NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
SUMMARY OF ACCOUNTING POLICIES
UMB Financial Corporation (the Company) is a multi-bank holding company,
which offers a wide range of banking and other financial services to its customers through its branches and offices in the states of Missouri, Kansas, Colorado, Illinois, Oklahoma, Arizona, Nebraska, Wisconsin and Pennsylvania. The preparation of
financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements. These estimates and assumptions also impact reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Following
is a summary of the more significant accounting policies to assist the reader in understanding the financial presentation.
Consolidation
The Company and its subsidiaries are included in the consolidated financial statements (references hereinafter to the Company in these Notes
to Consolidated Financial Statements include wholly-owned subsidiaries). Intercompany accounts and transactions have been eliminated.
Revenue Recognition
Interest on loans and securities is recognized based on rate times the principal amount outstanding. Interest accrual is discontinued when, in the opinion
of management, the likelihood of collection becomes doubtful. Other noninterest income is recognized as services are performed or revenue-generating transactions are executed.
Cash and Due From Banks
Cash on hand, cash items in the process of collection, and amounts due from correspondent banks and the Federal Reserve Bank are included in cash and due
from banks.
Loans and Loans Held for Sale
A loan is considered to be impaired when management believes it is probable
that it will be unable to collect all principal and interest due according to the contractual terms of the loan. If a loan is impaired, the Company records a loss valuation allowance equal to the carrying amount of the loan in excess of the present
value of the estimated future cash flows discounted at the loans effective rate, based on the loans observable market price or the fair value of the collateral if the loan is collateral dependent. Consumer loans are collectively
evaluated for impairment. Commercial loans are generally evaluated for impairment on a loan-by-loan basis.
The adequacy of the allowance for loan losses is based on managements continuing evaluation of the pertinent factors underlying the quality of the
loan portfolio, including actual loan loss experience, current economic conditions, detailed analysis of individual loans for which full collectibility may not be assured, determination of the existence and realizable value of the collateral and
guarantees securing such loans. The actual losses, notwithstanding such considerations, however, could differ from the amounts estimated by management.
Loans held for sale are carried at the lower of aggregate cost or market value. Loan fees (net of certain direct loan origination costs) on loans held for
sale are deferred until the related loans are sold or repaid. Gains or losses on loan sales are recognized at the time of sale and determined using the specific identification method.
55
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Securities
Debt securities available for sale principally include U.S. Treasury and agency securities and mortgage-backed securities. Securities classified as
available for sale are measured at fair value. Unrealized holding gains and losses are excluded from earnings and reported in accumulated other comprehensive income/(loss) until realized. Realized gains and losses on sales are computed by the
specific identification method at the time of disposition and are shown separately as a component of noninterest income.
Securities held to maturity are carried at amortized historical cost based on managements intention, and the Companys ability, to hold them to
maturity. The Company classifies certain securities of state and political subdivisions as held to maturity. Certain significant unforeseeable changes in circumstances may cause a change in the intent to hold these securities to maturity. For
example, such changes may include deterioration in the issuers credit-worthiness that is expected to continue or a change in tax law that eliminates the tax-exempt status of interest on the security.
Trading securities, generally acquired for subsequent sale to customers, are
carried at market value. Market adjustments, fees and gains or losses on the sale of trading securities are considered to be a normal part of operations and are included in trading and investment banking income.
On the Consolidated Statements of Shareholders Equity, Accumulated
Other Comprehensive Income/(Loss) consists only of unrealized gain (loss) on securities.
Goodwill and Other Intangibles
Goodwill on purchased affiliates represents the cost in excess of net tangible assets acquired. The Company has elected November 30 as its annual measurement date for testing impairment and as a result of the impairment tests of
goodwill performed on that date in 2007, 2006 and 2005, no impairment charge was recorded. Other intangible assets are amortized over a period of up to 17 years.
Bank Premises and Equipment
Bank premises and equipment are stated at cost less accumulated depreciation, which is computed primarily on the straight line method. Bank premises are
depreciated over 20 to 40 year lives, while equipment is depreciated over lives of 3 to 20 years. Gains and losses from the sale of bank premises and equipment are included in gains on sales of assets and deposits, net.
Impairment of Long-Lived Assets
Long-lived assets, including premises and equipment, are reviewed for
impairment whenever events or changes in circumstances indicate the carrying amount of an asset or group of assets may not be recoverable. The impairment review includes a comparison of future cash flows expected to be generated by the asset or
group of assets to their current carrying value. If the carrying value of the asset or group of assets exceeds expected cash flows (undiscounted and without interest charges), an impairment loss is recognized to the extent the carrying value exceeds
fair value.
Taxes
The Company recognizes certain income and expenses in different time periods
for financial reporting and income tax purposes. The provision for deferred income taxes is based on the liability method and represents the change in the deferred income tax accounts during the year excluding the tax effect of the change in net
unrealized gain/(loss) on securities available for sale.
56
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
The Company adopted the provisions of FASB Interpretation No. 48 (FIN 48), Accounting for
Uncertainty in Income Taxes, on January 1, 2007. This Interpretation clarifies the accounting and reporting for uncertainties in income tax law. It prescribes a comprehensive model for the financial statement recognition, measurement,
presentation and disclosure of uncertain tax positions. Differences between a tax position taken or expected to be taken in the Companys tax returns and the amount of benefit recognized and measured in the financial statements result in
unrecognized tax benefits, which are recorded in the balance sheet as either a liability for unrecognized tax benefits or reductions to recorded tax assets, as applicable.
The Company recognizes accrued interest related to unrecognized tax benefits in interest expense and penalties in other noninterest
expense. For the year ended December 31, 2007, the Company has recognized an immaterial amount in interest and penalties related to the unrecognized tax benefits.
Per Share Data
Basic income per share is computed based on the weighted average number of shares of common stock outstanding during each period. Diluted year-to-date
income per share includes the dilutive effect of 293,820; 220,602; and 203,198 shares issueable upon the exercise of stock options granted by the Company at December 31, 2007, 2006, and 2005, respectively.
Options issued under employee benefit plans to purchase 512,312; 380,661; and
153,438 shares of common stock were outstanding at December 31, 2007, 2006, and 2005, respectively, but were not included in the computation of diluted earnings per share because the options were anti-dilutive.
On May 30, 2006, the Companys common stock was split 2-for-1 in
the form of a stock dividend. Stockholders received one additional share for every share owned. The Board of Directors declared the stock split April 25, 2006 and the record date was May 16, 2006. All share and per share amounts (including
stock options and restricted stock) in the Consolidated Financial Statements and accompanying notes were restated to reflect the split.
Accounting for Stock-Based Compensation
Effective with the first quarter of 2006, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 123 (R) Share Based
Payment. SFAS No. 123 (R) establishes accounting standards for all transactions in which the Company exchanges its equity instruments for goods and services. SFAS No. 123 (R) focuses primarily on accounting for transactions
with employees, and carries forward, without change, prior guidance for share-based payments for transactions with non-employees.
SFAS No. 123 (R) eliminates the intrinsic value measurement objective in APB Opinion No. 25 and generally requires the Company to measure
the cost of employee services received in exchange for an award of equity instruments based on the fair value of the award on the date of the grant. The standard requires the grant date fair value to be estimated using either an option-pricing model
which is consistent with the terms of the award or a market observed price, if such a price exists. Such cost is generally recognized over the vesting period during which an employee is required to provide service in exchange for the award. The
standard also requires the Company to estimate the number of instruments that will ultimately be issued, rather than accounting for forfeitures as they occur.
57
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
The Company uses the Black-Scholes pricing model to determine the fair value of its options. The
assumptions for stock-based awards in the past three years utilized in the model are shown in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
Black-Scholes pricing model:
|
|
|
|
|
|
|
|
|
|
|
Weighted average fair value of the granted options
|
|
$
|
8.77
|
|
|
8.60
|
|
|
8.03
|
|
Weighted average risk-free interest rate
|
|
|
4.34
|
%
|
|
4.72
|
%
|
|
4.32
|
%
|
Expected option life in years
|
|
|
6.77
|
|
|
6.50
|
|
|
7.97
|
|
Expected volatility
|
|
|
15.71
|
%
|
|
16.13
|
%
|
|
18.62
|
%
|
Expected dividend yield
|
|
|
1.46
|
%
|
|
1.50
|
%
|
|
1.53
|
%
|
The expected option
life is derived from historical exercise patterns and represents the amount of time that options granted are expected to be outstanding. The expected volatility is based on historical volatilities of the Companys stock. The interest rate for
periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.
The modified prospective method of adoption was chosen by the Company. This method requires the provisions of SFAS No. 123 (R) to be generally
applied to share based awards granted or modified after the adoption of the new standard. In addition, compensation expense must be recognized for any unvested awards outstanding as of the date of adoption on a straight-line basis over the remaining
vesting period. The financial statements for periods prior to the adoption of SFAS No. 123 (R) are not changed under this method.
As noted above, prior to adoption of SFAS No. 123 (R), forfeitures were recognized as they actually occurred. Under the current standard an estimate
of forfeitures is made for all share based compensation outstanding and applied to compensation expense starting at the initial grant date. Forfeiture adjustments are required over the term of each grants service period to account for changes
in the Companys actual forfeitures of share based instruments. The Company recognized a transition adjustment of $0.2 million in 2006 upon adoption of SFAS No. 123 (R).
The Company recognized $1.2 million and $0.7 million in expense related to outstanding stock options and $2.1 million and
$1.0 million in expense related to outstanding restricted stock grants for the years ended December 31, 2007 and 2006, respectively. The Company has $4.4 million of unrecognized compensation expense related to the outstanding options and $4.9
million of unrecognized compensation expense related to outstanding restricted stock grants at December 31, 2007.
58
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
The following table illustrates the effect on net income and earnings per share, if the Company
had applied the fair value recognition provisions of SFAS No. 123 (R) to stock-based employee compensation in 2005 (in thousands
)
:
|
|
|
|
|
|
Year Ended
December 31
2005
|
|
|
Net income, as reported
|
|
$
|
56,318
|
Add: Stock based compensation expense included in reported net income, net of tax
|
|
|
268
|
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects
|
|
|
1,095
|
|
|
|
|
Pro forma net income
|
|
$
|
55,491
|
|
|
|
|
Earnings per share:
|
|
|
|
Basic-as reported
|
|
|
1.31
|
Basic-pro forma
|
|
|
1.29
|
Diluted-as reported
|
|
|
1.30
|
Diluted-pro forma
|
|
|
1.28
|
2.
NEW
ACCOUNTING PRONOUNCEMENTS
Accounting for
Uncertainty in Income Taxesan Interpretation of Financial Accounting Standards Board (FASB) Statement No. 109
In June 2006, the FASB issued FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income
Taxesan interpretation of FASB Statement No. 109. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or to be taken on a tax return.
This interpretation also provides additional guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company adopted the provisions of FIN 48 effective January 1, 2007
(See Note 17).
Fair Value Measurement
In September
2006, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurement. The Statement establishes a framework for measuring fair value in generally accepted accounting principles and expands
disclosure about fair value measurements. This Statement is applicable under other accounting pronouncements that require fair value recognition. It does not create new fair value measurements; however, it provides increased consistency in the
application of various fair value measurements. This Statement is effective for all financial instruments acquired or issued after January 1, 2008. The Company does not expect the adoption of this Statement to have a material effect on its
consolidated financial statements.
The Fair Value Option
for Financial Assets and Financial Liabilitiesincluding an amendment of FASB Statement No. 115
In February 2007, the FASB issued SFAS No. 159 The Fair Value Option for Financial Assets and Financial
Liabilitiesincluding an amendment of FASB Statement No. 115. This Statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by
providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. For calendar year companies, the
Statement is effective for all financial instruments acquired or issued after January 1, 2008. The Company does not expect the adoption of this Statement will have a material effect on its consolidated financial statements.
Business Combinations
In December 2007, the FASB issued SFAS
No. 141 (revised 2007) Business Combinations. The purpose of this statement is to improve the information that a reporting entity provides in its
59
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
financial reports about a business combination and its effects. This Statement establishes principles and requirements for how the acquirer recognizes and
measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; recognizes and measures the goodwill acquired in the business combination or a gain from a bargain
purchase; and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. It also retains from the original pronouncement, SFAS 141, the requirement
that the acquisition method (purchase method) be used in all business combinations and the guidance for identifying and recognizing intangible assets separately from goodwill. This Statement applies prospectively to business combinations for which
the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. An entity may not apply it before that date. The Company does not expect the adoption of this Statement to have a
material effect on its consolidated financial statements.
Noncontrolling Interests in Consolidated Financial Statementsan amendment of ARB No. 51
In December 2007, FASB issued SFAS 160, Noncontrolling Interest in Consolidated Financial Statementsan amendment of ARB
No. 51. This statement amends Accounting Research Bulletin (ARB) 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a
noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. It eliminates the former minority interest presentation. This statement also
requires that parent recognize a gain or loss in net income when a subsidiary is deconsolidated. This statement is effective for fiscal years, and interim periods within those years beginning on or after December 15, 2008. Earlier adoption is
prohibited. The Company does not expect the adoption of this Statement to have a material effect on its consolidated financial statements.
3.
