case analyze

Park University

MK 371, Case 1

Spring 2014 - William Venable Name:_______________________

Page 1

SUMMARY

UMB Financial Corporation is a financial holding company headquartered in Kansas City, Mo., offering complete banking and related financial services to both individual and business customers. Its banking subsidiaries own and operate 141 banking centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. Subsidiaries of the holding company and the lead bank, UMB Bank, n.a., include an investment services group based in Milwaukee, Wis., a trust management company in South Dakota, and single-purpose companies that deal with brokerage services, consulting services and insurance.

EARLY HISTORY

The story of UMB Financial Corporation in Kansas City, MO, is a success story in the best tradition of American free enterprise. From a storefront bank in Kansas City, MO, with first-day deposits of $1,100 in 1913, it has grown to become a financial holding company with multi-billion dollar assets. It has built a reputation as a financial partner who is dynamic enough to take advantage of opportunities, innovative enough to act on changing customer needs, and traditional enough to emphasize quality above all else.

The original bank was chartered first as City Center Bank and was purchased during World War I by W.T. Kemper and Associates. The bank’s strides forward are a testament to a young soldier and son, Rufus Crosby Kemper, who returned from the war and borrowed money to buy into City Center Bank with his father, W.T. Kemper. R. Crosby Kemper Sr. became president in 1919, and during this year, the bank began its steady pattern of growth under the leadership and direction of this new president. He was aggressive in developing contacts for the bank. He would go into the community to solicit business at the close of regular business hours each day. This was an unheard-of practice prior to that time, as many banks simply opened their doors, sat back and waited for the customers to come to them. In 1926, Kemper and his board of directors voted to build a new six-story headquarters for the bank. With expanded physical space, the bank established a trust department, a bond department and correspondent banking services. In 1928, the bank added a “drive-up” window, thought to be the first in the country.

By national charter, the bank became City National Bank and Trust Company in 1934. Ten years later, the bank expanded once again and moved to the R.A. Long Building in the heart of Kansas City’s downtown financial center. Today, the bank still owns the building at 928 Grand Boulevard and houses some administrative offices there. In 1945, the bank added an international department to address customer needs in the field of international commerce and travel. R. Crosby Kemper Jr., the third generation of Kemper bankers, joined City National in 1950. He became president in 1959 and led then United Missouri as it became the first regional bank to install its own computer processing center in 1960. As banking laws changed, Missouri Bancshares, Inc. was formed in 1969 as a one-bank holding company. The Company’s name was changed to United Missouri Bancshares, Inc. in mid-1971 when it became a multi-bank holding company. In the next decade, the new holding company acquired regional banks and became a billion-dollar corporation with offices strategically located throughout Missouri and Illinois.

