A month has gone by since the last earnings report for UMB Financial (UMBF Quick QuoteUMBF - Free Report) . Shares have added about 11% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is UMB due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

UMB Financial Q3 Earnings & Revenues Beat, Loans Down

UMB Financial’s operating earnings per share of $1.95 outpaced the Zacks Consensus Estimate of $1.81 in third-quarter of 2021. The bottom line also compares favorably with the prior-year quarter’s $1.59.

Higher revenues, aided by a rise in interest income, supported the company’s performance. Deposit growth and an improvement in the credit quality were other positives.

Including certain non-recurring items, the company reported a net income of $94.5 million or $1.94 per share compared with $73.1 million or $1.52 per share recorded in the prior-year quarter.

Revenues, Deposit Balance Rise, Costs up

Total revenues (fully tax-equivalent) were $324.2 million, up 6.6% year over year. The revenue figure outpaced the Zacks Consensus Estimate of $321.6 million.

The NII was $209.8 million, reflecting an increase of 13.8% from the year-ago quarter. Growth in organic loans, excess liquidity, and Paycheck Protection Program participation mainly led to the upside. The NIM contracted to 2.52% from the prior-year quarter’s 2.73%.

The non-interest income totaled $107.9 million, decreasing 4.5% year over year. The decline mainly resulted from a fall in trading and investment banking income, brokerage fees, and losses on investment securities.

Non-interest expenses were $208.9 million, up 5.5% from the year-ago quarter mainly due to increased processing fees, salary and benefit expenses, and operational losses.

The efficiency ratio decreased to 65.62% from the prior-year quarter’s 66.14%. A fall in the efficiency ratio indicates a improvementin profitability.

As of Sep 30, 2021, average loans and leases were $16.75 billion, down marginally sequentially. Average deposits climbed 5.9% from the prior-quarter end to $29.4 billion.

Credit Quality Improves

The ratio of net charge-offs to average loans was 0.07% in the reported quarter, down 6 basis points from the year-ago quarter. The provision for credit losses was a benefit of $5 million against expenses of $16 million seen in the prior-year quarter.

However, total non-accrual and restructured loans were $96.5 million, up 3% year over year.

Capital Ratios Mixed, Profitability Improves

As of Sep 30, 2021, the Tier 1 risk-based capital ratio was 12.26% compared with 11.93% as of Sep 30, 2020. The total risk-based capital ratio was 14.17%, remaining flat year over year. The Tier 1 leverage ratio was 7.87% compared with 8.19% as of Sep 30, 2020.

Adjusted return on average assets at the quarter’s end was 1.04% compared with the year-ago quarter’s 0.99%. Additionally, operating return on average equity was 11.97% compared with 10.70% witnessed in the prior-year quarter.

Outlook

For 2021, tax rate is expected to be between 16% and 18%.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

Currently, UMB has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise UMB has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.