UMB Financial (UMBF) 8-K UMB Announces Agreement to Acquire Heartland Financial

Exhibit 99.4

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

Defined terms included below have the same meaning as terms defined and included elsewhere in the preliminary prospectus supplement dated April 28, 2024 (the “Preliminary Prospectus Supplement”), except that, unless the context requires otherwise, the term “forward sale agreement” as used herein does not include any additional forward sale agreement that we may enter into in connection with the exercise by the underwriter of its option to purchase additional shares in the offering of shares of common stock contemplated by the Preliminary Prospectus Supplement (the “Offering”).

Introduction

UMB is providing the following unaudited pro forma condensed combined financial data to aid stockholders in their analysis of the financial aspects of the Merger and the forward sale agreement. The unaudited pro forma condensed combined financial data has been prepared in accordance with Article 11 of Regulation S-X and should be read in conjunction with the accompanying notes.

The unaudited pro forma condensed combined balance sheet as of December 31, 2023 combines the audited consolidated balance sheet of UMB as of December 31, 2023 with the audited consolidated balance sheet of HTLF as of December 31, 2023, giving effect to the Merger and the forward sale agreement as if the Merger had been consummated and the forward sale agreement had been fully physically settled on December 31, 2023.

The unaudited pro forma condensed combined statement of income for the year ended December 31, 2023 combines the audited consolidated statement of income of UMB for the year ended December 31, 2023 with the audited consolidated statement of income of HTLF for the year ended December 31, 2023, giving effect to the Merger and forward sale agreement as if the Merger had been consummated and the forward sale agreement had been fully physically settled on January 1, 2023.

The unaudited pro forma condensed combined financial data was derived from, and should be read in conjunction with, the following historical financial statements and the accompanying notes, which are incorporated by reference into the Preliminary Prospectus Supplement and the accompanying base prospectus:

• The historical audited consolidated financial statements of UMB as of and for the year ended December 31, 2023; and

• The historical audited consolidated financial statements of HTLF as of and for the year ended December 31, 2023.

The unaudited pro forma condensed combined financial data should also be read together with other financial data included elsewhere or incorporated by reference into the Preliminary Prospectus Supplement.

The foregoing historical financial statements have been prepared in accordance with GAAP. The unaudited pro forma condensed combined financial data has been prepared based on the aforementioned historical financial statements and the assumptions and adjustments as described in the notes to the unaudited pro forma condensed combined financial data. The pro forma adjustments reflect transaction accounting adjustments related to the Merger and the forward sale agreement, both of which are discussed in further detail below. Amounts presented reflect the accounting for the acquisition of HTLF by UMB. The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and do not purport to represent the combined company’s consolidated results of operations or consolidated financial position that would actually have occurred had the Merger been consummated and the forward sale agreement been fully physically settled on the dates assumed or to project the combined company’s consolidated results of operations or consolidated financial position for any future date or period.

The unaudited pro forma condensed combined financial data appearing below also does not consider any potential effects of changes in market conditions on revenues or expense efficiencies, among other factors. In addition, as explained in more detail in the accompanying notes, the preliminary allocation of the pro forma purchase price reflected in the unaudited pro forma condensed combined financial data is subject to adjustment and may vary significantly from the actual purchase price allocation that will be recorded upon completion of the Merger.

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Accounting for the Merger

The acquisition of HTLF will be accounted for using the purchase method of accounting. The total purchase price will be allocated to the tangible and intangible assets and liabilities acquired based on their respective fair values. The allocation of the purchase price reflected in the following unaudited pro forma condensed combined financial statements is preliminary and is subject to adjustment upon receipt of, among other things, appraisals of some of the assets and liabilities of HTLF.

