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 September 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 September 30, 1994, UMB Financial Corporation had 19,059,487
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 September 30, 1994 and 1993 and December 31, 1993.......3
Consolidated Statements of Income for the Three and Nine Months
Ended September 30, 1994 and 1993.............................4
Consolidated Statements of Cash Flows
for the Nine Months Ended September 30, 1994 and 1993.........5
Consolidated Statements of Shareholders' Equity
for the Nine Months Ended September 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)
September 30, December 31,
1994 1993 1993
ASSETS
______
Loans:
Commercial, financial and agricultural $1,097,225 $ 903,227 $1,103,306
Consumer (net of unearned interest) 646,952 574,993 588,671
Real estate 445,191 454,084 466,157
Leases 2,249 1,570 1,627
Allowance for loan losses (32,947) (36,520) (35,590)
_________ _________ _________
Net loans $2,158,670 $1,897,354 $2,124,171
Securities available for sale:
U.S. Treasury and agencies $2,301,179 $2,583,940 $2,689,255
Equity securities and other 9,315 8,033 10,957
_________ _________ _________
Total securities available for sale
(market value of September, 1993
$2,631,955) $2,310,494 $2,591,973 $2,700,212
Securities held to maturity:
State and political subdivisions $ 301,768 $ 287,242 $ 278,944
US Agencies 86,670 - -
_________ _________ _________
Total securities held to maturity
(market value of $380,776, $292,926
and $282,346 respectively) $ 388,438 $ 287,242 $ 278,944
Federal funds and resell agreements 279,554 362,789 339,175
Trading securities 64,125 76,123 83,746
_________ _________ _________
Total earning assets $5,201,281 $5,215,481 $5,526,248
Cash and due from banks 492,704 565,287 666,368
Bank premises and equipment, net 129,804 130,372 128,898
Accrued income 73,358 65,226 72,551
Premium on and intangibles of purchased banks 79,973 86,930 85,286
Other assets 64,072 63,021 49,475
_________ _________ _________
Total assets $6,041,192 $6,126,317 $6,528,826
========= ========= =========
LIABILITIES
___________
Deposits:
Noninterest-bearing demand $1,430,034 $1,285,615 $1,488,278
Interest-bearing demand and savings 2,317,011 2,267,833 2,364,341
Time deposits under $100,000 969,253 1,081,081 1,058,354
Time deposits of $100,000 or more 163,242 212,318 250,756
_________ _________ _________
Total deposits $4,879,540 $4,846,847 $5,161,729
Federal funds and repurchase agreements 480,859 566,864 625,082
Short-term debt 1,923 2,013 1,453
Long-term debt 49,907 57,784 51,529
Accrued expenses and taxes 32,282 45,743 56,754
Other liabilities 31,617 39,408 45,636
_________ _________ _________
Total liabilities $5,476,128 $5,558,659 $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, 20,818,938 and 20,818,938 shares
respectively $ 20,678 $ 236,579 $ 236,579
Capital surplus 442,640 168,380 167,368
Retained earnings 173,855 200,860 208,557
Net unrealized gain/(loss) on securities
available for sale (21,018) - 14,333
Treasury stock, 1,618,071, 1,247,806 and
1,300,346 shares, at cost, respectively (51,091) (38,161) (40,194)
_________ _________ _________
Total shareholders' equity $ 565,064 $ 567,658 $ 586,643
_________ _________ _________
Total liabilities and
shareholders' equity $6,041,192 $6,126,317 $6,528,826
========= ========= =========
<FN>
See Notes to Consolidated Financial Statements.
