UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________to________
Commission File Number: 0-23636
EXCHANGE NATIONAL BANCSHARES, INC.
(Exact name of small business issuer as specified in its charter)
Missouri 43-1626350
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
132 East High Street, Jefferson City, Missouri 65101
(Address of principal executive offices)
(573) 761-6100
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 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. [X] Yes [ ] No
As of November 3, 1997, the registrant had 718,511 shares of common
stock, par value $1.00 per share, outstanding.
Transitional Small Business Disclosure Format:
[ ] Yes [X] No
Page 1 of 29 pages
Index to Exhibits located on page 28
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARY
<CAPTION>
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
1997 1996
____________ ____________
<S> <C> <C>
ASSETS
Loans, net of unearned income:
Commercial $ 45,458,302 40,208,276
Real estate -- construction 30,453,697 22,737,000
Real estate -- mortgage 79,049,117 76,070,524
Consumer 37,654,673 34,292,925
____________ ____________
192,615,789 173,308,725
Less allowance for loan losses 2,437,460 2,307,068
____________ ____________
Loans, net 190,178,329 171,001,657
____________ ____________
Investments in debt and equity securities:
Available-for-sale, at estimated market value 51,281,431 51,023,834
Held-to-maturity, estimated market value
of $30,983,966 at September 30, 1997 and
$29,659,353 at December 31, 1996 30,709,687 29,599,537
____________ ____________
Total investments in debt
and equity securities 81,991,118 80,623,371
____________ ____________
Federal funds sold 10,400,000 13,500,000
Cash and due from banks 9,147,902 11,671,641
Premises and equipment 5,150,656 3,341,650
Accrued interest receivable 2,872,477 2,543,421
Deferred income taxes 602,446 649,306
Other assets 1,277,012 748,389
____________ ____________
$301,619,940 284,079,435
============ ============
</TABLE>
Continued on next page
<PAGE>
<TABLE>
EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARY
<CAPTION>
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Unaudited)
September 30, December 31,
1997 1996
____________ ____________
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits $ 34,419,985 32,834,946
Time deposits 196,434,776 195,188,826
____________ ____________
Total deposits 230,854,761 228,023,772
Securities sold under agreements to repurchase 22,408,559 12,303,391
Interest-bearing demand notes to U.S. Treasury 3,172,311 1,034,432
Accrued interest payable 1,153,346 1,008,681
Other liabilities 1,337,063 1,027,857
____________ ____________
Total liabilities 258,926,040 243,398,133
____________ ____________
Stockholders' equity:
Common Stock - $1 par value; 1,500,000 shares
authorized; 718,511 issued and outstanding 718,511 718,511
Surplus 1,281,489 1,281,489
Undivided profits 40,629,783 38,696,973
Unrealized holding gains (losses) on
investments in debt and equity
securities available-for-sale 64,117 (15,671)
____________ ____________
Total stockholders' equity 42,693,900 40,681,302
____________ ____________
$301,619,940 284,079,435
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARY
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
_______________________ _______________________
1997 1996 1997 1996
___________ ___________ ___________ ___________
<S> <C> <C> <C> <C>
Interest income $ 5,558,876 5,130,040 16,194,326 14,973,710
Interest expense 2,689,460 2,488,519 7,816,378 7,249,168
___________ ___________ ___________ ___________
Net interest income 2,869,416 2,641,521 8,377,948 7,724,542
Provision for loan losses 225,000 80,000 525,000 305,000
___________ ___________ ___________ ___________
Net interest income after
provision for loan losses 2,644,416 2,561,521 7,852,948 7,419,542
Noninterest income 491,194 480,644 1,401,373 1,346,552
Noninterest expense 1,663,978 1,595,043 4,856,856 4,580,494
___________ ___________ ___________ ___________
Income before
income taxes 1,471,632 1,447,122 4,397,465 4,185,600
Income taxes 478,000 475,000 1,430,000 1,364,000
___________ ___________ ___________ ___________
Net income $ 993,632 972,122 2,967,465 2,821,600
=========== =========== =========== ===========
Earnings per common share $1.38 1.36 4.13 3.93
===== ===== ===== =====
Dividends per share:
Declared $0.50 0.44 1.44 1.26
===== ===== ===== =====
Paid $0.50 0.44 1.38 1.20
===== ===== ===== =====
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARY
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
__________________________
1997 1996
___________ ___________
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,967,465 2,821,600
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 525,000 305,000
