UMB Financial Corporation Reports First Quarter 2025 Results

First Quarter 2025 Financial Highlights

• On January 31, 2025, UMB Financial Corporation completed its merger with Heartland Financial USA, Inc.
• GAAP net income available to common shareholders of $79.3 million, or $1.21 per diluted common share.
• Net operating income available to common shareholders⁽ⁱ⁾ of $168.9 million, or $2.58 per diluted common share.
• Operating pre-tax, pre-provision (operating PTPP)⁽ⁱ⁾ income of $233.3 million, compared to $157.5 million in the first quarter of 2024.
• Net interest margin on a fully taxable equivalent basis of 2.96%, up 39 basis points from the linked quarter.
• Efficiency ratio of 65.19% due to merger-related nonrecurring charges; operating efficiency ratio⁽ⁱ⁾ of 55.56% improved from 61.12% in the prior quarter and 60.04% in the first quarter of 2024.
• Average loans increased 27.8% on a linked-quarter basis to $32.3 billion; Average loans increased $9.0 billion, or 38.3% as compared to the first quarter of 2024.
• End-of-period loans were $35.9 billion at March 31, 2025.
• Average deposits increased 32.3% on a linked-quarter basis, to $50.3 billion.
• End-of-period deposits were $58.5 billion at March 31, 2025.

(i) A non-GAAP financial measure reconciled later in this release to the nearest comparable GAAP measure.

UMB Financial Corporation (Nasdaq: UMBF), a financial services company, announced net income available to common shareholders for the first quarter of 2025 of $79.3 million, or $1.21 per diluted share, compared to $120.0 million, or $2.44 per diluted share, in the fourth quarter (linked quarter) and $110.3 million, or $2.25 per diluted share, in the first quarter of 2024.

On January 31, 2025, UMBF completed its previously announced acquisition of Heartland Financial, USA, Inc. (HTLF). The acquisition added assets with a fair value of approximately $17.9 billion, $9.8 billion of loans, net of the allowance for credit losses, and $14.3 billion of deposits. The combined company retains its #1 deposit market share in Missouri and now ranks in the top 10 in Colorado, New Mexico, Kansas, and Arizona.

Net operating income available to common shareholders, a non-GAAP financial measure reconciled later in this release to net income available to common shareholders, the nearest comparable GAAP measure, was $168.9 million, or $2.58 per diluted share, for the first quarter of 2025, compared to $122.6 million, or $2.49 per diluted share, for the linked quarter and $120.7 million, or $2.47 per diluted share, for the first quarter of 2024. Operating pre-tax, pre-provision income (operating PTPP), a non-GAAP measure reconciled later in this release to the components of net income before taxes, the nearest comparable GAAP measure, was $233.3 million, or $3.57 per diluted share, for the first quarter of 2025, compared to $166.9 million, or $3.39 per diluted share, for the linked quarter, and $157.5 million, or $3.22 per diluted share, for the first quarter of 2024. These operating PTPP results represent increases of 39.8% on a linked-quarter basis and 48.2% compared to the first quarter of 2024.

“2025 is off to an exciting start with strong first quarter financial results in addition to the completion of our acquisition of Heartland Financial in January,” said Mariner Kemper, UMB Financial Corporation chairman and chief executive officer. “The cultural integration of the acquisition as well as technology systems conversion plans, are on track. The value proposition of the core deposit franchise at HTLF was evident as demonstrated by the 37-basis points improvement in cost of interest-bearing deposits and 39-basis points increase in our net interest margin, compared to the linked quarter. Total top line loan production exceeded $1.2 billion in the first quarter, including early encouraging pipeline in the acquired markets. Excluding the impact of acquired balances, legacy UMB average loans in the first quarter of 2025 increased 8.3%, while average total deposits increased 27.3%, including an 11.2% increase in average demand deposit balances, all on a linked-quarter annualized basis."

