We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Loan Growth Aids UMB Financial (UMBF) Amid Rising Costs
Read MoreHide Full Article
UMB Financial Corporation (UMBF - Free Report) benefits from revenue strength, aided by rising loan and deposit balances, along with a diversified fee income. Steady capital distributions are backed by a decent liquidity position. However, escalating expenses are major concerns for UMB Financial, limiting its bottom-line expansion. Intense competition and significant exposure to commercial loans are other headwinds.
UMB Financial has a healthy balance sheet position, with net loan growth witnessing a compound annual growth rate (CAGR) of 15.8% in the last three years (2020-2022). Also, deposits saw a CAGR of 9.8% during the same period. The rising trend for loans and deposits continued in the first nine months of 2023. Management continues to see opportunities for loan growth in various verticals across its footprint in fourth-quarter 2023. It expects continued outperformance relative to the industry.
The company’s net interest income (NII) witnessed a CAGR of 10.8% over the last four years (ended 2022). The rising trend for NII continued in the first nine months of 2023. High rates and decent loan demand will offer support going forward. Management expects NII to remain flat to grow slightly in the fourth quarter of 2023.
UMB Financial has been focusing on diversifying operations to non-interest sources of revenues in order to reduce exposure to spread income. The metric saw a CAGR of 9.1% for the four-year period ended in 2022. The company's investment in revenue-producing capabilities is likely to support growth. Going forward, diverse lines of business and verticals will keep aiding UMB Financial’s non-interest income.
As of Sep 30, 2023, UMB Financial had debt (comprising short-term and long-term debt) of $2.68 billion, which was volatile for the last several quarters. Nonetheless, cash and due from banks as well as interest-bearing due from banks were $4.01 billion as of the same date. The company, therefore, seems to be well-placed in terms of its liquidity profile and is expected to continue meeting its debt obligations, even if the economic situation worsens.
Decent liquidty is also expected to support the company’s capital distribution activities. In third-quarter 2023, it approved the repurchase of up to 1 million shares of its common stock. It has been raising dividends annually on a regular basis since 2002, with the latest hike of 2.6% announced in October 2023.
However, cost escalation is the key downside for UMB Financial. Non-interest expenses flared up, seeing a CAGR of 4.9% over the last four years (2019-2022). The rising trend continued in the first nine months of 2023. Such a rise in expenses is likely to impede bottom-line growth in the upcoming period.
The majority of UMB Financial’s loan portfolio, nearly 80.7% of the total loans as of Sep 30, 2023, comprises total commercial loans (commercial and industrial, as well as commercial real estate lending). The current rapidly changing macroeconomic backdrop is likely to put some strain on commercial lending. Thus, the lack of loan portfolio diversification is likely to hurt its financials if the economic situation worsens.
The company faces intense competition in its business operations. The growing market share of FinTech companies and online service providers is a key threat to traditional banks like UMB Financial.
Over the past three months, shares of this Zacks Rank #3 (Hold) company have rallied 36%, outperforming the industry's 25% rise.
Image Source: Zacks Investment Research
Bank Stocks Worth a Look
A couple of better-ranked stocks from the banking space are WSFS Financial Corporation (WSFS - Free Report) and Park National (PRK - Free Report) .
Earnings estimates for WSFS have been unchanged for 2023 over the past 30 days at $4.47. The company’s shares have gained 24.9% over the past six months. WSFS Financial currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Park National’s earnings estimates have been unchanged for 2023 over the past 30 days at $8.21. In six months’ time, PRK’s shares have gained 31.2%. The company carries a Zacks Rank #2 at present.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Shutterstock
Loan Growth Aids UMB Financial (UMBF) Amid Rising Costs
UMB Financial Corporation (UMBF - Free Report) benefits from revenue strength, aided by rising loan and deposit balances, along with a diversified fee income. Steady capital distributions are backed by a decent liquidity position. However, escalating expenses are major concerns for UMB Financial, limiting its bottom-line expansion. Intense competition and significant exposure to commercial loans are other headwinds.
UMB Financial has a healthy balance sheet position, with net loan growth witnessing a compound annual growth rate (CAGR) of 15.8% in the last three years (2020-2022). Also, deposits saw a CAGR of 9.8% during the same period. The rising trend for loans and deposits continued in the first nine months of 2023. Management continues to see opportunities for loan growth in various verticals across its footprint in fourth-quarter 2023. It expects continued outperformance relative to the industry.
The company’s net interest income (NII) witnessed a CAGR of 10.8% over the last four years (ended 2022). The rising trend for NII continued in the first nine months of 2023. High rates and decent loan demand will offer support going forward. Management expects NII to remain flat to grow slightly in the fourth quarter of 2023.
UMB Financial has been focusing on diversifying operations to non-interest sources of revenues in order to reduce exposure to spread income. The metric saw a CAGR of 9.1% for the four-year period ended in 2022. The company's investment in revenue-producing capabilities is likely to support growth. Going forward, diverse lines of business and verticals will keep aiding UMB Financial’s non-interest income.
As of Sep 30, 2023, UMB Financial had debt (comprising short-term and long-term debt) of $2.68 billion, which was volatile for the last several quarters. Nonetheless, cash and due from banks as well as interest-bearing due from banks were $4.01 billion as of the same date. The company, therefore, seems to be well-placed in terms of its liquidity profile and is expected to continue meeting its debt obligations, even if the economic situation worsens.
Decent liquidty is also expected to support the company’s capital distribution activities. In third-quarter 2023, it approved the repurchase of up to 1 million shares of its common stock. It has been raising dividends annually on a regular basis since 2002, with the latest hike of 2.6% announced in October 2023.
However, cost escalation is the key downside for UMB Financial. Non-interest expenses flared up, seeing a CAGR of 4.9% over the last four years (2019-2022). The rising trend continued in the first nine months of 2023. Such a rise in expenses is likely to impede bottom-line growth in the upcoming period.
The majority of UMB Financial’s loan portfolio, nearly 80.7% of the total loans as of Sep 30, 2023, comprises total commercial loans (commercial and industrial, as well as commercial real estate lending). The current rapidly changing macroeconomic backdrop is likely to put some strain on commercial lending. Thus, the lack of loan portfolio diversification is likely to hurt its financials if the economic situation worsens.
The company faces intense competition in its business operations. The growing market share of FinTech companies and online service providers is a key threat to traditional banks like UMB Financial.
Over the past three months, shares of this Zacks Rank #3 (Hold) company have rallied 36%, outperforming the industry's 25% rise.
Image Source: Zacks Investment Research
Bank Stocks Worth a Look
A couple of better-ranked stocks from the banking space are WSFS Financial Corporation (WSFS - Free Report) and Park National (PRK - Free Report) .
Earnings estimates for WSFS have been unchanged for 2023 over the past 30 days at $4.47. The company’s shares have gained 24.9% over the past six months. WSFS Financial currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Park National’s earnings estimates have been unchanged for 2023 over the past 30 days at $8.21. In six months’ time, PRK’s shares have gained 31.2%. The company carries a Zacks Rank #2 at present.