Strong gains in both interest and noninterest income, combined with an improved efficiency ratio, boosted second-quarter profits at UMB Financial in Kansas City, Mo.

The $20.4 billion-asset company said after the markets closed Tuesday that it earned $42.8 million in the quarter that ended June 30, up 14% from the same period last year. Earnings per share increased 10 cents, to 86 cents, but fell 6 cents of shy of consensus analysts’ estimates compiled by FactSet Research Systems.

Mariner Kemper, UMB’s chairman and CEO.
Mariner Kemper is UMB Financial's chairman and CEO.

Net interest income increased 13% year over year, to $137.4 million, thanks largely to a 9.4% increase in average loans and higher loan yields resulting from increases in short-term interest rates. Noninterest income climbed 7% to $110.3 million driven primarily by higher wealth management revenue, higher interchange income and a $2.2 million decrease in commercial card program rewards and rebate expenses.

The improved results helped to drive UMB’s efficiency ratio down from 72.6% in last year’s second quarter to 68.3% at June 30.
In a news release, chairman and CEO Mariner Kemper said he was pleased with the results as the company continues to focus on improving its operating leverage.

Credit quality weakened slightly, as net chargeoffs nearly quintupled, to $10 million, or 0.37% of total loans. UMB attributed the increase to a single chargeoff on a loan to a manufacturing and distribution company.

Noninterest expenses increased 5% year over year to $176.9 million on higher salary and wage expenses and increased consulting and technology expenses related to investments in cybersecurity and the ongoing modernization of the company’s core systems.

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