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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark one)

For the fiscal year ended: December 31, 2004

For the transition period from            to          

Commission file number: 0-4887

UMB FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

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

Securities Registered Pursuant to Section 12(b) of the Act: None

Securities Registered Pursuant to Section 12(g) of the Act:

Common Stock, $1.00 Par Value

(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x  No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x  No ¨

As of June 30, 2004, the aggregate market value of common stock outstanding held by nonaffiliates of the registrant was approximately $876,307,949 based on the NASDAQ closing price of that date.

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

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company’s definitive Proxy Statement to be delivered to shareholders in connection with the Annual Meeting of Shareholders, to be held on April 26, 2005, are incorporated by reference into in Part III of this Form 10K.

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INDEX

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PART I

ITEM 1.  BUSINESS

General

UMB Financial Corporation (the “Company”) was organized in 1967 under Missouri law for the purpose of becoming a bank holding company registered under the Bank Holding Company Act of 1956. In 2001, the Company elected to become a financial holding company under the Gramm-Leach-Bliley Act of 1999. The Company owns all of the outstanding stock of four commercial banks, a reinsurance company, a community development corporation, a consulting company, mutual fund servicing company and eleven other subsidiaries.

The four commercial banks are engaged in general commercial banking business entirely in domestic markets. Two of the banks are in Missouri, and two banks are in Kansas and Colorado. The principal affiliate bank, UMB Bank, n.a., whose charter is in Missouri, also has locations in Illinois, Kansas, Nebraska and Oklahoma. Another affiliate bank, UMB Bank, Colorado, opened a loan production office in Phoenix, Arizona during 2004. The banks offer a full range of banking services to commercial, retail, government and correspondent bank customers. In addition to standard banking functions, the principal affiliate bank, UMB Bank, n.a., provides international banking services, investment and cash management services, data processing services for correspondent banks and a full range of trust activities for individuals, estates, business corporations, governmental bodies and public authorities. The table below sets forth the names and locations of the Company’s affiliate banks, as well as their respective total assets, total loans, deposits and shareholders’ equity as of December 31, 2004.

SELECTED FINANCIAL DATA OF AFFILIATE BANKS (in thousands)

Other subsidiaries of the Company are Kansas City Realty Company, Kansas City Financial Corporation, UMB Redevelopment Corporation and Warsaw Financial Corporation. United Missouri Insurance Company, an

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Arizona corporation, is a reinsurance company that reinsures credit life and disability insurance originated by affiliate banks. UMB Community Development Corporation provides low-cost mortgage loans to low- to moderate-income families for acquiring or rehabilitating owner-occupied housing in Missouri, Kansas, Illinois, Nebraska, Oklahoma and Colorado. UMB Consulting Services, Inc. offers regulatory and compliance assistance to regional banks. UMB Fund Services, Inc. (formerly known as Sunstone Financial Group Inc.), located in Milwaukee, Wisconsin, is a nationally recognized mutual fund service provider to nearly 40 fund groups representing approximately 140 funds.

Effective August 1, 2004, UMB U.S.A., n.a. was merged into the principal affiliate bank, UMB Bank, n.a. UMB, U.S.A., n.a. was a credit card bank located in Nebraska. The credit card operations were moved to Missouri. Effective December 4, 2004, UMB Bank Omaha, n.a. was merged into the principal affiliate bank, UMB Bank, n.a. The branches of UMB Bank Omaha, n.a. continue to operate as branches of UMB Bank, n.a.

On a full-time equivalent basis at December 31, 2004, the Company and its subsidiaries employed 3,573 persons.

Competition.    The Company faces intense competition from hundreds of financial service providers in the markets served. The Company competes with other financial service providers including banks, savings and loan associations, finance companies, mutual funds, mortgage banking companies and credit unions. Customers for banking services and other financial services offered by the Company are generally influenced by convenience, quality of service, personal contacts, price of services and availability of products.

Monetary Policy and Economic Conditions.    The operations of the Company’s affiliate banks are affected by general economic conditions, as well as the monetary policy of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), which affects the supply of money available to commercial banks. Monetary policy measures by the Federal Reserve Board are affected through open market operations in U.S. government securities, changes in the discount rate on bank borrowings and changes in reserve requirements.

Supervision and Regulation.    As a bank holding company and a financial holding company, the Company (and its subsidiaries) are subject to extensive regulation and are affected by numerous federal and state laws and regulations.

