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, 2003

¨ 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 30, 2003, the aggregate market value of common stock outstanding held by nonaffiliates of the registrant was approximately $811,912,690 based on the NASDAQ closing price of that date.

Indicate the number of shares outstanding of the registrant’s classes of common stock, as of the latest practicable date.

Class	Outstanding at February 29, 2004
Common Stock, $1.00 Par Value	21,684,346

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company’s Proxy Statement relating to the 2004 Annual Meeting of

Shareholders are incorporated in Part III

INDEX

PART I	3
ITEM 1. BUSINESS	3
ITEM 2. PROPERTIES	7
ITEM 3. LEGAL PROCEEDINGS	8
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	8
PART II	8
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	8
ITEM 6. SELECTED FINANCIAL DATA	9
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	10
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	27
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	34
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	67
ITEM 9A. CONTROLS AND PROCEDURES	68
PART III	68
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT	68
ITEM 11. EXECUTIVE COMPENSATION	68
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	68
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	69
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES	69
PART IV	69
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K	69
SIGNATURES	72
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT	75
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT	76
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002	77
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002	78

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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 of 1999. The Company owns all of the outstanding stock of five commercial banks, a credit card bank, 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 principal affiliate UMB Bank, n.a., whose charter is in Missouri, also has locations in Illinois, Kansas and Oklahoma. 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, 2003.

SELECTED FINANCIAL DATA OF AFFILIATE BANKS (in thousands)

	December 31, 2003
	Number of Locations	Total Assets		Loans		Total Deposits		Shareholders’ Equity
Missouri
UMB Bank, n.a.	123	$	6,599,367	$	2,227,518	$	489,072	$	527,585
UMB Bank, Warsaw, n.a.	4		89,366		28,114		61,115		6,073
Colorado
UMB Bank Colorado, n.a.	10	$	396,294	$	205,108	$	321,743	$	30,524
Kansas
UMB National Bank of America	13	$	637,145	$	146,871	$	460,421	$	73,094
Nebraska
UMB Bank Omaha, n.a.	3	$	85,892	$	82,029	$	22,225	$	6,108
Banking—Related Subsidiaries
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.
UMB Bank and Trust, n.a.

UMB, U.S.A. n.a. is a credit card bank located in Nebraska. UMB, U.S.A. n.a. services incoming credit card requests, performs data entry services on new card requests and evaluates new and existing credit lines.

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Other subsidiaries of the Company are United Missouri Insurance Company, UMB Community Development Corporation, UMB Consulting Services, Inc., and UMB Fund Services, Inc. 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, 2003, the Company and its subsidiaries employed 3,807 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.

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.

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

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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 of 1999 (GLBA) the Company is eligible to engage in non-banking activities which are financial in nature (or incidental to such financial activity, or in cases where the Federal Reserve Board approves, complimentary to a financial activity) 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 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, 2003, approximately $19,155,000 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, 2003, 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 19.13% and 20.25%, respectively. The company’s leverage ratio at December 31, 2003, was 10.69%.

As of December 31, 2003, the most recent notification from the OCC categorized the Company’s most significant affiliate banks as well capitalized under the regulatory framework for prompt corrective action. To be

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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. No conditions or events have occurred since that notification that management believes have changed the affiliate banks’ category.

Segment Information.    Financial information regarding segments is included in Note 12 to the Financial Statements provided in Item 8, pages 53 through 55 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 33 of this report.

Executive Officer of the Registrants.    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	77	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	57	Vice Chairman of the Eastern Region UMB Bank, n.a. since January 2004. President of the Company from January 2000 to January 2004. Vice Chairman of the Board of the Company 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	53	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.
Peter de Silva	42	President and Chief Operating Officer of the Company since January 2004. Senior Vice President of Fidelity Investments from 1998-2004 with principal responsibility for brokerage operations.
Royce M. Hammons	58	Regional President of UMB Bank, n.a. since 2000. President and Chief Executive Officer of UMB Oklahoma Bank (a former subsidiary of the Company) from 1987 through 2000.
Dennis G. Powell	54	Executive Vice President of UMB Bank, n.a. since 2001. Senior Vice President Bank One, n.a. from 1996 to 2000 in the retail group with the principal responsibility for strategic planning.
James A. Sangster	49	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	60	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	48	Chief Financial Officer of the Company since 2001. Executive Vice President and CFO of Euronet Services Inc. from 1999 to 2000. Senior Vice President Chief Financial and Risk Manager of US Central Credit Union 1997 to 1999.

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Name	Age	Position with Registrant
James C. Thompson	61	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.
James D. Matteoni	61	Chief Information Officer of UMB Bank, n.a. since 1996.
Dennis R. Rilinger	56	Divisional Executive Vice President and General Counsel of the Company and of UMB Bank, n.a. since 1996.
Mark A. Schmidtlein	44	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	47	A daughter of R. Crosby Kemper. Executive Vice President of UMB Bank, n.a. since 1993.
David D. Kling	57	Divisional Executive Vice President of UMB Bank, n.a. since 1997.
J. Mariner Kemper	31	A son of R. Crosby Kemper. Chairman of the Company’s Western Region since January 2004. 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	48	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, which provides fund services to the investment management industry.
Miriam M. Allison	56	President UMB Fund Services, Inc. (formerly known as Sunstone Financial Group Inc.) since 2001. President of Sunstone Financial Group 1990-2001.
Chris N. Hoffman III	54	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	38	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.

A discussion of recent acquisitions is included in Note 15 to the Financial Statements provided in Item 8 on page 57 of this report.

Our SEC filings are available on our website at www.umb.com/investor.

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 accounting firm is a lessee of a portion of the space. The Company is currently looking for a lessee to fill the remaining space.

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

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leases 40,000 square feet of space in the Equitable Building, in the heart of the downtown commercial sector of St. Louis. A full service banking center, operations and administrative offices are housed at this location.

At December 31, 2003, the Company’s affiliate banks operated a total of five main banking houses and 148 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 an 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.

Additional information with respect to premises and equipment is presented in Note 1 and 8 to the Financial Statements in Item 8, pages 39, 47 and 48 of this report.

ITEM 3.  LEGAL PROCEEDINGS

None.

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, 2003.

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 17, 2004, the Company had 2,027 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
2003	March 31		June 30		September 30		December 31
Net income—basic	$	0.66	$	0.62	$	0.61	$	0.81
Net income—diluted		0.66		0.62		0.61		0.81
Dividend		0.20		0.20		0.20		0.21
Book value		36.75		37.08		37.19		37.43
Market price:
High		40.48		43.61		49.40		51.49
Low		36.25		36.75		43.04		47.54
Close		36.67		42.46		47.17		47.54
2002	March 31		June 30		September 30		December 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

Information concerning restrictions on the ability of the Registrant to pay dividends and the Registrant’s subsidiaries to transfer funds to the Registrant is contained in Item 1, page 5 and Note 10 to the Financial

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Statements provided in Item 8, pages 49 and 50 of this report. Information concerning securities the Company issued under equity compensation plans is contained in Item 12, pages 68 and 69 of this report.

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 27, of this report.

FIVE-YEAR FINANCIAL SUMMARY

(in thousands except per share data)

	2003			2002			2001			2000			1999
EARNINGS
Interest income	$	239,762		$	294,483		$	384,876		$	430,785		$	407,388
Interest expense		42,684			76,452			145,147			196,377			183,323
Net interest income		197,078			218,031			239,729			234,408			224,065
Provision for loan losses		12,005			16,738			14,745			9,201			8,659
Noninterest income		245,568			232,206			223,523			197,223			184,122
Noninterest expense		354,654			360,949			369,373			353,760			312,476
Minority interest in loss of subsidiary		—			—			11,800			19,437			—
Net income		58,879			57,173			65,230			65,111			64,077
AVERAGE BALANCES
Assets	$	7,149,988		$	7,589,065		$	7,366,444		$	7,289,098		$	7,439,411
Loans, net of unearned interest		2,588,794			2,632,850			2,929,061			3,004,754			2,615,978
Securities*		3,507,789			3,832,599			3,145,246			2,841,892			3,553,849
Deposits		5,280,056			5,527,836			5,410,264			5,364,754			5,348,341
Long-term debt		17,384			27,466			29,049			29,504			40,241
Shareholders’ equity		808,472			794,202			748,739			676,243			657,326
YEAR-END BALANCES
Assets	$	7,748,981		$	8,035,559		$	8,730,934		$	7,866,883		$	8,130,142
Loans, net of unearned interest		2,722,292			2,657,532			2,814,388			3,073,957			2,841,150
Securities*		3,721,943			4,138,569			4,521,294			3,145,466			3,897,786
Deposits		5,635,687			5,846,947			6,375,510			5,935,204			5,923,935
Long-term debt		16,280			26,302			27,388			27,041			37,904
Shareholders’ equity		811,923			802,800			768,577			702,934			654,991
PER SHARE DATA
Earnings—basic	$	2.70		$	2.59		$	2.95		$	2.91		$	2.80
Earnings—diluted		2.70			2.58			2.95			2.91			2.80
Cash dividends		0.81			0.80			0.76			0.76			0.70
Dividend payout ratio		30.00	%		30.89	%		27.12	%		26.12	%		25.00	%
Book value	$	37.43		$	36.52		$	34.73		$	31.58		$	28.93
Market price
High		51.49			50.10			43.52			37.14			40.21
Low		36.25			36.20			32.86			29.58			33.55
Close		47.54			38.26			40.00			35.60			35.95
RATIOS
Return on average assets		0.82	%		0.75	%		0.89	%		0.89	%		0.86	%
Return on average equity		7.28			7.20			8.71			9.63			9.75
Average equity to average assets		11.31			10.47			10.17			9.28			8.84
Total risk-based capital ratio		20.25			18.88			15.97			16.63			14.91

* Securities include securities held to maturity and securities available for sale

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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 ended December 31, 2003. 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.

Overview

Management believes the two factors having the greatest impact on the Company’s earnings are the sustained low rate environment, and the overall health of the equity and financial markets.

The sustained low interest rate environment adversely impacts the Company’s net interest income as our balance sheet is structured to be both very short in duration and liquid. Management believes that strong liquidity and capital are necessary given the types of products and services the Company offers, particularly as it relates to treasury and cash management products and services. A strong liquidity and capital position provide assurances that the cash needs of the Company can be met. This position adversely impacts the Company’s net interest income in a declining rate environment. However, in an increasing rate environment, this position should benefit the Company. Management believes that we will be entering into a period of rising interest rate given the overall expansion of the economy and the size of both the Federal and trade deficits. Item 7a, Quantitative Disclosures about Market Risk discusses in detail the impact of rising and declining rates on net interest income.

Net interest income is a main source of revenue for the Company. Net interest income is negatively impacted by smaller spreads between the yield on earning assets and the interest-free sources of funds. As the yields on loans and investments declined, interest-free sources of funds could not, by definition, be lowered to match the decrease in yield on earning assets. In addition, a competitive deposit pricing environment prevented the lowering of rates on interest bearing deposits to match the decrease in yields on earning assets. A sustained low rate environment will continue to put pressure on the Company’s net interest income. Table 2 appearing in the “Results of Operations—Net Interest Income” section of the Management’s Discussion and Analysis shows the impact of the declining rate environment and also shows the declining benefits derived from the Company’s interest free source of funds.

Management continues to focus on diversifying the revenue sources so that the net income of the Company is less susceptible to changes in interest rates. Management has also focused on reducing expenses that are not necessary to the delivery of products and services to the Company’s customer base.

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As some of the Company’s fee-based business is the direct result of the market value of its customer’s investments, the overall health of the equity and financial markets plays an important role in the recognition of fee income, particularly in the trust, mutual fund servicing and investment management areas of the Company. As the overall equity and financial markets improve, the basis on which certain fee income is calculated should grow.

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 a customer-centric focus. The Company will continue to focus its efforts to attract a customer base that values the advantages of banking with a company headquartered in their market while still possessing the products and services of a much larger institution.

Earnings Summary

The Company recorded consolidated net income of $58.9 million for the year ended December 31, 2003. This represents a 3.0% increase over 2002. Net income for 2002 decreased 12.4% compared to 2001. Earnings per share for the year ended December 31, 2003, were $2.70 per share compared to $2.59 in 2002 and $2.95 in 2001. Earnings per share for 2003 increased 4.2% over 2002 per share earnings, which had decreased 12.2% over 2001.

The Federal Reserve Board reduced the interest rate 11 times in 2001 for a total of 475 basis points (4.75%) and an additional 50 basis points in 2002 and 25 basis points in 2003. These reductions caused repricing pressures on loans and securities and thus contributed significantly to a decrease in interest income for 2003 and 2002. Although, this decrease in interest income was positively offset by a decrease in interest expense, the Company’s net interest income declined to $197.1 million in 2003 compared to $218.0 million in 2002 and $239.7 million in 2001.

The Company had an increase of 5.8% in noninterest income in 2003 as compared to 2002 and a 3.9% increase in 2002 compared to 2001. In 2003, the Company sold its merchant discount operation, which processes credit and debit card activity for commercial and retail merchants, for $8.25 million. This sale plus increases in trading and investment banking income and service charges on deposit accounts contributed to the increase in noninterest income for 2003 compared to 2002. A contributing factor to the increase in 2002 was the acquisition of Sunstone Financial Group, Inc. (now known as UMB Fund Services, Inc.) in 2001.

Noninterest expense declined in 2003 by 1.7% compared to 2002 and decreased in 2002 by 2.3% compared to 2001. The decrease in 2003 compared to 2002 was primarily due to lower salaries and employee benefits and employment costs as described below. The decrease in 2002 compared to 2001 was due to a year-end charge in 2001 of approximately $3.8 million related to the write-off of certain non-strategic assets, primarily real estate. Amortization of goodwill was also discontinued in 2002 due to the issuance of Statement of Financial Accounting Standards SFAS No. 142 “Goodwill and Other Intangible Assets”. This change in accounting standards resulted in a reduction of expense of $5.65 million in 2002.

The results of operations for the period January 1, 2001 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 (which operates now as Perfect Commerce subsequent to a merger) for a gain of $1.7 million, on May 18, 2001 put the Company in a minority ownership position. The results of eScout are no longer included in the consolidated results of the Company.

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

11

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 2003, 2002 and 2001. Table 1 also shows the impact of the declining rate environment on net interest income over the last three years.

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, 2003, 2002 and 2001. Table 2 also shows the decline in the benefit of interest free funds as a result of the declining interest rate environment over the last three years. Net interest income, average balance sheet amounts and the corresponding yields earned and rates paid for the years 1999 through 2003 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, which are primarily obligations of state and local governments.

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 the 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.

