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UMB Financial (UMBF - Free Report) reported a second-quarter 2022 net operating income per share of $2.83, surpassing the Zacks Consensus Estimate of $1.88. The bottom line also compares favorably with the prior-year quarter’s earnings of $1.79.
Results were supported by higher revenues, driven by increases in net interest income (“NII”) and fee income. A rise in average loans was another positive. Yet, increased expenses and deteriorating capital ratios were concerning.
Net income was $137.5 million, rising year over year from $87.4 million.
Revenues and Costs Increase, Average Loans Rise
Second-quarter 2022 total revenues (on a fully tax-equivalent basis or FTE) were $407.4 million, up 20% year over year. The top line beat the Zacks Consensus Estimate of $345.1 million.
NII, on an FTE basis, was $231.1 million, reflecting an increase of 11.25% from the year-ago quarter. Growth in average securities and increased average loans mainly led to the upside. The increases were driven by organic loan growth and excess liquidity. On a FTE basis, the net interest margin (“NIM”) expanded to 2.6% from the prior-year quarter’s 2.56%.
Non-interest income totaled $176.3 million, increasing 34% year over year. The rise mainly resulted from higher trust and securities processing fees, brokerage fees, and investment securities gains.
Non-interest expenses were $214.1 million, up 6.4% from the year-ago quarter’s level mainly due to increases in salaries and employee benefits, legal and consulting expenses, and higher processing expenses.
The efficiency ratio was 53.08% compared with the prior-year quarter’s 60.41%. A decline in the efficiency ratio indicates an increase in profitability.
As of Jun 30, 2022, average loans and leases were $18.3 billion, up 5.5% from the sequential quarter. This included paycheck protection program loan balances.
Average deposits fell 3% from the prior-quarter level to $31.5 billion as of Jun 30, 2022.
Credit Quality Improves
The ratio of net charge-offs to total average loans was 0.62% in the reported quarter, down from 0.68% in the year-ago quarter. The provision for credit losses was $13.4 million compared with $24 million in the prior-year quarter.
Moreover, total non-accrual and restructured loans were $18.1 million, declining from $58.2 million year over year.
Capital Ratios Decline, Profitability Ratios Improve
As of Jun 30, 2022, the Tier 1 risk-based capital ratio was 11.44% compared with 11.91% as of Jun 30, 2021. The total risk-based capital ratio was 13% compared with 13.84% in the year-ago quarter. Tier 1 leverage ratio was 8.17% at the second-quarter end compared with 8% as of Jun 30, 2021.
Return on average assets at the quarter’s end was 1.47% compared with the year-ago quarter’s 1.02%. Also, return on average equity was 20.83% compared with 11.43% 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 Oct 3 to its shareholders of record as of Sep 12, 2022.
Conclusion
UMB Financial put up an impressive performance in the second quarter. The company’s efforts to diversify its non-interest income sources to reduce exposure to interest rates will support revenues in the quarters ahead. A strong balance sheet position and increased revenues in the quarter are other tailwinds.
UMB Financial Corporation Price, Consensus and EPS Surprise
Washington Federal’s (WAFD - Free Report) third-quarter fiscal 2022 (ended Jun 30) earnings of 91 cents per share surpassed the Zacks Consensus Estimate of 79 cents. The figure reflects a year-over-year jump of 49.2%.
Results were primarily aided by higher revenues and improving loan balances. However, an increase in expenses and higher provisions were the undermining factors for WAFD.
Commerce Bancshares Inc.’s (CBSH - Free Report) second-quarter 2022 earnings of 96 cents per share beat the Zacks Consensus Estimate by a penny. The bottom line, however, plunged 27.3% from the prior-year quarter.
Results benefited from an improvement in net interest income, a rise in loan balance and a modest increase in non-interest income. However, an increase in non-interest expenses and higher provisions were the major headwinds for CBSH.
