UMB FINANCIAL CORP

Previous wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operations highlights the material changes in the results of operations and changes in financial condition of the Company for the three and nine months ended September 30, 2024. It should be read in conjunction with the accompanying Consolidated Financial Statements, Notes to Consolidated Financial Statements and other financial information appearing elsewhere in this Form 10-Q and the Form 10-K. Results of operations for the periods included in this review are not necessarily indicative of results to be attained during any future period.

Current wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operations highlights the material changes in the results of operations and changes in financial condition of the Company for the three-month period ended March 31, 2025. It should be read in conjunction with the accompanying Consolidated Financial Statements, Notes to Consolidated Financial Statements and other financial information appearing elsewhere in this Form 10-Q and the Form 10-K. Results of operations for the periods included in this review are not necessarily indicative of results to be attained during any future period.

Previous wording

the Company’s ability to promptly and effectively integrate the merger of HTLF;

Current wording

the Company’s ability to promptly and effectively integrate the merger with HTLF;

Previous wording

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 and reputational harm to the U.S. banking system;

Current wording

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 and reputational harm to the U.S. banking system; or

Previous wording

Any forward-looking statement made by the Company or on its behalf speaks only as of the date that it was made. The Company does 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 as required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that the Company may make in any subsequent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, or Current Report on Form 8-K.

Current wording

Any forward-looking statement made by the Company or on its behalf speaks only as of the date that it was made. The Company does 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 as required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature)

Previous wording

The first financial objective is to continuously improve operating efficiencies. The Company has focused on identifying efficiencies that simplify our organizational and reporting structures, streamline back-office functions, and take advantage of synergies and newer technologies among various platforms and distribution networks. The Company has identified and expects to continue identifying ongoing efficiencies through the normal course of business that, when combined with increased revenue, will contribute to improved operating leverage. During the third quarter of 2024, total revenue increased $50.5 million, or 14.2%, as compared to the third quarter of 2023, while noninterest expense increased $21.0 million, or 9.1%, for the same period. As part of the initiative to improve operating efficiencies, the Company continues to invest in technological advances that it believes will help management drive operating leverage in the future through improved data analysis and automation. The Company also continues to evaluate core systems and will invest in enhancements that it believes will yield operating efficiencies.

Current wording

The first financial objective is to continuously improve operating efficiencies. The Company has focused on identifying efficiencies that simplify our organizational and reporting structures, streamline back-office functions, and take advantage of synergies and newer technologies among various platforms and distribution networks. The acquisition of HTLF will be integral in improving operational efficiency. The Company has identified and expects to continue identifying ongoing efficiencies through the normal course of business that, when combined with increased revenue, will contribute to improved operating leverage. During the first quarter of 2025, total revenue increased $165.2 million, or 41.4%, as compared to the first quarter of 2024, while noninterest expense increased $130.0 million, or 51.0%, for the same period. Included in the first quarter noninterest expense is $53.2 million in acquisition-related expense. Revenue is also impacted by accretion and amortization of the fair value adjustments discussed in Note 13, “Acquisition” above. As part of the initiative to improve operating efficiencies, the Company continues to invest in technological advances that it believes will help management drive operating leverage in the future through improved data analysis and automation. The Company also continues to evaluate core systems and will invest in enhancements that it believes will yield operating efficiencies.

Previous wording

The second financial objective is to increase net interest income through profitable loan and deposit growth and the optimization of the balance sheet. During the third quarter of 2024, the Company had an increase in net interest income of $25.1 million, or 11.3%, from the same period in 2023. The change in net interest income was driven by increased average loan growth and higher rates, partially offset by higher interest expense due to an unfavorable mix shift in the composition of liabilities. These changes are driven by the higher interest rate environment compared to the third quarter of 2023. The increase in interest income was driven by a $1.6 billion, or 7.2%, increase in average loans, driven by organic loan growth, coupled with the impact of higher short-term and long-term interest rates. The funding for these assets was driven primarily by a $4.5 billion, or 21.0%, increase in average interest-bearing deposits, offset by a decrease in average borrowed funds of $1.1 billion, or 43.8%, compared to the same period in 2023. Net interest margin, on a tax-equivalent basis, increased three basis points compared to the same period in 2023, primarily due to increased loan yields and earning asset mix, partially offset by the cost and mix of interest-bearing liabilities. Net interest spread increased by three basis points during the same period. The Company expects to see continued volatility in the economic markets resulting from governmental responses to inflation and reversionary signs in the economy. These changing conditions could have impacts on the balance sheet and income statement of the Company for the remainder of the year.

Current wording

The second financial objective is to increase net interest income through profitable loan and deposit growth and the optimization of the balance sheet. During the first quarter of 2025, the Company had an increase in net interest income of $158.2 million, or 66.1%, from the same period in 2024. The change in net interest income was primarily driven by rate and mix changes related to the HTLF acquisition. The increase in interest income was driven by a $9.0 billion, or 38.3%, increase in average loans, a $3.5 billion, or 106.1%, increase in average interest-bearing due from banks, and a $2.9 billion, or 21.9%, increase in total securities. The funding for these assets was driven primarily by a 43.1% increase in average interest-bearing liabilities, including an increase in average interest-bearing deposits of $13.4 billion compared to the same period in 2024. Net interest margin, on a tax-equivalent basis, increased 48 basis points compared to the same period in 2024, primarily due to cost and mix changes of loan balances and interest-bearing liabilities. Net interest spread increased 72 basis points during the same period. The Company expects to see continued volatility in the economic markets resulting from governmental responses to inflation and recessionary signs in the economy, as well as uncertainty about the impacts of recent tariffs. These changing conditions could have impacts on the balance sheet and income statement of the Company for the remainder of the year.

