<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
For the transition period from ___________________ to ____________________
Commission file number 0-4887
UMB FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Missouri 43-0903811
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
1010 Grand Avenue, Kansas City, Missouri 64106
(Address of principal executive offices and Zip Code)
(816) 860-7000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
At March 31, 1998, UMB Financial Corporation had 20,446,003 shares of common
stock outstanding. This is the only class of stock of the Company.
<PAGE>
UMB FINANCIAL CORPORATION
FORM 10-Q
INDEX
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
as of March 31, 1998 and 1997 (unaudited) and December 31, 1997
(audited) 3
Consolidated Statements of Income for the Three Months
Ended March 31, 1998 and 1997 (unaudited) 4
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1998 and 1997 (unaudited) 5
Consolidated Statements of Shareholders' Equity for the Three Months
Ended March 31, 1998 and 1997 (unaudited) 6
Notes to Consolidated Financial Statements 7-8
Supplemental Financial Data
Average Balances/ Yields and Rates 9
Analysis of Changes in Net Interest Income and Margin 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-13
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
<PAGE>
UMB FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
March 31, (Unaudited) December 31,
------------------------------------------
ASSETS ........................................... 1998 1997 1997
----------- ----------- -----------
Loans:
<S> <C> <C> <C>
Commercial, financial and agricultural ....... $ 1,343,644 $ 1,270,849 $ 1,377,380
Consumer (net of unearned interest) .......... 1,020,959 947,118 1,039,331
Real estate .................................. 349,375 380,857 365,329
Leases ....................................... 3,572 3,161 3,991
Allowance for loan losses .................... (33,301) (33,631) (33,274)
----------- ----------- -----------
Net Loans ............................. $ 2,684,249 $ 2,568,354 $ 2,752,757
Securities available for sale:
U.S. Treasury and agencies ................... $ 2,133,160 $ 2,143,040 $ 2,162,242
State and political subdivisions ............. 6,904 5,405 7,904
Commercial paper and other ................... 23,490 47,076 261,595
----------- ----------- -----------
Total securities available for sale ... $ 2,163,554 $ 2,195,521 $ 2,431,741
Securities held to maturity:
State and political subdivisions ............. $ 489,127 $ 335,678 $ 452,762
----------- ----------- -----------
Total securities held to maturity
(market value of $492,607,
$335,444 & $456,745, respectively) .... $ 489,127 $ 335,678 $ 452,762
Federal funds and resell agreements .............. 246,131 143,907 71,213
Trading securities and other earning assets ...... 79,941 79,657 60,548
----------- ----------- -----------
Total earning assets .................. $ 5,663,002 $ 5,323,117 $ 5,769,021
Cash and due from banks .......................... 920,415 756,012 921,300
Bank premises and equipment, net ................. 181,141 155,868 172,811
Accrued income ................................... 78,243 73,190 72,627
Premium on and intangibles of purchased banks .... 58,698 65,664 60,464
Other Assets ..................................... 47,351 69,425 57,784
----------- ----------- -----------
Total assets .......................... $ 6,948,850 $ 6,443,276 $ 7,054,007
=========== =========== ===========
LIABILITIES
Deposits:
Noninterest-bearing demand ................... $ 1,928,568 $ 1,684,841 $ 1,906,627
Interest-bearing demand and savings .......... 2,243,817 2,296,648 2,290,923
Time deposits under $100,000 ................. 878,705 906,436 881,173
Time deposits of $100,000 or more ............ 392,713 269,545 468,274
----------- ----------- -----------
Total deposits ........................... $ 5,443,803 $ 5,157,470 $ 5,546,997
Federal funds and repurchase agreements .......... 732,187 584,308 715,545
Short-term debt .................................. 19 1,506 1,116
Long-term debt ................................... 43,885 50,725 44,550
Accrued expenses and taxes ....................... 50,107 51,165 56,735
Other liabilities ................................ 40,896 19,977 64,828
----------- ----------- -----------
Total liabilities ....................... $ 6,310,897 $ 5,865,151 $ 6,429,771
----------- ----------- -----------
SHAREHOLDERS' EQUITY
Common stock, $1.00 par value; authorized
33,000,000 shares; issued 24,490,189;
23,503,084; & 24,490,189 shares respectively . $ 24,490 $ 23,503 $ 24,490
Capital surplus .................................. 609,032 558,053 608,964
Retained earnings ................................ 148,300 154,017 137,230