Depreciation expense 236,707 219,822
Net amortization of debt securities
premiums and discounts 70,290 92,625
Increase in accrued interest receivable (329,056) (332,599)
Decrease (increase) in other assets (528,623) 13,577
Increase in accrued interest payable 144,665 117,682
Increase in other liabilities 309,206 371,144
Net securities losses 2,813 --
Other, net 235,735 (83,521)
Origination of mortgage loans for sale (15,110,871) (16,046,756)
Proceeds from the sale of mortgage loans
held for sale 15,110,871 16,046,756
___________ ___________
Net cash provided by operating activities 3,634,202 3,525,330
___________ ___________
Cash flows from investing activities:
Net increase in loans (21,273,602) (24,527,552)
Purchases of available-for-sale debt securities (9,450,570) (41,081,613)
Purchases of held-to-maturity debt securities (5,304,517) (7,546,904)
Proceeds from sales of debt securities:
Available-for-sale 362,915 --
Held-to-maturity 350,000 --
Proceeds from maturities of debt securities:
Available-for-sale 6,798,804 34,483,410
Held-to-maturity 2,804,166 2,454,937
Proceeds from calls of debt securities:
Available-for-sale 2,125,000 1,500,000
Held-to-maturity 1,000,000 200,000
Purchases of premises and equipment (2,078,897) (800,867)
Proceeds from sales of other real estate
owned and repossessions 1,326,269 1,208,305
___________ ___________
Net cash used in
investing activities (23,340,432) (34,110,284)
___________ ___________
</TABLE>
Continued on next page
<PAGE>
<TABLE>
EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARY
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
Nine Months Ended
September 30,
__________________________
1997 1996
___________ ___________
<S> <C> <C>
Cash flows from financing activities:
Net increase in demand deposits 1,585,039 3,452,560
Net increase (decrease) in interest-bearing
transaction accounts (1,549,365) 1,978,031
Net increase in time deposits 2,795,315 11,185,654
Net increase in securities sold
under agreements to repurchase 10,105,168 9,655,336
Net increase in interest-bearing
demand notes to U.S. Treasury 2,137,879 1,719,697
Cash dividends paid (991,545) (862,213)
___________ ___________
Net cash provided by
financing activities 14,082,491 27,129,065
___________ ___________
Net decrease in cash
and cash equivalents (5,623,739) (3,455,889)
Cash and cash equivalents, beginning of period 25,171,641 30,057,476
___________ ___________
Cash and cash equivalents, end of period $19,547,902 26,601,587
=========== ===========
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash paid during period for:
Interest $ 7,671,713 7,131,486
Income taxes 1,530,097 1,402,955
Other real estate and repossessions
acquired in settlement of loans 1,642,121 1,225,292
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Nine Months Ended September 30, 1997 and 1996
Exchange National Bancshares, Inc. ("Bancshares" or the "Company") is a
bank holding company registered under the Bank Holding Company Act of 1956.
Bancshares' activities currently are limited to ownership of the outstanding
capital stock of The Exchange National Bank of Jefferson City, a national
banking association.
On November 3, 1997 the Company acquired 100% of the outstanding shares of
common stock of Union State Bancshares, Inc. (Union), a one-bank holding
company located in Clinton, Missouri. The purchase of Union was accounted for
under the purchase method of accounting. The consolidated total assets and
stockholders' equity of Union at September 30, 1997 were $133.0 million and
$7.0 million, respectively.
Earnings per share amounts are based on 718,511 weighted average shares
outstanding for the three and nine month periods ended September 30, 1997 and
1996.
In June 1996, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities" (SFAS
125). SFAS 125 provides accounting and reporting standards for transfers and
servicing of financial assets and extinguishments of liabilities based on
consistent application of a financial components approach that focuses on
control. It distinguishes transfers of financial assets that are sales from
transfers that are secured borrowings. Under the financial components
approach, after a transfer of financial assets, an entity recognizes all
financial and servicing assets it controls and liabilities it has incurred and
derecognizes assets it no longer controls and liabilities that have been
extinguished. The financial components approach focuses on the assets and
liabilities that exist after the transfer. Many of these assets and
liabilities are components of financial assets that existed prior to the
transfer. If a transfer does not meet the criteria for a sale, the transfer
is accounted for as a secured borrowing with pledge of collateral.
