Core Viewpoint - The article compares Associated Banc-Corp (ASB) and UMB Financial (UMBF) to determine which stock is more attractive to value investors [1] Valuation Metrics - ASB has a forward P/E ratio of 10.37, while UMBF has a forward P/E of 11.83 [5] - ASB's PEG ratio is 1.13, compared to UMBF's PEG ratio of 1.29, indicating ASB may offer better value considering expected earnings growth [5] - ASB's P/B ratio is 0.95, while UMBF's P/B ratio is 1.26, suggesting ASB is undervalued relative to its book value [6] Earnings Outlook - ASB is currently experiencing an improving earnings outlook, which enhances its attractiveness in the Zacks Rank model [7] - ASB holds a Zacks Rank of 2 (Buy), while UMBF has a Zacks Rank of 4 (Sell), indicating a more favorable earnings estimate revision for ASB [3]

Group 1 - The article discusses UMB Financial Corporation's latest listed security, which is a 7.75% fixed-income security IPO [1] - The focus is on providing insights into the exchange-traded fixed-income security market [1] Group 2 - The article emphasizes that past performance does not guarantee future results, highlighting the inherent risks in investment [2] - It clarifies that no specific investment recommendations are being made, and opinions expressed may not reflect the views of the entire platform [2]

Core Viewpoint - The U.S. tariff situation is causing fluctuations in the market, impacting investor sentiment, while shares of UMB Financial have remained relatively stable since the initial analysis [1]. Company Analysis - UMB Financial (NASDAQ: UMBF) has shown flat performance in its stock price, indicating a potential stability amidst market volatility [1]. - The investment strategy focuses on a long-term, buy-and-hold approach, particularly favoring stocks that can deliver sustainable high-quality earnings, often found in the dividend and income sectors [1]. Market Context - The ongoing changes in U.S. tariffs are creating a mixed environment of optimism and despair among investors, which may influence stock performance across various sectors [1].

Financial Performance - The net income for the three months ended March 31, 2025, was $81,333 thousand, a decrease of 26.3% compared to $110,258 thousand for the same period in 2024[33]. - Basic net income per common share for Q1 2025 was $1.22, down from $2.27 in Q1 2024, reflecting a decline of 46.2%[33]. - Noninterest income for the three months ended March 31, 2025, totaled $166.198 million, up from $159.244 million in the same period of 2024, reflecting a growth of 4.4%[159]. - The total noninterest expense for the three months ended March 31, 2025, was $384.787 million, up from $254.804 million in the same period of 2024, representing an increase of 50.9%[159]. - The Commercial Banking segment reported a net income of $62.385 million for the three months ended March 31, 2025, compared to $82.178 million in the same period of 2024, a decrease of 24.2%[159]. - The Institutional Banking segment's net income was $50.043 million for the three months ended March 31, 2025, compared to $35.321 million for the same period in 2024, reflecting an increase of 41.7%[159]. - The Personal Banking segment reported a net loss of $31.095 million for the three months ended March 31, 2025, compared to a net loss of $7.241 million in the same period of 2024, indicating a worsening performance[159]. Asset and Loan Growth - As of March 31, 2025, cash and cash equivalents totaled $10,610,066 thousand, up from $6,943,108 thousand as of March 31, 2024, representing an increase of approximately 52.5%[28]. - As of March 31, 2025, the total loans amounted to $35,936.2 million, compared to $25,642.3 million on December 31, 2024, reflecting a significant increase[47]. - The total current loans increased to $35,762.1 million at March 31, 2025, from $25,603.9 million at December 31, 2024[47]. - Total loans amounted to $35,936.28 million, with a significant increase from $5,077.094 million in the previous year[52]. - The total amount of non-performing loans is monitored as part of the credit quality indicators, reflecting ongoing risk assessment[54]. - The company continues to focus on market expansion and new strategies to enhance loan offerings and customer engagement[52]. Credit Quality and Risk Management - The Company maintains an independent loan review department to continually assess and validate risk within its loan portfolio[38]. - The Company utilizes a risk grading matrix to continuously monitor credit risk across its loan portfolio[55]. - The company assigns risk ratings to borrowers based on their financial position, with categories including Pass, Special Mention, Substandard, and Doubtful[59]. - The company tracks individual borrower credit risk based on their loan to collateral position, with any borrower position where the underlying value of collateral is below the fair value of the loan considered higher risk[62]. - The company emphasizes the importance of economic conditions on the performance of non-owner-occupied commercial real estate loans, which are sensitive to local market factors[65]. - The company actively monitors credit quality indicators, which include changes in economic forecasts and updated financial records from borrowers[105]. Allowance for Credit Losses - The allowance for credit losses (ACL) is estimated based on historical credit loss experience and current loan-specific risk characteristics, with a focus on economic forecasts from Moody's[98]. - The ACL for Commercial and industrial loans was $192,146,000 as of March 31, 2025, up from $160,912,000 at the beginning of the period, reflecting a provision of $22,018,000[110]. - Total ACL for all segments reached $373,488,000 as of March 31, 2025, compared to $261,734,000 at the beginning of the previous year, indicating a significant increase in credit loss provisions[110]. - The ACL for Consumer segments is driven by the year of origination and macroeconomic variables such as unemployment and home price index[103]. Securities and Investments - As of March 31, 2025, the total fair value of securities available for sale was $10,895,659 thousand, an increase from $7,774,334 thousand as of December 31, 2024, representing a growth of 40%[117][118]. - The Company holds $5,717,330,000 in securities held to maturity, with unrealized losses of $(619,383,000) as of March 31, 2025, compared to $5,378,912,000 and $(642,009,000) as of December 31, 2024[126][129]. - The total investment securities (losses) gains, net for the three months ended March 31, 2025, was $(4.78) million, a decrease from $9.37 million in the same period of 2024[140]. - The Company has no allowance for credit losses related to available-for-sale securities as the decline in fair value did not result from credit issues[125]. Borrowings and Debt - As of March 31, 2025, total borrowed funds amounted to $654.4 million, an increase from $385.3 million as of December 31, 2024, reflecting a significant growth in long-term debt[144]. - The total long-term debt increased to $654.4 million as of March 31, 2025, driven by the acquisition activities and new issuances[144]. - The Company’s borrowing capacity with the FHLB was $1.6 billion as of March 31, 2025, indicating strong liquidity support[150]. Derivatives and Fair Value Measurements - The fair value of the company's assets measured at fair value as of March 31, 2025, was $11,237.155 million, with $1,910.925 million classified as Level 1 inputs and $9,326.230 million as Level 2 inputs[203]. - The estimated fair value of derivatives as of March 31, 2025, was $294,003,000, compared to $234,443,000 on December 31, 2024, reflecting an increase of approximately 25%[214][215]. - The company employs various valuation methods for financial instruments, including external appraisals and market comparisons, ensuring accurate fair value measurements[212].

