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, 1995 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 (I.R.S. Employer of incorporation or organization) Identification No.) 1010 Grand Avenue, Kansas City, Missouri 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, 1995, UMB Financial Corporation had 18,771,168 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, 1995 and 1994 and December 31, 1994 3 Consolidated Statements of Income for the Three and Nine Months Ended September 30, 1995 and 1994 4 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1995 and 1994 5 Consolidated Statements of Shareholders' Equity Ended September 30, 1995 and 1994 6 Notes to Consolidated Financial Statements 7-8 Supplemental Financial Data Average Balances/ Yields and Rates 9 Analysis of Changes in Net Interest Income and Margin 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11-13 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, ASSETS 1995 1994 1994 Loans: Commercial, financial and agricultural $1,206,473 $1,097,225 $1,135,827 Consumer (net of unearned interest) 767,708 646,952 687,068 Real estate 441,326 445,191 444,565 Leases 1,386 2,249 2,157 Allowance for loan losses (31,823) (32,947) (32,527) --------- --------- --------- Net Loans 2,385,070 2,158,670 2,237,090 Securities available for sale: U.S. Treasury and agencies 1,857,603 2,301,179 2,267,188 Equity securities and other 6,267 9,315 8,025 --------- --------- --------- Total securities available for sale 1,863,870 2,310,494 2,275,213 Securities held to maturity: State and political subdivisions 301,203 301,768 298,556 U.S. Agencies 86,189 86,670 86,278 -------- -------- --------- Total securities held to maturity (market value of $388,280, $380,776 & $373,644, respectively) 387,392 388,438 384,834 Federal funds and resell agreements 82,245 279,554 534,099 Trading securities and other earning assets 72,006 64,125 30,982 --------- --------- --------- Total earning assets 4,790,583 5,201,281 5,462,218 Cash and due from banks 500,645 492,704 770,813 Bank premises and equipment, net 138,667 129,804 130,261 Accrued income 74,786 73,358 81,219 Premium on and intangibles of purchased banks 72,767 79,973 78,091 Other Assets 42,422 64,072 76,418 --------- --------- --------- Total assets $5,619,870 $6,041,192 $6,599,020 ========= ========= ========= LIABILITIES Deposits: Noninterest-bearing demand $1,229,123 $1,430,034 $1,570,478 Interest-bearing demand and savings 1,836,898 2,317,011 2,421,149 Time deposits under $100,000 944,561 969,253 949,728 Time deposits of $100,000 or more 241,650 163,242 191,479 --------- --------- --------- Total deposits 4,252,232 4,879,540 5,132,834 Federal funds and repurchase agreements 651,437 480,859 801,003 Short-term debt 1,923 1,923 872 Long-term debt 41,626 49,907 46,330 Accrued expenses and taxes 37,779 32,282 38,638 Other liabilities 23,942 31,617 22,037 --------- --------- --------- Total liabilities $5,008,939 $5,476,128 $6,041,714 SHAREHOLDERS' EQUITY Common stock, $1.00 par value; authorized 23,000,000 shares; 20,677,558 shares issued $20,678 $20,678 $20,678 Capital surplus 442,557 442,640 442,606 Retained Earnings 208,064 173,855 182,159 Net unrealized gain (loss) on securities available for sale 233 (21,018) (35,211) Treasury stock, 1,906,390, 1,618,071 and 1,676,451 shares, at cost, respectively (60,601) (51,091) (52,926) -------- -------- -------- Total shareholders' equity 610,931 565,064 557,306 --------- --------- --------- Total liabilities and shareholders' equity $5,619,870 $6,041,192 $6,599,020 ========= ========= ========== <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 1995 1994 1995 1994 Loans $55,932 $44,661 $161,276 $125,053 Securities: Taxable interest 26,502 30,331 82,623 92,191 Tax-exempt interest 3,614 3,334 10,706 9,339 ------ ------ ------ ------- Total securities income 30,116 33,665 93,329 101,530 Federal funds and resell agreements 1,843 3,385 8,853 9,633 Trading securities and other 669 595 2,538 2,298 ------ ------ ------- ------- Total interest income 88,560 82,306 265,996 238,514 INTEREST EXPENSE Deposits 29,141 26,840 91,751 78,377 Federal funds and repurchase agreements 8,652 7,339 23,831 17,671 Short-term debt 17 8 38 23 Long-term debt 879 1,010 2,703 3,048 ------ ------ ------- ------ Total interest expense 38,689 35,197 118,323 99,119 Net interest income 49,871 47,109 147,673 139,395 Provision for loan losses 1,181 861 3,032 1,759 ------ ------ ------- ------- Net interest income after provision 48,690 46,248 144,641 137,636 NONINTEREST INCOME Trust income 8,741 8,403 26,119 25,942 Securities processing 2,530 3,707 8,120 9,496 Trading and investment banking 2,657 2,245 8,175 7,827 Service charges on deposits 7,729 8,107 24,041 24,486 Other service charges and fees 