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UMB Financial Q3 Earnings Beat on Higher NII & Fee Income, Costs Rise
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UMB Financial Corp. (UMBF - Free Report) reported third-quarter 2024 operating earnings per share of $2.25, which beat the Zacks Consensus Estimate of $2.16. Also, the bottom line compared favorably with the $2.02 earned in the year-ago quarter.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Results benefited from higher net interest income (NII) and fee income. Rising loan and deposit balances were other positives. However, higher expenses, increased provisions and worsening credit quality acted as spoilsport.
The results included a reduction of $31.7 million related to the pre-tax FDIC special assessment expense. After considering these charges, the GAAP net income for UMBF was $109.6 million for the third quarter, up 13.6% year over year.
UMB Financial’s Quarterly Revenues & Costs Rise
Quarterly revenues were $406.1 million, up 14.2% year over year. Also, the top line beat the Zacks Consensus Estimate of $398.8 million.
NII on an FTE basis was $254 million, which increased 11% from the prior-year quarter. On an FTE basis, Net interest margin (NIM) was 2.46%, up from 2.43% reported in the prior-year quarter.
Non-interest income was $158.7 million, up 19.1% year over year. The rise was primarily driven by an increase in almost all components of fee income, except for service charges on deposit accounts.
Non-interest expenses were $252.5 million, up 9.1% year over year. The rise was primarily driven by higher salaries and employee benefits, processing fees expense due to increased software subscription costs and legal and consulting expense related to the announced acquisition of Heartland Financial USA, Inc. These were partially offset by a decrease of $1.5 million in regulatory fees expense and a decline of $1.9 million in operational losses, recorded in other expense. The operating non-interest expense was $251.5 million.
The efficiency ratio increased to 61.69%, down from the prior-year quarter’s 64.51%. A decline in the efficiency ratio indicates an increase in profitability.
UMB Financial’s Loans & Deposits Increase
As of Sept. 30, 2024, average loans and leases were $24.4 billion, up 2.4% sequentially. Also, average deposits increased 2.8% to $35.3 billion.
UMB Financial’s Credit Quality Deteriorates
The ratio of net charge-offs to average loans was 0.14% in the reported quarter, up from 0.08% in the prior-year quarter.
Also, total non-accrual and restructured loans were $19.3 million, up 13.2% year over year.
The provision for credit losses was $18 million for the third quarter of 2024, up significantly from $5 million reported in the prior-year quarter.
UMB Financial’s Capital Ratios Improve
As of Sept. 30, 2024, the Tier 1 risk-based capital ratio was 11.22%, which rose from 10.77% as of Sept. 30, 2023. The Tier 1 leverage ratio was 8.58%, which increased from 8.55% as of Sept. 30, 2023. The total risk-based capital ratio was 13.14%, which grew from 12.68% in the year-ago quarter.
UMB Financial’s Profitability Ratios: Mixed Bag
Return on average assets at the quarter’s end was 1.01%, which increased from the year-ago quarter’s 0.97%.
The operating return on average equity was 12.71%, down from 13.50% reported in the year-ago quarter.
Our Take on UMBF
UMB Financial benefits from revenue strength aided by rising loan and deposit balances, along with diversified fee income. However, an elevated expense base is likely to impede the bottom-line growth in the near term.
UMB Financial Corporation Price, Consensus and EPS Surprise
Bank of Hawaii Corporation (BOH - Free Report) reported third-quarter 2024 adjusted earnings per share of 93 cents, beating the Zacks Consensus Estimate of 81 cents. The bottom line compared unfavorably with $1.17 earned in the year-ago quarter.
BOH's quarterly results benefited from an increase in deposits balance and NIM. A decline in NII, along with a drop in loans balances and higher expenses, were undermining factors. A surge in provisions was another major headwind.
Texas Capital Bancshares, Inc. (TCBI - Free Report) reported third-quarter 2024 adjusted earnings per share of $1.62, which beat the Zacks Consensus Estimate of 97 cents. Moreover, earnings compared favorably with $1.18 reported in the year-ago quarter.
TCBI's results benefited from an increase in NII, fee income and higher loan and deposit balances. However, an increase in expenses was the undermining factor.
