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UMB Financial’s (UMBF - Free Report) fourth-quarter 2023 operating earnings per share of $2.29 beat the Zacks Consensus Estimate of $1.76. Also, the bottom line compared favorably with $2.07 earned in the year-ago quarter.
Results benefited from higher non-interest income, strong loan and deposit balances and nil provisions. Nonetheless, a decline in net interest income (NII), lower net interest margin (NIM) and increased expenses were the headwinds.
The results included the charge of $52.8 million related to the FDIC special assessment. After considering these charges, the net income for UMBF was $70.9 million for the specified quarter, down 29.2% year over year.
In 2023, operating earnings per share were $8.14, which decreased 8.3% from the prior year and missed the Zacks Consensus Estimate of $7.49. Net income (GAAP) was $350 million, which declined 18.9% from 2022.
Quarterly Revenues Increase, Costs Rise
Quarterly revenues were $370.8 million, up marginally year over year. Also, the top line beat the Zacks Consensus Estimate of $361.6 million.
In 2023, total revenues were $1.46 billion, slightly down from the previous year. Also, the top line missed the Zacks Consensus Estimate of $1.47 billion.
NII on an FTE basis was $237.2 million, which declined 5.8% from the prior-year quarter. On an FTE basis, NIM was 2.46%, down 37 basis points.
Non-interest income was $140.3 million, up 11.8% year over year. The rise was primarily driven by an increase in trust and securities processing, service charges on deposit accounts and investment securities gain.
Non-interest expenses were $290 million, up 21.9% year over year. The rise was driven by higher regulatory fees, mainly from FDIC special assessment. Also, a rise in processing fees and an uptick in deferred compensation expenses were some of the other major reasons behind the jump. These were partially offset by a decline in bonus and commission expenses, equipment costs and legal and consulting expenses. The operating non-interest expense was $235.9 million.
The efficiency ratio increased to 77.65% from the prior-year quarter’s 63.72%. An increase in efficiency ratio indicates a decrease in profitability.
As of Dec 31, 2023, average loans and leases were $23.1 billion, up 1.6% sequentially. Also, average deposits increased 4.3% to $32.7 billion.
Credit Quality Improves
The ratio of net charge-offs to average loans was 0.02% in the reported quarter, which decreased from 0.04% in the year-ago quarter.
Also, total non-accrual and restructured loans were $13.2 million, down 31.4% year over year.
The provision for credit losses was nil for the fourth quarter of 2023 compared with $9 million reported in the prior-year quarter. This reduction was primarily due to favorable changes in macroeconomic factors and credit metrics, partially offset by increased loan growth.
Capital Ratios Improve
As of Dec 31, 2023, the Tier 1 risk-based capital ratio was 10.94%, which rose from 10.62% as of Dec 31, 2022. The Tier 1 leverage ratio was 8.49%, which increased from 8.43% as of Dec 31, 2022. The total risk-based capital ratio was 12.85%, which grew from 12.50% in the year-ago quarter.
Profitability Ratios Deteriorate
Return on average assets at the quarter’s end was 0.69%, which dipped from the year-ago quarter’s 1.06%. Further, the operating return on average equity was 9.52%, which decreased from 15.16% reported in the previous year’s quarter.
Our Take
UMB Financial is poised to benefit from elevated loan and deposit balances, as well as increased non-interest income and improved asset quality. However, reduced NII and NIM, together with increased expenses, are near-term concerns.
UMB Financial Corporation Price, Consensus and EPS Surprise
Hancock Whitney Corp.’s (HWC - Free Report) fourth-quarter 2023 adjusted earnings per share of $1.26 beat the Zacks Consensus Estimate of $1.08. Adjusted earnings per share, however, compared unfavorably with $1.65 earned in the year-ago quarter.
HWC’s results were impacted by a decline in both NII and non-interest income. Further, a slight decrease in loan balances and an increase in expenses and provisions acted as spoilsports.
WaFd, Inc.’s (WAFD - Free Report) first-quarter fiscal 2024 (ended Dec 31) earnings of 85 cents per share surpassed the Zacks Consensus Estimate of 72 cents. However, the bottom line declined 26.7% year over year.
WAFD’s results primarily benefited from the rise in other income and steady loan balance. In the reported quarter, the company did not record any provision for credit losses. However, a fall in NII and an increase in other expenses acted as spoilsports.