UMB FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(unaudited in thousands)
Three Months Nine Months
Ended September 30, Ended September 30,
INTEREST INCOME 1994 1993 1994 1993
Loans $44,661 $ 39,689 $125,053 $103,051
Securities:
Taxable interest $30,321 $ 30,783 $ 91,956 $ 84,832
Tax-exempt interest 3,344 3,294 9,574 8,955
______ _______ _______ _______
Total securities income $33,665 $ 34,077 $101,530 $ 93,787
Federal funds and resell agreements 3,385 2,488 9,633 7,585
Trading securities and other 595 938 2,298 2,121
______ _______ _______ _______
Total interest income $82,306 $ 77,192 $238,514 $206,544
______ _______ _______ _______
INTEREST EXPENSE
Deposits $26,840 $ 27,019 $ 78,377 $ 72,833
Federal funds and repurchase
agreements 7,339 4,433 17,671 12,342
Short-term debt 8 10 23 23
Long-term debt 1,010 1,142 3,048 3,253
______ _______ _______ _______
Total interest expense $35,197 $ 32,604 $ 99,119 $ 88,451
______ _______ _______ _______
Net interest income $47,109 $ 44,588 $139,395 $118,093
Provision for loan losses 861 901 1,759 2,484
______ _______ _______ _______
Net interest income after provision $46,248 $ 43,687 $137,636 $115,609
______ _______ _______ _______
NONINTEREST INCOME
Trust income $ 8,403 $ 8,441 $ 25,942 $ 23,479
Securities processing 3,707 3,155 9,496 10,101
Trading and investment banking 2,190 3,036 7,593 10,420
Service charges on deposits 8,107 7,999 24,486 21,754
Other service charges and fees 4,625 4,377 13,528 11,585
Bankcard fees 7,145 5,947 19,399 15,700
Net investment security gains 225 399 3,540 675
Other 1,137 1,007 3,200 2,487
______ _______ _______ _______
Total noninterest income $35,539 $ 34,361 $107,184 $ 96,201
______ _______ _______ _______
NONINTEREST EXPENSE
___________________
Salaries and employee benefits $29,964 $ 28,694 $ 89,822 $ 77,612
Occupancy, net 3,867 4,308 11,392 10,991
Equipment 5,403 5,230 15,492 13,655
Supplies and services 4,875 4,352 14,511 12,253
Bankcard processing 5,840 4,987 16,340 13,191
Marketing and business development 3,797 3,735 11,380 10,280
FDIC and regulatory fees 3,091 2,980 9,137 7,993
Other 8,052 8,736 23,549 21,139
______ _______ _______ _______
Total noninterest expense $64,889 $ 63,022 $191,623 $167,114
______ _______ _______ _______
Income before income taxes $16,898 $ 15,026 $ 53,197 $ 44,696
Income tax provision 5,647 5,166 17,491 14,810
______ _______ _______ _______
NET INCOME $11,251 $ 9,860 $ 35,706 $ 29,886
====== ======= ======= =======
PER SHARE DATA
______________
Net income $0.59 $0.51 $1.85 $1.76
Dividends $0.20 $0.18 $0.56 $0.54
<FN>
Weighted average shares outstanding 19,179,958 19,461,713 19,261,569 17,004,309
See Notes to Consolidated Financial Statements.
