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    UMBF
    Earnings call· Mar 2026(Q1 FY26)

    UMB FINANCIAL Q1 FY26 earnings call UMBF

    Apr 29, 2026 Source

    Executive summary

    UMB Financial Q1 FY26 — Strong Loan Growth, Margin Expansion, and Capital Build

    UMB Financial delivered a strong Q1 FY26, marked by robust loan growth and significant core margin expansion, alongside continued capital build. The company addressed concerns regarding private credit exposure, clarifying its negligible direct lending risk and diversified asset servicing. Management emphasized its long-term strategy of organic growth, opportunistic capital returns, and leveraging technology for efficiency, expecting continued positive operating leverage.

    Highlights

    5

    • 10.8% linked quarter annualized loan growth, boosted by $2.3 billion in gross production.

    • 9 basis points of core margin expansion, driven by a 24 basis point decrease in the cost of interest-bearing deposits.

    • Assets under administration increased nearly $20 billion from the prior quarter to $565 billion.

    • Common equity Tier 1 ratio improved by 20 basis points to 11.16%.

    • Positive operating leverage of 6.4% on a linked-quarter basis and an operating efficiency ratio of 47.6%.

    Concerns

    3

    • Provision for credit losses of $27 million, driven mostly by the $1.4 billion increase in period-end loan balances.

    • Net charge-offs of 19 basis points.

    • Contractual accretion benefits expected to be lower, with $71 million for the remainder of 2026 and $79 million for 2027, compared to $51 million in Q1 FY26.

    Guidance & targets

    5
    CategoryTargetConfidence
    Operating leverage
    Positive operating leverage
    high materiality
    High
    Operating expense
    $383 million
    medium materiality
    Medium
    Core net interest margin
    Relatively flat
    high materiality
    Medium
    Effective tax rate
    Between 20% and 22%
    medium materiality
    High
    Dividend
    Increase in dividend
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Fund Services
    Strong performance and continued momentum.
    Assets Under Administration: $565 billionAUA change from prior quarter: Up nearly $20 billion
    		————
    Private Credit (AUA)
    Represents a small portion of total AUA and fee income, with immaterial deposit impact. Beneficiary of capital movement within the private investing universe.
    Assets Under Administration: $43 billionPercentage of total AUA: 7.6%AUA change from prior quarter: Increased nearly 5%Annual fee income: $13 millionPercentage of annualized Q1 fee income: 1.6%
    		————

    Operational metrics

    37
    Linked quarter annualized loan growth
    10.8%
    Q1 FY26

    Boosted by $2.3 billion in gross production.

    Gross loan production
    $2.3 billion
    Q1 FY26

    Contributed to linked quarter annualized loan growth.

    Core margin expansion
    9 bpssequentially
    Q1 FY26

    Driven by a 24 basis point decrease in the cost of interest-bearing deposits.

    Cost of interest-bearing deposits decrease
    24 bps
    Q1 FY26

    Driver of core margin expansion.

    Net charge-offs
    19 bps
    Q1 FY26

    High-quality credit metrics.

    Period-end loan balances increase
    $1.4 billion
    Q1 FY26

    Main driver for provision for credit losses.

    Assets under administration
    $565 billionUp nearly $20 billion from prior quarter
    Q1 FY26

    Strong contributions from Fund Services.

    Total NDFI lending exposure
    $2.6 billion6.6% of total loans
    Q1 FY26

    Additional disclosure provided to explain private credit exposure.

    Subscription lines (within NDFI)
    $300 millionLess than 1% of total loans
    Q1 FY26

    Carry an even lower level of risk within NDFI exposure.

    Private equity funds (within NDFI)
    Just under $1 billion
    Q1 FY26

    Largest portion of these being subscription lines.

    Pass rated NDFI balances
    >98%
    Q1 FY26

    Indicates high quality of the NDFI portfolio.

    AUA related to private credit
    $43 billion7.6% of total AUA; increased nearly 5% from prior quarter
    Q1 FY26

    Related annual fee income totaled approximately $13 million.

    Annual fee income from private credit AUA
    $13 million1.6% of annualized Q1 fee income
    Q1 FY26

    Immaterial deposit impact from these funds.

