UMBF UMB Financial Corporation

UMB Financial Corporation (NASDAQ: UMBF), a diversified financial holding company, announced earnings for the three months ended June 30, 2011 of $26.3 million or $0.66 per share ($0.65 diluted). This is an increase of $3.3 million, or 14.4 percent, compared to second quarter 2010 earnings of $23.0 million or $0.57 per share ($0.57 diluted). Earnings for the six months ended June 30, 2011 were $57.2 million or $1.43 per share ($1.42 diluted). This is an increase of $8.0 million, or 16.2 percent, compared to the prior year-to-date earnings of $49.2 million or $1.23 per share ($1.22 diluted).

“Our second quarter earnings demonstrated strong performance across most of our businesses and in many of our key metrics,” said Mariner Kemper, Chairman and Chief Executive Officer. “We posted industry-leading revenue and net income improvement through increased noninterest income and steady growth in our balance sheet from both deposit and loan growth. The revenue gains and balance sheet growth outpaced margin pressure originating from the continued low interest rate environment. We achieved record total revenue for the second quarter of $187.8 million, which demonstrates that our recent acquisitions have paid off through strong sales. Noninterest expense increases were led by investments in our businesses which hampered operating leverage this quarter; however, we expect this metric to improve over time. Despite fairly significant headwinds, we are poised to benefit from our diversified business model and believe future opportunities exist for UMB.”

Net Interest Income and Margin

Net interest income for the second quarter of 2011 increased $2.3 million, or 2.9 percent, compared to the same period in 2010. Average earning assets increased by $1.4 billion, or 14.0 percent, compared to the second quarter of 2010. This increase was due to a $791.0 million, or 16.1 percent, increase in average total securities, including trading securities and a $305.2 million, or 6.9 percent, increase in average loans. Net interest margin decreased 31 basis points to 2.98 percent for the three months ended June 30, 2011 compared to the same quarter in 2010.

Noninterest Income and Expense

Noninterest income increased $18.8 million, or 21.1 percent, for the three months ended June 30, 2011 compared to the same period in 2010. This increase is primarily attributed to increased trust and securities processing income of $15.0 million, or 38.9 percent, for the three months ended June 30, 2011 compared to the same period in 2010. The increase in trust and securities processing income was primarily due to a $4.7 million, or 39.1 percent, increase in advisory fee income from the Scout Funds; a $2.6 million, or 16.3 percent, increase in fund administration and custody services; and a $7.5 million, or 791.3 percent, increase in fees related to institutional and personal investment management services. Bankcard fees increased $2.6 million, or 18.4 percent, compared to the second quarter of 2010 from increased processing fee income. Gains of $6.0 million on securities available for sale were recognized in the second quarter of 2011 compared to $1.1 million during the same period in 2010.

Noninterest expense increased $19.5 million, or 15.4 percent, for the three months ended June 30, 2011 compared to the same period in 2010. The primary driver of this increase is higher salary and benefits expense of $9.4 million, or 14.7 percent, due to higher base salary, commission and health insurance costs. Of this increase in salary and benefits expense, approximately $4.0 million, or 42.6 percent, is related to salary and benefits from acquisitions. Amortization of intangible assets increased $1.7 million, or 70.3 percent, compared to the second quarter of 2010. These increases are largely driven by acquisition activity in the last two quarters of 2010. Processing fees increased $2.1 million, or 18.8 percent, due primarily to fees paid by the advisor to third-party distributors of the Scout Funds. During the second quarter of 2011, the company and its subsidiary banks entered into an agreement to settle a class action lawsuit and established a $7.8 million escrow fund in accordance with this agreement.

“Total revenue increased in the second quarter largely because of the strength of our fee businesses,” said Peter deSilva, President and Chief Operating Officer. “Noninterest income increased 21.1 percent and was 57.4 percent of total revenue, compared to 53.4 percent in the same period a year ago. A continued success story within our Institutional Financial Services segment is Scout Investments. Net flows to our mutual funds were $315 million during the second quarter, driven primarily by mutual fund select list placement in the intermediary distribution channel. Increases in UMB Fund Services revenue and card purchase volume also contributed to our strong noninterest income growth. We are pleased with the results our businesses generated this quarter.”

Balance Sheet

Average total assets for the three months ended June 30, 2011 were $12.4 billion compared to $10.9 billion for the same period in 2010, an increase of $1.5 billion, or 13.9 percent. Average earning assets increased by $1.4 billion for the period, or 14.0 percent.

