UMB Financial Corporation Reports Third Quarter Earnings of $21.5 Million

UMB Financial Corporation (NASDAQ: UMBF): Selected financial highlights Declared $0.15 quarterly dividend, representing the 6th dividend increase since October 2003 Net interest margin increased 5 basis points to 3.48 percent Nonperforming loans decreased to 0.14 percent of total loans Net charge-offs decreased to 0.19 percent of average loans Total deposits increased 7.0 percent UMB Financial Corporation (NASDAQ: UMBF), a multi-bank holding company, announced earnings of $21.5 million or $0.52 per share ($0.51 diluted) for the three-month period ended September 30, 2007. This is an increase of $5.7 million, or 35.7 percent, compared to third quarter 2006 earnings of $15.9 million or $0.37 per share ($0.37 diluted). Revenue was higher due to a 19.4 percent increase in noninterest income and a 5.8 percent increase in net interest income. These revenue increases were partially offset by a 5.3 percent increase in noninterest expense. "This quarter’s results were driven by double digit noninterest income growth, as well as increasing net interest income primarily due to loan growth and margin expansion,” commented Mariner Kemper, Chairman and CEO of UMB Financial Corporation. "As always, this growth was achieved without compromising our tradition of strong liquidity, and asset quality. While most in the industry are struggling with credit quality, our loan net charge offs decreased to just 0.19 percent of average loans, and our nonperforming loans represented just 0.14 percent of total loans. The recent challenging times have validated our time-tested model and heritage of quality, liquidity and safety and soundness.” Net Interest Income Net interest income for the third quarter of 2007 increased $3.2 million, or 5.8 percent, compared to the same period in 2006 due primarily to higher average earning assets while increasing net interest margin. Average earning assets increased by $322.1 million, or 4.8 percent, as compared to the third quarter of 2006. Most of this increase was due to a $284.0 million, or 7.8 percent, increase in average loans. Net interest margin increased 5 basis points to 3.48 percent for the three months ended September 30, 2007 as compared to the same quarter in 2006. Net interest spread increased by 8 basis points from the three months ended September 30, 2006, which was offset by a 3 basis point reduction in the benefit from interest free funds. Noninterest Income and Expense "Our fee based businesses continue to drive our success,” said Peter deSilva, President and Chief Operating Officer. "Noninterest income, which represented 57.0 percent of our revenue, grew for the tenth consecutive quarter over the prior year. This growth was driven by trust and securities processing income from our Asset Management and Fund Services divisions, as well as from the sale of our securities transfer product. A continued success story within Asset Management is our Corporate Trust division, which ranked fourth in Thomson Financial's third quarter ranking by number of transactions of municipal trusteeships and paying agencies combined. With dominant market shares of 56 percent in Missouri and 67 percent in Kansas, and 34 percent growth in assets under administration, Corporate Trust remains a key area of focus for the company.” Noninterest income increased $12.5 million, or 19.4 percent, for the three months ended September 30, 2007 compared to the same period in 2006. Trust and securities processing income increased $3.9 million, or 15.4 percent, for the three months ended September 30, 2007 compared to the same period in 2006. This increase was primarily due to a $1.0 billion, or 22.0 percent, increase in total assets under management in the UMB Scout Funds at September 30, 2007 as compared to September 30, 2006. Deposit service charges were $1.8 million, or 9.6 percent, higher in the third quarter 2007 than in the same period in 