UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to             

Commission file number 0-4887

UMB FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Missouri	43-0903811
(State or other jurisdiction of incorporation or organization)	(I.R.S. – Employer Identification Number)
1010 Grand Boulevard, Kansas City, Missouri	64106
(Address of principal executive offices)	(ZIP Code)

(Registrant’s telephone number, including area code): (816) 860-7000

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

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

As of July 26, 2012, UMB Financial Corporation had 40,578,007 shares of common stock outstanding.

UMB FINANCIAL CORPORATION

FORM 10-Q

INDEX

PART I – FINANCIAL INFORMATION		3
ITEM 1.	FINANCIAL STATEMENTS (UNAUDITED)	3
CONDENSED CONSOLIDATED BALANCE SHEETS		3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME		4
CONDENSED STATEMENTS OF CONSOLIDATED COMPRENSIVE INCOME		5
STATEMENTS OF CHANGES IN CONDENSED CONSOLIDATED SHAREHOLDERS' EQUITY		6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS		7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS		8
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	30
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	46
ITEM 4.	CONTROLS AND PROCEDURES	49
PART II – OTHER INFORMATION		51
ITEM 1.	LEGAL PROCEEDINGS	51
ITEM 1A.	RISK FACTORS	51
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	51
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	51
ITEM 4.	MINE SAFETY DISCLOSURES	51
ITEM 5.	OTHER INFORMATION	52
ITEM 6.	EXHIBITS	52
SIGNATURES		53
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT		54
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT		55
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002		56
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002		57

2

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UMB FINANCIAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, dollars in thousands, except share and per share data)

	June 30, 2012			December 31, 2011
ASSETS
Loans:	$	5,315,609		$	4,960,343
Allowance for loan losses		(72,652	)		(72,017	)
Net loans		5,242,957			4,888,326
Loans held for sale		11,027			10,215
Securities:
Available for sale		6,329,724			6,107,882
Held to maturity (market value of $110,194 and $102,287, respectively)		96,250			89,246
Trading		56,844			58,142
Federal Reserve Bank stock and other		21,705			22,212
Total investment securities		6,504,523			6,277,482
Federal funds sold and securities purchased under agreements to resell		30,733			66,078
Interest-bearing due from banks		295,499			1,164,007
Cash and due from banks		402,893			446,580
Bank premises and equipment, net		234,754			227,936
Accrued income		71,396			75,997
Goodwill		211,114			211,114
Other intangibles		76,604			84,331
Other assets		101,162			89,332
Total assets	$	13,182,662		$	13,541,398
LIABILITIES
Deposits:
Noninterest-bearing demand	$	4,217,487		$	3,941,372
Interest-bearing demand and savings		4,920,957			4,680,125
Time deposits under $100,000		575,714			615,475
Time deposits of $100,000 or more		615,692			932,939
Total deposits		10,329,850			10,169,911
Federal funds purchased and repurchase agreements		1,400,566			1,950,827
Short-term debt		10,000			12,000
Long-term debt		5,260			6,529
Accrued expenses and taxes		169,812			186,380
Other liabilities		15,176			24,619
Total liabilities		11,930,664			12,350,266
SHAREHOLDERS’ EQUITY
Common stock, $1.00 par value; 80,000,000 shares authorized; 55,056,730 shares issued; and 40,529,293 and 40,426,342 shares outstanding, respectively		55,057			55,057
Capital surplus		726,708			723,299
Retained earnings		756,835			697,923
Accumulated other comprehensive income		81,244			81,099
Treasury stock, 14,527,437 and 14,630,388 shares, at cost, respectively		(367,846	)		(366,246	)
Total shareholders’ equity		1,251,998			1,191,132
Total liabilities and shareholders’ equity	$	13,182,662		$	13,541,398

See Notes to Condensed Consolidated Financial Statements.

3

UMB FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited, dollars in thousands, except share and per share data)

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
INTEREST INCOME
Loans	$	54,000	$	55,106	$	108,055	$	109,095
Securities:
Taxable interest		21,178		22,077		41,307		44,385
Tax-exempt interest		9,468		8,282		18,843		16,520
Total securities income		30,646		30,359		60,150		60,905
Federal funds and resell agreements		25		13		41		28
Interest-bearing due from banks		362		843		1,197		2,005
Trading securities		317		230		640		491
Total interest income		85,350		86,551		170,083		172,524
INTEREST EXPENSE
Deposits		4,376		6,163		9,364		12,829
Federal funds and repurchase agreements		508		398		948		1,066
Other		93		72		309		263
Total interest expense		4,977		6,633		10,621		14,158
Net interest income		80,373		79,918		159,462		158,366
Provision for loan losses		4,500		5,600		9,000		12,700
Net interest income after provision for loan losses		75,873		74,318		150,462		145,666
NONINTEREST INCOME
Trust and securities processing		55,755		53,635		110,465		105,363
Trading and investment banking		7,140		6,478		16,818		15,497
Service charges on deposits		19,009		18,181		39,020		36,789
Insurance fees and commissions		913		1,165		1,922		2,368
Brokerage fees		2,705		2,573		5,219		4,914
Bankcard fees		16,830		16,545		31,565		30,987
Gain on sales of securities available for sale, net		3,222		6,023		19,763		13,480
Other		4,652		3,256		17,755		6,208
Total noninterest income		110,226		107,856		242,527		215,606
NONINTEREST EXPENSE
Salaries and employee benefits		78,001		72,922		157,915		145,821
Occupancy, net		9,211		9,579		18,489		19,184
Equipment		11,004		10,774		21,669		21,710
Supplies and services		5,218		5,577		10,261		11,157
Marketing and business development		5,986		5,158		10,246		9,280
Processing fees		12,593		13,319		25,409		25,492
Legal and consulting		4,012		4,075		7,527		6,692
Bankcard		4,630		4,219		8,872		8,072
Amortization of intangible assets		3,733		4,159		7,585		8,165
Regulatory fees		2,314		2,394		4,733		6,111
Class action litigation settlement		—		7,800		—		7,800
Other		7,984		5,605		13,884		11,613
Total noninterest expense		144,686		145,581		286,590		281,097
Income before income taxes		41,413		36,593		106,399		80,175
Income tax provision		12,248		10,272		30,867		22,984
NET INCOME	$	29,165	$	26,321	$	75,532	$	57,191
PER SHARE DATA
Net income – basic	$	0.73	$	0.66	$	1.89	$	1.43
Net income – diluted		0.72		0.65		1.87		1.42
Dividends		0.205		0.195		0.410		0.390
Weighted average shares outstanding		40,034,649		40,080,402		40,030,052		40,075,428

See Notes to Condensed Consolidated Financial Statements.

4

UMB FINANCIAL CORPORATION

CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

(unaudited, dollars in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Net Income	$	29,165		$	26,321		$	75,532		$	57,191
Other comprehensive income, net of tax:
Unrealized gains on securities:
Change in unrealized holding gains, net		30,771			62,003			20,155			60,513
Less: Reclassifications adjustment for gains included in net income		(3,222	)		(6,023	)		(19,763	)		(13,480	)
Change in unrealized gains on securities during the period		27,549			55,980			392			47,033
Income tax expense		(10,173	)		(20,679	)		(247	)		(17,387	)
Other comprehensive income		17,376			35,301			145			29,646
Comprehensive income	$	46,541			61,622		$	75,677			86,837

See Notes to Condensed Consolidated Financial Statements.

5

UMB FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(unaudited, dollars in thousands, except per share data)

	Common Stock		Capital Surplus			Retained Earnings			Accumulated Other Comprehensive Income		Treasury Stock			Total
Balance – January 1, 2011	$	55,057	$	718,306		$	623,415		$	25,465	$	(361,383	)	$	1,060,860
Total comprehensive income							57,191			29,646					86,837
Cash dividends ($0.39 per share)		—		—			(15,801	)		—		—			(15,801	)
Purchase of treasury stock		—		—			—			—		(3,382	)		(3,382	)
Issuance of equity awards		—		(1,918	)		—			—		2,157			239
Recognition of equity based compensation		—		3,262			—			—		—			3,262
Net tax benefit related to equity compensation plans		—		97			—			—		—			97
Sale of treasury stock		—		115			—			—		116			231
Exercise of stock options		—		128			—			—		485			613
Balance – June 30, 2011	$	55,057	$	719,990		$	664,805		$	55,111	$	(362,007	)	$	1,132,956
Balance – January 1, 2012	$	55,057	$	723,299		$	697,923		$	81,099	$	(366,246	)	$	1,191,132
Total comprehensive income							75,532			145					75,677
Cash dividends ($0.41 per share)		—		—			(16,620	)		—		—			(16,620	)
Purchase of treasury stock		—		—			—			—		(5,284	)		(5,284	)
Issuance of equity awards		—		(1,698	)		—			—		1,942			244
Recognition of equity based compensation		—		3,565			—			—		—			3,565
Net tax benefit related to equity compensation plans		—		164			—			—		—			164
Sale of treasury stock		—		234			—			—		189			423
Exercise of stock options		—		1,144			—			—		1,553			2,697
Balance – June 30, 2012	$	55,057	$	726,708		$	756,835		$	81,244	$	(367,846	)	$	1,251,998

See Notes to Condensed Consolidated Financial Statements.