Supervision.    The Company is subject to regulation and examination by the Federal Reserve Board (FRB) and the Federal Reserve Bank of Kansas City. Its four subsidiary banks are subject to regulation and examination by the Office of the Comptroller of the Currency (“OCC”). UMB Scout Insurance Services, Inc. is regulated by state agencies in the states in which it operates. The FRB possesses cease and desist powers over bank holding companies if their actions represent unsafe or unsound practices or violations of law. In addition, the FRB is empowered to impose civil money penalties for violations of banking statutes and regulations. Regulation by the FRB is intended to protect depositors of the Company’s banks, not the Company’s shareholders. The Company is subject to a number of restrictions and requirements imposed by the Sarbanes-Oxley Act of 2002 relating to loans to directors or executive officers of the Corporation and its subsidiaries, the preparation and certification of the Company’s consolidated financial statements, the duties of the Company’s audit committee, relations with and functions performed by the Company’s independent auditors, and various accounting and corporate governance matters. The Company’s brokerage affiliate, UMB Scout Brokerage Services, Inc., is regulated by the Securities and Exchange Commission (“SEC”), the National Association of Securities Dealers, Inc., and the Missouri Division of Securities; it is also subject to certain regulations of the various states in which it transacts business. It is subject to regulations covering all aspects of the securities business, including sales methods, trade practices among broker/dealers, capital structure of securities firms, uses and safekeeping of customers’ funds and securities, recordkeeping, and the conduct of directors, officers and employees. The SEC and the self-regulatory organizations to whom it has delegated certain regulatory authority, may conduct administrative proceedings that can result in censure, fines, suspension or expulsion of a broker/dealer, its directors, officers and employees. The principal purposes of regulation of securities broker/dealers is the protection of customers and the securities market, rather than the protection of stockholders of broker/dealers.

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Limitation on Acquisitions and Activities.    The Company is subject to the Bank Holding Company Act of 1956 as amended (“BHCA”), which requires the Company to obtain the prior approval of the Federal Reserve Board to (i) acquire substantially all the assets of any bank, (ii) acquire more than 5% of any class of voting stock of a bank or bank holding company which is not already majority owned, or (iii) merge or consolidate with another bank holding company. The BHCA also imposes significant limitations on the scope and type of activities in which the Company and its subsidiaries may engage. The activities of bank holding companies are generally limited to the business of banking, managing or controlling banks, and other activities that the FRB has determined to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. In addition, under the Gramm-Leach-Bliley Act of 1999 (GLB Ac)t, a bank holding company, all of whose controlled depository institutions are “well-capitalized” and “well-managed” (as defined in federal banking regulations) and which obtains “satisfactory” Community Reinvestment Act ratings, may declare itself to be a “financial holding company” and engage in a broader range of activities.

A financial holding company may affiliate with securities firms and insurance companies and engage in other activities that are financial in nature or incidental or complementary to activities that are financial in nature. “Financial in nature” activities include:

A financial holding company that desires to engage in activities that are financial in nature or incidental to a financial activity but not previously authorized by the FRB, must obtain approval from the FRB before engaging in such activity. Also, a financial holding company may seek FRB approval to engage in an activity that is complementary to a financial activity, if it shows that the activity does not pose a substantial risk to the safety and soundness of insured depository institutions or the financial system. Under the GLB Act, subsidiaries of financial holding companies engaged in non-bank activities are supervised and regulated by the federal and state agencies which normally supervise and regulate such functions outside of the financial holding company context.

A financial holding company may acquire a company (other than a bank holding company, bank or savings association) engaged in activities that are financial in nature or incidental to activities that are financial in nature without prior approval from the FRB. Prior FRB approval is required, however, before the financial holding company may acquire control of more than 5% of the voting shares or substantially all of the assets of a bank holding company, bank or savings association. In addition, under the FRB’s merchant banking regulations, a financial holding company is authorized to invest in companies that engage in activities that are not financial in nature, as long as the financial holding company makes its investment with the intention of limiting the duration of the investment, does not manage the company on a day-to-day basis, and the company does not cross market its products or services with any of the financial holding company’s controlled depository institutions. If any subsidiary bank of a financial holding company receives a rating under the Community Reinvestment Act of less than “satisfactory”, then the financial holding company is limited with respect to its engaging in new activities or acquiring other companies, until the rating is raised to at least “satisfactory.”

