10-K

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, 2002

¨ 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 incorporation or organization)	(I.R.S. Employer Identification No.)
1010 Grand Boulevard, Kansas City, Missouri	64106
(Address of principal executive offices)	(ZIP Code)

(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 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 ¨

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 is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x  No ¨

As of June 28, 2002, the aggregate market value of common stock outstanding held by nonaffiliates of the registrant was approximately $770,111,596 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 January 31, 2003
Common Stock, $1.00 Par Value	21,981,208

DOCUMENTS INCORPORATED BY REFERENCE

Company’s 2003 Proxy Statement dated March 10, 2003—Part III

	INDEX
Item
	PART I
1.	Business	3-6
2.	Properties	7
3.	Legal Proceedings	8
4.	Submission of Matters to a Vote of Security Holders	8
	PART II
5.	Market for the Registrant’s Common Equity and Related Stockholder Matters	8
6.	Selected Financial Data	9
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10-26
7A.	Quantitative and Qualitative Disclosure about Market Risk	27-32
8.	Financial Statements and Supplementary Data	33-65
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	66
	PART III
10.	Directors and Executive Officers of the Registrant	66
11.	Executive Compensation	66
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	66
13.	Certain Relationships and Related Transactions	67
14.	Controls and Procedures	67
	PART IV
15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K	67-68
	Signatures	69-70
	Certifications	71-72

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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. In 2001, the Company elected to become a financial holding company under the Gramm-Leach-Bliley Act. The Company owns all of the outstanding stock of five commercial banks, a credit card bank, a bank real estate corporation, a reinsurance company, a community development corporation, a consulting company and a mutual fund servicing company.

The Company’s five commercial banks are engaged in general commercial banking business entirely in domestic markets. Two of the banks are in Missouri, and the three remaining banks are in Kansas, Colorado and Nebraska. The Banks 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. The table below sets forth the names and locations of the Company’s affiliate banks as well as their respective total assets, loans, deposits and shareholders’ equity as of December 31, 2002.

SELECTED FINANCIAL DATA OF AFFILIATE BANKS (in thousands)

	December 31, 2002
	Number of Locations	Total Assets		Loans		Total Deposits		Shareholders’ Equity
Missouri
UMB Bank, n.a.	128	$	7,003,680	$	2,220,608	$	5,181,664	$	547,118
UMB Bank, Warsaw, n.a.	4		85,144		20,216		69,321		7,169
Colorado
UMB Bank Colorado, n.a.	11	$	380,277	$	176,153	$	325,434	$	32,245
Kansas
UMB National Bank of America	13	$	604,825	$	136,440	$	369,829	$	78,959
Nebraska
UMB Bank Omaha, n.a.	4	$	93,694	$	89,270	$	26,906	$	6,332
Banking—Related Subsidiaries
UMB Properties, Inc.
UMB Community Development Corporation
UMB Banc Leasing Corp.
UMB U.S.A., n.a.
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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UMB, U.S.A. n.a. is a credit card bank located in Nebraska. UMB, U.S.A. n.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, UMB Community Development Corporation, UMB Consulting Services, Inc., and UMB Fund Services, Inc. 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. UMB Community Development Corporation provides low-cost mortgage loans to low- to moderate-income families for acquiring or rehabbing owner-occupied housing in Missouri, Kansas, Illinois, Nebraska, Oklahoma and Colorado. UMB Consulting Services, Inc. offers regulatory and compliance assistance to regional banks. UMB Fund Services, Inc. (formerly known as Sunstone Financial Group Inc.), located in Milwaukee, Wisconsin, is a nationally recognized mutual fund service provider to nearly 40 mutual funds and fund families.

On a full-time equivalent basis at December 31, 2002, the Company and its subsidiaries employed 4,027 persons.

Competition.    The Company faces intense competition from hundreds of financial service providers in the markets served. The Company competes with other financial service providers including banks, savings and loan associations, finance companies, mutual funds, mortgage banking companies and credit unions. Customers for banking services and other financial services offered by the Company are generally influenced by convenience, quality of service, personal contacts, price of services and availability of products.

Available Information.    The Company makes available on its website at www.umb.com, free of charge, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports, as soon as reasonably practicable after electronically filing such material with, or furnishing it to, the SEC. Information contained on the Company’s website is not incorporated by reference into this annual report on Form 10-K.

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 Reserve Board are affected 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 and a financial holding company, the Company and its subsidiaries are subject to extensive regulation and are affected by the enactment of federal and state legislation.

The Company is subject to regulation and examination by the Federal Reserve Board and the Federal Reserve Bank of Kansas City. Its subsidiary banks are subject to regulation and examination by the Office of the Comptroller of the Currency (“OCC”). UMB Scout Insurance Services, Inc. is regulated by state agencies in the states in which it operates. The Company’s brokerage affiliate, UMB Scout Brokerage Services, Inc., is regulated by the Securities and Exchange Commission (“SEC”), the National Association of Securities Dealers, Inc., and the Missouri Division of Securities; it is also subject to certain regulations of the various states in which it transacts business. The Company is subject to the Bank Holding Company Act (“BHCA”), which requires the Company to obtain the prior approval of the Federal Reserve Board to (i) acquire substantially all the assets of any bank, (ii) acquire more than 5% of any class of 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. The BHCA also imposes significant limitations on the scope and type of activities in which the Company and its subsidiaries may engage. 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 Federal Reserve Board possesses cease and desist powers over bank holding companies if their actions represent unsafe or unsound practices or violations of law.

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As a result of the enactment of the Interstate Banking and Branching Efficiency Act of 1994 (the “Interstate Banking Act”), bank holding companies may acquire banks in any state, subject to state deposit caps and a 10% nationwide cap. Banks may also merge across state lines, creating interstate branches. Furthermore, a bank may open new branches in a state in which it does not already have banking operations, if the law of that state does not prohibit de novo branching by an out of state bank or if the state has not “opted out” of interstate branching. As a result of the Interstate Banking Act, the Company has many more opportunities for expansion and has potentially greater competition in its market area from nationwide or regional banks.

A bank holding company and its subsidiaries are prohibited from engaging in certain tie-in arrangements in connection with the extension of credit, with limited exceptions. There are also 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. It is Federal Reserve Board policy that a bank holding company, such as the Company, should serve as a source of managerial and financial strength for each of its subsidiaries, and commit resources to them, even in circumstances in which it might not do so in absence of such policy.

Under the provisions of the Gramm-Leach-Bliley Act (GLBA) the Company is eligible to engage in non-banking activities which are financial in nature by notifying, or in certain cases obtaining the prior approval of, the Federal Reserve Board. Under the GLBA, subsidiaries of financial holding companies engaged in non-bank activities are supervised and regulated by the federal and state agencies, which normally supervise and regulate such functions outside of the financial holding company context. The Company is also subject to a number of restrictions and requirements imposed by the Sarbanes-Oxley Act of 2002 relating to loans to directors or executive officers of the Corporation, the preparation and certification of the Company’s financial statements, the duties of the Company’s audit committee, relations with and functions performed by the Company’s outsider independent auditors, and various accounting and corporate governance matters.

The Company’s bank subsidiaries are subject to a number of laws regulating depository institutions, including the Federal Deposit Insurance Corporation Improvement Act of 1991 which expanded the regulatory and enforcement powers of the federal bank regulatory agencies, required that these agencies prescribe standards relating to internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, compensation, fees and benefits, and mandated annual examinations of banks by their primary regulators. The Company’s bank subsidiaries are also subject to a number of consumer protection laws and regulations of general applicability, as well as the USA Patriot Act, which is designed to identify, prevent and deter international money laundering and terrorist financing.

All five of the commercial banks owned by the Company are national banks and are subject to supervision and examination by the OCC. UMB, U.S.A. n.a., a credit card bank, is located in the state of Nebraska and is subject to supervision and examination by the OCC. In addition, the national banks are subject to examination by The Federal Reserve System. All affiliate banks are members of and subject to examination by the Federal Deposit Insurance Corporation.

Payment of dividends by the affiliate banks to the parent company is subject to various regulatory restrictions. For national banks, 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. At December 31, 2002, approximately $10,737,000 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, 2002, the Company is required to have minimum Tier 1 and

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Total capital ratios of 4.00% and 8.00%, respectively. The Company’s actual ratios at that date were 17.98% and 18.88%, respectively. The company’s leverage ratio at December 31, 2002, was 10.04%.

As of December 31, 2002, the most recent notification from the Office of Comptroller of the Currency categorized the Company’s most significant affiliate banks as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well-capitalized, the affiliate banks must maintain total risk-based, Tier 1 risk-based and Tier 1 leverage ratios of 10.0%, 6.0% and 5.0%, respectively. There are no conditions or events since that notification that management believes have changed the affiliate banks’ category.

Financial information regarding segments is included in Item 8, pages 52 through 54 of this report.

Statistical Disclosure.    The information required by Guide 3, “Statistical Disclosure by Bank Holding Companies,” has been included in Items 6, 7, and 7A, pages 9 through 32 of this report.

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.

Name	Age	Position with Registrant
R. Crosby Kemper	76	Senior Chairman of the Board since January 2001. Chairman of the Board from 1972 to January 2001 and CEO of the Company from 1972 through July 1999 and from March, 2000 through January 2001. Chairman and Chief Executive Officer of UMB Bank, n.a. (a subsidiary of the Company) from 1971 through 1996, and Chairman through January 1997.
Peter J. Genovese	56	President of the Company since 2000. Vice Chairman of the Board since 1982. Chairman and Chief Executive Officer of UMB Bank of St. Louis, n.a. (a former subsidiary of the Company) from 1979 to 1999.
R. Crosby Kemper III	52	A son of R. Crosby Kemper. Chairman and CEO of the Company since January 2001. Vice Chairman of the Board from 1995 to 2001. Chairman and CEO of UMB Bank, n.a. since March 2000. President of UMB Bank of St. Louis, n.a. from 1993 to 1999.
Royce M. Hammons	57	Regional President of UMB Bank, n.a. since 2000. President and Chief Executive Officer of UMB Oklahoma Bank (a former subsidiary of the Company) since 1987 through 2000.
Dennis G. Powell	53	Executive Vice President of UMB Bank, n.a. since 2001. Senior Vice President Bank One, n.a. 1996 to 2000.
James A. Sangster	48	President of UMB Bank, n.a. since 1999. Divisional Executive Vice President of UMB Bank, n.a. from 1993 to 1999. Executive Vice President prior thereto.
Douglas F. Page	59	Executive Vice President of the Company since 1984 and Divisional Executive Vice President, Loan Administration, of UMB Bank, n.a. Since 1989.
Daniel C. Stevens	47	Chief Financial Officer of the Company since 2001. Executive Vice President and CFO of Euronet Services Inc. 1999 to 2000. Senior Vice President Chief Financial and Risk Manager of US Central Credit Union 1997 to 1999.
James C. Thompson	60	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.

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Name	Age	Position with Registrant
James D. Matteoni	60	Chief Information Officer of UMB Bank, n.a. since 1996.
Dennis R. Rilinger	55	Divisional Executive Vice President and General Counsel of the Company and of UMB Bank, n.a. since 1996.
Mark A. Schmidtlein	43	President of UMB Bank, n.a. Capital Markets since January 2003, Executive Vice President of UMB Bank, n.a. from 1996 to 2002. Senior Vice President prior thereto.
Sheila Kemper Dietrich	46	A daughter of R. Crosby Kemper. Executive Vice President of UMB Bank, n.a. since 1993.
David D. Kling	56	Divisional Executive Vice President of UMB Bank, n.a. since 1997.
J. Mariner Kemper	30	A son of R. Crosby Kemper. Chairman and CEO of UMB Bank Colorado, n.a. (a subsidiary of the Company) since 2000. President of UMB Bank Colorado from 1997 to 2000.
Vince J. Ciavardini	47	Vice Chairman of Board of the Company and President and CEO of Investor Services Group since 2002. President and CEO of PFPC, Inc. 1982 to 2001.
Miriam M. Allison	55	President UMB Fund Services, Inc. (formerly known as Sunstone Financial Group Inc.) since 2001. President and Chief Executive Officer of Sunstone Financial Group, Inc. 1990-2001.
Chris N. Hoffman III	53	Chairman of the UMB National Bank of America since 2002, President of Salina Banking Center of UMB National Bank of American Salina, Kansas from 1993 through 2001.
Darren Herrmann	37	Treasurer of the Company since 2002, Senior Vice President and Manager of the Financial Services Group in the Investment Banking Division of UMB Bank, n.a. since 1994, Vice President prior thereto.

ITEM 2.  PROPERTIES

The Company’s headquarters building, the UMB Bank Building, is located at 1010 Grand Boulevard 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 available for lease to third parties. The Company’s principal law firm and principal accounting firm are lessees.

UMB Fund Services, Inc., a subsidiary of the Company leases 83,315 square feet in Milwaukee, Wisconsin, at which its fund services operations is headquartered.

The banking facility of UMB Bank, n.a. at 928 Grand Boulevard principally houses that bank’s support functions and is connected to the headquarters building by an enclosed pedestrian walkway. UMB Bank, n.a. also leases 40,000 square feet of space in the Equitable Building, in St. Louis, in the heart of the downtown commercial sector. A full service banking center, operations and administrative offices are housed at this location.

At December 31, 2002, the Company’s affiliate banks operated a total of five main banking houses and 155 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 constructed a 180,000 square foot operations center in downtown Kansas City, Missouri. The Company moved its operational and item processing functions, as well as management information systems, to this building in the second quarter of 1999.

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Additional information with respect to premises and equipment is presented in Item 8, pages 38 and 46 of this report.

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, 2002. 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, 2002

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 February 14, 2003, the Company had 2,113 shareholders. Company stock information for each full quarter period within the two most recent fiscal years is set forth in the table below.

Per Share	Three Months Ended
2002	March 31		June 30		Sept 30		Dec 31
Net income—basic	$	0.89	$	0.63	$	0.52	$	0.55
Net income—diluted		0.88		0.63		0.52		0.55
Dividend		0.20		0.20		0.20		0.20
Book value		34.92		35.83		36.27		36.52
Market price:
High		43.74		50.95		48.59		40.64
Low		38.86		42.66		37.28		36.20
Close		42.88		46.87		39.04		38.26
2001	March 31		June 30		Sept. 30		Dec. 31
Net income—basic	$	0.80	$	0.75	$	0.77	$	0.63
Net income—diluted		0.80		0.75		0.77		0.63
Dividend		0.19		0.19		0.19		0.19
Book value		32.85		33.50		34.52		34.73
Market price:
High		37.50		40.95		43.52		42.75
Low		32.86		33.38		33.75		37.38
Close		36.19		40.95		39.52		40.00

Information concerning restrictions on the ability of the Registrant to pay dividends and the Registrant’s subsidiaries to transfer funds to Registrant is contained in Item 1, page 5 and Item 8, pages 48 and 49 of this report. Information concerning securities the Company issued under equity compensation plans is contained in Item 12, page 66 of this report.

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ITEM 6.   SELECTED FINANCIAL DATA

For a discussion of factors that may materially affect the comparability of the information below, please see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operation, pages 10 through 26, of this report.

FIVE YEAR FINANCIAL SUMMARY

(in thousands except per share data)

	2002			2001			2000			1999			1998
EARNINGS
Interest Income	$	294,483		$	384,876		$	430,785		$	407,388		$	409,625
Interest Expense		76,452			145,147			196,377			183,323			187,092
Net interest income		218,031			239,729			234,408			224,065			222,533
Provision for loan losses		16,738			14,745			9,201			8,659			10,818
Noninterest income		232,206			223,523			197,223			184,122			164,152
Noninterest expense		360,949			369,373			353,760			312,476			299,891
Minority interest in loss of subsidiary		—			11,800			19,437			—			—
Net income		57,173			65,230			65,111			64,077			54,214
AVERAGE BALANCES
Assets	$	7,589,065		$	7,366,444		$	7,289,098		$	7,439,411		$	7,017,417
Loans, net of unearned interest		2,650,249			2,929,061			3,004,754			2,615,978			2,640,933
Securities		3,815,199			3,145,246			2,841,892			3,553,849			3,005,330
Deposits		5,527,836			5,410,264			5,364,754			5,348,341			5,318,351
Long-term debt		27,466			29,049			29,504			40,241			42,584
Shareholders’ equity		794,202			748,739			676,243			657,326			650,078
YEAR-END BALANCES
Assets	$	8,035,559		$	8,730,934		$	7,866,883		$	8,130,142		$	7,646,878
Loans, net of unearned interest		2,673,786			2,814,388			3,073,957			2,841,150			2,559,136
Securities		4,122,315			4,521,294			3,145,466			3,897,786			3,755,049
Deposits		5,846,947			6,375,510			5,935,204			5,923,935			5,896,804
Long-term debt		26,302			27,388			27,041			37,904			39,153
Shareholders’ equity		802,800			768,577			702,934			654,991			662,767
PER SHARE DATA
Earnings—basic	$	2.59		$	2.95		$	2.91		$	2.80		$	2.30
Earnings—diluted		2.58			2.95			2.91			2.80			2.29
Cash dividends		0.80			0.76			0.76			0.70			0.70
Dividend payout ratio		30.89	%		27.12	%		26.12	%		25.00	%		30.43	%
Book value	$	36.52		$	34.73		$	31.58		$	28.93		$	28.30
Market price
High		50.10			43.52			37.14			40.21			55.85
Low		36.20			32.86			29.58			33.55			35.29
Close		38.26			40.00			35.60			35.95			39.72
RATIOS
Return on average assets		0.75	%		0.89	%		0.89	%		0.86	%		0.77	%
Return on average equity		7.20			8.71			9.63			9.75			8.34
Average equity to average assets		10.04			10.17			9.28			8.84			9.26
Total risk-based capital ratio		18.88			15.97			16.63			14.91			15.57

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ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND ANALYSIS

The following presents management’s discussion and analysis of the Company’s consolidated financial condition and results of operations. This review highlights the major factors affecting results of operations and any significant changes in financial conditions for the three-year period ending December 31, 2002. It should be read in conjunction with the accompanying consolidated financial statements and other financial statistics appearing elsewhere in the report.

The discussion 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. These forward-looking statements may refer to projections of future financial performance and financial items, plans and objectives of future operations, and other matters. These forward-looking statements reflect management’s expectations and are based on currently available data; however, actual future results are subject to future events and uncertainties, which could materially affect actual performance and cause future results to differ materially from those referred to in the forward-looking statements. Such future events and uncertainties include, but are not limited to, changes in: loan demand, the ability of customers to repay loans, consumer saving habits, employee costs, pricing, interest rates, competition, legal or regulatory requirements or restrictions, U.S. or international economic or political conditions such as inflation or fluctuation in interest rates or in the values of securities traded in the equity markets. Any forward-looking statements should be read in conjunction with information about risks and uncertainties set forth in this report. Forward-looking statements speak only as of the date they are made, and the Company does not intend to review or revise any particular forward-looking statement in light of events that occur thereafter or to reflect the occurrence of unanticipated events.

Earnings Summary

The Company recorded consolidated net income of $57.2 million for the year ended December 31, 2002. This represents a 12.4% decrease over 2001. Net income for 2001 increased slightly over 2000. Earnings per share for the year ended December 31, 2002, were $2.59 per share compared to $2.95 in 2001 and $2.91 in 2000. Earnings per share for 2002 decreased 11.9% over 2001 per share earnings, which had increased 1.4% over 2000.

The Federal Reserve Board reduced the interest rate 11 times in 2001, for a total of 475 basis points (4.75%). These reductions, caused repricing pressures on loans and securities and thus contributed significantly to a decrease in interest income for 2002 and 2001. Although, this decrease in interest income was positively offset by a decrease in interest expense, the Company’s net interest income declined to $218.0 million in 2002 compared to $239.7 million in 2001, and $234.4 million in 2000.

The Company had an increase of 3.9% in noninterest income in 2002 as compared to 2001 and a 13.3% increase in 2001 compared to 2000. A contributing factor to the increase in 2002 and 2001 was the acquisition in 2001 of Sunstone Financial Group, Inc (now known as UMB Fund Services, Inc). This acquisition has and is expected to continue to help the Company build its fee-based business.

Noninterest expense declined in 2002 by 2.3% compared to 2001 and increased in 2001 by 4.2% compared to 2000. In 2001, the Company recorded a year-end charge of approximately $3.8 million related to the write off and depreciation of certain non-strategic assets, primarily real estate. Also, amortization of goodwill was discontinued in 2002 due to the issuance of Statement of Financial Accounting Standards (“SFAS”) No. 142. This change in accounting standards resulted in a reduction of expense of $5.65 million in 2002. Also, in 2001, the Company had higher staffing costs due to the Company’s new acquisitions.

The results of operations for the year 2000 through May 18, 2001 were affected by the consolidation of the Company’s subsidiary eScout LLC (eScout). The sale of a portion of the Company’s ownership in eScout on May 18, 2001 put the Company in a minority ownership position. The results of eScout are no longer included in the

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consolidated results of the Company. The Company recorded a gain of $1.7 million in 2001 on the sale of part of its ownership interest in eScout.

Results of Operations

Net Interest Income

Net interest income is a significant source of the Company’s earnings and represents the amount by which interest income on earning assets exceeds the interest expense paid on liabilities. The volume of interest earning assets and the related funding sources, the overall mix of these assets and liabilities and the rates paid on each, affects net interest income. Table 1 summarizes the change in net interest income resulting from changes in volume and rates for 2002, 2001 and 2000.

Net interest margin is calculated as net interest income on a fully tax equivalent basis (FTE) as a percentage of average earning assets. A critical component of net interest income and related net interest margin is the percentage of earning assets funded by interest free funding sources. Table 2 analyzes net interest rate margin for the three years ended December 31, 2000, 2001 and 2002. Net interest income, average balance sheet amounts and the corresponding yields earned and rates paid for the years 1998 through 2002 are presented in a table following the footnotes to the consolidated financial statements. 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 obligations of state and local governments.

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TABLE 1

RATE-VOLUME ANALYSIS (in thousands)

This analysis attributes changes in net interest income either to changes in average balances or to changes in average rates for earning assets and interest-bearing liabilities. The change in net interest income is due jointly to both volume and rate and has been allocated to volume and rate in proportion to the relationship of the absolute dollar amount of change in each. All rates are presented on a tax-equivalent basis and give effect to the disallowance of interest expense, for federal income tax purposes, related to certain tax-free assets. The loan average balances and rates include nonaccrual loans and loan fees.

Average Volume				Average Rate				2002 vs. 2001	Increase (Decrease)
2002		2001		2002		2001			Volume			Rate			Total
								Change in interest earned on:
	$2,650,249	$	2,929,061	6.12	%	7.74	%	Loans	$	(20,171	)	$	(44,352	)	$	(64,523	)
								Securities:
	3,146,031		2,480,740	3.21		4.82		Taxable		27,240			(45,951	)		(19,357	)
	669,168		664,506	5.94		6.14		Tax-exempt		151			(1,955	)		(1,158	)
	185,678		195,854	1.69		3.89		Federal funds sold and resell agreements		(378	)		(4,112	)		(4,490	)
	66,952		70,360	4.11		5.36		Other		(149	)		(716	)		(865	)
	$6,718,078	$	6,340,521	4.59	%	6.28	%	Total	$	6,693		$	(97,086	)	$	(90,393	)
								Change in interest incurred on:
	$3,804,714	$	3,634,544	1.56	%	2.97	%	Interest-bearing deposits	$	4,838		$	(53,358	)	$	(48,520	)
	1,107,821		973,080	1.29		3.31		Federal funds purchased and repurchase agreements		3,954			(21,850	)		(17,896	)
	88,561		120,269	3.11		4.18		Other		(1,154	)		(1,125	)		(2,279	)
$	5,001,096	$	4,727,893	1.53	%	3.07	%	Total	$	7,638		$	(76,333	)	$	(68,695	)
								Net Interest Income		(945	)		(20,753	)		(21,698	)
Average Volume				Average Rate				2001 vs. 2002	Increase (Decrease)
2001		2000		2001		2000			Volume			Rate			Total
								Change in interest earned on:
$	2,929,061	$	3,004,754	7.74	%	8.53	%	Loans		(6,493	)	$	(23,209	)	$	(29,702	)
								Securities:
	2,480,740		2,105,720	4.82		5.88		Taxable		20,149			(25,007	)		(4,858	)
	664,506		736,172	6.14		6.36		Tax-exempt		(5,490	)		2,623			(2,867	)
	195,854		229,155	3.89		6.63		Federal funds sold and resell agreements		(5,359	)		(2,215	)		(7,574	)
	70,360		74,629	5.36		6.19		Other		(817	)		(91	)		(908	)
$	6,340,521	$	6,150,430	6.28	%	7.26	%	Total	$	1,990		$	(47,899	)	$	(45,909	)
								Change in interest incurred on:
$	3,634,544	$	3,442,735	2.97	%	3.85	%	Interest-bearing deposits	$	7,054		$	(31,682	)	$	(24,628	)
	973,080		1,051,205	3.31		5.62		Federal funds purchased and repurchase agreements		(4,112	)		(22,749	)		(26,861	)
	120,269		72,552	4.18		6.58		Other		2,404			(2,145	)		259
$	4,727,893	$	4,566,492	3.07	%	4.30	%	Total	$	5,346		$	(56,576	)	$	(51,230	)
								Net Interest Income	$	(3,356	)	$	(8,677	)	$	5,321

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TABLE 2

ANALYSIS OF NET INTEREST MARGIN (in thousands)

	2002			2001			2000
Average earning assets	$	6,718,078		$	6,340,521		$	6,150,430
Interest-bearing liabilities		5,001,096			4,727,893			4,566,492
Interest-free funds	$	1,716,982		$	1,612,628		$	1,583,938
Free funds ratio (free funds to earning assets)		25.56	%		25.43	%		25.75	%
Tax-equivalent yield on earning assets		4.59	%		6.28	%		7.26	%
Cost of interest-bearing liabilities		1.53			3.07			4.30
Net interest spread		3.06	%		3.21	%		2.96	%
Benefit of interest-free funds		0.40			0.79			1.11
Net interest margin		3.46	%		4.00	%		4.07	%

Average earning assets increased by approximately 6.0% in 2002 compared to an increase of 3.1% in 2001. These assets totaled $6.7 billion in 2002 compared to $6.3 billion in 2001 and $6.2 billion in 2000. The increase in average earning assets for 2002 compared to 2001 was entirely attributable to the Company’s investment security portfolio, which increased by 21.3%. Average loans decreased by 9.5% in 2002 compared to the prior year. The increase in the security portfolio was the result of a need to invest increases in deposits and fed funds purchased and repurchase agreements, and the reinvestment of loan paydowns and repayments. Average loans declined due to loan customers continuing to reduce the amount of their debt and the effect of auto manufacturer financing. During 2001, average loans decreased from 2000 by 2.5% compared to a 10.7% increase from 2000 in investment securities. During 2001, the increase in the security portfolio was the result of a need to invest increases in deposits.

The Company’s net interest spread was 3.06% in 2002, 3.21% in 2001 and 2.96% in 2000. Net interest spread is calculated as the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities. The decrease in net interest spread for 2002 was the result of lower rates earned on total earning assets, which decreased from 6.28% in 2001 to 4.59%, or 171 basis points, compared to a decrease of 154 basis points in the cost of funds. This change was the result of both a decrease in interest rates and a change in the mix of earnings assets. For the same reasons, the net interest margin declined in 2002 to 3.46% compared to 4.00% in 2001 and 4.07% in 2000. During 2002 loans comprised 39% of earning assets as compared with 46% during 2001 and 49% during 2000. Loan balances declined due to loan payoffs, customers reducing their debt in a declining economy and the effect of auto manufacturer financing. Also loan rates declined 162 basis points (1.62%) in 2002 compared to 2001 and declined 79 basis points (0.79%) in 2001 compared to 2000. During 2002, investment securities comprised 57% of earning assets as compared with 50% during 2001 and 46% in 2000. Investment securities increased due to the decline in loan balances and the increase in deposits, fed funds purchased and repurchase agreements. In 2001, the cost of funds decreased by 123 basis points (1.23%) compared to 2000.

Provision and Allowance for Loan Losses

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 its 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 economic conditions, loan growth and characteristics, industry or segment concentration 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

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Company utilizes a centralized credit administration function, which provides information on affiliate bank risk levels, delinquencies, an internal ranking system and overall credit exposure. In addition, loan requests are centrally reviewed to ensure the consistent application of the loan policy and standards.

The Company’s allowance for loan losses was $37.3 million at December 31, 2002 compared to $35.6 million at year-end 2001 and $32.0 million at year-end 2000. This represents an allowance to total loans of 1.4%, 1.3% and 1.0% as of December 31, 2002, 2001 and 2000, respectively. The Company’s net charge-off’s in 2002 were $15.0 million, compared to $11.1 million in 2001 and $8.4 million in 2000. The allowance for loan losses increased as a result of increases in net losses, and may continue to increase due to the impact that the slow economy may have on the ability of customers to service debt. At December 31, 2002, the allowance for loan losses exceeded total non-performing loans by $26.6 million.

As shown in Table 3, the ALL has been allocated to various loan portfolio segments. The Company manages the ALL against the risk in the entire loan portfolio and therefore, the allocation of the ALL to a particular loan segment may change in the future. In the opinion of management, the ALL is appropriate based on the inherent losses in the loan portfolio at December 31, 2002. Significant changes in general economic conditions and the ability of specific customers to repay loans could impact the level of the provision for loan losses required in future years.

TABLE 3

ALLOCATION OF ALLOWANCE FOR LOAN LOSSES (in thousands)

This table presents an allocation of the allowance for loan losses by loan categories. The breakdown is based on a number of qualitative factors; therefore, the amounts presented are not necessarily indicative of actual future charge-offs in any particular category.

	December 31
Loan Category	2002		2001		2000		1999		1998
Commercial	$	20,050	$	18,050	$	15,550	$	15,000	$	16,000
Consumer		16,278		16,587		15,548		15,343		16,319
Real estate		900		900		800		750		750
Agricultural		50		50		50		50		50
Leases		50		50		50		50		50
Total allowance	$	37,328	$	35,637	$	31,998	$	31,193	$	33,169

The Company recorded a provision for loan losses of $16.7 million during 2002, compared to $14.7 million during 2001 and $9.2 million in 2000. The increase in the loan loss provision in 2002 and 2001 was primarily the result of higher charge-offs related to commercial loans and bankcard loans. The increase in the loan loss provision in 2000 was primarily the result of the increased balance of the loan portfolio. Commercial loan net charge-offs were $8.0 million for 2002, $2.9 million for 2001 and $0.8 million for 2000. Two large commercial loans constituted a major portion of the $8 million in net charge-offs for 2002. Bankcard loans net charge-offs have declined to $4.8 million in 2002 compared to $5.2 million in 2001 but increased compared to $3.9 million in 2000.

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Table 4 presents a five-year summary of the Company’s allowance for loan losses. Also, please see Credit Risk under Risk Management in this report for information relating to nonaccrual, past due, restructured loans, and other credit risk matters.

TABLE 4

ANALYSIS OF ALLOWANCE FOR LOAN LOSSES (in thousands)

	2002			2001			2000			1999			1998
Allowance-beginning of year	$	35,637		$	31,998		$	31,193		$	33,169		$	33,274
Provision for loan losses		16,738			14,745			9,201			8,659			10,818
Allowances of acquired banks		—			—			—			710			—
Charge-offs:
Commercial	$	(8,483	)	$	(4,764	)	$	(992	)	$	(2,732	)	$	(322	)
Consumer
Bankcard		(6,118	)		(6,613	)		(5,051	)		(5,377	)		(7,554	)
Other		(3,746	)		(5,378	)		(5,887	)		(6,393	)		(6,182	)
Real estate		(13	)		(5	)		(3	)		(11	)		—
Agricultural		—			—			—			(1	)		(25	)
Total charge-offs	$	(18,360	)	$	(16,760	)	$	(11,933	)	$	(14,514	)	$	(14,083	)
Recoveries:
Commercial	$	457		$	1,820		$	236		$	431		$	647
Consumer
Bankcard		1,307			1,373			1,191			1,268			1,289
Other		1,507			2,204			2,073			1,383			1,049
Real estate		21			256			35			55			127
Agricultural		21			1			2			32			48
Total recoveries	$	3,313		$	5,654		$	3,537		$	3,169		$	3,160
Net charge-offs	$	(15,047	)	$	(11,106	)	$	(8,396	)	$	(11,345	)	$	(10,923	)
Allowance-end of year	$	37,328		$	35,637		$	31,998		$	31,193		$	33,169
Average loans, net of unearned interest	$	2,650,249		$	2,929,061		$	3,004,754		$	2,615,978		$	2,640,933
Loans at end of year, net of unearned interest		2,673,786			2,813,758			3,073,957			2,841,150			2,559,136
Allowance to loans at year-end		1.40	%		1.27	%		1.04	%		1.10	%		1.30	%
Allowance as a multiple of net charge-offs		2.48	x		3.21	x		3.81	x		2.75	x		3.04	x
Net charge-offs to:
Provision for loan losses		89.90	%		75.32	%		91.25	%		131.02	%		100.97	%
Average loans		0.57			0.38			0.28			0.43			0.41

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Noninterest Income

A key objective of the Company is the growth of noninterest income to enhance profitability, since fee-based services are non-credit related, provide steady income and are not directly affected by fluctuations in interest rates. Fee-based services provide the opportunity to offer multiple products and services to customers and, therefore, more closely align the customer with the Company. The Company’s goal is to offer multiple products and services to its customers, the quality of which will differentiate it from the competition. Fee-based services that have been emphasized include trust and securities processing, securities trading/brokerage and cash management.

TABLE 5

SUMMARY OF NONINTEREST INCOME (in thousands)

	Year Ended December 31
	2002		2001		2000
Trust fees	$	44,546	$	56,437	$	56,604
Securities processing		45,847		30,203		17,864
Trading and investment banking		17,937		18,097		14,116
Service charge on deposit accounts		58,879		53,468		49,340
Other service charges and fees		32,367		30,357		30,078
Bankcard fees		18,964		18,099		15,090
Gains on sales of securities available for sale, net		3,158		1,875		11
Other		10,508		14,987		14,120
Total Noninterest Income	$	232,206	$	223,523	$	197,223

Noninterest income was $232.2 million in 2002 compared to $223.5 million in 2001 and $197.2 million in 2000. This represents a 3.9% increase in 2002 compared to an increase of 13.3% during 2001. The increase in 2002 primarily resulted from a 51.8% increase in securities processing income and a 10.1% increase in service charges on deposit accounts offset by a 21% decrease in trust fees. The growth in 2001 was driven by a 69.1% increase in securities processing income, a 28.2% increase in trading and investment banking fees and an 8.4% increase in service charges on deposit accounts.

The Trust Division is a major source of fee income for the Company. Trust services have long been an identified strength of the Company and are expected to continue to be a driver of fee income. The Company offers a full range of trust services including personal and custody services, investment management and employee benefits processing. The Company has a Private Client Services division, which offers full trust and personal banking services to high net worth individuals.

Income from trust services totaled $44.5 million in 2002, $56.4 million in 2001 and $56.6 million in 2000. During 2002, personal trust, employee benefit and trust investment income all declined. All of these types of trust income were directly impacted by the negative fluctuations in the stock and bond markets that have had declines the past three years. The major portion of trust fee income is based on asset value, which is subject to stock and bond market fluctuations. Included in the 2001 results was the corporate trust business revenue associated with the State Street Bank & Trust Company of Missouri, n.a., acquisition. The revenue in 2002 and 2001 was also hampered by a reduction in assets under management. The aggregate value of managed trust assets was $11.8 billion at December 31, 2002, compared to $12.1 billion at year-end 2001 and $14.5 billion at year-end 2000.

The Company’s securities processing and custody revenue is primarily related to the mutual fund industry. Revenue from securities processing was $45.8 million in 2002, $30.2 million in 2001 and $17.9 million in 2000. The increase in revenue for 2002 and 2001 was primarily driven by the acquisition of Sunstone Financial Group, Inc. during the second quarter of 2001. Sunstone (now known as UMB Fund Services, Inc.) is a nationally

16

recognized mutual fund service provider to nearly 40 mutual funds and fund families. With the acquisition, the Company now offers all aspects of a mutual fund back office, including fund administration and accounting, transfer agency, distribution services, marketing, shareholder communications, custody, and cash management. The significant growth in the number and size of mutual funds has given the Company more opportunity to develop new customer relationships and has fueled growth from existing customers. The Company competes with companies many times its size in this line of business. Though the Company may not have the scale of its much larger competitors, management believes the Company can compete in certain areas due to better attention to customer service and overall flexibility related to services provided. Revenues from this business line may be subject to more volatility than other fee income due to the relative size of the customer base. The Company intends to adjust its expense structure so that revenue volatility will not significantly impact operating results. Total trust assets under custody were $97.4 billion at December 31, 2002, compared to $106.5 billion at December 31, 2001. Trust assets under custody were $106.0 billion at December 31, 2000.

Fees and service charges on deposit accounts were $58.9 million in 2002, $53.5 million in 2001 and $49.3 million in 2000. The increase in fees for 2002 and 2001 were primarily related to corporate deposit accounts as a result of new customer relationships and the sale of additional cash management services. Corporate and retail deposit fees also increased as a result of adjusting fee schedules to changes in market pricing. The level of compensating balances maintained by corporate customers and the earnings credit rate applied to the balance also impacts the level of fee income received. Movement in the earnings credit rate in 2002 and 2001 approximated changes in the interest rate on short-term treasury securities.

Other service charges and fees increased to $32.4 million in 2002 from $30.4 million in 2001 and $30.1 million in 2000. Cash management service fees to mutual fund companies have increased from $4.8 million in 2000, to $5.6 million in 2001 and to $7.2 million in 2002. Insurance and annuities commissions have increased from $3.1 million in 2000, to $3.6 million in 2001 and to $4.2 million in 2002. Customers have converted some of their cash from the sale of stocks and bonds into fixed annuities. The Company received commissions on these annuities. The Company anticipates that revenues will not increase in insurance and annuity commissions due to the decline in late 2002 in interest rates paid on new fixed annuities. ATM fees were $10.9 million in 2002, $11.1 million in 2001 and $10.4 million in 2000. The Company decreased its ATM network to 562 machines in 2002, compared to 579 at year-end 2001 and compared to 558 at year-end 2000. Bankcard fees were $19.0 million in 2002, $18.1 million in 2001 and $15.1 million in 2000.

Trading and investment banking income totaled $17.9 million in 2002, compared to $18.1 million in 2001 and $14.1 million in 2000. The increase in 2001 was mainly market driven, as customers fled the stock market to invest in high quality bonds.

Other income was $10.5 million in 2002, compared to $15.0 million and $14.1 million in 2000. Included in 2001 was a $1.7 million gain on the sale of part of the Company’s ownership in eScout LLC.

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Noninterest Expense

Total 2002 noninterest expense decreased 2.3% to $360.9 million compared to 2001 expense of $369.4 million and 2000 expense of $353.8 million. Included in 2001 and 2000 expenses were $13.4 million and $21.6 million, respectively in charges related to the operations of eScout, LLC (eScout), a partially owned subsidiary of the Company. While the results of eScout’s operations impact various non-interest income and expense categories of the Company’s consolidated statements of income, under the terms of its limited liability operating document, the net results of operation of this subsidiary are allocated to outside minority investors, and therefore, eliminated through an adjustment to minority interest in loss of consolidated subsidiary.

TABLE 6

SUMMARY OF NONINTEREST EXPENSE (in thousands)

	Year Ended December 31
	2002		2001		2000
Salaries and employee benefits	$	203,458	$	198,684	$	183,994
Occupancy, net		23,937		23,778		21,884
Equipment		44,367		50,685		48,130
Supplies and services		23,998		21,366		22,671
Marketing and business development		14,836		14,834		19,004
Processing fees		19,380		16,813		15,327
Legal and consulting		5,839		8,565		8,275
Amortization of goodwill on purchased affiliates		—		5,650		5,846
Amortization of intangibles		2,034		1,803		1,314
Other		23,100		27,195		27,315
Total Noninterest Expense	$	360,949	$	369,373	$	353,760

Costs associated with staffing are the largest component of noninterest expense as they approximate 56% of total noninterest expense in 2002. Salaries and employee benefits increased 2.4% in 2002 to $203.5 million compared to $198.7 million in 2001 and $184.0 million in 2000. The increase in staffing costs in 2002 was primarily due to an increase in medical insurance premiums. Staffing levels at year-end 2002 decreased to 4,027 compared to 4,222 at year-end 2001 and 3,900 at year-end 2000. The reduction in staff in late 2002 kept the increase in salaries expense to a minimum and is expected to assist in salary cost control in 2003. The increase in staffing costs in 2001 was primarily associated with increased staff due to the Company’s new acquisitions, and from increases in medical insurance premiums paid by the Company. The increase in staffing costs is consistent with the Company’s ongoing objective to hire, retain and reward high quality associates. Staffing levels and costs were also affected by the closing of facilities in 2002 and the opening of five new facilities in 2000. The control of staffing levels and cost, with a view of the long-term strategy, has been and will continue to be an important goal for the Company. The Company has and intends to take advantage of centralization of the administrative and operational functions when these opportunities arise. At the same time, management will strive to gain efficiencies in its existing products, services and processes.

Occupancy expense remained flat in 2002 at $23.9 million compared to $23.8 million in 2002 and $21.9 million in 2000. Equipment expenses decreased 12.5% to $44.4 million in 2002, compared to $50.7 million in 2001 and $48.1 million in 2000. During 2002, 2001 and 2000, the Company dedicated significant resources to improve its information infrastructure. This spending has included both the upgrades of old legacy systems, as well as investments in new delivery and information systems. Some of the initiatives under way or completed during 2002, 2001 and 2000 include a conversion to a new loan processing system, a conversion to a new network operating system, a conversion to a new teller transaction processing system, a consolidated call center, expanded internet capabilities, an upgrade to the core mainframe computer, a major upgrade of the customer information system, implementation of an integrated financial accounting system, new processing and

18

information systems for trust services, centralization of commercial and consumer loan processing and the creation of a data warehouse system. The majority of the increase in occupancy and equipment expense for 2001 can be associated with the new acquisitions.

Expenses for supplies and services were $24.0 million in 2002, compared to $21.4 million in 2001 and $22.7 million in 2000. The increase in 2002 was primarily due to a reclass of data line charges from equipment expense to telephone costs. The decrease in 2001 was mainly due to the decrease in telephone charges, especially long distance.

Marketing and business development costs remained flat at $14.8 million in 2002, compared to $14.8 million in 2001 and $19.0 million in 2000. Processing fees increased to $19.4 million in 2002 compared to $16.8 million in 2001 and $15.3 million in 2000. The increase in 2002 was due to an increase in Federal Reserve processing charges because of the decreased earnings credit on balances and increased volumes of activity. Legal and consulting fees decreased to $5.8 million in 2002 from $8.6 million in 2001 and $8.3 million in 2000. The use of third party contracts to assist with improvement of processes were the reason for higher costs in 2001 and 2000.

Amortization of goodwill on purchased affiliates was discontinued effective January 1, 2002 in accordance with the adoption of SFAS No. 142. Please see Critical Accounting Policies and Summary of Accounting Policies for additional details.

Other operating expenses decreased to $23.1 million in 2002, compared to $27.2 million in 2001 and $27.3 million in 2000. Included in the 2001 expense was $3.8 million in impairment charges related to the write-off and disposition of certain non-strategic assets, primarily real estate.

Income Taxes

Income tax expense totaled $15.4 million in 2002, compared to $25.7 million in 2001 and $23.0 million in 2000. These expense levels equate to effective tax rates of 20.1%, 27.5% and 25.3% for 2002, 2001 and 2000, respectively. The primary reason for the difference between the Company’s effective tax rate and the statutory tax rate is the effect of non-taxable income from municipal securities. The amount of municipal interest income received did not decrease proportionately to the decrease in the Company’s pretax income in 2002 causing a reduction in the effective tax rate. In 2002, the Company did not recognize nondeductible goodwill amortization pursuant to changes in financial accounting standards which also caused the effective tax rate to be lower than 2001. A portion of the decrease in the effective income tax rate for 2002 is due to a reduction in the tax reserve resulting from favorable conclusions and reduced risks associated with tax positions taken in past years.

Balance Sheet Analysis

Loans

Loans represent the Company’s largest source of interest income. At December 31, 2002, loans amounted to $2.7 billion compared to $2.8 billion in 2001 and compared to $3.0 billion in 2000. On average, loans totaled $2.65 billion in 2002, compared to $2.9 billion in 2001 and $3.0 billion in 2000. Average loan balances decreased in 2002 due to an increasingly competitive loan market and an increased volume of loans paid off. The markets for high quality credits that are consistent with the Company’s underwriting standards remain very competitive. Management anticipates that new loan volume should remain flat in 2003. Both commercial and consumer loan balances decreased in 2002 and 2001 from their previous years. The consumer loan decrease reflects the Company’s unwillingness to match the highly competitive rates offered by automobile manufacturers.

Included in Table 7 is a five-year breakdown of loans by type. During 2001, the Company upgraded to a new loan accounting system, which resulted in greater definition of our portfolio. The greater definition results in

19

reclassification of loan balances between categories, none of which are deemed material or significant. Business-related loans continue to represent the largest segment of the Company’s loan portfolio, comprising approximately 63% of total loans. The lending focus of the Company and each of its affiliate banks is on small-to-medium sized commercial companies located within their respective trade areas. The Company targets customers that will utilize multiple banking services and products. The Company’s goal is to differentiate itself from its large super-regional and national competitors through superior service, attention to detail, customer knowledge and responsiveness. The Company’s size allows it to meet this goal and at the same time offer the wide range of products most customers need. This strategy has worked especially well during a period of bank consolidation and should continue to be a benefit. The Company has experienced growth in the new markets it entered during 2001 and 2000. There has been a demand in these markets for bank services delivered with the customer-driven focus that the Company practices. The Company will continue to expand its efforts to attract customers that understand and see the advantages of banking with a company headquartered in their market.

TABLE 7

ANALYSIS OF LOANS BY TYPE (in thousands)

	December 31
	2002			2001			2000			1999			1998
	Amount
Commercial	$	1,317,016		$	1,416,431		$	1,553,566		$	1,472,376		$	1,246,979
Agricultural		47,729			40,777			36,799			39,218			44,879
Leases		8,146			7,454			7,677			5,645			4,717
Real estate—commercial		321,802			296,927			268,264			207,533			199,324
Total business-related	$	1,694,693		$	1,761,589		$	1,866,306		$	1,724,772		$	1,495,899
Bankcard	$	163,808		$	168,518		$	176,875		$	163,756		$	163,197
Other consumer installment		659,969			735,586			878,610			817,732			771,568
Real estate—residential		155,316			148,695			152,166			134,890			128,472
Total consumer-related	$	979,093		$	1,052,799		$	1,207,651		$	1,116,378		$	1,063,237
Total loans	$	2,673,786		$	2,814,388		$	3,073,957		$	2,841,150		$	2,559,136
Allowance for loan losses		(37,328	)		(35,637	)		(31,998	)		(31,193	)		(33,169	)
Net loans	$	2,636,458		$	2,778,751		$	3,041,959		$	2,809,957		$	2,525,967

As a % of total loans
Commercial	49.3	%	50.3	%	50.5	%	51.8	%	48.7	%
Agricultural	1.8		1.4		1.2		1.4		1.8
Leases	0.3		0.3		0.3		0.2		0.2
Real estate—commercial	12.0		10.6		8.7		7.3		7.8
Total business-related	63.4	%	62.6	%	60.7	%	60.7	%	58.5	%
Bankcard	6.1	%	6.0	%	5.8	%	5.8	%	6.4	%
Other consumer installment	24.7		26.1		28.6		28.8		30.1
Real estate—residential	5.8		5.3		4.9		4.7		5.0
Total consumer-related	36.6	%	37.4	%	39.3	%	39.3	%	41.5	%
Total loans	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%

20

Commercial real estate loans have increased to $322 million at December 31, 2002, from $297 million at year-end 2001 and $268 million at year-end 2000. As a percentage of total loans, commercial real estate loans now comprise 12.0% of total loans, compared to 10.6% at the end of 2001. Generally, these loans are made for working capital or expansion purposes and are primarily secured by real estate with a maximum loan-to-value of 80%. Many of these properties are owner-occupied and have other collateral or guarantees as security.

Bankcard loans have remained flat as a percentage of total loans. They comprise 6.1% of total loans at year-end 2002 compared to 6.0% at year-end 2001. A significant portion of the decrease in volume of bankcard loans in 2001 and 2002 was caused by a reduction in the private label portion of the portfolio. This type of loan is generally less profitable than traditional bankcard loans and is likely to continue to decrease in volume. The overall growth in the Company’s bankcard portfolio has been hampered by increased competition from banking and non-banking card issuers. This competition frequently lessens its credit standards and offers favorable introductory rates in an effort to obtain transfer balances from other cards. The Company has elected not to seek loan volume in such a manner. The Company’s credit and underwriting standards have become more strict as more consumers acquire multiple credit cards with revolving balances.

Nonaccrual, past due and restructured loans are discussed on pages 30 and 31 of this report.

Securities

The Company’s security portfolio provides significant liquidity as a result of the composition and average life of the underlying securities; this liquidity can be used to fund loan growth or to offset the outflow of traditional funding sources. In addition to providing a source of potential liquidity, the security portfolio can be used as a tool to manage interest rate sensitivity. The Company’s goal in the management of its securities portfolio is to maximize return within the Company’s parameters of liquidity goals, interest rate risk and credit risk. Historically, the Company has maintained very high liquidity levels while investing in only high-grade securities. The security portfolio generates the Company’s second largest component of interest income.

Securities available for sale and securities held to maturity comprised 59% of earning assets as of December 31, 2002, compared to 60% at year-end 2001. The decrease in 2002 resulted from the outflow of funds from reductions of deposits and repurchase agreements. Securities totaled $4.1 billion at December 31, 2002, compared to $4.5 billion at year-end 2001. Loan demand is expected to be the primary factor impacting changes in the level of security holdings.