6

UMB FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, dollars in thousands)

	Six Months Ended June  30,
	2012			2011
Operating Activities
Net Income	$	75,532		$	57,191
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for loan losses		9,000			12,700
Depreciation and amortization		20,505			22,401
Deferred income tax expense (benefit)		876			(2,458	)
Net decrease (increase) in trading securities		1,298			(800	)
Gains on sales of securities available for sale, net		(19,763	)		(13,480	)
Gains on sales of assets		(655	)		(1	)
Amortization of securities premiums, net of discount accretion		24,866			20,622
Originations of loans held for sale		(107,658	)		(94,110	)
Net gains on sales of loans held for sale		(919	)		(1,051	)
Proceeds from sales of loans held for sale		107,765			102,994
Issuance of equity awards		244			239
Equity based compensation		3,565			3,262
Changes in:
Accrued income		4,601			(1,476	)
Accrued expenses and taxes		(10,040	)		5,673
Other assets and liabilities, net		(14,106	)		7,025
Net cash provided by operating activities		95,111			118,731
Investing Activities
Proceeds from maturities of securities held to maturity		3,930			5,081
Proceeds from sales of securities available for sale		974,581			884,275
Proceeds from maturities of securities available for sale		826,048			928,392
Purchases of securities held to maturity		(10,849	)		(10,793	)
Purchases of securities available for sale		(2,032,803	)		(1,688,797	)
Net increase in loans		(364,749	)		(166,027	)
Net decrease in fed funds sold and resell agreements		35,345			190,690
Net decrease in interest-bearing balances due from other financial institutions		94,023			38,122
Purchases of bank premises and equipment		(20,303	)		(15,210	)
Net cash received (paid) for acquisitions		701			(8,000	)
Proceeds from sales of bank premises and equipment		661			43
Net cash (used in) provided by investing activities		(493,415	)		157,776
Financing Activities
Net increase in demand and savings deposits		516,947			1,179,954
Net decrease in time deposits		(357,008	)		(294,894	)
Net decrease in fed funds purchased and repurchase agreements		(550,261	)		(578,405	)
Net decrease in short-term debt		(2,000	)		(10,296	)
Repayment of long-term debt		(1,269	)		(2,539	)
Payment of contingent consideration on acquisitions		(7,651	)		—
Cash dividends paid		(16,626	)		(15,654	)
Net tax benefit related to equity compensation plans		164			97
Proceeds from exercise of stock options and sales of treasury shares		3,120			844
Purchases of treasury stock		(5,284	)		(3,382	)
Net cash (used in) provided by financing activities		(419,868	)		275,725
(Decrease) increase in cash and due from banks		(818,172	)		552,232
Cash and due from banks at beginning of period		1,459,631			1,033,617
Cash and due from banks at end of period	$	641,459		$	1,585,849
Supplemental Disclosures:
Income taxes paid	$	23,908		$	13,627
Total interest paid	$	11,588		$	15,256

See Notes to Condensed Consolidated Financial Statements.

7

UMB FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

1. Financial Statement Presentation

The condensed consolidated financial statements include the accounts of UMB Financial Corporation and its subsidiaries (collectively, the “Company”) after elimination of all significant intercompany transactions. In the opinion of management of the Company, all adjustments, which were of a normal recurring nature and necessary for a fair presentation of the financial position and results of operations, have been made. The results of operations and cash flows for the interim periods presented may not be indicative of the results of the full year. The financial statements should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

2. Summary of Accounting Policies

The Company is a multi-bank financial holding company, which offers a wide range of banking and other financial services to its customers through its branches and offices in the states of Missouri, Kansas, Colorado, Illinois, Oklahoma, Arizona, Nebraska, Pennsylvania, South Dakota, Indiana, Wisconsin, New Jersey, and Massachusetts. 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. A summary of the significant accounting policies to assist the reader in understanding the financial presentation is listed in the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

Interest-bearing Due From Banks

Amounts due from the Federal Reserve Bank which are interest-bearing for all periods presented, and amounts due from certificates of deposits held at other financial institutions are included in interest-bearing due from banks. The amount due from the Federal Reserve Bank totaled $238.6 million and $1,238.5 million at June 30, 2012 and June 30, 2011, respectively, and is considered cash and cash equivalents. The amounts due from certificates of deposit totaled $56.9 million and $133.0 million at June 30, 2012 and June 30, 2011, respectively.

This table provides a summary of cash and due from banks as presented on the Consolidated Statement of Cash Flows as of June 30, 2012 and June 30, 2011 (in thousands):

	June 30,
	2012		2011
Due from the Federal Reserve	$	238,566	$	1,238,480
Cash and due from banks		402,893		347,369
Cash and due from banks at end of period	$	641,459	$	1,585,849

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 quarterly per share data includes the dilutive effect of 442,499 and 323,509 shares issuable upon the exercise of options granted by the Company and outstanding at June 30, 2012 and 2011, respectively. Diluted year-to-date income per share includes the dilutive effect of 397,060 and 318,004 shares issuable upon the exercise of stock options granted by the Company and outstanding at June 30, 2012 and 2011, respectively.

Options issued under employee benefit plans to purchase 521,705 shares of common stock were outstanding at June 30, 2012, but were not included in the computation of year-to-date diluted EPS because the options were anti-dilutive. Options issued under employee benefit plans to purchase 765,818 shares of common stock were outstanding at June 30, 2011, but were not included in the computation of quarterly diluted EPS because the options were anti-dilutive. Options issued under employee benefit plans to purchase 874,914 shares of common stock were outstanding at June 30, 2011, but were not included in the computation of year-to-date diluted EPS because the options were anti-dilutive.

8

UMB FINANCIAL CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

3. New Accounting Pronouncements

Fair Value Measurements and Disclosure Requirements In May 2011, the FASB issued ASU No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (ASU 2011-04), which amends the FASB Standards Codification to change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. The Company adopted this standard for the quarter ended March 31, 2012 which resulted in a $6.9 million ($4.7 million, net of tax) reduction of the contingent consideration liabilities and a corresponding increase to other non-interest income due to the Company changing its fair value methodology. The adoption of this accounting pronouncement also resulted in additional fair value financial statement disclosures.

Presentation of Comprehensive Income In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income: Presentation of Comprehensive Income” (ASU 2011-05), which amends the FASB Standards Codification to allow the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. These amendments do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. ASU 2011-05 was effective for the Company for the period ended March 31, 2012; however, certain provisions related to the presentation of reclassification adjustments have been deferred by ASU No. 2011-12 (ASU 2011-12) “Comprehensive Income (Topic 220)—Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.” ASU 2011-12 allows entities to continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before ASU 2011-05. All other requirements in ASU 2011-05 are not affected by ASU 2011-12. The Company adopted ASU 2011-05 for the quarter ended March 31, 2012 with no material impact on its financial statements except for a change in presentation.

9

UMB FINANCIAL CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

4. Loans and Allowance for Loan Losses

Loan Origination/Risk Management

The Company has certain lending policies and procedures in place that are designed to minimize the level of risk within the loan portfolio. Diversification of the loan portfolio manages the risk associated with fluctuations in economic conditions. The Company maintains an independent loan review department that reviews and validates the credit risk program on a continual basis. Management regularly evaluates the results of the loan reviews. The loan review process complements and reinforces the risk identification and assessment decisions made by lenders and credit personnel, as well as the Company’s policies and procedures.

Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and prudently expand its business. Commercial loans are made based on the identified cash flows of the borrower and on the underlying collateral provided by the borrower. The cash flows of the borrower, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts from its customers. Commercial credit cards are generally unsecured and are underwritten with criteria similar to commercial loans including an analysis of the borrower’s cash flow, available business capital, and overall credit-worthiness of the borrower.

Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans, in addition to those of real estate loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. The Company requires an appraisal of the collateral be made at origination, on an as-needed basis, in conformity with current market conditions and regulatory requirements. The underwriting standards address both owner and non-owner occupied real estate.

Construction loans are underwritten using feasibility studies, independent appraisal reviews, sensitivity analysis or absorption and lease rates and financial analysis of the developers and property owners. Construction loans are based upon estimates of costs and value associated with the complete project. Construction loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term borrowers, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their repayment being sensitive to interest rate changes, governmental regulation of real property, economic conditions and the availability of long-term financing.

Underwriting standards for residential real estate and home equity loans are based on the borrower’s loan-to-value percentage, collection remedies, and overall credit history.

Consumer loans are underwritten based on the borrower’s repayment ability. The Company monitors delinquencies on all of its consumer loans and leases and periodically reviews the distribution of FICO scores relative to historical periods to monitor credit risk on its credit card loans. The underwriting and review practices, combined with the relatively small loan amounts that are spread across many individual borrowers, minimizes risk. Consumer loans and leases that are 90 days past due or more are considered non-performing.

10

UMB FINANCIAL CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

This table provides a summary of loan classes and an aging of past due loans at June 30, 2012 and December 31, 2011 (in thousands):

	June 30, 2012
	30-89 Days Past Due and Accruing		Greater than 90 Days Past Due and Accruing		Non- Accrual Loans		Total Past Due		Current		Total Loans
Commercial:
Commercial	$	4,622	$	877	$	14,115	$	19,614	$	2,616,327	$	2,635,941
Commercial – credit card		428		105		—		533		103,938		104,471
Real estate:
Real estate – construction		435		651		655		1,741		79,948		81,689
Real estate – commercial		6,032		1,110		8,574		15,716		1,336,696		1,352,412
Real estate – residential		2,121		139		1,819		4,079		190,448		194,527
Real estate – HELOC		877		113		463		1,453		557,275		558,728
Consumer:
Consumer – credit card		2,752		2,371		3,632		8,755		308,169		316,924
Consumer – other		2,527		832		1,384		4,743		48,802		53,545
Leases		204		—		—		204		17,168		17,372
Total loans	$	19,998	$	6,198	$	30,642	$	56,838	$	5,258,771	$	5,315,609

	December 31, 2011
	30-89 Days Past Due and Accruing		Greater than 90 Days Past Due and Accruing		Non- Accrual Loans		Total Past Due		Current		Total Loans
Commercial:
Commercial	$	2,986	$	767	$	9,234	$	12,987	$	2,221,830	$	2,234,817
Commercial – credit card		896		284		—		1,180		94,159		95,339
Real estate:
Real estate – construction		430		—		642		1,072		83,518		84,590
Real estate – commercial		2,368		313		7,218		9,899		1,384,656		1,394,555
Real estate – residential		1,713		247		1,660		3,620		182,266		185,886
Real estate – HELOC		819		41		696		1,556		531,476		533,032
Consumer:
Consumer – credit card		2,858		3,394		4,638		10,890		322,756		333,646
Consumer – other		1,260		952		1,493		3,705		90,939		94,644
Leases		—		—		—		—		3,834		3,834
Total loans	$	13,330	$	5,998	$	25,581	$	44,909	$	4,915,434	$	4,960,343

The Company sold $107.8 million and $103.0 million of residential real estate and student loans during the six month periods ended June 30, 2012 and June 30, 2011, respectively.

The Company has ceased the recognition of interest on loans with a carrying value of $30.6 million and $25.6 million at June 30, 2012 and December 31, 2011, respectively. Restructured loans totaled $8.3 million and $6.0 million at June 30, 2012 and December 31, 2011, respectively. Loans 90 days past due and still accruing interest amounted to $6.2 million and $6.0 million at June 30, 2012 and December 31, 2011, respectively. There was an insignificant amount of interest recognized on impaired loans during 2012 and 2011.

11

UMB FINANCIAL CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

Credit Quality Indicators

As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related to the risk grading of specified classes of loans, net charge-offs, non-performing loans, and general economic conditions.

The Company utilizes a risk grading matrix to assign a rating to each of its commercial, commercial real estate, and construction real estate loans. The loan rankings are summarized into the following categories: Non-watch list, Watch, Special Mention, and Substandard. Any loan not classified in one of the categories described below is considered to be a Non-watch list loan. A description of the general characteristics of the loan ranking categories is as follows:

• Watch – This rating represents credit exposure that presents higher than average risk and warrants greater than routine attention by Company personnel due to conditions affecting the borrower, the borrower’s industry or the economic environment. These conditions have resulted in some degree of uncertainty that results in higher than average credit risk.

• Special Mention – This rating reflects a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or the institution’s credit position at some future date. The rating is not adversely classified and does not expose an institution to sufficient risk to warrant adverse classification.

• Substandard – This rating represents an asset inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Loans in this category are characterized by the distinct possibility that the bank will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified substandard. This category may include loans where the collection of full principal is doubtful or remote.

All other classes of loans are generally evaluated and monitored based on payment activity. Non-performing loans include restructured loans, which are on non-accrual, and all other non-accrual loans.

12

UMB FINANCIAL CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

This table provides an analysis of the credit risk profile of each loan class at June 30, 2012 and December 31, 2011 (in thousands):

Credit Exposure

Credit Risk Profile by Risk Rating

	Commercial				Real estate- construction
	June 30, 2012		December 31, 2011		June 30, 2012		December 31, 2011
Non-watch list	$	2,473,132	$	2,064,658	$	78,964	$	83,100
Watch		85,969		100,499		362		355
Special Mention		20,839		16,688		—		—
Substandard		56,001		52,972		2,363		1,135
Total	$	2,635,941	$	2,234,817	$	81,689	$	84,590
	Real estate - commercial
	June 30, 2012		December 31, 2011
Non-watch list	$	1,227,429	$	1,275,280
Watch		49,825		27,777
Special Mention		9,739		35,019
Substandard		65,419		56,479
Total	$	1,352,412	$	1,394,555
Credit Exposure
Credit Risk Profile Based on Payment Activity
	Commercial – credit card				Real estate- residential
	June 30, 2012		December 31, 2011		June 30, 2012		December 31, 2011
Performing	$	104,471	$	95,339	$	192,708	$	184,226
Non-performing		—		—		1,819		1,660
Total	$	104,471	$	95,339	$	194,527	$	185,886
	Real estate - HELOC				Consumer – credit card
	June 30, 2012		December 31, 2011		June 30, 2012		December 31, 2011
Performing	$	558,265	$	532,336	$	313,292	$	329,008
Non-performing		463		696		3,632		4,638
Total	$	558,728	$	533,032	$	316,924	$	333,646
	Consumer - other				Leases
	June 30, 2012		December 31, 2011		June 30, 2012		December 31, 2011
Performing	$	52,161	$	93,151	$	17,372	$	3,834
Non-performing		1,384		1,493		—		—
Total	$	53,545	$	94,644	$	17,372	$	3,834

13

UMB FINANCIAL CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

Allowance for Loan Losses

The allowance for loan losses is a reserve established through a provision for loan losses charged to expense, which represents management’s judgment of losses within the Company’s loan portfolio as of the balance sheet date. The allowance is necessary to reserve for estimated loan losses and risks inherent in the loan portfolio. Accordingly, the methodology is based on historical loss trends. The Company’s process for determining the appropriate level of the allowance for loan losses is designed to account for credit deterioration as it occurs. The provision for possible loan losses reflects loan quality trends, including the levels of and trends related to non-accrual loans, past due loans, potential problem loans, criticized loans and net charge-offs or recoveries, among other factors.

The level of the allowance reflects management’s continuing evaluation of industry concentrations, specific credit risks, loan loss experience, current loan portfolio quality, present economic, political and regulatory conditions and unidentified losses inherent in the current loan portfolio. Portions of the allowance may be allocated for specific loans; however, the entire allowance is available for any loan that, in management’s judgment, should be charged off. While management utilizes its best judgment and information available, the adequacy of the allowance is dependent upon a variety of factors beyond the Company’s control, including, among other things, the performance of the Company’s loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward loan classifications.