2006. A $6.5 million net gain was recognized on the sale of the securities transfer product, which was completed during the quarter. Noninterest expense increased $5.1 million, or 5.3 percent, for the three months ended September 30, 2007 compared to the same period in 2006. Salary expense increased by $2.5 million, or 5.2 percent, mostly due to higher employee base salaries, higher commissions and bonuses, and higher cost of benefits. Occupancy expense increased $0.7 million, or 10.6 percent, mainly from increased repair and maintenance costs on existing facilities and additional facility security costs. Equipment expense increased by $0.8 million, or 6.0 percent, mostly due to amortization and maintenance costs related to software and associated equipment. Balance Sheet and Margin "Loan growth for the quarter reflected increases in our commercial, credit cards and HELOC portfolios, offset by a decrease in indirect loan balances. We made the strategic decision to allow our indirect portfolio to run-off as part of our ongoing strategy to enhance earning asset yield,” said Mike Hagedorn, Chief Financial Officer. "We continued to increase margin year over year, partly due to loan growth and higher earning asset yields from both our investment and loan portfolios. Contributing to the margin increase this quarter was a more moderate increase in the cost of our interest-bearing liabilities, as the recent interest rate reduction lowered the cost of our short-term funding. Going forward, margin improvement may be more moderate as our earning assets re-price in a lower rate environment.” Average total assets for the three months ended September 30, 2007 were $7.8 billion compared to $7.5 billion for the same period in 2006, an increase of $390.0 million, or 5.2 percent. Average earning assets increased by $322.1 million, or 4.8 percent. In addition to the increase in earning assets, the mix of higher yielding loans to overall earning assets was favorable. Average loans comprised 55.9 percent of the company’s earning asset base for 2007 as compared to 54.4 percent for 2006. For the three months ended September 30, 2007, average loans were $3.9 billion compared to $3.6 billion for the same period in 2006, an increase of 7.8 percent. Actual loan balances on September 30, 2007 were $4.0 billion, compared to $3.8 billion on September 30, 2006. These balances were as follows: Loans by Category (in thousands)   September 30,2007   September 30,2006   Change   Percent Change Commercial, financial and agricultural $1,801,190 $1,659,939 $141,251 8.5% Real estate construction 64,320 72,198 (7,878) (10.9)% Consumer 863,320 999,183 (135,863) (13.6)% Real estate 1,218,869 1,060,893 157,976 14.9% Leases 6,105 5,786 319 5.5% Loans before loans held for sale 3,953,804 3,797,999 155,805 4.1% Loans held for sale 12,987 17,658 (4,671) (26.5)% Total loans and loans held for sale $3,966,791 $3,815,657 $151,134 4.0% Nonperforming loans at September 30, 2007 totaled $5.7 million compared to $8.1 million a year earlier, a 29.7 percent reduction. As a percentage of total loans, nonperforming loans were 0.14 percent of loans as of September 30, 2007 and 0.21 percent at September 30, 2006. Nonperforming loans are defined as nonaccrual loans and restructured loans. The company’s allowance for loan losses totaled $46.2 million, or 1.17 percent of total loans as of September 30, 2007 compared to $43.5 million, or 1.15 percent of total loans as of September 30, 2006. For the three months ended September 30, 2007, average securities, including trading securities and other, totaled $2.7 billion. This is an increase of $78.9 million, or 3.0 percent from the same period in 2006. Average federal funds sold and resell agreements for the third quarter decreased $40.8 million, or 10.9 percent over the same period in 2006 to $331.4 million. Average total deposits increased $269.3 million, or 5.0 percent, to $5.7 billion for the three months ended September 30, 