UMBF UMB Financial Corporation

UMB Financial Corporation (NASDAQ: UMBF), a financial services holding company, announced earnings for the three months ended March 31, 2010 of $26.2 million or $0.65 per share ($0.65 diluted). This is an increase of $3.6 million, or 15.9 percent, compared to first quarter 2009 earnings of $22.6 million or $0.56 per share ($0.55 diluted).

Commenting on the company’s first quarter 2010 results, Chairman and Chief Executive Officer Mariner Kemper said, “Our results were driven primarily by the execution on our diversified financial services strategy. Noninterest income for the quarter was solid, reflecting our recent acquisitions and the strong equity markets. However, loan demand remains weak with commercial utilization rates well below historical averages. Although we see signs of an improving economy, continued high unemployment coupled with other uncertainties will likely make a full recovery in the short run more difficult.”

Net Interest Income and Margin

Net interest income for the first quarter of 2010 was flat compared to the same period in 2009. Average earning assets increased by $675.9 million, or 7.1 percent, compared to the first quarter of 2009. This increase was due to a $539.2 million, or 132.1 percent, increase in average interest-bearing due from banks and a $183.3 million, or 4.0 percent, increase in total securities, including trading securities. Net interest margin decreased 20 basis points to 3.19 percent for the three months ended March 31, 2010 compared to the same quarter in 2009.

Noninterest Income and Expense

Noninterest income increased $17.5 million, or 25.4 percent, for the three months ended March 31, 2010 compared to the same period in 2009. Trust and securities processing income increased $10.7 million, or 42.9 percent, for the three months ended March 31, 2010 compared to the same period in 2009. This increase was primarily due to a $6.5 million, or 76.9 percent, increase in fund administration and custody services and a $3.8 million, or 57.0 percent, increase in advisory fee income from the Scout Funds. Gains from the sale of securities available for sale of $5.4 million were recognized during the first quarter of 2010.

Noninterest expense increased $10.7 million, or 10.1 percent, for the three months ended March 31, 2010 compared to the same period in 2009. Salary and benefits expense increased by $4.3 million, or 7.3 percent, mostly due to higher base salary, commission, and health insurance costs. Processing fees increased $4.0 million, or 57.5 percent, due to increased third party custodian fees related to international transactions from mutual fund clients and fees paid by the advisor to third-party distributors of the Scout Funds.

“We are very pleased with the growth in noninterest income during the quarter,” said Peter deSilva, President and Chief Operating Officer. “The recent corporate trust acquisitions, along with more than $573 million of net flows into the Scout Funds and positive equity markets, helped to propel the 25.4 percent noninterest income growth in the quarter. In addition, recent new client wins in the commercial credit card space, along with an increase in commercial credit card purchase volume in excess of 20 percent, position us well for future growth from this key business segment. Expense growth during the quarter was driven by incentive payments based upon improved sales results and increased costs related to the distribution and custody of Scout Fund assets by third parties. We remain focused on expense control even as we grow top line revenue.”

Balance Sheet

Average total assets for the three months ended March 31, 2010 were $11.0 billion compared to $10.2 billion for the same period in 2009, an increase of $765.5 million, or 7.5 percent. Average earning assets increased by $675.9 million for the period, or 7.1 percent.

Actual loan balances on March 31, 2010 of $4.3 billion were flat compared to 2009. Real estate loans increased $214.4 million, or 13.2 percent, due to increases in commercial real estate and home equity loans. Consumer loans decreased $104.5 million, or 20.2 percent, due to the continued reduction in indirect auto loans as the company exits this market. Commercial loans decreased $116.9 million, or 5.7 percent. Average loan balances for the three months ended March 31, 2010 and 2009 were flat at $4.4 billion.

Nonperforming loans increased to $25.4 million at March 31, 2010 from $14.6 million at March 31, 2009. As a percentage of loans, nonperforming loans increased to 0.59 percent as of March 31, 2010 compared to 0.34 percent at March 31, 2009. This increase is predominately due to one syndicated national credit, which was placed on nonaccrual during 2009. Nonperforming loans are defined as nonaccrual loans and restructured loans. By comparison, the industry average for nonperforming loans as of December 31, 2009 was 5.30 percent. The company’s allowance for loan losses totaled $67.4 million, or 1.57 percent of loans as of March 31, 2010 compared to $54.0 million, or 1.25 percent of loans as of March 31, 2009.

For the three months ended March 31, 2010, average securities, including trading securities, totaled $4.8 billion. This is an increase of $183.3 million, or 4.0 percent, from the same period in 2009. Average interest-bearing due from banks increased for the first quarter by $539.2 million, or 132.1 percent, to $947.4 million from the same period in 2009.