The Company’s allowance for loan losses consists of specific valuation allowances and general valuation allowances based on historical loan loss experience for similar loans with similar characteristics and trends, general economic conditions and other qualitative risk factors both internal and external to the Company.

The allowances established for probable losses on specific loans are based on a regular analysis and evaluation of problem loans. Loans are classified based on an internal risk grading process that evaluates the obligor’s ability to repay, the underlying collateral, if any, and the economic environment and industry in which the borrower operates. When a loan is considered impaired, the loan is analyzed to determine the need, if any, to specifically allocate a portion of the allowance for loan losses to the loan. Specific valuation allowances are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk ranking of the loan and economic conditions affecting the borrower’s industry.

General valuation allowances are calculated based on the historical loss experience of specific types of loans including an evaluation of the time span and volume of the actual charge-off. The Company calculates historical loss ratios for pools of similar loans with similar characteristics based on the proportion of actual charge-offs experienced to the total population of loans in the pool. The historical loss ratios are updated based on actual charge-off experience. A valuation allowance is established for each pool of similar loans based upon the product of the historical loss ratio, time span to charge-off, and the total dollar amount of the loans in the pool. The Company’s pools of similar loans include similarly risk-graded groups of commercial loans, commercial real estate loans, commercial credit card, home equity loans, consumer real estate loans and consumer and other loans. The Company also considers a loan migration analysis for criticized loans. This analysis includes an assessment of the probability that a loan will move to a loss position based on its criticized category. In addition, a portion of the allowance is determined by a review of qualitative factors by Management including external factors such as legal and regulatory requirements, competition, unemployment, and other economic and business conditions. The qualitative review also includes an assessment of internal factors such as changes in lending policies and procedures, quality of Company’s loan review system, experience of management and staff, and credit concentrations.

14

UMB FINANCIAL CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

ALLOWANCE FOR LOAN LOSSES AND RECORDED INVESTMENT IN LOANS

This table provides a rollforward of the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2012 (in thousands):

	Three Months Ended June 30, 2012
	Commercial			Real estate			Consumer			Leases		Total
Allowance for loan losses:
Beginning balance	$	37,381		$	23,236		$	12,848		$	21	$	73,486
Charge-offs		(2,968	)		(69	)		(3,098	)		—		(6,135	)
Recoveries		12			3			786			—		801
Provision		3,517			(510	)		1,465			28		4,500
Ending Balance	$	37,942		$	22,660		$	12,001		$	49	$	72,652
	Six Months Ended June 30, 2012
	Commercial			Real estate			Consumer			Leases		Total
Allowance for loan losses:
Beginning balance	$	37,927		$	20,486		$	13,593		$	11	$	72,017
Charge-offs		(3,237	)		(408	)		(6,588	)		—		(10,233	)
Recoveries		250			9			1,609			—		1,868
Provision		3,002			2,573			3,387			38		9,000
Ending Balance	$	37,942		$	22,660		$	12,001		$	49	$	72,652
Ending Balance: individually evaluated for impairment	$	2,730		$	1,104		$	—		$	—	$	3,834
Ending Balance: collectively evaluated for impairment		35,212			21,556			12,001			49		68,818
Ending Balance: loans acquired with deteriorated credit quality		—			—			—			—		—
Loans:
Ending Balance: loans	$	2,740,412		$	2,187,356		$	370,469		$	17,372	$	5,315,609
Ending Balance: individually evaluated for impairment		15,208			13,754			71			—		29,033
Ending Balance: collectively evaluated for impairment		2,725,204			2,173,602			370,398			17,372		5,286,576
Ending Balance: loans acquired with deteriorated credit quality		—			—			—			—		—

15

UMB FINANCIAL CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

This table provides a rollforward of the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2011 (in thousands):

	Three Months Ended June 30, 2011
	Commercial			Real estate			Consumer			Leases			Total
Allowance for loan losses:
Beginning balance	$	36,171		$	22,363		$	14,173		$	11		$	72,718
Charge-offs		(2,884	)		(391	)		(3,913	)		—			(7,188	)
Recoveries		225			15			1,072			—			1,312
Provision		2,092			899			2,609			—			5,600
Ending Balance	$	35,604		$	22,886		$	13,941		$	11		$	72,442
	Six Months Ended June 30, 2011
	Commercial			Real estate			Consumer			Leases			Total
Allowance for loan losses:
Beginning balance	$	39,138		$	18,557		$	16,243		$	14		$	73,952
Charge-offs		(8,084	)		(458	)		(8,312	)		—			(16,854	)
Recoveries		376			15			2,253			—			2,644
Provision		4,174			4,772			3,757			(3	)		12,700
Ending Balance	$	35,604		$	22,886		$	13,941		$	11		$	72,442
Ending Balance: individually evaluated for impairment	$	1,861		$	1,115		$	—		$	—		$	2,976
Ending Balance: collectively evaluated for impairment		33,743			21,771			13,941			11			69,466
Ending Balance: loans acquired with deteriorated credit quality		—			—			—			—			—
Loans:
Ending Balance: loans	$	2,109,456		$	2,172,845		$	444,433		$	4,569		$	4,731,303
Ending Balance: individually evaluated for impairment		5,571			5,376			78			—			11,025
Ending Balance: collectively evaluated for impairment		2,103,885			2,167,469			444,355			4,569			4,720,278
Ending Balance: loans acquired with deteriorated credit quality		—			—			—			—			—

16

UMB FINANCIAL CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

Impaired Loans

This table provides an analysis of impaired loans by class at June 30, 2012 and December 31, 2011 (in thousands):

	June 30, 2012
	Unpaid Principal Balance		Recorded Investment with No Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
Commercial:
Commercial	$	18,115	$	5,567	$	9,641	$	15,208	$	2,730	$	12,613
Commercial – credit card				—		—		—		—		—
Real estate:
Real estate – construction				—		—		—		—		17
Real estate – commercial		10,978		8,573		2,178		10,751		920		9,680
Real estate – residential		3,403		1,871		1,132		3,003		184		3,010
Real estate – HELOC				—		—		—		—		—
Consumer:
Consumer – credit card				—		—		—		—		—
Consumer – other		71		71		—		71		—		92
Leases				—		—		—		—		—
Total	$	32,567	$	16,082	$	12,951	$	29,033	$	3,834	$	25,412

	December 31, 2011
	Unpaid Principal Balance		Recorded Investment with No Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
Commercial:
Commercial	$	14,368	$	2,940	$	8,121	$	11,061	$	3,662	$	8,308
Commercial – credit card		—		—		—		—		—		—
Real estate:
Real estate – construction		90		50		—		50		—		15
Real estate – commercial		9,323		7,983		1,247		9,230		226		7,000
Real estate – residential		3,568		2,329		859		3,188		42		2,312
Real estate – HELOC		—		—		—		—		—		—
Consumer:
Consumer – credit card		—		—		—		—		—		—
Consumer – other		23		23		—		23		—		28
Leases		—		—		—		—		—		—
Total	$	27,372	$	13,325	$	10,227	$	23,552	$	3,930	$	17,393

17

UMB FINANCIAL CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

Troubled Debt Restructurings

The Company adopted ASU No. 2011-02, “A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring (TDR),” as of July 1, 2011. This update provides additional guidance on evaluating whether a modification or restructuring of a receivable is a TDR. A loan modification is considered a TDR when a concession had been granted to a debtor experiencing financial difficulties. The Company assessed loan modifications made to borrowers experiencing financial distress occurring after January 1, 2011. The Company’s modifications generally include interest rate adjustments, and amortization and maturity date extensions. These modifications allow the debtor short-term cash relief to allow them to improve their financial condition. The Company’s restructured loans are individually evaluated for impairment and evaluated as part of the allowance for loan loss as described above in the Allowance for Loan Losses section of this note. There was no significant impact to the allowance for loan losses as a result of adopting the new guidance.

The Company had $527.0 thousand in commitments to lend to borrowers with loan modifications classified as TDR’s. The Company made no TDR’s in the last 12 months that had payment defaults for the three or six month periods ended June 30, 2012.