3,184 3,001 8,459 9,060 Bankcard fees 8,667 8,148 24,384 21,995 Net investment security gains 73 225 1,356 3,540 Other 930 1,257 5,781 3,776 ------ ------ ------- ------- Total noninterest income 34,511 35,093 106,435 106,122 NONINTEREST EXPENSE Salaries and employee benefits 30,464 30,254 92,486 90,667 Occupancy, net 4,038 3,867 11,665 11,392 Equipment 5,811 5,403 16,259 15,492 Supplies and services 5,024 4,875 14,291 14,511 Bankcard processing 8,876 6,735 23,698 18,680 Marketing and business development 3,272 2,904 9,809 9,042 FDIC and regulatory fees 972 3,091 7,126 9,137 Other 6,275 7,314 20,245 21,640 ------ ------ ------- ------- Total noninterest expense 64,732 64,443 195,579 190,561 ------ ------ ------- ------- Income before income taxes 18,469 16,898 55,497 53,197 Income tax provision 6,189 5,647 18,267 17,491 ------ ------ ------ ------ NET INCOME $12,280 $11,251 $37,230 $35,706 ====== ====== ====== ====== PER SHARE DATA Net income $0.65 $0.59 $1.97 $1.85 Dividends $0.20 $0.20 $0.60 $0.56 Weighted average shares outstanding 18,796,864 19,179,958 18,905,458 19,261,569 <FN> See Notes to Consolidated Financial Statements. UMB FINANCIAL CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited in thousands) Nine Months Ended September 30, 1995 1994 Operating Activities Net Income $37,230 $35,706 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 3,032 1,759 Depreciation and amortizaton 17,236 16,395 Deferred income taxes and investment tax credits (3,828) (1,419) Net (increase) decrease in trading securities (41,024) 19,621 Investment security gains (3,589) (3,600) Investment security losses 2,233 60 Amortization of securities premium, net of discount accretion 25,770 33,706 Increase (decrease) in interest receivable 6,433 (807) Decrease in interest payable (73) (2,201) Other, net 16,565 (27,950) ------ ------ Net cash provided by operating activities $59,985 $71,270 Investing Activities Proceeds from maturities of investment securities $82,421 $96,941 Proceeds from sales of investment securities 152 287 Proceeds from sales of securities available for sale 393,113 142,431 Proceeds from maturities of securities available for sale 986,297 679,661 Purchases of investment securities (86,995) (121,852) Purchases of securities available for sale (933,263) (604,375) Net increase in loans (151,012) (36,258) Net decrease in federal funds and resell agreements 451,854 59,621 Purchases of bank premises and equipment (20,399) (12,025) Proceeds from sales of bank premises and equipment 549 133 ------- ------- Net cash provided by investing activities $722,717 $204,564 Financing Activities Net decrease in demand and savings deposits $(925,606) $(105,574) Net (increase) decrease in time deposits 45,004 (176,615) Net decrease in federal funds and repurchase agreements (149,566) (144,223) Net increase in short term borrowings 1,051 470 Repayment of long term debt (4,704) (1,622) Cash dividends (11,325) (10,865) Proceeds from exercise of stock options 122 226 Purchases of treasury stock (7,846) (11,295) --------- ------- Net cash used by financing activities $(1,052,870) $(449,498) Decrease in cash and due from banks $(270,168) $(173,664) Cash and due from banks at beginning of year 770,813 666,368 ------- ------- Cash and due from banks at end of period $500,645 $492,704 ======== ======== <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, 1993 $236,579 $167,368 $208,557 $14,333 ($40,194) Net income 0 0 35,706 0 0 Cash Dividends 0 0 (10,865) 0 0 10% stock dividend 1,751 57,792 (59,543) 0 0 Adjust par value (217,652) 217,652 0 0 0 Purchase of treasury stock 0 0 0 0 (11,295) Exercise of stock options 0 (172) 0 0 398 Net unrealized loss on securities available for sale 0 0 0 (35,351) 0 ------ ------- ------- ------ ------ Balance - September 30, 1994 $20,678 $442,640 $173,855 ($21,018) ($51,091) ====== ======= ======= ====== ====== Balance - December 31, 1994 $20,678 $442,606 $182,159 ($35,211) ($52,926) Net income 0 0 37,230 0 0 Cash dividends 0 0 (11,325) 0 0 Purchase of treasury stock 0 0 0 0 (7,846) Exercise of stock options 0 (49) 0 0 171 Net unrealized gain on securities available for sale 0 0 0 35,444 0 ------ ------- ------- ------ -- Balance - September 30, 1995 $20,678 $442,557 $208,064 $233 ($60,601) ====== ======= ======= ====== <FN> See Notes to Consolidated Financial Statements. UMB FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 1995 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 1994 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 nine months ended September 30, 1995 and 1994 (in thousands): 1995 1994 Balance January 1 $32,527 $35,590 Additions: Provision for loan losses 3,032 1,759 ------ ------ 35,559 37,349 Deductions: Charge-offs (5,650) (6,466) Less recoveries on loans previously