UMB (UMBF) Up 3.1% Since Last Earnings Report: Can It Continue?

Core Viewpoint - UMB Financial reported strong third-quarter earnings, driven by organic growth and the integration of Heartland Financial, but faced challenges with asset quality and rising non-interest expenses [2][3][4]. Financial Performance - Operating earnings per share for Q3 2025 were $2.70, exceeding the Zacks Consensus Estimate of $2.48 and up from $2.25 in the previous year [2]. - Net income on a GAAP basis reached $180.4 million, a significant increase of 64.5% year over year [4]. - Quarterly revenues (FTE) totaled $686.7 million, a surge of 66.4% year over year, surpassing the Zacks Consensus Estimate by 4.2% [5]. - Net interest income (NII) on an FTE basis was $483.4 million, reflecting a 90.3% increase from the prior-year quarter, with a net interest margin of 3.04%, up 58 basis points year over year [5]. - Non-interest income rose to $203.3 million, an increase of 28.1% year over year, primarily due to higher trust and securities processing and service charges [6]. - Non-interest expenses were $419.3 million, up 66.1% year over year, including $35.6 million in acquisition-related costs [6]. Asset Quality - The ratio of net charge-offs to average loans was 0.20%, up from 0.14% in the prior-year quarter [9]. - Total non-accrual and restructured loans increased to $131.9 million from $19.3 million in the previous year [9]. - The provision for credit losses was $22.5 million, compared to $18 million in the prior-year quarter [9]. Capital Ratios - As of September 30, 2025, the Tier 1 risk-based capital ratio was 11.3%, slightly up from 11.2% a year ago [11]. - The Tier 1 leverage ratio decreased to 8.3% from 8.6% in the prior-year quarter [11]. - The total risk-based capital ratio remained stable at 13.1% compared to the previous year [11]. Profitability Ratios - Return on average assets was 1.04%, up from 1.01% in the year-ago quarter [12]. - Operating return on average common equity decreased to 11.6% from 12.7% in the prior-year quarter [12]. Outlook - Operating expenses for Q4 2025 are expected to be between $375 million and $380 million [13]. - The company anticipates a tax rate between 19% and 22%, wider than the previous range of 19-21% [14]. - Estimates for the stock have been trending upward, indicating a promising outlook [15][17].