UMB Financial Corporation Reports First Quarter 2011 Earnings of $30.9 Million, an Increase of 17.9 Percent

UMB Financial Corporation Reports First Quarter 2011 Earnings of $30.9 Million, an Increase of 17.9 Percent

Selected first quarter financial highlights:

• Total revenue increased 14.8 percent to $186.2 million
• Noninterest income increased 24.7 percent to $107.8 million
• Total assets under management increased 107.4 percent to $28.2 billion
• Average total loans increased 6.1 percent to $4.6 billion
• Nonperforming loans decreased from 0.59 percent to 0.41 percent of loans
• Tier 1 capital ratio remains strong at 11.6 percent

UMB Financial Corporation (NASDAQ: UMBF), a diversified financial holding company, announced earnings for the three months ended March 31, 2011 of $30.9 million or $0.77 per share ($0.76 diluted). This is an increase of $4.7 million, or 17.9 percent, compared to first quarter 2010 earnings of $26.2 million or $0.65 per share ($0.65 diluted).

“Our first quarter results demonstrate our businesses are off to a sound start in 2011, achieving another quarter of double-digit growth in revenue,” said Mariner Kemper, Chairman and Chief Executive Officer. “As expected, our acquisitions were a significant contributor to this growth, leading the 24.7 percent increase in noninterest income. Overall, our fee businesses provided 57.9 percent of our total revenue for the first quarter. End of period loans grew 8.5 percent compared to the same period a year ago, and with this steady loan growth our already strong credit quality improved further. We are proud to deliver quality earnings, without a material change in provision as seen throughout the industry. Our 17.9 percent increase in net income is the result of strong revenue growth and consistent operating results, hallmarks of our business strategy.”

Net Interest Income and Margin

Net interest income for the first quarter of 2011 increased $2.7 million, or 3.5 percent, compared to the same period in 2010. Average earning assets increased by $1.4 billion, or 14.3 percent, compared to the first quarter of 2010. This increase was due to a $914.8 million, or 19.2 percent, increase in average total securities, including trading securities. Net interest margin decreased 29 basis points to 2.9 percent for the three months ended March 31, 2011 compared to the same quarter in 2010.

Noninterest Income and Expense

Noninterest income increased $21.3 million, or 24.7 percent, for the three months ended March 31, 2011 compared to the same period in 2010. This increase is primarily attributed to increased trust and securities processing income of $16.2 million, or 45.4 percent, for the three months ended March 31, 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 45.1 percent, increase in advisory fee income from the Scout Funds, a $2.4 million, or 15.8 percent, increase in fund administration and custody services, and a $7.0 million, or 631.1 percent, increase in fees related to institutional and personal investment management services. Bankcard fees increased $2.4 million, or 20.1 percent, compared to the first quarter of 2010 from increased processing fee income. Gains of $7.5 million on securities available for sale were recognized in the first quarter of 2011 compared to $5.4 million during the same period in 2010.

Noninterest expense increased $18.1 million, or 15.5 percent, for the three months ended March 31, 2011 compared to the same period in 2010. The primary driver of this increase is higher salary and benefits expense of $10.6 million, or 17.1 percent, due to higher base salary, commission and health insurance costs. Of this increase in salary and benefits expense, approximately $3.5 million, or 33.2 percent, is related to salary and benefits from acquisitions. Amortization of intangible assets increased $1.9 million, or 91.6 percent, compared to the first quarter of 2010. These increases are largely driven by acquisition activity in the last two quarters of 2010. Processing fees increased $1.1 million, or 10.4 percent, due primarily to fees paid by the advisor to third-party distributors of the Scout Funds. Legal and consulting increased $1.0 million, or 61.3 percent, from the same period in 2010.

“The increase in fee income is due to two primary drivers: revenue from our institutional and individual asset management businesses and from our asset servicing business,” said Peter deSilva, President and Chief Operating Officer. “Revenue from these businesses is an important component of our consistent operating results. Total company assets under management grew 107.4 percent to $28.2 billion compared to the same period last year. The assets include $9.7 billion in Scout Investments’ bond and equity mutual funds and separately managed institutional assets, $10.2 billion in fixed income assets and $8.3 billion in UMB Bank individual wealth management assets. Assets under administration in UMB Fund Services increased 21.2 percent, driving a fee income increase of 15.8 percent to $17.4 million. Finally, card purchase volume increased 26.2 percent compared to the same period last year, contributing to the increase in bankcard fees. The acquisitions completed in these businesses are delivering results; however, they also contribute to expense growth. For the first quarter, expenses related to recent acquisitions were approximately 30 percent of our total expense increase.”