Forward sale agreement

In connection with the forward sale agreement, the forward purchaser or its affiliate is expected to borrow from third parties an aggregate of    shares of our common stock. Such borrowed shares of our common stock will be delivered by the forward seller for sale to the underwriter in this offering. In the event that (i) the forward purchaser (or its affiliate) is unable through commercially reasonable efforts to borrow and deliver for sale to the underwriter on the anticipated closing date the number of shares of our common stock to be sold to the underwriter or (ii) in the forward purchaser’s commercially reasonable judgment either it is impracticable to do so or the forward purchaser (or its affiliate) would incur a stock loan rate greater than a specified rate to borrow and deliver for sale to the underwriter on the anticipated closing date such number of shares of our common stock, or if certain other conditions to the forward seller’s obligations have not been satisfied, then we will issue and sell directly to the underwriter a number of shares of our common stock equal to the number of shares of our common stock that the forward purchaser or its affiliate does not borrow and deliver. Under such circumstances, the number of shares of our common stock underlying the forward sale agreement will be decreased by the number of shares of our common stock that we issue and sell to the underwriter. For purposes of this section “Unaudited Pro Forma Condensed Combined Financial Data”, we have assumed a total offering size of $100.0 million in the offering contemplated by the Preliminary Prospectus Supplement.

We will not receive any proceeds from the sale of the shares of our common stock sold by the forward seller to the underwriter. We expect to physically settle the forward sale agreement at the assumed offering size of $100.0 million (by the delivery of shares of our common stock) and receive proceeds from the sale of those shares of our common stock upon one or more forward settlement dates within approximately 18 months from the date hereof. We may also elect cash settlement or net share settlement for all or a portion of our obligations under the forward sale agreement. If we elect to cash settle or net share settle the forward sale agreement, then we may not receive any proceeds from the issuance of shares of our common stock in respect of the forward sale agreement, and we will instead receive or pay cash (in the case of cash settlement) or receive or deliver shares of our common stock (in the case of net share settlement).

Basis of Pro Forma Presentation

The historical financial data of UMB and HTLF has been adjusted to give pro forma effect to the transaction accounting required for the Merger and the forward sale agreement. The adjustments in the unaudited pro forma condensed combined financial data have been identified and presented to provide relevant information necessary to evaluate the financial overview of the combined company upon closing of the Merger and full physical settlement of the forward sale agreement at the assumed offering size of $100.0 million.

The unaudited pro forma condensed combined financial data is not necessarily indicative of what the combined company’s balance sheet or statement of income would have been had the Merger been completed and the forward sale agreement been fully physically settled at the assumed offering size of $100.0 million as of the dates indicated, nor do they purport to project the future financial position or operating results of the combined company. The unaudited pro forma condensed combined financial data is presented for illustrative purposes only and does not reflect the costs of any integration activities or cost savings or synergies that may be achieved as a result of the Merger. HTLF and UMB have not had any historical material relationship prior to the Merger. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

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Unaudited Pro Forma Condensed Combined Balance Sheet

As of December 31, 2023

(in thousands)

