UMB Financial Corporation Reports a 24 Percent Increase and Record Full-Year Earnings of $74.2 Million for 2007

Business Wire, Jan 22, 2008

Selected Financial Highlights

* Record full-year revenue of $521.5 million

* Record full-year noninterest income of $288.8 million

* Net interest margin for the year increased 6 basis points to 3.44 percent

* Nonperforming loans remained flat at 0.17 percent of loans

* Net chargeoffs for the year remained flat at 0.21 percent of average loans

* Capital remains strong with an equity-to-assets ratio of 9.5 percent

KANSAS CITY, Mo. -- UMB Financial Corporation (NASDAQ: UMBF), a multi-bank holding company, announced earnings for the year ended December 31, 2007 of $74.2 million or $1.78 per share ($1.77 diluted). This is an increase of $14.4 million, or 24.2 percent, compared to the prior year earnings of $59.8 million or $1.40 per share ($1.40 diluted). Earnings for the three months ended December 31, 2007 were $15.3 million or $0.37 per share ($0.37 diluted). This is a decrease of $0.5 million, or 3.2 percent, compared to fourth quarter 2006 earnings of $15.8 million or $0.37 per share ($0.37 diluted). The fourth quarter in 2007 included a pre-tax liability accrual of $4.6 million related to the company's estimated share of Visa U.S.A., Inc.'s (Visa) covered litigation provision as well as a $0.7 million net gain on a contingent payment received on the sale of the securities transfer product. Excluding these adjustments, net income for the fourth quarter would have increased 12.6 percent to $17.8 million. A table reconciling GAAP net income for these items for the quarter and year-to-date is included with this release.

"This quarter we watched the industry weather some challenging conditions," commented Mariner Kemper, Chairman and CEO of UMB Financial Corporation. "I am extremely proud of the results our associates achieved for the quarter and the year. Our results continued to be fueled by double-digit fee income growth and an increase in net interest income. In addition, we grew average loans 9.0 percent while not wavering from our historically strong underwriting standards. Our financial performance in the current market environment validates our time-tested model of quality, liquidity and capital strength."

Net Interest Income

Net interest income for the fourth quarter of 2007 increased $4.2 million, or 7.4 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 $266.0 million, or 3.9 percent, as compared to the fourth quarter of 2006. Most of this increase was due to a $138.5 million, or 3.7 percent, increase in average loans and a $149.1 million, or 5.3 percent, increase in total securities, including trading securities and other. Net interest margin increased 14 basis points to 3.55 percent for the three months ended December 31, 2007 as compared to the same quarter in 2006.

Noninterest Income and Expense

"Our results for the fourth quarter continue to be driven by the improvement in our fee-based businesses," said Peter deSilva, President and Chief Operating Officer. "Noninterest income increased 12.1 percent for the quarter, and 13.3 percent for the year. This growth was primarily due to the increase in trust and securities processing income from our Asset Management and Fund Services divisions, as well as bankcard fees. Additionally, during the quarter, we announced that our Healthcare Services Division passed $100 million in Health Savings Account (HSA) assets, or an increase of 53 percent over the prior year. Finally, with almost 800,000 healthcare accounts, we are optimistic about the growth opportunity and remain committed to maintaining our leadership position in this important segment."

Noninterest income increased $7.9 million, or 12.1 percent, for the three months ended December 31, 2007 compared to the same period in 2006. Trust and securities processing income increased $4.9 million, or 19.2 percent, for the three months ended December 31, 2007 compared to the same period in 2006. This increase was primarily due to a $1.5 million, or 20.0 percent, increase in fee income from the UMB Scout Funds and a $2.3 million, or 29.4 percent, increase in fund administration and distribution services. Deposit service charges were $1.5 million, or 8.4 percent, higher in the fourth quarter 2007 than in 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 2007. A $0.7 million net gain was recognized on a contingent payment received on the sale of the securities transfer product, which was completed during the third quarter. In addition, gains on the sale of available-for-sale securities of $1.0 million were recognized during the quarter.

Noninterest expense increased $11.3 million, or 11.4 percent, for the three months ended December 31, 2007 compared to the same period in 2006. Salary expense increased by $4.3 million, or 8.6 percent, mostly due to higher employee base salaries, higher commissions and bonuses, and higher cost of benefits. Marketing and business development increased $0.7 million, or 21.3 percent, due to timing of marketing initiatives in the fourth quarter of 2007 compared to the same quarter in 2006. Processing fees increased $1.0 million, or 13.1 percent, due to increased third party custodian fees related to international transactions from mutual fund clients and sub-transfer agency fees paid for the distribution of the UMB Scout Funds. A liability of $4.6 million, which represents more than 40 percent of the noninterest expense increase, was recorded for the estimated company's proportional share of Visa's covered litigation. Excluding this litigation liability, noninterest expense would have increased 6.7 percent.