Good day, ladies and gentlemen and welcome to the UMB Financial Second Quarter 2014 Financial Results Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Ms. Abby Wendel, Director of Investor Relations. Please go ahead, Ms. Wendel.

Thank you. Good morning, everyone and thank you for joining us for our conference call and webcast regarding our second quarter 2014 financial results. Before we begin, let me remind you that today’s presentation contains forward-looking statements, all of which are subject to assumptions, risks and uncertainties. Actual results and other future events, circumstances or aspirations may differ materially from those set forth in any forward-looking statement. Information about factors that may cause them to differ is contained in our 10-K for 2013 and subsequent 10-Qs and other SEC filings. Forward-looking statements made in today’s presentation speak only as of today and we undertake no obligation to update them. By now, we hope most of you on the call who are listening via webcast have had a chance to review our earnings release that was issued yesterday afternoon. If not, you will find it on our website at umbfinancial.com. Also, we have again published some supporting slides on our website that contains some of the drivers and metrics we will discuss today to make it a bit easier for you to follow along and to review afterwards. A link to the slides can be found at umbfinancial.com in the About UMB section or in the Investors section under News and Events, Presentations. On the call today are Mariner Kemper, Chairman and Chief Executive Officer; Peter deSilva, President and Chief Operating Officer; Mike Hagedorn, President and Chief Executive Officer of UMB Bank and Brian Walker, Chief Financial Officer. The agenda for today’s call is as follows: Mariner will provide high-level commentary on our results and Brian will review several details from our financials; then Mike and Peter will review results from our business segments. Following that, we will be happy to answer your questions. Now, I will turn the call over to Mariner Kemper.

Thank you, Abby. Good morning, everyone and thank you for joining us today. As Abby mentioned, we announced our financial results for the second quarter yesterday afternoon. As we hope you read in our press release and accompanying slide deck, we finished the first half of the year with another good quarter. Net income was $34.7 million or $0.76 per diluted share, an increase of 15.8% compared to the second quarter of 2013 on total revenue of $220.2 million. Return on average assets was 0.89%. Return on average equity was 8.77% and our efficiency ratio for the quarter was 73.3%. To better understand the results for the second quarter, there are several specific items you should be aware of as you have analyzed our numbers. First, we resolved the objections to our calculation of the earn-out amount and related incentive bonus compensation with the sellers of Prairie Capital Management during the quarter. We added $5.3 million to the contingency reserve bringing the total to $20.3 million for the year. Second, we recorded $3.5 million in unrealized gains on several of Prairie Capital’s investments in the second quarter bringing the total for the past four quarters to $22.5 million. Unrealized gains in the first quarter of 2014 were $2.5 million and no unrealized gains were recorded in the second quarter of 2013. The difference between the total contingency reserve and the total unrealized gains is $2.2 million in gains, which also represents the return to UMB generated by the initial investment in the underlying funds. Third, we have recognized a relatively small expense adjustment increase to the contingency consideration liabilities for Reams and Prairie Capital of $800,000 in the quarter. In the second quarter of 2013, we reported a nominal expense adjustment of just 12,000. Finally, in other income, we recognized…

Thanks Mariner and welcome everyone. Picking up Mariner’s comments on the income statement, net income increased 15.8% year-over-year and 48.1% on the linked quarter basis. Loan growth generated increases in net interest income and our fee based businesses drove the increase in non-interest income. This is a testament to the strength of our diversified business model. Fee income continues to play an important role to UMB success. Interest income growth came from volume and mix changes in total earning assets even though yield on loans was 3.51% compared to 3.69% a year ago. As we have discussed in prior conference calls, our loans are tied primarily to short-term interest rate, although we have been willing to extend slightly longer term debt to exchange from modestly higher rate. As of June 30, 68% of our loans were repriced, amortized or mature in the next 12 months. 56% were repriced, amortized or mature in the next quarter. The available for sale portion of our investment portfolio which represents 96% of total securities now has an average life of 46.9 months, down from 48.7 months in the second quarter of 2013 and has a total duration of 42.6 months, down from 46.8 months for the second quarter of 2013. Shortening the investment portfolio was part of our balance approach to managing our position in the current interest rate environment. We are positioned to take advantage of a rising rate environment while guarding against a continued sustained low rate environment. In terms of non-interest income, the most significant driver again this quarter was trust and securities processing. As we have discussed with you in the past, we record revenue associated with out investment management and asset servicing businesses in this line item, scout investments, fund services and the bank’s asset and investment management businesses,…