Average total deposits increased $967.8 million, or 13.0 percent, to $8.4 billion for the three months ended March 31, 2010 compared to the same period in 2009. The increase in deposits came primarily from mutual funds, treasury management accounts, and time deposit accounts. Average time deposit accounts increased $270.9 million, or 18.6 percent, for the three months ended March 31, 2010 as compared to 2009. Average money market accounts increased by $193.8 million, or 13.2 percent, in 2010 as compared to 2009. Average noninterest-bearing demand deposits increased $498.4 million, or 22.2 percent, compared to 2009. Total deposits as of March 31, 2010 were $8.2 billion, compared to $7.7 billion at March 31, 2009, a 7.1 percent increase.

“Deposit growth has outpaced loan demand, and as a result the investment portfolio has grown and is now our largest earning asset,” said Mike Hagedorn, Chief Financial Officer. “We continue to manage the investment portfolio’s duration and interest rate risk in anticipation of a rising interest rate environment. The overall high quality of the portfolio is further evidence of our balance sheet strength.”

As of March 31, 2010, UMB had total shareholders’ equity of $1.0 billion, an increase of 4.5 percent over March 31, 2009.

The company plans to host a conference call to discuss its first quarter financial results on April 28, 2010, at 8:30 a.m. (CDT). Interested parties may access the call by dialing U.S. (toll-free) 877.941.6009, by following the Web link to the live call: http://w.on24.com/r.htm?e=202344&s=1&k=825BE7A36DE06B1C44891AAA511D2B5D or by visiting umb.com to access the link to the live call.

A replay of the conference call may be heard until May 12, 2010, by calling U.S./Canada (toll-free) 800.406.7325 or 303.590.3030. The replay pass code required for playback is conference 4277502. The call replay may also be accessed via the company's web site, umb.com, by visiting the Investor Relations’ area.

Forward-Looking Statements:

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements rely on a number of assumptions concerning future events and are subject to risks and uncertainties, which could cause actual results to differ materially from those contemplated by the forward-looking statements in this Current Report on Form 8-K, any exhibits to this Current Report and other public statements the company may make. While management of UMB believes their assumptions are reasonable, UMB cautions that changes in general economic conditions, changes in interest rates, changes in the securities markets, changes in operations, changes in competition, technology changes, legislative or regulatory changes, the ability of customers to repay loans, changes in loan demand, increases in employee costs, its ability to integrate acquisitions and other risks and uncertainties detailed in UMB’s filings with the Securities and Exchange Commission, may cause actual results to differ materially from those discussed in this release. UMB has no duty to update such statements, and undertakes no obligation to update or supplement forward-looking statements that become untrue because of new information, future events or otherwise.

About UMB:

UMB Financial Corporation (NASDAQ: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, asset management, health spending solutions and related financial services to commercial, institutional and personal customers nationwide. Its banking subsidiaries own and operate 135 banking centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. Subsidiaries of the holding company and the lead bank, UMB Bank, n.a., include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers. For more information, visit umb.com or follow us on Twitter at @UMBFinancial.

  CONSOLIDATED BALANCE SHEETS   UMB Financial Corporation (unaudited, dollars in thousands) March 31,

Assets

  2010   2009   Loans $ 4,301,965 $ 4,306,769 Allowance for loan losses   (67,442 )   (54,005 ) Net loans   4,234,523     4,252,764   Loans held for sale 17,706 34,799 Investment Securities: Available for sale 4,740,505 4,071,584 Held to maturity 55,968 49,240 Trading securities 34,858 36,510 Non-marketable   22,432     21,614   Total investment securities   4,853,763     4,178,948   Federal funds and resell agreements 21,177 51,834 Interest-bearing due from banks 724,437 928,471 Cash and due from banks 319,966 351,722 Bank premises and equipment, net 213,330 221,622 Accrued income 61,515 61,783 Goodwill 131,356 104,914 Other intangibles 46,635 17,125 Other assets   99,648     42,876   Total assets $ 10,724,056   $ 10,246,858      

Liabilities

Deposits: Noninterest-bearing demand $ 2,716,510 $ 2,614,082 Interest-bearing demand and savings 3,904,509 3,604,529 Time deposits under $100,000 738,260 763,723 Time deposits of $100,000 or more   861,230     694,479   Total deposits   8,220,509     7,676,813   Federal funds and repurchase agreements 1,311,296 1,414,239 Short-term debt 21,874 27,161 Long-term debt 24,212 34,759 Accrued expenses and taxes 103,549 80,107 Other liabilities   13,165     28,795   Total liabilities   9,694,605     9,261,874    