UMB FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited in thousands)
Nine Months Ended September 30,
____________________________
1994 1993
____ ____
Operating Activities
Net Income $ 35,706 $ 29,886
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for loan losses 1,759 2,484
Depreciation and amortization 16,395 13,005
Deferred income taxes and investment tax credits (1,419) 6,319
Net (increase) decrease in trading securities 19,621 (37,102)
Investment security gains (3,600) (683)
Investment security losses 60 8
Amortization of securities premium,
net of discount accretion 33,706 23,782
Increase in interest receivable (807) (4,018)
Decrease in interest payable (2,201) (1,760)
Other, net (27,950) (628)
_________ _________
Net cash provided by operating activities $ 71,270 $ 31,293
_________ _________
Investing Activities
___________________
Proceeds from maturities of investment securities $ 96,941 $ 99,014
Proceeds from sales of investment securities 287 -
Proceeds from sales of securities available for sale 142,431 41,986
Proceeds from maturities of securities available
for sale 679,661 437,400
Purchases of investment securities (121,852) (132,254)
Purchases of securities available for sale (604,375) (527,675)
Net (increase) decrease in loans (36,258) 80,865
Net decrease in federal funds and resell agreements 59,621 89,533
Purchases of bank premises and equipment (12,025) (9,989)
Proceeds from sales of bank premises and equipment 133 808
Purchases of financial organizations,
net of cash received - 58,217
_________
_________
Net cash provided by investing activities $ 204,564 $ 137,905
_________ _________
Financing Activities
____________________
Net increase (decrease) in demand and savings deposits $ (105,574) $ 88,346
Net decrease in time deposits (176,615) (147,657)
Net decrease in federal funds and repurchase agreements (144,223) (168,957)
Net increase (decrease) in short term borrowings 470 (129)
Proceeds from issuance of long-term debt - 25,000
Repayment of long-term debt (1,622) (1,546)
Cash dividends (10,865) (9,528)
Proceeds from exercise of stock options 226 338
Purchases of treasury stock (11,295) (2,607)
_________ _________
Net cash used by financing activities $ (449,498) $ (216,740)
_________ _________
Decrease in cash and due from banks $ (173,664) $ (47,542)
Cash and due from banks at beginning of year 666,368 612,829
_________ _________
Cash and due from banks at end of period $ 492,704 $ 565,287
========= =========
<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 - - 29,886 - -
Cash dividends - - (9,528) - -
Issuance of common stock
for acquisitions 51,764 105,604 - - -
Purchase of treasury stock - - - - (10,085)
Exercise of stock options - (270) - - 608
_______ _______ _______ ________ ________
Balance - September 30, 1993 $236,579 $168,380 $200,860 - $(38,161)
======= ======= ======= ======== ========
Balance - December 31, 1993 $236,579 $167,368 $208,557 $14,333 $(40,194)
Net income - - 35,706 - -
Cash dividends - - (10,865) -
10% stock dividend 1,751 57,792 (59,543) - -
Adjust par value (217,652) 217,652 - - -
Purchase of treasury stock - - - - (11,295)
Exercise of stock options - (172) - - 398
Net unrealized loss on securities
available for sale - - - (35,351) -
_______ _______ _______ _________ ________
Balance - September 30, 1994 $ 20,678 $442,640 $173,855 $(21,018) $(51,091)
======= ======= ======= ========= ========
<FN>
See Notes to Consolidated Financial Statements.
UMB FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 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 have 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 nine
months ended September 30, 1994 and 1993 (in thousands):
Nine Months Ended September 30,
1994 1993
Balance January 1 $35,590 $24,456
Additions:
Provision for loan losses 1,759 2,484
Allowance of purchased banks - 12,076
______ ______
$37,349 $39,016
Deductions:
Charge-offs $(6,466) $(4,457)
Less recoveries on loans
previously charged-off 2,064 1,961
______ ______
Net charge-offs $(4,402) $(2,496)
______ ______
Balance, September 30 $32,947 $36,520
====== ======
UMB FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 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 Bancshares, 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
NINE MONTHS ENDED SEPTEMBER 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.
