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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended: DECEMBER 31, 1994
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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, 64106
KANSAS CITY, MISSOURI (Zip Code)
(Address of principal executive
offices)
Registrant's telephone number, including area code: (816) 860-7000
Securities Registered Pursuant to Section 12(b) of the Act:
NONE
Securities Registered Pursuant to Section 12(g) of the Act:
COMMON STOCK, $1.00 PAR VALUE
(Title of class)
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
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
As of February 28, 1995, the aggregate market value of common stock
outstanding held by nonaffiliates of the registrant was approximately
$429,171,000 based on the NASDAQ closing price of that date.
Indicate the number of shares outstanding of the registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding at February 28, 1995
Common Stock, $1.00 Par Value 18,991,546
DOCUMENTS INCORPORATED BY REFERENCE
Company's 1995 Proxy Statement dated March 16, 1995--Part III
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<PAGE>
INDEX
<TABLE>
<CAPTION>
ITEM PAGE
---- ----
PART I
<C> <S> <C>
1. Business................................................... 1
2. Properties................................................. 4
3. Legal Proceedings.......................................... 4
4. Submission of Matters to a Vote of Security Holders........ 4
PART II
Market for the Registrant's Common Equity and Related
5. Stockholder Matters........................................ 4
6. Selected Financial Data.................................... 5
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 5
8. Financial Statements and Supplementary Data................ 5
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure................................... 5
PART III
10. Directors and Executive Officers of the Registrant......... 5
11. Executive Compensation..................................... 5
Security Ownership of Certain Beneficial Owners and Manage-
12. ment....................................................... 5
13. Certain Relationships and Related Transactions............. 6
PART IV
Exhibits, Financial Statement Schedules and Reports on Form
14. 8-K........................................................ 6
Signatures........................................................ 8
Financial Information............................................. Appendix A
</TABLE>
i
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
UMB Financial Corporation (the "Company") was organized in 1967 under
Missouri law for the purpose of becoming a bank holding company registered
under the Bank Holding Company Act of 1956. The Company owns substantially all
of the outstanding stock of 18 commercial banks, a consumer credit bank, a bank
real estate corporation, a reinsurance company, a community development
corporation and a discount brokerage company.
The Company's 18 commercial banks are engaged in general commercial banking
business entirely in domestic markets. The banks, 14 located in Missouri, 2 in
Kansas, one in Illinois and one in Colorado, offer a full range of banking
services to commercial, retail, government and correspondent bank customers. In
addition to standard banking functions, the principal affiliate bank, UMB Bank,
n.a., provides international banking services, investment and cash management
services, data processing services for correspondent banks and a full range of
trust activities for individuals, estates, business corporations, governmental
bodies and public authorities. A table setting forth the names and locations of
the Company's affiliate banks as well as their total assets, loans, deposits
and shareholders' equity as of December 31, 1994, is included on page A-46 of
the attached Appendix, and is incorporated herein by reference.
United Missouri Bank, U.S.A. is a consumer credit bank chartered in Delaware.
United Missouri Bank, U.S.A. services all incoming credit card requests,
performs data entry services on new card requests and evaluates new and
existing credit lines.
Other subsidiaries of the Company are UMB Properties, Inc., United Missouri
Insurance Company, Scout Brokerage Services, Inc., and UMB Community
Development Corporation. UMB Properties, Inc. is a real estate company that
leases facilities to certain subsidiaries and acquires and holds land and
buildings for anticipated future facilities. United Missouri Insurance Company,
an Arizona corporation, is a reinsurance company that reinsures credit life and
disability insurance originated by affiliate banks. Scout Brokerage Services,
Inc. provides transaction services in a variety of investment securities for
the general public. This subsidiary offers brokerage and custodial services to
its customers (including affiliate and correspondent banks) through the
facilities of National Financial Services Corporation, a wholly-owned
subsidiary of Fidelity Brokerage Services, Inc. UMB Community Development
Corporation provides low-cost mortgage loans to low- to moderate-income
families for acquiring or rehabing owner-occupied housing in Missouri, Kansas,
Illinois and Colorado.
On a full-time equivalent basis at December 31, 1994, UMB Financial
Corporation and subsidiaries employed 4,006 persons.
COMPETITION
The commercial banking business is highly competitive. Affiliate banks
compete with other commercial banks and with other financial institutions,
including savings and loan associations, finance companies, money market mutual
funds, mortgage banking companies and credit unions. In recent years,
competition has also increased from institutions not subject to the same
geographical and other regulatory restrictions as domestic banks and bank
holding companies.
MONETARY POLICY AND ECONOMIC CONDITIONS
The operations of the Company's affiliate banks are affected by general
economic conditions as well as the monetary policy of the Board of Governors of
the Federal Reserve System (the "Federal Reserve Board") which affects the
supply of money available to commercial banks. Monetary policy measures by the
Federal
1
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Reserve Board are effected through open market operations in U.S. Government
securities, changes in the discount rate on bank borrowings and changes in
reserve requirements.
SUPERVISION AND REGULATION
As a bank holding company, the Company is subject to the Bank Holding Company
Act of 1956, as amended (the "BHCA") and to regulation by the Federal Reserve
Board.
The BHCA requires every bank holding company to obtain the prior approval of
the Federal Reserve Board before it may (i) acquire substantially all the
assets of any bank, (ii) acquire more than 5% of the voting stock of a bank or
bank holding company which is not already majority owned, or (iii) merge or
consolidate with another bank holding company.
Under the BHCA, a bank holding company is prohibited, with certain
exceptions, from acquiring direct or indirect ownership or control of more than
5% of the voting shares of any company which is not a bank and from engaging in
business other than that of banking, managing and controlling banks or
performing services for its banking subsidiaries. However, the BHCA authorizes
the Federal Reserve Board to permit bank holding companies to engage in
activities which are so closely related to banking or managing or controlling
banks as to be a proper incident thereto.
The BHCA prohibits the Federal Reserve Board from approving an application by
a registered bank holding company to acquire shares of a bank located outside
the state in which the operations of the holding company's banking subsidiaries
are principally conducted unless the acquisition is specifically authorized by
the laws of the state in which the bank to be acquired is located. In 1986,
Missouri authorized bank holding companies domiciled in contiguous states to
acquire Missouri banks and bank holding companies, provided their home states
have similar laws. Colorado and all of the eight states contiguous to Missouri
have passed similar legislation.
There are various legal restrictions on the extent to which a bank holding
company and certain of its non-bank subsidiaries can borrow or otherwise obtain
credit from its bank subsidiaries. The Company and its subsidiaries are also
subject to certain restrictions on issuance, underwriting and distribution of
securities.
Three of the affiliate banks are national banks and are subject to
supervision and examination by the Comptroller of the Currency. United Missouri
Bank, U.S.A. is chartered under the state banking laws of Delaware and is
subject to supervision and regular examination by the Office of the State Bank
Commissioner of Delaware. One of the affiliate banks is chartered under the
state banking laws of Illinois and is subject to supervision and regular
examination by the Office of the Commissioner of Banks and Trust Companies of
Illinois. One of the affiliate banks is chartered under the state banking laws
of Colorado and is subject to supervision and regular examination by the Office
of the State Bank Commissioner of Colorado. One of the affiliate banks is
chartered under the state banking laws of Kansas and is subject to supervision
and regular examination by the Kansas Banking Department. The remaining 12
banks are chartered under the state banking laws of Missouri and are subject to
supervision and regular examination by the Office of the Commissioner of
Finance of Missouri. In addition, the national banks and the one state bank
that are members of the Federal Reserve System are subject to examination by
that agency. All affiliate banks are members of the Federal Deposit Insurance
Corporation, and as such, are subject to examination thereby.
Scout Brokerage Services, Inc. is subject to supervision and regulation by
the National Association of Securities Dealers. This subsidiary is also a
member of the Securities Investor Protection Corporation.
Information regarding capital adequacy standards of Federal banking
regulators is included on pages A-15, A-39 and A-40 of the attached Appendix,
and is incorporated herein by reference.
Information regarding dividend restrictions is on page A-15 of the attached
Appendix, incorporated herein by reference.
2
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STATISTICAL DISCLOSURE
The information required by Guide 3, "Statistical Disclosure by Bank Holding
Companies," has been integrated throughout pages A-25 through A-46 of the
attached Appendix under the captions of "Five-Year Financial Summary" and
"Financial Review," and such information is incorporated herein by reference.
EXECUTIVE OFFICERS
The following are the executive officers of the Company, each of whom is
elected annually, and there are no arrangements or understandings between any
of the persons so named and any other person pursuant to which such person was
elected as an officer.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH REGISTRANT
---- --- ------------------------
<S> <C> <C>
R. Crosby Kemper........ 68 Chairman of the Board and Chief Executive Officer since
1972. Chief Executive Officer of UMB Bank, n.a. (a
subsidiary of the Company) since 1967.
Alexander C. Kemper..... 29 President of the Company since January, 1995. President
of UMB Bank, n.a. since January 1994, having previously
served as Divisional Executive Vice President.
Peter J. Genovese....... 48 Vice Chairman of the Board since 1982. Chairman of UMB
Bank of St. Louis, n.a. (a subsidiary of the Company)
since 1979.
Rufus Crosby Kemper III. 44 Vice Chairman of the Board since January 1995.
President of UMB Bank of St. Louis, n.a. since 1993.
Executive Vice President of UMB Bank, n.a. prior
thereto.
J. Lyle Wells, Jr. ..... 67 Vice Chairman of the Board of the Company since 1993.
Vice Chairman of the Board of UMB Bank, n.a. since
1982.
Geoffrey E. Lind........ 46 Vice Chairman of the Board since 1993. Chairman,
President and Chief Executive Officer of UMB Bank
Colorado (a subsidiary of the Company) since 1991.
Executive Vice President of UMB Bank, n.a. prior
thereto.
Richard A. Renfro....... 60 President of UMB National Bank of America, Salina,
Kansas, (a subsidiary of the Company) since 1986.
James A. Sangster....... 40 Divisional Executive Vice President of UMB Bank, n.a.
since 1993. Executive Vice President prior thereto.
William C. Tempel....... 56 President and Chief Executive Officer of UMB Bank
Kansas (a subsidiary of the Company) since 1993, having
previously served as President.
Edward J. McShane, Jr. . 62 Divisional Executive Vice President and Senior Trust
Officer of UMB Bank, n.a. since 1989. Executive Vice
President and Head of Personal Trust and Custody
Division prior thereto.
Douglas F. Page......... 51 Executive Vice President of the Company since 1984 and
Divisional Executive Vice President, Loan
Administration, of UMB Bank, n.a. since 1989.
Timothy M. Connealy..... 37 Senior Vice President and Treasurer since 1994. Chief
Financial Officer of UMB Bank Kansas prior thereto.
</TABLE>
3
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<TABLE>
<CAPTION>
NAME AGE POSITION WITH REGISTRANT
---- --- ------------------------
<S> <C> <C>
James C. Thompson... 52 Divisional Executive Vice President of UMB Bank, n.a.
since July 1994. Executive Vice President of UMB Bank
of St. Louis, n.a. since 1989.
E. Frank Ware....... 50 Executive Vice President of UMB Bank, n.a. since 1985.
</TABLE>
ITEM 2. PROPERTIES
The Company's headquarters building, the UMB Bank Building, is located at
1010 Grand Avenue in downtown Kansas City, Missouri, and was opened in July
1986. Of the total 250,000 square feet, the offices of the parent company and
customer service functions of UMB Bank, n.a. comprise 175,000 square feet. The
remaining 75,000 square feet are leased to the Company's principal law firm and
principal accounting firm.
The banking facility of UMB Bank, n.a. at 928 Grand Avenue principally houses
that bank's operations, data processing and other support functions and is
connected to the headquarters building by an enclosed pedestrian walkway.
At December 31, 1994, the Company's affiliate banks operated a total of 18
main banking houses and 98 detached facilities, the majority of which are owned
by them or a non-bank subsidiary of the Company and leased to the respective
bank.
The Company's affiliate bank in St. Louis leases 40,000 square feet of space
in the Equitable Building in the heart of the downtown commercial sector. A
full service banking center, operations and administrative offices are housed
at this location. The St. Louis affiliate bank provides full service banking at
19 additional offices, which circle the metropolitan area.
Additional information with respect to premises and equipment is presented on
page A-14 of the attached Appendix, which is incorporated herein by reference.
In the opinion of the management of the Company, the physical properties of
the Company and its subsidiaries are suitable and adequate and are being fully
utilized.
ITEM 3. LEGAL PROCEEDINGS
In the normal course of business, the Company and its subsidiaries had
certain lawsuits pending against them at December 31, 1994. In the opinion of
management, after consultation with legal counsel, none of these suits will
have a significant effect on the financial condition of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to the shareholders for a vote during the fourth
quarter ending December 31, 1994.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's stock is traded on the NASDAQ National Market System under the
symbol "UMBF." As of December 31, 1994, the Company had 2,722 shareholders.
Dividend and sale prices of stock information, by quarter, for the past two
years is contained on page A-43 of the attached Appendix and is hereby
incorporated by reference.
4
<PAGE>
Information concerning restrictions on the ability of Registrant to pay
dividends and Registrant's subsidiaries to transfer funds to Registrant is
contained on page A-15 of the attached Appendix and is hereby incorporated by
reference.
ITEM 6. SELECTED FINANCIAL DATA
See the "Five-Year Financial Summary" on page A-25 of the attached Appendix,
which is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
See the "Financial Review" on pages A-26 through A-46 of the attached
Appendix, which is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements and supplementary data
appearing on the indicated pages of the attached Appendix are incorporated
herein by reference:
Consolidated Financial Statements -- pages A-2 through A-23.
Summary of Operating Results by Quarter -- page A-43.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding directors is included in the Company's 1995 Proxy
Statement under the captions "Election of Directors" and "Compliance with
Section 16(a) of the Securities Exchange Act of 1934" and is hereby
incorporated by reference.
Information regarding executive officers is included in Part I of this Form
10-K under the caption "Executive Officers."
ITEM 11. EXECUTIVE COMPENSATION
This information is included in the Company's 1995 Proxy Statement under the
captions "Executive Compensation", "Report of the Officers Salary and Stock
Option Committee on Executive Compensation," "Director Compensation", "Salary
Committee Interlocks and Insider Participation," and "Performance Graph" and is
hereby incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
This information in included in the Company's 1995 Proxy Statement under the
caption "Principal Shareholders" and is hereby incorporated by reference.
SECURITY OWNERSHIP OF MANAGEMENT
This information is included in the Company's 1995 Proxy Statement under the
caption "Stock Beneficially Owned by Directors and Nominees and Executive
Officers" and is hereby incorporated by reference.
5
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is included in the Company's 1995 Proxy Statement under the
caption "Certain Transactions" and is hereby incorporated by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
Set forth below are the consolidated financial statements of the Company
appearing on the indicated pages of the attached Appendix, which are hereby
incorporated by reference.
<TABLE>
<CAPTION>
PAGE REFERENCE IN
THE ATTACHED APPENDIX
---------------------
<S> <C>
Consolidated Balance Sheet as of December 31, 1994, 1993
and 1992................................................ A-2
Consolidated Statement of Income for the Three Years
Ended December 31, 1994................................. A-3
Consolidated Statement of Cash Flows for the Three Years
Ended December 31, 1994................................. A-4
Consolidated Statement of Shareholders' Equity for the
Three Years Ended December 31, 1994..................... A-5
Notes to Financial Statements............................ A-6 to A-23
Independent Auditors' Report............................. A-24
</TABLE>
Condensed financial statements for parent company only may be found on page
A-23. All other schedules have been omitted because the required information is
presented in the financial statements or in the notes thereto, the amounts
involved are not significant or the required subject matter is not applicable.
REPORTS ON FORM 8-K
The Company did not file a report on Form 8-K during the fourth quarter of
1994.
EXHIBITS
The following Exhibit Index lists the Exhibits to Form 10-K.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
(3a) Articles of incorporation filed as Exhibit 3a to Form S-4,
Registration No. 33-56450*
(3b) Bylaws filed as Exhibit 3b to Form S-4, Registration No.
33-56450*
(4) Description of the Registrant's common stock in Amendment
No. 1 on Form 8 to its General Form for Registration of
Securities on Form 10, dated March 5, 1993.*
The Registrant's Articles of Incorporation and Bylaws are
attached as Exhibits 3(a) and 3(b), respectively, to the
Registrant's Registration Statement on Form S-4
(Commission file no. 33-56450) and are incorporated herein
by reference in response to Exhibit 3 above. The following
portions of those documents define some of the rights of
the holders of the Registrant's common stock, par value
$12.50 per share: Articles III (authorized shares), "X"
(amendment of the Bylaws) and XI (amendment of the
Articles of Incorporation) of the Articles of
Incorporation and Articles II (shareholder meetings),
Sections 2 (number and classes of directors) and 3
(Election and Removal of Directors) of Article III,
Section 1 (stock certificates) of Article VII and Section
4 (indemnification) of Article VIII of the Bylaws.
Note: No long-term debt instrument issued by the
Registrant exceeds 10% of the consolidated total assets of
the Registrant and its subsidiaries. In accordance with
paragraph 4 (iii) of Item 601 of Regulation S-K, the
Registrant will furnish to the Commission, upon request,
copies of long-term debt instruments and related
agreements.
</TABLE>
6
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<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
(10a) 1981 Incentive Stock Option Plan as amended November 27,
1985 and October 10, 1989, filed as Exhibit 10 to report
on Form 10-K for the fiscal year ended December 31, 1989*
(10b) 1992 Incentive Stock Option Plan filed as Exhibit 28 to
Form S-8, Registration No.
33-58312*
(10c) An Agreement and Plan of Merger between United Missouri
Bancshares, Inc. and CNB Financial Corporation filed as
Exhibit 2 to the Registrant's current report on Form 8-K
dated October 28, 1992*
(10d) Indenture between United Missouri Bancshares, Inc., Issuer
and NBD Bank, N.A., Trustee, filed as Exhibit 4a to Form
S-3, Registration No. 33-55394*
(11) Statement regarding computation of per share earnings
(12) Statement regarding computation of earnings to fixed
charges
(21) Subsidiaries of the Registrant
(23) Consent of Deloitte & Touche LLP
(24) Powers of Attorney
(27) Financial Data Schedule
</TABLE>
--------
* Exhibit has heretofore been filed with the Securities and Exchange Commission
and is incorporated herein as an exhibit by reference.
7
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SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
UMB FINANCIAL CORPORATION
/s/ R. Crosby Kemper
_____________________________________
R. Crosby Kemper, Chairman of the
Board and Chief Executive Officer
/s/ Timothy M. Connealy
_____________________________________
Timothy M. Connealy,
Senior Vice President and Treasurer
(Principal Accounting and Financial
Officer)
Date: March 24, 1995
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES ON THE DATE INDICATED.
<TABLE>
<S> <C>
Paul D. Bartlett, Jr.* Director
_______________________________
Paul D. Bartlett, Jr.
Thomas E. Beal* Director
_______________________________
Thomas E. Beal
Director
_______________________________
H. Alan Bell
Director
_______________________________
David R. Bradley, Jr.
Newton A. Campbell* Director
_______________________________
Newton A. Campbell
Director
_______________________________
Thom R. Cooper
William Terry Fuldner* Director
_______________________________
William Terry Fuldner
Director
_______________________________
Charles A. Garney
Peter J. Genovese* Director
_______________________________
Peter J. Genovese
</TABLE>
<TABLE>
<S> <C>
C.N. Hoffman, Jr.* Director
_______________________________
C.N. Hoffman, Jr.
Alexander C. Kemper* Director
_______________________________
Alexander C. Kemper
R. Crosby Kemper III* Director
_______________________________
R. Crosby Kemper III
Daniel N. League, Jr.* Director
_______________________________
Daniel N. League, Jr.
Director
_______________________________
William J. McKenna
Director
_______________________________
Roy E. Mayes
John H. Mize, Jr.* Director
_______________________________
John H. Mize, Jr.
