UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-4887
UMB FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Missouri 43-0903811
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1010 Grand Avenue, Kansas City, MO 64106
(address of principal executive offices and Zip Code)
(816) 860-7000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes x No
_________ _________
At June 30, 1994, UMB Financial Corporation had 19,271,380
shares of common stock outstanding. This is the only class of stock of the
Company.
UMB FINANCIAL CORPORATION
FORM 10-Q
INDEX
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
as of June 30, 1994 and 1993 and December 31, 1993........ 3
Consolidated Statements of Income for the Three and Six Months
Ended June 30, 1994 and 1993............................. 4
Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 1994 and 1993......... 5
Consolidated Statements of Shareholders' Equity
for the Six Months Ended June 30, 1994 and 1993......... 6
Notes to Consolidated Financial Statements................... 7-9
Supplemental Financial Data
Average Balances/Yields and Rates.......................... 10
Analysis of Changes in Net Interest Income and Margin...... 11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................ 12-13
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K............................. 14
Signatures................................................... 15
UMB FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
___________________ ____________
1994 1993 1993
___________________ ____________
ASSETS
______
Loans:
Commercial, financial and agricultural $1,116,181 $ 945,000 $1,103,306
Consumer (net of unearned interest) 619,375 573,248 588,671
Real estate 456,012 459,488 466,157
Leases 1,411 1,770 1,627
Allowance for loan losses (32,977) (36,480) (35,590)
_________ _________ _________
Net loans $2,160,002 $1,943,026 $2,124,171
Securities available for sale:
U.S. Treasury and agencies $2,467,105 $2,648,088 $2,689,255
Equity securities and other 10,753 7,717 10,957
_________ _________ _________
Total securities available for sale
(market value of June, 1993
$2,686,346) $2,477,858 $2,655,805 $2,700,212
Investment securities:
State and political subdivisions $ 285,239 $ 285,920 $ 278,944
US Agencies 86,448 - -
_________ _________ _________
Total investment securities (market
value of $368,097, $290,722
and $282,346 respectively) $ 371,687 $ 285,920 $ 278,944
Federal funds and resell agreements 304,860 306,775 339,175
Trading securities 42,868 78,339 83,746
_________ _________ _________
Total earning assets $5,357,275 $5,269,865 $5,526,248
Cash and due from banks 535,768 457,741 666,368
Bank premises and equipment, net 129,659 130,617 128,898
Accrued income 73,525 71,493 72,551
Premium on and intangibles of purchased banks 81,751 87,080 85,286
Other assets 62,552 66,102 49,475
_________ _________ _________
Total assets $6,240,530 $6,082,898 $6,528,826
========= ========= =========
LIABILITIES
___________
Deposits:
Noninterest-bearing demand $1,474,066 $1,258,760 $1,488,278
Interest-bearing demand and savings 2,381,824 2,214,591 2,364,341
Time deposits under $100,000 992,334 1,105,410 1,058,354
Time deposits of $100,000 or more 189,565 207,479 250,756
_________ _________ _________
Total deposits $5,037,789 $4,786,240 $5,161,729
Federal funds and repurchase agreements 515,727 584,313 625,082
Short-term debt 3,222 1,978 1,453
Long-term debt 51,453 59,330 51,529
Accrued expenses and taxes 33,230 47,757 56,754
Other liabilities 30,960 40,119 45,636
_________ _________ _________
Total liabilities $5,672,381 $5,519,737 $5,942,183
_________ _________ _________
SHAREHOLDERS' EQUITY
____________________
Common stock, Par Value $1.00, $12.50, and $12.50
respectively. Authorized 23,000,000 shares;
20,677,558, 20,698,342 and 19,388,557 shares
issued respectively $ 20,678 $ 236,579 $ 236,579
Capital surplus 442,753 168,494 167,368
Retained earnings 166,419 194,535 208,557
Net unrealized gain/(loss) on securities
available for sale (17,606) - 14,333
Treasury stock, 1,406,178, 1,205,963 and
1,300,346 shares, at cost, respectively (44,095) (36,447) (40,194)
_________ _________ _________
Total shareholders' equity $ 568,149 $ 563,161 $ 586,643
_________ _________ _________
Total liabilities and
shareholders' equity $6,240,530 $6,082,898 $6,528,826
========= ========= =========
<FN>
See Notes to Consolidated Financial Statements.
