UMB Financial’s UMBF fourth-quarter 2023 operating earnings per share of $2.29 beat the Zacks Consensus Estimate of $1.76. Also, the bottom line compared favorably with $2.07 earned in the year-ago quarter.

Results benefited from higher non-interest income, strong loan and deposit balances and nil provisions. Nonetheless, a decline in net interest income (NII), lower net interest margin (NIM) and increased expenses were the headwinds.

The results included the charge of $52.8 million related to the FDIC special assessment. After considering these charges, the net income for UMBF was $70.9 million for the specified quarter, down 29.2% year over year.

In 2023, operating earnings per share were $8.14, which decreased 8.3% from the prior year and missed the Zacks Consensus Estimate of $7.49. Net income (GAAP) was $350 million, which declined 18.9% from 2022.

Quarterly Revenues Increase, Costs Rise

Quarterly revenues were $370.8 million, up marginally year over year. Also, the top line beat the Zacks Consensus Estimate of $361.6 million.

In 2023, total revenues were $1.46 billion, slightly down from the previous year. Also, the top line missed the Zacks Consensus Estimate of $1.47 billion.

NII on an FTE basis was $237.2 million, which declined 5.8% from the prior-year quarter. On an FTE basis, NIM was 2.46%, down 37 basis points.

Non-interest income was $140.3 million, up 11.8% year over year. The rise was primarily driven by an increase in trust and securities processing, service charges on deposit accounts and investment securities gain.

Non-interest expenses were $290 million, up 21.9% year over year. The rise was driven by higher regulatory fees, mainly from FDIC special assessment. Also, a rise in processing fees and an uptick in deferred compensation expenses were some of the other major reasons behind the jump. These were partially offset by a decline in bonus and commission expenses, equipment costs and legal and consulting expenses. The operating non-interest expense was $235.9 million.

The efficiency ratio increased to 77.65% from the prior-year quarter’s 63.72%. An increase in efficiency ratio indicates a decrease in profitability.

As of Dec 31, 2023, average loans and leases were $23.1 billion, up 1.6% sequentially. Also, average deposits increased 4.3% to $32.7 billion.

Credit Quality Improves

The ratio of net charge-offs to average loans was 0.02% in the reported quarter, which decreased from 0.04% in the year-ago quarter.

Also, total non-accrual and restructured loans were $13.2 million, down 31.4% year over year.

The provision for credit losses was nil for the fourth quarter of 2023 compared with $9 million reported in the prior-year quarter. This reduction was primarily due to favorable changes in macroeconomic factors and credit metrics, partially offset by increased loan growth.