LOANS AND ALLOWANCE FOR LOAN LOSSES
This table provides a summary of the major categories of loans as of December 31, 2007 and 2006 (in thousands):
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2007
|
|
2006
|
Commercial, financial, and agricultural
|
|
$
|
1,769,505
|
|
$
|
1,564,793
|
Real estate construction
|
|
|
83,292
|
|
|
84,141
|
Consumer
|
|
|
795,826
|
|
|
982,325
|
Real Estate
|
|
|
1,262,389
|
|
|
1,116,405
|
Leases
|
|
|
6,113
|
|
|
5,781
|
|
|
|
|
|
|
|
Total loans
|
|
|
3,917,125
|
|
|
3,753,445
|
Loans held for sale
|
|
|
12,240
|
|
|
14,120
|
|
|
|
|
|
|
|
Total loans and loans held for sale
|
|
$
|
3,929,365
|
|
$
|
3,767,565
|
|
|
|
|
|
|
|
60
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Maturities and Sensitivities to Changes in Interest Rates
This table details loan maturities by variable and fixed rates as of
December 31, 2007 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due in one
year or less
|
|
Due after
one year
through five
years
|
|
Due after
five years
|
|
Total
|
Variable Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial and agricultural
|
|
$
|
687,752
|
|
$
|
219,963
|
|
$
|
27,584
|
|
$
|
935,299
|
Real estate construction
|
|
|
45,990
|
|
|
2,867
|
|
|
206
|
|
|
49,063
|
All other loans
|
|
|
266,032
|
|
|
63,178
|
|
|
97,474
|
|
|
426,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total variable rate loans
|
|
|
999,774
|
|
|
286,008
|
|
|
125,264
|
|
|
1,411,046
|
Fixed Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial and agricultural
|
|
|
464,038
|
|
|
302,387
|
|
|
67,781
|
|
|
834,206
|
Real estate construction
|
|
|
20,336
|
|
|
12,166
|
|
|
1,727
|
|
|
34,229
|
All other loans
|
|
|
446,406
|
|
|
1,019,006
|
|
|
184,472
|
|
|
1,649,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fixed rate loans
|
|
|
930,780
|
|
|
1,333,559
|
|
|
253,980
|
|
|
2,518,319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and loans held for sale
|
|
$
|
1,930,554
|
|
$
|
1,619,567
|
|
$
|
379,244
|
|
$
|
3,929,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
This table details
loan maturities by variable and fixed rates as of December 31, 2006 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due in one
year or less
|
|
Due after
one year
through five
years
|
|
Due after
five years
|
|
Total
|
Variable Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial and agricultural
|
|
$
|
652,645
|
|
$
|
192,257
|
|
$
|
17,585
|
|
$
|
862,487
|
Real estate construction
|
|
|
35,999
|
|
|
2,505
|
|
|
975
|
|
|
39,479
|
All other loans
|
|
|
220,484
|
|
|
69,136
|
|
|
88,193
|
|
|
377,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total variable rate loans
|
|
|
909,128
|
|
|
263,898
|
|
|
106,753
|
|
|
1,279,779
|
Fixed Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial and agricultural
|
|
|
375,123
|
|
|
297,048
|
|
|
30,135
|
|
|
702,306
|
Real estate construction
|
|
|
38,600
|
|
|
5,629
|
|
|
433
|
|
|
44,662
|
All other loans
|
|
|
283,810
|
|
|
1,274,695
|
|
|
182,313
|
|
|
1,740,818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fixed rate loans
|
|
|
697,533
|
|
|
1,577,372
|
|
|
212,881
|
|
|
2,487,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and loans held for sale
|
|
$
|
1,606,661
|
|
$
|
1,841,270
|
|
$
|
319,634
|
|
$
|
3,767,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Allowance for Loan Losses
This table provides a rollforward of the allowance for loan losses for the three years ended December 31, 2007, 2006
and 2005 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
Allowancebeginning of year
|
|
$
|
44,926
|
|
|
$
|
40,825
|
|
|
$
|
42,723
|
|
Additions (deductions):
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs
|
|
|
(12,474
|
)
|
|
|
(12,937
|
)
|
|
|
(10,107
|
)
|
Recoveries
|
|
|
4,201
|
|
|
|
5,945
|
|
|
|
2,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs
|
|
|
(8,273
|
)
|
|
|
(6,992
|
)
|
|
|
(7,673
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision charged to expense
|
|
|
9,333
|
|
|
|
8,734
|
|
|
|
5,775
|
|
Allowance for banks and loans acquired
|
|
|
|
|
|
|
2,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowanceend of year
|
|
$
|
45,986
|
|
|
$
|
44,926
|
|
|
$
|
40,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired Loans under SFAS 114
This table provides an analysis of impaired loans for the
three years ended December 31, 2007, 2006, and 2005 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31
|
|
|
2007
|
|
2006
|
|
2005
|
Total impaired loans as of December 31
|
|
$
|
5,617
|
|
$
|
5,485
|
|
$
|
6,650
|
Amount of impaired loans which have a related allowance
|
|
|
798
|
|
|
1,117
|
|
|
1,134
|
Amount of related allowance
|
|
|
433
|
|
|
318
|
|
|
502
|
Remaining impaired loans with no allowance
|
|
|
4,819
|
|
|
4,368
|
|
|
5,516
|
Average recorded investment in impaired loans during year
|
|
|
5,798
|
|
|
6,522
|
|
|
7,690
|
The amount of interest
income not recorded on impaired loans was $1,273,000 for 2007, $1,467,000 for 2006, and $1,262,000 for 2005.
4.
SECURITIES
Securities Available for Sale
This table
provides detailed information about securities available for sale at December 31, 2007 and 2006 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
|
Fair Value
|
U.S. Treasury
|
|
$
|
420,319
|
|
$
|
11,713
|
|
$
|
|
|
|
$
|
432,032
|
U.S. Agencies
|
|
|
1,162,406
|
|
|
7,671
|
|
|
(108
|
)
|
|
|
1,169,969
|
Mortgage-backed
|
|
|
1,052,304
|
|
|
3,172
|
|
|
(6,032
|
)
|
|
|
1,049,444
|
State and political subdivisions
|
|
|
730,712
|
|
|
4,983
|
|
|
(1,188
|
)
|
|
|
734,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,365,741
|
|
$
|
27,539
|
|
$
|
(7,328
|
)
|
|
$
|
3,385,952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
|
Fair Value
|
U.S. Treasury
|
|
$
|
493,632
|
|
$
|
1,712
|
|
$
|
(1,982
|
)
|
|
$
|
493,362
|
U.S. Agencies
|
|
|
1,154,296
|
|
|
295
|
|
|
(3,522
|
)
|
|
|
1,151,069
|
Mortgage-backed
|
|
|
942,339
|
|
|
505
|
|
|
(19,720
|
)
|
|
|
923,124
|
State and political subdivisions
|
|
|
675,493
|
|
|
969
|
|
|
(5,369
|
)
|
|
|
671,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,265,760
|
|
$
|
3,481
|
|
$
|
(30,593
|
)
|
|
$
|
3,238,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
The following table presents contractual maturity information for securities available for sale at
December 31, 2007 (in thousands):
|
|
|
|
|
|
|
|
|
Amortized Cost
|
|
Fair Value
|
Due in 1 year or less
|
|
$
|
808,851
|
|
$
|
809,580
|
Due after 1 year through 5 years
|
|
|
1,236,264
|
|
|
1,256,818
|
Due after 5 years through 10 years
|
|
|
216,485
|
|
|
218,134
|
Due after 10 years
|
|
|
51,837
|
|
|
51,976
|
|
|
|
|
|
|
|
Total
|
|
|
2,313,437
|
|
|
2,336,508
|
Mortgage-backed securities
|
|
|
1,052,304
|
|
|
1,049,444
|
|
|
|
|
|
|
|
Total securities available for sale
|
|
$
|
3,365,741
|
|
$
|
3,385,952
|
|
|
|
|
|
|
|
Securities may be
disposed of before contractual maturities due to sales by the Company or because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
During 2007, proceeds from the sales of securities available for sale were $67,929,000 compared to $3,895,000 for 2006.
Securities transactions resulted in gross realized gains of $1,201,000 for 2007, $130,000 for 2006 and $8,000 for 2005. The gross realized losses were $191,000 for 2007, $13,000 for 2006 and $233,000 for 2005.
Trading Securities
The net unrealized gains on trading securities at December 31, 2007, 2006, and 2005 were $67,335, $62,214, and $12,600
respectively, and were included in trading and investment banking income.
Securities Held to Maturity
The table
below provides detailed information for securities held to maturity at December 31, 2007 and 2006 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31
|
2007
|
|
Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
State and political subdivisions
|
|
$
|
37,658
|
|
$
|
4,551
|
|
$
|
|
|
$
|
42,209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
State and political subdivisions
|
|
$
|
44,781
|
|
$
|
38
|
|
$
|
|
|
$
|
44,819
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table
presents contractual maturity information for securities held to maturity at December 31, 2007 (in thousands):
|
|
|
|
|
|
|
|
|
Amortized Cost
|
|
Fair Value
|
Due in 1 year or less
|
|
$
|
1,423
|
|
$
|
1,593
|
Due after 1 year through 5 years
|
|
|
8,006
|
|
|
8,974
|
Due after 5 years through 10 years
|
|
|
16,780
|
|
|
18,809
|
Due after 10 years
|
|
|
11,449
|
|
|
12,833
|
|
|
|
|
|
|
|
Total securities held to maturity
|
|
$
|
37,658
|
|
$
|
42,209
|
|
|
|
|
|
|
|
63
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Expected maturities will differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
There were no sales of securities held to maturity during 2007 and 2006.
Securities available for sale and held to maturity with a market value of $3,206,222,000 at December 31, 2007, and $3,004,335,000 at
December 31, 2006, were pledged to secure U.S. Government deposits, other public deposits and certain Trust deposits as required by law.
The following table shows the Companys available for sale investments gross unrealized losses and fair value, aggregated by investment
category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2007 and 2006 (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
Less than 12 months
|
|
|
12 months or more
|
|
|
Total
|
|
Description of Securities
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
|
Fair Value
|
|
Unrealized
Losses
|
|
|
Fair Value
|
|
Unrealized
Losses
|
|
U.S. Treasury obligations
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
Direct obligations of U.S. government agencies
|
|
|
327,621
|
|
|
(85
|
)
|
|
|
9,979
|
|
|
(23
|
)
|
|
|
337,600
|
|
|
(108
|
)
|
Federal agency mortgage backed securities
|
|
|
307,012
|
|
|
(2,035
|
)
|
|
|
366,166
|
|
|
(3,997
|
)
|
|
|
673,178
|
|
|
(6,032
|
)
|
Municipal securities available for sale
|
|
|
44,821
|
|
|
(327
|
)
|
|
|
152,196
|
|
|
(861
|
)
|
|
|
197,017
|
|
|
(1,188
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total temporarily-impaired debt securities available for sale
|
|
$
|
679,454
|
|
$
|
(2,447
|
)
|
|
$
|
528,341
|
|
$
|
(4,881
|
)
|
|
$
|
1,207,795
|
|
$
|
(7,328
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
Less than 12 months
|
|
|
12 months or more
|
|
|
Total
|
|
Description of Securities
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
|
Fair Value
|
|
Unrealized
Losses
|
|
|
Fair Value
|
|
Unrealized
Losses
|
|
U.S. Treasury obligations
|
|
$
|
109,452
|
|
$
|
(400
|
)
|
|
$
|
162,898
|
|
$
|
(1,582
|
)
|
|
$
|
272,350
|
|
$
|
(1,982
|
)
|
Direct obligations of U.S. government agencies
|
|
|
55,282
|
|
|
(266
|
)
|
|
|
356,281
|
|
|
(3,256
|
)
|
|
|
411,563
|
|
|
(3,522
|
)
|
Federal agency mortgage backed securities
|
|
|
174,393
|
|
|
(1,138
|
)
|
|
|
673,389
|
|
|
(18,582
|
)
|
|
|
847,782
|
|
|
(19,720
|
)
|
Municipal securities available for sale
|
|
|
184,421
|
|
|
(815
|
)
|
|
|
282,713
|
|
|
(4,554
|
)
|
|
|
467,134
|
|
|
(5,369
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total temporarily-impaired debt securities available for sale
|
|
$
|
523,548
|
|
$
|
(2,619
|
)
|
|
$
|
1,475,281
|
|
$
|
(27,974
|
)
|
|
$
|
1,998,829
|
|
$
|
(30,593
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The unrealized losses
in the Companys investments in U.S. Treasury obligations; direct obligations of U.S. government agencies; federal agency mortgage backed securities and municipal securities were caused by interest rate risk. Because the Company has the ability
and intent to hold these investments until a recovery of fair value, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at December 31, 2007.
5.
SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL
The Company regularly enters into agreements for the purchase
of securities with simultaneous agreements to resell (resell agreements). The agreements permit the Company to sell or repledge these securities. Resell
64
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
agreements were $509,287,000 and $333,597,000 at December 31, 2007 and 2006, respectively. Of the $509,287,000 amount, $450,000,000 represented sales of
securities in which securities were received under reverse repurchase agreements (resell agreements) during 2007. All of the $333,597,000 represented sales of securities in which securities were received under reverse repurchase agreements (resell
agreements) during 2006.
6.
LOANS TO OFFICERS AND
DIRECTORS
Certain Company and principal
affiliate bank executive officers and directors, including companies in which those persons are principal holders of equity securities or are general partners, borrow in the normal course of business from affiliate banks of the Company. All such
loans have been made on the same terms, including interest rates and collateral, as those prevailing at the same time for comparable transactions with unrelated parties. In addition, all such loans are current as to repayment terms.
For the years 2007 and 2006, an analysis of activity with respect to such
aggregate loans to related parties appears below (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31
|
|
|
|
2007
|
|
|
2006
|
|
Balancebeginning of year
|
|
$
|
195,071
|
|
|
$
|
228,381
|
|
New loans
|
|
|
164,053
|
|
|
|
164,581
|
|
Repayments
|
|
|
(151,820
|
)
|
|
|
(197,891
|
)
|
|
|
|
|
|
|
|
|
|
Balanceend of year
|
|
$
|
207,304
|
|
|
$
|
195,071
|
|
|
|
|
|
|
|
|
|
|
7.
