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UMB Financial Q2 Earnings in Line with Estimates, Rises Y/Y

Zacks Equity Research

UMB Financial Corporation’s (UMBF) second-quarter 2014 earnings per share came in at 76 cents, in line with the Zacks Consensus Estimate. However, earnings compared favorably with the prior-year quarter figure of 74 cents.

Strong top-line performance and a robust capital position were the positives. Moreover, improvement in loans and deposits exhibited organic growth of the company. However, elevated non-interest expenses reflected undisciplined expense management.

The company’s net income stood at $34.7 million in the reported quarter, up from the year-ago quarter figure of $29.9 million.

Quarter in Detail

UMB Financial’s net interest income came in at $86.2 million, up 4.7% year over year. The rise was mainly due to higher average earnings assets. However, net interest margin (NIM) declined 3 basis points year over year to 2.53%.

Non-interest income climbed 18% year over year to $134 million. The upsurge was mainly due to higher trust and securities processing income and other non-interest revenues.

UMB Financial’s non-interest expense surged 10.8% year over year to $166.5 million. This was mainly due to higher salaries and employee benefits costs.

Credit Quality

UMB Financial’s credit metrics was a mixed bag in the reported quarter. Provision for loan losses was $5 million, in line with the prior-year quarter. As a percentage of loans, nonperforming loans decreased to 0.39% as of Jun 30, 2014, dipping from 0.40% as of Jun 30, 2013.

However, as of Jun 30, 2014, UMB Financial’s nonperforming loans were $27.2 million, up from $25.5 million as of Jun 30, 2013. Allowance for loan losses totaled $76.8 million, or 1.11% of loans, up from $71.6 million or 1.13% as of Jun 30, 2013.

Capital Position

As of Jun 30, 2014, total deposits stood at $12.2 billion, up 4.3% year over year, while net loans rose 7.9% to $6.8 billion. Total assets under management (AUM.TO) were recorded at $43.7 billion, up 21.9% year over year. Shareholders’ equity was $1.6 billion, up from $1.2 billion in the prior-year quarter.

Our Viewpoint

Overall, UMB Financial’s results reflected a commendable quarter for the company. While there are lingering concerns over the prevalent stringent regulatory landscape and mounting expenses, we believe that improvement in the company’s fee-based business will help it navigate through the current cycle.

Moreover, organic growth of the company is expected to significantly drive earnings in the coming quarters. Currently, UMB Financial carries a Zacks Rank #3 (Hold).

Among other finance stocks, Popular, Inc. (BPOP) and United Community Banks, Inc. (UCBI) are expected to release June-quarter end results on Jul 24 while HomeTrust Bancshares, Inc. (HTBI) on Jul 28.

Read the Full Research Report on BPOP
Read the Full Research Report on UMBF
Read the Full Research Report on UCBI
Read the Full Research Report on HTBI

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