UMB Financial Corporation Reports 2008 First Quarter Earnings of $32.4 Million

Business Wire,  April 22, 2008  

Tags: UMB Financial Corp.

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Excluding Visa-Related Impact, UMB Achieved Record Net Income of $24.1 Million or 39.1 Percent Growth

Selected financial highlights:

* Record quarterly revenue of $149.4 million

* Record quarterly noninterest income of $85.0 million

* Record loan balances of $4.1 billion

* Net interest margin increased 18 basis points to 3.50 percent

* Nonperforming loans decreased to 0.12 percent of loans

* Net chargeoffs decreased to 0.15 percent of average loans

KANSAS CITY, Mo. -- UMB Financial Corporation (NASDAQ: UMBF), a multi-bank holding company, announced earnings for the three-months ended March 31, 2008 of $32.4 million or $0.79 per share ($0.78 diluted). This is an increase of $15.0 million, or 86.8 percent, compared to the first quarter 2007 earnings of $17.3 million or $0.41 per share ($0.41 diluted).

"Simply stated, this quarter was a record quarter on its own merit," commented Mariner Kemper, Chairman and CEO of UMB Financial Corporation. "We achieved record quarterly earnings and revenue, with or without the impact of Visa, Inc.'s (Visa) Initial Public Offering (IPO). These times of unprecedented pressure in the financial services industry have validated our time-tested business model based on a proven risk profile and uncompromised underwriting standards. Our solid foundation together with disciplined execution of our strategies has led to strong financial performance."

As a direct result of Visa's IPO, the current quarter included a pre-tax gain of $8.9 million from the mandatory redemption of a portion of the company's Class B shares in Visa. The company also reduced its liability accrual by $4.0 million related to the company's estimated share of Visa's covered litigation. This reduction was a result of funding the covered litigation escrow by Visa, also part of their IPO process.

Excluding the Visa-related transactions, net income for the first quarter increased 39.1 percent to $24.1 million or $0.59 per share ($0.58 diluted). A table reconciling GAAP net income for these items for the quarter is included with this release.

Net Interest Income and Margin

Net interest income for the first quarter of 2008 increased $7.4 million, or 13.0 percent, compared to the same period in 2007 due primarily to higher average earning assets and increasing net interest margin in a declining rate environment. Average earning assets increased by $478.0 million, or 6.5 percent, as compared to the first quarter of 2007. This increase was due to a $212.6 million, or 5.5 percent, increase in average loans and a $301.0 million, or 10.4 percent, increase in total securities, including trading securities and other. Net interest margin increased 18 basis points to 3.50 percent for the three months ended March 31, 2008 as compared to the same quarter in 2007. Largely contributing to the margin improvement was a reduction of 89 basis points in the average cost of our interest-bearing liabilities, which offset a decrease in our average earning-asset yield of 46 basis points.

"The first quarter net interest margin improvement is a reflection of our success in implementing the strategy to optimize our balance sheet," said Mike Hagedorn, Chief Financial Officer. "This strategy over the last couple of years has led to a larger balance sheet, continued improvement in our earning-asset mix, longer average life of our investment portfolio and disciplined deposit rate management. While these actions have positioned us well to improve margin, our balance sheet has retained the high-quality and lower-risk profile that differentiates us from most of our competitors."

Noninterest Income and Expense

Noninterest income increased $17.6 million, or 26.0 percent, for the three months ended March 31, 2008 compared to the same period in 2007. Trust and securities processing income increased $3.9 million, or 14.4 percent, for the three months ended March 31, 2008 compared to the same period in 2007. This increase was primarily due to a $1.0 million, or 12.4 percent, increase in fee income from UMB Scout Funds and a $3.6 million, or 42.5 percent, increase in fund administration and distribution services, offset by a decrease of $1.0 million of securities transfer income primarily due to the sale of the Securities Transfer product during the third quarter of 2007. Deposit service charges were $1.7 million, or 9.2 percent, higher in the first quarter 2008 than in the same period in 2007 due mostly to greater individual overdraft and return item charges as well as pricing changes implemented at the beginning of 2008. An $8.9 million gain was recognized on the mandatory partial redemption of the company's holdings of Class B shares of Visa. This redemption was part of the IPO of Visa during the first quarter of 2008. Excluding this redemption gain on the Visa transaction, noninterest income increased 12.9 percent.

"One of our company's greatest strengths during this time of economic uncertainty is our ability to continue to drive improvement in our fee-based businesses," said Peter deSilva, President and Chief Operating Officer. "Noninterest income grew 26.0 percent for the quarter and 12.9 percent, excluding the Visa-related gain. Our Asset Management and Fund Services divisions, as well as our Bankcard business, continue to drive this growth. Assets Under Management benefited from $319 million in net flows into our equity, bond and money market UMB Scout Funds. We are very committed to this business and will continue to invest in it for the long-term. Finally, our Healthcare Services' deposits and investment assets grew to nearly $122 million, or 49 percent higher than the same period last year."