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UMB FINANCIAL CORP (UMBF)·Q1 2025 Earnings Summary

Executive Summary

  • Operating EPS of $2.58 beat S&P Global consensus $2.19 by $0.39 as NIM expanded 39 bps QoQ on the HTLF core deposit franchise and purchase accounting accretion; GAAP EPS was $1.21, reflecting $62M day‑1 provision and $53M merger/nonrecurring costs . EPS consensus value from S&P Global: $2.19468*.
  • Total revenue rose to $563.8M (+$129.7M QoQ; +$165.2M YoY) on strong net interest income ($397.6M) and stable noninterest income; operating efficiency improved to 55.56% from 61.12% QoQ . S&P “Revenue” consensus/actual are not directly comparable for banks; see Estimates Context.
  • Balance sheet inflected with HTLF close: average loans +27.8% QoQ to $32.3B; average deposits +32.3% QoQ to $50.3B; CET1 10.11% and total risk‑based capital 12.54% remain well‑capitalized .
  • Management guided Q2 core NIM ex‑accretion to 2.75–2.80%, Q2 operating expense ~$375M (incl. ~$25M amortization), and FY25 ETR 19–20%; accretion expected ~$33M in Q2; HTLF adds ~$8M/month fee income .
  • Asset quality headwind isolated to acquired loans (NCOs $35.9M; ~$29.7M from HTLF); legacy UMB NCOs were $6.2M (0.10% of avg loans). Board declared $0.40 dividend and authorized up to 1,000,000 share repurchase through post‑2026 AGM meeting .

What Went Well and What Went Wrong

What Went Well

  • Net interest margin rose to 2.96% (+39 bps QoQ) on lower cost of interest‑bearing deposits (–35 bps) and accretion benefit; CEO highlighted HTLF core deposit value proposition driving the improvement . “The value proposition of the core deposit franchise at HTLF was evident as demonstrated by the 37-basis points improvement in cost of interest-bearing deposits and 39-basis points increase in our net interest margin” — Mariner Kemper .
  • Operating leverage improved: operating efficiency ratio to 55.56% (from 61.12% QoQ; 60.04% YoY) and operating PTPP to $233.3M (+39.8% QoQ; +48.2% YoY) .
  • Fee momentum intact: trust & securities processing ($79.8M), higher service charges (+$6.1M QoQ) and bankcard fees (+$5.2M QoQ; HTLF cards +$5.4M) offset investment valuation headwinds .

What Went Wrong

  • GAAP EPS compressed to $1.21 on merger costs and day‑1 CECL provision ($62.0M) for HTLF non‑PCD loans; total noninterest expense rose $114.4M QoQ with $53.2M acquisition/nonrecurring costs .
  • Asset quality noise: NCOs increased to $35.9M (0.45% of avg loans) with ~$29.7M from acquired HTLF loans; nonaccrual loans rose to $100.9M (0.28% of loans) .
  • Investment and other income headwinds: net investment securities losses of $4.8M QoQ; lower COLI and derivative income within “Other” .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Net Interest Income ($USD Thousands)$239,434 $268,974 $397,639
Noninterest Income ($USD Thousands)$159,244 $165,211 $166,198
Total Revenue ($USD Thousands)$398,678 $434,185 $563,837
EPS – Diluted (GAAP) ($)2.25 2.44 1.21
Operating EPS – Diluted (Non‑GAAP) ($)2.47 2.49 2.58
Net Interest Margin (FTE, %)2.48% 2.57% 2.96%
Efficiency Ratio (GAAP, %)63.44% 61.83% 65.19%
Operating Efficiency Ratio (%, Non‑GAAP)60.04% 61.12% 55.56%
ROA (GAAP, %)1.06% 1.06% 0.54%
ROE (GAAP, %)14.11% 13.53% 5.86%

Segment Breakdown (Q1 2025)

SegmentNet Interest Income ($000)Provision ($000)Noninterest Income ($000)Noninterest Expense ($000)Income Before Taxes ($000)Net Income ($000)
Commercial Banking$273,916 $66,751 $37,218 $173,011 $71,372 $62,385
Institutional Banking$61,159 $435 $103,797 $107,268 $57,253 $50,043
Personal Banking$62,564 $18,814 $25,183 $104,508 $(35,575) $(31,095)

KPIs and Balance Sheet

KPIQ1 2024Q4 2024Q1 2025
Average Loans ($USD Thousands)$23,354,043 $25,289,788 $32,309,697
End‑of‑Period Loans ($USD Thousands)$23,637,649 $25,642,301 $35,936,281
Average Deposits ($USD Thousands)$33,526,132 $38,017,219 $50,284,519
End‑of‑Period Deposits ($USD Thousands)$36,913,610 $43,142,029 $58,521,178
CET1 Ratio (%)11.09% 11.29% 10.11%
Total Risk‑Based Capital Ratio (%)13.03% 13.21% 12.54%
Tier 1 Leverage Ratio (%)8.39% 8.50% 8.47%
Provision for Credit Losses ($000)$10,000 $19,000 $86,000
Net Charge‑Offs ($000)$3,017 $8,935 $35,872
NCOs / Avg Loans (%)0.05% 0.14% 0.45%
Nonaccrual & Restructured Loans ($000)$17,756 $19,282 $100,885
ACL on Loans ($000)$226,159 $259,089 $368,922