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UMB Financial Q3 Earnings Beat on Higher NII & Fee Income, Costs Rise
UMB Financial Corp. (UMBF - Free Report) reported third-quarter 2024 operating earnings per share of $2.25, which beat the Zacks Consensus Estimate of $2.16. Also, the bottom line compared favorably with the $2.02 earned in the year-ago quarter.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Results benefited from higher net interest income (NII) and fee income. Rising loan and deposit balances were other positives. However, higher expenses, increased provisions and worsening credit quality acted as spoilsport.
The results included a reduction of $31.7 million related to the pre-tax FDIC special assessment expense. After considering these charges, the GAAP net income for UMBF was $109.6 million for the third quarter, up 13.6% year over year.
UMB Financial’s Quarterly Revenues & Costs Rise
Quarterly revenues were $406.1 million, up 14.2% year over year. Also, the top line beat the Zacks Consensus Estimate of $398.8 million.
NII on an FTE basis was $254 million, which increased 11% from the prior-year quarter. On an FTE basis, Net interest margin (NIM) was 2.46%, up from 2.43% reported in the prior-year quarter.
Non-interest income was $158.7 million, up 19.1% year over year. The rise was primarily driven by an increase in almost all components of fee income, except for service charges on deposit accounts.
Non-interest expenses were $252.5 million, up 9.1% year over year. The rise was primarily driven by higher salaries and employee benefits, processing fees expense due to increased software subscription costs and legal and consulting expense related to the announced acquisition of Heartland Financial USA, Inc. These were partially offset by a decrease of $1.5 million in regulatory fees expense and a decline of $1.9 million in operational losses, recorded in other expense. The operating non-interest expense was $251.5 million.
The efficiency ratio increased to 61.69%, down from the prior-year quarter’s 64.51%. A decline in the efficiency ratio indicates an increase in profitability.
UMB Financial’s Loans & Deposits Increase
As of Sept. 30, 2024, average loans and leases were $24.4 billion, up 2.4% sequentially. Also, average deposits increased 2.8% to $35.3 billion.
UMB Financial’s Credit Quality Deteriorates
The ratio of net charge-offs to average loans was 0.14% in the reported quarter, up from 0.08% in the prior-year quarter.
Also, total non-accrual and restructured loans were $19.3 million, up 13.2% year over year.
The provision for credit losses was $18 million for the third quarter of 2024, up significantly from $5 million reported in the prior-year quarter.
UMB Financial’s Capital Ratios Improve
As of Sept. 30, 2024, the Tier 1 risk-based capital ratio was 11.22%, which rose from 10.77% as of Sept. 30, 2023. The Tier 1 leverage ratio was 8.58%, which increased from 8.55% as of Sept. 30, 2023. The total risk-based capital ratio was 13.14%, which grew from 12.68% in the year-ago quarter.
UMB Financial’s Profitability Ratios: Mixed Bag
Return on average assets at the quarter’s end was 1.01%, which increased from the year-ago quarter’s 0.97%.
The operating return on average equity was 12.71%, down from 13.50% reported in the year-ago quarter.
Our Take on UMBF
UMB Financial benefits from revenue strength aided by rising loan and deposit balances, along with diversified fee income. However, an elevated expense base is likely to impede the bottom-line growth in the near term.
UMB Financial Corporation Price, Consensus and EPS Surprise
UMB Financial Corporation price-consensus-eps-surprise-chart | UMB Financial Corporation Quote
UMB Financial currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Bank of Hawaii Corporation (BOH - Free Report) reported third-quarter 2024 adjusted earnings per share of 93 cents, beating the Zacks Consensus Estimate of 81 cents. The bottom line compared unfavorably with $1.17 earned in the year-ago quarter.
BOH's quarterly results benefited from an increase in deposits balance and NIM. A decline in NII, along with a drop in loans balances and higher expenses, were undermining factors. A surge in provisions was another major headwind.
Texas Capital Bancshares, Inc. (TCBI - Free Report) reported third-quarter 2024 adjusted earnings per share of $1.62, which beat the Zacks Consensus Estimate of 97 cents. Moreover, earnings compared favorably with $1.18 reported in the year-ago quarter.
TCBI's results benefited from an increase in NII, fee income and higher loan and deposit balances. However, an increase in expenses was the undermining factor.