First quarter 2025 earnings discussion

Net interest income

• First quarter 2025 net interest income totaled $397.6 million, an increase of $128.7 million, or 47.8%, from the linked quarter, driven primarily by the acquisition of HTLF during the first quarter of 2025, as well as legacy-UMB balance sheet growth.
• Average earning assets increased $12.9 billion, or 30.3%, from the linked quarter, largely driven by the acquisition of HTLF. The acquisition added earning assets with a fair value of approximately $14.4 billion, including $9.8 billion of loans, net of the allowance for credit losses, and $3.7 billion of securities as of January 31, 2025. On a consolidated basis, there were increases of $7.0 billion in average loans, $2.5 billion in average securities, and $3.2 billion in interest-bearing due from banks as compared to the linked quarter.
• Average interest-bearing liabilities increased $10.1 billion, or 33.6%, from the linked quarter, primarily driven by the acquisition of HTLF. The acquisition added interest-bearing deposits with a fair value of $10.6 billion and noninterest-bearing deposits of $3.9 billion as of January 31, 2025. On a consolidated basis, there was an increase of $9.5 billion in interest-bearing deposits, $442.4 million in federal funds and repurchase agreements, and $161.0 million in borrowed funds. Average noninterest-bearing demand deposits increased $2.8 billion, or 26.2%, as compared to the linked quarter.
• Net interest margin for the first quarter was 2.96%, an increase of 39 basis points from the linked quarter, driven by higher loan and securities yields driven in large part by the net impact of purchase accounting accretion income on acquired assets and liabilities, the decreased cost of interest-bearing liabilities due to lower short-term interest rates and benefit of lower-cost HTLF interest-bearing deposits balances, and earning asset mix changes. Average loan yields increased 16 basis points and total earning asset yields increased 20 basis points from the linked quarter. The cost of interest-bearing liabilities decreased 35 basis points sequentially to 3.44%. Total cost of funds decreased 22 basis points from the linked quarter to 2.58%.
• On a year-over-year basis, net interest income increased $158.2 million, or 66.1%, driven by a $15.7 billion, or 39.3%, increase in average earning assets, primarily driven by rate and mix changes related to the acquisition of HTLF. Average loans increased $9.0 billion, interest bearing due from banks increased $3.5 billion, and average securities increased $2.9 billion.
• Average deposits increased 50.0% compared to the first quarter of 2024. Average interest-bearing deposits increased 57.1% and noninterest-bearing demand deposit balances increased 33.4% compared to the first quarter of 2024. Average demand deposit balances comprised 26.7% of total deposits, compared to 28.0% in the linked quarter and 30.0% in the first quarter of 2024.
• Average borrowed funds increased $161.0 million as compared to the linked quarter and decreased $1.6 billion as compared to the first quarter of 2024, driven by the acquisition of HTLF and the repayment of borrowings under the BTFP and FHLB advances, respectively.

Noninterest income

• First quarter 2025 noninterest income increased $1.0 million, or 0.6%, on a linked-quarter basis, largely due to:
  • An increase of $6.1 million in service charges on deposits driven by increased service charge income on interest-bearing checking accounts, largely driven by the HTLF acquisition and increased corporate service charges income.
  • An increase of $5.2 million in bankcard income, driven by an additional $5.4 million of interchange income from legacy HTLF cards.
  • These increases were partially offset by the following decreases:
    • A decrease of $5.4 million in investment securities gains, primarily driven by decreased valuations in the company's non-marketable securities.
    • Decreases of $3.1 million in company-owned life insurance income and $1.4 million in derivative income, both recorded in other income. The decrease in company-owned life insurance was offset by a proportionate decrease in deferred compensation expense as noted below.
    • A decrease of $1.5 million in miscellaneous other income, driven by the gain of $4.1 million recorded during the linked quarter on the sale of UMB Distribution Services. During the first quarter of 2025, gains of $1.5 million were recorded for recoveries of loans previously charged off by HTLF and $0.9 million on legal settlements.
• Compared to the prior year, noninterest income in the first quarter of 2025 increased $7.0 million, or 4.4%, primarily driven by:
  • Increases of $4.4 million in trust income, $3.6 million in fund services income, and $2.4 million in corporate trust income, all recorded in trust and securities processing.
  • An increase of $6.7 million in service charges on deposit accounts, primarily driven by increased service charge income on interest-bearing checking accounts, largely due to the HTLF acquisition and increased corporate service charges income.
  • Increases of $4.9 million in brokerage income due to higher 12b-1 fees and money market income and $4.3 million in bankcard income due to increased interchange income, partially offset by increased rebates and rewards expense.
  • These increases were offset by the following decreases:
    • A decrease of $14.2 million in investment securities gains, primarily driven by a net $8.6 million gain on disposition of two of the company's non-marketable securities in the first quarter of 2024, coupled with $5.3 million in decreased valuation in the company's non-marketable securities during the first quarter of 2025.
    • A decrease of $5.3 million in company-owned life insurance income, recorded in other income. The decrease in company-owned life insurance was offset by a proportionate decrease in deferred compensation expense as noted below.

