Why Is UMB (UMBF) Up 11% Since Last Earnings Report?

Core Viewpoint - UMB Financial reported strong second-quarter earnings, driven by significant growth in net interest income and the integration of Heartland Financial, despite facing challenges with asset quality and rising non-interest expenses [2][3][5]. Financial Performance - Operating earnings per share for Q2 2025 were $2.96, exceeding the Zacks Consensus Estimate of $2.35 and up from $2.16 in the previous year [2]. - Net income on a GAAP basis was $217.4 million, compared to $101.3 million in the same quarter last year [4]. - Quarterly revenues reached $689.2 million, a 73.8% increase year over year, surpassing the Zacks Consensus Estimate by 8.2% [5]. Income and Expenses - Net interest income (NII) on a fully taxable equivalent (FTE) basis was $475.3 million, an 88.9% increase from the prior year, with a net interest margin (NIM) of 3.10% compared to 2.51% [5]. - Non-interest income rose to $222.2 million, up 53.3% year over year, driven by gains in investment securities and service charges [6]. - Non-interest expenses increased to $393.2 million, a 57.8% rise year over year, primarily due to higher salaries and employee benefits from the Heartland acquisition [7]. Asset Quality - The ratio of net charge-offs to average loans was 0.17%, up from 0.05% in the prior year [10]. - Total non-accrual and restructured loans amounted to $97 million, compared to $13.7 million in the previous year [10]. - The provision for credit losses was $21 million, an increase from $14.1 million in the prior year [10]. Capital Ratios - As of June 30, 2025, the Tier 1 risk-based capital ratio was 11.24%, slightly up from 11.14% a year ago [12]. - The Tier 1 leverage ratio decreased to 8.34% from 8.50% in the prior year [12]. - The total risk-based capital ratio improved to 13.46% from 13.08% year over year [12]. Profitability Ratios - Return on average assets was 1.29%, up from 0.96% in the previous year [13]. - Operating return on average common equity was stable at 13.31%, compared to 13.30% in the prior year [13]. Outlook - For Q3 2025, operating expenses are expected to be slightly higher, in the range of $380 million to $385 million [14]. - The company anticipates a tax rate between 19% and 21% for 2025 [15]. - Estimates for the stock have been trending upward, indicating a promising outlook [16][18]. Industry Performance - UMB Financial is part of the Zacks Banks - Midwest industry, where Associated Banc-Corp reported revenues of $366.98 million, reflecting a year-over-year change of +12.7% [19]. - Associated Banc-Corp is expected to post earnings of $0.66 per share for the current quarter, indicating a change of +17.9% from the year-ago quarter [20].