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What changed in UMB FINANCIAL CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of UMB FINANCIAL CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+561 added−373 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-22)

Top changes in UMB FINANCIAL CORP's 2024 10-K

561 paragraphs added · 373 removed · 318 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

55 edited+72 added−9 removed53 unchanged
Biggest changeThe capital ratios for the Company and the Bank as of December 31, 2023, are set forth below: Tier 1 Leverage Ratio Tier 1 Risk-Based Capital Ratio Common Equity Tier 1 Capital Ratio Total Risk-Based Capital Ratio UMB Financial Corporation 8.49 10.94 10.94 12.85 UMB Bank, n.a. 8.52 11.21 11.21 11.90 These capital-to-assets ratios also play a central role in prompt corrective action (PCA), which is an enforcement framework used by the federal banking agencies to constrain the activities of banking organizations based on their levels of regulatory capital.
Biggest changeThe capital ratios for the Company and the Bank as of December 31, 2024, are set forth below: Minimum Regulatory Capital Ratio Minimum Ratio Plus Capital Conservation Buffer Well-Capitalized Minimums Actual Common Equity Tier 1 Capital Ratio UMB Financial Corporation 4.50 % 7.00 % N/A % 11.29 % UMB Bank, n.a. 4.50 7.00 6.50 11.47 Tier 1 Risk-Based Capital Ratio UMB Financial Corporation 6.00 8.50 6.00 11.29 UMB Bank, n.a. 6.00 8.50 8.00 11.47 Total Risk-Based Capital Ratio UMB Financial Corporation 8.00 10.50 10.00 13.21 UMB Bank, n.a. 8.00 10.50 10.00 12.24 Tier 1 Leverage Ratio UMB Financial Corporation 4.00 N/A N/A 8.50 UMB Bank, n.a. 4.00 N/A 5.00 8.52 These capital-to-assets ratios also play a central role in prompt corrective action (PCA), which is an enforcement framework used by the federal banking agencies to constrain the activities of banking organizations based on their levels of regulatory capital.
In addition, the Company is subject to the direct supervision of various government authorities charged with overseeing the kinds of financial activities conducted by its business segments. This section summarizes certain provisions of the principal laws and regulations that apply to the Company.
In addition, the Company is subject to direct supervision by various government authorities charged with overseeing the kinds of financial activities conducted by its business segments. This section summarizes certain provisions of the principal laws and regulations that apply to the Company.
The FRB maintains a targeted policy that requires a bank holding company to inform and consult with the staff of the FRB sufficiently in advance of (1) declaring and paying a dividend that could raise safety and soundness concerns (for example, a dividend that exceeds earnings in the period for which the dividend is being paid), (2) redeeming or repurchasing regulatory capital instruments when the holding company is experiencing financial weaknesses, or (3) redeeming or repurchasing common stock or perpetual preferred stock that would result in a net reduction as of the end of the quarter in the amount of those equity instruments outstanding compared with the beginning of the quarter in which the redemption or repurchase occurred.
The FRB maintains a targeted policy that requires a bank holding company to consult with the staff sufficiently in advance of (1) declaring and paying a dividend that could raise safety and soundness concerns (for example, a dividend that exceeds earnings in the period for which the dividend is being paid), (2) redeeming or repurchasing regulatory capital instruments when the holding company is experiencing financial weaknesses, or (3) redeeming or repurchasing common stock or perpetual preferred stock that would result in a net reduction as of the end of the quarter in the amount of those equity instruments outstanding compared with the beginning of the quarter in which the redemption or repurchase occurred.
An example of the latter is a condition that, in order for the Company to engage in broader financial activities, its depository institutions must remain “well capitalized” and “well managed” under applicable banking laws and must receive at least a “satisfactory” rating under the Community Reinvestment Act (CRA).
An example of the latter is a condition that, in order for the Company to continue to engage in broader financial activities, its depository institutions must remain “well capitalized” and “well managed” under applicable banking laws and must receive at least a “satisfactory” rating under the Community Reinvestment Act (the CRA).
In addition, under the Basel III capital-adequacy standards described below under the heading “Capital-Adequacy Standards,” the Bank is currently required to maintain a capital conservation buffer in excess of its minimum risk-based capital ratios and will be restricted in declaring and paying dividends whenever the buffer is breached.
In addition, under the Basel III capital-adequacy standards described below under the heading “Capital-Adequacy Standards,” the Bank is required to maintain a capital conservation buffer in excess of its minimum risk-based capital ratios and will be restricted in declaring and paying dividends whenever the buffer is breached.
Competition comes from both traditional and non-traditional financial-services providers, including banks, savings associations, finance companies, investment advisors, asset managers, mutual funds, private-equity firms, hedge funds, brokerage firms, mortgage-banking companies, credit-card companies, insurance companies, trust companies, securities processing companies, and credit unions.
Competition comes from both traditional and non-traditional financial-services providers, including banks, savings associations, finance companies, investment advisors, asset managers, 4 mutual funds, private-equity firms, hedge funds, brokerage firms, mortgage-banking companies, credit-card companies, insurance companies, trust companies, securities processing companies, and credit unions.
The Company’s ability to directly or indirectly engage in these banking and financial activities, however, is subject to conditions and other limits imposed by law or the FRB and, in some cases, requires the approval of the FRB or other government authorities.
The Company’s ability to, directly or indirectly, engage in these banking and financial activities is subject to conditions and other limits imposed by law or the FRB and, in some cases, requires the approval of the FRB or other government authorities.
The Company expects that competition will likely intensify in the future. 4 Human Capital The Company is dedicated to creating the Unparalleled Customer Experience, and its associates are critical to achieving this mission.
The Company expects that competition will likely intensify in the future. Human Capital The Company is dedicated to creating the Unparalleled Customer Experience, and its associates are critical to achieving this mission.
Shankar spent time at FBR Capital Markets as a senior research analyst and at M&T Bank Corporation in the financial planning measurement and corporate finance/mergers & acquisitions group. Thomas S. Terry 60 Mr. Terry has served as Executive Vice President and Chief Credit Officer since October 2019. From January 2011 until October 2019, Mr.
Shankar spent time at FBR Capital Markets as a senior research analyst and at M&T Bank Corporation in the financial planning measurement and corporate finance/mergers & acquisitions group. Thomas S. Terry 61 Mr. Terry has served as Executive Vice President and Chief Credit Officer since October 2019. From January 2011 until October 2019, Mr.
Information on the Company’s website is not incorporated by reference into this report and should not be considered part of this document.
Information on the 5 Company’s website is not incorporated by reference into this report and should not be considered part of this document.
The following are the executive officers of the Company, each of whom is appointed annually, and there are no arrangements or understandings between any of the executive officers and any other person pursuant to which such person was elected as an executive officer. Name Age Position with Registrant R. Brian Beaird 50 Mr.
The following are the executive officers of the Company, each of whom is appointed annually, and there are no arrangements or understandings between any of the executive officers and any other person pursuant to which such person was elected as an executive officer. Name Age Position with Registrant R. Brian Beaird 51 Mr.
Johnson held these positions from April 2015 to October 2019, May 2011 to April 2015, and December 2009 to May 2011, respectively. J. Mariner Kemper 51 Mr. Kemper has served as the Chairman and Chief Executive Officer of the Company since May 2004. From November 2015 until January 2024, he served as President of the Company.
Johnson held these positions from April 2015 to October 2019, May 2011 to April 2015, and December 2009 to May 2011, respectively. J. Mariner Kemper 52 Mr. Kemper has served as the Chairman and Chief Executive Officer of the Company since May 2004. From November 2015 until January 2024, he served as President of the Company.
Newton served in various capacities with Waddell & Reed Financial, Inc. or its subsidiary, Ivy Distributors, Inc, including most recently, serving as President of Ivy Distributors, Inc. and Ivy Global from August 2017 to May 2018, and Head of Global Distribution and President of Ivy Global from January 2014 to August 2017. David C. Odgers 54 Mr.
Newton served in various capacities with Waddell & Reed Financial, Inc. or its subsidiary, Ivy Distributors, Inc, including most recently, serving as President of Ivy Distributors, Inc. and Ivy Global from August 2017 to May 2018, and Head of Global Distribution and President of Ivy Global from January 2014 to August 2017. David C. Odgers 55 Mr.
Beaird held these positions from July 2018 until October 2019, August 2017 until July 2018, September 2015 until August 2017, and December 2011 until September 2015, respectively. Amy Harris 38 Ms. Harris has served as Executive Vice President and Chief Legal Officer since January 2021. Ms.
Beaird held these positions from July 2018 until October 2019, August 2017 until July 2018, September 2015 until August 2017, and December 2011 until September 2015, respectively. Amy Harris 39 Ms. Harris has served as Executive Vice President and Chief Legal Officer since January 2021. Ms.
Johnson 44 Ms. Johnson has served as Executive Vice President and Chief Administrative Officer since October 2019. Ms. Johnson’s previous positions with the Company include Executive Vice President, Chief Human Resources Officer; Senior Vice President, Executive Director of Talent Management and Development; and Senior Vice President, Director of Talent Management. Ms.
Johnson 45 Ms. Johnson has served as Executive Vice President and Chief Administrative Officer since October 2019. Ms. Johnson’s previous positions with the Company include Executive Vice President, Chief Human Resources Officer; Senior Vice President, Executive Director of Talent Management and Development; and Senior Vice President, Director of Talent Management. Ms.
Odgers has served as Senior Vice President, Chief Accounting Officer of the Company since January 2020, and as the Company’s Controller since January 2014. Mr. Odgers was previously the Company’s Assistant Controller from January 2005 to January 2014. John C. Pauls 59 Mr.
Odgers has served as Senior Vice President, Chief Accounting Officer of the Company since January 2020, and as the Company’s Controller since January 2014. Mr. Odgers was previously the Company’s Assistant Controller from January 2005 to January 2014. John C. Pauls 61 Mr.
Overall, Mr. Rine has over 20 years of commercial banking experience with the Bank. Ram Shankar 51 Mr. Shankar was named as Executive Vice President and Chief Financial Officer of the Company effective August 2016.
Overall, Mr. Rine has over 20 years of commercial banking experience with the Bank. Ram Shankar 52 Mr. Shankar was named as Executive Vice President and Chief Financial Officer of the Company effective August 2016.
In addition, the EGRRCPA increased the statutory asset threshold above which the Federal Reserve is required to apply enhanced prudential standards from $50 billion to $250 billion (subject to certain discretion by the Federal Reserve to apply any enhanced prudential standard requirement to any bank holding company with between $100 billion and $250 billion in total consolidated assets that would otherwise be exempt under EGRRCPA).
In addition, EGRRCPA increased the statutory asset threshold above which the FRB is required to apply enhanced prudential standards from $50 billion to $250 billion subject to certain discretion by the FRB to apply any enhanced prudential standard requirement to any bank holding company with between $100 billion and $250 billion in total consolidated assets that would otherwise be exempt under EGRRCPA.
Under the Dodd-Frank Act, each institution’s assessment base is determined based on its average consolidated total assets less average tangible equity, and there is a scorecard method for calculating assessments that combines CAMELS (an acronym that refers to the five components of a bank’s condition that are addressed: capital adequacy, asset quality, management, earnings, and liquidity) ratings and specified forward-looking financial measures to determine each institution’s risk to the DIF.
Each institution’s assessment base is determined based on its average consolidated total assets less average tangible equity, and there is a scorecard method for calculating assessments that combines CAMELS (an acronym that refers to the five components of a bank’s condition that are addressed: capital adequacy, asset quality, management, earnings, and liquidity) ratings and specified forward-looking financial measures to determine each institution’s risk to the DIF.
While bank holding companies are not subject to the PCA framework, the FRB is empowered to compel a holding company to take measures—such as the execution of financial or performance guarantees—when prompt corrective action is required in connection with one of its depository-institution subsidiaries.
While bank holding companies are not subject to the PCA framework, the FRB is empowered to compel a holding company to take measures—such as the execution of financial or performance guarantees—when PCA is required in connection with one of its depository-institution subsidiaries.
Restrictions on Permissible Activities and Corporate Matters Under the BHCA, bank holding companies and their subsidiaries are generally limited to the business of banking and to closely related activities that are incidental to banking.
Restrictions on Permissible Activities and Corporate Matters Bank holding companies and their subsidiaries are generally limited to the business of banking and to closely related activities that are incidental to banking.
The OCC has similarly expansive authorities and powers over the Bank and its subsidiaries, as does the CFPB over matters involving consumer financial laws. The SEC, FINRA, and other domestic or foreign government authorities also have an array of means at their disposal to regulate and enforce matters within their jurisdiction that could impact the Company’s businesses and operations.
The OCC has similarly expansive authority over the Bank and its subsidiaries, as does the CFPB over matters involving consumer financial laws. The SEC, FINRA, and other domestic or foreign government authorities also have an array of means at their disposal to regulate, supervise, and enforce areas within their jurisdiction that could impact the Company’s businesses and operations.
The Company believes its associates, customers, and communities mutually benefit by its focus on providing opportunities for its associates to make an impact at work and in their respective communities. On a full-time equivalent basis at December 31, 2023, the Company and its subsidiaries employed 3,599 associates across the country. Compensation and Benefits Program .
The Company believes its associates, customers, and communities mutually benefit by its focus on providing opportunities for its associates to make an impact at work and in their respective communities. On a full-time equivalent basis at December 31, 2024, the Company and its subsidiaries employed 3,698 associates across the country. Compensation and Benefits Program .
These enforcement actions could include an imposition of civil monetary penalties and could directly affect not only the Company, its subsidiaries, and institution-affiliated parties but also the Company’s counterparties, shareholders, and creditors and its commitments, arrangements, or other dealings with them.
These enforcement actions could include extensive and costly remediation requirements, an imposition of civil monetary penalties and could directly affect not only the Company, its subsidiaries, and institution-affiliated parties but also the Company’s counterparties, shareholders, and creditors and its commitments, arrangements, or other dealings with them.
As a bank holding company that has elected to become a financial holding company under the GLBA, the Company is also able—directly or indirectly through its subsidiaries—to engage in activities that are financial in nature, that are incidental to a financial activity, or that are complementary to a financial activity and do not pose a 6 substantial risk to the safety or soundness of depository institutions or the financial system generally.
As a bank holding company that has elected to become a financial holding company, the Company is also able—directly or indirectly through its subsidiaries, other than the Bank—to engage in activities that are financial in nature, that are incidental to a financial activity, or that are complementary to a financial activity and do not pose a substantial risk to the safety or soundness of depository institutions or the financial system generally.
Mason served as Director of Relationship Management and Support Institutional Asset Management for the Bank beginning in April 2013. Mr. Mason first joined the Company in June of 2005, working in the corporate finance department in a variety of roles. 10 Nikki Newton 52 Mr.
Mason served as Director of Relationship Management and Support Institutional Asset Management for the Bank beginning in 14 April 2013. Mr. Mason first joined the Company in June of 2005, working in the corporate finance department in a variety of roles. Nikki Newton 53 Mr.
If an insured depository institution such as the Bank were to become insolvent or if other specified events were to occur relating to its financial condition or the propriety of its actions, the FDIC may be appointed as conservator or receiver for the institution.
Resolution and Related Matters If an insured depository institution such as the Bank were to become insolvent or if other specified events were to occur relating to its financial condition or the propriety of its actions, the FDIC may be appointed as conservator or receiver for the institution.
In addition, the administrative expenses of the conservator or receiver could be afforded priority over all or some of the claims of the institution’s creditors, and under the FDIA, the claims of depositors (including the FDIC as subrogee of depositors) would enjoy priority over the claims of the institution’s unsecured creditors.
In addition, the administrative expenses of the conservator or receiver could be afforded priority over all or some of the claims of the institution’s creditors, and under the Federal Deposit Insurance Act (the FDIA), the claims of depositors (including the FDIC as subrogee of depositors) would enjoy priority over the claims of the institution’s unsecured creditors.
These regulatory schemes, like those overseen by the FRB, are designed to protect public or private interests that often are not aligned with those of the Company’s shareholders or non-deposit creditors. The FRB possesses extensive authorities and powers to regulate the conduct of the Company’s businesses and operations.
These regulatory schemes, like those overseen by the FRB, are designed to protect public or private interests that often are not aligned with those of the Company’s shareholders or non-deposit creditors. 6 The FRB possesses extensive authority to regulate and supervise the conduct of the Company’s businesses and operations.
Under the BHCA, however, the Company must procure the prior approval of the FRB and possibly other government authorities to directly or indirectly acquire ownership or control of five percent or more of any class of voting securities of, or substantially all of the assets of, an unaffiliated bank, savings association, or bank holding company.
The Company must receive the prior approval of the FRB and possibly other government authorities to, directly or indirectly, acquire ownership or control of five percent or more of any class of voting securities of, or substantially all of the assets of, an unaffiliated bank, savings association, or bank holding company.
He served as Director of Healthcare Services and Chief Operating Officer Institutional Banking for the Bank from November 2019 until March 2023 and as Chief Operating Officer Institutional Banking for the Bank from June 2015 to October 2019. Prior to this time, Mr.
Mason has served as President of Institutional Banking for the Bank since April 2023. He served as Director of Healthcare Services and Chief Operating Officer Institutional Banking for the Bank from November 2019 until March 2023 and as Chief Operating Officer Institutional Banking for the Bank from June 2015 to October 2019. Prior to this time, Mr.
Pauls has served as Executive Vice President, General Counsel and Corporate Secretary of the Company and the Bank since June 2016. Mr. Pauls served as interim General Counsel from April 2016 until his full appointment in June of 2016.
Pauls served as Executive Vice President, General Counsel and Corporate Secretary of the Company and the Bank from June 2016 until his retirement in January 2025. Mr. Pauls served as interim General Counsel from April 2016 until his full appointment in June 2016.
These laws generally require the Bank and its subsidiaries to deal with the Company and its nonbank subsidiaries only on market terms and, in addition, impose restrictions on the Bank and its subsidiaries in 7 directly or indirectly extending credit to or engaging in other covered transactions with the Company or its nonbank subsidiaries.
These laws generally require the Bank and its subsidiaries to deal with the Company and its nonbank subsidiaries only on market terms and, in addition, impose restrictions on the Bank and its subsidiaries in directly or indirectly extending credit to or engaging in other covered transactions, including certain derivatives and securities lending transactions, with the Company or its nonbank subsidiaries.
Terry served as Executive Vice President and Chief Lending Officer of the Company, and prior to this time, Mr. Terry served as Executive Vice President. Mr. Terry first joined UMB in 1986, and subsequently joined the Commercial Lending department in 1987 where he worked as a loan officer until 2011. Abigail Wendel 50 Ms.
Terry served as Executive Vice President and Chief Lending Officer of the Company, and prior to this time, Mr. Terry served as Executive Vice President. Mr. Terry first joined the Company in 1986, and subsequently joined the Commercial Lending department in 1987 where he worked as a loan officer until 2011. Uma Wilson 46 Ms.
The descriptions, however, are not complete and are qualified in their entirety by the full text and judicial or administrative interpretations of those laws and regulations and other laws and regulations that affect the Company. Overview The Company is a bank holding company under the BHCA and a financial holding company under the GLBA.
The descriptions, however, are not complete and are qualified in their entirety by the full text and judicial or administrative interpretations of those laws and regulations and other laws and regulations that affect the Company. Overview The Company is a bank holding company that has elected to also become a financial holding company.
He has been with UMB for over 25 years, having served as a top legal advisor for the Company and the Bank for over 20 years. James D. Rine 53 Mr. Rine has served as President of the Company since January 2024, and Vice Chairman of the Company since November 2020.
He was with the Company for over 30 years, and served as a top legal advisor for the Company and the Bank for over 25 years. James D. Rine 54 Mr. Rine has served as President of the Company since January 2024, and Vice Chairman of the Company since November 2020.
Among the FRB’s policy tools are (1) open market operations (that is, purchases or sales of securities in the open market to adjust the supply of reserve balances in order to achieve targeted federal funds rates or to put pressure on longer-term interest rates in order to achieve more desirable levels of economic activity and job creation), (2) the discount rate charged on loans by the Federal Reserve Banks, (3) the level of reserves required to be held by depository institutions against specified deposit liabilities, (4) the interest paid or charged on balances maintained with the Federal Reserve Banks by depository institutions, including balances used to satisfy their reserve requirements, and (5) other deposit and loan facilities. 5 The FRB and its policies have a substantial impact on the availability and demand for loans and deposits, the rates, and other aspects of pricing for loans and deposits, and the conditions in equity, fixed income, currency, and other markets in which the Company operates.