GOODWILL
AND OTHER INTANGIBLES
Changes in the
carrying amount of goodwill for the years ended December 31, 2007 and 2006 by operating segment are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
Services
|
|
Asset
Management
|
|
Commercial
Banking and
Lending
|
|
Investment
Services
Group
|
|
Total
|
Balances as of January 1, 2006
|
|
$
|
14,556
|
|
$
|
10,479
|
|
$
|
20,187
|
|
$
|
14,505
|
|
$
|
59,727
|
Acquisition of Mountain States Bank
|
|
|
16,426
|
|
|
|
|
|
16,566
|
|
|
|
|
|
32,992
|
Additional earn-out payment for 2001 acquisition of Sunstone Financial Group, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
1,004
|
|
|
1,004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances as of December 31, 2006
|
|
$
|
30,982
|
|
$
|
10,479
|
|
$
|
36,753
|
|
$
|
15,509
|
|
$
|
93,723
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances as of January 1, 2007
|
|
$
|
30,982
|
|
$
|
10,479
|
|
$
|
36,753
|
|
$
|
15,509
|
|
$
|
93,723
|
Acquisition of Mountain States Bankadjustments
|
|
|
393
|
|
|
|
|
|
396
|
|
|
|
|
|
789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances as of December 31, 2007
|
|
$
|
31,375
|
|
$
|
10,479
|
|
$
|
37,149
|
|
$
|
15,509
|
|
$
|
94,512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During 2007, the
Company changed the methodology for allocation of goodwill recognized prior to the adoption of SFAS No. 142 Goodwill and Other Intangible Assets. A $20.2 million reclassification was made from Consumer Services to Commercial Banking
and Lending. For comparability purposes, amounts in prior periods are reported based on the methodologies in effect as of December 31, 2007 consistent with SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information.
65
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
During 2007, additional purchase accounting adjustments were made relating to the September 15,
2006 purchase of Mountain States Bancorporation, Inc. in Denver, Colorado. See additional disclosure about the acquisition in Note 16.
Following are the intangible assets that continue to be subject to amortization as of December 31, 2007 and 2006 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2007
|
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Carrying
Amount
|
Core deposit intangible assets
|
|
$
|
33,586
|
|
$
|
19,810
|
|
$
|
13,776
|
Other intangible assets
|
|
|
7,222
|
|
|
4,596
|
|
|
2,626
|
Other intangible assets acquired during period
|
|
|
97
|
|
|
36
|
|
|
61
|
|
|
|
|
|
|
|
|
|
|
Total other intangible assets
|
|
|
7,319
|
|
|
4,632
|
|
|
2,687
|
|
|
|
|
|
|
|
|
|
|
Total intangible assets
|
|
$
|
40,905
|
|
$
|
24,442
|
|
$
|
16,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2006
|
Core deposit intangibles assets
|
|
$
|
33,586
|
|
$
|
17,643
|
|
$
|
15,943
|
Other intangible assets
|
|
|
7,222
|
|
|
3,856
|
|
|
3,366
|
|
|
|
|
|
|
|
|
|
|
Total intangible assets
|
|
$
|
40,808
|
|
$
|
21,499
|
|
$
|
19,309
|
|
|
|
|
|
|
|
|
|
|
Amortization expense
for the years ended December 31, 2007, 2006 and 2005 was $2,943, $1,600 and $741, respectively. The following table discloses the estimated amortization expense of intangible assets in future years:
|
|
|
|
For the year ended December 31, 2008
|
|
$
|
2,851
|
For the year ended December 31, 2009
|
|
|
2,705
|
For the year ended December 31, 2010
|
|
|
2,519
|
For the year ended December 31, 2011
|
|
|
1,940
|
For the year ended December 31, 2012
|
|
|
1,412
|
8.
BANK
PREMISES AND EQUIPMENT
Bank premises and
equipment consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31
|
|
|
|
2007
|
|
|
2006
|
|
Land
|
|
$
|
42,531
|
|
|
$
|
42,530
|
|
Buildings and leasehold improvements
|
|
|
250,303
|
|
|
|
250,714
|
|
Equipment
|
|
|
119,950
|
|
|
|
152,667
|
|
Software
|
|
|
81,729
|
|
|
|
85,934
|
|
|
|
|
|
|
|
|
|
|
|
|
|
494,513
|
|
|
|
531,845
|
|
Accumulated depreciation
|
|
|
(210,498
|
)
|
|
|
(233,742
|
)
|
Accumulated amortization
|
|
|
(48,487
|
)
|
|
|
(54,887
|
)
|
|
|
|
|
|
|
|
|
|
Bank premises and equipment, net
|
|
$
|
235,528
|
|
|
$
|
243,216
|
|
|
|
|
|
|
|
|
|
|
66
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Consolidated rental and operating lease expenses were $6,054,000 in 2007, $5,993,000 in 2006 and
$5,664,000 in 2005. Consolidated bank premises and equipment depreciation and amortization expenses were $34,442,000 in 2007, $33,331,000 in 2006 and $30,215,000 in 2005. Minimum future rental commitments as of December 31, 2007 for all
non-cancelable operating leases are: 2008 $4,817,000; 2009 $4,703,000; 2010 $3,556,000; 2011 $2,673,000; 2012 $2,223,000; and thereafter $21,650,000.
9.
BORROWED FUNDS
The components of the Companys short-term and long-term debt are as
follows (in thousands):
|
|
|
|
|
|
|
|
|
December 31
|
|
|
2007
|
|
2006
|
Short-term debt:
|
|
|
|
|
|
|
U. S. Treasury demand notes and other
|
|
$
|
33,753
|
|
$
|
17,881
|
|
|
|
|
|
|
|
Long-term debt:
|
|
|
|
|
|
|
Federal Home Loan Bank 3.80% due 2018
|
|
|
1,933
|
|
|
2,082
|
Federal Home Loan Bank 4.53% due 2018
|
|
|
1,345
|
|
|
1,445
|
Federal Home Loan Bank 4.56% due 2019
|
|
|
847
|
|
|
902
|
Federal Home Loan Bank 4.75% due 2018
|
|
|
1,195
|
|
|
1,285
|
Federal Home Loan Bank 4.86% due 2019
|
|
|
4,731
|
|
|
5,020
|
Federal Home Loan Bank 4.92% due 2019
|
|
|
614
|
|
|
651
|
Federal Home Loan Bank 5.00% due 2019
|
|
|
1,290
|
|
|
1,375
|
Federal Home Loan Bank 5.14% due 2020
|
|
|
98
|
|
|
103
|
Federal Home Loan Bank 5.47% due 2020
|
|
|
15,700
|
|
|
16,577
|
Federal Home Loan Bank 5.54% due 2021
|
|
|
1,428
|
|
|
1,495
|
Federal Home Loan Bank 5.97% due 2017
|
|
|
|
|
|
1,878
|
Federal Home Loan Bank 5.89% due 2014
|
|
|
2,157
|
|
|
2,419
|
Federal Home Loan Bank 7.13% due 2010
|
|
|
508
|
|
|
710
|
Kansas Equity Fund IV, L.P. 0% due 2014
|
|
|
893
|
|
|
950
|
Kansas Equity Fund V, L.P. 0% due 2016
|
|
|
495
|
|
|
|
Kansas City Equity Fund , L.L.C. 0% due 2014
|
|
|
980
|
|
|
|
St. Louis Equity Fund 2005 LLC 0% due 2010
|
|
|
668
|
|
|
848
|
St. Louis Equity Fund 2006 LLC 0% due 2010
|
|
|
240
|
|
|
280
|
St. Louis Equity Fund 2007 LLC 0% due 2010
|
|
|
910
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt
|
|
|
36,032
|
|
|
38,020
|
|
|
|
|
|
|
|
Total borrowed funds
|
|
$
|
69,785
|
|
$
|
55,901
|
|
|
|
|
|
|
|
Aggregate annual
repayments of long-term debt at December 31, 2007 are as follows (in thousands):
|
|
|
|
2008
|
|
$
|
4,336
|
2009
|
|
|
3,712
|
2010
|
|
|
3,227
|
2011
|
|
|
2,667
|
2012
|
|
|
2,640
|
Thereafter
|
|
|
19,450
|
|
|
|
|
Total
|
|
$
|
36,032
|
|
|
|
|
67
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
All of the Federal Home Loan Bank notes are secured by investment securities of the Company. Federal
Home Loan Bank notes require monthly principal and interest payments and may require a penalty for payoff prior to the maturity date.
The Company enters into sales of securities with simultaneous agreements to repurchase (repurchase agreements). The amounts received under these
agreements represent short-term borrowings and are reflected as a separate item in the consolidated balance sheets. The amount outstanding at December 31, 2007, was $2,155,335,000 (with accrued interest payable of $566,493). This amount
consists of $450,000,000 representing sales of securities in which securities were received under reverse repurchase agreements (resell agreements) and $1,705,335,000 of sales of U.S. Treasury and Agency securities from the Companys securities
portfolio. The amount outstanding at December 31, 2006, was $1,916,130,000 (with accrued interest payable of $1,140,940). This amount consists of $333,597,000 representing sales of securities in which securities were received under reverse
repurchase agreements (resell agreements) and $1,582,533,000 of sales of U.S. Treasury and Agency securities from the Companys securities portfolio.
The carrying amounts and market values of the securities and the related repurchase liabilities and weighted average interest rates of the repurchase
liabilities (grouped by maturity of the repurchase agreements) were as follows as of December 31, 2007 (in thousands):
|
|
|
|
|
|
|
|
|
|
Maturity of the Repurchase Liabilities
|
|
Securities Market
Value
|
|
Repurchase
Liabilities
|
|
Weighted Average
Interest Rate
|
|
On Demand
|
|
$
|
22,323
|
|
$
|
21,978
|
|
3.98
|
%
|
2 to 30 days
|
|
|
1,973,194
|
|
|
1,683,357
|
|
4.28
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,995,517
|
|
$
|
1,705,335
|
|
4.28
|
%
|
|
|
|
|
|
|
|
|
|
|
10.
REGULATORY
REQUIREMENTS
Payment of dividends by the
affiliate banks to the parent company is subject to various regulatory restrictions. For national banks, the governing regulatory agency must approve the declaration of any dividends generally in excess of the sum of net income for that year and
retained net income for the preceding two years. At December 31, 2007, approximately $24,265,000 of the equity of the affiliate banks and non-bank subsidiaries was available for distribution as dividends to the parent company without prior
regulatory approval or without reducing the capital of the respective affiliate banks below minimum levels.
Certain affiliate banks maintain reserve balances with the Federal Reserve Bank as required by law. During 2007, this amount averaged $13,963,000,
compared to $34,266,000 in 2006.
The Company is required to
maintain minimum amounts of capital to total risk weighted assets, as defined by the banking regulators. At December 31, 2007, the Company is required to have minimum Tier 1 and Total capital ratios of 4.0% and 8.0%, respectively.
The Companys actual ratios at that date were 13.7% and 14.6%, respectively. The Companys leverage ratio at December 31, 2007, was 9.6%.
As of December 31, 2007, the most recent notification from the Office of Comptroller of the Currency categorized all of the affiliate banks as well
capitalized under the regulatory framework for prompt corrective action. To be categorized as well-capitalized all of the Companys affiliate banks must maintain total risk-based, Tier 1 risk-based and Tier 1 leverage ratios of 10.0%, 6.0% and
5.0%, respectively. There are no conditions or events since that notification that management believes have changed the affiliate banks category.
The UMB Bank, Warsaw, n.a. based affiliate was merged into the UMB Bank, n.a. affiliate during the fourth quarter of 2007. Therefore, no risk based
capital information is reported for UMB Bank, Warsaw, n.a. at December 31, 2007.
68
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Actual capital amounts as well as required and well-capitalized Tier 1, Total and Tier 1 Leverage
ratios as of December 31 for the Company and its banks are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
Actual
|
|
|
For Capital
Adequacy Purposes
|
|
|
To Be Well
Capitalized Under
Prompt
Corrective Action
Provisions
|
|
(in thousands)
|
|
Amount
|
|
Ratio
|
|
|
Amount
|
|
Ratio
|
|
|
Amount
|
|
Ratio
|
|
Tier 1 Capital:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UMB Financial Corporation
|
|
$
|
766,399
|
|
13.74
|
%
|
|
$
|
223,117
|
|
4.00
|
%
|
|
$
|
N/A
|
|
N/A
|
%
|
UMB Bank, n. a.
|
|
|
533,871
|
|
11.33
|
|
|
|
188,520
|
|
4.00
|
|
|
|
282,780
|
|
6.00
|
|
UMB National Bank of America, n.a.
|
|
|
58,207
|
|
20.85
|
|
|
|
11,169
|
|
4.00
|
|
|
|
16,754
|
|
6.00
|
|
UMB Bank Colorado, n.a.
|
|
|
89,851
|
|
14.53
|
|
|
|
24,731
|
|
4.00
|
|
|
|
37,097
|
|
6.00
|
|
UMB Bank, Warsaw, n.a.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UMB Bank Arizona, n.a.
|
|
|
8,813
|
|
19.46
|
|
|
|
1,811
|
|
4.00
|
|
|
|
2,717
|
|
6.00
|
|
Total Capital:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UMB Financial Corporation
|
|
|
813,383
|
|
14.58
|
|
|
|
446,234
|
|
8.00
|
|
|
|
N/A
|
|
N/A
|
|
UMB Bank, n. a.
|
|
|
571,547
|
|
12.13
|
|
|
|
377,040
|
|
8.00
|
|
|
|
471,300
|
|
10.00
|
|
UMB National Bank of America, n.a.
|
|
|
59,781
|
|
21.41
|
|
|
|
22,339
|
|
8.00
|
|
|
|
27,923
|
|
10.00
|
|
UMB Bank Colorado, n.a.
|
|
|
97,247
|
|
15.73
|
|
|
|
49,462
|
|
8.00
|
|
|
|
61,828
|
|
10.00
|
|
UMB Bank, Warsaw, n.a.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UMB Bank Arizona, n.a.
|
|
|
9,150
|
|
20.20
|
|
|
|
3,623
|
|
8.00
|
|
|
|
4,529
|
|
10.00
|
|
Tier 1 Leverage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UMB Financial Corporation
|
|
|
766,399
|
|
9.63
|
|
|
|
318,314
|
|
4.00
|
|
|
|
N/A
|
|
N/A
|
|
UMB Bank, n. a.
|
|
|
533,871
|
|
7.98
|
|
|
|
267,616
|
|
4.00
|
|
|
|
334,520
|
|
5.00
|
|
UMB National Bank of America, n.a.
|
|
|
58,207
|
|
10.28
|
|
|
|
22,657
|
|
4.00
|
|
|
|
28,321
|
|
5.00
|
|
UMB Bank Colorado, n.a.