UMB FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(unaudited in thousands)
Three Months Six Months
Ended June 30, Ended June 30,
_______________ _______________
INTEREST INCOME 1994 1993 1994 1993
Loans $41,716 $ 34,733 $ 80,392 $ 63,362
Securities:
Taxable interest $31,405 $ 28,677 $ 61,860 $ 54,236
Tax-exempt interest 3,067 3,020 6,005 5,474
______ ______ _______ _______
Total securities income $34,472 $ 31,697 $ 67,865 $ 59,710
Federal funds and resell agreements 3,077 2,491 6,248 5,097
Trading securities and other 824 614 1,703 1,183
______ _______ _______ _______
Total interest income $80,089 $ 69,535 $156,208 $129,352
______ ______ _______ _______
INTEREST EXPENSE
________________
Deposits $26,015 $ 24,505 $ 51,537 $ 45,814
Federal funds and repurchase
agreements 5,994 3,878 10,332 7,909
Short-term debt 7 6 15 13
Long-term debt 1,020 1,202 2,038 2,111
______ _______ _______ _______
Total interest expense $33,036 $ 29,591 $ 63,922 $ 55,847
______ ______ _______ _______
Net interest income $47,053 $ 39,944 $ 92,286 $ 73,505
Provision for loan losses 516 845 898 1,583
______ _______ _______ _______
Net interest income after provision $46,537 $ 39,099 $ 91,388 $ 71,922
______ _______ _______ _______
NONINTEREST INCOME
__________________
Trust income $ 9,079 $ 8,010 $ 17,539 $ 15,038
Securities processing 2,667 3,768 5,789 6,946
Trading and investment banking 2,413 3,195 5,403 7,384
Service charges on deposits 8,185 7,291 16,379 13,755
Other service charges and fees 5,241 3,998 8,903 7,208
Bankcard fees 6,940 5,660 12,254 9,753
Net investment security gains 288 283 3,315 276
Other 710 720 2,063 1,480
______ _______ _______ _______
Total noninterest income $35,523 $ 32,925 $ 71,645 $ 61,840
______ ______ _______ _______
NONINTEREST EXPENSE
___________________
Salaries and employee benefits $30,029 $ 26,066 $ 59,858 $ 48,918
Occupancy, net 3,723 3,538 7,525 6,683
Equipment 4,990 4,380 10,089 8,425
Supplies and services 4,998 4,069 9,636 7,901
Bankcard processing 5,965 4,796 10,500 8,204
Marketing and business development 4,021 3,658 7,583 6,545
FDIC and regulatory fees 3,051 2,693 6,046 5,013
Other 8,068 7,129 15,497 12,403
______ _______ _______ _______
Total noninterest expense $64,845 $ 56,329 $126,734 $104,092
______ _______ _______ _______
Income before income taxes $17,215 $ 15,695 $ 36,299 $ 29,670
Income tax provision 6,107 5,123 11,844 9,644
______ _______ _______ _______
NET INCOME $11,108 $ 10,572 $ 24,455 $ 20,026
====== ======= ======= =======
PER SHARE DATA
______________
Net income $0.58 $0.65 $1.27 $1.27
Dividends $0.18 $0.18 $0.36 $0.36
<FN>
Weighted average shares outstanding 19,281,838 16,343,950 19,303,050 15,755,242
See Notes to Consolidated Financial Statements.