SFAS 125 is effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after December 31, 1996, and has been
applied prospectively. Also, the extension of the SFAS 115 approach to
certain nonsecurity financial assets and the amendment to SFAS 115 was
effective for financial assets held on or acquired after January 1, 1997. The
adoption of SFAS 125 did not have a material impact on the Company's
consolidated financial statements.
In February 1997, the FASB issued Statement of Financial Accounting
Standards No. 128, "Earnings per Share" (SFAS 128) which establishes standards
for computing and presenting earnings per share (EPS). SFAS 128 simplifies
standards for computing EPS and makes them comparable to international
standards. It replaces the presentation of primary EPS with a presentation of
basic EPS. It also requires dual presentation of basic and diluted EPS on the
face of the income statement for all entities with complex capital structures
and requires a reconciliation of the components of basic and diluted EPS.
Basic EPS excludes dilution and is computed by dividing income available to
common shareholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the Company. SFAS 128 is effective
for financial statements issued for periods ending after December 15, 1997,
including interim periods, and requires restatement of all prior-period EPS
data presented. The Company does not believe the adoption of SFAS 128 will
have a material effect on its financial condition or results of operations.
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" (SFAS 130) which establishes
standards for reporting and display of comprehensive income and its components
in a full set of general purpose financial statements. It does not, however,
specify when to recognize or how to measure items that make up comprehensive
income. SFAS 130 was issued to address concerns over the practice of
reporting elements of comprehensive income directly in equity.
SFAS 130 requires all items that are required to be recognized under
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed in equal prominence with the other
financial statements. It does not require a specific format for that
financial statement, but requires that an enterprise display an amount
representing total comprehensive income for the period in that financial
statement. Enterprises are required to classify items of "other comprehensive
income" by their nature in the financial statements and display the balance of
other comprehensive income separately in the equity section of a statement of
financial position. It does not require per share amounts of comprehensive
income to be disclosed.
SFAS 130 is applicable to all entities that provide a full set of
financial statements consisting of a statement of financial position, results
of operations, and cash flows. SFAS 130 is effective for both interim and
annual periods beginning after December 15, 1997. Earlier application is
permitted. Comparative financial statements provided for earlier periods are
required to be reclassified to reflect the provisions of this statement.
Publicly traded enterprises that issue condensed financial statements for
interim periods are required to report a total for comprehensive income in
those financial statements. The Company does not believe the adoption of SFAS
130 will have a material effect on its financial condition or results of
operations.
The accompanying condensed consolidated financial statements include all
adjustments which in the opinion of management are necessary in order to make
those statements not misleading. Certain amounts in the 1996 condensed
consolidated financial statements have been reclassified to conform with the
1997 condensed consolidated presentation. Such reclassifications have no
effect on previously reported net income. Operating results for the period
ended September 30, 1997 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1997.
It is suggested that these condensed consolidated interim financial
statements be read in conjunction with the Company's audited consolidated
financial statements included in its 1996 Annual Report to Shareholders under
the caption "Consolidated Financial Statements" and incorporated by reference
into its Annual Report on Form 10-KSB for the year ended December 31, 1996 as
Exhibit 13.
Item 2. Management's Discussion and Analysis
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE STATEMENTS MADE IN
THIS REPORT ON FORM 10-QSB ARE FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS
AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS, FINANCIAL CONDITION, OR
BUSINESS COULD DIFFER MATERIALLY FROM ITS HISTORICAL RESULTS, FINANCIAL
CONDITION, OR BUSINESS, OR THE RESULTS OF OPERATIONS, FINANCIAL CONDITION, OR
BUSINESS CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD
CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE
DISCUSSED UNDER THE CAPTION "FACTORS THAT MAY AFFECT FUTURE RESULTS OF
OPERATIONS, FINANCIAL CONDITION, OR BUSINESS," IN THE COMPANY'S ANNUAL REPORT
ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 1996, AS WELL AS THOSE
DISCUSSED ELSEWHERE IN THE COMPANY'S REPORTS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION.
Net income for the three months ended September 30, 1997 of $993,000
increased $21,000 when compared to the third quarter of 1996. Earnings per
common share for the third quarter of 1997 of $1.38 increased 2 cents or 1.5%
when compared to the third quarter of 1996. Net income for the nine months
ended September 30, 1997 of $2,967,000 increased $145,000 when compared to the
first nine months of 1996. Earnings per common share for the nine months
ended September 30, 1997 of $4.13 increased 20 cents or 5.1% when compared to
the first nine months of 1996.
