UMB Financial Corporation Reports Third Quarter 2011 Earnings of $26.0 Million, an Increase of 14.2 Percent

UMB Financial Corporation (NASDAQ: UMBF), a diversified financial holding company, announced earnings for the three months ended September 30, 2011 of $26.0 million or $0.65 per share ($0.64 diluted). This is an increase of $3.2 million, or 14.2 percent, compared to third quarter 2010 earnings of $22.8 million or $0.57 per share ($0.57 diluted). Earnings for the nine months ended September 30, 2011 were $83.2 million or $2.08 per share ($2.06 diluted). This is an increase of $11.2 million, or 15.6 percent, compared to the prior year-to-date earnings of $72.0 million or $1.80 per share ($1.78 diluted).

"Even with continued economic headwinds, UMB’s unique position as a diversified financial services company allows us to post solid results for the quarter with revenue increasing 6.9 percent to $180.0 million,” said Mariner Kemper, Chairman and Chief Executive Officer. "UMB posted loan growth of 4.8 percent in the third quarter of 2011. This is our sixth consecutive quarter of loan growth when the industry as a whole is experiencing flat to declining loan balances.”

Net Interest Income and Margin

Net interest income for the third quarter of 2011 increased $0.7 million, or 0.9 percent, compared to the same period in 2010. Average earning assets increased by $1.0 billion, or 10.1 percent, compared to the third quarter of 2010. This increase was due to a $561.0 million, or 10.8 percent, increase in average total securities, including trading securities and a $220.1 million, or 4.8 percent, increase in average loans. Net interest margin decreased 25 basis points to 2.98 percent for the three months ended September 30, 2011 compared to the same quarter in 2010.

Noninterest Income and Expense

Noninterest income increased $10.9 million, or 12.1 percent, for the three months ended September 30, 2011 compared to the same period in 2010. This increase is primarily attributed to increased trust and securities processing income of $12.1 million, or 30.3 percent, for the three months ended September 30, 2011 compared to the same period in 2010. The increase in trust and securities processing income was primarily due to a $3.7 million, or 30.8 percent, increase in advisory fee income from the Scout Funds; a $1.2 million, or 7.8 percent, increase in fund administration and custody services; and a $6.1 million, or 231.2 percent, increase in fees related to institutional and personal investment management services.

Noninterest expense increased $8.8 million, or 6.7 percent, for the three months ended September 30, 2011 compared to the same period in 2010. The primary driver of this increase is higher salary and benefits expense of $5.9 million, or 8.5 percent, due to higher base salary, commission and employee benefits. Of this increase in salary and benefits expense, approximately $1.7 million, or 28.3 percent, is related to salary and benefits from acquisitions.

"The company’s total revenue increased in the third quarter due to the continued growth in our fee businesses, driven primarily by our recent acquisitions which are performing well,” said Peter deSilva, President and Chief Operating Officer. "Noninterest income increased 12.1 percent and was 56.1 percent of total revenue, compared to 53.5 percent in the same period a year ago. Scout Investments continues to perform well and during the third quarter, launched the Scout Unconstrained Bond Fund to round out our product offering in the fixed income space. This new addition is the second product launched by Scout this year. Additionally, Scout Funds posted $211.2 million in net fund flows during the quarter. Finally, increases in Fund Services revenue and card purchase volume also contributed to our strong noninterest income growth.”

Balance Sheet

Average total assets for the three months ended September 30, 2011 were $12.2 billion compared to $11.0 billion for the same period in 2010, an increase of $1.2 billion, or 10.5 percent. Average earning assets increased by $1.0 billion for the period, or 10.1 percent.

Average loan balances for the three months ended September 30, 2011 increased $220.1 million, or 4.8 percent, to $4.8 billion compared to the same period in 2010. Actual loan balances on September 30, 2011 were $4.8 billion, an increase of $192.5 million, or 4.2 percent, compared to September 30, 2010. Commercial loans increased $167.9 million, or 8.7 percent.