UMB FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited in thousands)
Six Months Ended June 30,
1994 1993
Operating Activities
Net Income $ 24,455 $ 20,026
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for loan losses 898 1,583
Depreciation and amortization 10,889 7,617
Deferred income taxes and investment tax credits (646) 6,206
Net (increase) decrease in trading securities 40,878 (39,318)
Investment security gains (3,360) (284)
Investment security losses 46 8
Amortization of securities premium,
net of discount accretion 21,606 15,545
Increase in interest receivable (974) (10,285)
Decrease in interest payable (1,935) (823)
Other, net (29,243) (2,046)
_________ _________
Net cash provided (used) by operating activities $ 62,614 $ (1,771)
_________ _________
Investing Activities
____________________
Proceeds from maturities of investment securities $ 65,967 $ 55,796
Proceeds from sales of securities available for sale 120,988 128,947
Proceeds from maturities of securities available
for sale 457,656 110,376
Purchases of investment securities (73,376) (87,160)
Purchases of securities available for sale (511,393) (344,350)
Net (increase) decrease in loans (36,729) 31,346
Net decrease in federal funds and resell agreements 34,315 145,547
Purchases of bank premises and equipment (8,065) (7,474)
Proceeds from sales of bank premises and equipment 35 127
Purchases of financial organizations,
net of cash received - 66,553
_________ _________
Net cash provided by investing activities $ 49,398 $ 99,708
_________ _________
Financing Activities
____________________
Net increase in demand and savings deposits $ 3,271 $ 8,249
Net decrease in time deposits (127,211) (128,167)
Net decrease in federal funds and repurchase agreements (109,355) (151,508)
Net increase (decrease) in short term borrowings 1,769 (164)
Proceeds from issuance of long-term debt - 25,000
Repayment of long-term debt (76) -
Cash dividends (7,050) (5,993)
Proceeds from exercise of stock options 122 221
Purchases of treasury stock (4,082) (663)
_________ __________
Net cash used by financing activities $ (242,612) $ (253,025)
_________ _________
Decrease in cash and due from banks $ (130,600) $ (155,088)
Cash and due from banks at beginning of year 666,368 612,829
_________ _________
Cash and due from banks at end of period $ 535,768 $ 457,741
========= =========
<FN>
See Notes to Consolidated Financial Statements.
UMB FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands)
Net Unrealized
Common Capital Retained Holding Treasury
Stock Surplus Earnings Gain (Loss) Stock
Balance - December 31, 1992 $184,815 $ 63,046 $180,502 $ - $(28,684)
Net income - - 20,026 - -
Cash dividends - - (5,993) - -
Issuance of common stock
for acquisitions 51,764 105,605 - - -
Purchase of treasury stock - - - - (8,141)
Exercise of stock options - (157) - - 378
_______ _______ _______ ________ ________
Balance - June 30, 1993 $236,579 $168,494 $194,535 - $(36,447)
======= ======= ======= ======== ========
Balance - December 31, 1993 $236,579 $167,368 $208,557 $ 14,333 $(40,194)
Net income - - 24,455 - -
Cash dividends - - (7,050) - -
10% stock dividend 1,751 57,792 (59,543) - -
Adjust par value (217,652) 217,652 - - -
Purchase of treasury stock - - - - (4,082)
Exercise of stock options - (59) - - 181
Net unrealized loss on securities
available for sale - - - (31,939) -
_______ _______ _______ _________ ________
Balance - June 30, 1994 $ 20,678 $442,753 $166,419 $ (17,606) $(44,095)
======= ======= ======= ========= ========
<FN>
See Notes to Consolidated Financial Statements.
UMB FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1994
1. Change of Company Name and Par Value of Common Stock:
On April 21, 1994, the Company's shareholders approved changing the
Company's name from United Missouri Bancshares, Inc. to UMB
Financial Corporation. The name change was made in order to have a
corporate identity which was not geographically restrictive and which was
consistent with the broad range of financial services and products
provided by the Company. On this same date the shareholders approved an
amendment to the Company's Articles of Incorporation to reduce the par
value of the Company's common stock from $12.50 per share to $1.00 per
share.
2. Financial Statement Presentation:
The consolidated financial statements include the accounts of the Company
and its subsidiaries after elimination of all material intercompany
transactions. In the opinion of management of the Company, all
adjustments, which were of a normal recurring nature, necessary for a fair
presentation of the financial position and results of operations have been
made. The financial statements should be read in conjunction with the
Management's Discussion and Analysis of Financial Condition and Results of
Operations and with reference to the 1993 Annual Report to Shareholders.
3. Earnings Per Share:
Earnings per share are based on the weighted average number of shares of
common stock outstanding during the interim periods. All share and per
share data has been adjusted to reflect a 10% stock dividend paid on
July 1, 1994.
