Back to top

Image: Bigstock

UMB Financial (UMBF) Beats on Q1 Earnings as Revenues Rise

Read MoreHide Full Article

UMB Financial’s (UMBF - Free Report) first-quarter 2019 net operating earnings from continuing operations of $1.19 per share surpassed the Zacks Consensus Estimate of $1.10. The reported figure compared unfavorably with the prior-year quarter’s earnings of $1.18.

Results benefited from rise in revenues, partly offset by higher expenses. Moreover, loans and deposit balances remained strong during the quarter. However, an increase in provisions was a headwind for the company.

Including certain non-recurring items, UMB Financial reported net income of $57.7 million or $1.18 per share for the quarter under review, up from $56.8 million or $1.14 per share recorded in the prior-year quarter.

Revenues Improve, Costs Flare Up

Total revenues (non-GAAP) were $270.4 million, up 6.8% year over year. Moreover, the figure surpassed the Zacks Consensus Estimate of $262.9 million.

Net interest income was $163.9 million, reflecting an increase of 10.8% from the year-ago quarter. Increase in average loans, along with elevated average loan yields, mainly led to this upside. Net interest margin (NIM) expanded 1 basis point (bp) from the prior-year quarter to 3.20%.

Non-interest income totaled $107.4 million, up 1.8% year over year. The upside was driven by an improvement in most of the income components, except for trust and securities processing fees, service charges on deposit accounts, and bankcard fees.

Non-interest expenses (GAAP basis) were $190.6 million, up 8.4% from the year-ago figure. This rise was due to an increase in almost all expense components, except for marketing and business development costs, bankcard related expenses, regulatory fees, and costs related to amortization of other intangible assets. Adjusted operating non-interest expenses were $188.7 million, up from $172.3 million recorded in the prior-year quarter.

Efficiency ratio (GAAP basis) increased to 70.00% from 68.82% in the prior-year quarter. A rise in efficiency ratio indicates decrease in profitability. Adjusted efficiency ratio was 69.78%, up from 68.04% in the prior-year quarter.

As of Mar 31, 2019, average loans and leases were around $12.3 billion, up 2.8% sequentially. Additionally, average deposits climbed 3% from the prior-quarter end to $18.7 billion.

Credit Quality: A Mixed Bag

Total non-accrual and restructured loans were $63.3 million, down 6.4% year over year. However, provision for loan losses came in at $12.4 million, up from $10 million in the year-earlier quarter. Also, the ratio of net charge-offs to average loans was 0.41% in the reported quarter, up 4 bps from the year-ago quarter.

Capital & Profitability Ratios Worsen

As of Mar 31, 2019, Tier 1 risk-based capital ratio was 12.70% compared with 13.36% as of Mar 31, 2018. Further, total risk-based capital ratio was 13.72% compared with 14.45% at the end of the prior-year quarter. Tier 1 leverage ratio was 9.65% compared with 10.20% as of Mar 31, 2018.

Adjusted return on average assets at the end of the quarter was 1.03%, down from 1.15% in the year-ago quarter. Additionally, return on average tangible common equity was 10.56% compared with 11.09% in the prior-year quarter.

Conclusion

UMB Financial’s organic growth is expected to continue, backed by higher revenues. Moreover, soaring loan balances and an expanding net interest margin are likely to act as tailwinds.

Nevertheless, elevated expenses, higher provisions and lower fee income may dampen the company’s revenues. In addition, intense competition from other FinTech companies and online service providers remains a concern.

UMB Financial Corporation Price, Consensus and EPS Surprise
 

UMB Financial Corporation Price, Consensus and EPS Surprise | 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

Washington Federal’s (WAFD - Free Report) second-quarter fiscal 2019 (ended Mar 31) earnings were 63 cents per share, surpassing the Zacks Consensus Estimate of 61 cents. The figure also reflected year-over-year growth of 10.5%.

Hancock Whitney Corporation’s (HWC - Free Report) first-quarter 2019 operating earnings per share of $1 surpassed the Zacks Consensus Estimate of 98 cents. Further, the reported figure was 11.1% higher than the year-ago figure.

Ally Financial Inc.’s (ALLY - Free Report) first-quarter 2019 adjusted earnings of 80 cents per share surpassed the Zacks Consensus Estimate of 79 cents. Further, the bottom line compared favorably with the prior-year quarter’s figure of 68 cents.

Will you retire a millionaire?

One out of every six people retires a multimillionaire. Get smart tips you can do today to become one of them in a new Special Report, “7 Things You Can Do Now to Retire a Multimillionaire.”

Click to get it free >>

Published in