UMB Financial Corporation Announces 2004 Earnings

    Business Editors

    KANSAS CITY, Mo.--(BUSINESS WIRE)--Jan. 25, 2005--UMB Financial Corporation (NASDAQ: UMBF), a Kansas City-based multi-bank holding company, announced earnings of $42.8 million or $1.98 per share for the year ended December 31, 2004. This is a decrease of $16.0 million compared to 2003 earnings of $58.9 million or $2.70 per share. The decrease in earnings compared to 2003 was a result of lower net interest income and lower non-interest income partially offset by lower provision for loan losses and lower non-interest expense.
    "The interest rate environment continued to challenge our net interest margins during 2004. The last quarter of the year showed that we are beginning to reverse the trends as our loan portfolio grew almost 2 percent and we had net growth in the number of consumer customers and accounts. A recovering economy, coupled with our strong balance sheet, increasing loan portfolio, and strong Scout mutual fund sales, position us well for growth in 2005," said Mariner Kemper, chairman and CEO of UMB Financial Corporation. "In 2005, we will remain focused on growing our commercial and consumer loan portfolios along with our other lines of business. We continue to build out our presence in Phoenix, Arizona, where we currently have a loan production office and recently opened an asset management office in Lee's Summit, Missouri."
    "We took several steps during the last quarter of 2004 to gain operational efficiencies, further reduce expenses and drive profitability, including the consolidation of our broker/dealer operations, the consolidation of our Collinsville, Illinois, call center and the streamlining of our consumer loan operations in Denver, Colorado," said Peter deSilva, president and COO. "Additionally, we developed several new significant partners in our HSA (Health Savings Account) healthcare initiative, including Assurant, Motivano, MHM Resources, MSaver and First Data Corporation. During 2005, we will continue to evaluate our business to make sure we maintain our top priority of providing outstanding service to our customers while we optimize operational efficiencies and capitalize on key growth areas."
    For the year ended December 31, 2004, net interest income was $180.1 million compared to $194.1 million for 2003. The decline was due to lower average yields on loans and higher rates on deposits and short-term borrowings. Net interest margin was 3.12 percent for the year ended 2004 compared to 3.31 percent for 2003.
    Provision for loan losses declined $6.6 million compared to 2003 due to sustained low net charge-offs.
    Non-interest income for 2004 decreased $18.7 million compared to 2003. The decrease was primarily due to lower trust and securities processing fees resulting from the sale of employee benefit account processing and a 2003 gain on the sale of the merchant discount operation ($8.3 million) partially offset by a 2004 $3.1 million gain on the sale of employee benefit accounts.
    Non-interest expense decreased $1.8 million in 2004 compared to 2003. The decrease was primarily due to lower salary and benefit costs from the employee benefit division sale offset by increases in software costs.
    Tax expense was down $8.2 million in 2004 compared to 2003 resulting in a 17.2 percent effective tax rate in 2004 compared to a 22.5 percent tax rate in 2003. The decrease in tax rate is primarily attributable to the sale of state tax credits. Missouri historical rehabilitation credits were received for the rehabilitation of a downtown Kansas City building. The Missouri credits in excess of the amount of current year state income tax were sold. This reduced the 2004 state income tax expense by approximately $1.84 million.
    For the year ended December 31, 2004, average loans were $2.78 billion compared to $2.59 billion for 2003. Average deposit totals decreased to $4.97 billion for the year ended December 31, 2004, compared to $5.28 billion for 2003. As of December 31, 2004, UMB had total shareholders' equity of $819 million compared to $812 million for the prior year.
    The quality of the company's loan portfolio remains high as nonperforming loans at December 31, 2004, totaled $12.8 million compared to $15.9 million a year earlier. As a percentage of total loans, nonperforming loans decreased to 0.45 percent of loans as of December 31, 2004, compared to 0.59 percent of loans as of December 31, 2003. Nonperforming loans are defined as nonaccrual loans and loans more than 90 days past due. The company's allowance for loan losses totaled $42.7 million or 1.49 percent of total loans as of December 31, 2004, compared to $43.5 million, or 1.60 percent of total loans as of December 31, 2003.