Net unrealized gain (loss) on securities available 6,180 (7,802) 3,910
for sale
Unearned ESOP shares ............................. (11,867) (14,368) (12,492)
Treasury stock, 3,743,155, 3,684,049 and
3,737,430 shares, at cost, respectively ...... (138,182) (135,278) (137,866)
----------- ----------- -----------
Total shareholders' equity ............... $ 637,953 $ 578,125 $ 624,236
----------- ----------- -----------
Total liabilities and shareholders'equity $ 6,948,850 $ 6,443,276 $ 7,054,007
=========== =========== ===========
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
UMB FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(unaudited in thousands)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
INTEREST INCOME ........................... 1998 1997
----------- -----------
<S> <C> <C>
Loans ..................................... $ 59,657 $ 55,383
Securities:
Taxable interest ...................... $ 33,740 $ 33,261
Tax-exempt interest ................... 5,318 3,708
----------- -----------
Total securities income ........... $ 39,058 $ 36,969
Federal funds and resell agreements ....... 4,672 1,902
Trading securities and other .............. 1,067 1,071
----------- -----------
Total interest income ......... $ 104,454 $ 95,325
----------- -----------
INTEREST EXPENSE
Deposits .................................. $ 34,906 $ 31,446
Federal funds and repurchase
agreements ............................ 12,073 9,366
Short-term debt ........................... 7 11
Long-term debt ............................ 655 916
----------- -----------
Total interest expense ............ $ 47,641 $ 41,739
----------- -----------
Net interest income ....................... $ 56,813 $ 53,586
Provision for loan losses ................. 2,858 1,925
----------- -----------
Net interest income after provision $ 53,955 $ 51,661
----------- -----------
NONINTEREST INCOME
Trust income .............................. $ 11,857 $ 10,716
Securities processing ..................... 3,075 2,673
Trading and investment banking ............ 4,349 3,547
Service charges on deposits ............... 9,970 8,734
Other service charges and fees ............ 5,578 4,756
Bankcard fees ............................. 1,820 1,620
Net investment security gains ............. 1 103
Other ..................................... 1,663 1,404
----------- -----------
Total noninterest income .......... $ 38,313 $ 33,553
----------- -----------
NONINTEREST EXPENSE
Salaries and employee benefits ............ $ 38,052 $ 33,837
Occupancy, net ............................ 5,096 4,635
Equipment ................................. 7,316 6,233
Supplies and services ..................... 5,233 4,969
Bankcard processing ....................... 1,490 1,268
Marketing and business development ........ 4,644 4,248
Amortization of premium on purchased banks 1,767 1,810
Other ..................................... 6,941 6,061
----------- -----------
Total noninterest expense ......... $ 70,539 $ 63,061
----------- -----------
Income before income taxes ................ $ 21,729 $ 22,153
Income tax provision ...................... 6,573 7,192
----------- -----------
NET INCOME .................... $ 15,156 $ 14,961
=========== ===========
PER SHARE DATA
Net income - Basic & Diluted .............. $ 0.74 $ 0.73
Dividends ................................. $ 0.20 $ 0.19
Weighted average shares outstanding ....... 20,437,716 20,506,066
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
UMB FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------------------
1998 1997
----------- -----------
Operating Activities
<S> <C> <C>
Net Income .................................................... $ 15,156 $ 14,961
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for loan losses ............................. 2,858 1,925
Depreciation and amortization ......................... 5,910 5,976
Deferred income taxes ................................. 280 (523)
Net (increase) decrease in trading securities ......... (19,393) 157
Gains on sales of securities available for sale ....... (1) (103)
Losses on sales of securities available for sale ...... -- --
Amortization of securities premiums,
net of discount accretion ......................... (615) 2,908
Earned ESOP shares .................................... 693 623
Changes in:
Accrued income ................................. (5,616) (473)
Accrued expenses and taxes ..................... (8,176) 4,961
Other, net ............................................ (13,377) 5,252
----------- -----------
Net cash provided by (used in) operating activities $ (22,281) $ 35,664
----------- -----------
Investing Activities
Proceeds from maturities of investment securities ............. $ 11,759 $ 14,728
Proceeds from sales of investment securities .................. -- --