Good morning everyone and thank you for joining us for our second quarter conference call. I am happy to talk with you this morning about the bank segment’s financials and business drivers which can be found starting on Slide 12 in the supplemental materials. For the second quarter 2014 compared to the second quarter 2013, net interest income increased 2.7% to $72.5 million driven by loan growth. The bank share provision for second quarter increased $1.1 million in accordance with the methodology Brian described. Total non-interest income increased to $56 million from $46.4 million a year ago. There are two items to mention here. First the equity earnings and alternative investments managed by Prairie Capital fall into the bank segment. The gain for the quarter was $3.5 million compared to no gains recorded in the second quarter 2013. Second we completed the sale of a branch property in the second quarter resulting in a gain of $2.8 million, which is included in the other non-interest income line in our income statement. We also had $2.6 million in gains on the sale of securities compared to $1.5 million in the second quarter 2013. Non-interest expense increased 9.1% to $100.9 million due mainly to the $5.3 million additional contingency reserve that Mariner mentioned and higher salary and benefit expense. Net income before tax was $24.9 million and the pretax profit margin for the bank was 19.4%. Performance in the bank segment’s ongoing operations was strong on several fronts. First, the C&I loan portfolio increased $207.5 million or 6.2% compared to the period ended June 30, 2013. Second, commercial real estate loans also contributed to overall loan growth with an increase of $160.2 million or 10.2% compared to CRE loan balances on June 30, 2013. And real estate construction loans increased $124.7 million.…

Thanks Mike. Good morning everyone. For the final part of our call, I will review results from our three fee based business segments. Starting with institutional investment management, which as you know is comprised of Scout Investment. For the second quarter of 2014 versus the same period a year ago, non-interest income was $34 million, an increase of 16.6%. Non-interest expense increased 17.3% to $22.1 million. Reflective of those two components net income before tax was $11.9 million, an increase of $15.5%, and the pretax profit margin still at 35%. Revenue in this segment is driven by average mutual fund and institutional and other managed accounts assets under management, the mix of those assets, net flows and finally equity and fixed income market performance. Strong net inflows to our fixed income strategies and positive market impact offset by net outflows from our equity strategies provides the context for Scout’s results this quarter. At quarter end assets under management were $32.4 billion, an increase of 23.1% compared to second quarter of 2013. For a breakdown of AUM by asset class, please reference Slide 19 in the company material. We look at close separated by equity and fixed income strategies across all Scout products. Slide 18 in the supporting materials shows the drivers of the change in assets under management both net flows and market impact. For the quarter, the Scout funds flow rate was a negative 7.7%. However, flows in the separate and other managed accounts were positive 4.8%. Year-to-date, the Scout funds had a negative flow rate of 7.1% and separate and other accounts was a positive 8.9%. In the second quarter, net flows for Scout equity strategies were negative $1.3 billion. The outflows were primarily driven by the international fund. Turning to fixed income, Scout fixed income strategies had…

Thank you. (Operator Instructions) We’ll take our first question from Matt Olney of Stephens. Please go ahead.

Hi, thanks. Good morning guys. How are you?

Good morning. How are you?

I’ a good, thanks. Hi, thanks for the slide on – Slide 18 the drivers of AUM, that’s helpful. I want to dig into the flows I think negative on the equity front. I think Peter you highlighted prepared remarks that it was the international fund, anymore commentary on this and can you remind us how big that fund is?

Sure. So, let’s talk about a little bit of context first the fund is about $8.5 billion fund today. If you look at the equity outflows for the period as you see on that Slide 18, we had about $1.287 billion in equity outflows. The majority of that was the international product. On a year-to-date basis, we have had $1.7 billion in international outflows partially offset by $246 million in positive flows to our midcap fund. Some of this is resulting in a bit of mix shift, but keep in mind we had an extraordinarily strong fixed income inflows and separate accounts in particular of over $900 million during the quarter. So, a bit of mix shift taking place overall in the portfolio of all of our products. You will notice in Q2 of ‘14, 55% of our assets are now in fixed income strategies versus 52% in the first quarter and in the second quarter 45% are now in equity strategies versus 48% in the first quarter. So, bit of a shift going on there. As you know, we earn a little bit less than revenue on our fixed income, but just know that, that’s partially offset by lower distribution cost on our fixed income strategies overall. On a going forward basis, I can’t really predict what the flows might do on any of our products quite honestly, but our sales pipeline remains strong in the fixed income space in particular. And as for the international fund on a go forward basis, we have not changed our strategy. We have been doing the same strategy for 20 years of buying high-quality stocks that we think will outperform over different market cycles. Rest assured, the team is squarely focused on improving performance, which is the surest way to ensure that flows turnaround over time.

Okay. Thanks Peter. And then as a follow-up, Brian I think in your prepared remarks you touched on the portion of loans that are going to reprice over the next 3 and 12 months, do you have any details as far as that the loan floors out there, how much you have today and how many rate movements we could see before we get above those four levels?

