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Growth & Income

UMB Financial Corporation (UMBF - Snapshot Report) 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%.

Company Description

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%.

Estimates Rising

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.

Dividend

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:

UMBF: UMB Financial Corporation

It currently yields a solid 1.7%.

Valuation

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.

Todd Bunton is the Growth & Income Stock Strategist for Zacks Investment Research and Editor of the Income Plus Investor service.

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