4. Allowance for Loan Losses:
The following is a summary of the Allowance for Loan Losses for the six
months ended June 30, 1994 and 1993 (in thousands):
Six Months Ended June 30,
1994 1993
____ ____
Balance January 1 $35,590 $24,456
Additions:
Provision for loan losses 898 1,583
Allowance of purchased banks - 12,076
______ ______
$36,488 $38,115
Deductions:
Charge-offs $(4,828) $(2,633)
Less recoveries on loans
previously charged-off 1,317 998
______ ______
Net loan losses $(3,511) $(1,635)
______ ______
Balance, June 30 $32,977 $36,480
====== ======
UMB FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1994
5. Acquisitions
As of June 25, 1993, the Company had consummated the acquisitions of eight
Kansas bank holding companies. The eight companies, their subsidiary
banks and the ownership percentage, and consideration paid are presented
below:
Number of
Assets as of Company Cash
Acquisition Company/ Acquisition Shares (in
Date Subsidiary Banks (% owned) (in millions) Issued (net) thousands)
03/26/93 Farmers Banshares, Inc. $ 57 168,898 $ 2,329
Farmers National Bank
Abilene (100%)
04/30/93 NBA Bankshares, Inc. $ 125 276,497 $ 4,986
The National Bank of America
at Salina (100%)
05/14/93 M L Bancshares, Inc. $ 159 308,578 $ 6,620
Russell State Bank
Russell/Luray (100%)
Security State Bank
Great Bend/Hudson (100%)
05/17/93 Highland Bancshares, Inc. $ 103 265,754 $ 2,299
Highland Park Bank & Trust
Topeka (100%)
05/17/93 North Plaza Bancshares, Inc. $ 43 - $ 7,433
North Plaza State Bank
Topeka (100%)
05/28/93 BellCorp, Inc. $ 110 373,951 $ 2,894
Citizens Bank & Trust Co.
Manhattan (100%)
06/14/93 Overland Park Bancshares, Inc. $ 188 1,021,580 $ -
Overland Park State Bank
& Trust Co. (100%)
Overland Park/Olathe
06/25/93 CNB Financial Corporation $ 504 1,526,770 $ -
Commercial National Bank (100%)
Kansas City/Overland Park
City National Bank
Atchison (100%)
First Bank & Trust, N.A.
Concordia/Glasco (100%)
Security State Bank
Fort Scott (100%)
_____ _________ ______
Total $1,289 3,942,028 $26,561
===== ========= ======
The cash portion of the purchase prices was obtained through the issuance
of debt by the Company. On February 24, 1993, the Company issued
$10,000,000 in medium-term notes due 2000 at 6.81% and $15,000,000 in
medium-term notes due 2003 at 7.30%.
The acquisitions of the Kansas banks have been accounted for by the Company
under the purchase method of accounting in accordance with Accounting
Principles Board Opinion No. 16, "Business Combinations", as amended. Under
this method of accounting, the purchase prices have been allocated to assets
acquired and liabilities assumed based on their estimated fair values,
including applicable income tax effects, at the effective dates of the
acquisitions. Consolidated income for the Company does not include income of
the acquired companies prior to the effective dates of the acquisitions.
UMB FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1994
5. Acquisitions (continued):
The following table presents supplementary information regarding the
acquisitions of the Kansas banks (dollars in thousands):
Fair values of assets acquired:
Securities $ 529,111
Net loans 522,111
Federal funds sold and resell agreements 85,207
Core deposit intangible 12,756
Other 140,108
_________
Total $1,289,293
_________
Fair values of liabilities assumed:
Deposits $1,062,992
Federal funds purchased and repurchase agreements 74,984
Borrowed funds 6,103
Other 19,190
_________
Total $1,163,269
_________
Fair value of net assets acquired $ 126,024
_________
Purchase prices of acquisitions:
Issuance of common stock (net of treasury stock acquired) $ 148,928
Cash paid 26,561
Direct costs of acquisitions 963
Previous investments in institutions acquired 1,506
_________
Total $ 177,958
_________
Goodwill (excess of purchase prices over
fair value of net assets acquired): $ 51,934
=========
The following proforma consolidated financial information gives effect to
the Kansas banks as if they were all acquired on January 1, 1993. These
pro forma results have been prepared for comparative purposes only and do
not purport to be indicative of the results of operations which actually
would have resulted had the combinations been in effect on the dates
indicated, or which may result in the future.
Six Months Ended
(dollars in thousands except per share data) June 30, 1993
______________
Net interest income $ 88,067
Noninterest income 67,716
Net income 21,708
Net income per share 1.12
6. Commitments and Contingencies:
In the normal course of business, the Company and its subsidiaries are
named defendants in various lawsuits and counterclaims. In the opinion of
management after consultation with legal counsel, none of these suits will
have a materially adverse effect on the financial position or results of
operations of the Company.