Group 1 - UMB Financial's shares have increased by 19% over the past year, driven by strong loan quality and an accretive acquisition [1] - The acquisition is expected to help UMB Financial build scale across key markets and unlock efficiency gains [1]

Core Viewpoint - UMB Financial Corp. reported strong operating earnings in Q1 2025, driven by increased net interest income and non-interest income, despite challenges from weak asset quality and rising non-interest expenses [1][10]. Financial Performance - Operating earnings per share for Q1 2025 were $2.58, exceeding the Zacks Consensus Estimate of $2.21 and up from $2.47 in the same quarter last year [1]. - Net income on a GAAP basis was $81.3 million, reflecting a 26.2% decline year over year [2]. - Quarterly revenues reached $571.3 million, a 41% increase year over year, surpassing the Zacks Consensus Estimate by 2.9% [3]. - Net interest income (NII) on a fully taxable equivalent (FTE) basis was $405.1 million, up 64.7% from the prior-year quarter, with a net interest margin (NIM) of 2.96% compared to 2.48% a year ago [3]. Income and Expenses - Non-interest income totaled $166.2 million, a 4.4% increase year over year, primarily due to growth in trust and securities processing, service charges, and brokerage income [4]. - Non-interest expenses rose to $384.8 million, a 51% increase year over year, driven by higher salaries, legal and consulting expenses, and amortization of intangibles [4]. - The efficiency ratio was 65.19%, up from 63.44% in the prior-year quarter, indicating a decrease in profitability [5]. Loans and Deposits - Average loans and leases as of March 31, 2025, were $32.3 billion, a 27.8% sequential increase, while average deposits rose 32.3% year over year to $50.3 billion [6]. Credit Quality - The ratio of net charge-offs to average loans was 0.45%, significantly higher than 0.05% in the prior-year quarter [7]. - Total non-accrual and restructured loans amounted to $100.9 million, up from $17.8 million a year ago [7]. - The provision for credit losses was $86 million in Q1 2025, compared to $10 million in the same quarter last year [7]. Capital Ratios - As of March 31, 2025, the Tier 1 risk-based capital ratio was 10.35%, down from 11.09% a year earlier, while the Tier 1 leverage ratio improved slightly to 8.47% from 8.39% [8]. - The total risk-based capital ratio decreased to 12.54% from 13.03% in the prior-year quarter [8]. Profitability Ratios - Return on average assets was 0.54%, down from 1.06% in the year-ago quarter [9]. - Operating return on average common equity was 12.47%, compared to 15.44% in the prior-year quarter [9].