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UMB Financial (UMBF) Q4 Earnings Beat Estimates, Costs Rise
UMB Financial’s (UMBF - Free Report) fourth-quarter 2023 operating earnings per share of $2.29 beat the Zacks Consensus Estimate of $1.76. Also, the bottom line compared favorably with $2.07 earned in the year-ago quarter.
Results benefited from higher non-interest income, strong loan and deposit balances and nil provisions. Nonetheless, a decline in net interest income (NII), lower net interest margin (NIM) and increased expenses were the headwinds.
The results included the charge of $52.8 million related to the FDIC special assessment. After considering these charges, the net income for UMBF was $70.9 million for the specified quarter, down 29.2% year over year.
In 2023, operating earnings per share were $8.14, which decreased 8.3% from the prior year and missed the Zacks Consensus Estimate of $7.49. Net income (GAAP) was $350 million, which declined 18.9% from 2022.
Quarterly Revenues Increase, Costs Rise
Quarterly revenues were $370.8 million, up marginally year over year. Also, the top line beat the Zacks Consensus Estimate of $361.6 million.
In 2023, total revenues were $1.46 billion, slightly down from the previous year. Also, the top line missed the Zacks Consensus Estimate of $1.47 billion.
NII on an FTE basis was $237.2 million, which declined 5.8% from the prior-year quarter. On an FTE basis, NIM was 2.46%, down 37 basis points.
Non-interest income was $140.3 million, up 11.8% year over year. The rise was primarily driven by an increase in trust and securities processing, service charges on deposit accounts and investment securities gain.
Non-interest expenses were $290 million, up 21.9% year over year. The rise was driven by higher regulatory fees, mainly from FDIC special assessment. Also, a rise in processing fees and an uptick in deferred compensation expenses were some of the other major reasons behind the jump. These were partially offset by a decline in bonus and commission expenses, equipment costs and legal and consulting expenses. The operating non-interest expense was $235.9 million.
The efficiency ratio increased to 77.65% from the prior-year quarter’s 63.72%. An increase in efficiency ratio indicates a decrease in profitability.
As of Dec 31, 2023, average loans and leases were $23.1 billion, up 1.6% sequentially. Also, average deposits increased 4.3% to $32.7 billion.
Credit Quality Improves
The ratio of net charge-offs to average loans was 0.02% in the reported quarter, which decreased from 0.04% in the year-ago quarter.
Also, total non-accrual and restructured loans were $13.2 million, down 31.4% year over year.
The provision for credit losses was nil for the fourth quarter of 2023 compared with $9 million reported in the prior-year quarter. This reduction was primarily due to favorable changes in macroeconomic factors and credit metrics, partially offset by increased loan growth.
Capital Ratios Improve
As of Dec 31, 2023, the Tier 1 risk-based capital ratio was 10.94%, which rose from 10.62% as of Dec 31, 2022. The Tier 1 leverage ratio was 8.49%, which increased from 8.43% as of Dec 31, 2022. The total risk-based capital ratio was 12.85%, which grew from 12.50% in the year-ago quarter.
Profitability Ratios Deteriorate
Return on average assets at the quarter’s end was 0.69%, which dipped from the year-ago quarter’s 1.06%. Further, the operating return on average equity was 9.52%, which decreased from 15.16% reported in the previous year’s quarter.
Our Take
UMB Financial is poised to benefit from elevated loan and deposit balances, as well as increased non-interest income and improved asset quality. However, reduced NII and NIM, together with increased expenses, are near-term concerns.
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
Hancock Whitney Corp.’s (HWC - Free Report) fourth-quarter 2023 adjusted earnings per share of $1.26 beat the Zacks Consensus Estimate of $1.08. Adjusted earnings per share, however, compared unfavorably with $1.65 earned in the year-ago quarter.
HWC’s results were impacted by a decline in both NII and non-interest income. Further, a slight decrease in loan balances and an increase in expenses and provisions acted as spoilsports.
WaFd, Inc.’s (WAFD - Free Report) first-quarter fiscal 2024 (ended Dec 31) earnings of 85 cents per share surpassed the Zacks Consensus Estimate of 72 cents. However, the bottom line declined 26.7% year over year.
WAFD’s results primarily benefited from the rise in other income and steady loan balance. In the reported quarter, the company did not record any provision for credit losses. However, a fall in NII and an increase in other expenses acted as spoilsports.