UMBF UMB Financial Corporation

UMB Financial Corporation (NASDAQ: UMBF): Selected quarterly financial highlights Record quarterly net income of $20.1 million Record quarterly revenue of $129.2 million Record quarterly noninterest income of $72.3 million Average loans increased 11.6 percent Credit quality remained strong with net charge-offs representing less than 0.05 percent of average loans UMB Financial Corporation (NASDAQ: UMBF), a Kansas City-based multi-bank holding company, announced record earnings of $20.1 million or $0.48 per share ($0.48 diluted) for the three-month period ended June 30, 2007. This is an increase of $5.2 million, or 35.0 percent, compared to the second quarter 2006 earnings of $14.9 million or $0.35 per share ($0.35 diluted). Revenue was higher due to a 6.3 percent increase in net interest income and a 10.1 percent increase in noninterest income. These revenue increases were partially offset by a 3.1 percent increase in noninterest expense. �Our second quarter results are continued evidence that our team�s disciplined approach to our strategies is driving profitable growth,� commented Mariner Kemper, Chairman and CEO of UMB Financial Corporation. �This strong quarterly performance was driven by solid noninterest income and loan growth, while we effectively managed expenses and remained focused on asset quality. Return on average equity is the highest level since the first quarter of 2002, and at 1.02 percent return on average assets improved significantly.� Net Interest Income Net interest income for the second quarter of 2007 increased $3.3 million, or 6.3 percent, compared to the same period in 2006 due primarily to higher average earning assets while maintaining net interest margin. Average earning assets increased by $414.5 million, or 6.3 percent, as compared to the second quarter of 2006. Most of this increase was due to a $406.2 million, or 11.6 percent, increase in average loans. Net interest margin remained flat at 3.43 percent for the three months ended June 30, 2007 as compared to the same quarter in 2006. Although net interest spread decreased by 3 basis points from the three months ended June 30, 2006, it was offset by the contribution from noninterest bearing deposits. Noninterest bearing deposits comprised 32.6 percent of total deposits as of June 30, 2007. Noninterest Income and Expense �Fee-based businesses continue to be an important driver for the company,� said Peter deSilva, President and Chief Operating Officer. �Our noninterest income grew substantially year over year, with trust income and deposit service charges continuing to lead the improvement. In addition, Asset Management continues to be an important fee income driver, with growth in Corporate Trust, Private Banking and UMB Scout Funds.� Noninterest income increased $6.6 million, or 10.1 percent, for the three months ended June 30, 2007 compared to the same period in 2006. Trust and securities processing income increased $4.0 million, or 15.9 percent, for the three months ended June 30, 2007 compared to the same period in 2006. This increase was primarily due to a $1.0 billion, or 22.7 percent, increase in total assets under management in the UMB Scout Funds at June 30, 2007 as compared to June 30, 2006. Deposit service charges were $1.7 million, or 8.9 percent, higher in the second quarter 2007 than the same period in 2006. Noninterest expense increased $2.9 million, or 3.1 percent, for the three months ended June 30, 2007 compared to the same period in 2006. Salary expense increased by $2.1 million, or 4.4 percent, mostly due to higher base employee salaries and higher cost of benefits. Occupancy expense increased $0.8 million, or 12.3 percent, mainly from increased repair and maintenance costs on existing facilities. Equipment expense increased by $0.7 million, or 5.8 percent, mostly due to amortization and maintenance costs related to software and related equipment. Balance Sheet �Our operating leverage for the quarter � revenue growth of 8.4 percent and expense growth of only 3.1 percent � is evidence that our strategies are working,� said Mike Hagedorn, Chief Financial Officer. �Looking at our balance sheet, we remain well-positioned in the current interest rate environment.