Securities available for sale comprised 90% of the Company’s securities portfolio at December 31, 2002, compared to 88% at year-end 2001. U.S. Treasury obligations comprised 32% of the available for sale portfolio as of December 31, 2002, compared with 28% one year earlier. U.S. Agency obligations represented an additional 47% of this portfolio at year-end 2002, compared with 52% at year-end 2001. In order to improve the yield of the securities portfolio, the Company periodically may choose to alter the mix of the portfolio, as opposed to significantly lengthening the average life of the portfolio. Securities available for sale had a net unrealized gain of $37.3 million at year-end, compared to $35.4 million the preceding year. These amounts are reflected, on an after-tax basis, in the Company’s other comprehensive income in shareholders’ equity as an unrealized gain of $23.7 million at year-end 2002, compared to $22.5 million for 2001.

The securities portfolio achieved an average yield on a tax-equivalent basis of 3.7% for 2002, compared to 5.1% in 2001 and 6.0% in 2000. The yield on the portfolio decreased by 141 basis points in 2002 as a result of the impact of decreases in short-term interest rates. A significant portion of the investment portfolio must be reinvested each year as a result of its liquidity. The average life of the core securities portfolio was 18 months at December 31, 2002 compared to 20 months at year-end 2001. Included in Tables 8 and 9 are analyses of the cost, fair value and average yield (tax equivalent basis) of securities available for sale and securities held to maturity.

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TABLE 8

SECURITIES AVAILABLE FOR SALE (in thousands)

December 31, 2002	Amortized Cost		Fair Value		Yield
U.S. Treasury	$	1,160,226	$	1,178,982	3.37%
U.S. Agencies		1,722,060		1,729,737	2.89%
Mortgage-backed		363,293		369,652	4.73%
State and political subdivisions		323,640		328,152	3.97%
Commercial paper		105,735		105,735	1.74%
Federal Reserve Bank Stock		6,726		6,726
Equity and other		912		912
Total	$	3,682,592	$	3,719,896
December 31, 2001	Amortized Cost		Fair Value		Yield
U.S. Treasury	$	1,096,430	$	1,115,637	3.99%
U.S. Agencies		2,038,225		2,051,299	2.68%
Mortgage-backed		251,260		254,295	5.72%
State and political subdivisions		133,285		133,421	4.96%
Commercial paper		415,937		415,937	1.87%
Federal Reserve Bank Stock		6,697		6,697
Equity and other		1,629		1,561
Total	$	3,943,463	$	3,978,847

TABLE 9

SECURITIES HELD TO MATURITY (in thousands)

December 31, 2002	Amortized Cost		Fair Value		Weighted Average Yield/ Average Maturity
Due in one year or less	$	98,252	$	99,830	6.60	%
Due after 1 year through 5 years		303,817		318,066	6.27	%
Due after 5 years through 10 years		350		368	6.63	%
Total	$	402,419	$	418,264	1 yr. 11 mo.
December 31, 2001
Due in one year or less	$	116,641	$	117,968	6.45	%
Due after 1 year through 5 years		414,834		423,873	6.32	%
Due after 5 years through 10 years		10,972		11,366	7.25	%
Total	$	542,447	$	553,207	2 yr. 4 mo.

Other Earning Assets

Federal funds transactions essentially are overnight loans between financial institutions, which allow for either the daily investment of excess funds or the daily borrowing of another institution’s funds in order to meet short-term liquidity needs. The net sold position at year-end 2002 was $11.2 million compared to a net sold position of $32.0 million at year-end 2001. During 2002, the Company was a net purchaser of federal funds with an average balance of $20.0 million, compared to 2001 when the Company was a net seller of federal funds with an average of $6.4 million.

The Investment Banking Division of the Company’s principal affiliate bank buys and sells federal funds as agent for non-affiliated banks. Because the transactions are pursuant to agency arrangements, these transactions do not appear on the balance sheet and averaged $775.5 million in 2002 and $965.3 million in 2001.

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At December 31, 2002, the Company held securities bought under agreements to resell of $106.6 million compared to $89.9 million at year-end 2001. The Company used these instruments as short-term secured investments, in lieu of selling federal funds, or to acquire securities required for a repurchase agreement. These investments averaged $161.0 million in 2002 and $152.0 million in 2001.

The Investment Banking Division also maintains an active securities trading inventory. The average holdings in the securities trading inventory in 2002 were $65.1 million, compared to $68.5 million in 2001, and were recorded at market value.

Deposits and Borrowed Funds

Deposits represent the Company’s primary funding source for its asset base. Deposits are gathered from various sources including commercial customers, individual retail customers and mutual fund and trust customers. Deposits totaled $5.8 billion at December 31, 2002 and $6.4 billion at year-end 2001. Deposits averaged $5.5 billion in 2002 and $5.4 billion in 2001. The Company continually strives to expand, improve and promote its cash management services in order to attract and retain commercial funding customers.

Noninterest bearing demand deposits average $1.7 billion and $1.8 billion during 2002 and 2001, respectively. These deposits represented 31.1% of average deposits in 2002, compared to 32.8% in 2001. The Company’s large commercial customer base provides a significant source of noninterest bearing deposits. Many of these commercial accounts do not earn interest, nor do they receive an earnings credit to offset the cost of other services provided by the Company.

TABLE 10

MATURITIES OF TIME DEPOSITS OF $100,000 OR MORE (in thousands)

	December 31
	2002		2001
Maturing within 3 months	$	331,714	$	218,335
After 3 months but within 6		34,763		48,522
After 6 months but within 12		37,384		34,972
After 12 months		43,851		25,348
Total	$	447,712	$	327,177

TABLE 11

ANALYSIS OF AVERAGE DEPOSITS (in thousands)

	2002			2001			2000			1999			1998
	Amount
Noninterest-bearing demand	$	1,723,122		$	1,775,720		$	1,922,019		$	1,748,926		$	1,702,282
Interest-bearing demand and savings		2,624,828			2,527,556			2,270,562			2,281,458			2,260,240
Time deposits under $100,000		892,164			823,385			824,307			860,456			875,480
Total core deposits	$	5,240,114		$	5,126,661		$	5,016,888		$	4,890,840		$	4,838,002
Time deposits of $100,000 or more		287,722			283,603			347,866			457,501			480,349
Total deposits	$	5,527,836		$	5,410,264		$	5,364,754		$	5,348,341		$	5,318,351
As a % of total deposits
Noninterest-bearing demand		31.2	%		32.9	%		35.8	%		32.7	%		32.0	%
Interest-bearing demand and savings		47.5			46.7			42.3			42.6			42.5
Time deposits under $100,000		16.1			15.2			15.4			16.1			16.5
Total core deposits		94.8	%		94.8	%		93.5	%		91.4	%		91.0	%
Time deposits of $100,000 or more		5.2			5.2			6.5			8.6			9.0
Total deposits		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

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Securities sold under agreements to repurchase totaled $1,209.8 million at December 31, 2002, and $1,288.6 million at year-end 2001. This liability averaged $1,063.1 million in 2002 and $935.7 million in 2001. Repurchase agreements are transactions involving the exchange of investment funds by the customer, for securities by the Company, under an agreement to repurchase the same or similar issues at an agreed-upon price and date. The Company enters into these transactions with its downstream correspondent banks, commercial customers, and various trust, mutual fund and local government relationships.

TABLE 12

SHORT-TERM DEBT (in thousands)

	2002				2001
	Amount		Rate		Amount		Rate
At year-end
Federal funds purchased	$	—	0	%	$	—	0	%
Repurchase agreements	$	1,209,770	0.92			1,288,638	1.19
Other		94,721	0.78			173,046	1.25
Total	$	1,304,491	0.91	%	$	1,461,684	1.20	%
Average for year
Federal funds purchased	$	44,758	1.79	%	$	37,421	4.47	%
Repurchase agreements		1,063,063	1.27			935,659	3.26
Other		61,095	1.44			91,502	3.36
Total	$	1,168,916	1.30	%	$	1,064,582	3.31	%
Maximum month-end balance
Federal funds purchased	$	59,736			$	97,112
Repurchase agreements		1,815,137				1,288,638
Other		200,860				193,905

The Company’s long-term debt includes a senior note issue for $15 million. The senior note represents funds borrowed in 1993 under a medium-term program to fund bank acquisitions. This $15.0 million note had an original maturity of ten years at 7.3%; it matures on February 24, 2003. The Company also has five fixed-rate advances from the Federal Home Loan Bank at rates of 5.84%, 5.89%, 5.97%, 7.13% and 7.61% These advances, collateralized by Company securities, are used to offset interest rate risk of longer term fixed rate loans.

Capital and Liquidity

The Company places a significant emphasis on the maintenance of a strong capital position, which promotes investor confidence, provides access to funding sources under favorable terms, and enhances the Company’s ability to capitalize on business growth and acquisition opportunities. Capital is managed for each subsidiary based upon its respective risks and growth opportunities as well as regulatory requirements.

Total shareholders’ equity was $802.8 million at December 31, 2002, compared to $768.6 million one year earlier. During each year, management has the opportunity to repurchase shares of the Company’s stock at prices, which, in management’s opinion, would enhance overall shareholder value. During 2002 and 2001, the Company acquired 238,758 and 164,722 shares, respectively, of its common stock.

Risk-based capital guidelines established by regulatory agencies establish 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 at least 8% of risk-weighted assets. At least half of that 8% must consist of Tier 1 core capital, and the

24

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 government securities, the Tier 1 capital ratio of 17.98% and total capital ratio of 18.88% substantially exceed the regulatory minimums.

For further discussion of capital and liquidity, see Item 7A, pages 31 and 32 of this report.

TABLE 13

RISK-BASED CAPITAL (in thousands)

This table computes risk-based capital in accordance with current regulatory guidelines. These guidelines as of December 31, 2002, excluded net unrealized gains or losses of securities available for sale from the computation of regulatory capital and the related risk-based capital ratios.

	Risk-Weighted Category
	0%			20%		50%			100%		Total
Risk-Weighted Assets
Loans:
Residential mortgage	$	—		$	139	$	116,942		$	38,235	$	155,316
All other		—			140,681		—			2,377,789		2,518,470
Total loans	$	—		$	140,820	$	116,942		$	2,416,024	$	2,673,786
Securities available for sale:
U. S. Treasury	$	1,160,228		$	—	$	—		$	—	$	1,160,228
U. S. agencies and mortgage-backed		5,507			2,079,845		—			—		2,085,352
State and political subdivisions		—			312,806		10,834			—		323,640
Commercial paper and other		6,726			—		—			105,735		112,461
Total securities available for sale	$	1,172,461		$	2,392,651	$	10,834		$	105,735	$	3,681,681
Securities held to maturity		—			389,965		12,454			—		402,419
Trading securities		3,107			68,367		—			—		71,474
Federal funds and resell agreements		—			117,831		—			—		117,831
Cash and due from banks		108,535			585,002		—			—		693,537
All other assets		—			—		—			333,274		333,274
Category totals	$	1,284,103		$	3,694,636	$	140,230		$	2,855,033	$	7,974,002
Risk-weighted totals	$	—		$	738,927	$	70,115		$	2,855,033	$	3,664,075
Off-balance-sheet items (risk-weighted)		—			1		200			328,587		328,788
Total risk-weighted assets	$	—		$	738,928	$	70,315		$	3,183,620	$	3,992,863
Capital		Tier 1			Tier 2		Total
Shareholders’ equity	$	802,800		$	—	$	802,800
Less accumulated other comprehensive income		(23,678	)		—		(23,678	)
Less premium on purchased banks		(61,580	)		—		(61,580	)
Allowance for loan losses		—			36,150		36,150
Total capital	$	717,542		$	36,150	$	753,692
Capital ratios
Tier 1 capital to risk-weighted assets							17.98	%
Total capital to risk-weighted assets							18.88	%
Leverage ratio (Tier 1 to total average assets less premium on purchased banks)							10.04	%

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Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of financial condition and results of operations discusses the Company’s consolidated financial statements, which have been prepared in accordance with accounting principals generally accepted in the United States. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgements, including those related to customers and suppliers, allowance for loan losses, bad debts, investments, financing operations, long-lived assets, contingencies and litigation. Management bases its estimates and judgements on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which have formed the basis for making such judgements about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from the recorded estimates under different assumptions or conditions.

Management believes that the Company’s critical accounting policies are those relating to: allowance for loan losses; goodwill and other intangibles; impairment of long-lived assets; revenue recognition; and, accounting for stock based compensation. The allowance for loan losses represents management’s judgement of the losses inherent in the Company’s loan portfolio. The adequacy is reviewed quarterly, considering such items as historical trends, a review of individual loans, current economic conditions, loan growth and characteristics, industry or segment concentration, and other factors. Bank regulatory agencies require that the adequacy of the allowance for loan losses be maintained on a bank-by-bank basis, however, the Company uses a centralized credit administration function, which provides information on affiliate bank risk levels, delinquencies, and internal ranking systems.

Goodwill and other intangibles are now to be accounted for under the SFAS No. 142, which was effective January 1, 2002. The Company has segregated goodwill acquired from prior acquisitions into goodwill and other intangibles. Goodwill is no longer amortized, in accordance with SFAS No. 142. The Company has performed two impairment tests of goodwill since inception of the new standard. As a result of those tests, the Company has not recorded an impairment charge. The Company is amortizing other intangibles over 10 years.

Long lived assets including goodwill, other intangible assets and premises and equipment, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or a group of assets may not be recoverable. Goodwill and other intangibles were addressed above. The impairment review includes a comparison of future cash flows expected to be generated by the asset or group of assets to their current carrying value. If the carrying value of the asset or group of assets exceeds expected cash flows (undiscounted and without interest charges) an impairment loss is recognized to the extent the carrying value exceeds its fair value.

Revenue recognition is the recording of interest on loans and securities and is recognized based on rate multiplied by the principal amount outstanding. Interest accrual is discontinued when, in the opinion of management, the likelihood of collection become doubtful. Annual bankcard fees are recognized on a straight-line basis over the period that cardholders may use the card. Other noninterest income is recognized as services are performed or revenue-generating transactions are executed.

Stock-based compensation is recognized using the intrinsic value method for disclosure purposes. Proforma net income and earnings per share disclose the impact on earnings as if the fair value method had been applied.

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ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Risk Management

Interest Rate Risk

In the banking industry, a major risk exposure is changing interest rates. To minimize the effect of interest rate changes to net interest income and exposure levels to economic losses, the Company manages its exposure to changes in interest rates through asset and liability management within guidelines established by its Asset Liability Committee (“ALC”) and approved by the Board of Directors. ALC has the responsibility for approving and ensuring compliance with asset/liability management policies, including interest rate exposure. The Company uses the following methods (simulation tools) for measuring and analyzing consolidated interest rate risk: Market Value of Equity Modeling (Net Portfolio Value); Net Interest Income Simulation Analysis; and, Repricing Mismatch Analysis. The Company does not use hedges or swaps to manage interest rate risk except for the use of future contracts to offset interest rate risk on specific securities held in its trading portfolio.

Market Value of Equity (Net Portfolio Value) Modeling

The Company uses the Market Value of Equity Modeling (“Net Portfolio Value”) to measure and manage interest rate sensitivity. The Net Portfolio Value measures the degree to which the market values of the Company’s assets and liabilities will change given a change in interest rates. This model is designed to represent, as of the respective date selected, the increase or decrease in the market value of assets and liabilities that would result from a hypothetical change in interest rates on such date. The Company uses a hypothetical rate change (rate shock) of 100 basis points and 200 basis points, up or down. To perform these calculations, the Company uses the current loan, investment and deposit portfolios. The Company then makes assumptions regarding new loans and deposits based on historical analysis, management’s outlook and repricing strategies. The Company also analyzes loan prepayments and other market risks from industry estimates of prepayment yields and other market changes. Given the low level of current interest rates, the down 200 basis point scenario cannot be completed as of December 31, 2002. Table 14 sets forth, for December 31, 2002 and 2001, the increase or decrease (as applicable) in Net Portfolio Value, that would be caused by the following hypothetical immediate changes in interest rates on such date: an immediate increase of 200 basis points; an immediate increase of 100 basis points; and, an immediate decrease of 100 basis points. Table 14 includes both instruments entered into for trading purposes, and the instruments entered into for other than trading purposes, since the former represents such a small portion of the Company’s portfolio that any difference in the interest rate risk associated with it (as compared with the risk associated with instruments entered into for other than trading purposes) is immaterial.

The net portfolio value as of December 31, 2001 is higher than December 31, 2002 at both the 100 and 200 basis points increases due to the following reasons: total assets, loans, investment securities and deposits were at higher levels at December 31, 2001; there was an additional 50 basis points (0.50%) decline in interest rates in November, 2002; the current economy has not improved since 2001; and, the threat of war with Iraq has affected the market projection. For these same reasons, the Net Portfolio Value as of December 31, 2001 is higher than December 31, 2002 at the 100 basis points decrease scenario.

TABLE 14

MARKET RISK (in thousands)

Hypothetical change in interest rate (in Basis Points) (Rate Shock)	Net portfolio Value
	December 31, 2002						December 31, 2001
	Amount		Dollar Change		Change		Amount		Dollar Change			Change
200	$	1,145,822	$	195,631	20.59	%	$	1,377,930	$	160,564		13.19	%
100		1,048,007		97,816	10.29			1,309,866		92,500		7.60
Static		950,191		—	—			1,217,366		—		—
(100)		993,694		43,503	4.58			1,202,497		(14,869	)	(1.22	)
(200)		n/a		n/a	n/a			1,188,644		(28,722	)	(2.36	)

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Net Interest Income Modeling

Another tool used to measure interest rate risk and the effect of interest rate changes on net interest income and net interest margin is Net Interest Income Simulation Analysis. This analysis incorporates substantially all of the Company’s assets and liabilities together with forecasted changes in the balance sheet and assumptions that reflect the current interest rate environment. Through these simulations management estimates the impact on net interest income of a 200 basis point upward or downward gradual change of market interest rates over a one year period. These simulations include assumptions about how the balance sheet is likely to change with changes in loan and deposit growth. Assumptions are made to project rates for new loans and deposits based on historical analysis, management outlook and repricing strategies. Loan prepayment and other market risks are developed from industry estimates of prepayment spreads and other market change. Since the results of these simulations can be significantly influenced by assumptions utilized, management evaluates the sensitivity of the simulation results to changes in assumptions. Due to the low level of current interest rates the scenarios that simulate a 100 basis point and a 200 basis point decrease cannot be completed as of December 31, 2002. Table 15 shows the net interest income increase or decrease over the next twelve months as of December 31, 2002 and 2001. Both years show that if rates rise 100 or 200 basis points net interest income will increase. As of December 31, 2001, the table shows that a decrease in rates will mean a decrease in net interest income (which actually occurred in 2002). This is a result of being asset sensitive, meaning assets reprice more quickly than liabilities, giving rise to an improved Net Interest Income in an increasing rate environment, and lower Net Interest Income in a decreasing rate environment.

TABLE 15

MARKET RISK (in thousands)

	Net Interest Income
Hypothetical change in interest rate (in Basis Points) (Rate Shock)	December 31, 2002 Amount of Change		December 31, 2001 Amount of Change
200	$	8,752	$	6,228
100		4,376		3,114
Static		—		—
(100)		n/a		(4,843	)
(200)		n/a		n/a

Repricing Mismatch Analysis

The Company also evaluates its interest rate sensitivity position in an attempt to maintain a balance between the amount of interest-bearing assets and interest-bearing liabilities which are expected to mature or reprice at any point in time. While a traditional repricing mismatch analysis (“gap analysis”) provides a snapshot of interest rate risk, it does not take into consideration that assets and liabilities with similar repricing characteristics may not in fact reprice at the same time or the same degree. Also, it does not necessarily predict the impact of changes in general levels of interest rates on net interest income.

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 16 is a static gap analysis, which presents the Company’s assets and liabilities, based on their repricing or maturity characteristics. This analysis shows that the Company is in a positive gap position because assets maturing or repricing exceed liabilities.

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TABLE 16

INTEREST RATE SENSITIVITY ANALYSIS (in millions)

December 31, 2002	1-90 Days			91-180 Days			181-365 Days			Total			1-5 Years			Over 5 Years			Total
Earning assets
Loans	$	1,470.4		$	59.5		$	85.7		$	1,615.6		$	940.1		$	118.1		$	2,673.8
Securities		1,765.8			317.0			733.0			2,815.8			1,210.5			96.0			4,122.3
Federal funds sold and resell agreements		117.8			0.0			0.0			117.8			0.0			0.0			117.8
Other		73.3			0.0			0.0			73.3			0.0			0.0			73.3
Total earning assets	$	3,427.3		$	376.5		$	818.7		$	4,622.5		$	2,150.6		$	214.1		$	6,987.2
% of total earning assets		49.1	%		5.4	%		11.7	%		66.2	%		30.8	%		3.1	%		100.0	%
Funding sources
Interest-bearing demand and savings	$	817.5		$	0.0		$	0.0		$	817.5		$	976.0		$	1,687.2		$	3,480.7
Time deposits		543.8			200.7			195.2			939.7			356.3			5.7			1,301.7
Federal funds purchased and repurchase agreements		1,198.7			0.2			0.5			1,199.4			4.6			5.8			1,209.8
Borrowed funds		109.9			0.2			0.3			110.4			3.2			7.5			121.1
Noninterest-bearing sources		495.1			0.0			133.6			628.7			144.8			100.4			873.9
Total funding sources	$	3,165.0		$	201.1		$	329.6		$	3,695.7		$	1,484.9		$	1,806.6		$	6,987.2
% of total earning assets		45.3	%		2.9	%		4.7	%		52.9	%		21.3	%		25.9	%		100.0	%
Interest sensitivity gap		262.3		$	175.4		$	489.1		$	926.8		$	665.7		$	(1,592.5	)
Cumulative gap		262.3			437.7			926.8			926.8			1,592.5			—
As a % of total earning assets		3.8	%		6.3	%		13.3	%		13.3	%		22.9	%		—	%
Ratio of earning assets to funding sources		1.08			1.87			2.48			1.25			1.45			0.12
Cumulative ratio of Earning Assets 2002		1.08			1.13			1.25			1.25			0.12			1.00
to Funding Sources 2001		1.05			1.07			1.15			1.15			1.00			1.00

TABLE 17

RATE SENSITIVITY AND MATURITY OF LOANS ( in thousands)

The following table presents the rate sensitivity of certain loans maturing after 2003 compared with the total loan portfolio as of December 31, 2002. Of the $1,183,582 of loans due after 2003, $807,036 are to individuals for the purchase of residential dwellings and other consumer goods. The remaining $376,546 is for all other purposes and reflects maturities of $320,982 in 2004 through 2007 and $55,564 after 2007.

	December 31, 2002
Loans due 2003:
Residential Homes and consumer goods	$	172,057
All Other		1,318,147
			$	1,490,204
Loans due after 2003:
Variable interest rate	$	211,778
Fixed interest rate		971,804
			$	1,183,582
Allowance for loan losses				(37,328	)
Net loans			$	2,636,458

29

Other Market Risk

The Company does not have commodity price risks or derivative risks.

Credit Risk Management

Credit risk represents the risk that a customer or counterparty may not perform in accordance with contractual terms. Credit risk is inherent in the financial services business and results from extending credit to customers. The Company utilizes a centralized credit administration function, which provides information on affiliate bank risk levels, delinquencies, an internal ranking system and overall credit exposure. In addition, loan requests are centrally reviewed to insure the consistent application of the loan policy and standards. In addition, the Company has an internal loan review staff that operates independently of the affiliate banks. This review team performs periodic examinations of each bank’s loans for credit quality, documentation and loan administration. The respective regulatory authority of each affiliate bank also reviews loan portfolios.

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 only 12.0% of total loans, with no history of significant losses. The Company has no significant exposure to highly leveraged transactions and has no foreign credits in its loan portfolio.

The allowance for loan losses, (“ALL”) has been discussed prior in this analysis. Also, please see Table 4 for a five-year analysis of the allowance for loan losses. The adequacy of the ALL is reviewed quarterly, considering such items as historical loss trends, a review of individual loans, current economic conditions, loan growth and characteristics, industry or segment concentration and other factors. A primary indicator of credit quality and risk management is the level of nonperforming loans. Nonperforming loans include both nonaccrual loans and restructured loans. The Company’s nonperforming loans increased $3.4 million at December 31, 2002, compared to a decrease of $7.3 million a year earlier. The major portion of nonperforming loans is due to three commercial loan customers. The Company’s nonperforming loans have not exceeded 0.50% of total loans in any of the last five years.

The Company had $5.0 million in other real estate owned as of December 31, 2002, compared to $6.5 million in 2001. The $5.0 million is primarily associated with one foreclosed credit. Loans past due more than 90 days totaled $7.7 million at December 31, 2002 compared to $11.0 million at December 31, 2001.

A loan is generally placed on nonaccrual status when payments are past due 90 days or more and/or 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.

Certain loans are restructured to provide a reduction or deferral of interest or principal due to deterioration in the financial condition of the respective borrowers. In 2002, there was no reduction or deferral of interest due. The balance of restructured loans has declined to less than $1 million at December 31, 2002.

30

TABLE 18

LOAN QUALITY (in thousands)

	December 31
	2002			2001			2000			1999			1998
Nonaccrual loans	$	9,723		$	5,375		$	10,239		$	4,818		$	9,454
Restructured loans		989			1,904			1,272			1,474			1,292
Total nonperforming loans	$	10,712		$	7,279		$	11,511		$	6,292		$	10,746
Other real estate owned		4,989			6,466			2,038			2,017			728
Total nonperforming assets	$	15,701		$	13,745		$	13,549		$	8,309		$	11,474
Loans past due 90 days or more	$	7,672			11,031		$	7,680		$	4,998		$	7,915
Reserve for Loans Losses		37,328			35,637			31,998			31,193			33,169
Ratios
Nonperforming loans as a % of loans		0.40	%		0.26	%		0.37	%		0.22	%		0.42	%
Nonperforming assets as a % of loans plus other real estate owned		0.59			0.49			0.44			0.29			0.45
Nonperforming assets as a % of total assets		0.20			0.16			0.17			0.10			0.15
Loans past due 90 days or more as a % of loans		0.29			0.39			0.25			0.18			0.31
Reserve for Loan Losses a % of loans		1.40			1.27			1.04			1.10			1.30
Reserve for Loan Losses a multiple of nonperforming loans		3.48	x		4.90	x		2.78	x		4.96	x		3.09	x

Liquidity Risk

Liquidity represents the Company’s ability to meet financial commitments through the maturity and sale of existing assets or availability of additional funds. The most important factor in the preservation of liquidity is maintaining public confidence that facilitates the retention and growth of a large, stable supply of core deposits and wholesale funds. Ultimately, public confidence is generated through profitable operations, sound credit quality and a strong capital position. The primary source of liquidity for the Company is regularly scheduled payments on and maturity of assets, which include $3.7 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. Neither the Company, nor its subsidiaries are active in the debt market. The traditional funding source for the Company’s subsidiary banks has been core deposits. The Company has not issued any debt since 1993 when $25 million of medium-term notes were issued to fund bank acquisitions. These notes are rated A3 by Moody’s Investor Service and A- by Standard and Poors. Based upon regular contact with investment banking firms, management is confident in its ability to raise debt or equity capital on favorable terms, should the need arise.

The Company has contractual obligations that require future cash payments. The amount of payments required under medium and long-term debt obligations and noncancellable property leases in 2003 is $20.4 million. Refer to the financial statements on page 46 for a further discussion on these contractual obligations.

The Company also has other commercial commitments that may impact liquidity. These commitments include unused commitments to extend credit, standby letters of credit and financial guarantees, and commercial letters of credit. The total amount of these commercial commitments at December 31, 2002 was $1.7 billion. Since many of these commitments expire without being drawn upon, the total amount of these commercial commitments does not necessarily represent the future cash requirements of the Company. Refer to pages 55 and 56 for a further discussion of these commercial commitments.

The 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

31

sufficient to satisfy these requirements and are expected to be in the future. The Company’s subsidiary banks are subject to various rules regarding payment of dividends to the Company. For the most part, all banks can pay dividends at least equal to their current year’s earnings without seeking prior regulatory approval. From time to time, approvals have been requested to allow a subsidiary bank to pay a dividend in excess of its current earnings. All such requests have been approved.

Operational Risk

The Company is exposed to numerous types of operational risk. Operational risk generally refers to the risk of loss resulting from the Company’s operations, including, but not limited to: the risk of fraud by employees or persons outside the Company; the execution of unauthorized transactions by employees or others; errors relating to transaction processing and systems; and, breaches of the internal control system and compliance requirements. This risk of loss also includes the potential legal or regulatory actions that could arise as a result of an operational deficiency, or as a result of noncompliance with applicable regulatory standards. Included in the legal and regulatory issues with which the Company must comply are a number of recently imposed rules resulting from the enactment of the Sarbanes-Oxley Act of 2002.

The Company operates in many markets and places reliance on the ability of its employees and systems to properly process a high number of transactions. In the event of a breakdown in the internal control systems, improper operation of systems or improper employee actions, the Company could suffer financial loss, face regulatory action and suffer damage to its reputation. In order to address this risk, management maintains a system of internal controls with the objective of providing proper transaction authorization and execution, safeguarding of assets from misuse or theft, and ensuring the reliability of financial and other data.

The Company maintains systems of controls that provide management with timely and accurate information about the Company’s operations. These systems have been designed to manage operational risk at appropriate levels given the Company’s financial strength, the environment in which it operates, and considering factors such as competition and regulation. The Company has also established procedures that are designed to ensure that policies relating to conduct, ethics and business practices are followed on a uniform basis. In certain cases, the Company has experienced losses from operational risk. Such losses have included the effects of operational errors that the Company has discovered and included as expense in the statement of income. While there can be no assurance that the Company will not suffer such losses in the future, management continually monitors and improves its internal controls, systems and corporate-wide processes and procedures. Furthermore, management believes the plans to streamline the organization through, further systems integration and policies enacted to push down reporting accountabilities further in the organization have improved the Company’s ability to identify and limit operational risk.

32

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED BALANCE SHEETS

(in thousands)

	December 31
	2002			2001
ASSETS
Loans:
Commercial, financial and agricultural	$	1,364,744		$	1,448,939
Consumer		823,779			912,373
Real estate		477,117			445,622
Leases		8,146			7,454
Allowance for loan losses		(37,328	)		(35,637	)
Net loans	$	2,636,458		$	2,778,751
Securities available for sale:
U. S. Treasury and agencies		1,687,186			1,891,591
U. S. Treasury and agencies pledged to creditors		1,221,533			1,275,346
State and political subdivisions		328,152			133,421
Mortgage-backed		369,652			254,295
Commercial paper and other		113,373			424,194
Total securities available for sale	$	3,719,896		$	3,978,847
Securities held to maturity:
State and political subdivisions (market value of $418,264 and $553,207, respectively)		402,419			542,447
Federal funds sold		11,226			31,993
Securities purchased under agreements to resell		106,605			89,852
Trading securities and other		73,308			84,962
Total earning assets	$	6,949,912		$	7,506,852
Cash and due from banks		691,703			790,675
Bank premises and equipment, net		230,678			240,656
Accrued income		58,261			60,661
Goodwill on purchased affiliates		54,761			52,974
Other intangibles		6,819			8,853
Other assets		43,425			70,263
Total assets	$	8,035,559		$	8,730,934
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand	$	1,811,007		$	2,109,285
Interest-bearing demand and savings		2,734,270			3,064,853
Time deposits under $100,000		853,958			874,195
Time deposits of $100,000 or more		447,712			327,177
Total deposits	$	5,846,947		$	6,375,510
Federal funds purchased		—			—
Securities sold under agreement to repurchase		1,209,770			1,288,638
Short-term debt		94,721			173,046
Long-term debt		26,302			27,388
Accrued expenses and taxes		45,445			51,443
Other liabilities		9,574			46,332
Total liabilities	$	7,232,759		$	7,962,357
Common stock, $1.00 par, Authorized 33,000,000 shares, 27,528,365 and 27,528,365 shares issued, respectively	$	27,528		$	27,528
Capital surplus		726,368			726,347
Retained earnings		240,295			200,780
Accumulated other comprehensive income		23,678			22,526
Treasury stock, 5,545,396 and 5,326,917 shares, at cost, respectively		(215,069	)		(206,113	)
Unearned ESOP shares		—			(2,491	)
Total shareholders’ equity	$	802,800		$	768,577
Total liabilities and shareholders’ equity	$	8,035,559		$	8,730,934

See Notes to Consolidated Financial Statements.

33

CONSOLIDATED STATEMENTS OF INCOME

(in thousands except share and per share data)

	Year Ended December 31
	2002		2001		2000
INTEREST INCOME
Loans	$	161,356	$	225,879	$	255,581
Securities
Securities available for sale—Taxable interest	$	100,548	$	119,171	$	123,873
Securities available for sale—Tax exempt interest		6,228		2,025		50
Securities held to maturity—Taxable interest		307		395		551
Securities held to maturity—Tax exempt interest		20,187		26,194		31,036
Total securities income	$	127,270	$	147,785	$	155,510
Federal funds and resell agreements	$	3,129	$	7,619	$	15,193
Trading securities and other		2,728		3,593		4,501
Total interest income	$	294,483	$	384,876	$	430,785
INTEREST EXPENSE
Deposits	$	59,407	$	107,927	$	132,555
Federal funds and repurchase agreements		14,291		32,187		59,048
Short-term debt		880		3,075		2,734
Long-term debt		1,874		1,958		2,040
Total interest expense	$	76,452	$	145,147	$	196,377
Net interest income	$	218,031	$	239,729	$	234,408
Provision for loan losses		16,738		14,745		9,201
Net interest income after provision for loan losses	$	201,293	$	224,984	$	225,207
NONINTEREST INCOME
Trust fees	$	44,546	$	56,437	$	56,604
Securities processing		45,847		30,203		17,864
Trading and investment banking		17,937		18,097		14,116
Service charges on deposit accounts		58,879		53,468		49,340
Other service charges and fees		32,367		30,357		30,078
Bankcard fees		18,964		18,099		15,090
Gains on sales of securities available for sale, net		3,158		1,875		11
Other		10,508		14,987		14,120
Total noninterest income	$	232,206	$	223,523	$	197,223
NONINTEREST EXPENSE
Salaries and employee benefits	$	203,458	$	198,684	$	183,994
Occupancy, net		23,937		23,778		21,884
Equipment		44,367		50,685		48,130
Supplies and services		23,998		21,366		22,671
Marketing and business development		14,836		14,834		19,004
Processing fees		19,380		16,813		15,327
Legal and consulting		5,839		8,565		8,275
Amortization of goodwill on purchased affiliates		—		5,650		5,846
Amortization of intangibles		2,034		1,803		1,314
Other		23,100		27,195		27,315
Total noninterest expense	$	360,949	$	369,373	$	353,760
Minority interest in loss of consolidated subsidiary	$	—	$	11,800	$	19,437
Income before income taxes	$	72,550	$	90,934	$	88,107
Income tax expense		15,377		25,704		22,996
Net income	$	57,173	$	65,230	$	65,111
Net income per share—basic	$	2.59	$	2.95	$	2.91
Net income per share—diluted		2.58		2.95		2.91
Weighted average shares outstanding		22,064,508		22,145,787		22,335,109

See Notes to Consolidated Financial Statements.

34

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended December 31
	2002			2001			2000
Operating Activities
Net income	$	57,173		$	65,230		$	65,111
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		16,738			14,745			9,201
Depreciation and amortization		33,617			38,665			39,186
Impairment charge for premises and equipment		—			3,800			—
Minority interest in net loss of subsidiary		—			(11,800	)		(19,437	)
Deferred income taxes		(2,427	)		(1,774	)		(836	)
Net decrease/(increase) in trading securities and other earning assets		11,654			(4,298	)		(3,590	)
Gains on sales of securities available for sale		(3,158	)		(1,875	)		(11	)
Gains on sales of disposition of interest in subsidiary		—			(1,699	)		—
Amortization of securities premiums, net of discount accretion		7,555			(11,752	)		(1,542	)
Earned ESOP shares		2,491			2,500			2,500
Changes in, net of acquisition
Accrued income		2,400			11,904			2,719
Accrued expenses and taxes		(4,254	)		(4,254	)		15,317
Other assets and liabilities, net		(14,288	)		(14,578	)		(1,931	)
Net cash provided by operating activities	$	107,501		$	84,814		$	106,687
Investing Activities
Proceeds from maturities of securities held to maturity	$	138,229		$	151,189		$	99,594
Proceeds from sales of securities available for sale		216,717			102,488			45,557
Proceeds from maturities of securities available for sale		16,607,874			26,938,184			8,169,087
Purchases of securities held to maturity		(160	)		(975	)		(50,215	)
Purchases of securities available for sale		(16,566,368	)		(28,549,061	)		(7,486,885	)
Net decrease/(increase) in loans		125,809			249,093			(241,203	)
Net decrease/(increase) in fed funds and resell agreements		4,014			37,200			(28,412	)
Investment in consolidated subsidiary		(1,787	)		—			—
Investment capital contributed to consolidated subsidiary		—			—			57,536
Purchases of bank premises and equipment		(23,736	)		(32,003	)		(43,591	)
Net change in unsettled securities transaction		2,078			(39,129	)		50,021
Deconsolidation of subsidiary		—			(390	)		—
Purchase of financial organization, net of cash received		—			(26,015	)		—
Proceeds from sales of bank premises and equipment		4,296			533			338
Net cash provided by (used in) investing activities	$	506,966		$	(1,168,886	)	$	571,827
Financing Activities
Net increase (decrease) in demand and savings deposits	$	(628,862	)	$	443,037		$	236,964
Net increase (decrease) in time deposits		100,298			(2,730	)		(225,695	)
Net increase (decrease) in fed funds/ repurchase agreements		(78,868	)		378,883			(507,608	)
Net change in short term debt		(78,325	)		102,720			72,184
Proceeds from long term debt		2,500			3,700			2,615
Repayment of long term debt		(3,586	)		(3,353	)		(13,478	)
Cash dividends		(17,658	)		(17,000	)		(17,134	)
Proceeds from exercise of stock options and sales of treasury shares		598			787			311
Purchases of treasury stock		(9,533	)		(6,624	)		(17,457	)
Net cash provided by (used in) financing activities	$	(713,436	)	$	899,420		$	(469,298	)
Increase/(Decrease) in cash and due from banks	$	(98,969	)	$	(184,652	)	$	209,216
Cash and due from banks at beginning of period		790,672			975,324			766,108
Cash and due from banks at end of period	$	691,703		$	790,672		$	975,324
Supplemental disclosures:
Income taxes paid	$	16,671		$	29,629		$	20,563
Total interest paid		81,076			150,673			197,096

Note:  Certain noncash transactions regarding the application of SFAS No. 115, guaranteed ESOP debt transactions and common stock issued for acquisitions and stock dividends are disclosed in the accompanying financial statements and notes to financial statements.

See Notes to Consolidated Financial Statements.

35

UMB FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands except per share data)

	Common Stock		Capital Surplus			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Unearned ESOP			Total
Balance—January 1, 2000	$	26,472	$	683,410		$	148,728		$	(12,836	)	$	(183,292	)	$	(7,491	)	$	654,991
Comprehensive Income:
Net income		—		—			65,111			—			—			—			65,111
Other comprehensive income—change in unrealized gains on securities of $23,272 net of tax of $8,653, and the reclassification adjustment for gains included in net income of $11 net of tax $4		—		—			—			14,612			—			—			14,612
Total comprehensive income																		$	79,723
Cash dividends ($0.76 per share)		—		—			(17,134	)		—			—			—			(17,134	)
Earned ESOP shares		—		—			—			—			—			2,500			2,500
Purchase of treasury stock		—		—			—			—			(17,457	)		—			(17,457	)
Sale of treasury stock		—		—			—			—			2			—			2
Exercise of stock options		—		(190	)		—			—			499			—			309
Balance—December 31, 2000	$	26,472	$	683,220		$	196,705		$	1,776		$	(200,248	)	$	(4,991	)	$	702,934
Comprehensive Income:
Net income		—		—			65,230			—			—			—			65,230
Other comprehensive income—change in unrealized gains on securities of $33,794, net of tax $11,825 and the reclassification adjustment for gains included in net income of $1,875 net of tax $856		—		—			—			20,750			—			—			20,750
Total comprehensive income																		$	85,980
Cash dividends ($0.76 per share)		—		—			(17,000	)		—			—			—			(17,000	)
Stock dividend (5%)		1,056		43,099			(44,155	)		—			—			—			—
Earned ESOP shares		—		—			—			—			—			2,500			2,500
Purchase of treasury stock		—		—			—			—			(6,624	)		—			(6,624	)
Sale of treasury stock		—		—			—			—			38			—			38
Exercise of stock options		—		28			—			—			721			—			749
Balance—December 31, 2001	$	27,528	$	726,347		$	200,780		$	22,526		$	(206,113	)	$	(2,491	)	$	768,577
Comprehensive Income:
Net income		—		—			57,173			—			—			—			57,173
Other comprehensive income—change in unrealized gains on securities of $4,958, net of tax $1,785 and the reclassification adjustment for gains included in net income of $3,158 net of tax $1,137		—		—			—			1,152			—			—			1,152
Total comprehensive income																		$	58,325
Cash dividends ($0.80 per share)		—		—			(17,658	)		—			—			—			(17,658	)
Earned ESOP shares		—		—			—			—			—			2,491			2,491
Purchase of treasury stock		—		—			—			—			(9,533	)		—			(9,533	)
Sale of treasury stock		—		—			—			—			27			—			27
Exercise of stock options		—		21			—			—			550			—			571
Balance—December 31, 2002	$	27,528	$	726,368		$	240,295		$	23,678		$	(215,069	)	$	—		$	802,800

See Notes to Consolidated Financial Statements.

36

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS

1.  SUMMARY OF ACCOUNTING POLICIES

The Company is a multi-bank holding company, which offers a wide range of banking services to its customers through its branches and offices in the states of Missouri, Kansas, Colorado, Illinois, Oklahoma, Nebraska and Wisconsin. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions 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 those estimates. Following is a summary of the more significant accounting policies to assist the reader in understanding the financial presentation.

Consolidation

The Company and its subsidiaries are included in the consolidated financial statements (reference hereinafter to the “Company” in these Notes to Financial Statements include wholly owned subsidiaries). Intercompany accounts and transactions have been eliminated. The consolidated statements of income for the period from January 1, 2001 to May 18, 2001 and for the year-ended December 31, 2000 include the results of eScout LLC, a partially-owned subsidiary of the Company. According to the terms of eScout’s operating agreement, operating losses have been allocated to the outside minority investors. As a result, these losses have been eliminated through minority interest in loss of consolidated subsidiary. On May 18, 2001, the Company sold a portion of its ownership of eScout, reducing its ownership interest. As a result, the Company’s investment in eScout is being accounted for using the equity method from that time.

Revenue Recognition

Interest on loans and securities is recognized based on rate times the principal amount outstanding. Interest accrual is discontinued when, in the opinion of management, the likelihood of collection becomes doubtful. Annual bankcard fees are recognized on a straight-line basis over the period that cardholders may use the card. Other noninterest income is recognized as services are performed or revenue-generating transactions are executed.

Loans

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 approximate level rate of return over the life of the lease.

A loan is considered to be impaired when management believes it is probable that it will be unable to collect all principal and interest due according to the contractual terms of the loan. If a loan is impaired, the Company records a loss valuation allowance equal to the carrying amount of the loan in excess of the present value of the estimated future cash flows discounted at the loan’s effective rate, based on the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. Real estate and consumer loans are collectively evaluated for impairment. Commercial loans are evaluated for impairment on a loan-by-loan basis.

The adequacy for 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 economic conditions, detailed analysis of individual loans for which full collectibility may not be assured, determination of the existence and realizable value of the collateral and guarantees securing such loans. The

37

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

actual losses, notwithstanding such considerations, however, could differ significantly from the amounts estimated by management.

Securities

Debt securities available for sale principally include U.S. Treasury and agency securities and mortgage-backed securities. Securities classified as available for sale are measured at fair value. Unrealized holding gains and losses are excluded from earnings and reported in accumulated other comprehensive income 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.

Securities held to maturity are carried at amortized historical cost based on management’s intention, and the Company’s ability, to hold them to maturity. The Company classifies most securities of state and political subdivision as held to maturity. 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 deterioration in the issuer’s credit-worthiness that is expected to continue or a change in tax law that eliminates the tax-exempt status of interest on the security.

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.

Goodwill and Other Intangibles

Effective January 1, 2002 goodwill and other intangibles are accounted for under SFAS No. 142. Prior to January 1, 2002, goodwill and other intangibles were amortized using the straight-line method over periods up to 40 years. As a result of the adoption of SFAS No. 142, the Company has segregated goodwill acquired from prior acquisitions into the separate line items of goodwill and other intangibles in the accompanying consolidated balance sheets. Goodwill is no longer amortized but is tested for impairment annually. Effective January 1, 2002 the Company performed the transitional impairment test of goodwill in accordance with SFAS No. 142; which resulted in no impairment charge. The Company has elected November 30 as its annual measurement date for testing impairment and as a result of the impairment test performed on that date no impairment charge was recorded. Other intangible assets are amortized over a period of 10 years.

Bank Premises and Equipment

Bank premises and equipment are stated at cost less accumulated depreciation, which is computed primarily on accelerated methods. Bank premises are depreciated over 20 to 40-year lives, while equipment is depreciated over lives of 3 to 20 years.

Impairment of Long-Lived Assets

Long-lived assets, including premises and equipment, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or group of assets may not be recoverable. The impairment review includes a comparison of future cash flows expected to be generated by the asset or group of assets to their current carrying value. If the carrying value of the asset or group of assets exceeds expected cash flows (undiscounted and without interest charges), an impairment loss is recognized to the extent the carrying value exceeds fair value.

38

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

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

Basic income per share is computed based on the weighted average number of shares of common stock outstanding during each period. Diluted income per share includes the diluted effect of issueable stock options outstanding during each year. All share and per share data have been restated for the 5% stock dividend declared October 18, 2001.

Reclassification

Certain reclassifications were made to the 2001 and 2000 consolidated financial statements to conform to the current year presentations.

Accounting for Stock-Based Compensation

Stock-based compensation is recognized using the intrinsic value method for disclosure purposes. Pro forma net income and earnings per share are disclosed as if the fair value method had been applied.

The Company applies Accounting Principles Board Opinion (APB) No. 25, “Accounting for Stock Issued to Employees,” and related interpretations in accounting for its plans. Accordingly, no compensation cost has been recognized for the stock option plan. The table below in accordance with SFAS No. 148 “Accounting for Stock Based Compensation—Transition and Disclosure, an Amendment to FASB Statement 123”, discloses the effect on the Company’s net income and per share data for the years ended December 31, 2002, 2001 and 2000 had compensation costs for the Company’s plans been determined based upon the fair value at the grant date for awards under these plans consistent with the methodology prescribed under SFAS No. 123, “Accounting for Stock-Based Compensation”.

The table below also discloses the weighted average risk-free interest rate, expected option life, expected volatility and the expected dividend yield used to determine the estimated fair value of options granted using the Black-Scholes pricing model under the Company’s plans for options granted during the years ended  December 31, 2002, 2001 and 2000.

	Year Ended December 31
	2002			2001			2000
Net income, as reported	$	57,173		$	65,230		$	65,111
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		355			323			262
Pro forma net income	$	56,818		$	64,907		$	64,849
Earnings per share:
Basic-as reported	$	2.59		$	2.95		$	2.91
Basic—pro forma		2.58			2.93			2.91
Diluted—as reported		2.58			2.95			2.91
Diluted—pro forma		2.56			2.93			2.90
Black-Scholes pricing model
Weighted average risk-free interest rate		3.69	%		5.19	%		5.17	%
Expected option life in years		8.75			8.75			8.75
Expected volatility		20.44			19.71			19.62
Expected dividend yield		2.05			2.05			2.14

39

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

2.  NEW ACCOUNTING PRONOUNCEMENTS

Accounting for Derivative Instruments    In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” as amended by SFAS No. 137 and No. 138. This Statement as amended requires entities to recognize all derivatives as either assets or liabilities in its financial statements and to measure such instruments at their fair value. The Statements were effective for the Company’s consolidated financial statements as of January 1, 2001. The Company has adopted the Statements and they did not have a significant impact on the consolidated financial statements upon adoption.

Accounting for Financial Assets and Extinguishments of Liabilities    In September 2000, the FASB issued SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” This Statement revises the standards for accounting for securitizations and other transfers of financial assets and collateral and requires certain disclosures. Certain provisions of SFAS No. 140 relating to pledged collateral, securitized financial assets and retained interest in securitized financial assets were effective for the Company’s consolidated financial statements as of December 31, 2000. The remainder of the Statement was effective for transactions occurring after March 31, 2001. The Company has adopted this Statement and it did not have a material impact on its consolidated financial statements.

Accounting for Business Combinations and Intangible Assets    In June 2001, the FASB issued SFAS No. 141 “Business Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No 141 requires the purchase method of accounting for business combinations initiated after June 30, 2001 and eliminates the pooling-of-interests method. Business combinations consummated subsequent to June 30, 2001 are accounted for under the provisions of the new statement. SFAS No. 142, which was effective for the Company on January 1, 2002, requires among other things, the discontinuance of goodwill amortization. In addition, the Statement includes provisions for the reclassification of certain existing recognized intangibles as goodwill, reassessment of the useful lives of existing recognized intangibles, reclassification of certain intangibles out of previously reported goodwill and identification of reporting units for the purpose of assessing potential future impairments of goodwill. SFAS No. 142 also requires the Company to complete a transitional goodwill impairment test within six months from the date of adoption. Effective January 1, 2002 the Company has discontinued the amortization of goodwill. The related goodwill amortization expense was $5,650,000 and $5,846,000 for the years-ended 2001 and 2000 respectively. Management has evaluated goodwill for impairment and did not record an impairment charge on the Company’s consolidated financial statements.