Interstate Banking and Branching.    Under the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the “Riegle-Neal Act”), a bank holding company is permitted to acquire the stock or substantially all of the assets of banks located in any state regardless of whether such transaction is prohibited under the laws of any state. The FRB will not approve an interstate acquisition if as a result of the acquisition the bank holding company would control more than 10% of the total amount of insured deposits in the United States or would

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control more than 30% of the insured deposits in the home state of the acquired bank. The 30%-of-insured-deposits state limit does not apply if the acquisition is the initial entry into a state by a bank holding company, or if the home state waives such limit. The Riegle-Neal Act also authorizes banks to merge across state lines, thereby creating interstate branches. Banks are also permitted to acquire and to establish de novo branches in other states where authorized under the laws of those states. Under the Riegle-Neal Act, individual states may restrict interstate acquisitions in two ways. A state may prohibit an out-of-state bank holding company from acquiring a bank located in the state unless the target bank has been in existence for a specified minimum period of time (not to exceed five years). A state may also establish limits on the total amount of insured deposits within the state which are controlled by a single bank holding company, provided that such deposit limit does not discriminate against out-of-state bank holding companies As a result of the Riegle-Neal Act, the Company has many more opportunities for expansion and has potentially greater competition in its market area from nationwide or regional banks.

Other Regulatory Restrictions & Requirements.    A bank holding company and its subsidiaries are prohibited from engaging in certain tie-in arrangements in connection with the extension of credit, with limited exceptions. There are also various legal restrictions on the extent to which a bank holding company and certain of its non-bank subsidiaries can borrow or otherwise obtain credit from its bank subsidiaries. The Company and its subsidiaries are also subject to certain restrictions on issuance, underwriting and distribution of securities. FRB policy requires a bank holding company to serve as a source of financial and managerial strength to its subsidiary banks. Under this “source of strength doctrine,” a bank holding company is expected to stand ready to use its available resources to provide adequate capital funds to its subsidiary banks during periods of financial stress or adversity, and to maintain resources and the capacity to raise capital that it can commit to its subsidiary banks. Furthermore, the FRB has the right to order a bank holding company to terminate any activity that the FRB believes is a serious risk to the financial safety, soundness or stability of any subsidiary bank. Also, under cross-guaranty provisions of the Federal Deposit Insurance Act (the “FDIA “), bank subsidiaries of a bank holding company are liable for any loss incurred by the FDIC insurance fund, in connection with the failure of any other bank subsidiary of the bank holding company.

The Company’s bank subsidiaries are subject to a number of laws regulating depository institutions, including the Federal Deposit Insurance Corporation Improvement Act of 1991, which expanded the regulatory and enforcement powers of the federal bank regulatory agencies. Such laws require that such agencies prescribe standards relating to internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, compensation, fees and benefits, and mandated annual examinations of banks by their primary regulators. The Company’s bank subsidiaries are also subject to a number of consumer protection laws and regulations of general applicability, as well as the USA Patriot Act, which is designed to identify, prevent and deter international money laundering and terrorist financing.

The rate of interest a bank may charge on certain classes of loan is limited by law. At certain times in the past, such limitations have resulted in reductions of net interest margins on certain classes of loans. Federal laws also impose additional restrictions on the lending activities of banks, including the amount that can be loaned to one borrower or related group.

All four of the commercial banks owned by the Company are national banks and are subject to supervision and examination by the Office of the Comptroller of the Currency (“OCC”). In addition, the national banks are subject to examination by The Federal Reserve System. All such banks are members of, and subject to examination by, the Federal Deposit Insurance Corporation (“FDIC”).

Payment of dividends by the Company’s affiliate banks to the Company is subject to various regulatory restrictions. For national banks, the OCC must approve the declaration of any dividends generally in excess of the sum of net income for that year and retained net income for the preceding two years. At December 31, 2004, approximately $11,335,000 of the equity of the Company’s banks was available for distribution as dividends to the Company without prior regulatory approval or without reducing the capital of the respective banks below prudent levels.

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Each of the Company’s subsidiary banks are subject to the Community Reinvestment Act (the “CRA “) and implementing regulations. CRA regulations establish the framework and criteria by which the bank regulatory agencies assess an institution’s record of helping to meet the credit needs of its community, including low- and-moderate-income neighborhoods. CRA ratings are taken into account by regulators in reviewing certain applications made by the Company and its bank subsidiaries.

Regulatory Capital Requirements Applicable to the Company.    The FRB has promulgated capital adequacy guidelines for use in its examination and supervision of bank holding companies. If a bank holding company’s capital falls below minimum required levels, then the bank holding company must implement a plan to increase its capital, and its ability to pay dividends and make acquisitions of new bank subsidiaries may be restricted or prohibited. The FRB’s capital adequacy guidelines provide for the following types of capital:

Tier 1 capital, also referred to as core capital, calculated as:

Tier 2 capital, also referred to as supplementary capital, calculated as:

The maximum amount of supplementary capital that qualifies as Tier 2 capital is limited to 100% of Tier 1 capital.