This table provides a summary of loans restructured by class for the three and six months ended June 30, 2012 (in thousands):

	Three Months Ended June 30, 2012						Six Months Ended June 30, 2012
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial:
Commercial		1	$	2,132	$	2,139		2	$	2,932	$	2,939
Commercial – credit card		—		—		—		—		—		—
Real estate:
Real estate – construction		—		—		—		—		—		—
Real estate – commercial		—		—		—		—		—		—
Real estate – residential		—		—		—		—		—		—
Real estate – HELOC		—		—		—		—		—		—
Consumer:
Consumer – credit card		—		—		—		—		—		—
Consumer – other		—		—		—		—		—		—
Leases		—		—		—		—		—		—
Total		1	$	2,132	$	2,139		2	$	2,932	$	2,939

18

UMB FINANCIAL CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

5. Securities

Securities Available for Sale

This table provides detailed information about securities available for sale at June 30, 2012 and December 31, 2011 (in thousands):

June 30, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury	$	77,113	$	924	$	(4	)	$	78,033
U.S. Agencies		923,223		7,808		(1	)		931,030
Mortgage-backed		3,270,595		70,958		(1,328	)		3,340,225
State and political subdivisions		1,775,248		49,709		(1,278	)		1,823,679
Corporates		155,177		1,593		(13	)		156,757
Total	$	6,201,356	$	130,992	$	(2,624	)	$	6,329,724
December 31, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury	$	184,523	$	4,802	$	—		$	189,325
U.S. Agencies		1,615,637		16,434		(62	)		1,632,009
Mortgage-backed		2,437,282		55,985		(919	)		2,492,348
State and political subdivisions		1,642,844		51,336		(144	)		1,694,036
Corporates		99,620		566		(22	)		100,164
Total	$	5,979,906	$	129,123	$	(1,147	)	$	6,107,882

The following table presents contractual maturity information for securities available for sale at June 30, 2012 (in thousands):

	Amortized Cost		Fair Value
Due in 1 year or less	$	595,965	$	599,241
Due after 1 year through 5 years		1,612,012		1,644,199
Due after 5 years through 10 years		607,199		628,664
Due after 10 years		115,585		117,395
Total		2,930,761		2,989,499
Mortgage-backed securities		3,270,595		3,340,225
Total securities available for sale	$	6,201,356	$	6,329,724

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.

For the six months ended June 30, 2012, proceeds from the sales of securities available for sale were $974.6 million compared to $884.3 million for the same period in 2011. Securities transactions resulted in gross realized gains of $20.1 million and $13.6 million for the six months ended June 30, 2012 and 2011. The gross realized losses for the six months ended June 30, 2012 and 2011 were $0.3 million and $0.1 million, respectively.

19

UMB FINANCIAL CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

Trading Securities

The net unrealized gains on trading securities at June 30, 2012 and June 30, 2011 were $495.0 thousand and $746.9 thousand respectively, and were included in trading and investment banking income on the consolidated statements of income.

Securities Held to Maturity

The table below provides detailed information for securities held to maturity at June 30, 2012 and December 31, 2011 (in thousands):

June 30, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
State and political subdivisions	$	96,250	$	13,944	$	—	$	110,194
December 31, 2011
State and political subdivisions	$	89,246	$	13,041	$	—	$	102,287

The following table presents contractual maturity information for securities held to maturity at June 30, 2012 (in thousands):

	Amortized Cost		Fair Value
Due in 1 year or less	$	66	$	76
Due after 1 year through 5 years		22,399		25,644
Due after 5 years through 10 years		27,541		31,531
Due after 10 years		46,244		52,943
Total securities held to maturity	$	96,250	$	110,194

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 the first six months of 2012 or 2011.

Securities available for sale and held to maturity with a market value of $4.4 billion at June 30, 2012, and $5.4 billion at December 31, 2011, were pledged to secure U.S. Government deposits, other public deposits, certain trust deposits as required by law, and other potential borrowings.

The following table shows the Company’s available for sale 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 June 30, 2012 and December 31, 2011 (in thousands):

June 30, 2012	Less than 12 months					12 months or more					Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. Treasury	$	5,041	$	(4	)	$	—	$	—		$	5,041	$	(4	)
U.S. Agencies		5,033		(1	)		—		—			5,033		(1	)
Mortgage-backed		192,684		(1,328	)		—		—			192,684		(1,328	)
State and political subdivisions		176,943		(1,277	)		1,380		(1	)		178,323		(1,278	)
Corporates		11,217		(13	)		—		—			11,217		(13	)
Total temporarily- impaired debt securities available for sale	$	390,918	$	(2,623	)	$	1,380	$	(1	)	$	392,298	$	(2,624	)

20

UMB FINANCIAL CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

December 31, 2011	Less than 12 months					12 months or more					Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. Treasury	$	—	$	—		$	—	$	—		$	—	$	—
U.S. Agencies		66,992		(62	)		—		—			66,992		(62	)
Mortgage-backed		226,081		(919	)		—		—			226,081		(919	)
State and political subdivisions		45,918		(139	)		2,571		(5	)		48,489		(144	)
Corporates		12,471		(22	)		—		—			12,471		(22	)
Total temporarily- impaired debt securities available for sale	$	351,462	$	(1,142	)	$	2,571	$	(5	)	$	354,033	$	(1,147	)

The unrealized losses in the Company’s investments in direct obligations of U.S. treasury obligations, U.S. government agencies, federal agency mortgage-backed securities, municipal securities, and corporates were caused by changes in interest rates. Because the Company does not have the intent to sell these securities, it is more likely than not that the Company will not be required to sell these securities before a recovery of fair value. The Company expects to recover its cost basis in the securities and does not consider these investments to be other-than-temporarily impaired at June 30, 2012.

6. Goodwill and Other Intangibles

Changes in the carrying amount of goodwill for the periods ended June 30, 2012 and December 31, 2011 by operating segment are as follows (in thousands):

	Bank		Institutional Investment Management		Asset Servicing		Total
Balances as of January 1, 2011	$	144,109	$	47,529	$	19,476	$	211,114
Balances as of December 31, 2011	$	144,109	$	47,529	$	19,476	$	211,114
Balances as of January 1, 2012	$	144,109	$	47,529	$	19,476	$	211,114
Balances as of June 30, 2012	$	144,109	$	47,529	$	19,476	$	211,114

Following are the intangible assets that continue to be subject to amortization as of June 30, 2012 and December 31, 2011 (in thousands):

	As of June 30, 2012
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Core deposit intangible assets	$	36,497	$	29,535	$	6,962
Customer relationships		104,997		36,651		68,346
Other intangible assets		3,247		1,951		1,296
Total intangible assets	$	144,741	$	68,137	$	76,604
	As of December 31, 2011
Core deposit intangible assets	$	36,497	$	28,629	$	7,868
Customer relationships		105,544		30,645		74,899
Other intangible assets		3,247		1,683		1,564
Total intangible assets	$	145,288	$	60,957	$	84,331

21

UMB FINANCIAL CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

Following is the aggregate amortization expense recognized in each period (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Aggregate amortization expense	$	3,733	$	4,159	$	7,585	$	8,165

Estimated amortization expense of intangible assets on future years (in thousands):

For the six months ending December 31, 2012	$	7,242
For the year ending December 31, 2012		13,374
For the year ending December 31, 2013		12,302
For the year ending December 31, 2014		9,706
For the year ending December 31, 2015		8,433

7. Commitments, Contingencies and Guarantees

In the normal course of business, the Company is 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, futures contracts, forward foreign exchange contracts and spot foreign exchange contracts. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts 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. Many of the commitments expire without being drawn upon, therefore, the total amount of these commitments does not necessarily represent the future cash requirements of the Company.

The Company’s exposure to credit loss in the event of nonperformance by the counterparty 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.

The following table summarizes the Company’s off-balance sheet financial instruments.

Contract or Notional Amount (in thousands):

	June 30, 2012		December 31, 2011
Commitments to extend credit for loans (excluding credit card loans)	$	2,272,762	$	2,202,838
Commitments to extend credit under credit card loans		2,122,416		2,059,193
Commercial letters of credit		7,547		19,564
Standby letters of credit		315,679		320,119
Futures contracts		15,000		30,600
Forward foreign exchange contracts		59,950		119,200
Spot foreign exchange contracts		3,219		3,040

22

UMB FINANCIAL CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

8. Business Segment Reporting

The Company has strategically aligned its operations into the following four reportable segments (collectively, “Business Segments”): Bank, Payment Solutions, Institutional Investment Management, and Asset Servicing. Business segment financial results produced by the Company’s internal management accounting system are evaluated regularly by the Executive Committee in deciding how to allocate resources and assess performance for individual Business Segments. The Business Segments were redefined during the first quarter of 2012 to reflect changes in how executive management responsibilities were changed by the Executive Committee for each of the core businesses, the products and services provided and the types of customers served, and how financial information is currently evaluated by management. The management accounting system assigns balance sheet and income statement items to each business segment using methodologies that are refined on an ongoing basis. In 2011, the Business Segments were Commercial Financial Services, Institutional Financial Services, and Personal Financial Services. For comparability purposes, amounts in all periods presented are based on methodologies in effect at June 30, 2012. Previously reported results have been reclassified to conform to the current organizational structure.