Noninterest expense

• GAAP noninterest expense for the first quarter of 2025 was $384.8 million, an increase of $114.4 million, or 42.3%, from the linked quarter and $130.0 million, or 51.0% from the first quarter of 2024. First quarter 2025 expenses included $53.2 million in total acquisition-related and other nonrecurring costs, compared to $3.7 million in the linked quarter. Operating noninterest expense, a non-GAAP financial measure reconciled later in this release to noninterest expense, the nearest comparable GAAP measure, was $330.5 million for the first quarter of 2025, an increase of $63.3 million, or 23.7%, from the linked quarter and an increase of $89.3 million, or 37.0%, from the first quarter of 2024.
• The linked-quarter increase in GAAP noninterest expense was driven by:
  • An increase of $45.5 million in salaries and bonus expense, recorded in salaries and employee benefits, primarily driven by increased severance, retention bonuses, and change in control payments made to HTLF associates.
  • An increase of $16.3 million in payroll taxes, insurance, and 401(k) expense recognized in the first quarter in employee benefits expense due to the on-boarding of additional associates from HTLF, coupled with the seasonal increase in these expenses.
  • Increases of $16.4 million and $15.6 million in legal and consulting expense and amortization of intangibles, respectively, both driven by additional expense related to the acquisition. Legal and consulting expense includes $19.0 million of non-recurring transaction costs associated with the acquisition. Amortization of intangibles includes amortization of the core deposit intangible, customer list and purchased credit card relationship intangibles recognized in the first quarter from the HTLF acquisition.
  • An increase of $10.3 million in processing fees due to increased software subscription costs, of which $6.2 million is driven by legacy-HTLF expenses.
  • Increases of $4.8 million in occupancy expense, $3.4 million in bankcard expense and $3.0 million in regulatory fees expense. The increases in occupancy and bankcard expense were driven by higher volume of activity from the HTLF acquisition.
  • These increases were partially offset by a decrease of $1.8 million in deferred compensation expense, recorded in salaries and employee benefits. The decrease in deferred compensation expense was offset by the decrease in company-owned life insurance income noted above.
• The year-over-year increase in GAAP noninterest expense was driven by:
  • An increase of $71.6 million in salaries and bonus expense, recorded in salaries and employee benefits, primarily driven by increased severance, retention bonuses, and change in control payments made to HTLF associates, as well as higher bonus expense due to higher company performance for UMB-legacy associates.
  • An increase of $10.1 million in payroll taxes, insurance, and 401(k) expense recognized in the first quarter in employee benefits expense due to the on-boarding of additional associates from HTLF.
  • Increases of $20.7 million and $15.5 million in legal and consulting expense and amortization of intangibles, respectively, both driven by additional expense related to the acquisition. Legal and consulting expense includes $19.0 million of non-recurring transaction costs associated with the acquisition in the first quarter of 2025. Amortization of intangibles includes amortization of the core deposit intangible, customer list and purchased credit card relationship intangibles recognized in the first quarter from the HTLF acquisition.
  • An increase of $12.9 million in processing fees due to increased software subscription costs, of which $6.2 million is driven by legacy-HTLF expenses.
  • Increases of $3.8 million in occupancy expense and $2.2 million in bankcard expense driven by higher volume of activity from the HTLF acquisition.
  • Increases of $1.7 million in operational losses and $0.8 million in insurance expense, both recorded in other expense.
  • These increases were partially offset by the following decreases:
    • A decrease of $11.2 million in regulatory fees driven by reduced FDIC special assessment expense during 2025 as compared to 2024. The results for the first quarter of 2024 included $13.0 million in regulatory fees expense for the special assessment compared to $0.6 million during the first quarter of 2025.
    • A decrease of $4.5 million in deferred compensation expense, recorded in salaries and employee benefits. The decrease in deferred compensation expense was offset by the decrease in company-owned life insurance income noted above.