Total capital, calculated as:

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The Company is required to maintain minimum amounts of capital to various categories of assets, as defined by the banking regulators. At December 31, 2004, the Company was required to have minimum Tier 1 capital, Total capital, and leverage, ratios of 4.00%, 8.00%, and 4.00% respectively. The Company’s actual ratios at that date were 18.2%, 19.2%, and 11%, respectively.

Regulatory Capital Requirements Applicable to the Company’s Subsidiary Banks.    In addition to the minimum capital requirements of the FRB applicable to the Company, there are separate minimum capital requirements applicable to its subsidiary national banks

Federal banking laws classify an insured financial institution in one of the following five categories, depending upon the amount of its regulatory capital:

Federal banking laws require the federal regulatory agencies to take prompt corrective action against undercapitalized financial institutions. The Company’s banks must be well-capitalized and well-managed in order for the Company to remain a financial holding company. To be well-capitalized, a bank must maintain a total Tier 1 leverage ratio of 5% or greater, a Tier 1 risk-based capital ratio of 6% or greater and a total risk-based capital ratio of 10% or greater. The capital ratios and classifications of each of the Company’s four banks as of December 31, 2005, are set forth below:

The Company is required to maintain minimum balances with the FRB for each of its subsidiary banks. These balances are calculated from reports filed with the respective FRB for each affiliate. At December 31, 2004, the Company held $58,861,000 at the respective FRB.

Deposit Insurance and Assessments.    The deposits of each of the Company’s four subsidiary banks are insured by an insurance fund administered by the FDIC, in general up to a maximum of $100,000 per insured deposit. Under federal banking regulations, insured banks are required to pay semi-annual assessments to the FDIC for deposit insurance. The FDIC’s risk-based assessment system requires members to pay varying assessment rates depending upon the level of the institution’s capital and the degree of supervisory concern over the institution. The FDIC’s assessment rates range from zero cents to 27 cents per $100 of insured deposits. The FDIC has authority to increase the annual assessment rate and there is no cap on the annual assessment rate which the FDIC may impose.

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Limitations on Transactions with Affiliates.    The Company and its non-bank subsidiaries are “affiliates” within the meaning of Sections 23A and 23B of the Federal Reserve Act. The amount of loans or extensions of credit which a bank may make to non-bank “affiliates, or to third parties secured by securities or obligations of the non-bank affiliates, are substantially limited by the Federal Reserve Act and the FDIA. Such acts further restrict the range of permissible transactions between a bank and an affiliated company. A bank and subsidiaries of a bank may engage in certain transactions, including loans and purchases of assets, with an affiliated company only if the terms and conditions of the transaction, including credit standards, are substantially the same as, or at least as favorable to the bank as, those prevailing at the time for comparable transactions with non-affiliated companies or, in the absence of comparable transactions, on terms and conditions that would be offered to non-affiliated companies.

Other Banking Activities.    The investments and activities of the Company’s subsidiary banks are also subject to regulation by federal banking agencies, regarding investments in subsidiaries, investments for their own account (including limitations in investments in junk bonds and equity securities), loans to officers, directors and their affiliates, security requirements, anti-tying limitations, anti-money laundering, financial privacy and customer identity verification requirements, truth-in-lending, the types of interest bearing deposit accounts which it can offer, trust department operations, brokered deposits, audit requirements, issuance of securities, branching and mergers and acquisitions.

Fiscal & Monetary Policies.    The Company’s business and earnings are affected significantly by the fiscal and monetary policies of the federal government and its agencies. It is particularly affected by the policies of the FRB, which regulates the supply of money and credit in the United States. Among the instruments of monetary policy available to the FRB are: conducting open market operations in United States government securities; changing the discount rates of borrowings of depository institutions; imposing or changing reserve requirements against depository institutions’ deposits; and imposing or changing reserve requirements against certain borrowings by banks and their affiliates. These methods are used in varying degrees and combinations to directly effect the availability of bank loans and deposits, as well as the interest rates charged on loans and paid on deposits. The policies of the FRB have a material effect on the Company’s business, results of operations and financial condition.

