Good morning, ladies and gentlemen and thank you for standing by. And welcome to the UMB Financial Second Quarter 2013 Financial Results Conference Call. During today’s presentation, all parties will be in a listen-only mode, and following the presentation, there will be a question-and-answer session and instructions will be given at that time. (Operator Instructions) And as a reminder, this call is being recorded today, July 24, 2013. I would now like to turn the call over to Kay McMillan. Please go ahead, ma’am.

Good morning, everyone, and thank you for joining us for our conference call and webcast regarding our second quarter 2013 results. Before we begin, let me remind you that our comments in this conference call contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements rely on a number of assumptions concerning future events and are subject to risks and uncertainties, which could cause actual results to differ materially from those indicated in our statements made during this call. While the management of UMB believes our assumptions are reasonable, UMB cautions that material changes in interest rates, the equity markets, general economic conditions as they relate to the company’s loan and fee-based customers, competition in the financial services industry, the ability to integrate acquisitions and other risks and uncertainties, which are detailed in our filings with the SEC may cause actual results to differ materially from those discussed in this call. UMB has no duty to update such statements and undertakes no obligation to update or supplement forward-looking statements that become untrue because of new information, future events or otherwise. By now, we hope most of you on the call who are listening via webcast have had a chance to review our earnings release, which was issued yesterday afternoon. If not, you will find it on our website at umb.com. On the call today are Mariner Kemper, Chairman and Chief Executive Officer; Peter deSilva, President and Chief Operating Officer; and Mike Hagedorn, our Chief Financial Officer. The agenda for today’s call is as as follows: Mariner will provide high level commentary on our results and Mike will review the details of our financials. Then Peter will review key fee income business drivers. And following that, we’ll be happy to answer your questions. Now, I’ll turn the call over to Mariner Kemper.

Thank you, Kay. Good morning everyone and thank you for joining us today. Our second quarter results continued to reflect the strong performance by our business units. Net income was $29.9 million, or $0.74 per diluted share, earned on total quarterly revenue of $195.9 million and return on average equity of 9.31%. Net interest income for the second quarter grew modestly increasing 2.4% compared to the same quarter last year. Mike will discuss this in detail later in the call, but I am pleased that growth in our earning assets and improved deposit pricing helped drive this increase. Non-interest income increased 3.1% to $113.6 million driven primarily by a nearly 14% increase in trust and securities processing revenue, which reflects solid performance from our fee businesses. The impact from the change in gain on sale of securities compared to the second quarter of last year partially overshadowed these results. Non-interest income was 58% of total revenue for the quarter. Non-interest expense for the quarter was $150.3 million, an increase of less than 4% compared to the same period a year ago, which combined with our revenue results drove an efficiency ratio of 73.5%. On a linked quarter basis, expenses remained flat. Once again this quarter, I am happy to report continued strong loan growth. Average net loans at June 30, 2013 were 18.1% higher than a year ago. On a linked quarter basis, this is an increase of 5.9%. This is our 13th consecutive quarter of loan growth and sixth consecutive quarter of year-over-year double-digit loan growth. Utilization moved up slightly this quarter coming in at 31% for the quarter compared to a 29% a year ago. Compared to the industry, more than 1,500 regulated financial institutions that had announced results as of July 22, 2013 reported an increase in…

Thanks, Mariner and welcome everyone. This morning I will review our company’s financials and provide a more detailed summary of our four business segments. During the second quarter, our average balance sheet grew 12.7% and average earning assets increased 13.2% to $13.8 billion. As we look to replace the roll-off from the investment portfolio nearly 60% of their earning asset growth came from loans. The average balance in our investment portfolio for the quarter was $7.2 billion, 10% higher than the second quarter a year ago. The average yield on securities was 1.95%, a decrease of 3 basis points from last quarter and a decrease of 27 basis points from the second quarter of 2012. Activity during the second quarter included the roll-off of $340 million in core portfolio of securities at an average yield of 2.13%. In turn we purchased 815 million of securities at an average yield of 1.41%. Continued changes in the portfolio combined with updated key assumptions lengthened the effective duration to 47 months from 40 months on a linked quarter basis. That said we do have a bias towards shortening the portfolio’s duration as securities mature which had flexibility to fund loan growth. During the next three months, $269 million of core investments with an average yield of 1.81% will cash flow and during the next 12 months $1.2 billion of core investments with an average yield of 1.88% will cash flow. The securities mix in our portfolio remained approximately same as the first quarter. Mortgage-backed securities dropped slightly to 45% of the portfolio, while municipal securities grew to 31%. 69% of our total loan portfolio is expected to re-price or mature in the next 12 months and 58% will re-price, mature or amortize next quarter. Allowance for loan losses is $71.6 million and allowance…