� Average total assets for the three months ended June 30, 2007 were $7.9 billion compared to $7.4 billion for the same period in 2006, an increase of $512.5 million, or 6.9 percent. Average earning assets increased by $414.5 million, or 6.3 percent. In addition to the increase in earning assets, the mix of higher yielding loans to overall earning assets was favorable. Average loans comprised 56.2 percent of the company�s earning asset base for 2007 as compared to 53.5 percent for 2006. For the three months ended June 30, 2007, average loans were $3.9 billion compared to $3.5 billion for the same period in 2006, an increase of 11.6 percent. Actual loan balances on June 30, 2007 were $4.0 billion, compared to $3.6 billion on June 30, 2006. These balances are as follows: Loans by Category (in thousands) June 30, 2007 June 30, 2006 Change Percent Change Commercial, financial and agricultural $1,777,252 $1,662,388 $114,864 6.9% Real estate construction 85,173 52,362 32,811 62.7% Consumer 909,488 977,150 (67,662) (6.9)% Real estate 1,180,204 892,036 288,168 32.3% Leases 6,061 � 5,715 � 346 � 6.1% Loans before loans held for sale 3,958,178 � 3,589,651 � 368,527 � 10.3% Loans held for sale 14,290 � 20,061 � (5,771) � (28.8)% Total loans and loans held for sale $3,972,468 � $3,609,712 � $362,756 � 10.0% Nonperforming loans at June 30, 2007 totaled $7.9 million compared to $8.6 million a year earlier. As a percentage of total loans, nonperforming loans were 0.20 percent of loans as of June 30, 2007 and 0.24 percent at June 30, 2006. The company�s allowance for loan losses totaled $45.2 million, or 1.14 percent of total loans as of June 30, 2007 compared to $42.1 million, or 1.17 percent of total loans as of June 30, 2006. Average securities balances were $2.7 billion for the second quarter of 2007 compared to $2.6 billion for the same period in 2006, an increase of $96.5 million, or 3.7 percent. This increase was partially offset by a $92.7 million decrease in average federal funds and resell agreements. Average total deposits increased $133.6 million, or 2.4 percent, to $5.6 billion for the three months ended June 30, 2007, compared to the same period in 2006. The increase in deposits came primarily from time deposits and money market accounts as a result of targeted marketing campaigns. Average time deposit accounts increased by $68.6 million, or 6.1 percent, for the three months ended June 30, 2007 as compared to 2006. Total deposits as of both June 30, 2007 and 2006 were $5.8 billion. As of June 30, 2007, UMB had total shareholders� equity of $860.4 million, a 4.6 percent increase from the prior year. Return on average equity increased during the second quarter to 9.32 percent, compared to 7.15 percent for the second quarter of 2006. Year-to-Date Earnings for the six months ended June 30, 2007 were $37.4 million or $0.89 per share ($0.89 diluted). This is an increase of $9.3 million, or 33.1 percent, compared to the prior year earnings of $28.1 million or $0.66 per share ($0.65 diluted). Net interest income for the year-to-date June 30, 2007 increased $8.1 million, or 7.6 percent, compared to the same period in 2006 due primarily to higher average earning assets and rates. Net interest margin increased to 3.37 percent for the year-to-date June 30, 2007 compared to 3.33 percent for the same period in 2006. Noninterest income increased $13.5 million, or 