Accounting for Asset Retirement Obligations    In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations”. This statement establishes accounting standard for recognition and measurement of a liability for asset retirement obligation and the associated asset retirement costs. This statement will be effective for the Company’s fiscal year ended December 31, 2003. Implementation of this statement is not expected to have a material effect on the Company’s consolidated financial statements.

Accounting for the Impairment or Disposal of Long-Lived Assets    In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. This statement requires that a long-lived asset to be abandoned, exchanged for a similar productive asset, or distributed to owners in a spin-off be considered held until it is disposed of. To resolve implementation issues this statement requires that the depreciable life of long lived assets to the abandoned be revised in accordance with APB opinion No. 20, “Accounting Changes” and amends APB Opinion No. 29 “Accounting for Nonmonetary Transactions”, to require that an impairment loss be recognized at the date a long-lived asset is exchanged for a similar productive asset or distributed to owners in a spin-off if the carrying amount of the asset exceeds its fair value. The effective date of this statement is for all fiscal years after December 31, 2001. Implementation of this statement on  January 1, 2002 did not have a material effect on the Company’s consolidated financial statements.

40

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13 and Technical Corrections    In April, 2002 the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44 and 64, amendment of FASB Statement No. 13 and Technical Corrections”. This statement rescinds the following pronouncements: FASB Statement No. 4, 44 and 64. This Statement also amends APB Opinion No. 30 and FASB Statements No. 13, 15, 22 and 144. This Statement also makes technical corrections to APB Opinion No. 28 and 30, and FASB Statements 13, 19 and 66. The effective date of this statement was May 15, 2002. Implementation of the statement did not to have a material effect on the Company’s consolidated financial statements.

Accounting for Costs Associated with Exit or Disposal Activities    In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities”. This statement applies to costs associated with an exit activity that does not involve newly acquired business or a disposal activity covered by SFAS No. 144. The provisions of this Statement are effective for exit or disposal activities initiated after December 31, 2002. Implementation of this statement is not expected to have a material effect on the Company’s consolidated financial statements.

Acquisitions of Certain Financial Institutions    In October 2002, the FASB issued SFAS No. 147, “Acquisition of Certain Financial Institutions”. This Statement addresses the financial accounting and reporting for the acquisition of all or part of financial institutions and removes the acquisition from the scope of SFAS No. 72. This Statement is in effect for all acquisitions after October 1, 2002. Implementation of this statement did not to have a material effect on the Company’s consolidated financial statements.

Accounting for Stock-Based Compensation—Transition and Disclosure—an Amendment of FASB Statement 123    In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure—an Amendment of FASB Statement 123”. This Statement amends FASB Statement No. 123, “Accounting for Stock-Based Compensation” to provide alternative methods of transition from an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. It also amends the disclosure provisions of that Statement to require disclosure about the effects on reported net income of an entity’s accounting policy decision with respect to stock-based employee compensation. Finally, this Statement amends APB Opinion No. 28 “Interim Financial Reporting”, to require disclosure about those effects in interim financial information. The Statement is effective for fiscal years ending December 31, 2002. The Company has included the required disclosures in the notes to these financial statements and plans to continue accounting for stock-based compensation under APB Opinion No. 25.

Accounting for Guarantees    In November 2002, the FASB issued Financial Interpretation (FIN) No. 45, “Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others”. FIN No. 45 requires a guarantor to recognize, at the inception of the guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. It also provides additional guidance on the disclosure of the guarantees. The recognition and measurement provisions are effective for guarantees made or modified after December 31, 2002. The disclosure provisions are effective for fiscal periods ending after December 15, 2002 and have been implemented herein. The Company will adopt the measurement provisions of FIN No. 45 as required in 2003 and does not expect a material impact on the consolidated financial statements.

Consolidation of Variable Interest Entities    In January 2003, the FASB issued FIN No. 46, “Consolidation of Variable Interest Entities”. FIN No. 46 requires consolidation by business enterprises of variable interest entities that meet certain requirements. The interpretation applies immediately to variable interest entities created after January 31, 2003 and to variable interest entities in which an enterprise obtains an interest after that date. The Company will adopt the provisions of FIN No. 46 in 2003 and does not expect a material impact on the consolidated financial statements based on the current structure of the Company.

41

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

3. ALLOWANCE FOR LOAN LOSSES

This table provides an analysis of the allowance for loan losses for the three years ended December 31, 2002 (in thousands)

	Year Ended December 31
	2002			2001			2000
Allowance—beginning of year	$	35,637		$	31,998		$	31,193
Additions(deductions):
Charge-offs	$	(18,360	)	$	(16,760	)	$	(11,933	)
Recoveries		3,313			5,654			3,537
Net charge-offs	$	(15,047	)	$	(11,106	)	$	(8,396	)
Provision charged to expense		16,738			14,745			9,201
Allowance—end of year	$	37,328		$	35,637		$	31,998

IMPAIRED LOANS UNDER SFAS 114

This table provides an analysis of impaired loans for the three years ended December 31, 2002 (in thousands)

	Year Ended December 31
	2002		2001		2000
Total impaired loans as of December 31	$	8,269	$	3,891	$	10,676
Amount of impaired loans which have a related allowance		1,491		1,426		1,602
Amount of related allowance		1,491		883		829
Remaining impaired loans with no allowance		6,778		2,465		9,074
Average recorded investment in impaired loans during year (approximately)	$	12,708	$	7,474	$	7,671

42

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

4. SECURITIES AVAILABLE FOR SALE

This table below provides detailed information for securities available for sale at December 31, 2002 and 2001 (in thousands)

2002	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
U.S. Treasury	$	1,160,226	$	18,842	$	(86	)	$	1,178,982
U.S. Agencies		1,722,060		8,166		(489	)		1,729,737
Mortgage-backed		363,293		6,459		(100	)		369,652
State and political subdivisions		323,640		5,100		(588	)		328,152
Commercial paper		105,735		—		—			105,735
Federal Reserve Bank stock		6,726		—		—			6,726
Equity and other		912		—		—			912
Total	$	3,682,592	$	38,567	$	(1,263	)	$	3,719,896
2001
U.S. Treasury	$	1,096,430	$	20,378	$	(1,171	)	$	1,115,637
U.S. Agencies		2,038,225		13,822		(748	)		2,051,299
Mortgage-backed		251,260		3,470		(435	)		254,295
State and political subdivisions		133,285		675		(539	)		133,421
Commercial paper		415,937		—		—			415,937
Federal Reserve Bank stock		6,697		—		—			6,697
Equity and other		1,629		—		(68	)		1,561
Total	$	3,943,463	$	38,345	$	(2,961	)	$	3,978,847
The following table presents contractual maturity information for securities available for sale at December 31, 2002.
					Amortized Cost			Fair Value
					(in thousands)
Due in 1 year or less					$	2,426,649		$	2,441,214
Due in 1 year through 5 years						741,153			757,009
Due after 5 years through 10 years						35,582			36,171
Due after 10 years						2,542			2,477
Total					$	3,205,926		$	3,236,871
Mortgage-backed securities						363,293			369,652
Commercial paper						105,735			105,735
Equity securities and other						7,638			7,638
Total securities available for sale					$	3,682,592		$	3,719,896

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.

Securities available for sale with a market value of $3,100,337,000 at December 31, 2002 and $2,983,589,000 at December 31, 2001 were pledged to secure U.S. Government deposits, other public deposits and certain trust deposits as required by law.

During 2002, proceeds from the sales of securities available for sale were $216,717,000 compared to $102,488,000 for 2001. Securities transactions resulted in gross realized gains of $3,334,000 for 2002, $1,876,000 for 2001 and $12,000 for 2000. The gross realized losses were $176,000 for 2002, $1,000 for 2001 and $1,000 for 2000.

The net realized gains on trading securities at December 31, 2002 and 2001 were $73,300 and $134,500 respectively, and were included in trading and investment banking income.

43

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

SECURITIES HELD TO MATURITY

The table below provides detailed information for securities held to maturity at December 31, 2002 and 2001 (in thousands)

	December 31							Fair Value
2002	Amortized Cost		Unrealized Gains		Unrealized Losses
State and political subdivisions	$	402,419	$	15,866	$	(21	)	$	418,264
2001
State and political subdivisions	$	542,447	$	10,905	$	(145	)	$	553,207

The following table presents contractual maturity information for securities held to maturity at December 31, 2002.

	Amortized Cost		Fair Value
	(in thousands)
Due in 1 year or less	$	98,252	$	99,830
Due after 1 year through 5 years		303,817		318,066
Due after 5 years through 10 years		350		368
Total securities held to maturity	$	402,419	$	418,264

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.

There were no sales of securities held to maturity during 2002; however, during 2001 and 2000 proceeds from sales of securities held to maturity were $116,000 and $229,000, respectively.

Securities held to maturity and some municipals available for sale with a market value of $658,178,000 at December 31, 2002 and $636,867,000 at December 31, 2001 were pledged to secure U.S. Government deposits, other public deposits and certain Trust deposits as required by law.

5. SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL

The Company regularly enters into agreements for the purchase of securities with simultaneous agreements to resell (resell agreements). The agreements permit the Company to sell or repledge these securities. Resell agreements were $106,605,000 and $89,852,000 at December 31, 2002 and 2001, respectively. Of those balances, $67,433,000 and $15,928,000, respectively, were resold under repurchase agreements.

6. LOANS TO OFFICERS AND DIRECTORS

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 unrelated parties. In addition, all such loans are current as to repayment terms. For the years 2002 and 2001, an analysis of activity with respect to such aggregate loans to related parties appears below (in thousands)

	Year Ended December 31
	2002			2001
Balance—beginning of year	$	174,392		$	183,507
New loans		46,693			1,160,556
Repayments		(107,043	)		(1,169,671	)
Balance—end of year	$	114,042		$	174,392

44

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

7. GOODWILL AND OTHER INTANGIBLES

The effect of the cessation of goodwill amortization, pursuant to SFAS No. 142 is summarized for the three years ended December 31, 2002, 2001 and 2000

	Year Ended December 31
	2002		2001		2000
Reported net income	$	57,173	$	65,230	$	65,111
Goodwill amortization		—		5,650		5,846
Adjusted net income	$	57,173	$	70,880	$	70,957
Reported basic earnings per share	$	2.59	$	2.95	$	2.91
Goodwill amortization		—		0.26		0.27
Adjusted basic earnings per share	$	2.59	$	3.21	$	3.18
Changes in the carrying amount of goodwill for the year ended: December 31, 2002 by operating segment are as follows
	Community Banking		Trust and Securities Processing		Total
Balances as of January 1, 2002	$	34,743	$	18,231	$	52,974
Goodwill acquired during the period		—		1,787		1,787
Balances as of December 31, 2002	$	34,743	$	20,018	$	54,761
Following are the intangible assets that continue to be subject to amortization: (in thousands)
	As of December 31, 2002
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortized intangible assets
Core deposit intangibles assets	$	16,777	$	16,228	$	549
Other intangible assets		7,200		930		6,270
Total	$	23,977	$	17,158	$	6,819
	Year Ended December 31
	2002		2001		2000
Aggregate amortization expense	$	2,034	$	1,803	$	1,314

Estimated amortization expense of intangible assets in future years:

For the year ended December 31, 2003	$	1,218
For the year ended December 31, 2004		754
For the year ended December 31, 2005		754
For the year ended December 31, 2006		754
For the year ended December 31, 2007		754

45

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

8. BANK PREMISES AND EQUIPMENT

Bank premises and equipment consisted of the following (in thousands):

	December 31
	2002			2001
Land	$	39,750		$	42,341
Buildings and leasehold improvements		233,464			229,055
Equipment		245,886			240,629
	$	519,100		$	512,025
Accumulated depreciation		(288,422	)		(271,369	)
Bank premises and equipment, net	$	230,678		$	240,656

Included in the results for 2001 was a year-end charge of approximately $3.8 million related to the write-off and disposition of certain non-strategic assets, primarily real estate. The Company is in the final stages of consolidating and improving its downtown campus.

Consolidated rental and operating lease expenses were $4,301,000 in 2002, $5,444,000 in 2001 and $4,449,000 in 2000. Consolidated bank premises and equipment depreciation and amortization expenses were $31,583,000 in 2002, $31,212,000 in 2001 and $32,026,000 in 2000. Minimum rental commitments as of December 31, 2002 for all non-cancelable operating leases are: 2003—$4,774,000; 2004—$3,676,000; 2005—$3,346,000; 2006—$2,847,000; 2007—$2,574,000; and thereafter—$12,702,000.

46

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

9. BORROWED FUNDS

The components of the Company’s short-term and long-tem debt are as follows (in thousands ):

	December 31
	2002		2001
Short-term debt
U. S. Treasury demand notes and other	$	94,721	$	173,046
Long-term debt
7.30% senior notes due 2003	$	15,000	$	15,000
ESOP debt guarantee		—		3,002
Regional Housing Commission Development		100		—
Federal Home Loan Bank 5.97% due 2017		2,341		—
Federal Home Loan Bank 5.89% due 2014		3,295		3,476
Federal Home Loan Bank 5.84% due 2009		3,401		3,568
Federal Home Loan Bank 7.13% due 2010		1,385		1,526
Federal Home Loan Bank 7.61% due 2015		780		816
Total long-term debt	$	26,302	$	27,388
Total borrowed funds	$	121,023	$	200,434

Aggregate annual repayments of long-term debt at December 31, 2002 are as follows (in thousands):

2003	$	15,668
2004		714
2005		764
2006		817
2007		873
Thereafter		7,466
Total	$	26,302

Long-term debt represents direct, unsecured obligations of the parent company and secured obligation of affiliate banks. The senior note due February 24, 2003 cannot be reduced prior to stated maturity.

All of the Federal Home Loan Bank notes are secured by investment securities of the Company. Federal Home Loan Bank notes requires monthly principal and interest payments.

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 sheets. The amount outstanding at December 31, 2002 was $1,209,770,000 (with accrued interest payable of $31,000). Of that amount, $67,433,000 represented sales of securities in which the securities were obtained under reverse repurchase agreements (“resell agreements”). The remainder of $1,142,337,000 represented sales of U.S. Treasury and agency securities obtained from the Company’s securities portfolio. The amount outstanding at December 31, 2001, was $1,288,638,000 (with accrued interest payable of $337,000) of that amount, $15,610,000 represented sales of securities under resell agreements. The carrying amounts and market values of the securities and the related repurchase liabilities and

47

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

weighted average interest rates of the repurchase liabilities (grouped by maturity of the repurchase agreements) were as follows as of December 31, 2002 (in thousands):

Maturity of the Repurchase Liabilities	Securities Market Value		Repurchase Liabilities		Weighted Average Interest Rate
	(in thousands)
On Demand	$	1,151,793	$	1,141,388	0.84	%
2 to 30 days		50		50	1.69
31 to 90 days		590		582	1.84
over 90 days		312		317	3.12
Total	$	1,152,745	$	1,142,337	0.84	%

10. REGULATORY REQUIREMENTS

Payment of dividends by the affiliate banks to the parent company is subject to various regulatory restrictions. For national banks, 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. At December 31, 2002, approximately $10,737,000 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.

Certain affiliate banks maintain reserve balances with the Federal Reserve Bank as required by law. During 2002, this amount averaged $55,029,000, compared to $94,273,000 in 2001.

48

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

The Company is required to maintain minimum amounts of capital to total “risk weighted” assets, as defined by the banking regulators. At December 31, 2002, 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 17.98% and 18.88%, respectively. The company’s leverage ratio at December 31, 2002, was 10.04%.

As of December 31, 2002, the most recent notification from the Office of Comptroller of the Currency categorized the Company’s all of the affiliate banks as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well-capitalized, the affiliate banks must maintain total risk-based, Tier 1 risk-based and Tier 1 leverage ratios of 10.0%, 6.0% and 5.0%, respectively. There are no conditions or events since that notification that management believes have changed the affiliate banks’ category.

Actual capital amounts as well as required and well-capitalized Tier 1, Total and Tier 1 Leverage ratios as of December 31 for the Company and its largest banks are as follows:

	2002
	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
Tier 1 Capital:
UMB Financial Corporation	$	717,542	17.98	%	$	159,667	4.00	%	$	239,501	6.00	%
UMB Bank, n. a.		481,501	13.74			140,149	4.00			210,223	6.00
UMB National Bank of America		69,062	38.64			7,148	4.00			10,723	6.00
Total Capital:
UMB Financial Corporation		753,692	18.88			319,335	8.00			399,169	10.00
UMB Bank, n. a.		510,339	14.57			280,298	8.00			350,372	10.00
UMB National Bank of America		70,893	39.67			14,297	8.00			17,871	10.00
Tier 1 Leverage
UMB Financial Corporation		717,542	10.04			285,860	4.00			357,325	5.00
UMB Bank, n. a.		481,501	7.85			245,434	4.00			306,793	5.00
UMB National Bank of America		69,062	12.93			21,360	4.00			26,700	5.00
	2001
Tier 1 Capital:
UMB Financial Corporation	$	684,224	15.18	%	$	180,302	4.00	%	$	270,453	6.00	%
UMB Bank, n. a.		470,215	11.50			163,545	4.00			245,217	6.00
UMB National Bank of America		65,106	34.78			7,487	4.00			11,231	6.00
Total Capital:
UMB Financial Corporation		719,861	15.97			360,603	8.00			450,754	10.00
UMB Bank, n. a.		497,279	12.16			327,089	8.00			450,862	10.00
UMB National Bank of America		66,948	35.77			14,975	8.00			18,718	10.00
Tier 1 Leverage
UMB Financial Corporation		684,224	9.22			296,957	4.00			371,196	5.00
UMB Bank, n. a.		470,215	7.29			258,036	4.00			322,545	5.00
UMB National Bank of America		65,106	12.24			21,277	4.00			26,596	5.00

11. 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 eligible officers and employees of the Company and its

49

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

subsidiaries. Contributions to these plans were $3,052,000 in 2002, 2001 and 2000. In 1996, the Employee Stock Ownership Plan (“ESOP”) borrowed $17 million to purchase common stock of the Company. The loan obligation of the ESOP is considered unearned employee benefit expense and, as such, is recorded as a reduction of the Company’s shareholders’ equity. Both the loan obligation and the unearned benefit expense are reduced by the amount of the loan principal repayments made by the ESOP. The portion of the Company’s ESOP contribution that funded principal repayments and the payment of interest expense were recorded accordingly in the consolidated financial statements. The ESOP loan was fully paid in 2002.

The Company has a qualified 401(k) profit sharing plan that permits participants to make contributions by salary deduction. The Company made a matching contribution to this plan of $2,225,000 for 2002, $2,114,000 for 2001 and $1,868,000 for 2000.

On April 18, 2002, the shareholders of the Company approved the 2002 Incentive Stock Options Plan (the “2002 Plan”), which provides incentive options to certain key employees for up to 1,000,000 common shares of the Company. All options that are issued under the plan are in effect for 10 years (except for any option granted to a person holding more than 10% of the Company’s stock, in which case the option is in effect for five years) and cannot be exercised until at least four years 11 months after the date they are granted. Except under circumstances of death, disability or certain retirements, the options cannot be exercised after the grantee has left the employment of the Company or its subsidiary. The Board salary and stock option committee is empowered to issue such incentive options under an agreement that accelerates the exercise period for an option upon the optionee’s qualified 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 no less than 100% of fair market value at date of grant. The plan terminates April 17, 2012. The table below discloses the information relating to the options granted in 2002 under this plan.

Stock Options Under the 2002 Plan	Number of Shares	Option Price Per Share		Weighted Average Price Per Share
Granted	82,796	$	38.11 to $41.93	$	38.24
Outstanding—December 31, 2002	82,796	$	38.11 to $41.93	$	38.24
Exercisable—December 31, 2002	—		—		—

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. Of the options granted prior to 1998, 40% are exercisable two years from the date of the grant and are thereafter exercisable in 20% increments annually, or for such periods or vesting increments 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. None of the options granted during or after 1998 are exercisable until four years eleven months after the grant date. The exercise period may be accelerated for an option upon the optionee’s qualified 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. No further options may be granted under the 1992 plan.

50

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

Activity in the 1992 Plan for the three years ended December 31, 2002 is summarized in the table below:

Stock Options Under the 1992 Plan	Number of Shares		Option Price Per Share		Weighted Average Price Per Share
Outstanding—January 1, 2000	222,083		$	22.47 to $47.95	$	34.47
Granted	55,182			32.91 to 36.21		33.14
Canceled	(19,254	)		22.58 to 43.66		33.50
Exercised	(2,765	)		24.78 to 34.43		28.47
Outstanding—December 31, 2000	255,246		$	22.47 to $47.95	$	34.23
Exercisable—December 31, 2000	91,227		$	22.47 to $47.95	$	31.07
Granted	80,106			40.02 to 44.02		40.14
Canceled	(22,016	)		22.58 to 43.06		37.22
Exercised	(21,923	)		22.55 to 34.91		29.39
Outstanding—December 31, 2001	291,413		$	24.01 to $47.96	$	35.98
Exercisable—December 31, 2001	76,747		$	22.47 to $47.96	$	32.03
Canceled	(19,443	)		24.02 to 47.96		38.68
Exercised	(19,619	)		22.58 to 43.59		29.16
Outstanding—December 31, 2002	252,351		$	22.47 to $44.02	$	36.30
Exercisable—December 31, 2002	61,635		$	22.47 to $43.69	$	33.27

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 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 two years ended December 31, 2001, is summarized in the following table:

Stock Options Under the 1981 Plan	Number of Shares		Option Price Per Share		Weighted Average Price Per Share
Outstanding—January 1, 2000	21,952		$	15.31 to $20.90	$	16.62
Canceled	(847	)		15.33 to 15.33		15.33
Exercised	(16,019	)		15.31 to 15.37		15.33
Outstanding—December 31, 2000	5,086		$	20.89 to $20.90	$	20.89
Exercisable—December 31, 2000	5,086		$	20.89 to $20.90	$	20.89
Exercised	(5,086	)	$	20.89 to $20.90	$	20.89
Outstanding—December 31, 2001	—

51

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

The table below shows the stock options outstanding and exercisable as of December 31, 2002.

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding at 12/31/02	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable at 12/31/02	Weighted Average Exercise Price
$24.23 to $24.26	6,488	1 year	$	24.26	6,488	$	24.26
22.57 to 22.58	7,590	2 year		22.58	7,590		22.58
31.23 to 31.25	11,832	3 year		31.24	11,832		31.24
30.17 to 30.41	15,471	4 year		30.33	15,471		30.33
43.34 to 47.96	20,254	5 year		43.59	20,254		43.59
38.73 to 42.79	31,675	6 year		39.18	—		—
34.58 to 38.41	38,403	7 year		35.15	—		—
32.60 to 36.20	46,157	8 year		33.10	—		—
40.02 to 44.02	74,481	9 year		40.15	—		—
38.11 to 41.93	82,796	10 year		38.24	—		—
	335,147				61,635

12. BUSINESS SEGMENT REPORTING

The Company has strategically aligned its operations into four major lines of business, as shown below (collectively, “Business Segments”). The Business Segments are differentiated based on the products and services provided. Lines of business financial results produced by the Company’s internal management accounting system are evaluated regularly in deciding how to allocate resources and assess performance per individual Business Segment. The management accounting system assigns balance sheet and income statement items to each line of business using methodologies which are constantly being refined. The Business Segments were redefined at the end of 2002, adding the Investment Services Group (described below) in the place of the Investment Banking segment used in previous reports on Business Segments. With the acquisition of Sunstone Financial Group, Inc. (now known as UMB Fund Services, Inc.), revenues resulting from mutual fund back office activities have created a need to recognize the Investment Services Group as a line of business. The Investment Banking segment shown in previous reports on Business Segments consists primarily of the Company’s investment portfolio, and is now allocated to the Business Segments shown below.

For comparability purposes, amounts in all periods are based on methodologies in effect at December 31, 2002. These methodologies may be modified as management accounting systems are enhanced and changes occur in the organizational structure or product lines. Noninterest income and noninterest expense directly attributable to a line of business is assigned to that line of business. Direct expenses incurred by areas whose services support the overall Company, and corporate overhead, are allocated to the Business Segments based on the ratio of an individual Business Segment’s noninterest expenses to total noninterest expense incurred by all business lines. Equity is allocated based on credit, operational and business risks.

Commercial Banking    serves medium and small businesses, corporate businesses and governmental entities by offering various products and services, including commercial loans and lines of credit, deposits, cash management, capital market products, international trade finance, letters of credit, foreign exchange management services and loan syndication services.

Community Banking    delivers a full range of products and services through the Company’s affiliate bank and branch network. Community Banking is a major provider of funds for the Company. Emphasis on

52

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

controlling interest expense and noninterest expense has resulted in steadily improved earnings for the three periods shown.

Trust and Wealth Management provides estate planning, trust, employee benefit and asset management services to individuals and corporate customers. The private client services division offers full trust and personal banking services to high net worth individuals.

Investment Services Group provides a full range of mutual fund services, including fund administration and accounting, transfer agency, distribution services, marketing, shareholder communications, custody and cash management. Certain revenues from this segment are subject to the performance of the equity markets, as is evident when comparing results of 2001 to 2000.

Other includes divested business lines and miscellaneous other items of a corporate nature not allocated to specific business lines.

BUSINESS SEGMENT INFORMATION

Line of business/segment financial results were as follows:

	Year Ended December 31
	Commercial Banking								Community Banking
	2002		2001			2000			2002		2001		2000
	(dollars in thousands)
EARNINGS SUMMARY
Interest Income	$	98,097	$	123,736		$	119,293		$	174,155	$	244,159	$	281,420
Interest Expense		14,829		24,116			15,934			54,688		117,178		171,827
Net Interest Income	$	83,268	$	99,620		$	103,359		$	119,467	$	126,981	$	109,593
Provision for Loan Losses		8,780		8,421			4,865			7,958		6,324		4,336
Noninterest income		56,560		47,168			36,332			91,301		108,263		106,541
Noninterest expense		91,133		84,628			69,254			195,055		223,637		232,982
Net Income before taxes	$	39,915	$	53,739		$	65,572		$	7,755	$	5,283	$	(21,184	)
Income Taxes		8,460		15,190			17,115			1,644		1,493		(5,529	)
Net Income	$	31,455	$	38,549		$	48,457		$	6,111	$	3,790	$	(15,654	)
Average Assets	$	3,025,084	$	2,680,438		$	1,835,738		$	4,146,547	$	4,434,098	$	6,044,865
	Trust and Wealth Management								Investment Services Group
	2002		2001			2000			2002		2001		2000
	(dollars in thousands)
EARNINGS SUMMARY
Interest Income	$	21	$	(147	)	$	(23	)	$	22,210	$	16,626	$	28,882
Interest Expense		—		(32	)		(45	)		6,935		3,823		8,620
Net Interest Income	$	21	$	(115	)	$	22		$	15,275	$	12,803	$	20,262
Provision for Loan Losses		—		—						—				—
Noninterest income		64,928		48,670			32,896			19,417		18,235		20,492
Noninterest expense		54,381		30,690			23,081			20,380		16,991		6,872
Net Income before taxes	$	10,568	$	17,865		$	9,837		$	14,312	$	14,047	$	33,882
Income Taxes		2,240		5,050			2,567			3,033		3,971		8,844
Net Income	$	8,328	$	12,815		$	7,270		$	11,279	$	10,076	$	25,038
Average Assets	$	39,229	$	4,945		$	315		$	709,044	$	386,894	$	836,928

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UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

	Other									Total Consolidated Company
	2002			2001			2000			2002		2001		2000
	(dollars in thousands)
EARNINGS SUMMARY
Interest Income	$	—		$	502		$	1,213		$	294,483	$	384,876	$	430,785
Interest Expense		—			62			41			76,452		145,147		196,377
Net Interest Income	$	—		$	440		$	1,172		$	218,031	$	239,729	$	234,408
Provision for Loan Losses		—			—			—			16,738		14,745		9,201
Noninterest income		—			1,187			962			232,206		223,523		197,223
Noninterest expense		—			13,427			21,571			360,949		369,373		353,760
Minority interest in loss of consolidated subsidiary		—			11,800			19,437			—		11,800		19,437
Net Income before taxes	$	—		$	—		$	—		$	72,550	$	90,934	$	88,107
Income Taxes		—			—			—			15,377		25,704		22,996
Net Income	$	—		$	—		$	—		$	57,173	$	65,230	$	65,111
Average Assets	$	(330,804	)	$	(142,875	)	$	(1,428,746	)	$	7,589,100	$	7,363,500	$	7,289,100

13. COMMON STOCK

The following table summarizes the share transactions for the three years ended December 31, 2002

	Shares Issued	Shares in Treasury
Balance January 1, 2000	26,472,039	(4,702,849	)
Purchase of Treasury Stock	—	(503,906	)
Issued in stock options	—	17,948
Balance December 31, 2000	26,472,039	(5,188,807	)
Stock Dividend (5%)	1,056,326	—
Purchase of Treasury Stock	—	(164,722	)
Issued in stock options	—	26,612
Balance December 31, 2001	27,528,365	(5,326,917	)
Purchase of Treasury Stock	—	(238,758	)
Issued in stock options	—	20,279
Balance December 31, 2002	27,528,365	(5,545,396	)

Basic earnings per share are computed by dividing income available to common shareholders by the weighted average number of shares outstanding during the year. Diluted earnings per share gives effect to all potential common shares that were outstanding during the year. The shares used in the calculation of basic and diluted earnings per share, which has been restated for all stock dividends, are shown below.

	For the Years Ended December 31
	2002	2001	2000
Weighted average basic common shares outstanding	22,064,508	22,145,787	22,335,109
Stock options	33,555	28,420	13,158
Weighted average diluted common shares outstanding	22,098,063	22,174,207	22,348,267

54

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

14. COMMITMENTS, CONTINGENCIES AND GUARANTEES

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. These 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 amount of those instruments reflects 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.

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 rate. If the commitment has a fixed interest rate, the rate is generally not set until such time as credit is extended. For 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 amount does 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 with respect to the performance of a customer of its obligations to a third party.

The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities. 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 movement 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. Open futures contract positions averaged $43.3 million and $51.8 million during the year ended December 31, 2002 and 2001, respectively. Net futures activity resulted in losses of $3.3 million for 2002, $2.5 million for 2001 and $2.2 million for 2000. The Company controls the credit risk of its futures contracts through credit approvals, limits and monitoring procedures.

55

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

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. During 2002, contracts to purchase and to sell foreign currency averaged approximately $51.3 million compared to $46.9 million during 2001. The net gains on these foreign exchange contracts for 2002, 2001 and 2000 were $1.3 million, $1.6 million and $1.5 million, respectively.

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, Oklahoma, Nebraska and Illinois. At December 31, 2002, 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 counter-claims. In the opinion of management, after consultation with legal counsel, none of these lawsuits are expected to have a materially adverse effect on the financial position or results of operations of the Company.

The Company has issued standby letters of credit, which in many respects are comparable to guarantees of its customers’ obligations. Standby letters of credit are conditional commitments issued by the Company payable upon the non-performance of a customer’s obligations to a third party. The Company issues these standby letters of credit for terms ranging from three months to three years. The Company generally requires the customer to pledge collateral to support the letter of credit. The maximum liability to the Company under standby letters of credit at December 31, 2002 was $187.3 million. It is unlikely that the Company would ever have to payout on the $187.3 million. As of December 31, 2002, standby letters of credit totaling $39.7 million were with related parties to the Company.

	Contract or Notional Amount December 31
	2002		2001
	(in thousands)
Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit for loans (excluding credit card loans)	$	644,497	$	693,557
Commitments to extend credit under credit card loans		848,256		914,936
Commercial letters of credit		6,148		8,041
Standby letters of credit		187,268		193,196
Financial instruments whose notional or contract amounts exceed the amount of credit risk:
Futures contracts	$	36,514	$	43,300

15. ACQUISITIONS

On March 7, 2001, the Company acquired certain corporate trust business located in St. Louis, Missouri from State Street Corporation for $18.3 million. On April 19, 2001, the Company acquired Sunstone Financial Group, Inc. (now known as UMB Fund Services, Inc.) located in Milwaukee, Wisconsin. The purchase price of Sunstone is directly connected to its gross revenues. The Company paid an initial amount of $8.0 million on April 19, 2001, and a $1.7 million payment in 2002, and will make subsequent annual payments, depending on gross revenue achieved through 2006. Both of these acquisitions were recorded as purchases and were funded with existing working capital.

56

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

16. INCOME TAXES

Income taxes as set forth below produce effective income tax rates of 20.1% in 2002, 27.5% in 2001 and 25.3% in 2000. These percentages are computed by dividing total income tax by the sum of such tax and net income. Income taxes include the following components (in thousands):

	Year Ended December 31
	2002			2001			2000
Federal:
Current liability	$	16,699		$	23,208		$	22,927
Deferred provision		(2,302	)		1,470			(902	)
Total federal tax provision	$	14,397		$	24,678		$	22,025
State:
Current liability	$	1,105		$	722		$	1,071
Deferred provision		(125	)		304			(100	)
Total state tax provision	$	980		$	1,026		$	971
Total tax provision	$	15,377		$	25,704		$	22,996
The reconciliation between the income tax provision and the amount computed by applying the statutory federal tax rate of 35% to income taxes is as follows (in thousands):
	Year Ended December 31
	2002			2001			2000
Provision at statutory rate	$	25,393		$	31,827		$	30,838
Tax-exempt interest income		(9,750	)		(10,330	)		(11,590	)
Disallowed interest expense		448			1,222			1,520
State and local income taxes, net of federal tax benefits		637			667			631
Amortization of goodwill and other intangible assets		—			2,008			1,847
Reduction of estimated income tax accruals		(1,783	)		—			—
Other		432			310			(250	)
Total tax provision	$	15,377		$	25,704		$	22,996
Deferred taxes are recorded based upon differences between the financial statement and tax basis assets and liabilities. Temporary differences which comprise a significant portion of deferred tax assets and liabilities at December 31, 2002, 2001 and 2000 were as follows (in thousands):
	2002			2001			2000
Deferred tax assets:
Allowance for loan losses	$	13,980		$	13,362		$	11,877
Miscellaneous		1,803			1,888			266
Total deferred tax assets	$	15,783		$	15,250		$	12,143
Deferred tax liabilities:
Net unrealized gain on securities available for sale	$	(13,627	)	$	(12,814	)	$	(989	)
Asset reevaluations on purchased banks		(2,352	)		(2,937	)		(3,507	)
Depreciation		(14,260	)		(16,044	)		(13,179	)
Miscellaneous		(3,061	)		(2,586	)		—
Total deferred tax liabilities	$	(33,300	)	$	(34,381	)	$	(17,675	)
Net deferred tax liability	$	(17,517	)	$	(19,131	)	$	(5,532	)

57

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

17. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumption were used to estimate the fair value of each class of financial instruments:

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 (included 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 rating 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, 2002 and 2001. The fair value of fixed-maturity certificate of deposit is estimated by discounting the future cash flow using the rates that are currently offered for deposits of similar remaining maturities.

Short-Term Debt The carrying amounts of federal funds purchased, repurchase agreements and other short-term debt are reasonable estimates of their fair value because of the short-term nature of their maturities.

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 loan commitments and letters of credit are 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 on these instruments nor 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, 2002 and 2001 are as follows (in millions)

	2002				2001
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
FINANCIAL ASSETS:
Cash and short-term investments	$	809.5	$	809.5	$	912.5	$	912.5
Securities available for sale		3,719.9		3,719.9		3,978.8		3,978.8
Securities held to maturity		402.4		418.3		542.4		553.2
Trading securities		73.3		73.3		85.0		85.0
Loans, excluding allowance		2,673.8		2,647.6		2,814.4		2,794.3

58

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

FINANCIAL LIABILITIES
Demand and savings deposits	$	4,545.3	$	4,545.3	$	5,174.1	$	5,174.1
Time deposits		1,301.7		1,324.7		1,201.4		1,224.7
Securities sold under agreements to repurchase		1,209.8		1,209.8		1,288.6		1,288.6
Short-term debt		94.7		94.7		173.1		173.1
Long-term debt		26.3		26.6		27.4		27.7

The fair value estimates presented herein are based on pertinent information available to management as of December 31, 2002 and 2001. 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 consolidated financial statements since those dates and, therefore, current estimates of fair value may differ significantly from the amount presented herein.

18. PARENT COMPANY ONLY FINANCIAL INFORMATION

      UMB FINANCIAL CORPORATION

BALANCE SHEETS

	December 31
	2002		2001
	(in thousands)
ASSETS:
Investment in subsidiaries:
Banks	$	663,913	$	672,189
Non-banks		45,810		17,102
Total investment in subsidiaries	$	709,723	$	689,291
Cash		55,668		77,671
Securities available for sale and other		54,065		22,481
Goodwill on purchased affiliates		5,011		5,011
Other intangibles		74		86
Total Assets	$	824,541	$	794,540
LIABILITIES AND SHAREHOLDERS’ EQUITY
Dividends payable	$	4,397	$	4,268
Long-term debt		15,000		18,002
Accrued expenses and other		2,344		3,693
Total	$	21,741	$	25,963
Shareholders’ equity		802,800		768,577
Total liabilities and shareholders’ equity	$	824,541	$	794,540

59

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

18. PARENT COMPANY ONLY FINANCIAL INFORMATION

      UMB FINANCIAL CORPORATION (Continued)

STATEMENT OF INCOME

	Year Ended December 31
	2002			2001			2000
	(in thousands)
INCOME:
Dividends and income received from affiliate banks	$	44,221		$	66,293		$	66,658
Service fees from subsidiaries		8,464			11,454			13,422
Net security gains (losses)		(95	)		21			2
Other		1,266			552			523
Total income	$	53,856		$	78,320		$	80,605
EXPENSE:
Salaries and employee benefits	$	6,183		$	5,143		$	4,808
Interest on long-term debt		1,215			1,388			1,683
Services from affiliate banks		652			652			652
Other		8,831			12,434			12,389
Total expense	$	16,881		$	19,617		$	19,532
Income before income taxes and equity in undistributed earnings of subsidiaries	$	36,975		$	58,703		$	61,073
Income tax benefit		(2,442	)		(2,054	)		(1,296	)
Income before equity in undistributed earnings of subsidiaries	$	39,417		$	60,757		$	62,369
Equity in undistributed earnings of subsidiaries:
Banks		15,198			4,128			2,452
Non-Banks		2,558			345			290
Net income	$	57,173		$	65,230		$	65,111

60

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

18. PARENT COMPANY ONLY FINANCIAL INFORMATION

      UMB FINANCIAL CORPORATION (Continued)

STATEMENTS OF CASH FLOWS

	Year Ended December 31
	2002			2001			2000
	(in thousands)
Operating activities:
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Net income	$	57,173		$	65,230		$	65,111
Equity in earnings of subsidiaries		(61,756	)		(70,473	)		(68,942	)
(Gains) losses from sales of securities available for sale		95			(21	)		(2	)
Earned ESOP shares		2,491			2,500			2,500
Other		(5,393	)		(2,619	)		1,402
Net cash provided by ( used in) operating activities	$	(7,390	)	$	(5,383	)	$	69
Investing Activities:
Proceeds from sales of securities available for sale	$	568		$	24		$	100
Proceeds from maturities of securities available for sale		18,750			42,836			70,001
Purchases of securities available for sale		(44,813	)		(29,590	)		(79,414	)
Net decrease in repurchase agreements		—			—			4,323
Net capital investment in subsidiaries		(1,823	)		(7,932	)		—
Dividends received from subsidiaries		44,000			66,000			66,200
Net capital expenditures for premises and equipment		(1,700	)		(18	)		(83	)
Net cash provided by investing activities	$	14,982		$	71,320		$	61,127
Financing Activities:
Repayments of long-term debt	$	(3,002	)	$	(2,888	)	$	(12,712	)
Cash Dividends paid		(17,658	)		(17,000	)		(17,134	)
Net purchase of treasury stock		(8,935	)		(5,837	)		(17,146	)
Net cash used in financing activities	$	(29,595	)	$	(25,725	)	$	(46,992	)
Net increase (decrease) in cash	$	(22,003	)	$	40,212		$	14,204
Cash at beginning of period		77,671			37,459			23,255
Cash at end of period	$	55,668		$	77,671		$	37,459

61

UMB FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS—(Continued)

19. SUMMARY OF OPERATING RESULTS BY QUARTER (in thousands except per share data)

(unaudited) 2002	Three Months Ended
	March 31		June 30		Sept. 30		Dec. 31
Interest income	$	80,225	$	76,069	$	70,842	$	67,347
Interest expense		22,579		20,199		18,352		15,322
Net interest income	$	57,646	$	55,870	$	52,490	$	52,025
Provision for loan losses		3,106		3,440		3,949		6,243
Noninterest income		62,092		56,208		57,588		56,318
Noninterest expense		89,660		90,292		91,600		89,397
Minority interest in loss of consolidated sub		—		—		—		—
Income tax provision		7,394		4,384		3,044		555
Net income	$	19,578	$	13,962	$	11,485	$	12,148
2001	March 31		June 30		Sept. 30		Dec. 31
Interest income	$	107,917	$	99,001	$	94,272	$	83,686
Interest expense		47,555		38,438		34,446		24,708
Net interest income	$	60,362	$	60,563	$	59,826	$	58,978
Provision for loan losses		2,963		5,011		2,989		3,782
Noninterest income		51,860		57,247		57,579		56,837
Noninterest expense		92,548		93,041		90,311		93,473
Minority interest in loss of consolidated sub		8,053		3,747		—		—
Income tax provision		7,046		6,797		7,239		4,622
Net income	$	17,718	$	16,708	$	16,866	$	13,938
Per Share 2002	Three Months Ended
	March 31		June 30		Sept. 30		Dec. 31
Net income—basic	$	0.89	$	0.63	$	0.52	$	0.55
Net income—diluted		0.88		0.63		0.52		0.55
Dividend		0.20		0.20		0.20		0.20
Book value		34.92		35.83		36.27		36.52
Market price:
High		43.74		50.95		48.59		40.64
Low		38.86		42.66		37.28		36.20
Close		42.88		46.87		39.04		38.26
2001	March 31		June 30		Sept. 30		Dec. 31
Net income—basic	$	0.80	$	0.75	$	0.77	$	0.63
Net income—diluted		0.80		0.75		0.77		0.63
Dividend		0.19		0.19		0.19		0.19
Book value		32.85		33.50		34.52		34.73
Market price:
High		37.50		40.95		43.52		42.75
Low		32.86		33.38		33.75		37.38
Close		36.19		40.95		39.52		40.00

62

INDEPENDENT AUDITORS’ REPORT

To the Shareholders and the Board Directors of UMB Financial Corporation and Subsidiaries:

We have audited the accompanying consolidated balance sheets of UMB Financial Corporation and subsidiaries as of December 31, 2002 and 2001, and the related consolidated statements of income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2002. 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 auditing standards generally accepted in the United States of America. 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, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America.

As discussed in the Summary of Significant Accounting Policies Note, the Company adopted the provisions of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, effective January 1, 2002.

Deloitte & Touche LLP

Kansas City, Missouri

February 20, 2003

63

FIVE YEAR AVERAGE BALANCE SHEETS/YIELDS AND RATES (in millions)

	2002							2001
	Average Balance			Interest Income/ Expense(1)		Rate Earned/ Paid(1)		Average Balance			Interest Income/ Expense(1)		Rate Earned/ Paid(1)
	(unaudited)
ASSETS
Loans, net of unearned interest (FTE) (2)	$	2,650.0		$	162.2	6.12	%	$	2,929.1		$	226.7	7.74	%
Securities:
Taxable	$	3,146.0		$	100.9	3.21	%	$	2,480.7		$	119.6	4.82	%
Tax-exempt (FTE)		669.2			39.7	5.94			664.5			40.8	6.14
Total securities	$	3,815.2		$	140.6	3.69	%	$	3,145.2		$	160.5	5.10	%
Federal funds sold and resell agreements		185.7			3.1	1.69			195.8			7.6	3.89
Other earning assets (FTE)		67.0			2.7	4.11			70.4			3.8	5.36
Total earning assets (FTE)	$	6,718.1		$	308.6	4.59	%	$	6,340.5		$	398.5	6.28	%
Allowance for loan losses		(37.2	)						(34.3	)
Cash and due from banks		497.1							617.1
Other assets		411.1							440.2
Total assets	$	7,589.1						$	7,363.5
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing demand and savings deposits	$	2,624.8		$	20.7	0.79	%	$	2,527.5		$	54.1	2.14	%
Time deposits under $100,000		892.2			31.8	3.56			823.4			40.7	4.95
Time deposits of $100,000 or more		287.7			6.9	2.40			283.6			13.1	4.62
Total interest bearing deposits	$	3,804.7		$	59.4	1.56	%	$	3,634.5		$	107.9	2.97	%
Short-term borrowings		61.1			0.9	1.44			91.5			3.1	3.36
Long-term debt		27.5			1.9	6.82			28.8			1.9	6.80
Federal funds purchased and repurchase agreements		1,107.8			14.2	1.29			973.1			32.2	3.26
Total interest bearing liabilities	$	5,001.1		$	76.4	1.53	%	$	4,727.9		$	145.1	3.07	%
Non-interest bearing demand deposits		1,723.1							1,775.7
Other		70.7							111.2
Total	$	6,794.9						$	6,614.8
Total shareholders’ equity	$	794.2						$	748.7
Total liabilities and shareholders’ equity	$	7,589.1						$	7,363.5
Net interest income (FTE)				$	232.2						$	253.5
Net interest spread						3.06	%						3.21	%
Net interest margin						3.46	%						4.00	%

(1) Interest income and yields are stated on a fully tax-equivalent (FTE) basis, using a rate of 35%. The tax-equivalent interest income and yields give effect to 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.

64

FIVE YEAR AVERAGE BALANCE SHEETS/YIELDS AND RATES (in millions) (continued)

2000						1999							1998
Average Balance	Interest Income/ Expense(1)		Rate Earned/ Paid(1)		Average Balance			Interest Income/ Expense(1)		Rate Earned/ Paid(1)		Average Balance			Interest Income/ Expense(1)		Rate Earned/ Paid(1)		Average Balance Five-Year Compound Growth Rate
(unaudited)
$3,004.8	$	256.3	8.53	%	$	2,616.0		$	212.8	8.14	%	$	2,640.9		$	228.8	8.66	%	0.01	%
$2,105.7	$	123.8	5.88	%	$	2,820.0		$	154.3	5.47	%	$	2,448.3		$	140.7	5.75	%	7.66	%
736.2		46.8	6.36			733.8			45.9	6.25			557.0			35.8	6.43		12.85
$2,841.9	$	170.6	6.00	%	$	3,533.8		$	200.2	5.63	%	$	3,005.3		$	176.5	5.87	%	8.49	%
229.1		15.2	6.63			120.4			6.0	4.84			224.1			12.3	5.49		5.99
74.6		4.7	6.19			66.3			3.9	5.68			72.3			4.3	5.87		(4.35	)
$6,150.4	$	446.8	7.26	%	$	6,356.5		$	422.9	6.65	%	$	5,942.6		$	421.9	7.10	%	4.43	%
(31.6)						(32.9	)						(33.2	)					2.49
720.3						691.6							723.7						(7.26	)
450.0						424.2							384.3						1.56
$7,289.1					$	7,439.4						$	7,017.4						3.20	%
$2,270.5	$	71.2	3.14	%	$	2,281.5		$	61.0	2.67	%	$	2,260.3		$	69.5	3.07	%	4.13	%
824.3		42.4	5.14			860.5			40.4	4.69			875.5			44.7	5.11		(0.15	)
347.9		19.0	5.45			457.5			21.5	4.70			480.3			24.2	5.04		(1.53	)
$3,442.7	$	132.6	3.85	%	$	3,599.5		$	122.9	3.41	%	$	3,616.1		$	138.4	3.83	%	2.56	%
43.0		2.7	6.35			3.8			0.1	4.57			0.7			—	3.55		152.10
29.6		2.0	6.91			40.2			2.8	6.91			42.6			3.2	7.54		(10.87	)
1,051.2		59.1	5.62			1,285.2			57.5	4.47			920.6			45.5	4.94		6.72
$4,566.5	$	196.4	4.30	%	$	4,928.7		$	181.3	3.72	%	$	4,580.0		$	187.1	4.08	%	3.54	%
1,922.0						1,748.9							1,702.3						1.80
124.4						104.5							85.0						(7.53	)
$6,612.9					$	6,782.1						$	6,367.3						2.92	%
$   676.2					$	657.3						$	650.1						5.82	%
$7,289.1					$	7,439.4						$	7,017.4						3.20	%
	$	250.4						$	239.6						$	234.8
			2.96	%						2.93	%						3.02	%
			4.07	%						3.77	%						3.95	%

65

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 2003 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 2003 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 is included in the Company’s 2003 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 2003 Proxy Statement under the caption “Stock Beneficially Owned by Directors and Nominees and Executive Officers” and is hereby incorporated by reference.

EQUITY COMPENSATION PLAN INFORMATION

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights. (a)	Weighted average exercise price of outstanding options, warrants and rights. (b)		Number of securities remaining available for future issuance under equity compensation plant (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders
1992 Incentive Stock Option Plan	252,351	$	36,30	None
2002 Incentive Stock Option Plan	82,796		38.24	917,204
Equity compensation plans not approved by security holders	None		None	None
Total	335,147	$	36.78	917,204

66

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

This information is included in the Company’s 2003 Proxy Statement under the caption “Certain Transactions” and is hereby incorporated by reference.

