UMB Financial Corporation (Nasdaq: UMBF), a financial services company, announced net income for the second quarter of 2023 of $90.1 million, or $1.85 per diluted share, compared to $92.4 million, or $1.90 per diluted share, in the first quarter of 2023 (linked quarter) and $137.6 million, or $2.83 per diluted share, in the second quarter of 2022. The results for the second quarter of 2022 include a pre-tax gain of $66.2 million on the sale of the company's entire investment in Visa Inc. Class B common shares, and a pre-tax $5.0 million contribution to the company's charitable foundation.
Net operating income, a non-GAAP financial measure reconciled later in this release to net income, the nearest comparable GAAP measure, was $93.8 million, or $1.93 per diluted share, for the second quarter of 2023, compared to $92.8 million, or $1.91 per diluted share, for the linked quarter and $137.6 million, or $2.83 per diluted share, for the second 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 $127.9 million, or $2.63 per diluted share, for the second quarter of 2023, compared to $135.4 million, or $2.78 per diluted share, for the linked quarter, and $187.1 million, or $3.84 per diluted share, for the second quarter of 2022. These operating PTPP results represent decreases of 5.5% on a linked-quarter basis and 31.6%, compared to the second quarter of 2022.
“In the second quarter of 2023, the positive impacts of fee income trends, a double-digit annualized increase in average loan balances, excellent asset quality metrics and expense management were masked by higher interest expense driven by the Federal Reserve’s monetary tightening actions as well as expected increases in funding costs in this high interest rate environment,” said Mariner Kemper, chairman, president and chief executive officer. “Average loans increased 17.3% on a linked-quarter annualized basis with nearly half of the increase driven by commercial & industrial loan balances. Credit metrics remain strong as evidenced by net recoveries this quarter and nine basis points of non-performing loans to total loans. Noninterest income was $138.1 million for the quarter. It's important to note that noninterest income for the same quarter in 2022 included a pre-tax gain of $66.2 million on the sale of our Visa Inc. Class B common shares. Finally, period-end deposit balances at quarter end were $33.5 billion, an increase of $1.6 billion, or 5.0%, as compared to March 31, 2023.”
Second Quarter 2023 earnings discussion
Summary of quarterly financial results | UMB Financial Corporation | |||||||||||
(unaudited, dollars in thousands, except per share data) | ||||||||||||
Q2 | Q1 | Q2 | ||||||||||
2023 | 2023 | 2022 | ||||||||||
Net income (GAAP) | $ | 90,110 | $ | 92,437 | $ | 137,556 | ||||||
Earnings per share (diluted) | 1.85 | 1.90 | 2.83 | |||||||||
Operating pre-tax, pre-provision income (Non-GAAP)(i) | 127,929 | 135,369 | 187,051 | |||||||||
Operating pre-tax, pre-provision earnings per share (diluted) | 2.63 | 2.78 | 3.84 | |||||||||
Operating pre-tax, pre-provision income - FTE (Non-GAAP)(i) | 134,504 | 141,924 | 193,329 | |||||||||
Operating pre-tax, pre-provision earnings per share - FTE (diluted) | 2.77 | 2.91 | 3.97 | |||||||||
Net operating income (Non-GAAP)(i) | 93,841 | 92,836 | 137,596 | |||||||||
Operating earnings per share (diluted) | 1.93 | 1.91 | 2.83 | |||||||||
GAAP | ||||||||||||
Return on average assets | 0.90 | % | 0.97 | % | 1.47 | % | ||||||
Return on average equity | 12.56 | 13.76 | 20.83 | |||||||||
Efficiency ratio | 65.59 | 63.12 | 53.08 | |||||||||
Non-GAAP (i) | ||||||||||||
Operating return on average assets | 0.93 | % | 0.98 | % | 1.47 | % | ||||||
Operating return on average equity | 13.08 | 13.82 | 20.84 | |||||||||
Operating return on average tangible equity excluding AOCI | 11.63 | 12.21 | 18.65 | |||||||||
Operating efficiency ratio | 64.24 | 62.98 | 53.06 | |||||||||
(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) | June | June | ||||||
YTD | YTD | |||||||
2023 | 2022 | |||||||
Net income (GAAP) | $ | 182,547 | $ | 243,519 | ||||
Earnings per share (diluted) | 3.75 | 4.99 | ||||||
Operating pre-tax, pre-provision income (Non-GAAP)(i) | 263,298 | 306,451 | ||||||
Operating pre-tax, pre-provision earnings per share (diluted) | 5.41 | 6.29 | ||||||
Operating pre-tax, pre-provision income - FTE (Non-GAAP)(i) | 276,428 | 319,128 | ||||||
Operating pre-tax, pre-provision earnings per share - FTE (diluted) | 5.68 | 6.55 | ||||||
Net operating income (Non-GAAP)(i) | 186,677 | 243,669 | ||||||
Operating earnings per share (diluted) | 3.83 | 4.99 | ||||||
GAAP | ||||||||
Return on average assets | 0.93 | % | 1.28 | % | ||||
Return on average equity | 13.14 | 17.60 | ||||||
Efficiency ratio | 64.34 | 58.03 | ||||||
Non-GAAP (i) | ||||||||
Operating return on average assets | 0.95 | % | 1.28 | % | ||||
Operating return on average equity | 13.44 | 17.61 | ||||||
Operating return on average tangible equity excluding AOCI | 11.91 | 16.86 | ||||||
Operating efficiency ratio | 63.61 | 58.00 | ||||||
(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) | ||||||||||||||||||||
Q2 | Q1 | Q2 | CQ vs. | CQ vs. | ||||||||||||||||
2023 | 2023 | 2022 | LQ | PY | ||||||||||||||||
Net interest income | $ | 225,611 | $ | 241,696 | $ | 224,791 | $ | (16,085 | ) | $ | 820 | |||||||||
Noninterest income: | ||||||||||||||||||||
Trust and securities processing | 61,589 | 62,359 | 58,886 | (770 | ) | 2,703 | ||||||||||||||
Trading and investment banking | 4,800 | 5,308 | 7,123 | (508 | ) | (2,323 | ) | |||||||||||||
Service charges on deposit accounts | 21,381 | 21,159 | 20,835 | 222 | 546 | |||||||||||||||
Insurance fees and commissions | 225 | 274 | 245 | (49 | ) | (20 | ) | |||||||||||||
Brokerage fees | 13,604 | 13,676 | 12,391 | (72 | ) | 1,213 | ||||||||||||||
Bankcard fees | 18,579 | 18,172 | 17,840 | 407 | 739 | |||||||||||||||
Investment securities gains (losses), net | 900 | (5,324 | ) | 60,720 | 6,224 | (59,820 | ) | |||||||||||||
Other | 17,004 | 14,576 | (1,705 | ) | 2,428 | 18,709 | ||||||||||||||
Total noninterest income | $ | 138,082 | $ | 130,200 | ||||||||||||||||
