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UMB Financial (UMBF) Q3 Earnings & Revenues Beat, Loans Down
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UMB Financial’s (UMBF - Free Report) operating earnings per share (non-GAAP) of $1.95 outpaced the Zacks Consensus Estimate of $1.81 in third-quarter 2021. The bottom line also compares favorably with the prior-year quarter’s $1.59.
Higher revenues, aided by a rise in interest, supported the company’s performance. Deposit growth and an improvement in the credit quality were other positives.
Including certain non-recurring items, the company reported a net income of $94.5 million or $1.94 per share in the third quarter compared with $73.1 million or $1.52 per share recorded in the prior-year quarter.
Revenues, Deposit Balance Rise, Costs up
Total revenues (fully tax-equivalent) in the September-ended quarter were $324.2 million, up 6.6% year over year. The revenue figure outpaced the Zacks Consensus Estimate of $321.6 million.
The net interest income was $209.8 million, reflecting an increase of 13.8% from the year-ago quarter. Growth in organic loans, excess liquidity, and Paycheck Protection Program participation mainly led to the upside. The net interest margin contracted to 2.52% from the prior-year quarter’s 2.73%.
The non-interest income totaled $107.9 million, declining 4.5% year over year. The decline mainly resulted from a fall in trading and investment banking income, brokerage fees, and losses on investment securities.
Non-interest expenses were $208.9 million, up 5.5% from the year-ago quarter mainly due to increased processing fees, salary and benefit expenses, and operational losses.
The efficiency ratio decreased to 65.62% from the prior-year quarter’s 66.14%. A fall in the efficiency ratio indicates a rise in profitability.
As of Sep 30, 2021, average loans and leases were $16.75 billion, down marginally sequentially. Average deposits climbed 5.9% from the prior-quarter end to $29.4 billion.
Credit Quality Improves
The ratio of net charge-offs to average loans was 0.07% in the reported quarter, down 6 basis points from the year-ago quarter. The provision for credit losses was a benefit of $5 million against expenses of $16 million seen in the prior-year quarter.
However, total non-accrual and restructured loans were $96.5 million, up 3.03% year over year.
Capital Ratios Mixed, Profitability Improves
As of Sep 30, 2021, the Tier 1 risk-based capital ratio was 12.26% compared with 11.93% as of Sep 30, 2020. The total risk-based capital ratio was 14.17%, remaining flat year over year. The Tier 1 leverage ratio was 7.87% compared with 8.19% as of Sep 30, 2020.
Adjusted return on average assets at the quarter’s end was 1.04% compared with the year-ago quarter’s 0.99%. Additionally, operating return on average equity was 11.97% compared with 10.70% 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. The dividend will be paid out on Jan 3 to shareholders of record as of Dec 10.
Conclusion
UMB Financial put up an impressive performance in the third quarter. Improving loan and deposit balances are likely to be driving factors 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 its bottom line.
UMB Financial Corporation Price, Consensus and EPS Surprise
BancorpSouth Bank delivered net operating earnings of 68 cents per share that beat the Zacks Consensus Estimate of 67 cents. However, the bottom line compares unfavorably with the 69 cents reported in the year-ago quarter.
Bank of Hawaii Corporation (BOH - Free Report) reported third-quarter 2021 earnings per share of $1.52, surpassing the Zacks Consensus Estimate of $1.34. Also, the bottom line compares favorably with the 95 cents reported in the prior-year quarter.
Bank OZK’s (OZK - Free Report) third-quarter 2021 earnings per share of $1 surpassed the Zacks Consensus Estimate of 97 cents. The bottom line reflects growth of 19% from the year-earlier quarter’s number.
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UMB Financial (UMBF) Q3 Earnings & Revenues Beat, Loans Down
UMB Financial’s (UMBF - Free Report) operating earnings per share (non-GAAP) of $1.95 outpaced the Zacks Consensus Estimate of $1.81 in third-quarter 2021. The bottom line also compares favorably with the prior-year quarter’s $1.59.
Higher revenues, aided by a rise in interest, supported the company’s performance. Deposit growth and an improvement in the credit quality were other positives.
Including certain non-recurring items, the company reported a net income of $94.5 million or $1.94 per share in the third quarter compared with $73.1 million or $1.52 per share recorded in the prior-year quarter.
Revenues, Deposit Balance Rise, Costs up
Total revenues (fully tax-equivalent) in the September-ended quarter were $324.2 million, up 6.6% year over year. The revenue figure outpaced the Zacks Consensus Estimate of $321.6 million.
The net interest income was $209.8 million, reflecting an increase of 13.8% from the year-ago quarter. Growth in organic loans, excess liquidity, and Paycheck Protection Program participation mainly led to the upside. The net interest margin contracted to 2.52% from the prior-year quarter’s 2.73%.
The non-interest income totaled $107.9 million, declining 4.5% year over year. The decline mainly resulted from a fall in trading and investment banking income, brokerage fees, and losses on investment securities.
Non-interest expenses were $208.9 million, up 5.5% from the year-ago quarter mainly due to increased processing fees, salary and benefit expenses, and operational losses.
The efficiency ratio decreased to 65.62% from the prior-year quarter’s 66.14%. A fall in the efficiency ratio indicates a rise in profitability.
As of Sep 30, 2021, average loans and leases were $16.75 billion, down marginally sequentially. Average deposits climbed 5.9% from the prior-quarter end to $29.4 billion.
Credit Quality Improves
The ratio of net charge-offs to average loans was 0.07% in the reported quarter, down 6 basis points from the year-ago quarter. The provision for credit losses was a benefit of $5 million against expenses of $16 million seen in the prior-year quarter.
However, total non-accrual and restructured loans were $96.5 million, up 3.03% year over year.
Capital Ratios Mixed, Profitability Improves
As of Sep 30, 2021, the Tier 1 risk-based capital ratio was 12.26% compared with 11.93% as of Sep 30, 2020. The total risk-based capital ratio was 14.17%, remaining flat year over year. The Tier 1 leverage ratio was 7.87% compared with 8.19% as of Sep 30, 2020.
Adjusted return on average assets at the quarter’s end was 1.04% compared with the year-ago quarter’s 0.99%. Additionally, operating return on average equity was 11.97% compared with 10.70% 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. The dividend will be paid out on Jan 3 to shareholders of record as of Dec 10.
Conclusion
UMB Financial put up an impressive performance in the third quarter. Improving loan and deposit balances are likely to be driving factors 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 its 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
BancorpSouth Bank delivered net operating earnings of 68 cents per share that beat the Zacks Consensus Estimate of 67 cents. However, the bottom line compares unfavorably with the 69 cents reported in the year-ago quarter.
Bank of Hawaii Corporation (BOH - Free Report) reported third-quarter 2021 earnings per share of $1.52, surpassing the Zacks Consensus Estimate of $1.34. Also, the bottom line compares favorably with the 95 cents reported in the prior-year quarter.
Bank OZK’s (OZK - Free Report) third-quarter 2021 earnings per share of $1 surpassed the Zacks Consensus Estimate of 97 cents. The bottom line reflects growth of 19% from the year-earlier quarter’s number.