|
|
|
89,851
|
|
12.17
|
|
|
|
29,540
|
|
4.00
|
|
|
|
36,925
|
|
5.00
|
|
UMB Bank, Warsaw, n.a.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UMB Bank Arizona, n.a.
|
|
|
8,813
|
|
27.56
|
|
|
|
1,279
|
|
4.00
|
|
|
|
1,599
|
|
5.00
|
|
|
|
|
|
2006
|
|
Tier 1 Capital:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UMB Financial Corporation
|
|
$
|
752,890
|
|
13.81
|
%
|
|
$
|
218,127
|
|
4.00
|
%
|
|
$
|
N/A
|
|
N/A
|
%
|
UMB Bank, n. a.
|
|
|
530,123
|
|
11.61
|
|
|
|
182,580
|
|
4.00
|
|
|
|
273,871
|
|
6.00
|
|
UMB National Bank of America, n.a.
|
|
|
50,654
|
|
18.76
|
|
|
|
10,802
|
|
4.00
|
|
|
|
16,203
|
|
6.00
|
|
UMB Bank Colorado, n.a.
|
|
|
78,452
|
|
12.29
|
|
|
|
25,540
|
|
4.00
|
|
|
|
38,310
|
|
6.00
|
|
UMB Bank, Warsaw, n.a.
|
|
|
6,729
|
|
15.39
|
|
|
|
1,749
|
|
4.00
|
|
|
|
2,624
|
|
6.00
|
|
UMB Bank Arizona, n.a.
|
|
|
9,511
|
|
56.73
|
|
|
|
671
|
|
4.00
|
|
|
|
1,006
|
|
6.00
|
|
Total Capital:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UMB Financial Corporation
|
|
|
798,814
|
|
14.65
|
|
|
|
436,255
|
|
8.00
|
|
|
|
N/A
|
|
N/A
|
|
UMB Bank, n. a.
|
|
|
566,557
|
|
12.41
|
|
|
|
365,161
|
|
8.00
|
|
|
|
456,451
|
|
10.00
|
|
UMB National Bank of America, n.a.
|
|
|
52,284
|
|
19.36
|
|
|
|
21,605
|
|
8.00
|
|
|
|
27,006
|
|
10.00
|
|
UMB Bank Colorado, n.a.
|
|
|
85,648
|
|
13.41
|
|
|
|
51,080
|
|
8.00
|
|
|
|
63,850
|
|
10.00
|
|
UMB Bank, Warsaw, n.a.
|
|
|
7,138
|
|
16.32
|
|
|
|
3,499
|
|
8.00
|
|
|
|
4,374
|
|
10.00
|
|
UMB Bank Arizona, n.a.
|
|
|
9,721
|
|
57.98
|
|
|
|
1,341
|
|
8.00
|
|
|
|
1,677
|
|
10.00
|
|
Tier 1 Leverage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UMB Financial Corporation
|
|
|
752,890
|
|
9.83
|
|
|
|
306,290
|
|
4.00
|
|
|
|
N/A
|
|
N/A
|
|
UMB Bank, n. a.
|
|
|
530,123
|
|
8.37
|
|
|
|
253,285
|
|
4.00
|
|
|
|
316,607
|
|
5.00
|
|
UMB National Bank of America, n.a.
|
|
|
50,654
|
|
9.18
|
|
|
|
22,063
|
|
4.00
|
|
|
|
27,578
|
|
5.00
|
|
UMB Bank Colorado, n.a.
|
|
|
78,452
|
|
9.85
|
|
|
|
31,855
|
|
4.00
|
|
|
|
39,819
|
|
5.00
|
|
UMB Bank, Warsaw, n.a.
|
|
|
6,729
|
|
8.18
|
|
|
|
3,289
|
|
4.00
|
|
|
|
4,111
|
|
5.00
|
|
UMB Bank Arizona, n.a.
|
|
|
9,511
|
|
48.74
|
|
|
|
781
|
|
4.00
|
|
|
|
976
|
|
5.00
|
|
11. EMPLOYEE BENEFITS
The Company has a discretionary noncontributory
profit sharing plan, which features an employee stock ownership plan. This plan is for the benefit of substantially all eligible officers and employees of the Company and its subsidiaries. The Company has accrued and anticipates making a
discretionary payment of $1,954,041 in March, 2008 for 2007. A $1,234,529 contribution was paid in 2007 for 2006. No contributions were accrued for 2005 under this discretionary plan.
69
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
The Company has a qualified 401(k) profit sharing plan that permits participants to make
contributions by salary deduction. The Company made a matching contribution to this plan of $2,448,105 in 2007 for 2006 and $1,907,966 in 2006 for 2005. The Company has accrued and anticipates making a matching contribution of $2,610,653 in March
2008 for 2007.
On April 18, 2002, the shareholders of the
Company approved the 2002 Incentive Stock Options Plan (the 2002 Plan), which provides incentive options to certain key employees to receive up to 2,000,000 common shares of the Company. All options that are issued under the 2002 plan are in effect
for 10 years (except for any option granted to a person holding more than 10 percent of the Companys stock, in which case the option is in effect for five years). All options issued prior to 2005 under the 2002 plan cannot be exercised until
at least four years 11 months after the date they are granted. Options issued in 2005, 2006, and 2007 under the 2002 plan have a vesting schedule of 50 percent after three years; 75 percent after four years and 100 percent after four years and
eleven months. Except under circumstances of death, disability or certain retirements, the options cannot be exercised after the grantee has left the employment of the Company or its subsidiaries. The exercise period for an option may be accelerated
upon the optionees qualified disability, retirement or death. All options expire at the end of the exercise period. Prior to 2006, the Company made no recognition in the balance sheet of the options until such options were exercised and no
amounts applicable thereto were reflected in net income as all options were granted at strike prices at the then current fair value of the underlying shares. For options granted after January 1, 2006, SFAS No. 123 (R) requires
compensation expense to be recognized on unvested options outstanding. Options are granted at exercise prices of no less than 100 percent of the fair market value of the underlying shares based on the fair value of the option at date of grant. The
plan terminates April 17, 2012.
The table below
discloses the information relating to option activity in 2007 under the 2002 plan:
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
Under the 2002
Plan
|
|
Number
of Shares
|
|
|
Weighted Average
Price Per Share
|
|
Weighted Average
Remaining
Contractual Term
|
|
Aggregate
Intrinsic Value
|
OutstandingDecember 31, 2006
|
|
656,068
|
|
|
$
|
29.04
|
|
|
|
|
|
Granted
|
|
152,700
|
|
|
|
38.48
|
|
|
|
|
|
Canceled
|
|
(69,700
|
)
|
|
|
29.22
|
|
|
|
|
|
Exercised
|
|
(4,100
|
)
|
|
|
21.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OutstandingDecember 31, 2007
|
|
734,968
|
|
|
|
31.02
|
|
7.6
|
|
$
|
5,394,112
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable or expected to be exercisableDecember 31, 2007
|
|
724,136
|
|
|
|
30.06
|
|
7.3
|
|
|
6,007,309
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted average
grant-date fair value of options granted during the years 2007, 2006, and 2005 was $8.98, $8.88 and $8.37, respectively. The total intrinsic value of options exercised during the year ended December 31, 2007 and 2005 was $158,704 and $12,176.
No options were exercised during 2006. As of December 31, 2007, there was $2,645,267 of unrecognized compensation cost related to the nonvested shares. The cost is expected to be recognized over a period of 4.0 years.
On April 16, 1992, the shareholders of the Company approved the 1992
Incentive Stock Option Plan (the 1992 plan), which provides incentive options to certain key employees for up to 1,000,000 common shares of the Company. Of the options granted prior to 1998, 40 percent are exercisable two years from the date of the
grant and are thereafter exercisable in 20 percent increments annually, or for such periods or vesting increments as the Board of Directors, or a committee thereof, specify (which may not exceed 10 years or in the case of a recipient holding more
than 10 percent of the Companys stock, five years), provided that the optionee has remained in the employment of the Company or its subsidiaries. None of the options granted during or after 1998 are exercisable
70
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
until four years eleven months after the grant date. The exercise period may be accelerated for an option upon the optionees qualified disability,
retirement or death. All options expire at the end of the exercise period. Prior to 2006, the Company made no recognition in the balance sheet of the options until such options were exercised and no amounts applicable thereto were reflected in net
income because options were granted at exercise prices of no less than 100 percent of the fair market value of the underlying shares at date of grant. No further options may be granted under the 1992 plan.
The table below discloses the information relating to option activity in
2007 under the 1992 plan:
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
Under the 1992
Plan
|
|
Number
of Shares
|
|
|
Weighted Average
Price Per Share
|
|
Weighted Average
Remaining
Contractual Term
|
|
Aggregate
Intrinsic Value
|
OutstandingDecember 31, 2006
|
|
216,910
|
|
|
$
|
18.91
|
|
|
|
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
Canceled
|
|
(5,424
|
)
|
|
|
19.03
|
|
|
|
|
|
Exercised
|
|
(49,969
|
)
|
|
|
20.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OutstandingDecember 31, 2007
|
|
161,517
|
|
|
|
18.52
|
|
2.8
|
|
$
|
3,204,432
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable or expected to be exercisableDecember 31, 2007
|
|
161,517
|
|
|
|
18.52
|
|
2.8
|
|
|
3,204,432
|
|
|
|
|
|
|
|
|
|
|
|
|
There were no options
granted under the plan during the years 2007, 2006, and 2005. The total intrinsic value of options exercised during the years ended December 31, 2007, 2006, and 2005 was $2,017,266, $637,516 and $701,072, respectively. As of December 31,
2007, there was no unrecognized compensation expense to be recognized for this plan.
On May 4, 2004, the Company entered into an agreement with Peter J. deSilva, President and Chief Operating Officer of the Company to issue 8,000 shares of common stock of the Company. The shares vest 20 percent
per year of employment through January 20, 2009. These restricted shares are automatically enrolled in the dividend reinvestment plan of the Company. Dividends paid on the restricted shares are used to purchase new shares which contain the same
restriction. If Mr. deSilva terminates employment all non-vested shares are forfeited.
The table below discloses the status of the restricted shares during 2007:
|
|
|
|
|
|
|
Restricted Stock
|
|
Number
of Shares
|
|
|
Weighted Average
Grant Date Fair
Value
|
NonvestedDecember 31, 2006
|
|
4,800
|
|
|
$
|
25.52
|
Granted
|
|
|
|
|
|
|
Canceled
|
|
|
|
|
|
|
Vested
|
|
(1,600
|
)
|
|
|
25.52
|
|
|
|
|
|
|
|
NonvestedDecember 31, 2007
|
|
3,200
|
|
|
$
|
25.52
|
|
|
|
|
|
|
|
As of
December 31, 2007, there was $43,126 of unrecognized compensation cost related to the nonvested shares. The cost is expected to be recognized over a period of 1.0 years. Total fair value of shares vested during the years ended December 31,
2007, 2006, and 2005 was $57,224, $40,832 and $40,832, respectively.
At the April 26, 2005, shareholders meeting, the shareholders approved the UMB Financial Corporation Long-Term Incentive Compensation Plan (LTIP) which became effective as of January 1, 2005. The Plan permits the issuance to
selected officers of the Company service based restricted stock grants, performance-based
71
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
restricted stock grants and non-qualified stock options. Service-based restricted stock grants will contain a service requirement. The performance-based
restricted grants will contain performance and service requirements. The non-qualified stock options will contain a service requirement.
The Plan reserves up to 1,200,000 shares of the Companys stock. Of the total, no more than 400,000 shares can be issued as restricted stock. These
two requirements will be in effect with the 2006 LTIP issuance. In 2005, the service and performance based restricted stock grants were issued out of treasury stock. No one eligible employee may receive more than $1,000,000 in benefits under the
Plan during any one fiscal year taking into account the value of all stock options and restricted stock received during such fiscal year.
The service-based restricted stock grants contain a service requirement. The vesting requirement is 50 percent of the shares after three years of service,
75 percent after four years of service and 100 percent after five years of service.
The performance-based restricted stock grants contain a service and a performance requirement. The performance requirement is based on a pre-determined performance requirement over a three year period. The service
requirement portion is a three year cliff vesting. If the performance requirement is not met, the executives do not receive the shares.
The dividends on service and performance-based restricted stock grants are treated as two separate transactions. First, cash dividends are paid on the
restricted stock. Those cash dividends are then paid to purchase additional shares of restricted stock. The dividends paid on the stock are recorded as a reduction to retained earnings (similar to all dividend transactions).
The table below discloses the status of the service based restricted
shares during 2007:
|
|
|
|
|
|
|
Service Based Restricted Stock
|
|
Number
of Shares
|
|
|
Weighted Average
Grant Date Fair
Value
|
NonvestedDecember 31, 2006
|
|
90,815
|
|
|
$
|
31.10
|
Granted
|
|
68,246
|
|
|
|
38.66
|
Canceled
|
|
(7,356
|
)
|
|
|
34.18
|
Vested
|
|
(4,906
|
)
|
|
|
|
|
|
|
|
|
|
|
NonvestedDecember 31, 2007
|
|
146,799
|
|
|
|
34.36
|
|
|
|
|
|
|
|
As of
December 31, 2007, there was $3,594,106 of unrecognized compensation cost related to the nonvested shares. The cost is expected to be recognized over a period of 3.1 years. Total fair value of shares vested during the year ended
December 31, 2007 was $189,998. No shares have vested in 2006 and 2005.
The table below discloses the status of the performance based restricted shares during 2007:
|
|
|
|
|
|
|
Performance Based Restricted Stock
|
|
Number
of Shares
|
|
|
Weighted Average
Grant Date Fair
Value
|
NonvestedDecember 31, 2006
|
|
68,674
|
|
|
$
|
31.05
|
Granted
|
|
35,024
|
|
|
|
38.75
|
Canceled
|
|
(5,476
|
)
|
|
|
34.12
|
Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NonvestedDecember 31, 2007
|
|
98,222
|
|
|
|
33.66
|
|
|
|
|
|
|
|
72
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
As of December 31, 2007, there was $1,304,925 of unrecognized compensation cost related to the
nonvested shares. The cost is expected to be recognized over a period of 1.9 years. No shares have vested in 2007 and 2006.