So, this is Mariner, we only have a little over $430 million in loans in total of course. So it’s narrow mind somewhat in a material to the overall mix.

Sure. Okay. Thanks guys.

Thank you. And we will move to our next question from Chris McGratty of KBW. Please go ahead.

Maybe I missed it in your prepared remarks, could you guys provide the commercial loan pipeline at June 30 and compare it to March 31?

We don’t make our actual pipeline public, what I can tell you will be we have been doing as telling you what – that whether or not our pipeline in the next – in the coming quarter is the strong as the previous quarter and that continues to be the case.

Okay. So in short-term maybe that comment with loan growth has been kind of 10% to 15% in the first half of the year and there is no reason to believe that similar rate of growth in the back half is likely…?

At least in the coming quarter our pipeline in the third quarter is the strong as it was in the second quarter.

Okay. On the expenses, I can appreciate the 5% and you guys have been consistent with that, if you look to next year are there any required investments that you see on the horizon that would make the rate of expense growth materially change one way or the other from that 5% (indiscernible)?

Again we remain committed to accomplishing that we have headwinds and you have probably been hearing this from everybody compliance costs are one of those headwinds. We have been hiring against that. You have seen everybody else’s announcements coming through and we have the same pressures as everybody does. So that’s the headwind going in the second half of the year that we didn’t come into the year expecting to see at the levels we are, but we do believe that we can – we are still committed to that 5% number.

Okay. Last question on your margin, I believe your loan yield is 3.51 can you talk about where new production was in the quarter (indiscernible) basis?

We have that data, I am not sure - I would have to dig it out. I am not sure we have been disclosing that. So at this point I guess we would have to get back to you on that.

Just to make that I think new production. I think what you would see those that the percentage of term debt is nice for us. We have been making head growth there and so we are not just remaining on lines of credit for loan growth.

There is pressure, what I will tell you is that there is definitely pressure on pricing. It seems like renewed pressure on pricing. So we do expect to continue to feel that pricing pressure within our commercial loan book. But one of the things as Michael just mentioned we are doing to make up for that as we have been successful so far and continue to work for it is the mix more term debt, more real estate debt. On the margin we now are planning to replace the portfolio with that but on the margin to make improvements through the mix change.

Understood and last one the tax rate in this quarter is that the fair assessment going forward?

It might be slightly high. We had some historic tax credits in 2013 that did not extend into 2014. Our estimated effective tax rate for 2014 is 27%.

Alright. Thank you.

I might cycle back around for you on the loan growth number. I think it’s important to note that the second quarter was unusual for us with pay offs, so we had some activity in the second quarter this year at a heightened level. So our net loan growth was lower because of pay off activity. So in the second quarter of 2013 approximately $57 million in pay offs, in the second quarter of 2014 we had an additional $100 million in pay offs in the second quarter of ’14. So we got some unusual activity in the second quarter of 2014 related to just economic activity business is selling etcetera.

So I want to make sure we get those numbers to you. So the second quarter 2014 pay offs and pay downs were $276 million, that’s unusual because in the second quarter of 2013 it was $158.7 million, so that’s $100 million difference that Mariner is mentioning.

Thank you. (Operator Instructions) We will move to our next question from Peyton Green of Sterne Agee. Please go ahead. Peyton Green – Sterne Agee: Yes. Good morning. Peter, I was wondering if you could talk maybe a couple of things about the asset management business. One is there a lag in the revenue recognition on the international fund AUM versus when you would see the outflows and if so I mean would we see any kind of hangover from the outflows in the third quarter that maybe didn’t hit in the second?

No, it’s about – it’s a little bit about timing because if you have a large outflow at the last day of a quarter (indiscernible) going to have 190 some of it happened in that particular quarter. So nothing unusual other than the timing at which the flows occurred both in and out during the quarter. Peyton Green – Sterne Agee: Okay. And then the unconstrained bond fund currently is subject to – the mutual fund piece is subject to a fairly significant fee and expense waiver that is suffix or was suffixed by on October 31, what’s your thought on, whether that will be renewed or whether that will expire?

That’s still the case, it is set to expire and we continue to evaluate based upon market conditions and our competitive positioning whether we will continue to enforce the peak out or let some part of it. But we really don’t know just yet Peyton we continue to evaluate it. Peyton Green – Sterne Agee: Okay. And then I guess in terms of interest rate sensitivity, you mentioned that you are preparing for higher rates, what does that mean on a plus 100, plus 200 basis point move in rates, another first quarter tends to be overstated because of the liquidity, but how was the interest rate risk sensitivity at June 30?

Specifically on the investment, can you repeat your question for me, Peyton please? Peyton Green – Sterne Agee: Yes. Just the overall interest rate sensitivity plus 100, plus 200 move in rates whether in the 12-month period like you have in the queue…?

