Union First Market Bankshares Corporation
) reported a third-quarter earnings surprise of 12.1% last month,
which means that this regional bank has now beaten quarterly
estimates in 9 of the last 10 quarters. Shares have been on the
rise since the announcement, while rising earnings estimates helped
UBSH become a Zacks #1 Rank (Strong Buy) on October 27. Meanwhile,
a P/B multiple of just 0.9 makes this stock an attractive pick for
On October 22, Union First Market Bankshares reported third quarter
earnings of 37 cents per share. The Zacks Consensus Estimate and
last year's performance were each 33 cents, so the result beat both
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 sales of loans. Non-interest expenses
soared 11.1% to $38.3 million, mainly due to higher salary and
Credit quality continued to improve at Union First Market
Bankshares. 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.
Earnings Estimates Surging
Over the past 30 days, the Zacks Consensus Estimate for 2012
increased 4.8% to $1.32 per share with 6 of 8 total estimates
moving higher. This implies year-over-year growth of 23.4%. For
2013, the Zacks Consensus Estimate advanced 5.8% to $1.28 over the
same time frame as 5 of 8 estimates moved north.
Valuation Looks Reasonable
Along with a P/B multiple of 0.9, Union First Market Bankshares has
an attractive forward P/E ratio of 11.9 (a P/E ratio under 15.0 and
a P/B ratio below 3.0 generally indicate value). Moreover, the
company has a trailing 12-month ROE of 8.0%, compared with the peer
group average of 7.6%. This implies that the company reinvests its
earnings more efficiently than its industry peers.
Given the long-term growth projection of 12%, the PEG ratio comes
in at 0.99, a 1.0% discount to the benchmark of 1 for a fairly
priced stock. Thus, the expected long-term earnings growth is
currently priced at a discount.
Headquartered in Richmond, Virginia, Union First Market Bankshares
is the holding company for Union First Market Bank. The company,
with about 94 branches and more than 150 ATMs throughout Virginia,
offers banking and related financial services to retail and
commercial customers. With a market capital of about $407.5
million, Union First Market Bankshares competes with Community
Trust Bancorp, Inc. (
) and Farmers Capital Bank Corporation (
), among others.
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