Among the FRB’s policy tools are (1) open market operations (that is, purchases or sales of securities in the open market to adjust the supply of reserve balances in order to achieve targeted federal funds rates or to put pressure on longer-term interest rates in order to achieve more desirable levels of economic activity and job creation), (2) the discount rate charged on loans by the Federal Reserve Banks, (3) the level of reserves required to be held by depository institutions against specified deposit liabilities, (4) the interest paid or charged on balances maintained with the Federal Reserve Banks by depository institutions, including balances used to satisfy their reserve requirements, and (5) other deposit and loan facilities.
A number of laws, principally Sections 23A and 23B of the Federal Reserve Act (the FRA), and the FRB’s Regulation W, also exist to prevent the Company and its nonbank subsidiaries from taking improper advantage of the benefits afforded to the Bank as a depository institution, including its access to federal deposit insurance and the discount window.
A number of laws also exist to prevent the Company and its nonbank subsidiaries from taking improper advantage of the benefits afforded to the Bank as a depository institution, including its access to federal deposit insurance and the discount window.
He served as the Chairman and Chief Executive Officer of the Bank between December 2012 and January 2014, and as the Chairman of UMB Bank Colorado, n.a. (a prior subsidiary of the Company) between 2000 and 2012. He was President of UMB Bank Colorado from 1997 to 2000. Mr. Kemper is the brother of Mr. Alexander C.
He served as the Chairman and Chief Executive Officer of the Bank between December 2012 and January 2014, and as the Chairman of UMB Bank Colorado, n.a. (a prior subsidiary of the Company) between 2000 and 2012. He was President of UMB Bank Colorado from 1997 to 2000. Stacy King 49 Ms.
The authorities and powers of the FRB, the OCC, and other government authorities to prevent any unsafe or unsound practice also could be employed to further limit the dividends that the Bank or the Company’s other subsidiaries may declare and pay to the Company.
The FRB or the OCC could also limit the dividends that the Bank or the Company’s other subsidiaries may pay to the Company to prevent any unsafe and unsound practice.
Many of the Company’s subsidiaries are also subject to separate or related forms of regulation, supervision, and examination, including: (1) the Bank, by the Office of the Comptroller of the Currency (the OCC) under the National Banking Acts, the FDIC under the Federal Deposit Insurance Act (the FDIA), and the Consumer Financial Protection Bureau (the CFPB) under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act); (2) UMBFS, UMB Distribution Services, LLC, and UMB Financial Services, Inc., by the Securities and Exchange Commission (the SEC) and State regulatory authorities under federal and State securities laws, and UMB Distribution Services, LLC and UMB Financial Services, Inc., by the Financial Industry Regulatory Authority (FINRA); and (3) UMB Insurance, Inc., by State regulatory authorities under applicable State insurance laws.
Many of the Company’s subsidiaries are also subject to separate or related forms of regulation, supervision, and examination, including: (1) the Bank, by the Office of the Comptroller of the Currency (the OCC), the FDIC, and the Consumer Financial Protection Bureau (the CFPB); (2) UMBFS, UMB Financial Services, Inc., and UMB Asset Management, LLC, by the Securities and Exchange Commission (the SEC) and State regulatory authorities, and UMB Financial Services, Inc., by the Financial Industry Regulatory Authority (FINRA); and (3) UMB Insurance, Inc., by State regulatory authorities.
The Dodd-Frank Act requires a bank holding company like the Company to serve as a source of financial strength for its depository-institution subsidiaries and to commit resources to support those subsidiaries in circumstances when the Company might not otherwise elect to do so.
The Company is required by law to serve as a source of financial strength for its depository-institution subsidiaries and to commit resources to support those subsidiaries in circumstances when the Company might not otherwise elect to do so.
At December 31, 2023, the Bank was categorized as well capitalized under the PCA framework. 8 Basel III, including revisions to the global Basel III capital framework (commonly known as Basel IV), includes a number of more rigorous provisions applicable only to banking organizations that are larger or more internationally active than the Company and the Bank.
Basel III, including revisions to the global Basel III capital framework (commonly known as the Basel III endgame), includes a number of more rigorous provisions applicable only to banking organizations that are larger or more internationally active than the Company and the Bank.
A sizeable influence is exerted, in particular, by the policies of the Board of Governors of the Federal Reserve System (the FRB), which influences monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates.
A sizeable impact is exerted, in particular, by the policies of the Board of Governors of the Federal Reserve System and the Federal Reserve Bank (the FRB), which, through the Federal Open Market Committee, influences monetary and credit conditions in the economy in pursuit of maximum employment and stable prices.
Lending limits, restrictions on tying arrangements, limits on permissible interest-rate charges, and other laws governing the conduct of banking or fiduciary activities are also applicable to the Bank. In addition, the GLBA imposes on the Company and its subsidiaries a number of obligations relating to financial privacy. Executive Officers of the Registrant.
Lending limits, restrictions on tying 13 arrangements, limits on permissible interest-rate charges, and other laws governing the conduct of banking or fiduciary activities are also applicable to the Bank. Executive Officers of the Registrant.
Kemper, who served on the Company's Board of Directors during 2023 until his resignation in August, 2023. Stacy King 48 Ms. King has served as Executive Vice President, Chief Risk Officer of the Company since March 2020. From May 2019 until March 2020, she served as Senior Director, Operations Management – Benefit Accounts for Willis Towers Watson.
King has served as Executive Vice President, Chief Risk Officer of the Company since March 2020. From May 2019 until March 2020, she served as Senior Director, Operations Management – Benefit Accounts for Willis Towers Watson.
Under amendments to the BHCA promulgated by the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 and the Dodd-Frank Act, the Company may acquire banks outside of its home State of Missouri, subject to specified limits and may establish new branches in other States to the same extent as banks chartered in those States.
Bank Acquisitions by the Company The Company may acquire banks outside of its home State of Missouri, subject to limits and may establish new branches in other States to the same extent as banks chartered in those States.
The Bank’s ratings under the CRA are taken into account by the FRB and the OCC when considering merger or other specified applications that the Company or the Bank may submit from time to time. 9 The Bank is subject as well to a vast array of consumer-protection laws, such as qualified-mortgage and other mortgage-related rules under the jurisdiction of the CFPB.
The Bank’s ratings under the CRA are taken into account by the FRB and the OCC when considering merger or other specified applications that the Company or the Bank may submit from time to time.
King held these positions from September 2018 until May 2019, October 2015 until September 2018, August 2014 until October 2015, and September 2013 until August 2014, respectively. Phil Mason 41 Mr. Mason has served as President of Institutional Banking for the Bank since April 2023.
King held these positions from September 2018 until May 2019, October 2015 until September 2018, August 2014 until October 2015, and September 2013 until August 2014, respectively. Elizabeth Lewis 51 Ms. Lewis has served as President, Consumer Banking since April of 2024. She has also served as Chief Marketing Officer since May of 2023. Prior to this time, Ms.
The Bank offers a full complement of banking products and other services to commercial, retail, government, and correspondent-bank customers, including a wide range of asset-management, trust, bankcard, and cash-management services. The Company also owns UMB Fund Services, Inc. (UMBFS), which is a significant nonbank subsidiary that has offices in Milwaukee, Wisconsin, Chadds Ford, Pennsylvania, and Ogden, Utah.
The Company also owns UMB Fund Services, Inc. (UMBFS), which is a significant nonbank subsidiary that has offices in Milwaukee, Wisconsin, Chadds Ford, Pennsylvania, and Ogden, Utah. UMBFS provides fund accounting, transfer agency, and other services to mutual fund and alternative-investment groups.
The Volcker Rule also provides for increased capital charges, quantitative limits, rigorous compliance programs, and other restrictions on permitted proprietary trading and fund activities, including a prohibition on transactions with a covered fund that would constitute a covered transaction under Sections 23A and 23B of the FRA.
The Volcker Rule also provides for increased capital charges, quantitative limits, rigorous compliance programs, and other restrictions on permitted proprietary trading and fund activities, including a prohibition on transactions with a covered fund that would constitute a covered transaction under Sections 23A and 23B of the Federal Reserve Act. 8 Stress Testing and Enhanced Prudential Standards Under the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), bank holding companies with assets of less than $100 billion, including the Company, are no longer subject to the requirement to conduct forward-looking, company-run stress testing, including publishing a summary of results.
The Company remains exempt from applying the enhanced prudential standards. Capital-Adequacy Standards The FRB and the OCC have adopted risk-based capital and leverage guidelines that require the capital-to-assets ratios of bank holding companies and national banks, respectively, to meet specified minimum standards.
See “Regulation and Supervision—Safety and Soundness Guidelines” in Part I, Item 1 of this report for additional information regarding federal guidelines prescribing safety and soundness standards. Capital-Adequacy Standards The FRB and the OCC have adopted risk-based capital and leverage regulations that require the capital-to-assets ratios of bank holding companies and national banks to meet specified minimum standards.
These laws include a variety of recordkeeping and reporting requirements (such as currency and suspicious activity reporting) as well as know-your-customer and due-diligence rules. Under the CRA, the Bank has a continuing and affirmative obligation to help meet the credit needs of its local communities—including low- and moderate-income neighborhoods—consistent with safe and sound banking practices.
In addition, because the Company’s common stock is listed with The NASDAQ Stock Market LLC (NASDAQ), the Company is subject to the listing rules of that exchange. Under the CRA, the Bank has a continuing and affirmative obligation to help meet the credit needs of its local communities—including low- and moderate-income neighborhoods—consistent with safe and sound banking practices.
Bank holding companies with assets of less than $100 billion, including the Company, are no longer subject to the requirement to conduct forward-looking, company-run stress testing, including publishing a summary of results. The Company continues to run internal stress tests as a component of its comprehensive risk management and capital planning process.
The Company continues to run internal stress tests as a component of its comprehensive risk management and capital planning process.
The Company currently owns all of the outstanding stock of one national bank and several nonbank subsidiaries. The Company’s national bank, UMB Bank, National Association (the Bank), has its principal office in Missouri and also has branches in Arizona, Colorado, Illinois, Kansas, Nebraska, Oklahoma, and Texas.
The Company currently owns all of the outstanding stock of one national bank and several nonbank subsidiaries.
Removed
UMBFS provides fund accounting, transfer agency, and other services to mutual fund and alternative-investment groups. Prior to March 31, 2021, the Company also owned Prairie Capital Management, LLC (PCM), which provided investment management services and alternative investments in hedge funds and private equity funds. The Company sold its membership interests in PCM during the first quarter of 2021.
Added
On January 31, 2025, the Company acquired all of the outstanding stock of Heartland Financial USA, Inc., a Delaware corporation (HTLF), in an all-stock transaction, issuing a total of 23.6 million shares of the Company’s common stock and 4.6 million depositary shares, each representing a 1/400th interest in a share of the Company’s 7.00% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series A (the Company’s preferred stock).
Removed
The functional regulator of any nonbank subsidiary of the Company, however, may prevent that subsidiary from directly or indirectly contributing its financial support, and if that were to preclude the Company from serving as an adequate source of financial strength, the FRB may instead require the divestiture of depository-institution subsidiaries and impose operating restrictions pending such a divestiture.
Added
Pursuant to the Agreement and Plan of Merger, dated as of April 28, 2024, (i) HTLF merged with and into the Company, with the Company continuing as the surviving corporation and (ii) one day after the closing date of the acquisition of HTLF by the Company, HTLF’s wholly owned bank subsidiary, a Colorado-chartered non-member bank (HTLF Bank), merged with and into UMB Bank, National Association, the Company’s national bank subsidiary (the Bank), with the Bank continuing as the surviving bank.
Removed
The Dodd-Frank Act extended the restrictions to derivatives and securities lending transactions and expanded the restrictions for transactions involving hedge funds or private-equity funds that are owned or sponsored by the Company or its nonbank subsidiaries.
Added
On April 29, 2024, the Company also announced that in connection with the execution of the merger agreement, it entered into a forward sale agreement with BofA Securities, Inc. or its affiliate to issue 2.8 million shares of its common stock.
Removed
Stress Testing and Enhanced Prudential Standards The Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) was enacted in May 2018, amending requirements previously established in the Dodd-Frank Act, including stress testing and enhanced prudential standards.
Added
The underwriters were granted an option to purchase up to an additional 420 thousand shares of the Company's common stock exercisable within 30 days of April 28, 2024.
Removed
The Dodd-Frank Act also requires the FDIC, in setting assessments, to offset the effect of increasing its reserve for the DIF on institutions with consolidated assets of less than $10 billion.
Added
The underwriters exercised this option in full on April 30, 2024, upon which the Company entered into an additional forward sale agreement relating to the 420 thousand shares of the Company's common stock.
Removed
The result of this revised approach to deposit-insurance assessments is generally an increase in costs, on an absolute or relative basis, for institutions with consolidated assets of $10 billion or more.
Added
The forward sale agreements entered into on April 28, 2024 and April 30, 2024 (collectively, the forward sale agreements) are classified as an equity instrument under ASC 815-40, Contracts in Entity’s Own Equity . The Company expects to receive net proceeds of approximately $231.8 million from the sale of shares of common stock and settlement of the forward sale agreements.
Removed
In addition, because the Company’s common stock is listed with The NASDAQ Stock Market LLC (NASDAQ), the Company is subject to the listing rules of that exchange.
Added
The Bank has its principal office in Missouri and provides financial services primarily throughout the Midwestern and Southwestern regions of the United States. The Bank offers a full complement of banking products and other services to commercial, retail, government, and correspondent-bank customers, including a wide range of asset-management, trust, bankcard, and cash-management services.
Removed
The Currency and Foreign Transactions Reporting Act of 1970 (commonly known as the Bank Secrecy Act), the USA PATRIOT Act of 2001, and related laws require all financial institutions, including banks and broker-dealers, to establish a risk-based system of internal controls reasonably designed to prevent money laundering and the financing of terrorism.
Added
The FRB and its policies have a substantial impact on the availability and demand for loans and deposits, the rates, and other aspects of pricing for loans and deposits, and the conditions in equity, fixed income, currency, and other markets in which the Company operates.
Removed
Wendel was named President of Consumer Banking of the Bank in September 2018. She has also served as Chief Strategy Officer for the Company from June 2015 until September 2018, and as the Director of Investor and Government Relations for the Company from February 2013 through June 2015. Uma Wilson 45 Ms.
Added
The standards by which bank and financial institution acquisitions are evaluated have been undergoing review and change by the OCC, FDIC and the Department of Justice (the DOJ), but not by the FRB. These reviews and changes were incorporated into non-binding guidance. Whether and how the guidance might be further changed or interpreted is uncertain.
Added
In September 2024, the OCC adopted a final rule and policy statement regarding its review of Bank Merger Act (BMA) applications for OCC-supervised institutions, including the Bank. The final rule removes the ability for BMA applicants to file a streamlined application form for certain types of acquisitions and 7 removes the expedited review process for BMA applications.
Added
The policy statement provides 19 indicators of whether a BMA application is more or less likely to be approved by the OCC. The policy statement also provides heightened expectations around the existing statutory factors the OCC is required to consider in evaluating BMA applications.
Added
In September 2024, the DOJ withdrew its 1995 Bank Merger Guidelines and issued the 2024 Banking Addendum to 2023 Merger Guidelines (the 2024 Banking Addendum).
Added
The DOJ clarified that it will assess competition considerations in connection with bank and bank holding company mergers using its 2023 Merger Guidelines, which is the general merger review framework the DOJ now uses to evaluate transactions in all segments of the economy, and 2024 Banking Addendum.
Added
The 2024 Banking Addendum provides guidance on how the DOJ will assess competition in the context of bank and bank holding company mergers.
Added
An analysis under the 2023 Merger Guidelines and 2024 Banking Addendum may include consideration of theories of harm and relevant markets not considered under the 1995 Bank Merger Guidelines, which focused primarily on concentrations of deposits and branches.
Added
Acquisitions of Ownership of the Company Acquisitions of the Company’s voting stock above certain thresholds are subject to prior regulatory notice or approval under federal banking laws, including the BHCA and the Change in Bank Control Act of 1978, as amended (the CIBCA).

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

69 edited+126 added−14 removed83 unchanged
Biggest changeThe Company establishes reserves for claims when appropriate under generally accepted accounting principles, but costs often can be incurred in connection with a matter before any reserve has been created. The Company also maintains insurance policies to mitigate the cost of litigation and other proceedings, but these policies have deductibles, limits, and exclusions that may diminish their value or efficacy.
Biggest changeAdditionally, the Company may incur costs in connection with the defense or settlement of any shareholder or stockholder lawsuits filed in connection with the acquisition of HTLF. The Company establishes reserves for claims when appropriate under generally accepted accounting principles, but costs often can be incurred in connection with a matter before any reserve has been created.
If the Company is not or is at risk of not satisfying these standards or applicable supervisory requirements—whether due to inadequate operating results that erode capital, future growth that outpaces the accumulation of capital through earnings, or otherwise—the Company may be required to raise capital, restrict dividends, or limit originations of certain types of commercial and mortgage loans.
If the Company is not satisfying or is at risk of not satisfying these standards or applicable supervisory requirements—whether due to inadequate operating results that erode capital, future growth that outpaces the accumulation of capital through earnings, or otherwise—the Company may be required to raise capital, restrict dividends, or limit originations of certain types of commercial and mortgage loans.
The Company faces intense competition in each of its business segments and in all of its markets and geographic regions, and the Company expects competitive pressures to intensify in the future—especially in light of recent legislative and regulatory initiatives, technological innovations that alter the barriers to entry, current economic and market conditions, and government monetary and fiscal policies.
The Company faces intense competition in each of its business segments and in all of its markets and geographic regions, and the Company expects competitive pressures to intensify in the future—especially in light of recent legislative 25 and regulatory initiatives, technological innovations that alter the barriers to entry, current economic and market conditions, and government monetary and fiscal policies.
The Company’s ability to address these matters successfully cannot be assured. In addition, its strategic efforts may divert resources or management's attention from ongoing business operations and may subject the 19 Company to additional regulatory scrutiny and potential liability.
The Company’s ability to address these matters successfully cannot be assured. In addition, its strategic efforts may divert resources or management's attention from ongoing business operations and may subject the Company to additional regulatory scrutiny and potential liability.
These risks and uncertainties, however, are not the only ones faced by the 11 Company. Other risks and uncertainties that are not presently known to the Company that it has failed to identify, or that it currently considers immaterial may adversely affect the Company as well.
These risks and uncertainties, however, are not the only ones faced by the Company. Other risks and uncertainties that are not presently known to the Company that it has failed to identify, or that it currently considers immaterial may adversely affect the Company as well.
Competitive pressures may drive the Company to take actions that the Company might otherwise eschew, such as 17 lowering the interest rates or fees on loans or raising the interest rates on deposits in order to keep or attract high-quality customers.
Competitive pressures may drive the Company to take actions that the Company might otherwise eschew, such as lowering the interest rates or fees on loans or raising the interest rates on deposits in order to keep or attract high-quality customers.
In addition, the Company is subject to the direct supervision of government authorities charged with overseeing the taxation of domestic companies and the kinds of financial activities conducted by the Company in its business segments.
In addition, the Company is subject to the direct supervision and examination of government authorities charged with overseeing the kinds of financial activities conducted by the Company in its business segments and the taxation of domestic companies.
All of 15 these and other regulatory risks and uncertainties could adversely affect the Company’s reputation, business, results of operations, financial condition, or prospects.
All of these and other regulatory risks and uncertainties could adversely affect the Company’s reputation, business, results of operations, financial condition, or prospects.
The secure processing, storage, maintenance, and transmission of this information is critical to the Company’s operations and reputation, and if any of this information were mishandled, misused, improperly accessed, lost, held hostage or 14 stolen or if the Company’s operations were disrupted, the Company could suffer significant financial, business, reputational, regulatory, or other damage.
The secure processing, storage, maintenance, and transmission of this information is critical to the Company’s operations and reputation, and if any of this information were mishandled, misused, improperly accessed, lost, breached, held hostage or stolen, or if the Company’s operations were disrupted, the Company could suffer significant financial, business, reputational, regulatory, or other damage.