Average Volume				Average Rate				2003 vs. 2002	Increase (Decrease)
2003		2002		2003		2002			Volume			Rate			Total
								Change in interest earned on:
	$2,588,794	$	2,632,850	5.46	%	6.13	%	Loans	$	(2,611	)	$	(17,051	)	$	(19,662	)
								Securities:
	2,771,882		3,146,077	2.56		3.12		Taxable		(11,108	)		(18,912	)		(30,020	)
	735,907		686,522	5.24		5.91		Tax-exempt		2,644			(5,034	)		(2,390	)
	146,470		185,678	1.16		1.69		Federal funds sold and resell agreements		(575	)		(854	)		(1,429	)
	51,211		66,952	2.99		4.06		Other		(575	)		(645	)		(1,220	)
	$6,294,264	$	6,718,079	4.04	%	4.59	%	Total	$	(12,225	)	$	(42,496	)	$	(54,721	)
								Change in interest incurred on:
	$3,492,038	$	3,804,714	0.95	%	1.56	%	Interest-bearing deposits	$	(4,550	)	$	(21,683	)	$	(26,233	)
	950,569		1,107,821	0.87		1.29		Federal funds purchased and repurchase agreements		(1,828	)		(4,219	)		(6,047	)
	41,161		88,561	3.07		3.11		Other		(1,457	)		(31	)		(1,488	)
$	4,483,768	$	5,001,096	0.95	%	1.53	%	Total	$	(7,835	)	$	(25,933	)	$	(33,768	)
								Net interest income	$	(4,390	)	$	(16,563	)	$	(20,953	)

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Average Volume				Average Rate				2002 vs. 2001	Increase (Decrease)
2002		2001		2002		2001			Volume			Rate			Total
								Change in interest earned on:
$	2,632,850	$	2,929,061	6.13	%	7.74	%	Loans	$	(21,579	)	$	(43,764	)	$	(65,343	)
								Securities:
	3,146,077		2,480,740	3.12		4.82		Taxable		27,254			(45,929	)		(18,675	)
	686,522		664,506	5.91		6.14		Tax-exempt		(77	)		(908	)		(985	)
	185,678		195,854	1.69		3.89		Federal funds sold and resell agreements		(2,867	)		(1,622	)		(4,489	)
	66,952		70,360	4.06		5.36		Other		(748	)		(153	)		(901	)
$	6,718,079	$	6,340,521	4.59	%	6.28	%	Total	$	1,983		$	(92,376	)	$	(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			(21,849	)		(17,895	)
	88,561		120,269	3.11		4.18		Other		(1,154	)		(1,126	)		(2,280	)
$	5,001,096	$	4,727,893	1.53	%	3.07	%	Total	$	7,638		$	(76,333	)	$	(68,695	)
								Net interest income	$	(5,655	)	$	(16,043	)	$	(21,698	)

TABLE 2

ANALYSIS OF NET INTEREST MARGIN (in thousands)

	2003			2002			2001
Average earning assets	$	6,294,264		$	6,718,079		$	6,340,521
Interest-bearing liabilities		4,483,768			5,001,096			4,727,893
Interest-free funds	$	1,810,496		$	1,716,983		$	1,612,628
Free funds ratio (free funds to earning assets)		28.76	%		25.56	%		25.43	%
Tax-equivalent yield on earning assets		4.04	%		4.59	%		6.28	%
Cost of interest-bearing liabilities		0.95			1.53			3.07
Net interest spread		3.09	%		3.06	%		3.21	%
Benefit of interest-free funds		0.27			0.40			0.79
Net interest margin		3.36	%		3.46	%		4.00	%

The Company experienced lower net interest income of $21.0 million for the year 2003 compared to 2002 and $21.7 million for the year 2002 compared to 2001. The 2003 decline was primarily driven by volume decreases in earning assets and lower rates, while the 2002 decline was primarily driven by lower rates. These decreases in net interest income have occurred due to several factors, primarily a reduction in demand for loans due to the soft economy; a reduction in mutual fund and trust related money market balances largely driven by both economic factors and a residual lack of public confidence impacting the overall securities industry; and an earning asset portfolio that, by design, is very short in duration and has been negatively impacted by the overall decline in interest rates over the past three years.

Management believes that the overall outlook in its net interest income is positive. In the short-term, a recovering economy is expected to spur higher demand for commercial and consumer loans. Loan-related earning assets tend to have a higher spread than those earned in the Company’s investment portfolio. In addition, over the next several quarters, most economists believe that interest rates will rise. Given the term of our earning assets, a rising rate environment would have a positive impact on the Company’s net interest income. Finally,

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management is undertaking a strategic initiative to focus additional efforts on marketing, product enhancements and streamlining the approval process for its consumer loan product suite. These efforts should result in increased volumes of new applications and booked loans.

Provision and Allowance for Loan Losses

The allowance for loan losses (“ALL”) represents management’s judgment 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 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.

Management of the Company increased the ALL from 1.27% of total loans as of December 31, 2001 to 1.40% of total loans as of December 31, 2002 and 1.60% of total loans as of December 31, 2003. This increase was due to an increase in nonperforming loans in 2003 and increased charge offs in 2002 caused by the overall softening of the economy in the region that the Company serves.

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, 2003. Although no assurance can be given, management of the Company believes the present ALL is adequate considering the Company’s loss experience, delinquency trends and current economic conditions.

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	2003		2002		2001		2000		1999
Commercial	$	22,550	$	20,050	$	18,050	$	15,550	$	15,000
Consumer		19,644		16,278		16,587		15,548		15,343
Real estate		1,200		900		900		800		750
Agricultural		50		50		50		50		50
Leases		50		50		50		50		50
Total allowance	$	43,494	$	37,328	$	35,637	$	31,998	$	31,193

The Company recorded a provision for loan losses of $12.0 million during 2003, compared to $16.7 million during 2002 and $14.7 million during 2001. The decrease in the loan provision in 2003 was primarily due to a $9.2 million decrease in net loan charge-offs, $8.7 million of the decrease is related to a decrease in commercial loans net charge offs. The increase in the loan loss provision in 2002 was primarily due to an increase of commercial loan net charge offs of $5.1 million.

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Table 4 presents a five-year summary of the Company’s ALL. Also, please see Credit Risk under Risk Management on page 32 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)

	2003			2002			2001			2000			1999
Allowance-beginning of year	$	37,328		$	35,637		$	31,998		$	31,193		$	33,169
Provision for loan losses		12,005			16,738			14,745			9,201			8,659
Allowances of acquired banks		—			—			—			—			710
Charge-offs:
Commercial	$	(2,320	)	$	(8,483	)	$	(4,764	)	$	(992	)	$	(2,732	)
Consumer
Bankcard		(6,175	)		(6,118	)		(6,613	)		(5,051	)		(5,377	)
Other		(2,825	)		(3,746	)		(5,378	)		(5,887	)		(6,393	)
Real estate		(17	)		(13	)		(5	)		(3	)		(11	)
Agricultural		—			—			—			—			(1	)
Total charge-offs	$	(11,337	)	$	(18,360	)	$	(16,760	)	$	(11,933	)	$	(14,514	)
Recoveries:
Commercial	$	2,998		$	457		$	1,820		$	236		$	431
Consumer
Bankcard		1,097			1,307			1,373			1,191			1,268
Other		1,294			1,507			2,204			2,073			1,383
Real estate		109			21			256			35			55
Agricultural		—			21			1			2			32
Total recoveries	$	5,498		$	3,313		$	5,654		$	3,537		$	3,169
Net charge-offs	$	(5,839	)	$	(15,047	)	$	(11,106	)	$	(8,396	)	$	(11,345	)
Allowance-end of year	$	43,494		$	37,328		$	35,637		$	31,998		$	31,193
Average loans, net of unearned interest	$	2,558,794		$	2,632,850		$	2,929,061		$	3,004,754		$	2,615,978
Loans at end of year, net of unearned interest		2,722,292			2,657,532			2,813,758			3,073,957			2,841,150
Allowance to loans at year-end		1.60	%		1.40	%		1.27	%		1.04	%		1.10	%
Allowance as a multiple of net charge-offs		7.45	x		2.48	x		3.21	x		3.81	x		2.75	x
Net charge-offs to:
Provision for loan losses		48.64	%		89.90	%		75.32	%		91.25	%		131.02	%
Average loans		0.23			0.57			0.38			0.28			0.43

Noninterest Income

A key objective of the Company is the growth of noninterest income to enhance profitability as 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 ongoing focus is to develop and 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. Management believes that it can offer these products and services both efficiently and profitably as most of these are driven off of common platforms and support structures.

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Table 5

SUMMARY OF NONINTEREST INCOME (in thousands)

	Year Ended December 31
	2003		2002		2001
Trust and securities processing	$	86,490	$	90,393	$	86,640
Trading and investment banking		20,863		17,937		18,097
Service charge on deposit accounts		70,705		66,081		59,018
Other service charges and fees		15,567		14,228		13,746
Bankcard fees		31,654		29,901		29,160
Gains on sales of securities available for sale, net		824		3,158		1,875
Other		19,465		10,508		14,987
Total noninterest income	$	245,568	$	232,206	$	223,523

Noninterest income (summarized in table 5) increased 5.8% in 2003 compared to an increase of 3.9% in 2002. The increase in 2003 was primarily a result of an increase in trading and investment banking, service charges on deposit accounts and other income. The growth in 2002 was driven by an increase in trust and securities processing and an increase in service charges on deposit accounts.

Trust and securities processing consists of fees earned on personal and corporate trust accounts, custody of securities services, trust investments and money management services and servicing of mutual fund assets. These fees decreased in 2003 compared to 2002. Part of this decrease was caused by the decline in equity and financial markets as trust fees are derived from the market value of the assets in the trust. In addition, due to the overall market decline in mutual fund volumes, fees relating to the custody of the securities and the servicing of mutual fund assets were negatively impacted. In addition, the mutual fund servicing industry as a whole has been negatively impacted by the continuing accusations of irregularities within some segments of the industry. The increase in fees in 2002 compared to 2001 was primarily due to the increase in the servicing of mutual fund assets. This was primarily driven by the acquisition of Sunstone Financial Group, Inc. (now known as UMB Fund Services, Inc.) during the second quarter 2001. Partially offsetting the 2002 increase in fees was a decline in trust fees caused by the decline in equity markets as mentioned above. Management of the Company believes that the current rebound in the securities market is beginning to have a positive impact as fees increased $1.2 million for the three months ended December 31, 2003, compared to the same period in 2002. If the securities market and public and market confidence in mutual funds continue to rebound, as is anticipated by most analysts, the Company’s fees for custody of securities and the servicing of mutual fund assets would increase. In addition, management believes that the overall quality and performance of both its investment management and Scout Funds will attract both increased and new investable dollars to it assets under management. Management is also introducing a wrap product which will allow our brokerage operations to sell our Scout Funds to retail clients. Finally, the Company has put a special emphasis on selling the Scout Funds through our institutional channels by the establishment of a dedicated sales force. The Company entered into an agreement in 2003 to sell certain employee benefit accounts. The Company services these accounts in an employee benefit plan recordkeeping and trustee capacity. The transfer of these accounts is expected to be complete in the first quarter of 2004. The sale of the Company’s employee benefit accounts will likely offset a portion of such potential increase in revenues.

Trading and investment banking consists mostly of fees earned from the sale of bonds to the Company’s correspondent banking market and throughout its brokerage operations. Fees increased $2.9 million in 2003 compared to 2002 and were flat in 2002 compared to 2001. The increase was mainly market driven as customers took advantage of rate opportunities within their respective portfolios.

Fees and service charges on deposit accounts increased $4.6 million in 2003 compared to 2002 and $7.0 million in 2002 compared to 2001. The increase in fees was primarily related to new corporate deposit relationships and the sale of additional cash management services. Corporate service charge fees also increased

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due to lower compensating balances maintained by corporate customers and the lower earnings credit rate allowed on those balances. An increase in the interest rate would have a negative impact on fees within this business sector. However, management believes that the overall economic recovery should increase the Company’s number of cash management customers and the corresponding number of transactions in customer accounts which would offset any adverse impact in fees caused by a rise in interest rates.

Bankcard fees increased $1.7 million in 2003 compared to 2002 and $0.7 million in 2002 compared to 2001. The increase was primarily due to higher merchant discount income partially offset by a slight decline in ATM interchange fees. The Company has sold its debit/credit card discount operation and anticipates a reduction of $1.7 million in bankcard fees in 2004. Interchange fees are expected to continue to decline as a result of recently settled industry lawsuit involving Master Card and Visa. Management is actively streamlining the approval process and adding increased functionality within its card base in order to increase the volume of cards used.

Other income increased $9.0 million in 2003 compared to 2002 and decreased $4.5 million in 2002 compared to 2001. The increase in 2003 was due to the sale of the merchant discount operation for an $8.25 million gain. Included in 2001 was a $1.7 million gain on the sale of part of the Company’s ownership in eScout.

Noninterest Expense

Noninterest expense in 2003 decreased $6.3 million compared to 2002 primarily due to lower salary and benefits costs, and decreased $8.4 million in 2002 compared to 2001 due to lower equipment expenses and suspension of goodwill amortization. Included in 2001 expenses were $13.4 million 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

	Year Ended December 31
	2003		2002		2001
Salaries and employee benefits	$	196,893	$	203,458	$	198,684
Occupancy, net		24,720		23,937		23,778
Equipment		42,645		44,367		50,685
Supplies and services		23,291		23,998		21,366
Marketing and business development		13,550		14,832		14,834
Processing fees		20,323		19,380		16,813
Legal and consulting		7,355		5,839		8,565
Amortization of goodwill on purchased affiliates		—		—		5,650
Amortization of intangibles		1,210		2,034		1,803
Other		24,667		23,104		27,195
Total noninterest expense	$	354,654	$	360,949	$	369,373

Salaries and employee benefits declined $6.6 million in 2003 compared to 2002 and increased $4.8 million in 2002 compared to 2001. The increase in staffing costs in 2002 was primarily due to higher medical insurance premiums. The decline in salaries represented roughly half of the overall decrease in 2003, primarily due to lower staffing levels reflecting a concerted effort on the part of management to decrease overhead costs. This was a continuation of the 2002 decrease in staffing levels. To illustrate, the Company’s full time equivalent employees dropped from 4,222 at year-end 2001, to 4,027 at year-end 2002 to 3,807 at year-end 2003. This

17

decrease in salary expense is expected to continue as the Company is committed to becoming more efficient. In addition, as the sale of our Employee Benefit accounts to Marshall & Isley Trust Company, n.a. is completed during the first quarter of 2004, the Company expects to garner additional salary and benefit related savings.

Occupancy expense remained flat for the three-year period 2001-2003. Equipment costs decreased $1.7 million in 2003 compared to 2002 and $6.3 million in 2002 compared to 2001. The decrease was primarily due to lower depreciation and equipment maintenance costs. Management expects these expenses to increase somewhat in 2004, due to conversion and upgrading of some of our mainframe computer systems.

Processing fees increased $1.0 million in 2003 compared to 2002 and increased $2.6 million in 2002 compared to 2001. 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.

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 on page 27 of this report for additional details.

Other expense increased $1.6 million in 2003 compared to 2002 and decreased $4.1 million in 2002 compared to 2001. 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 $17.1 million in 2003, compared to $15.4 million in 2002, compared to $25.7 million in 2001. These expense levels equate to effective rates of 22.5%, 21.2% and 28.3% for 2003, 2002 and 2001 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 2003 and 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. The effective income tax rate for 2003 and 2002 includes a reduction in the tax reserve resulting from a reassessment of ongoing risks associated with tax matters.