Proceeds from sales of securities available for sale .......... 10 7,610
Proceeds from maturities of securities available for sale ..... 1,734,104 801,323
Purchases of investment securities ............................ (48,681) (31,628)
Purchases of securities available for sale .................... (1,461,339) (629,119)
Net ( increase) decrease in loans ............................. 65,650 (46,052)
Net increase in federal funds and resell agreements ........... (174,918) (84,947)
Purchases of bank premises and equipment ...................... (12,724) (7,131)
Proceeds from sales of bank premises and equipment ............ 251 3
----------- -----------
Net cash provided by investing activities ......... $ 114,112 24,787
----------- -----------
Financing Activities
Net increase (decrease) in demand and savings deposits ........ $ (25,165) $ 85,065
Net decrease in time deposits ................................. (78,029) (118,129)
Net increase (decrease) in fed funds/ repurchase agreements ... 16,642 (30,087)
Net increase (decrease) in short term borrowings .............. (1,097) 595
Repayment of long term debt ................................... (665) (625)
Cash dividends ................................................ (4,086) (3,891)
Proceeds from exercise of stock options ....................... -- 20
Purchases of treasury stock ................................... (316) (10,018)
----------- -----------
Net cash used in financing activities .............. $ (92,716) $ (77,070)
----------- -----------
Decrease in cash and due from banks ........................... $ (885) $ (16,619)
Cash and due from banks at beginning of year .................. 921,300 772,631
----------- -----------
Cash and due from banks at end of period ...................... $ 920,415 $ 756,012
=========== ===========
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
UMB FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands)
<TABLE>
<CAPTION>
Net
Unrealized
Common Stock Capital Retained Holding Treasury Unearned
Surplus Earnings Gain (Loss) Stock ESOP
<S> <C> <C> <C> <C> <C> <C>
Balance - December 31, 1996 ..... $ 23,503 $ 558,073 $ 142,947 $ (1,755) $(125,288) $ (15,003)
Net Income ...................... -- -- 14,961 -- -- --
Cash Dividends .................. -- -- (3,891) -- -- --
Earned ESOP Shares .............. -- (12) -- -- -- 635
Purchase of treasury stock ...... -- -- -- -- (10,018) --
Exercise of stock Options ....... -- (8) -- -- 28 --
Net unrealized loss on securities -- -- -- (6,047) -- --
available for sale
--------- --------- --------- --------- --------- ---------
Balance - March 31, 1997 ........ $ 23,503 $ 558,053 $ 154,017 $ (7,802) $(135,278) $ (14,368)
========= ========= ========= ========= ========= =========
Balance - December 31, 1997 ..... $ 24,490 $ 608,964 $ 137,230 $ 3,910 $(137,866) $ (12,492)
Net Income ...................... -- -- 15,156 -- -- --
Cash Dividends .................. -- -- (4,086) -- -- --
Earned ESOP Shares .............. -- 68 -- -- -- 625
Purchase of treasury stock ...... -- -- -- -- (316) --
Exercise of stock Options ....... -- -- -- -- -- --
Net unrealized gain on securities -- -- -- 2,270 -- --
available for sale
--------- --------- --------- --------- --------- ---------
Balance - March 31, 1998 ........ $ 24,490 $ 609,032 $ 148,300 $ 6,180 $(138,182) $ (11,867)
========= ========= ========= ========= ========= =========
<FN>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
<PAGE>
UMB FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1998
1. Financial Statement Presentation:
The consolidated financial statements include the accounts of the Company and
its subsidiaries after elimination of all material intercompany transactions. In
the opinion of management of the Company, all adjustments, which were of a
normal recurring nature and necessary for a fair presentation of the financial
position and results of operations have been made. The financial statements
should be read in conjunction with the Management's Discussion and Analysis of
Financial Condition and results of Operations and with reference to the 1997
Annual Report to Shareholders.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates that affect the
reported amount of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements. These estimates and
assumptions also impact reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
2. Earnings:
Earnings per share are based on the weighted average number of shares of common
stock outstanding during the interim periods. All share and per share data has
been adjusted to reflect a 5% stock dividend paid on January 2, 1998. Diluted
earnings per share takes into account the dilutive effect of 72,074 and 40,419
shares issuable under options granted by the Company at March 31, 1998 and 1997,
respectively.