Financial Data and Key Metrics Changes - The company reported a strong first quarter with net operating income available to common shareholders of $168.9 million, or $2.58 per share, excluding merger-related and non-recurring charges [9][21] - Average loans increased by 27.8% to $32.3 billion, while average deposits rose by 32.3% to $50.3 billion on a linked quarter basis [9][10] - The operating efficiency ratio improved to 55.6%, and the operating return on assets (ROA) reached 1.14% [8] Business Line Data and Key Metrics Changes - Fee income for the quarter was reported at $166.2 million, impacted by $5.2 million in mark-to-market losses on certain equity investments [21] - Credit and debit card purchase volume increased by 18.6% year-over-year, surpassing $5.4 billion for the first time [13] - Assets under administration in institutional businesses grew by 16% year-over-year, reaching $559 billion, with corporate trust assets increasing by 25% [14] Market Data and Key Metrics Changes - The company noted an 8.3% linked quarter annualized increase in loan balances on a legacy UMB basis, outperforming peer banks that reported a median increase of 3.3% [10] - Nonperforming loans related to legacy UMB were just eight basis points, consistent with prior quarters, while the median NPL ratio for peer banks was reported at 8.45% [12] Company Strategy and Development Direction - The acquisition of Heartland added over $14 billion in deposits and more than doubled the branch presence across 13 states, with a focus on achieving cost synergies and cultural integration [6][7] - The company aims to leverage the lower-cost, granular core deposits from the acquisition to enhance its net interest margin [7][8] - The management expressed confidence in the growth opportunities presented by the acquisition, particularly in new markets and with new clients [68][70] Management's Comments on Operating Environment and Future Outlook - Management is closely monitoring the impact of tariffs and general economic conditions, noting that most clients are currently able to pass on costs [16][17] - The company expects to maintain strong loan growth driven by market share gains rather than economic activity, with a robust production pipeline for the upcoming quarters [39][70] - Management emphasized their role as risk managers and their preparedness to navigate periods of uncertainty [17] Other Important Information - The effective tax rate for the first quarter was 12.6%, including a benefit from the remeasurement of deferred tax assets [23] - The company expects second quarter margins to range between 2.75% and 2.8%, influenced by various factors including excess liquidity and Fed rate movements [23][24] Q&A Session Summary Question: Can you help us with the near-term NII trajectory? - Management highlighted that the first quarter EPS included a one-time tax benefit and noted adjustments for share count and mark-to-market impacts, indicating a positive outlook for future quarters [33][34][36] Question: What are the assumptions for core NIM in the second quarter? - Management expects core NIM to remain stable, influenced by additional month contributions from Heartland and potential rate cuts [50][52] Question: Any common thread among HTLF net charge-offs? - Charge-offs were identified through diligence and were part of normal business operations, with expectations for overall performance to align with historical trends [54][56] Question: How will Heartland contribute to loan growth? - The acquisition is expected to enhance growth through a larger deposit base and improved operational efficiency, with a strong pipeline of high-quality deals already emerging [68][70] Question: What is the outlook for deposit growth and DDA? - Management indicated that deposit growth is driven by client acquisition and higher average balances, with expectations for stability in the second quarter [86][90] Question: What is the plan for excess cash and balance sheet management? - The company plans to deploy excess cash into investments over the next three to six months, evaluating opportunities in treasuries and other securities [43][44] Question: How is the company addressing credit quality post-acquisition? - Management is aligning the acquired portfolio with UMB standards, ensuring that underwriting practices maintain high-quality credit performance [108][112]