10.7 percent, for the year-to-date June 30, 2007 compared to the same period in 2006. The increase was primarily attributable to higher trust and securities processing income, deposit service charges and trading and investment income. Trust and securities processing income increased $8.6 million, or 18.0 percent, for the year-to-date June 30, 2007 compared to the same period in 2006. Deposit service charges were $3.0 million, or 8.1 percent, higher for the six months ended June 30, 2007 than the same period in 2006 due mostly to greater individual overdraft and return item charges. Noninterest expense increased $9.3 million, or 5.0 percent, for the six months ended June 30, 2007 compared to the same period in 2006. Salary expense increased by $6.1 million, or 6.4 percent, mostly due to higher base employee salaries and higher cost of benefits. Occupancy expense increased $1.4 million, or 10.5 percent, mainly from increased repair and maintenance costs of existing facilities. Equipment expense increased by $3.0 million, or 12.6 percent, for the year-to-date June 30, 2007 as compared to the same period in 2006 due mostly to higher amortization and maintenance costs related to software and related equipment. The company declared its regular quarterly dividend of $0.14 per share to be paid on October 1, 2007 to shareholders of record as of the close of business on September 12, 2007. The company plans to host a conference call to discuss its second quarter results on July 25, 2007, at 8:30 a.m. (CT). Interested parties may access the call by dialing U.S. (toll-free) 800-240-2430 or access the following Web link at least 10 minutes before the call begins: http://w.on24.com/r.htm?e=64943&s=1&k=E6A709AF6D16DDC2A3C9FE66D66A87CB or visit www.umb.com, investor relations, to access the link to the live call. A replay of the conference call may be heard until August 8, 2007, by calling (U.S.) 800-405-2236 or (U.S.) 303-590-3000. The replay pass code required for playback is conference ID 11092699#. The call replay may also be accessed via the company's Web site, www.umb.com, by visiting the investor relations area. Forward-Looking Statements: This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements rely on a number of assumptions concerning future events and are subject to risks and uncertainties, which could cause actual results to differ materially from those contemplated by the forward-looking statements in this Current Report on Form 8-K, any exhibits to this Current Report and other public statements the company may make. While management of UMB believes their assumptions are reasonable, UMB cautions that changes in general economic conditions, changes in interest rates, changes in the securities markets, changes in operations, changes in competition, technology changes, legislative or regulatory changes, the ability of customers to repay loans, changes in loan demand, the ability to integrate acquisitions and increases in employee costs, and other risks and uncertainties detailed in UMB�s filings with the Securities and Exchange Commission, may cause actual results to differ materially from those discussed in this release. UMB has no duty to update such statements, and undertakes no obligation to update or supplement forward-looking statements that become untrue because of new information, future events or otherwise. About UMB: UMB Financial Corporation (NASDAQ: UMBF) is a multi-bank holding company headquartered in Kansas City, Mo., offering complete banking, asset management, health spending solutions and related financial services to both individual and business customers nationwide. Its banking subsidiaries own and operate 134 banking centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. Subsidiaries of the holding company and the lead bank, UMB