UMB Financial (UMBF Quick QuoteUMBF - Free Report) reported fourth-quarter 2021 net operating income of $1.62 per share, lagging the Zacks Consensus Estimate of $1.87. The bottom line also compares unfavorably with the prior-year quarter’s earnings of $3.26.

Results for the fourth quarter and full-year 2020 include a pre-tax gain of $108.8 million on UMBF’s investment in Tattooed Chef, Inc.

Lower non-interest income, and a fall in average loan and leases balance affected UMB Financial’s performance. Also, capital and profitability ratios witnessed a decline. Higher provisions and contraction of net interest margin (NIM) were the other drags. Nonetheless, increased net interest income (NII) and lower expenses acted as tailwinds.

UMBF reported GAAP net income of $78.5 million or $1.61 per share in the fourth quarter, down from $156.3 million or $3.24 recorded a year ago.

In 2021, UMB Financial reported a net income of $353 million or $7.24 per share compared with $286.5 million or $5.93 in 2020.

Revenues and Costs Down, Deposit Balance Rises

Fourth quarter 2021 total revenues were $329.3 million, down 22% year over year. The top line missed the Zacks Consensus Estimate of $330.3 million.

Revenues for the full year came in at $1.27 billion, lagging the Zacks Consensus Estimate of $1.32 billion. The top line also decreased marginally year over year.

NII on a quarterly basis was $210.6 million, reflecting an increase of 8% from the year-ago quarter’s figure. Growth in average securities and increased average loans mainly led to this upside. These increases were driven by organic loan growth, excess liquidity and UMBF’s PPP participation. The NIM contracted to 2.37% from the prior-year quarter’s 2.78%.

Non-interest income totaled $118.8 million, decreasing 48% year over year. The decline mainly resulted from lower trading and investment banking income, and the company-owned life insurance. Also, the reported quarter witnessed a substantial fall in net investment securities gains as the prior-year period included a gain on the sale of investments in Tattooed Chef, Inc.

Non-interest expenses were $222.5 million, down 1.9% from the year-ago quarter’s level, mainly due to decreased operational losses and deferred compensation expense.

The efficiency ratio increased to 67.78% from the prior-year quarter’s 53.44%. A rise in the efficiency ratio indicates a fall in profitability.

As of Dec 31, 2021, average loans and leases were $16.7 billion, down marginally from the sequential quarter’s level. This included PPP loan balances.

Average deposits climbed 7.5% from the prior quarter’s level to $31.6 billion as of Dec 31, 2021.

Credit Quality Deteriorates

The ratio of net charge-offs to average loans was 0.19% in the reported quarter, up 15 basis points from the year-ago quarter’s level. The provision for credit losses was $8.5 million compared with $5 million seen in the prior-year quarter.

Moreover, total non-accrual and restructured loans were $92.3 million, up 5% year over year.

Capital and Profitability Ratios Decline

As of Dec 31, 2021, the Tier 1 risk-based capital ratio was 12.05% compared with 12.10% as of Dec 31, 2020. The total risk-based capital ratio was 13.88% compared with 14.26% in the year-ago quarter. The Tier 1 leverage ratio was 7.61% at 2021 end compared with 8.37% as of Dec 31, 2020.

Adjusted return on average assets at the quarter’s end was 0.82% compared with the year-ago quarter’s 2.03%. Additionally, operating return on average equity was 9.91% compared with 21.18% 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 Apr 1 to its shareholders of record as of Mar 10.

Conclusion

UMB Financial put up a disappointing performance in the fourth quarter. Falling revenues and weak capital ratios were the major drags. UMBF’s deteriorated credit quality was also a headwind. Nonetheless, increase in NII and deposit balances along with a fall in cost base acted as the tailwind.

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

First Republic Bank’s fourth-quarter 2021 earnings per share of $2.02 surpassed the Zacks Consensus Estimate of $1.91. Additionally, the bottom line improved 26.3% from the year-ago quarter’s level.

FRC’s quarterly results were supported by a higher net interest income and non-interest income. Moreover, First Republic’s balance-sheet position was strong in the quarter. However, higher expenses and elevated net loan charge-offs were the offsetting factors.

Citigroup Inc. (C Quick QuoteC - Free Report) delivered an earnings surprise of 5.04% in fourth-quarter 2021. Income from continuing operations per share of $1.46 outpaced the Zacks Consensus Estimate of $1.39. However, the reported figure declined 24% from the prior-year quarter’s level.

Citigroup’s investment banking revenues jumped in the quarter under review, driven by equity underwriting and growth in advisory revenues. However, fixed-income revenues were down due to declining rates and spread products.

U.S. Bancorp (USB Quick QuoteUSB - Free Report) reported fourth-quarter 2021 earnings per share of $1.07, which missed the Zacks Consensus Estimate of $1.11. Results, however, compare favorably with the prior-year quarter’s figure of 95 cents.

Though lower revenues and escalating expenses were disappointing factors, credit quality was a tailwind. Growth in loan and deposit balance and a strong capital position were also encouraging factors. Moreover, U.S. Bancorp closed the acquisition of San Francisco-based fintech firm TravelBank, which offers technology-driven cost and travel management solutions.

(We are reissuing this article to correct a mistake. The original article, issued on January 26, 2022, should no longer be relied upon.)