Strategic Lines of Business

The Company’s operations are strategically aligned into four major lines of business: Commercial Banking; Retail Banking; Trust and Wealth Management; and, Investment Services Group. The lines of business are differentiated by the products and services offered. The Treasury and Other category includes items not directly associated with the other lines of business. Note 12 to the Consolidated Financial Statements describes how these segments were identified and presents financial results of the lines of business for the years ended December 31, 2003, 2002 and 2001.

Commercial Banking’s net income increased $1.8 million, or three percent, to $53.4 million in 2003, compared to a decrease of $12.5 million, or twenty percent to $51.6 million in 2002. For 2003, the increase in net income was driven primarily by an increase in noninterest income resulting from strong sales of Cash Management products and services. A lower provision for loan losses, due to a reduction in non-performing loans, also contributed to the improvement in net income. Net interest income declined in 2003 due to the sustained low rate environment and the corresponding impact on repricing of earning assets. For 2002, the net income decrease was due primarily to the decrease in net interest income resulting from a significant decrease in rates during 2001. An increase in interest rates, as expected by most economists, would have the most significant impact on this business segment, causing net interest income to rise. Because deposit service charges are also

18

affected by interest rates due to the earnings credit on commercial accounts, noninterest income is expected to decrease in a rising rate environment. Management believes the decrease in deposit service charges would be more than offset by the increase in net interest income. Management also believes that an anticipated improving economy would spur an increase in both loan commitments and outstandings which would generate increased net interest income.

Retail Banking’s net income decreased $6.9 million to a net loss of $3.3 million, compared to a decrease of $8.0 million or sixty-nine percent to $3.6 million in 2002. For 2003, the decrease in net income was primarily due to a decrease in the net interest income resulting from the sustained low rate environment. Retail banking is a source of funding for other activities within the Company. Due to the competitive nature of deposit pricing within the Company’s markets, the Company’s affiliates and subsidiaries were unable to continue to lower deposit rates to keep pace with the decreases in earning asset yields and still remain competitive. For 2002, the net income decrease was due primarily to the increase in noninterest expense resulting from increased costs related to a new residential mortgage product, increased advertising expense, and increased expenses related to new loan software purchased in 2001. The greatest potential for improving net income for this business segment lies in the continued focus on offering products and services in the most efficient manner and by booking more loans through the branch structure. Management’s intent is to aggressively market its home equity line of credit, direct auto loans and credit card products to more efficiently optimize its branch network as a source of earning assets.

Trust and Wealth Management net income increased $4.3 million or ninety-eight percent to $8.7 million in 2003, compared to an increase of $1.1 million, or thirty-five percent to $4.4 million in 2002. For 2003, increased sales of trust products and services resulted in an increase in noninterest income. A decrease in noninterest expense, through reduced salaries and benefits and reduced advertising expense, also contributed to improved net income. For 2002, increased sales of trust products and services were the primary reason for the increase in net income. This was offset by lower net interest income resulting from significant rate decreases in 2001. The Company sold its employee benefit account processing in 2003. Management does not believe that the sale of the employee benefit account processing will have an impact on the net income of this business segment due to the comparable revenues and expenses related to this activity. The greatest impact for earnings improvement in this business segment lies in continued increased sales of products and services and improved equity and financial markets, since most revenues are related to the market value of customer investments.

Investment Services Group net income decreased $3.5 million or twenty-seven percent to $9.2 million in 2003, compared to an increase of $0.9 million, or seven percent to $12.7 million in 2002. For 2003, decreased revenues related to a sluggish mutual fund industry had the greatest impact on earnings. For 2002, custody and cash management activities for mutual fund customers provided an increase to noninterest income, but were offset by lower net interest income caused by significant interest rate decreases in 2001. Improvement in the equity and financial markets, and in particular improvements in the mutual fund industry, would provide the greatest opportunity for improved earnings for this business segment. Management believes that the Company has a distinct advantage over its competitors by being able to provide the full range of services to mutual fund providers under one umbrella.

The net loss for the Treasury and Other category was $9 million for 2003, compared to a net loss of $15 million for 2002. The net loss for all years includes unallocated income tax expense for the consolidated Company. The smaller loss in 2003 was due primarily to the gain on the sale of the merchant discount processing activity which appears as noninterest income in 2003. For 2002, the net loss decreased due to lower income tax expense. The 2001 amounts include net interest income, noninterest income and noninterest expense related to, and offset by, minority interest in loss of a consolidated subsidiary which was sold in May 2001 and no longer has any affect on the earnings of the Company.

Balance Sheet Analysis

Loans

Loans represent the Company’s largest source of interest income. Loan balances have now stabilized due to management’s effort to focus on new commercial and consumer loan relationships, as well as the overall

19

improvement in the economy. Management plans to continue to focus on growing our consumer and middle market business as these market niches represent our best opportunity to cross-sell fee-related services, such as cash management. In addition, management intends to develop a small business initiative as this segment represents a growth opportunity for the Company. With both the recent hiring of Peter de Silva as President and Chief Operating Officer of the Company and the establishment of a management committee to run the day-to-day operations of the Company, R. Crosby Kemper III, the Chairman and Chief Executive Officer, and other members of the Commercial Banking Division’s management team, will focus more on acquiring new customers and selling our products and services.

Included in Table 7 is a five-year breakdown of loans by type. During the first quarter of 2003 the Company reviewed the classifications of loans to ensure that loans were properly recorded on the loan system, which resulted in the reclassification of $92 million in loans from the commercial category to the commercial real estate category. Business-related loans continue to represent the largest segment of the Company’s loan portfolio, comprising approximately 60% 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.

TABLE 5

ANALYSIS OF LOANS BY TYPE (in thousands)

	December 31
	2003			2002			2001			2000			1999
Commercial	$	1,134,633		$	1,300,762		$	1,416,431		$	1,553,566		$	1,472,376
Agricultural		52,027			47,729			40,777			36,799			39,218
Leases		7,467			8,146			7,454			7,677			5,645
Real estate construction		18,519			13,952			15,267			17,145			12,520
Real estate commercial		414,915			307,850			281,660			251,119			195,013
Total business-related	$	1,627,561		$	1,678,439		$	1,761,589		$	1,866,306		$	1,724,772
Bankcard	$	161,676		$	163,808		$	168,518		$	176,875		$	163,756
Other consumer installment		766,816			659,969			735,586			878,610			817,732
Real estate residential		166,239			155,316			148,695			152,166			134,890
Total consumer-related	$	1,094,731		$	979,093		$	1,052,799		$	1,207,651		$	1,116,378
Total loans	$	2,722,292		$	2,657,532		$	2,814,388		$	3,073,957		$	2,841,150
Allowance for loan losses		(43,494	)		(37,328	)		(35,637	)		(31,998	)		(31,193	)
Net loans	$	2,678,798		$	2,620,204		$	2,778,751		$	3,041,959		$	2,809,957
As a % of total loans
Commercial		41.7	%		49.0	%		50.3	%		50.5	%		51.80	%
Agricultural		1.9			1.8			1.4			1.2			1.4
Leases		0.3			0.3			0.3			0.3			0.2
Real estate construction		0.7			0.5			0.6			0.5			0.4
Real estate commercial		15.2			11.6			10.0			8.2			6.9
Total business-related		59.8	%		63.2	%		62.6	%		60.7	%		60.7	%
Bankcard		5.9	%		6.2	%		6.0	%		5.8	%		5.8	%
Other consumer installment		28.2			24.8			26.1			28.6			28.8
Real estate residential		6.1			5.8			5.3			4.9			4.7
Total consumer-related		40.2	%		36.8	%		37.4	%		39.3	%		39.3	%
Total loans		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

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As a percentage of total loans, commercial real estate which includes real estate construction loans now comprise 16% of total loans, compared to 12% at the end of 2002. 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 declined as a percentage of total loans. They comprise 5.9% of total loans at year-end 2003 compared to 6.2% at year-end 2002. A significant portion of the decrease in volume of bankcard loans in 2003 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. Competitors frequently lessen their credit standards and offer favorable introductory rates in an effort to obtain transfer balances from other cards. The Company has historically not elected to seek loan volume in such a manner. In fact, the Company’s credit and underwriting standards have become more strict as more consumers acquire multiple credit cards. However, management plans to further enhance the Company’s credit scoring matrices and believes the Company can attract more of those card customers historically not served by the Company without materially affecting the overall risk/reward ratio.

Other consumer installment loans have increased as a percentage of loans. They comprise 28.2% of total loans at year-end 2003 compared to 24.8% at year-end 2002. The increase was due primarily to an increase in the purchase of automobile dealer loans and direct consumer loans to our customers. With the improving economy, management believes that the volume of these types of loans will continue to increase. Management intends to increase its efforts in acquiring indirect paper with additional staff and a focus on penetration into markets adjacent to our current market area.

Real estate residential loans have increased as a percentage of loans. The increase was due to the success of a low rate home equity line promotion and product enhancements. Management expects that these loans will increase in 2004.

Nonaccrual, past due and restructured loans are discussed under “Credit Risk” within the quantitative and qualitative disclosure about market risk in Item 7A on page 32 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 potential source of 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. The Company maintains 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 56% of earning assets as of

December 31, 2003, compared to 60% at year-end 2002. Securities totaled $3.8 billion at December 31, 2003, compared to $4.2 billion at year-end 2002. The decrease in 2003 resulted from lower trust and mutual fund clients’ related deposits and borrowed funds. 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, 2003 compared to 88% at year-end 2002. In order to improve the yields of the securities portfolio the Company has altered the mix of the portfolio from U.S. Treasury Notes to U.S. Agency and Mortgage-Backed Securities of U.S. Agencies. Securities available for sale had a net unrealized gain of $5.1 million at year-end, compared to $37.3 million the preceding year. These amounts are reflected, on an after-tax basis, in the Company’s other comprehensive income in shareholder’s equity, net of tax, as an unrealized gain of $3.2 million at year-end 2003, compared to $23.7 million for 2002.

21

The securities portfolio achieved an average yield on a tax-equivalent basis of 3.1% for 2003, compared to 3.7% in 2002 and 5.1% in 2001. The yield on the portfolio decreased by 57 basis points in 2003 as a result of low, sustained 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 16.8 months at December 31, 2003 compared to 18 months at year-end 2002. 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.

TABLE 8

SECURITIES AVAILABLE FOR SALE (in thousands)

December 31, 2003	Amortized Cost		Fair Value
U.S. Treasury	$	848,687	$	852,242
U.S. Agencies		1,324,259		1,326,588
Mortgage-backed		840,277		836,570
State and political subdivisions		388,971		391,869
Federal Reserve Bank Stock		7,410		7,410
Equity and other		1,134		1,134
Total	$	3,410,738	$	3,415,813

December 31, 2002	Amortized Cost		Fair Value
U.S. Treasury	$	1,160,226	$	1,178,982
U.S. Agencies		1,722,060		1,729,737
Mortgage-backed		363,293		369,652
State and political subdivisions		323,640		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	$	3,719,896

	US Government and Agencies				Mortgage-Backed Securities				State and Political Subdivisions				Other Securities
December 31, 2003	Market Value		Weighted Average Yield		Market Value		Weighted Average Yield		Market Value		Weighted Average Yield		Market Value		Total Market Value
Due in one year or less	$	1,455,992	1.81	%	$	121,564	3.74	%	$	141,890	2.32	%	$	—	$	1,719,446
Due after 1 year through 5 years		722,782	2.08			714,942	3.18			202,209	4.06			—		1,639,933
Due after 5 years through 10 years		—	—			64	6.85			42,113	4.41			—		42,177
Due after 10 years		56	4.37			—	—			5,657	2.41			8,544		14,257
	$	2,178,830			$	836,570			$	391,869			$	8,544	$	3,415,813

Table 9

SECURITIES HELD TO MATURITY (in thousands)

December 31, 2003	Amortized Cost		Fair Value		Weighted Average Yield/Average Maturity
Due in one year or less	$	128,529	$	130,576	6.39%
Due after 1 year through 5 years		156,384		162,912	6.17%
Due after 5 years through 10 years		4,966		4,966	6.59%
Due over 10 years		16,251		16,251	3.51%
Total	$	306,130	$	314,705	2 yr. 1 mo.

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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 2003 was $12.0 million compared to a net sold position of $11.2 million at year-end 2002. During 2003, the Company was a net purchaser of federal funds with an average balance of $2.6 million, compared to an average balance of $20.0 million in 2002.

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 $827.9 million in 2003 and $775.5 million in 2002.

At December 31, 2003, the Company held securities bought under agreements to resell of $264.7 million compared to $106.6 million at year-end 2002. 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 $113.1 million in 2003 and $161.0 million in 2002.

The Investment Banking Division also maintains an active securities trading inventory. The average holdings in the securities trading inventory in 2003 were $49.4 million, compared to $65.1 million in 2002, and was recorded at market value.

Deposits and Borrowed Funds

Deposits represent the Company’s primary funding source for its asset base. In addition to the core deposits garnered by the Company’s retail branch structure, the Company continues to focus on its cash management services, as well as its trust and mutual fund servicing lines of business in order to attract and retain additional core deposits. Deposits totaled $5.6 billion at December 31, 2003 and $5.8 billion at year-end 2002. Deposits averaged $5.3 billion in 2003 and $5.5 billion in 2002. The Company continually strives to expand, improve and promote its cash management services in order to attract and retain commercial funding customers. It is one of the Company’s core competencies given both its scale and competitive product mix.

Noninterest bearing demand deposits average $1.8 billion and $1.7 billion during 2003 and 2002, respectively. These deposits represented 33.4% of average deposits in 2003, compared to 31.1% in 2002. 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
	2003		2002
Maturing within 3 months	$	275,247	$	331,714
After 3 months but within 6		33,335		34,763
After 6 months but within 12		26,820		37,384
After 12 months		36,195		43,851
Total	$	371,597	$	447,712

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TABLE 11

ANALYSIS OF AVERAGE DEPOSITS (in thousands)

	2003		2002		2001		2000		1999
Noninterest-bearing demand	$	1,788,018	$	1,723,122	$	1,775,720	$	1,922,019	$	1,748,926
Interest-bearing demand and savings		2,460,496		2,624,828		2,527,556		2,270,562		2,281,458
Time deposits under $100,000		779,473		892,164		823,385		824,307		860,456
Total core deposits	$	5,027,987	$	5,240,114	$	5,126,661	$	5,016,888	$	4,890,840
Time deposits of $100,000 or more		252,069		287,722		283,603		347,866		457,501
Total deposits	$	5,280,056	$	5,527,836	$	5,410,264	$	5,364,754	$	5,348,341

As a % of total deposits
Noninterest-bearing demand	33.9	%	31.2	%	32.9	%	35.8	%	32.7	%
Interest-bearing demand and savings	46.6		47.5		46.7		42.3		42.6
Time deposits under $100,000	14.7		16.1		15.2		15.4		16.1
Total core deposits	95.2	%	94.8	%	94.8	%	93.5	%	91.4	%
Time deposits of $100,000 or more	4.8		5.2		5.2		6.5		8.6
Total deposits	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%

Securities sold under agreements to repurchase totaled $1,173.9 million at December 31, 2003, and $1,209.8 million at year-end 2002. This liability averaged $914.7 million in 2002 and $1,063.1 million in 2002. 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)

	2003				2002
	Amount		Rate		Amount		Rate
At year-end
Federal funds purchased	$	—	—	%	$	—	—	%
Repurchase agreements		1,173,927	0.76			1,209,770	0.92
Other		70,604	0.66			94,721	0.78
Total	$	1,244,531	0.76	%	$	1,304,491	0.91	%
Average for year
Federal funds purchased	$	35,917	1.10	%	$	44,758	1.79	%
Repurchase agreements		914,652	0.86			1,063,063	1.27
Other		23,771	0.81			61,095	1.44
Total	$	974,340	0.87	%	$	1,168,916	1.30	%
Maximum month-end balance
Federal funds purchased	$	140,000			$	59,736
Repurchase agreements		1,816,927				1,815,137
Other		161,132				200,860

In 2003, the Company paid off a senior note issued for $15 million. The senior note represented funds borrowed in 1993 under a medium-term program to fund bank acquisitions. This $15.0 million note had an original maturity of 10 years at 7.3%. The Company also has eight fixed-rate advances from the Federal Home Loan Bank at rates of 3.80%, 4.53%, 4.75%, 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.