The following summaries provide information about the activities of each segment:

The Bank provides a full range of banking services to commercial, retail, government and correspondent bank customers through the Company’s branches, call center, internet banking, and ATM network. Services include traditional commercial and consumer banking, treasury management, leasing, foreign exchange, merchant bankcard, wealth management, brokerage, insurance, capital markets, investment banking, corporate trust, and correspondent banking.

Payment Solutions provides consumer and commercial credit and debit card, prepaid debit card solutions, healthcare services, and institutional cash management. Healthcare services include health savings account and flexible savings account products for healthcare providers, third-party administrators and large employers.

Institutional Investment Management provides equity and fixed income investment strategies in the intermediary and institutional markets via mutual funds, traditional separate accounts and sub-advisory relationships.

Asset Servicing provides services to the asset management industry, supporting a range of investment products, including mutual funds, alternative investments and managed accounts. Services include fund administration, fund accounting, investor services, transfer agency, distribution, marketing, custody, alternative investment services, managed account services, and collective and multiple-series trust services.

23

UMB FINANCIAL CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

Business Segment Information

Segment financial results were as follows (in thousands):

	Three Months Ended June 30, 2012
	Bank		Payment Solutions		Institutional Investment Management		Asset Servicing		Total
Net interest income	$	69,447	$	10,558	$	1	$	367	$	80,373
Provision for loan losses		2,281		2,219		—		—		4,500
Noninterest income		50,574		17,172		23,671		18,809		110,226
Noninterest expense		94,626		16,513		16,271		17,276		144,686
Income before taxes		23,114		8,998		7,401		1,900		41,413
Income tax expense		6,411		2,817		2,167		853		12,248
Net income	$	16,703	$	6,181	$	5,234	$	1,047	$	29,165
Average assets	$	10,800,000	$	871,000	$	83,000	$	1,448,000	$	13,202,000

	Three Months Ended June 30, 2011
	Bank		Payment Solutions		Institutional Investment Management		Asset Servicing		Total
Net interest income	$	68,999	$	10,440	$	11	$	468	$	79,918
Provision for loan losses		2,868		2,732		—		—		5,600
Noninterest income		52,674		14,778		22,157		18,247		107,856
Noninterest expense		97,205		14,611		17,366		16,399		145,581
Income before taxes		21,600		7,875		4,802		2,316		36,593
Income tax expense		6,141		2,159		1,185		787		10,272
Net income	$	15,459	$	5,716	$	3,617	$	1,529	$	26,321
Average assets	$	10,044,000	$	683,000	$	89,000	$	1,547,000	$	12,363,000

	Six Months Ended June 30, 2012
	Bank		Payment Solutions		Institutional Investment Management		Asset Servicing		Total
Net interest income	$	137,499	$	21,282	$	3	$	678	$	159,462
Provision for loan losses		4,256		4,744		—		—		9,000
Noninterest income		121,029		32,743		49,798		38,957		242,527
Noninterest expense		188,117		31,339		33,192		33,942		286,590
Income before taxes		66,155		17,942		16,609		5,693		106,399
Income tax expense		18,406		5,491		4,800		2,170		30,867
Net income	$	47,749	$	12,451	$	11,809	$	3,523	$	75,532
Average assets	$	10,935,000	$	857,000	$	83,000	$	1,375,000	$	13,250,000

	Six Months Ended June 30, 2011
	Bank		Payment Solutions		Institutional Investment Management		Asset Servicing		Total
Net interest income	$	136,560	$	20,869	$	14	$	923	$	158,366
Provision for loan losses		6,975		5,725		—		—		12,700
Noninterest income		109,663		27,753		42,563		35,627		215,606
Noninterest expense		188,876		27,935		32,546		31,740		281,097
Income before taxes		50,372		14,962		10,031		4,810		80,175
Income tax expense		14,284		4,490		2,515		1,695		22,984
Net income	$	36,088	$	10,472	$	7,516	$	3,115	$	57,191
Average assets	$	10,172,000	$	665,000	$	87,000	$	1,560,000	$	12,484,000

24

UMB FINANCIAL CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

9. Fair Value Measurements

The following table presents information about the Company’s assets measured at fair value on a recurring basis as of June 30, 2012, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value.

Fair values determined by Level 1 inputs utilize quoted prices in active markets for identical assets and liabilities that the Company has the ability to access. Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the hierarchy. In such cases, the fair value is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Assets measured at fair value on a recurring basis as of June 30, 2012 and December 31, 2011 (in thousands):

			Fair Value Measurement at June 30, 2012 Using
Description	June 30, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
U.S. Treasury	$	400	$	400	$	—	$	—
U.S. Agencies		1,523		1,523		—		—
Mortgage-backed		27,092		—		27,092		—
State and political subdivisions		6,528		—		6,528		—
Trading – other		21,301		20,928		373		—
Trading securities		56,844		22,851		33,993		—
U.S. Treasury		78,033		78,033		—		—
U.S. Agencies		931,030		931,030		—		—
Mortgage-backed		3,340,225		—		3,340,225		—
State and political subdivisions		1,823,679		—		1,823,679		—
Corporates		156,757		156,757		—		—
Available for sale securities		6,329,724		1,165,820		5,163,904		—
Total	$	6,386,568	$	1,188,671	$	5,197,897	$	—
Liabilities
Contingent consideration liability	$	57,792	$	—	$	—	$	57,792

25

UMB FINANCIAL CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

			Fair Value Measurement at December 31, 2011 Using
Description	December 31, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
U.S. Treasury	$	400	$	400	$	—	$	—
U.S. Agencies		1,517		1,517		—		—
Mortgage-backed		29,641		—		29,641		—
State and political subdivisions		7,252		—		7,252		—
Trading – other		19,332		19,317		15		—
Trading securities		58,142		21,234		36,908		—
U.S. Treasury		189,325		189,325		—		—
U.S. Agencies		1,632,009		1,632,009		—		—
Mortgage-backed		2,492,348		—		2,492,348		—
State and political subdivisions		1,694,036		—		1,694,036		—
Corporates		100,164		100,164		—		—
Available for sale securities		6,107,882		1,921,498		4,186,384		—
Total	$	6,166,024	$	1,942,732	$	4,223,292	$	—
Liabilities
Contingent consideration liability	$	72,046	$	—	$	—	$	72,046

The following table reconciles the beginning and ending balances of the contingent consideration liability:

	Six Months Ended June 30,
	2012			2011
Beginning Balance	$	72,046		$	77,719
Payment of contingent considerations on acquisitions		(7,651	)		(2,615	)
Income from fair value adjustments		(6,603	)		—
Ending Balance	$	57,792		$	75,104

The following table presents certain quantitative information about the significant unobservable input used in the fair value measurement for the contingent consideration liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

Description	Valuation Techniques	Significant Unobservable Inputs		Range (Weighted Average)
Liabilities
Contingent consideration liability	Present value techniques		Revenue growth percentage		5% - 36%

An increase in the revenue growth percentage may result in a significantly higher estimated fair value of the contingent consideration liability. Alternatively, a decrease in the revenue growth percentage may result in a significantly lower estimated fair value of the contingent consideration liability.

26

UMB FINANCIAL CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

Valuation methods for instruments measured at fair value on a recurring basis

The following methods and assumptions were used to estimate the fair value of each class of financial instruments measured on a recurring basis:

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 (including financial futures), 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.

Contingent Consideration The fair value of contingent consideration liabilities are derived from a discounted cash flow model of future contingent payments. The valuation of these liabilities are estimated by a collaborative effort of the Company’s mergers and acquisitions group, business unit management, and the corporate accounting group. These groups report primarily to the Company’s Chief Financial Officer. These future contingent payments are calculated based on estimates of future income and expense from each acquisition. These estimated cash flows are projected by the business unit management and reviewed by the mergers and acquisitions group. To obtain a current valuation of these projected cash flows, an expected present value technique is utilized to calculate a discount rate. The cash flow projections and discount rates are reviewed quarterly and updated as market conditions necessitate. Potential valuation adjustments are made as future income and expense projections for each acquisition are made which affect the calculation of the related contingent consideration payment. These adjustments are recorded through noninterest income and expense.