UMB FINANCIAL CORPORATION
AVERAGE BALANCES/YIELDS AND RATES (Tax-Equivalent Basis)
(in thousands)
Six Months Ended June 30,
1994 1993
Average Average Average Average
Balance Yield/Rate Balance Yield/Rate
ASSETS
Loans, net of unearned interest $2,111,143 7.74% $1,565,126 8.23%
Securities:
Taxable $2,681,683 4.65 $2,273,626 4.81
Tax-exempt 280,513 6.29 234,234 6.75
_________ _________
Total securities $2,962,196 4.81 $2,507,860 4.99
Federal funds and resell agreements 359,693 3.50 327,101 3.14
Other earning assets 67,612 5.22 46,491 5.41
_________ _________
Total earning assets $5,500,644 5.85 $4,446,578 6.00
Allowance for loan losses (35,441) (27,173)
Other assets 1,055,132 857,087
_________ _________
Total assets $6,520,335 $5,276,492
========= =========
LIABILITIES & SHAREHOLDERS' EQUITY
Interest-bearing deposits $3,651,587 2.85% $2,935,441 3.15%
Federal funds and repurchase agreements 652,721 3.19 575,534 2.77
Borrowed funds 53,077 7.80 52,198 8.21
_________ _________
Total interest-bearing liabilities $4,357,385 2.95 $3,563,173 3.16
Noninterest-bearing demand deposits 1,516,935 1,214,274
Other liabilities 66,674 64,129
Shareholders' equity 579,341 434,916
_________ _________
Total liabilities and
shareholders' equity $6,520,335 $5,276,492
========= =========
Net interest spread 2.90% 2.84%
Net interest margin 3.51 3.47
UMB FINANCIAL CORPORATION
ANALYSIS OF CHANGES IN NET INTEREST INCOME AND MARGIN
(tax-equivalent basis)
(in thousands)
ANALYSIS OF CHANGES IN NET INTEREST INCOME
Three Months Ended Six Months Ended
June 30, 1994 vs. 1993 June 30, 1994 vs. 1993
Volume Rate Total Volume Rate Total
Change in interest earned on:
Loans $ 8,420 $ (1,399) $ 7,021 $ 21,157 $ (4,018) $ 17,139
Securities:
Taxable 3,094 (366) 2,728 9,463 (1,839) 7,624
Tax-exempt 434 (278) 156 1,472 (560) 912
Federal funds sold 4 582 586 535 616 1,151
Other 156 56 212 548 (45) 503
______ ________ _______ ________ _______ ______
Interest income $12,108 $ (1,405) $ 10,703 $ 33,175 $ (5,846) $ 27,329
______ ________ _______ ________ _______ ______
Change in interest paid on:
Interest-bearing
deposits $ 3,859 $ (2,349) $ 1,510 $ 10,408 $ (4,685) $ 5,723
Federal funds
purchased 980 1,136 2,116 1,137 1,286 2,423
Borrowed funds (126) (55) (181) 35 (106) (71)
_____ ________ _______ ________ ________ ________
Interest expense $ 4,713 $ (1,268) $ 3,445 $ 11,580 $ (3,505) $ 8,075
______ ________ _______ ________ ________ ________
Net interest income $ 7,395 $ (137) $ 7,258 $ 21,595 $ (2,341) $ 19,254
====== ======== ======= ======= ======== ========
ANALYSIS OF NET INTEREST MARGIN
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 Change 1994 1993 Change
Average earning assets $5,439,161 $4,717,102 $ 722,059 $5,500,644 $4,446,578 $1,054,066
Interest-bearing
liabilities 4,357,804 3,719,018 638,786 4,357,385 3,563,173 794,212
_________ _________ _________ _________ _________ _________
Interest free
funds $1,081,357 $ 998,084 $ 83,273 $1,143,259 $ 883,405 $ 259,854
========= ========= ========= ========= ========= =========
Free funds ratio
(free funds to
earning assets) 19.88% 21.16% (1.28)% 20.78% 19.87% 0.91 %
Tax-equivalent yield
on earning assets 6.04% 6.05% (0.01)% 5.85% 6.00% (0.15)%
Cost of interest-
bearing liabilities 3.04 3.19 (0.15) 2.95 3.16 (0.21)
_____ _____ ______ ______ ______ ______
Net interest spread 3.00% 2.86% 0.14 % 2.90% 2.84% 0.06 %
Benefit of interest
free funds 0.60 0.67 (0.07) 0.61 0.63 (0.02)
_____ _____ _____ ______ ______ ______
Net interest margin 3.60% 3.53% 0.07 % 3.51% 3.47% 0.04 %
===== ===== ===== ====== ====== ======
UMB FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE
SIX MONTHS ENDED JUNE 30, 1994
SUMMARY
_______
UMB Financial Corporation, (UMB or the Company) earned $11,108,000 for the
three months ended June 30, 1994 compared to net income of $10,572,000 for the
three month period ended June 30, 1993. This increase represents a 5.07%
increase in second quarter earnings. On a per share basis earnings for the
second quarter of 1994 were $0.58 compared to $0.65 for the same period in
1993. On a year to date basis net income for the six months ended June 30,
1994 totaled $24,455,000, $1.27 per share, compared to $20,026,000, $1.27 per
share, for the same period last year.