Previous wording

The third financial objective is to grow the Company’s revenue from noninterest sources. The Company seeks to grow noninterest revenues throughout all economic and interest rate cycles, while positioning itself to benefit in periods of economic growth. Noninterest income increased $25.4 million, or 19.1%, to $158.7 million for the three months ended September 30, 2024, compared to the same period in 2023. See greater detail below under Noninterest Income. The Company continues to emphasize its asset management, brokerage, bankcard services, healthcare services, and treasury management businesses. For the three months ended September 30, 2024, noninterest income represented 39.1% of total revenue, compared to 37.5% for the same period in 2023. The recent economic changes have impacted fee income, especially those with assets tied to market values and interest rates.

Current wording

The third financial objective is to grow the Company’s revenue from noninterest sources. The Company seeks to grow noninterest revenues throughout all economic and interest rate cycles, while positioning itself to benefit in periods of economic growth. Noninterest income increased $7.0 million, or 4.4%, to $166.2 million for the three months ended March 31, 2025, compared to the same period in 2024. This change is primarily due to HTLF-related fee income from trust income, deposit service charges, and bankcard fees. These are partially offset by investment securities losses and lower company-owned life insurance income. See greater detail below under Noninterest Income. The Company continues to emphasize its asset management, brokerage, bankcard services, healthcare services, and treasury management businesses. For the three-month period ended March 31, 2025, noninterest income represented 29.5% of total revenues, compared to 39.9% for the same period in 2024. The recent economic changes have impacted fee income, especially those with assets tied to market values and interest rates.

Previous wording

The fourth financial objective is effective capital management. The Company places a significant emphasis on maintaining a strong capital position, which management believes promotes investor confidence, provides access to funding sources under favorable terms, and enhances the Company’s ability to capitalize on business growth and acquisition opportunities. The Company continues to maximize shareholder value through a mix of reinvesting in organic growth, evaluating acquisition opportunities that complement the Company’s strategies, increasing dividends over time, and appropriately utilizing a share repurchase program. At September 30, 2024, the Company had $3.5 billion in total shareholders’ equity. This is an increase of $728.8 million, or 26.0%, compared to total shareholders’ equity at September 30, 2023. At September 30, 2024, the Company had a total risk-based capital ratio of 13.14%. The Company did not repurchase shares of common stock during the third quarter of 2024, except for shares acquired pursuant to the Company's share-based incentive programs.

Current wording

The fourth financial objective is effective capital management. The Company places a significant emphasis on maintaining a strong capital position, which management believes promotes investor confidence, provides access to funding sources under favorable terms, and enhances the Company’s ability to capitalize on business growth and acquisition opportunities. The Company continues to maximize shareholder value through a mix of reinvesting in organic growth, evaluating acquisition opportunities that complement the Company’s strategies, increasing dividends over time, and appropriately utilizing a share repurchase program. At March 31, 2025, the Company had $6.7 billion in total shareholders’ equity. This is an increase of $3.6 billion, or 114.0%, compared to total shareholders’ equity at March 31, 2024. At March 31, 2025, the Company had a total risk-based capital ratio of 12.54%. The first quarter of 2025 includes the issuance of 23.6 million shares of UMBF common stock, or $2.8 billion and the issuance of 4.6 million depositary shares, each representing a 1/400 th interest in a share of the Company’s 7.00% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series A (the Series A Preferred Stock), or $115.2 million, in exchange for all of the outstanding common and preferred stock of HTLF as consideration for the acquisition. The Company also settled the previously announced forward contract which added 3.2 million common shares, or $235.1 million in equity. The Company did not repurchase shares of common stock during the first quarter of 2025, except for shares acquired pursuant to the Company's share-based incentive programs.

Previous wording

The following is a summary regarding the Company’s earnings for the third quarter of 2024. The changes identified in the summary are explained in greater detail below. The Company recorded net income of $109.6 million for the three-month period ended September 30, 2024, compared to net income of $96.6 million for the same period a year earlier. Basic earnings per share for the third quarter of 2024 were $2.25 per share ($2.23 per share fully-diluted) compared to $1.99 per share ($1.98 per share fully-diluted) for the third quarter of 2023. Return on average assets and return on average common shareholders’ equity for the three-month period ended September 30, 2024 were 1.01% and 12.63%, respectively, compared to 0.97% and 13.25%, respectively, for the three-month period ended September 30, 2023.

Current wording

The following is a summary regarding the Company’s earnings for the first quarter of 2025. The changes identified in the summary are explained in greater detail below. The Company recorded net income available to common shareholders of $79.3 million for the three-month period ended March 31, 2025, compared to $110.3 million for the same period a year earlier. Basic earnings per common share for the first quarter of 2025 was $1.22 per common share ($1.21 per common share fully-diluted) compared to basic earnings per common share of $2.27 per common share ($2.25 per common share fully-diluted) for the first quarter of 2024. Return on average assets and return on average common shareholders’ equity for the three-month period ended March 31, 2025 were 0.54% and 5.86%, respectively, compared to 1.06% and 14.11%, respectively, for the three-month period ended March 31, 2024.

Previous wording

Net interest income for the three and nine-month periods ended September 30, 2024 increased $25.1 million, or 11.3%, and increased $42.3 million, or 6.1%, respectively, compared to the same periods in 2023. For the three-month period ended September 30, 2024, average earning assets increased by $3.7 billion, or 9.8%, and for the nine-month period ended September 30, 2024, they increased by $3.0 billion, or 8.1%, compared to the same periods in 2023. Net interest margin, on a tax-equivalent basis, increased to 2.46% and decreased to 2.49% for the three and nine-month periods ended September 30, 2024, respectively, compared to 2.43% and 2.54% for the same periods in 2023.

