UMB Financial Corporation
) second-quarter 2014 earnings per share came in at 76 cents, in
line with the Zacks Consensus Estimate. However, earnings compared
favorably with the prior-year quarter figure of 74 cents.
Strong top-line performance and a robust capital position were the
positives. Moreover, improvement in loans and deposits exhibited
organic growth of the company. However, elevated non-interest
expenses reflected undisciplined expense management.
The company's net income stood at $34.7 million in the reported
quarter, up from the year-ago quarter figure of $29.9 million.
Quarter in Detail
UMB Financial's net interest income came in at $86.2 million, up
4.7% year over year. The rise was mainly due to higher average
earnings assets. However, net interest margin (NIM) declined 3
basis points year over year to 2.53%.
Non-interest income climbed 18% year over year to $134 million. The
upsurge was mainly due to higher trust and securities processing
income and other non-interest revenues.
UMB Financial's non-interest expense surged 10.8% year over year to
$166.5 million. This was mainly due to higher salaries and employee
UMB Financial's credit metrics was a mixed bag in the reported
quarter. Provision for loan losses was $5 million, in line with the
prior-year quarter. As a percentage of loans, nonperforming loans
decreased to 0.39% as of Jun 30, 2014, dipping from 0.40% as of Jun
However, as of Jun 30, 2014, UMB Financial's nonperforming loans
were $27.2 million, up from $25.5 million as of Jun 30, 2013.
Allowance for loan losses totaled $76.8 million, or 1.11% of loans,
up from $71.6 million or 1.13% as of Jun 30, 2013.
As of Jun 30, 2014, total deposits stood at $12.2 billion, up 4.3%
year over year, while net loans rose 7.9% to $6.8 billion. Total
assets under management (AUM) were recorded at $43.7 billion, up
21.9% year over year. Shareholders' equity was $1.6 billion, up
from $1.2 billion in the prior-year quarter.
Overall, UMB Financial's results reflected a commendable quarter
for the company. While there are lingering concerns over the
prevalent stringent regulatory landscape and mounting expenses, we
believe that improvement in the company's fee-based business will
help it navigate through the current cycle.
Moreover, organic growth of the company is expected to
significantly drive earnings in the coming quarters. Currently, UMB
Financial carries a Zacks Rank #3 (Hold).
Among other finance stocks,
United Community Banks, Inc.
) are expected to release June-quarter end results on Jul 24 while
HomeTrust Bancshares, Inc.
) on Jul 28.
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