During 1993 the Company acquired 12 banks in the State of Kansas (the Kansas
Banks). The Kansas Bank's contribution to the consolidated first and second
quarter earnings for 1994 was $1,725,000 and $1,865,000, respectively compared
to $22,000 and $516,000, respectively, for the same periods in 1993. Ignoring
the effect of the Kansas Banks, the Company's net income for the second
quarter of 1994 was down from the previous year due to an increase in net
interest income which was offset by higher operating costs, primarily salaries
and benefits. In addition, noninterest income from security services
decreased as the volume of security sale transactions decreased significantly.
RESULTS OF OPERATIONS
_____________________
Net interest income for the three months ended June 30, 1994 was $47,053,000
compared to $39,944,000 for the same period a year ago. Approximately 60% of
this increase is attributable to the acquisition of the Kansas Banks. The
remaining increase was the result of an increase in earning assets, primarily
loans, and higher earnings on variable rate loans, and investment securities
as a result of a general rise in interest rates. On a consolidated basis the
Company's net interest margin increased to 3.60% for the second quarter of
1994 compared to 3.53% for the second quarter of 1993. Exclusive of the
Kansas Banks, the Company's loans increased by 20% during the twelve months
ended June 30, 1994. This increase which is in line with Company
expectations, has resulted from continued marketing efforts and a general
increase in loan demand.
The Company's loan loss provision for the three months ended June 30, 1994 was
$516,000 compared to $845,000 for the same period in 1993. This decrease is
consistent with the 1994 year to date provision which decreased to $898,000
from $1,583,000 for 1993. The Company's increased loan volume has not, in
managements estimate, resulted in any significant increased risk in the loan
portfolio. Net charge offs for the second quarter of 1994 were $2,916,000
compared to $955,000 for the same period in 1993. This increase was the
result of a loss on one commerical loan in which some recovery is expected.
Noninterest income totaled $35,523,000 for the second quarter of 1994 compared
to $32,925,000 for the same period in 1993. Approximately $2,000,000 of this
increase resulted from the inclusion of the Kansas Banks in the consolidated
results of operations for the entire second quarter of 1994 and only since
acquisition for 1993. The remaining increase was the result of increased
service charge income and higher earnings from bankcard operations. These
increases in noninterest income were partially offset by decreases in income
from securities processing. For the first half of 1994 noninterest income
increased to $71,645,000 from $61,840,000 a year earlier. Approximately one
half of this increase resulted from the acquired Kansas Banks. The remaining
change is consistent with second quarter results. Also attributing to the six
month increase were gains on the sale of securities during the first quarter
which totaled approximately $3,000,000.
Noninterest expense during the second quarter of 1994 was $64,845,000 compared
to $56,329,000 for the same period during 1993. Approximately one half of
this increase was caused by the inclusion of the Kansas Banks. The remaining
increase was primarily due to higher salary and benefit costs and increased
bankcard processing costs. For the first six months of 1994 non interest
expense amounted to $126,734,000 compared to $104,092,000 for the first six
UMB FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE
SIX MONTHS ENDED JUNE 30, 1994
months of 1993. Approximately $14,500,000 of this increase was from the
inclusion of the Kansas Banks in the consolidated results for all of 1994 and
only since acquisition in 1993. The remaining increase resulted from
anticipated increases in salaries and benefits, higher bankcard processing
fees and increased supplies expense.
FINANCIAL CONDITION
___________________
At June 30, 1994 total assets were $6.241 billion compared to $6.529 billion
and $6.083 billion at December 31, 1993 and June 30, 1993, respectively.