Except where otherwise noted, the risk factors address risks and uncertainties that may affect the Company as well as its subsidiaries.
Except where otherwise noted, the 15 risk factors address risks and uncertainties that may affect the Company as well as its subsidiaries.
Likewise, a cyber-attack or other security breach affecting the business community, the markets, or parts of them may cycle or cascade through the financial system and adversely affect the Company or its service providers or counterparties. Many of these risks and uncertainties are beyond the Company’s control.
Likewise, a cyber-attack, hacking incident, or other security breach affecting the business community, the markets, or parts of them may cycle or cascade through the financial system and adversely affect the Company or its service providers or counterparties. Many of these risks and uncertainties are beyond the Company’s control.
In addition, increased ESG related compliance costs could result in increases to the Company’s overall operational costs. Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards, and fluctuations in these standards, could negatively impact the Company’s reputation, ability to do business with certain partners, and its stock price.
In addition, increased ESG related compliance costs could result in increases to the Company’s overall operational costs. Failure to adapt to or comply with regulatory 30 requirements or investor or stakeholder expectations and standards, and fluctuations in or conflicts among these standards, could negatively impact the Company’s reputation, ability to do business with certain partners, and its stock price.
Accounting standard-setting bodies, such as the Financial Accounting Standards Board, periodically change the financial accounting and reporting standards that affect the preparation of the Company’s Consolidated Financial Statements. These changes are beyond the Company’s control and could have a meaningful impact on its Consolidated Financial Statements.
Changes in accounting standards could impact the Company’s financial statements and reported earnings. Accounting standard-setting bodies, such as the Financial Accounting Standards Board, periodically change the financial accounting and reporting standards that affect the preparation of the Company’s Consolidated Financial Statements. These changes are beyond the Company’s control and could have a meaningful impact on its Consolidated Financial Statements.
Accordingly, to the extent that the Company is unable to effectively deploy its funds to originate or acquire loans or other assets with higher yields than those of its investment securities, the Company’s income may be negatively impacted. Additionally, approximately $7.1 billion, or 53.3%, of the Company’s investment securities are classified as available for sale and reported at fair value.
Accordingly, to the extent that the Company is unable to effectively deploy its funds to originate or acquire loans or other assets with higher yields than those of its investment securities, the Company’s income may be negatively impacted. Additionally, approximately $7.8 billion, or 56.9%, of the Company’s investment securities are classified as available for sale and reported at fair value.
If the Company were to lose and find itself unable to replace these personnel or other skilled employees or if the competition for talent drove its compensation costs to unsustainable levels, the Company’s business, results of operations, and financial condition could be negatively impacted.
If the Company were to lose and find itself unable to replace these personnel or other skilled employees, including as a result of the acquisition of HTLF, or if the competition for talent drove its compensation costs to unsustainable levels, the Company’s business, results of operations, and financial condition could be negatively impacted.
The trading volume in the Company’s common stock at times may be low, which could adversely affect liquidity and stock price. Although the Company’s common stock is listed for trading on the NASDAQ Global Select Market, the trading volume in the stock may at times be low and, in relative terms, less than that of other financial-services companies.
Although the Company’s common stock is listed for trading on the NASDAQ Global Select Market, the trading volume in the stock may at times be low and, in relative terms, less than that of other financial-services companies.
Even when an attempted cyber incident or other security breach is successfully avoided or thwarted, the Company may need to expend substantial resources in doing so, may be required to take actions that could adversely affect customer satisfaction or behavior, and may be exposed to reputational damage.
Even when an attempted cyber-attack, hacking incident or other security breach is successfully avoided or thwarted, the Company may need to expend substantial resources to avoid such breach, may be required to take actions that could adversely affect customer satisfaction or behavior, and may be exposed to reputational damage.
Negative shifts in economic conditions can impact the borrower’s ability to pay. Failures in the Company’s risk management policies, procedures and controls could adversely affect its ability to manage this portfolio going forward and could result in an increased rate of delinquencies in, and increased losses from, this portfolio, which could negatively impact the Company’s operating and financial performance.
Failures in the Company’s risk management policies, procedures and controls could adversely affect its ability to manage this portfolio going forward and could result in an increased rate of delinquencies in, and increased losses from, this portfolio, which could negatively impact the Company’s operating and financial performance.
The Company is subject to expansive legal and regulatory frameworks in the United States—at the federal, State, and local levels—and in the foreign jurisdictions where its business segments operate.
The Company operates in a highly regulated industry and is subject to expansive legal and regulatory frameworks in the United States—at the federal, State, and local levels—and in the foreign jurisdictions where its business segments operate.
Risks and exposures related to cybersecurity attacks are expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of these threats and the expanding use of technology-based products and services by the Company and its customers.
Risks and exposures related to cybersecurity attacks, particularly for financial institutions, are expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of these threats and the expanding use of technology-based products and services by the Company, its third-party service providers, and its customers.
The Company can provide no assurances that the safeguards it has in place or may implement in the future will prevent all unauthorized infiltrations or breaches and that the Company will not suffer losses related to a security breach in the future, which losses may be material.
The Company can provide no assurances that the safeguards it or its third-party service providers have in place or may implement in the future will prevent all unauthorized infiltrations or breaches and that the Company will not suffer losses related to a security breach in the future, which losses may be material.
The United States Congress, state legislatures and federal and state regulatory agencies have continued to propose and advance numerous legislative and regulatory initiatives seeking to mitigate the effects of climate change.
The United States Congress, state legislatures and federal and state regulatory agencies have proposed and advanced numerous legislative and regulatory initiatives seeking to mitigate the effects of climate change.
Risks also exist that government authorities could judge the Company’s business or other practices as unsafe, unsound, or otherwise unadvisable and bring formal or informal corrective or enforcement actions against it, including fines or other penalties and directives to change its products or other services.
Risks also exist that government authorities could judge the Company’s business or other practices as unsafe, unsound, or otherwise unadvisable and bring formal or informal corrective or enforcement actions against it, including fines or other penalties and directives to change its products or other services. For example, the federal banking agencies regularly conduct examinations of the Company’s business.
At December 31, 2023, 51.2% of the Company’s aggregate loan portfolio—comprised of commercial real estate loans (representing 38.4% of the aggregate loan portfolio) and consumer real estate loans (representing 12.8% of the aggregate loan portfolio)—was primarily secured by interests in real estate located in the States where the Company operates.
At December 31, 2024, 51.9% of the Company’s aggregate loan portfolio—comprised of commercial real estate loans (representing 39.5% of the aggregate loan portfolio) and consumer real estate loans (representing 12.4% of the aggregate loan portfolio)—was primarily secured by interests in real estate located in the States where the Company operates.
Also, a bank holding company must obtain the prior approval of the Federal Reserve before, among other things, acquiring direct or indirect ownership or control of more than 5 percent of the voting shares of any bank, including the Bank.
Also, a bank holding company must obtain the prior approval of the FRB under the BHCA before, among other things, acquiring direct or indirect ownership or control of more than 5 percent of any class of voting stock of any bank, including the Bank.
Financial services institutions are interrelated because of trading, clearing, counterparty and other relationships. The Company routinely executes transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, payment processors, and other institutional clients, which may result in payment obligations to the Company or to its clients due to products it has arranged.
The Company routinely executes transactions with counterparties in the financial services industry, including brokers and dealers, the FHLB, commercial banks, investment banks, payment processors, and other institutional clients, which may result in payment obligations to the Company or to its clients due to products it has arranged.
The Company’s customers and counterparties also may be negatively impacted by the levels of, or changes in, interest rates, which could increase the risk of delinquency or default on obligations to the Company.
The dynamics among these risks and uncertainties are also challenging to assess and manage. The Company’s customers and counterparties also may be negatively impacted by the levels of, or changes in, interest rates, which could increase the risk of delinquency or default on obligations to the Company.
Further, if laws impacting taxation and interest rates materially change, or if new laws are enacted, certain of the Company’s services and products, including municipal bonds, may be subject to less favorable tax treatment or otherwise adversely impacted. The level of and changes in market interest rates—and, as a result, these risks and uncertainties—are beyond the Company’s control.
Further, if laws impacting taxation and interest rates materially change, or if new laws are enacted, certain of the Company’s services and products, including municipal bonds, may be subject to less favorable tax treatment or otherwise adversely impacted.
Acquisition of ten percent or more of any class of voting stock of a bank holding company or depository institution, including shares of its common stock, generally creates a rebuttable presumption that the acquirer “controls” the bank holding company or depository institution.
Acquisition of ten percent or more of any class of voting stock of a bank holding company or depository institution, including shares of its common stock, generally creates a rebuttable presumption that the acquirer “controls” the bank holding company or depository institution and requires the acquirer to obtain the non-objection from the FRB under the CIBCA.
If the Company is required to limit originations of certain types of commercial and mortgage loans, it would thereby reduce the amount of credit available to borrowers and limit opportunities to earn interest income from the loan portfolio. The Company also may be compelled to raise capital if regulatory or supervisory requirements change.
If the Company is required to limit originations of certain types of commercial and mortgage loans, it would thereby reduce the amount of credit available to borrowers and limit opportunities to earn interest income from the loan portfolio.
The Company’s business relies on systems, employees, service providers, and counterparties, and failures or errors by any of them, intellectual property disputes, or other operational risks could adversely affect the Company.
The Company’s business relies on systems, employees, service providers, and other third parties, and failures or errors by any of them or other operational risks associated with the Company’s reliance on third parties could adversely affect the Company.
If any subsidiary were unable to remain viable as a going concern, moreover, the Company’s right to participate in a distribution of assets would be subject to the prior claims of the subsidiary’s creditors (including, in the case of the Bank, its depositors and the FDIC).
If any subsidiary were unable to remain viable as a going concern, moreover, the Company’s right to participate in a distribution of assets would be subject to the prior claims of the subsidiary’s creditors (including, in the case of the Bank, its depositors and the FDIC). 28 An inability to attract, retain, or motivate qualified employees could adversely affect the Company’s business or performance.
The Company believes that government scrutiny of all financial-services companies has increased, fundamental changes have been made to the banking, securities, and other laws that govern financial services (with the Dodd-Frank Act and Basel III being two of the more prominent examples), and a host of related business practices have been reexamined and reshaped.
The Company believes that government scrutiny and the intensity of supervision of all financial-services companies has increased, fundamental changes have been made to the banking, securities, and other laws that govern financial services, and a host of related business practices have been reexamined and reshaped.
In such an event, the Company may be required to sell assets at a loss in order to continue its operations. This could damage the performance and value of its business, prompt regulatory intervention, and harm its reputation, and if the condition were to persist for any appreciable period of time, its viability as a going concern could be threatened.
This could damage the performance and value of its business, prompt regulatory intervention, and harm its reputation, and if the condition were to persist for any appreciable period of time, its viability as a going concern could be threatened.
Regulatory or supervisory requirements, future growth, operating results, or strategic plans may prompt the Company to raise additional capital, but that capital may not be available at all or on favorable terms and, if raised, may be dilutive. The Company is subject to safety-and-soundness and capital-adequacy standards under applicable law and to the direct supervision of government authorities.
Regulatory or supervisory requirements, future growth, operating results, or strategic plans may prompt the Company to raise additional capital, but that capital may not be available at all or on favorable terms and, if raised, may be dilutive.
See “Quantitative and Qualitative Disclosures About Market Risk—Operational Risk” in Part II, Item 7A of this report for a discussion of how the Company monitors and manages operational risk. The soundness of other financial institutions could adversely affect us . The soundness of other financial institutions could adversely affect the Company.
See “Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Risk” in Part II, Item 7A of this report for a discussion of how the Company monitors and manages interest-rate risk.
The Company engages in a variety of businesses in diverse markets and relies on hosted and on-premises systems, employees, service providers, and counterparties to properly oversee, administer, and process a high volume of transactions and otherwise support our day-to-day operations.
The Company relies on hosted and on-premises systems, employees, service providers, and other third parties to properly oversee, administer, and process a high volume of transactions and otherwise support the Company’s day-to-day operations.
These new initiatives may subject the Company to, among other risks, increased business, reputational and operational risk, as well as more complex legal, regulatory and compliance costs and risks. Its ability to execute strategic activities and new business initiatives successfully will depend on a variety of factors.
These new initiatives may subject the Company to, among other risks, increased business, reputational and operational risk, as well as more complex legal, regulatory and compliance costs and risks.
If any of these restrictions were to operate or be perceived as operating to hinder or deter a potential acquirer for the Company, the market price of the Company’s common stock could suffer.
If any of these restrictions were to operate or be perceived as operating to hinder or deter a potential acquirer for the Company, the market price of the Company’s common stock could suffer. The Company’s inability to adequately protect and maintain its intellectual property may increase the Company’s legal exposure and adversely impact its performance.
The Company’s business and results of operations depend significantly on general economic conditions. When those conditions are weak or deteriorating in any of the markets or regions where the Company operates, or there are impacts stemming from geopolitical events, its business or performance could be adversely affected.
When those conditions are weak or deteriorating in any of the markets or regions where the Company operates, or there are impacts stemming from geopolitical events, its business or performance could be adversely affected. The Company provides financial services primarily throughout the Midwestern and Southwestern regions of the United States.
The Company’s lending and other banking businesses, in particular, are susceptible to weak or deteriorating economic conditions, which could result in reduced loan demand or utilization rates and at the same time increased delinquencies or defaults. These kinds of conditions also could dampen the demand for products and other services in the Company’s investment-management, asset-servicing, insurance, brokerage, or related businesses.
The Company’s lending and other banking businesses, in particular, are susceptible to weak or deteriorating economic conditions, including due to inflation, which could result in reduced loan demand or utilization rates and at the same time increased delinquencies or defaults.
Despite the Company’s efforts to appropriately reserve for claims and insure its business and operations, the actual costs associated with resolving a claim may be substantially higher than amounts reserved or covered.
Despite the Company’s efforts to appropriately reserve for claims and insure its business and operations, the actual costs associated with resolving a claim may be substantially higher than amounts reserved or covered. Substantial legal claims, even if not meritorious, could have a detrimental impact on the Company’s business, results of operations, and financial condition and could cause reputational harm.
Many of these initiatives are of significant duration, are tied to critical systems, and require substantial internal and external resources. Furthermore, to the extent these initiatives may implicate new technologies or solutions such as those related to artificial intelligence or automation, additional risk may be present.
Furthermore, to the extent these initiatives may implicate new technologies or solutions such as those related to artificial intelligence or automation, additional risk may be present.
This gives rise to meaningful operational risk—including the risk of fraud by employees or outside parties, unauthorized access to its premises or systems, errors in processing, failures of technology, breaches of internal controls or compliance safeguards, inadequate integration of acquisitions, human error, unavailability of systems and services, and other breakdowns in business continuity plans.
This gives rise to meaningful operational risk—including the risk of fraud by employees or outside parties, unauthorized access to the Company’s premises or systems, errors in processing, failures of technology, breaches of internal controls or compliance safeguards, malware and other security or hacking incidents, inadequate integration of acquisitions, human or software errors, design or performance issues, capacity constraints or unexpected transaction volumes, unavailability of systems and services, including due to electrical or telecommunications outages, bad weather, acts of terrorism or the like, and other breakdowns in business continuity plans or acts of misconduct.
In addition, the Company may elect to raise capital for strategic reasons even when it is not required to do so. The Company’s ability to raise capital on favorable terms or at all will depend on general economic and market conditions, which are outside of its control, and on the Company’s operating and financial performance.
The Company’s ability to raise capital on favorable terms or at all will depend on general economic and market conditions, which are outside of its control, and on the Company’s operating and financial performance. Accordingly, the Company cannot be assured of its ability to raise capital when needed or on favorable terms.
In addition, some parts of the Company’s business are particularly dependent on key personnel, including investment management, asset servicing, and commercial lending.
Recent scrutiny of compensation practices, especially in the financial-services industry, has made this only more difficult. In addition, some parts of the Company’s business are particularly dependent on key personnel, including investment management, asset servicing, and commercial lending.
Cyber incidents and other security breaches at the Company, at the Company’s service providers or counterparties, or in the business community or markets may negatively impact the Company’s business or performance.
Cybersecurity incidents and other security breaches of the Company’s information technology systems, or the information technology systems of the Company’s third-party service providers or their third-party service providers, the Company’s counterparties, or in the business community may negatively impact the Company’s business or performance.
The Company could be negatively impacted as well if, despite programs being in place, its risk-management or compliance personnel are ineffective in executing them and mitigating risk and loss.
The Company could be negatively impacted as well if, despite programs being in place, its risk-management or compliance personnel are ineffective in executing them and mitigating risk and loss. Some of the Company’s methods of managing risks are based upon use of observed historical market behavior, the use of analytical and/or forecasting models and management’s judgment.
In recent years, commercial real estate markets have been particularly impacted by the economic and other disruptions resulting from the COVID-19 pandemic. Repayment of commercial real estate, which typically involves higher loan principal amounts as compared to consumer real estate lending, is often dependent on the successful operation of the business conducted on the property securing the loans.
Repayment of commercial real estate, which typically involves higher loan principal amounts as compared to consumer real estate lending, is often dependent on the successful operation of the business conducted on the property securing the loans. Negative shifts in economic conditions can impact the borrower’s ability to pay.
Even though compensation is among the Company’s highest expenses, it may not be able to locate and hire the best people, keep them with the Company, or properly motivate them to perform at a high level. Recent scrutiny of compensation practices, especially in the financial-services industry, has made this only more difficult.
Skilled employees are the Company’s most important resource, and competition for talented people is intense. Even though compensation is among the Company’s highest expenses, it may not be able to locate and hire the best people, keep them with the Company, or properly motivate them to perform at a high level.
There is significant competition for valuable acquisition targets, and the Company may not be able to acquire other companies or businesses on attractive terms or at all.
There is significant competition for valuable acquisition targets, and the Company may not be able to acquire other companies or businesses on attractive terms or at all. Further, the Company’s ability to complete future acquisitions may depend on factors outside its control, including changes in the presidential administration or in one or both houses of Congress.
Regulatory restrictions and the Company’s investment policies generally result in the acquisition of securities with lower yields than loans. For the year-ended December 31, 2023, the weighted average yield of the Company’s securities portfolio was 2.66% as compared to 6.27% for its loan portfolio.
For the year-ended December 31, 2024, the weighted average yield of the Company’s securities portfolio was 2.96% as compared to 6.66% for its loan portfolio.
See “Regulation and Supervision” in Part I, Item 1 of this report.
See “Government Monetary and Fiscal Policies” and “Regulation and Supervision” in Part I, Item 1 of this report, which is incorporated by reference herein.
Any failure or delay in closing an acquisition could adversely affect the Company’s reputation, business, results of operations, financial condition, or prospects.
Any failure or delay in, or imposition of conditions on, closing an acquisition could adversely affect the Company’s reputation, business, results of operations, financial condition, or prospects. Moreover, the standards by which bank and financial institution acquisitions will be evaluated may be subject to change.
Unrealized gains or losses on these securities are excluded from earnings and reported in other comprehensive income, which in turn affects the Company’s reported equity. As a result, to the extent that the Company continues to maintain a significant portfolio of available-for-sale securities, its reported equity may experience greater volatility.
Unrealized gains or losses on these securities are excluded from earnings and reported in other comprehensive income, which in turn affects the Company’s reported equity.
Financial markets and global supply chains may be adversely affected by the impact of military conflict, including the current conflicts in Ukraine and Israel, terrorism or other geopolitical events.
These kinds of conditions also could dampen the demand for products and other services in the Company’s investment-management, asset-servicing, 16 insurance, brokerage, or related businesses. Financial markets and global supply chains may be adversely affected by the impact of military conflict, including the current conflicts in Ukraine and the Middle East, terrorism or other geopolitical events.
See “Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Risk” in Part II, Item 7A of this report for a discussion of how the Company monitors and manages interest-rate risk. 12 Weak or deteriorating economic conditions, geopolitical events, more liberal origination or underwriting standards, or financial or systemic shocks could increase the Company’s credit risk and adversely affect its lending or other banking businesses and the value of its loans or investment securities.
