UMB’s Chief Financial Officer Ram Shankar discusses earnings results for the second quarter of 2025.
Please refer to the second quarter 2025 UMBF Investor Presentation‡ for more details on our earnings.
This marked the first full quarter that included HTLF operations, and we posted strong results, with growth on both sides of the balance sheet, along with solid contributions from our fee income businesses. It’s been exciting to see everyone come together under one umbrella, and we’ve been encouraged by the activity and production by our new teammates.
Incorporating HTLF into UMB
We announced our second quarter results on Tuesday, July 29, with an investment community update the following morning. Our results include accounting adjustments related to the acquisition, which, along with the inclusion of HTLF results for just two months in the first quarter, make for difficult comparisons over prior periods.
Our reported net income available to common shareholders of $215.4 million included merger-related expenses and some other non-recurring items. Excluding these items, our net operating income was $225.4 million, or $2.96 per share, well ahead of the $2.37 expected by the 11 equity research analysts who cover our company.
Noninterest income – or fee income – is driven by a variety of businesses, including fund services, corporate trust, private wealth and private investments, bond trading and card services. For the second quarter, fee income was $222.2 million, an increase of 33.7% from the first quarter, partially related to the inclusion of HTLF operations for an extra month.
Investment strategy wins
One of the larger, exciting drivers for this quarter’s strong result was a pre-tax gain of $29.4 million on an investment we made in Voyager Technologies, a space technology company, which had an initial public offering (IPO) of stock in June 2025.
Our private investments team, part of our wealth management business, looks for private businesses with strong long-term growth potential, often companies with which we have other banking relationships. We partner with them by investing in their operations, providing funds to support growth and expansion.
In this case, we invested approximately $6 million in Voyager over the past five years and had an equity position that resulted in 904,000 shares of stock when the shares went public. The value of our position will fluctuate with Voyager’s stock price and will be reflected in our financial statements as long as we continue to hold the shares.
We have a successful track record of financing businesses and have invested more than $200 million across more than 50 businesses to date. You may remember a similar success a few years ago where we had a gain of $109 million on shares of Tattooed Chef stock. While we can’t predict when larger gains will materialize, we’ve had several successful investments over these past few years, and we see continued potential in our current holdings.
Strong growth continues in key business lines
Other highlights among our fee businesses included strong growth in our fund services and custody business, with assets under administration now standing at $543 billion. Our teams are bringing in new clients and we benefit from strong growth in our existing client base. Corporate trust assets under administration increased 15% in the quarter to nearly $56 billion, and our specialty trust and agency solutions team have seen new business growth of more than 50% year-to-date.
Combined assets under administration for all our institutional banking business, including fund services, custody, corporate trust and healthcare services, topped $600 billion as of June 30.
Additionally, credit and debit card purchase volumes reached $5.6 billion, including $782 million from legacy HTLF cards.
UMB’s diverse business model has long carried a higher percentage of fee income than peer banks, and for the second quarter, it was 32% of our total revenue. For comparison, peer banks with $10 billion to $100 billion in assets reported a median of 18% of total revenue from fee income.
Another portion of our revenue is traditional spread income, or net interest income. This is the difference between what we earn on our loans and other assets and pay for our deposits and other funding.
Net interest income garnered positive impacts from acquisition
Net interest income was again favorably impacted by acquisition accounting rules. Very simplistically, when we acquired HTLF’s balance sheet on January 31 this year, we brought it on at current fair value — and this difference from the original value is earned back, or “accreted,” as income over the remaining life of the asset or liability.
So, when an HTLF loan pays off early, we recognize a bigger benefit. We earned $467 million in net interest income in the second quarter — $42.2 million of that was related to those adjustments, including $13 million related to early loan payoffs and paydowns. We’ll continue to experience this volatility over the next several quarters as we continue to align acquired balances to UMB’s standards.
Excluding that income, net interest income was $424.8 million, an increase of $54 million from the first quarter, reflecting the one additional month of HTLF’s earning assets and liabilities, along with strong organic balance sheet growth.
Strong asset growth and liquidity position
On the asset side of the balance sheet, average loans increased 12.7% to $36.4 billion. On a legacy UMB basis, average loan balances increased 15.3% on an annualized basis, from the prior quarter, once again outpacing many peer banks. As of July 31, peer banks have reported just a 5.4% median annualized increase in loan balances. This growth was driven by a new record in top-line production in the quarter of $1.9 billion in new loans, with a solid contribution coming from legacy HTLF lenders and markets.
We remain very well diversified both in terms of loan products and geography and are looking forward to further penetration in the new regions across the footprint.
On the other side of balance sheet, we had strong deposit growth, both organic and related to the full quarter of HTLF balances. Interest-bearing deposits and demand deposit account (DDA) balances increased 11.9% and 7.3%, respectively, from the first quarter. DDAs are noninterest bearing transactional accounts which help benefit our total cost of funding our growth. These balances fluctuate in a somewhat seasonal pattern as our large commercial and institutional customers use funds for typical business purposes, including payroll, dividends and other regular activities.
In the second quarter, we maintained our strong liquidity position with an attractive loan-to-deposit ratio of 65.4%. Maintaining this liquidity through a strong focus on excess deposit generation allows us to deliver on our strong pipeline and for our clients.
Steadfast asset quality
As we discuss every quarter, UMB has had a long track record of excellent asset quality. We have strong underwriting standards that have not wavered over the years.
In the second quarter of 2025, our asset quality metrics improved with net charge-offs to total loans of 0.17%. Net charge-offs related to legacy UMB loans in the second quarter represented just 0.13% of average loans, in line with our recent quarters. Given what we know today, we continue to expect charge off levels to remain near, or below, our historical averages in the second half of the year.
Ready for what’s next
In closing, we’re pleased with our strong results in the first half of 2025. We are excited about the remainder of the year and beyond, as we fully convert the HTLF operations. I look forward to reviewing our third quarter results in late October.
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Please note: This presentation may contain forward-looking statements, including the discussion of future financial and operating results, benefits, synergies, gains and costs that the company expects to realize.
Forward-looking statements and any pro forma metrics are subject to assumptions, risks, and uncertainties as outlined in our SEC filings and summarized in our quarterly investor presentation. Actual results may differ from those set forth in forward-looking statements, which speak only as of the recording date. We undertake no obligation to update them, except to the extent required by securities laws. All per-share metrics discussed refer to common shares and are on a diluted share basis.
Further information regarding UMB and factors which could affect the forward-looking statements contained herein can be found in UMB’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (and which is available at on the SEC’s archive site, here‡,) and its other filings with the SEC.