Yes. Peyton Green – Sterne Agee: I know in the first quarter it tends to be exaggerated by the short-term nature of the flows from just depositors and the like, but I mean is it about the same as it was at March 30, is it a little bit more assets I am just trying to understand that?

It is a little bit more asset sensitive here in the second quarter. We remain neutral to asset sensitive, continuing to focus on our strategy to have a bias toward shortening that investment portfolio, moving into the loan portfolio at higher yields and have shown success on that. Peyton Green – Sterne Agee: Okay. And then I guess in terms of the expense side of the equation, I mean looking kind of just the past year going back, the marginal efficiency ratio (indiscernible) what would be called normal expenses, I guess ignoring the contingent liability for earn out, you get to a number that’s closer to 65% of revenue growth in terms of the amount of dollars expanded over the past year, is that a reasonable way to think about how you will do it going forward or is there not any real breaking on expense growth versus contingent pressure on the margin side from the loan portfolio perspective. I mean, I guess maybe another way to ask it is what loan rate is too low to make the loan, I mean, 3.5 down from over 4 historically and 3.69 a year ago, that seem to be get pretty thin?

Well, Peyton, it’s a – I get it suppose it’s an alternative question against what our alternatives are. And it also you have to assume we are able to remix, continue to remix and we are getting much better yield as we do remix.

And let me take a stab at this one Peyton, I think that it really (indiscernible) my answer really depends upon what goes out. So for instance in the payment businesses that Peter talks about as revenue or volume goes up in that business so does expense and so the relationship stays roughly the same. Turning on mix changes between whether it’s as an example debit or credit card or its healthcare and credit, there are reasons that it changes. Within the bank, however, in a higher interest rate environment expenses – everything else being equal shouldn’t really increase for no other reason than an interest rate increase will drive higher revenue because the net interest income we don’t need new branches, new people, etcetera right. So it depends on what is growing at the time. Peyton Green – Sterne Agee: Okay. And then I guess you mentioned that the compliance pattern seems to be going higher, and I guess for a bank like yours I’m already surprised that it would be rising maybe like it is for others?

Right, you are congressmen. Peyton Green – Sterne Agee: It’s not ours, but I guess I mean it – I mean where I guess from that perspective I mean is it millions more of dollars that you think you have to spend at the margin, I mean does that take the overall expense growth rate up above the 5% level or is that factored into those 5%?

We still think that we can do 5%. We are still committed to that. That’s our goal, so we are still committed to that. And as they continue to rise, we can’t tell you at this point, they can’t tell us. We don’t know how much they are going to rise. I wish I could tell you we knew how much they are going rise. We do not know how much they are going to rise. But we are committed to making changes and to managing that expense on the way up and making changes where we need to make and to control like overall expenses. Peyton Green – Sterne Agee: Okay, and then

I think there have been three dimensions, right the three different pressures if you will. There are more people for sure coming into the organization to ensure we are in compliance with all the new rules that are in place. Salaries are going up considerably. The competition for talent in this base is significant. We had a speaker last night at our board dinner and he talked about the war on talent in this particularly area. So just the cost generally to procure and maintain these folks are going up. Secondarily there is lot of technology expenses associated with this now enhancing our BSAML programs and any number of programs to ensure that we are in compliance. And then third, we have to use consultants to help us fill in some of the gaps as we needed to. So people costs, technology costs, consultants and others, Mariner is exactly write it, its going up, but we probably can’t predict exactly how high.

Yes. I think two-thirds of it is unwritten. So it’s an unknown, but we still remain committed to being compliant and making the appropriate expense changes to stay to our goals. Peyton Green – Sterne Agee: Okay. And then just with regard to the I know you all filed an 8-K on it, in terms of the Prairie Capital situation, but how I guess ignoring that but I mean because the 8-K has been filed, but what is the outlook for M&A activity, I mean are there opportunities that you are seeing that might be complementary to your business lines or would add scale that might help the expense side out?

You are not going to like this answer because the same one you got last quarter, which is we remain inquisitive (indiscernible) we would like to do deals that to do exactly what you said, but we have just activity based and of course we have nothing to talk to you about at this point, so. Peyton Green – Sterne Agee: Okay, alright. Great. Thank you for taking my questions.

Thank you. (Operator Instructions) There are no further questions at this time. Please continue.

Thank you. Thank you very much for your interest in UMB. This call can be accessed via replay at our website beginning in about two hours and it will run through August 8. And as always, you can contact UMB Investor Relations with any follow-up questions by calling 816-860-1685. Again we appreciate your interest and time.

Thank you. Ladies and gentlemen, this does concludes your conference call for today. We thank you for your participation. You may now disconnect your lines and have a great day.