Balance Sheet

Average total assets for the three months ended March 31, 2011 were $12.6 billion compared to $11.0 billion for the same period in 2010, an increase of $1.6 billion, or 14.5 percent. Average earning assets increased by $1.4 billion for the period, or 14.3 percent.

Actual loan balances on March 31, 2011 were $4.7 billion, an increase of $365.9 million, or 8.5 percent, compared to March 31, 2010. Commercial real estate loans increased $116.1 million, or 9.9 percent, and commercial loans increased $195.5 million, or 10.6 percent. Average loan balances for the three months ended March 31, 2011 increased $268.2 million, or 6.1 percent compared to the same period in 2010.

Nonperforming loans decreased to $19.2 million at March 31, 2011 from $25.4 million at March 31, 2010. As a percentage of loans, nonperforming loans decreased to 0.41 percent as of March 31, 2011 compared to 0.59 percent at March 31, 2010. Nonperforming loans are defined as nonaccrual loans and restructured loans. By comparison, the industry median for nonperforming loans as of December 31, 2010 was 4.04 percent. The company’s allowance for loan losses totaled $72.7 million, or 1.56 percent of loans, as of March 31, 2011 compared to $67.4 million, or 1.57 percent of loans, as of March 31, 2010.

For the three months ended March 31, 2011, average securities, including trading securities, totaled $5.7 billion. This is an increase of $914.8 million, or 19.2 percent, from the same period in 2010.

Average total deposits increased $1.1 billion, or 12.9 percent, to $9.5 billion for the three months ended March 31, 2011 compared to the same period in 2010. Average money market accounts increased by $789.7 million, or 47.6 percent, in 2011 as compared to 2010. Average noninterest-bearing demand deposits increased $319.7 million, or 11.6 percent, compared to 2010. Total deposits as of March 31, 2011 were $10.4 billion, compared to $8.2 billion as of March 31, 2010, a 26.2 percent increase. Also, as of March 31, 2011, noninterest-bearing demand deposits were 35.0 percent of total deposits.

“End of period deposits increased 26.2 percent,” said Mike Hagedorn, Chief Financial Officer. “This increase, combined with modest loan growth, drove the 18.5 percent increase in our investment portfolio. The deposit increase is also a reflection of the strength and stability of our balance sheet; however, this increase in deposits also creates downward pressure on net interest margin. The growth in our balance sheet demonstrates UMB’s continued ability to attract core deposits positioning us to meet all of our customers’ current and future loan needs.”

As of March 31, 2011, UMB had total shareholders’ equity of $1.1 billion, an increase of 4.8 percent over March 31, 2010.

Interested parties may access the call by dialing (toll-free) 877-941-2927 or (U.S.) 480-629-9724. The live call can also be accessed by following the link http://event.on24.com/r.htm?e=303034&s=1&k=DB4D7010EC5F5453DB94F401AB9CF7BB or by visiting the investor relations area of umb.com.

A replay of the conference call may be heard until May 12, 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 4430620. 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