During the twelve months ended June 30, 1994 the Company's deposits increased
by 5.3% even though the deposits of the acquired Kansas Banks decreased by $88
million during this period. The deposit shrinkage at the Kansas Banks was not
unexpected because deposit products and rates of the Kansas Banks were altered
after acquisition. Total deposits at June 30, 1994, decreased by 2.4% from
year end 1993. The most significant factor for the decrease in deposits
during the six months ended June 30, 1994 was continued run off from the
Kansas Banks. Deposits at the Kansas Banks are not expected to decrease
significantly from current levels. On a consolidated basis demand deposits
and savings accounts at June 30, 1994 are virtually unchanged from the year
end 1993 levels.
Loans at June 30, 1994 increased slightly from year end 1993 totals. The
Company will continue its efforts to increase the level of its loan portfolio
during the remainder of the year. The results of these efforts are evidenced
by the 11% increase in loans during the twelve month period ending June 30,
1994.
The Company's non performing loans (nonaccrual loans and restructured loans)
and other real estate owned totaled $14,831,000 at June 30, 1994 compared to
$14,379,000 at December 31, 1993 and $15,555,000 at June 30, 1993. The
allowance for loan losses at June 30, 1994 was $32,977,000 or 1.50% of loans
compared to an allowance to loans of 1.65% and 1.84% at December 31, 1993 and
June 30, 1993, respectively. Management believes the allowance for loan
losses is adequate to absorb the potential losses in the loan portfolio.
Securities available for sale at June 30, 1994 were $2.478 billion compared to
$2.700 billion at December 31, 1993. This decrease was the result of a first
quarter repositioning of the overall portfolio. Proceeds from the sale of
securities during the first quarter were reinvested in high quality mortgage
backed securities which the Company intends to hold until maturity. Also,
contributing to this decrease was the change in the net unrealized gain or
loss on securities available for sale. At June 30, 1994 the average life of
the Company's investment portfolio, including held to maturity was 19 months.
LIQUIDITY AND CAPITAL RESOURCES
_______________________________
The Company continues to maintain a high level of liquidity. At June 30, 1994
the Company's loan to deposit ratio was 43.5%. The average maturity of the
investment portfolio was 19 months and 34.8% of the portfolio matures within
twelve months. In addition, the Company has access to various borrowing
markets should the need arise, however such a need is not expected.
At June 30, 1994, shareholders' equity totaled $568,149,000 compared to
$586,643,000 at December 31, 1993 and $563,161,000 at June 30, 1993. The
decrease in equity from year end 1993 was the result of a $31,939,000 change
in the market value of securities available for sale. The Company adopted the
statement of Financial Accounting Standards No. 115 "Accounting for Certain
Investments in Debt and Equity Securities," during the fourth quarter of 1993.
A general increase in interest rates during 1994 resulted in a decrease in the
market value of the Company's securities available for sale. The Company's
capital ratios are included in the table below and far exceed regulatory
requirements.
Six Months Ended
June 30,
_____________________
1994 1993
____ ____
RATIOS
______
Return on average assets 0.76% 0.77%
Return on average equity 8.51 9.29
Average equity to assets 8.89 8.24
Tier 1 risk-based capital ratio 17.56 18.60
Total risk-based capital ratio 18.87 20.27
Leverage ratio 8.18 7.98
PER SHARE DATA
______________
Earnings $ 1.27 $ 1.27
Cash dividends 0.36 0.36
Dividend payout ratio 28.35% 28.35%
Book value $29.48 $28.89
UMB FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE
SIX MONTHS ENDED JUNE 30, 1994
PART II. Other information
Item 6. Exhibits and Reports on Form 8-K
(a) There are no exhibits filed with this report.
(b) Reports on Form 8-K:
(i) Form 8-K/A, Amendment No. 1 to the Form 8-K dated June 25, 1993,
was filed on September 8, 1993. Form 8-K/A included the pro
forma financial information regarding the Kansas bank
acquisitions as well as audited 1992 financial statements and
interim financial information for two of the acquirees.
(ii) Form 8-K dated April 19, 1994. Item 5. Other events, change in
executive management of the Company, change in par value of the
Company's common stock and name change of Company to UMB
Financial Corporation.
UMB FINANCIAL CORPORATION
FORM 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UMB FINANCIAL CORPORATION
/s/ R. Crosby Kemper
R. Crosby Kemper
Chairman
/s/ Timothy M. Connealy
Timothy M. Connealy
Senior Vice President of Finance
Date: August 11, 1994