For the period ended March 31, 1998 the Company reported net income of
$15,156,000. Its total comprehensive income, reported pursuant to SFAS No. 130
was $17,426,000, which includes the change in accumulated unrealized gains and
losses on AFS securities net of income taxes of $2,270,000.
3. Allowance for Loan Losses:
The following is a summary of the Allowance for Loan Losses for the three months
ended March 31, 1998 and 1997 (in thousands):
Three Months Ended March 31,
1998 1997
Balance January 1 $33,274 $33,414
Additions:
Provision for loan losses 2,858 1,925
------- -------
$36,132 $35,339
------- -------
Deductions:
Charge-offs $(3,447) $(2,500)
Less recoveries on loans
Less recoveries on loans
previously charged-off 616 792
------- -------
Net charge-offs $(2,831) $(1,708)
------- -------
Balance, March 31 $33,301 $33,631
======= =======
<PAGE>
UMB FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1998
3. Allowance for Loan Losses: (Continued)
At March 31, 1998 the amount of loans that are considered to be impaired under
SFAS No. 114 was $2,544,000 compared to $3,266,000 at December 31, 1997 and
$16,062,000 at March 31, 1997. At March 31, 1998 all of these loans are on a
nonaccrual or restructured basis. Included in the impaired loans is $987,000 of
loans for which the related allowance for loan losses is $412,000. The remaining
$1,557.000 of impaired loans do not have an allowance for loan losses as a
result of write-downs and supporting collateral value. The average recorded
investment in impaired loans during the period ended March 31, 1998 was
approximately $2,905,000.
4. Commitments and Contingencies:
In the normal course of business, the Company and its subsidiaries are named
defendants in various lawsuits and counterclaims. In the opinion of management,
after consultation with legal counsel, none of the suits will have a materially
adverse effect on the financial position or results of operations of the
Company.
5. New Accounting Pronouncements:
In June 1997, FASB issued SAFS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." The Statement establishes standards for the
way that public business enterprises report information about operating segments
in annual financial statements and requires that those enterprises report
selected information about operating segments in interim financial reports
issued to shareholders. The Company anticipates that the implementation of this
Statement at year-end 1998 may require additional disclosures.