    Fourth Quarter Results

    Earnings for the three months ended December 31, 2004, were $11.7 million or $0.54 per share compared to $17.7 million or $0.81 per share for the three months ended December 31, 2003. Net interest income declined $1.6 million to $45.1 million in the fourth quarter of 2004 compared to $46.7 million for the fourth quarter of the previous year. This was primarily due to higher rates on short-term borrowings. Non-interest income decreased $12.4 million in the fourth quarter of 2004 compared to the same period in 2003. The decrease was primarily due to a gain on the sale of a merchant discount operation ($8.3 million). Non-interest expense declined $1.1 million in the fourth quarter of 2004 compared to the same period in 2003.
    The company declared its regular quarterly dividend of $0.22 per share to be paid on April 1, 2005, to shareholders of record at the close of business on March 11, 2005.
    To further UMB Financial Corporation's commitment to best practices in corporate governance, 10 of UMB's directors voluntarily resigned their positions on the Board of Directors effective January 25, 2005. In response, the Board reduced the number of members of the Board from 30 (UMB currently has 28 directors and two vacancies on the Board) to 19 members. In addition, two additional directors, E. Jack Webster, Jr. and Miriam M. Allison, have voluntarily agreed not to stand for re-election at the expiration of their terms on April 26, 2005. In response, the Board reduced the number of members of the Board from 19 to 17 members effective April 26, 2005.
    The 10 directors who left the Board are: Paul D. Bartlett, Jr., Peter J. Genovese, William L. Bishop, Newton A. Campbell, C.N. Hoffman III, Thomas E. Beal, William J. McKenna, Tom J. McDaniel, Robert W. Plaster and Alan W. Rolley.
    The Board also amended its corporate governance guidelines to provide that, although not mandatory, directors who reach the age of 70 or who are not actively involved in a significant business endeavor would not normally be expected to stand for re-election thereafter.
    Additionally, on January 25, 2005, UMB announced the appointment of Theodore M. Armstrong as a director of UMB effective January 25, 2005. Mr. Armstrong will also serve on the company's Audit Committee and the Board has designated Mr. Armstrong as the Audit Committee Financial Expert.
    "We have always been prudent in our corporate structure and governing standards. In an effort to conform to the trends in current corporate governance best practices, we felt it was appropriate to make these changes at this time to ensure that we maintain strong corporate governance practices," said Mr. Kemper.

    About UMB

    UMB Financial Corporation is a multi-bank holding company headquartered in Kansas City, Mo., offering complete banking and related financial services to both individual and business customers. Its banking subsidiaries own and operate 152 banking centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma and Nebraska. Subsidiaries of the holding company and the lead bank, UMB Bank, n.a., include an investment services group based in Milwaukee, Wisconsin, a trust management company in South Dakota, and single-purpose companies that deal with brokerage services, consulting services and insurance.

    Forward-Looking Statements

    This release contains forward-looking statements of expected future developments. We wish to ensure such statements are accompanied by meaningful cautionary statements pursuant to safe harbor established by the Private Securities Litigation Reform Act of 1995. The forward-looking statements in the release refer to the expectations regarding continuing operating improvement and other matters. These forward-looking statements reflect management's expectations and are based on currently available data; however, actual results are subject to future events and uncertainties, which could materially affect actual performance. Our future performance involves a number of risks and uncertainties. Risks and uncertainties that could affect such performance include, but are not limited to: changing loan demand, the ability of customers to repay loans, changes in consumer saving habits, increases in employee costs, changes in interest rates, competition, and changes in economic conditions or regulatory requirements. Any forward-looking statements should be read in conjunction with information about risks and uncertainties set forth in the company's Securities and Exchange Commission reports, including its annual report and Form 10-K for the year ended December 31, 2004.

UMB Financial Corporation FOURTH QUARTER 2004 FINANCIAL HIGHLIGHTS ---------------------------------------------------------------------- (all dollars in thousands, except per share data) (unaudited)

Year Ended December 31 2004 2003 ------------------------------------------- -------------------------- Net interest income $ 180,052 $ 194,076 Provision for loan losses 5,370 12,005 Noninterest income 226,861 245,568 Noninterest expense 349,808 351,652 Income before income taxes 51,735 75,987 Net income 42,839 58,879 Net income per share - Basic 1.98 2.70 Net income per share - Diluted 1.97 2.70 Return on average assets 0.62 % 0.82 % Return on average equity 5.21 % 7.28 %

Three Months Ended December 31 ------------------------------------------- Net interest income $ 45,050 $ 46,692 Provision for loan losses (50) 2,125 Noninterest income 55,537 67,960 Noninterest expense 86,880 87,950 Income before income taxes 13,757 25,027 Net income 11,659 17,663 Net income per share - Basic 0.54 0.83 Net income per share - Diluted 0.54 0.81 Return on average assets 0.66 % 1.02 % Return on average equity 5.61 % 8.84 %