Bank, n.a., include an investment services group based in Milwaukee, Wisconsin, a trust management company in South Dakota, and single-purpose companies that deal with brokerage services and insurance. CONSOLIDATED BALANCE SHEETS � UMB Financial Corporation (all dollars in thousands) (unaudited) June 30, Assets 2007 � � 2006 � � Loans $3,958,178 $3,589,651 Allowance for loan losses (45,248 ) � (42,120 ) Net loans 3,912,930 3,547,531 Loans held for sale 14,290 20,061 Investment Securities: Available for sale 2,712,046 2,511,014 Held to maturity 39,445 52,046 Federal Reserve Bank stock and other 18,515 14,903 Trading securities 67,015 � � 63,785 � Total investment securities 2,837,021 2,641,748 Federal funds and resell agreements 365,466 560,422 Cash and due from banks 430,908 447,515 Bank premises and equipment, net 239,122 236,027 Accrued income 58,779 52,193 Goodwill 94,631 60,731 Other intangibles 17,935 6,487 Other assets 62,962 � � 60,117 � Total assets $8,034,044 � � $7,632,832 � � � Liabilities Deposits: Noninterest - bearing demand $1,892,947 $2,135,163 Interest - bearing demand and savings 2,679,537 2,443,546 Time deposits under $100,000 775,111 778,260 Time deposits of $100,000 or more 450,900 � � 394,867 � Total deposits 5,798,495 5,751,836 Federal funds and repurchase agreements 1,255,414 934,109 Short-term debt 12,646 23,598 Long-term debt 35,788 37,342 Accrued expenses and taxes 46,726 39,151 Other liabilities 24,547 � � 23,860 � Total liabilities 7,173,616 � � 6,809,896 � � Shareholders' Equity Common stock 55,057 55,057 Capital surplus 700,616 698,485 Retained earnings 406,048 359,868 Accumulated other comprehensive income (loss) (22,858 ) (37,590 ) Treasury stock (278,435 ) � (252,884 ) Total shareholders' equity 860,428 � � 822,936 � Total liabilities and shareholders' equity $8,034,044 � � $7,632,832 � Consolidated Statements of Income � UMB Financial Corporation (unaudited, dollars in thousands except share and per share data) � Three Months Ended Six Months Ended June 30, June 30, Interest Income 2007 � � 2006 � 2007 � � 2006 Loans $68,313 $57,541 $134,414 $110,774 Securities: Taxable Interest 23,206 19,180 47,948 40,932 Tax-exempt interest 6,126 � � 5,841 � 12,153 � � 11,525 Total securities income 29,332 25,021 60,101 52,457 Federal funds and resell agreements 4,126 5,039 11,332 10,127 Trading securities and other 666 � � 734 � 1,263 � � 1,449 Total interest income 102,437 � � 88,335 � 207,110 � � 174,807 � Interest Expense Deposits 28,961 22,830 57,779 43,592 Federal funds and repurchase agreements 15,985 11,409 34,340 24,243 Short-term debt 177 171 280 324 Long-term debt 459 � � 416 � 892 � � 894 Total interest expense 45,582 � � 34,826 � 93,291 � � 69,053 Net interest income 56,855 53,509 113,819 105,754 Provision for loan losses 2,000 � � 3,075 � 3,500 � � 6,234 Net interest income after provision for loan losses 54,855 � � 50,434 � 110,319 � � 99,520 � Noninterest Income Trust and securities processing 28,954 24,990 56,242 47,659 Trading and investment banking 5,555 4,567 10,394 8,680 Service charges on deposits 20,686 19,002 39,574 36,609 Insurance fees and commissions 955 1,101 1,631 2,093 Brokerage fees 1,987 1,600 4,065 3,117 Bankcard fees 9,900 9,860 19,296 18,806 Other gains, net (9 ) 574 (9 ) 596 Gains (loss) on sales of securities available for sale (7 ) 75 2 84 Other 4,305 � � 3,940 � 7,819 � � 7,885 Total noninterest income 72,326 � � 65,709 � 139,014 � � 125,529 � Noninterest Expense Salaries and employee benefits 49,908 47,796 101,099 95,034 Occupancy, net 7,640 6,802 14,754 13,356 Equipment 13,068 12,348 26,425 23,463 Supplies, postage and telephone 5,794 5,698 11,513 11,473 Marketing and business development 4,157 4,022 7,694 7,644 Processing fees 7,131 7,245 13,777 13,555 Legal and consulting 1,941 2,007 3,466 3,656 Bankcard 2,844 