Director
_______________________________
Mary Lynn Oliver
Director
_______________________________
W. L. Orscheln
</TABLE>
8
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<TABLE>
<S> <C>
Herman R. Sutherland* Director
_______________________________
Herman R. Sutherland
Alan W. Rolley* Director
_______________________________
Alan W. Rolley
E. Jack Webster, Jr.* Director
_______________________________
E. Jack Webster, Jr.
Joseph F. Ruysser* Director
_______________________________
Joseph F. Ruysser
John E. Williams* Director
_______________________________
John E. Williams
Thomas D. Sanders* Director
_______________________________
Thomas D. Sanders
*/s/ R. Crosby Kemper
-------------------------------------
R. Crosby Kemper
Attorney-in-Fact for each director
Date: March 24, 1995
</TABLE>
9
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UMB FINANCIAL CORPORATION
INDEX TO FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
PAGES
-----
<S> <C>
Consolidated Balance Sheet........................................ A-2
Consolidated Statement of Income.................................. A-3
Consolidated Statement of Cash Flows.............................. A-4
Consolidated Statement of Shareholders' Equity.................... A-5
Notes to Financial Statements..................................... A-6 to A-23
Independent Auditors' Report...................................... A-24
Selected Financial Data ("Five-Year Financial Summary")........... A-25
Management's Discussion and Analysis of Financial Condition and
Results of Operations ("Financial Review")....................... A-26 to A-46
</TABLE>
A-1
<PAGE>
UMB FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------
1994 1993 1992
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Loans:
Commercial, financial and agricultural.... $1,135,827 $1,103,306 $ 806,085
Consumer.................................. 688,672 591,383 427,967
Real estate............................... 444,565 466,157 250,339
Leases.................................... 2,157 1,627 1,930
Unearned interest......................... (1,604) (2,712) (3,273)
Allowance for loan losses................. (32,527) (35,590) (24,456)
---------- ---------- ----------
Net loans................................. $2,237,090 $2,124,171 $1,458,592
Securities available for sale:
U.S. Treasury and agencies................ $2,211,711 $2,615,783 $2,084,616
Mortgage-backed........................... 55,477 73,472 --
Equity and other.......................... 8,025 10,957 7,364
---------- ---------- ----------
Total securities available for sale (mar-
ket value 1992--$2,099,087).............. $2,275,213 $2,700,212 $2,091,980
Investment securities:
Mortgage-backed........................... $ 86,278 $ -- $ --
State and political subdivisions.......... 298,556 278,944 201,458
---------- ---------- ----------
Total investment securities (market value
of $373,644, $282,346 and $205,185,
respectively)............................ $ 384,834 $ 278,944 $ 201,458
Federal funds sold......................... 289,414 75,994 144,375
Securities purchased under agreements to
resell.................................... 244,685 263,181 222,740
Trading securities and other............... 30,982 83,746 39,021
---------- ---------- ----------
Total earning assets...................... $5,462,218 $5,526,248 $4,158,166
Cash and due from banks.................... 770,813 666,368 612,829
Bank premises and equipment, net........... 130,261 128,898 105,108
Accrued income............................. 81,219 72,551 53,881
Premiums on and intangibles of purchased
banks..................................... 78,091 85,286 24,654
Other assets............................... 76,418 49,475 48,549
---------- ---------- ----------
Total assets.............................. $6,599,020 $6,528,826 $5,003,187
========== ========== ==========
LIABILITIES
Deposits:
Noninterest-bearing demand................ $1,570,478 $1,488,278 $1,053,204
Interest-bearing demand and savings....... 2,421,149 2,364,341 1,807,346
Time deposits under $100,000.............. 949,728 1,058,354 811,961
Time deposits of $100,000 or more......... 191,479 250,756 170,655
---------- ---------- ----------
Total deposits............................ $5,132,834 $5,161,729 $3,843,166
Federal funds purchased.................... 139,800 26,210 131,000
Securities sold under agreements to repur-
chase..................................... 661,203 598,872 529,837
Short-term debt............................ 872 1,453 1,583
Long-term debt............................. 46,330 51,529 33,531
Accrued expenses and taxes................. 38,638 56,754 35,912
Other liabilities.......................... 22,037 45,636 28,479
---------- ---------- ----------
Total liabilities......................... $6,041,714 $5,942,183 $4,603,508
---------- ---------- ----------
SHAREHOLDERS' EQUITY
Common stock, $1.00 par. Authorized
23,000,000 shares. 20,677,558; 20,818,938;
and 16,263,689 shares issued, respective-
ly........................................ $ 20,678 $ 236,579 $ 184,815
Capital surplus............................ 442,606 167,368 63,046
Retained earnings.......................... 182,159 208,557 180,502
Net unrealized gain (loss) on securities
available for sale........................ (35,211) 14,333 --
Treasury stock 1,676,451; 1,300,346; and
1,003,700 shares, at cost, respectively... (52,926) (40,194) (28,684)
---------- ---------- ----------
Total shareholders' equity................ $ 557,306 $ 586,643 $ 399,679
---------- ---------- ----------
Total liabilities and shareholders' equi-
ty....................................... $6,599,020 $6,528,826 $5,003,187
========== ========== ==========
</TABLE>
See Notes to Financial Statements, pages A-6 to A-23.
A-2
<PAGE>
UMB FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------
1994 1993 1992
---------- ---------- ----------
(IN THOUSANDS EXCEPT SHARE AND
PER SHARE DATA)
<S> <C> <C> <C>
INTEREST INCOME
Loans........................................ $ 171,905 $ 142,713 $ 119,288
Securities available for sale................ 121,943 116,044 --
Investment securities:
Taxable interest............................ $ 954 $ -- $ 102,051
Tax-exempt interest......................... 11,743 11,656 12,496
Dividends................................... -- -- 407
---------- ---------- ----------
Total investment securities income.......... $ 12,697 $ 11,656 $ 114,954
Federal funds and resell agreements.......... 13,626 9,888 14,720
Trading securities and other................. 3,089 2,914 4,405
---------- ---------- ----------
Total interest income....................... $ 323,260 $ 283,215 $ 253,367
---------- ---------- ----------
INTEREST EXPENSE
Deposits..................................... $ 106,958 $ 99,127 $ 103,023
Federal funds and repurchase agreements...... 25,057 16,155 16,180
Short-term debt.............................. 33 29 1,036
Long-term debt............................... 4,016 4,407 3,547
---------- ---------- ----------
Total interest expense...................... $ 136,064 $ 119,718 $ 123,786
---------- ---------- ----------
Net interest income.......................... $ 187,196 $ 163,497 $ 129,581
Provision for loan losses.................... 2,640 3,332 2,981
---------- ---------- ----------
Net interest income after provision......... $ 184,556 $ 160,165 $ 126,600
---------- ---------- ----------
NONINTEREST INCOME
Trust fees................................... $ 34,992 $ 32,048 $ 27,334
Securities processing........................ 12,460 13,341 13,715
Trading and investment banking............... 9,932 13,629 12,503
Service charges on deposit accounts.......... 32,855 30,168 24,067
Other service charges and fees............... 15,614 14,101 9,748
Bankcard fees................................ 27,412 22,440 18,263
Net security gains........................... 3,632 1,607 5,305
Other........................................ 6,521 4,727 2,527
---------- ---------- ----------
Total noninterest income.................... $ 143,418 $ 132,061 $ 113,462
---------- ---------- ----------
NONINTEREST EXPENSE
Salaries and employee benefits............... $ 120,073 $ 106,329 $ 87,857
Occupancy, net............................... 15,096 14,809 12,180
Equipment.................................... 20,727 20,319 15,756
Supplies and services........................ 19,189 17,448 14,492
Bankcard processing.......................... 22,675 18,660 15,991
Marketing and business development........... 15,572 13,563 10,567
FDIC and regulatory fees..................... 12,225 10,955 8,568
Amortization of intangibles of purchased
banks....................................... 7,128 5,241 2,196
Other........................................ 24,890 23,653 17,340
---------- ---------- ----------
Total noninterest expense................... $ 257,575 $ 230,977 $ 184,947
---------- ---------- ----------
Income before income taxes................... $ 70,399 $ 61,249 $ 55,115
Income tax provision......................... 22,585 20,130 15,748
---------- ---------- ----------
Net income.................................. $ 47,814 $ 41,119 $ 39,367
========== ========== ==========
Per Share Data
Net income................................... $ 2.49 $ 2.34 $ 2.59
Dividends.................................... $ 0.76 $ 0.73 $ 0.73
Average shares outstanding................... 19,205,787 17,619,302 15,180,217
</TABLE>
See Notes to Financial Statements, pages A-6 to A-23.
A-3
<PAGE>
UMB FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
---------------------------------
1994 1993 1992
--------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income................................. $ 47,814 $ 41,119 $ 39,367
Adjustments to reconcile net income to net
cash provided by (used in) operating ac-
tivities:
Provision for loan losses.................. 2,640 3,332 2,981
Depreciation and amortization.............. 22,291 19,222 13,966
Deferred income taxes and investment tax
credits................................... 387 (225) 2,781
Net (increase) decrease in trading securi-
ties...................................... 42,860 (34,731) 55,390
Gains on sales of:
Investment securities..................... -- (17) (5,845)
Securities available for sale............. (3,719) (1,598) --
Losses on sales of:
Investment securities..................... -- -- 540
Securities available for sale............. 87 8 --
Amortization of securities premium, net of
discount accretion........................ 44,368 36,853 28,958
(Increase) decrease in interest receivable. (8,668) (6,334) 3,456
Increase (decrease) in interest payable.... 1,489 311 (6,228)
Other, net................................. (21,903) 2,581 (6,534)
--------- ---------- ----------
Net cash provided by operating activities.. $ 127,646 $ 60,521 $ 128,832
--------- ---------- ----------
INVESTING ACTIVITIES
Proceeds from sales of:
Investment securities...................... $ -- $ 697 $1,114,719
Securities available for sale.............. 150,570 225,587 --
Proceeds from maturities of:
Investment securities...................... 133,721 131,723 1,604,693
Securities available for sale.............. 844,237 654,769 --
Purchases of:
Investment securities...................... (242,492) (158,018) (3,244,086)
Securities available for sale.............. (687,722) (1,025,388) --
Net increase in loans...................... (115,559) (146,800) (125,756)
Net (increase) decrease in federal funds
sold and resell agreements................ (194,924) 113,147 177,257
Purchases of bank premises and equipment... (16,741) (12,804) (19,342)
Proceeds from sales of bank premises and
equipment................................. 216 811 646
Purchases of financial organizations, net
of cash received.......................... -- 57,211 (8,572)
--------- ---------- ----------
Net cash used in investing activities...... $(128,684) $ (159,065) $ (500,441)
--------- ---------- ----------
FINANCING ACTIVITIES
Net increase in demand and savings depos-
its....................................... $ 130,852 $ 400,373 $ 513,271
Net decrease in time deposits.............. (167,903) (131,946) (133,796)
Net increase (decrease) in federal funds
purchased and repurchase agreements....... 175,921 (115,439) (87,121)
Net decrease in short-term debt............ (581) (689) (48,964)
Proceeds from issuance of long-term debt... -- 25,000 --
Repayments of long-term debt............... (5,199) (7,801) (8,695)
Cash dividends............................. (14,669) (13,064) (11,042)
Purchases of treasury stock................ (13,318) (4,859) (1,722)
Proceeds from issuance of treasury stock... 380 508 393
--------- ---------- ----------
Net cash provided by financing activities.. $ 105,483 $ 152,083 $ 222,324
--------- ---------- ----------
Increase (decrease) in cash and due from
banks...................................... $ 104,445 $ 53,539 $ (149,285)
Cash and due from banks at beginning of
year....................................... 666,368 612,829 762,114
--------- ---------- ----------
Cash and due from banks at end of year...... $ 770,813 $ 666,368 $ 612,829
========= ========== ==========
Supplemental disclosures:
Income taxes paid.......................... $ 27,983 $ 20,833 $ 13,259
Total interest paid........................ 134,575 119,407 130,014
</TABLE>
--------
Note: Certain noncash transactions regarding the adoption of SFAS No. 115 and
common stock issued for acquisitions are disclosed in the accompanying
financial statements and notes to financial statements.
See Notes to Financial Statements, pages A-6 to A-23.
A-4
<PAGE>
UMB FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON CAPITAL RETAINED NET UNREALIZED TREASURY
STOCK SURPLUS EARNINGS HOLDING GAINS (LOSSES) STOCK
-------- -------- -------- --------------------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance -- January 1,
1992................... $184,815 $ 63,353 $152,177 $ -- $(27,662)
Net income.............. -- -- 39,367 -- --
Cash dividends ($0.73
per share)............. -- -- (11,042) -- --
Purchase of treasury
stock.................. -- -- -- -- (1,722)
Exercise of stock op-
tions.................. -- (307) -- -- 700
-------- -------- -------- -------- --------
Balance -- December 31,
1992................... $184,815 $ 63,046 $180,502 $ -- $(28,684)
Net income.............. -- -- 41,119 -- --
Cash dividends ($0.73
per share)............. -- -- (13,064) -- --
Issuance of common stock
for acquisitions, net.. 51,764 104,642 -- -- (7,478)
Purchase of treasury
stock.................. -- -- -- -- (4,859)
Exercise of stock op-
tions.................. -- (320) -- -- 827
Net unrealized gain on
securities available
for sale............... -- -- -- 14,333 --
-------- -------- -------- -------- --------
Balance -- December 31,
1993................... $236,579 $167,368 $208,557 $ 14,333 $(40,194)
Net income.............. -- -- 47,814 -- --
Cash dividends ($0.76
per share)............. -- -- (14,669) -- --
Adjust stock par value.. (217,652) 217,652 -- -- --
Stock dividend (10%).... 1,751 57,792 (59,543) -- --
Purchase of treasury
stock.................. -- -- -- -- (13,318)
Exercise of stock op-
tions.................. -- (206) -- -- 586
Net unrealized loss on
securities available
for sale............... -- -- -- (49,544) --
-------- -------- -------- -------- --------
Balance -- December 31,
1994................... $ 20,678 $442,606 $182,159 $(35,211) $(52,926)
======== ======== ======== ======== ========
</TABLE>
See Notes to Financial Statements, pages A-6 to A-23.
A-5
<PAGE>
UMB FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
SUMMARY OF ACCOUNTING POLICIES
The accounting policies of UMB Financial Corporation and its subsidiaries
conform to generally accepted accounting principles applicable to the banking
industry. Following is a summary of the more significant accounting policies to
assist the reader in understanding the financial presentation.
CONSOLIDATION -- All subsidiaries are included in the financial statements.
Intercompany accounts and transactions have been eliminated where significant.
ACQUISITIONS -- Banks acquired and recorded under the purchase method are
recorded at the fair value of the net assets acquired at the acquisition date,
and results of operations are included from that date. Excess of purchase price
over the value of net assets acquired is recorded as premiums on purchased
banks. Premiums on purchases prior to 1982 are being amortized ratably over 40
years. Premiums on purchases in 1982 and after are being amortized ratably over
15 years. Core deposit intangible assets are being amortized ratably over 10
years.
LOANS -- Interest on discount loans is recorded on a method that approximates
income at a level rate of return on the principal amount outstanding over the
term of the loan. Interest on all other loans is recognized based on the rate
times the principal amount outstanding. Interest accrual is discontinued when,
in the opinion of management, the likelihood of collection becomes doubtful.
Affiliate banks enter into lease financing transactions that are generally
recorded under the financing method of accounting. Income is recognized on a
basis that results in an approximately level rate of return over the life of
the lease.
Annual bankcard fees are recognized on a straight-line basis over the period
that cardholders may use the card.
The adequacy of the allowance for loan losses is based on management's
continuing evaluation of the pertinent factors underlying the quality of the
loan portfolio, including actual loan loss experience, current and anticipated
economic conditions, detailed analysis of individual loans for which full
collectibility may not be assured and determination of the existence and
realizable value of the collateral and guarantees securing such loans. The
actual losses, notwithstanding such considerations, however, could differ
significantly from the amounts estimated by management.
SECURITIES AVAILABLE FOR SALE -- Effective December 31, 1992, the company
classified certain debt securities as securities available for sale. These
securities are considered part of the company's asset/liability management
program that may be sold in response to changes in interest rates, prepayments,
or capital or liquidity needs.
Debt securities available for sale include principally U.S. Treasury and
agency securities and certain mortgage-backed securities. Until December 31,
1993, securities available for sale were carried at the lower of aggregate
amortized cost or market value.
Effective December 31, 1993, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." Accordingly, equity securities and debt securities
available for sale are measured at fair value. Unrealized holding gains and
losses are excluded from earnings and reported as a separate component of
shareholders' equity until realized. Realized gains and losses on sales are
computed by the specific identification method at the time of disposition and
are shown separately as a component of noninterest income.
A-6
<PAGE>
UMB FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
Prior to the adoption of SFAS No. 115, marketable equity securities, owned
primarily by the parent company, were carried at the lower of aggregate cost or
market value.
INVESTMENT SECURITIES -- Investment securities are carried at amortized
historical cost based on management's intention, and the Company's ability, to
hold them to maturity. The Company classifies securities of state and political
subdivisions and a portion of its mortgage-backed securities portfolio as
investment securities. Certain significant unforeseeable changes in
circumstances may cause a change in the intent to hold these securities to
maturity. For example, such changes may include a deterioration in the issuer's
creditworthiness that is expected to continue or a change in tax law that
eliminates the tax-exempt status of interest on the security.
TRADING SECURITIES -- Trading securities, generally acquired for subsequent
sale to customers, are carried at market value. Market adjustments, fees and
gains or losses on the sale of trading securities are considered to be a normal
part of operations and are included in trading and investment banking income.
Interest income on trading securities is included in income from earning
assets.
TAXES -- The Company recognizes certain income and expenses in different time
periods for financial reporting and income tax purposes. The provision for
deferred income taxes is based on the liability method and represents the
change in the deferred income tax accounts during the year, including the
effect of enacted tax rate changes.
PER SHARE DATA -- Earnings per share are computed based on the weighted
average number of shares of common stock outstanding during each period. All
per share presentations have been restated to give effect to the 10% stock
dividend paid July 1, 1994, to the shareholders of record June 14, 1994. The
dilutive effect of shares issuable under stock options granted by the Company
is immaterial.
RECLASSIFICATIONS -- Certain reclassifications were made to the 1993 and 1992
financial statements to conform to the current year presentation.
INDUSTRY SEGMENT REPORTING -- The Company operates principally in a single
business segment offering general commercial banking services.
ACCOUNTING CHANGES
EMPLOYERS' ACCOUNTING FOR POSTEMPLOYMENT BENEFITS -- The Financial Accounting
Standards Board issued SFAS No. 112, "Employers' Accounting for Postemployment
Benefits." This Statement, effective for fiscal years beginning after December
15, 1993, establishes accounting standards for employers who provide certain
benefits to former or inactive employees after employment but before
retirement. The Company does not provide any such postemployment benefits and,
consequently, adoption of this Statement did not affect its financial position
or results of operations.
ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF A LOAN -- The Financial Accounting
Standards Board issued SFAS No. 114, "Accounting by Creditors for Impairment of
a Loan." This Statement, which becomes effective for fiscal years beginning
after December 15, 1994, will require that impaired loans be measured based on
the present value of expected future cash flows discounted at the loan's
effective interest rate, at the loan's observable market price or the fair
value of collateral if the loan is collateral dependent. In October 1994, SFAS
No. 118 was issued as an amendment to SFAS No. 114 to allow a creditor to use
existing methods for recognizing interest income on an impaired loan. The
impact of the Statements on the Company has not yet been fully determined; the
effects are not expected to be significant to the consolidated financial
statements.
A-7
<PAGE>
UMB FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
REPORTING ON DERIVATIVE FINANCIAL INSTRUMENTS -- The Financial Accounting
Standards Board issued SFAS No. 119, which requires disclosures concerning
derivative financial instruments--futures, forward, swap, and option contracts,
and other financial instruments with similar characteristics. This statement
requires disclosures of amounts, nature, and terms of derivative financial
instruments that do not result in off-balance sheet risk of accounting loss. It
requires that a distinction be made between financial instruments held or
issued for trading purposes and financial instruments held or issued for
purposes other than trading. It also amends SFAS Nos. 105 and 107 requiring
distinctions in certain disclosures required by those statements. This
statement has been adopted for the year ending December 31, 1994.
ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS -- The Financial
Accounting Standards Board issued SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." This Statement, effective for
fiscal years beginning after December 15, 1992, requires accrual of
postretirement benefits (such as health care benefits) during the years an
employee provides services. The Company does not provide any such
postretirement benefits and, consequently, adoption of this Statement did not
affect its financial position or results of operations.
ACCOUNTING FOR INCOME TAXES -- The Financial Accounting Standards Board
issued SFAS No. 109, "Accounting For Income Taxes." This Statement superseded
SFAS No. 96, by the same title, which the Company had adopted in 1989. SFAS No.
109 reduces the complexity of SFAS No. 96 and changes the criteria for
recognition and measurement of deferred tax assets. SFAS No. 109 was adopted by
the Company in 1993 and did not have a material effect on the Company's
financial position or results of operations.
ACQUISITIONS
On January 23, 1992, the Company acquired Columbine National Bank, Denver,
Colorado (renamed UMB Columbine National Bank). The Company paid $9.1 million
in cash for all the shares of the bank's holding company, The Village
Corporation, as well as the minority holdings of bank stock. The acquisition of
this $62 million bank was recorded as a purchase, with $2.0 million recorded as
premium on purchased bank. On October 19, 1994, UMB Columbine National Bank was
merged into UMB Bank Colorado.
A-8
<PAGE>
UMB FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
As of June 25, 1993, the Company had consummated the acquisitions of eight
Kansas bank holding companies (the "Kansas banks"). During 1994, these Kansas
banks were merged to form two banks, UMB National Bank of America and UMB Bank
Kansas. The eight companies and their subsidiary banks are presented below:
<TABLE>
<CAPTION>
NUMBER OF
COMPANY
ACQUISITION COMPANY/ ASSETS AS OF SHARES
DATE SUBSIDIARY BANKS ACQUISITION ISSUED (NET) CASH
----------- ---------------- ------------ ----------- ---------
(IN (IN
MILLIONS) THOUSANDS)
<C> <S> <C> <C> <C>
3/26/93 Farmers Bancshares, Inc.... $ 57 168,898 $ 2,329
Farmers National Bank
4/30/93 NBA Bankshares, Inc........ 125 276,497 4,986
The National Bank of
America
5/14/93 M L Bancshares, Inc........ 159 308,578 6,620
Russell State Bank
Security State Bank
5/17/93 Highland Bancshares, Inc... 103 265,754 2,299
Highland Park Bank & Trust
5/17/93 North Plaza Bancshares, 43 -- 7,433
Inc.......................
North Plaza State Bank
5/28/93 BellCorp, Inc.............. 110 373,951 2,894
Citizens Bank & Trust Co.
6/14/93 Overland Park Bancshares, 188 1,021,580 --
Inc.......................
Overland Park State Bank &
Trust Co.
6/25/93 CNB Financial Corporation.. 504 1,526,770 --
Commercial National Bank
City National Bank
First Bank & Trust, N.A.
Security State Bank
------ --------- -------
Total...................... $1,289 3,942,028 $26,561
====== ========= =======
</TABLE>
The cash portion of the purchase prices was obtained principally 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. Income of the combined company does not include income of the
acquired companies prior to the effective dates of the acquisitions.
A-9
<PAGE>
UMB FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
The following table presents supplementary information regarding the
acquisitions of the Kansas banks (in thousands):
<TABLE>
<S> <C>
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 purchase prices............................................. $ 177,958
----------
Goodwill (excess of purchase prices over fair value of net assets
acquired).......................................................... $ 51,934
==========
</TABLE>
The following unaudited pro forma consolidated financial information gives
effect to the Kansas banks as if they were all acquired on January 1, 1992.
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.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31
---------------------
1993 1992
---------- ----------
(IN THOUSANDS EXCEPT
PER SHARE DATA)
<S> <C> <C>
Net interest income....................................... $ 180,663 $ 170,957
Noninterest income........................................ 137,937 130,060
Net income................................................ 44,715 43,656
Net income per share...................................... 2.30 2.24
</TABLE>
A-10
<PAGE>
UMB FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
ALLOWANCE FOR LOAN LOSSES
The table below provides an analysis of the allowance for loan losses for the
three years ended December 31, 1994 (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Allowance -- beginning of year...................... $35,590 $24,456 $26,241
Allowances of acquired banks........................ -- 12,076 207
Additions (deductions):
Charge-offs........................................ $(8,269) $(7,135) $(6,548)
Recoveries......................................... 2,566 2,861 1,575
------- ------- -------
Net charge-offs................................... $(5,703) $(4,274) $(4,973)
Provision charged to expense........................ 2,640 3,332 2,981
------- ------- -------
Allowance -- end of year............................ $32,527 $35,590 $24,456
======= ======= =======
</TABLE>
SECURITIES AVAILABLE FOR SALE
The table below provides detailed information for securities available for
sale at December 31, 1994, 1993 and 1992 (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------------------------
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1994
U.S. Treasury....................... $2,197,912 $ 76 $(55,571) $2,142,417
U.S. Agencies....................... 69,774 115 (595) 69,294
Mortgage-backed..................... 57,969 57 (2,549) 55,477
Federal Reserve Bank Stock.......... 3,656 -- -- 3,656
Equity.............................. 2,764 1,544 (60) 4,248
Other............................... 121 -- -- 121
---------- ------- -------- ----------
Total.............................. $2,332,196 $ 1,792 $(58,775) $2,275,213
========== ======= ======== ==========
1993
U.S. Treasury....................... $2,518,436 $23,457 $ (2,414) $2,539,479
U.S. Agencies....................... 76,585 -- (281) 76,304
Mortgage-backed..................... 73,293 328 (149) 73,472
Federal Reserve Bank Stock.......... 4,620 -- -- 4,620
Equity.............................. 3,940 2,187 (60) 6,067
Other............................... 270 -- -- 270
---------- ------- -------- ----------
Total.............................. $2,677,144 $25,972 $ (2,904) $2,700,212
========== ======= ======== ==========
1992
U.S. Treasury....................... $2,011,264 $ 6,184 $ (2,727) $2,014,721
U.S. Agencies....................... 73,352 68 (46) 73,374
Federal Reserve Bank Stock.......... 1,702 -- -- 1,702
Equity.............................. 5,352 3,717 (60) 9,009
Other............................... 310 -- (29) 281
---------- ------- -------- ----------
Total.............................. $2,091,980 $ 9,969 $ (2,862) $2,099,087
========== ======= ======== ==========
</TABLE>
Investment securities with a market value of $1,190,000 at December 31, 1994,
$5,356,000 at December 31, 1993, and $3,139,000 at December 31, 1992, were
pledged to secure U.S. Government deposits, other public deposits and certain
trust deposits as required by law.
A-11
<PAGE>
UMB FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
The following table presents contractual maturity information for securities
available for sale at December 31, 1994. Securities may be disposed of before
contractual maturities due to sales by the Company or because borrowers may
have the right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Due in 1 year or less.................................... $ 877,317 $ 869,330
Due after 1 year through 5 years......................... 1,389,902 1,341,914
Due after 5 years through 10 years....................... 467 467
Due after 10 years....................................... -- --
---------- ----------
Total................................................... $2,267,686 $2,211,711
---------- ----------
Mortgage-backed securities............................... 57,969 55,477
Equity securities and other.............................. 6,541 8,025
---------- ----------
Total securities available for sale..................... $2,332,196 $2,275,213
========== ==========
</TABLE>
Securities available for sale with a market value of $1,476,231,000 at
December 31, 1994, $1,554,257,000 at December 31, 1993, and $858,175,000 at
December 31,1992, were pledged to secure U.S. Government deposits, other public
deposits and certain trust deposits as required by law.
During 1994, proceeds from the sales of securities available for sale were
$150,570,000 and securities transactions resulted in gross realized gains of
$3,719,000 and gross realized losses of $87,000.
The net unrealized holding loss on trading securities at December 31, 1994,
was $39,000, and was included in trading and investment banking income.
INVESTMENT SECURITIES
The table below provides detailed information for investment securities at
December 31, 1994, 1993 and 1992 (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------------
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
1994 --------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Mortgage-backed........................ $ 86,278 $ -- $ (5,341) $ 80,938
State and political subdivisions....... 298,556 823 (6,672) 292,706
-------- ------ -------- --------
Total................................ $384,834 $ 823 $(12,013) $373,644
======== ====== ======== ========
1993
State and political subdivisions....... $278,944 $4,111 $ (709) $282,346
======== ====== ======== ========
1992
State and political subdivisions....... $201,458 $4,207 $ (480) $205,185
======== ====== ======== ========
</TABLE>
A-12
<PAGE>
UMB FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
The following table presents contractual maturity information for investment
securities at December 31, 1994. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
--------- --------
(IN THOUSANDS)
<S> <C> <C>
Due in 1 year or less....................................... $ 99,081 $ 98,564
Due after 1 year through 5 years............................ 243,800 235,357
Due after 5 years through 10 years.......................... 41,485 39,270
Due after 10 years.......................................... 468 453
-------- --------
Total investment securities............................... $384,834 $373,644
======== ========
</TABLE>
There were no sales of investment securities during 1994. Proceeds from sales
of investment securities and gross realized gains and gross realized losses on
such sales for 1993 and 1992 are presented below (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
---------------
1993 1992
---- ----------
<S> <C> <C>
Proceeds from sales of:
Debt securities............................................... $697 $1,114,377
Equity securities............................................. -- 342
---- ----------
Total proceeds............................................... $697 $1,114,719
==== ==========
Gross realized gains from sales of:
Debt securities............................................... $ 17 $ 5,832
Equity securities............................................. -- 13
---- ----------
Total gross realized gains................................... $ 17 $ 5,845
==== ==========
Gross realized losses from sales of:
Debt securities............................................... $ -- $ 540
---- ----------
Total gross realized losses.................................. $ -- $ 540
==== ==========
</TABLE>
COMMON STOCK
The following table summarizes the share transactions for the three years
ended December 31, 1994:
<TABLE>
<CAPTION>
SHARES SHARES IN
ISSUED TREASURY
---------- ----------
<S> <C> <C>
Balance -- January 1, 1992............................... 14,785,172 (985,574)
Purchase of treasury stock.............................. -- (43,071)
Issued in stock options................................. -- 24,945
---------- ----------
Balance -- December 31, 1992............................. 14,785,172 (1,003,700)
Issued (received) in acquisitions....................... 4,141,135 (199,107)
Purchase of treasury stock.............................. -- (126,996)
Issued in stock options................................. -- 29,457
---------- ----------
Balance -- December 31, 1993............................. 18,926,307 (1,300,346)
Stock dividend (10%).................................... 1,751,251 --
Purchase of treasury stock.............................. -- (396,984)
Issued in stock options................................. -- 20,879
---------- ----------
Balance -- December 31, 1994............................. 20,677,558 (1,676,451)
========== ==========
</TABLE>
A-13
<PAGE>
UMB FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
LOANS TO MANAGEMENT
Certain Company and principal affiliate bank executive officers and
directors, including companies in which those persons are principal holders of
equity securities or are general partners, borrow in the normal course of
business from affiliate banks of the Company. All such loans have been made on
the same terms, including interest rates and collateral, as those prevailing at
the same time for comparable transactions with other persons. In addition, all
such loans are current as to repayment terms. For the years 1994, 1993 and
1992, an analysis of activity with respect to such aggregate loans to related
parties appears below (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Balance -- beginning of year................... $ 111,921 $ 142,880 $ 123,487
New loans..................................... 458,400 377,601 311,277
Repayments.................................... (411,991) (408,560) (291,884)
--------- --------- ---------
Balance -- end of year......................... $ 158,330 $ 111,921 $ 142,880
========= ========= =========
BANK PREMISES AND EQUIPMENT
Bank premises and equipment are stated at cost less accumulated depreciation,
which is computed primarily on an accelerated method. Bank premises are
depreciated over a 20- to 40-year life span, while equipment is depreciated over
a life span of 3 to 20 years. Bank premises and equipment consisted of the
following (in thousands):
<CAPTION>
DECEMBER 31
-------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Land........................................... $ 29,873 $ 27,622 $ 22,296
Buildings and leasehold improvements........... 134,401 133,651 102,609
Equipment...................................... 122,025 111,571 92,279
--------- --------- ---------
$ 286,299 $ 272,844 $ 217,184
Accumulated depreciation....................... (156,038) (143,946) (112,076)
--------- --------- ---------
Bank premises and equipment, net............... $ 130,261 $ 128,898 $ 105,108
========= ========= =========
Consolidated rental and operating lease expenses were $2,522,000 in 1994,
$2,932,000 in 1993 and $2,422,000 in 1992. Minimum rental commitments as of
December 31, 1994, for all noncancelable operating leases are: 1995 --
$2,265,000; 1996 -- $2,281,000; 1997 -- $2,054,000; 1998 -- $2,022,000; 1999 --
$1,787,000; and thereafter -- $10,793,000.
BORROWED FUNDS
The components of the Company's short-term and long-term debt were as follows
(in thousands):
<CAPTION>
DECEMBER 31
-------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
SHORT-TERM DEBT
U.S. Treasury demand notes and other........... $ 872 $ 1,453 $ 1,583
--------- --------- ---------
LONG-TERM DEBT
6.81% senior notes due 2000.................... $ 10,000 $ 10,000 $ --
7.30% senior notes due 2003.................... 15,000 15,000 --
8.83% senior notes due 1996.................... 890 4,462 10,712
9.15% senior notes due 1999.................... 15,000 15,000 15,000
7.50% notes maturing serially through 1997..... 4,639 6,186 7,732
8.00% note maturing serially through 2000...... 724 799 --
7.50% note maturing serially through 2015...... 77 82 87
--------- --------- ---------
Total long-term debt......................... $ 46,330 $ 51,529 $ 33,531
--------- --------- ---------
Total borrowed funds......................... $ 47,202 $ 52,982 $ 35,114
========= ========= =========
</TABLE>
A-14
<PAGE>
UMB FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
Long-term debt represents direct, unsecured obligations of the parent
company. The senior notes due 2000 and 2003 cannot be redeemed prior to stated
maturity. The senior notes due 1996 require annual redemptions of $3,572,000.
Optional prepayments without premiums were made on the senior notes due 1996 of
$2,678,000 in 1993 and $3,572,000 in 1992. The senior notes due 1999 require
annual redemptions of $3,000,000 beginning in 1995. The 7.50% notes that mature
in 1997 require annual principal payments of $1,546,000. The senior notes
contain financial covenants relating to the issuance of additional debt,
payment of dividends, reacquisition of common stock and maintenance of minimum
tangible capital. Under the most restrictive covenant, approximately
$90,226,000 was available for the payment of dividends at December 31, 1994.
The Company enters into sales of securities with simultaneous agreements to
repurchase ("repurchase agreements"). The amounts received under these
agreements represent short-term borrowings and are reflected as a separate item
in the consolidated balance sheet. The amount outstanding at December 31, 1994,
was $661,203,000 (with accrued interest payable of $1,591,000). Of that amount,
$140,341,000 represented sales of securities in which the securities were
obtained under reverse repurchase agreements ("resell agreements"). The
remainder of $520,862,000 represented sales of U.S. Treasury securities
obtained from the Company's securities portfolio. The carrying amounts and
market values of the securities and the related repurchase liabilities and
weighted average interest rates of the repurchase liabilities (grouped by
maturity of the repurchase agreements) were as follows (amounts in thousands):
<TABLE>
<CAPTION>
SECURITIES WEIGHTED
----------------- AVERAGE
MATURITY OF THE CARRYING MARKET REPURCHASE INTEREST
REPURCHASE LIABILITIES AMOUNT VALUE LIABILITIES RATE
---------------------- -------- -------- ----------- --------
<S> <C> <C> <C> <C>
On demand................................ $316,590 $319,853 $316,876 4.86%
2 to 30 days............................. 133,250 136,172 127,529 4.86
31 to 90 days............................ 25,372 25,853 24,465 5.33
Over 90 days............................. 52,084 52,492 51,992 5.32
-------- -------- -------- ----
Total................................... $527,296 $534,370 $520,862 4.92%
======== ======== ======== ====
</TABLE>
REGULATORY REQUIREMENTS
Payment of dividends by the affiliate banks to the parent company is subject
to various regulatory restrictions. For national banks, state banks that are
Federal Reserve members and state banks in Colorado, the governing regulatory
agency must approve the declaration of any dividends generally in excess of the
sum of net income for that year and retained net income for the preceding two
years. The state banks in Missouri, Kansas and Illinois are subject to state
laws permitting dividends to be declared from retained earnings, provided
certain specified capital requirements are met. At December 31, 1994,
approximately $38,629,000 of the equity of the affiliate banks was available
for distribution as dividends to the parent company without prior regulatory
approval or without reducing the capital of the respective affiliate banks
below prudent levels.
The Company is required to maintain minimum amounts of capital to total "risk
weighted" assets, as defined by the banking regulators. At December 31, 1994,
the Company is required to have minimum Tier 1 and Total capital ratios of
4.00% and 8.00%, respectively. The Company's actual ratios at that date were
16.76% and 17.85%, respectively. The Company's leverage ratio at December 31,
1994, was 7.89%.
Certain affiliate banks maintain reserve balances with the Federal Reserve
Bank as required by law. During 1994, this amount averaged $125,294,000.
A-15
<PAGE>
UMB FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
EMPLOYEE BENEFITS
The Company has a noncontributory profit sharing plan, which features an
employee stock ownership plan. These plans are for the benefit of substantially
all officers and employees of the Company and its subsidiaries. Contributions
to these plans for the years 1994, 1993 and 1992 were $3,983,000, $3,542,000
and $3,317,000, respectively.
The Company has a qualified 401(k) profit sharing plan that permits
participants to make contributions by salary reduction. The Company does not
make contributions to this plan.
Substantially all officers and employees are covered by a noncontributory
defined benefit pension plan. Under the plan, retirement benefits are based on
years of service and the average of the employee's highest 120 consecutive
months of compensation. The Company's funding policy is to contribute annually
the maximum amount that can be deducted for federal income tax purposes.
Contributions are intended to provide not only for benefits attributed to
service to date but also for those expected to be earned in the future. To the
extent that these requirements are fully covered by assets in the plan, a
contribution may not be made in a particular year.
The pension plan was amended in January 1995 whereby the plan would not
accept any new participants. This change was made with consideration given to
discontinuing the current plan at a future date. New employees of the Company
that are not eligible to participate in the pension plan will receive a partial
matching contribution to the qualified 401(k) plan, as amended.