ITEM 14. CONTROLS AND PROCEDURES

Within the 90-day period immediately preceding the filing of this Report, the Company’s Chief Executive Officer and Chief Financial Officer has each evaluated the effectiveness of the Company’s “Disclosure Controls and Procedures” and believes as of the date of evaluation, that the Company’s disclosure controls and procedures are reasonably designed to be effective for the purposes for which they are intended. As such term is used above, the Company’s Disclosure Controls and Procedures are controls and other procedures of the Company that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Security Exchange Commission’s rules and forms. Disclosure Controls and Procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

There were no significant changes in the Company’s internal controls or in other factors that could significantly affect such controls subsequent to the date that the Company’s Chief Executive Officer and Chief Financial Officer conducted their evaluations of the Disclosure Controls and Procedures, including any corrective actions with regard to significant deficiencies and material weaknesses.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

Financial Statements and Financial Statement Schedules

The following consolidated financial statements of the Company are included in item 8 of this report.

Consolidated Balance Sheets as of December 31, 2002 and 2001

Consolidated Statements of Income for the Three Years Ended December 31, 2002

Consolidated Statements of Cash Flows for the Three Years Ended December 31, 2002

Consolidated Statements of Shareholders’ Equity for the Three Years Ended December 31, 2002

Notes to Financial Statements

Independent Auditors’ Report

Condensed financial statements for the parent company only may be found in item 8 above. 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 2002.

67

Exhibits

The following Exhibit Index lists the Exhibits to Form 10-K

3.1	Articles of Incorporation, restated as of March 10, 2003 and filed with the Missouri Secretary of State on March 13, 2003.
3.2	By-laws, dated October 17, 2002.
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 following portions of those documents define some of the rights of the holders of the Registrant’s common stock, par value $1.00 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 IX of the By-laws. 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.
10.1	1992 Incentive Stock Option Plan incorporated by reference to Exhibit 2.8 to Form S-8 Registration Statement filed on February 17, 1993.
10.2	2002 Incentive Stock Option Plan incorporated by reference to Exhibit 4.4 to Form S-8 Registration Statement filed on December 20, 2002.
10.3	Indenture between United Missouri Bancshares, Inc., Issuer and NBD Bank, N.A., Trustee, incorporated by reference to Exhibit 4a to Form S-3 Registration Statement filed on December 4, 1992.
10.4	Stock Purchase Agreement by and among UMB Financial Corporation and the Stockholders of Sunstone Financial Group, Inc. dated April 3, 2001.
10.5	Modification Agreement dated June 26, 2002 between UMB Financial Corporation and Miriam M. Allison.
10.6	DeferredCompensation Plan, dated as of April 20, 1995.
21	Subsidiariesof the Registrant.
23	Consentof Independent Auditors.
24	Powersof Attorney.
99.1	Certification of R. Crosby Kemper III pursuant to Section 906 of the Sarbanes-Oxely Act of 2002.
99.2	Certification of Daniel C. Stevens pursuant to Section 906 of the Sarbanes-Oxely Act of 2002.

* Exhibit has heretofore been filed with the Securities and Exchange Commission and is incorporated herein as an exhibit by reference.

68

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 III          

R. Crosby Kemper III

Chairman of the Board

/S/    DANIEL C. STEVENS          

Daniel C. Stevens,

Chief Financial Officer

Date: March 10, 2003

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.

MIRIAM M. ALLISON*       Miriam M. Allison	Director
PAUL D. BARTLETT* Paul D. Bartlett	Director
Thomas E. Beal	Director
H. Alan Bell	Director
WILLIAM L. BISHOP* William L. Bishop	Director
DAVID R. BRADLEY, JR.* David R. Bradley, Jr.	Director
NEWTON A. CAMPBELL* Newton A. Campbell	Director
PAUL UHLMANN, III Paul Uhlmann III	Director
Tom J. McDaniel	Director
William J. McKenna	Director
William Terry Fuldner	Director
Jack T. Gentry	Director
PETER J. GENOVESE* Peter J. Genovese	Director and President

69

RICHARD HARVEY* Richard Harvey	Director
C.N. HOFFMAN, III* C.N. Hoffman, III	Director
ALEXANDER C. KEMPER* Alexander C. Kemper	Director
R. CROSBY KEMPER* R. Crosby Kemper	Director, Senior Chairman of the Board
THOMAS D. SANDERS* Thomas D. Sanders	Director
L. JOSHUA SOSLAND* L. Joshua Sosland	Director
HERMAN R. SUTHERLAND* Herman R. Sutherland	Director
John H. Mize, Jr.	Director
Mary Lynn Oliver	Director
Robert W. Plaster	Director
Kris A. Robbins	Director
ALAN W. ROLLEY* Alan W. Rolley	Director
E. Jack Webster, Jr.	Director
Jon Wefald	Director
John E. Williams	Director
THOMAS J. WOOD III* Thomas J. Wood III	Director
*/S/     R. CROSBY KEMPER III            R. Crosby Kemper III Attorney-in-Fact for each director	Director, Chairman of the Board

Date: March 10, 2003

70

CERTIFICATIONS

I, R. Crosby Kemper III, certify that:

1. I have reviewed this annual report on Form 10-K of UMB Financial Corporation;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

/S/    R. CROSBY KEMPER III        

R. Crosby Kemper III

Chairman & CEO

Date: March 10, 2003

71

CERTIFICATIONS

I, Daniel C. Stevens, certify that:

1. I have reviewed this annual report on Form 10-K of UMB Financial Corporation;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

/S/    DANIEL C. STEVENS        

Daniel C. Stevens

Chief Financial Officer

Date: March 10, 2003

72

EX-3.1

                                                                     Exhibit 3.1

                       RESTATED ARTICLES OF INCORPORATION
                                       OF
                            UMB FINANCIAL CORPORATION

     UMB Financial Corporation, pursuant to Section 351.106 of the General and
Business Corporation Law of Missouri, hereby adopts the following Restated
Articles of Incorporation. The following Restated Articles of Incorporation
accurately restate the corporation's Articles of Incorporation, as amended and
supplemented by all Certificates of Amendments previously issued by the Missouri
Secretary of State. The following Restated Articles of Incorporation supersede
the original Articles of Incorporation of UMB Financial Corporation and all
amendments thereto:

                                    ARTICLE I

     The name of the corporation is "UMB Financial Corporation."

                                   ARTICLE II

     The address of the corporation's initial registered office in the State of
Missouri is: 928 Grand Avenue, Kansas City, Missouri, and the name of its
initial registered agent at such address is: Charles G. Young, Jr.

                                   ARTICLE III

     The aggregate number of shares which the corporation shall have the
authority to issue is thirty-four million (34,000,000). Thirty-three million
(33,000,000) of such shares shall be common stock with a par value of one dollar
($1.00) per share, and such common stock shall have no preferences,
qualifications, limitations, restrictions or special relative or convertible
rights. The remaining one million (1,000,000) shares shall be preferred stock
with a par value of one cent ($0.01) per share.

     The Board of Directors is authorized, subject to limitations prescribed by
law and the provisions of this Article III, to provide for the issuance of the
shares of preferred stock in series, and by compliance with the applicable law
of Missouri, to establish from time to time the number of shares to be included
in each such series, and to fix the designations, powers, preferences and rights
of the shares of each such series and the qualifications, limitations or
restrictions thereof. The authority of the Board of Directors with respect to
each series shall include, but not be limited to, determination of the
following:

(a)  The number of shares to constitute such series (which number may at any
     time, or from time to time, be increased or decreased by the Board of
     Directors, notwithstanding that shares of the series may be outstanding at
     the time of such increase or decrease, unless the Board of Directors shall
     have otherwise provided in creating such series) and the distinctive
     designation thereof;

(b)  The dividend rate on the shares of such series, whether or not dividends on
     the shares of such series shall be cumulative, and the date or dates, if
     any, from which dividends thereon shall be cumulative;



(c)  Whether or not the shares of such series shall be redeemable, and, if
     redeemable, the date or dates upon or after which they shall be redeemable,
     the amount per share payable thereon in the case of the redemption (which
     amount shall be, in the case of each share, not less than its preference
     upon involuntary liquidation, plus an amount equal to all dividends thereon
     accrued and unpaid, whether or not earned or declared and which amount may
     vary at different redemption dates or otherwise as permitted by law) and
     whether such series may be redeemed for cash, property or rights, including
     securities of the corporation or another corporation;

(d)  The right, if any, of holders of such series to convert the same into, or
     exchange the same for, common stock or other securities, and the terms and
     conditions of such conversion or exchange, as well as any provisions for
     adjustment of the conversion rate in such events as the Board of Directors
     shall determine;

(e)  Whether the holders of shares of such series shall have voting power, in
     addition to the voting powers provided by law, and if such additional
     voting power is established, to fix the extent thereof;

(f)  Whether such series shall have a sinking fund for the redemption or
     repurchase of shares of that series, and, if so, the terms and amount of
     such sinking fund;

(g)  The rights of the shares of such series in the event of voluntary or
     involuntary liquidation, dissolution or winding up of the corporation, and
     the relative rights of priority, if any, of payment of shares of that
     series; and

(h)  Any other rights and privileges and any qualifications, limitations or
     restrictions of such rights and privileges of such series; provided,
     however, that the designations, powers, preferences and rights, and the
     qualifications, limitations or restrictions thereof, so fixed by the Board
     of Directors shall not conflict with these Articles of Incorporation or
     with the resolution or resolutions adopted by the Board of Directors, as
     hereinabove provided, providing for the issue of any series of preferred
     stock for which there are then shares outstanding.

     All shares of preferred stock of the same series shall be identical in all
respects, except that shares of any one series issued at different times may
differ as to dates, if any, from which dividends thereon may accumulate. All
shares of preferred stock of all series shall be of equal rank and shall be
identical in all respects, except that, to the extent not otherwise limited in
this Article III, any series may differ from any other series with respect to
any one or more of the designations, relative rights, preferences and
limitations (including, without limitation, the designations, relative rights,
preferences and limitations described or referred to in subparagraphs (a.) to
(h.) inclusive above) which may be fixed by the Board of Directors pursuant to
this Article III.

     Dividends on the outstanding preferred stock shall be declared and paid or
set apart for payment before any dividends shall be declared and paid or set
apart for payment on the common stock with respect to the same dividend period.
Dividends on any shares of preferred stock shall be cumulative only if and to
the extent established by the Board of Directors.



          All shares of preferred stock of all series shall be of equal rank,
preference and priority as to dividends irrespective of whether the rates of
dividends to which the same shall be entitled shall be the same and when the
stated dividends are not paid in full, the shares of all series of the preferred
stock shall share ratably in the payment thereof in accordance with the sums
which would be payable on such shares if all dividends were paid in full
provided, however, that any two or more series of the preferred stock may differ
from each other as to the existence and extent of the right to cumulative
dividends, as previously provided herein.

          Except as otherwise specifically provided by law or as established by
the Board of Directors, preferred stock shall not have any right to vote for the
election of directors or for any other purpose, but if so provided, the Board of
Directors may give each holder of preferred stock more or less than one vote for
each share of stock held of record by such holder at the time entitled to voting
rights.

          In the event of any liquidation, dissolution or winding up of the
corporation, whether voluntary or involuntary, each series of preferred stock
shall have preference and priority over the common stock for payment of the
amount to which such series of preferred stock shall be entitled in accordance
with the provisions thereof and each holder of preferred stock shall be entitled
to be paid in full such holder's share of such amount, or have a sum sufficient
for the payment in full set aside. If, upon liquidation, dissolution or winding
up of the corporation, the assets of the corporation or proceeds thereof,
distributable among the holders of the shares of all series of the preferred
stock shall be insufficient to pay in full the preferential amount aforesaid,
then such assets, or the proceeds thereof, shall be distributed among such
holders ratably in accordance with the respective amounts which would be payable
if all amounts payable thereon were paid in full. After the payment to the
holders of preferred stock of all such amounts to which they are entitled, as
above provided, the remaining assets and funds of the corporation shall be
divided and paid to the holders of common stock.

          In the event that the preferred stock of any one or more series shall
be made redeemable, the corporation, at the option of the Board of Directors,
may redeem, at the time or times as established by the Board of Directors with
respect to any such series, all or any part of any such series of preferred
stock outstanding upon notice duly given as hereinafter specified, by paying for
each share the then applicable redemption price plus an amount equal to accrued
and unpaid dividends to the date fixed for redemption. A notice specifying the
shares to be redeemed, and the time and place of redemption (and, if less than
the total outstanding shares are to be redeemed, specifying the certificate
numbers and number of shares to be redeemed) shall be mailed, addressed to the
holders of record of the preferred stock to be redeemed at their respective
addresses as the same shall appear upon the books of the corporation, not less
than thirty (30) days nor more than ninety (90) days previous to the date fixed
for redemption. If less than the whole amount of any outstanding series of
preferred stock is to be redeemed, the shares of such series to be redeemed
shall be selected by lot or pro rata in any manner determined by resolution of
the Board of Directors to be fair and proper. From and after the date fixed in
any such notice as the date of redemption (unless default shall be made by the
corporation in providing monies at the time and place of redemption for payment
of the redemption price) all dividends upon the preferred stock so called for
redemption shall cease to accrue. With respect to any shares of preferred stock
so called for redemption, if, before the redemption date, the corporation shall
deposit with a bank or trust company in the United States, having a capital and
surplus of at least



$10,000,000, funds necessary for such redemption, in trust, to be applied to the
redemption of the shares of preferred stock so called for redemption, then from
and after the date of such deposit, all rights of the holders of such shares of
preferred stock so called for redemption shall cease, except the right to
receive, on and after the date of such deposit, the redemption price upon
surrender of the certificates representing such shares of preferred stock so
called for redemption, duly endorsed for transfer, if required, and except as
might otherwise be provided by the Board of Directors with respect to any such
shares of preferred stock so called for redemption. Any interest accrued on such
funds shall be paid to the corporation from time to time. Any funds so deposited
and unclaimed at the end of six (6) years from such redemption date shall be
released or repaid to the corporation, after which the holders of such shares of
preferred stock so called for redemption shall look only to the corporation for
payment of the redemption price. Notwithstanding the foregoing, no redemption of
any shares of any series of preferred stock shall be made by the corporation (1)
which as of the date of mailing of the notice of such redemption would, if such
date were the date fixed for redemption, reduce the net assets of the
corporation remaining after such redemption below the aggregate amount payable
upon voluntary or involuntary liquidation, dissolution or winding up to the
holders of shares having rights senior or equal to the preferred stock in the
assets of the corporation upon liquidation, dissolution or winding up; or (2)
unless all cumulative dividends for the current and all prior dividend periods
have been declared and paid or declared and set apart for payment on all shares
of the corporation having a right to cumulative dividends.

         Shares of any series of preferred stock which have been redeemed,
retired or purchased by the corporation (whether through the operation of a
sinking or purchase fund or otherwise) or which, if convertible or exchangeable,
have been converted into or exchanged for shares of stock of the corporation of
any other class or series shall thereafter have the status of authorized but
unissued shares of preferred stock of the corporation, and may thereafter be
reissued as part of the same series or may be reclassified and reissued by the
Board of Directors in the same manner as any other authorized and unissued
shares of preferred stock.

                                   ARTICLE IV

         The number and class of shares to be issued before the corporation
shall commence business is fifty (50) shares of common stock with a par value of
Twelve Dollars and Fifty Cents ($12.50) per share. The consideration to be paid
therefor and the capital with which the corporation shall commence business is
Six Hundred Twenty-Five Dollars ($625.00). The corporation will not commence
business until consideration of the value of at least Six Hundred Twenty-Five
Dollars ($625.00) has been received for the issuance of shares.

                                    ARTICLE V

         The name and place of residence of each incorporator is as follows:

         R. Crosby Kemper, Jr.
         1014 Greenway Terrace
         Kansas City, Missouri



     Charles G. Young, Jr
     221 West 48th Street
     Kansas City, Missouri

     V. B. Kassebaum
     1215 West 59th Street
     Kansas City, Missouri

                                   ARTICLE VI

     The number of directors constituting the first Board of Directors of the
corporation was nine (9) and the number constituting the Board at the time of
the effectiveness of the Amendment is seventeen (17). Hereinafter, the number of
directors shall be fixed by, or in the manner provided in, the By-Laws of the
corporation. Any change in the number of directors shall be reported to the
Secretary of State within thirty (30) calendar days of such change. Directors
need not be shareholders unless the By-Laws require them to be shareholders.

                                   ARTICLE VII

     The duration of the corporation is perpetual.

                                  ARTICLE VIII

     The corporation is formed for the following purposes:

(a)  To purchase, subscribe for or otherwise acquire and own, hold as an
     investment or otherwise, use, sell, assign, deal in, transfer, mortgage,
     pledge, exchange or otherwise dispose of, alone or in syndicates or
     otherwise in conjunction with others, shares of capital stock, bonds,
     debentures, notes, evidences of indebtedness and other securities,
     contracts or obligations of any corporation, association, partnership,
     entity, or governmental, municipal or public authority, domestic or
     foreign, and to pay therefor in whole or in part, in cash or by exchanging
     therefor shares of the capital stock, bonds, debentures, notes or other
     obligations of this corporation or any other corporation, and while the
     owner or holder of any such property to receive, collect and dispose of the
     interest, dividends and income arising from such property, and to possess
     and exercise in respect thereof all the rights, powers and privileges of
     ownership, including all voting powers of any securities so owned:

(b)  To carry on and conduct either directly or through subsidiaries any lawful
     business or businesses, and to do all things necessary or proper for the
     conduct of any businesses in which the corporation may be engaged;

(c)  To make, manufacture, process, organize, finance, manage, operate,
     purchase, sell, own, hold, store, exchange, rent, lease, service, repair,
     handle or deal in and with in any manner, property of any and every
     description and class which is now or may become the subject of trade or
     commerce;



(d)  To cause to be formed, to promote, and to aid in the formation of any
     corporation or association, domestic or foreign, and to cause or
     participate in the merger, consolidation, reorganization, liquidation or
     dissolution of any corporation or association, domestic or foreign, in
     which, or in the business or welfare of which, the corporation shall have
     directly or indirectly any interest;

(e)  To operate, manage, supervise, and control all or any part of the business
     and property of any corporation, association, firm, entity, individual or
     undertaking, domestic or foreign, or to take any part therein, and to
     appoint and remunerate any directors, accountants, other experts, agents,
     employees and persons;

(f)  To acquire by purchase, lease or otherwise, to construct, assemble, own,
     hold, lease, rent, remodel, improve, reconstruct, mortgage, encumber,
     operate, manage, deal in and dispose of machinery, equipment, appliances,
     fixtures, buildings, offices, factories, store rooms, warehouses, plants,
     garages, apartments and houses, with all improvements, machines, fixtures
     and equipment appurtenant or convenient thereto, or which may be useful or
     desirable in the conduct of any business or businesses in which the
     corporation is or may be engaged;

(g)  To own, acquire, buy, sell, deal in, lease, rent, remodel, improve,
     reconstruct, mortgage and otherwise encumber real estate, whether improved
     or unimproved, and any interest of any kind whatsoever therein, and to own,
     hold, deal in and dispose of such property, whether real, personal or
     mixed;

(h)  To acquire the good will, business, rights and property of any person,
     firm, association or corporation, and to pay for the same in cash,
     property, stocks, notes or otherwise; to hold and enjoy or in any manner to
     dispose of the whole or any part of the property, assets and rights so
     acquired; to conduct in any lawful manner the whole or any part of any
     business so acquired, and to exercise all powers necessary or convenient in
     and about the conduct and management of any business or businesses in which
     the corporation is now or may hereafter be engaged;

(i)  To sell, lease, convey, or otherwise dispose of, mortgage, pledge or
     otherwise encumber all or any part of its property and assets;

(j)  To acquire, deal in, purchase, own, hold, lease rent, mortgage, develop,
     mine, produce, acquire, exploit, encumber and dispose of lumber, natural
     resources, minerals and mineral rights or royalty interests of any kind;

(k)  To acquire, own, deal in, hold, enjoy, use and dispose of patents and
     patent rights, trademarks and trade names, distinctive marks, copyrights,
     licenses, inventions, improvements, processes, franchises, permits and
     other evidences of lawful authority or agency;

(1)  To borrow money for any of the purposes of the corporation and to draw,
     make, accept, endorse, discount, execute, issue, sell, pledge or otherwise
     dispose of promissory notes, drafts, bills of exchange, warrants, bonds,
     debentures and other negotiable or non-negotiable, transferable or
     non-transferable instruments and evidences of indebtedness,



     and to secure the payment thereof and the interest thereon by mortgage,
     assignment in trust, pledge, conveyance, or other encumbrance of the whole
     or any part of the property of the corporation at the time owned or
     thereafter acquired;

(m)  To purchase, acquire, hold, sell, transfer and redeem or otherwise deal in
     shares of its own capital stock, whenever and to the fullest extent
     permitted by law;

(n)  To lend money, and to acquire, take or hold as security, if desired, real
     and personal property, bonds, debentures, notes or any other evidences of
     interest or indebtedness or any other security for the payment of funds so
     loaned; to promote or to aid in any manner, financially or otherwise, any
     corporation or association of which any stocks, bonds, or other evidences
     of indebtedness or securities are held directly or indirectly by this
     corporation; and for this purpose to guarantee the contracts, dividends,
     stocks, bonds, notes and other obligations of such other corporation or
     association, and to do any other acts or things designed to protect,
     preserve, improve or enhance the value of such stocks, bonds, or other
     evidences of indebtedness or securities;

(o)  To have and to exercise all powers necessary or incident to carrying out
     its corporate purposes, to exercise all other powers permitted by law, and
     to possess and enjoy all rights and powers which now or at any time
     hereafter may be granted to or exercised by a corporation of this
     character;

(p)  Nothing in these Articles of Incorporation shall authorize this corporation
     to engage in any business which would cause the corporation to be, or
     become, an investment company as that term is defined in the Investment
     Company Act of 1940, or shall authorize the corporation to hold itself out
     as such an investment company.

                                   ARTICLE IX

     No holder of stock of the corporation of any class shall be entitled as a
matter of right to subscribe for or purchase any part of any new or additional
issue of stock, or securities convertible into stock, of any class whatsoever,
whether now or hereafter authorized, and all such additional shares of stock or
other securities convertible into stock may be issued and disposed of by the
Board of Directors to such person or persons and on such terms and for such
consideration (so far as may be permitted by law) as the Board of Directors, in
their absolute discretion, may deem advisable.

                                   ARTICLE X

     The By-Laws of the corporation may from time to time be altered, amended,
suspended or repealed, or new By-Laws may be adopted, in any of the following
ways: (i) by the affirmative vote, at any annual or special meeting of the
shareholders, of the holders of at least two-thirds of the outstanding shares of
stock of the corporation entitled to vote thereon, or (ii) by resolution adopted
by a majority of the full Board of Directors at a meeting thereof, or (iii) by
unanimous written consent of all the Directors in lieu of a meeting; provided,
however, that the power of the Directors to alter, amend, suspend or repeal the
By-Laws or any portion thereof may be denied as to any By-Laws or portion
thereof enacted by the shareholders if at the time of such enactment the
shareholders shall so expressly provide.



                                   ARTICLE XI

     The corporation reserves the right to alter, amend or repeal any provision
contained in its Articles of Incorporation in the manner now or hereafter
prescribed by the statutes of Missouri, and all rights and powers conferred
herein are granted subject to this reservation; and, in particular, the
corporation reserves the right and privilege to amend its Articles of
Incorporation from time to time so as to authorize other or additional classes
of shares (including preferential shares), to increase or decrease the number of
shares of any class now or hereafter authorized, to establish, limit or deny to
shareholders of any class the right to purchase or subscribe for any shares of
stock of the corporation of any class, whether now or hereafter authorized or
whether issued for cash, property or services or as a dividend or otherwise, or
to purchase or subscribe for any obligations, bonds, notes, debentures, or
securities or stock convertible into shares of stock of the corporation or
carrying or evidencing any right to purchase shares of stock of any class, and
to vary the preferences, priorities, special powers, qualifications,
limitations, restrictions and the special or relative rights or other
characteristics in respect of the shares of each class, and to accept and avail
itself of, or subject itself to, the provisions of any statutes of Missouri
hereafter enacted pertaining to general and business corporations, to exercise
all the rights, powers and privileges conferred upon corporations organized
thereunder or accepting the provisions thereof and to assume the obligations and
duties imposed therein, upon the affirmative vote of the holders of a majority
of the shares of stock entitled to vote thereon, or, in the event the laws of
Missouri require a separate vote by classes of shares, upon the affirmative vote
of the holders of a majority of the shares of each class whose separate vote is
required thereon; provided, however, that none of the provisions of the ARTICLE
XI or ARTICLE III or ARTICLE X may be amended or repealed nor may any provision
be added to these Articles of Incorporation that would be inconsistent with any
provision of this ARTICLE XI or ARTICLE III or ARTICLE X hereof or by the
By-Laws of the corporation, unless such amendment, repeal or additional
provision shall be approved by the affirmative vote, at any annual or special
meeting of the shareholders, of the holders of at least two-thirds of the
outstanding shares of the corporation entitled to vote thereon.

     WITNESS WHEREOF, these Restated Articles of Incorporation have been signed
this of 10th March, 2003.

                                               UMB FINANCIAL CORPORATION,
                                                 a Missouri corporation


                                               /s/ Dennis R. Rilinger
                                               ---------------------------------
                                               By:    Dennis R. Rilinger
                                               Title: Executive Vice President

ATTEST:


/s/ John C. Pauls
- --------------------------
Name:  John C. Pauls
Title: Assistant Secretary



STATE OF MISSOURI )
                  ) ss.
COUNTY OF JACKSON )

     I, Kathryn G. Major, a Notary Public, do hereby certify that on March 10,
2003, personally appeared before me Dennis R. Rilinger, Executive Vice President
of UMB Financial Corporation, and being duly sworn by me, acknowledged that he
signed as his own free act and deed the foregoing document in the capacity
therein set forth and declared that the statements therein contained are true.

     IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
before written.

                                                     /s/ Kathryn G. Major
     [SEAL]                                       ------------------------------
                                                         Notary Public


                                               My commission expires 6/15/2003

EX-3.2

                                                                     EXHIBIT 3.2

                           UMB FINANCIAL CORPORATION

                                     BY-LAWS

                      (As amended through October 17, 2002)

                                    ARTICLE I

                               Location of Offices
                               -------------------

Section 1. Principal Office. The principal office of the Corporation shall be
located in Kansas City, Jackson County, Missouri, or at such other place as may
be designated from time to time by the Board of Directors.

Section 2. Other Offices. The Corporation may have offices at such other place
or places, either within or without the State of Missouri, as the Board of
Directors may from time to time designate.

                                   ARTICLE II

                            Meetings of Stockholders
                            ------------------------

Section 1. Annual Meeting. The annual meeting of the stockholders shall be held
at the principal office of the Corporation, or at such other place as shall be
designated in the notice thereof, beginning at 11:00 a.m. or such other hour as
shall be designated in such notice, on the Thursday following the third
Wednesday in April in each year, or if that be a legal holiday on the next
succeeding day not a legal holiday, for the purpose of electing a Board of
Directors and transacting such other business as may come before the meeting.

Section 2. Special Meetings. Special meetings of the stockholders may be called
at any time by the Chairman of the Board, or in the case of the absence or
disability of the Chairman of the Board, by the Vice-Chairman of the Board, or
the President, or at any time upon the written request of a majority of the
Board of Directors, or upon the written request of the holders of not less than
one-fifth of the outstanding stock of the Corporation entitled to vote at such
meeting. Each call for a special meeting of the stockholders shall state the
time, the day, the place and the purpose or purposes of such meeting, and shall
be in writing, signed by the persons making the same, and delivered to the
Secretary. No business shall be transacted at a special meeting other than such
as is included in the purposes stated in the call.

Section 3. Notice of Meetings. Written or printed notice of each meeting of the
stockholders stating the hour and day when, and the place where, such meeting is
to be held shall be served as hereinafter provided on each stockholder entitled
to vote thereat not less than ten (10) days or no more than fifty (50) days
before such meeting, except that further notice shall be given of particular
matters if required by law. In the case of the annual meetings the notice shall
state that

                                                                               1



the purposes thereof are the election of a Board of Directors and the
transaction of such other business as may come before the meeting. In the case
of a special meeting such notice shall state the purpose or purposes for which
the meeting is called. Service of such notice shall be made either personally or
by depositing the same in a sealed envelope addressed to the stockholder at his
address as it appears upon the records of the Corporation, and deposited in a
United States Post Office, with the postage thereon prepaid. If such notice is
served by mailing the same, it shall be deemed to have been given at the time
when the same shall be thus mailed. If any stockholder shall not have an address
appearing upon the books of the Corporation, such notice may be given by mailing
the same as heretofore provided, addressed to such stockholder at the General
Post Office in Kansas City, Missouri. Service of such notice shall be made by
the Secretary, but in case the Secretary shall refuse or neglect to serve such
notice upon each stockholder as herein provided, then such service may be made
by any officer or director of the Corporation. In addition, such published
notice shall be given as required by law.

Section 4. Waiver of Notice. Any stockholder may waive notice of any meeting of
the stockholders, by a writing signed by him, or by his duly authorized
attorney, either before or after the time of such meeting. A copy of such waiver
shall be entered in the minutes, and shall be deemed to be the notice required
by law or by these By-Laws. Any stockholder present in person, or represented by
proxy, at any meeting of the stockholders shall be deemed to have thereby waived
notice of such meeting except where such attendance is for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened.

Section 5. Actions Without a Meeting. Any action which is required to be taken,
or may be taken, at a meeting of stockholders may be taken without a meeting if
consents in writing, setting forth the action so taken, shall be signed by all
of the stockholders entitled to vote with respect to the subject matter thereof.
Such consents shall have the same force and effect as a unanimous vote of the
stockholders at a meeting duly held, and may be stated as such in any
certificate or document filed under the provisions of Chapter 351 of the Revised
Statutes of Missouri, 1959, as amended. The Secretary shall file such consents
in the minute book of the Corporation.

Section 6. List of Stockholders. At least ten (10) days before each meeting of
stockholders the Secretary shall cause to be prepared a complete list of the
names and addresses of all stockholders entitled to vote at such meeting,
arranged in alphabetical order, with the number of shares held by each, and such
list shall be produced and kept at the registered Missouri office and shall be
subject to inspection by any stockholder during regular business hours. Such
list shall also be produced and kept open at the meeting and shall be subject to
inspection by any stockholder during the meeting.

Section 7. Quorum. At any meeting of the stockholders, a majority of the
outstanding capital stock entitled to vote at such meeting, being represented in
person or by proxy, shall constitute a quorum for all purposes, including the
election of directors, except where it is otherwise provided by law.

                                                                               2



Section 8. Organization. The Chairman of the Board, and in his absence, the
Vice-Chairman of the Board or the President, shall preside at each meeting of
the shareholders and shall act as Chairman thereof. The Secretary shall act as
secretary of all meetings of the stockholders.

Section 9. Voting. At each meeting of the stockholders, each stockholder shall
be entitled to vote in person, or by proxy made in accordance with the
provisions of the By-Laws of the Corporation, held by some person or persons
present at such meeting, upon all matters presented at the meeting. With the
exception of the election of directors, each stockholder shall have one vote for
each share of stock standing in his name on the books of the Corporation on the
record date determined as provided in Section 6 of Article VII of the By-Laws.
In the election of directors each stockholder shall have the right to cast as
many votes in the aggregate as shall equal the number of shares held by him
multiplied by the number of directors to be elected at such election, and said
votes may be cast for one director or distributed among two or more candidates.
All questions, except any question the manner of deciding which is specially
regulated by law, shall be determined by a majority of the outstanding shares of
capital stock represented at each meeting. If voting shall be by ballot for the
election of directors or other questions, the Chairman of such meeting of the
stockholders may appoint not less than two (2) persons, who are not directors or
candidates for the election as a director, to act as Inspectors of Election and
to receive and canvass the votes cast at such meeting and certify the results to
the Chairman. Each such Inspector, before entering upon the discharge of his
duties, shall take and subscribe the following oath: "I do solemnly swear, that
I will execute the duties of an Inspector of the election now to be held, with
strict impartiality and according to the best of my ability." The Inspectors of
Election shall take care of the polls and after the balloting shall make and
file a written certificate of the result of the votes cast at the meeting.

Section 10. Adjournment. If, at any meeting of the stockholders, a quorum shall
fail to attend at the time and place for which such meeting was called, or if
the business of such meeting shall not be completed, the stockholders present in
person or represented by proxy may, by a majority vote, adjourn the meeting from
day to day, or from time to time, not exceeding ninety (90) days from such
adjournment, without further notice, until a quorum shall attend or the business
thereof shall be completed. Such adjournment and the reasons therefor shall be
recorded in the minutes. At any such adjournment meeting, any business may be
transacted which might have been transacted at the meeting as originally called.

Section 11. Proxies. Proxies must either (1) be in writing, signed by the
stockholder himself, or by his duly authorized attorney, or by his legal
representative, or (2) be sent by electronic means to the Company's transfer
agent or other proxy tabulator through a system that is designed to (i) enable
the transfer agent or other proxy tabulator to verify that the transmission was
authorized by the shareholder, and (ii) enable the recipient to retain, retrieve
and reproduce the information sent by the shareholder. Unless specified therein
that it is irrevocable, any proxy may be revoked at the pleasure of the person
executing it (i) by a writing signed by the shareholder, his or her attorney or
legal representative and filed with the transfer agent or other proxy tabulator
or (ii) by notice given electronically to the Company's transfer agent or proxy
tabulator. To be effective the grant of a proxy or the revocation of a proxy
must be manually signed and filed

                                                                               3



with or delivered electronically to the Secretary of the Corporation at or
before the roll call of the meeting at which the same is to be used. No proxy
shall be valid after the expiration of eleven (11) months from its date, unless
the person executing it shall have specified therein the length of time for
which such proxy is to continue in force. In the event that such instrument in
writing shall designate two or more persons to act as proxies, a majority of
such persons present at the meeting, or, if only one shall be present, then that
one, shall have and may exercise all of the powers conferred by such written
instrument upon all of the persons so designated, unless the instrument shall
otherwise provide.

                                   ARTICLE III

                                    Directors
                                    ---------

Section 1. Qualifications. The corporate powers, business and property of the
Corporation shall be exercised, conducted and controlled by the Board of
Directors. It shall not be necessary for a director to be a stockholder.

Section 2. Directors - Number; Classes. Unless the Articles of Incorporation
shall require a different number, the number of directors to constitute the
Board of Directors shall be thirty-one (31). Commencing with the annual meeting
of shareholders in 1979, the Board of Directors shall be divided into three
classes, Class I, Class II, and Class III, as nearly equal in number as
possible. At the annual meeting of shareholders in 1979, directors of the first
class (Class I) shall be elected to hold office for a term expiring at the next
succeeding annual meeting of shareholders, directors of the second class (Class
II) shall be elected to hold office for a term expiring at the second succeeding
annual meeting of shareholders, and directors of the third class (Class III)
shall be elected to hold office for a term expiring at the third succeeding
annual meeting of shareholders. At each annual meeting of shareholders,
subsequent to the annual meeting of shareholders in 1979, the successors to the
class of directors whose term shall then expire shall be elected to hold office
for a term expiring at the third succeeding annual meeting. Any increase or
decrease in the authorized number of directors shall be apportioned among the
classes so as to make all classes as nearly equal in number as possible. No
decrease in the authorized number of directors shall shorten the term of any
incumbent director. If it shall happen at any time that the election of
directors shall not be held on the day designated by the By-Laws of the
Corporation, such election may be held on any other day at a special meeting of
the shareholders called and held for that purpose.

Section 3. Election of Directors; Terms; Removals; Vacancies. If at any meeting
of shareholders, due to a vacancy or vacancies, or otherwise, directors of more
than one class are to be elected, each class of directors to be elected at the
meeting shall be elected in a separate election. Each director shall hold office
for the term for which he is elected in accordance with these By-Laws, and until
his successor is elected and qualified or until his earlier death, resignation
or removal. The entire Board or any one or more directors may be removed with or
without cause if (1) at a meeting specially called for the purpose of removing
directors, the holders of at least two-thirds of the outstanding shares of stock
then entitled to vote in elections

                                                                               4



of directors shall vote for such removal, and (2) as to any director, the number
of shares voted against removal would not be sufficient to elect him if then
cumulatively voted in an election of the entire Board of Directors, or, if there
be classes of directors, at an election of the class of directors of which he is
a part. If the office of any director is vacant by reason of death, resignation,
removal or increase in the number of authorized directors due to amendment of
the By-Laws, a majority of the other directors, though less than a quorum, may
fill the vacancy until a successor shall have been duly elected at a
shareholders meeting, which election shall be not later than the next regularly
scheduled annual meeting of the shareholders. Any successor so elected at a
shareholders meeting shall be elected for a term which shall expire on the same
date as the term of his predecessor would have expired.

Section 4. Annual Meeting. The annual meeting of the directors for the purpose
of electing officers and transacting such other business as may come before the
meeting shall be held on the same day as the annual meeting of the stockholders,
following the final adjournment of the annual meeting of stockholders on that
day. In the event the annual meeting of stockholders is continued, recessed or
adjourned from day to day, or from time to time, then in such event the annual
meeting of the directors shall be held immediately following the final
adjournment of the annual meeting of stockholders. If for any reason such annual
meeting of the directors is not or cannot be held as herein prescribed, the
officers may be elected at any meeting of the directors thereafter held.

Section 5. Regular Meetings Other Than Annual Meetings. Regular meetings of the
directors may be held at such time and place as shall be determined from time to
time by resolution of the Board of Directors. After the time and place of such
regular meeting shall have been so determined, no notice of such regular meeting
need be given.

Section 6. Special Meetings. Special meetings of the Board of Directors for any
purpose or purposes shall be called by the Secretary of the Corporation at the
written request of the Chairman of the Board, the Vice-Chairman of the Board,
the President or at the written request of a majority of the directors. Such
request shall state the purpose or purposes of the proposed meeting.

Section 7. Notice of Meetings. No notice shall be required to be given of any
regular meeting of the Board of Directors. Notice of any change in the place of
holding any regular meeting, or of any adjournment of a regular meeting to
reconvene at a different place, shall be given by mail or telegraph not less
than forty-eight (48) hours before such meeting, to all directors who were
absent at the time such action was taken. The Secretary of the Corporation shall
give notice of all special meetings of the directors by delivering to each
director in person not later than the day prior to the meeting, or as to any
such director not so personally notified by mailing to him, a written or printed
notice of such meeting, postage prepaid, or by telegraph or by messenger
delivery to each such director, at his last known address, so that in the
ordinary course of the method of delivery it would reach such director at least
on the day prior to the meeting. The business transacted at all special meetings
of directors shall be confined to the subjects stated in the notice and to
matters germane thereto, unless all directors of the Corporation are present at

                                                                               5



such meeting and consent to the transaction of other business. Whenever any
notice is required to be given to any director under any provisions of the
By-Laws, a waiver thereof in writing, signed by the person entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. Such waiver may be by telegram, confirmed in writing within
five (5) days thereafter.

Section 8. Actions Without a Meeting. If all the directors, severally or
collectively, consent in writing to any action to be taken by the directors,
such consents shall have the same force and effect of a unanimous vote of the
directors at a meeting duly held, and may be stated as such in any certificate
or document filed under the provisions of Chapter 351 of the Revised Statutes of
Missouri, 1959, as amended. The Secretary shall file such consents in the minute
book of the Corporation.

Section 9. Quorum. A majority of the Board of Directors of the Corporation, at a
meeting duly assembled, shall be necessary to constitute a quorum for the
transaction of business, and the act of a majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board of Directors,
except where otherwise provided by law or by the By-Laws of the Corporation.

Section 10. Adjournment. If at any meeting of the Board of Directors a quorum
shall fail to attend, a majority of the directors present at the time and place
appointed for such meeting may adjourn the meeting from time to time to any date
until the next regular meeting, without notice other than verbal announcement at
the meeting and adjournments thereof, until a quorum shall attend. Likewise, any
meeting of directors at which a quorum is present may also be adjourned, in like
manner and on like notice, for such time or upon such call as may be determined
by vote of a majority of the directors there present. At any adjournment of any
such meeting at which a quorum shall be present, any business may be transacted
which might have been transacted at the meeting as originally called.

Section 11. Organization. The Chairman of the Board, and in his absence the
Vice-Chairman of the Board or the President, and in the absence of all of them,
a Chairman pro tem, chosen by the directors present, shall preside at each
meeting of the directors and shall act as Chairman thereof. The Secretary or an
Assistant Secretary, and in the absence of the Secretary or any Assistant
Secretary, a Secretary pro tem, chosen by the directors present, shall act as
Secretary of all meetings of the directors.

Section 12. Rules and Regulations. The Board of Directors shall supervise all
officers and agents and see that their duties are properly performed. The Board
of Directors may adopt such rules and regulations for the conduct of their
meetings, the guidance of the officers and the management of the affairs of the
Corporation as they deem proper, not inconsistent with law or the By-Laws of the
Corporation, and may, from time to time, determine the order of business at
their meetings.

                                                                               6



Section 13. Minutes and Statements. The Board of Directors shall cause to be
kept a complete record of their meetings and acts, and of the proceedings of the
stockholders.

Section 14. Powers of the Board. In addition to the power and authority
conferred upon them by law, the Board of Directors may exercise all such powers
of the Corporation and do all such lawful acts and things as are not by law
prohibited or limited, and which are not required or directed to be exercised or
done by the stockholders.

Section 15. Compensation of Directors. The compensation to be paid the directors
of this Corporation for services at all regular or special meetings of the Board
of Directors shall be determined from time to time by the Board of Directors;
provided, that no such compensation shall be paid to any director who shall at
the time be receiving a salary from this Corporation or any of its subsidiaries
as an officer thereof.

                                   ARTICLE IV

                                   Committees
                                   ----------

Section 1. Executive Committee. The Board of Directors may, by resolution passed
by a majority of the total number of directors, designate an Executive Committee
to consist of the Chairman of the Board, the President, and such number of other
Directors, Advisory Directors and Executive Officers as they shall determine.
The members of the Executive Committee shall hold their office as such until the
membership is changed by the Board of Directors. In making such new appointments
the Board of Directors shall designate the Directors, Advisory Directors or
Executive Officers said appointees are to succeed and the time they are
respectively to serve on said Committee. The Executive Committee shall have and
may exercise all powers of the Board of Directors. A majority of the members of
the Executive Committee shall determine its action and shall fix the time and
place of its meetings unless the Board of Directors shall otherwise provide.
When regular meetings have been established no notice shall be required thereof
and any and all business may be transacted thereat. Notices of special meetings
shall be given in the same manner as is provided for special meetings of the
Board of Directors. Unless otherwise indicated in the notice thereof any and all
business may be transacted at a special meeting. A majority of the Executive
Committee shall constitute a quorum. The Executive Committee shall keep regular
minutes of its proceedings and shall report the same at the next succeeding
meeting of the Board of Directors.

Section 2. Other Committees. The Board of Directors may, from time to time,
designate such other committees as the Board may deem advisable, and may select
or designate the manner of selecting any such committee, which committee may
consist in whole or in part of officers of this Corporation, whether or not they
be directors thereof, or directors of any subsidiary of this corporation. Each
such committee shall have and may exercise such powers as the Board of Directors
shall provide by its resolution.

                                                                               7



Section 3. Compensation of Committee Members. The Board of Directors shall
determine the compensation to be paid to each member of any committee appointed
by it for service on such committee, provided that no such compensation shall be
paid to any committee member who shall at the time be receiving a salary from
the Corporation or any of its subsidiaries as an officer thereof.

                                    ARTICLE V

                                    Officers
                                    --------

Section 1. Executive Officers. The executive officers of the Corporation shall
be a Chairman of the Board, a President, one or more Vice-Chairmen of the Board,
one or more Vice Presidents, a Secretary, a Treasurer and such other executive
officers as shall be designated by the Board of Directors, all of whom shall be
chosen by the Board of Directors. The Chairman of the Board and the President
shall be chosen from among the directors; any person may hold two or more
offices, except the offices of Chairman of the Board and Secretary, or President
and Secretary.

Section 2. Subordinate Officers. The Board of Directors, the Chairman of the
Board, the Vice-Chairman of the Board, or the President may appoint such
subordinate officers and such assistant officers as the Board of Directors, the
Chairman of the Board, the Vice-Chairman of the Board, or the President may deem
necessary or advisable.

Section 3. Tenure of Office and Removal. The tenure of office of each of the
executive officers of the Corporation, subject to prior removal, shall be until
the close of the next annual meeting of the stockholders following his election,
and until the election of his successor. Any executive officer may be removed at
any time prior to the expiration of his term by affirmative vote of the majority
of the directors. The Board of Directors, the Chairman of the Board, the
Vice-Chairman of the Board, or the President may remove any subordinate officer
or assistant officer at any time. If the office of any officer of the
Corporation becomes vacant by reason of death, resignation, retirement,
disqualification or removal from office, or inability to act, the Board of
Directors may, in every such case, choose a successor for such officer who shall
hold office for such term as may be prescribed by the Board of Directors, but no
longer than the unexpired portion of the term of the officer or agent whose
place is vacant, and until his successor shall have been duly elected and
qualified.

Section 4. Compensation. The Board of Directors may from time to time in its
discretion fix or alter the compensation of any executive officer and the Board
of Directors or the officer who appointed any subordinate or assistant officer
may from time to time in its or his discretion fix or alter the compensation of
any subordinate or assistant officer.

Section 5. Duties of the Officers. The Chairman of the Board, the Vice-Chairman
of the Board, the President and the Vice-Presidents shall perform such duties as
may from time to time be directed by the Board of Directors and have such powers
as may from time to time be conferred upon them by the Board of Directors,
except to the extent otherwise provided by law.

                                                                               8



The Secretary shall attend all meetings of the stockholders of the Corporation,
and the Board of Directors and standing committees. He shall act as the clerk or
secretary thereof and shall record all of the proceedings of such meetings in
minute books kept for that purpose. He shall keep in safe custody the corporate
seal of the Corporation and is authorized to affix the same to all instruments
requiring the Corporation's seal. He shall have charge of the corporate records
and, except to the extent authority may be conferred upon any transfer agent or
registrar duly appointed by the Board of Directors, he shall maintain the
Corporation's books, registers stock certificate and stock transfer books and
stock ledgers, and such other books, records and papers as the Board of
Directors may from time to time entrust to him. He shall give or cause to be
given proper notice of all meetings of stockholders and directors as required by
law and the By-Laws, and shall perform such other duties as may from time to
time be prescribed by the Board of Directors.

The Treasurer shall have the custody of the corporate funds and securities of
the Corporation and shall keep full and accurate account of the receipts and
disbursements in books belonging to the Corporation, and shall deposit all
moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of Directors.
He shall disburse the funds of the Corporation in the manner and for the purpose
ordered by the Board of Directors, and shall render to the Board of Directors,
whenever they may require it, an account of all of his transactions as Treasurer
and of the financial condition of the Corporation. And he shall perform such
other duties as the Board of Directors may from time to time prescribe.

Any subordinate officers and assistant officers appointed by the Board of
Directors, the Chairman of the Board, the Vice-Chairman of the Board, or the
President shall perform such duties as may from time to time be directed by the
Board of Directors or the officer who appointed them and any such subordinate
officer of assistant officer shall have such powers as may from time to time be
conferred upon them by the Board of Directors or the officer who appointed them,
except to the extent otherwise provided by law.

Section 6. Officers' Bonds. The Board of Directors may require any officer or
officers to furnish the Corporation a bond in such sum and in form and with
security satisfactory to the Board of Directors for the faithful performance of
the duties of their offices and the restoration to the Corporation in case of
death, resignation or removal from office of such officer or officers, of all
books, papers, vouchers, money and other property of whatever kind in their
possession, belonging to the Corporation.

                                   ARTICLE VI

                              Agents and Attorneys
                              --------------------

The Chairman of the Board, the Vice-Chairman of the Board and the President or
any one of them, may appoint such agents, attorneys and attorneys-in-fact of the
Corporation as any one of them may deem proper, and any one of them may, by
written power of attorney, authorize such agents, attorneys, or
attorneys-in-fact, to represent the Corporation and for it and in its name,

                                                                               9



place and stead, and for its use and benefit to transact any and all business,
to the extent authorized, which said Corporation is authorized to transact or do
by its Articles of Incorporation, and in its name, place and stead, and as its
corporate act and deed, to sign, acknowledge and execute any and all contracts
and instruments, in writing, necessary or convenient in the transaction of such
business as fully to all intents and purposes as said Corporation might or could
do if it acted by and through its regularly elected and qualified officers.

                                   ARTICLE VII

                       Certificate of Stock and Transfers
                       ----------------------------------

Section 1. Forms and Execution of Certificates. Each stockholder of the
Corporation whose stock has been paid for in full shall be entitled to have a
certificate or certificates, certifying the number of shares of stock of the
Corporation owned by him. The certificates of stock shall be in such form as the
Board of Directors shall determine. Each certificate shall be signed by the
Chairman or the.President, and the Secretary or an Assistant Secretary, having
affixed to it the seal of the Corporation, which seal may be facsimile, engraved
or printed, and express on its face its number, date of issuance, the number of
shares for which and the person to whom it is issued. If the Corporation has a
registrar, a transfer agent or a transfer clerk who actually signs such
certificates, the signatures of any of the officers above mentioned may be
facsimile, engraved or printed. In case any such officer who has signed or whose
facsimile signature has been placed upon any such certificate shall have ceased
to be such officer before such certificate is issued, such certificate may
nevertheless be issued by the Corporation with the same effect as if such
officer were an officer at the date of its issue.

Section 2. Transfer of Stock. Shares of stock, after certificates thereof have
been issued, shall be transferable only on the stock transfer books of the
Corporation which shall be in the possession of the Secretary or of a transfer
agent or clerk for the Corporation. No transfer shall be valid against the
Corporation until the same is so entered upon its books and the old certificate
is surrendered for cancellation.

Section 3. Old Certificate to be Canceled. No new certificate shall be issued
for previously issued certificates until the former certificate or certificates
for the shares represented thereby shall have been surrendered to and canceled
by the Secretary, by writing across the face thereof the word "Canceled" with
the date of cancellation; in case any certificate shall be claimed to be lost or
destroyed, no new or duplicate certificate shall be issued for the shares
represented thereby and no new certificate shall be issued upon a transfer of
such shares, except pursuant to a judgment of a court of competent jurisdiction,
duly given and made in accordance with the laws of the State of Missouri, or
upon a corporate surety bond or other indemnity in form and amount satisfactory
to the Corporation being furnished to the Corporation.