Current wording

Net interest income for the three-month period ended March 31, 2025 increased $158.2 million, or 66.1%, compared to the same period in 2024. For the three-month period ended March 31, 2025, average earning assets increased $15.7 billion, or 39.3%, compared to the same period in 2024. Net interest margin, on a tax-equivalent basis, increased to 2.96% for the three-month period ended March 31, 2025, compared to 2.48% for the same period in 2024.

Previous wording

The provision for credit losses increased by $13.0 million for the three-month period ended September 30, 2024 and increased by $0.8 million for the nine-month period ended September 30, 2024, as compared to the same periods in 2023. These changes were driven by loan growth, portfolio credit metric changes, and changes in macro-economic metrics in the current period as compared to the prior periods. The Company’s nonperforming loans increased $2.2 million to $19.3 million at September 30, 2024, compared to September 30, 2023. The ACL on loans as a percentage of total loans increased three basis points to 1.00% as of September 30, 2024, compared to September 30, 2023. For a description of the Company’s methodology for computing the ACL, please see the summary discussion in the “Provision and Allowance for Credit Losses” section included below.

Current wording

The provision for credit losses increased by $76.0 million for the three-month period ended March 31, 2025, as compared to the same period in 2024. Provision expense included $62.0 million to establish an allowance for credit losses on the acquired loans designated as non-PCD loans at the close of the transaction. See Note 13, “Acquisition” above. Provision expense for both periods is primarily impacted by macro-economic data and portfolio credit metrics. The Company’s nonperforming loans increased $83.1 million to $100.9 million at March 31, 2025, compared to March 31, 2024. This includes $80.8 million in nonperforming loans related to HTLF. The ACL on loans as a percentage of total loans increased to 1.03% as of March 31, 2025, compared to 0.96% at March 31, 2024. For a description of the Company’s methodology for computing the ACL, please see the summary discussion in the “Provision and Allowance for Credit Losses” section included below.

Previous wording

Noninterest income increased by $25.4 million, or 19.1%, for the three-month period ended September 30, 2024, and increased by $61.3 million, or 15.3%, for the nine-month period ended September 30, 2024, compared to the same periods in 2023. These changes are discussed in greater detail below under Noninterest Income.

Current wording

Noninterest income increased by $7.0 million, or 4.4%, for the three-month period ended March 31, 2025, compared to the same period in 2024. These changes are discussed in greater detail below under Noninterest Income.

Previous wording

Noninterest expense increased by $21.0 million, or 9.1%, for the three-month period ended September 30, 2024, and increased by $47.2 million, or 6.6%, for the nine-month period ended September 30, 2024, compared to the same periods in 2023. These changes are discussed in greater detail below under Noninterest Expense.

Current wording

Noninterest expense increased by $130.0 million, or 51.0%, for the three-month period ended March 31, 2025, compared to the same period in 2024. These changes are discussed in greater detail below under Noninterest Expense.

Previous wording

Net interest income is a significant source of the Company’s earnings and represents the amount by which interest income on earning assets exceeds the interest expense paid on liabilities. The volume of interest-earning assets and the related funding sources, the overall mix of these assets and liabilities, and the rates paid on each affect net interest income. Net interest income for the three and nine-month periods ended September 30, 2024 increased $25.1 million, or 11.3%, and increased $42.3 million, or 6.1%, compared to the same periods in 2023.

Current wording

Net interest income is a significant source of the Company’s earnings and represents the amount by which interest income on earning assets exceeds the interest expense paid on liabilities. The volume of interest-earning assets and the related funding sources, the overall mix of these assets and liabilities, and the rates paid on each affect net interest income. Net interest income for the three-month period ended March 31, 2025 increased $158.2 million, or 66.1%, compared to the same period in 2024. This increase is primarily driven by rate and mix changes related to the HTLF acquisition. Margin included $28.6 million of net accretion related to the fair value adjustments discussed in Note 13, “Acquisition” above.

Previous wording

Table 1 shows the impact of earning asset rate changes compared to changes in the cost of interest-bearing liabilities. As illustrated in this table, net interest spread for the three months ended September 30, 2024 increased three basis points as compared to the same period in 2023. Net interest margin for the three months ended September 30, 2024 increased three basis points compared to the same period in 2023. Net interest spread for the nine-month period ended September 30, 2024 decreased by 12 basis points as compared to the same period in 2023. Net interest margin for the nine-month period ended September 30, 2024 decreased by five basis points compared to the same period in 2023. The changes for three-month period ended September 30, 2024 are primarily due to increased average loan balances and rates, partially offset by higher interest costs due to unfavorable mix shift in the composition of liabilities. The changes for the nine-month period ended September 30, 2024 were related to the cost and mix of interest-bearing liabilities, partially offset by increased loan volumes, repricing of earning assets, and the benefit of interest free funds. The impact of the increased cost and mix of interest-bearing liabilities had a significant impact in the third quarter of 2024. The cost of interest-bearing liabilities increased 36 basis points from the third quarter of 2023 while the yield on earning assets increased 39 basis points compared to the same period. The cost of interest-bearing liabilities increased 66 basis points for the nine-month period ended September 30, 2024 as compared to the same period in 2023 while the yield on earning assets increased 54 basis points compared to the same period. Earning asset balance increases have been primarily driven by higher average loans and increased interest-bearing due from banks balances. The Company expects to see continued volatility in the economic markets and governmental responses to changes in the economy. These changing conditions could have impacts on the balance sheet and income statement of the Company for the remainder of the year. For the impact of the contribution from free funds, see the Analysis of Net Interest Margin within Table 2 below. Table 2 also illustrates how the changes in volume and interest rates have resulted in an increase in net interest income.