The following items are components of the net periodic pension expense
(income) for the three years ended December 31, 1994 (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Service costs -- benefits earned during the year..... $ 1,998 $ 1,463 $ 1,210
Interest cost on projected benefit obligation........ 2,100 2,059 1,899
Actual return on plan assets......................... 70 (2,208) (3,810)
Net amortization and deferral........................ (3,343) (1,626) (52)
------- ------- -------
Net periodic pension expense (income).............. $ 825 $ (312) $ (753)
======= ======= =======
Assumptions used in accounting for the plan were as follows:
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Weighted average discount rate....................... 7.50% 7.50% 8.00%
Rate of increase in future compensation levels....... 4.25 4.25 5.50
Expected long-term rate of return on assets.......... 8.00 8.00 8.50
</TABLE>
The following table sets forth the pension plan's funded status, using
valuation dates of September 30, 1994, 1993 and 1992 (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Actuarial present value of benefit obligation:
Vested benefits................................. $(24,395) $(20,177) $(17,693)
Nonvested benefits.............................. (1,198) (1,027) (898)
-------- -------- --------
Accumulated benefit obligation.................. $(25,593) $(21,204) $(18,591)
Additional benefits based on estimated future
salary levels.................................. (6,677) (7,804) (6,292)
-------- -------- --------
Projected benefit obligation................... $(32,270) $(29,008) $(24,883)
Plan assets at fair value, primarily U.S. obliga-
tions........................................... 31,874 34,701 35,205
-------- -------- --------
Plan assets in excess (deficiency) of projected
benefit obligation.............................. $ (396) $ 5,693 $ 10,322
Unrecognized net loss from past experience dif-
ferent from that assumed........................ 10,120 6,028 2,133
Prior service cost not yet recognized in net pe-
riodic pension cost............................. 361 260 284
Unrecognized net transition asset being recog-
nized over 10.66 years.......................... (2,848) (3,919) (4,990)
-------- -------- --------
Prepaid pension cost included in other assets.... $ 7,237 $ 8,062 $ 7,749
======== ======== ========
</TABLE>
A-16
<PAGE>
UMB FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
On April 16, 1992, the shareholders of the Company approved the 1992
Incentive Stock Option Plan ("the 1992 Plan"), which provides incentive options
to certain key employees for up to 500,000 common shares of the Company. The
options are not exercisable for two years from the date of the grant and are
thereafter exercisable for such periods as the Board of Directors, or a
committee thereof, specify (which may not exceed 10 years), provided that the
optionee has remained in the employment of the Company or its subsidiaries. The
Board or the committee may accelerate the exercise period for an option upon
the optionee's disability, retirement or death. All options expire at the end
of the exercise period. The Company makes no recognition in the balance sheet
of the options until such options are exercised and no amounts applicable
thereto are reflected in net income. Options are granted at not less than 100%
of fair market value at date of grant.
Activity in the 1992 Plan for the three years ended December 31, 1994, is
summarized in the following table:
<TABLE>
<CAPTION>
NUMBER OF OPTION PRICE
STOCK OPTIONS UNDER THE 1992 PLAN SHARES PER SHARE
--------------------------------- --------- ----------------
<S> <C> <C>
Outstanding -- January 1, 1992...................... -- --
Granted............................................ 16,115 $33.63 to $37.00
------ ----------------
Outstanding -- December 31, 1992.................... 16,115 $33.63 to $37.00
Granted............................................ 17,024 33.97 to 37.36
Canceled........................................... (440) 33.63
------ ----------------
Outstanding -- December 31, 1993.................... 32,699 $33.63 to $37.36
Granted............................................ 16,262 31.62 to 34.78
Canceled........................................... (4,620) 33.63 to 33.97
------ ----------------
Outstanding -- December 31, 1994.................... 44,341 $31.62 to $37.36
====== ================
Exercisable -- December 31, 1994.................... 5,214 $33.63 to $37.00
</TABLE>
All figures have been restated to reflect the 10% stock dividend paid July 1,
1994.
The 1981 Incentive Stock Option Plan ("the 1981 Plan") was adopted by the
Company on October 22, 1981, and amended November 27, 1985, and October 10,
1989. No further options may be granted under the 1981 Plan. Provisions of the
1981 Plan regarding option price, term and exercisability are generally the
same as that described for the 1992 Plan. Activity in the 1981 Plan for the
three years ended December 31, 1994, is summarized in the following table:
<TABLE>
<CAPTION>
NUMBER OF OPTION PRICE
STOCK OPTIONS UNDER THE 1981 PLAN SHARES PER SHARE
--------------------------------- --------- ----------------
<S> <C> <C>
Outstanding -- January 1, 1992....................... 192,521 $ 8.23 to $32.21
Canceled............................................ (64) 21.15
Exercised........................................... (27,440) 8.23 to 24.27
------- ----------------
Outstanding -- December 31, 1992..................... 165,017 $10.74 to $32.21
Canceled............................................ (3,267) 21.23 to 29.27
Exercised........................................... (32,402) 10.74 to 26.24
------- ----------------
Outstanding -- December 31, 1993..................... 129,348 $13.21 to $32.21
Canceled............................................ (23,111) 18.67 to 26.64
Exercised........................................... (21,393) 13.21 to 28.85
------- ----------------
Outstanding -- December 31, 1994..................... 84,844 $18.73 to $32.21
======= ================
Exercisable -- December 31, 1994..................... 76,944 $18.73 to $32.21
</TABLE>
All figures have been restated to reflect the 10% stock dividend paid July 1,
1994.
A-17
<PAGE>
UMB FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company is a party to financial
instruments with off-balance-sheet risk in order to meet the financing needs of
its customers and to reduce its own exposure to fluctuations in interest rates.
These financial instruments include commitments to extend credit, commercial
letters of credit, standby letters of credit, and futures contracts. Those
instruments involve, to varying degrees, elements of credit and interest rate
risk in excess of the amount recognized in the consolidated balance sheet. The
contract or notional amounts of those instruments reflect the extent of
involvement the Company has in particular classes of financial instruments.
The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit,
commercial letters of credit and standby letters of credit is represented by
the contract or notional amount of those instruments. The Company uses the same
credit policies in making commitments and conditional obligations as it does
for on-balance-sheet instruments. For futures contracts, the contract or
notional amounts do not represent exposure to credit loss. The Company controls
the credit risk of its futures contracts through credit approvals, limits and
monitoring procedures.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the agreement. These
conditions generally include, but are not limited to, each customer being
current as to repayment terms of existing loans and no deterioration in the
customer's financial condition. Commitments generally have fixed expiration
dates or other termination clauses and may require payment of a fee. The
interest rate is generally a variable, or floating, interest rate. If the
commitment has a fixed interest rate, the rate is generally not set until such
time as credit is extended. For its credit card customers, the Company has the
right to change or terminate any terms or conditions of the credit card account
at any time. Since a large portion of the commitments and unused credit card
lines are never actually drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. The Company evaluates each
customer's creditworthiness on an individual basis. The amount of collateral
obtained, if deemed necessary by the Company, upon extension of credit is based
on management's credit evaluation. Collateral held varies but may include
accounts receivable, inventory, real estate, plant and equipment, stock,
securities and certificates of deposit.
Commercial letters of credit are issued specifically to facilitate trade or
commerce. Under the terms of a commercial letter of credit, as a general rule,
drafts will be drawn when the underlying transaction is consummated as
intended. Standby letters of credit are conditional commitments issued by the
Company to guarantee the performance of a customer to a third party.
The credit risk involved in issuing letters of credit is essentially the same
as that involved in extending loan facilities to customers. The Company holds
collateral supporting those commitments when deemed necessary. Collateral
varies but may include such items as those described for commitments to extend
credit.
Futures contracts are contracts for delayed delivery of securities or money
market instruments in which the seller agrees to make delivery at a specified
future date of a specified instrument at a specified yield. Risks arise from
the possible inability of counterparties to meet the terms of their contracts
and from movements in securities values and interest rates. Instruments used in
trading activities are carried at market value and gains and losses on futures
contracts are settled in cash daily. Any changes in the market value are
recognized in trading and investment banking income.
The Company's use of futures contracts is very limited. The Company uses
contracts to offset interest rate risk on specific securities held in the
trading portfolio. The contract amount of open positions in financial futures
contracts at year end 1994 was $36 million. Open futures contract positions
averaged $44.5 million
A-18
<PAGE>
UMB FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
during the year ended December 31, 1994. Net futures activity resulted in gains
of $2.7 million for the year ended December 31, 1994.
The Company also enters into foreign exchange contracts on a limited basis.
For operating purposes the Company maintains certain balances in foreign banks.
Foreign exchange contracts are purchased on a monthly basis to avoid foreign
exchange risk on these foreign balances. The Company will also enter into
foreign exchange contracts to facilitate foreign exchange needs of customers.
The Company will enter into a contract to buy or sell a foreign currency at a
future date only as part of a contract to sell or buy the foreign currency at
the same future date to a customer. The Company had no open foreign exchange
contracts at December 31, 1994. During 1994 contracts to purchase and to sell
foreign currency averaged approximately $1.2 million. The gain or loss on these
foreign exchange contracts for 1994 was not significant.
With respect to group concentrations of credit risk, most of the Company's
business activity is with customers in the states of Missouri, Kansas, Colorado
and Illinois. At December 31, 1994, the Company did not have any significant
credit concentrations in any particular industry.
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 lawsuits will have a
materially adverse effect on the financial position or results of operations of
the Company.
<TABLE>
<CAPTION>
CONTRACT OR NOTIONAL
AMOUNT DECEMBER 31
--------------------------
1994 1993 1992
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Financial instruments whose contract amounts repre-
sent credit risk:
Commitments to extend credit for loans (excluding
credit card plans)............................... $568,017 $592,395 $361,570
Commitments to extend credit under credit card
plans............................................ 729,417 715,188 586,389
Commercial letters of credit...................... 16,047 17,281 26,588
Standby letters of credit......................... 72,718 74,046 63,883
Financial instruments whose notional or contract
amounts exceed the amount of credit risk:
Futures contracts................................. $ 36,000 $ 58,500 $ 10,700
</TABLE>
A-19
<PAGE>
UMB FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
INCOME TAXES
Income taxes as set forth below produce effective federal income tax rates of
29.78% in 1994, 30.17% in 1993 and 26.67% in 1992. These percentages are
computed by dividing total federal income tax by the sum of such tax and net
income. Income taxes include the following components (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Federal
Currently payable..................................... $19,512 $18,000 $11,557
Deferred.............................................. 770 (232) 2,762
------- ------- -------
Total federal tax provision......................... $20,282 $17,768 $14,319
State
Currently payable..................................... 2,683 2,355 1,410
Deferred.............................................. (380) 7 19
------- ------- -------
Total tax provision................................. $22,585 $20,130 $15,748
======= ======= =======
Tax effect of security gains included above........... $ 1,271 $ 562 $ 1,804
</TABLE>
The reconciliation between the income tax provision and the amount computed
by applying the statutory federal tax rate of 35% in 1994 and 1993 and 34% in
1992 to income before income taxes is as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Provision at statutory rate......................... $24,640 $21,437 $18,739
Tax-exempt interest income.......................... (5,016) (4,966) (5,306)
Disallowed interest expense......................... 484 474 584
State and local income taxes, net of federal tax
benefits........................................... 1,497 1,582 962
Amortization of intangibles of purchased banks...... 1,881 1,420 680
Other............................................... (901) 183 89
------- ------- -------
Total tax provision............................... $22,585 $20,130 $15,748
======= ======= =======
</TABLE>
Deferred taxes are recorded based upon differences between the financial
statement and tax basis of assets and liabilities. The net deferred tax asset
included in the consolidated balance sheet at December 31, 1992, was
$2,273,000.
A-20
<PAGE>
UMB FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
Temporary differences which comprise a significant portion of deferred tax
assets and liabilities at December 31, 1994 and 1993, were as follows (in
thousands):
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Deferred tax liabilities:
Net unrealized gain of securities available for sale....... $ -- $ 8,735
Asset revaluations on purchased banks...................... 6,557 8,130
Depreciation............................................... 5,269 5,001
Pension.................................................... 2,765 3,078
Insurance.................................................. 1,945 --
Tax allowance for loan losses.............................. 823 1,484
Miscellaneous.............................................. 165 54
-------- --------
Total deferred tax liabilities........................... $ 17,524 $ 26,482
-------- --------
Deferred tax assets:
Net unrealized loss on securities available for sale....... $(21,771) $ --
Allowance for loan losses.................................. (12,349) (13,480)
Miscellaneous.............................................. (849) (333)
-------- --------
Total deferred tax assets................................ $(34,969) $(13,813)
-------- --------
Net deferred tax liability (asset)......................... $(17,445) $ 12,669
======== ========
</TABLE>
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107, "Disclosure about Fair Value of Financial Instruments,"
requires disclosures about the fair value of all financial instruments, whether
or not recognized in the balance sheet. The following methods and assumptions
were used to estimate the fair value of each class of financial instruments for
which it is practicable to estimate that value:
CASH AND SHORT-TERM INVESTMENTS -- The carrying amounts of cash and due from
banks, federal funds sold and resell agreements are reasonable estimates of
their fair values.
SECURITIES AVAILABLE FOR SALE AND INVESTMENT SECURITIES -- Fair values are
based on quoted market prices or dealer quotes, if available. If a quoted
market price is not available, fair value is estimated using quoted market
prices for similar securities.
TRADING SECURITIES -- Fair values for trading securities (including financial
futures), which also are the amounts recognized in the balance sheet, are based
on quoted market prices where available. If quoted market prices are not
available, fair values are based on quoted market prices for similar
securities.
LOANS -- Fair values are estimated for portfolios with similar financial
characteristics. Loans are segregated by type, such as commercial, real estate,
consumer, and credit card. Each loan category is further segmented into fixed
and variable interest rate categories. The fair value of loans is estimated by
discounting the future cash flows using the current rates at which similar
loans would be made to borrowers with similar credit ratings and for the same
remaining maturities.
DEPOSIT LIABILITIES -- The fair value of demand deposits and savings accounts
is the amount payable on demand at December 31, 1994 and 1993. The fair value
of fixed-maturity certificates of deposit is estimated by discounting the
future cash flows using the rates currently offered for deposits of similar
remaining maturities.
A-21
<PAGE>
UMB FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
SHORT-TERM DEBT -- The carrying amounts of federal funds purchased,
repurchase agreements and other short-term debt are reasonable estimates of
their fair values.
LONG-TERM DEBT -- Rates currently available to the Company for debt with
similar terms and remaining maturities are used to estimate fair value of
existing debt.
OTHER OFF-BALANCE-SHEET INSTRUMENTS -- The fair value of a loan commitment
and a letter of credit is determined based on the fees currently charged to
enter into similar agreements, taking into account the remaining terms of the
agreement and the present creditworthiness of the counterparties. Neither the
fees earned during the year or these instruments or their fair value at year-
end are significant to the Company's consolidated financial position.
The estimated fair values of the Company's financial instruments at December
31, 1994, 1993, and 1992 are as follows (in millions):
<TABLE>
<CAPTION>
1994 1993 1992
------------------ ------------------ ------------------
CARRYING FAIR CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Financial assets:
Cash and short-term in-
vestments............. $1,305.0 $1,305.0 $1,005.6 $1,005.6 $ 979.9 $ 979.9
Securities available
for sale.............. 2,275.2 2,275.2 2,700.2 2,700.2 2,092.0 2,099.1
Investment securities.. 384.8 373.6 278.9 282.4 201.5 205.2
Trading securities..... 31.0 31.0 83.7 83.7 39.0 39.0
Loans.................. $2,267.5 $2,207.5 $2,158.2 $2,155.3 $1,481.1 $1,479.1
Less: allowance for
loan losses........... (32.5) -- (35.6) -- (24.4) --
-------- -------- -------- -------- -------- --------
Net loans............ $2,235.0 $2,207.5 $2,122.6 $2,155.3 $1,456.7 $1,479.1
-------- -------- -------- -------- -------- --------
Total financial as-
sets................ $6,231.0 $6,192.3 $6,191.0 $6,227.2 $4,769.1 $4,802.3
======== ======== ======== ======== ======== ========
Financial liabilities:
Demand and savings de-
posits................ $3,991.6 $3,991.6 $3,852.6 $3,852.6 $2,860.6 $2,860.6
Time deposits.......... 1,141.2 1,132.9 1,309.1 1,314.1 982.6 988.9
Federal funds and re-
purchase.............. 801.0 801.0 625.1 625.1 660.8 660.8
Short-term debt........ .9 .9 1.5 1.5 1.6 1.6
Long-term debt......... 46.3 45.6 51.5 53.9 33.5 34.7
-------- -------- -------- -------- -------- --------
Total financial lia-
bilities............ $5,981.0 $5,972.0 $5,839.8 $5,847.2 $4,539.1 $4,546.6
======== ======== ======== ======== ======== ========
</TABLE>
The fair value estimates presented herein are based on pertinent information
available to management as of December 31, 1994, 1993 and 1992. Although
management is not aware of any factors that would significantly affect the
estimated fair value amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since those dates and,
therefore, current estimates of fair value may differ significantly from the
amounts presented herein.
A-22
<PAGE>
UMB FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
PARENT COMPANY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------
1994 1993 1992
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET
Assets:
Investment in subsidiaries:
Banks........................................... $567,381 $605,148 $404,151
Non-banks....................................... 8,336 7,616 6,921
-------- -------- --------
Total investment in subsidiaries.............. $575,717 $612,764 $411,072
Premiums on purchased banks..................... 14,278 15,803 17,313
Securities available for sale and other......... 21,530 16,511 11,261
-------- -------- --------
Total assets.................................. $611,525 $645,078 $439,646
======== ======== ========
Liabilities and Shareholders' Equity:
Dividends payable............................... $ 3,804 $ 3,536 $ 2,759
Note payable to affiliate bank.................. -- -- 500
Notes payable to others......................... 45,529 50,647 33,444
Accrued expenses and other...................... 4,886 4,252 3,264
-------- -------- --------
Total liabilities............................. $ 54,219 $ 58,435 $ 39,967
Shareholders' equity............................ 557,306 586,643 399,679
-------- -------- --------
Total liabilities and shareholders' equity.... $611,525 $645,078 $439,646
======== ======== ========
STATEMENT OF INCOME
Income:
Dividends received from affiliate banks......... $ 45,600 $ 44,500 $ 29,100
Service fees from subsidiaries.................. 4,882 7,101 9,205
Net security gains.............................. 618 249 13
Other........................................... 298 371 384
-------- -------- --------
Total income.................................. $ 51,398 $ 52,221 $ 38,702
-------- -------- --------
Expense:
Salaries and employee benefits.................. $ 3,573 $ 3,162 $ 2,811
Interest on notes payable:
Affiliate bank.................................. 9 46 26
Other........................................... 3,952 4,334 3,540
Services from affiliate banks................... 662 870 762
Other........................................... 11,675 11,058 9,366
-------- -------- --------
Total expense................................. $ 19,871 $ 19,470 $ 16,505
-------- -------- --------
Income before income taxes and equity in undis-
tributed earnings of subsidiaries.............. $ 31,527 $ 32,751 $ 22,197
Income tax benefit.............................. (4,417) (3,639) (2,056)
-------- -------- --------
Income before equity in undistributed earnings
of subsidiaries................................ $ 35,944 $ 36,390 $ 24,253
Equity in undistributed earnings of subsidiar-
ies:
Banks........................................... 11,401 4,283 15,701
Non-banks....................................... 469 446 (587)
-------- -------- --------
Net income.................................... $ 47,814 $ 41,119 $ 39,367
======== ======== ========
STATEMENT OF CASH FLOWS
Operating Activities:
Net income...................................... $ 47,814 $ 41,119 $ 39,367
Equity in earnings of subsidiaries.............. (57,470) (49,229) (44,214)
Gains from sales of securities available for
sale........................................... (618) (249) (13)
Other........................................... 1,329 766 1,704
-------- -------- --------
Net cash used by operating activities.......... $ (8,945) $ (7,593) $ (3,156)
-------- -------- --------
Investing Activities:
Proceeds from sales of securities available for
sale........................................... $ 1,687 $ 319 $ 325
Purchases of securities available for sale...... -- -- (23)
Net (increase) decrease in repurchase agree-
ments.......................................... (5,500) (2,160) 3,685
Investments in and contributions to affiliate
banks.......................................... -- (33,004) (9,445)
Dividends received from subsidiaries............ 45,600 44,500 29,100
Net capital expenditures for premises and equip-
ment........................................... (211) (159) (118)
-------- -------- --------
Net cash provided by investing activities....... $ 41,576 $ 9,496 $ 23,524
-------- -------- --------
Financing Activities:
Issuance of long-term debt...................... $ -- $ 25,000 $ --
Repayments of long-term debt.................... (5,118) (7,797) (8,690)
Net increase (decrease) in short-term debt...... -- (500) 500
Cash dividends paid............................. (14,669) (13,064) (11,042)
Net issuance (purchase) of treasury stock....... (12,938) (4,351) (1,329)
-------- -------- --------
Net cash used by financing activities........... $(32,725) $ (712) $(20,561)
-------- -------- --------
Net increase (decrease) in cash.................. $ (94) $ 1,191 $ (193)
======== ======== ========
</TABLE>
A-23
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders and the Board of Directors of UMB Financial Corporation:
We have audited the accompanying consolidated balance sheets of UMB Financial
Corporation and subsidiaries as of December 31, 1994, 1993 and 1992, and the
related consolidated statements of income, shareholders' equity and cash flows
for the years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of UMB Financial Corporation and
subsidiaries as of December 31, 1994, 1993 and 1992, and the results of their
operations and their cash flows for the years then ended, in conformity with
generally accepted accounting principles.
