UMBF UMB Financial Corporation

UMB Financial Corporation (NASDAQ: UMBF), a financial services holding company, announced earnings for the three months ended December 31, 2010 of $19.0 million or $0.48 per share ($0.47 diluted). This is a decrease of $4.8 million, or 20.2 percent, compared to fourth quarter 2009 earnings of $23.9 million or $0.59 per share ($0.59 diluted). Earnings for the year ended December 31, 2010 were $91.0 million or $2.27 per share ($2.26 diluted). This is an increase of $1.5 million, or 1.7 percent, compared to the prior year-to-date earnings of $89.5 million or $2.22 per share ($2.20 diluted).

“2010 marked another strong year with record revenue, strategic acquisitions, and consistency in earnings and balance sheet strength, demonstrating performance against our strategies as a diversified financial services company,” said Mariner Kemper, Chairman and Chief Executive Officer. “For the fourth quarter, total revenue represents a 7.7 percent increase and noninterest income increased 13.6 percent compared to the fourth quarter 2009. While expenses were up in the fourth quarter mostly due to acquisition-related expenses, we remain pleased with the performance of our multiple fee businesses. Loan balances were up 6.2 percent at the end of the quarter, and our credit quality has remained solid, even as the external environment proved challenging. As the economy improves, we expect to achieve even greater operating leverage from the investments we have made in our company. ”

Net Interest Income and Margin

Net interest income for the fourth quarter of 2010 increased $1.1 million, or 1.4 percent, compared to the same period in 2009. Average earning assets increased by $1.0 billion, or 10.9 percent, compared to the fourth quarter of 2009. This increase was due to an $821.9 million, or 17.8 percent, increase in average total securities, including trading securities. Net interest margin decreased 29 basis points to 3.12 percent for the three months ended December 31, 2010 compared to the same quarter in 2009.

Noninterest Income and Expense

Noninterest income increased $11.3 million, or 13.6 percent, for the three months ended December 31, 2010 compared to the same period in 2009. This increase is primarily attributed to increased trust and securities processing income of $11.9 million, or 34.7 percent, for the three months ended December 31, 2010 compared to the same period in 2009. The increase in trust and securities processing income was primarily due to a $4.0 million, or 40.3 percent, increase in advisory fee income from the Scout Funds, a $1.9 million, or 12.8 percent, increase in fund administration and custody services, and a $4.1 million, or 336.1 percent, increase in fees related to institutional and personal investment management services. Bankcard fees increased $2.7 million, or 23.3 percent, compared to the fourth quarter of 2009 from increased processing fee income. Trading and investment banking fees increased $2.8 million, or 46.9 percent, for the fourth quarter compared to the same period in 2009. These increases were offset by a decrease in service charges on deposits of $3.4 million, or 16.1 percent, compared to the fourth quarter of 2009 primarily related to lower return item income of $3.5 million, or 42.3 percent. Gains of $1.0 million on securities available for sale were recognized in the fourth quarter of 2010 compared to $4.5 million during the same period in 2009.

Noninterest expense increased $18.7 million, or 15.6 percent, for the three months ended December 31, 2010 compared to the same period in 2009. The primary driver of this increase is higher salary and benefits expense of $9.3 million, or 14.8 percent, due to higher base salary, commission, and health insurance costs. Of this increase in salary and benefits expense, approximately $3.1 million, or 33.3 percent, is related to salary and benefits from acquisitions. Legal and consulting fees increased $2.2 million, or 68.1 percent, and amortization of intangible assets increased $1.6 million, or 86.8 percent, compared to the fourth quarter of 2009. These increases are largely driven by acquisition activity in 2010 compared to 2009. Business development expenses increased $1.7 million, or 42.9 percent, due to timing of various marketing campaigns during the fourth quarter of 2010 compared to 2009.

“During the fourth quarter we closed on our acquisition of Reams Asset Management, bringing Scout Investments’ assets under management to $19.8 billion and total company assets under management to $27.9 billion. Noninterest income growth continues to be driven by revenue from our asset management and asset servicing businesses, plus fee income from our card services and health care services businesses,” said Peter deSilva, President and Chief Operating Officer. “We are very pleased with the performance of these businesses and we look forward to achieving additional operating leverage in 2011.”