2007, compared to the same period in 2006. The increase in deposits came primarily from our public funds, mutual fund processing and treasury management businesses. Average time deposit accounts increased by $107.7 million, or 9.2 percent, for the three months ended September 30, 2007 as compared to 2006. Average money market accounts increased by $126.1 million, or 12.2 percent, in 2007 as compared to 2006. Total deposits as of September 30, 2007 were $5.9 billion, compared to $5.5 billion at September 30, 2006, a 7.0 percent increase. As of September 30, 2007, UMB had total shareholders’ equity of $884.3 million, a 3.5 percent increase from the prior year. Year-to-Date Earnings for the nine months ended September 30, 2007 were $58.9 million or $1.41 per share ($1.40 diluted). This is an increase of $14.9 million, or 34.0 percent, compared to the prior year earnings of $44.0 million or $1.03 per share ($1.03 diluted). Net interest income for the year-to-date September 30, 2007 increased $11.2 million, or 7.0 percent, compared to the same period in 2006 due primarily to higher average earning assets and rates. Net interest margin increased to 3.41 percent for year-to-date September 30, 2007 as compared to 3.36 percent for the same period in 2006. Noninterest income increased $26.0 million, or 13.7 percent, for year-to-date September 30, 2007 as compared to the same period in 2006. The increase was primarily attributable to higher trust and securities processing income, deposit service charges, trading and investment income and brokerage fees. A $6.5 million net gain was recognized on the sale of the securities transfer product, which was completed during the third quarter. Trust and securities processing income increased $12.4 million, or 17.1 percent, for year-to-date September 30, 2007 as compared to the same period in 2006. Deposit service charges were $4.7 million, or 8.6 percent, higher for the nine months ended September 30, 2007 than the same period in 2006 due mostly to greater individual overdraft and return item charges as well as pricing changes implemented at the beginning of the year. Noninterest expense increased $14.5 million, or 5.1 percent, for the nine months ended September 30, 2007 compared to the same period in 2006. Salary expense increased by $8.6 million, or 6.0 percent, mostly due to higher employee base salaries, higher commissions and bonuses and higher cost of benefits. Occupancy expense increased $2.1 million, or 10.5 percent, mainly from increased repair and maintenance costs of existing facilities and increased facility security expense. Equipment expense increased by $3.7 million, or 10.3 percent, for year-to-date September 30, 2007 as compared to the same period in 2006 due mostly to higher amortization and maintenance costs related to software and associated equipment. The company plans to host a conference call to discuss its third quarter results on October 24, 2007, at 8:30 a.m. (CST). Interested parties may access the call by dialing U.S./Canada (toll-free) 800-218-9073 or access the following Web link at least 10 minutes before the call begins: http://w.on24.com/r.htm?e=95042&s=1&k=801EE2F28B754C56A4BBA56E3AEA338F or visit www.umb.com, investor relations, to access the link to the live call. A replay of the conference call may be heard until November 7, 2007, by calling U.S./Canada (toll-free) 800-405-2236 or 303-590-3000. The replay pass code required for playback is conference ID 11098473#. The call replay may also be accessed via the company's Web site, www.