<PAGE>
The following table provides a comparison of fully taxable equivalent
earnings, including adjustments to interest income and tax expense for
interest on tax-exempt loans and investments.
<TABLE>
<CAPTION>
(Dollars expressed in thousands)
Three Months Nine Months
Ended Ended
September 30, September 30,
_______________ _______________
1997 1996 1997 1996
_______ _______ _______ _______
<S> <C> <C> <C> <C>
Interest income $ 5,558 5,130 16,194 14,974
Fully taxable equivalent (FTE) adjustment 104 93 296 273
_______ _______ _______ _______
Interest income (FTE basis) 5,662 5,223 16,490 15,247
Interest expense 2,689 2,488 7,816 7,249
_______ _______ _______ _______
Net interest income (FTE basis) 2,973 2,735 8,674 7,998
Provision for loan losses 225 80 525 305
_______ _______ _______ _______
Net interest income after provision
for loan losses (FTE basis) 2,748 2,655 8,149 7,693
Noninterest income 491 480 1 401 1,347
Noninterest expense 1,664 1,595 4,857 4,581
_______ _______ _______ _______
Earnings before income taxes
(FTE basis) 1,575 1,540 4,693 4,459
_______ _______ _______ _______
Income taxes 478 475 1,430 1,364
FTE adjustment 104 93 296 273
_______ _______ _______ _______
Income taxes (FTE basis) 582 568 1,726 1,637
_______ _______ _______ _______
Net income $ 993 972 2,967 2,822
======= ======= ======= =======
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS
ENDED SEPTEMBER 30, 1996
Net interest income on a fully taxable equivalent basis increased $238,000
or 8.7% to $2,973,000 or 4.26% of average earning assets for the third quarter
of 1997 compared to $2,735,000 or 4.13% of average earning assets for the same
period of 1996. The provision for possible loan losses for the three months
ended September 30, 1997 was $225,000 compared to $80,000 for the same period
of 1996.
<PAGE>
Noninterest income and noninterest expense for the three month periods
ended September 30, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
(Dollars expressed in thousands)
Three Months
Ended
September 30, Increase (decrease)
________________ __________________
1997 1996 Amount %
_______ _______ ________ ________
<S> <C> <C> <C> <C>
Noninterest Income
Service charges on deposit accounts $ 179 180 (1) (0.6)%
Trust department income 59 75 (16) (21.3)
Mortgage loan servicing fees 81 74 7 9.5
Gain on sales of mortgage loans 41 25 16 64.0
Credit card fees 92 89 3 3.4
Other 39 37 2 5.4
_______ _______ _______
$ 491 480 11 2.3 %
======= ======= =======
Noninterest Expense
Salaries, wages, and
employee benefits $ 854 850 4 0.5 %
Occupancy expense 87 86 1 1.2
Furniture and equipment expense 121 112 9 8.0
FDIC insurance assessment 7 1 6 600.0
Advertising and promotion 103 132 (29) (22.0)
Postage, printing, and supplies 83 88 (5) (5.7)
Legal, examination, and
professional fees 55 42 13 31.0
Credit card expenses 80 77 3 3.9
Credit investigation and loan
collection expenses 52 33 19 57.6
Other 222 174 48 27.6
_______ _______ _______
$ 1,664 1,595 69 4.3 %
======= ======= =======
</TABLE>
Noninterest income increased $11,000 or 2.3% to $491,000 for the third
quarter of 1997 compared to $480,000 for the same period of 1996. Increases
in mortgage loan servicing fees and gain on sales of mortgage loans both
reflected increased volume. Loans originated and sold to the secondary market
increased from approximately $3,900,000 for the third quarter of 1996 to
approximately $6,000,000 for the third quarter of 1997. Trust department
income decreased $16,000 due to a lesser volume of estate distribution fees.
Noninterest expense increased $69,000 or 4.3% to $1,664,000 for the
third quarter of 1997 compared to $1,595,000 for the third quarter of 1996.