Balance Sheet

Average total assets for the three months ended December 31, 2010 were $11.6 billion compared to $10.3 billion for the same period in 2009, an increase of $1.2 billion, or 11.7 percent. Average earning assets increased by $1.0 billion for the period, or 10.9 percent.

Actual loan balances on December 31, 2010 were $4.6 billion, an increase of $269.0 million, or 6.2 percent, compared to 2009. Real estate loans increased $170.1 million, or 9.5 percent, due to increases in commercial real estate and home equity loans. Commercial loans increased $81.0 million, or 4.1 percent. Average loan balances for the three months ended December 31, 2010 increased $272.2 million, or 6.3 percent compared to the same period in 2009.

Nonperforming loans increased to $25.1 million at December 31, 2010 from $23.3 million at December 31, 2009. As a percentage of loans, nonperforming loans increased to 0.55 percent as of December 31, 2010 compared to 0.54 percent at December 31, 2009. Nonperforming loans are defined as nonaccrual loans and restructured loans. By comparison, the industry median for nonperforming loans as of September 30, 2010 was 4.04 percent. The company’s allowance for loan losses totaled $74.0 million, or 1.61 percent of loans as of December 31, 2010 compared to $64.1 million, or 1.49 percent of loans as of December 31, 2009.

For the three months ended December 31, 2010, average securities, including trading securities, totaled $5.4 billion. This is an increase of $821.9 million, or 17.8 percent, from the same period in 2009.

Average total deposits increased $1.0 billion, or 12.9 percent, to $8.8 billion for the three months ended December 31, 2010 compared to the same period in 2009. Average money market accounts increased by $494.8 million, or 33.9 percent, in 2010 as compared to 2009. Average noninterest-bearing demand deposits increased $458.2 million, or 18.4 percent, compared to 2009. Total deposits as of December 31, 2010 were $9.0 billion, compared to $8.5 billion at December 31, 2009, a 5.8 percent increase. Also, as of December 31, 2010, noninterest-bearing demand deposits were 32.0 percent of total deposits.

“The growth in our balance sheet underscores our strengths and positive performance,” said Mike Hagedorn, Chief Financial Officer. “Average earning assets increased by $1.0 billion, or 10.9 percent, for the quarter. Deposits increased as well, as did equity. Increased expenses during the quarter indicate we are following our strategy to acquire quality fee businesses. More importantly, we have remained in a position to make acquisitions throughout the recent economic cycle without raising dilutive capital from external sources while maintaining strong capital ratios.”

As of December 31, 2010, UMB had total shareholders’ equity of $1.1 billion, an increase of 4.5 percent over December 31, 2009.

Year-to-Date

Earnings for the year ended December 31, 2010 were $91.0 million or $2.27 per share ($2.26 diluted). This is an increase of $1.5 million, or 1.7 percent, compared to the prior year-to-date earnings of $89.5 million or $2.22 per share ($2.20 diluted).

Net interest income for the year ended December 31, 2010 increased $7.6 million, or 2.5 percent, compared to the same period in 2009. Net interest margin decreased to 3.21 percent for the year ended December 31, 2010 as compared to 3.43 percent for the same period in 2009.

Noninterest income increased $50.2 million, or 16.2 percent, to $360.4 million for the year ended December 31, 2010 as compared to the same period in 2009. The increase is primarily attributable to higher trust and securities processing income and higher bankcard fees. Trust and securities processing income increased $39.8 million, or 33.0 percent, for year-to-date December 31, 2010 as compared to the same period in 2009. Bankcard fees increased $9.5 million, or 20.9 percent.

Noninterest expense increased $52.0 million, or 11.3 percent, for the year ended December 31, 2010 compared to the same period in 2009. Salary and employee benefit expense increased by $26.4 million, or 11.0 percent, mostly due to higher employee base salaries, higher commissions and bonuses and higher cost of benefits. Processing fees increased $10.0 million, or 28.3 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.

The company plans to host a conference call to discuss its 2010 fourth quarter and year-end earnings results on January 26, 2011, at 8:30 a.m. (CST). Interested parties may access the call by dialing (toll-free) 877-941-6010 or (U.S.) 480-629-9772. The call can also be accessed by the Web link to the live call or by visiting the investor relations area of umb.com.