Actual loan balances on June 30, 2011 were $4.7 billion, an increase of $282.9 million, or 6.4 percent, compared to June 30, 2010. Commercial real estate loans increased $94.2 million, or 7.6 percent, and commercial loans increased $140.3 million, or 7.5 percent. Average loan balances for the three months ended June 30, 2011 increased $305.2 million, or 6.9 percent compared to the same period in 2010.

Nonperforming loans decreased to $15.4 million on June 30, 2011 from $23.1 million on June 30, 2010. As a percentage of loans, nonperforming loans decreased to 0.33 percent as of June 30, 2011 compared to 0.52 percent on June 30, 2010. Nonperforming loans are defined as nonaccrual loans and restructured loans. By comparison, the industry median for nonperforming loans as of March 31, 2011 was 3.88 percent. The company’s allowance for loan losses totaled $72.4 million, or 1.53 percent of loans, as of June 30, 2011 compared to $70.1 million, or 1.58 percent of loans, as of June 30, 2010.

For the three months ended June 30, 2011, average securities, including trading securities, totaled $5.7 billion. This is an increase of $791.0 million, or 16.1 percent, from the same period in 2010.

Average total deposits increased $1.2 billion, or 14.9 percent, to $9.5 billion for the three months ended June 30, 2011 compared to the same period in 2010. Average money market accounts increased by $688.7 million, or 40.5 percent, in 2011 as compared to 2010. Average noninterest-bearing demand deposits increased $439.8 million, or 15.9 percent, compared to 2010. Total deposits as of June 30, 2011 were $9.9 billion, compared to $8.4 billion as of June 30, 2010, a 17.7 percent increase. Also, as of June 30, 2011, noninterest-bearing demand deposits were 38.5 percent of total deposits.

“The growth in our balance sheet continues to be driven by the growth in deposits,” said Mike Hagedorn, Chief Financial Officer. “Average deposits increased 14.9 percent, compared to the second quarter 2010 and the related cost of funds declined from 0.53 percent to 0.34 percent. We continue to actively manage our $5.6 billion investment portfolio, positioning it for rising interest rates. The well-documented challenges in the financial markets continue to make this difficult.”

As of June 30, 2011, UMB had total shareholders’ equity of $1.1 billion, an increase of 6.0 percent as compared to the same period in 2010. The company declared its regular quarterly cash dividend of $0.195 cents per share to be paid on October 3, 2011, to shareholders of record at the close of business on September 9, 2011.

Year-to-Date

Earnings for the six months ended June 30, 2011 were $57.2 million or $1.43 per share ($1.42 diluted). This is an increase of $8.0 million, or 16.2 percent, compared to the prior year-to-date earnings of $49.2 million or $1.23 per share ($1.22 diluted).

Net interest income for the six months ended June 30, 2011 increased $4.9 million, or 3.2 percent, compared to the same period in 2010. Net interest margin decreased to 2.94 percent for the six months ended June 30, 2011 as compared to 3.24 percent for the same period in 2010.

Noninterest income increased $40.1 million, or 22.9 percent, to $215.6 million for the six months ended June 30, 2011 as compared to the same period in 2010. Trust and securities processing income increased $31.2 million, or 42.0 percent, for year-to-date June 30, 2011 as compared to the same period in 2010. Gains from the sale of securities available for sale of $13.5 million were recognized during the first six months of 2011 compared to $6.5 million for the first six months of 2010.

Noninterest expense increased $37.6 million, or 15.5 percent, for the six months ended June 30, 2011 compared to the same period in 2010. Salary and employee benefit expense increased by $20.0 million, or 15.9 percent. Amortization of intangible assets increased $3.6 million, or 80.1 percent. Processing fees increased $3.3 million, or 14.6 percent. Additionally, during the second quarter, the company established a $7.8 million escrow fund to settle a class action lawsuit.

Interested parties may access the call by dialing (toll-free) 877-941-9205 or (U.S.) 480-629-9835. The live call can also be accessed by following the link http://event.on24.com/r.htm?e=333724&s=1&k=549D1134D7C06433E65E0B316B08B1D4 or by visiting the investor relations area of umb.com.