Salaries, wages, and employee benefits, the largest component of noninterest
expense, increased only $4,000 or 0.5%. That increase reflected merit
increases of approximately 4.0% which were offset in part by decreases in
officer staff and employee health insurance costs. The decrease in employee
health insurance costs reflected a two month premium holiday due to favorable
claims experience. Other noninterest expense increased $48,000 or 27.6% due
primarily to additional travel expense and board of directors meetings
relating to the recently completed acquisition, and to returned deposits which
resulted in approximately $11,000 in losses. Credit investigation and loan
collection expenses increased $19,000 or 57.6% due primarily to an increase in
reposession costs, and legal, examination, and professional fees increased
$13,000 or 31.0% due primarily to legal and accounting costs associated with
an unsuccessful bids to purchase additional facilities being sold by a
competitor. The $9,000 or 8.0% increase in furniture and equipment expense
primarily reflected an increase in maintenance contracts which was offset in
part by a decrease in other equipment repairs. The $29,000 or 22.0% decrease
advertising and promotion primarily reflects timing differences in the payment
of those expenses from quarter to quarter.
Income taxes as a percentage of earnings before income taxes as reported
in the condensed consolidated financial statements was 32.5% for the third
quarter of 1997 compared to 32.8% for the third quarter of 1996. After adding
a fully taxable equivalent adjustment to both income taxes and earnings before
income taxes for tax exempt income on loans and investment securities, the
fully taxable equivalent ratios of income taxes as a percentage of earnings
before income taxes were 37.0% for the third quarter of 1997 and 36.9% for the
third quarter of 1996.
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS
ENDED SEPTEMBER 30, 1996
Net interest income on a fully taxable equivalent basis increased $676,000
or 8.5% to $8,674,000 or 4.24% of average earning assets for the first nine
months of 1997 compared to $7,998,000 or 4.12% of average earning assets for
the same period of 1996. The provision for possible loan losses for the nine
months ended September 30, 1997 was $525,000 compared to $305,000 for the same
period of 1996.
<PAGE>
Noninterest income and noninterest expense for the nine month periods
ended September 30, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
(Dollars expressed in thousands)
Nine Months
Ended
September 30, Increase (decrease)
________________ __________________
1997 1996 Amount %
_______ _______ ________ ________
<S> <C> <C> <C> <C>
Noninterest Income
Service charges on deposit accounts $ 526 512 14 2.7 %
Trust department income 151 167 (16) (9.6)
Mortgage loan servicing fees 236 219 17 7.8
Gain on sales of mortgage loans 94 87 7 8.0
Net loss on sales and calls
of debt securities (3) -- (3) --
Credit card fees 272 254 18 7.1
Other 125 108 17 15.7
_______ _______ _______
$ 1,401 1,347 54 4.0 %
======= ======= =======
Noninterest Expense
Salaries, wages, and
employee benefits $ 2,599 2,558 41 1.6 %
Occupancy expense 246 225 21 9.3
Furniture and equipment expense 391 319 72 22.6
FDIC insurance assessment 21 2 19 950.0
Advertising and promotion 245 246 (1) (0.4)
Postage, printing, and supplies 255 248 7 2.8
Legal, examination, and
professional fees 200 160 40 25.0
Credit card expenses 231 221 10 4.5
Credit investigation and loan
collection expenses 117 79 38 48.1
Other 552 523 29 5.5
_______ _______ _______
$ 4,857 4,581 276 6.0 %
======= ======= =======
</TABLE>
Noninterest income increased $54,000 or 4.0% to $1,401,000 for the first
nine months of 1997 compared to $1,347,000 for the same period of 1996.
Increases in service charges on deposit accounts, mortgage loan servicing
fees, credit card fees, and other noninterest income all reflected increased
volume. The average volume of mortgage loans serviced increased from
approximately $69,800,000 for the first nine months of 1996 to approximately
$78,400,000 for the first nine months of 1997. Loans originated and sold to
the secondary market decreased from approximately $16,000,000 for the first
nine months of 1996 to approximately $15,100,000 for the first nine months of
1997. Trust department income decreased $16,000 due to a lesser volume of
estate distribution fees. Net loss on sales and calls of debt securities
reflected a $3,600 loss on the partial call of an available-for-sale municipal
security which was offset in part by an $800 net gain on the sale of several
available-for-sale mortgage-backed securities pools which had paid down to
insignificant remaining balances. A municipal security classified as
held-to-maturity was inadvertently sold in September 1997 at no gain or loss
due to confusion about its classification resulting from a conversion of the
investment accounting system.