Nine Months Ended
(dollars in thousands except per share data) September 30,1993
______________
Net interest income $132,665
Noninterest income 101,077
Net income 31,388
Net income per share 1.62
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)
Nine Months Ended September 30,
_____________________________
1994 1993
____ ____
Average Average Average Average
Balance Yield/Rate Balance Yield/Rate
_______ __________ _________________
ASSETS
Loans, net of unearned interest $2,133,696 7.89% $1,700,274 8.18%
Securities:
Taxable $2,621,289 4.70 $2,404,646 4.73
Tax-exempt 285,824 6.37 253,577 6.66
_________ _________
Total securities $2,907,113 4.87 $2,658,223 4.92
Federal funds and resell agreements 360,353 3.57 327,761 3.09
Other earning assets 58,781 5.39 55,813 5.33
_________ _________
Total earning assets $5,459,943 5.97 $4,742,071 5.96
Allowance for loan losses (34,616) (30,448)
Other assets 1,014,526 875,735
_________ _________
Total assets $6,439,853 $5,587,358
========= =========
LIABILITIES & SHAREHOLDERS' EQUITY
Interest-bearing deposits $3,608,489 2.90% $3,184,599 3.06%
Federal funds and repurchase agreements 674,287 3.50 597,443 2.76
Borrowed funds 53,125 7.73 54,400 8.05
_________ _________
Total interest-bearing liabilities $4,335,901 3.06 $3,836,442 3.08
Noninterest-bearing demand deposits 1,465,524 1,203,310
Other liabilities 62,976 67,200
Shareholders' equity 575,452 480,406
_________ _________
Total liabilities and
shareholders' equity $6,439,853 $5,587,358
========= =========
Net interest spread 2.91% 2.88%
Net interest margin 3.54 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 Nine Months Ended
September 30, 1994 vs. 1993 September 30, 1994 vs. 1993
________________________ ________________________
Volume Rate Total Volume Rate Total
______ ____ _____ ______ ____ _____
Change in interest earned on:
Loans $ 4,286 $ 565 $ 4,851 $ 25,699 $(3,710) $ 21,989
Securities:
Taxable (1,976) 1,432 (544) 7,622 (541) 7,081
Tax-exempt 69 (11) 58 1,554 (585) 969
Federal funds sold 263 634 897 800 1,248 2,048
Other (487) 132 (355) 120 28 148
______ ________ _______ ________ _______ ______
Interest income $ 2,155 $ 2,752 $ 4,907 $ 35,795 $(3,560) $ 32,235
______ ________ _______ ________ _______ ______
Change in interest paid on:
Interest-bearing
deposits $(1,202)$ 1,023 $ (179) $ 9,341 $(3,797) 5,544
Federal funds
purchased 576 2,330 2,906 1,725 3,604 5,329
Borrowed funds (107) (27) (134) (76) (129) (205)
_____ ________ _______ ________ ________ ________
Interest expense $ (733)$ 3,326 $ 2,593 $ 10,990 $ (322) $ 10,668
______ ________ _______ ________ ________ ________
Net interest income $ 2,888 $ (574) $ 2,314 $ 24,805 $(3,238) $ 21,567
====== ======== ======= ======= ======== ========
ANALYSIS OF NET INTEREST MARGIN
Three Months Ended Nine Months Ended
September 30, September 30,
____________________________ _____________________________
1994 1993 Change 1994 1993 Change
Average earning assets $5,378,541 $5,333,057 $ 45,484 $5,459,943$4,742,071 $ 717,872
Interest-bearing
liabilities 4,292,933 4,382,980 (90,047) 4,335,901 3,836,442 499,459
_________ _________ _________ _________ _________ _________
Interest free
funds $1,085,608 $ 950,077 $ 135,531 $1,124,042 $ 905,629 218,413
========= ========= ========= ========= ========= =========
Free funds ratio
(free funds to
earning assets) 20.18% 17.81% 2.37 % 20.59% 19.10% 1.49 %
Tax-equivalent yield
on earning assets 6.20% 5.89% 0.31 % 5.97% 5.96% 0.01 %
Cost of interest-
bearing liabilities 3.25 2.95 0.30 3.06 3.08 (0.02)%
_____ _____ ______ ______ ______ ______
Net interest spread 2.95% 2.94% 0.01 % 2.91% 2.88% 0.03 %
Benefit of interest
free funds 0.66 0.53 0.13 0.63 0.59 0.04
_____ _____ _____ ______ ______ ______
Net interest margin 3.61% 3.47% 0.14 % 3.54% 3.47% 0.07 %
===== ===== ===== ====== ====== ======
UMB FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1994
SUMMARY
_______
UMB Financial Corporation, (UMB or the Company) earned
$11,251,000 for the three month period ended September 30, 1994,
compared to $9,860,000 for the same period of 1993. This
represents 1994 quarterly per share income of $0.59 compared to
$0.51 for 1993. On a year to date basis net income for 1994
totaled $35,706,000 or $1.85 per share, compared to $29,886,000
or $1.76 per share, for the nine months ended September 30, 1993.