Current wording

Table 1 shows the impact of earning asset rate changes compared to changes in the cost of interest-bearing liabilities. As illustrated in this table, net interest spread for the three months ended March 31, 2025 increased 72 basis points as compared to the same period in 2024. Net interest margin for the three months ended March 31, 2025 increased 48 basis points compared to the same period in 2024. The changes are driven by rate and balance sheet mix changes from the acquired HTLF balance sheet. The cost of interest-bearing liabilities decreased 59 basis points from the first quarter of 2024 while the yield on earning assets increased 13 basis points compared to the same period. Earning asset balance increases have been primarily driven by higher average loan, interest-bearing due from bank, and securities balances. These variances have led to an increase in the Company’s net interest income during 2025, as compared to results for the same period in 2024. The Company expects to see continued volatility in the economic markets and governmental responses to changes in the economy. These changing conditions could have impacts on the balance sheet and income statement of the Company the remainder of the year. For the impact of the contribution from free funds, see the Analysis of Net Interest Margin within Table 2 below. Table 2 also illustrates how the changes in volume and interest rates have resulted in an increase in net interest income.

Previous wording

The following table presents, for the periods indicated, the average earning assets and resulting yields, as well as the average interest-bearing liabilities and resulting yields, expressed in both dollars and rates. All average balances are daily average balances. The average yield on earning assets without the tax-equivalent basis adjustment would have been 5.41% for the three-month period ended September 30, 2024, and 5.01% for the same period in 2023. The average yield on earning assets without the tax-equivalent basis adjustment would have been 5.35% for the nine-month period ended September 30, 2024, and 4.80% for the same period in 2023.

Current wording

The following table presents, for the periods indicated, the average earning assets and resulting yields, as well as the average interest-bearing liabilities and resulting yields, expressed in both dollars and rates. All average balances are daily average balances. The average yield on earning assets without the tax-equivalent basis adjustment would have been 5.39% for the three-month period ended March 31, 2025, and 5.25% for the same period in 2024.

Previous wording

Table 2 presents the dollar amount of change in net interest income and margin due to volume and rate. Table 2 also reflects the effect that interest-free funds have on net interest margin. The average balance of interest-free funds (total earning assets less interest-bearing liabilities) increased $48.9 million and decreased $413.5 million for the three and nine-month periods ended September 30, 2024, respectively, compared to the same periods in 2023. The benefit from interest-free funds was flat and increased seven basis points in the three and nine-month periods ended September 30, 2024, respectively, compared to the same periods in 2023, primarily due to increased short-term interest rates.

Current wording

Table 2 presents the dollar amount of change in net interest income and margin due to volume and rate. Table 2 also reflects the effect that interest-free funds have on net interest margin. The average balance of interest-free funds (total earning assets less interest-bearing liabilities) increased $3.6 billion for the three-month period ended March 31, 2025, compared to the same period in 2024. The benefit from interest-free funds decreased 24 basis points in the three-month period ended March 31, 2025 compared to the same period in 2024.

Previous wording

Based on the factors above, management of the Company recorded $18.0 million as provision for credit losses for the three-month period ended September 30, 2024, as compared to $5.0 million for the same period in 2023. For the nine-month period ended September 30, 2024, management of the Company recorded $42.1 million as provision for credit losses, as compared to $41.2 million for the same period in 2023. These changes are the result of applying the methodology for computing the ACL, coupled with the impacts of the current and forecasted economic environment. As illustrated in Table 3 below, the ACL on loans increased three basis points to 1.00% of total loans as of September 30, 2024, compared to September 30, 2023.

Current wording

Based on the factors above, management of the Company recorded $86.0 million as provision for credit losses for the three-month period ended March 31, 2025, compared to $10.0 million for the same period in 2024. As noted above, $62.0 million was recorded to establish an allowance for credit losses on the acquired loans designated as non-PCD loans at the close of the HTLF acquisition. See Note 13, “Acquisition” above. The remaining $24.0 million was recorded from applying the methodology for computing the allowance for credit losses, coupled with the impacts of the current and forecasted economic environment. As illustrated in Table 3 below, the ACL on loans increased to 1.03% of total loans as of March 31, 2025, compared to 0.96% of total loans as of March 31, 2024.

Previous wording

Table 3 presents a summary of the Company’s ACL for the nine-month periods ended September 30, 2024 and 2023, and for the year ended December 31, 2023. Net charge-offs were $14.3 million for the nine-month period ended September 30, 2024, compared to $9.1 million for the same period in 2023. See “Credit Risk Management” under “Item 3. Quantitative and Qualitative Disclosures About Market Risk” in this report for information relating to nonaccrual loans, past due loans, restructured loans and other credit risk matters.

Current wording

Table 3 presents a summary of the Company’s ACL for the three-month periods ended March 31, 2025 and 2024, and for the year ended December 31, 2024. Net charge-offs were $35.9 million, or 0.45% of average loans for the three-month period ended March 31, 2025, compared to $3.0 million, or 0.05% for the same period in 2024. Approximately $29.7 million of the net charge-offs were related to acquired loans. See “Credit Risk Management” under “Item 3. Quantitative and Qualitative Disclosures About Market Risk” in this report for information relating to nonaccrual loans, past due loans, restructured loans and other credit risk matters.

Previous wording

Noninterest income increased by $25.4 million, or 19.1%, during the three-month period ended September 30, 2024, and increased $61.3 million, or 15.3%, during the nine-month period ended September 30, 2024, compared to the same periods in 2023. Table 4 above summarizes the components of noninterest income and the respective year-over-year comparison for each category.

Current wording

Noninterest income increased by $7.0 million, or 4.4%, during the three-month period ended March 31, 2025, compared to the same period in 2024. Table 4 above summarizes the components of noninterest income and the respective year-over-year comparison for each category.

