UMB Financial Corporation (NASDAQ:UMBF) is a diversified financial services holding company headquartered in Kansas City, Missouri. It offers banking, asset management, and healthcare services. UMBF competes with other financial institutions like Westamerica Bancorporation, United Bankshares, Commerce Bancshares, Wintrust Financial, and Trustmark Corporation. These companies are evaluated based on their ability to generate returns relative to their cost of capital.
UMB Financial Corporation has a Return on Invested Capital (ROIC) of 9.12% and a Weighted Average Cost of Capital (WACC) of 16.28%, resulting in a ROIC to WACC ratio of 0.56. This ratio indicates that UMBF is generating returns that are lower than its cost of capital, suggesting room for improvement in capital efficiency.
In comparison, Westamerica Bancorporation has a ROIC of 1.99% and a WACC of 6.80%, leading to a ROIC to WACC ratio of 0.29. This lower ratio suggests that Westamerica is less efficient in generating returns compared to UMBF. United Bankshares, with a ROIC of 6.59% and a WACC of 14.68%, has a ratio of 0.45, also indicating lower efficiency than UMBF.
Commerce Bancshares matches UMBF with a ROIC to WACC ratio of 0.56, with a ROIC of 4.49% and a WACC of 7.97%. This suggests similar capital efficiency between the two companies. However, Wintrust Financial Corporation stands out with a ROIC of 10.46% and a WACC of 14.08%, resulting in the highest ROIC to WACC ratio of 0.74 among the peers.
Trustmark Corporation, with a ROIC of 6.25% and a WACC of 15.88%, has a ROIC to WACC ratio of 0.39. This places it below UMBF in terms of capital efficiency. Overall, while UMBF shows moderate efficiency, Wintrust Financial leads the group, highlighting the importance of optimizing returns relative to the cost of capital.
