,345				64,294				(383	)				1,668
Total securities			$	7,237,014			$	7,400,563			$	7,590,010			$	(163,549	)			$	(352,996	)

• Average securities available for sale decreased 2.3 percent on a linked-quarter basis and 4.4 percent compared to the third quarter of 2017 driven by the ongoing reinvestment of cash flows from such securities to partially fund growth in the loan portfolio.

Summary of average deposits - QTD Average								UMB Financial Corporation
(unaudited, dollars in thousands)
			Q3					Q2					Q3					CQ vs.					CQ vs.
			2018					2018					2017					LQ					PY
Deposits:
Noninterest-bearing demand			$	5,547,880				$	5,666,364				$	5,728,145				$	(118,484	)			$	(180,265	)
Interest-bearing demand and savings				9,954,008					9,768,015					8,789,217					185,993					1,164,791
Time deposits				1,030,411					1,032,000					1,162,383					(1,589	)				(131,972	)
Total deposits			$	16,532,299				$	16,466,379				$	15,679,745				$	65,920				$	852,554
Noninterest bearing deposits as % of total				33.56	%				34.41	%				36.53	%

• Average deposits increased 5.4 percent compared to the third quarter of 2017, in part driven by recent deposit campaigns.

Capital

Capital information			UMB Financial Corporation
(unaudited, dollars in thousands, except per share data)
			September 30, 2018					June 30,     2018					September 30, 2017
Total equity			$	2,203,464				$	2,201,812				$	2,101,543
Book value per common share				44.20					43.96					42.15
Regulatory capital:
Common equity Tier 1 capital			$	2,175,700				$	2,145,617				$	1,893,842
Tier 1 capital				2,175,700					2,145,617					1,893,842
Total capital				2,348,731					2,315,483					2,062,928
Regulatory capital ratios:
Common equity Tier 1 capital ratio				13.47	%				13.56	%				12.18	%
Tier 1 risk-based capital ratio				13.47					13.56					12.18
Total risk-based capital ratio				14.54					14.63					13.26
Tier 1 leverage ratio				10.58					10.50					9.43

• At September 30, 2018, the company’s risk-based capital ratios presented in the foregoing table exceeded all “well-capitalized” regulatory thresholds.

Asset Quality

Credit quality			UMB Financial Corporation
(unaudited, dollars in thousands)
			Q3					Q2					Q1					Q4					Q3
			2018					2018					2018					2017					2017
Net charge-offs - Commercial loans			$	624				$	6,137				$	6,847				$	2,248				$	8,961
Net charge-offs (recoveries) - Real estate loans				408					1,035					1,512					(242	)				238
Net charge-offs - Consumer credit card loans				1,632					1,786					1,849					1,612					1,635
Net charge-offs - Consumer other loans				82					46					94					167					74
Net charge-offs - Total loans				2,746					9,004					10,302					3,785					10,908
Net loan charge-offs as a % of total average loans				0.09	%				0.32	%				0.37	%				0.14	%				0.40	%
Loans over 90 days past due			$	1,927				$	2,883				$	5,650				$	3,091				$	2,088
Loans over 90 days past due as a % of total loans				0.02	%				0.02	%				0.05	%				0.03	%				0.02	%
Nonaccrual and restructured loans			$	50,568				$	56,030				$	67,604				$	59,142				$	54,231
Nonaccrual and restructured loans as a % of total loans				0.42	%				0.48	%				0.59	%				0.52	%				0.49	%
Provision for loan losses			$	5,750				$	7,000				$	10,000				$	6,000				$	11,500

Dividend Declaration

At the company’s quarterly board meeting, the Board of Directors declared a $0.30 per share quarterly cash dividend, an increase of 3.4 percent or $0.01 per share. The cash dividend will be payable on January 2, 2019, to shareholders of record at the close of business on December 10, 2018.

Accelerated Share Repurchase

The company has entered into an agreement with Bank of America Merrill Lynch (BAML) to repurchase an aggregate of $50 million of the company’s common stock through an accelerated share repurchase (ASR). The company will receive an initial delivery of shares representing approximately 85 percent of the expected total to be repurchased. The final number of shares repurchased and delivered under the ASR will be based on the volume weighted average share price of the company’s common stock during the term of the transaction. The final settlement of the transactions under the ASR is expected to occur no later than the end of the first quarter of 2019 and may be accelerated at the option of BAML. The ASR is part of the company’s authorization to repurchase up to two million shares of the company’s common stock, which was announced April 24, 2018.