The non-qualified stock options carry a service requirement and will vest 50 percent after three years, 75 percent after four years and 100 percent after
five years.
The table below discloses the information
relating to option activity in 2007 under the LTIP:
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options Under the LTIP
|
|
Number of
Shares
|
|
|
Weighted Average
Price Per Share
|
|
Weighted Average
Remaining
Contractual Term
|
|
Aggregate
Intrinsic Value
|
OutstandingDecember 31, 2006
|
|
222,467
|
|
|
$
|
30.53
|
|
|
|
|
|
Granted
|
|
143,328
|
|
|
|
38.92
|
|
|
|
|
|
Canceled
|
|
(17,887
|
)
|
|
|
32.35
|
|
|
|
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OutstandingDecember 31, 2007
|
|
347,908
|
|
|
|
33.90
|
|
8.1
|
|
$
|
1,552,971
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable or expected to be exercisableDecember 31, 2007
|
|
342,660
|
|
|
|
33.46
|
|
8.0
|
|
|
1,677,434
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted average
grant-date fair value of options granted during the years 2007, 2006, and 2005 was $8.56, $8.21 and $7.63. No options were exercised during 2007 and 2006. As of December 31, 2007, there was $1,770,016 million of unrecognized compensation cost
related to the nonvested shares. The cost is expected to be recognized over a period of 3.3 years.
Cash received from options exercised under all share based compensation plans was $1,094,669, $636,872 and $942,557 for the years ended December 31,
2007, 2006, and 2005, respectively. The tax benefit realized for stock options exercised was inconsequential for 2007, 2006, and 2005.
The Company has no specific policy to repurchase common shares to mitigate the dilutive impact of options; however, the Company has historically made
adequate discretionary purchases to satisfy stock option exercise activity. See a description of the Companys share repurchase plan in Note 14 to the Consolidated Financial Statements provided in Item 8, pages 77 and 78 of this report.
With the acquisition of Mountain States Bank in the third
quarter of 2006, the Company assumed the liability associated with the Mountain States Bank Retirement Plan, a defined benefit plan. As of August 31, 2006, the Mountain States Bank Retirement Plan had a plan curtailment. This plan curtailment
suspended future accruals of benefits under the plan so that the employees do not earn additional defined benefits for future services. Under SFAS 88, Employers Accounting for Settlements and Curtailments of Defined Benefit Pension Plans
and for Termination Benefits, the Company has recorded a minimum pension liability of approximately $0.8 million at December 31, 2006. An application was filed with the Internal Revenue Service to terminate the plan, liquidate the plan
assets and make required distributions to plan participants as of August 31, 2006.
73
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
12. OTHER COMPREHENSIVE INCOME (LOSS)
The table below discloses the Companys component of other comprehensive income (loss) during the periods presented,
which is comprised of unrealized gains (losses) on available for sale securities (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
Unrealized holding gains (losses)
|
|
$
|
47,592
|
|
|
$
|
6,879
|
|
|
$
|
(17,569
|
)
|
Reclassification adjustments for gains (losses) included in net income
|
|
|
(1,010
|
)
|
|
|
(117
|
)
|
|
|
225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized holding gains (losses)
|
|
|
46,582
|
|
|
|
6,762
|
|
|
|
(17,344
|
)
|
Income tax expense (benefit)
|
|
|
(17,077
|
)
|
|
|
(2,471
|
)
|
|
|
6,413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
$
|
29,505
|
|
|
$
|
4,291
|
|
|
$
|
(10,931
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13. BUSINESS SEGMENT REPORTING
The Company has strategically aligned its operations
into six major segments, as shown below (collectively, Business Segments). The Business Segments are differentiated based on the products and services provided. Business segment financial results produced by the Companys internal management
accounting system are evaluated regularly by the Executive Committee in deciding how to allocate resources and assess performance per individual Business Segment. The management accounting system assigns balance sheet and income statement items to
each business segment using methodologies that are refined on an ongoing basis. For comparability purposes, amounts in all periods are based on methodologies in effect at December 31, 2007 consistent with SFAS No. 131, Disclosures
about Segments of an Enterprise and Related Information.
In determining revenues and expenses associated with each individual business segment, the Company utilizes a funds transfer pricing model. This model records cost of funds or credit for funds using matched maturity funding for certain
assets and liabilities, or a blended rate based on various maturities for the remaining assets and liabilities. The allowance for loan losses is allocated using specifically identified reserves assigned to loans where available, with general
reserves assigned to the remaining loan portfolio based on historical losses, economic outlook and other factors. The related loan loss provision is assigned based on the amount necessary to maintain reserves adequate for each segment. Noninterest
income and noninterest expense directly attributable to a segment is assigned to that segment. Direct expenses incurred by areas whose services support the overall Company are allocated to the Business Segments based on standard unit costs applied
to actual volume measurements. Administrative expenses are allocated based on the estimated time expended for each segment. Any remaining expenses, such as corporate overhead, are assigned based on the ratio of an individual business segments
noninterest expense to total noninterest expense incurred by all business lines. Virtually all interest rate risk is assigned to the Treasury and Other business segment that is the offset to the funds transfer pricing charges and credits assigned to
each business segment.
The following summaries provide
information about the activities of each segment:
Commercial Banking and Lending
serves the commercial lending and leasing as well as the capital markets needs of the Companys mid-market businesses and governmental entities by offering various products and services. The
commercial loan and leasing group provides commercial loans and lines of credit, letters of credit, and loan syndication services. Capital markets provide consultative services and offers a variety of financing for companies that need
non-traditional banking services. The services provided by capital markets include asset
74
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
based financing, asset securitization, equity and mezzanine financing, factoring, private and public placement of senior debt, as well as merger and
acquisition consulting.
Payment and Technology
Solutions
meets the treasury management and healthcare services needs of our commercial clients. Treasury management products and services include account reconciliation services, automated clearing house, controlled disbursements, lockbox
services, foreign exchange, and various card products and services. Healthcare services include health savings account and flexible savings account products for healthcare providers, third-party administrators and large employers.
Banking Services
provides products and services mainly to the
Companys correspondent bank customer network in the Midwest. Products and services include bond trading transactions, cash letter collections, FiServ account processing, investment portfolio accounting and safekeeping, reporting for
asset/liability management, and Fed funds transactions. Banking Services includes the bank dealer function in which competitive and negotiated underwritings of municipal securities as well as underwritings of government agency securities are
performed.
Consumer Services
delivers products and
services through the Companys bank branches, call center, internet banking and ATM network. These services are distributed over a seven state area, as well as through on-line and telephone banking. Consumer Services is a major provider of
funds and assets for the Company. This segment offers a variety of consumer products, including deposit accounts, installment loans, credit cards, home equity lines of credit, residential mortgages, small business loans, and insurance services for
individuals.
Asset Management
provides a full
spectrum of investment advisory, trust, and custody services to both personal and institutional clients of the Company focusing on estate planning, trust, retirement planning and investment management and private banking services. The Companys
investment advisory services provided to the Companys proprietary funds, the UMB Scout Funds, are also included in this segment. Corporate trust services include serving as corporate and municipal bond trustee, serving as the paying
agent/registrar for issued bonds and notes, and providing escrow services.
Investment Services Group
provides a broad array of services for mutual funds, partnerships, funds of funds and commingled funds to a wide range of investment advisors, independent money managers,
broker/dealers, banks, third-party administrators, insurance companies and other financial service providers. Services provided include fund administration and accounting, investor services and transfer agency, cash management, marketing and
distribution, custody and alternative investment services.
Treasury and Other Adjustments
includes asset and liability management activities and miscellaneous other items of a corporate nature not allocated to specific business lines. The assets within this segment include the Companys
investment portfolio. Corporate eliminations are also allocated to this segment.
75
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
BUSINESS SEGMENT INFORMATION
Line of business/segment financial results were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31
|
|
|
Commercial Banking and Lending
|
|
Payment and Technology Solutions
|
|
|
2007
|
|
|
2006
|
|
2005
|
|
2007
|
|
2006
|
|
2005
|
|
|
(dollars in thousands)
|
Net interest income
|
|
$
|
55,546
|
|
|
$
|
53,075
|
|
$
|
48,265
|
|
$
|
60,646
|
|
$
|
55,378
|
|
$
|
46,320
|
Provision for loan losses
|
|
|
3,981
|
|
|
|
5,989
|
|
|
3,643
|
|
|
61
|
|
|
|
|
|
|
Noninterest income
|
|
|
2,537
|
|
|
|
1,856
|
|
|
867
|
|
|
59,080
|
|
|
51,906
|
|
|
53,864
|
Noninterest expense
|
|
|
30,407
|
|
|
|
27,057
|
|
|
25,810
|
|
|
76,228
|
|
|
74,846
|
|
|
72,756
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) before tax
|
|
$
|
23,695
|
|
|
$
|
21,885
|
|
$
|
19,679
|
|
$
|
43,437
|
|
$
|
32,438
|
|
$
|
27,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets
|
|
$
|
2,813
|
|
|
$
|
2,487
|
|
$
|
2,146
|
|
$
|
67
|
|
$
|
57
|
|
$
|
55
|
Depreciation and amortization
|
|
|
2,020
|
|
|
|
1,923
|
|
|
1,522
|
|
|
8,674
|
|
|
8,560
|
|
|
9,281
|
Expenditures for additions to premises and equipment
|
|
|
1,169
|
|
|
|
2,258
|
|
|
1,867
|
|
|
4,084
|
|
|
8,254
|
|
|
9,478
|
|
|
|
|
|
Banking Services
|
|
Consumer Services
|
|
|
2007
|
|
|
2006
|
|
2005
|
|
2007
|
|
2006
|
|
2005
|
|
|
(dollars in thousands)
|
Net interest income
|
|
$
|
3,561
|
|
|
$
|
4,196
|
|
$
|
4,055
|
|
$
|
97,079
|
|
$
|
93,853
|
|
$
|
80,997
|
Provision for loan losses
|
|
|
|
|
|
|
|
|
|
|
|
|
5,278
|
|
|
2,745
|
|
|
2,132
|
Noninterest income
|
|
|
24,960
|
|
|
|
27,513
|
|
|
28,454
|
|
|
67,521
|
|
|
62,933
|
|
|
63,990
|
Noninterest expense
|
|
|
29,901
|
|
|
|
29,833
|
|
|
30,220
|
|
|
158,259
|
|
|
150,564
|
|
|
135,888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) before tax
|
|
$
|
(1,380
|
)
|
|
$
|
1,876
|
|
$
|
2,289
|
|
$
|
1,063
|
|
$
|
3,477
|
|
$
|
6,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets
|
|
$
|
119
|
|
|
$
|
86
|
|
$
|
76
|
|
$
|
1,328
|
|
$
|
1,378
|
|
$
|
1,249
|
Depreciation and amortization
|
|
|
1,504
|
|
|
|
1,408
|
|
|
1,038
|
|
|
17,138
|
|
|
14,811
|
|
|
11,346
|
Expenditures for additions to premises and equipment
|
|
|
773
|
|
|
|
1,606
|
|
|
1,715
|
|
|
15,687
|
|
|
21,648
|
|
|
22,725
|
|
|
|
|
|
Asset Management
|
|
Investment Services Group
|
|
|
2007
|
|
|
2006
|
|
2005
|
|
2007
|
|
2006
|
|
2005
|
|
|
(dollars in thousands)
|
Net interest income
|
|
$
|
7,314
|
|
|
$
|
2,159
|
|
$
|
201
|
|
$
|
9,003
|
|
$
|
9,051
|
|
$
|
8,964
|
Provision for loan losses
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest income
|
|
|
90,001
|
|
|
|
75,070
|
|
|
66,062
|
|
|
48,190
|
|
|
41,577
|
|
|
37,521
|
Noninterest expense
|
|
|
71,809
|
|
|
|
63,327
|
|
|
57,341
|
|
|
42,266
|
|
|
40,910
|
|
|
38,581
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) before tax
|
|
$
|
25,493
|
|
|
$
|
13,902
|
|
$
|
8,922
|
|
$
|
14,927
|
|
$
|
9,718
|
|
$
|
7,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets
|
|
$
|
77
|
|
|
$
|
32
|
|
$
|
22
|
|
$
|
37
|
|
$
|
32
|
|
$
|
29
|
Depreciation and amortization
|
|
|
3,531
|
|
|
|
3,434
|
|
|
3,053
|
|
|
3,029
|
|
|
3,191
|
|
|
3,037
|
Expenditures for additions to premises and equipment
|
|
|
2,095
|
|
|
|
3,509
|
|
|
3,943
|
|
|
1,460
|
|
|
3,449
|
|
|
5,133
|
76
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasury and Other Adjustments
|
|
|
Total Consolidated Company
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2007
|
|
2006
|
|
2005
|
|
|
(dollars in thousands)
|
Net interest income
|
|
$
|
(465
|
)
|
|
$
|
(488
|
)
|
|
$
|
(512
|
)
|
|
$
|
232,684
|
|
$
|
217,224
|
|
$
|
188,290
|
Provision for loan losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,333
|
|
|
8,734
|
|
|
5,775
|
Noninterest income
|
|
|
(3,501
|
)
|
|
|
(5,910
|
)
|
|
|
1,115
|
|
|
|
288,788
|
|
|
254,945
|
|
|
251,873
|
Noninterest expense
|
|
|
(1,706
|
)
|
|
|
(5,120
|
)
|
|
|
(2,527
|
)
|
|
|
407,164
|
|
|
381,417
|
|
|
358,069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) before tax
|
|
$
|
(2,260
|
)
|
|
$
|
(1,278
|
)
|
|
$
|
3,130
|
|
|
$
|
104,975
|
|
$
|
82,018
|
|
$
|
76,319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets
|
|
$
|
3,555
|
|
|
$
|
3,511
|
|
|
$
|
3,517
|
|
|
$
|
7,996
|
|
$
|
7,583
|
|
$
|
7,094
|
Depreciation and amortization
|
|
|
1,489
|
|
|
|
1,603
|
|
|
|
1,678
|
|
|
|
37,385
|
|
|
34,930
|
|
|
30,955
|
Expenditures for additions to premises and equipment
|
|
|
2,606
|
|
|
|
1,165
|
|
|
|
568
|
|
|
|
27,874
|
|
|
41,889
|
|
|
45,429
|
14.