Assets measured at fair value on a non-recurring basis as of June 30, 2012 and December 31, 2011 (in thousands):

			Fair Value Measurement at June 30, 2012 Using
Description	June 30, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses) Recognized During the Six Months Ended June 30
Impaired loans	$	9,117	$	—	$	—	$	9,117	$	96
Other real estate owned		1,093		—		—		1,093	$	(46	)
Total	$	10,210	$	—	$	—	$	10,210	$	50
			Fair Value Measurement at December 31, 2011 Using
Description	December 31, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses) Recognized During the Twelve  Months Ended December 31
Impaired loans	$	6,296	$	—	$	—	$	6,296	$	(1,370	)
Other real estate owned		5,909		—		—		5,909	$	(1,065	)
Total	$	12,505	$	—	$	—	$	12,505	$	(2,435	)

Valuation methods for instruments measured at fair value on a nonrecurring basis

27

UMB FINANCIAL CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

The following methods and assumptions were used to estimate the fair value of each class of financial instruments measured on a non-recurring basis:

Impaired loans While the overall loan portfolio is not carried at fair value, adjustments are recorded on certain loans to reflect partial write-downs that are based on the value of the underlying collateral. In determining the value of real estate collateral, the Director of Property Management, who reports to the Chief Risk Officer, obtains external appraisals. The external appraisals are generally based on recent sales of comparable properties which are then adjusted for the unique characteristics of the property being valued. Upon receiving the external appraisal, the Director of Property Management in collaboration with the Company’s credit department led by the Chief Credit Officer review the appraisal to determine if the appraisal is a reasonable basis for the value of the property based upon historical experience and detailed knowledge of the specific property and location. In the case of non-real estate collateral, reliance is placed on a variety of sources, including external estimates of value and judgments based on the experience and expertise of internal specialists within the Company’s property management group and the Company’s credit department. The valuation of the impaired loans is reviewed on a quarterly basis. Because many of these inputs are not observable, the measurements are classified as Level 3.

Other real estate owned Other real estate owned consists of loan collateral which has been repossessed through foreclosure. This collateral is comprised of commercial and residential real estate and other non-real estate property, including auto, recreational and marine vehicles. Other real estate owned is recorded as held for sale initially at the lower of the loan balance or fair value of the collateral. The initial valuation of the foreclosed property is obtained through an appraisal process similar to the process described in the impaired loans paragraph above. Subsequent to foreclosure, valuations are reviewed quarterly and updated periodically, and the assets may be marked down further, reflecting a new cost basis. Fair value measurements may be based upon appraisals or third-party price opinions and, accordingly, those measurements may be classified as Level 2. Other fair value measurements may be based on internally developed pricing methods, and those measurements may be classified as Level 3.

Fair value disclosures require disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis. The estimated fair value of the Company’s financial instruments at June 30, 2012 and December 31, 2011 are as follows (in millions):

			Fair Value Measurement at June 30, 2012 Using
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Estimated Fair Value
FINANCIAL ASSETS
Securities held to maturity	$	96.3	$	—	$	110.2	$	—	$	110.2
Federal Reserve Bank and other stock		21.7		—		21.7		—		21.7
Loans (exclusive of allowance for loan loss)		5,326.6		—		5,413.2		—		5,413.2
FINANCIAL LIABILITIES
Time deposits		1,191.4		—		1,199.0		—		1,199.0
Long-term debt		5.3		—		5.4		—		5.4
OFF-BALANCE SHEET ARRANGEMENTS
Commitments to extend credit for loans										2.7
Commercial letters of credit										0.1
Standby letters of credit										1.1

28

UMB FINANCIAL CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

			Fair Value Measurement at December 31, 2011 Using
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Estimated Fair Value
FINANCIAL ASSETS
Securities held to maturity	$	89.2	$	—	$	102.3	$	—	$	102.3
Federal Reserve Bank and other stock		22.2		—		22.2		—		22.2
Loans (exclusive of allowance for loan loss)		4,898.5		—		5,042.0		—		5,042.0
FINANCIAL LIABILITIES
Time deposits		1,548.4		—		1,557.8		—		1,557.8
Long-term debt		6.5		—		6.8		—		6.8
OFF-BALANCE SHEET ARRANGEMENTS
Commitments to extend credit for loans										5.8
Commercial letters of credit										0.3
Standby letters of credit										2.2

The fair values of cash and short-term investments, demand and savings deposits, federal funds and repurchase agreements, and short-term debt approximate the carrying values.

Securities Held to Maturity Fair value of held-to-maturity securities are estimated by discounting the future cash flows using the current rates at which similar investments would be made to borrowers with similar credit ratings and for the same remaining maturities.

Federal Reserve Bank and Other Stock Amount consists of Federal Reserve Bank stock held by the Company’s affiliate banks and other miscellaneous investments. The fair value is considered to be the carrying value because no readily determinable market exists for these investments.

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 ratings and for the same remaining maturities.

Time Deposits 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.

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 fair value estimates presented herein are based on pertinent information available to management as of June 30, 2012 and December 31, 2011. 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.

In the previously filed Form 10-Q for the period ended June 30, 2011, the Company inadvertently excluded certain disclosures regarding the fair value of the contingent consideration liability from this footnote as required by ASC 820, Fair Value Measurements and Disclosures. As a result, the accompanying 2011 fair value footnote has been amended to include the appropriate disclosures. There is no quantitative impact on the financial statements of the Company as a result of this additional disclosure.

29

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This review highlights the material changes in the results of operations and changes in financial condition for the three-month and six-month periods ended June 30, 2012. It should be read in conjunction with the accompanying condensed consolidated financial statements, notes to condensed consolidated financial statements and other financial statistics appearing elsewhere in this report. Results of operations for the periods included in this review are not necessarily indicative of results to be attained during any future period.

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

The information included or incorporated by reference in this report contains forward-looking statements of expected future developments within the meaning of and pursuant to the safe harbor provisions established by Section 21E of the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may refer to financial condition, results of operations, plans, objectives, future financial performance and business of the Company, including, without limitation:

• Statements that are not historical in nature; and

• Statements preceded by, followed by or that include the words “believes,” “expects,” “may,” “should,” “could,” “anticipates,” “estimates,” “intends,” or similar words or expressions.

Forward-looking statements are not guarantees of future performance or results. You are cautioned not to put undue reliance on any forward-looking statement which speaks only as of the date it was made. Forward-looking statements reflect management’s expectations and are based on currently available data; however, they involve risks, uncertainties and assumptions. Actual results may differ materially from those contemplated by the forward-looking statements due to, among others, the following factors:

• General economic and political conditions, either nationally, internationally or in the Company’s footprint, may be less favorable than expected;

• Legislative or regulatory changes;

• Changes in the interest rate environment;

• Changes in the securities markets impacting mutual fund performance and flows;

• Changes in operations;

• The ability to successfully and timely integrate acquisitions;

• Competitive pressures among financial services companies may increase significantly;

• Changes in technology may be more difficult or expensive than anticipated;

• Changes in the ability of customers to repay loans;

• Changes in loan demand may adversely affect liquidity needs; and

• Changes in employee costs.

Any forward-looking statements should be read in conjunction with information about risks and uncertainties set forth in this report and in documents incorporated herein by reference. 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.

30

Overview

The Company focuses on the following four core strategies. Management believes these strategies will guide our efforts to achieving our vision, to deliver the Unparalleled Customer Experience, all while maintaining a focus to improve net income and strengthen the balance sheet.

The first strategy is to maintain high quality through a strong balance sheet, solid credit quality, a low cost of funding, and effective risk management. The strength in the balance sheet can be seen in the solid credit quality of the earning assets and the Company’s continued growth in low cost funding. At June 30, 2012, the Company’s nonperforming assets as a percentage of total assets was 0.28 percent. As a percentage of loans, nonperforming loans increased to 0.58 percent as compared to 0.33 percent on June 30, 2011. While the Company experienced a slight increase, these ratios are amongst the best in the industry. These credit quality ratios were achieved while maintaining positive directional growth in average earning assets, which increased 6.6% from June 30, 2011, driven by a 29.2 percent increase in average noninterest-bearing demand deposits compared to June 30, 2011.