Income taxes

• The company’s effective tax rate was 12.6% for the three months ended March 31, 2025, compared to 17.6% for the same period in 2024. The effective tax rate decreased primarily due to more favorable discrete tax items in 2025 as compared to 2024, including a favorable discrete tax benefit for the remeasurement of deferred tax assets due to an increase in the forecasted state marginal tax rate driven by the acquisition of HTLF. Additionally, there was an increase in excess tax benefits associated with stock compensation recorded in the first quarter of 2025 compared to the same period a year earlier.

Balance sheet

• Average total assets for the first quarter of 2025 were $60.0 billion compared to $45.0 billion for the linked quarter and $42.0 billion for the same period in 2024.

• Average loans for the first quarter of 2025 increased $7.0 billion, or 27.8%, on a linked-quarter basis and $9.0 billion, or 38.3%, compared to the first quarter of 2024.

• Average total securities increased 19.1% on a linked-quarter basis and increased 21.9% compared to the first quarter of 2024.

• Average deposits increased 32.3% on a linked-quarter basis and 50.0% compared to the first quarter of 2024.

Capital

• Under the terms of the HTLF merger agreement, former HTLF shareholders received 0.55 shares of UMBF for each share of HTLF common stock, or 23.6 million UMBF shares.
• On March 14, 2025, the company settled its previously announced forward sale arrangement which added $235.1 million in common equity and 3.2 million shares of common stock.
• At March 31, 2025, the regulatory capital ratios presented in the foregoing table exceeded all “well-capitalized” regulatory thresholds.

Asset Quality

• Provision for credit losses for the first quarter increased $67.0 million from the linked quarter and $76.0 million from the first quarter of 2024. Provision in the first quarter of 2025 includes $62.0 million for Day 1 provision expense to establish an allowance for credit losses on those acquired HTLF loans that were designated as non-purchase credit deteriorated (non-PCD) at the close of the transaction. The remainder of the change in provision expense is driven largely by provision tied to the $681.3 million and $2.7 billion increases in period-end organic UMB loans, as compared to the linked quarter and prior year, respectively, as well as general portfolio trends in the current period as compared to the prior periods.
• Net charge-offs for the first quarter totaled $35.9 million, or 0.45% of average loans, compared to $8.9 million, or 0.14% of average loans in the linked quarter, and $3.0 million, or 0.05% of average loans for the first quarter of 2024. Approximately $29.7 million of the net charge-offs in the first quarter of 2025 were related to loans acquired from HTLF. Excluding net charge-offs from acquired loans, net charge-offs on legacy UMB loans totaled $6.2 million, or only 0.10% of average loans.

Dividend Declaration and Share Repurchase Authorization

At the company’s quarterly board meeting, the Board of Directors declared a $0.40 per share quarterly cash dividend, payable on July 1, 2025, to stockholders of record of the company's common stock at the close of business on June 10, 2025. Additionally, the Board of Directors declared a dividend of $175 per share of the Company's Series A 7.00% preferred stock, which results in a dividend of $0.4375 per depositary share. The preferred stock dividend is payable on July 15, 2025, to stockholders of record of the preferred stock as of the close of business on June 30, 2025.

As in prior years, the Board also reviewed and approved the repurchase of up to 1,000,000 shares of the company’s common stock. Share repurchases may occur from time to time at any point until the regular meeting of the Board that immediately follows the 2026 annual meeting of the company’s shareholders. Shares acquired under the repurchase program may be available for reissuance or resale, including in connection with the company’s compensation plans and dividend reinvestment plan. Under the repurchase program, the company may acquire the shares from time to time in open market or privately negotiated transactions, at the discretion of management.