<PAGE>
UMBFINANCIAL CORPORATION
AVERAGE BALANCES/YIELDS AND RATES
(tax-equivalent basis)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
Assets Average Average Average Average
Balance Yield/Rate Balance Yield/Rate
---------------------------------------------
<S> <C> <C> <C> <C>
Loans, net of unearned $2,742,946 8.85 % $2,546,214 8.86 %
interest
Securities:
Taxable $2,337,642 5.85 $2,316,925 5.82
Tax-exempt 471,029 6.72 326,723 6.65
---------- --------- ---------- --------
Total securities $2,808,671 6.00 $2,643,648 5.92
Federal funds and resell 336,448 5.63 147,350 5.23
agreements
Other earning assets 75,360 6.00 72,392 6.24
---------- ---------- ---------- -------
Total earning assets $5,963,425 7.29 $5,409,604 7.29
Allowance for loan losses (33,137) (33,427)
Other assets 1,104,758 1,095,671
---------- ----------
Total assets $7,035,046 $6,471,848
========== ==========
Liabilities and Shareholders' Equity
Interest-bearing deposits $3,567,730 3.97 % $3,388,841 3.76 %
Federal funds and repurchase 956,531 5.12 793,357 4.79
agreements
Borrowed funds 44,801 5.99 52,124 7.21
---------- ---------- ---------- -------
Total interest-bearing $4,569,062 4.23 $4,234,322 4.00
liabilities
Noninterest-bearing demand 1,731,709 1,508,558
deposits
Other liabilities 93,699 146,077
Shareholders' equity 640,576 582,891
---------- ----------
Total liabilities and
shareholders' equity $7,035,046 $6,471,848
========== ==========
Net interest spread 3.06 % 3.29 %
Net interest margin 4.05 4.16
</TABLE>
<PAGE>
UMB FINANCIAL CORPORATION
ANALYSIS OF CHANGES IN NET INTEREST INCOME AND MARGIN
(tax-equivalent basis) (in thousands)
<TABLE>
<CAPTION>
ANALYSIS OF CHANGES IN NET INTEREST INCOME
Three Months Ended
March 31, 1998 vs. 1997
---------------------------------
Volume Rate Total
Change in interest earned on:
<S> <C> <C> <C>
Loans ...................................... $4,294 $4,268 $(26)
Securities:
Taxable ................................................298 182 480
Tax-exempt ........................................ 2,388 58 2,446
Federal funds sold .......................................2,616 154 2,770
Other .............................................. 45 (44) 1
------- ------- -------
Interest income ............................... 9,641 324 9,965
------- ------- -------
Change in interest paid on:
Interest-bearing deposits ............................... 1,704 1,756 3,460
Federal funds purchased ..................................2,026 681 2,707
Borrowed funds .............................. (120) (145) 265)
------- ------ -------
Interest expense ............................... 3,610 2,292 5,902
------- ------ -------
Net interest income ....................................... 6,031 (1,968) 4,063
======= ====== =======
</TABLE>
ANALYSIS OF NET INTEREST MARGIN
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1998
--------------------------------
1998 1997 Change
<S> <C> <C> <C>
Average earning assets ............... $ 5,963,425 $ 5,409,604 $ 553,821
Interest-bearing liabilities ......... 4,569,062 4,234,322 334,740
============= ============= ============
Interest free funds .................. $ 1,394,363 $ 1,175,282 $ 219,081
============= ============= ============
Free funds ratio ..................... 23.38 % 21.73 % 1.66 %
(free funds to earning assets)
Tax-equivalent yield on earning assets 7.29 % 7.29 % 0.00 %
Cost of interest-bearing liabilities . 4.23 4.00 0.23
------------- ------------- ------------
Net interest spread .................. 3.06 % 3.29 % (0.23) %
Benefit of interest free funds ....... 0.99 0.87 0.12
------------- ------------- ------------
Net interest margin .................. 4.05 % 4.16 % (0.11) %
============= ============= ============
</TABLE>
<PAGE>
UMB FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
Summary
UMB Financial Corporation (the Company) earned net income of $15,156,000 for the
three months ended March 31, 1998, compared to $14,961,000 for the same period a
year earlier. This represents per share earnings of $0.74 for the first quarter
of 1998 compared to $0.73 for the first quarter of 1997.
The Company's net interest income increased as a result of an increase in
lending activity. Partially offsetting the higher level of net interest income
was an increase in the provision for loan losses. Non interest income increased
as the Company continues to build on its substantial fee-based income. Non
interest expenses were higher as the Company continues its investments in
personnel, equipment and technology systems required to sustain long-term
growth.
Results of Operations
For the three months ended March 31, 1998 the Company earned net interest income
of $56,813,000 compared to $53,586,000 for the first quarter of 1997, an
increase of 6.02%. The improvement in the Company's net interest income was
fueled by an increase in average earning assets of 10.24%. Contributing to the
increase in average earning assets was a 7.73 % increase in average loans and a
6.24% increase in investment securities. While the yield on average earnings
assets remained relatively unchanged, the Company's spread and margin decreased
as a result of paying higher rates on it's interest bearing liabilities.
