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UMB Financial (UMBF) Stock Rallies 1.8% on Q1 Earnings Beat

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Shares of UMB Financial UMBF rallied 1.8% post reporting first-quarter 2021 results. Net operating income of $1.91 per share outpaced the Zacks Consensus Estimate of $1.47. The bottom line also compares favorably with the prior-year quarter’s loss of 4cents.

The first-quarter results include a $16.1-million pre-tax mark-to-market loss on the company’s investment in Tattooed Chef, Inc.

Higher revenues, aided by rise in interest and fee income, supported the company’s performance. Also, capital position and profitability ratios were strong. However, elevated expenses and low interest rates were major drags.

Including certain non-recurring items, the company reported net income of $92.6 million or $1.91 per share in the first quarter, as against the net loss of $3.4 million or 7 cents per share recorded in the prior year.

Revenues, Loans & Deposits Balance Rise, Costs Up

Total revenues (fully tax-equivalent) in the March-ended quarter came in at $303 million, up 11.3% year over year. The revenue figure, however, lagged the Zacks Consensus Estimate of $307.5 million.

Net interest income came in at $194.1 million, reflecting an increase of 11.6% from the year-ago quarter. Growth in organic loans and decline in interest expenses, on lower costs of deposits, mainly led to this upside. Net interest margin contracted 38 basis points (bps) to 2.59% from the prior-year quarter.

Non-interest income totaled $108.9 million, rising 10.6% year over year. This upsurge mainly resulted from rise in trading and investment banking, trust and securities processing, insurance fees and commissions and other income.

Non-interest expenses came in at $200.9 million, up 6.5% from the year-ago quarter, mainly due to higher salaries and employee benefits, processing fees, bankcard, along with high regulatory fees. These were partly negated by lower marketing and business development, equipment costs, legal and consulting fees supplies and services, along with occupancy expenses.

Efficiency ratio decreased to 66.46% from the prior-year quarter’s 68.93%. Adjusted efficiency ratio was 66.40%, down from the year-earlier quarter’s 68.19%. A fall in efficiency ratio indicates rise in profitability.

As of Mar 31, 2021, average loans and leases were $16.2 billion, up 1.3% sequentially. Additionally, average deposits climbed 7.5% from the prior-quarter end to $26.8 billion.

Credit Quality Improves

During the reported quarter, credit metrics improved. Total non-accrual and restructured loans came in at $76.7 million, down 21% year over year. Provision for loan losses was a benefit of $7.5 million as against the provision of $88 million seen in the prior-year quarter.

Further, the ratio of net charge-offs to average loans was 0.13% in the reported quarter, down 10 bps from the year-ago quarter.

Strong Capital & Profitability Ratios

As of Mar 31, 2021, Tier 1 risk-based capital ratio was 12.25% compared with 11.90% on Mar 31, 2020. Also, total risk-based capital ratio was 14.28% compared with the 13.12% witnessed at the end of the prior-year quarter. Tier 1 leverage ratio was 8.08% compared with 8.81% as of Mar 31, 2020.

Adjusted return on average assets at the quarter’s end was 1.14%, against the year-ago quarter’s negative return of 0.03%. Additionally, return on average equity was 12.58% as against the loss of 0.28% witnessed in the prior-year quarter.

Conclusion

UMB Financial put up an impressive performance during the first quarter. Soaring loan and deposit balances are likely to be a driving factor in the future. Furthermore, the company’s efficiency ratio has been decent, which signals better profitability over the long run. Moreover, provision benefits and an improving credit quality are tailwinds. Nonetheless, margin pressure might weigh on the company’s bottom line.

UMB Financial Corporation Price, Consensus and EPS Surprise

UMB Financial Corporation Price, Consensus and EPS Surprise
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 #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

BlackRock, Inc.’s BLK first-quarter 2021 adjusted earnings of $7.77 per share outpaced the Zacks Consensus Estimate of $7.64. The figure reflected a rise of 17.7% from the year-ago quarter’s number.

Blackstone’s BX distributable earnings for the first quarter of 2021 of 96 cents per share surpassed the Zacks Consensus Estimate of 72 cents. The reported figure also marked a significant rise from the 46 cents recorded in the prior-year quarter.

SEI Investments Co.’s SEIC earnings of 89 cents per share for the first quarter of 2021 missed the Zacks Consensus Estimate by a penny. However, the bottom line underlined 24% growth from the prior-year quarter.

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