At December 31 ------------------------------------------- Assets $ 7,805,006 $ 7,749,419 Loans, net of unearned interest 2,869,224 2,722,292 Securities 3,764,011 3,721,943 Deposits 5,383,704 5,636,125 Shareholders' equity 819,182 811,923 Book value per share 37.85 37.43 Market price per share 56.66 47.54 Equity to assets 10.50 % 10.48 % Allowance for loan losses $ 42,723 $ 43,494 As a % of loans 1.49 % 1.60 % Nonaccrual and restructured loans $ 9,752 $ 12,796 As a % of loans 0.34 % 0.47 % Loans over 90 days past due $ 3,029 $ 3,131 As a % of loans 0.11 % 0.12 % Other real estate owned $ - $ 78

Common shares outstanding 21,641,053 21,694,078

Average Balances Year Ended December 31 ------------------------------------------- Assets $ 6,927,929 $ 7,150,137 Loans, net of unearned interest 2,781,084 2,588,794 Securities 2,966,402 3,507,789 Deposits 4,974,107 5,280,203 Shareholders' equity 821,556 808,472

UMB Financial Corporation CONSOLIDATED BALANCE SHEETS ---------------------------------------------------------------------- (all dollars in thousands) (unaudited) December 31, Assets 2004 2003 ---------------------------------------- ------------------------- Loans: Commercial, financial and agricultural $ 1,204,629 $ 1,186,660 Real estate construction 27,205 18,519 Consumer (net of unearned interest) 968,681 928,492 Real estate 663,555 581,154 Leases 5,154 7,467 Allowance for loan losses (42,723) (43,494) ------------------------- Net loans 2,826,501 2,678,798 Securities available for sale: U.S. Treasury and agencies 3,135,997 3,015,400 State and political subdivisions 452,907 391,869 Commercial paper and other - 0 ------------------------- Total securities available for sale 3,588,904 3,407,269 Securities held to maturity: State and political subdivisions 166,065 306,130 Federal Reserve Bank stock and other 9,042 8,544 Federal funds and resell agreements 293,599 276,715 Interest bearing due from banks 1,834 1,834 Trading securities 60,221 60,780 ------------------------- Total earning assets 6,946,166 6,740,070 Cash and due from banks 497,382 647,588 Bank premises and equipment, net 226,239 219,281 Accrued income 36,590 40,428 Goodwill on purchased affiliates 59,239 57,428 Other intangibles 5,045 5,601 Other assets 34,345 39,023 ------------------------- Total assets $ 7,805,006 $ 7,749,419 -------------------------

Liabilities ---------------------------------------- ------------------------- Deposits: Noninterest - bearing demand $ 1,993,281 $ 2,098,560 Interest - bearing demand and savings 2,433,885 2,451,743 Time deposits under $100,000 630,988 714,225 Time deposits of $100,000 or more 325,550 371,597 ------------------------- Total deposits 5,383,704 5,636,125 Federal funds and repurchase agreements 1,506,000 1,173,927 Short-term debt 39,426 70,604 Long-term debt 21,051 16,280 Accrued expenses and taxes 21,530 28,148 Other liabilities 14,113 12,412 ------------------------- Total liabilities 6,985,824 6,937,496 -------------------------

Shareholders' Equity ---------------------------------------- ------------------------- Common stock 27,528 27,528 Capital surplus 726,595 726,405 Retained earnings 305,986 281,556 Accumulated other comprehensive income (loss) (10,619) 3,183 Treasury stock (230,308) (226,749) ------------------------- Total shareholders' equity 819,182 811,923 ------------------------- Total liabilities and shareholders' equity $ 7,805,006 $ 7,749,419 -------------------------

UMB Financial Corporation Consolidated Statements of Income ---------------------------------------------------------------------- (unaudited, dollars in thousands except share and per share data)

Three Months Ended Year Ended December 31, December 31, Interest Income 2004 2003 2004 2003 ---------------------- ----------------------------------------------- Loans $ 36,467 $ 33,575 $ 137,233 $ 137,872 Securities: Taxable Interest 15,081 15,569 57,746 70,870 Tax-exempt interest 4,533 5,824 18,923 24,844 ----------------------------------------------- Total securities income 19,614 21,393 76,669 95,714 Federal funds and resell agreements 1,681 569 4,389 1,701 Trading securities and other 561 369 2,111 1,473 ----------------------------------------------- Total interest income 58,323 55,906 220,402 236,760 -----------------------------------------------