Conference Call

The company plans to host a conference call to discuss its third quarter 2018 earnings results on Wednesday, October 24, 2018, 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 3Q 2018 Conference Call

A replay of the conference call may be heard through November 7, 2018, by calling (toll-free) 877-344-7529 or (international) 412-317-0088. The replay access code required for playback is 10124649. 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- 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.

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
(unaudited, dollars in thousands)
					September 30,
					2018					2017
ASSETS
Loans					$	11,964,724				$	10,997,028
Allowance for loan losses						(101,302	)				(98,389	)
Net loans						11,863,422					10,898,639
Loans held for sale						2,222					4,525
Investment Securities:
Available for sale						5,932,741					5,848,960
Held to maturity						1,199,114					1,276,252
Trading securities						81,159					60,660
Other securities						65,252					63,543
Total investment securities						7,278,266					7,249,415
Federal funds sold and resell agreements						206,412					244,436
Interest-bearing due from banks						668,990					221,856
Cash and due from banks						348,700					366,169
Premises and equipment, net						277,123					277,454
Accrued income						104,012					103,076
Goodwill						180,867					180,867
Other intangibles, net						16,335					23,477
Other assets						516,011					655,846
Discontinued assets - goodwill and other intangibles, net						—					53,743
Total assets					$	21,462,360				$	20,279,503
LIABILITIES
Deposits:
Noninterest-bearing demand					$	5,757,353				$	5,812,117
Interest-bearing demand and savings						10,938,839					9,063,079
Time deposits under $250,000						594,705					576,035
Time deposits of $250,000 or more						445,807					548,373
Total deposits						17,736,704					15,999,604
Federal funds purchased and repurchase agreements						1,192,985					1,856,837
Long-term debt						78,523					76,071
Accrued expenses and taxes						171,548					193,978
Other liabilities						79,136					51,470
Total liabilities						19,258,896					18,177,960
SHAREHOLDERS' EQUITY
Common stock						55,057					55,057
Capital surplus						1,054,801					1,042,022
Retained earnings						1,477,732					1,239,865
Accumulated other comprehensive loss, net						(155,641	)				(22,668	)
Treasury stock						(228,485	)				(212,733	)
Total shareholders' equity						2,203,464					2,101,543
Total liabilities and shareholders' equity					$	21,462,360				$	20,279,503

Consolidated Statements of Income			UMB Financial Corporation
(unaudited, dollars in thousands except share and per share data)
			Three Months Ended									Nine Months Ended
			September 30,									September 30,
			2018				2017					2018					2017
INTEREST INCOME
Loans			$	143,947			$	119,132				$	405,231				$	338,416
Securities:
Taxable interest				20,263				17,720					60,566					55,351
Tax-exempt interest				18,281				18,893					55,274					54,372
Total securities income				38,544				36,613					115,840					109,723
Federal funds and resell agreements				665				1,008					2,455					2,638
Interest-bearing due from banks				1,513				753					4,149					1,884
Trading securities				428				389					1,567					1,135
Total interest income				185,097				157,895					529,242					453,796
INTEREST EXPENSE
Deposits				25,792				10,181					57,961					23,982
Federal funds and repurchase agreements				7,524				5,811					18,922					14,274
Other				1,291				1,045					3,721					2,973
Total interest expense				34,607				17,037					80,604					41,229
Net interest income				150,490				140,858					448,638					412,567
Provision for loan losses				5,750				11,500					22,750					35,000
Net interest income after provision for loan losses				144,740				129,358					425,888					377,567
NONINTEREST INCOME
Trust and securities processing				43,425				45,060					130,272					132,412
Trading and investment banking				3,711				4,453					12,465					18,168
Service charges on deposit accounts				20,927				21,510					63,554					66,316
Insurance fees and commissions				339				425					980					1,584
Brokerage fees				6,402				5,815					19,046					17,081
Bankcard fees				16,838				17,427					52,145					55,413
Gains on sales of securities available for sale, net				211				2,390					578					4,138
Other				9,032				7,226					27,659					22,417
Total noninterest income				100,885				104,306					306,699					317,529
NONINTEREST EXPENSE
Salaries and employee benefits				102,956				99,749					315,099					306,174
Occupancy, net				11,628				11,285					33,394					33,314
Equipment				18,533				17,880					56,201					53,318
Supplies and services				4,528				4,076					12,434					12,962
Marketing and business development				6,671				5,056					17,889					14,929
Processing fees				12,331				11,151					35,029					31,093
Legal and consulting				8,470				5,844					18,774					17,361
Bankcard				4,407				5,130					13,198					15,066
Amortization of other intangible assets				1,385				1,715					4,432					5,685
Regulatory fees				3,337				3,798					10,014					11,702
Other				6,139				6,137					17,015					20,966
Total noninterest expense				180,385				171,821					533,479					522,570
Income before income taxes				65,240				61,843					199,108					172,526
Income tax expense				7,391				12,971					28,302					36,907
Income from continuing operations				57,849				48,872					170,806					135,619
Discontinued Operations
Loss from discontinued operations before income taxes				—				(1,030	)				(917	)				(722	)
Income tax benefit				—				(300	)				(170	)				(247	)
Loss from discontinued operations				—				(730	)				(747	)				(475	)
NET INCOME			$	57,849			$	48,142				$	170,059				$	135,144
PER SHARE DATA
Basic:
Income from continuing operations			$	1.17			$	0.99				$	3.45				$	2.76
Loss from discontinued operations				—				(0.01	)				(0.01	)				(0.01	)
Net income – basic				1.17				0.98					3.44					2.75
Diluted:
Income from continuing operations				1.16				0.98					3.41					2.72
Loss from discontinued operations				—				(0.01	)				(0.01	)				(0.01	)
Net income - diluted				1.16				0.97					3.40					2.71
Dividends				0.290				0.255					0.870					0.765
Weighted average shares outstanding - basic				49,473,157				49,283,322					49,482,087					49,221,629
Weighted average shares outstanding - diluted				49,912,084				49,833,141					49,952,984					49,838,619