A replay of the conference call may be heard until August 10, 2011, by calling (toll-free) 800-406-7325 or (U.S.) 303-590-3030. The replay pass code required for playback is conference identification number 4455422. 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 diversified financial 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 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 Scout Investments, offering equity and fixed income investment strategies for institutions and individual investors. For more information, visit umb.com or follow us on Twitter at @UMBFinancial

        CONSOLIDATED BALANCE SHEETS           UMB Financial Corporation (unaudited, dollars in thousands)         June 30,

Assets

  2011           2010   Loans $ 4,731,303 $ 4,448,418 Allowance for loan losses   (72,442)           (70,110) Net loans   4,658,861           4,378,308 Loans held for sale 6,581 10,439 Investment securities: Available for sale 5,510,299 4,925,822 Held to maturity 69,393 57,075 Trading securities 43,280 47,779 Federal Reserve Bank Stock and other   22,511           21,838 Total investment securities   5,645,483           5,052,514 Federal funds and resell agreements 44,486 29,636 Interest-bearing due from banks 1,371,431 718,410 Cash and due from banks 347,369 311,171 Bank premises and equipment, net 220,499 213,648 Accrued income 78,129 61,810 Goodwill 211,114 131,356 Other intangibles 92,132 53,015 Other assets   94,491           101,973 Total assets $ 12,770,576         $ 11,062,280    

Liabilities

Deposits: Noninterest-bearing demand $ 3,818,556 $ 2,865,776 Interest-bearing demand and savings 4,696,077 4,047,404 Time deposits under $100,000 652,792 716,839 Time deposits of $100,000 or more   746,376           790,373 Total deposits   9,913,801           8,420,392 Federal funds and repurchase agreements 1,505,937 1,400,866 Short-term debt 23,724 28,622 Long-term debt 7,545 9,316 Accrued expenses and taxes 166,060 117,837 Other liabilities   20,553           16,749 Total liabilities   11,637,620           9,993,782  

Shareholders' Equity

Common stock 55,057 55,057 Capital surplus 719,990 715,038 Retained earnings 664,805 596,973 Accumulated other comprehensive income 55,111 60,378 Treasury stock   (362,007)           (358,948) Total shareholders' equity   1,132,956           1,068,498 Total liabilities and shareholders' equity $ 12,770,576         $ 11,062,280   Consolidated Statements of Income                                   UMB Financial Corporation (unaudited, dollars in thousands except share and per share data)                                 Three Months Ended Six Months Ended June 30, June 30,

Interest Income

  2011           2010           2011           2010 Loans $ 55,106 $ 55,949 $ 109,095 $ 109,432 Securities: Taxable interest 22,077 22,496 44,385 46,275 Tax-exempt interest 8,282           7,028           16,520           14,345 Total securities income 30,359 29,524 60,905 60,620 Federal funds and resell agreements 13 47 28 109 Interest-bearing due from banks 843 1,032 2,005 2,350 Trading securities 230           181           491           323 Total interest income 86,551           86,733           172,524           172,834  

Interest Expense

Deposits 6,163 8,462 12,829 18,085 Federal funds and repurchase agreements 398 503 1,066 948 Other 72           100           263           360 Total interest expense 6,633           9,065           14,158           19,393 Net interest income 79,918 77,668 158,366 153,441 Provision for loan losses 5,600           8,100           12,700           16,410 Net interest income after provision for loan losses 74,318           69,568           145,666           137,031  

Noninterest Income

Trust and securities processing 53,635 38,615 105,363 74,187 Trading and investment banking 6,478 5,530 15,497 12,557 Service charges on deposits 18,181 20,163 36,789 40,683 Insurance fees and commissions 1,165 1,287 2,368 2,986 Brokerage fees 2,573 1,598 4,914 2,934 Bankcard fees 16,545 13,979 30,987 25,998 Gains on sale of securities available for sale, net 6,023 1,136 13,480 6,518 Other 3,256           6,792           6,208           9,643 Total noninterest income 107,856           89,100           215,606           175,506  

Noninterest Expense

Salaries and employee benefits 72,922 63,552 145,821 125,805 Occupancy, net 9,579 8,924 19,184 17,844 Equipment 10,774 11,213 21,710 22,083 Supplies and services 5,577 4,680 11,157 9,387 Marketing and business development 5,158 4,430 9,280 8,135 Processing fees 13,319 11,214 25,492 22,242 Legal and consulting 4,075 2,770 6,692 4,392 Bankcard 4,219 4,360 8,072 7,550 Amortization of intangible assets 4,159 2,442 8,165 4,533 Regulatory fees 2,394 3,516 6,111 6,754 Class action litigation settlement 7,800 - 7,800 - Other 5,605           9,021           11,613           14,750 Total noninterest expense 145,581 126,122 281,097 243,475   Income before income taxes 36,593 32,546 80,175 69,062 Income tax provision 10,272           9,533           22,984           19,864 Net income $ 26,321         $ 23,013         $ 57,191         $ 49,198  