Section 4. Treasury Stock. All issued and outstanding stock of the Corporation
that may be purchased or otherwise required by the Corporation shall be treasury
stock, and shall be subject

                                                                              10



to disposal by action of the Board of Directors. Such stock shall neither vote
nor participate in dividends while held by the Corporation.

Section 5. Registered Stockholders. The Corporation shall be entitled to treat
the registered holder of any share or shares of stock whose name appears on its
books as the owner or holder thereof as the absolute owner of all legal and
equitable interest therein for all purposes and (except as may be otherwise
provided by law) shall not be bound to recognize any equitable or other claim to
or interest in such shares of stock on the part of any other person, regardless
of whether or not it shall have actual or implied notice of such claim or
interest.

Section 6. Closing of Stock Transfer Books - Fixing Record Date. The Board of
Directors shall have power to close the stock transfer books of the Corporation
for a period not exceeding fifty (50) days preceding the date of any meeting of
stockholders, or the date for payment of any dividend, or the date for the
allotment of rights, or the date when any change, conversion or exchange of
capital stock shall go into effect; provided, however, that in lieu of closing
the stock transfer books as aforesaid, the Board of Directors may fix in advance
a date, not exceeding fifty (50) days preceding the date of any meeting of
stockholders, or the date for the payment of any dividend, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
capital stock shall go into effect, as a record date for the determination of
the stockholders entitled to notice of, and to vote at, any such meeting, and
any adjournment thereof, or entitled to receive payment of any such dividend, or
to any such allotment of rights, or to exercise the rights in respect of any
such change, conversion or exchange of capital stock, and in such case such
stockholders and only such stockholders as shall be stockholders of record on
the date so fixed shall be entitled to notice of, and to vote at, such meeting,
and any adjournment thereof, or to receive payment of such dividend, or to
receive such allotment of rights, or to exercise such rights, as the case may
be, notwithstanding any transfer of any stock on the books of the Corporation
after any such record date fixed as aforesaid. If the Board of Directors shall
not have closed the transfer books or set a record date for the determination of
its stockholders entitled to vote as herein provided, the date on which notice
of the meeting is mailed or the date such dividend is declared or other right
announced, as the case may be, shall be the record date for such determination
of stockholders so entitled to participate.

                                  ARTICLE VIII

                                      Seal
                                      ----

The Corporation shall have a corporate seal which shall have inscribed around
the circumference thereof "UMB Financial Corporation - Missouri", and elsewhere
thereon shall bear the words "Corporate Seal". The corporate seal may be affixed
by impression or may be facsimile, engraved or printed.

                                                                              11



                                   ARTICLE IX

                            Miscellaneous Provisions
                            ------------------------

Section 1. Fiscal Year. The fiscal year of the Corporation shall be as
determined from time to time by the Board of Directors. Absent action by the
Board of Directors, the fiscal year of the Corporation shall begin on the first
day of January in each calendar year and shall terminate on the last day of
December of the same calendar year.

Section 2. Failure or Refusal to Give Notice Upon Request. If the Secretary,
upon written request by the proper party or parties as permitted and provided in
these By-Laws, shall fail or refuse to give any notice which he is required to
give in accordance with the provisions hereof, the party or parties entitled to
require that such notice be given may sign and issue a notice of the character
and in the manner herein provided and setting forth in such notice the fact of
such failure or refusal on the part of the Secretary to give the notice as
requested; and such notice so signed and issued shall have the same force and
effect as though signed and issued by the Secretary of the Corporation.

Section 3. Checks, Drafts, etc. All checks and drafts on the Corporation's bank
accounts and all bills of exchange and promissory notes, and all acceptances,
obligations and other instruments for the payment of money, shall be signed by
such officer or officers or agent or agents as shall be thereunto duly
authorized from time to time by the Board of Directors; provided, that the Board
of Directors may authorize the use of facsimile signatures of such officers and
upon such terms and subject to such conditions as the Board of Directors may
determine.

Section 4. Indemnification of Directors and Officers.

1. Any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a director,
officer or employee of the Corporation, or is or was serving at the request of
the Corporation as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise (which shall be deemed to
include any employee benefit plan of the Corporation or any other corporation)
shall be indemnified against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement (which shall include any excise taxes
assessed against a person with respect to an employee benefit plan) actually and
reasonably incurred by him in connection with such action, suit or proceeding so
long as: (a) such indemnification is permissible under applicable provisions of
law and regulations ; and (b) the results of an investigation of the matter as
described in Section 5 includes a finding under the provisions of Section 5 that
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation or the participants or
beneficiaries of any employee benefit plan, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful.

                                                                              12



2. Any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer or employee of the Corporation, or is or was serving
at the request of the Corporation as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise (which shall
be deemed to include any employee benefit plan of the Corporation or any other
corporation) shall be indemnified against expenses (including attorneys' fees)
and amounts paid in settlement (which shall include any excise taxes assessed
against a person with respect to an employee benefit plan) actually and
reasonably incurred by him in connection with the defense or settlement of the
action or suit so long as (a) such indemnification is permissible under
applicable provisions of law and regulations; and (b) the results of an
investigation of the matter as described in Section 5 includes a finding under
the provisions of Section 5 that he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation or the participants or beneficiaries of any employee benefit plan;
provided however that no such indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his or her duty to the
Corporation unless and only to the extent that the court in which the action or
suit was brought determines upon application that, despite the adjudication of
liability and in view of all the circumstances of the case, that the person is
fairly and reasonably entitled to indemnity for such expenses which the court
shall deem proper.

3. The termination of any action, suit, or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interest of the Corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.

4. Any person who has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Sections 1 or 2 above, shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.

5. Except as provided in Section 4, indemnification of anyone under Sections 1
or 2, unless ordered by a court, shall be made by the Corporation only as
authorized in each case upon a determination that it is proper because the
director, officer or employee has met the applicable standard of conduct set
forth. Such a determination shall be made by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to the
action, suit or proceeding, or if such a quorum is not obtainable, or even if
obtainable, a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or by the shareholders.

6. Notwithstanding anything herein to the contrary, no director, officer or
employee shall be indemnified against any expenses, penalties or other payments
incurred in an administrative proceeding or action instituted by a bank
regulatory agency to the extent that such

                                                                              13



indemnification would constitute a "prohibited indemnification payment" (as such
term is defined under applicable provisions of the Federal Deposit Insurance Act
and regulations thereunder, as amended from time to time) except under
circumstances specifically permitted by such Act and regulations, or that would
otherwise constitute an indemnification payment that is prohibited by applicable
provisions of law or regulations.

7. If authorized by the Board of Directors and if permissible under applicable
law and regulation, the Corporation may advance the costs and expenses incurred
in defending a civil or criminal action, suit or proceeding upon receipt of an
undertaking by or on behalf of the director, officer or employee to repay such
amount if it is ultimately determined that he is not entitled to
indemnification.

8. The Corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer or employee of the Corporation or is or was
serving at the request of the Corporation as a director, officer or employee of
another corporation, partnership, joint venture, trust or other enterprise
against any liability for which it may indemnify such people under the terms of
this Article, and against other liabilities to the extent permitted by
applicable law and regulations.

9. The indemnification provided for directors, officers or employees of the
Corporation shall not be deemed exclusive of any other rights to which those
officers, directors or employees may be entitled under any by-law, agreement,
vote of shareholders or disinterested directors or otherwise, both as to actions
in his or her official capacity and as to actions in another capacity while
holding such office, and shall continue as to any person who has ceased to be a
director, officer or employee of the Corporation and shall inure to the benefit
of his or her heirs, executors and administrators.

Section 5. Amendments to By-Laws. The Board of Directors shall have the power to
make, alter, amend or repeal the By-Laws of this Corporation from time to time.

                                                                              14

EX-10.4

                                                                    EXHIBIT 10.4


                            STOCK PURCHASE AGREEMENT

                                  BY AND AMONG

                               UMB FINANCIAL CORP.

                                       AND

                               THE STOCKHOLDERS OF

                         SUNSTONE FINANCIAL GROUP, INC.

                            Dated as of April 3, 2001



                                TABLE OF CONTENTS

                                                                          PAGE
ARTICLE I - PURCHASE AND SALE OF SHARES .................................   1
   Section 1.1 - Purchase and Sale of Shares ............................   1
   Section 1.2 - Purchase Price..........................................   1
      Section 1.2(a) - Treatment of Option Holders ......................   1
      Section 1.2(b) - Seller Notes......................................   2
      Section 1.2(c) - Earn-Out Payments ................................   2
      Section 1.2(d) - Resolution of Earn-Out Disputes ..................   4
      Section 1.2(e) - Purchase Price ...................................   4
      Section 1.2(f) - Earn-Out Payment Adjustment.......................   4

ARTICLE II - CLOSING ....................................................   5
   Section 2.1 - Time and Place .........................................   5
   Section 2.2 - Deliveries by the Sellers ..............................   6
   Section 2.3 - Pre-Closing Delivery by the Buyer ......................   7
   Section 2.4 - Deliveries by the Buyer.................................   7

ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE SELLERS..............   8
   Section 3.1 - Organization and Standing; Corporate Power; Authority ..   8
   Section 3.2 - Capitalization; Share Ownership ........................   9
   Section 3.3 - Good Title..............................................   9
   Section 3.4 - Equity Investments .....................................  10
   Section 3.5 - Consents; No Violation .................................  10
   Section 3.6 - Financial Statements....................................  11
   Section 3.7 - No Undisclosed Liabilities .............................  11
   Section 3.8 - Absence of Certain Changes..............................  11
   Section 3.9 - Taxes...................................................  13
   Section 3.10 - Real Property .........................................  15
   Section 3.11 - Intellectual Property .................................  17
   Section 3.12 - Absence of Litigation .................................  19
   Section 3.13 - Insurance..............................................  19
   Section 3.14 - Employee Benefits......................................  19
   Section 3.15 - Contracts and Commitments .............................  22
   Section 3.16 - Labor Matters .........................................  23
   Section 3.17 - Compliance.............................................  24
   Section 3.18 - Environmental Matters .................................  24
   Section 3.19 - Employees .............................................  26
   Section 3.20 - Licenses and Permits; Assets...........................  27
   Section 3.21 - Bank Accounts..........................................  27
   Section 3.22 - Sellers' Documentation ................................  27
   Section 3.23 - Disclosure ............................................  27
   Section 3.24 - No Finder's Fee .......................................  27
   Section 3.25 - Legal Representation ..................................  28
   Section 3.26 - Certain Representations and Warranties Regarding
                     Broker-Dealer Status................................  28



ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE BUYER
                OF THE BUYER.............................................  29
   Section 4.1 - Organization ...........................................  29
   Section 4.2 - Authorization...........................................  29
   Section 4.3 - Valid and Binding Agreement.............................  29
   Section 4.4 - Consents; No Violation .................................  29
   Section 4.5 - Absence of Litigation ..................................  30
   Section 4.6 - No Finder's Fee ........................................  30

ARTICLE V - COVENANTS ...................................................  30
   Section 5.1 - Conduct and Preservation of Business ...................  30
   Section 5.2 - Reasonable Efforts......................................  33
   Section 5.3 - Public Announcements; Notification of Certain Matters ..  33
   Section 5.4 - No Solicitation.........................................  34
   Section 5.5 - Insurance...............................................  35
   Section 5.6 - Consents of Third Parties ..............................  35
   Section 5.7 - Taxes...................................................  35
   Section 5.8 - Continuing Involvement with Company ....................  39
   Section 5.9 - Control of Company Operations...........................  40
   Section 5.10 - Company's 401(k) Plan .................................  40
   Section 5.11 - Cancellation of Note...................................  40
   Section 5.12 - Option Payout Loan and Guaranty .......................  41

ARTICLE VI - POST-CLOSING COVENANTS .....................................  41

ARTICLE VII - CLOSING CONDITIONS ........................................  41
   Section 7.1 - Conditions to the Obligations of the Buyer..............  41
      Section 7.1(a) - Representations and Warranties ...................  41
      Section 7.1(b) - Performance ......................................  41
      Section 7.1(c) - Noncompetition Agreements ........................  41
      Section 7.1(d) - Approvals and Consents ...........................  42
      Section 7.1(e) - Opinion of Counsel ...............................  42
      Section 7.1(f) - No Material Adverse Effect........................  42
      Section 7.1(g) - No Prohibition....................................  42
      Section 7.1(h) - Certificates and Other Closing Deliveries ........  42
      Section 7.1(i) - Option Payout Agreement ..........................  42
      Section 7.1(j) - Seller Guaranties and Obligations ................  42
   Section 7.2 - Conditions to the Obligations of Sellers................  42
      Section 7.2(a) - Representations and Warranties....................  42
      Section 7.2(b) - Performance ......................................  43
      Section 7.2(c) - Approvals and Consents............................  43
      Section 7.2(d) - No Prohibition....................................  43
      Section 7.2(e) - No Material Adverse Effect .......................  43
      Section 7.2(f) - Opinion of Counsel................................  43



ARTICLE VIII - SURVIVAL OF REPRESENTATIONS AND
                  WARRANTIES; INDEMNIFICATION ...........................  43
   Section 8.1 - Survival of Representations and Warranties .............  43
   Section 8.2 - Indemnification by Ms. Allison..........................  43
   Section 8.3 - Indemnification by Buyer................................  44
   Section 8.4 - Reimbursement...........................................  44
   Section 8.5 - Indemnification Procedures..............................  44
   Section 8.6 - Limitations of Indemnification..........................  45
   Section 8.7 - Offsets.................................................  45
   Section 8.8 - Determination of Amount of Claim........................  45

ARTICLE IX - TERMINATION, AMENDMENT AND WAIVER...........................  46
   Section 9.1 - Termination ............................................  46
   Section 9.2 - Effect of Termination ..................................  46
   Section 9.3 - Amendment, Extension and Waiver.........................  46

ARTICLE X - MISCELLANEOUS ...............................................  47
   Section 10.1 - Expenses ..............................................  47
   Section 10.2 - Parties in Interest ...................................  47
   Section 10.3 - Entire Agreement; Assignment ..........................  47
   Section 10.4 - Headings; Section References ..........................  47
   Section 10.5 - Notices ...............................................  47
   Section 10.6 - Law Governing .........................................  48
   Section 10.7 - Counterparts...........................................  48
   Section 10.8 - Construction; Invalidity ..............................  48
   Section 10.9 - Remedies ..............................................  49
   Section 10.10 - Definition of Sellers' Knowledge......................  49



                            STOCK PURCHASE AGREEMENT

          THIS STOCK PURCHASE AGREEMENT (this "Agreement") dated as of April 3,
2001, is by and among UMB Financial Corp., a Missouri corporation (the "Buyer"),
and the persons listed on Exhibit A attached hereto (individually, a "Seller"
and collectively, the "Sellers").

                                    RECITALS
                                    --------

          A. The Sellers have represented to Buyer that they are the record and
beneficial owners of 50,000 shares (the "Shares") of the issued and outstanding
capital stock of Sunstone Financial Group, Inc., a Wisconsin corporation (the
"Company"), with its principal office at 803 W. Michigan Street, Suite A,
Milwaukee, Wisconsin, and that the Shares constitute all of the issued and
outstanding shares of the capital stock of the Company.

          B. The Buyer desires to acquire from the Sellers, and the Sellers
desire to sell to Buyer, all of the Shares.

          C. The Buyer and the Sellers have entered into a letter of intent
dated January 24, 2001 (the "Letter of Intent"), regarding the purchase of the
Shares by the Buyer.

                                    AGREEMENT

          NOW, THEREFORE, in consideration of the premises set forth above and
the respective representations, warranties, covenants, agreements and conditions
contained herein, the parties hereto, intending to be legally bound, do hereby
agree as follows:

                                    ARTICLE I

                          PURCHASE AND SALE OF SHARES
                          ---------------------------

          Section 1.1 Purchase and Sale of Shares. At the Closing (as defined in
Section 2.1 hereof), each Seller shall sell, transfer, convey, assign and
deliver good, valid, marketable and indefeasible title in and to the number of
Shares set forth on Exhibit A hereto opposite such Seller's name to the Buyer,
and the Buyer shall purchase the Shares from Sellers, upon the terms and subject
to the conditions set forth in this Agreement.

          Section 1.2 Purchase Price. In consideration of the sale and transfer
of the Shares, Buyer agrees as follows:

          (a) Treatment of Option Holders. The Company has outstanding to each
     of the persons listed on Exhibit B attached hereto (each, an "Option
     Holder"), parallel stock unit rights (the "Option Rights"). The parties
     agree that immediately prior to the Closing

                                       -1-



     Date, the Company shall settle the Option Rights for (i) cash in the
     amounts set forth on Exhibit B attached hereto, and in accordance with the
     terms of the Sunstone Financial Group, Inc. Parallel Stock Unit Plan and
     the terms of the related option agreements with the Option Holders and the
     Option Payout Agreements (as defined below), and (ii) promissory notes in
     the form attached to those certain agreements between the Company and each
     Option Holder (the "Option Payout Agreement," the form and content of such
     agreements and attached notes being subject to Buyer's written approval
     prior to Closing) to be executed and delivered by the Company and each
     Option Holder at Closing. In order to finance the first installment under
     the Option Payout Agreements, the Buyer shall, prior to the Closing Date,
     make a loan to the Company in the principal amount of $630,000 on terms
     determined by the Buyer (but consistent with the terms of this Section),
     and the Company shall use the proceeds to make such first installment
     payments. This borrowing by the Company shall not be deemed a violation of
     any covenant, or the breach of any representation or warranty made by the
     Sellers, in the Agreement. No Seller shall have any obligation to repay the
     indebtedness associated with this borrowing, except as set forth in Section
     5.12.

          (b) Seller Notes. Buyer shall deliver to the Sellers at Closing, pro
     rata in accordance with their ownership of stock of the Company: (i) cash,
     by wire transfer of immediately available funds to accounts designated by
     each Seller, in a total amount designated by Sellers in written notice
     delivered to Buyer at least one (1) business day prior to Closing, which
     total amount shall be equal to the lesser of (A) $3,000,000 or (B) the
     amount that generates taxable gain to the Company such that when the gain
     is allocated to Miriam Meyer Allison ("Ms. Allison") pro rata in accordance
     with her ownership of stock of the Company, the gain allocated to her will
     be an amount equal to her allocable share of the taxable loss of the
     Company for the period beginning January 1, 2001 and ending immediately
     prior to the Closing plus any "suspended" taxable losses for periods ending
     prior to January 1, 2001; (ii) a promissory note (the "Initial Seller
     Note") in substantially the form of Exhibit C attached hereto and
     incorporated herein by reference, in the principal amount set forth
     opposite each Seller's name on Exhibit A, less the amount of cash to be
     received by such individual pursuant to subsection (i) above.

          (c) Earn-Out Payments. Subject to the provisions of Section 1(f)
     hereof, pay to the Sellers in five (5) annual installments (commencing one
     (1) year from the first Annual Date (as defined below)), cash (the
     "Earn-Out Payments") in accordance with the earnout formula set forth in
     Exhibit D attached hereto and incorporated herein by reference. The
     aggregate amount of all of the Earn-Out Payments to be made to Sellers
     (collectively) in each given annual installment shall be determined as
     provided for in Exhibit D, and then such aggregate amount shall be
     apportioned among the Sellers according to the percentages set forth in
     Exhibit D. Subject to the provisions of this Agreement, Buyer shall make
     such Earn-Out Payments within 75 days after the end of each of the five
     12-month periods by certified check or wire transfer of immediately
     available funds (each, an "Earn-out Period") specified in Exhibit D and in
     accordance with the formula set forth in Exhibit D. For purposes of this
     subsection (c), the term "Annual Date" shall refer to whichever of the
     following two days is closer in time to the Closing date: (a) the first day
     of the first month of the calendar quarter in which Closing occurs, or (b)
     the day following the last day of the third month of the calendar quarter
     in

                                       -2-



     which Closing occurs. Each Earn-out Period listed on Exhibit D shall
     consist of the 12-month period immediately preceding the Annual Date of the
     year referenced in the first column on Exhibit D. For purposes of the
     formula set forth on Exhibit D, "Gross Revenues" for any given Earn-out
     Period consist of the sums accrued by Company and Subsidiary (as defined in
     Section 3.1) during such Earn-out Period representing payments due from
     customers in consideration of goods and services provided to such customers
     by Company and Subsidiary, as calculated in a manner consistent with the
     Company's audited financial statements for the period ending December 31,
     2000 and attached hereto as Exhibit E and incorporated herein by reference;
     provided, however, that such Gross Revenues shall specifically (i) include
     revenues in respect of the Company or Subsidiary's (x) providing services
     to the Buyer's proprietary Scout Funds as listed on Exhibit F attached
     hereto; (y) fund accounting servicing of transferred Buyer portfolios as
     listed on Exhibit F attached hereto; and (z) any "Related UMB Revenue" (as
     defined below); and shall (i) exclude all reimbursements representing
     advances or expense reimbursements (including reimbursement for filing
     fees, printing, professional fees, etc.) due or received by Company or
     Subsidiary from customers and all other sums described as "Client
     Distribution Revenue" in Company's unaudited internal operating statements
     (a copy of which relating to the month of January, 2001 being attached
     hereto as Exhibit G and incorporated herein by reference), and (ii) be
     reduced, by the amount of any receivables that were previously included in
     the gross revenues of the Company and/or Subsidiary but were written off or
     otherwise determined to be uncollectable during the respective Earn-out
     Period ("Write-Offs"), all as determined in a manner consistent with
     generally accepted accounting principles ("GAAP"). Sellers agree and
     acknowledge that Buyer, as the owner of the Company, will have the right to
     accept or reject any business proposed to be conducted by the Company and
     to modify any pricing structures of the Company; provided, that such right
     of acceptance or rejection and right to modify shall be exercised in good
     faith and in a commercially reasonable manner; and provided, further., that
     Buyer shall comply with the provisions of Article VI hereof.

     For purposes of subsection (z) above, the term "Related UMB Revenue" shall
     consist of the following revenues accrued (less any such revenues written
     off) by UMB Bank N.A ("UMB") during the relevant time period:

               (i) Revenues in consideration of UMB providing custody and/or
          cash management services ("UMB Services") to a fund to whom Company or
          Subsidiary hereafter provides for the first time (Oberweis Funds being
          expressly included); one or more of its core transfer agency services,
          fund accounting services, distribution services, administration
          services or marketing services (the "Core Services"), if UMB was not
          providing UMB Services to such fund prior to the date of this
          Agreement;

               (ii) Revenues in consideration of UMB providing UMB Services to a
          new fund hereafter created by a customer to whom Company or Subsidiary
          currently provides one or more Core Services;

               (iii) Revenues representing cash deposit fees, IRA custody fees,
          or related bank fees in consideration of UMB providing UMB Services to
          any fund

                                       -3-



          for which Company or Subsidiary is hereafter appointed as transfer
          agent, if UMB is not already providing UMB Services to such fund.

          If a fund agrees with UMB to utilize account balances and earnings
          credits to effect payment of the qualifying revenues, then the amount
          of such earning credits granted by UMB and used by the fund to effect
          such payments shall be included within the UMB Related Revenue.

          (d) Resolution of Earn-Out Disputes. Buyer shall cause the Company to,
     within sixty (60) days after the end of each of the five (5) Earn-out
     Periods specified in Exhibit D, give the Sellers work papers and other
     information reasonably requested by such parties reasonably detailing the
     Buyer's determination of the cash that each Seller is entitled to receive
     as the Earn-out Payment. If Sellers have any objection to such
     determination, they must, within thirty (30) business days after receipt of
     the notice, give written notice ("Earn-Out Notice") to Buyer specifying in
     reasonable detail the Sellers' objections to Buyer's determination of the
     Earn-Out Payment. Failure to provide such Earn-Out Notice within such
     30-day period shall constitute Seller's agreement and acceptance of the
     determination as provided by Buyer. The parties shall meet in person and
     negotiate in good faith during the thirty (30) business-day period (the
     "Earn-Out Resolution Period") after the date of Buyer's receipt of any
     Earn-Out Notice to resolve the Sellers' objections. If the parties are
     unable to resolve all such disputes within the Earn-Out Resolution Period,
     then within ten (10) business days after the expiration of the Earn-Out
     Resolution Period, all disputes shall be submitted to a mutually-agreed
     upon independent accountant (the "Independent Accountant"), who shall be
     engaged to provide a final and conclusive resolution of all unresolved
     disputes within thirty (30) business days after such engagement. The
     Independent Accountant's determination shall be limited to the specific
     components of the earn-out formula that are in dispute and shall not result
     in a recalculation of the earn-out formula set forth in Exhibit D hereto.
     The determination of the Independent Accountant shall be final, binding and
     conclusive on the parties hereto, and the fees and expenses of the
     Independent Accountant shall be borne by Sellers unless the audit discloses
     that the proposed Earn-Out Payment for such Earn-Out Resolution Period is
     incorrect by more than ten percent (10%), in which case, Buyer shall pay
     the reasonable fees and expenses charged by the Independent Accountant.

          (e) Purchase Price. The payments made in accordance with Section
     1.2(b) - (d) shall collectively constitute the purchase price (the
     "Purchase Price").

          (f) Earn-Out Payment Adjustment. Notwithstanding the provisions of
     this Agreement, the Earn-Out Payment to be made during the first Earn-Out
     Period (and any subsequent Earn Out Period, if necessary to implement the
     adjustment described below) shall be reduced by an amount equal to the
     "Adjusted Operating Loss" (as defined below), if any, of the Company during
     the first such Earn-Out Period. The Adjusted Operating Loss will be
     calculated by (i) taking the Company's pre-tax profit or loss (after
     excluding any Client Distribution Revenue) reflected on the Company's
     financial statement for the first Earn-Out Period (prepared in accordance
     with GAAP and consistently with past practices); (ii) adding any Related
     UMB Revenue for such period;

                                       -4-



     (iii) subtracting any Write-Offs occurring during such period; and (iv)
     adding the difference between (A) the actual interest due UMB on loans made
     to the Company or Subsidiary to pay off the promissory notes owed to Park
     Bank and other indebtedness mutually agreed to from time to time by Buyer
     and Ms. Allison (collectively, "Repaid Debt"), and (B) the "Carrying Cost"
     of such Repaid Debt during such period. For purposes of this subsection,
     the "Carrying Cost" of the Repaid Debt shall be calculated by multiplying
     the amount of the Repaid Debt repaid by, or on behalf of, the Company on or
     after Closing, by the prime rate announced from time to time by UMB Bank,
     N.A., minus 200 basis points, for those periods of time commencing when
     each portion of the Repaid Debt is repaid and ending on April 1, 2002. (No
     adjustment to the Earn-Out Payments will be made if there is no Adjusted
     Operating Loss applicable to the first Earn-Out Period.)

     For purposes of calculating the Adjusted Operating Loss, no general charges
     or allocations to the Company shall be assessed by Buyer or its affiliates
     for administrative services, overhead, management fees or other similar
     expenses that Buyer generally allocates to its subsidiaries; provided
     however, that Buyer or its affiliates may charge the Company (and such
     charges shall be treated as an expense of the Company for purposes of
     calculating its Adjusted Operating Loss) for (a) services actually provided
     by Buyer or its affiliates, but only to the extent (and in comparable
     amounts) that such charges are assessed against independent third-party
     customers for comparable goods or services under similar circumstances, and
     (b) the annual cost of any equipment, software or services purchased by
     Buyer or its subsidiaries for the primary use and benefit of the Company,
     but purchased and held on Buyer's or such subsidiaries' books for capital
     or other business purposes. Notwithstanding the foregoing, the parties
     agree and acknowledge that the Adjusted Operating Loss shall not exceed
     Five Hundred Thousand Dollars ($500,000.00).

          (g) Earn-Out Payments in Event of Death. In the event of Ms. Allison's
     death during the Earn-Out Period, Buyer shall cause any Earn-Out Payments
     due to Ms. Allison to be paid to the Miriam M. and Daniel S. Allison
     Revocable Trust dated June 4, 1991, as amended.

                                   ARTICLE II
                                     CLOSING

          Section 2.1 Time and Place. Upon the terms and subject to the
conditions contained herein, the closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Shook, Hardy &
Bacon L.L.P., 1010 Grand Blvd., 5th Floor, Kansas City, Missouri, beginning at
noon Central Standard Time, on (a) April 17, 2001 or (b) at such other place,
time or later date as may be agreed upon by the parties. The actual date of the
Closing is sometimes referred to herein as the "Closing Date."

                                       -5-



          Section 2.2 Deliveries by the Sellers. At the Closing, the Sellers
shall deliver or cause to be delivered to the Buyer the following:

          (a) Certificates issued by the Company evidencing ownership of the
     Shares by each of the Sellers, duly endorsed (or accompanied by a duly
     executed stock power) by the appropriate Seller for transfer to the Buyer;

          (b) Copies of the articles of incorporation of the Company and the
     articles of organization of Subsidiary (as defined in Section 3.1 below),
     certified as of a recent date by the Department of Financial Institutions
     of the State of Wisconsin;

          (c) Certificates from the Department of Financial Institutions or
     other equivalent authority affirmatively certifying (i) the active status
     of each of the Company and Subsidiary in the state of incorporation and any
     jurisdiction in which the Company or Subsidiary is qualified to do business
     as a foreign corporation and (ii) the payment of taxes by each of the
     Company and Subsidiary in each such jurisdiction, each such certificate to
     be dated as of the most recent practicable date;

          (d) A certificate of the secretary or assistant secretary of the
     Company stating that (i) the Shares constitute all of the issued and
     outstanding capital stock of the Company, (ii) the Company owns all of the
     issued and outstanding membership interests of Subsidiary, and (iii) the
     articles of incorporation of Company and the articles of organization of
     Subsidiary have not been amended or modified since the date of the
     certification referred to in Section 2.2(b) hereof. A true and correct copy
     of the by-laws of the Company and the operating agreement of Subsidiary, as
     in effect on the date hereof and at all times thereafter to and including
     the Closing Date, also shall be attached to such certificate;

          (e) The opinion of Sellers' counsel referred to in Section 7.1(e)
     hereof;

          (f) The Required Consents (as identified on Schedule 3.5 hereof);

          (g) The results of a recent search of the Uniform Commercial Code,
     judgment and tax lien filings which may have been filed with respect to
     personal property of the Company and Subsidiary in each jurisdiction where
     such filings may have been made or property is located, and the results of
     such search shall be satisfactory to the Buyer;

          (h) A Non-competition Agreement referred to in Section 7.1(c) hereof,
     (substantially in the form attached hereto as Schedule 7.1) duly and
     validly executed by Ms. Allison and delivered to Buyer;

          (i) Certificates of the Sellers certifying that all representations
     and warranties of the Sellers contained herein are accurate, that all
     covenants to be performed by the Sellers have been performed, that all
     conditions precedent to closing have been performed, and that all other
     documents, instruments, payments and writings required to be delivered by
     the Sellers to the Buyer at the Closing pursuant to this Agreement or
     otherwise required or reasonably requested in connection herewith have been
     delivered;

                                       -6-



          (j) Estoppel certificates in form satisfactory to Buyer, executed by
     all landlords and sub-landlords, as the case may be, and Subordination,
     Non-Disturbance and Attornment Agreements, duly executed and in a form
     satisfactory to Buyer, as to the Properties.

          (k) All other documents, instruments, payments and writings required
     to be delivered by the Sellers to the Buyer at the Closing pursuant to this
     Agreement or otherwise required or reasonably required in connection
     herewith; and

          (1) A release (in form reasonably satisfactory to Buyer) of any
     guaranty or other instrument or obligation to which Company or Subsidiary
     are a party or otherwise bound, guaranteeing or otherwise relating to any
     indebtedness or obligations of Ms. Allison or any other Seller.

          Section 2.3 Pre-Closing Delivery by the Buyer. Prior to Closing, the
Buyer shall deliver or cause to be delivered the $630,000 loan to the Company
identified in Section 1.2(a) hereof.

          Section 2.4 Deliveries by the Buyer. At the Closing, the Buyer shall
deliver or cause to be delivered to the Sellers the following:

          (a) The cash and promissory note identified in Section 1.2(b) hereof;

          (b) A certificate of the secretary or assistant secretary of the Buyer
     stating that all requisite corporate actions necessary for consummation of
     the transaction contemplated by this Agreement have been taken by Buyer;

          (c) Copies of articles of incorporation of Buyer, certified as of a
     recent date by the Secretary of State of Missouri, and a true and correct
     copy of the by-laws of the Buyer, as in effect on the date hereof and at
     all times thereafter to and including the Closing Date, certified as such
     by the secretary or assistant secretary of the Buyer;

          (d) A certificate of the Buyer certifying that all representations and
     warranties of the Buyer contained herein are accurate, that all covenants
     to be performed by the Buyer have been performed, that all conditions
     precedent to Closing have been performed, and that all other documents,
     instruments, payments and writings required to be delivered by the Buyer to
     the Sellers at the Closing pursuant to this Agreement or otherwise required
     or reasonably requested in connection herewith have been delivered;

          (e) A written acknowledgement of receipt of the certificates purchased
     by the Buyer hereunder;

          (f) The opinion of Buyer's counsel referred to in Section 7.2(f)
     hereof;

          (g) An unconditional agreement of Buyer to effect the release of Ms.
     Allison from the guaranties set forth on Schedule 5.8(c) upon conclusion of
     the Closing; and

                                       -7-



          (h) All other documents, instruments, payments and writings required
     to be delivered by the Buyer to the Sellers at the Closing pursuant to this
     Agreement or otherwise required or reasonably required in connection
     herewith.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES
                         ------------------------------

                                 OF THE SELLERS
                                 --------------

          To induce the Buyer to enter into this Agreement, each of the Sellers
hereby individually represents and warrants to the Buyer as follows:

          Section 3.1 Organization and Standing; Corporate Power; Authority.

          (a) The Company is a corporation duly organized, validly existing and
     in active status under the laws of the State of Wisconsin. Sunstone
     Distribution Services LLC ("Subsidiary") is a limited liability company
     duly organized, validly existing and in active status under the laws of the
     State of Wisconsin. Each of the Company and Subsidiary has all requisite
     corporate power and authority to own, lease and operate its respective
     properties and assets, and to carry on its respective business as presently
     conducted. Each of the Company and Subsidiary possesses all governmental
     licenses, franchises, rights and privileges required for the conduct of its
     respective business. Each of the Company and Subsidiary is qualified to do
     business as a foreign corporation in any state or foreign jurisdiction
     where such qualification is required.

          (b) Each of the Sellers has all requisite power and authority to
     execute and deliver this Agreement, to sell and convey the Shares to be
     sold by such Seller hereunder and to carry out and perform his or her
     obligations under the terms of this Agreement. All proceedings, if any,
     required to be taken by the Sellers to authorize the execution, delivery
     and performance of this Agreement and the agreements relating hereto have
     been properly taken, or will be taken prior to the Closing. This Agreement
     has been duly executed and delivered by each Seller (directly, under a
     power of attorney, or otherwise) and constitutes the legal, valid and
     binding obligation of each Seller.

          (c) The Sellers have furnished to the Buyer true, complete and correct
     copies of (i) the articles of incorporation, and all amendments thereto, as
     certified by the Department of Financial Institutions of the State of
     Wisconsin, and the by-laws, each as presently in effect, for the Company,
     and (ii) the articles of organization, and all amendments thereto, as
     certified by the Department of Financial Institutions of the State of
     Wisconsin, and the operating agreement, each as presently in effect, for
     Subsidiary. Neither the Company nor Subsidiary is in violation of any of
     the provisions of their organizational documents. All minutes of the
     Company and Subsidiary are contained in their respective minute books,
     copies of which have been provided to the Buyer for examination, and the
     minute books of each of the Company and Subsidiary contain a complete and
     accurate record of the substance of all corporate actions taken at all
     meetings of the board of directors or the members, as applicable, of all
     committees thereof and of the Sellers and the members, as applicable.

                                       -8-



          Section 3.2 Capitalization; Share Ownership.

          (a) The authorized capital stock of the Company consists solely of
     56,000 Shares, of which 50,000 Shares are validly issued and outstanding,
     duly authorized, fully paid and non-assessable, except as otherwise
     provided in Section 180.0622(2)(b) of the Wisconsin Statutes and the cases
     decided thereunder, and no Shares are held in the Company's treasury. All
     of the Shares are held by the Sellers as set forth on Schedule 3.2 hereto.
     Except as listed on Schedule 3.2 hereto, there are no outstanding (i)
     securities convertible into or exchangeable for capital stock of the
     Company, (ii) options, warrants, calls or other rights to purchase or
     subscribe for capital stock of the Company or rights to acquire any such
     rights or (iii) contracts, commitments, agreements, understandings,
     arrangements or restrictions to which the Company or any Seller is a party
     or by which it or he or she is bound relating to any shares of capital
     stock or other securities of the Company (including the Shares), other than
     this Agreement. Immediately prior to the Closing, the Sellers will lawfully
     own their Shares, of record and beneficially, free and clear of all
     liabilities, obligations, claims, liens, pledges, contractual rights,
     security interests, options, charges, encumbrances and restrictions of any
     kind whatsoever (except this Agreement) and shall transfer good, valid,
     marketable and indefeasible title in and to such Shares to the Buyer. The
     stock transfer records of the Company, copies of which have been provided
     to the Buyer for examination, fully and accurately reflect all issuances,
     cancellations, transfers, splits and other transactions involving or
     affecting the capital stock of the Company. The Option Rights are the only
     phantom or similar rights to acquire options or equity in the Company
     and/or Subsidiary. The cash payment made at Closing pursuant to Section
     1.2(a) hereof and the performance of the terms of the Option Payout
     Agreements satisfy all obligations of the Company and/or Subsidiary with
     respect to the plan referred to in Section 1.2(a), the Option Rights and
     any other phantom or similar rights.

          (b) The issued and outstanding membership interests of Subsidiary
     consist solely of 100 units, which are validly issued and outstanding, duly
     authorized, fully paid and non-assessable, and no units are held in
     Subsidiary's treasury. All of such units are owned by the Company. Except
     as listed on Schedule 3.2 hereto, there are no outstanding (i) securities
     convertible into or exchangeable for units of or interests in Subsidiary,
     (ii) options, warrants, calls or other rights to purchase or subscribe for
     units of Subsidiary or rights to acquire any such rights, or (iii)
     contracts, commitments, agreements, understandings, arrangements or
     restrictions to which Subsidiary or the Company is a party or by which it
     is bound relating to the units or interests in or other securities of
     Subsidiary. Immediately prior to the Closing, the Company will lawfully own
     all Subsidiary Units (and all other interests in Subsidiary), of record and
     beneficially, free and clear of all liabilities, obligations, claims,
     liens, pledges, contractual rights, security interests, options, charges,
     encumbrances and restrictions of any kind whatsoever.

          Section 3.3 Good Title. Each Seller has, and on the Closing Date will
have, good, valid, marketable and indefeasible title to the Shares proposed to
be sold by such Seller hereunder on the Closing Date and full right, power and
authority to enter into this Agreement and to sell, assign, transfer and deliver
such Shares hereunder, free and clear of all voting trust

                                       -9-



arrangements, liens, encumbrances, equities, security interests, restrictions
and claims whatsoever; and upon delivery of and payment at the Closing of the
amount to be paid with respect to such Shares at the Closing, Buyer will acquire
good, valid, marketable and indefeasible title thereto, free and clear of all
liens, encumbrances, equities, claims, restrictions, security interests, voting
trusts or other defects of title whatsoever.

          Section 3.4 Equity Investments. Schedule 3.4 sets forth a complete and
correct list of each corporation, partnership or other business organization in
which the Company owns, directly or indirectly, any capital stock or other
equity interest or right to acquire any equity interest. The Company has good
and marketable title to all of the securities listed on Schedule 3.4 as owned by
it free and clear of all liens, charges, encumbrances and rights of others, and
there are no irrevocable proxies with respect to the securities listed on
Schedule 3.4. Except as set forth on Schedule 3.4, there are outstanding no
subscriptions, options, convertible securities, warrants, calls or rights of any
kind issued or granted by, or binding upon, the Company to purchase or otherwise
acquire any security of, or equity interest in, any entity listed on Schedule
3.4. Except as set forth on Schedule 3.4, the Company does not own any note,
bond, debenture or other evidence of indebtedness, and is not otherwise a
creditor, of any entity listed on Schedule 3.4. The Company has no subsidiaries,
except as set forth on Schedule 3.4.

          Section 3.5 Consents; No Violation.

          (a) Except as set forth on Schedule 3.5, neither the execution nor
     delivery of this Agreement, nor the consummation of the transactions
     contemplated hereby, nor the compliance with any of the provisions hereof,
     (i) violates or conflicts with, breaches, terminates or constitutes a
     default under the Articles of Incorporation, By-Laws or Operating Agreement
     of the Company or Subsidiary, (ii) violates or conflicts with any statute
     or law or any rule, regulation, order, writ, award, judgment or decree of
     any court or governmental authority of any jurisdiction, or any regulation
     or restriction of any regulatory or self-regulatory body or agency,
     affecting the Company, Subsidiary or any Seller, (iii) as of the Closing
     Date, violates or conflicts with, results in the breach or termination of,
     or constitutes a default under, or permits any other party to terminate,
     any contract, commitment, mortgage, deed of trust, agreement,
     understanding, arrangement, lease, trust, license or restriction of any
     kind to which the Company or Subsidiary is a party, or by which its assets
     are bound, (iv) as of the Closing Date, will cause, or give any persons
     valid grounds to cause (with or without notice, the passage of time or
     both), the maturity of any debt, liability or obligation of the Company or
     Subsidiary to be accelerated, or will increase any such liability or
     obligation or will result in the imposition of any lien, encumbrance,
     charge or claim upon any of the assets of the Company or Subsidiary, or (v)
     requires any filing with, the notification of, or the obtaining of any
     permit, authorization, consent or approval of, any third party, court or
     governmental or regulatory authority, foreign or domestic (collectively,
     the "Required Consents").

          (b) The execution, delivery and performance of and compliance with
     this Agreement by Seller and the sale and transfer of the Shares to be sold
     by each Seller pursuant to the terms hereof, will not result in (i) any
     violation or breach of any term of such charter documents of the Company or
     Subsidiary, if any, (ii) any violation or breach

                                      -10-



     by such Seller of any term of any indenture, mortgage, deed of trust or
     other agreement, instrument, court order, judgment, decree, statute, rule
     or regulation to which such Seller is a party or by which such Seller is
     bound, (iii) any conflict with or default under any such term or (iv) the
     creation of any mortgage, pledge, lien, encumbrance or charge upon any of
     the properties or assets of such Seller.

          Section 3.6 Financial Statements. The Sellers have previously
delivered to the Buyer copies of (i) the most recent audited balance sheets,
including those as of December 31, 1998 and December 31, 1999 and December 31,
2000, and the related audited statements of earnings, stockholders' equity and
cash flows of the Company and Subsidiary for the years then ended, all of which
have been audited by Virchow, Krause & Company LLP, independent public
accountants for the Company and Subsidiary ("Audited Financial Statements"), and
(ii) the most recent unaudited balance sheet and related unaudited statements of
income of the Company and Subsidiary (the "Unaudited Financial Statements")
(collectively with the Audited Financial Statements, the "Financial
Statements"). The Financial Statements (and the notes thereto): (i) present
fairly in all respects the financial position and results of operations and
changes in financial position and cash flows for each of the Company and
Subsidiary as of the dates and for the periods covered thereby, and (ii) were
prepared in accordance with GAAP consistently applied except, in the case of the
Unaudited Financial Statements, for the absence of normal year-end adjustments
and footnotes, and (iii) reflect all necessary accruals and reserves (except
those relating to income taxes).

          Section 3.7 No Undisclosed Liabilities. Except as disclosed on
Schedule 3.7, neither the Company nor Subsidiary has any debts, liabilities or
financial obligations (whether absolute, accrued, contingent or otherwise) which
are not disclosed in the Financial Statements and the notes thereto as required
by GAAP. Neither the Company nor Subsidiary has other liabilities or obligations
of any nature which are not required by GAAP to be set forth in its respective
balance sheet, whether absolute, accrued, contingent or otherwise, whether due
or to become due, which are not reflected in such balance sheet, and neither
Company nor Subsidiary knows of any basis for assertion against the Company or
Subsidiary of any such liability or obligation.

          Section 3.8 Absence of Certain Changes. Except as set forth on
Schedule 3.8, there has not been since December 31, 2000:

          (a) an occurrence of any event, fact, conditional change or effect
     that is or could reasonably be expected to be materially adverse to the
     business, operations, results of operations, condition (financial or
     otherwise), assets, earnings or liabilities of the Company and/or
     Subsidiary (including, without limitation, the receipt by Company,
     Subsidiary or any Seller of any information regarding any actual or
     potential termination of, or significant change in, the business or
     revenues provided by any customer or client of the Company or Subsidiary);

          (b) any loan made by the Company and/or Subsidiary to any officer,
     director, employee, member or stockholder, or any new agreement or
     agreement to enter into any or any change in any, bonus or other
     compensation arrangement or agreement with any officer, director, member,
     employee, stockholder, consultant or other such person;

                                      -11-



          (c) any declaration, payment or set aside for payment of any dividend
     or other distribution of assets of the Company or Subsidiary to the
     stockholders, members, or any of their affiliates, or any direct or
     indirect retirement, redemption, repurchase or other acquisition by the
     Company or Subsidiary of any shares or units of its capital stock or units
     of interest;

          (d) any change in the indebtedness of the Company or Subsidiary, or
     any change in the contingent obligations of the Company and/or Subsidiary
     by way of guaranty, endorsement, indemnity, warranty or otherwise, other
     than in the ordinary course of business, consistent with past practices;

          (e) any obligation or liability (absolute, accrued, contingent or
     otherwise) other than in the ordinary course of business, consistent with
     past practices, incurred in an aggregate amount of $5,000 or more with
     respect to any event or transaction or any series of related events or
     transactions by the Company and/or Subsidiary;

          (f) any waiver, cancellation or compromise by the Company and/or
     Subsidiary of a right or of a debt owed to it, or any delay or deferral of
     payment of accounts payable or other obligations of the Company and/or
     Subsidiary or any acceleration of collection of receivables or other
     obligations due the Company and/or Subsidiary;

          (g) any satisfaction or discharge of any lien, claim or encumbrance or
     payment of any obligation other than in the ordinary course of business,
     consistent with past practices, by the Company and/or Subsidiary;

          (h) any issuance, redemption or sale by the Company and/or Subsidiary
     of their securities or interests;

          (i) any sale, assignment, license or transfer of any patents,
     trademarks, service marks, trade names, copyrights, trade secrets,
     licenses, information, proprietary rights, codes, computer software
     programs, processes or other intangible assets by the Company and/or
     Subsidiary;

          (j) any mortgage, pledge, lien, charge or other encumbrance, or grant
     to third parties of any rights to, any of tangible assets of the Company
     and/or Subsidiary;

          (k) any change in any method of accounting, including but not limited
     to accounting principles or methods of application of said principles, or
     any business practice by the Company and/or Subsidiary;

          (l) any damage, destruction or loss, whether or not covered by
     insurance, affecting any of the material properties or business of the
     Company and/or Subsidiary;

          (m) any change in the relationship or course of dealing between the
     Company, Subsidiary and any of their respective customers or material
     suppliers or vendors;

          (n) other than in the ordinary course of business and consistent with
     past practices, any sale, lease, license, encumbrance or other disposition
     of, or any agreement

                                      -12-



     to sell, lease, license, encumber or otherwise dispose of, any assets of
     the Company and/or Subsidiary by any party;

          (o) any transaction by the Company and/or Subsidiary not in the
     ordinary course of business;

          (p) any settlement by the Company and/or Subsidiary of non-insured
     litigation for amounts in excess of $5,000;

          (q) any adoption, termination, amendment or increase in benefits paid
     or payable under any severance, termination, profit sharing, deferred
     compensation, or other employee benefit plan, program or arrangement, or
     any agreement or arrangement with any officer, director, employee, member,
     stockholder, consultant or other such person;

          (r) any agreement or commitment by the Company and/or Subsidiary to do
     any of the things described in this Section 3.8;

          (s) any changes in the compensation or commitments to employees,
     members or shareholders of the Company or Subsidiary; or

          (t) any change to or breach of any of the contracts listed on Schedule
     3.15 hereto.

          Section 3.9 Taxes.

          (a) Each of the Company and the Subsidiary has filed all Tax Returns
     that it was required to file. All such Tax Returns were correct and
     complete in all respects. All Taxes owed by either the Company or the
     Subsidiary (whether or not shown on any Tax Return) have been paid. Neither
     the Company nor the Subsidiary currently is the beneficiary of any
     extension of time within which to file any Tax Return. No claim has ever
     been made by an authority in a jurisdiction where either the Company or the
     Subsidiary does not file Tax Returns that it is or may be subject to
     taxation by that jurisdiction. There are no liens or encumbrances on any of
     the assets of either the Company or the Subsidiary that arose in connection
     with any failure (or alleged failure) to pay any Tax.

          (b) Each of the Company and the Subsidiary has withheld and paid all
     Taxes required to have been withheld and paid in connection with amounts
     paid or owing to any employee, independent contractor, creditor,
     stockholder, or other third party, including amounts required to be
     withheld and paid in connection with the payments to the Option Holders
     described in Section 1.2(a) above.

          (c) There is no dispute or claim concerning any Tax liability of
     either the Company or the Subsidiary either (A) claimed or raised by any
     authority in writing or (B) as to which any of the Sellers or the directors
     and officers (and employees responsible for Tax matters) of either the
     Company or the Subsidiary has knowledge based upon personal contact with
     any agent of such authority. Schedule 3.9 lists those Tax Returns filed
     after December 31, 1996, that have been audited, and indicates those Tax
     Returns that currently are the subject of audit. The Sellers have delivered
     to the Buyer correct and

                                      -13-



     complete copies of all federal income Tax Returns, examination reports, and
     statements of deficiencies assessed against or agreed to by the Company or
     the Subsidiary relating to taxable periods ending after December 31, 1990.