COMMON
STOCK AND EARNINGS PER SHARE
The following table
summarizes the share transactions for the three years ended December 31, 2007:
|
|
|
|
|
|
|
|
Shares
Issued
|
|
Shares in
Treasury
|
|
Balance December 31, 2004
|
|
55,056,730
|
|
(11,774,624
|
)
|
Purchase of Treasury Stock
|
|
|
|
(445,038
|
)
|
Sale of Treasury Stock
|
|
|
|
11,970
|
|
Issued for stock options & restricted stock
|
|
|
|
132,084
|
|
|
|
|
|
|
|
Balance December 31, 2005
|
|
55,056,730
|
|
(12,075,608
|
)
|
Purchase of Treasury Stock
|
|
|
|
(850,997
|
)
|
Sale of Treasury Stock
|
|
|
|
13,784
|
|
Issued for stock options & restricted stock
|
|
|
|
122,132
|
|
|
|
|
|
|
|
Balance December 31, 2006
|
|
55,056,730
|
|
(12,790,689
|
)
|
Purchase of Treasury Stock
|
|
|
|
(1,099,998
|
)
|
Sale of Treasury Stock
|
|
|
|
12,950
|
|
Issued for stock options & restricted stock
|
|
|
|
148,631
|
|
|
|
|
|
|
|
Balance December 31, 2007
|
|
55,056,730
|
|
(13,729,106
|
)
|
|
|
|
|
|
|
On April 24, 2007
the Company announced a plan to repurchase up to two million shares of common stock. This plan will terminate on April 24, 2008. The Company has not made any repurchases other than through this plan, which permits both open market and privately
negotiated transactions. All open market share purchases under the share repurchase plans are intended to be within the scope of Rule 10b-18 promulgated under the Securities Exchange Act of 1934. Rule 10b-18 provides a safe harbor for purchases in a
given day if the Company satisfies the manner, timing and volume conditions of the rule when purchasing its own common shares.
On May 30, 2006, the Companys common stock was split 2-for-1 in the form of a stock dividend. Stockholders received one additional share for
every share owned. The Board of Directors declared the stock split April 25, 2006 and the record date was May 16, 2006. All share and per share amounts (including stock options and restricted stock) in the Consolidated Financial Statements
and accompanying notes were restated to reflect the split.
77
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Basic earnings per share are computed by dividing income available to common shareholders by the
weighted average number of shares outstanding during the year. Diluted earnings per share gives effect to all potential common shares that were outstanding during the year.
The shares used in the calculation of basic and diluted earnings per share, are shown below:
|
|
|
|
|
|
|
|
|
For the Years Ended December 31
|
|
|
2007
|
|
2006
|
|
2005
|
Weighted average basic common shares outstanding
|
|
41,712,223
|
|
42,592,960
|
|
43,109,536
|
Dilutive effect of stock options and restricted stock
|
|
293,820
|
|
220,602
|
|
203,198
|
|
|
|
|
|
|
|
Weighted average diluted common shares outstanding
|
|
42,006,043
|
|
42,813,562
|
|
43,312,734
|
|
|
|
|
|
|
|
15.
COMMITMENTS, CONTINGENCIES AND GUARANTEES
In the
normal course of business, the Company is a party to financial instruments with off-balance-sheet risk in order to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. These financial
instruments include commitments to extend credit, commercial letters of credit, standby letters of credit, and futures contracts. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount
recognized in the consolidated balance sheet. The contract or notional amount of those instruments reflects the extent of involvement the Company has in particular classes of financial instruments.
The Companys exposure to credit loss in the event of nonperformance by
the other party to the financial instruments for commitments to extend credit, commercial letters of credit, and standby letters of credit is represented by the contract or notional amount of those instruments. The Company uses the same credit
policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the agreement. These
conditions generally include, but are not limited to, each customer being current as to repayment terms of existing loans and no deterioration in the customers financial condition. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. The interest rate is generally a variable rate. If the commitment has a fixed interest rate, the rate is generally not set until such time as credit is extended. For credit card customers, the
Company has the right to change or terminate terms or conditions of the credit card account at any time. Since a large portion of the commitments and unused credit card lines are never actually drawn upon, the total commitment amount does not
necessarily represent future cash requirements. The Company evaluates each customers creditworthiness on an individual basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on
managements credit evaluation. Collateral held varies but may include accounts receivable, inventory, real estate, plant and equipment, stock, securities and certificates of deposit.
Commercial letters of credit are issued specifically to facilitate trade or
commerce. Under the terms of a commercial letter of credit, as a general rule, drafts will be drawn when the underlying transaction is consummated as intended.
Standby letters of credit are conditional commitments issued by the Company payable upon the non-performance of a customers obligation to a third
party. The Company issues standby letters of credit for terms ranging from three months to three years. The Company generally requires the customer to pledge collateral to support the letter of credit. The maximum liability to the Company under
standby letters of credit at
78
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
December 31, 2007 and 2006 was $291.7 million and $291.9 million, respectively. As of December 31, 2007 and 2006, standby letters of credit
totaling $63.1 million and $43.1 million, respectively were with related parties to the Company.
The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities. The Company holds collateral
supporting those commitments when deemed necessary. Collateral varies but may include such items as those described for commitments to extend credit.
Futures contracts are contracts for delayed delivery of securities or money market instruments in which the seller agrees to make delivery at a specified
future date, of a specified instrument, at a specified yield. Risks arise from the possible inability of counterparties to meet the terms of their contracts and from movement in securities values and interest rates. Instruments used in trading
activities are carried at market value and gains and losses on futures contracts are settled in cash daily. Any changes in the market value are recognized in trading and investment banking income.
The Company uses contracts to offset interest rate risk on specific
securities held in the trading portfolio. Open futures contract positions averaged $30.2 million and $44.2 million during the years ended December 31, 2007 and 2006, respectively. Net futures activity resulted in losses of $1.0 million for 2007
and gains of $0.4 million for 2006 and $0.6 million for 2005. The Company controls the credit risk of its futures contracts through credit approvals, limits and monitoring procedures.
The Company also enters into foreign exchange contracts on a limited basis. For operating purposes, the Company maintains
certain balances in foreign banks. Foreign exchange contracts are purchased on a monthly basis to avoid foreign exchange risk on these foreign balances. The Company will also enter into foreign exchange contracts to facilitate foreign exchange needs
of customers. The Company will enter into a contract to buy or sell a foreign currency at a future date only as part of a contract to sell or buy the foreign currency at the same future date to a customer. During 2007, contracts to purchase and to
sell foreign currency averaged approximately $13.8 million compared to $17.1 million during 2006. The net gains on these foreign exchange contracts for 2007, 2006 and 2005 were $1.9 million, $1.6 million and $1.5 million, respectively.
With respect to group concentrations of credit risk, most of the
Companys business activity is with customers in the states of Missouri, Kansas, Colorado, Oklahoma, Nebraska and Illinois. At December 31, 2007, the Company did not have any significant credit concentrations in any particular industry.
In the normal course of business, the Company and its
subsidiaries are named defendants in various lawsuits and counter-claims. In the opinion of management, after consultation with legal counsel, none of these lawsuits are expected to have a materially adverse effect on the financial position, results
of operations, or cash flows of the Company.
The following
table summarizes the Companys off-balance sheet financial instruments as described above.
|
|
|
|
|
|
|
|
|
Contract or Notional
Amount December 31
|
|
|
2007
|
|
2006
|
|
|
(in thousands)
|
Commitments to extend credit for loans (excluding credit card loans)
|
|
$
|
1,302,101
|
|
$
|
1,438,855
|
Commitments to extend credit under credit card loans
|
|
|
1,013,317
|
|
|
906,179
|
Commercial letters of credit
|
|
|
6,155
|
|
|
7,082
|
Standby letters of credit
|
|
|
291,661
|
|
|
291,904
|
Futures contracts
|
|
|
14,900
|
|
|
33,000
|
Forward foreign exchange contracts
|
|
|
10,295
|
|
|
6,803
|
Spot foreign exchange contracts
|
|
|
17,475
|
|
|
2,828
|
79
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
16.
ACQUISITIONS
The following acquisition, which is not considered to be a material business
combination, was completed during the third quarter of 2006:
On September 15, 2006, UMB Financial Corporation completed the acquisition of Mountain States Bancorporation, Inc., a bank holding company headquartered in Denver, Colorado which had consolidated assets of $284.1 million at the time of
the merger. Total cash consideration in this transaction amounted to $81.3 million. Mountain States Bancorporation, and its subsidiary, Mountain States Bank were merged with and into UMB Bank Colorado on September 15, 2006. Mountain States Bank
operated from a single location in Denver, Colorado. Initial goodwill, subject to the completion of appraisals and valuation of the assets acquired and liabilities assumed, amounted to $33.0 million. Identifiable intangible assets including core
deposit intangibles, non-compete agreements, and commercial loan customer lists amounted to $13.9 million. The goodwill and intangibles resulting from this transaction are not deductible for tax purposes.
On April 19, 2001, the Company acquired Sunstone Financial Group, Inc.
(now known as UMB Fund Services, Inc.) located in Milwaukee, Wisconsin. The purchase price of Sunstone is directly connected to gross revenue targets. The Company paid an initial amount of $8.0 million on April 19, 2001. Subsequently, the
Company has made a $2.7 million payment in 2003, a $1.5 million payment in 2004, a $0.8 million payment in 2005 and a $1.0 million payment in 2006. This acquisition was recorded as a purchase and was funded with existing working capital.
17.
INCOME TAXES
Income taxes as set forth below produce effective income tax rates of 29.3%
in 2007, 27.1% in 2006, and 26.2% in 2005. These percentages are computed by dividing total income tax by the sum of such tax and net income.
Income taxes include the following components (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31
|
|
|
|
2007
|
|
2006
|
|
|
2005
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
Federal provision
|
|
$
|
28,290
|
|
$
|
22,875
|
|
|
$
|
19,143
|
|
State benefit
|
|
|
1,219
|
|
|
(55
|
)
|
|
|
(2,401
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current tax provision
|
|
|
29,509
|
|
|
22,820
|
|
|
|
16,742
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
Federal provision (benefit)
|
|
|
517
|
|
|
(1,247
|
)
|
|
|
1,305
|
|
State provision (benefit)
|
|
|
736
|
|
|
678
|
|
|
|
1,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax provision (benefit)
|
|
|
1,253
|
|
|
(569
|
)
|
|
|
3,259
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total tax provision
|
|
$
|
30,762
|
|
$
|
22,251
|
|
|
$
|
20,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
The reconciliation between the income tax provision and the amount computed by applying the
statutory federal tax rate of 35% to income taxes is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
Provision at statutory rate
|
|
$
|
36,741
|
|
|
$
|
28,706
|
|
|
$
|
26,712
|
|
Tax-exempt interest income
|
|
|
(7,676
|
)
|
|
|
(6,859
|
)
|
|
|
(6,291
|
)
|
State and local income taxes, net of federal tax benefits
|
|
|
1,497
|
|
|
|
739
|
|
|
|
741
|
|
Federal tax credits
|
|
|
(122
|
)
|
|
|
(18
|
)
|
|
|
(700
|
)
|
Sale of state tax credits
|
|
|
|
|
|
|
|
|
|
|
(946
|
)
|
Other
|
|
|
322
|
|
|
|
(317
|
)
|
|
|
485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total tax provision
|
|
$
|
30,762
|
|
|
$
|
22,251
|
|
|
$
|
20,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment tax credits
are recorded as a component of tax expense in the period that the National Park Service approves such credits. Investment tax credits related to the acquisition of assets reduce the tax basis of the associated assets and tax depreciation is
calculated on this reduced amount. A deferred tax liability is established for the difference between the book and tax basis of such assets.
In 2005, state tax credits received for the renovation of an office building were sold under a program with the taxing authority that issued such credits.
The sale of these tax credits was recorded as a component of tax expense and a deferred tax liability was established for the gain on the sale of the tax credits.
In preparing its tax returns, the Company is required to interpret complex tax laws and regulations to determine its taxable
income. Periodically, the Company is subject to examinations by various taxing authorities that may give rise to differing interpretations of these complex laws. The Company is not in the examination process with any tax jurisdictions at
December 31, 2007. However, upon examination, agreement of tax liabilities between the Company and the multiple tax jurisdictions in which the Company files tax returns may ultimately be different.
The Company has various state net operating loss carryforwards (NOL) of
approximately $17 million, $19 million, and $11 million for 2007, 2006, and 2005, respectively. These net operating losses expire at various times through 2026. The Company acquired a state NOL of approximately $14 million in connection with the
2006 acquisition of Mountain States Bank resulting in an overall increase in state NOL from 2005 to 2006.
Deferred income tax expense (benefit) results from differences between assets and liabilities measured for financial reporting and for income tax return
purposes. During 2006 and 2007, adjustments to the deferred tax liability were recorded to reflect the purchase accounting adjustments related to the acquisition of Mountain States Bank.
81
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
The significant components of deferred tax assets and liabilities are reflected in the following
table (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Allowance for loan losses
|
|
$
|
18,548
|
|
|
$
|
17,110
|
|
Net unrealized loss on securities available for sale
|
|
|
|
|
|
|
10,065
|
|
Accrued expenses
|
|
|
5,124
|
|
|
|
2,986
|
|
Miscellaneous
|
|
|
3,441
|
|
|
|
3,269
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
27,113
|
|
|
|
33,430
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Net unrealized gain on securities transfer available for sale
|
|
|
(7,012
|
)
|
|
|
|
|
Land, building, and equipment
|
|
|
(22,831
|
)
|
|
|
(20,150
|
)
|
Intangibles
|
|
|
(8,219
|
)
|
|
|
(7,719
|
)
|
Miscellaneous
|
|
|
(7,545
|
)
|
|
|
(7,014
|
)
|
|
|
|
|
|
|
|
|
|
Total deferred tax liabilities
|
|
|
(45,607
|
)
|
|
|
(34,883
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax liability
|
|
$
|
(18,494
|
)
|
|
$
|
(1,453
|
)
|
|
|
|
|
|
|
|
|
|
The net deferred tax
liability at December 31, 2007 and December 31, 2006 is included in other liabilities. The net deferred tax asset at December 31, 2005 is included in other assets.