Consolidated Statements of Comprehensive Income			UMB Financial Corporation
(unaudited, dollars in thousands)
			Three Months Ended										Nine Months Ended
			September 30,										September 30,
			2018					2017					2018					2017
Net income			$	57,849				$	48,142				$	170,059				$	135,144
Other comprehensive (loss) income, net of tax:
Unrealized gains and losses on debt securities:
Change in unrealized holding gains and losses, net				(36,331	)				5,064					(133,013	)				62,646
Less: Reclassification adjustment for gains included in net income				(211	)				(2,390	)				(578	)				(4,138	)
Change in unrealized gains and losses on debt securities during the period				(36,542	)				2,674					(133,591	)				58,508
Change in unrealized gains and losses on derivative hedges				1,162					(169	)				4,274					(1,080	)
Income tax benefit (expense)				8,698					(1,548	)				32,250					(22,554	)
Other comprehensive (loss) income before reclassifications				(26,682	)				957					(97,067	)				34,874
Amounts reclassified from accumulated other comprehensive income				—					—					(13,049	)				—
Net current-period other comprehensive (loss) income				(26,682	)				957					(110,116	)				34,874
Comprehensive income			$	31,167				$	49,099				$	59,943				$	170,018

Consolidated Statements of Shareholders' Equity								UMB Financial Corporation
(unaudited, dollars in thousands except per share data)
			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				—					—					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
Balance - January 1, 2018			$	55,057				$	1,046,095				$	1,338,110				$	(45,525	)			$	(212,206	)			$	2,181,531
Total comprehensive income (loss)				—					—					170,059					(110,116	)				—					59,943
Reclassification of certain tax effects				—					—					12,917					—					—					12,917
Cash dividends ($0.870 per share)				—					—					(43,499	)				—					—					(43,499	)
Purchase of treasury stock				—					—					—					—					(26,417	)				(26,417	)
Issuance of equity awards				—					(2,004	)				—					—					2,499					495
Recognition of equity-based compensation				—					8,469					—					—					—					8,469
Sale of treasury stock				—					409					—					—					406					815
Exercise of stock options				—					1,832					—					—					7,233					9,065
Cumulative effect adjustments				—					—					145					—					—					145
Balance - September 30, 2018			$	55,057				$	1,054,801				$	1,477,732				$	(155,641	)			$	(228,485	)			$	2,203,464