charged-off 1,914 2,064 ------ ------- Net charge-offs (3,736) (4,402) ------ ------ Balance, September 30 $31,823 $32,947 ====== ====== UMB FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 1995 4. Allowance for Loan Losses: (Continued) At September 30, 1995 the amount of loans that are considered to be impaired under SFAS No. 114 was $1,010,000. All of these loans are currently on a nonaccrual basis. Included in the impaired loans is $641,000 of loans for which the related allowance for loan losses is $213,000. The remaining $369,000 of impaired loans do not have an allowance for loan loss as a result of write-downs and supporting collateral value. The average recorded investment in impaired loans during the period ended September 30, 1995 was approximately $993,000. The Company has recorded no interest income on its impaired loans for the nine months ended September 30, 1995. 5. 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 the suits will have a materially adverse effect on the financial position or results of operations of the Company. 6. Subsequent Events: On August 2, 1995 the Company entered into an agreement to purchase 100% of the outstanding shares of First Sooner Bancshares, Inc., a one bank holding company headquartered in Oklahoma City, Oklahoma. First Sooner Bancshares is the sole owner of The Oklahoma Bank, a $129 million-asset bank with three locations in Oklahoma City. The acquisition, which is structured as a cash transaction, is expected to close by the end of the year. UMB FINANCIAL CORPORATION AVERAGE BALANCES/YIELDS AND RATES (tax-equivalent basis) (in thousands) 1995 1994 Average Average Average Average Assets Balance Yield/Rate Balance Yield/Rate Loans, net of unearned interest $2,333,152 9.29% $2,133,696 7.89% Securities: Taxable 2,114,011 5.23 2,621,289 4.70 Tax-exempt 308,555 6.81 285,824 6.37 Total securities 2,422,566 5.43 2,907,113 4.87 Federal funds and resell agreements 209,095 5.66 360,353 3.57 Other earning assets 56,272 6.33 58,781 5.39 --------- --------- Total earning assets 5,021,085 7.24 5,459,943 5.97 Allowance for loan losses (32,131) (34,616) Other assets 970,332 1,014,526 --------- --------- Total assets $5,959,286 $6,439,853 ========= ========= Liabilities and Shareholders' Equity Interest-bearing deposits $3,323,082 3.69% $3,608,489 2.90% Federal funds and repurchase agreements 582,065 5.47 674,287 3.50 Borrowed funds 47,013 7.80 53,125 7.73 --------- --------- Total interest-bearing liabilities 3,952,160 4.00 4,335,901 3.06 Noninterest-bearing demand deposits 1,359,135 1,465,524 Other liabilities 58,391 62,976 Shareholders' equity 589,600 575,452 --------- --------- Total liabilities and shareholders' equity $5,959,286 $6,439,853 ========= ========= Net interest spread 3.24% 2.91% Net interest margin 4.09 3.54 UMB FINANCIAL CORPORATION ANALYSIS OF CHANGES IN NET INTEREST INCOME AND MARGIN (tax-equivalent basis) (in thousands) [CAPTION] ANALYSIS OF CHANGES IN NET INTEREST INCOME Three Months Ended Nine Months Ended September 30, 1995 vs. 1994 September 30, 1995 vs. 1994 Volume Rate Total Volume Rate Total Change in interest earned on: Loans $3,061 $8,245 $11,306 $12,497 $23,733 $36,230 Securities: Taxable (6,183) 2,354 (3,829) (19,101) 9,533 (9,568) Tax-exempt 252 248 500 1,122 988 2,110 Federal funds sold (2,426) 884 (1,542) (5,030) 4,251 (779) Other 60 18 78 (104) 399 295 ----- ------ ----- ------ ------ ---- Interest income ($5,236) $11,749 $6,513 ($10,616) $38,904 $28,288 Change in interest paid on: Interest-bearing deposits $(3,048) $5,349 $2,301 $ (6,579) $19,953 13,374 Federal funds purchased (1,373) 2,686 1,313 (2,683) 8,843 $6,160 Borrowed funds (135) 13 (122) (356) 26 (330) ------ ----- ----- ----- ------ Interest expense (4,556) 8,048 3,492 (9,618) 28,822 19,204 ----- ----- ----- ----- ------ Net interest income ($680) $3,701 $3,021 ($998) $10,082 $9,084 ====== ===== ===== ===== ====== ANALYSIS OF NET INTEREST MARGIN Three Months Ended Nine Months Ended September 30, 1995 September 30, 1995 1995 1994 Change 1995 1994 Change Average earning assets $4,843,402 $5,378,541 ($535,139) $5,021,085 $5,459,943 ($438,858) Interest-bearing liabilities 3,792,452 4,292,933 (500,481) 3,952,160 4,335,901 (383,741) --------- --------- ------- --------- --------- ------- Interest free funds $1,050,950 $1,085,608 ($34,658) $1,068,925 $1,124,042 ($ 55,117) ========= ========= ====== ========= ========= ====== Free funds ratio 21.70% 20.18% 1.51% 21.29% 20.59% .70% (free funds to earning assets) Tax-equivalent yield on earning assets 7.42% 6.20% 1.22% 7.24% 5.97% 1.27% Cost of interest-bearing liabilities 4.05 3.25 .80 4.00 3.06 .94 ---- ---- ---- ---- ---- ---- Net interest spread 3.37 2.95 .42 3.24 2.91 .33 Benefit of interest free funds .88 .66 .22 .85 .63 .22 ---- ---- ---- ---- ---- ---- Net interest margin 4.25% 3.61% .64% 4.09% 3.54% .55% ==== ==== ==== ==== ==== ==== UMB FINANCIAL CORPORATION MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 Summary UMB Financial Corporation (the Company) recorded net income of $12,280,000 for the three months ended September 30, 1995, a 9.15% increase over the third quarter results of 1994. On a per share basis, income for the period was $0.65, compared to $0.59 for the same period in 1994. Year to date income for 1995 was $37,230,000, $1.97 per share, compared to $35,706,000, $1.85 per share, for the same period in 1994. The Company's improved performance has been primarily driven by an increase in net interest income. Higher interest rates, an increase in lending activity and a change in balance sheet mix have resulted in an increase in the Company's net interest margin. In comparing the third quarter of 1995 to the same period in 1994, non interest income decreased marginally and non interest expense increased slightly. Results of Operations For the three months ended September 30, 1995, net interest income totaled $49,871,000 compared to $47,109,000 for the same period a year earlier. This represents a 5.9% increase which is consistent with the year to date results which increased to $147,673,000 for 1995 from $139,395,000 for 1994. The Company's yield on interest earning assets was 7.24% as of September 30, 1995, compared to 5.97% for the first three quarters of 1994. This increase has resulted from higher interest rates and change in the mix of the Company's assets. Average loans during 1995 increase 9.3% over the average for the same period of 1994. The Company's loan growth has been the result of continued emphasis on middle market commercial lending and targeted campaigns for consumer loans. The effect of this increase on the Company's asset yield has been magnified as a result of a 8% decrease in average earning assets. Average investment securities during 1995 decreased by $485 million compared to the average for 1994. This change was primarily caused by the increase in lending activity and the loss of deposit balances associated with a mutual fund processing customer. On average these mutual fund deposit balances paid a higher interest rate than the Company's other deposits. As a result year to date 1995 funding costs increased by only 94 basis points compared to a 127 basis point increase in the yield on interest earning assets. The provision for loan losses for the three months ended September 30, 1995, was $1,181,000 compared to $861,000 for the same period of 1994. The provision for third quarter 1995 approximates net charge offs for the period. The year to date 1995 loan loss provision was $3,032,000 compared to $1,759,000 for year to date 1994. Year to date net charge offs for 1995 were $3,736,000 compared to $4,402,000 for the same period of 1994. Non interest income totaled $34,511,000 for the third quarter of 1995 compared to $35,093,000 for the same period of 1994. The largest component of this change was a decrease in securities processing income, resulting from the loss of a large mutual fund processing customer. This change was partially offset by an increase in trust income, fees related to security sales and bankcard processing income. Year to date income in this area is consistent with third quarter results. UMB FINANCIAL CORPORATION MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 Non interest expense was $64,732,000 for the three months ended September 30, 1995, compared to $64,443,000 for the same period of 1994. In comparing the third quarter of 1995 to the same period of 1994, the Company incurred marginal increases in occupancy costs, equipment related expenses and various supplies and services. Salaries and benefit costs, the largest component of non interest expense, increased by only 0.7%. The Company has and will continue to aggressively take measures to control not only staffing costs but all overhead related items. Costs associated with bankcard processing increase significantly in the third quarter of 1995 compared to the same period of 1994. In the first quarter of 1995 the Company converted to a new bankcard processor and has seen its resulting costs increase significantly. A portion of this increase was anticipated as the new processor has provided additional services to the Company that previously were performed in house or from a different source. The Company is continuing to work with the new processor to ensure the system is being utilized in the most efficient manner as possible. The recent reduction in premiums for deposit insurance resulted in a decrease in expense for the third quarter of 1995. Other expenses decreased during the third quarter of 1995 as