On January 8, Zacks Investment Research upgraded Union First Market Bankshares Corporation ( UBSH - Snapshot Report ) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Union First has been witnessing rising earnings estimates on the back of strong third-quarter 2012 results. Moreover, this well-known provider of banking and related financial services to retail and commercial customers delivered positive earnings surprises in 9 of the last 10 quarters. The long-term expected earnings growth rate for this stock is 12.0%.

Union First reported third-quarter results on October 22. Earnings per share came in at 37 cents, surpassing the Zacks Consensus Estimate and year-ago earnings of 33 cents by 12.1%. Results benefited from an improved fee income, partly offset by higher expenses and a decline in net interest income.

The company's net interest income fell 1.7% year over year to $38.8 million. However, non-interest income totaled $15.6 million, jumping 36.3%, driven by higher other service charges, commissions and fees along with gains on sale of loans. Non-interest expenses soared 11.1% to $38.3 million, mainly due to higher salary and compensation costs.

Credit quality continued to improve at Union First. Provision for loan losses plummeted 33.3% from the prior-year quarter to $2.4 million. Similarly, as of September 30, 2012, nonperforming assets were 2.29% of total loans, down 79 basis points from the prior-year quarter.

Following strong third-quarter results, Union First also increased its quarterly dividend to 12 cents per share. This reflects a 20% increase over the prior-quarter and a 71% jump over the prior-year quarter.

The Zacks Consensus Estimate for 2012 increased 7.9% to $1.36 per share over the last 90 days. For 2013, the Zacks Consensus Estimate jumped 9.9% to $1.33 per share over the same time frame.

Other Stocks to Consider

IberiaBank Corp. ( IBKC - Snapshot Report ) and Cardinal Financial Corp. ( CFNL - Snapshot Report ) are the other regional banks with a Zacks Rank #1 (Strong Buy).