Liabilities Associated With Unrecognized Tax Benefits
The Company adopted the provisions of FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, on
January 1, 2007. This Interpretation clarifies the accounting and reporting for uncertainties in income tax law. It prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain
tax positions. Differences between a tax position taken or expected to be taken in the Companys tax returns and the amount of benefit recognized and measured in the financial statements result in unrecognized tax benefits, which are recorded
in the balance sheet as either a liability for unrecognized tax benefits or reductions to recorded tax assets, as applicable.
The Company files income tax returns in the U.S. federal jurisdiction and various states. With few exceptions, the Company is no longer subject to U.S.
federal, state and local income tax examinations by tax authorities for years before 2004 in the jurisdictions in which it files. Upon implementation of FIN 48, the Companys unrecognized tax benefit was $0.9 million. The Companys
adoption of FIN 48 resulted in a reclassification of certain recorded liabilities accrued for under SFAS No. 5, Accounting for Contingencies, to Liability for Unrecognized Tax Benefits. Therefore, a cumulative adjustment to retained
earnings was not necessary. The Company does not expect any significant increase or decrease in the amount of unrecognized tax benefits over the next 12 months.
82
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in
thousands):
|
|
|
Unrecognized tax benefits opening balance
|
|
925
|
Gross increases tax positions in prior period
|
|
|
Gross decreases tax positions in prior period
|
|
|
Gross increases current-period tax positions
|
|
552
|
Settlements
|
|
|
Lapse of statute of limitations
|
|
|
|
|
|
Unrecognized tax benefitsending balance
|
|
1,477
|
|
|
|
If recognized, the
full amount of unrecognized tax benefits, net of the associated deferred tax benefit, would affect the effective tax rate. The unrecognized tax benefit relates to state tax positions that, if recognized, would result in the recognition of a deferred
tax asset for the corresponding federal tax benefit.
18.
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of each class of financial instruments:
Cash and Short-Term Investments
The carrying
amounts of cash and due from banks, federal funds sold and resell agreements are reasonable estimates of their fair values.
Securities Available for Sale and Investment Securities
Fair values are based on quoted market prices or dealer quotes, if
available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.
Trading Securities
Fair values for trading securities (including financial futures), are based on quoted market prices where
available. If quoted market prices are not available, fair values are based on quoted market prices for similar securities.
Loans
Fair values are estimated for portfolios with similar financial characteristics. Loans are segregated by type, such as
commercial, real estate, consumer, and credit card. Each loan category is further segmented into fixed and variable interest rate categories. The fair value of loans is estimated by discounting the future cash flows using the current rates at which
similar loans would be made to borrowers with similar credit rating and for the same remaining maturities.
Deposit Liabilities
The fair value of demand deposits and savings accounts is the amount payable on demand at
December 31, 2007 and 2006. The fair value of fixed-maturity certificates of deposit is estimated by discounting the future cash flows using the rates that are currently offered for deposits of similar remaining maturities.
Short-Term Debt
The carrying amounts of federal
funds purchased, repurchase agreements and other short-term debt are reasonable estimates of their fair value because of the short-term nature of their maturities.
Long-Term Debt
Rates currently available to the Company for debt with similar terms and
remaining maturities are used to estimate fair value of existing debt.
Other Off-Balance Sheet Instruments
The fair value of loan commitments and letters of credit are determined based on the fees currently charged to enter into similar agreements, taking into account the
83
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
remaining terms of the agreement and the present creditworthiness of the counterparties. Neither the fees earned during the year on these instruments nor
their fair value at year-end are significant to the Companys consolidated financial position.
The estimated fair value of the Companys financial instruments at December 31, 2007 and 2006 are as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31
|
|
|
2007
|
|
2006
|
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
FINANCIAL ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Cash and short-term investments
|
|
$
|
1,520.4
|
|
$
|
1,520.4
|
|
$
|
1,380.1
|
|
1,380.1
|
Securities available for sale
|
|
|
3,386.0
|
|
|
3,386.0
|
|
|
3,238.6
|
|
3,238.6
|
Securities held to maturity
|
|
|
37.7
|
|
|
42.2
|
|
|
44.8
|
|
44.8
|
Federal Reserve Bank and other stock
|
|
|
17.5
|
|
|
17.5
|
|
|
15.5
|
|
15.5
|
Trading securities
|
|
|
43.9
|
|
|
43.9
|
|
|
64.5
|
|
64.5
|
Loans (exclusive of allowance for loan loss)
|
|
|
3,929.4
|
|
|
3,910.2
|
|
|
3,767.6
|
|
3,692.3
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
Demand and savings deposits
|
|
|
5,053.5
|
|
|
5,053.5
|
|
|
4,937.2
|
|
4,937.2
|
Time deposits
|
|
|
1,497.3
|
|
|
1,527.3
|
|
|
1,371.7
|
|
1,381.2
|
Federal funds and repurchase agreements
|
|
|
1,734.7
|
|
|
1,734.7
|
|
|
1,620.9
|
|
1,620.9
|
Short-term debt
|
|
|
33.8
|
|
|
33.8
|
|
|
17.9
|
|
17.9
|
Long-term debt
|
|
|
36.0
|
|
|
38.0
|
|
|
38.0
|
|
35.6
|
OFF-BALANCE SHEET ARRANGEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
Commitments to extend credit for loans
|
|
|
|
|
|
2.8
|
|
|
|
|
3.3
|
Commercial letters of credit
|
|
|
|
|
|
0.2
|
|
|
|
|
0.3
|
Standby letters of credit
|
|
|
291.7
|
|
|
2.3
|
|
|
291.9
|
|
1.7
|
The fair value
estimates presented herein are based on pertinent information available to management as of December 31, 2007 and 2006. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such
amounts have not been comprehensively revalued for purposes of these consolidated financial statements since those dates and, therefore, current estimates of fair value may differ significantly from the amount presented herein.
84
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
19.
PARENT
COMPANY FINANCIAL INFORMATION
UMB FINANCIAL
CORPORATION
BALANCE SHEETS
|
|
|
|
|
|
|
|
|
December 31
|
|
|
2007
|
|
2006
|
|
|
(in thousands)
|
ASSETS:
|
|
|
|
|
|
|
Investment in subsidiaries:
|
|
|
|
|
|
|
Banks
|
|
$
|
794,405
|
|
$
|
750,971
|
Non-banks
|
|
|
34,568
|
|
|
30,519
|
|
|
|
|
|
|
|
Total investment in subsidiaries
|
|
|
828,973
|
|
|
781,490
|
Goodwill on purchased affiliates
|
|
|
5,011
|
|
|
5,011
|
Cash
|
|
|
36,552
|
|
|
28,953
|
Securities available for sale and other
|
|
|
23,437
|
|
|
41,432
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
893,973
|
|
$
|
856,886
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
|
|
|
|
|
|
Dividends payable
|
|
$
|
96
|
|
$
|
5,521
|
Accrued expenses and other
|
|
|
3,303
|
|
|
2,490
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
3,399
|
|
|
8,011
|
Shareholders equity
|
|
|
890,574
|
|
|
848,875
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity
|
|
$
|
893,973
|
|
$
|
856,886
|
|
|
|
|
|
|
|
STATEMENTS OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(in thousands)
|
|
INCOME:
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends and income received from affiliate banks
|
|
$
|
61,900
|
|
|
$
|
74,760
|
|
|
$
|
34,860
|
|
Service fees from subsidiaries
|
|
|
11,742
|
|
|
|
10,973
|
|
|
|
11,085
|
|
Other
|
|
|
2,940
|
|
|
|
1,690
|
|
|
|
2,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income
|
|
|
76,582
|
|
|
|
87,423
|
|
|
|
48,505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSE:
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits
|
|
|
15,247
|
|
|
|
12,713
|
|
|
|
9,486
|
|
Services from affiliate banks
|
|
|
|
|
|
|
|
|
|
|
652
|
|
Other
|
|
|
8,944
|
|
|
|
9,260
|
|
|
|
10,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expense
|
|
|
24,191
|
|
|
|
21,973
|
|
|
|
20,249
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes and equity in undistributed earnings of subsidiaries
|
|
|
52,391
|
|
|
|
65,450
|
|
|
|
28,256
|
|
Income tax benefit
|
|
|
(3,815
|
)
|
|
|
(3,471
|
)
|
|
|
(2,620
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before equity in undistributed earnings of subsidiaries
|
|
|
56,206
|
|
|
|
68,921
|
|
|
|
30,876
|
|
Equity in undistributed earnings of subsidiaries:
|
|
|
|
|
|
|
|
|
|
|
|
|
Banks
|
|
|
13,958
|
|
|
|
(12,004
|
)
|
|
|
23,678
|
|
Non-Banks
|
|
|
4,049
|
|
|
|
2,850
|
|
|
|
1,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
74,213
|
|
|
$
|
59,767
|
|
|
$
|
56,318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(in thousands)
|
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net income to cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
74,213
|
|
|
$
|
59,767
|
|
|
$
|
56,318
|
|
Equity in earnings of subsidiaries
|
|
|
(79,907
|
)
|
|
|
(65,606
|
)
|
|
|
(60,302
|
)
|
Net increase in trading securities
|
|
|
(2,779
|
)
|
|
|
(12,228
|
)
|
|
|
|
|
Other
|
|
|
6,228
|
|
|
|
6,232
|
|
|
|
(3,523
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(2,245
|
)
|
|
|
(11,835
|
)
|
|
|
(7,507
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sales of securities available for sale
|
|
|
|
|
|
|
|
|
|
|
8
|
|
Proceeds from maturities of securities available for sale
|
|
|
19,000
|
|
|
|
67,000
|
|
|
|
52,950
|
|
Purchases of securities available for sale
|
|
|
|
|
|
|
|
|
|
|
(18,825
|
)
|
Net capital investment in subsidiaries
|
|
|
|
|
|
|
(83,795
|
)
|
|
|
(13,343
|
)
|
Dividends received from subsidiaries
|
|
|
61,900
|
|
|
|
74,760
|
|
|
|
34,860
|
|
Net capital expenditures for premises and equipment
|
|
|
(66
|
)
|
|
|
(52
|
)
|
|
|
(378
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by investing activities
|
|
|
80,834
|
|
|
|
57,913
|
|
|
|
55,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends paid
|
|
|
(29,278
|
)
|
|
|
(21,833
|
)
|
|
|
(19,015
|
)
|
Net purchase of treasury stock
|
|
|
(41,712
|
)
|
|
|
(28,487
|
)
|
|
|
(11,899
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(70,990
|
)
|
|
|
(50,320
|
)
|
|
|
(30,914
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash
|
|
|
7,599
|
|
|
|
(4,242
|
)
|
|
|
16,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at beginning of period
|
|
|
28,953
|
|
|
|
33,195
|
|
|
|
16,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at end of period
|
|
$
|
36,552
|
|
|
$
|
28,953
|
|
|
$
|
33,195
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20.
FDIC
ONE-TIME ASSESSMENT CREDIT
Effective
November 17, 2006, the FDIC implemented a one time credit of $4.7 billion to eligible institutions. The purpose of the credit was to recognize contributions made by certain institutions to capitalize the Bank Insurance Fund and Savings
Association Insurance Fund, which have now been merged into the Deposit Insurance Fund. The affiliate banks of the Company are eligible institutions and have received notice from the FDIC that their remaining share of the credit is approximately
$5.1 million at December 31, 2007. This amount is not reflected in the accompanying financial statements as it represents contingent future credits against future insurance assessment payments. As such, the timing of the one-time credit may
change.
86
UMB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
21.
