UMB Financial Corporation (Nasdaq: UMBF), a financial services company, announced net income for the third quarter of 2023 of $96.6 million, or $1.98 per diluted share, compared to $90.1 million, or $1.85 per diluted share, in the second quarter of 2023 (linked quarter) and $88.0 million, or $1.81 per diluted share, in the third quarter of 2022.
Net operating income, a non-GAAP financial measure reconciled later in this release to net income, the nearest comparable GAAP measure, was $98.4 million, or $2.02 per diluted share, for the third quarter of 2023, compared to $93.8 million, or $1.93 per diluted share, for the linked quarter and $88.3 million, or $1.82 per diluted share, for the third quarter of 2022. Operating pre-tax, pre-provision income (operating PTPP), a non-GAAP measure reconciled later in this release to the components of net income before taxes, the nearest comparable GAAP measure, was $126.6 million, or $2.60 per diluted share, for the third quarter of 2023, compared to $127.9 million, or $2.63 per diluted share, for the linked quarter, and $131.2 million, or $2.70 per diluted share, for the third quarter of 2022. These operating PTPP results represent decreases of 1.0% on a linked-quarter basis and 3.5%, compared to the third quarter of 2022.
“Our third quarter results demonstrated strong loan growth, stable deposits, continued momentum in many of our fee generating businesses, and solid asset quality,” said Mariner Kemper, chairman, president and chief executive officer. “Average loan balances increased more than 10% on a linked-quarter, annualized basis, driven primarily by construction draws and commercial & industrial loan growth. While net interest income for the industry continues to be impacted by higher interest costs paid to deposit clients, our net interest margin in the third quarter was essentially flat on a linked-quarter basis. Our loan portfolio, predominantly indexed to short-term interest rates, continues to reprice in the current interest rate environment as evidenced by the 21 basis points increase in loan yields as compared to the second quarter. Client sentiment remains cautiously optimistic amidst an uncertain geopolitical and interest rate environment. At UMB, our overall portfolio health remains solid as evidenced by a low loan loss ratio of just 0.08% of average loans and nonperforming loans comprising just 0.07% of total loans.”
(i) A non-GAAP financial measure reconciled later in this release to net income, the nearest comparable GAAP measure.
Third Quarter 2023 earnings discussion
Summary of quarterly financial results | UMB Financial Corporation | |||||||||||
(unaudited, dollars in thousands, except per share data) | ||||||||||||
Q3 | Q2 | Q3 | ||||||||||
2023 | 2023 | 2022 | ||||||||||
Net income (GAAP) | $ | 96,554 | $ | 90,110 | $ | 87,990 | ||||||
Earnings per share (diluted) | 1.98 | 1.85 | 1.81 | |||||||||
Operating pre-tax, pre-provision income (Non-GAAP)(i) | 126,592 | 127,929 | 131,166 | |||||||||
Operating pre-tax, pre-provision earnings per share (diluted) | 2.60 | 2.63 | 2.70 | |||||||||
Operating pre-tax, pre-provision income - FTE (Non-GAAP)(i) | 133,151 | 134,504 | 137,620 | |||||||||
Operating pre-tax, pre-provision earnings per share - FTE (diluted) | 2.73 | 2.77 | 2.83 | |||||||||
Net operating income (Non-GAAP)(i) | 98,400 | 93,841 | 88,259 | |||||||||
Operating earnings per share (diluted) | 2.02 | 1.93 | 1.82 | |||||||||
GAAP | ||||||||||||
Return on average assets | 0.97 | % | 0.90 | % | 0.96 | % | ||||||
Return on average equity | 13.25 | 12.56 | 12.90 | |||||||||
Efficiency ratio | 64.51 | 65.59 | 63.58 | |||||||||
Non-GAAP (i) | ||||||||||||
Operating return on average assets | 0.99 | % | 0.93 | % | 0.96 | % | ||||||
Operating return on average equity | 13.50 | 13.08 | 12.94 | |||||||||
Operating return on average tangible equity excluding AOCI | 11.77 | 11.63 | 11.34 | |||||||||
Operating efficiency ratio | 63.83 | 64.24 | 63.49 | |||||||||
(i) See reconciliation of Non-GAAP measures to their nearest comparable GAAP measures later in this release.
Summary of year-to-date financial results | UMB Financial Corporation | |||||||
(unaudited, dollars in thousands, except per share data) | September | September | ||||||
YTD | YTD | |||||||
2023 | 2022 | |||||||
Net income (GAAP) | $ | 279,101 | $ | 331,509 | ||||
Earnings per share (diluted) | 5.73 | 6.80 | ||||||
Operating pre-tax, pre-provision income (Non-GAAP)(i) | 389,890 | 437,617 | ||||||
Operating pre-tax, pre-provision earnings per share (diluted) | 8.00 | 8.98 | ||||||
Operating pre-tax, pre-provision income - FTE (Non-GAAP)(i) | 409,579 | 456,748 | ||||||
Operating pre-tax, pre-provision earnings per share - FTE (diluted) | 8.40 | 9.37 | ||||||
Net operating income (Non-GAAP)(i) | 285,077 | 331,928 | ||||||
Operating earnings per share (diluted) | 5.85 | 6.81 | ||||||
GAAP | ||||||||
Return on average assets | 0.95 | % | 1.18 | % | ||||
Return on average equity | 13.18 | 16.05 | ||||||
Efficiency ratio | 64.40 | 59.86 | ||||||
Non-GAAP (i) | ||||||||
Operating return on average assets | 0.97 | % | 1.18 | % | ||||
Operating return on average equity | 13.46 | 16.07 | ||||||
Operating return on average tangible equity excluding AOCI | 11.86 | 14.93 | ||||||
Operating efficiency ratio | 63.68 | 59.81 | ||||||
(i) See reconciliation of Non-GAAP measures to their nearest comparable GAAP measures later in this release.
Summary of revenue | UMB Financial Corporation | |||||||||||||||||||
(unaudited, dollars in thousands) | ||||||||||||||||||||
Q3 | Q2 | Q3 | CQ vs. | CQ vs. | ||||||||||||||||
2023 | 2023 | 2022 | LQ | PY | ||||||||||||||||
Net interest income | $ | 222,287 | $ | 225,611 | $ | 233,485 | $ | (3,324 | ) | $ | (11,198 | ) | ||||||||
Noninterest income: | ||||||||||||||||||||
Trust and securities processing | 66,668 | 61,589 | 59,586 | 5,079 | 7,082 | |||||||||||||||
Trading and investment banking | 3,771 | 4,800 | 5,387 | (1,029 | ) | (1,616 | ) | |||||||||||||
Service charges on deposit accounts | 21,080 | 21,381 | 19,932 | (301 | ) | 1,148 | ||||||||||||||
Insurance fees and commissions | 272 | 225 | 375 | 47 | (103 | ) | ||||||||||||||
Brokerage fees | 13,400 | 13,604 | 13,840 | (204 | ) | (440 | ) | |||||||||||||
Bankcard fees | 19,296 | 18,579 | 19,379 | 717 | (83 | ) | ||||||||||||||
Investment securities gains (losses), net | 271 | 900 | (1,345 | ) | (629 | ) | 1,616 | |||||||||||||
Other | 8,559 | |||||||||||||||||||
