UMB Financial Is Down After Largest Acquisition In Its 111-Year History - Here's Why

UMB Financial Corporation UMBF shares are trading lower after it inked an acquisition deal, priced an underwritten offering, and reported first-quarter FY24 results.

M&A: The company inked a definitive merger deal to acquire Heartland Financial, USA Inc. HTLF in an all-stock transaction valued at around $2.0 billion.

As per the terms, Heartland shareholders will receive a fixed exchange ratio of 0.55 shares of UMB common shares for each share of HTLF stock they hold. 

The per-share price consideration is valued at $45.74 per share based on UMB’s closing price of $83.17 on April 26. 

This transaction, the largest in UMB’s 111-year history, will result in the company having $64.5 billion in assets, increase private wealth management’s AUM/AUA by 31% and nearly double its retail deposit base. 

The transaction is subject to customary closing conditions, including regulatory approvals and approval by UMB shareholders and HTLF stockholders, and is expected to close in the first quarter of 2025.

First-quarter Earnings: UMB Financial reported revenue of $398.7 million, beating the consensus of $368.0 million, and adjusted EPS of $2.47, surpassing the consensus of $1.76. 

The Board approved a share repurchase of up to 1 million shares and declared a quarterly cash dividend of $0.39 per share, payable on July 1, to shareholders of record on June 10.

Mariner Kemper, chairman and chief executive officer, said, “Our 2024 is off to a great start, with strong first quarter financial results driven by balance sheet and net interest income growth, net interest margin expansion, double-digit growth in our fee income revenue, and stable credit metrics.” 

“While indications suggest the economy is on reasonably stable footing, persistently high inflation, an upcoming presidential election cycle, and a potential ‘No Landing’ scenario may dictate a constrictive Federal Reserve monetary policy that could pose economic challenges.”

Public Offering Pricing: UMB Financial disclosed that it priced an underwritten public offering of 2.80 million shares of its common stock for around net proceeds of $201.6 million.

Price Action: UMBF shares are down 4% at $79.83, while HTLF is up 19% at $42.54 at the last check Monday.

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