3,519 5,435 6,810 Amortization of other intangibles 734 286 1,469 504 Other 5,121 � � 5,668 � 10,115 � � 10,928 Total noninterest expense 98,338 � � 95,391 � 195,747 � � 186,423 � Income before income taxes 28,843 20,752 53,586 38,626 Income tax provision 8,780 � � 5,893 � 16,199 � � 10,526 Net income $20,063 � � $14,859 � $37,387 � � $28,100 Per Share Data Net income- Basic $0.48 $0.35 $0.89 $0.66 Net income- Diluted 0.48 0.35 0.89 0.65 Dividends 0.14 0.13 0.28 0.26 Weighted average shares outstanding 41,857,515 � � 42,677,639 � 41,944,564 � � 42,748,188 UMB FINANCIAL CORPORATION STATEMENTS OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY (unaudited, dollars in thousands) � Accumulated Other Common Capital Unearned Retained Comprehensive Treasury � � Stock � Surplus � Compensation � Earnings Income � Stock � Total Balance - January 1, 2006 $27,528 $728,108 $(1,904) $342,675 $(21,550) $(241,394) $833,463 Adoption of SFAS 123(R) - (1,904) 1,904 - - - - Comprehensive income/(loss) Net income - - - 28,100 - - 28,100 Change in unrealized losses on securities - - - - (16,040) - (16,040) Total comprehensive income 12,060 Cash dividends ($0.26 per share) - - - (10,907) - - (10,907) Stock split two for one 27,529 (27,529) - Purchase of treasury stock - - - - - (12,616) (12,616) Issuance of stock awards - (758) 908 150 Recognition of restricted stock compensation - 428 - - - - 428 Sale of treasury stock - 117 - - - 85 202 Exercise of stock options - � 23 � - � - - � 133 � 156 Balance - June 30, 2006 $55,057 � $698,485 � $- � $359,868 $(37,590) � $(252,884) � $822,936 � Balance - January 1, 2007 $55,057 $699,794 $- $380,464 $(17,259) $(269,181) $848,875 Comprehensive income Net income - - - 37,387 - - 37,387 Change in unrealized losses on securities - � - � - � - (5,599) � - � (5,599) Total comprehensive income 31,788 Cash dividends ($0.28 per share) - - - (11,803) - - (11,803) Purchase of treasury stock - - - - - (10,739) (10,739) Issuance of stock awards (898) - 1,035 137 Recognition of stock based compensation - 1,419 - 1,419 Sale of treasury stock - 149 - - - 94 243 Exercise of stock options - � 152 � - � - - � 356 � 508 Balance - June 30, 2007 $55,057 � $700,616 � $- � $406,048 $(22,858) � $(278,435) � $860,428 Average Balances / Yields and Rates UMB Financial Corporation (tax - equivalent basis) (all dollars in thousands)(unaudited) � � Three Months Ended June 30, 2007 � 2006 Average Average Average Average Assets Balance � Yield/Rate � Balance � Yield/Rate Loans, net of unearned interest $3,918,415 7.00 % $3,512,210 6.58 % Securities: Taxable 1,975,785 4.71 1,915,411 4.02 Tax-exempt 708,503 � � 5.05 � 672,360 � � 5.04 � Total securities 2,684,288 4.80 2,587,771 4.28 Federal funds and resell agreements 307,503 5.38 400,226 5.05 Other earning assets 67,305 � � 4.14 � 62,772 � � 4.85 � Total earning assets 6,977,511 6.05 6,562,979 5.56 Allowance for loan losses (44,965 ) (41,401 ) Other assets 995,491 � 893,992 � Total assets $7,928,037 � $7,415,570 � � � Liabilities and Shareholders' Equity Interest-bearing deposits $3,811,967 3.05 % $3,581,602 2.56 % Federal funds and repurchase agreements 1,309,594 4.90 1,007,869 4.54 Borrowed funds 51,166 � � 4.99 � 52,685 � � 4.47 � Total interest-bearing liabilities 5,172,727 3.53 4,642,156 3.01 Noninterest-bearing demand deposits 1,799,376 1,896,092 Other liabilities 92,829 43,521 Shareholders' equity 863,105 � 833,801 � Total liabilities and shareholders' equity $7,928,037 � $7,415,570 � Net interest spread 2.52 % 2.55 % Net interest margin 3.43 3.43 � � Six Months Ended June 30, 2007 � 2006 Average Average Average Average Assets Balance � Yield/Rate � Balance � Yield/Rate Loans, net of unearned interest $3,892,891 6.97 % $3,457,914 6.47 % Securities: Taxable 2,055,414 4.70 2,112,942 3.91 Tax-exempt 705,629 � � 5.06 � 