A replay of the conference call may be heard until February 5, 2011, by calling (toll-free) 800-406-7325 or (U.S.) 303-590-3030. The replay pass code required for playback is conference ID 4398639#. The call replay may also be accessed via the company's website, 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 128 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)   December 31,

Assets

2010   2009   Loans $

4,583,683

$ 4,314,705 Allowance for loan losses   (73,952 )     (64,139 ) Net loans   4,509,731       4,250,566   Loans held for sale 14,414 17,523 Investment securities: Available for sale 5,613,047 4,885,788 Held to maturity 63,566 56,986 Trading securities 42,480 38,214 Federal Reserve Bank Stock and other   23,011       22,732   Total investment securities   5,742,104       5,003,720   Federal funds and resell agreements 235,176 329,765 Interest-bearing due from banks 848,598 1,057,195 Cash and due from banks 356,092 458,093 Bank premises and equipment, net 219,727 217,642 Accrued income 76,653 64,949 Goodwill 211,114 131,356 Other intangibles 92,297 47,462 Other assets   99,026       85,084   Total assets $ 12,404,932     $ 11,663,355      

Liabilities

Deposits: Noninterest-bearing demand $ 2,888,881 $ 2,775,222 Interest-bearing demand and savings 4,445,798 3,904,268 Time deposits under $100,000 693,600 772,040 Time deposits of $100,000 or more   1,000,462       1,082,958   Total deposits   9,028,741       8,534,488   Federal funds and repurchase agreements 2,084,342 1,927,607 Short-term debt 35,220 29,514 Long-term debt 8,884 25,458 Accrued expenses and taxes 145,458 107,896 Other liabilities   41,427       22,841   Total liabilities   11,344,072       10,647,804    

Shareholders' Equity

Common stock 55,057 55,057 Capital surplus 718,306 712,774 Retained earnings 623,415 562,748 Accumulated other comprehensive income 25,465 40,454 Treasury stock   (361,383 )     (355,482 ) Total shareholders' equity   1,060,860       1,015,551   Total liabilities and shareholders' equity $ 12,404,932     $ 11,663,355     Consolidated Statements of Income   UMB Financial Corporation (unaudited, dollars in thousands except share and per share data)   Three Months Ended   Year Ended December 31, December 31,

Interest Income

2010   2009   2010   2009 Loans $ 55,783   $ 54,492 $ 221,797   $ 215,305 Securities: Taxable interest 22,109 26,079 90,409 106,474 Tax-exempt interest   7,822       7,634     29,497     29,376 Total securities income 29,931 33,713 119,906 135,850 Federal funds and resell agreements 22 35 159 263 Interest-bearing due from banks 814 1,114 3,914 4,078 Trading securities   231       150     731     721 Total interest income   86,781       89,504     346,507     356,217  

Interest Expense

Deposits 7,462 11,263 33,447 49,919 Federal funds and repurchase agreements 545 358 2,017 2,001 Other   (13 )     174     430     1,312 Total interest expense   7,994       11,795     35,894     53,232 Net interest income 78,787 77,709 310,613 302,985 Provision for loan losses   7,400       11,500     31,510     32,100 Net interest income after provision for loan losses   71,387       66,209     279,103     270,885  

Noninterest Income

Trust and securities processing 46,326 34,380 160,356 120,544 Trading and investment banking 8,757 5,962 29,211 26,587 Service charges on deposits 17,504 20,864 77,617 83,392 Insurance fees and commissions 1,025 1,090 5,565 4,800 Brokerage fees 1,666 1,679 6,345 7,172 Bankcard fees 14,250 11,560 54,804 45,321 Gains on sale of securities available for sale, net 1,045 4,540 8,315 9,737 Other   4,182       3,350     18,157     12,623 Total noninterest income   94,755       83,425     360,370     310,176  

Noninterest Expense

Salaries and employee benefits 72,364 63,032 267,213 240,819 Occupancy, net 9,244 9,062 36,251 34,760 Equipment 11,729 11,464 44,934 47,645 Supplies and services 4,632 4,503 18,841 20,237 Marketing and business development 5,787 4,049 18,348 15,446 Processing fees 11,689 10,663 45,502 35,465 Legal and consulting 5,546 3,300 14,046 10,254 Bankcard 4,872 3,752 16,714 14,251 Amortization of other intangibles 3,459 1,852 11,142 6,169 Regulatory fees 3,474 3,004 13,448 15,675 Other   5,689       5,126     26,183     19,864 Total noninterest expense 138,485 119,807 512,622 460,585   Income before income taxes 27,657 29,827 126,851 120,476 Income tax provision   8,626       5,969     35,849     30,992 Net income $ 19,031     $ 23,858   $ 91,002   $ 89,484  

