UMB Financial (UMBF)

Regional banking company UMB Financial (NASDAQ:UMBF) reported Q4 CY2025 results beating Wall Street’s revenue expectations, with sales up 66% year on year to $720.9 million. Its non-GAAP profit of $3.08 per share was 13.9% above analysts’ consensus estimates.

Company Overview

With roots dating back to 1913 and a name derived from "United Missouri Bank," UMB Financial (NASDAQ:UMBF) is a financial holding company that provides banking, asset management, and fund services to commercial, institutional, and individual customers.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

UMB Financial competes with regional banks like Commerce Bancshares (NASDAQ:CBSH), Bank of Hawaii (NYSE:BOH), and Cullen/Frost Bankers (NYSE:CFR), as well as larger national institutions including U.S. Bancorp (NYSE:USB) and Truist Financial (NYSE:TFC). In its fund services business, it competes with State Street (NYSE:STT) and Northern Trust (NASDAQ:NTRS).

Net interest income and and fee-based revenue are the two pillars supporting bank earnings. The former captures profit from the gap between lending rates and deposit costs, while the latter encompasses charges for banking services, credit products, wealth management, and trading activities. Luckily, UMB Financial’s revenue grew at an excellent 17.4% compounded annual growth rate over the last five years. Its growth beat the average banking company and shows its offerings resonate with customers, a helpful starting point for our analysis.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. UMB Financial’s annualized revenue growth of 32.9% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, UMB Financial reported magnificent year-on-year revenue growth of 66%, and its $720.9 million of revenue beat Wall Street’s estimates by 6%.

Net interest income made up 64.1% of the company’s total revenue during the last five years, meaning lending operations are UMB Financial’s largest source of revenue.

Markets consistently prioritize net interest income growth over fee-based revenue, recognizing its superior quality and recurring nature compared to the more unpredictable non-interest income streams.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

UMB Financial’s EPS grew at a remarkable 13% compounded annual growth rate over the last five years. However, this performance was lower than its 17.4% annualized revenue growth, telling us the company became less profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For UMB Financial, its two-year annual EPS growth of 17.9% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q4, UMB Financial reported adjusted EPS of $3.08, up from $2.49 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects UMB Financial’s full-year EPS of $11.32 to grow 2.6%.

Banks are balance sheet-driven businesses because they generate earnings primarily through borrowing and lending. They’re also valued based on their balance sheet strength and ability to compound book value (another name for shareholders’ equity) over time.

Because of this, tangible book value per share (TBVPS) emerges as the critical performance benchmark. By excluding intangible assets with uncertain liquidation values, this metric captures real, liquid net worth per share. EPS can become murky due to acquisition impacts or accounting flexibility around loan provisions, and TBVPS resists financial engineering manipulation.

UMB Financial’s TBVPS grew at a tepid 3.2% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 8% annually over the last two years from $57.49 to $67.02 per share.

Over the next 12 months, Consensus estimates call for UMB Financial’s TBVPS to grow by 15.8% to $77.62, solid growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, UMB Financial has averaged a Tier 1 capital ratio of 10.9%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity (ROE) measures how effectively banks generate profit from each dollar of shareholder equity - a critical funding source. High-ROE institutions typically compound shareholder wealth faster over time through retained earnings, share repurchases, and dividend payments.

Over the last five years, UMB Financial has averaged an ROE of 12.6%, healthy for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This shows UMB Financial has a decent competitive moat.

We were impressed by how significantly UMB Financial blew past analysts’ net interest income expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this quarter featured some important positives. The stock remained flat at $124.91 immediately following the results.

Updated: January 27, 2026 at 4:18 PM EST

Before making an investment decision, investors should account for UMB Financial’s business fundamentals and valuation in addition to what happened in the latest quarter.

There are some positives when it comes to UMB Financial’s fundamentals. First off, its revenue growth was impressive over the last five years. And while its net interest margin limits its operating profit potential compared to other banks that can earn more, all else equal., its net interest income growth was exceptional over the last five years. On top of that, its expanding net interest margin shows its loan book is becoming more profitable.

UMB Financial’s P/B ratio based on the next 12 months is 1.2x. When scanning the banking space, UMB Financial trades at a fair valuation. If you trust the business and its direction, this is an ideal time to buy.

Wall Street analysts have a consensus one-year price target of $138.46 on the company (compared to the current share price of $124.91), implying they see 10.9% upside in buying UMB Financial in the short term.