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UMB (UMBF) Down 2.1% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for UMB Financial (UMBF - Free Report) . Shares have lost about 2.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is UMB due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
UMB Financial Q1 Earnings Meet, Revenues Rise Y/Y
UMB Financial reported operating earnings per share for first-quarter 2023 of $1.91, which is in line with the Zacks Consensus Estimate. The bottom line declined 12% from the prior-year quarter’s earnings of $2.17.
Results were aided by higher revenues, expansion of NIM and increasing loan balances. However, a rise in expenses and higher provisions adversely impacted the company's growth.
UMB Financial reported GAAP net income of $92.4 million or $1.90 per share in the first quarter, down from $106 million or $2.17 per share recorded a year ago.
Revenues & Costs Rise, Average Loans and Deposits Grow
Total revenues were $378.45 million, up 11.2% year over year. The top line beat the Zacks Consensus Estimate of $370.2 million.
NII on an FTE basis was $248.2 million, reflecting an increase of 14.5%. Growth in average loans and higher interest rates mainly led to this upside. On an FTE basis, NIM expanded to 2.76% from the prior-year quarter’s 2.35%.
Non-interest income was $130.2 million, up 5.3%. The rise was driven by an increase in trust and securities processing and brokerage fees. These were partially offset by lower service charges on deposit accounts and higher investment and securities losses.
Non-interest expenses came in at $237 million, up 10.4%. Increased salaries and employee benefits expenses, processing fees, supplies and services expenses, bankcard expenses, amortization of other intangible assets, and regulatory expenses primarily resulted in this upside.
The efficiency ratio decreased to 63.12% from the prior-year quarter’s 63.98%. A decline in the efficiency ratio indicates an increase in profitability.
As of Mar 31, 2023, average loans and leases were $21.3 billion, up 4.8% from the sequential quarter’s level. The average deposits grew marginally to $31.6 billion as of Mar 31, 2023.
Credit Quality: Mixed Bag
The ratio of net charge-offs to average loans was 0.09% in the reported quarter, down 11 basis points from the year-ago quarter. Moreover, total non-accrual and restructured loans were $15.5 million, plunging 86%.
The provision for credit losses was $23.3 million against the benefit of $6.5 million in the prior-year quarter.
Capital & Profitability Ratios Decline
As of Mar 31, 2023, the Tier 1 risk-based capital ratio was 10.57% compared with 11.81% as of Mar 31, 2022. The total risk-based capital ratio was 12.49% compared with 13.55% in the year-ago quarter. Nonetheless, the Tier 1 leverage ratio was 8.35% compared with 7.53% as of Mar 31, 2022.
Return on average assets at the quarter’s end was 0.97% compared with the year-ago quarter’s 1.10%. Additionally, the operating return on average equity was 13.82% compared with 14.67% witnessed in the prior-year quarter.
Outlook
The company expects operating expenses for second-quarter 2023 to be approximately $227 million. Also, the acquisition of HSA deposits is expected to add $4.5 million in amortization expenses annually.
A decent loan growth is expected in 2023. It also expects opportunities for loan growth in various verticals across its footprint in the second quarter of 2023.
Management expects mid-single-digit growth in NII in 2023.
Further, an increase in the FDIC assessment rate is likely to lead to a $1.3 million increase in expenses per year.
For 2023, the effective tax rate is anticipated to be between 17% and 19%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, UMB has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, UMB has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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UMB (UMBF) Down 2.1% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for UMB Financial (UMBF - Free Report) . Shares have lost about 2.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is UMB due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
UMB Financial Q1 Earnings Meet, Revenues Rise Y/Y
UMB Financial reported operating earnings per share for first-quarter 2023 of $1.91, which is in line with the Zacks Consensus Estimate. The bottom line declined 12% from the prior-year quarter’s earnings of $2.17.
Results were aided by higher revenues, expansion of NIM and increasing loan balances. However, a rise in expenses and higher provisions adversely impacted the company's growth.
UMB Financial reported GAAP net income of $92.4 million or $1.90 per share in the first quarter, down from $106 million or $2.17 per share recorded a year ago.
Revenues & Costs Rise, Average Loans and Deposits Grow
Total revenues were $378.45 million, up 11.2% year over year. The top line beat the Zacks Consensus Estimate of $370.2 million.
NII on an FTE basis was $248.2 million, reflecting an increase of 14.5%. Growth in average loans and higher interest rates mainly led to this upside. On an FTE basis, NIM expanded to 2.76% from the prior-year quarter’s 2.35%.
Non-interest income was $130.2 million, up 5.3%. The rise was driven by an increase in trust and securities processing and brokerage fees. These were partially offset by lower service charges on deposit accounts and higher investment and securities losses.
Non-interest expenses came in at $237 million, up 10.4%. Increased salaries and employee benefits expenses, processing fees, supplies and services expenses, bankcard expenses, amortization of other intangible assets, and regulatory expenses primarily resulted in this upside.
The efficiency ratio decreased to 63.12% from the prior-year quarter’s 63.98%. A decline in the efficiency ratio indicates an increase in profitability.
As of Mar 31, 2023, average loans and leases were $21.3 billion, up 4.8% from the sequential quarter’s level. The average deposits grew marginally to $31.6 billion as of Mar 31, 2023.
Credit Quality: Mixed Bag
The ratio of net charge-offs to average loans was 0.09% in the reported quarter, down 11 basis points from the year-ago quarter. Moreover, total non-accrual and restructured loans were $15.5 million, plunging 86%.
The provision for credit losses was $23.3 million against the benefit of $6.5 million in the prior-year quarter.
Capital & Profitability Ratios Decline
As of Mar 31, 2023, the Tier 1 risk-based capital ratio was 10.57% compared with 11.81% as of Mar 31, 2022. The total risk-based capital ratio was 12.49% compared with 13.55% in the year-ago quarter. Nonetheless, the Tier 1 leverage ratio was 8.35% compared with 7.53% as of Mar 31, 2022.
Return on average assets at the quarter’s end was 0.97% compared with the year-ago quarter’s 1.10%. Additionally, the operating return on average equity was 13.82% compared with 14.67% witnessed in the prior-year quarter.
Outlook
The company expects operating expenses for second-quarter 2023 to be approximately $227 million. Also, the acquisition of HSA deposits is expected to add $4.5 million in amortization expenses annually.
A decent loan growth is expected in 2023. It also expects opportunities for loan growth in various verticals across its footprint in the second quarter of 2023.
Management expects mid-single-digit growth in NII in 2023.
Further, an increase in the FDIC assessment rate is likely to lead to a $1.3 million increase in expenses per year.
For 2023, the effective tax rate is anticipated to be between 17% and 19%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, UMB has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, UMB has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.