    Shares repurchased
    178,000 shares
    March

    Opportunistically repurchased following Board approval of increased share repurchase authorization.

    Positive operating leverage
    6.4%
    linked-quarter

    Driven by strong Q1 results.

    Operating ROTCE improvement
    155 bps
    linked-quarter

    Reflects strong performance.

    Net interest income from purchase accounting adjustments
    $51 million
    Q1 FY26

    Includes $15.1 million related to accelerated accretion from early payoffs.

    Accelerated accretion from early payoffs
    $15.1 million
    Q1 FY26

    Part of net interest income from purchase accounting adjustments.

    Benefit to NIM from total accretion
    33 bps
    Q1 FY26

    Impact on reported net interest margin.

    Noninterest income
    $204.8 millionIncrease of $6.4 million or 3.2%
    Q1 FY26

    Driven by Fund Services, Corporate Trust, deposit service charges, and investment banking revenue.

    Municipal trading income increase
    39%from Q4 FY25
    Q1 FY26

    Contributed to investment banking revenue.

    Nonrecurring gains on previously charged off HCLF loans
    $5.9 millionVariance of $5.4 million from Q4 FY25
    Q1 FY26

    Included within other income category.

    Decline in COLI income
    $3.8 million
    Q1 FY26

    Similar offset in reduced deferred compensation expense.

    Adjusted fee income
    $198 million
    Q1 FY26

    Adjusted for investment gains, nonrecurring items, and mark-to-market on COLI.

    Merger-related costs
    $4.4 million
    Q1 FY26

    Compared to elevated levels in the prior quarter.

    Reduction in salaries and benefits expense
    $5.9 million
    Q1 FY26

    Related to lower bonus and commissions accruals.

    Reduction in deferred compensation expense
    $3.9 million
    Q1 FY26

    Partially offset by seasonal increases in payroll taxes, insurance, and 401(k) expense.

    Average C&I balances growth
    22%annualized
    Q1 FY26

    Led by strong activity in Texas and other regions.

    DDAs increase
    10.4%linked quarter annualized
    Q1 FY26

    Largely offset by lower interest-bearing deposit balances.

    Average customer funding increase
    $702 million1.2% from prior quarter; 4.8% linked quarter annualized
    Q1 FY26

    Includes customer repurchase agreement balances.

    Cost of total deposits
    2.06%Down 19 bps
    Q1 FY26

    Driven by favorable mix shift and outperformance of pricing on soft index deposits.

    Cost of interest-bearing deposits
    2.79%Down 24 bps; 280% in prior quarter
    Q1 FY26

    Reflects favorable mix shift and repricing.

    Blended beta on total deposits
    70%
    Q1 FY26

    Driven by favorable mix shift and continued outperformance of pricing on soft index deposits.

    Reported loan yield
    6.52%
    Q1 FY26

    Includes accretion benefit from loans.

    Production yields
    6% to 6.25%
    Q1 FY26

    For new money coming in, accretive to core loan yields.

    Loans with sub 5% rates repricing higher
    ~$3 billion
    current

    Expected to reprice higher in today's environment.

    Q1 baseline operating expense (adjusted)
    $378 million
    Q1 FY26

    Adjusted for $3 million expense credit from deferred compensation.

    Industry KPIs

    13
    MetricValueDetails
    Loans$1.4B increaseUSD
    DepositsEssentially flat
    Rotce ROE155 bps improvementbps
    Cet1 ratio11.16%%
    Capital returns178,000 sharesunits
    Fee income lines$204.8MUSD
    Allowance reserves$27MUSD
    Net interest income$51MUSD
    Net interest margin3.38%%
    Net charge offs npls19 bpsbps
    Total operating expenses$375.4MUSD
    Provision for credit losses$27MUSD
    Efficiency ratio operating leverage47.6%%

    Risks & headwinds

    2
    Lower contractual accretion benefitsRemainder of 2026, 2027

    $71 million for remainder of 2026 and $79 million for 2027

    Mitigation: Offset by strong operating leverage and balance sheet growth.

