On Mar 27, Zacks Investment Research upgraded StellarOne Corporation ( STEL - Snapshot Report ) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

StellarOne has been witnessing rising earnings estimates on the back of strong fourth-quarter 2012 results. Moreover, this well-known commercial banking services provider delivered positive earnings surprises in the last 4 quarters, with an average beat of 15.8%. The long-term expected earnings growth rate for this stock is 5.0%.

StellarOne reported fourth-quarter results on Jan 24. Earnings per share came in at 27 cents, surpassing the Zacks Consensus Estimate of 24 cents by 12.5% and year-ago earnings of 17 cents by 58.8%.

Earnings were primarily aided by solid year-over-year growth of 14.0% in non-interest income coupled with a 2.8% decrease in non-interest expenses. Moreover, pre-tax, pre-provision earnings were $10.6 million, up 19.4% year over year.

StellarOne marked growth in total assets and loans and the company’s balance sheet exhibited a strong capital position. Credit quality metrics also continued to improve, recording foreclosed asset levels at the lowest in the last 8 quarters. Moreover, non-performing assets declined 12.8% compared with the prior-year quarter, while net charge-offs for the fourth quarter of 2012 descended 67.6% year over year.

The Zacks Consensus Estimate for 2013 increased 4.2% to $1.00 per share over the last 60 days. For 2014, the Zacks Consensus Estimate jumped 6.0% to $1.06 per share over the same time frame.

Other Stocks to Consider

Besides StellarOne, other banks that are worth considering include Popular Inc. ( BPOP - Snapshot Report ) , Monarch Financial Holdings, Inc. ( MNRK - Snapshot Report ) and Union First Market Bankshares Corporation ( UBSH - Snapshot Report ) . All the 3 banks retain a Zacks Rank #1.