Weak or deteriorating economic conditions, geopolitical events, more liberal origination or underwriting standards, or financial or systemic shocks could increase the Company’s credit risk and adversely affect its lending or other banking businesses and the value of its loans or investment securities. The Company’s business and results of operations depend significantly on general economic conditions.
Service providers and counterparties also present a source of risk to the Company if their own security measures or other systems or infrastructure were to be breached, rendered inaccessible, or otherwise fail.
As noted above, third-party service providers also present a source of risk to the Company if their own security measures or other systems or infrastructure were to be breached or subject to another cybersecurity incident, rendered inaccessible or interrupted, experience an outage, downtime or degradation in service, or otherwise fail or experience adverse conditions (including conditions which interfere with the Company’s access to and use of such third-party services).
In a rising rate environment, the Company may experience a sharper decline in low-cost funding sources or an increase in cost of deposits due to its customer profile. However, the expectation of higher earning asset growth and the benefit of higher interest rates on our earning assets may help mitigate any impact.
However, the expectation of higher earning asset growth and the benefit of higher interest rates on our earning assets may help mitigate any impact.
As a result, the Company expects to continue devoting increased time and resources to risk management, compliance, and regulatory change management.
See risk below “The future results of the Company following the acquisition of HTLF may suffer if the Company does not effectively manage its expanded operations.” As a result, the Company expects to continue devoting increased time and resources to risk management, compliance, and regulatory change management.
Like most financial-services companies, the Company significantly depends on technology to deliver its products and other services and to otherwise conduct business. To remain technologically competitive and operationally efficient, the Company invests in system upgrades, new solutions, and other technology initiatives, including for both internally and externally hosted solutions.
To remain technologically competitive and operationally efficient, the Company invests in system upgrades, new solutions, and other technology initiatives, including for both internally and externally hosted solutions. Many of these initiatives are of significant duration, are tied to critical systems, and require substantial internal and external resources.
For example, despite security measures, the Company’s information technology and infrastructure may be breached or rendered inaccessible through cyber-attacks, ransomware and other computer viruses or malware, pretext calls, electronic phishing, or other means. These risks and uncertainties are rapidly evolving and increasing in complexity, and the Company’s failure to effectively mitigate them could negatively impact its business and operations.
These risks and uncertainties are rapidly evolving and increasing in complexity, and the Company’s failure to effectively mitigate them could negatively impact its business and operations.
The Company’s bank-card revenue is driven 13 primarily by transaction volumes in business, healthcare, and consumer spending that generate interchange fees, and any of these conditions could dampen those volumes. Other fee-based banking businesses that could be adversely affected include trading, asset management, custody, trust, and cash and treasury management.
The Company’s bank-card revenue is driven primarily by transaction volumes in business, healthcare, and consumer spending that generate interchange fees, and any of these conditions could dampen those volumes. Economic conditions can also reduce the usage of credit cards in general and the average purchase amount of transactions, which reduces interest income and transaction fees.
These amounts could have a material adverse effect on the Company’s business, financial condition and results of operations. 16 Significant financial, business, reputational, regulatory, or other harm could come to the Company as a result of these or related risks and uncertainties.
As the Company does not have a significant banking presence in other parts of the country, a prolonged economic downturn in these markets could have a material adverse effect on the Company’s financial condition and results of operations.
To the extent that the Company continues to maintain a sizeable portfolio of investment securities, its income may be adversely affected and its reported equity more volatile. As of December 31, 2023, the Company’s securities portfolio totaled approximately $13.3 billion, which represented approximately 30.1% of its total assets.
To the extent that the Company continues to maintain a sizeable portfolio of investment securities, its income may be adversely affected and its reported equity more volatile, and the portfolio values may be adversely impacted by deterioration in the credit quality of underlying collateral within the various categories of investment securities it owns.
The Company’s internal controls, risk-management and compliance programs or functions may not be effective in identifying and mitigating risk and loss.
There can be no assurances that the Company will be successful following the acquisition of HTLF or that it will realize the expected operating efficiencies, cost savings or other benefits currently anticipated from the acquisition of HTLF. The Company’s internal controls, risk-management and compliance programs or functions may not be effective in identifying and mitigating risk and loss.
The impact of interest rate changes on the Company’s funding costs may differ from some peers given the Company’s concentration of funding from commercial and institutional sources. These deposits, which often include the benefit of other ancillary revenues, are generally more price-sensitive than consumer funding sources.
See “Government Monetary and Fiscal Policies” in Part I, Item 1 of this report, which is incorporated by reference herein. The impact of interest rate changes on the Company’s funding costs may differ from some peers given the Company’s concentration of funding from commercial and institutional sources.
These legal, regulatory, and supervisory frameworks are often designed to protect public or private interests that differ from the interests of the Company’s shareholders or non-deposit creditors. See “Government Monetary and Fiscal Policies” and “Regulation and Supervision” in Part I, Item 1 of this report, which is incorporated by reference herein.
These legal, regulatory, and supervisory frameworks are designed to protect public or private interests, including protecting depositors and other customers of the Bank, the FDIC’s DIF and the banking and financial systems as a whole, that differ from the interests of the Company’s shareholders or non-deposit creditors.
In addition, service providers utilizing technology or other intellectual property in connection with our services may make allegations of patent infringement or other intellectual property rights violations. Depending on the scope of the claim, the Company may have to engage in protracted litigation, which is often time-consuming, expensive and can be disruptive to the Company’s operations.
In addition, service providers utilizing third-party technology or other intellectual property in connection with their provision of services may face allegations of misappropriation, misuse, infringement or other intellectual property rights violations, which could result in the Company losing access to such technology or services.
Removed
See “Government Monetary and Fiscal Policies” in Part I, Item 1 of this report, which is incorporated by reference herein. Additionally, the Company has a significant number of loans, derivative contracts, borrowings and other financial instruments with attributes that are either directly or indirectly dependent on the London Interbank Offered Rate (LIBOR). In 2017, the U.K.
Added
These deposits, which often include the benefit of other ancillary revenues, are generally more price-sensitive than consumer funding sources. In a rising rate environment, the Company may experience a sharper decline in low-cost funding sources or an increase in cost of deposits due to its customer profile.
Removed
Financial Conduct Authority announced that LIBOR is to be transitioned to alternative rates. The Alternative Reference Rates Committee (ARRC) has proposed that the Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York represents the best alternative to LIBOR for use in derivatives and other financial contracts that are currently indexed to LIBOR.
Added
For example, the federal government, in recent years, has taken steps to provide stability to and confidence in the financial markets, and these steps could affect the Company’s resource requirements in order to comply with updated laws. The level of and changes in market interest rates—and, as a result, these risks and uncertainties—are beyond the Company’s control.
Removed
The Company discontinued entering into new LIBOR-indexed financial instruments effective December 31, 2021. The majority of existing LIBOR-indexed contracts will revert to SOFR. The remainder will be individually negotiated to a mutual preferred replacement index. Since proposed alternative rates are calculated differently, payments under contracts referencing new rates will differ from those referencing LIBOR.
Added
Further, changes to U.S. global policy, including as it relates to tariffs, trade disputes and renewing trade agreements with various countries, could affect the Company’s results of operations. The global economy, the strength of the U.S. dollar, international trade conditions, and oil prices may ultimately affect interest rates, business import/export activity, capital expenditures by businesses, and investor confidence.
Removed
Although the Company is currently unable to assess what the ultimate impact of the transition from LIBOR will be, failure to adequately manage the transition could have a material adverse effect on its business, financial condition and results of operations.
Added
Unfavorable changes in those factors may result in declines in consumer credit usage, increased delinquencies and defaults, and reduced loan demand.
Removed
The dynamics among these risks and uncertainties are also challenging to assess and manage.
Added
In recent years, commercial real estate markets have been particularly impacted by the economic and other disruptions resulting from the COVID-19 pandemic and its aftermath.
Removed
For example, while the highly accommodative monetary policy currently adopted by the FRB may benefit the Company to some degree by spurring economic activity among its customers, such a policy may ultimately cause the Company more harm by inhibiting its ability to grow or sustain net interest income.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeSensitive Information can be of significant value to criminal actors, and, as described in the Company’s Risk Factors, cyber incidents and other security breaches involving this information at the Company, at the Company’s service providers or counterparties, or in the business community or markets, may negatively impact the Company’s business or performance.
Biggest changeSensitive Information can be of significant value to criminal actors, and, as described in the Company’s Risk Factors, cyber incidents and other security breaches involving this information at the Company, at the Company’s service providers or counterparties, or in the business community or markets, may negatively impact the Company’s business or performance. 31 The board of directors of the Company has oversight responsibility for the risk management policies of the Company’s global operations and the operation of the Company’s global risk management framework.
The Company has appointed a qualified CISO/CPO, who reports to the Chief Risk Officer (CRO) as part of independent risk management, who is responsible for establishing strategy and overseeing implementation of an effective, integrated, and proactive information security and privacy program.
The Company has appointed a qualified CISO/CPO, who reports to the Chief Risk Officer (CRO) as part of independent risk management, who is responsible for establishing strategy and overseeing implementation of an integrated and proactive information security and privacy program.
The Company’s security and privacy practices are also subject to ongoing independent oversight by multiple regulatory bodies including the OCC and the Federal Reserve, independent audits such as SOC I and SOC II, independent penetration testing of internal and external systems, independent security attestations of compliance with the requirements of the Society of Worldwide Interbank Financial 20 Telecommunications (SWIFT) and the Federal Reserve (FedLine), and independent assessments in connection with the Company’s Payment Card Industry Data Security Standard (PCI DSS) obligations, as applicable.
The Company’s security and privacy practices are also subject to ongoing independent oversight by multiple regulatory bodies including the OCC and the FRB, independent audits such as SOC I and SOC II, independent penetration testing of internal and external systems, independent security attestations of compliance with the requirements of the Society of Worldwide Interbank Financial Telecommunications (SWIFT) and the Federal Reserve (FedLine), and independent assessments in connection with the Company’s Payment Card Industry Data Security Standard (PCI DSS) obligations, as applicable.
The combined Chief Information Security Officer and Chief Privacy Officer (CISO/CPO) supplies the Board, directly or through the Board Risk Committee, with regular reports on the operation of the information security and privacy components of this program, the related evolving risks to the Company’s businesses, and the controls and other mitigants utilized to manage those risks.
The combined Chief Information Security Officer and Chief Privacy Officer (CISO/CPO) supplies the Board, directly or through the Board Risk Committee, with regular reports, on at least a quarterly basis, on the operation of the information security and privacy components of this program, the related evolving risks to the Company’s businesses, and the controls and other mitigants utilized to manage those risks.
The CISO/CPO utilizes the data to understand potential exposure to the Company and to take preventative action where appropriate. 21 The Company has an Incident Response Program (IRP) to support management of cybersecurity or privacy incidents, impact assessment (i.e., type and quantity of data impacted, materiality, etc.), and response coordination including with law enforcement and government agencies, and impacted parties.
The Company has an Incident Response Program (IRP) to support management of cybersecurity or privacy incidents, impact assessment (i.e., type and quantity of data impacted, materiality, etc.), and response coordination including with law enforcement and government agencies, and impacted parties.
The IRP sets forth the framework to elevate cybersecurity or privacy issues to the CISO/CPO and when and how incidents are escalated and reported beyond the CISO/CPO, including to executive management and the Board Risk Committee. Depending on the incident, escalation to the full board of directors may also occur.
The IRP sets forth the framework to elevate cybersecurity or privacy issues to the CISO/CPO and when and how incidents are escalated and reported beyond the CISO/CPO, including to executive management and the Board Risk Committee.
The vulnerability management program also assesses emerging and potential threats through dedicated threat intelligence capabilities that monitor attacks and breaches associated with financial institutions and key third-party service providers.
The vulnerability management program also assesses emerging and potential threats through dedicated threat intelligence capabilities that monitor attacks and breaches associated with financial institutions and key third-party service providers. The CISO/CPO utilizes the data to understand potential exposure to the Company and to take preventative action where appropriate.
The Company has also implemented a third-party risk program to oversee and manage information security and privacy risks associated with third-party relationships.
Depending on the incident, escalation to the full board of directors may also occur. 32 The Company has also implemented a third-party risk program to oversee and manage information security and privacy risks associated with third-party relationships.
Removed
The board of directors of the Company has oversight responsibility for the risk management policies of the Company’s global operations and the operation of the Company’s global risk management framework.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed3 unchanged
Biggest changeAs of December 31, 2023, the Bank operated a total of 88 banking centers. UMBFS leases 85,164 square feet at 235 West Galena Street in Milwaukee, Wisconsin, for its fund services operations. Additionally, UMBFS leases 18,655 square feet at 2225 Washington Boulevard in Ogden, Utah, and 8,339 square feet at 223 Wilmington West Chester Pike in Chadds Ford, Pennsylvania.
Biggest changeUMBFS leases 85,164 square feet at 235 West Galena Street in Milwaukee, Wisconsin, for its fund services operations. Additionally, UMBFS leases 18,655 square feet at 2225 Washington Boulevard in Ogden, Utah, and 8,339 square feet at 223 Wilmington West Chester Pike in Chadds Ford, Pennsylvania.
Additional information with respect to properties, premises and equipment is presented in Note 1, “Summary of Significant Accounting Policies,” and Note 8, “Premises, Equipment, and Leases,” in the Notes to the Consolidated Financial Statements in Item 8 of this report, and is hereby incorporated by reference herein. 22
Additional information with respect to properties, premises and equipment is presented in Note 1, “Summary of Significant Accounting Policies,” and Note 8, “Premises, Equipment, and Leases,” in the Notes to the Consolidated Financial Statements in Item 8 of this report, and is hereby incorporated by reference herein.
The Bank also leases 34,681 square feet on the first, second, and fifth floors of the 1670 Broadway building located in the financial district of downtown Denver, Colorado. The location has a full-service banking center and is home to operational and administrative support functions for the Bank.
The Bank also leases 34,681 square feet on the first, second, and fifth floors of the 1670 Broadway building located in the financial district of downtown Denver, Colorado. The location has a full-service banking center and is home to operational and administrative support functions for the Bank. As of December 31, 2024, the Bank operated a total of 93 branches.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeMINE SAF ETY DISCLOSURES Not applicable. 23 PART II
Biggest changeMINE SAF ETY DISCLOSURES Not applicable. 33 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+0 added−0 removed2 unchanged
Biggest changeThe performance graph represents past performance and should not be considered to be an indication of future performance. 24 Index 2018 2019 2020 2021 2022 2023 UMB Financial Corporation $ 100.00 $ 114.71 $ 117.74 $ 183.72 $ 147.04 $ 150.29 S&P US BMI Banks Index 100.00 137.36 119.83 162.92 135.13 147.41 S&P 500 Index 100.00 131.49 155.68 200.37 164.08 207.21 ITEM 6. [R ESERVED] 25
Biggest changeThe performance graph represents past performance and should not be considered to be an indication of future performance. 34 Index 2019 2020 2021 2022 2023 2024 UMB Financial Corporation $ 100.00 $ 102.64 $ 160.16 $ 128.18 $ 131.02 $ 179.94 S&P US BMI Banks Index 100.00 87.24 118.61 98.38 107.32 143.68 S&P 500 Index 100.00 118.40 152.39 124.79 157.59 197.02 ITEM 6. [R ESERVED] 35
Rule 10b-18 provides a safe harbor for purchases in a given day if the Company satisfies the manner, timing and volume conditions of the rule when purchasing its own shares of common stock. For discussion of management's intentions regarding dividends, see “Results of Operations” in Part II, Item 7 of this report.
Rule 10b-18 provides a safe harbor for purchases in a given day if the Company satisfies the manner, timing and volume conditions of the rule when purchasing its own shares of common stock. For discussion of management's intentions regarding dividends, see “Results of Operations” in Part II, Item 7 and “Liquidity Risk” in Part II, Item 7A of this report.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table provides information about common stock repurchase activity by the Company during the quarter ended December 31, 2023: ISSUER PURCHASES OF EQUITY SECURITIES Period Total Number of Shares (or Units) Purchased (1) Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs October 1 - October 31, 2023 — $ — — 1,000,000 November 1 - November 30, 2023 — — — 1,000,000 December 1 - December 31, 2023 2,940 91.93 — 1,000,000 Total 2,940 $ 91.93 — (1) Includes shares acquired pursuant to the Company's share-based incentive programs.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table provides information about common stock repurchase activity by the Company during the quarter ended December 31, 2024: ISSUER PURCHASES OF EQUITY SECURITIES Period Total Number of Shares (or Units) Purchased (1) Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs October 1 - October 31, 2024 — $ — — 1,000,000 November 1 - November 30, 2024 — — — 1,000,000 December 1 - December 31, 2024 — — — 1,000,000 Total — $ — — (1) Includes shares acquired pursuant to the Company's share-based incentive programs.
The graph assumes an investment of $100 on December 31, 2018 and reinvestment of dividends.
The graph assumes an investment of $100 on December 31, 2019 and reinvestment of dividends.
In the future, it may determine to resume repurchases. All share purchases pursuant to a Repurchase Authorization are intended to be within the scope of Rule 10b-18 promulgated under the Exchange Act.
The Company is not currently engaging in repurchases. In the future, it may determine to resume repurchases. All share purchases pursuant to a Repurchase Authorization are intended to be within the scope of Rule 10b-18 promulgated under the Exchange Act.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company's common stock is traded on the NASDAQ Global Select Stock Market under the symbol "UMBF." As of February 16, 2024, the Company had 1,268 shareholders of record.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company's common stock is traded on the NASDAQ Global Select Stock Market under the symbol "UMBF." As of February 21, 2025, the Company had 2,884 shareholders of record.
On July 25, 2023, the Company’s Board of Directors (the Board) authorized the repurchase of up to one million shares of the Company’s common stock, which will terminate on April 30, 2024 (a Repurchase Authorization). The Company has not made any repurchases other than through this Repurchase Authorization. The Company is not currently engaging in repurchases.
On April 30, 2024, the Company’s Board of Directors (the Board) authorized the repurchase of up to one million shares of the Company’s common stock, which will terminate on April 29, 2025 (a Repurchase Authorization). The Company has not made any repurchases other than through the Repurchase Authorization, but did acquire shares pursuant to the Company's share-based incentive programs.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

147 edited+37 added−27 removed63 unchanged
Biggest changeAverage Volume Average Rate Increase (Decrease) 2023 2022 2023 2022 2023 vs. 2022 Volume Rate Total Change in interest earned on: $ 22,337,119 $ 18,823,810 6.27 % 4.30 % Loans $ 171,189 $ 418,765 $ 589,954 Securities: 9,097,110 9,616,691 2.36 2.00 Taxable (10,813 ) 33,673 22,860 3,790,921 3,885,153 3.38 3.16 Tax-exempt (3,142 ) 8,149 5,007 316,072 965,911 5.58 1.98 Federal funds and resell agreements (19,173 ) 17,711 (1,462 ) 2,046,349 2,408,468 5.04 0.77 Interest-bearing due from banks (3,203 ) 87,811 84,608 14,030 12,076 5.65 4.96 Trading securities 117 101 218 37,601,601 35,712,109 4.96 3.26 Total 134,975 566,210 701,185 Change in interest incurred on: 21,122,305 18,063,498 3.33 0.93 Interest-bearing deposits 32,883 503,774 536,657 169,997 249,663 4.97 2.10 Federal funds purchased (2,103 ) 5,307 3,204 2,005,418 2,527,426 4.22 1.40 Securities sold under agreements to repurchase (8,697 ) 57,816 49,119 2,311,238 309,204 5.25 5.00 Borrowed Funds 105,080 806 105,886 $ 25,608,958 $ 21,149,791 3.59 % 1.06 % Total 127,163 567,703 694,866 Net interest income $ 7,812 $ (1,493 ) $ 6,319 Average Volume Average Rate Increase (Decrease) 2022 2021 2022 2021 2022 vs. 2021 Volume Rate Total Change in interest earned on: $ 18,823,810 $ 16,629,867 4.30 % 3.72 % Loans $ 87,505 $ 103,229 $ 190,734 Securities: 9,616,691 7,422,432 2.00 1.72 Taxable 41,676 22,820 64,496 3,885,153 4,246,943 3.16 2.93 Tax-exempt (10,751 ) 9,636 (1,115 ) 965,911 1,234,533 1.98 0.81 Federal funds and resell agreements (2,599 ) 11,660 9,061 2,408,468 4,063,089 0.77 0.13 Interest-bearing due from banks (3,034 ) 16,199 13,165 12,076 23,480 4.96 4.33 Trading securities (492 ) 149 (343 ) 35,712,109 33,620,344 3.26 2.64 Total 112,305 163,693 275,998 Change in interest incurred on: 18,063,498 17,678,122 0.93 0.15 Interest-bearing deposits 589 140,552 141,141 249,663 163,744 2.10 0.04 Federal funds purchased 56 5,109 5,165 2,527,426 2,454,290 1.40 0.28 Securities sold under agreements to repurchase 211 28,393 28,604 309,204 270,498 5.00 4.68 Borrowed Funds 1,895 917 2,812 $ 21,149,791 $ 20,566,654 1.06 % 0.22 % Total 2,751 174,971 177,722 Net interest income $ 109,554 $ (11,278 ) $ 98,276 32 Table 3 ANALYSIS OF NET INTEREST MARGIN (in thousands) 2023 2022 2021 Average earning assets $ 37,601,601 $ 35,712,109 $ 33,620,344 Interest-bearing liabilities 25,608,958 21,149,791 20,566,654 Interest-free funds $ 11,992,643 $ 14,562,318 $ 13,053,690 Free funds ratio (interest free funds to average earning assets) 31.89 % 40.78 % 38.83 % Tax-equivalent yield on earning assets 4.96 % 3.26 % 2.64 % Cost of interest-bearing liabilities 3.59 1.06 0.22 Net interest spread 1.37 % 2.20 % 2.42 % Benefit of interest-free funds 1.15 0.43 0.08 Net interest margin 2.52 % 2.63 % 2.50 % The Company experienced an increase in net interest income of $6.3 million, or 0.7%, for the year ended December 31, 2023, compared to 2022.