Nonperforming loans decreased to $20.1 million on September 30, 2011 from $25.0 million on September 30, 2010. As a percentage of loans, nonperforming loans decreased to 0.42 percent as of September 30, 2011 compared to 0.55 percent on September 30, 2010. Nonperforming loans are defined as nonaccrual loans and restructured loans. By comparison, the industry median for nonperforming loans as of June 30, 2011 was 3.71 percent. The company’s allowance for loan losses totaled $72.9 million, or 1.53 percent of loans, as of September 30, 2011 compared to $72.7 million, or 1.59 percent of loans, as of September 30, 2010.

For the three months ended September 30, 2011, average securities, including trading securities, totaled $5.7 billion. This is an increase of $561.0 million, or 10.8 percent, from the same period in 2010.

Average total deposits increased $1.2 billion, or 14.2 percent, to $9.5 billion for the three months ended September 30, 2011 compared to the same period in 2010. Average money market accounts increased by $201.1 million, or 11.2 percent, in 2011 as compared to 2010. Average noninterest-bearing demand deposits increased $797.1 million, or 29.4 percent, compared to 2010. Total deposits as of September 30, 2011 were $9.4 billion, compared to $8.6 billion as of September 30, 2010, a 9.2 percent increase. Also, as of September 30, 2011, noninterest-bearing demand deposits were 38.5 percent of total deposits.

"Growth in deposits continues to fuel our balance sheet growth,” said Mike Hagedorn, Chief Financial Officer. "Average deposits increased 14.2 percent, compared to the third quarter 2010 and the related cost of funds declined from 0.48 percent to 0.36 percent. Average equity grew by 7.8 percent compared to the third quarter 2010, and is up 31.4 percent since the beginning of 2008. We are especially pleased with this growth since it was achieved without dilutive measures. We will continue to actively manage our $5.9 billion investment portfolio with a bias toward positioning it for rising interest rates, which is a challenge with the continued volatility in the financial markets.”

As of September 30, 2011, UMB had total shareholders’ equity of $1.2 billion, an increase of 7.3 percent as compared to the same period in 2010.

Year-to-Date

Earnings for the nine months ended September 30, 2011 were $83.2 million or $2.08 per share ($2.06 diluted). This is an increase of $11.2 million, or 15.6 percent, compared to the prior year-to-date earnings of $72.0 million or $1.80 per share ($1.78 diluted).

Net interest income for the nine months ended September 30, 2011 increased $5.6 million, or 2.4 percent, compared to the same period in 2010. Net interest margin decreased to 2.95 percent for the nine months ended September 30, 2011 as compared to 3.24 percent for the same period in 2010.

Noninterest income increased $51.0 million, or 19.2 percent, to $316.6 million for the nine months ended September 30, 2011 as compared to the same period in 2010. Trust and securities processing income increased $43.3 million, or 37.9 percent, for year-to-date September 30, 2011 as compared to the same period in 2010. Bankcard fees increased $6.3 million, or 15.6 percent, compared to 2010. Gains from the sale of securities available for sale of $15.9 million were recognized during the first nine months of 2011 compared to $7.3 million for the first nine months of 2010.

Noninterest expense increased $46.4 million, or 12.4 percent, for the nine months ended September 30, 2011 compared to the same period in 2010. Salary and employee benefit expense increased by $25.9 million, or 13.3 percent. Amortization of intangible assets increased $4.5 million, or 58.6 percent. Processing fees increased $4.4 million, or 13.0 percent. Additionally, during the second quarter, the company established a $7.8 million escrow fund to settle a class action lawsuit.

Conference Call

The company plans to host a conference call to discuss its third quarter financial results on October 26, 2011, at 8:30 a.m. (CDT). Interested parties may access the call by dialing (toll-free) 877-941-8609 or (U.S.) 480-629-9818. The live call can also be accessed by following the link http://event.on24.com/r.htm?e=364793&s=1&k=E90EE7EC07850C7FCB261E0C6A13DDC9 or by visiting the investor relations area of umb.com.

A replay of the conference call may be heard until November 9, 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 4477737. 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 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.