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, 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 multi-bank holding company headquartered in Kansas City, Mo., offering complete banking, asset management, health spending solutions and related financial services to both individual and business customers nationwide. Its banking subsidiaries own and operate 136 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 an investment services group based in Milwaukee, Wisc., single-purpose companies that deal with brokerage services and insurance and a registered investment advisor that manages the company’s proprietary mutual funds. CONSOLIDATED BALANCE SHEETS UMB Financial Corporation (all dollars in thousands) (unaudited) September 30, Assets   2007     2006     Loans $ 3,953,804 $ 3,797,999 Allowance for loan losses   (46,174 )   (43,538 ) Net loans 3,907,630 3,754,461 Loans held for sale 12,987 17,658 Investment Securities: Available for sale 2,709,973 2,636,811 Held to maturity 39,803 51,606 Federal Reserve Bank stock and other 19,926 15,158 Trading securities   60,652     48,160   Total investment securities 2,830,354 2,751,735 Federal funds and resell agreements 305,553 280,910 Cash and due from banks 499,535 408,094 Bank premises and equipment, net 237,283 241,290 Accrued income 60,845 56,300 Goodwill on purchased affiliates 94,512 96,017 Other intangibles 17,181 19,136 Other assets   54,180     47,156   Total assets $ 8,020,060   $ 7,672,757       Liabilities Deposits: Noninterest - bearing demand $ 1,755,443 $ 1,900,220 Interest - bearing demand and savings 2,853,488 2,493,922 Time deposits under $100,000 820,701 797,068 Time deposits of $100,000 or more   491,412     344,716   Total deposits 5,921,044 5,535,926 Federal funds and repurchase agreements 1,060,585 1,148,677 Short-term debt 16,468 22,644 Long-term debt 36,693 36,798 Accrued expenses and taxes 63,612 46,039 Other liabilities   37,349     27,834   Total liabilities   7,135,751     6,817,918     Shareholders' Equity Common stock 55,057 55,057 Capital surplus 701,620 699,029 Retained earnings 421,729 370,184 Accumulated other comprehensive income (loss) (1,417 ) (15,765 ) Treasury stock   (292,680 )   (253,666 ) Total shareholders' equity   884,309     854,839   Total liabilities and shareholders' equity $ 8,020,060   $ 7,672,757   Consolidated Statements of Income UMB Financial Corporation (unaudited, dollars in thousands except share and per share data)   Three Months Ended Nine Months Ended September 30, September 30, Interest Income   2007   2006     2007   2006 Loans $ 68,972 $ 62,157 $ 203,385 $ 172,931 Securities: Taxable Interest 23,251 21,004 71,200 61,937 Tax-exempt interest 6,490   5,864     18,642   17,388 Total securities income 29,741 26,868 89,842 79,325 Federal funds and resell agreements 4,326 5,025 15,658 15,152 Trading securities and other 561   579     1,824   2,029 Total interest income 103,600   94,629     310,709   269,437   Interest Expense Deposits 31,412 25,942 89,191 69,533 Federal funds and repurchase agreements 13,647 13,443 47,987 37,686 Short-term debt 161 105 441 429 Long-term debt 373   311     1,265   1,206 Total interest expense 45,593   39,801     138,884   108,854 Net interest income 58,007 54,828 171,825 160,583 Provision for loan losses 2,833   1,500     6,333   7,734 Net interest income after provision for loan losses 55,174   53,328     165,492   152,849   Noninterest Income Trust and securities processing 28,889 25,038 85,131 72,698 Trading and investment banking 4,353 4,757 14,747 13,437 Service charges on deposits 20,361 18,581 59,936 55,191 Insurance fees and commissions 913 1,056 2,544 3,149 Brokerage fees 1,959 1,508 6,024 4,626 Bankcard fees 10,135 9,945 29,431 28,750 Other gains, net 96 (188 ) 87 408 Gain on sale of securities transfer, net 6,490 - 6,490 - Gains (losses) on sales of securities available for sale 1 37 3 120 Other 3,700   3,669     11,519   11,553 Total noninterest income 76,897   64,403     215,912   189,932   Noninterest Expense Salaries and employee benefits 51,439 48,894 152,538 143,928 Occupancy, net 7,667 6,932 22,421 20,288 Equipment 13,385 12,623 39,810 36,086 Supplies, postage and telephone 5,814 5,514 17,327 16,988 Marketing and business development 3,880 4,001 11,574 11,645 Processing fees 7,491 7,137 21,268 20,692 Legal and consulting 2,329 2,080 5,795 5,736 Bankcard 2,648 3,410 