	UMB Historical			HTLF Historical			Transaction Adjustments				Combined Pro Formas
ASSETS
Loans	$	23,172,484		$	12,068,645		$	(780,326	)	(A)	$	34,460,803
Allowance for credit losses on loans		(219,738	)		(122,566	)		59,199		(A)		(367,803	)
								(84,698	)	(E)
Net loans		22,952,746			11,946,079			(805,825	)			34,093,000
Loans held for sale		4,420			5,071							9,491
Securities:
Available for sale		7,068,613			4,646,891							11,715,504
Held to maturity, net of allowance for credit losses		5,688,610			838,241			(26,278	)	(A)		6,500,573
Trading securities		18,093			—							18,093
Other securities / Other investments at cost		492,935			91,277							584,212
Total securities		13,268,251			5,576,409			(26,278	)			18,818,382
Federal funds sold and securities purchased under agreements to resell		245,344										245,344
Interest-bearing due from banks		5,159,802										5,159,802
Interest bearing deposits with other banks and other short-term investments					47,459							47,459
Cash and due from banks		447,201			275,554			100,000		(B)		607,755
								(215,000	)	(D)
Time deposits in other financial institutions					1,240							1,240
Premises and equipment, net		241,700			177,001							418,701
Premises and equipment held for sale					4,069							4,069
Other real estate, net					12,548							12,548
Accrued income		220,306										220,306
Goodwill		207,385			576,005			207,785		(A)		991,175
Other intangibles, net		71,012			18,415			407,585		(A)		497,012
Cash surrender value on life insurance					197,085							197,085
Deferred tax assets								58,609		(A)		58,609
Other assets		1,193,507			574,772							1,768,279
Total assets		44,011,674			19,411,707			(273,124	)			63,150,257
LIABILITIES
Deposits
Noninterest-bearing demand		12,130,662			4,500,304							16,630,966
Interest-bearing demand and savings		20,588,606			8,805,597							29,394,203
Time deposits under $250,000		2,292,899										2,292,899
Time deposits of $250,000 or more		780,692										780,692
Time deposits					2,895,813			11,015		(A)		2,906,828
Total deposits		35,792,859			16,201,714			11,015				52,005,588
Federal funds purchased and repurchase agreements		2,119,644										2,119,644
Borrowings					622,255							622,255
Short-term debt		1,800,000										1,800,000
Long-term debt		383,247			372,396			(71,744	)	(A)		683,899
Accrued expenses and taxes		389,860										389,860
Other liabilities		425,645										425,645
Accrued expenses and other liabilities					282,225							282,225
Total liabilities		40,911,255			17,478,590			(60,729	)			58,329,116
SHAREHOLDER’S EQUITY
Series E Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock					110,705							110,705
Common stock		55,057			42,688			(19,188	)	(A)		79,781
								1,224		(B)
Capital surplus		1,134,363			1,090,740			695,475		(A)		3,019,354
								98,776		(B)
Retained earnings		2,810,824			1,141,501			(1,141,501	)	(A)		2,511,126
								(215,000	)	(D)
								(84,698	)	(E)
Accumulated other comprehensive loss, net		(556,935	)		(452,517	)		452,517		(A)		(556,935	)
Treasury stock at cost		(342,890	)		—							(342,890	)
Total shareholder’s equity		3,100,419			1,933,117			(212,395	)			4,821,141
Total liabilities and stockholders’ equity	$	44,011,674		$	19,411,707		$	(273,124	)		$	63,150,257

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Unaudited Pro Forma Condensed Combined Balance Sheet

As of December 31, 2023

(in thousands)

Please refer to the notes to the unaudited pro forma condensed combined financial data