Thanks, Mike and good morning everyone. As Mariner mentioned earlier, fee income represented 58% of total revenue this quarter. As a point of comparison the industry median level of fee income to total revenue in the first quarter was 18.5% according to SNL Financial. To provide some additional context to our results, let me discussed primary drivers of fee income and highlight some of the developments in each of our operating segments. Let me begin with institutional investment management, which is comprised the Scout Investments, equity and fixed income mutual funds, and separately managed investment accounts. Revenue in this segment was driven by average mutual fund and separately managed account assets, the mix of those assets, and net flows along with the timing of those flows throughout the quarter. And finally, equity and fixed income market performance. To add context, the S&P 500 increased 2.9% and the MSCI decreased 0.8% for the second quarter. Solid performance in net flows combined to contribute to another good quarter for Scout, despite sometimes challenging financial markets. At quarter end, assets under management stood at $26.3 billion, an increase of 17.5% compared to the second quarter of 2012. Scout fixed income mutual funds closed the quarter with assets of $1.3 billion and Scout equity mutual funds with assets of $11.1 billion. Assets in Scout fixed income separate accounts totaled $11.6 billion and Scout equity separate accounts totaled $2.3 billion in assets under management. If you look at our flows separated by equity and fixed income across all of our Scout products, including the Scout funds and separately managed accounts. During the second quarter, the assets in Scout equity strategies increased by $87.8 million. Components of this increase include $176.5 million in positive flows for the Scout equity mutual funds led by the Scout International…

Thank you very much. (Operator Instructions) And our first question does come from the line of Chris McGratty with KBW.

Good morning guys.

Good morning, Chris.

Mariner, you had three straight, I think 20% annualized growth quarters. I was wondering if you could speak to pipelines today, mid-year and whether you think this level of growth maybe sustainable in the back half of the year?

Sure. We continue to have a strong pipeline activities are strong and the pipeline continues to stay strong.

Okay. So, is this a fair level of growth or should we see, is there any seasonality that in the back half of the year we should expect?

No seasonality to it. And like I said, I think comparable pipeline strength to previous quarters.

Okay. And then on acquisitions, I was wondering if we have seen a few bank deals in the past couple of weeks, you guys obviously have a strong currency to go out and do something. Is that something that you are contemplating at this point and are there any markets, particularly maybe some of your newer growth markets that you may be interested in?

Sure. For folks that have followed us know that we first think about culture and fit. And with that being said we would be interested in doing a bank deal in our footprint in our larger markets that are showing growth and the strength for us, and I have stable and growing population basis. So, we would like to do a deal and we are always looking.

I mean, in terms of size and then I’ll jump out, what’s the type of bank, what’s the profile of the bank obviously the culture is important, well how big of a bank would you contemplate?

We don’t really give that kind of guidance. So, it will be probably stepping out a bit to give that kind of information, but that’s probably been all I can do for you.

Okay, thanks.

Yes.

And our next question does come from the line of Matt Olney with Stephens.

Hi, guys. This is actually Tyler in for Matt. I just hopped on pretty late, so I apologize if you’ve already covered this in your prepared remarks. But I was wondering if you could give an update on the progress and success on your new Dallas loan office you opened up I think two quarters ago and then how much of the 2Q growth was attributable to that new office?

So, pretty simple, it’s incredibly early. So, there is really – there is really not a lot to report. We are excited about that we hired a handful of people down there, locals, high-profile local people to help us build the business. We have signed a lease that’s about it. We have some business that we had. We have been calling there for 30 plus years, so we have a book of business, a base of business to work from, but at this point we signed a lease and have a team on the ground and look for future quarters and future news on that one.

Okay, thanks. And then within your investment management business, can you remind us where you are in terms of adding new personnel and maybe any new products coming down the pipeline?

Hey, Tyler, this is Peter. In the last couple of years, we’ve rolled out a number of new products including emerging markets recently we’ve rolled out an unconstrained bond fund in the last 18 months and we continue to look at opportunities to do that. The new products we’ve rolled out have done extraordinarily well particularly the unconstrained bond fund, which is the fastest fund we’ve ever launched over $500 million in AUM. We continue to look at opportunities for new products. We are very deliberate in the areas that we choose to launch new products in and I think you will continue to see new products from us, but I don’t have much else to say about that this morning.