Conference Call

The company will host a conference call to discuss its first quarter 2025 earnings results on Wednesday, April 30, 2025, at 8:30 a.m. (CT).

Interested parties may access the call by dialing (toll-free) 833-470-1428 or (international) 404-975-4839 and requesting to join the UMB Financial call with access code 218749. The live call may also be accessed by visiting investorrelations.umb.com or by using the following link:

UMB Financial 1Q 2025 Conference Call

A replay of the conference call may be heard through May 14, 2025, by calling (toll-free) 866-813-9403 or (international) 929-458-6194. The replay access code required for playback is 301051. The call replay may also be accessed at investorrelations.umb.com.

Non-GAAP Financial Information

In this release, we provide information about net operating income available to common shareholders, operating earnings per share – diluted (operating EPS), operating return on average common equity (operating ROE), operating return on average assets (operating ROA), operating noninterest expense, operating efficiency ratio, operating pre-tax, pre-provision income (operating PTPP), operating pre-tax, pre-provision earnings per share – diluted (operating PTPP EPS), operating pre-tax, pre-provision income on a fully tax equivalent basis (operating PTPP-FTE), operating pre-tax, pre-provision FTE earnings per share – diluted (operating PTPP-FTE EPS), tangible common shareholders’ equity, and tangible book value per share, 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 available to common shareholders, operating EPS, operating ROE, operating ROA, operating noninterest expense, operating efficiency ratio, operating PTPP, operating PTPP EPS, operating PTPP-FTE, operating PTPP-FTE EPS, tangible common shareholders’ equity, and tangible book value per share – 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 the FDIC special assessment that management does not believe reflect the company’s fundamental operating performance.

Net operating income available to common shareholders for the relevant period is defined as GAAP net income available to common shareholders, adjusted to reflect the impact of excluding expenses related to Day 1 acquisition provision expense, acquisitions, severance expense, the FDIC special assessment, 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 available to common shareholders, divided by the company’s average total common shareholders’ equity for the relevant period. Operating ROA is calculated as net operating income available to common shareholders, 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).

Operating PTPP income for the relevant period is defined as GAAP net interest income plus GAAP noninterest income, less noninterest expense, adjusted to reflect the impact of excluding expenses related to acquisitions and severance, and the FDIC special assessment.

Operating PTPP-FTE for the relevant period is defined as GAAP net interest income on a fully tax equivalent basis plus GAAP noninterest income, less noninterest expense, adjusted to reflect the impact of excluding expenses related to acquisitions and severance, and the FDIC special assessment.

Tangible common shareholders’ equity for the relevant period is defined as GAAP common shareholders’ equity, net of intangible assets. Tangible book value per share is defined as tangible common shareholders’ equity divided by the Company’s total common shares outstanding.

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, 2024, 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). In addition to such factors that have been disclosed previously: macroeconomic and adverse developments and uncertainties related to the collateral effects of the collapse of, and challenges for, domestic and international banks, including the impacts to the U.S. and global economies; sustained levels of high inflation and the potential for an economic recession on the heels of aggressive quantitative tightening by the Federal Reserve; and impacts related to or resulting from instability in the Middle East and Russia’s military action in Ukraine, such as the broader impacts to financial markets and the global macroeconomic and geopolitical environments, may also cause actual results or other future events, circumstances, or aspirations to differ from our forward-looking statements. 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, Missouri. UMB offers commercial banking, which includes comprehensive deposit, lending, investment and retirement plan services; personal banking, which includes comprehensive deposit, lending, wealth management and financial planning services; and institutional banking, which includes asset servicing, corporate trust solutions, investment banking and healthcare services. UMB operates branches throughout Missouri, Arizona, California, Colorado, Iowa, Kansas, Illinois, Minnesota, Nebraska, New Mexico, Oklahoma, Texas, and Wisconsin. As the company’s reach continues to grow, it also serves business clients nationwide and institutional clients in several countries. For more information, visit UMB.com, UMB Blog, UMB Facebook and UMB LinkedIn.