	UMB Historical			HTLF Historical			Transaction Adjustments				Combined Pro Formas
INTEREST INCOME
Loans	$	1,399,961		$	697,997		$	156,065		(AA)	$	2,254,023
Securities:
Taxable interest		214,981			223,521							438,502
Tax-exempt interest		102,197			25,268							127,465
Total securities income		317,718			248,789			—				565,967
Federal funds and resell agreements		17,647			3							17,650
Interest-bearing due from banks		103,190										103,190
Interest on interest bearing deposits in other financial institutions					7,007							7,007
Trading securities		729										729
Total interest income		1,838,705			953,796			156,065				2,948,566
INTEREST EXPENSE
Deposits		704,210			319,688			(11,015	)	(AA)		1,012,883
Federal funds and repurchase agreements		93,026										93,026
Borrowings					10,311							10,311
Term debt					22,560			(8,297	)	(AA)		14,263
Other		121,353										121,353
Total interest expense		918,589			352,559			(19,312	)			1,251,836
Net interest income		920,116			601,237			175,377				1,696,730
Provision for credit losses		41,227			21,707			84,698		(CC)		147,632
Net interest income after provision for credit losses		878,889			579,530			90,679				1,549,098
NONINTEREST INCOME
Trust and securities processing		257,200										257,200
Trading and investment banking		19,630										19,630
Service charges on deposit accounts		84,950			74,024							158,974
Loan servicing income					1,561							1,561
Trust fees					20,715							20,715
Insurance fees and commissions		1,009										1,009
Brokerage fees		54,119										54,119
Brokerage fees and insurance commissions					2,794							2,794
Capital market fee					10,007							10,007
Bankcard fees		74,719										74,719
Investment securities (losses) gains, net		(3,139	)		(141,539	)						(144,678	)
Unrealized gain on equity securities, net					240							240
Net gains on sale of loans held for sale					3,880							3,880
Income on bank owned life insurance					3,771							3,771
Other		53,365			3,621							56,986
Total noninterest income		541,853			(20,926	)		—				520,927
NONINTEREST EXPENSE
Salaries and employee benefits		553,421			251,276							804,697
Occupancy, net		48,502			26,847							75,349
Equipment		68,718			11,599							80,317
Supplies and services		16,829										16,829
Marketing and business development / Advertising expense		25,749			8,347							34,096
Processing Fees		103,099										103,099
Legal and consulting		29,998										29,998
Bankcard		32,969										32,969
Amortization of other intangible assets		8,587			6,739			74,106		(AA)		89,432
Regulatory fees		77,010										77,010
Professional fees					58,667							58,667
FDIC insurance assessments					19,940							19,940
Other real estate and loan collection expenses					1,489							1,489
(Gain) on sale/valuations of assets, net					(77	)						(77	)
Acquisition, integration and restructuring costs					10,359			215,000		(BB)		225,359

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Unaudited Pro Forma Condensed Combined Statement of Income

As of December 31, 2023

(in thousands)

	UMB Historical		HTLF Historical			Transaction Adjustments				Combined Pro Formas
Partnership investment in tax credit projects				5,401							5,401
Other		34,258		61,240							95,498
Total noninterest expense		999,140		461,827			289,106				1,750,073
Income before taxes		421,602		96,777			(198,427	)			319,952
Income tax expenses		71,578		16,857			(62,937	)	(EE)		25,498
NET INCOME		350,024		79,920			(135,491	)			294,453
Preferred dividends				(8,050	)						(8,050	)
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	350,024	$	71,870		$	(135,491	)		$	286,403
PER SHARE DATA.
Net income – basic	$	7.22	$	1.68						$	3.91
Net income – diluted	$	7.18	$	1.68						$	3.89
Dividends	$	1.53	$	1.20						$	2.73
Weighted average shares outstanding – basic		48,503,643		42,701,000							73,227,334
Weighted average shares outstanding – diluted		48,763,820		42,792,000							73,537,561

Please refer to the notes to the unaudited pro forma condensed combined financial data

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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

1. Basis of Presentation

The pro forma adjustments have been prepared as if the Merger had been consummated and the forward sale agreement had been fully physically settled at the assumed offering size of $100.0 million on December 31, 2023, in the case of the unaudited pro forma condensed combined balance sheet, and, in the case of the unaudited pro forma condensed combined statement of income, as if the Merger had been consummated and the forward sale agreement had been fully physically settled at the assumed offering size of $100.0 million on January 1, 2023, the beginning of the earliest period presented in the unaudited pro forma condensed combined statement of income.

The unaudited pro forma condensed combined financial data has been prepared assuming the purchase method of accounting in accordance with GAAP. Under this method, HTLF’s assets and liabilities as of the date of the Merger will be recorded at their respective fair values and added to those of UMB. Any difference between the purchase price for HTLF and the fair value of the identifiable net assets acquired (including intangibles) will be recorded as goodwill. The goodwill resulting from the acquisition will not be amortized to expense, but instead will be reviewed for impairment at least annually. The pro formas are based on preliminary accounting conclusions and are subject to potential revisions with further analysis.

The pro forma adjustments represent management’s estimates based on information available as of the date of the Preliminary Prospectus Supplement and are subject to change as additional information becomes available and additional analyses are performed. UMB management considers this basis of presentation to be reasonable under the circumstances.