Park University

MK 371, Case 1

Spring 2014 - William Venable Name:_______________________

Page 2

EXPANSION AND GROWTH

UMB launched the first offerings from its no-load mutual fund family with the inception of the UMB Scout Stock Fund, the UMB Scout Bond Fund, the UMB Scout Money Market Fund, and the UMB Scout Tax-free Money Market Fund. All the banks in the system continue to project the image of innovative and responsible service that the senior Kemper started so many years ago. In 1986, a new headquarters for the holding company and UMB Bank, n.a., the lead bank, was built at 1010 Grand Boulevard in Kansas City. As federal banking regulations changed in the 1980s, the Company ventured into interstate banking and acquired FCB Corp. and its three banks in southern Illinois in 1987. The banks in St. Louis and southern Illinois were merged in 1994 to form UMB Bank of St. Louis, the first interstate bank in the Midwest able to offer banking center locations on both sides of a state line, improving customer service. Legislation allowed expansion into the Colorado market in 1992, and the Company purchased Valley Bank and National Bank of the West in Colorado Springs. Columbine National Bank in Denver became a part of the UMB system in early 1992. In the fall of 1994, these banks were merged into what was the largest state- chartered bank, UMB Bank Colorado, n.a. Kansas interstate banking laws were passed in July of 1992, allowing UMB to become the first Missouri bank to announce merger agreements in that state. In early 1993, the Company acquired several Kansas banks along the I-70 corridor and merged them into two banks. UMB Bank, n.a. and UMB National Bank of America continue to have a strong growth-oriented presence in Kansas. In 1994, the name was changed to UMB Financial Corporation. This name was much better suited for this multi-bank holding company that was now offering an expanded product line throughout the four states of Missouri, Illinois, Colorado and Kansas. UMB expanded into Oklahoma after acquiring The Oklahoma Bank and its holding company, First Sooner Bancshares, in 1995. It also increased ATM coverage by installing 120 ATMs in various QuikTrip® and Texaco® StarMart convenience stores, bringing the total to more than 300. New grocery store banking centers opened in Denver, CO, Lawrence, KS, Warrensburg, MO, Kansas City, MO, St. Louis, MO, Springfield, IL., and Colorado Springs, CO. Planning for the future, UMB established a Year 2000 Project Team to look into the possible computer issues that could arise with the turn of the century. UMB in conjunction with Visa Interactive introduced UMB PC Direct in 1995, making UMB one of the first banks in the Midwest to offer an online banking product. With this service, UMB customers are able to pay bills, reconcile accounts, and transfer funds between accounts all from the convenience of their computer. Plans for an operations and technology hub in downtown Kansas City were unveiled.

NEW TECHNOLOGIES ENHANCE GROWTH

The Kellogg Group gave UMB its highest quotient on its list of the top 100 banks (7.7 ATMs per $100 million in assets). American Banker also reported that UMB was ranked No. 1 in terms of ATM coverage and convenience. UMB opened the bank’s first full-service banking center in Omaha, NE. Ground was broken for the new UMB Bank Technology Center in downtown Kansas City. For commercial and correspondent customers, UMB launched UNITEPlus®, a customizable, Web-based account reporting product. This service allows customers to view transaction details, loan status, lockbox reports or to originate ACH payments. UMB became the first bank in the United States to create Web EDI, an Electronic Data Interchange service for commercial customers, making business communication and document exchange easier. UMB's online expansion continued as its subsidiary, UMB Financial Services, Inc., member NASD, SIPC, introduced an online service offering trading, account information, and individual stock and mutual fund information. The UMB Service Center was opened in 1998 for retail customers who need live assistance. It operates seven days a week. Taking a large step toward the approaching millennium, UMB renovated and successfully tested 99 percent of its mission-critical, internally controlled computer systems. During the fall, UMB became the first bank in the country to engage in a successful public test of its most common deposit transaction systems for Year 2000 readiness.

Park University

MK 371, Case 1

Spring 2014 - William Venable Name:_______________________

Page 3

Continuing with its successful expansion, UMB opened the 210,000-square-foot UMB Bank Technology Center in October 1999. This building houses operations and Management Information Services personnel, which improves workflow, productivity and service. UMB processed more than $3.3 trillion in electronic payments and transfers during that first year, making it one of America’s top 20 banks in terms of operational volume and cash management services. Accolades continued in 2000 as UMB was named one of America’s top 10 banks for e-business innovation by PC Week Magazine. It was also honored with a 2000 Web Business 50/50 Award sponsored by CIO Magazine. 2000 brought the rise of a third generation of bankers at UMB. R. Crosby Kemper III took over as president of UMB Financial Corporation and UMB Bank, n.a., as his younger brother and former president, Sandy Kemper, left to focus on eScout, an online business-to-business network of independent businesses. As R. Crosby Kemper Jr. celebrated his 50th year in banking, he stepped up to become senior chairman of UMB Financial Corporation and UMB Bank, n.a. The board then appointed R. Crosby Kemper III to chairman and CEO of both companies. In that same year, the younger Kemper was also inducted as chairman of the Missouri Bankers Association. After decades of serving nonprofit clients, UMB launched UMB Nonprofit Financial and Advisory Services in February 2001. This division fosters the financial success of nonprofit clients by offering them the tools they need to achieve financial stability while preserving their missions as they grow. During 2001, UMB acquired Sunstone Financial Group, Inc., which changed its name to UMB Fund Services, Inc. in 2002. This Company is nationally recognized for its superior mutual fund services. UMB strengthened its position as a premier provider of full-service corporate trust services when it acquired State Street Bank & Trust Company of Missouri, n.a. Also in 2001, UMB established Scout Investment Advisors, Inc. to manage its customers’ accounts directly and serve as advisor to the UMB Scout Funds family of mutual funds.