Noninterest expense increased $276,000 or 6.0% to $4,857,000 for the first
nine months of 1997 compared to $4,581,000 for the first nine months of 1996.
The $72,000 or 22.6% increase in furniture and equipment expense reflects
costs associated with the new East Bank building, including the write-off of
items no longer being used, plus increases in depreciation expense and
maintenance agreements in connection with expanded data processing
capabilities. The $41,000 or 1.6% increase in salaries, wages, and employee
benefits reflected merit increases of approximately 4.0% plus increases in
profit sharing expense and payroll taxes. Those increases were partially
offset by a decrease in officer staff and recruiting expense. The $40,000 or
25.0% increase in legal, examination, and professional fees reflects indirect
costs associated with the recently completed acquisition plus legal and
accounting costs associated with unsuccessful bids to purchase additional
facilities being sold by a competitor. Credit investigation and loan
collection expenses increased $38,000 or 48.1% due primarily to an increase in
reposession costs, while the $21,000 or 9.3% increase in occupancy expense
primarily reflected increased costs associated with the new East Bank
building. The $19,000 increase in FDIC insurance assessment reflects the fact
that in 1997 the Company is now assessed by the Financing Corporation for
Savings Association Insurance Fund at an annual rate 1.296% per $100 of
deposits. For the first nine months of 1996 the Company was assessed at the
minimum FDIC assessment level of $1,500 in effect at that time.
Income taxes as a percentage of earnings before income taxes as reported
in the condensed consolidated financial statements was 32.5% for the first
nine months of 1997 and 32.6% the first nine months of 1996. After adding a
fully taxable equivalent adjustment to both income taxes and earnings before
income taxes for tax exempt income on loans and investment securities, the
fully taxable equivalent ratios of income taxes as a percentage of earnings
before income taxes were 36.8% for the first nine months of 1997 and 36.7% for
the first nine months of 1996.
NET INTEREST INCOME
The increases in fully taxable equivalent net interest income for the
three and nine month periods ended September 30, 1997 primarily reflect growth
in average total loans outstanding.
The following tables present average balance sheets, net interest income,
average yields of earning assets, and average costs of interest bearing
liabilities on a fully taxable equivalent basis for the three and nine month
periods ended September 30, 1997 and 1996.
<PAGE>
<TABLE>
<CAPTION>
(Dollars expressed in thousands)
Three Months Ended Three Months Ended
September 30, 1997 September 30, 1996
___________________________ ___________________________
Interest Rate Interest Rate
Average Income/ Earned/ Average Income/ Earned/
Balance Expense/1/ Paid/1/ Balance Expense/1/ Paid/1/
________ __________ _______ ________ __________ _______
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Loans:/2/
Commercial $ 45,125 $1,036 9.11% $ 40,654 $ 915 8.95%
Real estate 107,951 2,396 8.81 91,790 2,035 8.82
Consumer 36,672 838 9.07 33,758 795 9.37
Money market/3/ 587 8 5.41 7,352 101 5.47
Investment
securities:/4/
U.S. Treasury and
U.S. Government
agencies 62,752 942 5.96 57,406 836 5.79
State and municipal 17,813 358 7.97 16,250 314 7.69
Other 1,112 20 7.14 3,687 60 6.47
Federal funds sold 4,508 63 5.54 12,435 166 5.31
Interest-bearing
deposits 61 1 6.50 39 1 10.20
________ ______ ________ ______
Total interest
earning assets 276,581 5,662 8.12 263,371 5,223 7.89
All other assets 18,595 16,837
Allowance for loan
losses (2,327) (2,304)
________ ________
Total assets $292,849 $277,904
======== ========
</TABLE>
Continued on next page
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
September 30, 1997 September 30, 1996
___________________________ ___________________________
Interest Rate Interest Rate
Average Income/ Earned/ Average Income/ Earned/
Balance Expense/1/ Paid/1/ Balance Expense/1/ Paid/1/
________ __________ _______ ________ __________ _______
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES AND
STOCKHOLDERS' EQUITY
NOW accounts $ 26,789 $ 180 2.67% $ 27,109 $ 181 2.66%
Savings 22,475 223 3.94 22,250 220 3.93
Money market 32,572 343 4.18 31,766 335 4.20
Deposits of
$100,000 and over 13,159 180 5.43 10,214 140 5.45
Other time deposits 101,913 1,484 5.78 95,283 1,392 5.81
________ ______ ________ ______
Total time deposits 196,908 2,410 4.86 186,622 2,268 4.83
Securities sold under
agreements to
repurchase 18,933 267 5.59 17,770 210 4.70
Interest-bearing
demand notes
to U.S. Treasury 1,092 12 4.36 846 10 4.70
________ ______ ________ ______
Total interest-
bearing
liabilities 216,933 2,689 4.92 205,238 2,488 4.82
______ ______
Demand deposits 31,562 31,318
Other liabilities 1,993 1,827
________ ________
Total liabilities 250,488 238,383
Stockholders' equity 42,361 39,521
________ ________
Total liabilities
and stockholders'
equity $292,849 $277,904
======== ========
Net interest income $ 2,973 $ 2,735
======= =======
Net interest margin/5/ 4.26% 4.13%
__________ ==== ====
/1/ Interest income and yields are presented on a fully taxable equivalent
basis using the Federal statutory income tax rate of 34%, net of
nondeductible interest expense. Such adjustments were $104,000 in 1997
and $93,000 in 1996.