One-time direct and incremental transaction costs anticipated to be incurred prior to, or concurrent with, the closing of the Merger will be expensed as incurred under ASC 805 and are assumed to be cash settled.

UMB has performed a preliminary review of HTLF’s and UMB’s accounting policies, and no material impacts are expected to be required as a result of the review performed.

2. Adjustments to the Unaudited Pro Forma Condensed Combined Balance Sheet as of December 31, 2023

The adjustments included in the unaudited pro forma condensed combined balance sheet as of December 31, 2023 are as follows:

(A) Reflects the purchase price allocation adjustments to record HTLF’s assets and liabilities at estimated fair value as of December 31, 2023 based on the consideration conveyed.

The preliminary purchase price was allocated among the identified assets to be acquired, based on a preliminary analysis. Goodwill is expected to be recognized as a result of the acquisition, which represents the excess fair value of consideration over the fair value of the underlying net assets of HTLF. This was considered appropriate based on the determination that the Merger would be accounted for as a business acquisition under ASC 805. The deferred tax assets represent the deferred tax impact associated with the incremental differences in book and tax basis created from the preliminary purchase price allocation. Deferred taxes associated with estimated fair value adjustments were calculated using an estimated tax rate of 21%. The estimates of fair value are based upon preliminary valuation assumptions believed to be reasonable but which are inherently uncertain and unpredictable; and, as a result, actual results may differ from estimates and the difference may be material.

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Unaudited Pro Forma Condensed Combined Statement of Income

As of December 31, 2023

(in thousands)

Net Assets Identified	Fair Value as of December 31, 2023 (in thousands)
Loans	$	11,288,319
Allowance for credit losses on loans		(63,367	)
Loans held for sale		5,071
Available for sale		4,646,891
Held to maturity, net of allowance for credit losses		811,963
Other securities / Other investments at cost		91,277
Interest bearing deposits with other banks and other short-term investments		47,459
Cash and due from banks		275,554
Time deposits in other financial institutions		1,240
Premises and equipment, net		177,001
Premises and equipment held for sale		4,069
Other real estate, net		12,548
Goodwill		783,790
Core deposit intangible (“CDI”)		426,000
Cash surrender value on life insurance		197,085
Deferred tax assets		58,609
Other assets		574,772
Noninterest-bearing demand		(4,500,304	)
Interest-bearing demand and savings		(8,805,597	)
Time deposits		(2,906,828	)
Borrowings		(622,255	)
Long-term debt		(300,652	)
Accrued expense and other liabilities		(282,225	)
Total Fair Value		1,920,420

Consideration Conveyed	(in thousands except exchange ratio and stock price)
Shares to HTLF common stockholders	$	23,500,000
Current UMB stock price		81.72	(1)
Total preliminary purchase price consideration	$	1,920,420

(1) Reflects opening price of UMB’s common stock as of April 22, 2024. A 10% fluctuation in the market price of UMB’s stock price would affect the estimated value of the Merger Consideration reflected in the unaudited pro forma condensed combined financial data with a corresponding change to goodwill (bargain purchase gain) related to the Merger, as illustrated in the table below:

Change in Stock Price	Stock Price		Estimated Merger Consideration (in thousands)		Estimated Goodwill (in thousands)
As presented for consideration conveyed	$	81.72	$	1,920,420	$	783,790
10% increase in stock price	$	89.89	$	2,112,462	$	975,832
10% decrease in stock price	$	73.55	$	1,728,378	$	591,748

(B) Represents the receipt of $100.0 million from the forward purchaser and the issuance of approximately 1.2 million shares, in accordance with the terms of the forward sale agreement and assuming such shares are issued at $81.72 per share and that the forward sale agreement has been fully physically settled at the assumed size of $100.0 million.