Previous wording

Trust and securities processing income consists of fees earned on personal and corporate trust accounts, custody of securities services, trust investments and wealth management services, mutual fund assets, and alternative asset servicing. The increase in these fees for the three and nine-month periods ended September 30, 2024, compared to the same periods in 2023, was primarily due to an increase in fund services and corporate trust revenues. For the three-month period ended September 30, 2024, fund services revenue increased $5.2 million, or 13.6%, corporate trust revenue increased $1.8 million, or 12.4%, and trust income increased $0.6 million, or 4.2%, compared to the same period in 2023. For the nine-month period ended September 30, 2024, fund services revenue increased $15.8 million, or 14.7%, corporate trust revenue increased $4.3 million, or 10.2%, and trust services revenue increased $3.1 million, or 7.4%, compared to the same period in 2023. The recent volatile markets have impacted the income in this category. Since trust and securities processing fees are primarily asset-based, which are highly correlated to the change in market value of the assets, the related income for the remainder of the year will be affected by changes in the securities markets. Management continues to emphasize sales of services to both new and existing clients as well as increasing and improving the distribution channels.

Current wording

Trust and securities processing income consists of fees earned on personal and corporate trust accounts, custody of securities services, trust investments and wealth management services, mutual fund assets, and alternative asset servicing. The increase in these fees for the three-month period ended March 31, 2025, compared to the same period in 2024, was primarily due to an increase in trust services income primarily related to HTLF, and increases in fund services revenue and corporate trust revenue. For the three-month period ended March 31, 2025, trust services income increased $4.4 million, or 29.4%, fund services revenue increased $3.6 million, or 9.0%, and corporate trust revenue increased $2.4 million, or 15.7%, in each case compared to the same period in 2024. The recent volatile markets have impacted the income in this category. Since trust and securities processing fees are primarily asset-based, which are highly correlated to the change in market value of the assets, the related income for the remainder of the year will be affected by changes in the securities markets. Management continues to emphasize sales of services to both new and existing clients as well as increasing and improving the distribution channels.

Previous wording

Brokerage fees for the three-month period ended September 30, 2024 increased $2.3 million, or 17.5%, and increased $2.2 million, or 5.5%, for the nine-month period ended September 30, 2024, compared to the same periods in 2023. The changes in the three-month and nine-month periods were driven by 12b-1 fees and money market income.

Current wording

Brokerage fees for the three-month period ended March 31, 2025 increased $4.9 million, or 37.6%, compared to the same period in 2024. This increase was driven by increased 12b-1 fees and money market share revenue.

Previous wording

Investment securities gains, net for the three and nine-month periods ended September 30, 2024 increased $2.4 million, or 867.9%, and increased $14.3 million, or 343.8%, respectively, compared to the same periods in 2023. The increase for the three-month period ended September 30, 2024, was primarily driven by net gains on dispositions of, and increased valuations in the Company's securities without readily determinable fair values during the third quarter of 2024. The increase for the nine-month period was driven by a net gain of $12.0 million on dispositions of securities without readily determinable fair values during 2024, coupled with a $4.9 million impairment loss on one Corporate available-for-sale security during the same period in 2023. The income in this category is highly correlated to the change in market value of the assets, and the related income for the remainder of the year will be affected by changes in the securities markets. The Company’s investment portfolio is continually evaluated for opportunities to improve its performance and risk profile relative to market conditions and the Company’s interest rate expectations. This can result in differences from quarter to quarter in the amount of realized gains or losses on this portfolio.

Current wording

Investment securities gains, net for the three-month period ended March 31, 2025 decreased by $14.2 million, or 151.0%, compared to the same period in 2024. This decrease was 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. The income in this category is highly correlated to the change in market value of the assets, and the related income for the remainder of the year will be affected by changes in the securities markets. The Company’s investment portfolio is continually evaluated for opportunities to improve its performance and risk profile relative to market conditions and the Company’s interest rate expectations. This can result in differences from quarter to quarter in the amount of realized gains or losses on this portfolio.

Previous wording

Noninterest expense increased $21.0 million, or 9.1%, and increased $47.2 million, or 6.6%, for the three and nine-month periods ended September 30, 2024, respectively, compared to the same periods in 2023. Table 5 above summarizes the components of noninterest expense and the respective year-over-year comparison for each category.

Current wording

Noninterest expense increased by $130.0 million, or 51.0%, for the three-month period ended March 31, 2025, compared to the same period in 2024. Table 5 above summarizes the components of noninterest expense and the respective year-over-year comparison for each category. First quarter 2025 noninterest expense included $53.2 million in total acquisition-related and other nonrecurring costs, compared to $0.4 million in the same period in 2024. It also includes $15.6 million in other intangible amortization expense related to the HTLF acquisition.

Previous wording

Processing fees increased $3.7 million, or 14.1%, and $11.5 million, or 15.2%, for the three and nine-month periods ended September 30, 2024, respectively, compared to the same periods in 2023, primarily due to increased software subscription costs.

Current wording

Processing fees increased $12.9 million, or 46.2%, for the three-month period ended March 31, 2025, compared to the same period in 2024, primarily due to increased software subscription costs, of which $6.2 million was driven by legacy-HTLF software subscriptions.

Previous wording

Legal and consulting expense increased $2.3 million, or 31.6%, and $12.4 million, or 57.5%, for the three and nine-month periods ended September 30, 2024, respectively, compared to the same periods in 2023, primarily due to expense related to the recently announced acquisition of HTLF.

Current wording

Legal and Consulting expense increased $20.7 million, or 262.4%, for the three-month period ended March 31, 2025, compared to the same period in 2024, primarily due to $19.0 million of non-recurring transaction costs associated with the acquisition in the first quarter of 2025.