Future Legislation.    Various legislation, including proposals to change substantially the financial institution regulatory system, is from time to time introduced in Congress. This legislation may change banking statutes and the Company’s (and its subsidiaries’) operating environment in substantial and unpredictable ways. If enacted, this legislation could increase or decrease the cost of doing business, limit or expand permissible activities, or affect the competitive balance among banks, savings associations, credit unions and other financial institutions. The Company cannot predict whether any of this potential legislation will be enacted and, if enacted, the effect that it, or any implementing regulations, could have on the business, results of operations or financial condition of the Company or its subsidiaries.

The references in the foregoing discussion to various aspects of statutes and regulations are merely summaries which do not purport to be complete and which are qualified in their entirety by reference to the actual statutes and regulations.

Segment Information.    Financial information regarding segments is included in Note 12 to the Consolidated Financial Statements provided in Item 8, pages 55 through 58 of this report.

Statistical Disclosure.    The information required by Guide 3, “Statistical Disclosure by Bank Holding Companies,” has been included in Items 6, 7, and 7A, pages 13 through 41 of this report.

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Executive Officers of the Registrants.    The following are the executive officers of the Company, each of whom is elected annually, and there are no arrangements or understandings between any of the persons so named and any other person pursuant to which such person was elected as an officer.

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A discussion of recent acquisitions is included in Note 15 to the Consolidated Financial Statements provided in Item 8 on page 65 of this report.

The Company makes available free of charge on its website at www.umb.com/investor, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such reports, as soon as reasonably practicable after it electronically files or furnishes such material with or to the SEC.

ITEM 2.  PROPERTIES

The Company’s headquarters building, the UMB Bank Building, is located at 1010 Grand Boulevard in downtown Kansas City, Missouri, and was opened in July 1986. Of the total 250,000 square feet, the offices of the parent company and customer service functions of UMB Bank, n.a. comprise 175,000 square feet. The remaining 75,000 square feet are available for lease to third parties. The Company’s principal accounting firm is a lessee of a portion of the space. The Company is currently looking for a lessee to fill the remaining space.

UMB Fund Services, Inc., a subsidiary of the Company, leases 72,135 square feet in Milwaukee, Wisconsin, at which its fund services operations are headquartered.

The banking facilities of UMB Bank, n.a. at 928 Grand Boulevard and 906 Grand Boulevard principally house the bank’s support functions. The 928 Grand Boulevard location is connected to the headquarters building by an enclosed pedestrian walkway. The 928 Grand Boulevard finished a major rehabilitation during 2004. UMB Bank, n.a. also leases 40,000 square feet of space in the Equitable Building, in the heart of the downtown commercial sector of St. Louis. A full service banking center, operations and administrative offices are housed at this location.

At December 31, 2004, the Company’s affiliate banks operated a total of four main banking houses and 148 detached facilities, the majority of which are owned by the affiliate banks or a non-bank subsidiary of the Company and leased to the respective bank. The Company constructed an 180,000 square foot operations center in downtown Kansas City, Missouri. The Company moved its operational and item processing functions, as well as management information systems, to this building in the second quarter of 1999.

Additional information with respect to premises and equipment is presented in Note 1 and 8 to the Consolidated Financial Statements in Item 8, pages 47 and 55 of this report.

ITEM 3.  LEGAL PROCEEDINGS

None.

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ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to the shareholders for a vote during the fourth quarter ended December 31, 2004.

PART II

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company’s stock is traded on the NASDAQ National Market System under the symbol “UMBF.” As of February 28, 2005, the Company had 1,958 shareholders. Company stock information for each full quarter period within the two most recent fiscal years is set forth in the table below.

Information concerning restrictions on the ability of the Registrant to pay dividends and the Registrant’s subsidiaries to transfer funds to the Registrant is contained in Item 1, page 6 and Note 10 to the Consolidated Financial Statements provided in Item 8, pages 52 and 53 of this report. Information concerning securities the Company issued under equity compensation plans is contained in Item 12, page 78 of this report.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table provides information about share repurchase activity by the Company during the quarter ended December 31, 2004:

ISSUER PURCHASE OF EQUITY SECURITIES

On April 29, 2004 the Company announced a plan to purchase up to one million shares of common stock. This plan will terminate on April 29, 2005. The Company has not made any repurchases other than through this

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plan. All share purchases under this share repurchase plan are within the scope of Rule 10b-18 promulgated under the Securities Exchange Act of 1934. Rule 10b-18 provides a safe harbor for purchases in a given day if the Company satisfies the manner, timing, price and volume conditions of the rule when purchasing its own common shares.

ITEM 6.  SELECTED FINANCIAL DATA

For a discussion of factors that may materially affect the comparability of the information below, please see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, pages 14 through 35, of this report.

