UMB Financial Corporation’s UMBF strong balance sheet position and efforts to diversify operations will continue to aid its top-line growth. Also, its enhanced capital position makes it well poised to undertake expansion moves. However, escalating expenses and intense competition might impede bottom-line growth.
Backed by loan growth, UMB Financial’s net interest income (NII) continues to witness improvement. While the company’s low-cost deposit base aided net interest margin in the prior years, the same declined in the first nine months of 2019 due to challenging rate environment. The company has a healthy balance sheet position, and with lower tax rates and easing of regulations, loan and deposit balances are likely to grow further. This is expected to continue benefiting NII.
Moreover, UMB Financial has been making efforts to diversify operations to non-interest sources of revenues. This will reduce the bank’s exposure to interest rates in order to balance the risks related to the rate environment.
Notably, the company’s several credit metrics have been improving and steadily moving toward normalized levels. Also, UMB Financial’s strong capital position will help it to undertake opportunistic expansion moves. Further, on the back of consistent earnings growth, the bank’s capital deployment activities seem sustainable.
However, UMB Financial’s costs remain elevated due to investments in newer technologies and building distribution networks. Also, the bank faces intense competition in its business operations. With increased market share of fintech companies and online service providers, financials of traditional banks like UMB Financial are hampered as new entrants are not subject to the same level of regulations and supervisions.
Further, as of Sep 30, 2019, nearly 73% of the bank’s loans comprised total commercial loans (commercial as well as commercial real estate lending). Such high exposure to commercial loans can be risky for the company amid a challenging economy and competitive markets.
Shares of UMB Financial have gained 12.9% over the past year compared with the industry’s growth of 20.3%. Reflecting analysts’ optimism, the Zacks Consensus Estimate for 2019 earnings of $4.76 has moved marginally upward over the past 30 days. The stock currently carries a Zacks Rank #3 (Hold).
Eagle Bancorp Montana, Inc.’s EBMT 2019 earnings estimates have moved 6% north in the past 60 days. Further, the company’s shares have rallied 29.3% in the past year. At present, it sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
TD Ameritrade Holding Corporation’s AMTD 2019 earnings estimates have moved slightly north in the past 60 days. Moreover, the Zacks Rank #1 stock has gained 2.1% in the past year.
Enova International, Inc.’s ENVA earnings estimates have moved 7.3% upward for 2019 in the past 30 days. Moreover, the Zacks Rank #1 stock has gained 19.9% in the past year.
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