8,084 10,220 Amortization of other intangibles 754 365 2,222 868 Other 5,992   5,309     16,107   16,238 Total noninterest expense 101,399   96,265     297,146   282,689   Income before income taxes 30,672 21,466 84,258 60,092 Income tax provision   9,145   5,601     25,344   16,127 Net income $ 21,527 $ 15,865   $ 58,914 $ 43,965 Per Share Data Net income- Basic $ 0.52 $ 0.37 $ 1.41 $ 1.03 Net income- Diluted 0.51 0.37 1.40 1.03 Dividends 0.14 0.13 0.42 0.39 Weighted average shares outstanding 41,687,476   42,531,525     41,857,927   42,675,173 UMB FINANCIAL CORPORATION STATEMENTS OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY (unaudited, dollars in thousands)   Accumulated Other Common Capital Unearned Retained Comprehensive Treasury     Stock   Surplus   Compensation   Earnings   Income   Stock   Total Balance - January 1, 2006 $ 27,528 $ 728,108 $ (1,904) $ 342,675 $ (21,550) $ (241,394) $ 833,463 Adoption of SFAS 123(R) - (1,904) 1,904 - - - - Comprehensive income/(loss) Net income - - - 43,965 - - 43,965 Change in unrealized losses on securities - - - - 5,785 - 5,785 Total comprehensive income 49,750 Cash dividends ($0.39 per share) - - - (16,456) - - (16,456) Stock split two for one 27,529 (27,529) - Purchase of treasury stock - - - - - (13,813) (13,813) Issuance of stock awards - (938) 1,088 150 Recognition of restricted stock compensation - 1,046 - - - - 1,046 Sale of treasury stock - 182 - - - 132 314 Exercise of stock options   -   64   -   -   -   321   385 Balance - September 30, 2006 $ 55,057 $ 699,029 $ - $ 370,184 $ (15,765) $ (253,666) $ 854,839   Balance - January 1, 2007 $ 55,057 $ 699,794 $ - $ 380,464 $ (17,259) $ (269,181) $ 848,875 Comprehensive income Net income - - - 58,914 - - 58,914 Change in unrealized losses on securities -   -   -   -   15,842   -   15,842 Total comprehensive income 74,756 Cash dividends ($0.42 per share) - - - (17,649) - - (17,649) Purchase of treasury stock - - - - - (25,223) (25,223) Issuance of stock awards (928) - 1,065 137 Recognition of stock based compensation - 2,299 - 2,299 Sale of treasury stock - 232 - - - 138 370 Exercise of stock options   -   223   -   -   -   521   744 Balance - September 30, 2007 $ 55,057 $ 701,620 $ - $ 421,729 $ (1,417) $ (292,680) $ 884,309   See Notes to Condensed Consolidated Financial Statements. Average Balances / Yields and Rates   UMB Financial Corporation (tax - equivalent basis)     (all dollars in thousands)(unaudited) Nine Months Ended September 30,   2007     2006   Average Average Average Average Assets   Balance Yield/Rate     Balance Yield/Rate   Loans, net of unearned interest $ 3,897,257 6.98 % $ 3,513,171 6.59 % Securities: Taxable 2,019,521 4.71 2,051,522 4.04 Tax-exempt 716,106   5.11 675,102   5.01 Total securities 2,735,627 4.82 2,726,624 4.28 Federal funds and resell agreements 392,659 5.33 409,080 4.95 Trading securities and other 62,397   4.06 57,910   4.81 Total earning assets 7,087,940 6.03 6,706,785 5.53 Allowance for loan losses (45,289 ) (41,524 ) Other assets   929,192     863,284   Total assets $ 7,971,843   $ 7,528,545       Liabilities and Shareholders' Equity Interest-bearing deposits $ 3,884,511 3.07 % $ 3,612,891 2.57 % Federal funds and repurchase agreements 1,320,837 4.86 1,122,993 4.49 Borrowed funds 49,147   4.64 50,549   4.32 Total interest-bearing liabilities 5,254,495 3.53 4,786,433 3.04 Noninterest-bearing demand deposits 1,769,917 1,851,588 Other liabilities 80,368 52,041 Shareholders' equity   867,063     838,483   Total liabilities and shareholders' equity $ 7,971,843   $ 7,528,545   Net interest spread 2.50 % 2.49 % Net interest margin 3.41 3.36     Three Months Ended September 30,   2007     2006   Average Average Average Average Assets   Balance Yield/Rate     Balance Yield/Rate   Loans, net of unearned interest $ 3,905,847 7.01 % $ 3,621,883 6.81 % Securities: Taxable 1,948,907 4.73 1,930,684 4.32 Tax-exempt 736,715   5.21 686,237   4.95 Total securities 2,685,622 4.86 