As discussed in the Accounting Policies note to the consolidated financial
statements, the Company changed its method of accounting for certain
investments in debt and equity securities effective December 31, 1993, to
conform with Statement of Financial Accounting Standards No. 115.
/s/ Deloitte & Touche LLP
Kansas City, Missouri
January 19, 1995
A-24
<PAGE>
UMB FINANCIAL CORPORATION
FIVE-YEAR FINANCIAL SUMMARY
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
EARNINGS
Interest income......... $ 323,260 $ 283,215 $ 253,367 $ 298,199 $ 317,756
Interest expense........ 136,064 119,718 123,786 171,677 196,807
Net interest income..... 187,196 163,497 129,581 126,522 120,949
Provision for loan loss-
es..................... 2,640 3,332 2,981 6,044 6,604
Noninterest income...... 143,418 132,061 113,462 98,691 89,644
Noninterest expense..... 257,575 230,977 184,947 165,774 155,653
Net income.............. 47,814 41,119 39,367 39,485 37,159
AVERAGE BALANCES
Assets.................. $6,372,607 $5,766,843 $4,622,968 $4,162,583 $3,959,793
Loans, net of unearned
interest............... 2,148,606 1,786,529 1,337,305 1,356,082 1,349,078
Securities*............. 2,844,306 2,729,270 2,109,121 1,816,711 1,624,617
Deposits................ 5,021,401 4,559,551 3,595,644 3,189,224 3,191,177
Long-term debt.......... 50,370 53,522 40,966 46,322 51,413
Shareholders' equity.... 572,446 502,614 385,988 355,570 328,479
YEAR-END BALANCES
Assets.................. $6,599,020 $6,528,826 $5,003,187 $4,692,053 $4,271,606
Loans, net of unearned
interest............... 2,269,617 2,159,761 1,483,048 1,349,144 1,548,678
Securities*............. 2,660,047 2,979,156 2,293,438 1,753,563 1,659,590
Deposits................ 5,132,834 5,161,729 3,843,166 3,410,193 3,254,106
Long-term debt.......... 46,330 51,529 33,531 42,226 47,349
Shareholders' equity.... 557,306 586,643 399,679 372,683 343,121
Realized shareholders'
equity***.............. 592,517 572,310 399,679 372,683 343,121
PER SHARE DATA
Earnings................ $ 2.49 $ 2.34 $ 2.59 $ 2.60 $ 2.45
Cash dividends.......... 0.76 0.73 0.73 0.66 0.66
Dividend payout ratio... 30.52% 31.20% 28.19% 25.38% 26.94%
Book value.............. $ 29.33 $ 30.25 $ 26.36 $ 24.55 $ 22.64
Realized book value***.. $ 31.18 $ 29.32 $ 26.36 $ 24.55 $ 22.64
Market price
High................... 34.55 37.05 37.95 33.86 25.62
Low.................... 29.50 33.18 32.95 21.69 19.22
Close.................. 31.25 34.09 36.36 33.86 22.32
RATIOS
Return on average as-
sets................... 0.75% 0.71% 0.85% 0.95% 0.94%
Return on average equi-
ty..................... 8.35 8.18 10.20 11.10 11.31
Average equity to as-
sets................... 8.98 8.72 8.35 8.54 8.30
Total risk-based capital
ratio.................. 17.85 18.50 20.16 21.25 17.49
Earnings to fixed
charges**
Excluding interest on
deposits.............. 3.35 3.83 3.56 2.76 2.65
Including interest on
deposits.............. 1.51 1.51 1.44 1.31 1.24
</TABLE>
--------
Per share information restated for 10% stock dividend paid July 1, 1994.
*Securities include investment securities and securities available for sale.
**For purposes of computing these ratios, earnings represent pretax income
plus fixed charges. Fixed charges include all interest (except interest on
deposits as indicated above), the portion of rental expense deemed
representative of an interest factor and amortization of debt expense.
***Excludes SFAS 115 mark-to-market equity adjustment.
A-25
<PAGE>
The following financial review presents management's discussion and analysis
of UMB Financial Corporation's consolidated financial condition and results of
operations. This review highlights the major factors affecting results of
operations and any significant changes in financial condition for the three-
year period ending December 31, 1994. It should be read in conjunction with the
accompanying consolidated financial statements, notes to financial statements
and other financial statistics appearing elsewhere in this report.
OVERVIEW
During the year ended December 31, 1994, the Company earned $47.8 million,
compared to $41.1 million and $39.4 million in 1993 and 1992, respectively.
Earnings for 1994 represent a 16.3% increase over the prior year. On a per
share basis, 1994 earnings were $2.49, compared to $2.34 and $2.59,
respectively, for the prior two years. Earnings per share for 1994 increased
6.4% from 1993 earnings per share. Per share amounts for prior periods have
been restated for a ten percent stock dividend distributed to shareholders on
July 1, 1994.
During 1993, the Company completed the acquisition of twelve banks in the
state of Kansas (the Acquired Banks). The last of these acquisitions was
completed in the second quarter. Each of the acquisitions was accounted for as
a purchase, therefore, the results of operations of the Acquired Banks are
included in consolidated operating results from the respective date of
acquisition. The following discussion and analysis of financial condition and
results of operations will attempt to distinguish changes and variances caused
by the acquisition of the Acquired Banks from other changes.
As noted above, the acquisitions of the Acquired Banks were accounted for as
purchases whereby the purchase price of the acquisitions was allocated to the
fair market value of the Acquired Banks with any remaining amount recorded as
goodwill. As a result of these acquisitions the Company recorded additional
intangible assets of $64.7 million. The amortization expense of these
intangible assets along with the amortization of the premium allocated to other
assets, primarily investment securities and fixed assets, amounted to $6.3
million and $4.7 million, on an after-tax basis, for the years ended December
31, 1994 and 1993, respectively. On a per share basis this expense totaled
$0.33 and $0.27 for 1994 and 1993, respectively.
During 1994, the Company consolidated its Kansas banking operations and
merged the Acquired Banks into two bank charters, which are two of the largest
banks in the state. The Company also merged its two Colorado banks into the
largest state-chartered bank in Colorado. In addition, the Company completed an
interstate merger through the merger of its St. Louis bank and its bank in
Collinsville, Illinois. Application has been filed to merge our four banking
companies in Monett, Joplin, Carthage and Springfield, Missouri, into one
entity. The goal of these reorganizations is to increase customer convenience
and service and improve consolidated efficiency.
RESULTS OF OPERATIONS
NET INTEREST INCOME
Net interest income, the Company's principal source of earnings, is the
amount of interest income generated by earning assets less interest expense
paid on interest-bearing liabilities. Table 1 summarizes the changes in net
interest income resulting from changes in volume and rates for the past two
years. Net interest income on a fully tax-equivalent basis (FTE), average
balance sheet amounts, and the corresponding yields and rates for the years
1990 through 1994 are shown on pages A-44 and A-45. Net interest income is
presented on a "tax-equivalent" basis to adjust for the tax-exempt status of
earnings from certain loans and investments, primarily the obligations of
states and local governments.
On a tax-equivalent basis net interest income increased $24.0 million or
14.1%, to $194.3 million, compared to $170.3 million in 1993 and $136.5 in
1992. The contribution of the Acquired Banks to this increase was $3 million as
they added $28 million, and $25 million to the tax equivalent net interest
income for 1994 and 1993, respectively.
A-26
<PAGE>
TABLE 1: TAX-EQUIVALENT RATE-VOLUME ANALYSIS
This analysis attributes changes in net interest income on a tax-equivalent
basis either to changes in average balances or to changes in average rates for
earning assets and interest-bearing liabilities. The change in interest due
jointly to volume and rate has been allocated to volume and rate in proportion
to the relationship of the absolute dollar amount of change in each. All
information is presented on a tax-equivalent basis and gives effect to the
disallowance of interest expense, for federal income tax purposes, related to
certain tax-free assets.
<TABLE>
<CAPTION>
AVERAGE
AVERAGE VOLUME RATE 1994 VS. 1993 INCREASE (DECREASE)
--------------------- ---------- ------------------------ --------------------------
1994 1993 1994 1993 VOLUME RATE TOTAL
---------- ---------- ---- ---- ------- -------- -------
(IN THOUSANDS)
<C> <C> <C> <C> <S> <C> <C> <C>
Change in interest
earned on:
$2,148,606 $1,786,529 8.06% 8.06% Loans................... $29,173 $ (94) $29,079
Securities:
2,555,231 2,468,796 4.77 4.70 Taxable................. 4,106 1,793 5,899
289,075 260,474 6.41 6.53 Tax-exempt.............. 1,839 (320) 1,519
Federal funds sold and
337,958 320,391 4.03 3.09 resell agreements...... 567 3,171 3,738
56,487 58,156 5.65 5.24 Other................... (89) 235 146
---------- ---------- ---- ---- ------- -------- -------
$5,387,357 $4,894,346 6.13% 5.92% Total................... $35,596 $ 4,785 $40,381
========== ========== ==== ==== ------- -------- -------
Change in interest paid
on:
Interest-bearing
$3,576,025 $3,285,879 2.99 3.02 deposits............... $ 8,685 $ (854) $ 7,831
Federal funds purchased
and repurchase
664,499 581,130 3.77 2.78 agreements............. 2,555 6,347 8,902
51,365 54,937 7.88 8.07 Other................... (284) (103) (387)
---------- ---------- ---- ---- ------- -------- -------
$4,291,889 $3,921,946 3.17% 3.05% Total................... $10,956 $ 5,390 $16,346
========== ========== ==== ==== ------- -------- -------
Net interest income..... $24,640 $ (605) $24,035
======= ======== =======
<CAPTION>
AVERAGE
AVERAGE VOLUME RATE 1993 VS. 1992 INCREASE (DECREASE)
--------------------- ---------- ------------------------ --------------------------
1993 1992 1993 1992 VOLUME RATE TOTAL
---------- ---------- ---- ---- ------- -------- -------
(IN THOUSANDS)
<C> <C> <C> <C> <S> <C> <C> <C>
Change in interest
earned on:
$1,786,529 $1,337,305 8.06% 9.03% Loans................... $37,277 $(14,057) $23,220
Securities:
2,468,796 1,868,585 4.70 5.48 Taxable................. 29,658 (16,072) 13,586
260,474 240,536 6.53 7.41 Tax-exempt.............. 1,405 (2,203) (798)
Federal funds sold and
320,391 405,240 3.09 3.63 resell agreements...... (2,813) (2,019) (4,832)
58,156 70,517 5.24 6.42 Other................... (722) (758) (1,480)
---------- ---------- ---- ---- ------- -------- -------
$4,894,346 $3,922,184 5.92% 6.63% Total................... $64,805 $(35,109) $29,696
========== ========== ==== ==== ------- -------- -------
Change in interest paid
on:
Interest-bearing
$3,285,879 $2,657,322 3.02 3.88 deposits............... $21,579 $(25,475) $(3,896)
Federal funds purchased
and repurchase
581,130 511,090 2.78 3.17 agreements............. 2,074 (2,099) (25)
54,937 69,315 8.07 6.61 Other................... (1,053) 906 (147)
---------- ---------- ---- ---- ------- -------- -------
$3,921,946 $3,237,727 3.05% 3.82% Total................... $22,600 $(26,668) $(4,068)
========== ========== ==== ==== ------- -------- -------
Net interest income..... $42,205 $ (8,441) $33,764
======= ======== =======
</TABLE>
A-27
<PAGE>
Average earning assets were $5.4 billion in 1994, compared to $4.9 billion in
1993 and $3.9 billion in 1992. The Acquired Banks' contribution to consolidated
average earning assets was $1.1 billion in 1994 and $743 million in 1993.
Net interest margin measures the Company's ability to generate net interest
income. It is defined as net interest income (FTE) as a percent of earning
assets. The behavior of the margin depends on the interaction of three factors:
1) net interest spread (defined as the difference between the yield on earning
assets and the rate paid on interest-bearing liabilities); 2) yield earned on
assets funded by interest-free funding sources (primarily noninterest-bearing
demand deposits and equity capital); and 3) percentage of earning assets funded
by interest-free funding sources.
TABLE 2: ANALYSIS OF NET INTEREST MARGIN
<TABLE>
<CAPTION>
1994 1993 CHANGE
---------- ---------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Average earning assets....................... $5,387,357 $4,894,346 $493,011
Interest-bearing liabilities................. 4,291,889 3,921,946 369,943
---------- ---------- --------
Interest-free funds.......................... $1,095,468 $ 972,400 $123,068
========== ========== ========
Free funds ratio (free funds to earning as- 20.33% 19.87% 0.46%
sets)....................................... ===== ===== ====
Tax-equivalent yield on earning assets....... 6.13% 5.92% 0.21%
Cost of interest-bearing liabilities......... 3.17 3.05 0.12
----- ----- ----
Net interest spread.......................... 2.96% 2.87% 0.09%
Benefit of interest-free funds............... 0.65 0.61 0.04
----- ----- ----
Net interest margin.......................... 3.61% 3.48% 0.13%
===== ===== ====
</TABLE>
The Company's net interest margin was 3.61% in 1994, compared to 3.48% in
1993 and 1992. A primary factor in the 1994 increase in net interest margin was
a change in asset mix with loans increasing to 40% of average earning assets,
compared to 37% in 1993 and 34% in 1992. Average loans increased by $362
million, or 20% in 1994 and $449 million in 1993. The average loans of the
Acquired Banks were $456 million in 1994 and $321 million in 1993. The
remaining increases resulted from increased marketing efforts to promote this
line of business and higher customer demand.
The Company's yield on earning assets was 6.13% in 1994, compared to 5.92% in
1993 and 6.63% in 1992. The 1994 increase resulted from an increase in loan
volume and an increase in the rate earned on securities and loans. As interest
rates increased during the year, security maturities and short term investments
were reinvested at higher rates. In addition 56% of the Company's loan
portfolio has floating interest rates, therefore the effect of rate changes is
recognized immediately. The decrease in the yield on earning assets for 1993,
as compared to 1992, resulted from a general decrease in short-term interest
rates.
The Company's cost of funds also increased during the year as a result of
rising interest rates. Cost of funds increased 12 basis points to 3.17%,
compared to 3.05% in 1993. Cost of funds in 1992 was 3.82%. The increase in
cost of funds in 1994 did not keep pace with the increasing yield on earning
assets, and as a result, the Company's net interest spread increased to 2.96%,
compared to 2.87% in 1993 and 2.81% in 1992. During 1994, noninterest-bearing
demand deposits represented 25.2% of funding sources, compared to 24.5% in 1993
and 22.5% in 1992. The Company expects its interest spread and margin to
improve in 1995 regardless of additional increases in interest rates.
A-28
<PAGE>
TABLE 3: ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
This table presents an allocation of the allowance for loan losses by loan
categories; however, the breakdown is based on a number of qualitative factors,
and the amounts presented are not necessarily indicative of actual future
charge-offs in any particular category. The percent of loans in each category
to total loans is provided in Table 6.
<TABLE>
<CAPTION>
DECEMBER 31
---------------------------------------
LOAN CATEGORY 1994 1993 1992 1991 1990
------------- ------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Commercial.............................. $16,000 $17,500 $13,250 $14,000 $14,000
Consumer................................ 13,400 13,500 10,500 11,000 11,000
Real estate............................. 2,500 3,000 500 1,000 1,000
Agricultural............................ 500 1,000 100 100 100
Leases.................................. 50 50 50 50 50
Unallocated............................. 77 540 56 91 1,118
------- ------- ------- ------- -------
Total allowance........................ $32,527 $35,590 $24,456 $26,241 $27,268
======= ======= ======= ======= =======
</TABLE>
PROVISION AND ALLOWANCE FOR LOAN LOSS
The allowance for loan losses (ALL) represents management's judgement of the
losses inherent in the Company's loan portfolio. The provision for loan losses
is the amount necessary to adjust the ALL to the level considered appropriate
by management. The adequacy of the ALL is reviewed quarterly considering such
items as historical loss trends, a review of individual loans, current and
projected economic conditions, loan growth and characteristics and other
factors. Bank regulatory agencies require that the adequacy of the ALL be
maintained on a bank-by-bank basis for each of the Company's subsidiaries.
The Company's ALL was $32.5 million, $35.6 million and $24.5 million, as of
December 31, 1994, 1993 and 1992, respectively. The ALL as a percentage of
loans was 1.4% for 1994 and 1.7% for both 1993 and 1992. At December 31, 1994,
the ALL exceeded the level of nonperforming loans by $27.2 million. Included in
the consolidated ALL was $11.1 million and $11.4 million for 1994 and 1993,
respectively, attributable to the Acquired Banks. As shown in Table 3, the ALL
has been allocated to various portfolio segments. The Company manages the ALL
against the entire loan portfolio and therefore the allocation of the ALL to a
particular loan segment may change in the future.
The provision for loan losses was $2.6 million in 1994, $3.3 million in 1993
and $3.0 million in 1992. Net charge-offs in 1994 were $5.7 million, compared
to $4.3 million in 1993 and $5.0 million in 1992. The overall quality of the
Company's loan portfolio has allowed management to record a loss provision that
was less than the amount of net charge-offs during each of the last three
years. Based on a current assessment of the risk in the loan portfolio, and
absent any unforeseen deterioration in the loan portfolio, management does not
anticipate a material increase in the loss provision for 1995.
As noted in Table 4, over one half of the Company's net charge-offs were
related to bankcard loans, which, compared to the remainder of the portfolio,
earn an increased yield to reflect higher anticipated losses. The level of net
losses and past due loans in the Company's bankcard portfolio as a percentage
of total is well below industry averages. At December 31, 1994, past due loans
totaled 2.22% of this portfolio. Excluding net losses related to bankcard
loans, 81% of the remaining net losses of the Company in 1994 was attributable
to the charge-off of one commercial loan.
NONINTEREST INCOME
Management has stressed growth of noninterest income to enhance the Company's
profitability since fee-based services are non-credit related, provide steady
income and are not affected by fluctuations in interest rates. These activities
are also relatively low-risk and do not impact the Company's regulatory capital
needs.
A-29
<PAGE>
Fee-based services that have been emphasized include trust and securities
processing, securities trading, cash management and merchant processing. Fee
income (exclusive of net security gains) as a percent of adjusted operating
revenues has increased from 38.4% in 1989 to 41.8% in 1994. Adjusted operating
revenues is defined as tax-equivalent net interest income plus noninterest
income, excluding net security gains.
Noninterest income, exclusive of net securities gains, was $139.8 million in
1994, compared to $130.5 million in 1993 and $108.2 million in 1992. The
contribution of the Acquired Banks to the above noninterest income was $13.3
million in 1994 and $9.0 million in 1993.
Trust fees continue to be the largest component of noninterest income as they
totaled $35.0 million in 1994, $32.0 million in 1993 and $27.3 million in 1992.
Trust fees related to the Acquired Banks were $4.6 million in 1994 and $2.5
million in 1993. The Company has long been identified as a leader in the trust
area and management will continue to market and grow this recognized strength
of the Company. The aggregate value of managed trust assets at December 31,
1994 was $8.1 billion, compared to $8.7 billion and $7.5 billion at December
31, 1993 and 1992, respectively.