Average Balances / Yields and Rates			UMB Financial Corporation
(tax - equivalent basis)
(unaudited, dollars in thousands)
			Three Months Ended September 30,
			2018									2017
			Average					Average				Average					Average
			Balance					Yield/Rate				Balance					Yield/Rate
Assets
Loans, net of unearned interest			$	11,718,552				4.87	%			$	10,911,154				4.33	%
Securities:
Taxable				3,760,332				2.14					3,794,074				1.85
Tax-exempt				3,431,206				2.67					3,746,540				3.06
Total securities				7,191,538				2.39					7,540,614				2.46
Federal funds and resell agreements				101,223				2.61					190,036				2.10
Interest bearing due from banks				322,882				1.86					254,702				1.17
Trading securities				45,476				4.35					49,396				3.95
Total earning assets				19,379,671				3.89					18,945,902				3.52
Allowance for loan losses				(99,289	)								(99,954	)
Other assets				1,469,283									1,467,273
Total assets			$	20,749,665								$	20,313,221
Liabilities and Shareholders' Equity
Interest-bearing deposits			$	10,984,419				0.93	%			$	9,951,600				0.41	%
Federal funds and repurchase agreements				1,733,884				1.72					2,234,666				1.03
Borrowed funds				78,764				6.50					76,159				5.44
Total interest-bearing liabilities				12,797,067				1.07					12,262,425				0.55
Noninterest-bearing demand deposits				5,547,880									5,728,145
Other liabilities				179,775									207,417
Shareholders' equity				2,224,943									2,115,234
Total liabilities and shareholders' equity			$	20,749,665								$	20,313,221
Net interest spread								2.82	%								2.97	%
Net interest margin								3.18									3.16

Average Balances / Yields and Rates			UMB Financial Corporation
(tax - equivalent basis)
(unaudited, dollars in thousands)
			Nine Months Ended September 30,
			2018									2017
			Average					Average				Average					Average
			Balance					Yield/Rate				Balance					Yield/Rate
Assets
Loans, net of unearned interest			$	11,484,757				4.72	%			$	10,762,401				4.20	%
Securities:
Taxable				3,830,164				2.11					3,995,441				1.85
Tax-exempt				3,519,060				2.66					3,625,727				3.07
Total securities				7,349,224				2.37					7,621,168				2.43
Federal funds and resell agreements				122,961				2.67					192,817				1.83
Interest bearing due from banks				336,144				1.65					271,799				0.93
Trading securities				45,206				5.21					61,604				3.06
Total earning assets				19,338,292				3.76					18,909,789				3.42
Allowance for loan losses				(100,856	)								(96,181	)
Other assets				1,467,036									1,474,177
Total assets			$	20,704,472								$	20,287,785
Liabilities and Shareholders' Equity
Interest-bearing deposits			$	10,831,775				0.72	%			$	9,777,717				0.33	%
Federal funds and repurchase agreements				1,678,108				1.51					2,321,144				0.82
Borrowed funds				78,770				6.32					76,192				5.22
Total interest-bearing liabilities				12,588,653				0.86					12,175,053				0.45
Noninterest-bearing demand deposits				5,753,237									5,853,905
Other liabilities				172,560									203,037
Shareholders' equity				2,190,022									2,055,790
Total liabilities and shareholders' equity			$	20,704,472								$	20,287,785
Net interest spread								2.90	%								2.97	%
Net interest margin								3.20									3.12

Business Segment Information			UMB Financial Corporation
(unaudited, dollars in thousands)
			Three Months Ended September 30, 2018
			Commercial Banking				Institutional Banking				Personal Banking				Healthcare Services				Total
Net interest income			$	94,633			$	15,293			$	31,145			$	9,419			$	150,490
Provision for loan losses				4,062				355				1,333				—				5,750
Noninterest income				20,831				43,169				28,266				8,619				100,885
Noninterest expense				64,083				47,081				56,648				12,573				180,385
Income before taxes				47,319				11,026				1,430				5,465				65,240
Income tax expense				5,381				1,241				160				609				7,391
Income from continuing operations			$	41,938			$	9,785			$	1,270			$	4,856			$	57,849
Average assets			$	9,838,000			$	3,920,000			$	4,791,000			$	2,201,000			$	20,750,000
			Three Months Ended September 30, 2017
			Commercial Banking				Institutional Banking				Personal Banking				Healthcare Services				Total
Net interest income			$	89,386			$	12,763			$	30,675			$	8,034			$	140,858
Provision for loan losses				9,565				313				1,622				—				11,500
Noninterest income				21,094				46,405				28,261				8,546				104,306
Noninterest expense				60,620				44,727				56,127				10,347				171,821
Income before taxes				40,295				14,128				1,187				6,233				61,843
Income tax expense				8,454				2,965				244				1,308				12,971
Income from continuing operations			$	31,841			$	11,163			$	943			$	4,925			$	48,872
Average assets			$	9,710,000			$	3,582,000			$	5,072,000			$	1,949,000				20,313,000
			Nine Months Ended September 30, 2018
			Commercial Banking				Institutional Banking				Personal Banking				Healthcare Services				Total
Net interest income			$	279,521			$	47,351			$	93,220			$	28,546			$	448,638
Provision for loan losses				17,179				1,027				4,544				—				22,750
Noninterest income				60,606				131,999				87,700				26,394				306,699
Noninterest expense				189,096				141,499				165,945				36,939				533,479
Income before taxes				133,852				36,824				10,431				18,001				199,108
Income tax expense				19,032				5,227				1,484				2,559				28,302
Income from continuing operations			$	114,820			$	31,597			$	8,947			$	15,442			$	170,806
Average assets			$	9,788,000			$	3,895,000			$	4,853,000			$	2,168,000				20,704,000
			Nine Months Ended September 30, 2017
			Commercial Banking				Institutional Banking				Personal Banking				Healthcare Services				Total
Net interest income			$	261,497			$	36,731			$	91,484			$	22,855			$	412,567
Provision for loan losses				28,500				1,101				5,399				—				35,000
Noninterest income				62,014				140,232				87,932				27,351				317,529
Noninterest expense				185,825				136,086				168,760				31,899				522,570
Income before taxes				109,186				39,776				5,257				18,307				172,526
Income tax expense				23,297				8,437				1,273				3,900				36,907
Income from continuing operations			$	85,889			$	31,339			$	3,984			$	14,407			$	135,619
Average assets			$	9,723,000			$	3,457,000			$	5,233,000			$	1,875,000				20,288,000