2,616,921 4.48 Federal funds and resell agreements 331,443 5.18 372,198 5.36 Trading securities and other 58,750   3.98 48,525   4.78 Total earning assets 6,981,662 6.07 6,659,527 5.80 Allowance for loan losses (45,913 ) (42,863 ) Other assets   904,440     833,500   Total assets $ 7,840,189   $ 7,450,164       Liabilities and Shareholders' Equity Interest-bearing deposits $ 3,947,820 3.16 % $ 3,625,766 2.84 % Federal funds and repurchase agreements 1,159,531 4.67 1,091,492 4.89 Borrowed funds 49,981   4.24 45,706   3.61 Total interest-bearing liabilities 5,157,332 3.51 4,762,964 3.32 Noninterest-bearing demand deposits 1,731,499 1,784,278 Other liabilities 71,081 57,270 Shareholders' equity   880,277     845,652   Total liabilities and shareholders' equity $ 7,840,189   $ 7,450,164   Net interest spread 2.56 % 2.48 % Net interest margin 3.48 3.43 THIRD QUARTER 2007   FINANCIAL HIGHLIGHTS UMB Financial Corporation (all dollars in thousands, except per share data) (unaudited)   Nine Months Ended September 30,   2007     2006   Net interest income $ 171,825 $ 160,583 Provision for loan losses 6,333 7,734 Noninterest income 215,912 189,932 Noninterest expense 297,146 282,689 Income before income taxes 84,258 60,092 Net income 58,914 43,965 Net income per share - Basic 1.41 1.03 Net income per share - Diluted 1.40 1.03 Return on average assets 0.99 % 0.78 % Return on average equity 9.08 % 7.01 %   Three Months September 30 Net interest income $ 58,007 $ 54,828 Provision for loan losses 2,833 1,500 Noninterest income 76,897 64,403 Noninterest expense 101,399 96,265 Income before income taxes 30,672 21,466 Net income 21,527 15,865 Net income per share - Basic 0.52 0.37 Net income per share - Diluted 0.51 0.37 Return on average assets 1.09 % 0.84 % Return on average equity 9.70 % 7.44 %   At September 30 Assets $ 8,020,060 $ 7,672,757 Loans, net of unearned interest 3,953,804 3,797,999 Securities 2,830,354 2,751,735 Deposits 5,921,044 5,535,926 Shareholders' equity 884,309 854,839 Book value per share 21.18 20.03 Market price per share 42.86 36.57 Equity to assets 11.03 % 11.14 % Allowance for loan losses $ 46,174 $ 43,538 As a % of loans 1.17 % 1.15 % Nonaccrual and restructured loans $ 5,709 $ 8,121 As a % of loans 0.14 % 0.21 % Loans over 90 days past due $ 1,946 $ 5,924 As a % of loans 0.05 % 0.16 % Other real estate owned $ 1,230 $ 157 Net loan charge-offs quarter-to-date $ 1,907 $ 2,440 As a % of average loans 0.19 % 0.27 % Net loan charge-offs year-to-date $ 5,085 $ 7,379 As a % of average loans 0.18 % 0.28 %   Common shares outstanding 41,755,015 42,685,009   Average Balances Nine Months Ended September 30 Assets $ 7,971,843 $ 7,528,545 Loans, net of unearned interest 3,897,257 3,513,171 Securities 2,735,627 2,726,624 Deposits 5,654,428 5,464,479 Shareholders' equity 867,063 838,483 Selected Financial Data of Affiliate Banks   UMB Financial Corporation (all dollars in thousands)(unaudited) September 30, 2007 Loans Net of Total Unearned Total Shareholder's Missouri   Assets   Interest   Deposits   Equity UMB Bank, n.a. $ 6,606,849 $ 3,200,029 $ 4,941,778 $ 569,274 UMB Bank Warsaw, N.A. 101,637 41,890 68,023 7,331 Colorado                 UMB Bank Colorado, n.a. 787,085 458,896 568,333 133,933   Kansas                 UMB National Bank of America 539,796 212,025 386,672 62,527   Arizona                 UMB Bank Arizona, n.a. 20,143 19,666 10,283 9,281 Banking - Related Subsidiaries UMB Community Development Corporation UMB Banc Leasing Corp. UMB Financial Services, Inc. UMB Scout Insurance Services, Inc. UMB Capital Corporation United Missouri Insurance Company UMB Trust Company of South Dakota Scout Investment Advisors, Inc. UMB Fund Services, Inc. UMB Consulting Services, Inc. Kansas City Realty Company Kansas City Financial Corporation UMB Redevelopment Corporation UMB Realty Company, LLC UMB National Sales Corporation Grand Distribution Services, LLC UMB Distribution Service, LLC Warsaw Financial Corporation