The provision for loan losses was $2,858,000 and $1,925,000 for the three months
ended March 31, 1998 and 1997, respectively. The increase in provision was
primarily related to the increase in loan charge-offs. Net loan charge-offs in
the first quarter of 1998 were $2,831,000 compared to $1,708,000 for the same
period last year. The majority of the charge-offs in both periods were from
Bankcard and consumer loans. The Company will continue to closely monitor its
loan positions, the related underwriting efforts and underwriting in order to
minimize credit losses.
Non interest income totaled $38,313,000 for the first quarter of 1998 compared
to $33,553,000 for the same period of 1997, an increase of 14.19%. Nearly all
categories of fee income increased as the Company continues its efforts to grow
this revenue source, which does not carry the credit and interest rate risk of
interest-based revenue. Trust and custody services, service charges and trading
income were the largest components of the increases in non interest income.
Non interest expense was $70,539,000 for the three months ended March 31, 1998
compared to $63,061,000 for the same period of 1997. Staffing related costs
represent the most significant increase in total expenses, with a 12.46%
increase. Staffing for the Company's many growth initiatives, coupled with a
tight labor market has contributed to the increase. Equipment expense also
increased as a result of ongoing upgrades to operating systems. The prudent
management of non interest expense will continue to be a priority for the
Company.
<PAGE>
UMB FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
Financial Condition
Total assets at March 31, 1998 were $6.949 billion compared to $6.443 billion at
March 31, 1997 and $7.054 billion at December 31, 1997. Loans, net of unearned
interest, increased to $2.718 billion as of March 31, 1998 compared to $2.602
billion at March 31, 1997. This 4.44% increase in loans reflects management's
goal to increase loans in a very competitive market. The increase in loans was
consistent with increase in deposits, the Company's primary funding source for
its asset base. Total deposits increased to $5.444 billion at March 31, 1998
compared to $5.157 billion at March 31, 1997
Non accrual and restructured loans totaled $3,837,000, 0.14% of loans, at March
31, 1998 compared to $17,193,000, 0.66% of loans, at March 31, 1997 and
$4,120,000 at December 31, 1997, 0.15% of loans. Loans past due 90 days or more
were $9,185,000, 0.34% of loans at March 31, 1998, compared to $5,786,000, 0.22%
of loans at March 31, 1997 and $7,752,000, 0.28% of loans at December 31, 1997.
The Company's loan quality remains strong by industry standards. This decrease
in non-accrual loans was achieved at the same time the Company's average loans
increased by 7.73%. The total non performing loans and loans past due 90 days or
more were less than 1.0% of total loans. At March 31, 1998 the Company's
allowance for loan losses was $33,301,000 or 1.23% of outstanding loans. The
Company has a well-diversified loan portfolio with no foreign loans and no
significant credit exposure to commercial real estate. Delinquency rates in the
Company's bankcard loan portfolio are well below industry averages.
Liquidity and Capital Resources
The Company's liquidity position continues to be strong. At March 31, 1998, the
Company's average loan to deposit ratio was 51.8% compared to 52.0% at March 31,
1997. At March 31, 1998, the average life of the securities portfolio was 21
months with 36% of the portfolio matures during the next twelve months. The
Company has access to various borrowing markets should there be a need for
additional funding.
Shareholders' equity totaled $638 million at March 31, 1998 compared to $578
million at March 31, 1997 and $624 million at year end 1997. During the twelve
months ended March 31, 1998 the Company increased its treasury stock holdings by
$3 million. Management will continue to consider treasury stock purchases
depending on price, availability and alternative use of funds. At March 31,
1998, the net unrealized gain on securities available for sale was $6.2 million,
compared to an unrealized loss of $7.8 million at March 31, 1997 and an
unrealized gain of $3.9 million at December 31, 1997.