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Unaudited Pro Forma Condensed Combined Statement of Income

As of December 31, 2023

(in thousands)

(C) Reflects nonrecurring transaction costs of $215.0 million expected to be incurred as a result of the Merger and the forward sale agreement. This amount is comprised of investment banking fees, legal fees, issuance costs, accounting and audit fees, and other related advisory costs. The nonrecurring expense is reflected at adjustment (BB).

(D) Reflects the recognition of an allowance for loan losses on HTLF’s loans; this adjustment relates to loans that are not considered to be purchase credit deteriorated (“PCD”) assets. The nonrecurring expense is reflected at adjustment (CC).

3. Adjustments and Assumptions to the Unaudited Pro Forma Condensed Combined Statement of Income for the Year ended December 31, 2023

(AA) Reflects the pro forma impacts related to the purchase price allocation discussed at adjustment (A). This includes the following impacts:

1) Interest income related to Loans. Reflects an increase in interest income related to loans due to the reduced fair value of loans per the purchase price allocation.

2) Interest expense related to Time deposits. Reflects a decrease in interest expense related time deposits due to the increase in fair value of this liability per the purchase price allocation.

3) Interest expense related to Long-term debt. Reflects a decrease in interest expense related to long-term debt due to the reduced fair value of this liability per the purchase price allocation.

4) Amortization expense. Reflects an increase in amortization expense related to CDI, calculated using the sum-of-the-year-digits method and an amortization period of 10 years.

(BB) Reflects the recognition of nonrecurring expenses related to estimated transaction costs in the amount of $215.0 million, which are primarily comprised of investment banking fees, legal fees, issuance costs, accounting and audit fees, and other related advisory costs. An equivalent balance sheet adjustment is reflected at adjustment (C).

(CC) Reflects the recognition of nonrecurring expenses related to the provision for credit losses. An equivalent balance sheet adjustment is reflected at adjustment (D).

(DD) Reflects the tax impact of all pro forma adjustments for the year ended December 31, 2023, calculated using the estimated global blended statutory rate of 21%.

4. Earnings per Share Information

The pro forma weighted average shares calculations have been performed for the year ended December 31, 2023 using the historical weighted average shares outstanding, and the issuance of additional shares in connection with the Merger and the forward sale agreement, assuming they occurred, and the forward sale agreement was fully physically settled at the assumed offering size of $100.0 million, on January 1, 2023. As the Merger and the forward sale agreement are being reflected as if they had occurred, and the forward sale agreement was fully physically settled at the assumed offering size of $100.0 million, at the beginning of the period presented, the calculation of weighted average shares outstanding for both basic and diluted earnings per share assumes that the shares issuable relating to the Merger and the forward sale agreement have been outstanding for the entire periods presented.

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Unaudited Pro Forma Condensed Combined Statement of Income

As of December 31, 2023

(in thousands)

Pro forma net income per share—basic and diluted

(in thousands except share and per share amounts)

	For the Year Ended December 31, 2023
Numerator
Pro forma net income – basic and diluted	$	294,453
Less: Preferred dividends		(8,050	)
Net earnings allocated to common stock		286,403
Denominator
Pro forma weighted average shares of common stock outstanding – basic		73,227,334
Pro forma basic earnings per share	$	3.91
Add: Dilutive effect of stock options and restricted stock		310,227
Pro forma weighted average shares of common stock outstanding – diluted		73,537,561
Pro forma diluted earnings per share	$	3.89

The above calculation excludes the following potential common stock as of December 31, 2023 from the computation of diluted net earnings per share attributable to common shareholders of the combined company for the period indicated because including them would have had an antidilutive effect:

	As of December 31, 2023
Outstanding stock options and RSUs of UMB		55,649
Stock units of HTLF		61,600	(1)
Stock options of HTLF		33,000	(2)

(1) Assumes 112,000 stock units of HTLF outstanding, multiplied by the Exchange Ratio.

(2) Assumes 60,000 stock options of HTLF outstanding, multiplied by the Exchange Ratio.

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