UMB Financial Q2 Earnings Beat on Strong NII Growth, Expenses Rise Y/Y

UMB Financial Corp. UMBF reported second-quarter 2025 operating earnings per share of $2.96, which beat the Zacks Consensus Estimate of $2.35. The bottom line also compared favorably with $2.16 in the year-ago quarter.

The company delivered a strong quarterly performance, supported by organic growth within its legacy UMBF operations and the integration benefits of its January 2025 acquisition of Heartland Financial USA, Inc. The results were further bolstered by increases in net interest income (NII) and non-interest income. However, the overall performance was partially offset by deteriorating asset quality and elevated non-interest expenses.

Net income (GAAP basis) for UMBF was $217.4 million in the second quarter compared with the $101.3 million reported in the year-ago quarter.

UMB Financial’s Revenues & Expenses Rise

Quarterly revenues were $689.2 million, surging 73.8% year over year. Also, the top line beat the Zacks Consensus Estimate by 8.2%.

NII on an FTE basis was $475.3 million, an increase of 88.9% from the prior-year quarter. On an FTE basis, the net interest margin (NIM) was 3.10% compared with 2.51% in the prior-year quarter.  The increase was primarily driven by a rise in average earning assets due to rate and mix changes related to the acquisition of Heartland Financial.

Non-interest income was $222.2 million, up 53.3% year over year. The rise was primarily driven by an increase in investment securities gains, trust and securities processing, and service charges on deposit accounts.

Non-interest expenses were $393.2 million, up 57.8% year over year. The increase was primarily due to a rise in salaries and employee benefits expenses, driven by the additional associates added as part of the Heartland Financial acquisition, an increase in occupancy expenses, and processing fees. Operating non-interest expenses (adjusted basis) were $380 million, up 56.3% year over year.
 
The efficiency ratio was 53.38%, down from the prior-year quarter’s 63.37%. An increase in the efficiency ratio indicates a decrease in profitability.

UMBF’s Loans & Deposit Balances Rise

As of June 30, 2025, average loans and leases were $36.4 billion, up 12.7% sequentially. Also, average deposits increased 10.7% year over year to $55.6 billion.

UMB Financial’s Credit Quality Deteriorates

The ratio of net charge-offs to average loans was 0.17% in the reported quarter compared with 0.05% in the prior-year quarter. 
 
Total non-accrual and restructured loans were $97 million compared with $13.7 million in the prior-year quarter. 
 
The provision for credit losses was $21 million in the second quarter of 2025 compared with the $14.1 million reported in the prior-year quarter.

UMBF’s Capital Ratios: Mixed Bag

As of June 30, 2025, the Tier 1 risk-based capital ratio was 11.24% compared with 11.14% as of June 30, 2024. The Tier 1 leverage ratio was 8.34% compared with 8.50% in the prior-year quarter. The total risk-based capital ratio was 13.46% compared with 13.08% in the year-ago quarter.

UMB Financial’s Profitability Ratios Improve

Return on average assets at the second-quarter end was 1.29% compared with the year-ago quarter’s 0.96%.

The operating return on average common equity was 13.31% compared with 13.30% in the year-ago quarter.

Our Take on UMBF

UMB Financial posted a solid second quarter, driven by strong net interest income, meaningful contributions from the Heartland Financial acquisition, and healthy loan and deposit growth. While elevated expenses and weakening credit quality pose challenges, the company’s improved efficiency and profitability metrics underscore its ability to navigate a changing operating environment. Looking forward, the continued integration of Heartland Financial and prudent risk management will be the key to sustaining the performance momentum.

UMB Financial Corporation Price, Consensus and EPS Surprise

UMB Financial Corporation price-consensus-eps-surprise-chart | UMB Financial Corporation Quote

UMBF currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

Hancock Whitney Corp.’s HWC second-quarter 2025 adjusted earnings per share of $1.37 exceeded the Zacks Consensus Estimate of $1.34. Further, the bottom line rose 4.6% from the prior-year quarter.

HWC's results benefited from an increase in non-interest income and NII. Higher loans were another positive. However, higher adjusted expenses and provisions, alongside lower deposit balances, were headwinds.

Bank OZK OZK reported second-quarter 2025 earnings per share of $1.58, which surpassed the Zacks Consensus Estimate of $1.51. Moreover, the bottom line reflected a rise of 3.9% from the prior-year quarter’s actual.

Overall, OZK’s results benefited from a rise in NII and non-interest income, and lower provisions. Also, higher loans and deposit balances were other positives. However, higher non-interest expenses acted as spoilsports.

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