<PAGE>
UMB FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
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. One of these tools is a model which internally
generates estimates of the change in net portfolio value (NPV). NPV is the
present value of expected cash flows from assets, liabilities and off-balance
sheet contracts. By projecting the timing and amount of future net cash flows an
estimated value of that asset or liability can be determined. The following
table sets forth the Company's NPV as of March 31, 1998.
Net Portfolio Value
Rates in
Basis Points Dollar Percentage
(Rate Shock) Amount Change Change
200 $1,412,002 $152,177 12.08%
100 1,339,999 80,174 6.36%
Static 1,259,825 - -%
(100) 1,203,988 (55,837) (4.43)%
(200) 1,164,644 (95,181) (7.56)%
Included in this report are limited forward looking statements concerning the
Company's future financial condition and results of operations. These statements
are the result of Management's current expectations based on information
presently available. Actual results could differ from these expectations as a
result of many factors including changes in economic conditions impacting
customers ability to repay loans, interest rates and loan demand. Changes in
technology, regulatory requirements and competition will also impact future
results.
The Company's capital position is summarized in the table below and far exceeds
regulatory requirements.
Three Months Ended
March 31,
RATIOS 1998 1997
Return on average assets 0.87 % 0.94 %
Return on average equity 9.60 10.41
Average equity to assets 9.11 9.01
Tier 1 risk-based capital ratio 16.09 15.10
Total risk-based capital ratio 17.02 16.08
Leverage ratio 8.33 8.16
Per Share Data
Earnings Basic & diluted $ 0.74 $ 0.73
Cash Dividends $ 0.20 $ 0.19
Dividend payout ratio 27.03 % 26.02 %
Book value $ 31.20 $ 28.27
<PAGE>
UMB FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE
THREE MONTHS ENDED MARCH 31, 1998
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
a) The following exhibit is filed herewith: 27-Article 9 of
Regulation S-X Financial Data Schedule for March 31, 1998 Form
10-Q.
b) Reports on Form 8-K: The Company filed no reports
on Form 8-K during the quarter ended March 31, 1998.
<PAGE>
UMB FINANCIAL CORPORATION
FORM 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UMB FINANCIAL CORPORATION
/s/ R. Crosby Kemper
R. Crosby Kemper
Chairman
/s/ Timothy M. Connealy
Timothy M. Connealy
Chief Financial Officer
Date: May 12, 1998
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 920,415
<INT-BEARING-DEPOSITS> 3,515,235
<FED-FUNDS-SOLD> 246,131
<TRADING-ASSETS> 79,941
<INVESTMENTS-HELD-FOR-SALE> 2,163,554
<INVESTMENTS-CARRYING> 489,127
<INVESTMENTS-MARKET> 492,607
<LOANS> 2,717,550
<ALLOWANCE> 33,301
<TOTAL-ASSETS> 6,948,850
<DEPOSITS> 5,443,803
<SHORT-TERM> 19
<LIABILITIES-OTHER> 91,003
<LONG-TERM> 43,885
0
0
<COMMON> 24,490
<OTHER-SE> 613,463
<TOTAL-LIABILITIES-AND-EQUITY> 6,948,850
<INTEREST-LOAN> 59,657
<INTEREST-INVEST> 40,125
<INTEREST-OTHER> 4,672
<INTEREST-TOTAL> 104,454
<INTEREST-DEPOSIT> 34,906
<INTEREST-EXPENSE> 47,641
<INTEREST-INCOME-NET> 56,813
<LOAN-LOSSES> 2,858
<SECURITIES-GAINS> 1
<EXPENSE-OTHER> 70,539
<INCOME-PRETAX> 21,729
<INCOME-PRE-EXTRAORDINARY> 21,729
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,156
<EPS-PRIMARY> 0.74
<EPS-DILUTED> 0.74
<YIELD-ACTUAL> 4.05
<LOANS-NON> 2,469
<LOANS-PAST> 9,185
<LOANS-TROUBLED> 1,368
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 33,274
<CHARGE-OFFS> 3,447
<RECOVERIES> 616
<ALLOWANCE-CLOSE> 33,301
<ALLOWANCE-DOMESTIC> 33,301
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