Financial Data and Key Metrics Changes - The company reported a strong first quarter with net operating income available to common shareholders of $168.9 million, or $2.58 per share, excluding merger-related and non-recurring charges [7] - Average loans increased by 27.8% to $32.3 billion, while average deposits rose by 32.3% to $50.3 billion on a linked quarter basis [7][8] - The operating efficiency ratio improved to 55.6%, and the operating return on assets (ROA) reached 1.14% [6] Business Line Data and Key Metrics Changes - Fee income for the quarter was reported at $166.2 million, impacted by $5.2 million in mark-to-market losses on certain equity investments [19] - Credit and debit card purchase volume increased by 18.6% year-over-year, surpassing $5.4 billion for the first time [11] - Assets under administration in institutional businesses grew by 16% year-over-year, reaching $559 billion, with corporate trust assets increasing by 25% [12] Market Data and Key Metrics Changes - The company noted an 8.3% linked quarter annualized increase in loan balances, outperforming the median annualized increase of 3.3% reported by peer banks [8] - Nonperforming loans related to legacy UMB were just eight basis points, consistent with prior quarters, while the median nonperforming loan ratio for peer banks was reported at 8.45% [10] Company Strategy and Development Direction - The acquisition of Heartland added over $14 billion in deposits and more than doubled the branch presence across 13 states, with a focus on achieving cost synergies and cultural integration [5][6] - The company aims to leverage the lower-cost, granular core deposits from the acquisition to enhance its net interest margin [6] - Future growth is expected to come from market share gains rather than economic activity, with a strong production pipeline anticipated for the second quarter [34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to pass on costs to clients amid tariff uncertainties, indicating that most clients are currently able to manage these costs [15][89] - The company is closely monitoring the evolving tariff situation and its potential impacts on clients, emphasizing a proactive approach to risk management [15] - Overall, management expects the combined companies to perform in line with historical trends, maintaining a focus on high-quality growth [51][104] Other Important Information - The effective tax rate for the first quarter was 12.6%, including a $5 million benefit from the remeasurement of deferred tax assets [21] - The company expects to achieve greater than 40% of the identified cost synergies in calendar year 2025 due to the earlier-than-expected close of the Heartland acquisition [20] Q&A Session Summary Question: Comments on bridging the earnings run rate and near-term NII trajectory - Management highlighted that the first quarter EPS included a one-time tax benefit and noted adjustments for share count and mark-to-market impacts [29][30] Question: Outlook for core NIM in the second quarter - Management expects core NIM to range between 2.75% and 2.8%, influenced by additional month of Heartland's deposits and potential rate cuts [44][46] Question: Update on loan growth opportunities with Heartland - Management emphasized the potential for growth from Heartland's lower-cost deposits and larger footprint, with strong early indications from the loan pipeline [60][61] Question: Interest rate sensitivity following the acquisition - Management indicated a liability-sensitive position in the first year but expected to become more asset-sensitive in the second year due to loan repricing dynamics [118][120]

Financial Highlights - UMB Financial Corporation's market capitalization is $7.7 billion[5] - Total assets reached $69.3 billion[5] - Gross loans amounted to $35.9 billion[5] - Total deposits totaled $58.5 billion[5] - Institutional Assets Under Administration (AUA) reached $558.9 billion[5] - The Common Equity Tier 1 Capital Ratio is 10.11%[5] - The Total Risk Based Capital Ratio is 12.54%[5] Q1 2025 Performance - Commercial & Personal Banking Services revenue was $398.9 million, with average deposits of $33.7 billion[9] - Institutional Banking Services revenue was $164.9 million, with average deposits of $16.6 billion[12] - Net Interest Income (NII) was $397.6 million, including Purchase Accounting Adjustments (PAA) accretion of $28.6 million[62] - Net income available to common shareholders (GAAP) was $79.3 million, or $1.21 per diluted share[62]

Core Insights - UMB Financial (UMBF) reported a revenue of $571.34 million for Q1 2025, marking a 41% year-over-year increase and exceeding the Zacks Consensus Estimate by 2.99% [1] - The earnings per share (EPS) for the same quarter was $2.58, up from $2.47 a year ago, representing a surprise of 16.74% over the consensus estimate of $2.21 [1] Financial Performance Metrics - Efficiency Ratio (GAAP) was reported at 65.2%, higher than the average estimate of 59.5% from four analysts [4] - Net interest margin (FTE) stood at 3%, slightly above the average estimate of 2.9% from four analysts [4] - Net loan charge-offs as a percentage of total average loans were 0.5%, exceeding the average estimate of 0.2% from three analysts [4] - Average balance of total earning assets was $55.54 billion, surpassing the average estimate of $53.50 billion from three analysts [4] - Tier 1 risk-based capital ratio was reported at 10.4%, above the average estimate of 9.6% from two analysts [4] - Tier 1 Leverage Ratio was 8.5%, compared to the estimated 8.1% from two analysts [4] - Total Risk-based Capital Ratio was 12.5%, exceeding the average estimate of 11.6% from two analysts [4] - Net interest income (FTE) was $405.14 million, higher than the average estimate of $381.93 million from four analysts [4] - Total noninterest income was $166.20 million, below the average estimate of $177.22 million from four analysts [4] - Bankcard fees reached $26.29 million, exceeding the average estimate of $21.50 million from three analysts [4] - Service charges on deposit accounts were $27.46 million, lower than the average estimate of $32.17 million from three analysts [4] - Trust and securities processing income was $79.78 million, slightly above the average estimate of $79.38 million from three analysts [4] Stock Performance - UMB shares have returned -5.1% over the past month, compared to a -0.8% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]