TABLE 4: ANALYSIS OF ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Allowance -- beginning
of year................ $ 35,590 $ 24,456 $ 26,241 $ 27,268 $ 27,176
Provision for loan loss-
es..................... 2,640 3,332 2,981 6,044 6,604
Allowances of acquired
banks.................. -- 12,076 207 352 110
Charge-offs:
Commercial............. $ (2,833) $ (1,717) $ (1,401) $ (3,823) $ (3,077)
Consumer:
Bankcard.............. (4,236) (3,983) (4,082) (4,657) (4,262)
Other................. (1,018) (836) (890) (864) (1,264)
Real estate............ (182) (578) (175) (81) (57)
Agricultural........... -- (21) -- (13) (5)
---------- ---------- ---------- ---------- ----------
Total charge-offs... $ (8,269) $ (7,135) $ (6,548) $ (9,438) $ (8,665)
Recoveries:
Commercial............. $ 573 $ 1,051 $ 186 $ 680 $ 523
Consumer:
Bankcard.............. 1,102 1,144 956 1,002 1,051
Other................. 528 469 363 307 364
Real estate............ 118 138 70 19 73
Agricultural........... 245 59 -- 7 32
---------- ---------- ---------- ---------- ----------
Total recoveries.... $ 2,566 $ 2,861 $ 1,575 $ 2,015 $ 2,043
---------- ---------- ---------- ---------- ----------
Net charge-offs......... $ (5,703) $ (4,274) $ (4,973) $ (7,423) $ (6,622)
---------- ---------- ---------- ---------- ----------
Allowance -- end of
year................... $ 32,527 $ 35,590 $ 24,456 $ 26,241 $ 27,268
========== ========== ========== ========== ==========
Average loans........... $2,148,606 $1,786,529 $1,337,305 $1,356,082 $1,349,078
Loans at end of year,
net of unearned
interest............... 2,269,617 2,159,761 1,483,048 1,349,144 1,548,678
Allowance to loans at
year-end............... 1.43% 1.65% 1.65% 1.95% 1.76%
Allowance as a multiple
of net charge-offs 5.70x 8.33x 4.92x 3.54x 4.12x
Net charge-offs to:
Provision for loan
losses................ 216.02% 128.27% 166.82% 122.82% 100.27%
Average loans.......... 0.27 0.24 0.37 0.55 0.49
</TABLE>
A-30
<PAGE>
Income from the Company's custodial trust business, principally from the
mutual fund industry, declined 6.6% in 1994 to $12.5 million, compared to $13.3
million in 1993 and $13.7 million in 1992. The decrease in 1994 fee income was
the result of negotiated price adjustments and a decrease in activity
reflective of the decreased performance of the mutual fund industry. A large
customer of the Company was sold in 1994, which will cause a loss of custodial
processing business. This potential loss of business is not expected to
significantly affect the Company due to previous pricing concessions, new
business opportunities and expected reductions in variable costs. Total trust
assets under custody were $189.8 billion at December 31, 1994, compared to
$187.1 billion at year end 1993 and $150.6 billion at year end 1992.
Service charge income on deposit accounts increased to $32.9 million in 1994,
compared to $30.2 million in 1993 and $24.1 million in 1992. The Acquired Banks
contributed service charge income of $4.7 million in 1994 and $3.2 million in
1993. The remaining increases for 1994 and 1993 resulted primarily from higher
transaction volumes. Increased interest rates applied to compensating balances
caused a comparative decrease in fees received. Other service charge income was
$15.6 million in 1994, compared to $14.1 million in 1993 and $9.7 million in
1992. The increase in 1994 income was primarily the result of the addition of
the Acquired Banks for a full year. The 1993 increase was affected by both the
acquisition and a 45% increase in fees related to cash management services.
Bankcard fees increased by 22% to $27.4 million in 1994, compared to $22.4
million in 1993 and $18.3 million in 1992. The increase in fee income for both
1994 and 1993 was the result of a higher volume of credit card transactions
processed for merchants.
Trading and investment banking income decreased by 27% in 1994 to $9.9
million, compared to $13.6 million in 1993 and $12.5 million in 1992. The sharp
1994 decrease was consistent with industry experience for the year as
transaction volumes decreased significantly, particularly sales of higher
margin mortgage-backed securities. An increased volume of sales of mortgaged-
backed securities and tax-exempt securities accounted for the increase in
income in 1993 as compared to 1992.
Other fee income increased to $6.5 million in 1994 from $4.7 million in 1993
and $2.5 million in 1992. The increase for both 1994 and 1993 was primarily
attributable to the acquisition of the Acquired Banks. Net security gains
totaled $3.6 million in 1994, $1.6 million in 1993 and $5.3 million in 1992.
During the first quarter of 1994 the Company repositioned a portion of its
available for sale portfolio which resulted in over 80% of net security gains
for the year. A similar repositioning of the portfolio in 1992 resulted in 80%
of that year's net security gains.
TABLE 5: ANALYSIS OF NONINTEREST EXPENSE
<TABLE>
<CAPTION>
1994 1993
-------------------------------------- --------------------------------
TOTAL WITHOUT ACQUIRED TOTAL WITHOUT
ACQUIRED BANKS ACQUIRED BANKS TOTAL BANKS ACQUIRED BANKS TOTAL
-------------- -------------- -------- -------- -------------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Personnel............... $17,659 $102,414 $120,073 $13,125 $ 93,204 $106,329
Occupancy............... 3,155 11,941 15,096 2,100 12,709 14,809
Equipment............... 2,348 18,379 20,727 2,741 17,578 20,319
Supplies and services... 2,326 16,863 19,189 1,706 15,742 17,448
Bankcard................ 874 21,801 22,675 564 18,096 18,660
Marketing............... 1,027 14,545 15,572 839 12,724 13,563
FDIC/regulatory......... 2,297 9,928 12,225 1,716 9,239 10,955
Intangibles............. 4,846 2,282 7,128 3,008 2,233 5,241
Other................... 6,673 18,217 24,890 3,152 20,501 23,653
------- -------- -------- ------- -------- --------
Total................. $41,205 $216,370 $257,575 $28,951 $202,026 $230,977
======= ======== ======== ======= ======== ========
</TABLE>
A-31
<PAGE>
NONINTEREST EXPENSE
Noninterest expense increased by $26.6 million in 1994 to $257.6 million from
$231.0 million in 1993 and $184.9 million in 1992. As shown in Table 5, 46% of
the increase in 1994 and 63% of the increase in 1993 resulted from the
acquisition of the Acquired Banks. The impact of the acquisitions on 1994
noninterest expense is even greater than indicated above, as a number of
backroom and operating functions of the Acquired Banks have been consolidated
or merged with the Company's lead bank. These consolidation efforts will
continue in order to increase the efficiency of the Company.
Personnel costs are the largest component of noninterest expense and totaled
$120.1 million in 1994, $106.3 million in 1993 and $87.9 million in 1992. The
addition of the Acquired Banks added $17.7 million and $13.1 million to these
cost in 1994 and 1993, respectively. The remaining increase resulted from merit
pay increases, additional staffing, higher health insurance costs and increased
contributions to employee benefit plans.
Occupancy costs increased only marginally in 1994 after a $2.6 million
increase in 1993. The 1993 increase was primarily the result of the Acquired
Banks. Equipment expense also increased slightly in 1994, compared to a 29.0%
increase in 1993. Approximately 60% of the 1993 increase was due to the
Acquired Banks. The remaining increase resulted from depreciation on new data
processing, check imaging and bond trading system equipment. Supplies and
services expense increased by $1.7 million in 1994 and $3.0 million in 1993.
These increases resulted primarily from inclusion of the Acquired Banks.
Bankcard processing expense increased to $22.7 million in 1994 compared to
$18.7 million in 1993 and $16.0 million in 1992. These increases were primarily
due to a higher volume of merchant processing transactions. Expenses in 1994
also include cost associated with a planned conversion of the bankcard
processing system, scheduled for first quarter of 1995.
Marketing and business development expense increased by $2.0 million in 1994
and by $3.0 million in 1993. During both 1994 and 1993 the Company continued a
campaign to promote new loan business. The 1993 increase exceeds the 1994
increase as a result of the Acquired Banks.
The increases in both FDIC and regulatory fees and amortization of
intangibles of purchased banks for 1994 and 1993 were due primarily to the
acquisition of the Acquired Banks.
Other noninterest expense totaled $24.9 million in 1994, $23.7 million in
1993 and $17.3 million in 1992. The increase in 1994 was due solely to the
Acquired Banks while the 1993 increase also included higher fees paid for
various processing services.
INCOME TAXES
The Company income tax expense for 1994 was $22.6 million, compared to $20.1
million in 1993 and $15.7 million in 1992. The effective tax rate for each year
was 32.08%, 32.87% and 28.57%, respectively. For 1993 and 1994, the federal
statutory tax rate was 35%, compared to 34% in 1992. The primary differences
between the Company effective tax rate and statutory rate for all three years
relates principally to non-taxable interest income and an increase in
nondeductible goodwill amortization in 1994 and 1993.
FINANCIAL CONDITION
LOANS
For the year ended December 31, 1994, the Company's average loans were $2.1
billion, compared to $1.8 billion in 1993 and $1.3 billion in 1992. This
represents a 20% increase in average loans for 1994 over 1993 and a 34%
increase for 1993 over 1992. Year end loan totals were $2.3 billion, $2.2
billion and $1.5 billion for 1994, 1993 and 1992, respectively. Average loans
of the Acquired Banks were $456 million in 1994 and $321 million in 1993. Year
end loans for the Acquired Banks were $434 million in 1994 and $489 million
A-32
<PAGE>
in 1993. Exclusive of the impact of the Acquired Banks, year end 1994 loans
increased 10% over the level at year end 1993. This increase was the result of
increased customer demand, fueled by an improved economy, and continued
emphasis on business development efforts.
Table 6 presents an analysis of loans by type which shows there has been no
significant increases in any specific loan category for year end 1994, except
consumer loans. The majority of the growth in this loan segment has been the
result of increases in indirect loans from automobile dealers at two of the
Company's affiliates. Credit reviews of these portfolios indicate no excessive
risk has been taken to achieve this growth.
At December 31, 1994, commercial real estate loans comprised 12.4% of total
loans, compared to 12.9% at year end 1993. The largest component of this
segment is loans secured by commercial property which totaled $218.9 million
and $211.3 million at year end 1994 and 1993, respectively. The geographic mix
of these loans is well diversified to the markets served by the Company's
affiliate banks. Approximately 46% of this segment is secured by commercial
property in the metropolitan Kansas City area. The Company's commercial real
estate loans generally do not exceed a maximum loan to value ratio of 80% and
for the most part the properties are owner-occupied. The Company keeps regular
contact with these customers in order to monitor changes in the financial
condition of the customer and the market. Generally these borrowers have an
established relationship with the Company that includes credit and noncredit
products.
TABLE 6: ANALYSIS OF LOANS BY TYPE
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
AMOUNT
------ (IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Commercial.............. $1,066,621 $1,035,159 $ 777,205 $ 652,583 $ 877,629
Agricultural............ 69,206 68,148 28,880 35,035 28,055
Leases.................. 2,157 1,627 1,930 2,595 1,849
Real estate -- commer-
cial................... 281,011 280,060 140,278 126,326 95,037
---------- ---------- ---------- ---------- ----------
Total business-relat-
ed................... $1,418,995 $1,384,994 $ 948,293 $ 816,539 $1,002,570
---------- ---------- ---------- ---------- ----------
Bankcard................ $ 188,374 $ 180,345 $ 145,241 $ 148,361 $ 160,533
Other consumer install-
ment................... 500,298 411,037 282,726 279,500 272,779
Real estate -- residen-
tial................... 163,554 186,097 110,061 109,547 122,163
---------- ---------- ---------- ---------- ----------
Total consumer-relat-
ed................... $ 852,226 $ 777,479 $ 538,028 $ 537,408 $ 555,475
---------- ---------- ---------- ---------- ----------
Total loans........... $2,271,221 $2,162,473 $1,486,321 $1,353,947 $1,558,045
Unearned interest....... (1,604) (2,712) (3,273) (4,803) (9,367)
Allowance for loan loss-
es..................... (32,527) (35,590) (24,456) (26,241) (27,268)
---------- ---------- ---------- ---------- ----------
Net loans............. $2,237,090 $2,124,171 $1,458,592 $1,322,903 $1,521,410
========== ========== ========== ========== ==========
<CAPTION>
AS A % OF TOTAL LOANS
---------------------
<S> <C> <C> <C> <C> <C>
Commercial.............. 47.0% 47.9% 52.3% 48.2% 56.3%
Agricultural............ 3.0 3.2 2.0 2.6 1.8
Leases.................. 0.1 0.1 0.1 0.2 0.1
Real estate -- commer-
cial................... 12.4 12.9 9.4 9.3 6.1
---------- ---------- ---------- ---------- ----------
Total business-relat-
ed................... 62.5% 64.1% 63.8% 60.3% 64.3%
---------- ---------- ---------- ---------- ----------
Bankcard................ 8.3% 8.3% 9.8% 11.0% 10.3%
Other consumer install-
ment................... 22.0 19.0 19.0 20.6 17.5
Real estate -- residen-
tial................... 7.2 8.6 7.4 8.1 7.9
---------- ---------- ---------- ---------- ----------
Total consumer-relat-
ed................... 37.5% 35.9% 36.2% 39.7% 35.7%
---------- ---------- ---------- ---------- ----------
Total loans........... 100.0% 100.0% 100.0% 100.0% 100.0%
========== ========== ========== ========== ==========
</TABLE>
A-33
<PAGE>
LOAN QUALITY
The quality of the loan portfolio has always been an underlying strength of
the Company. A measure of the effectiveness of credit risk management is the
percentage of the loan portfolio that is classified as nonperforming.
Nonperforming loans include nonaccrual loans and restructured loans. The
Company's nonperforming loans totaled $5.3 million at December 31, 1994,
representing only 0.2% of the loan portfolio, compared to $7.2 million and 0.3%
one year earlier. The Company's nonperforming loans have not exceeded 0.5% of
total loans in any of the last five years.
Nonperforming assets include foreclosed real estate with the nonaccrual and
restructured loans. The Company's nonperforming asset ratio (nonperforming
assets divided by loans plus foreclosed real estate) was 0.5% at December 31,
1994 and 0.7% at December 31, 1993.
Key factors of the Company's loan quality program are a sound credit policy
combined with periodic and independent credit reviews. All affiliate banks
operate under written loan policies. Credit decisions continue to be based on
the borrower's cash flow position and the value of underlying collateral, as
well as other relevant factors. Each bank is responsible for evaluating its
loans by using a ranking system. In addition, the Company has an internal loan
review staff that operates independent of the affiliate banks. This review team
performs periodic examinations of each bank's loans for credit quality,
documentation and loan administration.
Another means of ensuring loan quality is diversification. By keeping its
loan portfolio diversified, the Company has avoided problems associated with
undue concentrations of loans within particular industries. Commercial real
estate loans comprise 12.4% of total loans, with a history of no significant
losses. The Company has no significant exposure to highly leveraged
transactions and has no foreign credits in its loan portfolio.
A loan is generally placed on nonaccrual status when payments are past due 90
days or more and when management has considerable doubt about the borrower's
ability to repay on the terms originally contracted. The accrual of interest is
discontinued and recorded thereafter only when actually received in cash. At
year end 1994, $215,000 of interest due was not recorded as earned, compared to
$210,000 for the prior year.
Certain loans are restructured to provide a reduction or deferral of interest
or principal because of deterioration in the financial condition of the
respective borrowers. Management estimates that approximately $30,000 of
additional interest would have been earned in 1994 if the terms of these loans
were similar to other comparable loans. In certain instances, the Company
continues to accrue interest on loans past due 90 days or more. Though the loan
payments are delinquent, collection of interest and principal is expected to
resume and sufficient collateral is believed to exist to protect the Company
from significant loss. Consequently, management considers the ultimate
collection of these loans to be reasonable and has recorded $54,000 of interest
due as earned for 1994. The comparative figure for 1993 was $214,000.
In addition to the loans discussed above, management has identified through
its loan ranking system $920,000 of potential problem loans. Though the loan
payments are current, the borrowers' abilities to comply with the stated terms
are questioned. Each of these loans is subject to ongoing management review,
including current classification.
Other real estate that has been acquired through foreclosures has a carrying
value of $5.4 million, which approximates market value. The largest portion of
this is a property located in Kansas City. The remaining other real estate
parcels are primarily located in Kansas.
A-34
<PAGE>
TABLE 7: LOAN QUALITY
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------------------------
1994 1993 1992 1991 1990
------- ------- ------- ------ ------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Nonaccrual loans.................... $ 3,131 $ 4,639 $ 1,887 $4,744 $5,746
Restructured loans.................. 2,149 2,553 1,205 932 301
------- ------- ------- ------ ------
Total nonperforming loans......... $ 5,280 $ 7,192 $ 3,092 $5,676 $6,047
Other real estate owned*............ 5,388 7,187 6,932 2,325 61
------- ------- ------- ------ ------
Total nonperforming assets........ $10,668 $14,379 $10,024 $8,001 $6,108
======= ======= ======= ====== ======
Nonperforming loans as a % of loans. 0.23% 0.33% 0.21% 0.42% 0.39%
Allowance as a multiple of
nonperforming loans................ 6.16x 4.95x 7.91x 4.62x 4.51x
Nonperforming assets as a % of loans
plus other real estate owned....... 0.47% 0.66% 0.67% 0.59% 0.39%
Loans past due 90 days or more...... $ 4,779 $ 6,359 $ 4,507 $5,500 $8,543
As a % of loans..................... 0.21% 0.29% 0.30% 0.41% 0.55%
</TABLE>
--------
* Includes in-substance foreclosures.
SECURITIES
Effective for year end 1993, the Company adopted Financial Accounting
Standards Board Statement 115, "Accounting for Certain Investments in Debt and
Equity Securities."
At December 31, 1994, the Company had total securities of $2.7 billion,
compared to $3.0 billion at year end 1993. Securities, which include available
for sale and held to maturity securities, represented 48.4% of total earning
assets at year end 1994, compared to 53.6% for 1993. The percentage breakdown
of securities by classification for year end 1994 and 1993 was as follows:
available for sale, 86% and 91%, respectively, and held to maturity, 14% and
9%, respectively.
The percentage increase in securities held to maturity was due to the
purchase of high quality mortgage backed securities during the first quarter of
1994. The Company has the positive ability and intent to hold these securities
until maturity. The remaining items in this classification are securities of
state and political subdivisions.
The average life of the Company's securities portfolio was approximately 17
months at December 31, 1994, compared to 24 months at year end 1993. Included
in Table 8 and on Table 9 is an analysis of the cost, fair value and average
yield of the Company's securities available for sale and securities held to
maturity.
A-35
<PAGE>
TABLE 8: SECURITIES AVAILABLE FOR SALE
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE YIELD
---------- ---------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
DECEMBER 31, 1994
U.S. Treasury................................ $2,197,912 $2,142,417 4.99%
U.S. Agencies................................ 69,774 69,294 5.77
Mortgage-backed.............................. 57,969 55,477 5.68
Federal Reserve Bank Stock................... 3,656 3,656
Equity....................................... 2,764 4,248
Other........................................ 121 121
---------- ----------
Total....................................... $2,332,196 $2,275,213
========== ==========
DECEMBER 31, 1993
U.S. Treasury................................ $2,518,436 $2,539,479 4.72%
U.S. Agencies................................ 76,585 76,304 5.06
Mortgage-backed.............................. 73,293 73,472 5.43
Federal Reserve Bank Stock................... 4,620 4,620
Equity....................................... 3,940 6,067
Other........................................ 270 270
---------- ----------
Total....................................... $2,677,144 $2,700,212
========== ==========
TABLE 9: INVESTMENT SECURITIES HELD TO MATURITY
<CAPTION>
YIELD/
AMORTIZED AVERAGE
COST FAIR VALUE MATURITY
---------- ---------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
DECEMBER 31, 1994
Due in 1 year or less........................ $ 99,081 $ 98,564 6.23%
Due after 1 year through 5 years............. 243,800 235,357 7.35
Due after 5 years through 10 years........... 41,485 39,270 7.17
Due after 10 years........................... 468 453 9.01
---------- ----------
Total...................................... $ 384,834 $ 373,644 2 yr. 5 mo.