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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 $811.9 million at December 31, 2003 compared to $802.8 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 2003 and 2002, the Company acquired 301,293 and 238,758 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 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 19.13% and total capital ratio of 20.25% substantially exceed the regulatory minimums.

For further discussion of capital and liquidity, see the Liquidity Risk section of Item 7A, Quantitative and Qualitative Disclosures about Market Risk on pages 32 and 33 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 December 31, 2003, excluded net unrealized gains or losses on 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	$	—	$	135	$	106,423	$	59,681	$	166,239
All other		—		78,674		—		2,477,379		2,556,053
Total loans	$	—	$	78,809	$	106,423	$	2,537,060	$	2,722,292
Securities available for sale:
U. S. Treasury	$	848,687	$	—	$	—	$	—	$	848,687
U. S. agencies and mortgage-backed		546,115		1,618,421		—		—		2,164,536
State and political subdivisions		—		358,886		29,936		149		388,971
Commercial paper and other		7,410		—		—		1,134		8,544
Total securities available for sale	$	1,402,212	$	1,977,307	$	29,936	$	1,283	$	3,410,738
Securities held to maturity		—		277,835		18,872		9,423		306,130
Trading securities		2,562		51,843		6,106		269		60,780
Federal funds and resell agreements		—		276,715		—		—		276,715
Cash and due from banks		206,500		442,484		—		—		648,984
All other assets		—		—		—		298,795		298,795
Category totals	$	1,611,274	$	3,104,993	$	161,337	$	2,846,830	$	7,724,434
Risk-weighted totals	$	—	$	620,998	$	80,669	$	2,846,830	$	3,548,497
Off-balance-sheet items (risk-weighted)		—		—		1,712		347,241		348,953
Total risk-weighted assets	$	—	$	620,998	$	82,381	$	3,194,071	$	3,897,450

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	Risk-Weighted Category
Capital	Tier1			Tier2		Total
Shareholders’ equity	$	811,923		$	—	$	811,923
Less: accumulated other comprehensive income		(3,183	)		—		(3,183	)
Less premium on purchased banks		(63,029	)		—		(63,029	)
Allowance for loan losses		—			43,494		43,494
Total capital	$	745,711		$	43,494	$	789,205
Capital ratios
Tier 1 capital to risk-weighted assets							19.13	%
Total capital to risk-weighted assets							20.25	%
Leverage ratio (Tier 1 to total assets less premium on purchased banks)							10.69	%

Off-balance Sheet Arrangements

The Company’s main off-balance sheet arrangements are loan commitments, commercial and standby letters of credit, futures contracts and forward exchange contracts, which have maturity dates rather than payment due dates. Please see note 14, “Commitments, Contingencies and Guarantees” in the Notes to Financial Statements under Item 8 on pages 56 and 57 for detailed information on these arrangements.

Table 14

OFF-BALANCE SHEET ARRANGEMENTS (in thousands)

The table below details the contractual obligations for the Company as of December 31, 2003. The Company has no capital leases or long-term purchase obligations.

	Payments due by period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Contractual Obligations
Long-Term Debt Obligations	$	16,280	$	1,012	$	2,216	$	2,500	$	10,552
Operating Lease Obligations		26,823		4,469		7,312		4,863		10,179
Other Long-Term Liabilities Reflected on the Registrant’s Balance Sheet under GAAP		—		—		—		—		—
Total	$	43,103	$	5,481	$	9,528	$	7,363	$	20,731
	Maturities due by Period
Commitments, Contingencies and Guarantees
Commitments, to extend credit for loans (excluding credit under credit card loans)	$	796,737	$	221,256	$	436,345	$	57,580	$	81,556
Commitments, to extend credit under credit card loans		891,493		891,493		—		—		—
Commercial letters of credit		7,341		7,172		169		—		—
Standby letters of credit		171,293		114,166		57,127		—		—
Futures contracts		38,000		38,000		—		—		—
Forward foreign exchange contracts		8,033		8,033		—		—		—
Total	$	1,912,897	$	1,280,120	$	493,641	$	57,580	$	81,556
Total off balance sheet arrangements	$	1,956,000	$	1,285,601	$	503,169	$	64,943	$	102,287

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

26

principles 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 judgments, 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 judgments 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 judgments 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 judgment 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. The allowance for loan losses are 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. Goodwill is no longer amortized, in accordance with SFAS No. 142, but is tested periodically for impairment. The Company has performed three 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 their estimated useful life of 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 for long-lived assets other than goodwill 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 with 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 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.

Stock-based compensation is recognized using the intrinsic value method for disclosure purposes. Per the requirements of FAS 123 proforma net income and earnings per share is disclosed in the footnotes to the financial statements and discloses the impact on earnings as if the fair value method had been applied.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Risk Management

Market risk is a broad term for the risk of economic loss due to adverse changes in the fair value of a financial instrument. These changes may be the result of various factors, including interest rates, foreign exchange prices, commodity prices or equity prices. Financial instruments that are subject to market risk can be classified either as held for trading or held for purposes other than trading.

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The Company is subject to market risk primarily through the effect of changes in interest rates of its assets held for purposes other than trading. The following discussion of interest risk, however, combines instruments held for trading and instruments held for purposes other than trading because the instruments held for trading represent such a small portion of the Company’s portfolio that the interest rate risk associated with them is immaterial.

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 Funds Management Committee (“FMC”) and approved by the Company’s Board of Directors. The FMC 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, 2003. Table 15 sets forth, for December 31, 2003 and 2002, 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 15 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, 2003 is higher than December 31, 2002 at both the 100 and 200 basis points increases. The Company should benefit from rate increases because a majority of its earnings assets and deposits have been repriced. Also, the Company had higher loans at December 31, 2003 than December 31, 2002.

TABLE 15

MARKET RISK (in thousands)

	Net Portfolio Value
Rates in Basis Points (Rate Shock)	December 31, 2003							December 31, 2002
	Amount		Change			% Change		Amount		Change		% Change
200	$	1,323,774	$	278,504		26.64	%	$	1,145,822	$	195,631	20.59	%
100		1,184,522		139,252		13.32			1,048,007		97,816	10.29
Static		1,045,270		—		—			950,191		—	—
(100)		1,022,952		(22,318	)	(2.14	)		993,634		43,503	4.58
(200)		—		—		—			—		—	—

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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, 2003 and 2002. Table 16 shows the net interest income increase or decrease over the next twelve months as of December 31, 2003 and 2002. Both years show that if rates rise 100 or 200 basis points, net interest income will increase. 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 16

MARKET RISK (in thousands)

	Net Interest Income
Rates in Basis Points (Rate Shock)	December 31, 2003 Amount of Change		December 31, 2002 Amount of Change
200	$	6,127	$	8,752
100		3,064		4,376
Static		—		—
(100)		—		—
(200)		—		—

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 17 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 17

INTEREST RATE SENSITIVITY ANALYSIS (in millions)

December 31, 2003	1-90 Days			91-180 Days			181-365 Days			Total			1-5 Years			Over 5 Years			Total
Earning assets
Loans	$	1,541.2		$	118.6		$	194.5		$	1,854.3		$	800.5		$	67.5		$	2,722.3
Securities		1,199.8			264.5			440.4			1,904.7			1,622.9			194.3			3,721.9
Federal funds sold and resell agreements		276.7			—			—			276.7			—			—			276.7
Other		62.6			—			—			62.6			—			—			62.6
Total earning assets	$	3,080.3		$	383.1		$	634.9		$	4,098.3		$	2,423.4		$	261.8		$	6,783.5
% of total earning assets		45.4	%		5.6	%		9.4	%		60.4	%		35.7	%		3.9	%		100.0	%
Funding sources
Interest-bearing demand and savings	$	479.3		$	—		$	—		$	479.3		$	530.8		$	1,441.6		$	2,451.7
Time deposits		466.7			184.0			169.0			819.7			257.0			9.1			1,085.8
Federal funds purchased and repurchase agreements		1,173.9			—			—			1,173.9			—			—			1,173.9
Borrowed funds		71.0			0.3			0.7			72.0			6.4			8.5			86.9
Noninterest-bearing sources		569.4			—			53.3			622.7			160.0			1,202.5			1,985.2
Total funding sources	$	2,760.3		$	184.3		$	223.0		$	3,167.6		$	954.2		$	2,661.7		$	6,783.5
% of total earning assets		40.7	%		2.7	%		3.3	%		46.7	%		14.1	%		39.2	%		100.0	%
Interest sensitivity gap	$	320.0		$	198.8		$	411.9		$	930.7		$	1,469.2		$	(2,399.9	)
Cumulative gap		320.0			518.8			930.7			930.7			2,399.9			—
As a % of total earning assets		4.7	%		7.6	%		13.7	%		13.7	%		35.4	%		—
Ratio of earning assets to funding sources		1.12			2.08			2.85			1.29			2.54			(0.10	)
Cumulative ratio of Earning Assets2003		1.12			1.18			1.29			1.29			1.58			1.00
to Funding Sources2002		1.08			1.13			1.25			1.25			1.31			1.00

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Table 18

MATURITIES AND SENSITIVITIES TO CHANGES IN INTEREST RATES

(in thousands)	Due in one year or less		Due after one year through five years		Due after five years		Total
Variable Rate
Commercial, financial and agricultural	$	504,287	$	213,786	$	15,889	$	733,962
Real estate construction		5,955		300		—		6,255
All other loans		82,703		117,630		79,476		279,809
Total Variable Rate Loans		592,945		331,716		95,365		1,020,026
Fixed Rate
Commercial, financial and agricultural		325,691		110,825		16,182		452,698
Real estate construction		6,981		5,180		103		12,264
All other loans		311,009		867,700		58,595		1,237,304
Total Fixed Rate Loans		643,681		983,705		74,880		1,702,266
Total Loans	$	1,236,626	$	1,315,421	$	170,245	$	2,722,292
Reserve for Loan Losses								(43,494	)
Net Loans							$	2,678,798

Other Market Risk

The Company does not have material 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 ALL. 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 $2.1 million at December 31, 2003, compared to an increase of $3.4 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.

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The Company has $78 thousand in other real estate owned as of December 31, 2003, compared to $5.0 million in 2002. The $5.0 million in 2002 was primarily associated with one foreclosed credit. Loans past due more than 90 days totaled $3.1 million at December 31, 2003 compared to $7.7 million at December 31, 2002.

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 was less than $1 million at December 31, 2003.

TABLE 19

LOAN QUALITY (in thousands)

	December 31
	2003			2002			2001			2000			1999
Nonaccrual loans	$	12,431		$	9,723		$	5,375		$	10,239		$	4,818
Restructured loans		365			989			1,904			1,272			1,474
Total nonperforming loans	$	12,796		$	10,712		$	7,279		$	11,511		$	6,292
Other real estate owned		78			4,989			6,466			2,038			2,017
Total nonperforming assets	$	12,874		$	15,701		$	13,745		$	13,549		$	8,309
Loans past due 90 days or more	$	3,131		$	7,672		$	11,031		$	7,680		$	4,998
Reserve for Loans Losses		43,494			37,328			35,637			31,998			31,193
Ratios
Nonperforming loans as a % of loans		0.47	%		0.40	%		0.26	%		0.37	%		0.22	%
Nonperforming assets as a % of loans plus other real estate owned		0.47			0.59			0.49			0.44			0.29
Nonperforming assets as a % of total assets		0.17			0.20			0.16			0.17			0.10
Loans past due 90 days or more as a % of loans		0.12			0.29			0.39			0.25			0.18
Reserve for Loan Losses a % of loans		1.60			1.40			1.27			1.04			1.10
Reserve for Loan Losses a multiple of nonperforming loans		3.40	x		3.48	x		4.9	x		2.78	x		4.96	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 $3.4 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 $15 million of medium-term notes were issued to fund bank acquisitions. Prior to being paid off in February, 2003 these notes were rated A3 by Moody’s Investor Service and A- by Standard and Poor’s. 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.

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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, 2003 was $1.9 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.

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 sufficient to satisfy these requirements and are expected to be sufficient 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 works to improve its internal controls, systems and corporate-wide processes and procedures.