CONSOLIDATED BALANCE SHEETS		UMB Financial Corporation
(unaudited, dollars in thousands)
		March 31,
Assets		2011				2010
Loans		$	4,667,862			$	4,301,965
Allowance for loan losses			(72,718	)			(67,442	)
Net loans			4,595,144				4,234,523
Loans held for sale			6,446				17,706
Investment Securities:
Available for sale			5,604,318				4,740,505
Held to maturity			68,161				55,968
Trading securities			54,060				34,858
Federal Reserve Bank stock and other			22,772				22,432
Total investment securities			5,749,311				4,853,763
Federal funds sold and securities purchased under agreements to resell			3,793				21,177
Interest-bearing due from banks			2,012,990				724,437
Cash and due from banks			309,741				319,966
Bank premises and equipment, net			219,438				213,330
Accrued income			73,750				61,515
Goodwill			211,114				131,356
Other intangibles			88,291				46,635
Other assets			82,302				99,648
Total assets		$	13,352,320			$	10,724,056
Liabilities
Deposits:
Noninterest-bearing demand		$	3,627,918			$	2,716,510
Interest-bearing demand and savings			5,294,235				3,904,509
Time deposits under $100,000			673,775				738,260
Time deposits of $100,000 or more			776,828				861,230
Total deposits			10,372,756				8,220,509
Federal funds purchased and repurchase agreements			1,687,352				1,311,296
Short-term debt			23,862				21,874
Long-term debt			7,718				24,212
Accrued expenses and taxes			145,112				103,549
Other liabilities			36,531				13,165
Total liabilities			12,273,331				9,694,605
Shareholders' Equity
Common stock			55,057				55,057
Capital surplus			718,158				713,062
Retained earnings			646,383				581,443
Accumulated other comprehensive income			19,811				36,631
Treasury stock			(360,420	)			(356,742	)
Total shareholders' equity			1,078,989				1,029,451
Total liabilities and shareholders' equity		$	13,352,320			$	10,724,056

Consolidated Statements of Income		UMB Financial Corporation
(unaudited, dollars in thousands except share and per share data)
		Three Months Ended
		March 31,
Interest Income		2011			2010
Loans		$	53,989		$	53,483
Securities:
Taxable interest			22,308			23,779
Tax-exempt interest			8,238			7,317
Total securities income			30,546			31,096
Federal funds sold and resell agreements			15			61
Interest-bearing due from banks			1,162			1,319
Trading securities			261			142
Total interest income			85,973			86,101
Interest Expense
Deposits			6,666			9,624
Federal funds purchased and repurchase agreements			668			444
Other			191			259
Total interest expense			7,525			10,327
Net interest income			78,448			75,774
Provision for loan losses			7,100			8,310
Net interest income after provision for loan losses			71,348			67,464
Noninterest Income
Trust and securities processing			51,727			35,572
Trading and investment banking			9,019			7,027
Service charges on deposit accounts			18,608			20,519
Insurance fees and commissions			1,204			1,699
Brokerage fees			2,341			1,336
Bankcard fees			14,442			12,020
Gains on sales of securities available for sale, net			7,456			5,382
Other			2,953			2,875
Total noninterest income			107,750			86,430
Noninterest Expense
Salaries and employee benefits			72,900			62,253
Occupancy, net			9,605			8,921
Equipment			10,936			10,870
Supplies and services			5,580			4,707
Marketing and business development			4,122			3,705
Processing fees			12,173			11,029
Legal and consulting			2,617			1,622
Bankcard			3,852			3,190
Amortization of other intangible assets			4,006			2,091
Regulatory fees			3,716			3,238
Other			6,009			5,752
Total noninterest expense			135,516			117,378
Income before income taxes			43,582			36,516
Income tax expense			12,712			10,331
Net income		$	30,870		$	26,185
Per Share Data
Net income - basic		$	0.77		$	0.65
Net income – diluted			0.76			0.65
Dividends			0.195			0.185
Weighted average shares outstanding			40,070,399			40,089,527

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, 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			-			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
Balance - January 1, 2011		$	55,057		$	718,306			$	623,415			$	25,465			$	(361,383	)		$	1,060,860
Comprehensive income
Net income			-			-				30,870				-				-				30,870
Change in unrealized gains on securities			-			-				-				(5,654	)			-				(5,654	)
Total comprehensive income																						25,216
Cash dividends ($0.195 per share)			-			-				(7,902	)			-				-				(7,902	)
Purchase of treasury stock			-			-				-				-				(1,373	)			(1,373	)
Issuance of equity awards			-			(1,918	)			-				-				2,157				239
Recognition of equity based compensation			-			1,553				-				-				-				1,553
Net tax benefit related to equity compensation			-			127				-				-				-				127
Sale of treasury stock			-			21				-				-				18				39
Exercise of stock options			-			69				-				-				161				230
Balance – March 31, 2011		$	55,057		$	718,158			$	646,383			$	19,811			$	(360,420	)		$	1,078,989