========== ==========
DECEMBER 31, 1993
Due in 1 year or less........................ $ 114,942 $ 114,274 5.80%
Due after 1 year through 5 years............. 134,922 138,462 7.51
Due after 5 years through 10 years........... 28,544 29,050 7.00
Due after 10 years........................... 536 560 8.98
---------- ----------
Total...................................... $ 278,944 $ 282,346 2 yr. 1 mo.
========== ==========
DECEMBER 31, 1992
State and Political Subdivisions............. $ 201,458 $ 205,185 1 yr. 8 mo.
========== ==========
</TABLE>
OTHER EARNING ASSETS
Federal funds transactions essentially are overnight loans between financial
institutions. The net sold position at year end 1994 was $149.6 million,
compared to $49.8 million for year end 1993. During 1994, the Company was a net
purchaser of federal funds and this funding source averaged $60.1 million.
During 1993, the Company was a net seller of federal funds, which averaged
$36.3 million.
A-36
<PAGE>
The Investment Banking Division of the Company's principal affiliate bank
buys and sells federal funds as agent for nonaffiliated banks. Due to the
agency arrangement, these transactions do not appear on the balance sheet and
averaged $568.6 million in 1994 and $776.8 million in 1993.
The Investment Banking Division also maintains an active securities trading
inventory. The average holdings in the securities trading inventory in 1994
were $56.5 million, compared to $58.1 million in 1993, and were recorded at
market value.
TABLE 10: MATURITIES OF TIME DEPOSITS OF $100,000 OR MORE
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------
1994 1993 1992
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Maturing within 3 months............................ $ 95,514 $160,893 $114,555
After 3 months but within 6......................... 39,756 29,482 20,416
After 6 months but within 12........................ 27,124 30,099 15,309
After 12 months..................................... 29,085 30,282 20,375
-------- -------- --------
Total............................................. $191,479 $250,756 $170,655
======== ======== ========
</TABLE>
DEPOSITS AND BORROWED FUNDS
Interest-bearing liabilities averaged $4.3 billion in 1994, compared to $3.9
billion in 1993. The increase was primarily the result of the acquisition of
the Acquired Banks which had average interest-bearing liabilities of $880
million and $594 million for 1994 and 1993, respectively. Interest-bearing
liabilities were $4.4 billion at both year end 1994 and 1993.
Interest-bearing deposits averaged $3.6 billion in 1994, compared to $3.3
billion in 1993. Year end totals were $3.6 billion for 1994 and $3.7 billion
for 1993. Interest-bearing demand and savings deposits, the largest portion of
the Company's deposit base, represented 47.1% of total average deposits in
1994, compared to 45.9% for 1993. Time deposits have decreased as a percentage
of total deposits in each of the last four years. Interest rate uncertainties
have caused some customers to avoid investing in products with longer-term
maturities.
Average noninterest-bearing demand deposits represented 28.8% of total
average deposits for 1994, compared to 27.9% for 1993. This change resulted
from increased balances from custody processing, corporate and trust customers.
Repurchase agreements averaged $498.4 million in 1994, compared to $515.9
million in 1993. Repurchase agreements are transactions involving investment
funds that are exchanged for securities to repurchase the same or similar
issues at an agreed-upon price and date. The Investment Banking Division buys
and sells repurchase agreements as principal for nonaffiliated banks. These
agreements are reflected on the balance sheet as both an asset ("resell
agreement") and a corresponding liability ("repurchase agreement"), since such
funds are purchased and then sold to approved dealer banks and primary dealers.
The amount of repurchase agreements handled in this manner was $244.7 million
at December 31, 1994, compared to $263.2 million one year earlier.
At year-end 1994, the Company had repurchase agreements of $416.5 million for
its own funding needs, compared to $335.7 million at December 31, 1993.
The Company's other short-term borrowings consist primarily of U.S. Treasury
demand notes. These demand notes represent treasury tax deposits remitted to
the Federal Reserve Bank other than daily. The rate paid on these funds is
0.25% below the weekly average federal funds rate.
A-37
<PAGE>
The Company's long-term borrowings consist of four senior note issues and
some installment notes. The Company's ratio of long-term debt to total capital,
a measure of debt capacity, was 8.31% at December 31, 1994, which compares very
favorably with its peer group. The Company borrowed $25.0 million in 1993 under
a medium-term note program to fund the cash portions of the Kansas bank
acquisitions. Of the total, $10.0 million of notes were issued with a seven-
year maturity at 6.81% and $15.0 million of notes were issued with a 10-year
maturity at 7.30%.
TABLE 11: ANALYSIS OF AVERAGE DEPOSITS
<TABLE>
<CAPTION>
AMOUNT 1994 1993 1992 1991 1990
------ ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Noninterest-bearing de-
mand................... $1,445,376 $1,273,672 $ 938,322 $ 731,088 $ 747,897
Interest-bearing demand
and savings............ 2,365,024 2,092,048 1,559,004 1,274,520 1,105,840
Time deposits under
$100,000............... 1,003,784 957,677 904,970 930,236 851,568
---------- ---------- ---------- ---------- ----------
Total core deposits... $4,814,184 $4,323,397 $3,402,296 $2,935,844 $2,705,305
Time deposits of
$100,000 or more....... 207,217 236,154 193,348 253,380 485,872
---------- ---------- ---------- ---------- ----------
Total deposits........ $5,021,401 $4,559,551 $3,595,644 $3,189,224 $3,191,177
========== ========== ========== ========== ==========
<CAPTION>
AS A % OF TOTAL DEPOSITS
------------------------
<S> <C> <C> <C> <C> <C>
Noninterest-bearing de-
mand................... 28.8% 27.9% 26.1% 22.9% 23.4%
Interest-bearing demand
and savings............ 47.1 45.9 43.3 40.0 34.7
Time deposits under 20.0 21.0 25.2 29.2 26.7
$100,000............... ----- ----- ----- ----- -----
Total core deposits... 95.9% 94.8% 94.6% 92.1% 84.8%
Time deposits of 4.1 5.2 5.4 7.9 15.2
$100,000 or more....... ----- ----- ----- ----- -----
Total deposits........ 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====
</TABLE>
TABLE 12: SHORT-TERM DEBT
<TABLE>
<CAPTION>
1994 1993 1992
------------- ------------- -------------
AMOUNT RATE AMOUNT RATE AMOUNT RATE
-------- ---- -------- ---- -------- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
At year-end
-----------
Federal funds purchased............ $139,800 4.80% $ 26,210 3.03% $131,000 1.95%
Repurchase agreements.............. 661,203 2.77 598,872 2.91 529,837 2.81
Other.............................. 872 3.71 1,453 2.76 1,583 2.82
-------- -------- --------
Total............................ $801,875 3.13% $626,535 2.91% $662,420 2.64%
======== ======== ========
Average for the year
--------------------
Federal funds purchased............ $166,084 4.04% $ 65,184 2.99% $ 36,237 3.20%
Repurchase agreements.............. 498,415 3.68 515,945 2.75 474,853 3.16
Other.............................. 994 3.26 1,416 2.08 28,349 3.66
-------- -------- --------
Total............................ $665,493 3.77% $582,545 2.78% $539,439 3.19%
======== ======== ========
Maximum month-end balance
-------------------------
Federal funds purchased............ $222,000 $134,000 $131,000
Repurchase agreements.............. 699,216 598,872 561,831
Other.............................. 1,975 2,367 62,539
-------- -------- --------
Total............................ $923,191 $735,239 $755,370
======== ======== ========
</TABLE>
A-38
<PAGE>
CAPITAL
The Company places a significant emphasis on the maintenance of strong
capital which helps safeguard our customers' funds, promotes investor
confidence, provides access to funding sources under favorable terms, and
enhances the ability to capitalize on business growth and acquisition
opportunities. Capital is managed for each subsidiary based upon their
respective risks and growth opportunities, as well as regulatory requirements.
At December 31, 1994, shareholders' equity was $557.3 million, compared to
$586.6 million one year earlier. This 5.0% decrease was the result of recording
an unrealized loss on securities available for sale of $35.2 million, compared
to an unrealized gain on these securities of $14.3 million at year end 1993.
Excluding the effect of the mark to market adjustment on securities available
for sale, shareholders' equity at December 31, 1994, increased by 3.5% from the
previous year. Also contributing to the decrease in shareholders' equity for
1994 was the purchase of 396,984 shares of Company stock for treasury purposes.
During the year, management had the opportunity to repurchase shares of the
Company's stock at a price which, in management's opinion, would enhance
overall shareholder value. Depending on availability, price and cash flow
requirements, management will continue to consider treasury stock purchases
from time to time.
In April, 1994, in order to reduce regulatory expenses, shareholders approved
a reduction in the par value of the Company's common stock from $12.50 per
share to $1.00 per share.
Risk-based capital guidelines established by regulatory agencies set minimum
capital standards based on the level of risk associated with a financial
institution's assets. A financial institution's total capital is required to
equal 8% of risk-weighted assets. At least half of that 8% must consist of Tier
1 core capital, and the remainder may be Tier 2 supplementary capital. The
risk-based capital guidelines indicate the specific risk weightings by type of
asset. Certain off-balance sheet items (such as standby letters of credit and
binding loan commitments) are multiplied by "credit conversion factors" to
translate them into balance sheet equivalents before assigning them specific
risk weightings. Due to the Company's high level of core capital and
substantial portion of earning assets invested in riskless government
securities, the Tier 1 capital ratio of 16.76% and Total capital ratio of
17.85% substantially exceed the regulatory minimums.
DIVIDENDS
The Company's dividend payout ratio was 30.52% in 1994, compared to 31.20% in
1993 and 28.19% in 1992. On July 1, 1994, the Company distributed a 10% stock
dividend to shareholders. All per share data has been restated to give effect
to this stock dividend for all periods presented.
A-39
<PAGE>
TABLE 13: RISK-BASED CAPITAL
The table below computes risk-based capital in accordance with current
regulatory guidelines. These guidelines as of December 31, 1994, excluded net
unrealized gains or losses on securities available for sale from the
computation of regulatory capital and the related risk-based capital ratios.
<TABLE>
<CAPTION>
RISK-WEIGHTED CATEGORY
-----------------------------------------------------
RISK-WEIGHTED ASSETS 0% 20% 50% 100% TOTAL
-------------------- ---------- ---------- -------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Loans:
Residential mortgage... $ -- $ 1,002 $145,348 $ 17,204 $ 163,554
All other.............. -- 72,209 14,827 2,019,027 2,106,063
---------- ---------- -------- ---------- ----------
Total loans.......... $ -- $ 73,211 $160,175 $2,036,231 $2,269,617
Securities available for
sale:
U.S. Treasury.......... $2,197,912 $ -- $ -- $ -- $2,197,912
U.S. agencies and mort-
gage-backed........... 2,122 125,621 -- -- 127,743
Equity securities and
other................. 3,656 33 -- 2,852 6,541
---------- ---------- -------- ---------- ----------
Total securities
available for sale.. $2,203,690 $ 125,654 $ -- $ 2,852 $2,332,196
Investment securities... -- 374,897 9,937 -- 384,834
Trading securities...... 14,959 15,784 -- 239 30,982
Federal funds and resell
agreements............. -- 534,099 -- -- 534,099
Cash and due from banks. 352,562 418,251 -- -- 770,813
All other assets........ -- -- -- 287,898 287,898
---------- ---------- -------- ---------- ----------
Category totals...... $2,571,211 $1,541,896 $170,112 $2,327,220 $6,610,439
---------- ---------- -------- ---------- ----------
Risk-weighted totals.... $ 0 $ 308,379 $ 85,056 $2,327,220 $2,720,655
Off-balance-sheet items
(risk-weighted)........ -- 1,423 35 348,120 349,578
---------- ---------- -------- ---------- ----------
Total risk-weighted
assets.............. $ 0 $ 309,802 $ 85,091 $2,675,340 $3,070,233
========== ========== ======== ========== ==========
<CAPTION>
CAPITAL TIER 1 TIER 2 TOTAL
------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Shareholders' equity.......................... $592,517 $ -- $ 592,517
Minority interest in subsidiaries............. 9 -- 9
Less premium on purchased banks............... (78,091) -- (78,091)
Long-term debt*............................... -- 967 967
Allowance for loan losses..................... -- 32,527 32,527
-------- ---------- ----------
Total capital............................... $514,435 $ 33,494 $ 547,929
======== ========== ==========
<CAPTION>
CAPITAL RATIOS
--------------
<S> <C> <C> <C> <C> <C>
Tier 1 capital to risk-weighted assets........ 16.76%
Total capital to risk-weighted assets......... 17.85
Leverage ratio (Tier 1 to total assets less
premium on purchased banks).................. 7.89
</TABLE>
--------
*Qualifying amounts.
A-40
<PAGE>
ASSET/LIABILITY MANAGEMENT
INTEREST RATE SENSITIVITY
Due to the nature of the Company's business, some degree of interest rate
risk is inherent and appropriate. Management's objective in this area is to
limit the level of earnings exposure arising from interest rate movements. This
analysis is related to liquidity due to the impact of maturing assets and
liabilities. Many of the Company's financial instruments reprice prior to
maturity.
Interest rate sensitivity is measured by "gaps", which is the difference
between interest earning assets and interest-bearing liabilities which reprice
or mature within a specific time interval. A positive gap indicates that
interest earning assets exceed interest-bearing liabilities within a given
interval. A positive gap position results in increased net interest income when
rates increase and the opposite when rates decline.
Management attempts to structure the balance sheet to provide for the
repricing of approximately equal amounts of assets and liabilities within
specific time intervals. Table 15 is a static gap analysis which presents the
Company's assets and liabilities based on their repricing or maturity
characteristics. This analysis shows that for the 180 day interval beginning
January 1, 1995, the Company is in a negative gap position as liabilities
maturing or repricing during this time exceed assets. At the one-year period
the Company has a positive cumulative gap as the ratio of earning assets to
paying liabilities is 1.12%, compared to 1.02% at December 31, 1993.
In management's opinion the static gap report tends to overstate the interest
rate risk of the Company due to certain factors which are not measured on a
static or snapshot analysis. A static gap analysis assumes that all liabilities
reprice based on their contractual term. However, the effect of rate increases
on core retail deposits, approximately 53% of total deposits, tends to lag the
change in market rates. This lag generally lessens the negative impact of
rising interest rates when the Company has more liabilities repricing than
assets. In addition, a static analysis ignores the impact of changes in the mix
and volume of interest-bearing assets and liabilities. During 1994, the
Company's loans increased as a percentage of total earning assets and
noninterest-bearing demand deposit accounts represented a larger component of
total funding sources.
The Company will continue to manage its interest rate risk using static gap
analysis along with other tools which help measure the impact of various
interest rate scenarios. The Company does not use off-balance-sheet hedges or
swaps to manage this risk.
TABLE 14: RATE SENSITIVITY AND MATURITY OF LOANS
The following table presents the rate sensitivity of certain loans maturing
after 1995, compared with the total loan portfolio as of December 31, 1994. Of
the $1,205,622,000 of loans due after 1995, $702,841,000 are to individuals for
the purchase of residential dwellings and other consumer goods. The remaining
$502,781,000 is for all other purposes and reflects maturities of $376,170,000
in 1996 through 1999 and $126,611,000 after 1999.
<TABLE>
<CAPTION>
DECEMBER 31, 1994
-----------------
(IN THOUSANDS)
<S> <C>
Loans due 1995:
Residential homes and consumer goods......................... $ 149,385
All other.................................................... 916,214
----------
$1,065,599
Loans due after 1995:
Variable interest rate....................................... $ 498,919
Fixed interest rate.......................................... 706,703
----------
$1,205,622
Unearned interest and allowance for loan losses............... (34,131)
----------
Net loans.................................................. $2,237,090
==========
</TABLE>
A-41
<PAGE>
TABLE 15: INTEREST RATE SENSITIVITY ANALYSIS
<TABLE>
<CAPTION>
1-90
DECEMBER 31, 1994 DAYS 91-180 DAYS 181-365 DAYS TOTAL OVER 365 DAYS TOTAL
----------------- -------- ----------- ------------ -------- ------------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Earning assets
Loans................... $1,297.4 $176.9 $205.5 $1,679.8 $ 589.8 $2,269.6
Securities*............. 299.2 222.0 447.2 968.4 1,691.6 2,660.0
Federal funds sold and
resell agreements...... 534.1 -- -- 534.1 -- 534.1
Other................... 30.9 -- -- 30.9 0.1 31.0
-------- ------ ------ -------- -------- --------
Total earning assets.. $2,161.6 $398.9 $652.7 $3,213.2 $2,281.5 $5,494.7
-------- ------ ------ -------- -------- --------
% of total earning as-
sets................. 39.3% 7.3% 11.9% 58.5% 41.5% 100.0%
-------- ------ ------ -------- -------- --------
Funding sources
Interest-bearing demand
and savings............ $1,297.1 $ -- $ -- $1,297.1 $1,124.1 $2,421.2
Time deposits........... 338.6 243.9 189.7 772.2 369.0 1,141.2
Federal funds purchased
and repurchase agree-
ments.................. 801.0 -- -- 801.0 -- 801.0
Borrowed funds.......... 1.0 4.5 0.9 6.4 40.8 47.2
Noninterest-bearing
sources................ 3.0 -- -- 3.0 1,081.1 1,084.1
-------- ------ ------ -------- -------- --------
Total funding sources. $2,440.7 $248.4 $190.6 $2,879.7 $2,615.0 $5,494.7
-------- ------ ------ -------- -------- --------
% of total earning as-
sets................. 44.4% 4.5% 3.5% 52.4% 47.6% 100.0%
-------- ------ ------ -------- -------- --------
Interest sensitivity
gap.................... $ (279.1) $150.5 $462.1 $ 333.5 $ (333.5)
Cumulative gap.......... (279.1) (128.6) 333.5 333.5 --
As a % of total earning
assets................. 5.1% 2.3% 6.1% 6.1% --
Ratio of earning assets
to funding sources..... 0.89 1.61 3.42 1.12 0.87
Cumulative ratio --
1994................... 0.89 0.95 1.12 1.12 1.00
-- 1993.......... 0.78 0.85 1.02 1.02 1.00
-- 1992.......... 0.73 0.72 0.90 0.90 1.00
</TABLE>
--------
* Includes securities available for sale based on scheduled maturity dates.
LIQUIDITY
Liquidity represents the Company's ability to meet financial commitments
through the maturity and sale of existing assets or availability of additional
funds. The primary source of liquidity for the Company is regularly scheduled
maturities of assets along with$2.3 billion of high-quality securities
available for sale. The liquidity of the Company and its affiliate banks is
also enhanced by its activity in the federal funds market and by its core
deposits.
The parent company's cash requirements consist primarily of dividends to
shareholders, debt service and treasury stock purchases. Management fees and
dividends received from subsidiary banks traditionally have been sufficient to
satisfy these requirements and are expected to be in the future.
