UMB Financial Q3 Earnings Beat on Higher NII & Fee Income, Costs Rise

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UMB Financial Corp. UMBF 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.

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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.