• GAAP Earnings: $109.6 million or $2.23 per share.
• Operating Earnings: $2.25 per share.
• Loan Growth: Near double-digit annualized growth with $1.4 billion in top-line loan production.
• Net Interest Income: $247 million, an increase of $2.3 million.
• Net Interest Margin: Decreased by 5 basis points to 2.46%.
• Fee Income Growth: 30% linked quarter increase in fee income in corporate trust.
• Assets Under Administration: Exceeded half a trillion dollars.
• Average Loan Balances Growth: 9.8% linked quarter annualized increase.
• Net Charge Offs: 8 basis points year-to-date.
• Non-Performing Loans: 8 basis points of total loans.
• Average Total Deposits Growth: $951 million or 11.1% linked quarter annualized basis.
• Common Equity Tier 1 Ratio: Increased to 11.22%.
• Dividend Increase: 2.6% increase to 40 cents per share, payable in January 2025.
• Tangible Book Value Per Share: Increased to $66.86, a growth of more than 28% over the past year.
• Non-Interest Income: $158.7 million, a linked quarter increase of 9.5%.
• Non-Interest Expense: $252.5 million for the quarter.

• Warning! GuruFocus has detected 6 Warning Sign with UMBF.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• UMB Financial Corp (NASDAQ:UMBF) reported strong fee business performance with a near double-digit annualized loan growth driven by record top line loan production of $1.4 billion.
• The company achieved GAAP earnings of $109.6 million or $2.23 per share, with operating earnings slightly higher at $2.25 per share.
• UMB Financial Corp (NASDAQ:UMBF) saw a significant increase in fee income, particularly in institutional business, with assets under administration exceeding half a trillion dollars.
• The company reported excellent credit quality with just eight basis points of net charge-offs year-to-date and non-performing loans also at eight basis points of total loans.
• UMB Financial Corp (NASDAQ:UMBF) is on track to complete its pending acquisition of Hartland Financial, which is expected to accelerate growth strategy and further diversify its business model.

Negative Points

• The company's net interest margin decreased by five basis points sequentially to 2.46%, largely due to a decline in average DDA balances.
• UMB Financial Corp (NASDAQ:UMBF) experienced a higher provision expense in the quarter, reflecting the impact of loan growth and some general portfolio trends.
• The cost of interest-bearing deposits increased quarter over quarter due to new institutional deposit growth.
• There was a decrease of $601 million in DDA balances, impacting net interest margin by five basis points.
• The company noted that its consumer credit card portfolio, acquired recently, had a different credit profile than normally underwritten, leading to higher net charge-offs.

Q & A Highlights

Q: Can you discuss the pricing of deposits and any trends you've observed as we move into the fourth quarter? A: About 35% of our deposits are hard-indexed, adjusting immediately with market rates, and another 18% are soft-indexed, negotiated at prevailing rates. We achieved close to 90% beta on our index deposits following the recent rate cut. Additionally, the third quarter is typically a low point for DDAs due to seasonality, so we expect some build-up in the fourth quarter. Ram Shankar, CFO

Q: Are you seeing any pushback from clients when lowering deposit rates, especially on negotiated components? A: There is no pushback on the index deposits and very little on the soft index. Clients generally expect rates to drop, and we haven't encountered significant challenges in this area. Mariner Kemper, President & CEO

Q: With strong fee income performance, is the current level sustainable going into 2025? A: We feel confident about our fee income trajectory. All our fee income businesses are performing well, with significant growth in off-balance sheet deposits, fund services, and trading and investment banking income. The only non-core item was a $1.1 million gain on the sale of a building. Ram Shankar, CFO

Q: Could you provide an update on the expected accretion as part of net interest income for 2025? A: We don't typically refresh our accretion analysis until close. However, given the current direction of rates, we expect a positive impact on interest rate marks and capital. Ram Shankar, CFO

Q: How do you view the competitive landscape for loan growth, and are there any changes in terms of structure or rates? A: The competitive landscape remains consistent, with no new changes. We continue to focus on quality and are confident in our ability to win business. Mariner Kemper, President & CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.