UMB Financial NASDAQ: UMBF reported third-quarter 2026 net income of $272.3 million, or $3.56 per share, as loan growth, fee income momentum and stable net interest margin supported an operating return on tangible common equity of 19.5%.
The company also announced an agreement to acquire Placerville, California-based El Dorado Savings Bank, a transaction UMB said would expand its West Coast retail presence and add a low-cost consumer deposit base. The deal is expected to close in the first quarter of 2027, subject to El Dorado shareholder and regulatory approvals.
Loan growth and credit quality
UMB produced a record $3.1 billion of loans during the quarter, driving a $1.1 billion increase in average loan balances, or 11.1% on an annualized linked-quarter basis. Average commercial and industrial balances rose at a nearly 22% annualized rate, with activity led by St. Louis, Texas and Utah, according to Chief Financial Officer Ram Shankar.
Management expects loan production to moderate in the fourth quarter from the third-quarter record, though it said the pipeline remains healthy. Chairman and CEO Mariner Kemper said production could return closer to levels seen during the first half of the year, while executives noted that the quarter’s growth was diversified rather than concentrated in one industry or segment.
Credit metrics remained strong. Net charge-offs totaled 13 basis points, while the nonperforming loan ratio improved to 28 basis points from 31 basis points in the second quarter. Kemper said the company’s credit discipline centers on identifying potential problems early and actively managing watch-list credits.
On deposits, average balances increased 1.1% from the prior quarter. Average demand deposit account balances declined 6.1%, which management attributed to expected seasonal institutional banking disbursements. Executives said they expect the seasonal deposit pattern to reverse in the fourth quarter and cited visibility into commercial and institutional deposit growth in the first quarter.
Margin, fee income and expenses
Reported net interest margin was 3.32%, unchanged from the second quarter. Purchase accounting adjustments contributed about 22 basis points to margin, including $9 million of accelerated accretion related to early payoffs of acquired HTLF loans. Excluding those adjustments, core net interest margin was 3.10%, up one basis point sequentially.
Shankar said fourth-quarter core margin is expected to be relatively flat. He cited continued benefits from fixed-rate asset repricing, higher reinvestment rates in lending and securities portfolios, and a greater mix of higher-yielding commercial and industrial loans. Those factors were partly offset by seasonal demand deposit declines and higher interest-bearing deposit costs.
Non-interest income totaled $232.4 million, down $13.1 million from the second quarter. The decline reflected a $16.1 million reduction in investment securities gains after a strong prior quarter and a $7 million decrease in company-owned life insurance income. Excluding securities gains, company-owned life insurance mark-to-market effects and a one-time building-sale gain, fee income increased $8.2 million, or 3.9%, sequentially to an approximately $218 million run rate.
Institutional banking fee income rose 3.2% from the second quarter and nearly 18% year to date. Fund services revenue within trust and securities processing increased 8.8% sequentially and more than 22% year to date. Corporate Trust revenue increased nearly 19% year to date, and Kemper said the business had reached the No. 2 position nationally among municipal trustees by deal count.
Private wealth teams generated $1.2 billion in net new assets through September, matching the company’s full-year 2025 level. UMB reported year-to-date positive operating leverage of 11.5%.
Non-interest expense was $399.5 million, essentially unchanged from the second quarter. The company expects fourth-quarter operating expenses of $400 million to $405 million, reflecting incentive compensation accruals tied to performance and technology project costs. Shankar said UMB has rolled out Glean, an artificial intelligence tool, to nearly 1,000 associates, generating more than 550 use cases across customer-facing and back-office functions.
El Dorado acquisition expands West Coast footprint
UMB’s proposed acquisition of El Dorado Savings Bank would add 35 branches across the Sacramento metropolitan area, Sierra Nevada foothills, Lake Tahoe and Reno markets. UMB said its total branch count would rise 18% to 227.
El Dorado has approximately $2.1 billion in deposits and $500 million in loans, with a 24% loan-to-deposit ratio. Its third-quarter total cost of deposits was 88 basis points, while 89% of deposits were insured. Kemper said the average deposit account age, excluding certificates of deposit, was 14 years, and average deposits per branch were about $60 million.
The acquired loan portfolio is primarily composed of consumer mortgages, with a 39% loan-to-value ratio and an average loan size of $138,000. El Dorado also holds about $1.4 billion of primarily mortgage-backed securities, which Shankar said would be marked to market in the acquisition.
The approximately $500 million purchase price will be structured as a cash-and-stock transaction. UMB plans to issue 1.8 million shares to El Dorado shareholders based on a fixed exchange ratio of 13.553 UMB shares for each El Dorado share. The company expects the transaction to be modestly accretive to earnings in 2027 and estimates a 15- to 20-basis-point impact on its CET1 ratio at closing.
Kemper said UMB expects to preserve El Dorado’s customer, associate and community focus while using the acquired liquidity to support lending growth. He added that the transaction would not prevent UMB from considering additional tuck-in acquisitions, provided they fit its strategy and do not push the company above the $100 billion asset threshold before it is prepared.
About UMB Financial (NASDAQ:UMBF)
UMB Financial Corporation is a financial holding company headquartered in Kansas City, Missouri. Its principal subsidiary, UMB Bank, provides banking and financial services to individuals, businesses, institutions and government entities. The company serves customers through banking offices and digital channels across the Midwest and other U.S. markets.
UMB Bank offers commercial and personal banking products, including deposit accounts, loans, treasury management, payment services and credit solutions.
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