UMB Financial Corporation’s UMBF subsidiary, UMB Bank, recently entered into an agreement to acquire the corporate trust business of Commerce Trust Company, a division of Commerce Bank, to expand its presence in Missouri. Commerce Bancshares CBSH is the parent company of Commerce Bank.

The deal is backed by UMB Financial’s motive to enhance its corporate trust portfolio in Kansas and become an integral part of the Missouri’s corporate trust market. Post closure, UMB Financial will become a key provider of trustee and paying agent services in Missouri.

According to the deal, Bill Ekey, manager of Commerce Trust Company, and his team of corporate trust associates will continue to manage existing relationships. Further, the entire team will be supporting UMB Financial to expand its footprint in new businesses. However, the terms of the deal remain undisclosed.

Notably, Commerce Trust Company is among the largest bank-owned trust companies in the United States with a rank 19 and more than $52 billion worth client assets.

Jim Cornelius, president of UMB Financial’s Institutional Banking noted, “It also complements our other efforts, which include expansion in our national products of escrow, default, aviation and asset-backed securities sectors as well as growth in key geographic areas.”

According to John Handy, president and CEO of Commerce Trust Company, selling the bond administration portion of the business is a strategic decision to focus resources on the company’s the core areas of growth.

Conclusion

UMB Financial has a strong capital position which places it well to undertake such opportunistic expansions. Its capital ratios remain above the levels required to be considered well capitalized. As of Sep 30, 2019, the total risk-based capital ratio was 13.51%. Such capital strength makes us believe that the company will be able to leverage many more strategic decisions in the near term.

Currently, UMB Financial carries a Zacks Rank #3 (Hold).

Also, shares of UMB Financial have gained 7.9% so far this year compared with 15.1% growth recorded by the industry.

Key Picks

Eagle Bancorp Montana, Inc. EBMT has witnessed 8.3% upward earnings estimate revisions for 2019, in the past 30 days. Moreover, this Zacks #1 (Strong Buy) Ranked stock has rallied 25.1%, in the year-to-date period. You can see the complete list of today’s Zacks #1 Rank stocks here.

Macatawa Bank Corporation’s MCBC ongoing-year earnings estimate moved 5.8% north in 30 days’ time. Additionally, the stock has surged 9.6%, so far this year. It carries a Zacks Rank #2 (Buy), at present.

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