Per Share Data

Net income - basic $ 0.66 $ 0.57 $ 1.43 $ 1.23 Net income – diluted 0.65 0.57 1.42 1.22 Dividends 0.195 0.185 0.390 0.370 Weighted average shares outstanding 40,080,402 40,079,714 40,075,428 40,084,593   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, 2010

$ 55,057 $ 712,774 $ 562,748 $ 40,454 $ (355,482) $ 1,015,551 Comprehensive income Net income - - 49,198 - - 49,198 Change in unrealized gains on securities - - - 19,924 - 19,924 Total comprehensive income 69,122 Cash dividends ($0.37 per share) - - (14,973) - - (14,973) Purchase of treasury stock - - - - (5,211) (5,211) Issuance of equity awards - (1,225) - - 1,350 125 Recognition of equity based compensation - 2,882 - - - 2,882 Net tax benefit related to equity compensation plans - 147 - - - 147 Sale of treasury stock - 233 - - 125 358 Exercise of stock options   -           227           -           -           270           497 Balance – June 30, 2010 $ 55,057         $ 715,038         $ 596,973         $ 60,378         $ (358,948)         $ 1,068,498   Balance - January 1, 2011 $ 55,057 $ 718,306 $ 623,415 $ 25,465 $ (361,383) $ 1,060,860 Comprehensive income Net income - - 57,191 - - 57,191 Change in unrealized gains on securities - - - 29,646 - 29,646 Total comprehensive income 86,837 Cash dividends ($0.39 per share) - - (15,801) - - (15,801) Purchase of treasury stock - - - - (3,382) (3,382) Issuance of equity awards - (1,918) - - 2,157 239 Recognition of equity based compensation - 3,262 - - - 3,262 Net tax benefit related to equity compensation plans - 97 - - - 97 Sale of treasury stock - 115 - - 116 231 Exercise of stock options   -           128           -           -           485           613 Balance – June 30, 2011 $ 55,057         $ 719,990         $ 664,805         $ 55,111         $ (362,007)         $ 1,132,956   Average Balances / Yields and Rates                       UMB Financial Corporation   (tax - equivalent basis)                               (unaudited, dollars in thousands) Three Months Ended June 30,   2011           2010 Average Average Average Average Assets   Balance         Yield/Rate             Balance         Yield/Rate   Loans, net of unearned interest $ 4,723,668 4.68 % $ 4,418,479 5.08 % Securities: Taxable 4,281,896 2.07 3,909,296 2.31 Tax-exempt 1,386,995         3.65 977,538         4.47 Total securities 5,668,891 2.46 4,886,834 2.74 Federal funds and resell agreements 16,392 0.32 43,402 0.43 Interest-bearing due from banks 872,967 0.39 551,402 0.75 Trading securities 49,313         1.98 40,399         1.92 Total earning assets 11,331,231 3.22 9,940,516 3.66 Allowance for loan losses (72,759) (67,991) Other assets   1,104,871   983,600 Total assets $ 12,363,343 $ 10,856,125     Liabilities and Shareholders' Equity Interest-bearing deposits $ 6,307,790 0.39 % $ 5,510,102 0.62 % Federal funds and repurchase agreements 1,513,263 0.11 1,345,516 0.15 Borrowed funds 37,638         0.75 46,154         0.87 Total interest-bearing liabilities 7,858,691 0.34 6,901,772 0.53 Noninterest-bearing demand deposits 3,211,035 2,771,267 Other liabilities 167,196 131,067 Shareholders' equity   1,126,421   1,052,019 Total liabilities and shareholders' equity $ 12,363,343 $ 10,856,125 Net interest spread 2.88 % 3.13 % Net interest margin 2.98 3.29     Six Months Ended June 30,  