FIVE-YEAR FINANCIAL SUMMARY

(in thousands except per share data)

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ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND ANALYSIS

The following presents management’s discussion and analysis of the Company’s consolidated financial condition, changes in condition, and results of operations. This review highlights the major factors affecting results of operations and any significant changes in financial conditions for the three-year period ended December 31, 2004. It should be read in conjunction with the accompanying Consolidated Financial Statements and other financial statistics appearing elsewhere in the report.

The discussion contains forward-looking statements of expected future developments. We wish to ensure such statements are accompanied by meaningful cautionary statements pursuant to safe harbor established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may refer to projections of future financial performance and financial items, plans and objectives of future operations, and other matters. The use of variations of words such as “expects,” “estimates,” “anticipates,” “believes,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements reflect management’s expectations and are based on currently available data; however, actual future results are subject to future events and uncertainties, which could materially affect actual performance and cause future results to differ materially from those referred to in the forward-looking statements. Such future events and uncertainties include, but are not limited to, changes in: loan demand, the ability of customers to repay loans, consumer saving habits, employee costs, pricing, interest rates, competition, legal or regulatory requirements or restrictions, U.S. or international economic or political conditions such as inflation or fluctuation in interest rates or in the values of securities traded in the equity markets. Any forward-looking statements should be read in conjunction with information about risks and uncertainties set forth in this report. Forward-looking statements speak only as of the date they are made, and the Company does not intend to review or revise any particular forward-looking statement in light of events that occur thereafter or to reflect the occurrence of unanticipated events.

Overview

The Company has experienced nearly three years of suppressed earnings largely driven by the following factors: the sustained low interest rate environment, the overall health of the equity markets and increased competition within its market. However, as discussed later, the fourth quarter of 2004 has begun to reflect improvements in these factors.

The sustained low interest rate environment adversely impacts the net interest income as the Company’s balance sheet is structured to be both very short in duration and liquid. Management believes that liquidity and capital are necessary given the types of products and services the Company offers, particularly as it relates to treasury and cash management products and services. Thus, the Company does not anticipate that the structure of its balance sheet will change substantially in the near future. The Company’s liquidity and capital position is designed to provide assurances that the cash needs of the Company can be met. This position adversely impacts the Company’s net interest income in a declining rate environment. However, in an increasing rate environment, this position should, over time, benefit the Company. Management believes that we will be entering into a period of rising interest rates given the overall expansion of the economy. Item 7a, Quantitative and Qualitative Disclosures about Market Risk discusses in detail the impact of rising and declining rates on net interest income.

Net interest income is a main source of revenue for the Company. Net interest income is negatively impacted by smaller spreads between the yield on earning assets and the interest-free sources of funds. As the yield on loans and investments have declined, interest-free sources of funds could not, by definition, be lowered to match the decrease in yield on earning assets. In addition, a competitive deposit- pricing environment prevented the lowering of rates on interest bearing deposits to match the decrease in yields on earning assets. During the second half of 2004, interest rates began to rise but the repricing of funds occurred faster than the repricing of rates on loans and investments. Table 2 appearing in the “Results of Operations—Net Interest

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Income” section of the Management’s Discussion and Analysis shows the impact of the declining rate environment and also shows the declining benefits derived from the Company’s interest free source of funds.

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

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

The Company is also facing increased competition from other banks in its markets as well as other competitors such as non-bank financial institutions, brokers, insurance companies and investment advisory firms. The Company faces intense competition for retail customers and competes nationally with respect to its asset management business. This increased competition continues to have the impact of compressing margins and income from the Company’s fee based businesses.

To counteract this competitive pressure, the Company’s goal is to differentiate itself from its large super-regional and national competitors through superior service, attention to detail, customer knowledge and responsiveness. Management believes that the Company’s size should allow it to meet this goal and at the same time offer the wide range of products most customers need. The Company has experienced growth in markets outside of the Kansas City metropolitan area and is developing its customer base in those outlying regions. In particular, the Company will be focusing on the St. Louis and Colorado markets. The Company believes that there is demand in these markets for bank services delivered with a customer-centric focus.

Earnings Summary

The Company recorded consolidated net income of $42.8 million for the year ended December 31, 2004. This represents a 27.2% decrease over 2003. Net income for 2003 increased 3% compared to 2002. Earnings per share for the year ended December 31, 2004, were $1.98 per share compared to $2.70 in 2003 and $2.59 in 2002. Earnings per share for 2004 decreased 26.7% over 2003 per share earnings, which had increased 4.2% over 2002.