Average Balances / Yields and Rates		UMB Financial Corporation
(tax - equivalent basis)
(unaudited, dollars in thousands)		Three Months Ended March 31,
		2011							2010
		Average				Average			Average				Average
Assets		Balance				Yield/Rate			Balance				Yield/Rate
Loans, net of unearned interest		$	4,632,581			4.74	%		$4,364,423				4.98	%
Securities:
Taxable			4,288,742			2.11			3,736,919				2.58
Tax-exempt			1,325,316			3.84			980,953				4.68
Total securities			5,614,058			2.52			4,717,872				3.02
Federal funds sold and resell agreements			25,916			0.23			88,555				0.28
Interest-bearing due from banks			1,276,091			0.37			947,374				0.56
Trading securities			54,827			2.14			36,193				1.76
Total earning assets			11,603,473			3.16			10,154,417				3.60
Allowance for loan losses			(75,096	)					(64,992		)
Other assets			1,077,259						922,399
Total assets		$	12,605,636						$11,011,824
Liabilities and Shareholders' Equity
Interest-bearing deposits		$	6,435,500			0.42	%		$5,666,615				0.69	%
Federal funds purchased and repurchase agreements			1,824,087			0.15			1,390,408				0.13
Borrowed funds			36,012			2.16			47,722				2.20
Total interest-bearing liabilities			8,295,599			0.37			7,104,745				0.59
Noninterest-bearing demand deposits			3,066,930						2,747,217
Other liabilities			167,006						123,582
Shareholders' equity			1,076,101						1,036,280
Total liabilities and shareholders' equity		$	12,605,636						$11,011,824
Net interest spread						2.79	%						3.01	%
Net interest margin						2.90							3.19

FIRST QUARTER 2011
FINANCIAL HIGHLIGHTS		UMB Financial Corporation
(unaudited, dollars in thousands, except share and per share data)
Three Months Ended March 31		2011				2010
Net interest income		$	78,448			$	75,774
Provision for loan losses			7,100				8,310
Noninterest income			107,750				86,430
Noninterest expense			135,516				117,378
Income before income taxes			43,582				36,516
Net income			30,870				26,185
Net income per share - Basic			0.77				0.65
Net income per share - Diluted			0.76				0.65
Return on average assets			0.99	%			0.96	%
Return on average equity			11.63	%			10.25	%
At March 31
Assets		$	13,352,320			$	10,724,056
Loans, net of unearned interest			4,667,862				4,301,965
Securities			5,749,311				4,853,763
Deposits			10,372,756				8,220,509
Shareholders' equity			1,078,989				1,029,451
Book value per share			26.62				25.43
Market price per share			37.37				40.60
Equity to assets			8.08	%			9.60	%
Allowance for loan losses		$	72,718			$	67,442
As a % of loans			1.56	%			1.57	%
Nonaccrual and restructured loans		$	19,161			$	25,407
As a % of loans			0.41	%			0.59	%
Loans over 90 days past due		$	7,263			$	6,244
As a % of loans			0.16	%			0.15	%
Other real estate owned		$	4,116			$	5,821
Net loan charge-offs quarter-to-date		$	8,334			$	5,007
As a % of average loans			0.73	%			0.46	%
Common shares outstanding			40,526,355				40,488,195
Average Balances
Three Months ended March 31
Assets		$	12,605,636			$	11,011,824
Loans, net of unearned interest			4,632,581				4,364,423
Securities			5,668,885				4,717,872
Deposits			9,502,430				8,413,832
Shareholders' equity			1,076,101				1,036,280

Selected Financial Data

of Affiliate Banks

UMB Financial Corporation

(unaudited, dollars in thousands)

March 31, 2011

Loans

Net of

Total

Unearned

Total

Shareholders'

Missouri

Assets

Interest

Deposits

Equity

UMB Bank, n.a.

$

11,354,327

$

3,786,801

$

9,014,803

$

696,009

Colorado

UMB Bank Colorado, n. a.

1,450,088

566,853

969,353

141,842

Kansas

UMB National Bank of America

634,785

218,467

396,908

58,697

Arizona

UMB Bank Arizona, n. a.

109,182

94,429

45,401

11,255

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

UMB Financial Corporation
Contact:
Mandie Nelson, 816-860-5088
or
Investor Relations Contact:
Abby Wendel, 816-860-1685