Shareholders' Equity

Common stock 55,057 55,057 Capital surplus 713,062 708,044 Retained earnings 581,443 517,486 Accumulated other comprehensive income 36,631 46,475 Treasury stock   (356,742 )   (342,078 ) Total shareholders' equity   1,029,451     984,984   Total liabilities and shareholders' equity $ 10,724,056   $ 10,246,858   Consolidated Statements of Income  

 

UMB Financial Corporation

(unaudited, dollars in thousands except share and per share data) Three Months Ended March 31,

Interest Income

  2010   2009 Loans $ 53,483 $ 52,800 Securities: Taxable interest 23,779 29,122 Tax-exempt interest 7,317   7,020 Total securities income 31,096 36,142 Federal funds and resell agreements 61 130 Interest-bearing due from banks 1,319 842 Trading securities 142   168 Total interest income 86,101   90,082  

Interest Expense

Deposits 9,624 13,823 Federal funds and repurchase agreements 444 660 Short-term debt - - Long-term debt 259   390 Total interest expense 10,327   14,873 Net interest income 75,774 75,209 Provision for loan losses 8,310   6,000 Net interest income after provision for loan losses 67,464   69,209  

Noninterest Income

Trust and securities processing 35,572 24,899 Trading and investment banking 7,027 4,861 Service charges on deposits 20,519 20,795 Insurance fees and commissions 1,699 1,570 Brokerage fees 1,336 2,352 Bankcard fees 12,020 10,947 Gains on sale of securities available for sale, net 5,382 42 Other 2,875   3,443 Total noninterest income 86,430   68,909  

Noninterest Expense

Salaries and employee benefits 62,253 57,996 Occupancy, net 8,921 8,144 Equipment 10,870 12,996 Supplies and services 4,707 5,377 Marketing and business development 3,705 3,191 Processing fees 11,029 7,004 Legal and consulting 1,622 1,548 Bankcard 3,190 3,957 Amortization of other intangibles 2,091 976 Regulatory fees 3,238 1,727 Other 5,752   3,728 Total noninterest expense 117,378 106,644   Income before income taxes 36,516 31,474 Income tax provision 10,331   8,873 Net income $ 26,185 $ 22,601  

Per Share Data

Net income - basic $

0.65

$ 0.56 Net income - diluted

0.65

0.55 Dividends 0.185 0.175 Weighted average shares outstanding 40,089,527 40,598,097 Consolidated Statements of           Shareholders' Equity                     UMB Financial Corporation (unaudited, dollars in thousands, except per share data)     Accumulated Other Common Capital Retained Comprehensive Treasury   Stock     Surplus     Earnings     Income (Loss)     Stock     Total

Balance - January 1, 2009

$ 55,057 $ 707,813 $ 502,073 $ 41,105 $ (331,236) $ 974,811 Comprehensive income Net income - - 22,601 - - 22,601 Change in unrealized gains on securities - - - 5,370 - 5,370 Total comprehensive income 27,971 Cash dividends ($0.175 per share) - - (7,188) - - (7,188) Purchase of treasury stock - - - - (12,443) (12,443) Issuance of equity awards - (1,261) - - 1,393 132 Recognition of equity based compensation - 1,202 - - - 1,202 Net tax benefit related to equity compensation plans - 58 - - - 58 Sale of treasury stock - 114 - - 54 168 Exercise of stock options   -     119     -     -     154     273 Balance – March 31,2009 $ 55,057   $ 708,044   $ 517,486   $ 46,475   $ (342,078)   $ 984,984   Balance - January 1, 2010 $ 55,057 712,774 562,748 40,454 (355,482) 1,015,551 Comprehensive income Net income - - 26,185 - - 26,185 Change in unrealized gains on securities - - - (3,823) - (3,823) Total comprehensive income 22,362 Cash dividends ($0.185 per share) - -

(7,490)