Per Share Data

Net income - basic $ 0.48 $ 0.59 $ 2.27 $ 2.22 Net income - diluted 0.47 0.59 2.26 2.20 Dividends 0.195 0.185 0.755 0.71 Weighted average shares outstanding 40,037,130 40,091,335 40,071,751 40,324,437   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   Stock   Total Balance - January 1, 2009 $ 55,057 $707,812 $ 502,073 $ 41,105 $(331,236 ) $974,811 Comprehensive income Net income - - 89,484 - - 89,484 Change in unrealized gains on securities - - - (651 ) - (651 ) Total comprehensive income 88,833 Cash dividends ($0.71 per share) - - (28,809 ) - - (28,809 ) Purchase of treasury stock - - - - (26,894 ) (26,894 ) Issuance of equity awards - (1,457 ) - - 1,589 132 Recognition of equity based compensation - 5,313 - - - 5,313 Net tax benefit related to equity compensation plans - 191 - - - 191 Sale of treasury stock - 419 - - 215 634 Exercise of stock options   -   496       -       -     844     1,340   Balance – December 31, 2009 $ 55,057   $712,774     $ 562,748     $ 40,454     $(355,482 )   $1,015,551     Balance - January 1, 2010 $ 55,057 $712,774 $ 562,748 $ 40,454 $(355,482 ) $1,015,551 Comprehensive income Net income - - 91,002 - - 91,002 Change in unrealized gains on securities - - - (14,989 ) - (14,989 ) Total comprehensive income 76,013 Cash dividends ($0.755 per share) - - (30,335 ) - - (30,335 ) Purchase of treasury stock - - - - (8,879 ) (8,879 ) Issuance of equity awards - (1,673 ) - - 1,798 125 Recognition of equity based compensation - 5,953 - - - 5,953 Net tax benefit related to equity compensation plans - 152 - - - 152 Sale of treasury stock - 540 - - 298 838 Exercise of stock options   -   560       -       -     882     1,442   Balance – December 31, 2010 $ 55,057   $718,306     $ 623,415     $ 25,465     $(361,383 )   $1,060,860     Average Balances / Yields and Rates   UMB Financial Corporation (tax - equivalent basis)   (unaudited, dollars in thousands) Year Ended December 31, 2010   2009 Average   Average   Average   Average Assets Balance   Yield/Rate   Balance   Yield/Rate Loans, net of unearned interest $ 4,490,587 4.95 % $ 4,383,551 4.92 % Securities: Taxable 3,964,661 2.28 3,432,373 3.10 Tax-exempt   1,067,689     4.28     916,302     4.98   Total securities 5,032,350 2.71 4,348,675 3.50 Federal funds and resell agreements 44,383 0.36 54,069 0.49 Interest-bearing due from banks 593,518 0.66 492,915 0.83 Trading securities   41,489     1.91     33,503     2.39   Total earning assets 10,202,327 3.56 9,312,713 4.00 Allowance for loan losses (69,087 ) (57,291 ) Other assets   974,993     855,233   Total assets $ 11,108,233   $ 10,110,655       Liabilities and Shareholders' Equity Interest-bearing deposits $ 5,656,508 0.59 % $ 5,211,569 0.96 % Federal funds and repurchase agreements 1,409,349 0.14 1,351,206 0.15 Borrowed funds   42,313     1.02     51,857     2.53   Total interest-bearing liabilities 7,108,170 0.50 6,614,632 0.80 Noninterest-bearing demand deposits 2,795,458 2,372,456 Other liabilities 137,733 116,976 Shareholders' equity   1,066,872     1,006,591   Total liabilities and shareholders' equity $ 11,108,233   $ 10,110,655   Net interest spread 3.06 % 3.20 % Net interest margin 3.21 3.43     Three Months Ended December 31, 2010   2009 Average Average Average Average Assets Balance   Yield/Rate   Balance   Yield/Rate Loans, net of unearned interest $ 4,606,019 4.81 % $ 4,333,799 5.00 % Securities: Taxable 4,162,658 2.11 3,577,638 2.89 Tax-exempt   1,219,440     3.95  

 