2011

          2010 Average Average Average Average Assets   Balance         Yield/Rate             Balance         Yield/Rate   Loans, net of unearned interest $ 4,678,376 4.71 % $ 4,391,601 5.03 % Securities: Taxable 4,285,300 2.09 3,823,603 2.44 Tax-exempt 1,356,326         3.74 979,218         4.58 Total securities 5,641,626 2.49 4,802,821 2.88 Federal funds and resell agreements 21,128 0.27 65,854 0.33 Interest-bearing due from banks 1,073,415 0.38 748,294 0.63 Trading securities 52,055         2.06 38,308         1.84 Total earning assets 11,466,600 3.19 10,046,878 3.63 Allowance for loan losses (73,921) (66,499) Other assets   1,091,142   953,165 Total assets $ 12,483,821 $ 10,933,544     Liabilities and Shareholders' Equity Interest-bearing deposits $ 6,371,292 0.41 % $ 5,587,925 0.65 % Federal funds and repurchase agreements 1,667,817 0.13 1,367,838 0.14 Borrowed funds 36,830         1.43 46,934         1.55 Total interest-bearing liabilities 8,075,939 0.35 7,002,697 0.56 Noninterest-bearing demand deposits 3,139,381 2,759,309 Other liabilities 167,101 127,346 Shareholders' equity   1,101,400   1,044,192 Total liabilities and shareholders' equity $ 12,483,821 $ 10,933,544 Net interest spread 2.84 % 3.07 % Net interest margin 2.94 3.24                     SECOND QUARTER 2011 FINANCIAL HIGHLIGHTS             UMB Financial Corporation (unaudited, dollars in thousands, except share and per share data)   Six Months Ended June 30   2011             2010   Net interest income $ 158,366 $ 153,441 Provision for loan losses 12,700 16,410 Noninterest income 215,606 175,506 Noninterest expense 281,097 243,475 Income before income taxes 80,175 69,062 Net income 57,191 49,198 Net income per share - Basic 1.43 1.23 Net income per share - Diluted 1.42 1.22 Return on average assets 0.92 % 0.91 % Return on average equity 10.47 % 9.50 %   Three Months Ended June 30 Net interest income $ 79,918 $ 77,668 Provision for loan losses 5,600 8,100 Noninterest income 107,856 89,100 Noninterest expense 145,581 126,122 Income before income taxes 36,593 32,546 Net income 26,321 23,013 Net income per share - Basic 0.66 0.57 Net income per share - Diluted 0.65 0.57 Return on average assets 0.85 % 0.85 % Return on average equity 9.37 % 8.77 %   At June 30 Assets $ 12,770,576 $ 11,062,280 Loans, net of unearned interest 4,731,303 4,448,418 Securities 5,645,483 5,052,514 Deposits 9,913,801 8,420,392 Shareholders' equity 1,132,956 1,068,498 Book value per share 27.97 26.42 Market price per share 41.88 35.56 Equity to assets 8.87 % 9.66 % Allowance for loan losses $ 72,442 $ 70,110 As a % of loans 1.53 % 1.58 % Nonaccrual and restructured loans $ 15,383 $ 23,139 As a % of loans 0.33 % 0.52 % Loans over 90 days past due $ 7,421 $ 14,630 As a % of loans 0.16 % 0.33 % Other real estate owned $ 6,696 $ 6,737 Net loan charge-offs quarter-to-date $ 5,876 $ 5,433 As a % of average loans 0.50 % 0.49 % Net loan charge-offs year-to-date $ 14,210 $ 10,440 As a % of average loans 0.61 % 0.48 %   Common shares outstanding 40,499,385 40,443,242   Average Balances Six Months Ended June 30 Assets $ 12,483,821 $ 10,933,544 Loans, net of unearned interest 4,678,376 4,391,601 Securities 5,693,681 4,802,821 Deposits 9,510,673 8,347,234 Shareholders' equity 1,101,400 1,044,192   Selected Financial Data                                 of Affiliate Banks                                   UMB Financial Corporation (unaudited, dollars in thousands) June 30, 2011 Loans Net of Total Unearned Total Shareholders' Missouri           Assets           Interest           Deposits           Equity UMB Bank, n.a. $ 10,668,231 $ 3,824,386 $ 8,488,363 $ 729,282   Colorado                                                 UMB Bank Colorado, n. a. 1,461,050 581,913 992,665 152,556   Kansas                                                 UMB National Bank of America 640,302 216,829 391,010 62,932   Arizona                                                 UMB Bank Arizona, n. a. 125,173 107,031 51,336 11,784   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 Trust Company of South Dakota UMB Fund Services, Inc. Kansas City Realty Company

Kansas City Financial Corporation

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 UMB Colorado Property, LLC