Company: UMBFO
Filing Date: 2025-02-27
Form Type: 10-K
Source: 0000950170-25-028420
Chunk: 83

Company: UMB FINANCIAL CORP
Filing Date: 2025-02-27
Form: 10-K
Item: Item 1B
Chunk 83
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, 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 rate on earning assets during 2024 increased by 41 basis points, while the average rate on interest-bearing liabilities increased by 44 basis points, resulting in a three basis-point decrease in spread.  The volume of loans increased from an average of $22.3 billion in 2023 to an average of $24.2 billion in 2024, driven by organic loan growth.  The volume of interest-bearing liabilities increased from $25.6 billion in 2023 to $29.0 billion in 2024.  The Company expects to see continued volatility in the economic markets and governmental responses to inflation, geopolitical tensions, and supply chain constraints.  These changing economic conditions and governmental responses could have impacts on the balance sheet and income statement of the Company in 2025.  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.  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.    

Provision and Allowance for Credit Losses

The ACL represents management’s judgment of total expected losses included in the Company’s loan portfolio as of the balance sheet date.  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.

A mathematical calculation of an estimate is made to assist in determining the adequacy and reasonableness of management’s recorded ACL.  To develop the estimate, the Company follows the guidelines in Accounting Standards Codification (ASC) Topic 326, Financial Instruments – Credit Losses (ASC 326).