UMB Financial's Third-Quarter Profit Climbs 51% As Acquisition Costs Vanish And Business Loans Surge
The Kansas City bank's efficiency ratio improved to 48.71% from 58.09% a year earlier as loan growth and lower deal costs lifted results.
UMB Financial, the Kansas City bank holding company, said Tuesday that third-quarter net income available to common shareholders rose 51.0% from a year earlier to $272.3 million, or $3.56 per diluted share, in an 8-K filed with the SEC. Revenue grew 13.9% to $772.4 million while expenses fell, and the bank booked a record $3.1 billion of gross loan production.
Revenue up, costs down
Adjusted net operating income, a measure that strips out deal-related items, was $272.4 million, up 31.9% from the third quarter of 2025. Net income available to common shareholders was $271.8 million, or $3.56 per share, in the second quarter, so the latest quarter was essentially flat from the prior one.
Net interest income, the gap between what the bank earns on loans and securities and what it pays on deposits, rose 13.7% to $540.0 million. The net interest margin was 3.32%, up 28 basis points (0.28 percentage points) from a year ago and unchanged from the second quarter. Noninterest income rose 14.3% to $232.4 million.
The GAAP efficiency ratio, which measures expenses against revenue, improved to 48.71% from 58.09% a year earlier. Return on average common equity was 13.83%, against 10.14% a year ago.
Deal costs from Heartland fade
UMB closed its purchase of Heartland Financial USA on January 31, 2025, so year-ago results carried heavy integration charges. Acquisition-related and other nonrecurring expenses were $0.1 million this quarter, versus $35.6 million in the third quarter of 2025. Noninterest expense fell 4.7% from a year earlier to $399.5 million.
On an operating basis, which excludes those items, noninterest expense actually rose 3.7% from a year ago.
Business lending drives growth
UMB, whose national bank serves commercial, retail, government and correspondent-bank customers mainly across the Midwest, Southwest and West, saw average loans reach $41.7 billion, up 12.4% from a year earlier. Average commercial and industrial loans rose 24.9% from the third quarter of 2025 to $18.5 billion. Gross loan production was $3.1 billion, against $2.6 billion in the second quarter.
Chairman and CEO Mariner Kemper said customer sentiment and demand for business investment remain strong, "as demonstrated by our record third quarter production." He also cited persistent inflation, the Middle East conflict and higher interest rates as potential headwinds.
Credit quality improved. Net charge-offs were $14.0 million, or 13 basis points of average loans, and nonperforming loans fell to 28 basis points of total loans from 31 basis points at June 30. Kemper said they declined about $10 million to $118 million.
Dividend and call
The board declared a quarterly common dividend of $0.50 per share, payable January 4, 2027. UMB hosts its earnings call Wednesday at 9:30 a.m. ET.
The company redeemed $150.0 million of 2.75% subordinated notes due 2031 in mid-September, and its common equity Tier 1 capital ratio stood at 11.50% on September 30.