Biggest changeAverage Volume Average Rate Increase (Decrease) 2024 2023 2024 2023 2024 vs. 2023 Volume Rate Total Change in interest earned on: $ 24,212,645 $ 22,337,119 6.66 % 6.27 % Loans $ 121,804 $ 91,183 $ 212,987 Securities: 9,290,809 9,097,110 2.77 2.36 Taxable 4,664 37,917 42,581 3,634,588 3,790,921 3.44 3.38 Tax-exempt (4,989 ) 2,167 (2,822 ) 303,096 316,072 5.82 5.58 Federal funds and resell agreements (739 ) 720 (19 ) 3,482,402 2,046,349 5.23 5.04 Interest-bearing due from banks 74,976 3,979 78,955 22,311 14,030 6.53 5.65 Trading securities 491 131 622 40,945,851 37,601,601 5.37 4.96 Total 196,207 136,097 332,304 Change in interest incurred on: 25,224,201 21,122,305 3.89 3.33 Interest-bearing deposits 149,076 129,016 278,092 80,017 169,997 5.05 4.97 Federal funds purchased (4,538 ) 135 (4,403 ) 2,258,438 2,005,418 4.54 4.22 Securities sold under agreements to repurchase 11,179 6,756 17,935 1,447,646 2,311,238 5.61 5.25 Borrowed Funds (47,986 ) 7,890 (40,096 ) $ 29,010,302 $ 25,608,958 4.03 % 3.59 % Total 107,731 143,797 251,528 Net interest income $ 88,476 $ (7,700 ) $ 80,776 Average Volume Average Rate Increase (Decrease) 2023 2022 2023 2022 2023 vs. 2022 Volume Rate Total Change in interest earned on: $ 22,337,119 $ 18,823,810 6.27 % 4.30 % Loans $ 171,189 $ 418,765 $ 589,954 Securities: 9,097,110 9,616,691 2.36 2.00 Taxable (10,813 ) 33,673 22,860 3,790,921 3,885,153 3.38 3.16 Tax-exempt (3,142 ) 8,149 5,007 316,072 965,911 5.58 1.98 Federal funds and resell agreements (19,173 ) 17,711 (1,462 ) 2,046,349 2,408,468 5.04 0.77 Interest-bearing due from banks (3,203 ) 87,811 84,608 14,030 12,076 5.65 4.96 Trading securities 117 101 218 37,601,601 35,712,109 4.96 3.26 Total 134,975 566,210 701,185 Change in interest incurred on: 21,122,305 18,063,498 3.33 0.93 Interest-bearing deposits 32,883 503,774 536,657 169,997 249,663 4.97 2.10 Federal funds purchased (2,103 ) 5,307 3,204 2,005,418 2,527,426 4.22 1.40 Securities sold under agreements to repurchase (8,697 ) 57,816 49,119 2,311,238 309,204 5.25 5.00 Borrowed Funds 105,080 806 105,886 $ 25,608,958 $ 21,149,791 3.59 % 1.06 % Total 127,163 567,703 694,866 Net interest income $ 7,812 $ (1,493 ) $ 6,319 42 Table 3 ANALYSIS OF NET INTEREST MARGIN (in thousands) 2024 2023 2022 Average earning assets $ 40,945,851 $ 37,601,601 $ 35,712,109 Interest-bearing liabilities 29,010,302 25,608,958 21,149,791 Interest-free funds $ 11,935,549 $ 11,992,643 $ 14,562,318 Free funds ratio (interest free funds to average earning assets) 29.15 % 31.89 % 40.78 % Tax-equivalent yield on earning assets 5.37 % 4.96 % 3.26 % Cost of interest-bearing liabilities 4.03 3.59 1.06 Net interest spread 1.34 % 1.37 % 2.20 % Benefit of interest-free funds 1.17 1.15 0.43 Net interest margin 2.51 % 2.52 % 2.63 % The Company experienced an increase in net interest income of $80.8 million, or 8.8%, for the year ended December 31, 2024, compared to 2023.
The remainder of the Company’s long-term debt was assumed from the acquisition of Marquette Financial Companies in 2015 and consists of debt obligations payable to four unconsolidated trusts (Marquette Capital Trust I, Marquette Capital Trust II, Marquette Capital Trust III, and Marquette Capital Trust IV) that previously issued trust preferred securities.
The remainder of the Company’s long-term debt was assumed from the acquisition of Marquette Financial Companies (Marquette) in 2015 and consists of debt obligations payable to four unconsolidated trusts (Marquette Capital Trust I, Marquette Capital Trust II, Marquette Capital Trust III, and Marquette Capital Trust IV) that previously issued trust preferred securities.
The Company’s process for recording the ACL is based on the evaluation of the Company’s lifetime historical loss experience, management’s understanding of the credit quality inherent in the loan portfolio, and the impact of the current economic environment, coupled with reasonable and supportable economic forecasts.
The Company’s process for recording the ACL is based on the evaluation of the Company’s lifetime historical loss experience, management’s understanding of the credit quality inherent in the loan portfolio, and the impact of the current economic environment, coupled with reasonable and supportable economic forecasts.
The Company considers a variety of factors to ensure the safety and soundness of its estimate including a strong internal control framework, extensive methodology documentation, credit underwriting standards which encompass the Company’s desired risk profile, model validation, and ratio analysis.
The Company considers a variety of factors to ensure the safety and soundness of its estimate including a strong internal control framework, extensive methodology documentation, credit underwriting standards which encompass the Company’s desired risk profile, model validation, and ratio analysis.
If the Company’s total ACL estimate, as determined in accordance with the approved ACL methodology, is either outside a reasonable range based on review of economic indicators or by comparison of historical ratio analysis, the ACL estimate is an outlier and management will investigate the underlying reason(s).
If the Company’s total ACL estimate, as determined in accordance with the approved ACL methodology, is either outside a reasonable range based on review of economic indicators or by comparison of historical ratio analysis, the ACL estimate is an outlier and management will investigate the underlying reason(s).
Based on that investigation, issues or factors that previously had not been considered may be identified in the estimation process, which may warrant adjustments to estimated credit losses.
Based on that investigation, issues or factors that previously had not been considered may be identified in the estimation process, which may warrant adjustments to estimated credit losses.
For further information on the Company’s investment securities, refer to Note 4, “Securities,” in the Notes to the Consolidated Financial Statements. Other Earning Assets Federal funds transactions essentially are overnight loans between financial institutions, which allow for either the daily investment of excess funds or the daily borrowing of another institution’s funds in order to meet short-term liquidity needs.
For further information on the Company’s investment securities, refer to Note 4, “Securities,” in the Notes to the Consolidated Financial Statements. 55 Other Earning Assets Federal funds transactions essentially are overnight loans between financial institutions, which allow for either the daily investment of excess funds or the daily borrowing of another institution’s funds in order to meet short-term liquidity needs.
Net interest margin, presented in Table 1, is calculated as net interest income on a fully tax-equivalent basis as a percentage of average earning assets. Net interest income is presented on a tax-equivalent basis to adjust for the 29 tax-exempt status of earnings from certain loans and investments, which are primarily obligations of state and local governments.
Net interest margin, presented in Table 1, is calculated as net interest income on a fully tax-equivalent basis as a percentage of average earning assets. Net interest income is presented on a tax-equivalent basis to adjust for the tax-exempt status of earnings from certain loans and investments, which are primarily obligations of state and local governments.
The tax-equivalent interest income and yields give effect to tax-exempt interest income net of the disallowance of interest expense, for federal income tax purposes related to certain tax-free assets. Rates 30 earned/paid may not compute to the rates shown due to presentation in millions.
The tax-equivalent interest income and yields give effect to tax-exempt interest income net of the disallowance of interest expense, for federal income tax purposes related to certain tax-free assets. Rates earned/paid may not compute to the rates shown due to presentation in millions.
The Company received $107.9 million, after deducting underwriting discounts and commissions and offering expenses, and used the proceeds from the offering for general corporate purposes, including, among other uses, contributing Tier 1 capital into the Bank.
The Company received $107.9 million, after deducting underwriting discounts and commissions and offering 59 expenses, and used the proceeds from the offering for general corporate purposes, including, among other uses, contributing Tier 1 capital into the Bank.
The estimation process involves the consideration of quantitative and qualitative factors relevant to the specific segmentation of loans. These factors have been established over decades of financial institution experience and include economic observation and loan loss characteristics.
The estimation process involves the consideration of quantitative and qualitative factors relevant to the specific segmentation of loans. These factors have been established over decades of financial institution experience 61 and include economic observation and loan loss characteristics.
This process allows management 49 to take a holistic view of the recorded ACL reserve and ensure that all significant and pertinent information is considered in its estimate.
This process allows management to take a holistic view of the recorded ACL reserve and ensure that all significant and pertinent information is considered in its estimate.
Since commitments associated with letters of credit and lending and financing arrangements may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements. See Table 17 below, as well as Note 15, “Commitments, Contingencies and Guarantees” in the Notes to Consolidated Financial Statements under Item 8 for detailed information and further discussion of these arrangements.
Since commitments associated with letters of credit and lending and financing arrangements may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements. See Table 20 below, as well as Note 15, “Commitments, Contingencies and Guarantees” in the Notes to Consolidated Financial Statements under Item 8 for detailed information and further discussion of these arrangements.
The Company is also required to maintain a leverage ratio equal to or greater than 4%. The leverage ratio is tier 1 core capital to total average assets less goodwill and intangibles. The Company's capital position as of December 31, 2023 is summarized in the table below and exceeded regulatory requirements.
The Company is also required to maintain a leverage ratio equal to or greater than 4%. The leverage ratio is tier 1 core capital to total average assets less goodwill and intangibles. The Company's capital position as of December 31, 2024 is summarized in the table below and exceeded regulatory requirements.
The estimate reserves for assets held at amortized cost and any related credit deterioration in the Company’s available-for-sale debt security portfolio. Assets held at amortized cost include the Company’s loan book and held-to-maturity security portfolio. 33 The process involves the consideration of quantitative and qualitative factors relevant to the specific segmentation of loans.
The estimate reserves for assets held at amortized cost and any related credit deterioration in the Company’s available-for-sale debt security portfolio. Assets held at amortized cost include the Company’s loan book and held-to-maturity security portfolio. 43 The process involves the consideration of quantitative and qualitative factors relevant to the specific segmentation of loans.
For more information on loan portfolio segments, the Company’s ACL methodology, and management’s assumptions in estimating the ACL, refer to the section captioned “Allowance for Credit Losses” within Note 3, “Loans and Allowance for Credit Losses,” in the Notes to the Consolidated Financial Statements. 50
For more information on loan portfolio segments, the Company’s ACL methodology, and management’s assumptions in estimating the ACL, refer to the section captioned “Allowance for Credit Losses” within Note 3, “Loans and Allowance for Credit Losses,” in the Notes to the Consolidated Financial Statements. 62
The volume of interest earning-assets and the related funding sources, the overall mix of these assets and liabilities, and the interest rates paid on each affect net interest income. Table 2 summarizes the change in net interest income resulting from changes in volume and rates for 2023, 2022 and 2021.
The volume of interest earning-assets and the related funding sources, the overall mix of these assets and liabilities, and the interest rates paid on each affect net interest income. Table 2 summarizes the change in net interest income resulting from changes in volume and rates for 2024, 2023 and 2022.
These guidelines as of December 31, 2023, excluded net unrealized gains or losses on securities available for sale and net unrealized losses on securities held to maturity transferred from the available-for-sale category from the computation of regulatory capital and the related risk-based capital ratios.
These guidelines as of December 31, 2024, excluded net unrealized gains or losses on securities available for sale and net unrealized losses on securities held to maturity transferred from the available-for-sale category from the computation of regulatory capital and the related risk-based capital ratios.
A critical component of net interest income and related net interest margin is the percentage of earning assets funded by interest-free sources. Table 3 analyzes net interest margin for the three years ended December 31, 2023, 2022 and 2021.
A critical component of net interest income and related net interest margin is the percentage of earning assets funded by interest-free sources. Table 3 analyzes net interest margin for the three years ended December 31, 2024, 2023 and 2022.
Agency Securities December 31, 2023 Fair Value Weighted Average Yield Fair Value Weighted Average Yield Due in one year or less $ 1,109,140 3.51 % $ 60,985 1.89 % Due after 1 year through 5 years 189,602 2.86 98,736 3.39 Due after 5 years through 10 years — — — — Due after 10 years — — — — Total $ 1,298,742 3.40 % $ 159,721 2.81 % 41 Mortgage-backed Securities State and Political Subdivisions December 31, 2023 Fair Value Weighted Average Yield Fair Value Weighted Average Yield Due in one year or less $ 9,590 2.77 % $ 76,610 2.90 % Due after 1 year through 5 years 1,211,344 2.55 365,953 2.63 Due after 5 years through 10 years 2,368,394 1.73 422,410 2.92 Due after 10 years 31,457 3.80 422,002 3.29 Total $ 3,620,785 2.01 % $ 1,286,975 2.96 % Corporates Collateralized Loan Obligations December 31, 2023 Fair Value Weighted Average Yield Fair Value Weighted Average Yield Due in one year or less $ 46,746 2.97 % $ — — % Due after 1 year through 5 years 214,084 1.97 159,371 6.96 Due after 5 years through 10 years 90,445 3.34 151,896 6.81 Due after 10 years — — 39,848 7.44 Total $ 351,275 2.48 % $ 351,115 6.95 % U.S.
Agency Securities December 31, 2023 Fair Value Weighted Average Yield Fair Value Weighted Average Yield Due in one year or less $ 1,109,140 3.51 % $ 60,985 1.89 % Due after 1 year through 5 years 189,602 2.86 98,736 3.39 Due after 5 years through 10 years — — — — Due after 10 years — — — — Total $ 1,298,742 3.40 % $ 159,721 2.81 % Mortgage-backed Securities State and Political Subdivisions December 31, 2023 Fair Value Weighted Average Yield Fair Value Weighted Average Yield Due in one year or less $ 9,590 2.77 % $ 76,610 2.90 % Due after 1 year through 5 years 1,211,344 2.55 365,953 2.63 Due after 5 years through 10 years 2,368,394 1.73 422,410 2.92 Due after 10 years 31,457 3.80 422,002 3.29 Total $ 3,620,785 2.01 % $ 1,286,975 2.96 % Corporates Collateralized Loan Obligations December 31, 2023 Fair Value Weighted Average Yield Fair Value Weighted Average Yield Due in one year or less $ 46,746 2.97 % $ — — % Due after 1 year through 5 years 214,084 1.97 159,371 6.96 Due after 5 years through 10 years 90,445 3.34 151,896 6.81 Due after 10 years — — 39,848 7.44 Total $ 351,275 2.48 % $ 351,115 6.95 % Table 15 SECURITIES HELD TO MATURITY (in thousands) U.S.
The Company funds a significant portion of its balance sheet with noninterest-bearing demand deposits. Noninterest-bearing demand deposits represented 33.9%, 40.6% and 45.9% of total outstanding deposits as of December 31, 2023, 2022 and 2021, respectively. The decrease in 2023 is driven by the increase in short-term interest rates.
The Company funds a significant portion of its balance sheet with noninterest-bearing demand deposits. Noninterest-bearing demand deposits represented 31.6%, 33.9% and 40.6% of total outstanding deposits as of December 31, 2024, 2023 and 2022, respectively. The decrease in 2024 is driven by the increase in short-term interest rates.
As of December 31, 2023, the Company does not believe the decline in value in these portfolios is related to credit impairments and instead is due to increasing market interest rates.
As of December 31, 2024, the Company does not believe the decline in value in these portfolios is related to credit impairments and instead is due to increasing market interest rates.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management’s Discussion and Analysis This Management’s Discussion and Analysis highlights the material changes in the results of operations and changes in financial condition for each of the three years in the period ended December 31, 2023.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management’s Discussion and Analysis This Management’s Discussion and Analysis highlights the material changes in the results of operations and changes in financial condition for each of the three years in the period ended December 31, 2024.
Repurchase agreements are transactions involving the exchange of investment funds by the customer for securities by the Company, under an agreement to repurchase the same issues at an agreed-upon price and date. Securities sold under agreements to repurchase and federal funds purchased totaled $2.1 billion at December 31, 2023, and $2.2 billion at December 31, 2022.
Repurchase agreements are transactions involving the exchange of investment funds by the customer for securities by the Company, under an agreement to repurchase the same issues at an agreed-upon price and date. Securities sold under agreements to repurchase and federal funds purchased totaled $2.6 billion at December 31, 2024, and $2.1 billion at December 31, 2023.
The Company is a member bank with the FHLB of Des Moines, and through this relationship, the Company owns $55.2 million of FHLB stock and has access to additional liquidity and funding sources through FHLB advances. The Company’s borrowing capacity is dependent upon the amount of collateral the Company places at the FHLB.
The Company is a member bank with the FHLB of Des Moines, and through this relationship, the Company owns FHLB stock and has access to additional liquidity and funding sources through FHLB advances. The Company’s borrowing capacity is dependent upon the amount of collateral the Company places at the FHLB.
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 $10.1 billion of securities pledged to secure U.S. Government deposits, other public deposits, certain trust deposits, derivative transactions, and repurchase agreements at December 31, 2023.
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 $10.5 billion of securities pledged to secure U.S. Government deposits, other public deposits, certain trust deposits, derivative transactions, and repurchase agreements at December 31, 2024.