Okay, alright. Thanks guys.

And our next question does come from the line of Peyton Green with Sterne Agee.

Yes, good morning. I was wondering if you could talk a little bit about, Mike possibly about the earning asset mix shift you would like to see over the coming year, I know I guess loan growth represented about 58% to 60% of the overall year-over-year increase in earning assets and I’m just wondering might we see an acceleration in that given where rates are and also the robust pipeline that you got?

Yes, I’m going to point you backwards on that one, if you look backwards in time, we’ve been able to grow roughly about $300 million in loans and as Mariner said the pipeline is roughly the same, so we are looking for somewhere in the neighborhood of $900 million to a $1 billion a year right now. So, that will give you a good idea that’s about equal to what’s rolling off the investment portfolio, so strategically we’d like to replace that roll-off with high quality, higher yielding loans. I would caution you too, a pipeline is a pipeline, but so that’s if the past is any indication of the future that’s a fair statement.

And Mariner, on the loan utilization I mean this is the first quarter that’s really picked up was that because the new volume came on and higher utilization or did you see existing customers tap lines more.

Yes, I would say that’s just indication of the slight recovery that we see across the economy because as you know as well paid in our underwriting is now changed, so that’s more of an indicator of economic activity than it is a change in the way we are underwriting.

Okay. And then I mean just thinking about operating leverage going forward, I mean if I look at the expense basic grew 11% year-over-year in the fourth quarter and about 6% in the first and now 4%. Should we still expect a continued decrease in the year-over-year growth rate and overhead?

I think I’d point you back to our previous comments about our commitment to reduce expense growth and without any specific number there, we are committed to keeping that below 4.9% where it was last year.

Okay, okay. And then I guess in terms of just the overall strategic opportunities that you are seeing, I mean, you mentioned that you would be willing to do a bank deal, but it seems to me that over the last few years the most attractive and probably best acquisitions that you have done maybe in your history have been on the non-bank or financial services end. How would you kind of rank between the two?

Well, I think so the ones we’ve done in the non-bank space have given us scale that closed gaps, they’ve added real value to the offering or changed the complexity of a business. You look back on the last couple of bank deals we’ve done, you could call them bank acquisitions, but they’ve effectively really been branch acquisitions. And so if we’re going to do a bank deal, we are going to do a bank deal that is more of a bank deal than a branch deal. So, without getting into numbers and size, it’s certainly going to be one that gives us breadth and depth as opposed to a branch if that’s helpful.

Okay. And then I guess I mean just a follow-up on that I mean your organic growth is stronger than it’s ever been on the company’s history, why bother with changing something through a bank acquisition?

That’s fair and certainly that is our primary goals to keep doing it the way we are doing it, but as it relates to geographic expansion in some of the places where we like to build scale and acquisition would be very helpful in building scale and building the foundation for future growth. So, whether it’s a new market we are in, whether it’s Dallas or whether it’s growth markets for us like Denver or Phoenix, if we can find a deal in markets like that, that help give us foundational scale to help build from. That would be something we would be interested in doing if we can find it.

Okay. And then maybe this is for Peter, but the bankcard fee line was down year-over-year, that was down linked quarter and I was just wondering if there was any – what might have caused that that?

Interchange was up $1.7 million.

I am trying to figure out which line you are looking at…

It may have been that last year we had a one-time benefit from Visa contract expansion that we signed. And we also had the benefit from the FAS91 changes that happened in the second quarter of last year. That’s the primary driver.

Okay. And then linked quarter, was there any reason for it to fall?

Not particularly, mix maybe of the healthcare, which is at a lower level. Healthcare is strong typically in the first and fourth quarters and so it may have been a mixed shift, but nothing that strikes me.

Consumer spend has been a little late, I guess.

Yes.

Nothing material.

Nothing that strikes me unusual.

Okay, great. Thank you very much.

(Operator Instructions) And at this time, I am not showing any further questions. I would like to turn the call back to management for any closing comments.

Thank you very much for your interest in UMB today. This call can be accessed via a replay at our website beginning in about two hours, and it will run through August 8. Again, we appreciate your interest and time. Thank you.

Thank you. Ladies and gentlemen, that will conclude the conference for today. We do thank you for your participation. You may now disconnect your lines at this time.