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ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED BALANCE SHEETS

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

(in thousands except share data)

	December 31,
	2003			2002
ASSETS
Loans:
Commercial, financial and agricultural	$	1,186,660		$	1,348,491
Real estate construction		18,519			13,952
Consumer		928,492			823,779
Real estate		581,154			463,164
Leases		7,467			8,146
Allowance for loan losses		(43,494	)		(37,328	)
Net loans		2,678,798			2,620,204
Securities available for sale:
U. S. Treasury and agencies		998,055			1,687,186
U. S. Treasury and agencies pledged to creditors		1,180,775			1,221,533
State and political subdivisions		391,869			328,152
Mortgage-backed		836,570			369,652
Commercial paper and other		8,544			113,373
Total securities available for sale		3,415,813			3,719,896
Securities held to maturity—
State and political subdivisions (market value of $314,705 and $434,518 respectively)		306,130			418,673
Federal funds sold		11,978			11,226
Securities purchased under agreements to resell		264,737			106,605
Interest bearing due from banks		1,834			1,834
Trading securities		60,780			71,474
Total earning assets		6,740,070			6,949,912
Cash and due from banks		647,150			691,703
Bank premises and equipment, net		219,281			230,678
Accrued income		40,428			58,261
Goodwill on purchased affiliates		57,428			54,761
Other intangibles		5,601			6,819
Other assets		39,023			43,425
Total assets		7,748,981			8,035,559
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand		2,098,122			1,817,507
Interest-bearing demand and savings		2,451,743			2,727,770
Time Deposits under $100,000		714,225			853,958
Time Deposits of $100,000 or more		371,597			447,712
Total deposits		5,635,687			5,846,947
Securities sold under agreement to repurchase		1,173,927			1,209,770
Short-term debt		70,604			94,721
Long-term debt		16,280			26,302
Accrued expenses and taxes		28,148			45,445
Other liabilities		12,412			9,574
Total liabilities		6,937,058			7,232,759
Common stock, $1.00 par, Authorized 33,000,000 shares, 27,528,365 and 27,528,365 shares issued, and 21,694,078 and 21,982,969 shares outstanding, respectively		27,528			27,528
Capital surplus		726,405			726,368
Retained earnings		281,556			240,295
Accumulated other comprehensive income		3,183			23,678
Treasury stock, 5,834,287 and 5,545,396 shares, at cost, respectively		(226,749	)		(215,069	)
Total shareholders’ equity		811,923			802,800
Total liabilities and shareholders’ equity	$	7,748,981		$	8,035,559

See Notes to Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF INCOME

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

(in thousands except share and per share data)

	Year Ended December 31
	2003		2002		2001
INTEREST INCOME
Loans	$	140,874	$	160,536	$	225,879
Securities:
Securities available for sale—Taxable interest		70,731		100,584		119,171
Securities available for sale—Tax exempt interest		9,372		6,227		2,025
Securities held to maturity—Taxable interest		140		307		395
Securities held to maturity—Tax exempt interest		15,472		21,007		26,194
Total securities income		95,715		128,125		147,785
Federal funds and resell agreements		1,701		3,130		7,619
Trading securities and other		1,472		2,692		3,593
Total interest income		239,762		294,483		384,876
INTEREST EXPENSE
Deposits		33,174		59,407		107,927
Federal funds and repurchase agreements		8,245		14,292		32,187
Short-term debt		193		880		3,075
Long-term debt		1,072		1,873		1,958
Total interest expense		42,684		76,452		145,147
Net interest income		197,078		218,031		239,729
Provision for loan losses		12,005		16,738		14,745
Net interest income after provision for loan losses		185,073		201,293		224,984
NONINTEREST INCOME
Trust and securities processing		86,490		90,393		86,640
Trading and investment banking		20,863		17,937		18,097
Service charges on deposit accounts		70,705		66,081		59,018
Other service charges and fees		15,567		14,228		13,746
Bankcard fees		31,654		29,901		29,160
Gains on sales of securities available for sale, net		824		3,158		1,875
Other		19,465		10,508		14,987
Total noninterest income		245,568		232,206		223,523
NONINTEREST EXPENSE
Salaries and employee benefits		196,893		203,458		198,684
Occupancy, net		24,720		23,937		23,778
Equipment		42,645		44,367		50,685
Supplies and services		23,291		23,998		21,366
Marketing and business development		13,550		14,832		14,834
Processing fees		20,323		19,380		16,813
Legal and consulting		7,355		5,839		8,565
Amortization of goodwill on purchased affiliates		—		—		5,650
Amortization of intangibles		1,210		2,034		1,803
Other		24,667		23,104		27,195
Total noninterest expense		354,654		360,949		369,373
Minority interest in loss of consolidated subsidiary		—		—		11,800
Income before income taxes		75,987		72,550		90,934
Income tax expense		17,108		15,377		25,704
Net income	$	58,879	$	57,173	$	65,230
Net income per share—basic	$	2.70	$	2.59	$	2.95
Net income per share—diluted		2.70		2.58		2.95
Weighted average shares outstanding		21,783,354		22,064,508		22,145,787

See Notes to Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

(in thousands)

	Year Ended December 31
	2003			2002			2001
OPERATING ACTIVITIES
Net income	$	58,879		$	57,173		$	65,230
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		12,005			16,738			14,745
Depreciation and amortization		32,422			33,617			38,665
Impairment charge for premises and equipment		—			—			3,800
Minority interest in net loss of subsidiary		—			—			(11,800	)
Deferred income taxes		(5,440	)		(2,427	)		(1,774	)
Net decrease in trading securities and other earning assets		10,695			11,654			(4,298	)
Gains on sales of securities available for sale		(824	)		(3,158	)		(1,875	)
Gains on sales of disposition of interest in subsidiary		—			—			(1,699	)
Amortization of securities premiums, net of discount accretion		25,598			7,555			(11,752	)
Earned ESOP shares		—			2,491			2,500
Changes in:
Accrued income		17,833			2,400			11,904
Accrued expenses and taxes		37			(4,254	)		(4,254	)
Other assets and liabilities, net		7,086			(14,288	)		(14,578	)
Net cash provided by operating activities		158,291			107,501			84,814
INVESTING ACTIVITIES
Proceeds from maturities of securities held to maturity		123,818			138,229			151,189
Proceeds from sales of securities available for sale		51,617			216,717			102,488
Proceeds from maturities of securities available for sale		13,076,191			16,607,874			26,938,184
Purchases of securities held to maturity		—			(160	)		(975	)
Purchases of securities available for sale		(12,879,353	)		(16,566,368	)		(28,549,061	)
Net (increase) decrease in loans		(83,256	)		125,809			249,093
Net (increase) decrease in fed funds and resell agreements		(158,884	)		4,014			37,200
Investment in consolidated subsidiary		(2,659	)		(1,787	)		—
Purchases of bank premises and equipment		(20,081	)		(23,736	)		(32,003	)
Net change in unsettled securities transactions		—			2,078			(39,129	)
Deconsolidation of subsidiary		—			—			(390	)
Purchase of financial organization, net of cash received		—			—			(26,015	)
Proceeds from sales of bank premises and equipment		266			4,296			533
Net cash provided by (used in) investing activities		107,659			506,966			(1,168,886	)
FINANCING ACTIVITIES
Net increase (decrease) in demand and savings deposits		4,588			(628,862	)		443,037
Net increase (decrease) in time deposits		(215,848	)		100,298			(2,730	)
Net increase (decrease) in fed funds/ repurchase agreements		(35,843	)		(78,868	)		378,883
Net change in short-term debt		(24,117	)		(78,325	)		102,720
Proceeds from long-term debt		5,995			2,500			3,700
Repayment of long-term debt		(16,017	)		(3,586	)		(3,353	)
Cash dividends		(17,618	)		(17,658	)		(17,000	)
Proceeds from exercise of stock options and sales of treasury shares		431			598			787
Purchases of treasury stock		(12,074	)		(9,533	)		(6,624	)
Net cash provided by (used in) financing activities		(310,503	)		(713,436	)		899,420
Decrease in cash and due from banks		(44,553	)		(98,969	)		(184,652	)
Cash and due from banks at beginning of year		691,703			790,672			975,324
Cash and due from banks at end of year	$	647,150		$	691,703		$	790,672
Supplemental disclosures:
Income taxes paid	$	19,818		$	16,671		$	29,629
Total interest paid		46,790			81,076			150,673

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.

36

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

(in thousands)

	Common Stock		Capital Surplus		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Unearned ESOP			Total
Balance—January 1, 2001	$	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 $33,594 net of tax of $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
Comprehensive income
Net income		—		—		58,879			—			—			—			58,879
Other comprehensive income, change in unrealized gain on securities of $33,060, net of tax $12,035 and the reclassification adjustment for gains included in net income of $824 net of tax $294		—		—		—			(20,495	)		—			—			(20,495	)
Total comprehensive income																		38,384
Cash dividends ($0.81 per share)		—		—		(17,618	)		—			—			—			(17,618	)
Purchase of treasury stock		—		—		—			—			(12,074	)		—			(12,074	)
Sale of treasury stock		—		—		—			—			30			—			30
Exercise of stock options		—		37		—			—			364			—			401
Balance—December 31, 2003	$	27,528	$	726,405	$	281,556		$	3,183		$	(226,749	)	$	—		$	811,923

See Notes to Consolidated Financial Statements

37

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

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

38

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS—(Continued)

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 include 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 tests performed on that date in 2003 and 2002, 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.

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.

39

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS—(Continued)

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.

Reclassification

Certain reclassifications were made to the 2002 and 2001 consolidated financial statements to conform to the current year presentations.

Accounting for Stock-Based Compensation

In accordance with SFAS No. 123, “Accounting for Stock-based Compensation”, the Company has elected to account for stock-based compensation using the intrinsic value method under the provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”. The following table illustrates the effect on net income and earnings per share, if the Company had applied the fair value recognition provisions of SFAS No. 123, to stock-based employee compensation.

	Year Ended December 31
	2003			2002			2001
Net income, as reported	$	58,879		$	57,173		$	65,230
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		414			355			323
Pro forma net income	$	58,465		$	56,818		$	64,907
The following table summarizes the weighted average fair value of the granted options, determined using the Black-Scholes option pricing model and the assumptions used in their determination.
Earnings per share:
Basic—as reported		2.70			2.59			2.95
Basic—pro forma		2.68			2.58			2.93
Diluted—as reported		2.70			2.58			2.95
Diluted—pro forma		2.68			2.56			2.93
Black-Scholes pricing model:
Weighted average fair value of the granted options	$	11.98		$	9.42		$	11.55
Weighted average risk-free interest rate		3.21	%		3.69	%		5.19	%
Expected option life in years		8.75			8.75			8.75
Expected volatility		19.92	%		20.44	%		19.71	%
Expected dividend yield		1.70	%		2.05	%		2.05	%

2.   NEW ACCOUNTING PRONOUNCEMENTS

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

40

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS—(Continued)

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 for the year ended 2001. Management has evaluated goodwill for impairment and did not record an impairment charge on the Company’s consolidated financial statements in each of the fiscal years ended December 31, 2003 and 2002.

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 lives of long lived assets to be 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 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.

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 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 did not 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 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

41

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS—(Continued)

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 for 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 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 ended after December 15, 2002 and have been implemented herein. The Company’s adoption of the measurement provisions of FIN No. 45 in 2003 did not have 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”, which was revised by FIN No. 46 (Revised December 1, 2003), “Consolidation of Variable Interest Entities”. FIN No. 46 requires consolidation by business enterprises of variable interest entities that meet certain requirements. FIN No. 46 (R) changes the effective date of FIN No. 46 for certain entities. Public companies shall apply either FIN No. 46 or FIN No. 46 (R) to their interests in special purpose entities (SPE) as of the first interim or annual period ending after December 15, 2003. The decision to apply FIN No 46 or FIN No. 46(R) may be made on an SPE by SPE basis. The Company’s adoption of FIN No. 46 and FIN No. 46(R) did not have a significant impact on its consolidated financial statements.

Amendment of Statement 133 on Derivative Instruments and Hedging Activities    In April, 2003, FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” The statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts under FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities”. This statement is effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003. Implementation of this statement did not have a material effect on the Company’s consolidated financial statements.

Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity    In May 2003, FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” The statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were formerly classified as equity. This statement was effective for financial instruments entered into or modified after May 31, 2003, and otherwise was effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatory, redeemable financial instruments of nonpublic entities. Implementation of this statement did not have a material effect on the Company’s consolidated financial statements.

42

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS—(Continued)

3.   LOANS AND ALLOWANCE FOR LOAN LOSSES

Maturities and Sensitivities to Changes in Interest Rates

This table details loan maturities by variable and fixed rates as of December 31, 2003 (in thousands):

	Due in one year or less		Due after one year through five years		Due after five years		Total
Variable Rate
Commercial, financial and agricultural	$	504,287	$	213,786	$	15,889	$	733,962
Real estate construction		5,955		300		—		6,255
All other loans		82,703		117,630		79,476		279,809
Total variable rate loans		592,945		331,716		95,365		1,020,026
Fixed Rate
Commercial, financial and agricultural		325,691		110,825		16,182		452,698
Real estate construction		6,981		5,180		103		12,264
All other loans		311,009		867,700		58,595		1,237,304
Total fixed rate loans		643,681		983,705		74,880		1,702,266
Total loans	$	1,236,626	$	1,315,421	$	170,245	$	2,722,292
Reserve for loan losses								(43,494	)
Net loans							$	2,678,798

Allowance for Loan Losses

This table provides an analysis of the allowance for loan losses for the three years ended December 31, 2003 (in thousands):

	Year Ended December 31
	2003			2002			2001
Allowance—beginning of year	$	37,328		$	35,637		$	31,998
Additions(deductions):
Charge-offs	$	(11,337	)	$	(18,360	)	$	(16,760	)
Recoveries		5,498			3,313			5,654
Net charge-offs	$	(5,839	)	$	(15,047	)	$	(11,106	)
Provision charged to expense		12,005			16,738			14,745
Allowance—end of year	$	43,494		$	37,328		$	35,637

Impaired Loans under SFAS 114

This table provides an analysis of impaired loans for the three years ended December 31, 2003 (in thousands):

	Year Ended December 31
	2003		2002		2001
Total impaired loans as of December 31	$	10,725	$	8,269	$	3,891
Amount of impaired loans which have a related allowance		1,898		1,491		1,426
Amount of related allowance		1,030		1,491		883
Remaining impaired loans with no allowance		8,827		6,778		2,465
Average recorded investment in impaired loans during year		10,290		12,708		7,474

43

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS—(Continued)

4.   SECURITIES AVAILABLE FOR SALE

This table below provides detailed information for securities available for sale at December 31, 2003 and 2002 (in thousands):

2003	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
U.S. Treasury	$	848,687	$	3,759	$	(204	)	$	852,242
U.S. Agencies		1,324,259		2,475		(146	)		1,326,588
Mortgage-backed		840,277		2,890		(6,597	)		836,570
State and political subdivisions		388,971		3,698		(800	)		391,869
Federal Reserve Bank stock		7,410		—		—			7,410
Equity and other		1,134		—		—			1,134
Total	$	3,410,738	$	12,822	$	(7,747	)	$	3,415,813
2002
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

The following table presents contractual maturity information for securities available for sale at December 31, 2003 (in thousands):

	Amortized Cost		Fair Value
Due in 1 year or less	$	1,594,072	$	1,597,882
Due in 1 year through 5 years		920,150		924,991
Due after 5 years through 10 years		41,942		42,113
Due after 10 years		5,753		5,713
Total	$	2,561,917	$	2,570,699
Mortgage-backed securities		840,277		836,570
Equity securities and other		8,544		8,544
Total securities available for sale	$	3,410,738	$	3,415,813

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 $2,948,103,000 at December 31, 2003 and $3,100,337,000 at December 31, 2002 were pledged to secure U.S. Government deposits, other public deposits and certain trust deposits as required by law.

During 2003, proceeds from the sales of securities available for sale were $51,617,000 compared to $216,717,000 for 2002. Securities transactions resulted in gross realized gains of $824,000 for 2003, $3,334,000 for 2002 and $1,876,000 for 2001. The gross realized losses were $0 for 2003, $176,000 for 2002 and $1,000 for 2001.

The net realized gains on trading securities at December 31, 2003 and 2002 were $113,300 and $73,300 respectively, and were included in trading and investment banking income.

