UMB Financial Corporation (UMBF) recently delivered better than expected first quarter results, driven by strong fee-based income and solid credit quality.
Estimates have been rising off the strong quarter, sending the stock to a Zacks #1 Rank (Strong Buy).
Unlike many of its peers, UMB has been steadily raising its dividend over the last decade - even during the financial crisis. It currently yields 1.7%.
UMB Financial Corporation is a financial services company primarily offering banking and asset management services.
It is headquartered in Kansas City, Missouri and was founded in 1913. It has a market cap of $1.9 billion.
First Quarter Results
UMB Financial delivered better than expected first quarter results on April 24. Earnings per share came in at $1.15, crushing the Zacks Consensus Estimate of $0.61. Excluding certain one-time items, 'core' EPS was around $0.76, still easily beating the consensus.
Net interest income declined 1% year-over-year, but this was more than offset by a 6% increase adjusted non-interest income. Trust & Securities Processing, which made up 41% of non-interest income, increased 6%. Overall, non-interest accounted for 63% of total revenue for the quarter.
The company also recorded its 8th consecutive quarter of loan growth, driven by a 21% increase in commercial loans. And credit quality remained strong, with non-performing loans representing just 0.50% of total loans, well below the industry average around 3.4%.
Earnings estimates jumped higher for both 2012 and 2013 following solid Q1 results, sending the stock to a Zacks #1 Rank (Strong Buy) stock.
The Zacks Consensus Estimate for 2012 is now $3.10, representing 12% growth over 2011 EPS. The 2013 consensus is a couple pennies higher at $3.12.
Unlike many of its peers, UMB did not cut its dividend during the financial crisis of 2008-2009. In fact, the company actually raised it twice in 2008 and then again in 2009:
It currently yields a solid 1.7%.
The valuation picture looks reasonable for UMB with shares trading at 15x 12-month forward earnings. That's a premium to the industry median of 13x, but a discount to its 10-year median of 19x.
Its price to book ratio of 1.6 is in-line with the group and its historical multiple.
The Bottom Line
With a growing loan portfolio, strong fee-based income, solid credit quality, a 1.7% yield and reasonable valuation, UMB Financial offers investors a lot to like.
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