          (d) Neither the Company nor the Subsidiary has waived any statute of
     limitations in respect of Taxes or agreed to any extension of time with
     respect to a Tax assessment or deficiency.

          (e) Neither the Company nor the Subsidiary has made any payments, is
     obligated to make any payments, or is a party to any agreement that under
     certain circumstances could obligate it to make any payments that will not
     be deductible under Code Sec. 162 (as unreasonable compensation), Code Sec.
     162(m) or Code Sec. 280G, except that no representation or warranty is made
     with respect to any payment to be made to any Option Holder. Neither the
     Company nor the Subsidiary is party to any Tax allocation or sharing
     agreement. Neither the Company nor the Subsidiary (A) has been a member of
     an affiliated group filing a consolidated federal income Tax Return or (B)
     has any liability for the Taxes of any person or entity (other than the
     Company or the Subsidiary), as a transferee or successor, by contract, or
     otherwise.

          (f) The unpaid Taxes of the Company and the Subsidiary did not, as of
     the date of the Balance Sheet exceed the reserve for Tax liability (rather
     than any reserve for deferred Taxes established to reflect timing
     differences between book and Tax income) set forth on the face of the
     Balance Sheet (defined herein as the December 31, 2000, balance sheet for
     the Audited Financial Statements) (rather than in any notes thereto); the
     parties acknowledge, however, that there has been no reserve established in
     the Balance Sheet for income taxes.

          (g) Since the date of the Balance Sheet, neither the Company nor the
     Subsidiary has incurred any liabilities for Taxes except in the ordinary
     course of business.

          (h) The Company has been a validly electing S corporation within the
     meaning of Code Sec. 1361 and 1362 at all times during its existence, and
     the Company will be an S corporation up to and including the Closing Date.

          (i) The Company has no subsidiary that is a "qualified subchapter S
     subsidiary" within the meaning of Code Sec. 1361(b)(3)(B).

          (j) The Company will not be liable for any Tax under Code Sec. 1374 in
     connection with the deemed sale of the Company's assets caused by the
     Section 338(h)(10) election. Neither the Company nor the Subsidiary has, in
     the last 10 years, (A) acquired assets (other than certain assets acquired
     by Subsidiary from the Company upon its formation) from another corporation
     in a transaction in which the Company's or Subsidiary's Tax basis for the
     acquired assets was determined, in whole or in part, by reference to the
     Tax basis of the acquired assets (or any other property) in the hands of
     the transferor or (B) acquired the stock of any corporation which is a
     qualified subchapter S subsidiary.

                                      -14-



          (k) At all times during its existence, the Subsidiary has been treated
     as an entity that is "disregarded as an entity separate from its owner" in
     accordance with Treas. Reg. Section 301.7701-3(b)(1)(ii), and this
     treatment will continue up to and including the Closing Date.

          For purposes of this Agreement, the following definitions shall apply:

          "Tax" means any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Sec. 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or additional thereto, whether disputed or not.

          "Tax Return" means any return, declaration, report, claim or refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

          Section 3.10 Real Property. Neither the Company nor Subsidiary owns
any real property in fee simple. Schedule 3.10(a) sets forth a list of all real
property leased by the Company and/or Subsidiary (collectively, the
"Properties"). The Company or Subsidiary, as the case may be, holds a good and
valid leasehold title and estate in the Properties, in each case free and clear
of all mortgages, deeds of trust, pledges, liens, security interests, claims,
mechanic's or materialmen's liens, charges, easements, restrictive covenants,
rights-of-way and other encumbrances, other than for Permitted Encumbrances. As
used herein, "Permitted Encumbrances" means liens for Taxes not yet due or which
are being contested in good faith by appropriate proceedings and as to which
adequate reserves have been established in accordance with GAAP, municipal and
zoning ordinances and easements of record, utility easements for utilities
serving the property of record, and any similar encumbrances, none of which
interfere with the use of such Properties as currently utilized.

The Company hereby represents that:

          (a) Neither the Company nor Subsidiary has received written notice (i)
     that any of the Properties (or the buildings, structures or improvements
     thereon), or the operations of Company or Subsidiary violate the zoning or
     planning laws, ordinances, rules or regulations of the city, county or
     state in which they are located, or any building regulations or codes of
     such city, county or state, or land use laws or regulations applicable to
     the Properties, or (ii) of any claims of others to rights over, under,
     across or through any of the Properties by virtue of use or prescription;

          (b) All permits, approvals, authorizations or licenses required or
     necessary for the use of any of the Properties to the extent required of
     the Company have been obtained and are in full force and effect;

                                      -15-



          (c) Except as set forth on Schedule 3.10(d), neither the Company nor
     Subsidiary has sublet, nor is subletting, all or any part of any of the
     Properties, nor has assigned all or any part of its interests in any of the
     leases.

          (d) Schedule 3.10(d) sets forth a list of all service and maintenance
     contracts affecting the Properties and all utility and management contracts
     affecting the Properties to which the Company or Subsidiary is a party and
     which in any individual contract obligate the Company or Subsidiary to pay
     more than $5,000 in any year. All such contracts are currently in full
     force and effect, and, as to the Company or Subsidiary, and to Sellers'
     knowledge, as to third parties, there is no default, or action or omission
     which with the giving of notice or passage of time or both would constitute
     a default thereunder. Copies of all such contracts have been delivered to
     Buyer. In addition, the Sellers have previously delivered to the Buyer
     copies of the most recently issued bills for real estate tax assessments
     against any or all of the Properties;

          (e) All the Properties are free and clear of any agreements to
     sublease (or to grant an assignment of lease), options to sublease (or to
     grant an assignment of lease) or rights of first refusal relating thereto.
     All real property with respect to which the Company or Subsidiary has an
     agreement to purchase, lease or sublease, option to purchase, lease, or
     sublease or right of first refusal relating thereto is set forth on
     Schedule 3.10(e);

          (f) To Sellers' knowledge, all the Properties are currently zoned in
     the zoning category which permits operation of said Properties as now used,
     operated and maintained;

          (g) To Sellers' knowledge, the Properties currently have access to all
     gas, water, electricity, storm sewer, sanitary sewer, telephone and all
     other utilities necessary or beneficial to the current operation of the
     Properties, and all of such utilities are adequate and sufficient for the
     current operation of the Properties;

          (h) Except as set forth on Schedule 3.10(h), and except for repair and
     maintenance in the ordinary course of business, no construction,
     improvements, or expansion is currently on-going at any of the Properties,
     and Company and/or Subsidiary have accepted possession of the Properties;

          (i) The Company or Subsidiary, as the case may be, holds a valid
     leasehold estate pursuant to each lease by which the Properties are leased,
     as shown on Schedule 3.10(h), and enjoys peaceful and undisturbed
     possession thereunder. The Sellers have previously delivered to the Buyer
     complete and accurate copies of all such scheduled leases. All such leases
     are valid, binding, and enforceable, as to the Company or Subsidiary and to
     Sellers' knowledge, as to third parties, in accordance with their terms,
     and are in full force and effect, the Company and/or Subsidiary has
     complied with all obligations thereunder, and there are no existing
     defaults by the Company and/or Subsidiary, and to Sellers' knowledge, there
     are no existing defaults by any other party thereunder. No event has
     occurred which (whether with or without notice, lapse of time or the
     happening or occurrence of any other event) would constitute a default by
     the Company and/or Subsidiary, and no event has occurred to Sellers'
     knowledge, which (whether with or

                                      -16-



     without notice, lapse of time or the happening or occurrence of any other
     event) would constitute a default by any other party thereunder. All such
     leases shall continue in full force and effect (without default) after the
     Closing and consummation of the transactions contemplated by this Agreement
     without the consent, approval or act of any other party, except as set
     forth in Schedule 3.5;

          (j) To the Seller's knowledge, there are no proposed, pending or
     threatened proceedings or governmental or quasi-governmental actions to
     condemn or take by the power of eminent domain (or to purchase in lieu
     thereof), or otherwise to take or restrict the right to use or occupy, any
     of the Properties; and

          (k) Neither the Sellers, the Company nor Subsidiary has received
     written notice that it is in violation of any applicable antipollution,
     health or other law, ordinance or regulation in respect of the Properties
     or their operation, which violation remains uncured, and to Sellers'
     knowledge, no such violation exists.

          Section 3.11 Intellectual Property.

          (a) Schedule 3.11 contains an accurate and complete description of all
     domestic and foreign URL registrations, patents, patent applications,
     patent licenses, shop rights, trademarks, trademark registrations and
     applications therefor, service marks, service mark registrations and
     applications therefor, logos, trade names, assumed names, copyright
     registrations and applications therefor, and registered domain names, which
     are used by the Company or Subsidiary, or which are presently owned or held
     by the Company or Subsidiary or under which the Company or Subsidiary owns
     or holds any license, or in which the Company or Subsidiary owns or holds
     any direct or indirect interest, other than those rights granted to Buyer
     hereunder (collectively, the "Intellectual Property Rights"). Schedule 3.11
     further sets forth: (i) the nature of such Intellectual Property Rights;
     (ii) the owner of such Intellectual Property Rights; (iii) the jurisdiction
     by or in which such Intellectual Property Rights has been issued or
     registered or in which an application for such issuance or registration has
     been filed, including the respective registration or application numbers;
     and (iv) licenses, sublicenses and other agreements as to which the Company
     is a party and pursuant to which the Company, or any other person or entity
     is authorized to use such Intellectual Property Rights, process, design,
     invention, know-how, trade secret or other proprietary information
     (collectively, the "Company/Subsidiary Intellectual Property").

          (b) Except as set forth on Schedule 3.11, neither the Company nor
     Subsidiary infringes or unlawfully or wrongly uses any patent, trademark,
     trade name, service mark, copyright, trade secret, confidential or
     proprietary right or any similar rights owned or claimed by another.

          (c) Except as set forth in Schedule 3.11, neither the Company nor
     Subsidiary knows of any use that has been or is now being made by another
     of the Company/Subsidiary Intellectual Property or that would infringe such
     rights, or would prevent the unrestricted use thereof by Buyer.

                                      -17-



          (d) Except as set forth on Schedule 3.11, (i) the Company or the
     Subsidiary, as the case may be, is the sole and exclusive owner of or
     possesses valid licenses and rights to use all Company/Subsidiary
     Intellectual Property necessary to conduct the businesses of the Company
     and the Subsidiary as are currently being conducted, and (ii) such
     ownership or right to use under licenses will not be adversely affected as
     a result of the execution of this Agreement and consummation of the
     transactions provided for herein.

          (e) Except as set forth on Schedule 3.11, neither the Company nor
     Subsidiary has sold, licensed or otherwise disposed of or transferred or
     granted any interest in the Company/Subsidiary Intellectual Property. The
     Company and/or Subsidiary has taken all reasonable measures, which may or
     may not have included the institution of litigation, to maintain and
     protect the Company/Subsidiary Intellectual Property and, to Sellers'
     knowledge, all such rights remain valid and enforceable.

          (f) Except as set forth on Schedule 3.11(g), to Sellers' knowledge, no
     claims have been asserted by any person to the use or validity of any of
     the Company/Subsidiary Intellectual Property or challenging or questioning
     the validity or effectiveness of any license or agreement related thereto,
     and to Sellers' knowledge, there is no valid basis for any such claim. None
     of the Company/Subsidiary Intellectual Property is subject to any
     outstanding order, judgment, decree, stipulation or agreement restricting
     the use thereof by the Company and/or Subsidiary or restricting the
     licensing thereof by the Company/Subsidiary to any other person or entity.
     Except as set forth on Schedule 3.11, neither the Company and/or Subsidiary
     has entered into any agreement to indemnify any other person or entity
     against any charge of infringement of any Company/Subsidiary Intellectual
     Property.

          (g) Except as set forth in Schedule 3.11, (i) neither the Company nor
     the Subsidiary has any systems and applications computer programs which
     were developed by, or on behalf of, the Company or the Subsidiary (the
     "Software Programs."); (ii) the systems and applications computer programs
     of the Company and Subsidiary and the technical documentation and
     inventories of the Software Programs were developed by personnel, including
     employees, agents, consultants and contractors, on behalf of the Company
     and such parties (A) entered into "work-for-hire" arrangements or
     agreements with the Company, in accordance with applicable federal and
     state law, that has accorded the Company full, effective exclusive, and
     original ownership of all tangible and intangible property thereby arising;
     or (B) executed appropriate instruments of assignment in favor of the
     Company as assignee that conveyed to the Company full, effective and
     exclusive ownership of all tangible and intangible property thereby
     arising; (iii) the technical documentation for the Software Programs
     includes the source code, system documentation, statements of principles of
     operation, and schematics for all Software Programs, as well as any
     pertinent commentary or explanation that may be necessary to render such
     materials understandable and usable by a trained computer programmer; (iv)
     the technical documentation also includes any program (including
     compilers), "workbenches," tools and higher level (or "proprietary")
     language used for the development, maintenance and implementation of the
     Software Programs; (v) the Company has validly and effectively obtained the
     right and license to use, copy, modify, and distribute the third-party
     programming and materials contained in the Software

                                      -18-



     Programs and technical documentation; (vi) the Software Programs and
     technical documentation contain no other programming or materials in which
     any third party may claim superior, joint, or common ownership, including
     any right or license; (vii) the Software Programs and technical
     documentation do not contain derivative works of any programming or
     materials not owned in their entirety by Company and Subsidiary; (viii)
     neither Company nor Subsidiary have granted, transferred, or assigned any
     right or interest in the Software Programs or the technical documentation
     to any person or entity; and (ix) there are no contracts, agreements,
     licenses, and other commitments and arrangements in effect with respect to
     the marketing, distribution, licensing or promotion of the Software
     Programs or the technical documentation by any independent salesperson,
     distributor, sublicensor or other remarketer or sales organization.

          Section 3.12 Absence of Litigation. Except as disclosed in Schedule
3.12, as of the date hereof, there is no action, suit, claim, investigation or
proceeding pending or to the Sellers' knowledge, threatened, nor is there any
valid basis for any claim, against the Company, Subsidiary or any of their
properties before any court or arbitrator or any administrative, regulatory or
governmental body, or any agency or official. Except as disclosed on Schedule
3.12, as of the date hereof, neither the Company, Subsidiary nor any of their
property is subject to any order, writ, judgment, injunction, decree,
determination or award.

          Section 3.13 Insurance.

          (a) Schedule 3.13(a) sets forth a complete and correct list of all
     insurance policies (including a brief summary of the nature and terms
     thereof and any amounts paid or payable to the Company or Subsidiary
     thereunder, their respective expiration dates, deductibles and stop-loss
     thresholds) providing coverage in favor of the Company, Subsidiary or any
     of their respective officers, directors, employees or properties. Each such
     policy is valid, in full force and effect and will remain in full force and
     effect at least through the respective dates set forth in Schedule 3.13(a)
     without the payment of additional premiums other than additional premiums
     in the ordinary course of business prior to the Closing. No notice of
     termination, cancellation or reservation of rights has been received with
     respect to any such policy, there is no default with respect to any
     provision contained in any such policy, and except as set forth on Schedule
     3.13(a), there has not been any failure to give any notice or present any
     claim under any such policy in a timely fashion or in the manner or detail
     required by any such policy.

          (b) The Company and Subsidiary have insurance in an amount and of a
     type normal in the ordinary course for similar-sized businesses similar to
     the Company and Subsidiary. Other than as set forth on Schedule 3.13(b),
     neither the Company nor Subsidiary has received notice of any proposed
     increase in premiums or deductible amounts, decrease in coverage or
     termination of any policy.

          Section 3.14 Employee Benefits.

          (a) Schedule 3.14(a) contains a true and complete list of each bonus,
     deferred compensation, incentive compensation, stock purchase, stock
     option, severance or termination pay, hospitalization or other medical,
     dental, life, disability or other

                                      -19-



     insurance, supplemental unemployment benefits, profit-sharing, pension,
     savings or retirement plan, program, agreement or arrangement, cafeteria
     plans within the meaning of section 125 of the Code, retiree medical plans
     and any trust fund, plan, program or arrangement funding any plan
     (including any voluntary employee beneficiary association within the
     meaning of section 501(c)(9) of the Code), and each other employee benefit
     plan, program, agreement or arrangement, sponsored, maintained or
     contributed to or required to be contributed to by the Company or any
     subsidiary for the benefit of any employee or terminated employee of the
     Company or any subsidiary (all of such plans, programs, agreements and
     arrangements included in this Section 3.14(a) being referred to hereinafter
     collectively as the "Plans" and individually as a "Plan"). Schedule 3.14(a)
     identifies each of the Plans that is an "employee benefit plan," as that
     term is defined in section 3(3) of the Employee Retirement Income Security
     Act of 1974, as amended ("ERISA") (the "ERISA Plans").

          (b) With respect to each Plan, the Sellers have heretofore delivered
     to Buyer true and complete copies of each of the following documents (to
     the extent applicable):

               (i)  a copy thereof;

               (ii) a copy of the three most recent Form 5500 annual reports and
          accompanying accountants' reports;

               (iii) a copy of the most recent Summary Plan Description,
          summaries of all modifications, administrative forms and other
          documents that constitute a part of or are incident to the
          administration of the Plans;

               (iv) copies of any insurance contracts and administrative service
          contracts;

               (v) if the Plan is funded through a trust or any third party
          funding vehicle, a copy of the trust or other funding agreement and
          the latest financial statements thereof,

               (vi) the most recent determination letter received from the
          Internal Revenue Service with respect to each Plan intended to qualify
          under section 401 (a) of the Internal Revenue Code of 1986, as amended
          (the "Code") and any pending determination letter request; and

               (vii) Schedule 3.14(a) also shall contain a written description
          of all communications regarding any Plan to employees or former
          employees with respect to this transaction.

          (c) Neither the Company, any subsidiary nor any Affiliate of the
     Company, as determined under Code Section 414(b), (c) or (m) or ERISA
     Section 4001(b) (an "ERISA Affiliate") or predecessor to any of the
     foregoing maintains or has ever maintained a plan which is or was subject
     to (i) the minimum funding requirements of ERISA or the Code or (ii) Title
     IV of ERISA.

                                      -20-



          (d) Neither the Company, any subsidiary, nor any ERISA Affiliate, nor
     any ERISA Plan, nor any trust created thereunder, nor any trustee or
     administrator thereof has engaged in a transaction in connection with which
     the Company, any subsidiary or any ERISA Affiliate, any ERISA Plan, any
     such trust, or any trustee or administrator thereof, or any party dealing
     with any ERISA Plan or any such trust could be in violation of sections
     404, 405, or 406 of ERISA or could be subject to either a civil penalty
     assessed pursuant to section 409, 502(i) or 502(1) of ERISA or a Tax
     imposed pursuant to Chapter 43 of the Code.

          (e) No ERISA Plan is a "multi-employer plan," as defined in section
     3(37) of ERISA, nor is any ERISA Plan a plan described in section 4063(a)
     of ERISA. Neither the Company, any subsidiary, nor any ERISA Affiliate or
     predecessor to any of the foregoing has ever maintained, contributed to or
     been required to contribute to a "multi-employer plan" as defined in
     section 3(37) of ERISA.

          (f) Each Plan has been operated and administered in accordance with
     its terms and applicable law, including but not limited to ERISA and the
     Code.

          (g) Each ERISA Plan intended to be qualified within the meaning of
     section 401(a) of the Code and each related trust intended to be qualified
     within the meaning of section 501(a) of the Code has been established and
     operated so as to be qualified and tax-exempt under such sections. Nothing
     has occurred or, in connection with the transactions contemplated by this
     Agreement, will occur, which would adversely affect the qualified status of
     such plans and trusts. In the event the Company, any subsidiary or any
     affiliated entity sponsors or maintains a voluntary employee beneficiary
     association within the meaning of section 501(c)(9) of the Code, all
     necessary governmental approvals for obtaining tax exempt status have been
     obtained, and such determination letter is dated on or after January 1,
     1985.

          (h) No amounts payable under any Plan as a result of or in connection
     with the consummation of the transactions contemplated by this Agreement
     will fail to be deductible for federal income tax purposes by application
     of section 162(m), section 280G or section 404 of the Code.

          (i) Except as set forth on Schedule 3.14(i), no Plan provides
     benefits, including without limitation death or medical benefits (whether
     or not insured), with respect to current or former employees (and their
     dependents) of the Company, any subsidiary, or any ERISA Affiliate beyond
     their retirement or other termination of service other than continued
     medical coverage required by Section 4980B of the Code.

          (j) Except as provided in Schedule 3.14(j), the consummation of the
     transactions contemplated by this Agreement will not (i) entitle any
     current or former employee or officer of the Company, any subsidiary, or
     any ERISA Affiliate to severance pay, unemployment compensation or any
     other payment, except as expressly provided in this Agreement or (ii)
     accelerate the time of payment or vesting, or increase the amount of
     compensation due any such employee or officer.

                                      -21-



          (k) There are no pending or threatened claims by or on behalf of any
     Plan, by any employee or beneficiary covered under any such Plan, or
     otherwise involving any such Plan (other than routine claims for benefits).

          (1) The Company and Subsidiary has reserved the right to amend or
     terminate any Plan.

          (m) Neither the Company nor Subsidiary has announced any plan or
     legally binding commitment to create any additional Plans which are
     intended to cover employees or former employees of the Company or
     Subsidiary or to amend or modify any existing Plan which covers or has
     covered employees or former employees of the Company or Subsidiary.

          (n) No event has occurred in connection with which the Company, any
     subsidiary, or any ERISA Affiliate or any Plan, directly or indirectly,
     could be subject to any liability (i) under any statute, regulation or
     governmental order relating to any Plans or (ii) pursuant to any obligation
     of the Company, any subsidiary, or any ERISA Affiliate to indemnify any
     person against liability incurred under any such statute, regulation or
     order as they relate to the Plans.

          (o) All contributions with respect to each Plan for all periods ending
     on or prior to the Closing Date (including periods from the first day of
     the current plan year to the Closing Date) will be made by the Company, any
     subsidiary or any ERISA Affiliate, as the case may be, or accrued on the
     Company's financial statements and books and records prior to the Closing
     Date.

          Section 3.15 Contracts and Commitments. (a) Schedule 3.15 contains a
true and complete list of (i) all Company and Subsidiary agreements and other
commitments for the provision of goods or services, or for the purchase or
license or lease of any materials, supplies, software, equipment, furniture,
services or other agreements involving an amount greater than $5,000 over the
term of such contract; (ii) all employment and consulting agreements; (iii)
agreements and other commitments with clients or customers of Company and/or
Subsidiary; (iv) all license agreements with third parties (other than
off-the-shelf shrink wrap license agreements that are not material to the
business of Company or Subsidiary); (v) all leases, whether for real property or
personal property; (vi) all loan agreements, mortgages or indentures; (vii) all
agreements, arrangements or commitments with any director, officer, employee,
stockholder or beneficial owner of any of the capital stock or any of their
affiliates; and (viii) all other arrangements, commitments and understandings
(written or oral) to which the Company is a party or by which it or its
properties are bound that are not terminable upon 30 days' or less notice
without the payment of a penalty or termination fee or any other sum in excess
of $500, or that require (or that the Company or Subsidiary have reason to
believe it will require) payment by any party to the agreement, commitment or
understanding of, or the performance by any party to the agreement, commitment
or understanding of services having a value of, more than $5,000 individually
over the term of such contract. True and complete copies of the agreements,
commitments and understandings, or in the case of unwritten agreements,
commitments and understandings, summaries thereof, of Company and Subsidiary
referred to in Schedule 3.15 (collectively, the "Commitments") have been
delivered to Buyer. Schedule 3.15 contains a true

                                      -22-



and correct list of all contracts of the Company and Subsidiary that require
written consent of an outside party or parties before assignment, or that will
be terminated in the event of assignment (as defined in the Investment Company
Act of 1940, as amended).

          (b) Except as set forth in Schedule 3.15, (i) all of the Commitments,
as to the Company or Subsidiary and to Sellers' knowledge, as to third parties,
are valid, binding and enforceable and in full force and effect in accordance
with their respective terms and there is no existing default, as to the Company
or Subsidiary and to Sellers' knowledge, as to third parties, that would permit
the other party to a Commitment to terminate the Commitment, not to perform its
obligations under the Commitment or accelerate the payment of money, and no
condition exists that, with notice or lapse of time or both, would constitute a
default on any Commitment, by the Company, Subsidiary, or to the Sellers'
knowledge, any other party under any Commitment; (ii) all of Company's and to
Sellers' knowledge, third parties' covenants and obligations under all
Commitments accrued to date have been performed; (iii) no party has made or
asserted or has any defense, setoff or counterclaim under any Commitment; (iv)
neither the Company nor Subsidiary has received notice that any party under any
Commitment has exercised any option granted to it to cancel or terminate its
Commitment, to shorten the term of its Commitment or to renew or extend the term
(other than automatic renewals) of the Commitment and neither the Company nor
Subsidiary has received any notice of termination of any Commitment; (v) except
as disclosed on Schedule 3.8, neither the Company nor Subsidiary has received
any notice (written or otherwise) of cancellation or termination of, or any
expression or indication of an intention or desire to cancel or terminate, any
of the Commitments; and (vi) no Commitment is the subject of, or to Sellers'
knowledge, has been threatened to be made the subject of, any arbitration, suit
or other legal proceeding. Except as noted on Schedule 3.15, nothing in any
contract listed on such schedule prohibits the consummation of the Agreement,
and the consummation of the transactions provided for in this Agreement will not
cause a termination of or default under any such contract.

          (c) With respect to Commitments involving trust accounts or other
accounts over which Company or Subsidiary has any access or control which
contain funds belonging to any Fund or other third party, the accounts in which
such funds are maintained have been held and administered in accordance with the
provisions and requirements of such Commitments and the duties and rights of the
Company or Subsidiary thereunder and with respect thereto. All deposits,
withdrawals and transfers by or at the direction of Company or Subsidiary have
been made consistent with their obligations under, and the provision of, the
Commitments and other agreements and obligations relating to such accounts and
funds to which Company or Subsidiary are a party or are bound. The balance of
such accounts held or controlled by the Company on the Closing Date will be
equal in all material respects to the amount required to be held at such time
under and pursuant to such Commitments and otherwise with respect to the
Business. The Company has, and as of the Closing Date shall have, reserved for
fiduciary tax liabilities in accordance with such Commitments, if required.

          Section 3.16 Labor Matters. Except as set forth in Schedule 3.16,
neither the Company nor Subsidiary is a party to any collective bargaining or
other labor union contract or labor union agreement applicable to persons
employed by the Company or Subsidiary, no collective bargaining agreement is
being negotiated by the Company or Subsidiary, and to the Sellers' knowledge, no
activities or proceedings of any labor union are being held to organize

                                      -23-



any of its respective employees. There is no labor dispute, strike or work
stoppage against the Company or Subsidiary pending or to the Sellers' knowledge,
threatened which may interfere with the respective business activities of the
Company or Subsidiary. Each or the Company and Subsidiary is in compliance with
all federal, state and local laws, including without limitation the rules and
regulations of the Department of Labor and the Office of Federal Contract
Compliance Programs, respecting employment and employment practices, terms and
conditions of employment and wages and hours and not engaged in any unfair labor
practice. There is no unfair labor practice complaint against the Company or
Subsidiary pending or to the Sellers' knowledge, threatened before the National
Labor Relations Board. Except as set forth on Schedule 3.16, no charges with
respect to or relating to the Company or Subsidiary are pending, or to the
Sellers' knowledge threatened, before the Equal Employment Opportunity
Commission or any state, local or foreign agency responsible for the enforcement
of labor or employment laws or for the conduct of an investigation of or
relating to the Company and no such investigation is in process.

          Section 3.17 Compliance. Except as set forth on Schedule 3.17, the
Company and Subsidiary have complied and are complying with applicable
provisions of (i) all laws, rules, statutes, orders, ordinances or regulations
and (ii) any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise, or other instrument or obligations, in each case, to
which the Company or Subsidiary is a party or by which the Company, Subsidiary
or their property are bound or affected.

          Section 3.18 Environmental Matters.

          (a) Except as set forth in Schedule 3.18, each of the Company and
     Subsidiary is in compliance with all applicable Environmental Laws (which
     compliance includes, but is not limited to, the possession by the Company
     and Subsidiary of all permits and other governmental authorizations
     required under applicable Environmental Laws, and compliance with the terms
     and conditions thereof).

          (b) Except as set forth on Schedule 3.18, neither the Company nor
     Subsidiary has received any communication (written or oral), whether from a
     governmental authority, private party, citizens group, employee or
     otherwise, that alleges that the Company and/or Subsidiary is not in such
     compliance, and there are no past or present actions, activities,
     circumstances, conditions, events or incidents that would prevent or
     interfere with such compliance in the future.

          (c) Except as set forth in Schedule 3.18, there is no Environmental
     Claim pending or to the Sellers' knowledge, threatened against the Company
     or Subsidiary or against any person or entity whose liability for any
     Environmental Claim the Company or Subsidiary has retained or assumed
     either contractually or by operation of law.

          (d) Except as set forth in Schedule 3.18, there are no past or present
     actions, activities, circumstances, conditions, events or incidents
     (including, without limitation, the release, emission, discharge, presence
     or disposal of any Hazardous Material) which could form the basis of any
     Environmental Claim against the Company or Subsidiary or

                                      -24-



     against any person or entity whose liability for any Environmental Claim
     the Company or Subsidiary has retained or assumed either contractually or
     by operation of law.

          (e) Except as set forth in Schedule 3.18, neither the Company nor
     Subsidiary has Released, placed, stored, buried or dumped Hazardous
     Materials on, beneath or adjacent to any property owned, operated or leased
     or formerly owned, operated or leased by the Company or Subsidiary in
     violation of Environmental Laws, and neither the Company nor Subsidiary has
     received notice that it is a potentially responsible party for the Cleanup
     of any property, whether or not owned or operated by the Company and/or
     Subsidiary.

          (f) The Sellers have delivered to Buyer true, complete and correct
     copies and results of any reports, studies, analyses, tests or monitoring
     possessed or initiated by the Company and/or Subsidiary pertaining to
     Hazardous Materials in, on, beneath or adjacent to the property owned or
     leased by the Company and/or Subsidiary or regarding compliance by the
     Company and/or Subsidiary with applicable Environmental Laws.

          (g) Except as set forth in Schedule 3.18, no transfers of permits or
     other governmental authorizations under Environmental Laws, and no
     additional permits or other governmental authorizations under Environmental
     Laws, will be required to permit the Company, Subsidiary or their
     successors, as the case may be, to be in full compliance with all
     applicable Environmental Laws for the period immediately following the
     transactions contemplated hereby, as conducted by the Company and
     Subsidiary immediately prior to the date hereof. To the extent that such
     transfers or additional permits and other governmental authorizations are
     required, each of the Company and Subsidiary agrees to use reasonable best
     efforts to effect such transfers and obtain such permits and other
     governmental authorizations at the time such transfers, permits and other
     governmental authorizations are required by law.

          (h) The following terms as used in this Section 3.18 shall have the
     following meanings:

          "Cleanup" means all actions required by governmental entities or
     Environmental Laws to: (1) cleanup, remove, treat or remediate Hazardous
     Materials in the indoor or outdoor environment; (2) prevent the Release of
     Hazardous Materials so that they do not migrate, endanger or threaten to
     endanger public health or welfare of the indoor or outdoor environment; (3)
     perform remedial studies and investigations and post-remedial monitoring
     and care; or (4) respond to any government requests for information or
     documents in any way relating to cleanup, removal, treatment or remediation
     or potential cleanup, removal, treatment or remediation of Hazardous
     Materials in the indoor or outdoor environment.

          "Environmental Claim" means any claim, action, cause of action,
     investigation or notice (written or oral) by any person or entity alleging
     potential liability (including, without limitation, potential liability for
     investigatory costs, Cleanup costs, governmental response costs, natural
     resources damages, property damages, personal injuries, or penalties)
     arising out of, based on or resulting from (a) the presence, or Release
     into the indoor or outdoor environment, of any Hazardous Materials at any
     location, whether or

                                      -25-



     not owned or operated by the Company or (b) circumstances forming the basis
     of any violation, or alleged violation, of any Environmental Law.

          "Environmental Laws" means all federal, state, local and foreign laws,
     statutes, rules, orders, common law, regulations and ordinances now or
     hereinafter in effect relating to pollution or protection of human health
     or the environment, including without limitation, laws relating to Releases
     or threatened Releases of Hazardous Materials into the indoor or outdoor
     environment (including, without limitation, ambient air, surface water,
     ground water, land surface or subsurface strata) or otherwise relating to
     the manufacture, processing, distribution, use, treatment, storage,
     Release, disposal, transport or handling of Hazardous Materials and all
     laws, regulations and ordinances with regard to recordkeeping,
     notification, disclosure and reporting requirements respecting Hazardous
     Materials.

          "Hazardous Materials" means (1) any substance, material, chemical, or
     waste that is now or hereafter becomes defined as or included in the
     definition of 'Hazardous Substance,' 'Oil,' or 'Pollutant or Contaminant'
     in the National Oil and Hazardous Substances Pollution Contingency Plan, 40
     C.F.R. (S) 300.5; (2) asbestos and asbestoscontaining materials,
     polychlorinated biphenyls ("PCBs"), and lead-based paints; and (3) any
     other substance, material, chemical, or waste regulated under any
     Environmental Law.

          "Release" means any release, spill, emission, discharge, leaking,
     pumping, injection, deposit, disposal, discharge, dispersal, leaching or
     migration into the indoor or outdoor environment (including, without
     limitation, ambient air, surface water, groundwater and surface or
     subsurface strata) or into or out of any property, including the movement
     of Hazardous Materials through or in the air, soil, surface water,
     groundwater or property.

          Section 3.19 Employees.

          (a) Except as set forth on Schedule 3.19(a): (i) neither the Company
     nor Subsidiary has been informed since June 30, 2000, of any current plans
     of any personnel of the Company or Subsidiary to terminate their employment
     with the Company, and (ii) no employees of the Company or Subsidiary (other
     than those party to the Parallel Stock Unit Plan and only to the extent
     provided in the Parallel Stock Unit Plan and terminated pursuant to the
     terms of the Option Payment Agreements) have any greater rights upon
     termination as a result of the execution and performance of this Agreement
     and the transactions contemplated herein. Sellers agree to use their
     reasonable efforts to ensure that this Agreement and the transactions
     contemplated herein will not cause the termination of any employees of the
     Company or Subsidiary.

          (b) Schedule 3.19(b) sets forth the names of all directors, officers
     and employees of each of Company and Subsidiary. The total salary, bonuses,
     fringe benefits and perquisites each received during the year ended
     December 31, 2000, and any changes to the foregoing which occurred (or are
     scheduled to hereafter occur) after December 31, 2000, and through March 7,
     2001, are as set forth on Schedule 3.19(b). No changes will be made by the
     Company or Subsidiary in the amount or kind of any compensation being

                                      -26-



     paid or provided to any individual listed in Schedule 3.19(b) without
     Buyer's prior written consent. Except as disclosed in Schedule 3.19(b),
     there are no other forms of compensation paid to any directors, officers or
     employees of the Company or Subsidiary. Except as disclosed on Schedule
     3.19(b), the amounts accrued on the Financial Statements for vacation pay,
     sick pay and all commissions and other fees payable to agents, salesmen and
     representatives of the Company and Subsidiary will be adequate to cover the
     liabilities of the Company and Subsidiary for such items.

          Section 3.20 Licenses and Permits; Assets. Each of the Company and
Subsidiary has obtained all licenses, product and establishment registrations,
franchises, permits, easements, certificates, consents, rights and privileges
necessary or appropriate to the conduct of the respective businesses of the
Company and Subsidiary (collectively, the "Licenses," all of which are set forth
on Schedule 3.20(a)). The Licenses are valid and in full force at the Closing as
to the Company and/or Subsidiary, and to Sellers' knowledge, as to third
parties, and Sellers know of no reason why the Licenses will not remain valid
and in full force from and after the Closing. Except as set forth on Schedule
3.20(c), as of the Closing Date, Company and Subsidiary shall have good and
marketable title to all of their intangible or other personal property (other
than licensed or leased property, as to which they shall have a valid licensee
or leasehold interest) reflected on their books or otherwise necessary or
appropriate to operate and conduct their business in the manner heretofore
operated or conducted. Except as set forth on Schedule 3.20(b), no Seller or any
member of any Seller's family owns or will own on the Closing Date, any property
rights, tangible or intangible, which are used in the business of the Company or
Subsidiary.

          Section 3.21 Bank Accounts. Schedule 3.21 sets forth the names and
locations of all banks in which the Company and/or Subsidiary has an account or
safe deposit box, the account numbers of all such corporate accounts, and the
names of all persons authorized to draw thereon or have access thereto.

          Section 3.22 Sellers' Documentation. All documents supplied by the
Sellers to the Buyer with respect to the business of the Company and Subsidiary,
including customer agreements, payment cards, ledgers and similar records, and
other information related to the businesses of the Company and the Subsidiary
are true, accurate and complete. The financial books and records of the Company
and Subsidiary accurately reflect the transactions to which they are or were a
party or by which their properties are or were bound, and such books and records
are and have been properly kept and maintained.

          Section 3.23 Disclosure. No representation or warranty by Sellers in
this Agreement or in any exhibits, schedules or other documents delivered by or
on behalf of Sellers contains, or will contain as of the Closing Date, any
untrue statement of a material fact or omits, or will omit as of the Closing
Date, a material fact to make the statements contained herein and therein not
misleading.

          Section 3.24 No Finder's Fee. Sellers represent that the Company has
retained the services of Barrington Partners (and no other person or entity) as
agent or broker in connection with this transaction, and Sellers agree to
personally pay all fees, commissions, expenses and other sums that may now or
hereafter be due to Barrington Partners. Sellers

                                      -27-



represent and warrant that neither Company nor Subsidiary has retained any
finder or broker in connection with the transactions contemplated by this
Agreement, or shall have any liability for any payment to any finder or broker,
and Ms. Allison hereby agrees to indemnify and to hold the Buyer harmless of and
from any liability for any commission or compensation in the nature of a
finder's fee to any broker or other person or firm (and the costs and expenses
of defending against such liability or asserted liability) (other than the
professional fees paid by the Company to Barrington Partners in the amount of
approximately $40,000 through January 31, 2001).

          Section 3.25 Legal Representation. Each Seller acknowledges that the
Buyer is represented by separate legal counsel, and Sellers have been advised
that they may wish to consult independent legal counsel with regard to the
transactions contemplated by this Agreement. Sellers agree that all fees and
expenses of their legal counsel, accountants and other professionals or
consultants in connection with the transaction provided for herein, shall be
borne by them personally, and not by the Company or Subsidiary.

          Section 3.26 Certain Representations and Warranties Regarding
Broker-Dealer Status.

          (a) Subsidiary is duly registered as a broker-dealer under Section
     15(b) of the Securities Exchange Act of 1934, as amended (together with all
     the rules and regulations thereunder, the "Exchange Act") and all
     applicable State broker-dealer laws and is a member in good standing with
     the National Association of Securities Dealers, Inc. (the "NASD"). Prior to
     engaging in any activities requiring it to be registered as a securities
     broker/dealer under the Exchange Act, Subsidiary was, and at all times
     since has been, a duly registered broker-dealer under the Exchange Act and
     the Rules and regulations promulgated thereunder and duly registered or
     licensed in good standing under the laws of each jurisdiction in which such
     qualification is necessary, as set forth on Schedule 3.26 attached hereto.
     All of Subsidiary's registrations set forth on Schedule 3.26 are in full
     force and effect, and Subsidiary has paid all annual registration fees owed
     in a timely manner. Company and Subsidiary are fully in compliance with all
     applicable federal and state securities laws and all applicable rules and
     requirements of regulatory agencies and bodies (including self-regulatory
     bodies), as well as all applicable policies, obligations, descriptions and
     restrictions, including but not limited to those under the Exchange Act.

          (b) There are no legal or governmental investigations of Company or
     Subsidiary pending, or to Sellers', Company's or Subsidiary's knowledge,
     threatened, which would question the right of Subsidiary to act as
     broker-dealer. There are no special restrictions, judgments or SEC orders
     with regard to Subsidiary currently in effect that have a material adverse
     effect on the business or operations of Subsidiary. No orders of exemption
     have been issued to Subsidiary by any federal or state regulatory agency.

          (c) Neither the Company or Subsidiary are required to be registered
     under the Investment Company Act of 1940, as amended, or the Investment
     Advisers Act of 1940, as amended.

          (d) Although Company and Subsidiary are not required to comply with
     Section 17(j) of the Investment Company Act of 1940, as amended, and Rule
     17j-1 thereunder,

                                      -28-



     Company and Subsidiary have adopted formal codes of ethics and written
     policies regarding insider trading. Except for the annual and initial
     holding report and certification requirements (which the Company and
     Subsidiary are not required to comply with), such codes and policies comply
     in all material respects with Section 17(j) of the Investment Company Act
     of 1940, as amended, and Rule 17j-1 thereunder. Other than as disclosed on
     Schedule 3.26(d), there have been no violations of the aforesaid codes and
     policies.

          (e) Except as set forth on Schedule 3.26(f), neither the Company,
     Subsidiary or any Person "associated" (as defined under the Investment
     Advisers Act of 1940, as amended) with the Company or Subsidiary, has in
     the last ten (10) years been convicted of any crime or is or has been
     subject to any disqualification that would be the basis for denial,
     suspension or revocation of a broker-dealer under Section 15 of the
     Exchange Act, and there is no proceeding or investigation that is
     reasonably likely to become the basis for any such disqualification,
     denial, suspension or revocation.

                                   ARTICLE IV

                   REPRESENTATIONS AND WARRANTIES OF THE BUYER
                   -------------------------------------------

          The Buyer hereby represents and warrants to each of the Sellers as
follows:

          Section 4.1 Organization. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Missouri
and has the corporate power and authority to enter into this Agreement and to
carry out the transactions contemplated hereby, and to own, lease and operate
its assets and properties and to carry on its business as it is now being
conducted. The Buyer is qualified to do business and is in good standing in each
jurisdiction in which the properties owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary.

          Section 4.2 Authorization. The execution and delivery of this
Agreement, and the consummation of the transactions contemplated hereby, have
been duly authorized by all requisite corporate action of the Buyer and such
authorization was duly and validly given and has not been modified, revoked or
rescinded in any respect and is in full force and effect. No other corporate
proceedings on the part of the Buyer are necessary to authorize this Agreement
or the transactions contemplated hereby. Buyer is not in violation of any
provisions of its organizational documents.

          Section 4.3 Valid and Binding Agreement. This Agreement constitutes a
valid and binding agreement of the Buyer enforceable against the Purchaser in
accordance with its terms.

          Section 4.4 Consents; No Violation. Except as set forth on Schedule
4.4, neither the execution nor the delivery of this Agreement, the consummation
of the transactions contemplated hereby, nor the compliance with any of the
provisions hereof, by the Buyer, including without limitation its payment of the
Earn-Out Payments in accordance with this Agreement: (i) violates any statute or
law or any rule, regulation, order, award, judgment or decree of any court or
governmental authority, affecting the Buyer, (ii) violates or conflicts with,

                                      -29-



or constitutes a default under any contract, commitment, agreement,
understanding, arrangement, trust or restriction of any kind to which the Buyer
is a party, by which it is bound or which otherwise in any way affects it, (iii)
will cause, or give any persons valid grounds to cause (with or without notice,
the passage of time or both), the maturity of any debt, liability or obligation
of the Buyer to be accelerated, or will increase any such liability or
obligation, (iv) requires any filing with, the notification of, or the obtaining
of any permit, authorization, consent or approval of any third party or
governmental or regulatory authority, foreign or domestic other than the Federal
Reserve Bank of Kansas City or (v) violates or conflicts with or constitutes a
default under the certificate of incorporation or by-laws, as amended, of the
Buyer.

          Section 4.5 Absence of Litigation. As of the date hereof, there is no
action, suit, claim, investigation or proceeding pending or threatened against,
Buyer or any of its property before any court or arbitrator or any
administrative, regulatory or governmental body, or any agency or official which
challenges or seeks to prevent, enjoin, alter or delay the transactions
contemplated by this Agreement. As of the date hereof, neither Buyer nor any of
its property is subject to any order, writ, judgment, injunction, decree,
determination or award which would prevent or delay the consummation of the
transactions contemplated hereby.

          Section 4.6 No Finder's Fee. Buyer represents and warrants that it has
not retained any finder or broker in connection with the transactions
contemplated by this Agreement, and shall have no liability for any payment to
any finder or broker.

                                    ARTICLE V

                                    COVENANTS
                                    ---------

          Section 5.1 Conduct and Preservation of Business.

          (a) The Sellers agree with the Buyer that, except as contemplated by
     this Agreement, from the date hereof until the Closing Date, unless
     otherwise consented to by the Buyer in advance in writing, the Sellers will
     cause the Company and Subsidiary to conduct their businesses diligently, in
     the ordinary course and consistent with past practice. Without limiting the
     generality of the foregoing, and except as otherwise expressly provided in
     this Agreement or with the prior written consent of Buyer, from the date
     hereof to the Closing Date, neither the Company nor Subsidiary will:

               (i) incur any obligations or liabilities for borrowed monies
          (whether absolute, accrued, contingent or otherwise and whether due or
          to become due) other than in the ordinary course of business and in
          accordance with past Company practices, except to the extent approved
          by the Buyer, or make any loans, advances or capital contributions to,
          or investments in, any other person;

               (ii) permit any change in any accounting principles, or methods
          of application of said principles, or practices used by it, including
          but not limited to changes with respect to collection of accounts
          receivable or payments of accounts payable;

                                      -30-



               (iii) pay, discharge or satisfy any claim, lien, encumbrance or
          liability (whether absolute, accrued, contingent or otherwise and
          whether due or to become due) except in the ordinary course of
          business consistent with past practices;

               (iv) permit or allow any of its properties or assets (whether
          real, personal or mixed, tangible or intangible) to be mortgaged,
          pledged or subjected to any lien or encumbrance, or pledge or
          otherwise encumber shares of capital stock of the Company or interests
          in Subsidiary (other than to the extent of security interests already
          existing on or before the Closing Date, which shall be terminated
          following the Closing Date);

               (v) except as disclosed on Schedule 3.8(n), acquire, sell, lease,
          distribute or dispose of any assets outside the ordinary course of
          business, including but not limited to any write-down of the value of
          any inventory, or write-off as uncollectable any notes or accounts
          receivable or any portion thereof or cancel or release any debts or
          claims, or waive any rights of substantial value or sell, transfer or
          convey any of its properties or assets (whether real, personal or
          mixed, tangible or intangible); or incur any obligation(s) or
          liability(s) (absolute, contingent or otherwise) in an aggregate
          amount of more than Five Thousand Dollars ($5,000) with respect to any
          single event or transaction or series of related events or
          transactions;

               (vi) enter into, adopt, amend or terminate any bonus, profit
          sharing, 401(k) plan, compensation, severance, termination, stock
          option, stock appreciation right, restricted stock, performance unit,
          parallel stock unit, stock equivalent, stock purchase agreement,
          pension, retirement, deferred compensation, employment, severance or
          other employee benefit agreement, trust, plan, fund or other
          arrangement for the benefit or welfare of any director, officer,
          employee, member or stockholder, or increase in any manner the
          compensation or benefits of any director, officer, employee, member or
          stockholder or pay any benefits not required by any plan or
          arrangement as in effect as of the date hereof;

               (vii) acquire (by merger, consolidation, or acquisition of stock
          or assets) any corporation, partnership or other business organization
          or division thereof; (ii) authorize any capital expenditures or
          commitments in excess of $20,000 individually; (iii) settle any
          litigation for amounts in excess of $20,000; or (iv) enter into or
          amend any contract, agreement, commitment or arrangement with respect
          to any of the foregoing;

               (viii) declare, pay or make, or set aside for payment or making,
          any dividend or other distribution (whether in cash, stock, or
          property or any combination thereof) in respect of its capital stock
          or other securities, or split, combine or reclassify any shares of its
          capital stock, or directly or indirectly redeem, purchase or otherwise
          acquire any of its capital stock or other securities;

                                      -31-



               (ix) authorize for issuance, issue, sell, deliver or agree or
          commit to issue, sell or deliver (whether through the issuance or
          granting of options, warrants, commitments, subscriptions, rights to
          purchase or otherwise) any stock of any class or any other interest in
          the Company or Subsidiary;

               (x) pay, distribute, loan or advance any amount to or in respect
          of, or sell, transfer or lease any properties or assets (whether real,
          personal or mixed, tangible or intangible) to, or enter into any
          agreement, arrangement or transaction with, any stockholder, member,
          any of the officers or directors of the Company or Subsidiary, any
          affiliate or associate of any stockholder, or member of the Company or
          Subsidiary or any of their respective officers or directors, or any
          business or entity in which any stockholder, member or any affiliate
          or associate of any such persons has a direct or indirect interest,
          other than customary advances for reasonable business expenses made in
          the ordinary course of business;

               (xi) make any Tax election or settle or compromise any Tax
          liability, or terminate its Subchapter S status;

               (xii) amend, terminate or voluntarily suffer the termination of
          any material contract, lease, agreement or license, or fail to perform
          all of its obligations or suffer or permit any default to exist under,
          any such contract, lease, agreement or license;

               (xiii) amend the Articles of Incorporation or By-Laws of the
          Company or the Articles of Organization or Operating Agreement of the
          Subsidiary;

               (xiv) enter into any material contract or obligation or terminate
          or breach any such existing material contract or obligation without
          the express written consent of the Buyer;

               (xv) cause or permit Company or Subsidiary to accelerate or defer
          the collection of their receivables or payment of their obligations
          such that the timing and pattern of such collection and payment is
          substantially different than that which has existed during the
          two-year period immediately preceding the date of this Agreement;

               (xvi) cancel, waive or compromise any right or debt or obligation
          owed or due to it by any client, customer, employee, officer or other
          person or entity, other than in the ordinary course of business and in
          an amount of $5,000 or less; or

               (xvii) agree, whether in writing or otherwise, to take any action
          prohibited in this Section 5.1.