The second strategy is to deliver profitable and sustainable growth by accelerating fee businesses, growing quality earning assets, maximizing efficiencies, and maintaining sales leverage. The Company’s acceleration of fee businesses is apparent with the increase in trust and securities processing. Trust and securities processing income increased $2.1 million, or 4.0 percent, for the three months ended June 30, 2012 compared to the same period in 2011. The increase in trust and securities processing income was primarily due to a $0.5 million, or 2.9 percent, increase in fund administration and custody services and a $0.6 million, or 3.5 percent, increase in fees related to institutional and personal investment management services. Also notable and continuing to push industry trends, the Company produced double digit loan growth. While maintaining the aforementioned credit ratios, the Company’s June 30, 2012 average loans increased $492.8 million, or 10.4 percent, as compared to the same three month period one year ago.

The third strategy is to maintain diversified revenue streams. The emphasis on fee-based operations helps reduce the Company’s exposure to changes in interest rates. During the second quarter of 2012, noninterest income increased $2.4 million, or 2.2 percent, compared to the same period of 2011. The Company continues to emphasize its asset management, brokerage, bankcard services, health care services, and treasury management businesses. In particular, during the second quarter of 2012, this favorable change is primarily attributable to increased trust and securities processing income. At June 30, 2012, noninterest income represented 57.8 percent of total revenues, as compared to 57.4 percent at June 30, 2011.

The fourth strategy is a focus on capital management. The Company places a significant emphasis on the maintenance of a strong capital position, which management believes 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. The Company continues to maximize shareholder value through a mix of reinvesting in organic growth, investing in acquisitions, evaluating increased dividends over time and utilizing a share buy-back strategy when appropriate. At June 30, 2012, the Company had $1.3 billion in total shareholders’ equity. This is an increase of $119.0 million, or 10.5 percent, compared to total shareholders’ equity at June 30, 2011. At June 30, 2012, the Company had a total risk-based capital ratio of 12.59 percent, which is higher than the 10 percent regulatory minimum to be considered well-capitalized. The Company repurchased 56,489 shares at an average price of $46.35 per share during the second quarter of 2012.

Earnings Summary

The Company recorded consolidated net income of $29.2 million for the three-month period ended June 30, 2012, compared to $26.3 million for the same period a year earlier. This represents a 10.8 percent increase over the three-month period ended June 30, 2011. Basic earnings per share for the second quarter of 2012 were $0.73 per share ($0.72 per share fully-diluted) compared to $0.66 per share ($0.65 per share fully-diluted) for the second quarter of 2011. Return on average assets and return on average common shareholders’ equity for the three-month period ended June 30, 2012 were 0.89 and 9.42 percent, respectively, compared to 0.85 and 9.37 percent for the three-month period ended June 30, 2011.

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The Company recorded consolidated net income of $75.5 million for the six-month period ended June 30, 2012, compared to $57.2 million for the same period a year earlier. This represents a 32.1 percent increase over the six-month period ended June 30, 2011. Basic earnings per share for the six-month period ended June 30, 2012 were $1.89 per share ($1.87 per share fully-diluted) compared to $1.43 per share ($1.42 per share fully-diluted) for the period in 2011. Return on average assets and return on average common shareholders’ equity for the six-month period ended June 30, 2012 were 1.15 and 12.36 percent, respectively, compared to 0.92 and 10.47 percent for the same period in 2011.

Net interest income for the three and six-month periods ended June 30, 2012 increased $0.5 million, or 0.6 percent, and $1.1 million, or 0.7 percent, respectively, compared to the same period in 2011. For the three-month period ended June 30, 2012, average earning assets increased by $839.3 million, or 7.4 percent, and for the six-month period ended June 30, 2012, they increased by $755.9 million, or 6.6 percent, compared to the same periods in 2011. Net interest margin, on a tax-equivalent basis, decreased to 2.82 percent and 2.79 percent for the three and six-months periods ended June 30, 2012, compared to 2.98 percent and 2.94 percent for the same periods in 2011. These changes are discussed in greater detail below under Net Interest Income.

The provision for loan losses decreased by $1.1 million and $3.7 million for the three and six-month periods ended June 30, 2012, compared to the same periods in 2011. These changes are a direct result of applying the Company’s methodology for computing the allowance for loan losses. With the decreased provision, the allowance for loan losses as a percentage of total loans decreased by 16 basis points to 1.37 percent as of June 30, 2012, compared to June 30, 2011. For a description of the Company’s methodology for computing the allowance for loan losses, please see the summary discussion of the Allowance for Loan Losses within the Critical Accounting Policies and Estimates subsection of the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section in the Company’s 2011 Annual Report on Form 10-K.

Noninterest income increased by $2.4 million, or 2.2 percent, for the three-month period ended June 30, 2012 and increased by $26.9 million, or 12.5 percent, for the six-month period ended June 30, 2012, compared to the same periods one year ago. These increases are discussed in greater detail below under Noninterest Income.

Noninterest expense decreased by $0.9 million, or 0.6 percent, for the three-month period ended June 30, 2012, and increased by $5.5 million, or 2.0 percent, for the six-month period ended June 30, 2012, compared to the same periods in 2011. These increases are discussed in greater detail below under Noninterest Expense.

Net Interest Income

Net interest income is a significant source of the Company’s earnings and represents the amount by which interest income on earning assets exceeds the interest expense paid on liabilities. The volume of interest-earning assets and the related funding sources, the overall mix of these assets and liabilities, and the rates paid on each affect net interest income. For the three-month period ended June 30, 2012, average earning assets increased by $839.3 million, or 7.4 percent, and for the six-month period ended June 30, 2012, they increased by $755.9 million, or 6.6 percent, compared to the same periods in 2011. Net interest margin, on a tax-equivalent basis, decreased to 2.82 percent and 2.79 percent for the three and six-months periods ended June 30, 2012, compared to 2.98 percent and 2.94 percent for the same periods in 2011.

Table 1 shows the impact of earning asset rate changes compared to changes in the cost of interest-bearing liabilities. The Company continues to experience a repricing of these earning assets and interest-bearing liabilities during the recent interest rate cycle. While the Company continues to see declining rates, it has been able to improve net interest income through volume. As illustrated in this table, net interest spread for the three months ended June 30, 2012 decreased by 15 basis points and net interest margin decreased by 16 basis points compared to the same period in 2011. Net interest spread for the six months ended June 30, 2012 decreased by 15 basis points and net interest margin decreased by 15 basis points compared to the same period in 2011. These results are primarily due to an unfavorable rate variance, offset by a favorable volume variance on loans and securities. The combined impact of these variances has led to a decrease in interest expense and flat interest income, or an increase in the Company’s net interest income as compare to results one year ago.

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The favorable rate variance on deposits is bolstered by the contribution from free funds. For the impact of the contribution from free funds, see the Analysis of Net Interest Margin within Table 2 below. Table 2 also illustrates how the changes in volume and rates have resulted in an increase in net interest income.

Table 1

AVERAGE BALANCES/YIELDS AND RATES (tax-equivalent basis) (unaudited, dollars in thousands)

The following table presents, for the periods indicated, the average earning assets and resulting yields, as well as the average interest-bearing liabilities and resulting yields, expressed in both dollars and rates. All average balances are daily average balances. The average yield on earning assets without the tax equivalent basis adjustment would have been 2.82 percent for the three-month period ended June 30, 2012 and 3.06 percent for the same period in 2011. The average yield on earning assets without the tax equivalent basis adjustment would have been 2.80 percent for the six-month period ended June 30, 2012 and 3.03 percent for the same period in 2011.

	Three Months Ended June 30,
	2012					2011
	Average Balance		Average Yield/Rate			Average Balance		Average Yield/Rate
Assets
Loans, net of unearned interest	$	5,216,477		4.17	%	$	4,723,668		4.68	%
Securities:
Taxable		4,616,169		1.85			4,281,896		2.07
Tax-exempt		1,830,468		3.16			1,386,995		3.65
Total securities		6,446,637		2.22			5,668,891		2.46
Federal funds and resell agreements		24,908		0.40			16,392		0.32
Interest-bearing due from banks		432,693		0.34			872,967		0.39
Trading		49,789		2.80