While no list of assumptions, risks, or uncertainties could be complete, some of the factors that may cause actual results or other future events, circumstances, or aspirations to differ from those in forward-looking statements include: • local, regional, national, or international business, economic, or political conditions or events; • changes in laws or the regulatory environment, including as a result of financial-services legislation or regulation; • changes in monetary, fiscal, or trade laws or policies, including as a result of actions by central banks or supranational authorities; • the pace and magnitude of interest rate movements; • changes in accounting standards or policies; • shifts in investor sentiment or behavior in the securities, capital, or other financial markets, including changes in market liquidity or volatility or changes in interest or currency rates; • changes in spending, borrowing, or saving by businesses or households; • the Company’s ability to effectively manage capital or liquidity or to effectively attract or deploy deposits; • changes in any credit rating assigned to the Company or its affiliates; • adverse publicity or other reputational harm to the Company; • changes in the Company’s corporate strategies, the composition of its assets, or the way in which it funds those assets; • the Company’s ability to develop, maintain, or market products or services or to absorb unanticipated costs or liabilities associated with those products or services; 26 • the Company’s ability to innovate to anticipate the needs of current or future customers, to successfully compete in its chosen business lines, to increase or hold market share in changing competitive environments, or to deal with pricing or other competitive pressures; • changes in the credit, liquidity, or other condition of the Company’s customers, counterparties, or competitors; • the Company’s ability to effectively deal with economic, business, or market slowdowns or disruptions; • judicial, regulatory, or administrative investigations, proceedings, disputes, or rulings that create uncertainty for, or are adverse to, the Company or the financial-services industry; • the Company’s ability to address changing or stricter regulatory or other governmental supervision or requirements; • the Company’s ability to maintain secure and functional financial, accounting, technology, data processing, or other operating systems or facilities, including its capacity to withstand cyber-attacks; • the adequacy of the Company’s corporate governance, risk-management framework, compliance programs, or internal controls, including its ability to control lapses or deficiencies in financial reporting or to effectively mitigate or manage operational risk; • the efficacy of the Company’s methods or models in assessing business strategies or opportunities or in valuing, measuring, monitoring, or managing positions or risk; • the Company’s ability to keep pace with changes in technology that affect the Company or its customers, counterparties, or competitors; • mergers, acquisitions, or dispositions, including the Company’s ability to integrate acquisitions and divest assets; • the adequacy of the Company’s succession planning for key executives or other personnel; • the Company’s ability to grow revenue, control expenses, or attract and retain qualified employees; • natural disasters, war, terrorist activities, including instability in the Middle East and Russia's military action in Ukraine, pandemics, and their effects on economic and business environment in which the Company operates; • 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 • other assumptions, risks, or uncertainties described in the Risk Factors (Item 1A), Management’s Discussion and Analysis of Financial Condition and Results of Operations (Item 7), or the Notes to the Consolidated Financial Statements (Item 8) in this Annual Report on Form 10-K or described in any of the Company’s annual, quarterly or current reports.
While no list of assumptions, risks, or uncertainties could be complete, some of the factors that may cause actual results or other future events, circumstances, or aspirations to differ from those in forward-looking statements include: • local, regional, national, or international business, economic, or political conditions or events; • changes in laws or the regulatory environment, including as a result of financial-services legislation or regulation; • changes in monetary, fiscal, or trade laws or policies, including as a result of actions by central banks or supranational authorities; • the pace and magnitude of interest rate movements; • changes in accounting standards or policies; • shifts in investor sentiment or behavior in the securities, capital, or other financial markets, including changes in market liquidity or volatility or changes in interest or currency rates; • changes in spending, borrowing, or saving by businesses or households; • the Company’s ability to effectively manage capital or liquidity or to effectively attract or deploy deposits; • changes in any credit rating assigned to the Company or its affiliates; • adverse publicity or other reputational harm to the Company; • changes in the Company’s corporate strategies, the composition of its assets, or the way in which it funds those assets; • the Company’s ability to develop, maintain, or market products or services or to absorb unanticipated costs or liabilities associated with those products or services; 36 • the Company’s ability to innovate to anticipate the needs of current or future customers, to successfully compete in its chosen business lines, to increase or hold market share in changing competitive environments, or to deal with pricing or other competitive pressures; • changes in the credit, liquidity, or other condition of the Company’s customers, counterparties, or competitors; • the Company’s ability to effectively deal with economic, business, or market slowdowns or disruptions; • judicial, regulatory, or administrative investigations, proceedings, disputes, or rulings that create uncertainty for, or are adverse to, the Company or the financial-services industry; • the Company’s ability to address changing or stricter regulatory or other governmental supervision or requirements; • the Company’s ability to maintain secure and functional financial, accounting, technology, data processing, or other operating systems or facilities, including its capacity to withstand cyber-attacks; • the adequacy of the Company’s corporate governance, risk-management framework, compliance programs, or internal controls, including its ability to control lapses or deficiencies in financial reporting or to effectively mitigate or manage operational risk; • the efficacy of the Company’s methods or models in assessing business strategies or opportunities or in valuing, measuring, monitoring, or managing positions or risk; • the Company’s ability to keep pace with changes in technology that affect the Company or its customers, counterparties, or competitors; • mergers, acquisitions, or dispositions, including the Company’s ability to integrate acquisitions and divest assets; • the Company’s ability to complete the planned issuance of shares of the Company’s common stock in connection with the forward sale agreements; • the Company’s ability to manage the expenses associated with the merger with HTLF and the impact these expenses may have on the Company’s financial results; • the benefits from the merger with HTLF may not be fully realized or may take longer to realize than expected; • the Company’s ability to promptly and effectively integrate the merger of HTLF; • the adequacy of the Company’s succession planning for key executives or other personnel; • the Company’s ability to grow revenue, control expenses, or attract and retain qualified employees; • natural disasters, war, terrorist activities, including instability in the Middle East and Russia's military action in Ukraine, pandemics, and their effects on economic and business environment in which the Company operates; • 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 • other assumptions, risks, or uncertainties described in the Risk Factors (Item 1A), Management’s Discussion and Analysis of Financial Condition and Results of Operations (Item 7), or the Notes to the Consolidated Financial Statements (Item 8) in this Annual Report on Form 10-K or described in any of the Company’s annual, quarterly or current reports.
The dollar change and percent change columns highlight the respective net increase or decrease in the categories of noninterest income in 2023 compared to 2022, and in 2022 compared to 2021.
The dollar change and percent change columns highlight the respective net increase or decrease in the categories of noninterest income in 2024 compared to 2023, and in 2023 compared to 2022.
Management does not anticipate any material losses from its off-balance sheet arrangements. Table 17 COMMITMENTS, MATERIAL CASH REQUIREMENTS AND OFF-BALANCE SHEET ARRANGEMENTS (in thousands) The table below details the commitments, material cash requirements, and off-balance sheet arrangements for the Company as of December 31, 2023 and includes principal payments only. The Company has no capital leases or long-term purchase obligations.
Management does not anticipate any material losses from its off-balance sheet arrangements. Table 20 COMMITMENTS, MATERIAL CASH REQUIREMENTS AND OFF-BALANCE SHEET ARRANGEMENTS (in thousands) The table below details the commitments, material cash requirements, and off-balance sheet arrangements for the Company as of December 31, 2024 and includes principal payments only. The Company has no capital leases or long-term purchase obligations.
Loan-related earning assets tend to generate a higher spread than those earned in the Company’s investment portfolio. By design, the Company’s investment portfolio is moderate in duration and liquid in its composition of assets. During 2024, approximately $2.1 billion of available-for-sale securities are expected to have principal repayments.
Loan-related earning assets tend to generate a higher spread than those earned in the Company’s investment portfolio. By design, the Company’s investment portfolio is moderate in duration and liquid in its composition of assets. During 2025, approximately $1.5 billion of available-for-sale securities are expected to have principal repayments.
See further information in Note 4, “Securities” in the Notes to the Consolidated Financial Statements. The Company’s AFS securities portfolio comprised 53.3% of the Company’s investment securities portfolio at December 31, 2023, compared to 52.9% at December 31, 2022. The Company’s AFS securities portfolio provides liquidity as a result of the composition and average life of the underlying securities.
See further information in Note 4, “Securities” in the Notes to the Consolidated Financial Statements. The Company’s AFS securities portfolio comprised 56.9% of the Company’s investment securities portfolio at December 31, 2024, compared to 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.
These long-term debt obligations had an aggregate contractual balance of $103.1 million and had a carrying value of $75.6 million at December 31, 2023 and $74.6 million at December 31, 2022. Interest rates on trust preferred securities are tied to the three-month term SOFR with spreads ranging from 133 basis points to 160 basis points and reset quarterly.
These long-term debt obligations had an aggregate contractual balance of $103.1 million and had a carrying value of $76.8 million at December 31, 2024 and $75.6 million at December 31, 2023. Interest rates on trust preferred securities are tied to the three-month term SOFR with spreads ranging from 133 basis points to 160 basis points and reset quarterly.
The magnitude and duration of this impact will be largely dependent upon the FRB’s policy decisions and market movements. See Table 18 in Item 7A for an illustration of the impact of an interest rate increase or decrease on net interest income as of December 31, 2023.
The magnitude and duration of this impact will be largely dependent upon the FRB’s policy decisions and market movements. See Table 21 in Item 7A for an illustration of the impact of an interest rate increase or decrease on net interest income as of December 31, 2024.
Long-term debt totaled $383.2 million at December 31, 2023, compared to $381.3 million at December 31, 2022. In September 2022, the Company issued $110.0 million in aggregate subordinated notes due in September 2032.
Long-term debt totaled $385.3 million at December 31, 2024, compared to $383.2 million at December 31, 2023. In September 2022, the Company issued $110.0 million in aggregate subordinated notes due in September 2032.
The increase in the FRB balance at December 31, 2023 compared to the prior year is primarily due to an increase in deposit balances. The interest-bearing accounts held at other financial institutions totaled $78.7 million and $121.7 million at December 31, 2023 and 2022, respectively. Deposits and Borrowed Funds Deposits represent the Company’s primary funding source for its asset base.
The increase in the FRB balance at December 31, 2024 compared to the prior year is primarily due to an increase in deposit balances. The interest-bearing accounts held at other financial institutions totaled $110.8 million and $78.7 million at December 31, 2024 and 2023, respectively. Deposits and Borrowed Funds Deposits represent the Company’s primary funding source for its asset base.
Repurchase agreements and federal funds purchased averaged $2.2 billion in 2023 and $2.8 billion in 2022. The Company enters into these transactions with its downstream correspondent banks, commercial customers, and various trust, mutual fund, and local government relationships.
Repurchase agreements and federal funds purchased averaged $2.3 billion in 2024 and $2.2 billion in 2023. The Company enters into these transactions with its downstream correspondent banks, commercial customers, and various trust, mutual fund, and local government relationships.
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, and mutual fund assets servicing. This income category increased by $20.0 million, or 8.4% in 2023, compared to 2022, and increased by $13.1 million, or 5.8%, in 2022, compared to 2021.
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, and mutual fund assets servicing. This income category increased by $33.4 million, or 13.0% in 2024, compared to 2023, and increased by $20.0 million, or 8.4%, in 2023, compared to 2022.
Interest-bearing due from banks totaled $5.2 billion as of December 31, 2023 compared to $1.2 billion as of December 31, 2022 and includes amounts due from the FRB and interest-bearing accounts held at other financial institutions. The amount due from the FRB averaged $2.0 billion and $2.3 billion during the years ended December 31, 2023 and 2022, respectively.
Interest-bearing due from banks totaled $8.0 billion as of December 31, 2024 compared to $5.2 billion as of December 31, 2023 and includes amounts due from the FRB and interest-bearing accounts held at other financial institutions. The amount due from the FRB averaged $3.4 billion and $2.0 billion during the years ended December 31, 2024 and 2023, respectively.
The tax-equivalent interest income totaled $26.4 million, $25.8 million, and $26.3 million in 2023, 2022, and 2021, respectively. (2) Loan fees are included in interest income. Such fees totaled $17.7 million, $18.2 million, and $17.1 million in 2023, 2022, and 2021, respectively. (3) Loans on nonaccrual are included in the computation of average balances.
The tax-equivalent interest income totaled $25.9 million, $26.4 million, and $25.8 million in 2024, 2023, and 2022, respectively. (2) Loan fees are included in interest income. Such fees totaled $21.4 million, $17.7 million, and $18.2 million in 2024, 2023, and 2022, respectively. (3) Loans on nonaccrual are included in the computation of average balances.
In total, net interest income increased $6.3 million, as compared to 2022, primarily driven by a favorable volume variance of $7.8 million, offset by a $1.5 million rate variance. See Table 2. The favorable volume variance on earning assets was predominantly driven by an increase of $1.9 billion, or 5.3%, in average earning assets.
In total, net interest income increased $80.8 million, as compared to 2023, primarily driven by a favorable volume variance of $88.5 million, offset by a $7.7 million rate variance. See Table 2. The favorable volume variance on earning assets was predominantly driven by an increase of $3.3 billion, or 8.9%, in average earning assets.
Table 16 RISK-BASED CAPITAL (in thousands) This table computes risk-based capital in accordance with current regulatory guidelines.
Table 19 RISK-BASED CAPITAL (in thousands) This table computes risk-based capital in accordance with current regulatory guidelines.
As of December 31, 2023, there is no ACL related to the Company’s available-for-sale securities as the decline in fair value did not result from credit issues. Included in Tables 11 and 12 are analyses of the fair value and average yield (tax-equivalent basis) of securities available for sale and securities held to maturity.
As of December 31, 2024, there is no ACL related to the Company’s available-for-sale securities as the decline in fair value did not result from credit issues. Included in Tables 14 and 15 are analyses of the fair value and average yield (tax-equivalent basis) of securities available for sale and securities held to maturity.
Marketing and business development expense was flat in 2023 compared to 2022, and increased $7.2 million, or 38.7%, in 2022 compared to 2021. The increase in 2022 was driven by the timing of advertising and business development projects and higher travel expenses as compared to the prior year.
Marketing and business development expense increased $2.7 million, or 10.4%, in 2024 compared to 2023, and was flat in 2023 compared to 2022. The increase in 2024 was driven by the timing of advertising and business development projects and higher travel expenses as compared to the prior year.
At December 31, 2023, the Company held securities purchased under agreements to resell of $240.3 million compared to $951.6 million at December 31, 2022. The Company uses these instruments as short-term secured investments, in lieu of selling federal funds, or to acquire securities required for collateral purposes.
At December 31, 2024, the Company held securities purchased under agreements to resell of $545.0 million compared to $240.3 million at December 31, 2023. The Company uses these instruments as short-term secured investments, in lieu of selling federal funds, or to acquire securities required for collateral purposes.
For more information on loan portfolio segments and ACL methodology refer to Note 3, “Loans and Allowance for Credit Losses,” in the Notes to the Consolidated Financial Statements. 34 As illustrated in Table 5 below, the ACL increased as a percentage of total loans to 0.95% as of December 31, 2023, compared to 0.91% as of December 31, 2022.
For more information on loan portfolio segments and ACL methodology refer to Note 3, “Loans and Allowance for Credit Losses,” in the Notes to the Consolidated Financial Statements. 44 As illustrated in Table 5 below, the ACL increased as a percentage of total loans to 1.01% as of December 31, 2024, compared to 0.95% as of December 31, 2023.
In addition to the borrowing capacity with the FHLB and at the Federal Reserve Discount Window as described above, the Company had additional liquidity of $7.9 billion available via cash, unpledged bond collateral, the federal funds market, and the IntraFi Cash Service program as of December 31, 2023.
In addition to the borrowing capacity with the FHLB and at the Federal Reserve Discount Window as described above, the Company had additional liquidity of $12.4 billion available via cash, unpledged bond collateral, the federal funds market, and the IntraFi Cash Service program as of December 31, 2024.
As illustrated in Table 3, the impact from these interest-free funds was 115 basis points in 2023, as compared to 43 basis points in 2022 and eight basis points in 2021. The Company experienced an increase in net interest income during 2023 due to a volume variance of $7.8 million, offset by a negative rate variance of $1.5 million.
As illustrated in Table 3, the impact from these interest-free funds was 117 basis points in 2024, as compared to 115 basis points in 2023 and 43 basis points in 2022. The Company experienced an increase in net interest income during 2024 due to a volume variance of $88.5 million, offset by a negative rate variance of $7.7 million.
The average life of the HTM portfolio was 8.4 years at December 31, 2023, compared to 9.3 years at December 31, 2022. The securities portfolio generates the Company’s second largest component of interest income. The AFS, HTM, and Other securities portfolios achieved an average yield on a tax-equivalent basis of 2.66% for 2023, compared to 2.33% in 2022.
The average life of the HTM portfolio was 9.1 years at December 31, 2024, compared to 8.4 years at December 31, 2023. 52 The securities portfolio generates the Company’s second largest component of interest income. The AFS, HTM, and Other securities portfolios achieved an average yield on a tax-equivalent basis of 2.96% for 2024, compared to 2.66% in 2023.
Balances will fluctuate based on the Company’s liquidity and investment decisions as well as the Company’s correspondent bank borrowing levels. These investments averaged $310.5 million in 2023 and $959.2 million in 2022. The Company also maintains an active securities trading inventory.
Balances will fluctuate based on the Company’s liquidity and investment decisions as well as the Company’s correspondent bank borrowing levels. These investments averaged $303.0 million in 2024 and $310.5 million in 2023. The Company also maintains an active securities trading inventory.
Collateralized deposits are public fund deposits or corporate trust deposits that are collateralized by high quality securities within the investment portfolio. Excluding affiliate deposits of $2.0 billion and collateralized deposits of $6.2 billion, the adjusted estimated uninsured deposits were $16.2 billion as of December 31, 2023.
Collateralized deposits are public fund deposits or corporate trust deposits that are collateralized by high quality securities within the investment portfolio. Excluding affiliate deposits of $2.4 billion and collateralized deposits of $6.0 billion, the adjusted estimated uninsured deposits were $22.7 billion as of December 31, 2024.
Balance Sheet Analysis Loans and Loans Held For Sale Loans represent the Company’s largest source of interest income. Loan balances held for investment increased by $2.1 billion, or 10.2%, in 2023.
Balance Sheet Analysis Loans and Loans Held For Sale Loans represent the Company’s largest source of interest income. Loan balances held for investment increased by $2.5 billion, or 10.7%, in 2024.
Estimated uninsured deposits comprised approximately 68.2% and 75.5% of total deposits as of December 31, 2023 and December 31, 2022, respectively. A portion of these uninsured deposits represent affiliate deposits and collateralized deposits. Affiliate deposits represent deposit accounts owned by the wholly owned subsidiaries of UMB Financial Corporation that are on deposit at UMB Bank, n.a.
Estimated uninsured deposits comprised approximately 72.0% and 68.2% of total deposits as of December 31, 2024 and December 31, 2023, respectively. A portion of these uninsured deposits represent affiliate deposits and collateralized deposits. Affiliate deposits represent deposit accounts owned by the wholly owned subsidiaries of UMB Financial Corporation that are on deposit at the Bank.
The Company has shown increased net interest income through the effects of increased volume and mix of average earning assets, coupled with higher interest rates. This increase was partially offset by higher interest-bearing deposit rates and increased borrowed funds. Average earning assets increased $1.9 billion, or 5.3%, compared to 2022.
The Company has shown increased net interest income through the effects of increased volume and mix of average earning assets, coupled with higher interest rates. This increase was partially offset by higher interest-bearing deposit rates. Average earning assets increased $3.3 billion, or 8.9%, compared to 2023.
Net interest income increased $33.1 million, or 20.7%, compared to the same period last year, due to an increase in funds transfer pricing due to the increase in interest rates. Provision for credit losses increased $0.9 million as compared to 2022, driven by loan growth, portfolio metric changes, and changes in the macro-economic metrics in 2023 as compared to 2022.
Net interest income increased $7.1 million, or 3.7%, compared to the same period last year, due to an increase in funds transfer pricing due to the increase in interest rates. Provision for credit losses increased $1.4 million as compared to 2023, driven by loan growth, portfolio metric changes, and changes in the macro-economic metrics in 2024 as compared to 2023.
Table 11 SECURITIES AVAILABLE FOR SALE (in thousands) U.S. Treasury Securities U.S.
Table 14 SECURITIES AVAILABLE FOR SALE (in thousands) U.S. Treasury Securities U.S.
Securities available for sale had a net unrealized loss of $624.2 million at year-end, compared to a net unrealized loss of $771.6 million the preceding year. This market value change primarily reflects the impact of a shorter average life and increasing market interest rates as of December 31, 2023, compared to December 31, 2022.
Securities available for sale had a net unrealized loss of $633.3 million at year-end, compared to a net unrealized loss of $624.2 million the preceding year. This market value change primarily reflects the impact of a longer average life and increasing market interest rates as of December 31, 2024, compared to December 31, 2023.
These amounts are reflected, on an after-tax basis, in the Company’s Accumulated other comprehensive income (loss) in shareholders’ equity, as an unrealized loss of $471.9 million at year-end 2023, compared to an unrealized loss of $514.6 million for 2022.
These amounts are reflected, on an after-tax basis, in the Company’s Accumulated other comprehensive income (loss) (AOCI) in shareholders’ equity, as an unrealized loss of $478.5 million at year-end 2024, compared to an unrealized loss of $471.9 million for 2023.
