UMB reports record earnings for 5th year in a row

UMB Financial Corporation reported record net income of $61.7 million for the year ended Dec. 31, 1997, compared to $57.5 million for 1996. That and the following information was obtained from a release from UMB dated Jan. 22.

1996 was the fifth consecutive year of record earnings for the company. On a per-share basis, the company earned $3.02, a 10 percent increase over last year's per-share earnings of $2.75. During the final quarter of 1997, the company earned $16.8 million, compared to $11 million, or 53 cents per share, for the fourth quarter of 1996. This represents a 55 percent increase in per-share earnings for the quarter.

The company's cash-basis return on average assets and return on average equity were 1.06 percent and 11.50 percent, respectively. Cash-basis returns exclude the impact on earnings of the premium amortization related to acquisitions, which is a non-cash expense.

Fundamental to the company's improved performance was a 7 percent increase in net interest income, which was driven by a 9 percent increase in loans for the year. The company has experienced strong growth in both its commercial and consumer loan portfolios. However, the yield on the portfolio has continued to tighten as a result of increased competition for quality loans.

The company also benefitted from continued increases in its fee-based business. Significant gains were made in areas of trust, services performed for mutual fund customers and fee income from both commercial and retail deposits. Increases in non-interest expense partially offset the benefits in net interest income and fee income. The largest contributor to the company's higher expense level was staffing costs. The company has experienced increases in these costs as a result of higher staffing levels in strategic areas such as management information systems and trust services. These costs have also been affected by a very competitive job market, which has escalated the cost of hiring and keeping a quality work force.

The company also increased its provision for loan losses by an additional $1.3 million during 1997 compared to 1996. This increase was primarily attributable to increased credit losses within the consumer loan portfolio.

UMB increased its loan portfolio while reducing its nonperforming loans and loans more than 90 days past due. These loans totaled $11.9 million Dec. 31, 1997, compared to $18.2 million at year-end 1996. UMB's allowance for loan losses was $33.3 million or 1.2 percent of total loans at year-end 1997.

UMB Financial Corporation's board of directors also voted a quarterly cash dividend of 20 cents per share, payable April 1 to shareholders of record at the close of business March 13.

UMB Financial Corporation is a $7 billion multi-bank holding company with headquarters in Kansas City.

The company owns and operates 16 banks with more than 150 locations and offices throughout Missouri, Kansas, Colorado, Oklahoma, Nebraska, Illinois and Iowa.

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