UMB Financial Q3 EPS Rises as Loan Production Drives Net Interest Income

UMB Financial Corporation (Nasdaq: UMBF) reported higher third-quarter earnings from a year earlier as record loan production and expanding net interest income offset a sequential decline in investment gains. Diluted GAAP earnings were $3.56 per share for the quarter ended September 30, 2026, unchanged from the second quarter but up from $2.36 a year earlier.

Net income available to common shareholders reached $272.3 million, compared with $271.8 million in the prior quarter and $180.4 million in the third quarter of 2025. Non-GAAP operating earnings were also $3.56 per diluted share, versus $3.57 in the second quarter and $2.70 a year ago.

Total revenue was $772.4 million, down 0.7% sequentially but up from $678.3 million in the year-earlier period. The linked-quarter decrease reflected lower noninterest income, while net interest income continued to grow.

Loan Growth Supports Net Interest Income

GAAP net interest income increased 1.4% from the second quarter to $540.0 million. Excluding purchase accounting adjustments, net interest income rose 2.1% to $506.9 million, supported by organic loan growth, stable margins, an additional day in the quarter and the net effect of higher short-term interest rates.

The fully taxable-equivalent net interest margin held at 3.32%. Excluding purchase accounting benefits, the margin edged up to 3.10% from 3.09%. Purchase accounting contributed $33.1 million of net accretion income and 22 basis points to the quarter’s margin, compared with $35.9 million and 23 basis points in the second quarter.

Average loans increased 2.8% sequentially to $41.75 billion, equivalent to an annualized growth rate of 11.1%. End-of-period loans rose by $1.38 billion, or 3.4%, to $42.53 billion after gross production reached a record $3.09 billion.

Commercial and industrial lending accounted for most of the expansion. Average C&I loans increased 6.5% from the prior quarter to $18.93 billion, with growth led by St. Louis, Texas and Utah. C&I balances totaled $19.7 billion at quarter-end, representing 46.4% of UMB’s loan portfolio. Construction and land development loans declined, while investment commercial real estate balances were largely stable.

Average deposits increased 1.1% sequentially to $58.22 billion, driven by a 7.1% increase in commercial deposits excluding public funds. That growth was partly offset by seasonal declines in corporate trust and other institutional deposits. End-of-period deposits were $60.17 billion.

The cost of total deposits increased to 2.17% from 2.08%, reflecting higher short-term rates on indexed deposits and a change in funding mix. Average noninterest-bearing deposits fell to $13.82 billion from $14.71 billion, primarily because of seasonality in corporate trust balances.

Fee Revenue Falls as Investment Gains Moderate

Noninterest income declined 5.3% from the second quarter to $232.4 million. Net investment securities gains fell by $16.1 million to $11.0 million, while company-owned life insurance income decreased by $7.0 million.

Those declines were partly offset by a $5.7 million increase in trust and securities processing revenue to $104.0 million. Fund Services revenue rose 8.8% sequentially to $59.2 million, while corporate trust and institutional asset management revenue increased 2.2% to $23.0 million. UMB reported $619.4 billion of Fund Services and custody assets under administration at quarter-end.

Other offsets included a $1.8 million gain on the sale of a building and higher income from customer derivatives. Fee income represented 30.1% of total revenue.

GAAP noninterest expense was nearly unchanged at $399.5 million. A $10.1 million reduction in deferred compensation expense was partly offset by higher salaries and bonuses, computer hardware costs, occupancy expenses, other real estate owned losses, and marketing and business development spending. Non-GAAP operating expense increased 0.3% to $399.3 million.

Credit Metrics Remain Stable

Net charge-offs declined to 0.13% of average loans from 0.16% in the second quarter. Nonperforming loans fell to 0.28% of total loans from 0.31%, while the allowance for credit losses remained at 1.06% of loans.

The provision for credit losses increased to $31.0 million from $28.0 million. Net charge-offs totaled $14.0 million, down from $15.9 million in the prior quarter.

UMB’s investment commercial real estate and construction portfolio totaled $10.6 billion, or 25.0% of loans, with an average loan-to-value ratio of 57% and recourse on 84% of balances. Non-depository financial institution loans totaled $3.2 billion, or 8% of loans, with more than 99% classified as pass-rated.

Capital and Business Priorities

UMB ended the quarter with a Common Equity Tier 1 capital ratio of 11.50% and a total risk-based capital ratio of 13.52%. The tangible common equity ratio, a non-GAAP measure, was 7.55%. The company listed $37.4 billion of available liquidity sources, including the Federal Reserve discount window, free bond collateral and its Federal Reserve account balance.

Management’s stated priorities include gaining market share across its geographic footprint, expanding specialized lending teams and using capacity in recently acquired markets. The presentation also emphasized fee-based institutional businesses, including Fund Services, custody, corporate trust, Investor Solutions and Healthcare Services, as sources of revenue diversification.

The company’s balance sheet remains sensitive to interest-rate movements: 73% of quarter-end loans were variable rate, and 77% of total loans were scheduled to reprice within 12 months. UMB also reported a $1.76 billion net unrealized loss across its available-for-sale and held-to-maturity securities portfolios as of September 30.

UMB identified tariffs and trade restrictions, banking-sector stress, sustained inflation, the possibility of recession and geopolitical instability as factors that could cause future results to differ from current expectations.