A-42
<PAGE>
TABLE 16: SUMMARY OF OPERATING RESULTS BY QUARTER (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------
MARCH 31 JUNE 30 SEPT. 30 DEC. 31
-------- ------- -------- -------
(IN THOUSANDS EXCEPT PER SHARE
DATA)
<S> <C> <C> <C> <C>
1994
Interest income.............................. $76,119 $80,089 $82,306 $84,746
Interest expense............................. 30,886 33,036 35,197 36,945
------- ------- ------- -------
Net interest income........................ $45,233 $47,053 $47,109 $47,801
Provision for loan losses.................... 382 516 861 881
Noninterest income........................... 36,122 35,523 35,539 36,234
Noninterest expense.......................... 61,889 64,845 64,889 65,952
Income tax provision......................... 5,737 6,107 5,647 5,094
------- ------- ------- -------
Net income................................. $13,347 $11,108 $11,251 $12,108
======= ======= ======= =======
1993
Interest income.............................. $59,817 $69,535 $77,192 $76,671
Interest expense............................. 26,256 29,591 32,604 31,267
------- ------- ------- -------
Net interest income........................ $33,561 $39,944 $44,588 $45,404
Provision for loan losses.................... 738 845 901 848
Noninterest income........................... 28,915 32,901 34,290 35,955
Noninterest expense.......................... 47,763 56,305 62,951 63,958
Income tax provision......................... 4,521 5,123 5,166 5,320
------- ------- ------- -------
Net income................................. $ 9,454 $10,572 $ 9,860 $11,233
======= ======= ======= =======
<CAPTION>
THREE MONTHS ENDED
---------------------------------
MARCH 31 JUNE 30 SEPT. 30 DEC. 31
-------- ------- -------- -------
<S> <C> <C> <C> <C>
PER SHARE 1994
Net income................................... $ 0.69 $ 0.58 $ 0.59 $ 0.65
Dividend..................................... 0.18 0.18 0.20 0.20
Book value................................... 29.75 29.48 29.65 29.33
Market price:
High........................................ 34.55 34.50 34.00 33.25
Low......................................... 31.82 32.05 32.50 29.50
Close....................................... 32.73 33.75 32.50 31.25
PER SHARE 1993
Net income................................... $ 0.63 $ 0.65 $ 0.51 $ 0.58
Dividend..................................... 0.18 0.18 0.18 0.18
Book value................................... 26.89 28.85 29.15 30.25
Market price:
High........................................ 37.05 36.82 36.14 36.59
Low......................................... 33.41 33.41 34.77 33.18
Close....................................... 36.14 35.00 35.45 34.09
</TABLE>
--------
Per share information restated for the 10% stock dividend paid July 1, 1994.
A-43
<PAGE>
UMB FINANCIAL CORPORATION
FIVE-YEAR AVERAGE BALANCE SHEETS/YIELDS AND RATES
<TABLE>
<CAPTION>
1994 1993
---------------------------- ----------------------------
(IN MILLIONS)
(UNAUDITED)
INTEREST RATE INTEREST RATE
AVERAGE INCOME/ EARNED/ AVERAGE INCOME/ EARNED/
BALANCE EXPENSE(1) PAID(1) BALANCE EXPENSE(1) PAID(1)
-------- ---------- ------- -------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Loans, net of unearned
interest (FTE) (2)..... $2,148.6 $173.1 8.06% $1,786.5 $144.0 8.06%
Securities:
Taxable................ $2,555.2 $122.0 4.77 $2,468.8 $116.0 4.70
Tax-exempt (FTE)....... 289.1 18.5 6.41 260.5 17.0 6.53
-------- ------ ---- -------- ------ ----
Total securities...... $2,844.3 $140.5 4.94 $2,729.3 $133.0 4.88
Federal funds sold and
resell agreements...... 338.0 13.6 4.03 320.4 9.9 3.09
Other earning assets
(FTE).................. 56.5 3.2 5.65 58.1 3.1 5.24
-------- ------ ---- -------- ------ ----
Total earning assets
(FTE)................ $5,387.4 $330.4 6.13 $4,894.3 $290.0 5.92
Allowance for loan
losses................. (34.2) (31.9)
Cash and due from banks. 675.3 604.4
Other assets............ 344.1 300.0
-------- --------
Total assets.......... $6,372.6 $5,766.8
======== ========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing demand
and savings deposits... $2,365.0 $ 58.6 2.48% $2,092.1 $ 50.9 2.43%
Time deposits under
$100,000............... 1,003.8 40.8 4.06 957.7 41.4 4.32
Time deposits of
$100,000 or more....... 207.2 7.6 3.62 236.1 6.8 2.91
-------- ------ ---- -------- ------ ----
Total interest-bearing
deposits............. $3,576.0 $107.0 2.99 $3,285.9 $ 99.1 3.02
Short-term borrowings... 1.0 -- 3.26 1.4 -- 2.08
Long-term debt.......... 50.4 4.0 7.97 53.5 4.4 8.23
Federal funds purchased
and repurchase
agreements............. 664.5 25.1 3.77 581.1 16.2 2.78
-------- ------ ---- -------- ------ ----
Total interest-bearing
liabilities.......... $4,291.9 $136.1 3.17 $3,921.9 $119.7 3.05
Noninterest-bearing
demand deposits........ 1,445.4 1,273.7
Other liabilities....... 62.9 68.6
-------- --------
Total liabilities..... $5,800.2 $5,264.2
-------- --------
Total shareholders'
equity................. 572.4 $ 502.6
-------- --------
Total liabilities and
shareholders' equity. $6,372.6 $5,766.8
======== ========
------ ------
Net interest income
(FTE).................. $194.3 $170.3
====== ======
Net interest spread..... 2.96% 2.87%
Net interest margin..... 3.61 3.48
</TABLE>
--------
(1) Interest income and yields are stated on a fully tax-equivalent (FTE)
basis, using a rate of 34% for 1990 through 1992 and 35% for 1993 and 1994.
The tax-equivalent interest income and yields give effect to the
disallowance of interest expense, for federal income tax purposes, related
to certain tax-free assets. Rates earned/paid may not compute to the rates
shown due to presentation in millions.
(2) Loan fees and income from loans on nonaccrual status are included in loan
income.
A-44
<PAGE>
<TABLE>
<CAPTION>
1992 1991 1990 AVERAGE
--------------------------------------------------------- ---------------------------- BALANCE
FIVE-
YEAR
INTEREST RATE INTEREST RATE INTEREST RATE COMPOUND
AVERAGE INCOME/ EARNED/ AVERAGE INCOME/ EARNED/ AVERAGE INCOME/ EARNED/ GROWTH
BALANCE EXPENSE(1) PAID(1) BALANCE EXPENSE(1) PAID(1) BALANCE EXPENSE(1) PAID(1) RATE
-------- ---------- ------- -------- ---------- ------- -------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$1,337.3 $120.8 9.03% $1,356.1 $145.8 10.75% $1,349.1 $156.9 11.63% 9.69%
$1,868.6 $102.5 5.48 $1,530.9 $114.8 7.50 $1,398.9 $116.4 8.32 18.30
240.5 17.8 7.41 285.8 24.3 8.49 225.7 20.8 9.23 10.62
-------- ------ ---- -------- ------ ----- -------- ------ ----- ------
$2,109.1 $120.3 5.70 $1,816.7 $139.1 7.66 $1,624.6 $137.2 8.45 17.36
405.3 14.7 3.63 314.7 17.6 5.58 380.2 30.5 8.02 (4.74)
70.5 4.5 6.42 73.7 5.2 7.08 34.2 2.9 8.39 19.69
-------- ------ ---- -------- ------ ----- -------- ------ ----- ------
$3,922.2 $260.3 6.63 $3,561.2 $307.7 8.64 $3,388.1 $327.5 9.67 11.80
(26.1) (26.2) (26.8) 4.46
494.1 404.1 401.2 9.61
232.8 223.5 197.3 13.76
-------- -------- -------- ------
$4,623.0 $4,162.6 $3,959.8 11.70
======== ======== ======== ======
$1,559.0 $ 51.1 3.28% $1,274.5 $ 63.6 4.99% $1,105.8 $ 66.7 6.03% 18.24%
905.0 44.8 4.95 930.2 63.6 6.83 851.6 67.5 7.92 6.92
193.3 7.1 3.69 253.4 15.0 5.92 485.9 34.0 7.00 (15.95)
-------- ------ ---- -------- ------ ----- -------- ------ ----- ------
$2,657.3 $103.0 3.88 $2,458.1 $142.2 5.78 $2,443.3 $168.2 6.88 9.85
28.3 1.0 3.66 38.6 2.2 5.77 34.4 2.8 8.03 (49.21)
41.0 3.6 8.65 46.3 4.0 8.67 51.4 4.4 8.65 2.71
511.1 16.2 3.17 460.8 23.3 5.06 297.6 21.4 7.20 23.87
-------- ------ ---- -------- ------ ----- -------- ------ ----- ------
$3,237.7 $123.8 3.82 $3,003.8 $171.7 5.72 $2,826.7 $196.8 6.97 11.08
938.3 731.1 747.9 13.60
61.0 72.1 56.7 5.69
-------- -------- -------- ------
$4,237.0 $3,807.0 $3,631.3 11.61
-------- -------- -------- ------
$ 386.0 $ 355.6 $ 328.5 12.71
-------- -------- -------- ------
$4,623.0 $4,162.6 $3,959.8 11.70
======== ======== ======== ======
------ ------ ------
$136.5 $136.0 $130.7
====== ====== ======
2.81% 2.92% 2.70%
3.48 3.82 3.86
</TABLE>
A-45
<PAGE>
UMB FINANCIAL CORPORATION
SELECTED FINANCIAL DATA OF AFFILIATE BANKS
<TABLE>
<CAPTION>
DECEMBER 31, 1994
--------------------------------------------------------
LOANS
NUMBER OF TOTAL NET OF TOTAL SHAREHOLDERS'
LOCATIONS ASSETS UNEARNED DEPOSITS EQUITY
--------- ---------- ---------- ---------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
WESTERN MISSOURI
UMB Bank, n.a. (Kansas
City).................. 26 $3,486,544 $1,101,798 $2,806,383 $223,714
UMB Bank, Cass County
(Peculiar)............. 1 30,745 8,193 26,381 2,215
UMB Bank, Northwest (St.
Joseph)................ 9 181,686 33,433 155,862 12,700
EASTERN MISSOURI AND IL-
LINOIS
UMB Bank of St. Louis,
n.a.................... 19 $ 794,240 $ 337,698 $ 600,260 $ 61,413
UMB Bank, Northeast
(Monroe City).......... 2 64,763 19,418 46,846 6,541
UMB First State Bank of
Morrisonville
(Illinois)............. 1 9,456 1,670 8,481 785
SOUTHWESTERN MISSOURI
United Missouri Bank of
Carthage............... 2 $ 61,992 $ 14,697 $ 48,268 $ 3,945
United Missouri Bank of
Joplin................. 3 65,694 21,511 54,663 4,472
United Missouri Bank of
Monett................. 1 104,810 26,879 69,954 6,929
United Missouri Bank of
Springfield............ 2 115,025 41,736 45,688 5,333
UMB Bank, Warsaw........ 3 64,824 12,628 52,022 6,995
CENTRAL MISSOURI
UMB Bank, Boonville..... 2 $ 44,009 $ 12,776 $ 32,875 $ 3,120
UMB Bank, Jefferson
City................... 1 42,702 26,806 29,304 3,965
UMB Bank, North Central
(Brookfield)........... 5 83,565 15,141 62,358 6,176
UMB Bank, Warrensburg... 4 108,165 22,745 95,466 7,526
COLORADO
UMB Bank Colorado....... 6 $ 210,729 $ 86,235 $ 183,541 $ 16,435
KANSAS
UMB Bank Kansas......... 16 $ 730,392 $ 267,239 $ 507,440 $108,799
UMB National Bank of
America................ 13 466,102 167,004 371,829 68,892
BANKING-RELATED SUBSIDI-
ARIES
Scout Brokerage Servic-
es, Inc................
UMB Community
Development
Corporation............
UMB Mortgage Company....
UMB Properties, Inc.....
United Missouri Banc
Leasing Corporation....
United Missouri Bank,
U.S.A..................
United Missouri Capital
Corporation............
United Missouri Insur-
ance Company...........
United Missouri Trust
Company of New York....
</TABLE>
A-46
<PAGE>
EXHIBIT 11 TO FORM 10-K
UMB FINANCIAL CORPORATION
Computation of Earnings Per Share
1994 1993 1992
---- ---- ----
Net income divided by $47,814,000 $41,119,000 $39,367,000
Weighted average shares outstanding 19,205,787 17,619,302 15,180,217
Earnings per share $2.49 $2.34 $2.59
<PAGE>
EXHIBIT 12 TO FORM 10-K
UMB FINANCIAL CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Income before income taxes and change in
accounting principle.............................. $ 70,399 $ 61,249 $ 55,115 $ 53,395 $ 48,336
Add
Portion of rents representative of the interest
factor........................................... 840 977 807 715 689
Interest on indebtedness other than deposits...... 29,106 20,591 20,763 29,540 28,636
Amortization of debt expense...................... 48 51 -- -- --
-------- -------- -------- -------- --------
Income as adjusted excluding interest on
deposits.......................................... $100,393 $ 82,868 $ 76,685 $ 83,650 $ 77,661
Add interest on deposits........................... 106,958 99,127 103,023 142,137 168,171
-------- -------- -------- -------- --------
Income as adjusted including interest on
deposits.......................................... $207,351 $181,995 $179,708 $225,787 $245,832
======== ======== ======== ======== ========
Fixed charges:
Interest on indebtedness other than deposits...... $ 29,106 $ 20,591 $ 20,763 $ 29,540 $ 28,636
Portion of rents representative of the interest
factor........................................... 840 977 807 715 689
Amortization of debt expense...................... 48 51 -- -- --
-------- -------- -------- -------- --------
Fixed charges excluding interest on deposits....... $ 29,994 $ 21,619 $ 21,570 $ 30,255 $ 29,325
Interest on deposits............................... 106,958 99,127 103,023 142,137 168,171
-------- -------- -------- -------- --------
Fixed charges including interest on deposits....... $136,952 $120,746 $124,593 $172,392 $197,496
======== ======== ======== ======== ========
Ratio of earnings to fixed charges
Excluding interest on deposits.................... 3.35 3.83 3.56 2.76 2.65
==== ==== ==== ==== ====
Including interest on deposits.................... 1.51 1.51 1.44 1.31 1.24
==== ==== ==== ==== ====
</TABLE>
<PAGE>
EXHIBIT 21 TO FORM 10-K
UMB FINANCIAL CORPORATION
Subsidiaries of the Registrant
Subsidiary Jurisdiction of
---------- Organization
------------
WESTERN MISSOURI BANKS
UMB Bank, n.a. (Kansas City) U.S.
UMB Bank, Cass County (Peculiar) Missouri
UMB Bank Northwest (St. Joseph) Missouri
EASTERN MISSOURI AND ILLINOIS BANKS
UMB Bank of St. Louis, n.a. U.S.
UMB Bank, Northeast (Monroe City) Missouri
UMB First State Bank of Morrisonville (Illinois) Illinois
SOUTHWESTERN MISSOURI BANKS
United Missouri Bank of Carthage Missouri
United Missouri Bank of Joplin Missouri
United Missouri Bank of Monett Missouri
United Missouri Bank of Springfield Missouri
UMB Bank, Warsaw Missouri
CENTRAL MISSOURI BANKS
UMB Bank, Boonville Missouri
UMB Bank, Jefferson City Missouri
UMB Bank, North Central (Brookfield) Missouri
UMB Bank, Warrensburg Missouri
COLORADO BANK
UMB Bank Colorado Colorado
KANSAS BANKS
UMB Bank Kansas Kansas
UMB National Bank of America U.S.
BANKING--RELATED SUBSIDIARIES
Scout Brokerage Services, Inc. Missouri
UMB Community Development Corporation Missouri
UMB Properties, Inc. Missouri
United Missouri Bank, U.S.A. Delaware
United Missouri Insurance Company Arizona
City Bond and Mortgage Company Missouri
TIERED BANK HOLDING COMPANIES
FCB Corp. Delaware
Valley Bank Holding Co. Colorado
United Kansas Bancshares, Inc. Kansas
<PAGE>
EXHIBIT 23 TO FORM 10-K
UMB FINANCIAL CORPORATION
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement
No. 33-58312 on Form S-8 of UMB Financial Corporation and Subsidiaries of our
report dated January 19, 1995, included in this Annual Report on Form 10-K of
UMB Financial Corporation and Subsidiaries for the year ended December 31, 1994.
/s/ DELOITTE & TOUCHE LLP
Kansas City, Missouri
March 24, 1995
<PAGE>
EXHIBIT 24 TO FORM 10-K
UMB FINANCIAL CORPORATION
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
R. Crosby Kemper, David D. Miller and Timothy M. Connealy his true and lawful
attorneys-in-fact and agents, each acting alone, with full power of substitution
and resubstitution, for and in his name, place and stead, in any and all
capacities, to file this report the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto such attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing required and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that such attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.
SIGNATURE AND NAME CAPACITY DATE
------------------ -------- ----
/s/ PAUL D. BARTLETT, JR. Director
--------------------------
Paul D. Bartlett, Jr.
/s/ THOMAS E. BEAL Director January 19, 1995
--------------------------
Thomas E. Beal
Director
--------------------------
H. Alan Bell
Director
--------------------------
David R. Bradley, Jr.
/s/ NEWTON A. CAMPBELL Director January 19, 1995
--------------------------
Newton A. Campbell
Director
--------------------------
Thom R. Cooper
/s/ WILLIAM TERRY FULDNER Director January 19, 1995
--------------------------
William Terry Fuldner
Director
--------------------------
Charles A. Garney
/s/ PETER J. GENOVESE Director, Vice Chairman January 19, 1995
-------------------------- of the Board
Peter J. Genovese
/s/ C.N. HOFFMAN, JR. Director January 19, 1995
--------------------------
C.N. Hoffman, Jr.
<PAGE>
SIGNATURE AND NAME CAPACITY DATE
------------------ -------- ----
/s/ ALEXANDER C. KEMPER Director, President January 19, 1995
----------------------------
Alexander C. Kemper
/s/ R. CROSBY KEMPER III Director, Vice Chairman January 19, 1995
---------------------------- of the Board
R. Crosby Kemper III
/s/ DANIEL N. LEAGUE, JR. Director January 19, 1995
----------------------------
Daniel N. League, Jr.
Director
----------------------------
William J. McKenna
Director
----------------------------
Roy E. Mayes
/s/ JOHN H. MIZE, JR. Director January 19, 1995
----------------------------
John H. Mize, Jr.
Director
----------------------------
Mary Lynn Oliver
Director
----------------------------
W.L. Orscheln
/s/ ALAN W. ROLLEY Director January 19, 1995
----------------------------
Alan W. Rolley
/s/ JOSEPH F. RUYSSER Director January 19, 1995
----------------------------
Joseph F. Ruysser
/s/ THOMAS D. SANDERS Director January 19, 1995
----------------------------
Thomas D. Sanders
/s/ HERMAN R. SUTHERLAND Director January 19, 1995
----------------------------
Herman R. Sutherland
/s/ E. JACK WEBSTER, JR. Director January 19, 1995
----------------------------
E. Jack Webster, Jr.
/s/ JOHN E. WILLIAMS Director January 19, 1995
----------------------------
John E. Williams
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 770,813
<INT-BEARING-DEPOSITS> 3,562,356
<FED-FUNDS-SOLD> 534,099
<TRADING-ASSETS> 30,982
<INVESTMENTS-HELD-FOR-SALE> 2,275,213
<INVESTMENTS-CARRYING> 384,834
<INVESTMENTS-MARKET> 373,644
<LOANS> 2,269,617
<ALLOWANCE> 32,527
<TOTAL-ASSETS> 6,599,020
<DEPOSITS> 5,132,834
<SHORT-TERM> 872
<LIABILITIES-OTHER> 60,675
<LONG-TERM> 46,330
<COMMON> 20,678
0
0
<OTHER-SE> 536,628
<TOTAL-LIABILITIES-AND-EQUITY> 6,599,020
<INTEREST-LOAN> 171,905
<INTEREST-INVEST> 137,729
<INTEREST-OTHER> 13,626
<INTEREST-TOTAL> 323,260
<INTEREST-DEPOSIT> 106,958
<INTEREST-EXPENSE> 136,064
<INTEREST-INCOME-NET> 187,196
<LOAN-LOSSES> 2,640
<SECURITIES-GAINS> 3,632
<EXPENSE-OTHER> 257,575
<INCOME-PRETAX> 70,399
<INCOME-PRE-EXTRAORDINARY> 70,399
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47,814
<EPS-PRIMARY> 2.49
<EPS-DILUTED> 2.49
<YIELD-ACTUAL> 3.47
<LOANS-NON> 3,131
<LOANS-PAST> 4,779
<LOANS-TROUBLED> 2,149
<LOANS-PROBLEM> 760
<ALLOWANCE-OPEN> 35,590
<CHARGE-OFFS> 8,269
<RECOVERIES> 2,566
<ALLOWANCE-CLOSE> 32,527
<ALLOWANCE-DOMESTIC> 32,527
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