44

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS—(Continued)

Securities Held to Maturity

The table below provides detailed information of securities held to maturity at December 31, 2003 and 2002 (in thousands):

	December 31
2003	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
State and political subdivisions	$	306,130	$	8,578	$	(3	)	$	314,705
2002
State and political subdivisions	$	418,673	$	15,866	$	(21	)	$	434,518

The following table presents contractual maturity information of securities held to maturity at December 31, 2003 (in thousands):

	Amortized Cost		Fair Value
Due in 1 year or less	$	128,529	$	130,576
Due after 1 year through 5 years		156,384		162,912
Due after 5 years through 10 years		4,966		4,966
Due after 10 years		16,251		16,251
Total securities held to maturity	$	306,130	$	314,705

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 2003 and 2002; however, during 2001 proceeds from sales of securities held to maturity were $116,000.

Securities held to maturity and some municipals available for sale with a market value of $619,025,000 at December 31, 2003 and $658,178,000 at December 31, 2002 were pledged to secure U.S. Government deposits, other public deposits and certain Trust deposits as required by law.

The following table shows the Company’s investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2003 (in thousands).

	Less than 12 months				12 months or more				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Description of Securities
U.S. Treasury obligations and direct obligations of U.S. government agencies	$	33,783	$	349	$	—	$	—	$	33,783	$	349
Federal agency mortgage-backed securities		503,759		6,598		—		—		503,759		6,598
Municipal securities available for sale		134,527		626		11,033		174		145,560		800
Municipal securities held to maturity		1,243		2		1,002		1		2,245		3
Total debt securities	$	673,312	$	7,575	$	12,035	$	175	$	685,347	$	7,750

45

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS—(Continued)

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 $264,737,000 and $106,605,000 at December 31, 2003 and 2002, respectively. Of those balances, $0 in 2003 and $67,433,000 in 2002 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 2003 and 2002, an analysis of activity with respect to such aggregate loans to related parties appears below (in thousands)

	Year Ended December 31
	2003			2002
Balance—beginning of year	$	114,042		$	174,392
New loans		104,956			46,693
Repayments		(86,024	)		(107,043	)
Balance—end of year	$	132,974		$	114,042

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, 2003, 2002 and 2001

	Year Ended December 31
	2003		2002		2001
Reported net income	$	58,879	$	57,173	$	65,230
Goodwill amortization		—		—		5,650
Adjusted net income	$	58,879	$	57,173	$	70,880
Reported basic earnings per share	$	2.70	$	2.59	$	2.95
Goodwill amortization		—		—		0.26
Adjusted basic earnings per share	$	2.70	$	2.59	$	3.21

Changes in the carrying amount of goodwill for the year ended December 31, 2003 by operating segment are as follows (in thousands):

	Retail Banking		Trust and Wealth Management		Investment Services Group		Total
Balances of January 1, 2002	$	34,743	$	10,479	$	7,752	$	52,974
Additional earn-out payment for 2001 acquisition of Sunstone Financial Group, Inc.						1,787		1,787
Balances as of December 31, 2002	$	34,743	$	10,479	$	9,539	$	54,761
Additional earn-out payment for 2001 acquisition of Sunstone Financial Group, Inc.		—		—		2,667		2,667
Balances as of December 31, 2003	$	34,743	$	10,479	$	12,206	$	57,428

46

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS—(Continued)

Following are the intangible assets that continue to be subject to amortization (in thousands):

	As of December 31, 2003
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortized intangible assets
Core deposit intangibles assets	$	16,777	$	16,715	$	62
Other intangible assets		7,200		1,661		5,539
Total	$	23,977	$	18,376	$	5,601
	As of December 31, 2002
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
	2003		2002		2001
Aggregate amortization expense	$	1,210	$	2,034	$	1,803

Estimated amortization expense of intangible assets on future years:

For the year ended December 31, 2004	$	742
For the year ended December 31, 2005		742
For the year ended December 31, 2006		742
For the year ended December 31, 2007		742
For the year ended December 31, 2008		742

8.   BANK PREMISES AND EQUIPMENT

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

	December 31
	2003			2002
Land	$	39,500		$	39,750
Buildings and leasehold improvements		239,478			233,464
Equipment		228,560			245,886
		507,538			519,100
Accumulated depreciation		(288,257	)		(288,422	)
Bank premises and equipment, net	$	219,281		$	230,678

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.

Consolidated rental and operating lease expenses were $4,442,000 in 2003, $4,301,000 in 2002 and $5,444,000 in 2001. Consolidated bank premises and equipment depreciation and amortization expenses were

47

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS—(Continued)

$31,212,000 in 2003, $31,583,000 in 2002 and $31,212,000 in 2001. Minimum rental commitments as of December 31, 2003 for all non-cancelable operating leases are: 2004—$4,469,000; 2005—$4,111,000; 2006—$3,201,000; 2007—$2,557,000; 2008—$2,306,000; and thereafter—$10,179,000.

9.   BORROWED FUNDS

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

	December 31
Short-term debt	2003		2002
U. S. Treasury demand notes and other	$	70,604	$	94,721
Long-term debt
7.30% senior note due 2003	$	—	$	15,000
Regional Housing Commission Development		—		100
Federal Home Loan Bank 3.80% due 2018		2,495		—
Federal Home Loan Bank 4.53% due 2018		1,719		—
Federal Home Loan Bank 4.75% due 2018		1,531		—
Federal Home Loan Bank 5.97% due 2017		2,236		2,341
Federal Home Loan Bank 5.89% due 2014		3,100		3,295
Federal Home Loan Bank 5.84% due 2009		3,224		3,401
Federal Home Loan Bank 7.13% due 2010		1,234		1,385
Federal Home Loan Bank 7.61% due 2015		741		780
Total long-term debt	$	16,280	$	26,302
Total borrowed funds	$	86,884	$	121,023

Aggregate annual repayments of long-term debt at December 31, 2003 are as follows (in thousands):

2004	$	1,012
2005		1,075
2006		1,141
2007		1,212
2008		1,288
Thereafter		10,552
Total	$	16,280

Long-term debt represents direct, unsecured obligations of the parent company and secured obligation of affiliate banks. The 7.3% senior note was paid February 2003.

All of the Federal Home Loan Bank notes are secured by investment securities of the Company. Federal Home Loan Bank notes require monthly principal and interest payments and require a substantial penalty for payoffs prior to the maturity date.

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, 2003 was $1,173,927,000 (with accrued interest payable of $23,000) of that amount there were $0 reverse repurchase agreements (“resell agreements”) as of December 31, 2003. The amount outstanding at December 31, 2002, was

48

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS—(Continued)

$1,209,770,000 (with accrued interest payable of $31,000) of that amount; $67,433,000 represented sales of securities under resell agreements. The carrying amounts and market values of the securities and the related repurchase liabilities and weighted average interest rates of the repurchase liabilities (grouped by maturity of the repurchase agreements) were as follows as of December 31, 2003 (in thousands):

Maturity of the Repurchase Liabilities	Securities Market Value		Repurchase Liabilities		Weighted Average Interest Rate
On Demand	$	1,180,190	$	1,173,334	0.72	%
2 to 30 days		51		50	0.94
31 to 90 days		534		543	1.21
Total	$	1,180,775	$	1,173,927	0.72	%

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, 2003, approximately $19,155,000 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 2003, this amount averaged $83,364,000, compared to $55,029,000 in 2002.

The Company is required to maintain minimum amounts of capital to total “risk weighted” assets, as defined by the banking regulators. At December 31, 2003, 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 19.13% and 20.25%, respectively. The Company’s leverage ratio at December 31, 2003, was 10.69%.

As of December 31, 2003, the most recent notification from the Office of Comptroller of the Currency categorized all of the affiliate banks as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well-capitalized all of the Company’s 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.

49

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS—(Continued)

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 (in thousands):

	2003
	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Tier 1 Capital:
UMB Financial Corporation	$	745,711	19.13	%	$	155,898	4.00	%	$	N/A	N/A	%
UMB Bank, n. a.		486,703	14.46			134,594	4.00			201,892	6.00
UMB National Bank of America		66,674	36.26			7,354	4.00			11,032	6.00
Total Capital:
UMB Financial Corporation		789,205	20.25			311,796	8.00			N/A	N/A
UMB Bank, n. a.		521,501	15.50			269,189	8.00			336,486	10.00
UMB National Bank of America		68,560	37.29			14,709	8.00			18,386	10.00
Tier 1 Leverage:
UMB Financial Corporation		745,711	10.69			278,936	4.00			N/A	N/A
UMB Bank, n. a.		486,703	8.27			235,524	4.00			294,405	5.00
UMB National Bank of America		66,674	12.13			21,991	4.00			27,489	5.00
	2002
Tier 1 Capital:
UMB Financial Corporation	$	717,542	17.98	%	$	159,667	4.00	%	$	N/A	N/A	%
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			N/A	N/A
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			N/A	N/A
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

11.   EMPLOYEE BENEFITS

The Company has a noncontributory profit sharing plan, which features an employee stock ownership plan. This plan is for the benefit of substantially all eligible officers and employees of the Company and its subsidiaries. Contributions to this plan were $0 in 2003, $3,052,000 in 2002 and 2001. 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 $2,175,000 for 2003, $2,149,100 for 2002 and $2,114,000 for 2001.

50

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS—(Continued)

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 2002 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 subsidiaries. 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 exercise prices of no less than 100% of the fair market value of the underlying shares at date of grant. The plan terminates April 17, 2012. The table below discloses the information relating to the options granted in 2003 and 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	—		—		—
Granted	86,960		$48.65 to $53.51	$	48.76
Canceled	(6,750	)	$38.11	$	38.11
Exercised	(200	)	$38.11	$	38.11
Outstanding—December 31, 2003	162,806		$38.11 to $53.51	$	43.86
Exercisable—December 31, 2003	—		—		—

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 or in the care of a recipient holding more than 10% of the Company’s stock, 5 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.

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UMB FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS—(Continued)

Activity in the 1992 Plan for the three years ended December 31, 2003 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, 2001	255,246		$	22.47	to	$	47.95	$	34.23
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		$	22.57	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		$	22.57	to	$	44.02	$	36.30
Exercisable—December 31, 2002	61,635		$	22.57	to	$	43.69	$	33.27
Canceled	(20,147	)		24.02	to		47.96		37.10
Exercised	(11,485	)		22.58	to		43.59		31.04
Outstanding—December 31, 2003	220,719		$	22.57	to	$	44.02	$	36.53
Exercisable—December 31, 2003	77,289		$	22.57	to	$	47.96	$	35.83

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 those described for the 1992 Plan. Activity in the 1981 Plan for the year 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, 2001	5,086		$	20.89	to	$	20.90	$	20.89
Exercised	(5,086	)	$	20.89	to	$	20.90		20.89
Outstanding—December 31, 2001	—

The table below shows the stock options outstanding and exercisable as of December 31, 2003.

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding at 12/31/03	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable at 12/31/03	Weighted Average Exercise Price
$22.57 to $22.58	7,030	1 year	$	22.58	7,030	$	22.58
31.23 to   31.25	10,782	2 year		31.24	10,782		31.24
30.17 to   30.41	14,708	3 year		30.33	14,708		30.33
43.34 to   47.96	18,496	4 year		43.59	18,496		43.59
38.73 to   42.79	26,273	5 year		38.86	26,273		38.86
34.58 to   38.41	34,937	6 year		35.17	—		—
32.60 to   36.20	41,587	7 year		33.13	—		—
40.02 to   44.02	66,906	8 year		40.17	—		—
38.11 to   41.93	75,846	9 year		38.24	—		—
48.65 to   53.51	86,960	10 year		48.76	—		—
	383,525				77,289

52

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS—(Continued)

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 access 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 refined on an ongoing basis. 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 Business Segment reporting. 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, 2003. These methodologies may be modified as management accounting systems are enhanced and changes occur in the organizational structure or product lines.

The Company utilizes a funds transfer pricing model to neutralize the interest rate risk affecting the financial results of the business segments on a stand alone basis. This model records cost of funds or credit for funds using matched maturity funding for certain assets and liabilities, or a blended rate based on various maturities for the remaining assets and liabilities. The allowance for loan losses is allocated using specifically identified reserves assigned to loans where available, with general reserves assigned to the remaining loan portfolio based on historical losses, economic outlook and other factors. The related loan loss provision is assigned based on the amount necessary to maintain reserves adequate for each line of business. 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 are allocated to the Business Segments based on standard unit costs applied to actual volume measurements. Administrative expenses are allocated based on the estimated time expended for each segment. Any remaining expenses such as corporate overhead are assigned based on the ratio of an individual business segment’s noninterest expense to total noninterest expense incurred by all business lines. Virtually all interest rate risk is assigned to the Treasury and Other business segment which is the offset to the funds transfer pricing charges and credits assigned to each business segment.

The following summaries provide information about the activities of each line of business. A discussion of the financial results and the factors impacting 2003 performance can be found in the “Strategic Lines of Business” section of Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operation pages 18 and 19 of this report.

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, bond sales and loan syndication services.

Retail Banking delivers a full range of products and services through the Company’s affiliate bank and branch network. Retail Banking is a major provider of funds for the Company. This line of business offers a variety of consumer products, including deposit accounts, installment loans, credit cards, home equity lines of credit, residential mortgages, and brokerage and insurance services for individuals.

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

53

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS—(Continued)

banking services to high net worth individuals. The Company’s proprietary funds, Scout Funds, are also included in this segment.

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.