Subject to applicable law and the agreements set forth in Section 5.1(a),
between the date hereof and the Closing Date, the Sellers will, during normal
business hours and upon reasonable prior notice: give Buyer and its counsel,
financial advisors, auditors and other authorized

                                      -32-



representatives reasonable access to all employees, landlords, suppliers,
customers (provided that Ms. Allison or her designee is present during
discussions with customers), vendors, plants, offices, warehouses and other
facilities and to all books and records of the Company and Subsidiary; will
permit Buyer and its counsel, financial advisors, auditors and other authorized
representatives to make such inspections as Buyer may reasonably require; and
will cause the officers of the Company and Subsidiary to furnish Buyer or its
representatives with such financial and operating data and other information
with respect to the business and properties of the Company and Subsidiary as
Buyer may from time to time reasonably request. No investigation pursuant to
this Section 5.1(b) shall affect any representations or warranties of the
parties herein or the conditions to the obligations of the parties hereunder.
Sellers shall, during normal business hours and upon reasonable prior notice:
cause the Company and Subsidiary to permit Buyer to meet with their employees,
between the date hereof and the Closing Date, to discuss retention and other
relevant issues pertaining to operations following Closing. Sellers will
promptly notify Buyer if it learns or has reason to believe that any customer or
client of Company or Subsidiary has terminated or is contemplating a termination
of any contract or agreement with Company or Subsidiary or any other material
change in its business relationship (including a significant change in fees or
revenues paid by the client or customer to Company or Subsidiary) with Company
or Subsidiary. Sellers will also immediately inform Buyer if they learn or have
reason to believe any investigation or proceeding (legal or regulatory) is
instituted or is being contemplated or threatened against Company or Subsidiary.
Buyer will keep confidential and not divulge (except to its employees, counsel,
accountants and other advisors who need to know such information in connection
with this Agreement and who agree to keep confidential and not divulge, or as
may be required by law or order of a court or regulatory agency or body) any
confidential information obtained by it regarding the business and finances of
the Company and Subsidiary; provided, however, that this prohibition will not
include any information (i) known generally to the public, or (ii) accessible to
third parties on an unrestricted basis. Sellers will cause Company and
Subsidiary to not enter into any new contracts or agreements with any client or
customer (or materially amend any existing such contracts or agreements) without
Buyer's prior consent, not to be unreasonably withheld. Buyer shall promptly
return all such confidential information to the Sellers if this Agreement is
terminated.

          Section 5.2 Reasonable Efforts. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its, his or her
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things reasonably necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. Without limiting the generality of
the foregoing, Buyer and the Sellers shall cooperate with one another (i) in
determining whether action by or in respect of, or filing with, any governmental
body, agency, official or authority (either domestic or foreign) is required,
proper or advisable or any actions, consents, waivers or approvals are required
to be obtained from parties to any contracts, in connection with the
transactions contemplated by this Agreement and (ii) in timely seeking to obtain
any such actions, consents and waivers and to make any such filings. In case at
any time after the Closing any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and directors of each
party hereto shall take all such necessary action.

          Section 5.3 Public Announcements; Notification of Certain Matters.
Buyer and the Sellers will consult with each other, and obtain the other's
consent, before issuing any

                                      -33-



press release or other publicly-disseminated statement with respect to the
transactions contemplated by this Agreement, except as may be required by
applicable law, by applicable rules of any securities exchange, as may be
reasonably necessary to obtain the third-party consents required of the Sellers
hereunder, or to the Company's and Subsidiary's clients or prospective clients.
The Sellers shall give prompt notice to Buyer, and Buyer shall give prompt
notice to the Sellers, upon becoming aware of (i) the occurrence, or
non-occurrence, of any event the occurrence or non-occurrence of which would
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate, (ii) any fact which was in existence on the date of this Agreement
and, if known on such date, would have been required to be set forth as
described on the Schedules hereto, and (iii) any failure of the Sellers or
Buyer, as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, that the
delivery of any notice pursuant to this Section 5.3 shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.

          Section 5.4 No Solicitation.

          (a) The Sellers are not engaged in and will not engage in, or allow
     the Company or Subsidiary to engage in, any discussions or negotiations
     with any third parties with respect to any Acquisition Proposal (as defined
     below). Neither the Company nor the Sellers shall, directly or indirectly,
     through any officer, director, employee, representative or agent (as
     applicable), (i) solicit, initiate or encourage any inquiries or proposals
     that constitute, or would lead to, a proposal or offer for a sale of common
     stock, a merger, consolidation, business combination, sale of substantial
     assets, sale of a substantial percentage of shares of capital stock
     (including, without limitation, by way of a tender offer) or similar
     transactions involving the Company or Subsidiary, other than the
     transactions contemplated by this Agreement (any of the foregoing inquiries
     or proposals being referred to in this Agreement as an "Acquisition
     Proposal"), (ii) engage in negotiations or discussions concerning, or
     provide any non-public information to any person or entity relating to, any
     Acquisition Proposal or (iii) agree to, approve or recommend any
     Acquisition Proposal.

          (b) The Sellers shall notify Buyer promptly after receipt by the
     Company or the Sellers of any Acquisition Proposal or any request for
     non-public information in connection with an Acquisition Proposal or for
     access to the properties, books or records of the Company or Subsidiary by
     any person or entity that informs the Company, Subsidiary or the Sellers
     that it is considering making, or has made, an Acquisition Proposal. Such
     notice shall indicate the identity of the offeror and the terms and
     conditions of such proposal, inquiry or contact.

     The Sellers' obligations under this Section 5.4 shall terminate upon the
     earlier of the termination of this Agreement pursuant to Section 9.1 hereof
     or the Closing.

                                      -34-



          Section 5.5 Insurance. The Sellers shall cause the Company and
Subsidiary to maintain the insurance coverage specified in Section 3.13 hereto
in full force and effect through the Closing.

          Section 5.6 Consents of Third Parties. The Sellers shall obtain, prior
to Closing, consents of all third parties to change of control of the Company
and Subsidiary with respect to all leases, licenses, product and establishment
registrations, contracts and commitments that require such consents.

          Section 5.7 Taxes.

          (a) The Company and each of the Sellers will, if Buyer so requests,
     join with Buyer in making a timely election under IRS Code Sec. 338(h)(10)
     (and any corresponding election under state, local, and foreign tax law)
     with respect to the purchase and sale of the stock of the Company hereunder
     (a "Section 338(h)(10) Election"). If Buyer so requests, the Sellers agree
     to cooperate fully in order to make the Section 338(h)(l0) Election valid,
     including but not limited to, the filing of Form 8023 and any accompanying
     statements or schedules that may be required. Sellers will include any
     income, gain, loss, deduction, or other tax item resulting from the Section
     338(h)(l0) Election on their Tax Returns to the extent required by
     applicable law. Sellers shall also pay any Tax imposed on the Company or
     its subsidiaries attributable to the making of the Section 338(h)(10)
     Election, including, but not limited to, (i) any Tax imposed under Code
     Sec. 1374, (ii) any tax imposed under Treas. Reg. (S)1.338(h)(10)-IT(d)(2),
     or (iii) any state, local or foreign tax imposed on the Company's gain, and
     Sellers shall indemnify Buyer and the Company against (i) any adverse
     consequences arising out of any failure to pay any such Taxes, and (ii)
     against any income Tax of the Sellers, the Company or the Subsidiary
     incurred during the period up to and including the Closing Date. As
     described in Section 5.7(h), Buyer shall reimburse Sellers for certain
     Taxes imposed on Sellers as a result of the Section 338(h)(10) Election.

          (b) The Buyer shall prepare any and all documents, statements and
     other forms that are required to be submitted to any taxing authority in
     connection with the Section 338(h)(10) Election (the "Section 338 Forms")
     and deliver the same to the Sellers no later than 15 days prior to the date
     the Section 338 Forms are required to be filed. Each of the Buyer, the
     Sellers and the Company shall cause the Section 338 Forms to be duly
     executed by an authorized person and shall return the same to the Buyer no
     later than 5 days prior to the date such Section 338 Forms are required to
     be filed, and the Buyer shall duly and timely file the same in accordance
     with the applicable tax laws.

          (c) The Buyer and the Sellers shall use their best efforts, as soon as
     practicable after the Closing Date, to enter into an agreement, as may be
     amended from time to time (the "Allocation Agreement"), to allocate the
     Purchase Price and the liabilities of the Company and the Subsidiary to the
     assets of the Company for tax purposes. The Buyer shall initially prepare a
     statement setting forth a proposed computation and allocation and shall
     submit the same to the Sellers along with copies of all workpapers,
     reports, opinions and other documents used to prepare the computation no
     later than thirty (30) days after the Closing Date. If, within thirty (30)
     days of the Sellers' receipt of the computation and

                                      -35-



     the workpapers, the Sellers shall not have objected to such computation,
     the computation shall be the allocation. If the Sellers object in writing
     to the computation within thirty (30) days, the Buyer and the Sellers shall
     negotiate in good faith to resolve the computation. If the Buyer and the
     Sellers shall not have agreed to the computation and adopted an allocation
     within thirty (30) days after the Sellers' objection, any disputed aspects
     of the allocation shall be resolved by an accounting firm mutually
     acceptable to the Buyer and the Sellers (the "338 Auditors") as soon as
     practicable but in no event later than thirty (30) days prior to the
     earlier of (i) the last date on which the Section 338 Forms may be filed or
     (ii) the last date on which either the Buyer or the Seller (whichever is
     earlier) must file a Tax Return relating to the transactions contemplated
     hereby. The decision of the 338 Auditors shall be final, and the costs,
     expenses and fees of the 338 Auditors shall be born equally by the Buyer
     and the Sellers. The Buyer and the Sellers shall not take a position before
     any taxing authority or otherwise (including in any Tax Return)
     inconsistent with the allocations provided hereunder.

          (d) The Company and Sellers will not revoke the Company's election to
     be taxed as an S corporation within the meaning of Code Sec. 1361 and 1362.
     The Company and Sellers will not take or allow any action that would result
     in the termination of the Company's status as a validly electing S
     corporation within the meaning of Code Sec. 1361 and 1362.

          (e) Sellers shall prepare or cause to be prepared and file or cause to
     be filed (on a timely basis) all income Tax Returns for the Company and the
     Subsidiary for all periods ending on or prior to the Closing Date which are
     filed after the Closing Date. Sellers shall prepare the Tax Returns in a
     manner consistent with the Tax Returns previously filed for the Company and
     Subsidiary and in accordance with applicable law, and Sellers shall
     indemnify Buyer, the Company and the Subsidiary against any Taxes and
     penalties either (i) incurred by any of them related to the filing of such
     Tax Returns; or (ii) required to be reported on such Tax Returns. Sellers
     shall permit Buyer to review and comment on each such Tax Return described
     in the preceding sentence prior to filing. To the extent required by
     applicable law, Sellers shall include any income, gain, loss, deduction or
     other tax items for such periods on their income Tax Returns in a manner
     consistent with the Schedule K-1's furnished to the Sellers for such
     periods. Buyer shall prepare or cause to be prepared and file or cause to
     be filed all non-income Tax Returns for the Company and Subsidiary for all
     periods ending on or prior to the Closing Date which are filed after the
     Closing Date. Sellers shall reimburse Buyer for any Taxes of Company or
     Subsidiary with respect to such periods within fifteen (15) days after
     payment by Buyer, the Company, or the Subsidiary of such Taxes to the
     extent such Taxes are not reflected in the reserve for Tax liability
     (rather than any reserve for deferred Taxes established to reflect timing
     differences between book and Tax income) shown on the face of the Balance
     Sheet, as adjusted for the passage of time through the Closing Date (in
     accordance with the past custom and practice of the Company and Subsidiary
     in filing Tax Returns) to reflect Tax liabilities incurred in the ordinary
     course of business after the date of the Balance Sheet.

          (f) Buyer, the Company, the Subsidiary and Sellers shall cooperate
     fully, as and to the extent reasonably requested by the other party, in
     connection with the filing of Tax

                                      -36-



     Returns pursuant to this Section and any audit, litigation or other
     proceeding with respect to Taxes. Such cooperation shall include the
     retention and (upon the other party's request) the provision of records and
     information which are reasonably relevant to any such audit, litigation or
     other proceeding and making employees available on a mutually convenient
     basis to provide additional information and explanation of any material
     provided hereunder. The Company, the Subsidiary and Sellers agree (A) to
     retain all books and records with respect to Tax matters pertinent to the
     Company and the Subsidiary relating to any taxable period beginning before
     the Closing Date until the expiration of the statute of limitations (and,
     to the extent notified by Buyer or Sellers, any extensions thereof) of the
     respective taxable periods, and to abide by all record retention agreements
     entered into with any taxing authority, and (B) to give the other party
     reasonable written notice prior to transferring, destroying or discarding
     any such books and records and, if the other party so requests, the Company
     and the Subsidiary or Sellers, as the case may be, shall allow the other
     party to take possession of such books and records. Buyer and Sellers
     further agree, upon request, to use their best efforts to obtain any
     certificate or other document from any governmental authority or any other
     person as may be necessary to mitigate, reduce or eliminate any Tax that
     could be imposed (including, but not limited to, with respect to the
     transactions contemplated hereby).

          (g) All transfer, documentary, sales, use, stamp, registration or
     other such Taxes and fees (including any penalties and interest) incurred
     in connection with this Agreement shall be paid one-half by Buyer and
     one-half by Sellers when due, and the party required by applicable law will
     file all necessary Tax Returns and other documentation with respect to all
     such transfer, documentary, sales, use, stamp, registration and other such
     Taxes and fees, and, if required by applicable law, the other parties will,
     and will cause their affiliates to, join in the execution of any such tax
     Returns and other documentation. The expense of such filings shall be paid
     one-half by Buyer and one-half by Sellers.

          (h) Buyer shall reimburse Sellers for certain Taxes imposed on Sellers
     as a result of the Section 338(h)(10) Election as follows:

               (i) By no later than the sixtieth (60th) day prior to the due
          date (including one four (4)-month automatic extension) of the federal
          income Tax Returns of Sellers for each calendar year beginning with
          calendar year 2001 and ending with the last calendar year in which a
          payment to or from the Sellers is required under this Agreement,
          Sellers shall calculate and notify Buyer of an amount equal to the
          excess of (A) the total amount of federal and state income taxes
          payable by each Seller for all such years (including any increase or
          decrease in federal or state taxes payable as a result of any payment
          pursuant to this Section 5.7(h)), minus (B) the total amount of
          federal and state income taxes which would have been payable by each
          Seller for all such years if no Section 338(h)(10) Election had been
          made. The amount calculated pursuant to this Section 5.7(h) for each
          Seller is referred to herein as the "Section 338(h)(10) Amount" and
          shall be allocated to goodwill.

                                      -37-



               (ii) Buyer, within fifteen (15) days following the date of each
          notice from Sellers of their calculation of Section 338(h)(10) Amounts
          pursuant to Section 5.7(h)(i), may object to such calculation by
          delivery of written notice to Sellers, setting forth in reasonable
          detail the nature of the objections. If Sellers and Buyer within ten
          (10) days following receipt by the Sellers of the written notice of
          objections are unable to resolve any disagreements regarding the
          calculation, all such disagreements at the written request of either
          Buyer or Sellers shall be referred for resolution to a
          mutually-agreed-upon neutral accounting firm (the "Neutral Accounting
          Firm"). In such event, the Neutral Accounting Firm shall as soon as
          reasonably practicable following the referral to it of the
          disagreements deliver to Sellers and Buyer a written report in which
          it shall set forth its determination of the Section 338(h)(10) Amounts
          for Sellers, and its determination shall be conclusive and binding on
          the parties hereto. Buyer and Sellers shall fully cooperate, and Buyer
          shall cause the Company to fully cooperate, with the Neutral
          Accounting Firm in connection with such determination hereunder,
          including without limitation providing the Neutral Accounting Firm
          with full access to his, her or its books and records to the extent
          relevant to such resolution. The costs and expenses of retaining the
          Neutral Accounting Firm shall be borne equally by the Buyer, on the
          one hand, and the Sellers, on the other hand (in proportion to their
          Shares). Within fifteen (15) days of each notice from Sellers to Buyer
          of the Section 338(h)(10) Amounts (or, if Buyer objects to such
          Notice, within fifteen (15) days after the final computation of the
          Section 338(h)(l0) Amounts), Buyer and Seller shall be obligated to
          make payments between them such that the net payment made from Buyer
          to Sellers (in the aggregate) under this Section 5.7(h) is equal to
          the lesser of (a) the aggregate total of the Section 338(h)(10)
          Amounts or (b) Two Hundred Eighty Thousand Dollars ($280,000) plus
          fifty percent (50%) of the amount by which the aggregate total of the
          Section 338(h)(10) amounts exceeds Two Hundred Eighty Thousand Dollars
          ($280,000).

               (iii) At such time as a final and binding determination is made
          in any audit, review, examination or any other administrative or
          judicial proceeding (including any administrative or judicial review
          of any claim for refund) involving any Tax Return referred to in this
          Section 5.7(h) (a "Tax Contest"), the obligations of the parties under
          this Section 5.7(h) shall be adjusted (and payments shall be made
          between the parties to reflect such adjustments) in accordance with
          such final determination.

               (iv) Each of the parties shall provide prompt notice to the other
          party of any pending or threatened Tax Contest of which it becomes
          aware that could affect the obligations of either party under this
          Section 5.7(h). Such notice shall contain factual information (to the
          extent known) describing any asserted Tax liability or adjustment in
          reasonable detail (and its possible effect upon the obligations under
          this Section 5.7(h)) and shall be accompanied by copies of any notice
          and other documents received from any Tax authority in respect of any
          such matters. If a party that would be entitled to receive a payment
          under this Section 5.7(h) (an "Indemnified Party") has knowledge of an
          asserted Tax liability

                                      -38-



         or adjustment that could affect the amount of such payment and such
         party fails to give the party that would be obligated to make such
         payment (the "Indemnifying Party") prompt notice of such asserted Tax
         liability or adjustment, then (i) if the Indemnifying Party is
         precluded from contesting the asserted Tax liability or adjustment in
         any forum as a result of the failure to give prompt notice, the
         Indemnifying Party shall have no obligation to make an additional
         payment to the Indemnified Party with respect to any Taxes arising out
         of such asserted Tax liability, and (ii) if the Indemnifying Party is
         not precluded from contesting the asserted Tax liability in any forum,
         but such failure to give prompt notice results in a monetary detriment
         to the Indemnifying Party, then any amount which the Indemnifying Party
         is otherwise required to pay the Indemnified Party pursuant to this
         Agreement shall be reduced by the amount of such detriment.

               (v) In the case of any Tax Contest, Sellers shall control the
          defense or prosecution of such Tax Contest; provided, however, Sellers
          shall not agree to or concede any Tax liability or adjustment that
          could cause Buyer to have an obligation under this Section 5.7(h)
          without Buyer's written consent, which consent shall not be
          unreasonably withheld. All costs and expenses of any such Tax Contest
          shall be borne by the party incurring such costs and expenses.

          (i) Notwithstanding any other provision of this Agreement, the
     agreements and obligations under this Section 5.7 shall survive
     indefinitely.

          (j) Unless the Company is entitled to claim a compensation deduction
     (for a Tax Period other than the Company's final S Corporation Tax Return)
     for the payments made to the Option Holders under Section 1.2 above or
     under the Option Payout Agreements between the Company and the Option
     Holders, Sellers shall be liable to Buyer and the Company for any payroll
     Taxes incurred by Buyer or the Company as a result of any payment made to
     the Option Holders under Section 1.2 above or under the Option Payout
     Agreements between the Company and the Option Holders (including payroll
     Taxes incurred by the Company in its final S Corporation Tax year).

          Section 5.8 Continuing Involvement with Company.

          (a) After the Closing Date and for five (5) years thereafter, or such
     longer period thereafter as Buyer elects,

               (i) Buyer shall cause the Company's Board of Directors to be
          comprised of the following persons, subject to reasonable
          substitutions and changes (other than as to Miriam Meyer Allison and
          the CEO of the Company) as necessary in Buyer's reasonable discretion:

                                      -39-



                                   Miriam Meyer Allison
                                   Crosby Kemper III
                                   Sheila Kemper Dietrich
                                   Mark Schmidtlein
                                   Frank Ware
                                   Chief Operating Officer of the Company (to be
                                       announced);

               (ii) Buyer shall nominate Ms. Allison for election to Buyer's
          Board of Directors.

               (iii) Buyer shall cause the Company's operations to remain in
          Milwaukee, Wisconsin;

     Promptly after Closing, Buyer shall cause its fund accounting functions to
     be moved to the Company's Milwaukee, Wisconsin, location, take all steps
     possible to cause the UMB Scout Funds to utilize the services of the
     Company and Subsidiary as promptly as possible; and use its best efforts to
     recruit other clients and customers for the Company and Subsidiary;

          (b) The terms of Ms. Allison's post-Closing employment by the Buyer
     are set forth on Schedule 5.8(b) attached hereto and incorporated herein by
     reference.

          (c) At or promptly after Closing, Buyer shall cause Seller Ms. Allison
     to be released from her obligations under the guaranties, notes and other
     instruments and documents listed on Schedule 5.8(c).

          Section 5.9 Control of Company Operations. Nothing contained in this
Agreement shall give to Buyer, directly or indirectly, the right to control or
direct the Company's operations prior to the Closing Date. Prior to the Closing,
the Company shall exercise, consistent with the exercise of its reasonable
business judgment but subject to the terms and conditions of this Agreement,
complete control and supervision of its operations.

          Section 5.10 Company's 401(k) Plan. The Sellers shall cause the
Company to take all action necessary to terminate the Company's 401(k) Plan (the
"401(k) Plan") prior to the Closing Date (with such termination to be effective
prior to the Closing Date). Thereafter, the parties shall apply to the Internal
Revenue Service for a favorable determination letter in connection with the
termination and liquidation of the 401(k) Plan. Upon the receipt of a favorable
Internal Revenue Service determination letter, the 401(k) Plan participants who
are employed by the Company may, in accordance with Section 401(a)(31) of the
Code, directly rollover, in cash, any "eligible rollover distribution" (as such
term is defined in Code Section 402(c)(4)) from the 401(k) Plan to Buyer's
401(k) plan.

          Section 5.11 Cancellation of Note. Prior to Closing, Ms. Allison shall
forgive indebtedness owed to her by the Company pursuant to that certain Five
Hundred Thousand Dollar ($500,000) Note dated December 28, 2000, between the
Company and Ms. Allison (the "Note") and return the Note to the Company for
cancellation.

                                      -40-



          Section 5.12 Option Payout Loan and Guaranty. Prior to Closing, Buyer
will loan to Company $630,000 in accordance with the provisions of Section
1.2(a) hereof, pursuant to a form of note mutually agreed upon by Buyer, Ms.
Allison and the Company; provided,however that if the Closing does occur on
April 17, 2001, the Company shall, upon Buyer's request, pay the balance due to
Buyer in immediately available funds. Ms. Allison will guarantee the Company's
obligations with respect to such note.

                                   ARTICLE VI

                             POST-CLOSING COVENANTS
                             ----------------------

          From the Closing Date to the end of the fifth Earn-Out Period, Buyer
will (a) use reasonable efforts to preserve the existence and corporate
structure of the Company and Subsidiary; (b) not, directly or indirectly, engage
in any business that is competitive with the business being conducted by the
Company or Subsidiary without the prior consent of the Company's Board; and (c)
not engage in any practice intended to minimize Sellers' ability to earn the
Earn-Out Payments. In addition, for two (2) years following the Closing Date,
Buyer agrees that it will not terminate any of the Company's lines of business
existing on the Closing Date or terminate any customer of the Company existing
on the Closing Date without the prior approval of Ms. Allison, which consent
shall not unreasonably be withheld. Without limiting the generality of the
foregoing, as to contracts between Company or Subsidiary and Buyer or UMB,
Company and Subsidiary will accrue Gross Revenues for services provided at a
rate at least equal to their then-current standard fee schedules for
unaffiliated accounts. In addition, Buyer shall make available to the Sellers
copies of Buyer's internal management reports concerning Gross Revenues as Buyer
prepares or receives such reports in the ordinary course of its own business.

                                   ARTICLE VII

                               CLOSING CONDITIONS
                               ------------------

          Section 7.1 Conditions to the Obligations of the Buyer. All
obligations of the Buyer hereunder are subject to the fulfillment, prior to or
at the Closing, unless waived by the Buyer, of each of the following conditions:

          (a) Representations and Warranties. All representations and warranties
     made by the Sellers in this Agreement shall be true and correct in all
     material respects as of the date of this Agreement and at and as of the
     Closing Date, as if made at and as of such time, and Buyer shall have
     received a certification of the Sellers to that effect dated the Closing
     Date;

          (b) Performance. The Sellers shall have performed and complied in all
     material respects with all covenants, agreements, obligations and
     conditions required by this Agreement to be so performed or complied with
     by them on or prior to Closing;

          (c) Noncompetition Agreements. Ms. Allison shall have entered into a
     Noncompetition Agreement with the Buyer effective as of the Closing,
     substantially in the form attached hereto as Schedule 7.1(c);

                                      -41-



          (d) Approvals and Consents. All governmental and material third party
     approvals and consents required to be obtained by the Sellers, the Company
     or Subsidiary for consummation of the transactions contemplated by this
     Agreement shall have been obtained at or prior to Closing, provided, that
     the parties agree that material consents shall include, without limitation,
     all distribution agreements, call management and fulfillment agreements, as
     well as any other agreements that automatically expire or terminate in the
     event of assignment (as defined in the Investment Company Act of 1940, as
     amended) (other than standard dealer assistance agreements), and shall not
     include contracts that can easily be obtained from other third parties
     without significant additional cost.

          (e) Opinion of Counsel. Buyer shall have received an opinion of
     counsel to the Sellers, dated the Closing Date, addressing the matters set
     forth on Schedule 7.1(e) attached hereto and reasonably satisfactory to
     Buyer and its counsel;

          (f) No Material Adverse Effect. There shall have been no material
     adverse effect on the business, customer base, Gross Revenues, operations,
     results of operations, condition, assets, prospects and liabilities of the
     Company and/or Subsidiary between the date of this Agreement and the
     Closing Date;

          (g) No Prohibition. No statute, rule, regulation, executive order,
     decree, ruling, injunction or other order shall have been enacted, entered,
     promulgated or enforced by any court or governmental authority of competent
     jurisdiction within the United States which prohibits or makes illegal the
     transactions contemplated by this Agreement; and

          (h) Certificates and Other Closing Deliveries. The Sellers shall have
     executed and delivered to the Buyer the officers' certificates and any
     other documents required by Section 2.2 hereof; and

          (i) Option Payout Agreement. The Option Holders shall have executed
     and delivered to the Buyer the Option Payout Agreements, effective as of
     Closing.

          (j) Seller Guaranties and Obligations. Neither the Company nor the
     Subsidiary shall have any liability for any indebtedness or obligation of
     Ms. Allison or any other Seller, whether under a guaranty, as co-signor, or
     otherwise.

          Section 7.2 Conditions to the Obligations of the Sellers. All
obligations of the Sellers hereunder are subject to the fulfillment, prior to or
at the Closing, unless waived by the Sellers, of each of the following
conditions:

          (a) Representations and Warranties. The representations and warranties
     made by the Buyer in this Agreement shall be true when made and shall
     continuously remain true and shall be reaffirmed and remade at and as of
     the Closing Date in all material respects as though such representations
     and warranties were made at and as of the Closing Date, and Sellers shall
     have received a certification of the Buyer to that effect dated the Closing
     Date;

                                      -42-



          (b) Performance. The Buyer shall have performed and complied in all
     material respects with all covenants, agreements, obligations and
     conditions required by this Agreement to be so performed or complied with
     by it;

          (c) Approvals and Consents. All governmental and third party approvals
     and consents required to be obtained by the Buyer for consummation of the
     transactions contemplated by this Agreement shall have been obtained at or
     prior to Closing; and

          (d) No Prohibition. No statute, rule, regulation, executive order,
     decree, ruling, injunction or other order has been enacted, entered,
     promulgated, or enforced by any court or governmental authority of
     competent jurisdiction within the United States which prohibits or makes
     illegal the transactions contemplated by this Agreement.

          (e) No Material Adverse Effect. There shall have been no material
     adverse effect on the business, customer base, revenues, operations,
     results of operations, condition, assets, prospects and liabilities of the
     Buyer between the date of this Agreement and the Closing Date.

          (f) Opinion of Counsel. Sellers shall have received an opinion of
     counsel to the Buyer, dated the Closing Date, addressing the matters set
     forth on Schedule 7.2(f) attached hereto and reasonably satisfactory to
     Sellers and their counsel.

                                  ARTICLE VIII

           SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
           -----------------------------------------------------------

          Section 8.1 Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall survive for a
period of twenty-eight (28) months following the Closing; provided, however,
that the representations, warranties and covenants regarding tax and
environmental liabilities contained in Sections 3.9, 3.18 and 5.7 hereof shall
survive until expiration of all applicable statutes of limitation; and provided,
further, that if a Notice of Claim shall have been made before the expiration of
the applicable statutes of limitation, the representation to which such Notice
applies shall survive in respect of that claim until the final determination or
settlement of that claim.

          Section 8.2 Indemnification by Ms. Allison. Ms. Allison individually
agrees to indemnify, defend and hold harmless Buyer and its affiliates,
directors, officers, employees and representatives from and against all
liabilities, losses, claims, costs or damages whatsoever (including reasonable
attorneys' fees), arising out of, from or based on:

          (a) the inaccuracy of any representation or warranty contained herein
     made by the Sellers; or

          (b) the non-performance of the Sellers of any covenant, agreement or
     obligation to be performed by any such party under this Agreement.

                                      -43-



          Section 8.3 Indemnification by Buyer. Buyer agrees to indemnify,
defend and hold harmless the Sellers from and against all liabilities, losses,
claims, costs or damages whatsoever (including reasonable attorneys' fees)
arising out of, from or based on:

          (a) the inaccuracy of any representation or warranty contained herein
     made by Buyer; or

          (b) the non-performance by Buyer of any covenant, agreement or
     obligation to be performed by Buyer hereunder.

          Section 8.4 Reimbursement.

          (a) After a claim has been approved or deemed approved by Ms. Allison
     pursuant to Section 8.5(b) and subject to the right of Ms. Allison to
     assume control and defense of any such claim pursuant to Section 8.5(c),
     Ms. Allison individually agrees to reimburse Buyer within twenty (20) days
     after receipt of Buyer's written request for payment with respect to any
     loss, damage, cost or expense suffered by Buyer at any time after the date
     hereof in accordance with Section 8.2 above.

          (b) After a claim has been approved or deemed approved by Buyer
     pursuant to Section 8.5(b) and subject to the right of the Buyer to assume
     control and defense of any such claim pursuant to Section 8.5(c), Buyer
     agrees to reimburse the Sellers within twenty (20) days after receipt of
     Buyer's written request for payment with respect to any loss, damage, cost
     or expense suffered by Sellers at any time after the date hereof in
     accordance with Section 8.3 above.

          Section 8.5 Indemnification Procedures.

          (a) When a claim is made by any person not a party to this Agreement
     with respect to any matter that relates to the indemnification provisions
     of this Article 8, the indemnified party (the "Indemnitee") shall notify
     the indemnifying party (the "Indemnitor") in writing within ten (10) days
     after the Indemnitee has written notice of the facts constituting the basis
     for such claim (the "Notice of Claim"). Whenever any claim is made by one
     of the parties to this Agreement with respect to any matter to which the
     indemnification provisions of this Article 8 relate, the Indemnitee shall
     send a Notice of Claim to the Indemnitor as soon as practicable. The Notice
     of Claim shall specify all facts known to Indemnitee relating to such
     indemnification claim and the amount or an estimate of the amount of the
     liability arising from such claim. The Notice of Claim shall be given in
     accordance with Section 10.5 of this Agreement.

          (b) Each claim will be deemed approved by the Indemnitor, unless the
     Indemnitor gives the Indemnitee written notice of disapproval within twenty
     (20) days of receipt of such Notice of Claim. The parties shall undertake,
     in good faith, to resolve any dispute with respect to any such claim that
     is so disapproved. If such good faith discussions do not lead to a
     resolution of the controversy or dispute, then the parties shall meet with
     a mutually acceptable mediator to further attempt to resolve such
     controversy or dispute.

                                      -44-



          (c) If the facts giving rise to any such indemnification shall involve
     any actual, threatened or possible claim or demand by any person against
     the Indemnitee, the Indemnitor shall be entitled to defend such claim at
     its expense and through counsel of its own choosing if it gives written
     notice of its intention to assume the defense of such claim to Indemnitee
     within twenty (20) days after receipt of the Notice of Claim. If the
     Indemnitor shall exercise such option, it shall have control over such
     defense and over the payment, settlement or compromise of such claim, and
     the Indemnitee agrees to cooperate fully with the Indemnitor and its
     attorneys with respect to such claim. If the Indemnitor shall not exercise
     such option, the Indemnitee may, but shall not be obligated to, assume the
     contest and defense of such claim. Any payment or settlement resulting from
     such contest, together with the total expenses thereof, including but not
     limited to attorneys' fees, shall be binding upon the Indemnitor and
     Indemnitee.

          (d) After the Closing, and except with respect to obligations under
     Section 5.7 above, the indemnification provided for by this Article 8 shall
     constitute the exclusive remedy of either party with respect to (i) the
     matters for which indemnification is provided, and (ii) any other matters
     arising out of, relating to or in conjunction with this Agreement or the
     transactions contemplated hereby.

          Section 8.6 Limitations of Indemnification. No Indemnitee shall assert
any claim for indemnification against any Indemnitor until such time as the
aggregate of all claims which the Indemnitee shall have against the Indemnitor
shall equal One Hundred Thousand Dollars ($100,000.00) (the "Basket Amount"),
and then only for the amounts in excess of the Basket Amount. In no event shall
the indemnification obligations hereunder of an Indemnitor exceed Seven Million
Five Hundred Thousand Dollars ($7,500,000.00). The provisions of this Section
8.6 shall not apply to (i) any claim based on a representation, warranty or
covenant made in Section 3.9 above, (ii) any obligation under Section 5.7 above,
or (iii) any obligations of the Buyer to make any payments pursuant to Section
1.2 hereof, subject to the provisions of Section 8.7 hereof.. Notwithstanding
any term contained herein to the contrary, the provisions of Section 8.6 shall
not apply to any claim based on a representation, warranty or covenant made in
Section 4.4 (ii) and (iii).

          Section 8.7 Offsets. The Buyer shall have the right to offset against
any and all amounts paid to any and all Sellers pursuant to Section 1.2(c) of
this Agreement to the extent that moneys are owed at any time by Sellers to
Buyer pursuant to the indemnification provisions of this Article VIII. The
Sellers agree that such right of offset shall be in addition to the rights of
Buyer to make claims under this Article VIII.

          Section 8.8 Determination of Amount of Claim. In determining the
amount of any claim under this Article VIII, such amount shall be net of
insurance proceeds actually received. In addition, with respect to all claims by
Buyer for indemnification pursuant to Section 8.2 hereof, Buyer shall, in good
faith, first determine whether insurance coverage exists with respect to such
claims, and if such coverage exists, Buyer shall timely and diligently pursue
such coverage and shall apply the proceeds thereof to all such claims prior to
seeking indemnification under Section 8.2 hereof.

                                      -45-



                                   ARTICLE IX

                        TERMINATION, AMENDMENT AND WAIVER

          Section 9.1 Termination. Subject to Section 9.2 hereof, this Agreement
may be terminated and the transactions contemplated hereby abandoned at any time
prior to the Closing:

          (a) by mutual written consent of Buyer, on the one hand, and Sellers,
     on the other hand;

          (b) by Buyer, on one hand or Sellers, on the other hand, if any court
     or governmental authority of competent jurisdiction shall have issued an
     order, decree or ruling or taken any other action restraining, enjoining or
     otherwise prohibiting the transactions contemplated hereby and such order,
     decree, ruling or other action shall have become final and non-appealable;

          (c) by Buyer, on one hand or the Sellers, on the other hand, at any
     time after June 30, 2001, if the transactions contemplated hereby shall not
     have occurred by such date; provided, that the right to terminate this
     Agreement under this subparagraph (c) shall not be available to any party
     whose failure to fulfill any obligation under this Agreement has been the
     cause or resulted in the failure of the transactions contemplated hereby to
     have occurred by such date;

          (d) by Buyer, if there shall have been a breach of any material
     representation, warranty or covenant or agreement of the Sellers contained
     herein which shall not have been cured prior to ten (10) business days
     following notice of such breach; or

          (e) by Sellers, if there shall have been a breach of any material
     representation, warranty, covenant or agreement of Buyer contained herein
     which would prevent the consummation of the transactions contemplated
     hereby which shall not have been cured prior to ten (10) business days
     following notice of such breach.

          Section 9.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 9.1 hereof, this Agreement shall forthwith
become void and have no effect, without any liability on the part of any party
hereto, except based upon obligations set forth in Article 9 and except for
duties of non-disclosure and confidentiality undertaken in this Agreement. The
termination of this Agreement shall not relieve any party from liability for any
breach of this Agreement.

          Section 9.3 Amendment, Extension and Waiver. At any time prior to the
Closing, the Buyer, on the one hand, and the Sellers, on the other hand, may by
an instrument in writing signed on behalf of each party hereto (a) amend, alter
or modify this Agreement, (b) extend the time for the performance of any of the
obligations or other acts of the parties hereto, (c) waive any inaccuracies in
the representations and warranties contained herein or any document delivered
pursuant hereto and (d) waive compliance with any of the agreements or
conditions contained herein. This Agreement may not be amended except by an
instrument in writing signed on behalf of the Buyer, on the one hand, and
Sellers, on the other hand. The aforementioned requirement of a signed writing
to amend, alter or modify this Agreement may

                                      -46-



not be waived, except in writing, and may not be deemed waived orally or by
implication. Subject to the express terms and conditions of this Agreement, the
failure of any party at any time or times to require performance of any
provision hereof shall in no manner affect its right at a later time to enforce
the same.

                                    ARTICLE X

                                  MISCELLANEOUS
                                  -------------

          Section 10.1 Expenses. Each Seller shall bear all fees and expenses
incurred by him, her or the Company or Subsidiary in connection with the
preparation of, and consummation of, this Agreement. The Buyer shall bear all of
its fees incurred by it in connection with the preparation of, and consummation
of, this Agreement.

          Section 10.2 Parties In Interest. All the terms and provisions of this
Agreement shall be binding upon, shall inure to the benefit of and shall be
enforceable by the respective heirs, successors and assigns of the parties
hereto. Except for any assignees permitted by this Agreement, no third party is
entitled to rely on any of the representations, warranties and agreements of the
parties contained in this Agreement, and the Buyer, the Company, Subsidiary and
the Sellers assume no liability to any third party because of such reliance.

          Section 10.3 Entire Agreement; Assignment. This Agreement, including
the Schedules attached hereto, (i) contains the entire understanding of the
parties with respect to its subject matter and supersedes all prior agreements
and understandings between the parties with respect to its subject matter and
(ii) shall not be assigned by operation of law or otherwise (including a change
of control (as that term is defined in Schedule 5.8(c) hereof)); provided, that
the Buyer may assign its rights and obligations in whole or in part to any
subsidiary or affiliate of the Buyer (provided that such transferee agrees to be
bound by this Agreement); and provided, further, that the Buyer unconditionally
agrees to guarantee the obligation of such subsidiary or affiliate to make
Earn-Out Payments hereunder.

          Section 10.4 Headings; Section References. The section and paragraph
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. All
section references in this Agreement are to sections of this Agreement, unless
specifically set forth in this Agreement to the contrary. All Schedule
references in this Agreement are to Schedules of this Agreement, unless
specifically set forth in this Agreement to the contrary.

          Section 10.5 Notices. All notices, requests, claims, demands and other
communications hereunder (collectively, "Notices") shall be in writing and shall
be deemed to have been duly given if (i) delivered in person against signed and
dated receipt, (ii) sent by recognized commercial overnight delivery service on
the next business day, (iii) sent by registered or certified mail, first class
postage prepaid, return receipt requested or (iv) sent by telecopy or electronic
mail (with receipt orally confirmed on the same date) and simultaneously mailed,
first class, postage prepaid, as follows:

                                      -47-



                       (a)   If to the Sellers:

                             Miriam M. Allison
                             207 E. Buffalo St., Suite 650
                             Milwaukee, WI 53202

                             with a copy to:

                             Quarles & Brady LLP
                             411 E. Wisconsin Avenue
                             Milwaukee, WI 53202
                             Attn: Fredrick G. Lautz

                       (b)   If to the Buyer:

                             UMB Financial Corp.
                             1010 Grand Blvd.
                             Kansas City, Missouri 64106
                             Attn: Dennis Rilinger, General Counsel

                       with a copy to:

                             Shook, Hardy & Bacon L.L.P.
                             1010 Grand Blvd., Fifth Floor
                             P.O. Box 15607
                             Kansas City, Missouri 64106
                             Attn: Victoria R. Westerhaus

Notice shall be deemed effective on the day of delivery if given pursuant to
clause (i) or (iv) above, or on the third following business day following
mailing if given pursuant to clause (iii) above, or on the next business day
following delivery to the recognized commercial delivery service if given
pursuant to clause (ii). Any party may change its address for purposes hereof by
written Notice in accordance herewith, except that Notices regarding change of
address shall only be effective upon receipt. Failure to accept a Notice shall
not invalidate such Notice.

          Section 10.6 Law Governing. Regardless of the place of its execution,
this Agreement shall be governed by and construed and enforced in accordance
with the laws of the State of Wisconsin without regard to its conflict of laws
rules.

          Section 10.7 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed to be
an original but all of which together shall constitute one and the same
instrument.

          Section 10.8 Construction; Invalidity. This Agreement shall be
construed according to its fair meaning as if prepared mutually by all parties
hereto, and no party shall be deemed to be the draftsman hereof. Each section
and subsection of this Agreement constitutes a separate and distinct
undertaking, covenant and/or provision thereof. If any provision of this

                                      -48-



Agreement is held invalid, such invalidity shall not affect the other provisions
hereof which can be given effect without the invalid provisions, and, to this
end, the provisions of this Agreement are intended and shall be deemed
severable. Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, the parties
hereby waive any provision of law which renders any provision of this Agreement
prohibited or unenforceable in any way, and any prohibited or unenforceable
provision of this Agreement shall be considered to have been superseded by a
legally permissible and enforceable clause which corresponds most closely to the
intent of the parties as evidenced by the provisions held to be unenforceable.

          Section 10.9 Remedies. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.

          Section 10.10 Definition of Sellers' Knowledge. "Sellers' knowledge"
shall mean, where a representation or warranty is stated to, or based on, the
knowledge of the Sellers, the matter is actually known by Sellers or should have
been known by Sellers in their capacities as stockholders and by Ms. Allison in
her capacity as an executive officer of the Company.

                                      -49-



     IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the Sellers and by the duly authorized officers of the Buyer as of the date
first above written.


                                       UMB FINANCIAL CORP.


                                       By:/s/ Rufus Crosby Kemper III
                                          --------------------------------------
                                       Name: Rufus Crosby Kemper III
                                       Title: Chairman & Chief Executive Officer


                                       SELLERS:


                                       /s/ Miriam M. Allison
                                       -----------------------------------------
                                       Miriam M. Allison


                                       /s/ Sarah Hammond
                                       -----------------------------------------
                                       Sarah Hammond


                                       /s/ Rebekah Allison
                                       -----------------------------------------
                                       Rebekah Allison


                                       /s/ Matthew Allison
                                       -----------------------------------------
                                       Matthew Allison


                                       /s/ Peter Hammond
                                       -----------------------------------------
                                       Peter Hammond



                         TABLE OF EXHIBITS AND SCHEDULES

                                    EXHIBITS

Exhibit A         List of Sellers

Exhibit B         List of Option Holders

Exhibit C         Form of Initial Sellers Note

Exhibit D         Earn-out Payments

Exhibit E         Company's Audited Financial Statements for the
                  Period Ending December 31, 2000

Exhibit F         Service to Buyer's Scout Funds

Exhibit G         Company's Unaudited Internal Operating Statement
                  for January, 2001

                                    SCHEDULES

Schedule 3.2      Sellers and Shareholdings

Schedule 3.4      Equity Investments

Schedule 3.5      Required Consents

Schedule 3.7      Undisclosed Liabilities

Schedule 3.8      Absence of Certain Changes

Schedule 3.9      Tax Returns

Schedule 3.10     Real Property

Schedule 3.11     Intellectual Property

Schedule 3.12     Litigation

Schedule 3.13     Insurance

Schedule 3.14     Employee Benefits

Schedule 3.15     Contracts and Commitments

Schedule 3.16     Labor Matters

Schedule 3.17     Compliance

Schedule 3.18     Environmental Matters

Schedule 3.19     Employees

Schedule 3.20     Licenses and Permits



Schedule 3.21     Bank Accounts

Schedule 3.26     Broker/Dealer Status

Schedule 4.4      Buyer's Consents

Schedule 5.8(b)   Release of Guarantees

Schedule 5.8(c)   Ms. Allison's Employment Agreement

Schedule 7.1(c)   Form of Noncompetition Agreement

Schedule 7.1(e)   Matters to Be Addressed in Seller's Counsel's Opinion

Schedule 7.2(f)   Matters to Be Addressed in Buyer's Counsel's Opinion

EX-10.5

                                                                    Exhibit 10.5

                             MODIFICATION AGREEMENT

This Modification Agreement, dated as of June 26 2002, is entered into by and
between UMB Financial Corporation, a Missouri corporation headquartered at 1010
Grand Boulevard, Kansas City, Missouri 64106 ("Buyer"), and Miriam M. Allison,
an individual whose mailing address is 207 E. Buffalo Street, Suite 650,
Milwaukee, Wisconsin 53202 ("Allison").

Recitals

A.   Sarah Hammond, Rebekah Allison, Matthew Allison, and Peter Hammond (collec-
     tively the "Other Sellers"), Buyer and Allison entered into that certain
     Stock Purchase Agreement dated as of April 3, 2001 (the "Purchase
     Agreement"), under which Buyer acquired all of the capital stock of
     Sunstone Financial Group, Inc. a Wisconsin corporation ("Company").

B.   Pursuant to the Purchase Agreement, Buyer agreed to pay to Allison and the
     Other Sellers the "Earn-Out Payments" referred to in Section 1.2(c)of the
     Purchase Agreement, such Earn-Out Payments being calculated upon the "Gross
     Revenues" (as such term is defined in Section 1.2(c) of the Purchase
     Agreement) of Company during stated periods of time.

C.   Buyer now desires to employ Vincent Ciavardini ("Employee") to manage
     certain Company operations, with the intent of procuring significant new
     business from one or more Designated Funds or Designated Fund Servicers (as
     such terms are defined herein).

D.   Buyer has informed Allison that in order to induce Employee to accept
     employment with the Company and to undertake such efforts as may be needed
     in order to obtain business from Designated Funds and/or Designated Fund
     Servicers, Company will incur substantial expenses in the form of capital
     investments in software and other expenses and in making certain
     compensation and financial arrangements with Employee, and that such
     payments and expenses, together with the Earn-Out Payments that would
     otherwise be payable to Allison under the existing terms of the Purchase
     Agreement with respect to Gross Revenues associated with new business from
     Designated Funds and/or Designated Fund Servicers, would create such a high
     level of expense that such business would not be economically viable.

E.   Buyer has thus concluded that it is not an economically viable course of
     action for it to employ Employee and to seek to procure business from
     Designated Funds and/or Designated Fund Servicers unless Allison first
     agrees to modify Buyer's obligations under the Purchase Agreement so as to
     reduce the level of Earn-Out Payments that Allison is eligible to receive
     under the Purchase Agreement with respect to Gross Revenues associated with
     Designated Funds and/or Designated Fund Servicers, but without affecting
     Earn-Out Payments that the Other Sellers are entitled to receive under the
     existing terms of the Purchase Agreement.



F.   Allison has indicated that she is willing to agree to such modification,
     provided that Buyer makes certain commitments as to other aspects of
     Company's operations.

G.   The parties thus desire to reduce their agreements to writing and modify
     and amend certain rights and obligations they have vis-a-vis each other
     under the Purchase Agreement.

NOW THEREFORE, in consideration of the premises and the mutual agreements of the
parties, the parties hereby agree as follows:

1.   Certain Definitions. When used in this Modification Agreement, the
     following terms shall have the meaning specified:

     "Absorbed Fund" shall mean a Currently Serviced Fund that later becomes a
     Designated Fund as a result of a merger, consolidation, assignment and
     assumption, or other corporate transaction, or which later becomes a
     Designated Fund solely by reason of appointing as its Investment Advisor an
     Investment Advisor that is an Affiliate of an entity listed on Exhibit A
     attached to this Agreement and who has no substantial influence over the
     selection of the Fund Servicer which will be retained to provide Fund
     Services to the Designated Fund from time to time.

     "Affiliate" of a party shall mean an entity that controls, is controlled
     by, or is under common control with, such party.

     "Control" shall mean the power to exercise a controlling influence over the
     management or policies of an entity (including (without limitation) with
     respect to a Fund or Fund Servicer, the selection or appointment of the
     entity(s) that are to provide Fund Services to such Fund or Fund
     Servicer), whether direct or indirect and whether by virtue of ownership of
     stock or other equity interests, voting power, contract rights or other
     means.

     "Currently Serviced Fund" means a Fund to which Fund Services are being
     provided or made available by Company or Buyer (or any of their respective
     Affiliates) or by a Currently Serviced Fund Servicer as of the relevant
     date of inquiry.