/2/ Non-accruing loans are included in the average amounts outstanding.
/3/ Includes banker's acceptances and commercial paper.
/4/ Average balances based on amortized cost.
/5/ Net interest income divided by average total interest earning assets.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
(Dollars expressed in thousands)
Nine Months Ended Nine Months Ended
September 30, 1997 September 30, 1996
___________________________ ___________________________
Interest Rate Interest Rate
Average Income/ Earned/ Average Income/ Earned/
Balance Expense/1/ Paid/1/ Balance Expense/1/ Paid/1/
________ __________ _______ ________ __________ _______
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Loans:/2/
Commercial $ 43,955 $2,981 9.07% $ 39,788 $2,691 9.03%
Real estate 104,377 6,844 8.77 88,078 5,866 8.90
Consumer 35,251 2,409 9.14 32,576 2,266 9.29
Money market/3/ 1,159 47 5.42 2,469 101 5.46
Investment
securities:/4/
U.S. Treasury and
U.S. Government
agencies 63,600 2,857 6.01 59,993 2,560 5.70
State and municipal 17,298 1,015 7.85 15,567 907 7.78
Other 1,671 87 6.96 3,366 161 6.39
Federal funds sold 6,085 248 5.45 17,445 694 5.31
Interest-bearing
deposits 53 2 5.05 24 1 5.57
________ ______ ________ ______
Total interest
earning assets 273,449 16,490 8.06 259,306 15,247 7.85
All other assets 18,487 16,692
Allowance for loan
losses (2,330) (2,266)
________ ________
Total assets $289,606 $273,732
======== ========
</TABLE>
Continued on next page
<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, 1997 September 30, 1996
___________________________ ___________________________
Interest Rate Interest Rate
Average Income/ Earned/ Average Income/ Earned/
Balance Expense/1/ Paid/1/ Balance Expense/1/ Paid/1/
________ __________ _______ ________ __________ _______
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES AND
STOCKHOLDERS' EQUITY
NOW accounts $ 27,838 $ 555 2.67% $ 28,067 $ 561 2.67%
Savings 22,648 669 3.95 21,993 649 3.94
Money market 32,368 1,010 4.17 31,310 981 4.19
Deposits of
$100,000 and over 13,451 548 5.45 8,580 346 5.39
Other time deposits 100,286 4,309 5.74 93,173 4,057 5.82
________ ______ ________ ______
Total time deposits 196,591 7,091 4.82 183,123 6,594 4.81
Securities sold under
agreements to
repurchase 17,311 691 5.34 17,751 625 4.70
Interest-bearing
demand notes
to U.S. Treasury 1,037 34 4.38 778 30 5.15
________ ______ ________ ______
Total interest-
bearing
liabilities 214,939 7,816 4.86 201,652 7,249 4.80
______ ______
Demand deposits 31,037 31,207
Other liabilities 1,939 1,760
________ ________
Total liabilities 247,915 234,619
Stockholders' equity 41,691 39,113
________ ________
Total liabilities
and stockholders'
equity $289,606 $273,732
======== ========
Net interest income $ 8,674 $ 7,998
======= =======
Net interest margin/5/ 4.24% 4.12%
__________ ==== ====
/1/ Interest income and yields are presented on a fully taxable equivalent
basis using the Federal statutory income tax rate of 34%, net of
nondeductible interest expense. Such adjustments were $296,000 in 1997
and $273,000 in 1996.