Treasury and Other includes asset and liability management activities 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 (in thousands):

	Year Ended December 31
	Commercial Banking						Retail Banking
	2003		2002		2001		2003			2002		2001
	(dollars in thousands)
Net interest income	$	100,668	$	111,215	$	125,704	$	86,700		$	94,302	$	97,166
Provision for loan losses		4,784		8,164		5,656		7,221			8,574		9,089
Noninterest income		78,668		67,469		60,952		58,034			63,706		65,785
Depreciation and amortization		7,392		7,416		10,402		16,481			17,789		19,622
Noninterest expense		113,804		111,538		106,492		124,324			128,050		122,610
Net income (loss)		53,356		51,566		64,106		(3,292	)		3,595		11,630
Average Assets		4,781,637		5,176,476		4,744,216		2,275,560			2,307,817		2,471,107
Expenditures for additions to premises and equipment		4,911		6,606		3,193		8,143			10,737		23,704
	Trust and Wealth Management						Investment Services Group
	2003		2002		2001		2003			2002		2001
	(dollars in thousands)
Net interest income	$	2,057	$	3,546	$	6,174	$	7,604		$	8,838	$	10,504
Provision for loan losses		—		—		—		—			—		—
Noninterest income		70,192		67,203		64,535		30,582			33,347		29,511
Depreciation and amortization		5,539		5,529		6,017		3,010			2,883		2,624
Noninterest expense		58,053		60,854		61,459		25,934			26,597		25,548
Net income (loss)		8,657		4,366		3,233		9,242			12,705		11,843
Average Assets		40,512		44,152		44,620		52,279			60,620		106,501
Expenditures for additions to premises and equipment		3,777		3,880		1,723		3,250			2,513		3,383

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UMB FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS—(Continued)

	Treasury and Other									Total Consolidated Company
	2003			2002			2001			2003		2002		2001
	(dollars in thousands)
Net interest income	$	49		$	130		$	181		$	197,078	$	218,031	$	239,729
Provision for loan losses		—			—			—			12,005		16,738		14,745
Noninterest income		8,092			481			2,740			245,568		232,206		223,523
Depreciation and amortization		—			—			—			32,422		33,617		38,665
Noninterest expense		117			293			14,599			322,232		327,332		330,708
Minority interest in loss of consolidated subsidiary		—			—			11,800			—		—		11,800
Net income (loss)		(9,084	)		(15,059	)		(25,582	)		58,879		57,173		65,230
Average Assets		—			—			—			7,149,988		7,589,065		7,366,444
Expenditures for additions to premises and equipment		—			—			—			20,081		23,736		32,003

13.  COMMON STOCK

The following table summarizes the share transactions for the three years ended December 31, 2003:

	Shares Issued	Shares in Treasury
Balance January 1, 2001	26,472,039	(5,188,807	)
Stock Dividend (5%)	1,056,326	—
Purchase of Treasury Stock	—	(164,722	)
Issued for stock options	—	26,612
Balance December 31, 2001	27,528,365	(5,326,917	)
Purchase of Treasury Stock	—	(238,758	)
Sale of Treasury Stock	—	660
Issued for stock options	—	19,619
Balance December 31, 2002	27,528,365	(5,545,396	)
Purchase of Treasury Stock	—	(301,293	)
Sale of Treasury Stock	—	717
Issued for stock options	—	11,685
Balance December 31, 2003	27,528,365	(5,834,287	)

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
	2003	2002	2001
Weighted average basic common shares outstanding	21,783,354	22,064,508	22,145,787
Stock options	46,239	33,555	28,420
Weighted average diluted common shares outstanding	21,829,593	22,098,063	22,174,207

55

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

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 instruments 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 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 payable upon the non-performance of a customer’s obligations to a third party. The Company issues 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, 2003 and 2002 were $171.3 million and $187.3 million, respectively. As of December 31, 2003 and 2002, standby letters of credit totaling $29.3 million and $39.7 million, respectively were with related parties to the Company.

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.

56

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS—(Continued)

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 $39.5 million and $43.3 million during the years ended December 31, 2003 and 2002, respectively. Net futures activity resulted in losses of $0.8 million for 2003, $3.3 million for 2002 and $2.5 million for 2001. The Company controls the credit risk of its futures contracts through credit approvals, limits and monitoring procedures.

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 2003, contracts to purchase and to sell foreign currency averaged approximately $11.3 million compared to $51.3 million during 2002. The net gains on these foreign exchange contracts for 2003, 2002 and 2001 were $1.7 million, $1.3 million and $1.6 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, 2003, 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.

	Contract or Notional Amount December 31
	2003		2002
	(in thousands)
Commitments to extend credit for loans (excluding credit card loans)	$	796,737	$	644,497
Commitments to extend credit under credit card loans		891,493		848,256
Commercial letters of credit		7,341		6,148
Standby letters of credit		171,293		187,268
Futures contracts		38,300		36,514
Forward foreign exchange contracts		8,033		13,109

15.  ACQUISITIONS

On November 22, 1999 the Company acquired Charter National Bank, Oklahoma City, Oklahoma for $10 million. The acquisition was funded with existing working capital. The acquisition of this $51.2 million bank was recorded as a purchase. The acquisition was not deemed to be material in relation to the consolidated results of the Company. Income of the Company does not include income of the acquired company prior to the effective date of acquisition. In March 2000, this bank was merged into the Company’s principle affiliate bank.

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 gross revenue targets. The Company paid an initial amount of $8.0 million on April 19, 2001, subsequently, the Company has made a $1.7 million payment in 2002, and a $2.7 million payment in 2003, 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.

57

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS—(Continued)

16.  INCOME TAXES

Income taxes as set forth below produce effective income tax rates of 22.5% in 2003, 21.2% in 2002 and 28.3% in 2001. These percentages are computed by dividing total income tax by income before income tax. Income tax expense includes the following components (in thousands):

	Year Ended December 31
	2003			2002			2001
Federal:
Current	$	20,843		$	16,699		$	23,208
Deferred		(4,777	)		(2,302	)		1,470
Total federal tax provision	$	16,066		$	14,397		$	24,678
State:
Current	$	1,705		$	1,105		$	722
Deferred		(663	)		(125	)		304
Total state tax provision	$	1,042		$	980		$	1,026
Income tax expense	$	17,108		$	15,377		$	25,704

The reconciliation between the income tax provision and the amount computed by applying the statutory federal tax rate of 35% to pretax income is as follows (in thousands):

	Year Ended December 31
	2003			2002			2001
Provision at statutory rate	$	26,595		$	25,393		$	31,827
Tax-exempt interest income		(9,052	)		(9,750	)		(10,330	)
Disallowed interest expense		308			448			1,222
State and local income taxes, net of federal tax benefits		677			637			667
Amortization of goodwill and other intangible assets		—			—			2,008
Reduction of estimated income tax accruals		(1,804	)		(1,783	)		—
Other		384			432			310
Income tax expense	$	17,108		$	15,377		$	25,704

Deferred taxes are recorded based upon differences between the financial statement and tax basis of assets and liabilities.

The Company has various state net operating losses in the aggregate amount of $21.2 million and $21.8 million for 2003 and 2002, respectively. A portion of these net operating losses expire each year through 2023. The Company has a full valuation allowance to offset these amounts because management does not believe it is more likely than not such state net operating losses will be utilized.

58

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS—(Continued)

Temporary differences which comprise a significant portion of deferred tax assets and liabilities at December 31, 2003, 2002 and 2001 were as follows (in thousands):

	2003			2002			2001
Deferred tax assets:
Allowance for loan losses	$	16,043		$	13,980		$	13,362
Miscellaneous		2,623			1,803			1,888
Total deferred tax assets	$	18,666		$	15,783		$	15,250
Deferred tax liabilities:
Net unrealized gain on securities available for sale	$	(1,892	)	$	(13,627	)	$	(12,814	)
Asset revaluations on purchased banks		(1,931	)		(2,352	)		(2,937	)
Fixed Assets		(11,796	)		(14,260	)		(16,044	)
Miscellaneous		(3,389	)		(3,061	)		(2,586	)
Total deferred tax liabilities	$	(19,008	)	$	(33,300	)	$	(34,381	)
Net deferred tax liability	$	(342	)	$	(17,517	)	$	(19,131	)

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, 2003 and 2002. The fair value of fixed-maturity certificates of deposit is estimated by discounting the future cash flows 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.

59

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS—(Continued)

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, 2003 and 2002 are as follows (in millions)

	2003				2002
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
FINANCIAL ASSETS
Cash and short-term investments	$	925.7	$	925.7	$	809.5	$	809.5
Securities available for sale		3,415.8		3,415.8		3,719.9		3,719.9
Securities held to maturity		306.1		314.7		402.4		418.3
Trading securities		60.8		60.8		73.3		73.3
Loans (exclusive of allowance for loan losses)		2,722.2		2,722.1		2,673.8		2,647.6
FINANCIAL LIABILITIES
Demand and savings deposits	$	4,549.9	$	4,546.9	$	4,545.3	$	4,545.3
Time deposits		1,085.8		1,093.4		1,301.7		1,324.7
Federal funds and repurchase agreements		1,173.9		1,173.9		1,209.8		1,209.8
Short-term debt		70.6		70.6		94.7		94.7
Long-term debt		16.3		16.3		26.3		26.6
OFF-BALANCE SHEET ARRANGEMENTS
Commitments to extend credit for loans	$	1,688.2	$	3.0	$	1,492.8	$	3.2
Commercial letter of credit		7.4		0.4		6.1		0.4
Standby letters of credit		171.3		0.3		187.3		1.1

The fair value estimates presented herein are based on pertinent information available to management as of December 31, 2003 and 2002. 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.

60

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS—(Continued)

18.  PARENT COMPANY FINANCIAL INFORMATION

UMB FINANCIAL CORPORATION

BALANCE SHEETS

				December 31
				2003			2002
				(in thousands)
ASSETS:
Investment in subsidiaries:
Banks				$	643,411		$	663,913
Non-banks					46,083			45,810
Total investment in subsidiaries					689,494			709,723
Goodwill on purchased affiliates					5,011			5,011
Other intangibles					62			74
Cash					27,758			55,668
Securities available for sale and other					96,297			54,065
Total Assets				$	818,622		$	824,541
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Dividends payable				$	4,556		$	4,397
Long-term debt					—			15,000
Accrued expenses and other					2,143			2,344
Total					6,699			21,741
Shareholders’ equity					811,923			802,800
Total liabilities and shareholders’ equity				$	818,622		$	824,541
STATEMENTS OF INCOME
	Year Ended December 31
	2003			2002			2001
	(in thousands)
INCOME:
Dividends and income received from affiliate banks	$	64,228		$	44,221		$	66,293
Service fees from subsidiaries		10,058			8,464			11,454
Net security gains (losses)		—			(95	)		21
Other		1,765			1,266			552
Total income		76,051			53,856			78,320
EXPENSE:
Salaries and employee benefits		6,604			6,183			5,143
Interest on long-term debt		210			1,215			1,388
Services from affiliate banks		652			652			652
Other		9,904			8,831			12,434
Total expense		17,370			16,881			19,617
Income before income taxes and equity in undistributed earnings of subsidiaries		58,681			36,975			58,703
Income tax benefit		(1,949	)		(2,442	)		(2,054	)
Income before equity in undistributed earnings of subsidiaries		60,630			39,417			60,757
Equity in undistributed earnings of subsidiaries:
Banks		(221	)		15,198			4,128
Non-Banks		(1,530	)		2,558			345
Net income	$	58,879		$	57,173		$	65,230

61

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS—(Continued)

18.   PARENT COMPANY ONLY FINANCIAL INFORMATION (Continued)

        UMB FINANCIAL CORPORATION

STATEMENTS OF CASH FLOWS

	Year Ended December 31
	2003			2002			2001
	(in thousands)
OPERATING ACTIVITIES
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Net income	$	58,879		$	57,173		$	65,230
Equity in earnings of subsidiaries		(62,249	)		(61,756	)		(70,473	)
(Gains) losses from sales of securities available for sale		—			95			(21	)
Earned ESOP shares		—			2,491			2,500
Other		8,001			(5,393	)		(2,619	)
Net cash provided by (used in) operating activities		4,631			(7,390	)		(5,383	)
INVESTING ACTIVITIES:
Proceeds from sales of securities available for sale		—			568			24
Proceeds from maturities of securities available for sale		38,000			18,750			42,836
Purchases of securities available for sale		(90,183	)		(44,813	)		(29,590	)
Refund of capital investment from closed subsidiary		4,880			—			—
Net capital investment in subsidiaries		(6,684	)		(1,823	)		(7,932	)
Dividends received from subsidiaries		64,000			44,000			66,000
Repayment of loan advances from subsidiary		2,075			—			—
Net capital expenditures for premises and equipment		(368	)		(1,700	)		(18	)
Net cash provided by investing activities		11,720			14,982			71,320
FINANCING ACTIVITIES:
Repayments of long-term debt		(15,000	)		(3,002	)		(2,888	)
Cash dividends paid		(17,618	)		(17,658	)		(17,000	)
Net purchase of treasury stock		(11,643	)		(8,935	)		(5,837	)
Net cash used in financing activities		(44,261	)		(29,595	)		(25,725	)
Net increase (decrease) in cash		(27,910	)		(22,003	)		40,212
Cash at beginning of year		55,668			77,671			37,459
Cash at end of year	$	27,758		$	55,668		$	77,671

62

UMB FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS—(Continued)

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

(unaudited) 2003	Three Months Ended
	March 31		June 30		Sept. 30		Dec. 31
Interest income	$	63,993	$	60,413	$	58,735	$	56,621
Interest expense		13,256		11,053		9,160		9,215
Net interest income	$	50,737	$	49,360	$	49,575	$	47,406
Provision for loan losses		3,973		3,040		2,867		2,125
Noninterest income		58,748		59,406		59,454		67,960
Noninterest expense		86,351		87,998		91,641		88,664
Income tax provision		4,654		4,252		1,288		6,914
Net income	$	14,507	$	13,476	$	13,233	$	17,663
2002	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
Income tax provision		7,394		4,384		3,044		555
Net income	$	19,578	$	13,962	$	11,485	$	12,148
Per Share	Three Months Ended
2003	March 31		June 30		Sept. 30		Dec. 31
Net income—basic	$	0.66	$	0.62	$	0.61	$	0.81
Net income—diluted		0.66		0.62		0.61		0.81
Dividend		0.20		0.20		0.20		0.21
Book value		36.75		37.08		37.19		37.43
Market price:
High		40.48		43.61		49.40		51.49
Low		36.25		36.75		43.04		47.54
Close		36.67		42.46		47.17		47.54
Per Share
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

63

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, 2003 and 2002, and the related consolidated statements of income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2003. 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, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2003 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

March 5, 2004

64

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65

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

	2003							2002
	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)	$	2,588.8		$	141.5	5.46	%	$	2,632.9		$	161.3	6.13	%
Securities:
Taxable	$	2,771.9		$	70.9	2.56	%	$	3,146.0		$	100.9	3.21	%
Tax-exempt (FTE)		735.9			38.5	5.24			686.5			40.6	5.91
Total securities	$	3,507.8		$	109.4	3.12		$	3,832.5		$	141.5	3.69
Federal funds sold and resell agreements		146.5			1.7	1.16			185.7			3.1	1.69
Other earning assets (FTE)		51.2			1.5	2.99			67.0			2.7	4.06
Total earning assets (FTE)	$	6,294.3		$	254.1	4.04		$	6,718.1		$	308.6	4.59
Allowance for loan losses		(40.8	)						(37.2	)
Cash and due from banks		511.8							497.1
Other assets		384.7							411.1
Total assets		7,150.0							7,589.1
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing demand and savings deposits	$	2,460.4		$	9.1	0.37	%	$	2,624.8		$	20.7	0.79	%
Time deposits under $100,000		779.5			19.8	2.54			892.2			31.8	3.56
Time deposits of $100,000 or more		252.1			4.3	1.72			287.7			6.9	2.40
Total interest bearing deposits	$	3,492.0		$	33.2	0.95	%	$	3,804.7		$	59.4	1.56	%
Short-term borrowings		23.8			0.2	0.84			61.1			0.9	1.44
Long-term debt		17.4			1.1	6.17			27.5			1.9	6.82
Federal funds purchased and repurchase agreements		950.6			8.2	0.87			1,107.8			14.2	1.29
Total interest bearing liabilities	$	4,483.8		$	42.7	0.95	%	$	5,001.1		$	76.4	1.53	%
Non-interest bearing demand deposits		1,788.0							1,723.1
Other		69.7							70.7
Total		6,341.5							6,794.9
Total shareholders’ equity		808.5							794.2
Total liabilities and shareholders’ equity	$	7,150.0						$	7,589.1
Net interest income (FTE)				$	211.4						$	232.2
Net interest spread						3.09	%						3.06	%
Net interest margin						3.36							3.46

(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.