The Federal Reserve Board has reduced the interest rate 550 basis points (5.50%) since 2001. In the second half of 2004, the Federal Reserve Board increased interest rates five times aggregating 125 basis points (1.25%). This overall reduction in rates caused repricing pressures on loans and securities and thus contributed significantly to a decrease in interest income for 2002, 2003 and into 2004. Although this decrease in interest income was partially offset by a decrease in interest expense, the Company’s net interest income declined to $180.1 million in 2004 compared to $194.1 million in 2003 and $218.0 million in 2002. With the five rate increases in the second half of 2004, the Company is beginning to see a turn around in its yield on earning assets as these rate increases are beginning to have a positive impact. To illustrate: the Company’s yield on earning assets reached a low in the first quarter of 2004 at 3.62% and increased to 3.87% during the fourth quarter of 2004. The Company anticipates that its yields will continue to slowly improve if rates gradually rise or remain stable.

The Company had a decrease of 7.6% in noninterest income in 2004 as compared to 2003 and a 5.8% increase in 2003 compared to 2002. This decrease of $18.7 million in 2004 is due to two factors: In 2003, the Company sold its merchant discount operation, which processes credit and debit card activity for commercial and retail merchants, and realized a one-time gain of $8.25 million. Decreases in trading, trust and investment banking income and service charges on deposit accounts in 2004 contributed to an absolute decrease in noninterest income for 2004 compared to 2003. Trust income was down in 2004 primarily because of the sale of the employee benefit accounts in 2003. Except for its receipt later in 2005 of the final payment on the sale of such accounts, no significant income or expenses are expected in the future with respect to employee benefit accounts.

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Noninterest expense declined in 2004 by 0.5% compared to 2003 and decreased in 2003 by 2.6% compared to 2002. The $1.8 million decrease in 2004 compared to 2003 was primarily due to lower salaries and employee benefit costs as fully realized from the sale of its employee benefits business as well as other personnel related efficiencies. This decrease in salaries and benefits was partially offset by increases in occupancy (largely due to the refurbishment of the headquarters’ building in Kansas City and the construction of new branches) equipment, legal and consulting and processing fees (linked to the Company’s upgrading of its core operating systems); and marketing expenses (the Company’s creation of its branding strategy as well as product support). The decrease in 2003 compared to 2002 was primarily due to lower salaries and employee benefit related costs.

Results of Operations

Net Interest Income

Net interest income is a significant source of the Company’s earnings and represents the amount by which interest income on earning assets exceeds the interest expense paid on liabilities. The volume of interest earning assets and the related funding sources, the overall mix of these assets and liabilities and the rates paid on each, affects net interest income. Table 1 summarizes the change in net interest income resulting from changes in volume and rates for 2004, 2003 and 2002. Table 1 also shows the impact of the declining rate environment on net interest income over the last three years.

Net interest margin is calculated as net interest income on a fully tax equivalent basis (FTE) as a percentage of average earning assets. A critical component of net interest income and related net interest margin is the percentage of earning assets funded by interest free funding sources. Table 2 analyzes net interest rate margin for the three years ended December 31, 2004, 2003 and 2002. Table 2 also shows the decline in the benefit of interest free funds as a result of the declining interest rate environment over the last three years. Net interest income, average balance sheet amounts and the corresponding yields earned and rates paid for the years 2000 through 2004 are presented in a table following the footnotes to the Consolidated Financial Statements. Net interest income is presented on a tax-equivalent basis to adjust for the tax-exempt status of earnings from certain loans and investments, which are primarily obligations of state and local governments.

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Table 1

RATE-VOLUME ANALYSIS (in thousands)

This analysis attributes changes in net interest income either to changes in average balances or to changes in average rates for earning assets and interest-bearing liabilities. The change in net interest income is due jointly to both volume and rate and has been allocated to volume and rate in proportion to the relationship of the absolute dollar amount of the change in each. All rates are presented on a tax-equivalent basis and give effect to the disallowance of interest expense, for federal income tax purposes, related to certain tax-free assets. The loan average balances and rates include nonaccrual loans.

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Table 2

ANALYSIS OF NET INTEREST MARGIN (in thousands)

The Company experienced lower net interest income of $14.0 million for the year 2004 compared to 2003 and $24.0 million for the year 2003 compared to 2002. As illustrated in Table 1, the 2004 and 2003 declines were primarily driven by lower rates. These decreases in net interest income have occurred due to several factors, primarily a reduction in demand for loans due to the soft economy; a reduction in mutual fund and trust related money market balances largely driven by both economic factors and a residual lack of public confidence impacting the overall securities industry; and an earning asset portfolio that, by design, is very short in duration and has been negatively impacted by the overall decline in interest rates over the past three years. As discussed below, management believes these factors will gradually improve.