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Core NIM (ex‑accretion)Q2 2025—2.75–2.80% New
Purchase Accounting Accretion to NIIQ2 2025—~$33M New
Operating ExpenseQ2 2025—≈$375M incl. ~$25M amortization New
Effective Tax RateFY 202520–24% (Q4 call) 19–20% Lowered
Fee Income from HTLFRun‑rate—≈$8M per month New
DividendQ2/Q3 2025$0.40 declared Q4 2024 $0.40 payable July 1, 2025 Maintained
Share Repurchase AuthorizationThrough post‑2026 AGM meeting—Up to 1,000,000 shares New authorization (annual cycle)

Earnings Call Themes & Trends

TopicQ3 2024Q4 2024Q1 2025Trend
Technology/systems conversionIntegration planning underway; legal day one targeted Q1 Approvals received; close 1/31/25; conversion planning active Systems conversion targeted October 2025; cultural integration on track Advancing toward October conversion
Supply chain/tariffs/macroNeutral to modest benefit from rate path; fee growth resilient Higher‑for‑longer favorable; NII trajectory positive Clients largely able to pass through costs; monitoring tariff uncertainty Watch macro tariffs; manageable near term
Deposit dynamics (DDA volatility)Seasonal low; episodic institutional flows Strong DDA build QoQ; beta steeper on way down DDA benefit 2–3 bps; expect flat to slightly up with extra HTLF month Improving with HTLF addition
Rate sensitivity/hedgesSlightly liability‑sensitive; hedges in place Neutral pro forma; higher‑for‑longer positive Year 1 modest up with 100 bp cut; loan repricing in year 2 Neutral to modestly positive
Loan growth/pipelineRecord production; strong CRE/C&I pipelines Record top line production; underpenetrated markets to drive gains $1.2B production; early encouraging pipeline in acquired markets Strong; leverage new footprint
Credit qualityLow NCOs; nonperformers 8 bps NCOs 14 bps; CRE nonowner‑occupied net charge‑offs de minimis HTLF loans drove NCOs; legacy UMB NCOs 0.10% Mixed near term due to HTLF; legacy stable

Management Commentary

  • “2025 is off to an exciting start… The value proposition of the core deposit franchise at HTLF was evident… Total top line loan production exceeded $1.2 billion… legacy UMB average loans… increased 8.3%” — Mariner Kemper, CEO .
  • “First quarter results included $28.6 million in net accretion to net interest income… core margin benefited approximately 2 to 3 basis points from higher DDA… operating expenses reflected a $15.6 million increase related to amortization of newly created intangibles” — Ram Shankar, CFO .
  • “Relative to the core margin of 2.75% in 1Q that excludes all accretion, we expect second quarter margin to range between 2.75% and 2.80%… We expect our second quarter operating expense to be approximately $375 million… and effective tax rate… between 19% and 20% for the full year 2025” — Ram Shankar .
  • “Charge‑offs attributed to legacy UMB loans were just $6.2 million… We expect the overall performance of the combined companies to perform in line with our historical trends” — Mariner Kemper .

Q&A Highlights

  • NII trajectory and accretion: Per‑day NII ~$4.5–$5.0M; contractual accretion ~$33M in Q2; additional month of HTLF savings to flow through .
  • Deposit outlook: Average DDA expected flat to slightly up in Q2 with extra HTLF month; episodic institutional flows continue .
  • Cost saves: ~$17M quarterly run‑rate achieved; majority of additional saves expected around Q4 conversion; >40% of modeled saves in CY2025 due to earlier close .
  • Asset quality: HTLF charge‑offs were known/identified through diligence; expect combined portfolio to align with historical UMB performance; ongoing aligning of underwriting standards .
  • Rate sensitivity: Slightly liability‑sensitive year one under rate cuts due to deposit indexing; more asset‑sensitive year two as loans reprice down; overall neutral post‑acquisition .

Estimates Context

Metric (S&P Global)ConsensusActualResult
Primary EPS Consensus Mean ($)2.19468*2.58*Beat (by $0.39)*
Revenue Consensus Mean ($)559,014,880*477,837,000*Miss (by $81.18M)*

Notes:

  • Company‑reported total revenue was $563,837,000 in Q1 2025, which is above the S&P Global “Revenue” actual shown above; bank revenue definitions can differ vs S&P standardized series .
  • Values marked with an asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Operating EPS beat was driven by NIM expansion and purchase accounting accretion, signaling near‑term revenue tailwinds even as GAAP EPS absorbed integration costs .
  • Margin durability: core NIM guide of 2.75–2.80% for Q2, plus ~$33M Q2 accretion, suggests continued NII strength; watch DDA levels and timing of rate cuts .
  • Cost synergy ramp into Q4 conversion should improve operating efficiency further; current operating efficiency already stepped down to 55.56% .
  • Asset quality noise concentrated in acquired HTLF loans; legacy UMB credit metrics remain strong; expect normalization as portfolios align with UMB standards .
  • Balance sheet scale and new markets create multi‑year share‑gain potential in CRE/C&I and consumer/wealth; management sees strong loan production pipelines in acquired regions .
  • Capital remains solid (CET1 10.11%); dividend maintained at $0.40 and buyback authorization provides optionality post‑conversion and capital build .
  • Trading stance: Near term, positive on NII/margin and operating leverage momentum; monitor acquisition integration milestones, Q2 expense cadence, and DDA volatility; medium term, thesis rests on execution of synergies and sustained share gains across enlarged footprint .