The Company's acquisition of banks in the State of Kansas (the
Kansas Banks), completed during the second quarter of 1993,
effects the comparability of operating results from year to year.
The Kansas Banks' contribution to 1994 consolidated income for
the third quarter and on a year to date basis was $1,531,000 and
$5,121,000, respectively, compared to a 1993 quarterly and year
to date contribution of $570,000 and $1,108,000, respectively.
Besides the increased contribution from the Kansas Banks the
Company also benefitted from an increase in net interest income
and non interest income. These increases were partially offset
by higher operating costs, primarily related to salary and
benefit expense.
RESULTS OF OPERATIONS
_____________________
For the three months ended September 30, 1994, net interest
income totaled $47,109,000 compared to $44,588,000 for the third
quarter of 1993. This increase is primarily due to an increase
in loans. During the three month period ended September 30,
1994, loans averaged $2.179 billion which represents a 11%
increase over average loans for the third quarter of 1993.
Interest rate changes had little impact on the Company during the
third quarter as net interest margin was virtually unchanged from
the second quarter. The increase in lending activity was a
continuation of a trend for the year resulting from increased
marketing efforts. On a year to date basis net interest income
increased by $21,302,000, or 18% for the nine months ended
September 30, 1994, compared to the same period of a year ago.
This increase was the result of increased lending activity and
the addition of the Kansas Banks to the consolidated results of
operations. Approximately 65% of the year to date increase in
net interest income was attributable to the Kansas Banks, which
have been included in 1993 results of operations only since the
date of their respective acquisitions. For the nine month period
ended September 30, 1994, the Company's net interest margin
increased by 7 basis points compared to the same period in 1993.
The improvement in the net interest margin, was primarily the
result of increased lending activity. The cost of the Company's
interest bearing liabilities increased by 21 basis points during
the third quarter of 1994 compared to the second quarter of the
same year. On a year to date basis the Company's cost of funds
was virtually unchanged. The Company expects that its costs of
funds will increase on an incremental basis as a result of higher
rates paid on deposit accounts. This increase is not expected to
have a significant effect on the Company due to its asset mix and
the short life of the investment portfolio.
The provision for loan losses for the three months ended
September 30, 1994, was $861,000 compared to $901,000 for the
same period in 1993. On a year to date basis the 1994 loan loss
provision was $1,759,000 compared to $2,484,000 for the same
period a year earlier. The decrease in the loan loss provision
is consistent with the decrease in non performing loans and loans
over 90 days past due. At September 30, 1994, the above
described loans totaled $10,814,000 which represents a 28%
decrease from the level a year ago. The Company's reserve for
loan loss was $32,947,000 at September 30, 1994, more than three
times the level of problem loans. Net charge offs during the
third quarter of 1994 totaled $891,000 which approximates net
charge offs during the third quarter of 1993.
Noninterest income for the three months ended September 30, 1994,
totaled $35,539,000 compared to $34,361,000 for the third quarter
of 1993. Increases in bankcard fees due to higher merchant
volumes and income from securities processing were partially
offset by a decrease in fees related to security
UMB FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1994
sales. The decrease in fees related to security sales is a
continuation of a trend noted throughout the year resulting from
a sharp drop in sales volume. On a year to date basis
approximately one half of the $10,983,000 increase in noninterest
income resulted from the inclusion of the Kansas Banks in
consolidated results of operations for all of 1994. The
remaining increase was the result of increased service charge
income, trust income, bankcard fees, and increased gains from the
sale of securities available for sale. These increases were
partially offset by decreases in fees from bond sales and income
from securities processing.
Non interest expense totaled $64,889,000 for the third quarter of
1994 compared to $63,022,000 for the same period of 1993. Higher
costs related to staffing and bankcard processing were partially
offset by a decrease in occupancy expense. On a year to date
basis noninterest for 1994 was $191,623,000, a $24,509,000
increase over the same period in 1993. Over 50% of this increase
resulted from the inclusion of the Kansas Banks in the results of
operations for all of 1994. The remaining increase resulted from
higher staffing costs and increased bankcard processing fees and
supplies expense.