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UMB Financial (UMBF) Q2 Earnings Beat, Revenues Rise Y/Y
UMB Financial (UMBF - Free Report) reported a second-quarter 2022 net operating income per share of $2.83, surpassing the Zacks Consensus Estimate of $1.88. The bottom line also compares favorably with the prior-year quarter’s earnings of $1.79.
Results were supported by higher revenues, driven by increases in net interest income (“NII”) and fee income. A rise in average loans was another positive. Yet, increased expenses and deteriorating capital ratios were concerning.
Net income was $137.5 million, rising year over year from $87.4 million.
Revenues and Costs Increase, Average Loans Rise
Second-quarter 2022 total revenues (on a fully tax-equivalent basis or FTE) were $407.4 million, up 20% year over year. The top line beat the Zacks Consensus Estimate of $345.1 million.
NII, on an FTE basis, was $231.1 million, reflecting an increase of 11.25% from the year-ago quarter. Growth in average securities and increased average loans mainly led to the upside. The increases were driven by organic loan growth and excess liquidity. On a FTE basis, the net interest margin (“NIM”) expanded to 2.6% from the prior-year quarter’s 2.56%.
Non-interest income totaled $176.3 million, increasing 34% year over year. The rise mainly resulted from higher trust and securities processing fees, brokerage fees, and investment securities gains.
Non-interest expenses were $214.1 million, up 6.4% from the year-ago quarter’s level mainly due to increases in salaries and employee benefits, legal and consulting expenses, and higher processing expenses.
The efficiency ratio was 53.08% compared with the prior-year quarter’s 60.41%. A decline in the efficiency ratio indicates an increase in profitability.
As of Jun 30, 2022, average loans and leases were $18.3 billion, up 5.5% from the sequential quarter. This included paycheck protection program loan balances.
Average deposits fell 3% from the prior-quarter level to $31.5 billion as of Jun 30, 2022.
Credit Quality Improves
The ratio of net charge-offs to total average loans was 0.62% in the reported quarter, down from 0.68% in the year-ago quarter. The provision for credit losses was $13.4 million compared with $24 million in the prior-year quarter.
Moreover, total non-accrual and restructured loans were $18.1 million, declining from $58.2 million year over year.
Capital Ratios Decline, Profitability Ratios Improve
As of Jun 30, 2022, the Tier 1 risk-based capital ratio was 11.44% compared with 11.91% as of Jun 30, 2021. The total risk-based capital ratio was 13% compared with 13.84% in the year-ago quarter. Tier 1 leverage ratio was 8.17% at the second-quarter end compared with 8% as of Jun 30, 2021.
Return on average assets at the quarter’s end was 1.47% compared with the year-ago quarter’s 1.02%. Also, return on average equity was 20.83% compared with 11.43% 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 Oct 3 to its shareholders of record as of Sep 12, 2022.
Conclusion
UMB Financial put up an impressive performance in the second quarter. The company’s efforts to diversify its non-interest income sources to reduce exposure to interest rates will support revenues in the quarters ahead. A strong balance sheet position and increased revenues in the quarter are other tailwinds.
UMB Financial Corporation Price, Consensus and EPS Surprise
UMB Financial Corporation price-consensus-eps-surprise-chart | UMB Financial Corporation Quote
UMB Financial currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance of Other Banks
Washington Federal’s (WAFD - Free Report) third-quarter fiscal 2022 (ended Jun 30) earnings of 91 cents per share surpassed the Zacks Consensus Estimate of 79 cents. The figure reflects a year-over-year jump of 49.2%.
Results were primarily aided by higher revenues and improving loan balances. However, an increase in expenses and higher provisions were the undermining factors for WAFD.
Commerce Bancshares Inc.’s (CBSH - Free Report) second-quarter 2022 earnings of 96 cents per share beat the Zacks Consensus Estimate by a penny. The bottom line, however, plunged 27.3% from the prior-year quarter.
Results benefited from an improvement in net interest income, a rise in loan balance and a modest increase in non-interest income. However, an increase in non-interest expenses and higher provisions were the major headwinds for CBSH.