Commercial and industrial loans and commercial real estate loans continue to represent the largest segments of the Company’s loan portfolio, comprising approximately 42.8% and 38.4%, respectively, of total loans and loans held for sale at the end of 2023 and 43.8% and 36.2%, respectively, of total loans and loans held for sale at the end of 2022.
Commercial and industrial loans and commercial real estate loans continue to represent the largest segments of the Company’s loan portfolio, comprising approximately 42.5% and 39.5%, respectively, of total loans and loans held for sale at the end of 2024 and 42.8% and 38.4%, respectively, of total loans and loans held for sale at the end of 2023.
The net borrowed position was $8.8 million at December 31, 2023 compared to $55.5 million at December 31, 2022. The Bank buys and sells federal funds as agent for non-affiliated banks. Because the transactions are pursuant to agency arrangements, these transactions do not appear on the balance sheet and averaged $192.6 million in 2023 and $262.9 million in 2022.
The net borrowed position was $70.4 million at December 31, 2024 compared to $8.8 million at December 31, 2023. The Bank buys and sells federal funds as agent for non-affiliated banks. Because the transactions are pursuant to agency arrangements, these transactions do not appear on the balance sheet and averaged $161.7 million in 2024 and $192.6 million in 2023.
This includes approximately $1.1 billion that will have principal repayments during the first quarter of 2024. The available-for-sale investment portfolio had an average life of 52.6 months, 62.3 months, and 67.6 months as of December 31, 2023, 2022, and 2021, respectively.
This includes approximately $317 million that will have principal repayments during the first quarter of 2025. The available-for-sale investment portfolio had an average life of 56.0 months, 52.6 months, and 62.3 months as of December 31, 2024, 2023, and 2022, respectively.
The Company’s HTM securities portfolio consists of U.S. agency-backed securities, mortgage-backed securities, general obligation bonds, and private placement bonds. The Company’s HTM portfolio, net of the ACL totaled $5.7 billion as of December 31, 2023, a decrease of $170.6 million from December 31, 2022.
The Company’s HTM securities portfolio consists of U.S. agency-backed securities, mortgage-backed securities, general obligation bonds, and private placement bonds. The Company’s HTM portfolio, net of the ACL totaled $5.4 billion as of December 31, 2024, a decrease of $312.3 million from December 31, 2023.
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.
Due to these risks, the Company is actively monitoring its exposure to commercial real estate. 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.
Investment securities totaled $13.3 billion as of December 31, 2023 and $13.2 billion as of December 31, 2022 and comprised 31.9% and 36.5% of the Company’s earning assets, respectively, as of those dates.
Investment securities totaled $13.7 billion as of December 31, 2024 and $13.3 billion as of December 31, 2023 and comprised 28.5% and 31.9% of the Company’s earning assets, respectively, as of those dates.
Service charges on deposits income decreased $0.2 million, or 0.3%, in 2023 compared to 2022 and decreased $0.9 million, or 1.0%, in 2022 compared to 2021. The decrease in 2023 compared to 2022 was driven by decreased healthcare services income, offset by increased commercial service charge income.
Service charges on deposits income decreased $0.4 million, or 0.5%, in 2024 compared to 2023 and decreased $0.2 million, or 0.3%, in 2023 compared to 2022. The decrease in both years was driven by decreased healthcare services income, offset by increased commercial service charge income.
The provision for credit losses, including provision for off-balance sheet credit exposures, totaled $41.2 million for the year ended December 31, 2023, which is an increase of $3.3 million, or 8.8%, compared to the same period in 2022. The provision for credit losses, including provision for off-balance sheet credit exposures, totaled $37.9 million for the year ended December 31, 2022.
The provision for credit losses, including provision for off-balance sheet credit exposures, totaled $61.1 million for the year ended December 31, 2024, which is an increase of $19.8 million, or 48.1%, compared to the same period in 2023. The provision for credit losses, including provision for off-balance sheet credit exposures, totaled $41.2 million for the year ended December 31, 2023.
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 40 portfolio decreased from 62.3 months at December 31, 2022 to 52.6 months at December 31, 2023.
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 increased from 52.6 months at December 31, 2023 to 56.0 months at December 31, 2024.
The average holdings in the securities trading inventory in 2023 were $14.0 million, compared to $12.1 million in 2022, and were recorded at fair market value.
The average holdings in the securities trading inventory in 2024 were $22.3 million, compared to $14.0 million in 2023, and were recorded at fair market value.
Consumer real estate loans increased $237.4 million, or 8.7%, compared to 2022. These loans represented 12.8% of total loans as of December 31, 2023, compared to 12.9% as of December 31, 2022. For further information on loan portfolio segments refer to Note 3, “Loans and Allowance for Credit Losses,” in the Notes to the Consolidated Financial Statements.
These loans represented 12.4% of total loans as of December 31, 2024, compared to 12.8% as of December 31, 2023. For further information on loan portfolio segments refer to Note 3, “Loans and Allowance for Credit Losses,” in the Notes to the Consolidated Financial Statements.
This follows an increase of $98.3 million, or 12.1%, for the year ended December 31, 2022, compared to 2021. Average earning assets for the year ended December 31, 2023 increased by $1.9 billion, or 5.3%, compared to the same period in 2022. Net interest margin, on a tax-equivalent basis, decreased to 2.52% for 2023 compared to 2.63% in 2022.
This follows an increase of $6.3 million, or 0.7%, for the year ended December 31, 2023, compared to 2022. Average earning assets for the year ended December 31, 2024 increased by $3.3 billion, or 8.9%, compared to the same period in 2023. Net interest margin, on a tax-equivalent basis, decreased to 2.51% for 2024 compared to 2.52% in 2023.
At December 31, 2023, the Company had a total risk-based capital ratio of 12.85% and $3.1 billion in total shareholders’ equity, an increase of $433.3 million, or 16.2%, compared to total shareholders’ equity at December 31, 2022. The Company did not repurchase shares of common stock during 2023 except for shares acquired pursuant to the Company's share-based incentive programs.
At December 31, 2024, the Company had a total risk-based capital ratio of 13.21% and $3.5 billion in total shareholders’ equity, an increase of $366.1 million, or 11.8%, compared to total shareholders’ equity at December 31, 2023. The Company did not repurchase shares of common stock during 2024 except for shares acquired pursuant to the Company's share-based incentive programs.
The amounts presented are not necessarily indicative of actual future charge-offs in any particular category and are subject to change. 2023 2022 At December 31: Allowance for credit losses Percent of loans to total loans Allowance for credit losses Percent of loans to total loans Commercial and industrial $ 155,658 42.8 % $ 136,737 43.7 % Specialty lending — 2.2 — 2.9 Commercial real estate 45,507 38.4 39,370 36.2 Consumer real estate 6,941 12.8 6,148 12.9 Consumer 1,089 0.7 494 0.7 Credit cards 7,935 1.8 6,866 2.1 Leases and other 2,608 1.3 2,221 1.5 Total allowance for credit losses on loans $ 219,738 100.0 % $ 191,836 100.0 % Table 5 presents a summary of the Company’s ACL for the years ended December 31, 2023 and 2022.
The amounts presented are not necessarily indicative of actual future charge-offs in any particular category and are subject to change. 2024 2023 At December 31: Allowance for credit losses Percent of loans to total loans Allowance for credit losses Percent of loans to total loans Commercial and industrial $ 160,912 42.5 % $ 155,658 42.8 % Specialty lending — 1.8 — 2.2 Commercial real estate 77,340 39.5 45,507 38.4 Consumer real estate 4,327 12.4 6,941 12.8 Consumer 966 0.8 1,089 0.7 Credit cards 14,272 2.3 7,935 1.8 Leases and other 1,272 0.7 2,608 1.3 Total allowance for credit losses on loans $ 259,089 100.0 % $ 219,738 100.0 % Table 5 presents a summary of the Company’s ACL for the years ended December 31, 2024 and 2023.
The increase in both years was driven by increased 12b-1 and money market fees driven by the increase in short-term interest rates. Bankcard fees increased $1.3 million, or 1.7%, in 2023 compared to 2022, and increased $8.9 million, or 13.7%, in 2022 compared to 2021.
Brokerage fees increased $7.4 million, or 13.8%, in 2024 compared to 2023 and increased $11.1 million, or 25.8%, in 2023 compared to 2022. The increase in both years was driven by increased 12b-1 and money market fees driven by the increase in short-term interest rates.
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.
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. 37 Results of Operations Overview The Company focuses on the following four core financial objectives.
Noninterest expense increased $6.3 million, or 2.6%, primarily due to increases of $2.3 million in operational losses, $2.1 million in regulatory fees, $1.9 million in salaries and employee benefits, and $1.2 million in bankcard expense. These increases were partially offset by a decrease of $1.0 million in technology, service, and overhead expenses.
Noninterest expense increased $11.7 million, or 4.7%, primarily due to increases of $6.4 million in technology, service, and overhead expenses, $5.2 million in salaries and employee benefits, and $1.0 million in bankcard expense, partially offset by a decrease of $1.7 million in operational losses.
Net interest spread contracted by 83 basis points during the same period. 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.
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.
Fee-based services are typically non-credit related and are not generally affected by fluctuations in interest rates. Noninterest income decreased in 2023 by $12.4 million, or 2.2%, compared to 2022 and increased in 2022 by $87.1 million, or 18.6%, compared to 2021.
Fee-based services are typically non-credit related and are not generally affected by fluctuations in interest rates. Noninterest income increased in 2024 by $86.3 million, or 15.9%, compared to 2023 and decreased in 2023 by $12.4 million, or 2.2%, compared to 2022.
The Board authorized, at its April 26, 2022, and April 27, 2021 meetings, the repurchase of up to two million shares of the Company’s common stock during the twelve months following each meeting (each a Repurchase Authorization).
The Board authorized, at its April 26, 2022 meeting, the repurchase of up to two million shares of the Company’s common stock during the twelve months following the meeting (a Repurchase Authorization). The Board authorized, at its July 25, 2023, and April 30, 2024 meetings, the repurchase of up to one million shares of the Company's common stock.
Fully diluted earnings per share decreased 19.0% from 2022 to 2023 and increased 22.4% from 2021 to 2022. Return on average assets and return on average common shareholder’s equity for the year ended December 31, 2023 were 0.88% and 12.23%, respectively, compared to 1.15% and 15.83%, respectively, for the year ended December 31, 2022.
Fully diluted earnings per share increased 25.2% from 2023 to 2024 and decreased 19.0% from 2022 to 2023. Return on average assets and return on average common shareholder’s equity 38 for the year ended December 31, 2024 were 1.02% and 13.24%, respectively, compared to 0.88% and 12.23%, respectively, for the year ended December 31, 2023.
Return on average assets and return on average common shareholder’s equity for the year ended December 31, 2021 were 1.00% and 11.43%, respectively. The Company’s net interest income increased to $920.1 million in 2023 compared to $913.8 million in 2022 and $815.5 million in 2021.
Return on average assets and return on average common shareholder’s equity for the year ended December 31, 2022 were 1.15% and 15.83%, respectively. The Company’s net interest income increased to $1.0 billion in 2024 compared to $920.1 million in 2023 and $913.8 million in 2022.
Net income for 2022 was $431.7 million, or an increase of 22.3% compared to 2021. Basic earnings per share for the year ended December 31, 2023, were $7.22 per share compared to $8.93 per share in 2022, a decrease of 19.1%. Basic earnings per share were $7.31 per share in 2021, or an increase of 22.2% from 2021 to 2022.
Basic earnings per share for the year ended December 31, 2024, were $9.05 per share compared to $7.22 per share in 2023, an increase of 25.3%. Basic earnings per share were $8.93 per share in 2022, or a decrease of 19.1% from 2022 to 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

28 edited+8 added−4 removed29 unchanged
Biggest changeThe Company had $548 thousand of restructured loans at December 31, 2023 and $5.2 million at December 31, 2022. 54 Table 21 LOAN QUALITY (in thousands) December 31, 2023 2022 Nonaccrual loans $ 12,828 $ 16,838 Restructured loans on nonaccrual 384 2,431 Total non-performing loans 13,212 19,269 Other real estate owned 1,738 68 Total non-performing assets $ 14,950 $ 19,337 Loans past due 90 days or more $ 3,111 $ 1,617 Restructured loans accruing 164 2,790 Allowance for credit losses on loans 219,738 191,836 Ratios Non-performing loans as a % of loans 0.06 % 0.09 % Non-performing assets as a % of loans plus other real estate owned 0.06 0.09 Non-performing assets as a % of total assets 0.03 0.05 Loans past due 90 days or more as a % of loans 0.01 0.01 Allowance for credit losses on loans as a % of loans 0.95 0.91 Allowance for credit losses on loans as a multiple of non-performing loans 16.63x 9.96x Table 22 SUMMARY OF NET CHARGE-OFFS (in thousands) 2023 2022 Net Charge-Offs (Recoveries) Average Loans Outstanding Net Charge-Offs (Recoveries) to Average Loans Outstanding Net Charge-Offs (Recoveries) Average Loans Outstanding Net Charge-Offs (Recoveries) to Average Loans Outstanding At December 31: Commercial and industrial $ (248 ) $ 9,669,378 (0.00 )% $ 35,719 $ 8,160,147 0.44 % Specialty lending 761 540,371 0.14 (433 ) 525,697 (0.08 ) Commercial real estate 155 8,359,937 0.00 (356 ) 6,784,082 (0.01 ) Consumer real estate 1,140 2,858,510 0.04 (74 ) 2,512,597 (0.00 ) Consumer real estate 1,021 147,240 0.69 674 146,949 0.46 Credit cards 7,645 478,328 1.60 4,338 431,003 1.01 Leases and other — 281,178 — — 261,941 — Total $ 10,474 $ 22,334,942 0.05 % $ 39,868 $ 18,822,416 0.21 % Net charge-offs for the year ended December 31, 2023 were $10.5 million, compared to $39.9 million for the year ended December 31, 2022.
Biggest changeTable 24 LOAN QUALITY (in thousands) December 31, 2024 2023 Nonaccrual loans $ 19,241 $ 12,828 Restructured loans on nonaccrual 41 384 Total non-performing loans 19,282 13,212 Other real estate owned 1,612 1,738 Other repossessed assets 26,779 — Total non-performing assets $ 47,673 $ 14,950 Loans past due 90 days or more $ 7,602 $ 3,111 Restructured loans accruing 155 164 Allowance for credit losses on loans 259,089 219,738 Ratios Non-performing loans as a % of loans 0.08 % 0.06 % Non-performing assets as a % of loans plus other real estate owned and other repossessed assets 0.19 0.06 Non-performing assets as a % of total assets 0.09 0.03 Loans past due 90 days or more as a % of loans 0.03 0.01 Allowance for credit losses on loans as a % of loans 1.01 0.95 Allowance for credit losses on loans as a multiple of non-performing loans 13.44x 16.63x 67 Table 25 SUMMARY OF NET CHARGE-OFFS (in thousands) 2024 2023 Net Charge-Offs (Recoveries) Average Loans Outstanding Net Charge-Offs (Recoveries) to Average Loans Outstanding Net Charge-Offs (Recoveries) Average Loans Outstanding Net Charge-Offs (Recoveries) to Average Loans Outstanding At December 31: Commercial and industrial $ 3,551 $ 10,169,805 0.03 % $ (248 ) $ 9,669,378 (0.00 )% Specialty lending (4 ) 497,301 (0.00 ) 761 540,371 0.14 Commercial real estate 250 9,517,745 0.00 155 8,359,937 0.00 Consumer real estate (216 ) 3,036,136 (0.01 ) 1,140 2,858,510 0.04 Consumer real estate 1,283 166,278 0.77 1,021 147,240 0.69 Credit cards 18,397 587,958 3.13 7,645 478,328 1.60 Leases and other 1 234,324 0.00 — 281,178 — Total $ 23,262 $ 24,209,547 0.10 % $ 10,474 $ 22,334,942 0.05 % Net charge-offs for the year ended December 31, 2024 were $23.3 million, compared to $10.5 million for the year ended December 31, 2023.
Another factor affecting liquidity is the amount of deposits and customer repurchase agreements that have pledging requirements. All customer repurchase agreements require collateral in the form of a security. The U.S. 55 Government, other public entities, and certain trust depositors require the Company to pledge securities if their deposit balances are greater than the FDIC-insured deposit limitations.
Another factor affecting liquidity is the amount of deposits and customer repurchase agreements that have pledging requirements. All customer repurchase agreements require collateral in the form of a security. The U.S. Government, other public entities, and certain trust depositors require the Company to pledge securities if their deposit balances are greater than the FDIC-insured deposit limitations.
In order to address this risk, management maintains a system of internal controls with the objective of providing proper transaction authorization and execution, safeguarding of assets from misuse or theft, and ensuring the reliability of financial and other data. The Company maintains systems of internal controls that provide management with timely and accurate information about the Company’s operations.
In order to address this risk, management maintains a system of internal controls with the objective of providing proper transaction authorization and execution, safeguarding of assets from misuse or theft, and ensuring the reliability of financial and other data. 69 The Company maintains systems of internal controls that provide management with timely and accurate information about the Company’s operations.
This review team performs periodic examinations of the Bank’s loans for credit quality, documentation and loan administration. The respective regulatory authority of the Bank also reviews loan portfolios. A primary indicator of credit quality and risk management is the level of nonperforming loans. Nonperforming loans include both nonaccrual loans and restructured loans on nonaccrual.
This review team performs periodic 66 examinations of the Bank’s loans for credit quality, documentation and loan administration. The respective regulatory authority of the Bank also reviews loan portfolios. A primary indicator of credit quality and risk management is the level of nonperforming loans. Nonperforming loans include both nonaccrual loans and restructured loans on nonaccrual.
This would include but is not limited to the risk of fraud by 56 employees or persons outside the Company, the execution of unauthorized transactions by employees or others, errors relating to transaction processing, breaches of the internal control system and compliance requirements, and unplanned interruptions in service.
This would include but is not limited to the risk of fraud by employees or persons outside the Company, the execution of unauthorized transactions by employees or others, errors relating to transaction processing, breaches of the internal control system and compliance requirements, and unplanned interruptions in service.
Ultimately, the Company believes public confidence is generated through profitable operations, sound credit quality and a strong capital position. The primary source of liquidity for the Company is regularly scheduled payments on and maturity of assets, which include $7.1 billion of high-quality securities available for sale.
Ultimately, the Company believes public confidence is generated through profitable operations, sound credit quality and a strong capital position. The primary source of liquidity for the Company is regularly scheduled payments on and maturity of assets, which include $7.8 billion of high-quality securities available for sale.
The discussion in Table 19 above of interest rate risk, however, combines instruments held for trading and instruments held for purposes other than trading, because the instruments held for trading represent such a small portion of the Company’s portfolio that the interest rate risk associated with them is immaterial.
The discussion in Table 22 above of interest rate risk, however, combines instruments held for trading and instruments held for purposes other than trading, because the instruments held for trading represent such a small portion of the Company’s portfolio that the interest rate risk associated with them is immaterial.
While there can be no assurance that the Company will not suffer such losses in the future, management continually monitors and works to improve its internal controls, systems and corporate-wide processes and procedures. 57
While there can be no assurance that the Company will not suffer such losses in the future, management continually monitors and works to improve its internal controls, systems and corporate-wide processes and procedures. 70
The Company is a member bank with the FHLB of Des Moines, and through this relationship, the Company owns $55.2 million of FHLB stock and has access to additional liquidity and funding sources through FHLB advances. The Company’s borrowing capacity is dependent upon the amount of collateral the Company places at the FHLB.
The Company is a member bank with the FHLB of Des Moines, and through this relationship, the Company owns FHLB stock and has access to additional liquidity and funding sources through FHLB advances. The Company’s borrowing capacity is dependent upon the amount of collateral the Company places at the FHLB.
These pledging requirements affect liquidity risk in that the related security cannot otherwise be disposed due to the pledging restriction. At December 31, 2023, $10.1 billion, or 79.2%, of securities were pledged or used as collateral, compared to $10.3 billion, or 80.3%, at December 31, 2022. The Company also has other commercial commitments that may impact liquidity.