SUMMARY OF OPERATING RESULTS BY QUARTER (unaudited) (in thousands except per share
data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
2007
|
|
March 31
|
|
|
June 30
|
|
|
Sept 30
|
|
|
Dec 31
|
|
Interest income
|
|
$
|
104,673
|
|
|
$
|
102,437
|
|
|
$
|
103,600
|
|
|
$
|
103,703
|
|
Interest expense
|
|
|
(47,709
|
)
|
|
|
(45,582
|
)
|
|
|
(45,593
|
)
|
|
|
(42,845
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
56,964
|
|
|
|
56,855
|
|
|
|
58,007
|
|
|
|
60,858
|
|
Provision for loan losses
|
|
|
(1,500
|
)
|
|
|
(2,000
|
)
|
|
|
(2,833
|
)
|
|
|
(3,000
|
)
|
Noninterest income
|
|
|
66,688
|
|
|
|
72,326
|
|
|
|
76,897
|
|
|
|
72,877
|
|
Noninterest expense
|
|
|
(97,409
|
)
|
|
|
(98,338
|
)
|
|
|
(101,399
|
)
|
|
|
(110,018
|
)
|
Income tax provision
|
|
|
(7,419
|
)
|
|
|
(8,780
|
)
|
|
|
(9,145
|
)
|
|
|
(5,418
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
17,324
|
|
|
$
|
20,063
|
|
|
$
|
21,527
|
|
|
$
|
15,299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
March 31
|
|
|
June 30
|
|
|
Sept 30
|
|
|
Dec 31
|
|
Interest income
|
|
$
|
86,473
|
|
|
$
|
88,335
|
|
|
$
|
94,629
|
|
|
$
|
99,646
|
|
Interest expense
|
|
|
(34,227
|
)
|
|
|
(34,826
|
)
|
|
|
(39,801
|
)
|
|
|
(43,005
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
52,246
|
|
|
|
53,509
|
|
|
|
54,828
|
|
|
|
56,641
|
|
Provision for loan losses
|
|
|
(3,159
|
)
|
|
|
(3,075
|
)
|
|
|
(1,500
|
)
|
|
|
(1,000
|
)
|
Noninterest income
|
|
|
59,820
|
|
|
|
65,709
|
|
|
|
64,403
|
|
|
|
65,013
|
|
Noninterest expense
|
|
|
(91,033
|
)
|
|
|
(95,391
|
)
|
|
|
(96,265
|
)
|
|
|
(98,728
|
)
|
Income tax provision
|
|
|
(4,633
|
)
|
|
|
(5,893
|
)
|
|
|
(5,601
|
)
|
|
|
(6,124
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
13,241
|
|
|
$
|
14,859
|
|
|
$
|
15,865
|
|
|
$
|
15,802
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
Per Share
2007
|
|
March 31
|
|
June 30
|
|
Sept 30
|
|
Dec 31
|
Net incomebasic
|
|
$
|
0.41
|
|
$
|
0.48
|
|
$
|
0.52
|
|
$
|
0.37
|
Net incomediluted
|
|
|
0.41
|
|
|
0.48
|
|
|
0.51
|
|
|
0.37
|
Dividend
|
|
|
0.14
|
|
|
0.14
|
|
|
0.14
|
|
|
0.15
|
Book value
|
|
|
20.42
|
|
|
20.44
|
|
|
21.18
|
|
|
21.55
|
|
|
|
|
|
Per Share
2006
|
|
March 31
|
|
June 30
|
|
Sept 30
|
|
Dec 31
|
Net incomebasic
|
|
$
|
0.31
|
|
$
|
0.35
|
|
$
|
0.37
|
|
$
|
0.37
|
Net incomediluted
|
|
|
0.31
|
|
|
0.35
|
|
|
0.37
|
|
|
0.37
|
Dividend
|
|
|
0.13
|
|
|
0.13
|
|
|
0.13
|
|
|
0.13
|
Book value
|
|
|
19.35
|
|
|
19.28
|
|
|
20.03
|
|
|
20.08
|
87
FIVE YEAR AVERAGE BALANCE SHEETS/YIELDS AND RATES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
Average
Balance
|
|
|
Interest
Income/
Expense (1)
|
|
Rate
Earned/
Paid (1)
|
|
|
Average
Balance
|
|
|
Interest
Income/
Expense (1)
|
|
Rate
Earned/
Paid (1)
|
|
|
|
(in millions)
|
|
|
|
(unaudited)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, net of unearned interest (FTE) (2)(3)
|
|
$
|
3,901.9
|
|
|
$
|
270.8
|
|
6.94
|
%
|
|
$
|
3,579.7
|
|
|
$
|
238.6
|
|
6.66
|
%
|
Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable
|
|
|
2,062.0
|
|
|
|
97.6
|
|
4.73
|
|
|
|
2,059.9
|
|
|
|
85.6
|
|
4.15
|
|
Tax-exempt (FTE)
|
|
|
725.8
|
|
|
|
37.1
|
|
5.12
|
|
|
|
682.4
|
|
|
|
34.1
|
|
4.99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities
|
|
|
2,787.8
|
|
|
|
134.7
|
|
4.83
|
|
|
|
2,742.3
|
|
|
|
119.7
|
|
4.36
|
|
Federal funds sold and resell agreements
|
|
|
360.2
|
|
|
|
18.7
|
|
5.18
|
|
|
|
378.0
|
|
|
|
19.1
|
|
5.06
|
|
Other earning assets (FTE)
|
|
|
58.9
|
|
|
|
2.4
|
|
4.03
|
|
|
|
56.6
|
|
|
|
2.6
|
|
4.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total earning assets (FTE)
|
|
|
7,108.8
|
|
|
|
426.6
|
|
6.00
|
|
|
|
6,756.6
|
|
|
|
380.0
|
|
5.62
|
|
Allowance for loan losses
|
|
|
(45.6
|
)
|
|
|
|
|
|
|
|
|
(42.2
|
)
|
|
|
|
|
|
|
Cash and due from banks
|
|
|
481.1
|
|
|
|
|
|
|
|
|
|
461.7
|
|
|
|
|
|
|
|
Other assets
|
|
|
452.0
|
|
|
|
|
|
|
|
|
|
407.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
7,996.3
|
|
|
|
|
|
|
|
|
$
|
7,583.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand and savings deposits
|
|
$
|
2,649.9
|
|
|
$
|
60.7
|
|
2.29
|
%
|
|
$
|
2,454.7
|
|
|
$
|
48.9
|
|
1.99
|
%
|
Time deposits under $100,000
|
|
|
796.5
|
|
|
|
35.9
|
|
4.51
|
|
|
|
783.8
|
|
|
|
30.4
|
|
3.88
|
|
Time deposits of $100,000 or more
|
|
|
489.7
|
|
|
|
23.6
|
|
4.82
|
|
|
|
409.7
|
|
|
|
17.6
|
|
4.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest bearing deposits
|
|
|
3,936.1
|
|
|
|
120.2
|
|
3.05
|
|
|
|
3,648.2
|
|
|
|
96.9
|
|
2.66
|
|
Short-term debt
|
|
|
12.9
|
|
|
|
0.6
|
|
4.59
|
|
|
|
13.5
|
|
|
|
0.6
|
|
2.87
|
|
Long-term debt
|
|
|
36.9
|
|
|
|
1.7
|
|
4.53
|
|
|
|
37.5
|
|
|
|
1.6
|
|
4.27
|
|
Federal funds purchased and repurchase agreements
|
|
|
1,272.7
|
|
|
|
59.3
|
|
4.66
|
|
|
|
1,148.5
|
|
|
|
52.8
|
|
4.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest bearing liabilities
|
|
|
5,258.6
|
|
|
|
181.8
|
|
3.46
|
|
|
|
4,847.7
|
|
|
|
151.9
|
|
3.13
|
|
Noninterest bearing demand deposits
|
|
|
1,780.1
|
|
|
|
|
|
|
|
|
|
1,840.6
|
|
|
|
|
|
|
|
Other
|
|
|
83.5
|
|
|
|
|
|
|
|
|
|
51.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
7,122.2
|
|
|
|
|
|
|
|
|
|
6,740.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity
|
|
|
874.1
|
|
|
|
|
|
|
|
|
|
843.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity
|
|
$
|
7,996.3
|
|
|
|
|
|
|
|
|
$
|
7,583.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income (FTE)
|
|
|
|
|
|
$
|
244.8
|
|
|
|
|
|
|
|
|
$
|
228.1
|
|
|
|
Net interest spread
|
|
|
|
|
|
|
|
|
2.54
|
%
|
|
|
|
|
|
|
|
|
2.49
|
%
|
Net interest margin
|
|
|
|
|
|
|
|
|
3.44
|
%
|
|
|
|
|
|
|
|
|
3.38
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Interest income and yields are stated on a fully tax-equivalent (FTE) basis, using a rate of 35%. The tax-equivalent interest income and yields give effect to disallowance of
interest expense, for federal income tax purposes related to certain tax-free assets. Rates earned/paid may not compute to the rates shown due to presentation in millions.
|
(2)
|
|
Loan fees are included in interest income. Such fees totaled $10.3 million $9.9 million, $7.9 million, $9.1 million, and $9.8 million in 2007, 2006, 2005, 2004, and 2003,
respectively.
|
(3)
|
|
Loans on non-accrual are included in the computation of average balances. Interest income on these loans is also included in loan income.
|
88
FIVE YEAR AVERAGE BALANCE SHEETS/YIELDS AND RATES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
Average
Balance
Five-Year
Compound
Growth Rate
|
|
Average
Balance
|
|
Interest
Income/
Expense (1)
|
|
Rate
Earned/
Paid (1)
|
|
|
Average
Balance
|
|
|
Interest
Income/
Expense (1)
|
|
Rate
Earned/
Paid (1)
|
|
|
Average
Balance
|
|
|
Interest
Income/
Expense (1)
|
|
Rate
Earned/
Paid (1)
|
|
|
(in millions)
|
|
(unaudited)
|
|
$3,130.8
|
|
$
|
177.1
|
|
5.66
|
%
|
|
$
|
2,781.1
|
|
|
$
|
136.5
|
|
4.91
|
%
|
|
$
|
2,588.8
|
|
|
$
|
137.6
|
|
5.31
|
%
|
|
8.19
|
%
|
2,230.6
|
|
|
64.8
|
|
2.91
|
|
|
|
2,351.2
|
|
|
|
57.8
|
|
2.46
|
|
|
|
2,771.9
|
|
|
|
70.9
|
|
2.56
|
|
|
(8.10
|
)
|
629.6
|
|
|
29.7
|
|
4.72
|
|
|
|
615.2
|
|
|
|
28.7
|
|
4.67
|
|
|
|
735.9
|
|
|
|
38.5
|
|
5.24
|
|
|
1.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,860.2
|
|
|
94.5
|
|
3.30
|
|
|
|
2,966.4
|
|
|
|
86.5
|
|
2.91
|
|
|
|
3,507.8
|
|
|
|
109.4
|
|
3.12
|
|
|
(6.17
|
)
|
228.2
|
|
|
8.0
|
|
3.50
|
|
|
|
280.3
|
|
|
|
4.4
|
|
1.57
|
|
|
|
146.5
|
|
|
|
1.7
|
|
1.16
|
|
|
14.17
|
|
60.1
|
|
|
2.4
|
|
3.91
|
|
|
|
69.2
|
|
|
|
2.2
|
|
3.15
|
|
|
|
50.4
|
|
|
|
1.5
|
|
3.04
|
|
|
(2.56
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,279.3
|
|
|
282.0
|
|
4.49
|
|
|
|
6,097.0
|
|
|
|
229.6
|
|
3.76
|
|
|
|
6,293.5
|
|
|
|
250.2
|
|
3.98
|
|
|
1.14
|
|
(40.5)
|
|
|
|
|
|
|
|
|
(44.3
|
)
|
|
|
|
|
|
|
|
|
(40.8
|
)
|
|
|
|
|
|
|
|
4.18
|
|
481.5
|
|
|
|
|
|
|
|
|
511.2
|
|
|
|
|
|
|
|
|
|
512.0
|
|
|
|
|
|
|
|
|
(0.65
|
)
|
374.0
|
|
|
|
|
|
|
|
|
364.0
|
|
|
|
|
|
|
|
|
|
385.4
|
|
|
|
|
|
|
|
|
1.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$7,094.3
|
|
|
|
|
|
|
|
$
|
6,927.9
|
|
|
|
|
|
|
|
|
$
|
7,150.1
|
|
|
|
|
|
|
|
|
1.05
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$2,302.2
|
|
$
|
25.8
|
|
1.12
|
%
|
|
$
|
2,214.7
|
|
|
$
|
9.0
|
|
0.41
|
%
|
|
$
|
2,460.4
|
|
|
$
|
9.1
|
|
0.37
|
%
|
|
0.19
|
%
|
658.4
|
|
|
17.9
|
|
2.72
|
|
|
|
668.9
|
|
|
|
14.3
|
|
2.14
|
|
|
|
779.5
|
|
|
|
19.8
|
|
2.54
|
|
|
(2.24
|
)
|
288.1
|
|
|
8.4
|
|
2.92
|
|
|
|
226.8
|
|
|
|
3.8
|
|
1.68
|
|
|
|
252.1
|
|
|
|
4.3
|
|
1.72
|
|
|
11.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,248.7
|
|
|
52.1
|
|
1.60
|
|
|
|
3,110.4
|
|
|
|
27.1
|
|
0.87
|
|
|
|
3,492.0
|
|
|
|
33.2
|
|
0.95
|
|
|
0.68
|
|
14.5
|
|
|
0.4
|
|
2.87
|
|
|
|
18.4
|
|
|
|
0.2
|
|
1.09
|
|
|
|
23.8
|
|
|
|
0.2
|
|
0.84
|
|
|
(26.73
|
)
|
34.8
|
|
|
1.8
|
|
4.89
|
|
|
|
17.7
|
|
|
|
0.9
|
|
5.11
|
|
|
|
17.4
|
|
|
|
1.1
|
|
6.17
|
|
|
6.06
|
|
1,029.1
|
|
|
29.4
|
|
2.85
|
|
|
|
1,050.9
|
|
|
|
12.2
|
|
1.16
|
|
|
|
950.6
|
|
|
|
8.2
|
|
0.87
|
|
|
2.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,327.1
|
|
|
83.7
|
|
1.93
|
|
|
|
4,197.4
|
|
|
|
40.4
|
|
0.96
|
|
|
|
4,483.8
|
|
|
|
42.7
|
|
0.95
|
|
|
1.01
|
|
1,887.3
|
|
|
|
|
|
|
|
|
1,865.6
|
|
|
|
|
|
|
|
|
|
1,788.1
|
|
|
|
|
|
|
|
|
0.65
|
|
50.5
|
|
|
|
|
|
|
|
|
43.3
|
|
|
|
|
|
|
|
|
|
69.7
|
|
|
|
|
|
|
|
|
3.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,264.9
|
|
|
|
|
|
|
|
|
6,106.3
|
|
|
|
|
|
|
|
|
|
6,341.6
|
|
|
|
|
|
|
|
|
0.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
829.4
|
|
|
|
|
|
|
|
|
821.6
|
|
|
|
|
|
|
|
|
|
808.5
|
|
|
|
|
|
|
|
|
1.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$7,094.3
|
|
|
|
|
|
|
|
$
|
6,927.9
|
|
|
|
|
|
|
|
|
$
|
7,150.1
|
|
|
|
|
|
|
|
|
1.05
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
198.3
|
|
|
|
|
|
|
|
|
$
|
189.2
|
|
|
|
|
|
|
|
|
$
|
207.5
|
|
|
|
|
|
|
|
|
|
|
|
2.56
|
%
|
|
|
|
|
|
|
|
|
2.80
|
%
|
|
|
|
|
|
|
|
|
3.03
|
%
|
|
|
|
|
|
|
|
|
3.16
|
%
|
|
|
|
|
|
|
|
|
3.10
|
%
|
|
|
|
|
|
|
|
|
3.30
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|