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UMB Financial’s (UMBF - Free Report) operating earnings per share of $1.80 per share outpaced the Zacks Consensus Estimate of $1.74. The bottom line also compares favorably with the prior-year quarter’s $1.33.
Higher revenues, aided by a rise in interest and fee income, supported the company’s performance. However, low interest rates were major drags.
Including certain non-recurring items, the company reported a net income of $87.4 million or $1.79 per share in the second quarter compared with $60.5 million or $1.26 per share recorded in the prior year.
Revenues, Loans & Deposit Balance Rise, Costs Dip
Total revenues (fully tax-equivalent) in the June-ended quarter were $339.3 million, up 9.6% year over year. The revenue figure outpaced the Zacks Consensus Estimate of $312 million.
Net interest income was $201.1 million, reflecting an increase of 12.8% from the year-ago quarter. Growth in organic loans, excess liquidity and the company’s PPP participation mainly led to the upside. Net interest margin contracted to 2.56% from the prior-year quarter’s 2.79%.
Non-interest income totaled $131.6 million, rising 9.2% year over year. The upsurge mainly resulted from a rise in investment securities gains; and services income and corporate trust income, service charges on deposits, and derivative income.
Non-interest expenses were $201.3 million, down 3.5% from the year-ago quarter mainly due to lower deferred compensation expenses recorded in salaries and employee benefits, and software expenses. These were partly negated by higher processing fees, legal and professional expenses, and marketing and business development expenses.
Efficiency ratio decreased to 60.41% from the prior-year quarter’s 70.20%. A fall in efficiency ratio indicates a rise in profitability.
As of Jun 30, 2021, average loans and leases were $16.8 billion, up 3.5% sequentially. Additionally, average deposits climbed 3.6% from the prior-quarter end to $27.8 billion.
Credit Quality Improves
In the reported quarter, credit metrics improved. Total non-accrual and restructured loans came in at $58.2 million, down 29% year over year. The ratio of net charge-offs to average loans was 0.68% in the reported quarter, down 2 basis points from the year-ago quarter.
Provision for loan losses was $24 million compared with $21.5 million seen in the prior-year quarter.
Capital Ratios Decline, Profitability Improves
As of Jun 30, 2021, Tier 1 risk-based capital ratio was 11.91% compared with 11.92% on Jun 30, 2020. Total risk-based capital ratio was 13.84% compared with the 13.17% witnessed at the end of the prior-year quarter. Tier 1 leverage ratio was 8% compared with 8.35% as of Jun 30, 2020.
Adjusted return on average assets at the quarter’s end was 1.02% compared with the year-ago quarter’s 0.87%. Additionally, operating return on average equity was 11.46% compared with 9.44% witnessed in the prior-year quarter.
Dividend Update
UMB Financial’s board of directors announced a common stock quarterly dividend of 37 cents per share, indicating a sequential hike of 15.6%. The dividend will be paid out on Oct 1 to shareholders of record as of Sep 10.
Conclusion
UMB Financial put up an impressive performance in the second quarter. Improving loan and deposit balances are likely to be a driving factor in the future. The company’s efficiency ratio has been decent, which signals better profitability over the long run. Nonetheless, margin pressure might weigh on the company’s bottom line.
UMB Financial Corporation Price, Consensus and EPS Surprise
Regions Financial (RF - Free Report) reported second-quarter 2021 earnings of 77 cents per share, which surpassed the Zacks Consensus Estimate of 52 cents on impressive top-line strength. The bottom line compares favorably with the prior-year loss of 25 cents.
PNC Financial (PNC - Free Report) delivered a second-quarter 2021 earnings surprise of 42.4% on substantial reserve release. Adjusted earnings per share of $4.50 outpaced the Zacks Consensus Estimate of $3.16.
Webster Financial (WBS - Free Report) reported second-quarter 2021 earnings per diluted share of $1.21, which surpassed the Zacks Consensus Estimate of $1 The reported figure excluded noteworthy items such as charges related to mergers and strategic optimization initiatives.