Interest Expense ---------------------- Deposits 8,130 7,145 27,059 33,174 Federal funds and repurchase agreements 4,799 1,793 12,163 8,245 Short-term debt 76 44 185 193 Long-term debt 268 232 943 1,072 ----------------------------------------------- Total interest expense 13,273 9,214 40,350 42,684 ----------------------------------------------- Net interest income 45,050 46,692 180,052 194,076 Provision for loan losses (50) 2,125 5,370 12,005 ----------------------------------------------- Net interest income after provision for loan losses 45,100 44,567 174,682 182,071 -----------------------------------------------

Noninterest Income ---------------------- Trust and securities processing 19,846 21,833 75,742 86,490 Trading and investment banking 4,233 4,804 17,915 20,863 Service charges on deposits 17,766 17,216 73,533 70,705 Insurance and brokerage 2,335 3,244 11,218 13,341 Bankcard fees 7,995 7,834 31,435 31,655 Gains on sales of securities available for sale, net - 818 141 824 Other 3,362 12,211 16,877 21,690 ----------------------------------------------- Total noninterest income 55,537 67,960 226,861 245,568 -----------------------------------------------

Noninterest Expense ---------------------- Salaries and employee benefits 45,282 49,495 189,876 196,893 Occupancy, net 6,589 6,208 26,131 24,720 Equipment 10,603 11,003 43,422 42,645 Supplies, postage and telephone 5,577 5,679 22,268 23,291 Marketing and business development 4,026 2,735 15,306 13,550 Processing fees 5,859 5,076 21,372 20,323 Legal and consulting 2,743 2,347 8,825 7,355 Amortization of other intangibles 185 186 741 1,210 Other 6,016 5,221 21,867 21,665 ----------------------------------------------- Total noninterest expense 86,880 87,950 349,808 351,652 -----------------------------------------------

Income before income taxes 13,757 25,027 51,735 75,987 Income tax provision 2,098 6,914 8,896 17,108 ----------------------------------------------- Net income $ 11,659 $ 17,663 $ 42,839 $ 58,879 =============================================== Per Share Data ---------------------- Net income - Basic $ 0.54 $ 0.81 $ 1.98 $ 2.70 Net income - Diluted 0.54 0.81 1.97 2.70 Dividends 0.22 0.21 0.85 0.81 Weighted average shares outstanding 21,648,264 21,716,333 21,668,749 21,783,354 -----------------------------------------------

UMB Financial Corporation Consolidated Statements of Shareholders' Equity (all dollars in thousands)(unaudited) ---------------------------------------------------------------------- Accumulated Other Compre- hensive Common Capital Retained Income Treasury Stock Surplus Earnings (Loss) Stock Total --------------------------------------------------------------------- Balance - Jan. 1, 2003 $27,528 $726,368 $240,295 $23,678 $(215,069) $802,800 Net income - - 58,879 - - 58,879 Other Comprehensive income, change in unrealized gain on securities of $33,060, net of tax $12,035 and the reclassifi- cation adjustment for gains included in net income of $824 net of tax $294 - - - (20,495) - (20,495) Total --------- comprehensive income 38,384 Cash dividends ($0.81 per share) - - (17,618) - - (17,618) Purchase of treasury stock - - - - (12,074) (12,074) Sale of treasury stock - - - - 30 30 Exercise of stock options - 37 - - 364 401 ---------------------------------------------------------------------- Balance - Dec. 31, 2003 $27,528 $726,405 $281,556 $ 3,183 $(226,749) $ 811,923 ====================================================================== Balance - Jan. 1, 2004 $27,528 $726,405 $281,556 $ 3,183 $(226,749) $ 811,923 Net income - - 42,839 - - 42,839 Other comprehensive income, change in unrealized loss on securities of $21,958, net of tax $8,066 and the reclassification adjustment for gains included in net income of $141 net of tax $51 - - - (13,802) - (13,802) Total --------- comprehensive income 29,037 Cash dividends ($0.85 per share) - - (18,409) - - (18,409) Purchase of treasury stock - - - - (4,411) (4,411) Sale of treasury stock - - - - 39 39 Exercise of stock options - 190 - - 813 1,003 ---------------------------------------------------------------------- Balance - Dec. 31, 2004 $27,528 $726,595 $305,986 $(10,619)$(230,308) $819,182 ======================================================================