    Private credit industry headlines exaggerating exposures and risks at regional banksOngoing

    Negligible direct lending exposure; $2.6 billion (6.6% of total loans) NDFI lending exposure, $300 million (<1% of loans) subscription lines; $43 billion (7.6% of AUA) related to private credit, generating $13 million (1.6% of Q1 fee income) annually.

    Mitigation: Exposure is to high-quality and experienced operators with diversified holdings, strong credit structures, low leverage, and low loan-to-value metrics. Added disclosures to IR deck to clarify.

    What to watch in Q2 FY26

    5

    Second quarter operating expense

    Q2 FY26
    Current$375.4M (Q1 operating noninterest expense, adjusted to $378M baseline)
    TargetIn line with current consensus expectations of $383M

    Why it matters

    Expense discipline and operating leverage are key to profitability.

    Looking ahead, we would expect second quarter operating expense to be in line with the current consensus expectations of $383 million.

    Q&A highlights

    6

    Inquired about the sustainability of the $2.3 billion gross loan production and potential impacts from geopolitical risks or higher energy costs.

    Mariner Kemper stated that strong pipelines are consistent with historical trends, not seasonal, and driven by strategy, officer capability, and market share opportunities across their footprint, including new markets. No impact from geopolitical risks or energy costs was noted.

    “I said the same thing every quarter for 22 years, which is the next quarter looks pretty good, and it is not seasonal at all.”

    asked by Jon Arfstrom · answered by J. Kemper

    2 min read6 chapters

    Detailed Narrative

    01

    Private Credit Exposure Clarification

    Management proactively addressed market concerns regarding private credit, detailing that NDFI lending exposure is $2.6 billion, representing 6.6% of total loans. Only $300 million, or less than 1% of total loans, are in lower-risk subscription lines. Asset servicing related to private credit is $43 billion, which is 7.6% of total Assets Under Administration (AUA), generating $13 million in annual fee income, or 1.6% of Q1 fee income. The company emphasized minimal risk due to high-quality operators, diversified holdings, strong credit structures, and low leverage at the fund level.

    02

    Capital Management and Flexibility

    UMB's Common Equity Tier 1 (CET1) ratio improved by 20 basis points to 11.16% as of March 31. Management noted a preliminary positive read on updated capital rules, anticipating relief from risk-weighted assets. This strong capital position, coupled with rapid capital accretion, provides flexibility for organic growth, tuck-in acquisitions, and capital returns. The company opportunistically repurchased approximately 178,000 shares in March and expects a dividend increase this year.

    03

    Robust Loan Growth and Pipeline Strength

    The company reported 10.8% linked-quarter annualized loan growth, driven by $2.3 billion in gross production. Average Commercial & Industrial (C&I) balances saw 22% annualized growth, with strong activity noted in Texas and new markets such as California and Utah. The loan pipeline remains robust, and new money loan yields are between 6% and 6.25%, contributing positively to the core Net Interest Margin (NIM).

    04

    Deposit Dynamics and Funding Costs

    Average deposits were essentially flat in Q1 FY26, with a 10.4% linked-quarter annualized increase in Demand Deposit Accounts (DDAs) largely offsetting lower interest-bearing balances. The cost of total deposits decreased by 19 basis points to 2.06%, and interest-bearing deposits declined by 24 basis points to 2.79%. This improvement was driven by a favorable mix shift and continued outperformance in pricing soft index deposits. Management highlighted the importance of long-term average growth due to episodic client activity.

    05

    Fee Income Momentum

    Fee businesses, particularly Fund Services and Corporate Trust, demonstrated strong performance. Assets Under Administration (AUA) increased by nearly $20 billion from the prior quarter, reaching $565 billion. Investment banking revenue, including a 39% increase in municipal trading income from Q4 FY25, also contributed significantly to a 3.2% increase in noninterest income, totaling $204.8 million for the quarter.

    06

    Efficiency and Operating Leverage

    UMB achieved positive operating leverage of 6.4% on a linked-quarter basis and an operating efficiency ratio of 47.6%. The operating Return on Tangible Common Equity (ROTCE) improved by 155 basis points linked-quarter. Management expects to maintain positive operating leverage for the full year 2026, driven by strategic scale building, selective market expansion, and continuous investment in technology to enhance operational efficiency.

    AI-generated summary of the company’s earnings call. Not investment advice.