CONTINUITY FOR THE NEXT GENERATION

In February of 2002, UMB acquired the name-in-title rights to Riverport Amphitheatre in St. Louis, MO, and renamed it UMB Bank Pavilion. On April 23, 2003, R. Crosby Kemper III opened trading on the NASDAQ Stock Market in honor of UMB’s 90th anniversary. In May of that same year, UMB announced the sale of its Employee Benefits Division to Marshall & Ilsley Trust Company, n.a., allowing UMB to focus on its core product offerings. 2004 brought about a leadership change as R. Crosby Kemper III resigned as chairman and CEO of UMB Financial Corporation. His younger brother, J. Mariner Kemper, took over the helm. Peter deSilva was brought on as president and COO of the holding company and was subsequently named chairman and CEO of UMB Bank, n.a.

GUIDING PRINCIPLES

Our Shared Vision:

To be recognized for the unparalleled customer experience.

Our Shared Mission:

With our position of trust and our tradition of integrity, our shared mission is to know our customers and anticipate their needs; advocate and advise; innovate and surprise.

Our Shared Values:

Customers First

We do the unparalleled to create an environment that consistently exceeds the expectations of our customers. Integrity & Trust

We demonstrate our uncompromising honesty and integrity to earn the trust of everyone we serve.

Park University

MK 371, Case 1

Spring 2014 - William Venable Name:_______________________

Page 4

Performance & Strength

We achieve sustainable greatness by delivering on our promise, remaining independent and maintaining financial soundness. Associate Spirit

We rely upon our people and their collective attitude and skills to differentiate us from our competition.

Source: https://www.umb.com/AboutUMB/CompanyInformation/OurHistory/000213

CASE ANALYSIS

In 1998, R. Crosby Kemper Jr., then Chairman, told the officers of UMB, “Some day we’ll be the 13

th largest

bank in America, but there will only be 15 to 20 banks.” Given the dramatic changes in the financial services industry over the last 20 years and the information presented on UMB, please develop a detailed case analysis that sets a course for the future growth of UMB.

Use your personal knowledge of the banking and financial services industry, combined with information you have learned in the class to provide the following case analysis:

1. A brief introduction and description of the organization and the present situation or conditions. The information for this section will come from the case in the text. The purpose is to allow the reader to gain an insight or understanding of how the person(s) presenting the case perceives the organization and the situation.

2. An analysis of the organization, the situation and contributing factors and other variables. In doing

the analysis, one should consider the five functions that exist in every organization: management; technology; marketing; finance; and human resources. The strengths, weaknesses, opportunities, and threats should be identified along with an explanation as to the basis for the respective classification. Any products or services should be considered from an on-going, strategic, perspective.

3. Present the alternative solutions developed for consideration to solve any identified or potential

problems. Each problem should be followed with an explanation of possible threats or alternative outcomes, and any risks associated with the use of the respective alternative course of action.

4. The final section of the report identifies the selected alternative solutions to be implemented and

describes the courses of action and order or sequence for their adoption. This section is concluded with an overall summary of the perceived position of the organization and the future potential for the products and services provided.

Use the blank case format as your guide; the case analysis should show your knowledge of the management functions and the concepts of organization behavior relative to the diverse financial services offering available from UMB for both businesses and consumers.