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

2001					2000							1999
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
$ 2,929.1	$	226.7	7.74	%	$	3,004.8		$	256.3	8.53	%	$	2,616.0		$	212.8	8.14	%	(0.40	)%
$ 2,480.7	$	119.6	4.82		$	2,105.7		$	123.8	5.88		$	2,820.0		$	154.3	5.47		2.51
664.5		40.8	6.14			736.2			46.8	6.36			733.8			45.9	6.25		5.73
$ 3,145.2	$	160.4	5.10		$	2,841.9		$	170.6	6.00		$	3,533.8		$	200.2	5.63		3.14
195.8		7.6	3.89			229.1			15.2	6.63			120.4			6.0	4.84		(8.15	)
70.4		3.8	5.36			74.6			4.7	6.19			66.3			3.9	5.68		(6.67	)
$ 6,340.5	$	398.5	6.28		$	6,150.4		$	446.8	7.26		$	6,356.5		$	422.9	6.65		1.16
(34.3)						(31.6	)						(32.9	)					4.21
617.1						720.3							691.6						(6.69	)
440.2						450.0							424.2						0.02
7,363.5						7,289.1							7,439.4						0.38	%
$ 2,527.5	$	54.1	2.14	%	$	2,270.5		$	71.2	3.14	%	$	2,281.5		$	61.0	2.67	%	1.71	%
823.4		40.7	4.95			824.3			42.4	5.14			860.5			40.4	4.69		(2.30	)
283.6		13.1	4.62			347.9			19.0	5.45			457.5			21.5	4.70		(12.10	)
$ 3,634.5	$	107.9	2.97		$	3,442.7		$	132.6	3.85		$	3,599.5		$	122.9	3.41		(0.70	)
91.5		3.1	3.36			43.0			2.7	6.35			3.8			0.1	4.57		102.44
28.8		1.9	6.80			29.6			2.0	6.91			40.2			2.8	6.91		(16.40	)
973.1		32.2	3.26			1,051.2			59.1	5.62			1,285.2			57.5	4.47		0.64
$ 4,727.9	$	145.1	3.07		$	4,566.5		$	196.4	4.30		$	4,928.7		$	181.3	3.72		(0.42	)
1,775.7						1,922.0							1,748.9						0.99
111.2						124.4							104.5						(3.89	)
6,614.8						6,612.9							6,782.1						(0.08	)
748.7						676.2							657.3						4.46
$ 7,363.5					$	7,289.1						$	7,439.4						0.38	%
	$	253.5						$	250.4						$	239.6
			3.21	%						2.96	%						2.93	%
			4.00							4.07							3.77

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

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ITEM 9A.  CONTROLS AND PROCEDURES

At the end of the period covered by 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 Securities 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.

No significant changes in the Company’s disclosure controls or in other factors occurred that could significantly affect such controls after the date that the Company’s Chief Executive Officer and Chief Financial Officer conducted their evaluations of the Disclosure Controls and Procedures.

While the Company believes that its existing disclosure controls and procedures have been effective to accomplish the Company’s objectives, the Company intends to continue to examine, refine, and formalize its disclosure controls and procedures and to monitor ongoing developments in this area.

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding directors is included in the Company’s 2004 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 report on pages 6 and 7 under the caption “Executive Officers.”

We have adopted a code of ethics that applies to all directors, officers, and employees including our chief executive officer, chief financial officer and chief accounting officer. You can find our code of ethics on our website by going to the following address: www.umb.com/investor. We will post any amendments to the code of ethics, as well as any waivers that are required to be disclosed, under the rules of either the SEC or NASDAQ.

ITEM 11.  EXECUTIVE COMPENSATION

This information is included in the Company’s 2004 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 2004 Proxy Statement under the caption “Principal Shareholders” and is hereby incorporated by reference.

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Security Ownership of Management

This information is included in the Company’s 2004 Proxy Statement under the caption “Stock Beneficially Owned by Directors and Nominees and Executive Officers” and is hereby incorporated by reference.

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 plan (excluding securities reflected in column (a) (c)
Equity compensation plans approved by security holders
1992 Incentive Stock Option Plan	220,719	$	36.53	None
2002 Incentive Stock Option Plan	162,806		48.86	830,244
Equity compensation plans not approved by security holders	None		None	None
Total	383,525	$	41.76	830,244

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

This information is included in the Company’s 2004 Proxy Statement under the caption “Certain Transactions” and is hereby incorporated by reference.

ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

This information is included in the Company’s 2004 Proxy Statement under the caption “Independent Auditor’s Fees” and is hereby incorporated by reference.

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, 2003 and 2002

Consolidated Statements of Income for the Three Years Ended December 31, 2003

Consolidated Statements of Cash Flows for the Three Years Ended December 31, 2003

Consolidated Statements of Shareholders’ Equity for the Three Years Ended December 31, 2003

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

i October 16, 2003 the Company issued a press release of third quarter earnings for the third quarter ended September 30, 2003 and the year to date September 30, 2003.

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ii November 7, 2003 the Company sent a notice to its directors and officers informing them of a blackout period, which will temporarily prevent participants in the UMB Financial Corporation Profit Sharing and 401(k) Savings Plan and the Employee Stock Ownership Plan from engaging in transactions in the Company’s common stock in their plan accounts.

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Exhibits

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

3.1	Articles of Incorporation restated as of March 6, 2003, and filed with the Missouri Secretary of State on April 2, 2003, incorporated by reference to Exhibit 3(i) to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2003, and filed with the Commission on May 12, 2003.
3.2	Bylaws, dated January 29, 2004.
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 and incorporated by reference to Exhibit 10.4 to Company’s Form 10-K filed on March 12, 2003.
10.5	Modification Agreement dated June 26, 2002 between UMB Financial Corporation and Miriam M. Allison and incorporated by reference to Exhibit 10.5 to Company’s Form 10-K filed on March 12, 2003.
10.6	Deferred Compensation Plan, dated as of April 20, 1995 and incorporated by reference to Exhibit 10.6 to Company’s Form 10-K filed on March 12, 2003.
21	Subsidiaries of the Registrant.
23	Consent of Independent Auditors
24	Powers of Attorney
31.1	CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act
31.2	CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act
32.1	CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act
32.2	CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act

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

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

UMB FINANCIAL CORPORATION

/S/    R. CROSBY KEMPER III

R. Crosby Kemper III

Chairman of the Board

/S/    DANIEL C. STEVENS

Daniel C. Stevens,

Chief Financial Officer

/S/    PATRICK J. DERPINGHAUS

Patrick J. Derpinghaus

Senior Vice President and Controller

(Chief Accounting Officer)

Date: March 11, 2004

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	Director
PAUL D. BARTLETT, JR. Paul D. Bartlett, Jr.	Director
THOMAS E. BEAL Thomas E. Beal	Director
H. Alan Bell	Director
WILLIAM L. BISHOP William L. Bishop	Director
DAVID R. BRADLEY, JR. David R. Bradley, Jr.	Director
CYNTHIA J. BRINKLEY Cynthia J. Brinkley	Director
NEWTON A. CAMPBELL Newton A. Campbell	Director

72

Vincent J. Ciavardini	Director, Vice Chairman
TERRENCE P. DUNN Terrence P. Dunn	Director
WILLIAM TERRY FULDNER William Terry Fuldner	Director
PETER J. GENOVESE Peter J. Genovese	Director, Vice Chairman
GREGORY M. GRAVES Gregory M. Graves	Director
Royce M. Hammons	Director
Richard Harvey	Director
CHRIS N. HOFFMAN III Chris N. Hoffman III	Director
R. Crosby Kemper	Director, Senior Chairman of the Board
ALEXANDER C. KEMPER Alexander C. Kemper	Director
Mariner Kemper	Director, Vice Chairman
Tom J. McDaniel	Director
William J. McKenna	Director
JOHN H. MIZE, JR. John H. Mize, Jr.	Director
Mary Lynn Oliver	Director
Douglas F. Page	Director

73

ROBERT W. PLASTER Robert W. Plaster	Director
KRIS A. ROBBINS Kris A. Robbins	Director
ALAN W. ROLLEY Alan W. Rolley	Director
Thomas D. Sanders	Director
James A. Sangster	Director
L. JOSHUA SOSLAND L. Joshua Sosland	Director
PAUL UHLMANN III Paul Uhlmann III	Director
E. Jack Webster, Jr.	Director
JON M. WEFALD Jon M. Wefald	Director
J. Lyle Wells, Jr.	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 11, 2004

74

EX-3.2

Exhibit 3.2

UMB FINANCIAL CORPORATION

BY-LAWS

(As amended January 29, 2004)

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 fourth 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 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 or her 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 her, or by his or her 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, in accordance with Section 351.273 of The General and Business Corporation Law of Missouri. 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.

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 or her 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 or her 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 or her 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 herself, or by his or her duly authorized attorney, or by his or her legal representative, or (2) be sent by electronic means to the Corporation’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 Corporation’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 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. The Corporation will take all reasonable efforts to comply with applicable requirements of the Securities and Exchange Commission, any self regulatory organization having requirements applicable to the Corporation, and other applicable legal and regulatory requirements, including but not limited to the requirement that at least a majority of the members of the Board qualify as “independent directors” as such term is defined and described in the aforesaid requirements and as determined by the Board from time to time.

Section 2.    Directors – Number; Classes. The Board of Directors shall consist of not less than eleven (11) nor more than thirty-two (32) members, the exact number to be set from time to time by the Board. 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. Nominees for election shall be selected and approved by the Corporate Governance/Nominating Committee, and shall be presented to the Board of Directors for nomination for election by the shareholders at each respective annual meeting of shareholders. 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.

Pursuant to the Corporate Governance & Nominating Committee Charter, nominees for election shall be selected and approved by the Corporate Governance & Nominating Committee. The Committee

will consider any director candidates recommended by shareholders in accordance with applicable laws and regulations, or as provided below. Shareholders may nominate director candidates by writing to the Committee and providing the candidate’s name, biographical data and qualifications. The Corporation’s policy regarding procedures to be followed by shareholders in submitting such recommendations shall be disclosed in the Corporation’s annual proxy statement.

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/she is elected in accordance with these By-Laws, and until his/her successor is elected and qualified or until his/her 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 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, the Corporate Governance/Nominations Committee may select and approve, and a majority of the other directors (though less than a quorum) may appoint, a director to 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. Independent directors shall convene regularly scheduled executive sessions at least twice per year in conjunction with regularly scheduled Board meetings and/or at such other times and places as deemed necessary by such independent directors or as required by applicable rules and regulations.

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 courier or telephone or confirmed facsimile transmission 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 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 signed facsimile transmission or 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, in accordance with Section 351.340 of The General and Business Corporation Law of Missouri. 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 in accordance with the Corporation Code of Ethics 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, the By-Laws of the Corporation, or the Corporation Code of Ethics and may, from time to time, determine the order of business at their meetings.

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, based upon the recommendations of the Officers Salary and Stock Option Committee (and in accordance with the Officers Salary and Stock Option Charter); 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.    Management Committee. The Board of Directors may, by resolution passed by a majority of the total number of directors, designate a Management Committee to consist of the Chairman of the Board, the Chief Executive Officer, and such number of other Directors, Advisory Directors and Executive Officers as they shall determine. The members of the Management 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 Management Committee shall have and may exercise all powers of the Board of Directors except for powers and functions that are reserved for, or that must under applicable requirements of law, regulations or governing self regulatory organizations be taken by, the Audit Committee, Officer Salary and Stock Option Committee, or Corporate Governance/Nominating Committee or by a majority of the independent directors of the full Board. A majority of the members of the Management 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 Management Committee shall constitute a quorum. The Management 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 shall prepare and adopt Charters establishing, and setting forth the authority of, each of an Audit Committee, an Officer Salary and Stock Option Committee, and a Corporate Governance/Nominating Committee, and shall review and revise such Charters from time to time as necessary or appropriate. Each such Committee shall have the purposes, functions, goals, responsibilities and authority set forth in its respective Charter. Each such Charter shall also set out the criteria and qualifications for membership on such Committees. The Board of Directors may also, 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. Each such committee shall have and may exercise such powers as the Board of Directors shall provide by its resolution or in any Charter adopted by the Board of Directors with respect to such committees.

Section 3.    Compensation of Committee Members. The Board of Directors shall determine the compensation to be paid to Board committee members, based upon the recommendation of the Officers Salary and Stock Option 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. As provided in the Charter of the Officers Salary and Stock Option Committee and in accordance with applicable law or regulations, the Officers Salary and Stock Option Committee shall annually determine the compensation of the Corporation’s Chief Executive Officer. In addition, the Officers Salary and Stock Option Committee shall have the authority and responsibility of determining and adjusting, from time to time, the compensation of such top-level executive officers (other than the chief executive officer) of the Corporation and its subsidiaries as such Committee may designate from time to time. The Corporation’s Chief Executive Officer shall have authority to determine the compensation of other officers (excluding himself/herself and such top-level executive officers as may be designated by the Officers Salary and Stock Option Committee, as provided for above) and associates of the Corporation.

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.

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, 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 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.

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 any of its subsidiaries, or is or was serving at the request of the Corporation as a director, officer, employee or agent 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.

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 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.

EX-23

Exhibit 23

INDEPENDENT AUDITORS’ CONSENT

We consent to the incorporation by reference in Registration Statement No. 333-102044 of UMB Financial Corporation and Subsidiaries on Form S-8 of our report dated March 5, 2004, (which expresses an unqualified opinion and includes an explanatory paragraph relating to the adoption of the provisions of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets), appearing in the Annual Report on Form 10-K of UMB Financial Corporation and Subsidiaries for the year ended December 31, 2003.

Kansas City, Missouri

March 15, 2004

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT

I, R. Crosby Kemper III, certify that:

1. I have reviewed this report as of December 31, 2003 on Form 10-K of UMB Financial Corporation;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

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

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/S/    R. CROSBY KEMPER, III        

R. Crosby Kemper, III

Chief Executive Officer

Date: March 11, 2004

75

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT

I, Daniel C. Stevens, certify that:

1. I have reviewed this report as of December 31, 2003 on Form 10-K of UMB Financial Corporation;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

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

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/S/    DANIEL C. STEVENS        

Daniel C. Stevens

Chief Financial Officer

Date: March 11, 2004

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EX-32.1

Exhibit 32.1

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, 2003, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, R. Crosby Kemper III, Chief Executive Officer of the Company, hereby certify, 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.

/S/    R. CROSBY KEMPER, III        

R. Crosby Kemper, III

Chief Executive Officer

Dated: March 11, 2004

A signed original of this written statement required by Section 906 has been provide to UMB Financial Corporation and will be retained by UMB Financial Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

77

EX-32.2

Exhibit 32.2

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, 2003, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel C. Stevens, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

3) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

4) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/S/    DANIEL C. STEVENS, CFO        

Daniel C. Stevens

Chief Financial Officer

Dated: March 11, 2004

A signed original of this written statement required by Section 906 has been provide to UMB Financial Corporation and will be retained by UMB Financial Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

78