Management believes that the overall outlook in its net interest income is positive. Outstanding loans have increased from $2.72 billion at the end of 2003 to $2.87 billion at the end of 2004. As the economy continues to strengthen, this will spur higher demand for commercial and consumer loans. Loan-related earning assets tend to have a higher spread than those earned in the Company’s investment portfolio, as, by design, its investment portfolio is very short in duration and liquid in its composition of assets. In addition, as evidenced by the rate increases in 2004, most economists believe that the Federal Reserve Board will slowly apply the brake to the economy by increasing rates in 2005. Given the term of the Company’s earning assets, a rising rate environment has historically had a positive impact on the Company’s net interest income and management expects that this will occur in the future, especially once rates stabilize. Finally, management is continuing a strategic initiative that it launched in the early part of 2004 to focus additional efforts on marketing, product enhancements and streamlining the approval process for its consumer loan product suite. These efforts are expected to result in increased volumes of new applications and booked loans.

Provision and Allowance for Loan Losses

The allowance for loan losses (“ALL”) represents management’s judgment of the probable losses inherent in the Company’s loan portfolio. The provision for loan losses is the amount necessary to adjust its ALL to the level considered appropriate by management. The adequacy of the ALL is reviewed quarterly, considering such items as historical loss trends, a review of individual loans, current economic conditions, loan growth and characteristics, industry or segment concentration and other factors. Bank regulatory agencies require that the adequacy of the ALL be maintained on a bank-by-bank basis for each of the Company’s subsidiaries. Furthermore, a Joint Interagency Advisory was issued on March 1, 2004, by the federal banking, thrift and credit union regulators providing clarification on the guidance on the accounting for loan and lease losses. Management estimates its probable losses in accordance with this guidance.

In 2004, the Company partially decentralized its loan approval process by increasing the lending authority limits for its regions. However, the Company maintained its centralized credit administration function, which

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provides information on affiliate bank risk levels, delinquencies, an internal ranking system and overall credit exposure. In addition, larger loan requests are still centrally reviewed to ensure the consistent application of the loan policy and standards.

Management of the Company decreased the ALL from 1.60% of total loans as of December 31, 2003 to 1.49% of total loans as of December 31, 2004. This decrease was due to both a decrease in nonperforming loans in 2004 and sustained low charge-offs in 2003 and 2004. In 2003 the ALL was increased from 1.40% of total loans as of December 31, 2002 to 1.60% of total loans as of December 31, 2003. This increase was due to an increase in nonperforming loans in 2003.

As shown in Table 3, the ALL has been allocated to various loan portfolio segments. The Company manages the ALL against the risk in the entire loan portfolio and therefore, the allocation of the ALL to a particular loan segment may change in the future. In the opinion of management, the ALL is appropriate based on the inherent losses in the loan portfolio at December 31, 2004. Although no assurance can be given, management of the Company believes the present ALL is adequate considering the Company’s loss experience, delinquency trends and current economic conditions, and does not anticipate material increases in the ALL or in the level of provisions to the ALL, in the near future. Future economic conditions and borrowers’ ability to meet their obligations, however, are uncertainties which could affect the Company’s ALL and/or need to change its current level of provision.

Table 3

ALLOCATION OF ALLOWANCE FOR LOAN LOSSES (in thousands)

This table presents an allocation of the allowance for loan losses by loan categories. The breakdown is based on a number of qualitative factors; therefore, the amounts presented are not necessarily indicative of actual future charge-offs in any particular category.

The Company recorded a provision for loan losses of $5.4 million in 2004, compared with $12.0 million during 2003 and $16.7 million during 2002. The decrease in the loan provision in 2004 was primarily due to sustained low charge-offs in 2004. Net charge-offs were $6.1 million in 2004 and $5.8 million in 2003 compared with $15.0 million in 2002. The decrease in the loan provision in 2003 was primarily due to a $9.2 million decrease in net loan charge-offs, $8.7 million of the decrease is related to a decrease in commercial loans net charge offs.

Table 4 presents a five-year summary of the Company’s ALL. Also, please see Credit Risk under Risk Management on pages 39 and 40 in this report for information relating to nonaccrual, past due, restructured loans, and other credit risk matters.

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Table 4

ANALYSIS OF ALLOWANCE FOR LOAN LOSSES (in thousands)