-

- (7,490) Purchase of treasury stock - - - - (2,961) (2,961) Issuance of equity awards - (1,374) - - 1,498 124 Recognition of equity based compensation - 1,410 - - - 1,410 Net tax benefit related to equity compensation plans - 48 - - - 48 Sale of treasury stock - 113 - - 63 176 Exercise of stock options   -     91     -     -     140     231 Balance – March 31, 2010 $ 55,057     713,062     581,443     36,631     (356,742)     1,029,451 Average Balances / Yields and Rates       UMB Financial Corporation (tax - equivalent basis) (unaudited, dollars in thousands) Three Months Ended March 31,   2010     2009   Average Average Average Average Assets   Balance Yield/Rate     Balance Yield/Rate   Loans, net of unearned interest $ 4,364,423 4.98 % $ 4,413,064 4.86 % Securities: Taxable 3,736,919 2.58 3,685,760 3.20 Tax-exempt 980,953 4.68 853,703 5.18 Total securities 4,717,872 3.02 4,539,463 3.58 Federal funds and resell agreements 88,555 0.28 86,452 0.61 Interest-bearing due from banks 947,374 0.56 408,177 0.84 Trading securities 36,193 1.76 31,346 2.39 Total earning assets 10,154,417 3.60 9,478,502 4.02 Allowance for loan losses (64,992) (53,615) Other assets   922,399   821,415 Total assets $ 11,011,824 $ 10,246,302     Liabilities and Shareholders' Equity Interest-bearing deposits $ 5,666,615 0.69 % $ 5,197,118 1.08 % Federal funds and repurchase agreements 1,390,408 0.13 1,659,010 0.16 Borrowed funds 47,722 2.20 52,219 3.03 Total interest-bearing liabilities 7,104,745 0.59 6,908,347 0.87 Noninterest-bearing demand deposits 2,747,217 2,248,865 Other liabilities 123,582 96,252 Shareholders' equity   1,036,280   992,838 Total liabilities and shareholders' equity $ 11,011,824 $ 10,246,302 Net interest spread 3.01 % 3.15 % Net interest margin 3.19 3.39 FIRST QUARTER 2010   FINANCIAL HIGHLIGHTS     UMB Financial Corporation (unaudited, dollars in thousands, except share and per share data)   Three Months Ended March 31   2010     2009   Net interest income $ 75,774 $ 75,209 Provision for loan losses 8,310 6,000 Noninterest income 86,430 68,909 Noninterest expense 117,378 106,644 Income before income taxes 36,516 31,474 Net income 26,185 22,601 Net income per share - Basic

0.65

0.56 Net income per share - Diluted

0.65

0.55 Return on average assets 0.96 % 0.89 % Return on average equity 10.25 % 9.23 %   At March 31 Assets $ 10,724,056 $ 10,246,858 Loans, net of unearned interest 4,301,965 4,306,769 Securities 4,853,763 4,178,948 Deposits 8,220,509 7,676,813 Shareholders' equity 1,029,451 984,984 Book value per share 25.43 24.19 Market price per share 40.60 42.49 Equity to assets 9.60 % 9.61 % Allowance for loan losses $ 67,442 $ 54,005 As a % of loans 1.57 % 1.25 % Nonaccrual and restructured loans $ 25,407 $ 14,648 As a % of loans 0.59 % 0.34 % Loans over 90 days past due $ 6,244 $ 6,658 As a % of loans 0.15 % 0.15 % Other real estate owned $ 5,821 $ 1,905 Net loan charge-offs quarter-to-date $ 5,007 $ 4,292 As a % of average loans 0.46 % 0.40 %   Common shares outstanding 40,488,195 40,720,210   Average Balances Three Months ended March 31 Assets $ 11,011,824 $ 10,246,302 Loans, net of unearned interest 4,364,423 4,413,064 Securities 4,717,872 4,539,463 Deposits 8,413,832 7,445,983 Shareholders' equity 1,036,280 992,838 Selected Financial Data of Affiliate Banks           UMB Financial Corporation (unaudited, dollars in thousands) March 31, 2010 Loans Net of Total Unearned Total Shareholders' Missouri   Assets   Interest   Deposits   Equity UMB Bank, n.a. $ 9,110,410 $ 3,491,482 $ 6,998,067 $ 633,166   Colorado                 UMB Bank Colorado, n. a. 1,033,514 533,295 844,486 156,393   Kansas                 UMB National Bank of America 639,634 216,631 429,432 63,087   Arizona                 UMB Bank Arizona, n. a. 86,114 75,592 44,232 10,581   Banking - Related Subsidiaries                 UMB Community Development Corporation UMB Banc Leasing Corp. UMB Financial Services, Inc. UMB Insurance, Inc. UMB Capital Corporation United Missouri Insurance Company UMB South Dakota Trust Company UMB Fund Services, Inc. Kansas City Realty Company Kansas City Financial Corp. UMB Redevelopment Corporation UMB Realty Company, LLC Grand Distribution Services, LLC UMB Distribution Services, LLC

J. D. Clark & Co., Inc.

UMB Bank & Trust, National Association Scout Distributors, LLC Scout Investment Advisors, Inc.