FINANCIAL CONDITION
___________________
Total assets at September 30, 1994, were $6.041 billion compared
to $6.529 billion and $6.126 billion at December 31, 1993, and
September 30, 1993, respectively. Earning assets at September
30, 1994, were virtually unchanged from the level at September
30, 1993, and down $325 million from December 31, 1993. The
decrease in earning assets from year end 1993 is the result of a
shrinkage of the investment security portfolio to fund an outflow
of deposits, primarily at the Kansas Banks. The Company has
experienced some deposit shrinkage at its Kansas Banks during the
last twelve months. The deposits of the Kansas Banks decreased
by approximately $120 million during the twelve month period
ended September 30, 1994. Since the acquisition of twelve banks
in Kansas during the second quarter of 1993, these Banks have
experienced a change in ownership, a restructuring of deposit
products and pricing and a merger which reduced the number of
acquired banks from twelve to two. As a result of these changes
some deposit run off was expected. Any additional decreases in
deposit totals for the Kansas Banks will not have a significant
adverse effect on the Company.
At September 30, 1994, loans totaled $2.192 billion, which is a
13% increase from twelve months earlier. Loan totals are
expected to continue increasing as a result of ongoing marketing
efforts.
The allowance for loan losses at September 30, 1994, was
$32,947,000 or 1.50% of total loans, compared to a reserve total
of $35,590,000, 1.65% of total loans, at year end 1993.
Management believes the reserve is adequate to absorb potential
loan losses in the loan portfolio. The decrease in the loan
reserve was primarily the result of charging off one identified
problem loan during the second quarter of 1994. Some recovery is
expected on this write off.
Investment securities and securities available for sale totaled
$2.699 billion at September 30, 1994, compared to $2.979 billion
at December 31, 1993. This decrease primarily resulted from not
reinvesting all security maturities due to increased loan volume
and a decrease in deposits at the Kansas Banks. Also
contributing to the decrease in securities was a change in the
mark to market adjustment of securities available for sale of $57
million during the nine months ended September 30, 1994.
UMB FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1994
LIQUIDITY AND CAPITAL RESOURCES
_______________________________
The Company's liquidity position continues to be strong. At
September 30, 1994, the Company's loan to deposit ratio was
44.9%. The Company is not heavily dependent upon large
liabilities as a funding source. At September 30, 1994, the
average life of the securities portfolio was 18 months and 37% of
the portfolio matures during the next twelve months.
At September 30, 1994, shareholders' equity totaled $565,064,000
compared to $586,643,000 and $567,658,000 at December 31, 1993,
and September 30, 1993, respectively. During the nine months
ended September 30, 1994, the Company's equity was reduced by $35
million due to the change in the unrealized loss on securities
available for sale. In addition the Company purchased treasury
stock of approximately $11 million. From time to time the
Company will continue to consider treasury stock purchases
depending on price and availability. Due to the type of
securities held by the Company and the relatively short average
life, future changes in market valuations should not have a
significant adverse effect on capital. The Company's capital
ratio's are included in the table below and far exceed regulatory
requirements.
Nine Months Ended
September 30,
_____________________
1994 1993
____ ____
RATIOS
______
Return on average assets 0.74% 0.72%
Return on average equity 8.30 8.32
Average equity to assets 8.94 8.60
Tier 1 risk-based capital ratio 17.92 19.01
Total risk-based capital ratio 19.25 20.69
Leverage ratio 8.49 7.96
PER SHARE DATA
______________
Earnings $ 1.85 $ 1.76
Cash dividends 0.56 0.54
Dividend payout ratio 30.27% 30.68%
Book value $29.65 $29.19
UMB FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE
NINE MONTHS ENDED SEPTEMBER 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: November 14, 1994