Previous wording

For the nine-month period ended September 30, 2024, Institutional Banking net income decreased $2.6 million, or 2.3%, to $110.0 million, as compared to the same period last year. Net interest income decreased $1.9 million, or 1.3%, compared to the same period last year, driven by higher deposit interest expense due to the increase in short-term interest rates. Provision for credit losses increased $1.0 million for the period, driven by portfolio metric changes and changes in macro-economic metrics in 2024 as compared to 2023. Noninterest income increased $30.9 million, or 12.0%, primarily due to increases of $19.9 million in trust and securities processing income driven by higher fund services and corporate trust revenue, an increase of $4.9 million in bankcard income, an increase of $4.2 million in bond trading income, an increase of $2.3 million in brokerage income, and an increase of $1.4 million in other income. These increases were partially offset by a decrease of $3.2 million in service charges on deposit accounts. Noninterest expense increased $30.0 million, or 11.2%, primarily driven by increases of $9.8 million in technology, service, and overhead expenses, $9.2 million in salaries and employee benefits expense, $7.4 million in bankcard expense, $4.7 million in processing fees, $1.1 million in legal and consulting expense, and $1.1 million in equipment expense. These increases were partially offset by a decrease of $3.1 million in operational losses.

Current wording

For the three-month period ended March 31, 2025, Institutional Banking net income increased $14.7 million, or 41.7%, compared to the same period last year. Net interest income increased $12.0 million, or 24.5%, compared to the same period last year, due to an increase in funds transfer pricing due to higher deposit balances. Noninterest income increased $12.1 million, or 13.2%, primarily due to increases of $6.0 million in trust and securities processing income driven by higher fund services and corporate trust revenue, $4.0 million in brokerage fees and $1.8 million in deposit service charges. Noninterest expense increased $9.7 million, or 10.0%, primarily driven by increases of $7.4 million in salaries and employee benefits expense, $3.8 million in processing fees, and $1.5 million in bankcard expense. These increases were partially offset by a decrease of $3.1 million in technology, service, and overhead expenses.

Previous wording

For the nine-month period ended September 30, 2024, Personal Banking net income decreased $1.5 million, or 6.9%, to a net loss of $23.2 million, as compared to the same period in 2023. Net interest income increased $2.8 million, or 2.9%, compared to the same period last year due to loan growth and the increase in short-term interest rates. Provision for credit losses increased $0.1 million for the period, driven by portfolio metric changes and changes in macro-economic metrics in 2024 as compared to 2023. Noninterest income increased $1.1 million, or 1.6%, for the same period primarily driven by an increase of $3.2 million in trust and securities processing income, partially offset by a decrease of $2.0 million in investment securities gains. Noninterest expense increased $5.4 million, or 2.9%, primarily due to increases of $5.0 million in technology, service, and overhead expenses, $1.5 million in salaries and employee benefits, and $1.0 million in bankcard expense, partially offset by a decrease of $1.6 million in operational losses.

Current wording

For the three-month period ended March 31, 2025, Personal Banking net income decreased $23.9 million to a net loss of $31.1 million, as compared to the same period in 2024. Net interest income increased $30.2 million, or 93.5%, compared to the same period last year driven by the acquisition of HTLF, as well as organic legacy-UMB loan growth, and earning asset mix change. Provision for credit losses increased $16.8 million for the period driven by the acquisition of HTLF as well as by portfolio metric changes and changes in macro-economic metrics in 2025 as compared to 2024. Noninterest income increased $1.6 million, or 6.9%, for the same period driven by an increase of $3.8 million in trust and securities processing income, an increase of $1.3 million in bankcard fees, and an increase of $0.9 million in brokerage income. These increases were partially offset by a decrease of $4.1 million in investment securities gains. Noninterest expense increased $42.5 million, or 68.5%, primarily due to an increase of

Previous wording

Total assets of the Company increased $3.5 billion, or 7.9%, as of September 30, 2024, compared to December 31, 2023, primarily due to an increase of $1.8 billion, or 7.8%, in loan balances and an increase of $1.4 billion, or 27.9%, in interest-bearing due from banks.

Current wording

Total assets of the Company increased $18.9 billion, or 37.6%, as of March 31, 2025, compared to December 31, 2024, primarily due to an increase of $10.3 billion, or 40.1% in loan balances, an increase of $3.1 billion, or 40.1%, in securities available for sale, and an increase of $1.8 billion, or 22.9%, in interest-bearing due from banks.

Previous wording

Actual loan balances totaled $25.0 billion as of September 30, 2024, and increased $1.8 billion, or 7.8%, compared to December 31, 2023, and increased $2.1 billion, or 9.2%, compared to September 30, 2023. Compared to December 31, 2023, commercial real estate loans increased $887.1 million, or 10.0%, commercial and industrial loans increased $741.7 million, or 7.5%, and credit card loans increased $157.8 million, or 37.2%. Compared to September 30, 2023, commercial real estate loans increased $1.0 billion, or 11.4%, commercial and industrial loans increased $882.0 million, or 9.0%, consumer real estate loans increased $186.6 million, or 6.4%, and credit card loans increased $131.2 million, or 29.1%. The increase in credit card loans in both periods is related to the purchase of $109.4 million in co-branded credit card receivables during the first quarter of 2024. See further information in Note 4, “Loans and Allowance for Credit Losses” in the Notes to Consolidated Financial Statements.

Current wording

Actual loan balances totaled $35.9 billion as of March 31, 2025, and increased $10.3 billion, or 40.1%, compared to December 31, 2024, and increased $12.3 billion, or 52.0%, compared to March 31, 2024. Compared to December 31, 2024, commercial real estate loans increased $5.9 billion, or 57.9%, commercial and industrial loans increased $3.1 billion, or 28.7%, and consumer real estate loans increased $1.0 billion, or 31.5%. Compared to March 31, 2024, commercial real estate loans increased $6.7 billion, or 72.3%, commercial and industrial loans increased $4.1 billion, or 41.2%, and consumer real estate loans increased $1.2 billion, or 40.9%. A significant driver in the increases in loans was the acquisition of HTLF and its loan portfolio with an acquired fair value of $9.8 billion at January 31, 2025. The remaining increase in loans compared to March 31, 2024 is related to loans originated through the legacy UMB channels. See further information in Note 4, “Loans and Allowance for Credit Losses” in the Notes to Consolidated Financial Statements.