669,443 � � 5.05 � Total securities 2,761,043 4.79 2,782,385 4.18 Federal funds and resell agreements 423,775 5.39 427,827 4.77 Other earning assets 64,251 � � 4.10 � 62,680 � � 4.81 � Total earning assets 7,141,960 6.01 6,730,806 5.40 Allowance for loan losses (44,972 ) (40,844 ) Other assets 941,773 � 878,423 � Total assets $8,038,761 � $7,568,385 � � � Liabilities and Shareholders' Equity Interest-bearing deposits $3,852,331 3.02 % $3,606,346 2.44 % Federal funds and repurchase agreements 1,402,826 4.94 1,139,005 4.29 Borrowed funds 48,723 � � 4.85 � 53,011 � � 4.63 � Total interest-bearing liabilities 5,303,880 3.55 4,798,362 2.90 Noninterest-bearing demand deposits 1,789,445 1,885,801 Other liabilities 85,089 49,382 Shareholders' equity 860,347 � 834,840 � Total liabilities and shareholders' equity $8,038,761 � $7,568,385 � Net interest spread 2.46 % 2.50 % Net interest margin 3.37 3.33 SECOND QUARTER 2007 FINANCIAL HIGHLIGHTS � UMB Financial Corporation (all dollars in thousands, except per share data) (unaudited) � Three Months Ended June 30 2007 � � 2006 � Net interest income $56,855 $53,509 Provision for loan losses 2,000 3,075 Noninterest income 72,326 65,709 Noninterest expense 98,338 95,391 Income before income taxes 28,843 20,752 Net income 20,063 14,859 Net income per share - Basic 0.48 0.35 Net income per share - Diluted 0.48 0.35 Return on average assets 1.02 % 0.80 % Return on average equity 9.32 % 7.15 % � Six Months Ended June 30, Net interest income $113,819 $105,754 Provision for loan losses 3,500 6,234 Noninterest income 139,014 125,529 Noninterest expense 195,747 186,423 Income before income taxes 53,586 38,626 Net income 37,387 28,100 Net income per share - Basic 0.89 0.66 Net income per share - Diluted 0.89 0.65 Return on average assets 0.94 % 0.75 % Return on average equity 8.76 % 6.79 % � At June 30 Assets $8,034,044 $7,632,832 Loans, net of unearned interest 3,958,178 3,589,651 Securities 2,837,021 2,641,748 Deposits 5,798,495 5,751,836 Shareholders' equity 860,428 822,936 Book value per share 20.44 19.28 Market price per share 36.87 33.34 Equity to assets 10.71 % 10.78 % Allowance for loan losses $45,248 $42,120 As a % of loans 1.14 % 1.17 % Nonaccrual and restructured loans $7,926 $8,606 As a % of loans 0.20 % 0.24 % Loans over 90 days past due $1,789 $4,773 As a % of loans 0.05 % 0.13 % Other real estate owned $270 $40 � Common shares outstanding 42,099,765 42,684,847 � Average Balances Six Months Ended June 30 Assets $8,038,761 $7,568,385 Loans, net of unearned interest 3,892,891 3,457,914 Securities 2,761,043 2,782,385 Deposits 5,641,776 5,492,147 Shareholders' equity 860,347 834,840 Selected Financial Data of Affiliate Banks � � � � � UMB Financial Corporation (all dollars in thousands)(unaudited) � June 30, 2007 Loans Net of Total Unearned Total Shareholder's Missouri � Assets � Interest � Deposits � Equity UMB Bank, n.a. $6,629,192 $3,161,130 $4,846,609 $549,546 UMB Bank Warsaw, N.A. 98,910 41,071 67,219 6,726 � Colorado � � � � � � � � UMB Bank Colorado, n.a. 810,481 511,996 556,013 130,005 � Kansas � � � � � � � � UMB National Bank of America 540,985 222,944 399,700 58,568 � Arizona � � � � � � � � UMB Bank Arizona, n.a. 25,580 25,148 9,862 9,434 � Banking - Related Subsidiaries � � � � � � � � UMB Community Development Corporation UMB Banc Leasing Corp. UMB Scout Brokerage Services, Inc. UMB Scout Insurance Services, Inc. UMB Capital Corporation United Missouri Insurance Company UMB Trust Company of South Dakota Scout Investment Advisors, Inc. UMB Fund Services, Inc. UMB Consulting Services, Inc. Kansas City Realty Company Kansas City Financial Corporation UMB Redevelopment Corporation UMB Realty Company, LLC UMB National Sales Corporation Grand Distribution Services, LLC UMB Distribution Service, LLC Warsaw Financial Corporation