These pledging requirements affect liquidity risk in that the related security cannot otherwise be disposed due to the pledging restriction. At December 31, 2024, $10.5 billion, or 80.1%, of securities were pledged or used as collateral, compared to $10.1 billion, or 79.2%, at December 31, 2023. The Company also has other commercial commitments that may impact liquidity.
Table 20 presents the break-out of fixed and variable rate loans by repricing or maturity characteristics for each loan class.
Table 23 presents the break-out of fixed and variable rate loans by repricing or maturity characteristics for each loan class.
Also, it does not necessarily predict the impact of changes in general levels of interest rates on net interest income. 52 Table 19 is a static gap analysis, which presents the Company’s assets and liabilities, based on their repricing or maturity characteristics and reflecting principal amortization.
Also, it does not necessarily predict the impact of changes in general levels of interest rates on net interest income. 64 Table 22 is a static gap analysis, which presents the Company’s assets and liabilities, based on their repricing or maturity characteristics and reflecting principal amortization.
The results of these simulations can be significantly influenced by assumptions utilized and management evaluates the sensitivity of the simulation results on a regular basis. 51 Table 18 shows the net interest income percentage increase or decrease over the next twelve- and twenty-four-month periods as of December 31, 2023 and 2022 based on hypothetical changes in interest rates and a constant sized balance sheet with runoff being replaced.
The results of these simulations can be significantly influenced by assumptions utilized and management evaluates the sensitivity of the simulation results on a regular basis. 63 Table 21 shows the net interest income percentage increase or decrease over the next twelve- and twenty-four-month periods as of December 31, 2024 and 2023 based on hypothetical changes in interest rates and a constant sized balance sheet with runoff being replaced.
The risk associated with the carrying of trading securities is offset by the sale of exchange-traded financial futures contracts, with both the trading account and futures contracts marked to market daily. This account had a balance of $18.1 million as of December 31, 2023, compared to $18.0 million as of December 31, 2022.
The risk associated with the carrying of trading securities is offset by the sale of exchange-traded financial futures contracts, with both the trading account and futures contracts marked to market daily. This account had a balance of $28.5 million as of December 31, 2024, compared to $18.1 million as of December 31, 2023.
In addition to the borrowing capacity with the FHLB and at the Federal Reserve Discount Window as described above, the Company had additional liquidity of $7.9 billion available via cash, unpledged bond collateral, the federal funds market, and the IntraFi Cash Service program as of December 31, 2023.
In addition to the borrowing capacity with the FHLB and at the Federal Reserve Discount Window as described above, the Company had additional liquidity of $12.4 billion available via cash, unpledged bond collateral, the federal funds market, and the IntraFi Cash Service program as of December 31, 2024.
Table 18 MARKET RISK Hypothetical change in interest rate – Rate Ramp Year One Year Two December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 (basis points) Percentage change Percentage change Percentage change Percentage change 200 (0.7 )% (1.1 )% 4.2 % 7.1 % 100 (0.3 ) (0.4 ) 2.2 3.6 Static — — — — (100) 0.3 0.4 (3.1 ) (3.8 ) (200) 0.9 n/a (5.7 ) n/a (300) 1.5 n/a (8.8 ) n/a Hypothetical change in interest rate – Rate Shock Year One Year Two December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 (basis points) Percentage change Percentage change Percentage change Percentage change 200 3.1 % 2.4 % 7.4 % 9.5 % 100 1.6 1.2 3.8 4.8 Static — — — — (100) (1.7 ) (1.3 ) (4.7 ) (5.0 ) (200) (2.8 ) n/a (9.3 ) n/a (300) (3.5 ) n/a (14.3 ) n/a The Company is positioned relatively neutral to changes in interest rates in the next year.
Table 21 MARKET RISK Hypothetical change in interest rate – Rate Ramp Year One Year Two December 31, 2024 December 31, 2023 December 31, 2024 December 31, 2023 (basis points) Percentage change Percentage change Percentage change Percentage change 200 (3.9 )% (0.7 )% 1.3 % 4.2 % 100 (2.3 ) (0.3 ) (0.2 ) 2.2 Static — — — — (100) 3.0 0.3 0.7 (3.1 ) (200) 6.1 0.9 1.6 (5.7 ) (300) 9.1 1.5 1.5 (8.8 ) Hypothetical change in interest rate – Rate Shock Year One Year Two December 31, 2024 December 31, 2023 December 31, 2024 December 31, 2023 (basis points) Percentage change Percentage change Percentage change Percentage change 200 (2.7 )% 3.1 % 3.0 % 7.4 % 100 (2.3 ) 1.6 0.6 3.8 Static — — — — (100) 3.4 (1.7 ) (0.4 ) (4.7 ) (200) 6.8 (2.8 ) (0.7 ) (9.3 ) (300) 9.1 (3.5 ) (2.3 ) (14.3 ) The Company is liability sensitive to changes in interest rates in the next year.
These commitments include unused commitments to extend credit, standby letters of credit and financial guarantees, and commercial letters of credit. The total amount of these commercial commitments at December 31, 2023 was $17.5 billion.
These commitments include unused commitments to extend credit, standby letters of credit and financial guarantees, and commercial letters of credit. The total amount of these commercial commitments at December 31, 2024 was $18.8 billion.
The Company’s nonperforming loans decreased $6.1 million to $13.2 million at December 31, 2023, compared to December 31, 2022. There was an immaterial amount of interest recognized on nonperforming loans during 2023, 2022, and 2021. The Company had $1.7 million and $68 thousand of other real estate owned as of December 31, 2023 and December 31, 2022, respectively.
The Company’s nonperforming loans increased $6.1 million to $19.3 million at December 31, 2024, compared to December 31, 2023. There was an immaterial amount of interest recognized on nonperforming loans during 2024, 2023, and 2022. The Company had $1.6 million and $1.7 million of other real estate owned as of December 31, 2024 and December 31, 2022, respectively.
Net interest income is predicted to decrease in all upward rate ramp scenarios and increase in all upward rate shock scenarios. In down rate scenarios, net interest income is predicted to increase in rate ramp scenarios and decrease in rate shock scenarios.
Net interest income is predicted to decrease in all upward rate scenarios and increase in all downward rate scenarios. In year two, net interest income is predicted to increase in all upward rate shock scenarios and decrease in all downward rate shock scenarios.
Loans past due more than 90 days and still accruing interest totaled $3.1 million as of December 31, 2023, compared to $1.6 million as of December 31, 2022.
Other repossessed assets totaled $26.8 million as of December 31, 2024. Loans past due more than 90 days and still accruing interest totaled $7.6 million as of December 31, 2024, compared to $3.1 million as of December 31, 2023.
Management fees and dividends received from bank and non-bank subsidiaries traditionally have been sufficient to satisfy these requirements and are expected to be sufficient in the future. The Bank is subject to various rules regarding payment of dividends to the Company.
Management fees and dividends received from bank and non-bank subsidiaries traditionally have been sufficient to satisfy these requirements and are expected to be sufficient in the future.
In September 2022, the Company issued $110.0 million in aggregate subordinated notes due in September 2032. The Company received $107.9 million, after deducting underwriting discounts and commissions and offering expenses, and used the proceeds from the offering for general corporate purposes, including, among other uses, contributing Tier 1 capital into the Bank.
The Company received $107.9 million, after deducting underwriting discounts and commissions and offering expenses, and used the proceeds from the offering for general corporate purposes, including, among other uses, contributing Tier 1 capital into the Bank.
The Company’s ability to price deposits consistent with its historical approach is a key assumption in these scenarios. Repricing Mismatch Analysis The Company also evaluates its interest rate sensitivity position in an attempt to maintain a balance between the amount of interest-bearing assets and interest-bearing liabilities which are expected to mature or reprice at any point in time.
Repricing Mismatch Analysis The Company also evaluates its interest rate sensitivity position in an attempt to maintain a balance between the amount of interest-bearing assets and interest-bearing liabilities which are expected to mature or reprice at any point in time.
The Company had no outstanding advances at FHLB Des Moines as of December 31, 2022. Based on the collateral pledged, the Company had $975.3 million of borrowing capacity remaining at the FHLB at December 31, 2023. As of December 31, 2023, the Company had an $800.0 million short-term borrowing outstanding with the Federal Reserve Bank's BTFP.
Based on the collateral pledged, the Company had $1.8 billion of borrowing capacity remaining at the FHLB at December 31, 2024. As of December 31, 2024, the Company had no borrowings outstanding with the Federal Reserve Bank's Bank Term Funding Program (BTFP). As of December 31, 2023, the Company had an $800.0 million short-term borrowing outstanding with the BTFP.
Certain loans are restructured to provide a reduction or deferral of interest or principal due to deterioration in the financial condition of the respective borrowers.
Certain loans are restructured to provide a reduction or deferral of interest or principal due to deterioration in the financial condition of the respective borrowers. The Company had $196 thousand of restructured loans at December 31, 2024 and $548 thousand at December 31, 2023.
As of December 31, 2023, the Company had one short-term advance for $1.0 billion outstanding at the FHLB of Des Moines. Additionally, in 2023, the FHLB of Des Moines issued a letter of credit for $150.0 million on behalf of the Company to secure deposits. This letter of credit expired in January 2024.
Additionally, in both 2024 and 2023, the FHLB of Des Moines issued a letter of credit for $150.0 million on behalf of the Company to secure deposits. The letter of credit outstanding as of December 31, 2024 expired in January 2025 and was subsequently renewed with an expiration date in February 2025.
As of December 31, 2023, the Company's borrowing capacity with the BTFP was $5.0 million and its remaining borrowing capacity at the Federal Reserve Discount Window was $10.5 billion.
The FRB terminated the BTFP during 2024. As of December 31, 2024, the Company's borrowing capacity with the Federal Reserve Discount Window was $12.5 billion.
For the most part, the Bank can pay dividends at least equal to its current year’s earnings without seeking prior regulatory approval. The Company also uses cash to inject capital into the Bank and its non-Bank subsidiaries to maintain adequate capital as well as to fund strategic initiatives.
There can be no assurance the Company will declare and pay dividends to shareholders. The Bank is subject to various rules regarding payment of dividends to the Company. For the most part, the Bank can pay dividends at least equal to its current year’s earnings without seeking prior regulatory approval.
Removed
The largest change in net interest income relative to base in either rate ramp or rate shock scenarios is less than 4% in year one. In year two, net interest income is predicted to rise in all increasing rate scenarios and decrease in falling rate scenarios.
Added
In rate ramp scenarios net interest income is predicted to increase in all scenarios except for the 100-basis-point upward ramp scenario. The Company’s ability to price deposits consistent with its historical approach is a key assumption in these scenarios.
Removed
Table 19 INTEREST RATE SENSITIVITY ANALYSIS (in millions) 1-90 91-180 181-365 1-5 Over 5 Days Days Days Total Years Years Total December 31, 2023 Earning assets Loans $ 14,520.2 $ 718.9 $ 1,252.4 $ 16,491.5 $ 4,983.0 $ 1,702.4 $ 23,176.9 Securities 2,105.2 598.3 557.6 3,261.1 5,141.9 4,850.5 13,253.5 Federal funds sold and resell agreements 245.3 — — 245.3 — — 245.3 Other 5,177.3 — — 5,177.3 0.6 — 5,177.9 Total earning assets $ 22,048.0 $ 1,317.2 $ 1,810.0 $ 25,175.2 $ 10,125.5 $ 6,552.9 $ 41,853.6 % of total earning assets 52.7 % 3.1 % 4.3 % 60.1 % 24.2 % 15.7 % 100.0 % Funding sources Interest-bearing demand and savings $ 20,588.6 $ — $ — $ 20,588.6 $ — $ — $ 20,588.6 Time deposits 1,019.6 1,627.3 221.4 2,868.3 202.6 2.7 3,073.6 Federal funds purchased and repurchase agreements 2,119.6 — — 2,119.6 — — 2,119.6 Short term debt — 1,000.0 800.0 1,800.0 — — 1,800.0 Long term debt 75.6 — — 75.6 307.6 — 383.2 Noninterest-bearing sources 12,130.8 — — 12,130.8 — 1,757.8 13,888.6 Total funding sources $ 35,934.2 $ 2,627.3 $ 1,021.4 $ 39,582.9 $ 510.2 $ 1,760.5 $ 41,853.6 % of total earning assets 85.9 % 6.2 % 2.4 % 94.5 % 1.3 % 4.2 % 100.0 % Interest sensitivity gap $ (13,886.2 ) $ (1,310.1 ) $ 788.6 $ (14,407.7 ) $ 9,615.3 $ 4,792.4 Cumulative gap (13,886.2 ) (15,196.3 ) (14,407.7 ) (14,407.7 ) (4,792.4 ) — As a % of total earning assets (33.2 )% (36.3 )% (34.4 )% (34.4 )% (11.5 )% — % Ratio of earning assets to funding sources 0.61 0.50 1.77 0.64 19.85 3.72 Cumulative ratio of earning assets to funding sources 2023 0.61 0.61 0.64 0.64 0.88 1.00 2022 0.59 0.63 0.68 0.68 0.92 1.00 Table 20 Maturities and Sensitivities to Changes in Interest Rates This table details loan maturities by variable and fixed rates as of December 31, 2023 (in thousands): Due in one year or less Due after one year through five years Due after five years through fifteen years Due after fifteen years Total Variable Rate Commercial and industrial $ 7,056,626 $ 35,780 $ 171 $ 2,480 $ 7,095,057 Specialty lending 498,786 — — — 498,786 Commercial real estate 5,329,868 176,617 7,459 14 5,513,958 Consumer real estate 444,067 484,648 319,043 — 1,247,758 Consumer 58,787 14 — — 58,801 Credit cards 423,502 454 — — 423,956 Leases and other 251,727 743 28 — 252,498 Total variable rate loans 14,063,363 698,256 326,701 2,494 15,090,814 Fixed Rate Commercial and industrial 988,753 1,685,457 160,662 — 2,834,872 Specialty lending — — — — — Commercial real estate 1,130,647 1,856,898 386,753 5,670 3,379,968 Consumer real estate 241,581 658,767 629,616 187,330 1,717,294 Consumer 58,085 44,976 1,278 151 104,490 Credit cards — — — — — Leases and other 9,127 38,626 1,713 — 49,466 Total fixed rate loans 2,428,193 4,284,724 1,180,022 193,151 8,086,090 Total loans and loans held for sale $ 16,491,556 $ 4,982,980 $ 1,506,723 $ 195,645 $ 23,176,904 53 Trading Account The Bank carries taxable governmental securities in a trading account that is maintained in accordance with Board-approved policy and procedures.
Added
Table 22 INTEREST RATE SENSITIVITY ANALYSIS (in millions) 1-90 91-180 181-365 1-5 Over 5 Days Days Days Total Years Years Total December 31, 2024 Earning assets Loans $ 16,421.1 $ 531.3 $ 865.8 $ 17,818.2 $ 5,676.3 $ 2,150.6 $ 25,645.1 Securities 1,054.4 618.9 657.6 2,330.9 5,538.6 5,754.8 13,624.3 Federal funds sold and resell agreements 545.0 — — 545.0 — — 545.0 Other 8,014.2 — — 8,014.2 0.5 — 8,014.7 Total earning assets $ 26,034.7 $ 1,150.2 $ 1,523.4 $ 28,708.3 $ 11,215.4 $ 7,905.4 $ 47,829.1 % of total earning assets 54.4 % 2.4 % 3.2 % 60.0 % 23.5 % 16.5 % 100.0 % Funding sources Interest-bearing demand and savings $ 27,397.2 $ — $ — $ 27,397.2 $ — $ — $ 27,397.2 Time deposits 1,412.8 404.8 235.7 2,053.3 72.0 2.4 2,127.7 Federal funds purchased and repurchase agreements 2,609.7 — — 2,609.7 — — 2,609.7 Long term debt 76.8 — 199.7 276.5 108.8 — 385.3 Noninterest-bearing sources 13,617.1 — — 13,617.1 — 1,692.1 15,309.2 Total funding sources $ 45,113.6 $ 404.8 $ 435.4 $ 45,953.8 $ 180.8 $ 1,694.5 $ 47,829.1 % of total earning assets 94.3 % 0.8 % 1.0 % 96.1 % 0.4 % 3.5 % 100.0 % Interest sensitivity gap $ (19,078.9 ) $ 745.4 $ 1,088.0 $ (17,245.5 ) $ 11,034.6 $ 6,210.9 Cumulative gap (19,078.9 ) (18,333.5 ) (17,245.5 ) (17,245.5 ) (6,210.9 ) — As a % of total earning assets (39.9 )% (38.3 )% (36.1 )% (36.1 )% (13.0 )% — % Ratio of earning assets to funding sources 0.58 2.84 3.50 0.62 62.03 4.67 Cumulative ratio of earning assets to funding sources 2024 0.58 0.60 0.62 0.62 0.87 1.00 2023 0.61 0.61 0.64 0.64 0.88 1.00 65 Table 23 Maturities and Sensitivities to Changes in Interest Rates This table details loan maturities by variable and fixed rates as of December 31, 2024 (in thousands): Due in one year or less Due after one year through five years Due after five years through fifteen years Due after fifteen years Total Variable Rate Commercial and industrial $ 8,154,233 $ 32,809 $ 25 $ — $ 8,187,067 Specialty lending 469,194 — — — 469,194 Commercial real estate 6,129,672 107,380 2,470 — 6,239,522 Consumer real estate 553,279 557,575 265,245 — 1,376,099 Consumer 107,335 39 — — 107,374 Credit cards 578,716 50 — — 578,766 Leases and other 155,425 258 — — 155,683 Total variable rate loans 16,147,854 698,111 267,740 — 17,113,705 Fixed Rate Commercial and industrial 634,199 1,884,237 195,999 — 2,714,435 Specialty lending — — — — — Commercial real estate 697,756 2,362,633 829,143 2,231 3,891,763 Consumer real estate 290,643 669,756 636,992 216,396 1,813,787 Consumer 47,724 37,799 866 97 86,486 Credit cards — — — — — Leases and other — 23,712 1,169 — 24,881 Total fixed rate loans 1,670,322 4,978,137 1,664,169 218,724 8,531,352 Total loans and loans held for sale $ 17,818,176 $ 5,676,248 $ 1,931,909 $ 218,724 $ 25,645,057 Trading Account The Bank carries taxable governmental securities in a trading account that is maintained in accordance with Board-approved policy and procedures.
Removed
To enhance general working capital needs, the Company has a revolving line of credit with Wells Fargo Bank, N.A. which allows the Company to borrow up to $30.0 million for general working capital purposes.
Added
The declaration and payment of dividends to shareholders, as well as the amount thereof, are subject to the discretion of the Board and depend on the Company’s results of operations, financial condition, capital levels, cash requirements, future prospects, regulatory requirements and other factors deemed relevant by the Board.
Removed
The interest rate applied to borrowed balances will be at the Company’s option, either 1.4% above Term SOFR or 1.75% below the prime rate on the date of an advance. The Company pays a 0.4% unused commitment fee for unused portions of the line of credit. The Company had no advances outstanding at December 31, 2023.
Added
The Company also uses cash to inject capital into the Bank and its non-Bank subsidiaries to maintain adequate capital as well as to fund strategic initiatives. 68 Additionally, on April 29, 2024, the Company also announced that in connection with the execution of the Merger Agreement, it entered into a forward sale agreement with BofA Securities, Inc. or its affiliate to issue 2.8 million shares of its common stock.
Added
The underwriters were granted an option to purchase up to an additional 420 thousand shares of the Company's common stock exercisable within 30 days of April 28, 2024.
Added
The underwriters exercised this option in full on April 30, 2024, upon which the Company entered into an additional forward sale agreement relating to the 420 thousand shares of the Company's common stock. The forward sale agreements are classified as an equity instrument under ASC 815-40, Contracts in Entity’s Own Equity .
Added
The Company expects to receive net proceeds of approximately $231.8 million from the sale of shares of common stock and settlement of the forward sale agreements. In September 2022, the Company issued $110.0 million in aggregate subordinated notes due in September 2032.
Added
As of December 31, 2024, and December 31, 2023, the Company owned $10.2 million and $55.2 million of FHLB stock, respectively. As of December 31, 2024, the Company had no outstanding advances at the FHLB of Des Moines. As of December 31, 2023, the Company had one short-term advance for $1.0 billion outstanding at the FHLB of Des Moines.

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