996,292     4.73   Total securities 5,382,098 2.52 4,573,930 3.29 Federal funds and resell agreements 23,066 0.38 44,417 0.31 Interest-bearing due from banks 517,048 0.62 551,891 0.80 Trading securities   48,039     2.12     34,286     1.91   Total earning assets 10,576,270 3.42 9,538,323 3.90 Allowance for loan losses (72,880 ) (62,155 ) Other assets   1,058,717     871,345   Total assets $ 11,562,107   $ 10,347,513       Liabilities and Shareholders' Equity Interest-bearing deposits $ 5,873,330 0.50 % $ 5,327,009 0.84 % Federal funds and repurchase agreements 1,441,146 0.15 1,311,829 0.11 Borrowed funds   38,900     (0.13 )   49,945     1.38   Total interest-bearing liabilities 7,353,376 0.43 6,688,783 0.70 Noninterest-bearing demand deposits 2,947,452 2,489,266 Other liabilities 170,240 142,437 Shareholders' equity   1,091,039     1,027,027   Total liabilities and shareholders' equity $ 11,562,107   $ 10,347,513   Net interest spread 2.99 % 3.20 % Net interest margin 3.12 3.41   FOURTH QUARTER 2010 FINANCIAL HIGHLIGHTS   UMB Financial Corporation (unaudited, dollars in thousands, except share and per share data)     Year Ended December 31 2010   2009 Net interest income $ 310,613 $ 302,985 Provision for loan losses 31,510 32,100 Noninterest income 360,370 310,176 Noninterest expense 512,622 460,585 Income before income taxes 126,851 120,476 Net income 91,002 89,484 Net income per share - Basic 2.27 2.22 Net income per share - Diluted 2.26 2.20 Return on average assets 0.82 % 0.89 % Return on average equity 8.53 % 8.89 %   Three Months Ended December 31 Net interest income $ 78,787 $ 77,709 Provision for loan losses 7,400 11,500 Noninterest income 94,755 83,425 Noninterest expense 138,485 119,807 Income before income taxes 27,657 29,827 Net income 19,031 23,858 Net income per share - Basic 0.48 0.59 Net income per share - Diluted 0.47 0.59 Return on average assets 0.65 % 0.91 % Return on average equity 6.92 % 9.22 %   At December 31 Assets $ 12,404,932 $ 11,663,355 Loans, net of unearned interest 4,583,683 4,314,705 Securities 5,742,104 5,003,720 Deposits 9,028,741 8,534,488 Shareholders' equity 1,060,860 1,015,551 Book value per share 26.24 25.11 Market price per share 41.44 39.35 Equity to assets 8.55 % 8.71 % Allowance for loan losses $ 73,952 $ 64,139 As a % of loans 1.61 % 1.49 % Nonaccrual and restructured loans $ 25,142 $ 23,263 As a % of loans 0.55 % 0.54 % Loans over 90 days past due $ 5,480 $ 8,319 As a % of loans 0.12 % 0.19 % Other real estate owned $ 4,387 $ 5,203 Net loan charge-offs quarter-to-date $ 6,166 $ 6,173 As a % of average loans 0.53 % 0.57 % Net loan charge-offs year-to-date $ 21,697 $ 20,257 As a % of average loans 0.48 % 0.46 %   Common shares outstanding 40,430,081 40,439,607   Average Balances Year Ended December 31 Assets $ 11,108,233 $ 10,110,655 Loans, net of unearned interest 4,490,587 4,383,551 Securities 5,073,839 4,382,178 Deposits 8,451,966 7,584,025 Shareholders' equity 1,066,872 1,006,591   Selected Financial Data of Affiliate Banks   UMB Financial Corporation (unaudited, dollars in thousands)   December 31, 2010   Loans     Net of Total Unearned Total Shareholders' Missouri   Assets   Interest   Deposits   Equity UMB Bank, n.a. $ 10,690,856 3,724,520 7,826,613 679,793   Colorado                

UMB Bank Colorado, n.a.

1,353,403 559,621 982,566 138,460   Kansas                 UMB National Bank of America 837,428 217,857 394,254 56,781   Arizona                

UMB Bank Arizona, n.a.

109,023 94,574 49,457 11,120   Banking - Related Subsidiaries                 UMB CDC, Inc. 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 Corporation Association 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 Investments, Inc. Prairie Capital Management, LLC UMB Merchant Banc, LLC