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UMB Financial (UMBF) Tops Q2 Earnings Estimates, Ups Dividend
UMB Financial’s (UMBF - Free Report) operating earnings per share of $1.80 per share outpaced the Zacks Consensus Estimate of $1.74. The bottom line also compares favorably with the prior-year quarter’s $1.33.
Higher revenues, aided by a rise in interest and fee income, supported the company’s performance. However, low interest rates were major drags.
Including certain non-recurring items, the company reported a net income of $87.4 million or $1.79 per share in the second quarter compared with $60.5 million or $1.26 per share recorded in the prior year.
Revenues, Loans & Deposit Balance Rise, Costs Dip
Total revenues (fully tax-equivalent) in the June-ended quarter were $339.3 million, up 9.6% year over year. The revenue figure outpaced the Zacks Consensus Estimate of $312 million.
Net interest income was $201.1 million, reflecting an increase of 12.8% from the year-ago quarter. Growth in organic loans, excess liquidity and the company’s PPP participation mainly led to the upside. Net interest margin contracted to 2.56% from the prior-year quarter’s 2.79%.
Non-interest income totaled $131.6 million, rising 9.2% year over year. The upsurge mainly resulted from a rise in investment securities gains; and services income and corporate trust income, service charges on deposits, and derivative income.
Non-interest expenses were $201.3 million, down 3.5% from the year-ago quarter mainly due to lower deferred compensation expenses recorded in salaries and employee benefits, and software expenses. These were partly negated by higher processing fees, legal and professional expenses, and marketing and business development expenses.
Efficiency ratio decreased to 60.41% from the prior-year quarter’s 70.20%. A fall in efficiency ratio indicates a rise in profitability.
As of Jun 30, 2021, average loans and leases were $16.8 billion, up 3.5% sequentially. Additionally, average deposits climbed 3.6% from the prior-quarter end to $27.8 billion.
Credit Quality Improves
In the reported quarter, credit metrics improved. Total non-accrual and restructured loans came in at $58.2 million, down 29% year over year. The ratio of net charge-offs to average loans was 0.68% in the reported quarter, down 2 basis points from the year-ago quarter.
Provision for loan losses was $24 million compared with $21.5 million seen in the prior-year quarter.
Capital Ratios Decline, Profitability Improves
As of Jun 30, 2021, Tier 1 risk-based capital ratio was 11.91% compared with 11.92% on Jun 30, 2020. Total risk-based capital ratio was 13.84% compared with the 13.17% witnessed at the end of the prior-year quarter. Tier 1 leverage ratio was 8% compared with 8.35% as of Jun 30, 2020.
Adjusted return on average assets at the quarter’s end was 1.02% compared with the year-ago quarter’s 0.87%. Additionally, operating return on average equity was 11.46% compared with 9.44% witnessed in the prior-year quarter.
Dividend Update
UMB Financial’s board of directors announced a common stock quarterly dividend of 37 cents per share, indicating a sequential hike of 15.6%. The dividend will be paid out on Oct 1 to shareholders of record as of Sep 10.
Conclusion
UMB Financial put up an impressive performance in the second quarter. Improving loan and deposit balances are likely to be a driving factor in the future. The company’s efficiency ratio has been decent, which signals better profitability over the long run. Nonetheless, margin pressure might weigh on the company’s bottom line.
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 #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Regions Financial (RF - Free Report) reported second-quarter 2021 earnings of 77 cents per share, which surpassed the Zacks Consensus Estimate of 52 cents on impressive top-line strength. The bottom line compares favorably with the prior-year loss of 25 cents.
PNC Financial (PNC - Free Report) delivered a second-quarter 2021 earnings surprise of 42.4% on substantial reserve release. Adjusted earnings per share of $4.50 outpaced the Zacks Consensus Estimate of $3.16.
Webster Financial (WBS - Free Report) reported second-quarter 2021 earnings per diluted share of $1.21, which surpassed the Zacks Consensus Estimate of $1 The reported figure excluded noteworthy items such as charges related to mergers and strategic optimization initiatives.