A month has gone by since the last earnings report for UMB Financial (UMBF Quick QuoteUMBF - Free Report) . Shares have added about 3.2% 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 the most recent earnings report in order to get a better handle on the important catalysts.

UMB Financial Q4 Earnings Top, Revenues Rise Y/Y

UMB Financial reported fourth-quarter 2022 net operating income (GAAP basis) of $2.06 per share, which surpassed the Zacks Consensus Estimate of $2.04. The bottom line also compared favorably with the prior-year quarter’s earnings of $1.61.

Results were aided by higher revenues, expansion of NIM and increasing loan balances. However, a rise in expenses and provisions adversely impacted the company’s performance.

UMB Financial reported GAAP net income of $100.2 million in the fourth quarter, up from $78.5 million recorded a year ago.

Revenues & Costs Rise, Average Loans and Deposits Grow

Total revenues for the fourth quarter were $370.7 million, up 12.5% year over year. However, the top line missed the Zacks Consensus Estimate of $375.3 million.

Revenues for 2022 came in at $1.47 billion, lagging the Zacks Consensus Estimate of $1.49 billion. However, the top line increased 15.2%.

NII on a quarterly basis was $245.2 million, reflecting an increase of 16.4%. Growth in average loans and higher interest rates mainly led to this upside. The NIM expanded to 2.83% from the prior-year quarter’s 2.37%.

Non-interest income was $125.5 million, up 5.7%, mainly due to higher brokerage income, bankcard income and the company-owned life insurance income, partially offset by lower investment and securities gain, service charges on deposits and derivative income.

Non-interest expenses were $237.8 million, up 6.9%. Increased salaries and employee benefits expenses, processing fees, marketing and business development expenses, bankcard expenses and occupancy expenses primarily resulted in this upside.

The efficiency ratio decreased to 63.72% from the prior-year quarter’s 67.78%. A decline in the efficiency ratio indicates increase in profitability.

As of Dec 31, 2022, average loans and leases were $20.3 billion, up 5.2% from the sequential quarter’s level.

Average deposits grew 5.3% to $31.4 billion as of Dec 31, 2022.

Credit Quality – A Mixed Bag

The ratio of net charge-offs to average loans was 0.04% in the reported quarter, down 15 basis points from the year-ago quarter’s level. Moreover, total non-accrual and restructured loans were $19.3 million, plunging 79.1%.

The provision for credit losses was $9 million, up from $8.5 million in the prior-year quarter.

Capital & Profitability Ratios Solid

As of Dec 31, 2022, the Tier 1 risk-based capital ratio was 10.62% compared with 12.05% as of Dec 31, 2021. Total risk-based capital ratio was 12.5% compared with 13.88% in the year-ago quarter. The Tier 1 leverage ratio was 8.43% at 2022 end compared with 7.61% as of Dec 31, 2021.
 
Adjusted return on average assets at the quarter end was 1.06% compared with the year-ago quarter’s 0.82%. Additionally, operating return on average equity was 15.16% compared with 9.91% witnessed in the prior-year quarter.

2023 Outlook

Management anticipates NIM in the first quarter to be stable or rise slightly on a sequential basis.

A solid loan growth is expected, which along with deposit repricing, will support NII growth for the full year.

The company expects quarterly non-interest expenses to be in the range of $225-$227 million. Besides, as always, the first quarter will include “seasonal reset of payroll taxes and other benefits expenses.” Also, the acquisition of HSA deposits is expected to add $4.5 million in amortization expense annually.

Further, increase in FDIC assessment rate will lead to almost $6 million increase in expenses per year.

For the full year, the effective tax rate is anticipated to be between 19% and 20%.

How Have Estimates Been Moving Since Then?

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

VGM Scores

At this time, UMB has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

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

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, UMB has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

UMB belongs to the Zacks Banks - Midwest industry. Another stock from the same industry, Huntington Bancshares (HBAN Quick QuoteHBAN - Free Report) , has gained 1.2% over the past month. More than a month has passed since the company reported results for the quarter ended December 2022.

Huntington Bancshares reported revenues of $1.97 billion in the last reported quarter, representing a year-over-year change of +19.2%. EPS of $0.43 for the same period compares with $0.36 a year ago.

For the current quarter, Huntington Bancshares is expected to post earnings of $0.38 per share, indicating a change of +18.8% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.7% over the last 30 days.

Huntington Bancshares has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.