     "Currently Serviced Fund Servicer" shall mean any Fund Servicer that, as of
     the relevant time of inquiry, is receiving Fund Services from Buyer or the
     Company (or any of their Affiliates) and which in turn provides or makes
     those Fund Services available to one or more Funds.

     "Designated Fund" shall mean any of the following: (A) a Fund whose
     Investment Advisor or Distributor is, or is an Affiliate of, any of the
     entities (or any affiliate of any such entity) listed on Exhibit A attached
     hereto (each, an "Entity"); (B) a Fund that is a member of a Fund Complex
     listed on Exhibit A attached hereto or of which a Designated Fund also is a
     member; or (C) a Fund with respect to which any Entity or its Affiliate has
     the power or ability to select the provider of Fund Services to such Fund
     (or to a Fund Servicer who provides Fund Services to such Fund), or has the
     power or ability to control the outsourcing of Fund Services for such Fund.
     The fol-

                                        2



     lowing rules shall govern the status of whether a Fund constitutes a
     Designated Fund in the context of the specific circumstances addressed:

          .    If a Designated Fund should change its name at any time without
               otherwise affecting its continuity or structure, it nonetheless
               shall remain a Designated Fund.

          .    If a Designated Fund merges or otherwise consolidates with one or
               more other Funds that is/are not Designated Fund(s) or Currently
               Serviced Fund(s), then, following such merger or consolidation,
               the surviving or resulting Fund shall: (a) be considered a
               Designated Fund as a result of such merger or consolidation, if
               the total assets of the Designated Fund, immediately prior to the
               merger or consolidation, are greater than the total assets of all
               other Funds which are a party to the merger or consolidation,
               immediately prior to the merger or consolidation; and (b) not be
               considered a Designated Fund as a result of such merger or
               consolidation, if the total assets of the Designated Fund,
               immediately prior to the merger or consolidation, are less than
               the total assets of all other Funds that are a party to the
               merger or consolidation, immediately prior to the merger or
               consolidation.

     "Designated Fund Servicer" shall mean any Fund Servicer providing Fund
     Services to a Designated Fund, but only with respect to, and to the extent
     of, such Fund Services. The following rules shall govern the status of
     whether a Fund Servicer constitutes a Designated Fund Servicer in the
     context of the specific circumstances addressed:

          .  If a Designated Fund Servicer should change its name at any time
             without otherwise affecting its continuity or structure, it
             nonetheless shalt remain a Designated Fund Servicer;

          .  If a Designated Fund Servicer merges or otherwise consolidates with
             one or more other Fund Servicer(s) that is/are not Designated Fund
             Servicer(s) or a Currently Serviced Fund Servicer, then, following
             such merger or consolidation, the surviving or resulting Fund
             Servicer shall: (a) be considered a Designated Fund Servicer as a
             result of such merger or consolidation, if the total assets,
             immediately prior to the merger or consolidation, of the Designated
             Funds to which it provided Fund Services are greater than the total
             assets, immediately prior to the merger or consolidation, of all
             Funds (other than Designated Funds) to which the other Fund
             Servicer party (parties) to the merger or consolidation provided
             Fund Services; and (b) not be considered a Designated Fund Servicer
             as a result of such merger or consolidation, if the total assets,
             immediately prior to the merger or consolidation, of the Designated
             Funds to which it provided Fund Services are less than the total
             assets, immediately prior to the merger or consolidation, of all
             Funds (other than Designated Funds) to which the other Fund
             Servicer party(s) to the merger or consolidation provided Fund
             Services.

                                        3



          "Distributor" shall mean the entity that serves as principal
          underwriter or distributor for the shares of a Fund.

          "Fund" shall mean any mutual fund, whether organized as a stand-alone
          registered investment company or whether a series of a registered
          investment company authorized to designate and offer its shares or
          other units of beneficial ownership interest in multiple series.

          "Fund Complex" shall mean any two or more Funds that: (a) hold
          themselves out to investors as related companies for purposes of
          investment and investor services and/or that are marketed or promoted
          under a common name; or (b) have a common Investment Advisor or
          whose Investment Advisors are Affiliates of each other; or (c) have a
          common Distributor or whose Distributors are Affiliates of each other.

          "Fund Servicer" shall mean any investment advisor, distributor,
          underwriter, fund accountant, transfer agent or other entity providing
          Fund Services to a Fund or Fund Servicer, but only with respect to,
          and to the extent of, such Fund Services.

          "Fund Services" shall mean services as Distributor, Investment
          Advisor, call management, fulfillment and marketing services (even
          if not provided in a role as Distributor), fund accounting services,
          custody services, transfer agent services, fund administrative
          services, shareholder services, cash management services and the like
          commonly provided to Funds or Fund Servicers by the Company or Buyer
          or any of their respective Affiliates.

          "Investment Advisor" shall mean the primary investment advisor for a
          Fund, as opposed to a subadvisor.

          "Measuring Period" shall mean the period commencing on the first day
          of Employee's employment with Buyer or any Affiliate of Buyer and
          continuing for a period of six months following the date on which
          Employee no longer is employed with Buyer or any Affiliate of Buyer.

   2.     Modification to Earn-Out Calculation. For purposes of calculating
          Earn-Out Payments to be paid to Allison by Buyer under the Purchase
          Agreement, 60% of the Gross Revenues derived from Fund Services
          provided to Designated Funds or Designated Fund Servicers which first
          become customers of Company or Buyer (or their Affiliates) during the
          Measuring Period shall be excluded from the Gross Revenues upon which
          such Earn-Out Payments are computed during the five Earn-Out Periods
          identified in Exhibit D to the Purchase Agreement. Notwithstanding
          anything herein or in the Agreement to the contrary, to the extent
          that a Currently Serviced Fund hereafter becomes an Absorbed Fund
          (and thus, a Designated Fund), then the following special rule shall
          apply for the calculation of Earn-Out Payments payable to Allison with
          respect to Gross Revenues derived from Fund Services provided to such
          Absorbed Fund/Designated Fund after the date that it becomes an
          Absorbed Fund/Designated Fund (the "Absorption Date"):

                                        4



         .         First, promptly following the Absorption Date, there shall
                   be calculated a ratio (the "Absorption Ratio"). The numerator
                   of the Absorption Ratio shall be the actual Gross Revenues
                   derived from Fund Services provided to the Currently Serviced
                   Fund during the most recently completed calendar month prior
                   to the Absorption Date, adjusted to reflect the fee schedule
                   for Fund Services that will be applicable for Fund Services
                   provided to the Absorbed Fund/Designated Fund following the
                   Absorption Date, as though such fee schedule had been in
                   place and applicable to the Currently Serviced Fund during
                   such calendar month. The denominator of the Absorption Ratio
                   shall be a projection of monthly gross revenues to be derived
                   from Fund Services provided to the Absorbed Fund/Designated
                   Fund, such projection to be calculated based upon: (i) the
                   fee schedule for Fund Services in effect for the Absorbed
                   Fund/Designated Fund following the Absorption Date; (ii) the
                   total assets of the Absorbed Fund/Designated Fund as of the
                   Absorption Date; (iii) the total number of shareholder
                   accounts of the Absorbed Fund/Designated Fund as of the
                   Absorption Date; and (iv) the combined total number of
                   transactions and other account activity relevant under the
                   fee schedule during the most recently completed calendar
                   month prior to the Absorption Date for the Currently Serviced
                   Fund and any other Fund(s) involved in the Absorption
                   Transaction.

         .         Next, the Gross Revenues actually derived from Fund Services
                   provided to such Absorbed Fund/Designated Fund after its
                   Absorption Date shall be adjusted downward to an amount equal
                   to the sum of the following: (i) the product of such actual
                   Gross Revenues multiplied by the Absorption Ratio; plus (ii)
                   forty percent (40%) of the following: such actual Gross
                   Revenues minus the amount calculated in clause (i) of this
                   bullet point.

    By way of illustration of the foregoing, assume the following facts:

         .         Adjusted revenues derived from Fund Services provided to a
                   Currently Serviced Fund during the most recently completed
                   calendar month prior to its Absorption Date are $25,000;

         .         Revenues projected to be derived from the Absorbed Fund/
                   Designated Fund for the first month following its Absorption
                   Date are $100,000: and

         .         Actual revenues derived from the Absorbed Fund/Designated
                   Fund during the first year following the Absorption Date are
                   $1.5 million.

                                        5



         Then the Absorption Ratio is one-fourth ($25,000/$100,000), and the
         portion of the actual Gross Revenues that would be used to calculate
         the amount of the Earn-Out Payment owing to Allison with respect to the
         Absorbed Fund for the initial one-year period following the Absorption
         Date would be $825,000, calculated as follows:

                  $1,500,000 x 1/4                = $375,000
                 ($1,500,000 - $375,000) x 40%    =  450,000
                                                    --------
                       Total                      = $825,080
                                                    ========

 3.      UMB Commitment. UMB hereby agrees that if: (a) Company hereafter enters
         into a binding contract or letter of intent or other commitment deemed
         satisfactory by UMB for the provision of Fund Services to one or two
         Fund Complexes to whom Company does not presently provide Fund
         Services, or enters into a binding contract or letter of intent or
         other commitment deemed satisfactory by UMB for the provision of
         transfer agency services to one or two Fund Complexes to whom Company
         currently provides other Fund Services but not transfer agency
         services, and (b) the provision of such new or additional Fund Services
         under such binding contract or letter of intent is reasonably projected
         to generate at least two million dollars ($2,000,000) in Gross Revenues
         to Company (excluding client reimbursements) during the twelve-month
         period following conversion, then Buyer promptly (in connection with
         the conversion(s) or other startup of the provision of Fund Services to
         such Fund Complex(es)) shall purchase or license or otherwise acquire
         the right to use or the use of, a new stock transfer agency software
         system and other resources appropriate in order for Company to provide
         competitive transfer agency services and products to such Fund
         Complex(es) as well as to Company's other clients, it being understood
         that such system may be purchased, leased, outsourced, accessed by
         remote usage, or otherwise obtained; provided however that no such
         action shall be required if Buyer determines, and Allison agrees (such
         agreement not to be unreasonably withheld), that the acquisition of
         such system and resources would constitute an unreasonable economic
         investment on the part of Company or Buyer.

 4.      Fees. Buyer agrees to pay the sum of $20,000 to Allison to reimburse
         her for legal and consultant expenses reasonably incurred by her in
         negotiating and preparing this Modification Agreement.

 5.      Effect on Purchase Agreement. This Modification Agreement is intended
         to amend the Purchase Agreement as necessary to reflect the calculation
         of Earn-Out Payments payable by Buyer to Allison as provided for
         herein, and to incorporate the Buyer's covenants set forth in Paragraph
         3 hereof. Except as so explicitly modified, the terms and conditions of
         the Purchase Agreement shall continue in full force and effect in
         accordance therewith, unmodified by this Modification Agreement.
         Without limiting the generality of the foregoing, nothing in this
         Modification Agreement is intended to affect in any respect any right
         or obligation of any of the Other Sellers. As a matter of confirmation
         and clarification and without limiting the generality of the preceding
         sentence, the formula and basis for calculation of Earn-Out Payments
         payable by the Buyer to the Other Sellers under the terms of the
         Purchase Agreement remain in full force and effect, unaffected by the
         provisions of this Modification Agreement.

                                       6



6.   Capitalized Terms. Except as explicitly defined otherwise herein, all
     capitalized terms shall have the meanings ascribed to them in the Purchase
     Agreement.

IN WITNESS WHEREOF, this Modification Agreement has been duly executed and
delivered as of the date first above written.

UMB Financial Corporation "BUYER"

By: /s/ Daniel C. Stevens                 /s/ Miriam M. Allison
   ----------------------------------    -------------------------------------
                                         Miriam M. Allison "ALLISON"
Name:   Daniel C. Stevens
     --------------------------------
Title:  EVP + CFO
      -------------------------------

                                        7



                                    EXHIBIT A

                                     OMITTED

EX-10.6

                                                                    Exhibit 10.6

                            UMB FINANCIAL CORPORATION
                 EXECUTIVE COMMITTEE DEFERRED COMPENSATION PLAN

                                EXECUTIVE SUMMARY

The UMB Executive Committee Deferred Compensation Plan is a nonqualified
deferred compensation plan which allows selected employees to defer a portion of
their salary to a later predetermined date. As such, the employees deferring the
salary do not pay income tax on the amounts deferred. The amounts deferred are
subject to the employee and employers share of FICA tax. Additionally, the
employee is an unsecured creditor of the bank.

Making Salary Deferrals

     Employees eligible to defer a part of their salary are members of the UMB
Executive Committee.

     Executives complete election forms choosing the percent of gross salary,
excluding non cash fringe benefits, they wish to defer.

     Elections are first made when the plan is adopted or when the employee
becomes a member of the Executive Committee.

     Election forms must be submitted prior to March 1 for the year(s) for which
the election applies.

     If an employee was a member of the Executive Committee but had not
previously made an election, an election must be made on or before March 1
applicable to each year thereafter.

     UMB will reduce the employees salary by the elected amount.

     Once a deferral is made, it remains in effect until changed or revoked by
the employee.

What Happens to the Salary Deferrals

     UMB has an obligation to pay the employee the amount of the salary
deferred.

     The obligation increases or decreases based on how the amount would have
increased or decreased if it had been invested in one of the following UMB
funds:

          UMB Worldwide Fund

          UMB Heartland Fund

          Fund for Pooling Equity Investments of Employee Trusts

          Fund for Pooling Debt Investments of Employee Trusts

          Pooled Income Fund for Employee Trusts

     UMB may but is not required to invest the deferrals in any of the Funds.

     The employee may elect to change, not more than semiannually, the Fund or
Funds which acts as the earnings benchmark.

     At least annually, the employees will be provided a summary statement of
their contributions to date and the earnings thereon.

When Does the Employee Receive His Deferrals

     When filing the initial election, the employee elects one of the following
distribution options:

          At retirement/separation from service;

          50% of his account balance in 10 years and the remainder at
          retirement;

          50% of his account balance in 20 years and the remainder at
          retirement; or

          50% of his account balance in 10 years, 50% of what is in his account
          at 20 years and the remainder at retirement.

     If faced with financial hardship, the employee may request a distribution
sufficient to meet the financial needs.

     A complete distribution also occurs upon the death of the employee or upon
the Board of Directors dissolution of this Plan.



                            UMB FINANCIAL CORPORATION

                            EXECUTIVE COMMITTEE
                            DEFERRED COMPENSATION PLAN



                 UMB FINANCIAL CORPORATION EXECUTIVE COMMITTEE
                           DEFERRED COMPENSATION PLAN

CONTENTS                                                                    Page
- --------------------------------------------------------------------------------

Preamble                                                                      1

Article I - Definitions                                                       1

Article II - Participation in the Plan                                        5

Article III - Deferral Election Account                                       6

Article IV - Funds                                                            8

Article V - Distribution of Account                                           9

Article VI - Non-Assignability                                               10

Article VII - Vesting                                                        11

Article VIII - Amendment or Termination of the Plan                          11

Article IX - Plan Administration                                             12

Article X - Miscellaneous                                                    14



                            UMB FINANCIAL CORPORATION

                               EXECUTIVE COMMITTEE
                           DEFERRED COMPENSATION PLAN

                                    PREAMBLE

     UMB Financial Corporation (the "Company") hereby establishes the UMB
Financial Corporation Executive Committee Deferred Compensation Plan (the
"Plan"), effective as of the date specified herein. The Company intends to
establish and maintain the plan as an unfunded retirement plan for members of
the Executive Committee.

     The purpose of the Plan is to permit members of the Company's Executive
Committee to accumulate additional retirement income through a nonqualified
deferred compensation plan that enables them to make elective deferrals in
excess of those permitted under the UMB Profit Sharing and 401(k) Savings Plan
that are precluded by the provisions of that plan or by applicable law.

                                    ARTICLE I
                                   DEFINITIONS

     As used in this Plan, the following capitalized words and phrases have the
meanings indicated, unless the context requires a different meaning:

          1.1. Account

          "Account" means amounts credited to a Participant under the Plan or
the aggregate of all of a Participant's accounts. The Plan includes the Deferral
Election Account as one of the Participant Accounts.

          1.2. Allocation Date

          "Allocation Date" means the last day of any Plan Year.

          1.3. Approved UMB Fund.

          "Approved UMB Fund" means one or more of the Funds designated by the
Committee under the provisions of Section 4.2, and listed on the attached
Exhibit A.

          1.4. Beneficiary

          "Beneficiary" means the person or persons designated by a Participant,
or otherwise entitled, to receive any amount credited to his Account that
remains undistributed at his death.

          1.5. Board of Directors

          "Board of Directors" means the Board of Directors of the Company.

                                       1



          1.6. Code.

          "Code" means the Internal Revenue Code of 1986, as amended from time
to time.

          1.7. Committee

          "Committee" means the committee appointed in accordance with Section
9.1 to administer the Plan.

          1.8. Company

          "Company" means UMB Financial Corporation, a Missouri corporation, and
any successor thereto.

          1.9. Company Contribution Account

          "Company Contribution Account" means an account created for each
Participant to which funds allocated to each Participant under the terms of
Section 3.3(c) will be credited.

          1.10. Compensation

          "Compensation" means the aggregate compensation paid to a Participant
by the Company for a Plan Year, including salary, overtime pay, commissions and
all other items that constitute wages within the meaning of section 3401(a) of
the Code or are required to be reported under section 6041(d), 6051(a)(3) or
6052 of the Code. Compensation also includes amount deferred by a participant's
Salary Reduction Election under this Plan and; any elective deferrals under
cash-or-deferred arrangements or cafeteria plans that are not includible in
gross income by reason of section 125 or 402(a)(8) of the Code but does not
include any other amounts contributed pursuant to, or received under, this Plan
or any other plan of deferred compensation. Notwithstanding the above, however,
compensation shall exclude non-cash fringe benefits such as car allowances,
stock options or group term life insurance premiums.

          Compensation shall not include any amount included in the taxable
income of Employee in any given year as a result of its distribution pursuant to
Article V of this Agreement.

          1.11. Deemed Fund

          "Deemed Fund" means one or more Approved UMB Funds into which monies
are treated as having been invested by Company for Employee's Account even
though such monies, in fact, may not be so invested.

          1.12. Deferral Election

          "Deferral Election" means Employee's election to defer a percentage of
his Compensation pursuant to Section 3.1.

                                       2



          1.13. Deferral Election Account

          "Deferral Election Account" means a Participant's Account as referred
to in Section 3.2.

          1.14. Deferred Compensation

          "Deferred Compensation" means the amount of Compensation which may be
deferred pursuant to the provision of this Agreement immediately prior to each
respective Year in which such Compensation would otherwise be earned.

          1.15. Disability

          "Disability" means a mental or physical condition that, in the opinion
of a licensed physician approved by the Committee, renders a Participant
permanently incapable of satisfactorily performing his usual duties for the
Company or the duties of such other position as the Company may make available
to him for which he is qualified by reason of training, education or experience.

          1.16. Effective Date

          "Effective Date" means May 1, 1995, the date on which this Plan went
into effect.

          1.17. Eligible Employee

          "Eligible Employee" means an employee of the Company or any of its
subsidiaries who holds a position on the Executive Committee of the Company.

          1.18. Entry Date

          "Entry Date" means the Effective Date and the first day of March each
Year thereafter.

          1.19. Funds

          "Funds" means one or more of the Funds designated by the Committee
under the provisions of Section 4.2, and listed on the attached Exhibit A.

          1.20. New Entry Date

          "New Entry Date" means the first day a person becomes an Eligible
Employee.

          1.21. Participant

          "Participant" means any Eligible Employee who satisfies the conditions
for participation in the Plan set forth in Section 2.1.

          1.22. Plan

          "Plan" means the UMB Financial Corporation Executive Committee
Deferred Compensation Plan, as set forth herein and as from time to time
amended.

                                       3



          1.23. Plan Year

          "Plan Year" means the accounting year of the Plan, which ends the last
day in February.

          1.24. Qualified Plan

          "Qualified Plan" means the UMB Profit Sharing and 401(k) Savings Plan,
as from time to time amended.

          1.25. Retirement

          "Retirement" means the termination of Participant's employment with
the Company upon qualifying for Retirement as specified in the Qualified Plan.

          1.26. Salary Reduction Election

          "Salary Reduction Election" means an agreement between a Participant
and the Company, under which the Participant agrees to a reduction in his
Compensation.

          1.27. Separation from Service

          "Separation from Service" means the termination of Participant's
employment with the Company for any reason other than Retirement or Disability
as defined herein.

          1.28. Trust or Trust Fund

          "Trust" or "Trust Fund" means any trust established to hold amounts
set aside by the Company in accordance with Section 3.5.

          1.29. Trustee

          "Trustee" means those individuals or corporations specified in the UMB
Executive Committee Deferred Compensation Plan Trust Agreement, if such
agreement may exist, and any additional or successor trustee of the Trust Fund.

          1.30. Valuation Date

          "Valuation Date" means any Allocation Date and any other date as of
which the value of Participants' Accounts is determined.

          1.31. Year

          "Year" means the twelve month period beginning March 1 and ending on
the last day of February of each year.

                                       4



          1.32. Rules of Construction

          1.32.1. Governing law. The construction and operation of this Plan is
governed by the laws of the State of Missouri.

          1.32.2. Undefined terms. Unless the context clearly requires another
meaning, any term not specifically defined in this Plan is used in the sense
given to it by the Qualified Plan.

          1.32.3. Headings. The headings of Articles, Sections and Subsections
are for reference only and are not to be utilized in construing the Plan.

          1.32.4. Gender. Unless clearly inappropriate, all pronouns of whatever
gender refer indifferently to persons or objects of any gender.

          1.32.5. Singular and plural. Unless clearly inappropriate, singular
terms refer also to the plural and vice versa.

          1.32.6. Severability. If any provision of this Plan is held illegal or
invalid for any reason, the remaining provisions are to remain in full force and
effect and to be construed and enforced in accordance with the purposes of the
Plan as if the illegal or invalid provision did not exist.

                                   ARTICLE II
                            PARTICIPATION IN THE PLAN

          2.1. Commencement of Participation

          2.1.1. Eligible Employees as of an Entry Date. An Eligible Employee
becomes a Participant on the earliest Entry Date on which he has executed a
valid Salary Reduction Election (as defined in Section 3.1) that is still in
effect.

          2.1.2. Eligible Employees as of a New Entry Date. Anyone who becomes
an Eligible Employee subsequent to an Entry Date becomes a Participant on the
New Entry Date or as soon thereafter as the employee satisfies the conditions of
Sections 2.1.1.

          2.2. Cessation of Participation

          If a Participant ceases to satisfy any of the conditions set forth in
Section 2.1, his participation in this Plan terminates immediately, except that
his Account will continue to be held for his benefit and will be distributed to
him in accordance with the provisions of Article V. He may resume participation
as of any New Entry Date on which he again satisfies the conditions of Section
2.1.

                                       5



                                   ARTICLE III
                            DEFERRAL ELECTION ACCOUNT

          3.1. Deferral Election

          Each Year each Eligible Employee may execute a Salary Reduction
Election under which he may elect to defer a percentage of his Compensation not
to exceed 100%. Such Salary Reduction Election, if made, shall be made prior to
the commencement of the respective Year to which the Salary Reduction Election
applies and prior to any performance of services by a Participant for such Year.
The Election for a given Year shall be written in a form supplied by the
Company. Once made, the Election for that Year shall be irrevocable except in
the event of a Hardship Withdrawl as defined in Section 5.5. In the event that a
Participant makes a Hardship Withdrawl further contributions to the
Participant's Deferral Election Account during that Plan Year will be in the
discretion of the Committee. Notwithstanding the above, anyone who becomes an
Eligible Employee subsequent to an Entry Date may make a Deferral Election,
applicable to the period from the date of the Deferral Election to the end of
the Year.

          3.2. Account Reflecting Deferred Compensation

          The Company shall establish and maintain a separate Deferral Election
Account for each Participant which shall reflect the amount of Participant's
Deferred Compensation under this Agreement and all credits or charges under
Section 3.3 from time to time. The amount of Deferred Compensation credited to
Participant's Deferral Election Account each Year shall be determined in
accordance with Participant's Deferral Election applicable to such Year. All
amounts credited or charged to Participant's Deferral Election Account
hereunder, whether such amount be Deferred Compensation or credits or charges
under Section 3.3, shall be in a manner and form determined within the sole
discretion of the Committee.

          3.3. Credits or Charges

          (a) Effective May 1, 1995. Annual Earnings or Losses

          Beginning May 1, 1995, and for each Year thereafter, such earnings or
losses shall be approximately equal to the earnings, gain or loss on the
Approved UMB Funds or Deemed Funds indicated as preferred by Particpant for the
Year or for the portion of such Year in which the Account is invested or deemed
to be invested. If Participant fails to indicate a preference on or before his
entry date, his Account will be deemed to have been invested in the same
Approved UMB Fund or Funds in which Participant elected to invest his account in
the Qualified Plan. If the Participant has not so elected in the Qualified Plan,
the funds will be invested in the equivalent of a money market account.

          (b) Salary

          Any amount deferred by a Participant which would have constituted
salary during a Year shall be credited to Participant's Deferral Election
Account within three business days from the dates such salary would have been
paid if it had not been deferred. If Participant should elect to defer salary
ratably over a period of time, then the credits to his Deferral Election Account
shall be ratable reflecting the dates such amounts of salary would have been
paid if not deferred.

                                       6



          (c) Company Allocation

          Company shall also credit the Participant's Company Contribution
Account with an amount equivalent to the hypothetical allocation of Company
contributions and forfeitures which would have occurred in the Company sponsored
Employee Stock Ownership Plan, the Company sponsored Profit Sharing and 401(k)
Savings Plan and/or any Company sponsored successor qualified plan had the
Participant not filed a Deferral Election under the Plan. The "amount equivalent
to the hypothetical Employer allocation" shall be the amount the Company would
have allocated to the respective Qualified Plan and the Company sponsored
Employee Stock Ownership Plan on behalf of Participants if such allocation were
based on compensation as defined in the Qualified Plan plus the amount of
compensation the Participant elected to defer under this Plan less the amount
actually allocated to the Qualified Plan and the Company sponsored Employee
Stock Ownership Plan on behalf of Participants. Such credit shall be subject to
the contribution, maximum annual addition and compensation limitations
applicable to the Qualified Plan. The credit shall be made on approximately the
same date as the Company contributions to the Qualified Plan.

          (d) Income Taxes

               (1) All income produced by the assets invested in an Approved UMB
Fund during a year shall be income of the Company. The resultant income tax
liability, if any, shall be the responsibility of Company and no charge shall be
made to a Participant's Account for any income taxes. In the event that assets
invested in an Approved UMB Fund produce a loss recognizable for income tax
purposes, such loss shall be that of the Company and no charge or credit shall
be made to the Account.

               (2) In the event money is switched from one Approved UMB Fund to
another so that a taxable gain is incurred in an Account because of the switch,
the Account shall not be charged for the amount of the income tax incurred by
the Company. If a taxable loss is incurred because of the switch, the Account
shall not be credited for the amount of the reduction in income taxes incurred
by the Company.

               (3) If the Company should, of its own volition and not at the
request of a Participant, withdraw monies from an Approved UMB Fund or switch
monies from one Approved UMB Fund to another, the. Account shall not be credited
or charged for the amount of either the income tax or the amount of the
reduction in income taxes incurred by the Company.

          3.4. Investment, Management and Use

          The Company shall have sole control and discretion over the
investment, management and use of all amounts credited to a Participant's
Account until such amounts are distributed pursuant to Article V.

          3.5. Contributions to Trust Fund

          The Company may establish a Trust Fund and make contributions to it
corresponding to any or all amounts accrued under Section 3.3.

                                       7



          3.6. Status of the Trust Fund

          Should the Company provide the benefits required by the Plan,
notwithstanding any other provision of this Plan, all assets of the Trust Fund
shall remain the property of the Company and are subject to the claims of its
creditors in accordance with the terms of the Trust. No Participant shall have
any priority claim on Trust assets or any security interest or other right in or
to them superior to the rights of general creditors of the Company.

                                   ARTICLE IV
                                      FUNDS

          4.1. Preference

          Each Participant may from time to time indicate to the Company, in
writing, a preference that monies in his Account be invested by the Company in
one or more Approved UMB Funds. If the monies are invested by the Company in one
or more Approved UMB Funds, then the value of the Participant's Account at any
time shall include the current fair market value of the investment in such
Approved UMB Funds, or, if applicable, the current fair market value of the
monies deemed to have been invested in Deemed Funds. Company shall not be
obligated to follow a Participant's expressed preference and may follow the
procedure in Section 4.4(b).

          4.2. Identity of Funds; Notification

          Committee shall identify the names of those Funds which are Approved
UMB Funds and which Committee will consider investing the monies credited to an
Account. As it is likely that the Company, in its discretion, will not invest
monies in an Approved UMB Fund as preferred by an Employee, but instead will
provide a return on the Participant's Account as if such monies had been so
invested, the monies will be treated as having been invested in a Deemed Fund.
For purposes of accounting, the Deemed Fund will be the same as the Approved UMB
Fund preferred by Participant. Additionally, in no circumstance shall the
Company invest the monies in any pooled fund maintained by the Trust Department
of UMB Bank, N.A. which may be an Approved UMB Fund.

          If a Participant fails to indicate his preference with respect to all
or any part of his Account, Company shall invest such monies in a Deemed Fund in
accordance with Section 3.3(a).

          4.3. Switch of Funds

          A Participant may, not more often than semiannually, indicate to the
Committee, by submitting the appropriate change form, that he prefers to switch
all or a portion of monies in his Account from one Approved UMB Fund to another
or from one Deemed Fund to another. If a Participant determines to make a
switch, he shall indicate whether such switch shall apply to either/or the
balances in the Participant's Account and all future contributions, and shall be
to an Approved UMB Fund or to a Deemed Fund.

                                       8



          4.4. Investment in Other Assets

          (a) Participant. Participant may not indicate a preference that monies
in his Account be invested by the Company in any assets other than one or more
Approved Funds.

          (b) Company. Notwithstanding the provisions of Section 4.2, Company
shall have the discretion to invest the monies in an Account in any assets it
may choose and sha11 not have a duty to notify Employee of the identity of such
assets. Thereafter, the credits or charges to an Account shall be determined
using earnings, gains or losses equivalent to the hypothetical rate of earnings,
gains or losses which such Account would have experienced had the Account been
invested in the Deemed Fund preferred by Participant. The method of crediting
earnings shall be the same as utilized in the Qulified Plan.

                                    ARTICLE V
                             DISTRIBUTION OF ACCOUNT

          5.1. Time and Method of Distribution

          5.1.1. Due to Separation from Service. Distribution of an Account
shall be made to Participant within 60 days of his Separation from Service.
Distribution shall be made in a lump sum cash payment.

          5.1.2. Due to Retirement or Disability. Distribution of an Account
shall begin as soon as administratively practicable following Retirement or
Disability of Participant as defined herein, but not later than 60 days
following Retirement or Disability. Such distribution shall be made in annual
cash payment installments over a three-year period.

          5.1.3. Distribution Upon Death. If a Participant dies before receiving
the total amount of his Account, the Account shall be paid to Participant's
Beneficiary as designated in Section 5.4. Payment to such Beneficiary shall be
made as soon as administratively practicable after Participant's death.
Distribution shall be made in a lump sum cash payment.

          5.2. Amount Distributed

          The amount distributed shall be based on the fair market value of
Participant's Account immediately before such distribution. The fair market
value of the Account shall reflect the net asset value of the monies invested in
Approved UMB Funds, or, if applicable, the net asset value of the Deemed Funds.
Such distribution shall be considered as a proportionate distribution from the
Approved UMB Fund or the Deemed Fund based on the anniversary date.

                                       9



          5.3. In-Service Withdrawals

          At the time an Eligible Employee completes his first Salary Reduction
Election, he may elect to receive a distribution equal to 50% of his Account, as
of his 10th and/or 20th anniversary date of becoming an Eligible Employee, in
the form of a lump sum cash payment at the end of the 10th and/or 20th year as
an Eligible Employee. Such distribution shall be considered as a proportionate
distribution from the Approved UMB Fund or the Deemed Fund based on the
anniversary date.

          5.4. Designation of Beneficiary

          Participant shall designate a Beneficiary on a form to be supplied by
Company. Participant may change his Beneficiary designation at any time, but any
such change shall not be effective until the Beneficiary designation form
completed by Participant is delivered to and received by Company. In the event
that Company receives more than one Beneficiary designation form from
Participant, the form bearing the most recent date shall be controlling. In the
event there is no valid Beneficiary designation of Participant in existence at
the time of Participant's death, then Participant's Beneficiary shall be the
Participant's spouse if any. If the Participant does not have a spouse at the
time of death, the Participant's Beneficiary shall be the Participant's estate.

          5.5. Hardship Withdrawals

          If a Participant suffers a hardship, as defined herein, the Committee,
in its sole discretion, may pay to the Participant only that portion, if any, of
the vested portion of his or her Account which the Committee determines is
necessary to satisfy the hardship, including any amounts necessary to pay any
federal, state or local income taxes reasonably anticipated to result from the
distribution. A Participant requesting a hardship payment shall apply for the
payment in writing in a form approved by the Committee and shall provide such
additional information as the Committee may require. For purposes of this
paragraph, "hardship" means an immediate; and severe financial need resulting
from a sudden and unexpected illness or accident of the Participant or of a
dependent (as defined in Code Section 152(a)) of the Participant, loss of the
Participant's property due to casualty or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of
the Participant. Payment may not be made to the extent that such hardship is or
may be relieved:

          (i) through reimbursement or compensation by insurance or otherwise

          (ii) by liquidation of the Participant's assets, to the extent the
          liquidation of such assets would not itself cause severe financial
          hardship; or

          (iii) by cessation of deferrals under the Plan.

Withdrawals of amounts because of a hardship must only be permitted to the
extent reasonably needed to satisfy the hardship.

                                       10



                                   ARTICLE VI
                                NON-ASSIGNABILITY

          Neither Participant nor any Beneficiary of Participant shall have any
right to commute, sell, assign, pledge, transfer or otherwise convey the right
to receive his Account until his Account is actually distributed to Participant
or his Beneficiary. The portion of the Account which has not been distributed
shall not be subject to attachment, garnishment or execution for the payment of
any debts, judgments, alimony or separate maintenance and shall not be
transferable by operation of law in the event of bankruptcy or insolvency of
Participant or Participant's Beneficiary.

                                   ARTICLE VII
                                     VESTING

          7.1. Definition of "Vesting"

          A Participant's interest in his Account is "vested" when it is not
subject to forfeiture for any reason. The nonvested portion of an Account is
forfeited to the Company upon Termination for any reason other than death,
Disability or Retirement.

          7.2. Vesting Requirements

          7.2.1 Deferral Election Account. A Participant's interest in his
Deferral Election Account is fully (100%) vested at all times.

          7.2.2 Company Contribution. A Participant shall be vested in his
interest in his Company Contribution Account in the same percent as he is vested
in the Qualified Plan.

                                  ARTICLE VIII
                      AMENDMENT OR TERMINATION OF THE PLAN

          8.1. Company's Right to Amend Plan

          The Board of Directors may, at any time and from time to time, amend,
in whole or in part, any of the provisions of this Plan or may terminate it as a
whole or with respect to any Participant or group of Participants. Any such
amendment is binding upon all Participants and their Beneficiaries, the Trustee,
the Committee and all other parties in interest. In the event of termination of
the Plan, the Board of Directors shall determine the time and manner in which
the distribution of each Participant's Account Balances will occur

                                       11



          8.2. When Amendments Take Effect

          A resolution amending or terminating the Plan becomes effective as of
the date specified therein.

          8.3. Restriction on Retroactive Amendments

          No amendment may be made that retroactively deprives a Participant of
any benefit accrued before the date of the amendment.

                                   ARTICLE IX
                               PLAN ADMINISTRATION

          9.1. The Committee

          The Plan is administered by a Committee consisting of three or more
persons appointed by the Board of Directors. The Board of Directors may remove
any member of the Committee at any time, with or without cause, and may fill any
vacancy. If a vacancy occurs, the remaining member or members of the Committee
have full authority to act. The Committee is responsible for transmitting to the
Trustee, if applicable, the names and authorized signatures of the members of
the Committee and, as changes take place in membership, the names and signatures
of new members. Any member of the Committee may resign by delivering his written
resignation to the Board of Directors, the Committee, and the Trustee, if
applicable. Any such resignation becomes effective upon its receipt by the Board
of Directors or on such other date as is agreed to by the Board of Directors and
the resigning member. The Committee acts by a majority of its members at the
time in office and may take action either by vote at a meeting or by consent in
writing without a meeting. The Committee may adopt such rules and appoint such
subcommittees as it deems desirable for the conduct of its affairs and the
administration of the Plan.

          9.2. Powers of the Committee

          In carrying out its duties with respect to the general administration
of the Plan, the Committee has, in addition to any other powers conferred by the
Plan or by law, the following powers:

          (a) to determine all questions relating to eligibility to participate
     in the Plan;

          (b) to compute and certify to the Trustee the amount and kind of
     distributions payable to Participants and their Beneficiaries;

          (c) to maintain all records necessary for the administration of the
     Plan that are not maintained by the Company or the Trustee;

          (d) to interpret the provisions of the Plan and to make and publish
     such rules for the administration of the Plan as are not inconsistent with
     the terms thereof;

                                       12



          (e) to establish and modify the method of accounting for the Plan or
     the Trust;

          (f) to employ counsel, accountants and other consultants to aid in
     exercising its powers and carrying out its duties hereunder; and

          (g) to perform any other acts necessary and proper for the
     administration of the Plan, except those that are to be performed by the
     Trustee.

          9.3. Indemnification

          9.3.1. Indemnification of Members of the Committee by the Company. The
Company agrees to indemnify and hold harmless each member of the Committee
against any and all expenses and liabilities arising out of his action or
failure to act in such capacity, excepting only expenses and liabilities arising
out of his own willful misconduct or gross negligence as determined by Board of
Directors. Judicial proceeding which determine the members actions were neither
an act of willful misconduct or gross negligence shall be determinative. This
right of indemnification is in addition to any other rights to which any member
of the Committee may be entitled.

          9.3.2. Liabilities for Which Members of the Committee are Indemnified.
Liabilities and expenses against which a member of the Committee is indemnified
hereunder include, without limitation, the amount of any settlement or judgment,
costs, counsel fees and related charges reasonably incurred in connection with a
claim asserted or a proceeding brought against him or the settlement thereof.

          9.3.3. Company's Right to Settle Claims. The Company may, at its own
expense, settle any claim asserted or proceeding brought against any member of
the Committee when such settlement appears to be in the best interests of the
Company. Such settlement by the Company does not void any claim for willful
misconduct or gross negligence the Company may have against a committee member.

          9.4. Claims Procedure

          If a dispute arises between the Committee and a Participant or
Beneficiary over the amount of benefits payable under the Plan, the Participant
or Beneficiary may file a claim for benefits by notifying the Committee in
writing of his claim. The Committee will review and adjudicate the claim. If the
claimant and the Committee are unable to reach a mutually satisfactory
resolution of the dispute, it will be submitted to arbitration under the rules
of the American Arbitration Association. Each Participant agrees, by the
execution of a Salary Reduction Agreement, that arbitration will be the sole
means of resolving disputes arising under the Plan and waives, on behalf of
himself and his Beneficiary, any right to litigate any such dispute in a court
of law.

          9.5. Expenses of the Committee

          The members of the Committee serve without compensation for services
as such. All expenses of the Committee are paid by the Company.

                                       13



                                    ARTICLE X
                                  MISCELLANEOUS

          10.1. Plan Not a Contract of Employment

          The adoption and maintenance of the Plan does not constitute a
contract between the Company and any Participant or to be a consideration for
the employment of any person. Nothing herein contained gives any Participant the
right to be retained in the employ of the Company or derogates from the right of
the Company to discharge any Participant at any time without regard to the
effect of such discharge upon his rights as a Participant in the Plan.

          10.2. No Rights Under Plan Except as Set Forth Herein

          Nothing in this Plan, express or implied, is intended, or shall be
Construed, to confer upon or give to any person, firm, association, or
corporation, other than the Company, the Participants and the Participant's
designated Beneficiaries and their successors in interest, any right, remedy, or
claim under or by reason of this Plan or any covenant, condition, or stipulation
hereof, and all covenants, conditions and stipulations in this Plan, by or on
behalf of any party, are for the sole and exclusive benefit of the Company, the
Participants and the Participant's designated Beneficiaries.

          10.3. Rules

          The Committee shall have full and complete discretionary authority to
construe and interpret provisions of the Plan. The Committee may adopt such
rules as it deems necessary, desirable or appropriate. All rules and decisions
shall be uniformly applied to all Participant's in similar circumstances.

          10.4. Other Benefit Plans

          Deferred Compensation under this Agreement shall not be deemed to be
compensation for purposes of determining Participant's benefit or contribution
under any plan of Company qualified under Code (S)401(a), or any life insurance
plan or disability plan established or maintained by Company except to the
extent specifically provided in such other plan.

          10.5. Withholding of Taxes

          Company shall cause income taxes to be withheld from distribution from
an Account as required by law. Company shall also cause other taxes, such as
Kansas City Earnings tax, FICA and FUTA to be paid if not paid previously.

          10.6. Severability

          If any provision of this Agreement is determined to be invalid or
illegal, the remaining provisions shall be effective and shall be interpreted
as if the invalid or illegal provision did not exist, unless the illegal or
invalid provision is of such materiality that its omission defeats the purposes
of the parties in entering into this Agreement.

                                       14



          IN WITNESS WHEREOF, UMB Financial Corporation has caused these
presents to be executed by its duly authorized officer and its corporate seal to
be hereunto affixed by authority of its Board of Directors this ___________ day
of ________ 1995.

                                            UMB Financial Corporation

          [Corporate Seal]

                                            By _________________________________

                                       15



                                    EXHIBIT A

Approved Funds

UMB Worldwide Fund

UMB Heartland Fund

Fund for Pooling Equity Investments of Employee Trusts (Stock Fund)

Fund for Pooling Debt Investments of Employee Trusts (Bond Fund)

Pooled Income Fund For Employee Trusts (Money Market Fund)

                                       16

EX-21

                                                                      Exhibit 21

                    SUBSIDIARIES OF UMB FINANCIAL CORPORATION
                                December 31, 2002



                                                                                Jurisdiction of
                                                                                ---------------
                                                                                Incorporation or
                                                                                ----------------
Name of Entity                                                                  Organization
- --------------                                                                  ------------
                                                                             
A.  Registrant and Parent Company

    UMB Financial Corporation                                                   Missouri

B.  Subsidiaries of Registrant

         1.  UMB Bank, Omaha                                                    United States
                 UMB Financial Corporation owns 100%


         2.  UMB Bank Warsaw                                                    United States
                 UMB Financial Corporation owns 100%

                 a.  Warsaw Financial Corp.                                     Missouri
                        UMB Bank Warsaw owns 100%


         3.  UMB USA, n.a.                                                      United States
                 UMB Financial Corporation owns 100%


         4.  UMB National Bank of America                                       United States
                 UMB Financial Corporation owns 100%


         5.  UMB Bank Colorado                                                  United States
                 UMB Financial Corporation owns 100%


         6.  UMB Bank, n.a.                                                     United States
                 UMB Financial Corporation owns 100%

                 a.  Kansas City Financial                                      Kansas
                        UMB Bank, n.a. owns 100%

                 b.  UMB Bank & Trust, n.a.                                     Missouri
                        UMB Bank, n.a. owns 100%

                 c.  UMB Capital Corp.                                          Missouri
                        UMB Bank, n.a. owns 100%

                 d.  Scout Investment Advisors, Inc.                            Missouri




                                                                    
                       UMB Bank, n.a. owns 100%

               e.   UMB Redevelopment Corp.                                     Missouri
                       UMB Bank, n.a. owns 100%

               f.   UMB Banc Leasing Corp.                                      Missouri
                       UMB Bank, n.a. owns 100%

               g.   UMB Trust Company of South Dakota                           South Dakota
                       UMB Bank, n.a. owns 100%

               h.   UMB Scout Brokerage Services, Inc.                          Missouri
                       UMB Bank, n.a. owns 100%

               i.   UMB Scout Insurance Services, Inc.                          Missouri
                       UMB Bank, n.a. owns 100%

               j.   Kansas City Realty Company                                  Kansas
                       UMB Bank, n.a. owns 100%

                       1) UMB Realty Company, LLC                               Delaware
                            Kansas City Realty Company owns 100%


         7.  UMB Properties, Inc.                                               Missouri
               UMB Financial Corporation owns 100%

         8.  United Missouri Insurance Co.                                      Arizona
               UMB Financial Corporation owns 100%

         9.  UMB CDC                                                            Missouri
               UMB Financial Corporation owns 100%

         10. UMB Consulting Services, Inc.                                      Missouri
               UMB Financial Corporation owns 100%

         11. UMB Fund Services, Inc.                                            Wisconsin
               UMB Financial Corporation owns 100%

               a. UMB Distribution Services, LLC                                Wisconsin
                       UMB Fund Services, Inc. owns 100%

         

EX-23

INDEPENDENT AUDITORS' CONSENT                                Exhibit 23

We consent to the incorporation by reference in the Registration Statement No.
333-102044 of UMB Financial Corporation and Subsidiaries on Form S-8 of our
report dated February 20, 2003, appearing in this Annual Report on Form 10-K of
UMB Financial Corporation and Subsidiaries for the year ended December 31, 2002.

/s/ Deloitte & Touche LLP
- -------------------------

Deloitte & Touche LLP

Kansas City, Missouri
March 12, 2003

EX-24

                                                                      EXHIBIT 24

                                   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


Date  1-16-03                                  By /s/ R. Crosby Kemper
                                               ---------------------------------
                                               R. Crosby Kemper, III
                                               Chairman of the Board

                                POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints R.
Crosby Kemper, R. Crosby Kemper, III and Peter J. Genovese 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/ Miriam M. Allison                   Director           1-16-03
- ----------------------------
Miriam M. Allison


/s/ Paul D. Bartlett, Jr.               Director           1-16-03
- ----------------------------
Paul D. Bartlett, Jr.


____________________________            Director           _______
Thomas E. Beal



     Signature and Name                 Capacity            Date
     ------------------                 --------            ----


____________________________            Director           _______
H.Alan Bell


/s/ William L. Bishop                   Director           1-16-03
- ----------------------------
William L. Bishop


/s/ David R. Bradley, Jr.               Director           1-16-03
- ----------------------------
David R. Bradley, Jr.


/s/ Newton A. Campbell                  Director           1-16-03
- ----------------------------
Newton A. Campbell


____________________________    Chief Financial Officer    _______
Daniel C. Stevens


____________________________            Director           _______
William Terry Fuldner


/s/ Peter J. Genovese            Director and President    1-16-03
- ----------------------------
Peter J. Genovese


____________________________            Director           _______
Jack T. Gentry


/s/ Richard Harvey                      Director           1-16-03
- ----------------------------
Richard Harvey


/s/ C. N. Hoffman, III                  Director           1-16-03
- ----------------------------
C. N. Hoffman, III


/s/ Alexander C. Kemper                 Director           1-16-03
- ----------------------------
Alexander C. Kemper

                               Director; Senior Chairman
/s/ R. Crosby Kemper                of the board;          _______
- ----------------------------
R. Crosby Kemper


/s/ R. Crosby Kemper III           Director; Chairman      1-16-03
- ----------------------------
R. Crosby Kemper III



     Signature and Name                 Capacity            Date
     ------------------                 --------            ----


____________________________            Director           _______
Tom J. McDaniel


____________________________            Director           _______
William J. McKenna


____________________________            Director           _______
John H. Mize, Jr.


____________________________            Director           _______
Mary Lynn Oliver


____________________________            Director           _______
Robert W. Plaster


____________________________            Director           _______
Kris A. Robbins


/s/ Alan W. Rolley                      Director           1-16-03
- ----------------------------
Alan W. Rolley


/s/ Thomas D. Sanders                   Director           1-16-03
- ----------------------------
Thomas D. Sanders


/s/ L. Joshua Sosland                   Director           1-16-03
- ----------------------------
L. Joshua Sosland


/s/ Herman R. Sutherland                Director           1-16-03
- ----------------------------
Herman R. Sutherland


/s/ Paul Uhlmann, III                   Director           1-16-03
- ----------------------------
Paul Uhlmann, III


____________________________            Director           _______
E. Jack Webster, Jr.


____________________________            Director           _______
Dr. Jon Welfald



     Signature and Name                 Capacity            Date
     ------------------                 --------            ----


____________________________            Director           _______
John E. Williams


/s/ Thomas J. Wood, III                 Director           1-16-03
- ----------------------------
Thomas J. Wood, III

EX-99.1

                                                                    Exhibit 99.1


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of UMB Financial Corporation (the
"Company") on Form 10-K for the period ending December 31, 2002, as filed with
the Securities and Exchange Commission on the date hereof (the "Report"),
R. Crosby Kemper III, Chief Executive Officer of the Company, hereby certifies,
pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

     1.   The Report fully complies with the requirements of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     2.   The information contained in the Report fairly presents, in all
          material respects, the financial condition and result of operations of
          the Company.

Dated: March 10, 2003

/s/ R. Crosby Kemper III
- ------------------------------
    R. Crosby Kemper III
    Chief Executive Officer

EX-99.2

                                                                    Exhibit 99.2


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of UMB Financial Corporation (the
"Company") on Form 10-K for the period ending December 31, 2002, as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), Daniel
C. Stevens, Chief Financial Officer of the Company, hereby certifies, pursuant
to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, that:

     1.   The Report fully complies with the requirements of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     2.   The information contained in the Report fairly presents, in all
          material respects, the financial condition and result of operations of
          the Company.

Dated: March 10, 2003

/s/ Daniel C. Stevens
- -------------------------------
    Daniel C. Stevens
    Chief Financial Officer