Previous wording

As of September 30, 2024 and December 31, 2023, commercial real estate loans comprised approximately 39.1% and 38.4%, respectively, of the Company's loan portfolio. Commercial real estate loans generally involve a greater degree of credit risk than consumer real estate loans because they typically have larger balances and are more affected by adverse conditions in the economy. Because payments on loans secured by commercial real estate often depend upon the successful operation and management of the properties and the businesses which operate from within them, repayment of such loans may be affected by factors outside the borrower’s control, such as adverse conditions in the real estate market or the economy or changes in government regulations. In recent years, commercial real estate markets have been particularly impacted by the economic disruption resulting from the COVID-19 pandemic. The COVID-19 pandemic has also been a catalyst for the evolution of various remote work options, which could impact the long-term performance of some types of office properties within our commercial real estate portfolio. Due to these risks, the Company is actively monitoring its exposure to commercial real estate.

Current wording

As of March 31, 2025 and December 31, 2024, commercial real estate loans comprised approximately 44.5% and 39.5%, respectively, of the Company's loan portfolio. Commercial real estate loans generally involve a greater degree of credit risk than consumer real estate loans because they typically have larger balances and are more affected by adverse conditions in the economy. Because payments on loans secured by commercial real estate often depend upon the successful operation and management of the properties and the businesses which operate from within them, repayment of such loans may be affected by factors outside the borrower’s control, such as adverse conditions in the real estate market or the economy or changes in government regulations. In recent years, commercial real estate markets have been particularly impacted by the economic disruption resulting from the

Previous wording

Generally, these loans are made for investment and real estate development or working capital and business expansion purposes and are primarily secured by real estate with a maximum loan-to-value of 80%. Most of these properties are non-owner occupied and have guarantees as additional security. The Company's investment CRE portfolio (which includes non-owner occupied and construction loans) totaled 27.7% and 26.5% of total Company loans as of September 30, 2024 and December 31, 2023, respectively. The average investment CRE loan was approximately $6.9 million and $5.8 million, as of September 30, 2024 and December 31, 2023, respectively, and 90% are recourse loans as of both September 30, 2024 and December 31, 2023. These loans have an average loan-to-value of 57% as of both September 30, 2024 and December 31, 2023.

Current wording

Generally, these loans are made for investment and real estate development or working capital and business expansion purposes and are primarily secured by real estate with a maximum loan-to-value of 80%. Most of these properties are non-owner occupied and have guarantees as additional security. The Company's investment CRE portfolio (which includes non-owner occupied and construction loans) totaled 29.6% and 28.5% of total Company loans as of March 31, 2025 and December 31, 2024, respectively. The average investment CRE loan was approximately $3.9 million and $7.2 million, as of March 31, 2025 and December 31, 2024, respectively.

Previous wording

The Company’s investment portfolio contains trading, AFS, and HTM securities, as well as FRB stock, FHLB stock, and other miscellaneous investments. Investment securities totaled $13.0 billion as of September 30, 2024, and $13.3 billion as of December 31, 2023, and comprised 28.9% and 31.9% of the Company’s earning assets, respectively, as of those dates.

Current wording

The Company’s investment portfolio contains trading, AFS, and HTM securities, as well as FRB stock, FHLB stock, and other miscellaneous investments. Investment securities totaled $17.3 billion as of March 31, 2025, and $13.7 billion as of December 31, 2024, and comprised 27.2% and 28.5% of the Company’s earning assets, respectively, as of those dates. A significant driver in the increases in the Company's investment portfolio was the acquisition of HTLF and its bond portfolio, which added total securities with an acquired fair value of $3.7 billion at January 31, 2025.

Previous wording

The Company’s AFS securities portfolio comprised 54.0% of the Company’s total securities portfolio at September 30, 2024 and 53.3% at December 31, 2023. The Company’s AFS securities portfolio provides liquidity as a result of the composition and average life of the underlying securities. This liquidity can be used to fund loan growth or to offset the outflow of traditional funding sources. The average life of the AFS securities portfolio was 55.4 months at September 30, 2024, compared to 52.6 months at December 31, 2023, and 61.7 months at September 30, 2023. In addition to providing a potential source of liquidity, the AFS securities portfolio can be used as a tool to manage interest rate sensitivity. The Company’s goal in the management of its AFS securities portfolio is to maximize return within the Company’s parameters of liquidity goals, interest rate risk, and credit risk.

Current wording

The Company’s AFS securities portfolio comprised 63.0% of the Company’s investment securities portfolio at March 31, 2025 and 56.9% at December 31, 2024. The Company’s AFS securities portfolio provides liquidity as a result of the composition and average life of the underlying securities. This liquidity can be used to fund loan growth or to offset the outflow of traditional funding sources. The average life of the AFS securities portfolio was 77.5 months at March 31, 2025, compared to 56.0 months at December 31, 2024, and 57.8 months at March 31, 2024. In addition to providing a potential source of liquidity, the AFS securities portfolio can be used as a tool to manage interest rate sensitivity. The Company’s goal in the management of its AFS securities portfolio is to maximize return within the Company’s parameters of liquidity goals, interest rate risk, and credit risk.

Previous wording

Management expects collateral pledging requirements for public funds, loan demand, and deposit funding to be the primary factors impacting changes in the level of AFS securities. There were $9.4 billion and $10.1 billion of securities pledged to secure U.S. Government deposits, other public deposits, certain trust deposits, derivative transactions, and repurchase agreements at September 30, 2024 and December 31, 2023, respectively.