UMB Financial Corporation Average Balances / Yields and Rates ---------------------------------------------------------------------- (tax - equivalent basis) ------------------------- (all dollars in thousands)(unaudited) Year Ended December 31, 2004 2003 --------------------- ---------------------- Average Average Average Average Assets Balance Yield/Rate Balance Yield/Rate --------------------- ---------------------- Loans, net of unearned interest $2,781,084 4.94 % $2,588,794 5.35 % Securities: Taxable 2,351,226 2.46 2,771,882 2.56 Tax-exempt 615,176 4.67 735,907 5.24 -------------------- -------------------- Total securities 2,966,402 2.91 3,507,789 3.12 Federal funds and resell agreements 280,305 1.57 146,470 1.16 Other earning assets 69,784 3.12 51,211 2.99 -------------------- -------------------- Total earning assets 6,097,575 3.78 6,294,264 3.99 Allowance for loan losses (44,303) (40,770) Other assets 874,657 896,643 ---------- ----------- Total assets $6,927,929 $7,150,137 =========== ===========

Liabilities and Shareholders' Equity

Interest-bearing deposits$3,108,502 0.87 % $3,492,038 0.95 % Federal funds and repurchase agreements 1,050,891 1.16 950,569 0.87 Borrowed funds 36,052 3.13 41,161 3.07 -------------------- -------------------- Total interest- bearing liabilities 4,195,445 0.96 4,483,768 0.95 Noninterest-bearing demand deposits 1,865,605 1,788,165 Other liabilities 45,323 69,730 Shareholders' equity 821,556 808,472 ---------- ----------- Total liabilities and shareholders' equity $6,927,929 $7,150,135 =========== =========== Net interest spread 2.82 % 3.04 % Net interest margin 3.12 3.31

Three Months Ended December 31, 2004 2003 --------------------- ---------------------- Average Average Average Average Assets Balance Yield/Rate Balance Yield/Rate --------------------- ---------------------- Loans, net of unearned interest $2,845,004 5.10 % $2,646,356 5.05 % Securities: Taxable 2,394,293 2.51 2,540,178 2.43 Tax-exempt 603,575 4.49 734,755 4.83 -------------------- -------------------- Total securities 2,997,868 2.91 3,274,933 2.97 Federal funds and resell agreements 315,002 2.12 207,695 1.09 Other earning assets 69,353 3.33 54,500 2.74 -------------------- -------------------- Total earning assets 6,227,227 3.87 6,183,484 3.80 Allowance for loan losses (44,302) (43,715) Other assets 861,745 896,765 ---------- ----------- Total assets $7,044,670 $7,036,534 =========== ===========

Liabilities and Shareholders' Equity

Interest-bearing deposits $3,141,026 1.03 % $3,345,147 0.85 % Federal funds and repurchase agreements 1,126,110 1.70 929,940 0.76 Borrowed funds 38,507 3.55 38,651 2.83 -------------------- -------------------- Total interest- bearing liabilities 4,305,643 1.23 4,313,738 0.85 Noninterest-bearing demand deposits 1,874,220 1,843,530 Other liabilities 38,385 66,800 Shareholders' equity 826,422 812,466 ---------- ----------- Total liabilities and shareholders' equity $7,044,670 $7,036,534 =========== =========== Net interest spread 2.65 % 2.95 % Net interest margin 3.03 3.20

UMB Financial Corporation Selected Financial Data of Affiliate Banks ---------------------------------------------------------------------- (all dollars in thousands) December 31, 2004 (unaudited) Loans Net of Total Unearned Total Shareholder's Missouri Assets Interest Deposits Equity ---------------------------------------------------------------------- UMB Bank, n.a. $6,625,746 $2,434,753 $4,618,902 $ 544,866 UMB Bank, Warsaw 76,654 24,337 56,926 5,524

Colorado ---------------------------------------------------------------------- UMB Bank Colorado, n.a. 447,217 235,086 360,244 31,014

Kansas ---------------------------------------------------------------------- UMB National Bank of America 581,677 164,253 430,718 71,218

Banking - Related Subsidiaries ---------------------------------------------------------------------- UMB Community Development Corporation UMB Banc Leasing Corp. UMB Scout Brokerage Services, Inc. UMB Scout Insurance Services, Inc. UMB Capital Corporation United Missouri Insurance Company UMB Trust Company of South Dakota Scout Investment Advisors, Inc. UMB Fund Services, Inc. UMB Consulting Services, Inc.

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CONTACT: UMB Financial Corporation Corporate Communications: Jill Stockham, 816-860-5606 or Investor Relations: Begonya Klumb, 816-860-7906

KEYWORD: COLORADO NEBRASKA MISSOURI KANSAS OKLAHOMA ILLINOIS INDUSTRY KEYWORD: BANKING MANAGEMENT CHANGES EARNINGS SOURCE: UMB Financial Corporation

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