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 September 30, 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 September 30,										Nine Months Ended September 30,
			2018					2017					2018					2017
Income from continuing operations (GAAP)			$	57,849				$	48,872					170,806				$	135,619
Adjustments:
Acquisition and divestiture expense (income)				3					5					(3	)				22
Severance expense				221					80					3,035					815
Tax-impact of adjustments (i)				(49	)				(30	)				(673	)				(301	)
Total Non-GAAP adjustments (net of tax)				175					55					2,359					536
Net operating income from continuing operations (Non-GAAP)			$	58,024				$	48,927				$	173,165				$	136,155
Earnings per share from continuing operations - diluted (GAAP)			$	1.16				$	0.98				$	3.41				$	2.72
Acquisition and divestiture expense (income)				—					—					—					—
Severance expense				—					—					0.07					0.02
Tax-impact of adjustments (i)				—					—					(0.01	)				(0.01	)
Operating earnings per share from continuing operations - diluted (Non-GAAP)			$	1.16				$	0.98				$	3.47				$	2.73
GAAP
Return on average assets				1.11	%				0.95	%				1.10	%				0.89	%
Return on average equity				10.32					9.17					10.43					8.82
Non-GAAP
Operating return on average assets				1.11	%				0.96	%				1.12	%				0.90	%
Operating return on average equity				10.35					9.18					10.57					8.85

(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. The prior periods were calculated using the company’s marginal tax rate of 36.0%.

Operating noninterest expense and operating efficiency ratio Non-GAAP reconciliations:			UMB Financial Corporation
(unaudited, dollars in thousands)
			Three Months Ended September 30,												Nine Months Ended September 30,
			2018						2017						2018						2017
Noninterest expense			$	180,385					$	171,821					$	533,479					$	522,570
Adjustments to arrive at operating noninterest expense (pre-tax):
Acquisition and divestiture expense (income)				3						5						(3		)				22
Severance expense				221						80						3,035						815
Total Non-GAAP adjustments (pre-tax)				224						85						3,032						837
Operating noninterest expense (Non-GAAP)			$	180,161					$	171,736					$	530,447					$	521,733
Noninterest expense			$	180,385					$	171,821					$	533,479					$	522,570
Less: Amortization of other intangibles				1,385						1,715						4,432						5,685
Noninterest expense, net of amortization of other intangibles (Non-GAAP) (numerator A)			$	179,000					$	170,106					$	529,047					$	516,885
Operating noninterest expense			$	180,161					$	171,736					$	530,447					$	521,733
Less: Amortization of other intangibles				1,385						1,715						4,432						5,685
Operating expense, net of amortization of other intangibles (Non-GAAP) (numerator B)			$	178,776					$	170,021					$	526,015					$	516,048
Net interest income			$	150,490					$	140,858					$	448,638					$	412,567
Noninterest income				100,885						104,306						306,699						317,529
Less: Gains on sales of securities available for sale, net				211						2,390						578						4,138
Total Non-GAAP Revenue (denominator A)			$	251,164					$	242,774					$	754,759					$	725,958
Efficiency ratio (numerator A/denominator A)				71.27		%				70.07		%				70.09		%				71.20		%
Operating efficiency ratio (Non-GAAP) (numerator B/denominator A)				71.18						70.03						69.69						71.09

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