Current wording

Management expects collateral pledging requirements for public funds, loan demand, and deposit funding to be the primary factors impacting changes in the level of AFS securities. There were $11.2 billion and $10.5 billion of securities pledged to secure U.S. Government deposits, other public deposits, certain trust deposits, derivative transactions, and repurchase agreements at March 31, 2025 and December 31, 2024, respectively.

Previous wording

The Company’s HTM securities portfolio consists of U.S. agency-backed securities, mortgage-backed securities, general obligation bonds, and private placement bonds. The HTM portfolio, net of the ACL, totaled $5.5 billion and $5.7 billion at September 30, 2024 and December 31, 2023, respectively. The average life of the HTM portfolio was 8.7 years at September 30, 2024, compared to 8.4 years at December 31, 2023, and 9.5 years at September 30, 2023.

Current wording

The Company’s HTM securities portfolio consists of U.S. agency-backed securities, mortgage-backed securities, general obligation bonds, and private placement bonds. The HTM portfolio, net of the ACL, totaled $5.7 billion at March 31, 2025 and $5.4 billion as of December 31, 2024. The average life of the HTM portfolio was 8.7 years at March 31, 2025, compared to 9.1 years at December 31, 2024, and 9.0 years at March 31, 2024.

Previous wording

The securities portfolio generates the Company’s second largest component of interest income. The securities portfolio achieved an average yield on a tax-equivalent basis of 2.93% for the nine-month period ended September 30, 2024, compared to 2.64% for the same period in 2023.

Current wording

The securities portfolio generates the Company’s second largest component of interest income. The securities portfolio achieved an average yield on a tax-equivalent basis of 3.48% for the three-month period ended March 31, 2025, compared to 2.88% for the same period in 2024.

Previous wording

At September 30, 2024, the unrealized pre-tax net loss on the AFS securities portfolio was $449.4 million, or 6.0% of the $7.5 billion amortized cost value, a decrease of $174.9 million as compared to December 31, 2023. At September 30, 2024, the unrealized pre-tax net loss on the securities designated as HTM was $563.5 million, or 10.3% of amortized cost value, compared to $508.5 million at December 31, 2023. During 2022, the Company transferred securities with an amortized cost balance of $4.1 billion and a fair value of $3.8 billion from the AFS category to the HTM category. The transfer of securities was made at fair value at the time of transfer. The remaining balance of unrealized pre-tax losses related to transferred securities was $179.8 million as of September 30, 2024, and $207.2 million as of December 31, 2023, and was included in the amortized cost balance of HTM securities. See further information in Note 5, “Securities” in the Notes to Consolidated Financial Statements.

Current wording

At March 31, 2025, the unrealized pre-tax net loss on the AFS securities portfolio was $557.5 million, or 4.9% of the $11.5 billion amortized cost value, an improvement of $75.8 million as compared to December 31, 2024. At March 31, 2025, the unrealized pre-tax net loss on the securities designated as HTM was $610.3 million, or 10.7% of amortized cost value, compared to $630.0 million at December 31, 2024. During 2022, the Company transferred securities with an amortized cost balance of $4.1 billion and a fair value of $3.8 billion from the AFS category to the HTM category. The transfer of securities was made at fair value at the time of transfer. The remaining balance of unrealized pre-tax losses related to transferred securities was $163.0 million as of March 31, 2025, and $171.3 million as of December 31, 2024, and was included in the amortized cost balance of HTM securities. See further information in Note 5, “Securities” in the Notes to Consolidated Financial Statements.

Previous wording

Deposits increased $3.9 billion, or 10.9%, from December 31, 2023 to September 30, 2024 and increased $6.3 billion, or 18.8%, from September 30, 2023 to September 30, 2024. Total interest-bearing balances increased $3.2 billion and noninterest-bearing deposits increased $710.3 million from December 31, 2023 to September 30, 2024. Total interest-bearing deposits increased $4.7 billion and noninterest-bearing deposits increased $1.6 billion from September 30, 2023 to September 30, 2024. Noninterest-bearing deposits were 32.3%, 33.9%, and 33.7% of total deposits at September 30, 2024, December 31, 2023, and September 30, 2023, respectively.

Current wording

Deposits increased $15.4 billion, or 35.6%, from December 31, 2024 to March 31, 2025 and increased $21.6 billion, or 58.5%, from March 31, 2024 to March 31, 2025. A significant driver in the increases in the Company's deposits was the acquisition of HTLF, which added total deposits with an acquired value of $14.3 billion at January 31, 2025. Total noninterest-bearing deposits increased $4.8 billion and total interest-bearing deposits increased $10.6 billion from December 31, 2024 to March 31, 2025. Total noninterest-bearing deposits increased $5.2 billion, and interest-bearing deposits increased $16.4 billion from March 31, 2024 to March 31, 2025. Noninterest-bearing deposits were 31.5%, 31.6%, and 35.9% of total deposits at March 31, 2025, December 31, 2024, and March 31, 2024, respectively.

Previous wording

Deposits represent the Company’s primary funding source for its asset base. In addition to the core deposits garnered by the Company’s retail branch structure, the Company continues to focus on its cash management services, as well as its trust and investment company servicing businesses, in order to attract and retain additional deposits. Management believes a strong core deposit composition is one of the Company’s key strengths given its competitive product mix.

Current wording

Deposits represent the Company’s primary funding source for its asset base. In addition to the core deposits garnered by the Company’s retail branch structure, the Company continues to focus on its cash management services, as well as its trust and mutual fund servicing businesses, in order to attract and retain additional deposits. Management believes a strong core deposit composition is one of the Company’s key strengths given its competitive product mix.