compared to the third quarter of 1995 primarily as a result of a decrease in legal and other professional fees. Financial Condition Total assets at September 30, 1995, were $5.620 billion compared to $6.041 billion at September 30, 1994. The decrease in assets during the twelve month period ended September 30, 1995, was primarily the result of a reduction in securities available for sale. Maturing securities were used to fund an increase in loans and a decrease in deposits. Total deposits at September 30, 1995, decreased to $4.252 billion from $4.880 billion a year earlier. The most significant reason for this decline was a loss of deposits associated with a mutual fund processing customer. As noted previously, these deposits paid interest at near money market rates and based on the Company's balance sheet mix, were at best, marginally profitable. The Company also experienced a reduction in deposits related to trust business as more customers invested in mutual funds. A portion of which were invested in funds managed by the Company. There has also been a decline in the Company's retail money market deposits. Interest rate competition and the popularity of mutual funds has been the primary cause of this decline. Loans totaled $2.417 billion at September 30, 1995, compared to $2.192 billion a year earlier, a 10.3% increase. The Company has and expects to continue to grow its commercial loan portfolio. This growth comes from both increased borrowing needs of existing customers as well as the establishment of new borrowing relationships and increased marketing efforts in new markets. During the third quarter the Company established a loan production office in Omaha, Nebraska and is planning a similar office in Lincoln, Nebraska. The Company's consumer loan portfolio increased by 18% for the twelve months ended September 30, 1995, to $768 million. A significant portion of this growth has been the result of target campaigns with the goal to attract new customers to the Company and provide multiple products and services. Non accrual and restructured loans totaled $4.1 million at September 30, 1995, a 31% decrease from the previous year. Loans over 90 days past due totaled $6.4 million, or 0.27% of total loans at September 30, 1995, compared to 0.22% of total loans at September 30, 1994. This represents only a temporary increase in past due credits and the Company does not expect any significant increase in loan losses. Other real estate owned totaled $4.5 million at September 30, 1995, compared to $5.8 million a year earlier. The Company anticipated further reductions during the remainder of the year. UMB FINANCIAL CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 LIQUIDITY AND CAPITAL RESOURCES The Company has a high level of liquidity as evidenced by the funding of the recent reduction of deposits. The Company does not anticipate borrowing funds to complete its pending acquisition in Oklahoma. The average maturity of the investment portfolio (both held to maturity and available for sale) at September 30, 1995, was 20 months. The Company's loan to deposit ratio has increased to 56.8% from 44.9% at September 30, 1994. This increase was the result of both an increase in loans and a reduction of deposits. The Company has access to various borrowing markets should there be a need for additional funding. Shareholders' equity totaled $611 million at September 30, 1995, compared to $565 million at September 30, 1994 and $557 million at year end 1994. During the twelve months ended September 30, 1995, the Company increased its treasury stock holdings by $9.5 million. Management will continue to consider treasury stock purchases depending on price, availability and alternative uses of funds. At September 30, 1995, the net unrealized gain on securities available for sale was $233 thousand, compared to a loss of $35.2 million at December 31, 1994. The Company's capital position is summarized in the table below and far exceeds regulatory requirements. Nine Months Ended September 30, 1995 1994 RATIOS Return on average assets .84% .74% Return on average equity 8.44 8.30 Average equity to assets 9.89 8.94 Tier 1 risk-based capital rio 16.82 17.92 Total risk-based capital rao 17.84 19.25 Leverage ratio 9.70 8.49 UMB FINANCIAL CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 PART II. Other Information Item 6. Exhibits and Reports on Form 8-K a) The following exhibit is filed herewith: 27-Article 9 of Regulation S-X Financial Data Schedule for September 30, 1995 Form 10-Q. b) Reports on Form 8-K: The Company filed no reports on Form 8-K during the quarter ended September 30, 1995. 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 R. Crosby Kemper Chairman Timothy M. Connealy Chief Financial Officer Date: November 14, 1995