Company: UMBFO
Filing Date: 2025-02-27
Form Type: 10-K
Source: 0000950170-25-028420
Chunk: 41

Company: UMB FINANCIAL CORP
Filing Date: 2025-02-27
Form: 10-K
Item: Item 1A
Chunk 41
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 its customers will not repay their loans. A customer’s ability and willingness to repay can be adversely affected by decreases in the income of the borrower or increases in their payment obligations to other lenders, whether as a result of a job loss, higher debt levels or rising cost of servicing debt, inflation outpacing wage growth, or by restricted availability of credit generally. The Company may fail to quickly identify and reduce its exposure to customers that are likely to default on their payment obligations, whether by closing credit lines or restricting authorizations. The Company’s ability to manage credit risk also is affected by legal or regulatory changes (such as restrictions on collections, bankruptcy laws, minimum payment regulations and re-age guidance), competitors’ actions and consumer behavior, and depends on the effectiveness of its collections staff, techniques and models. 

Rising credit losses or leading indicators of rising credit losses (such as higher delinquencies, higher rates of nonperforming loans, higher bankruptcy rates, lower collateral values, elevated unemployment rates or changing market terms) may require the Company to increase its allowance for credit losses, which would decrease its profitability if it is unable to raise revenue or reduce costs to compensate for higher credit losses, whether actual or expected. In particular, the Company faces the following risks in this area: 

•Missed payments: Customers may fail to make required payments on time and may default or become delinquent. Loan charge-offs (including from bankruptcies) are generally preceded by missed payments or other indications of worsening financial conditions for the Company’s customers. Historically, customers are more likely to miss payments during an economic downturn, recession, periods of high unemployment, or prolonged periods of slow economic growth. Customers might also be more likely to miss payments if the payment burdens on their existing debt grow due to rising interest rates, or if inflation outpaces wage growth.

•Incorrect estimates of expected credit losses: The credit quality of the Company’s loan portfolios can have a significant impact on its earnings. The Company allows for and reserves against credit risks based on an assessment of expected credit losses in its loan portfolios. This process, which is critical to the Company’s financial condition and results of operations, requires complex judgments, including forecasts of economic conditions. The Company may underestimate its expected credit losses and fail to hold an allowance for credit losses sufficient to account for these credit losses. Incorrect assumptions could lead to material underestimations of expected credit losses and an inadequate allowance for credit losses. See risk below “The Company’s selection of accounting methods, assumptions, and estimates could impact its financial statements