/2/ Non-accruing loans are included in the average amounts outstanding.
/3/ Includes banker's acceptances and commercial paper.
/4/ Average balances based on amortized cost.
/5/ Net interest income divided by average total interest earning assets.
</TABLE>
<PAGE>
The following tables present, on a fully taxable equivalent basis, analyses
of changes in net interest income resulting from changes in average volumes of
earning assets and interest bearing liabilities and average rates earned and
paid. The change in interest due to the combined rate/volume variance has
been allocated to rate and volume changes in proportion to the absolute dollar
amounts of change in each.
<TABLE>
<CAPTION>
(Dollars expressed in thousands) Three Months Ended September
30, 1997 Compared to Three
Months Ended September 30, 1996
_______________________________
Change due to
Total ____________________
Change Volume Rate
________ ________ _________
<S> <C> <C> <C>
Interest income on a fully
taxable equivalent basis:
Loans:
Commercial $ 121 103 18
Real estate 361 359 2
Consumer 43 68 (25)
Money market (93) (92) (1)
Investment securities:
U.S. Treasury and U.S.
Government agencies 106 79 27
State and municipal 44 31 13
Other (40) (45) 5
Federal funds sold (103) (111) 8
Interest-bearing deposits -- -- --
_______ _______ ________
Total interest income 439 392 47
Interest expense:
NOW accounts (1) (2) 1
Savings 3 2 1
Money market 8 8 --
Deposits of $100,000 and over 40 40 --
Other time deposits 92 97 (5)
Securities sold under
agreements to repurchase 57 15 42
Interest-bearing demand
notes to U.S. Treasury 2 3 (1)
_______ _______ ________
Total interest expense 201 163 38
_______ _______ ________
Net interest income on a fully
taxable equivalent basis $ 238 229 9
======= ======= ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
(Dollars expressed in thousands)
Nine Months Ended September
30, 1997 Compared to Nine
Months Ended September 30, 1996
_______________________________
Change due to
Total ____________________
Change Volume Rate
________ ________ _________
<S> <C> <C> <C>
Interest income on a fully
taxable equivalent basis:
Loans:
Commercial $ 290 283 7
Real estate 978 1,070 (92)
Consumer 143 184 (41)
Money market (54) (53) (1)
Investment securities:
U.S. Treasury and U.S.
Government agencies 297 158 139
State and municipal 108 102 6
Other (74) (87) 13
Federal funds sold (446) (463) 17
Interest-bearing deposits 1 1 --
_______ _______ ________
Total interest income 1,243 1,195 48
Interest expense:
NOW accounts (6) (5) (1)
Savings 20 19 1
Money market 29 33 (4)
Deposits of $100,000 and over 202 198 4
Other time deposits 252 307 (55)
Securities sold under
agreements to repurchase 66 (16) 82
Interest-bearing demand
notes to U.S. Treasury 4 9 (5)
_______ _______ ________
Total interest expense 567 545 22
_______ _______ ________
Net interest income on a fully
taxable equivalent basis $ 676 650 26
======= ======= ========
</TABLE>
<PAGE>
Provision and Allowance for Loan Losses
The provision for loan losses is based on management's evaluation of the
loan portfolio in light of national and local economic conditions, changes in
the composition and volume of the loan portfolio, changes in the volume of
past due and nonaccrual loans, and other relevant factors. The allowance for
loan losses which is reported as a deduction from loans, is available for loan
charge-offs. The allowance is increased by the provision charged to expense
and is reduced by loan charge-offs net of loan recoveries.
Management formally reviews all loans in excess of certain dollar amounts
(periodically established) at least annually. In addition, on a monthly
basis, management reviews past due, "classified", and "watch list" loans in
order to classify or reclassify loans as "loans requiring attention,"
"substandard," "doubtful," or "loss". During that review, management also
determines what loans should be considered to be "impaired". Management
believes, but there can be no assurance, that these procedures keep management
informed of possible problem loans. Based upon these procedures, both the
allowance and provision for loan losses are adjusted to maintain the allowance
at a level considered adequate by management for estimated losses inherent in
the loan portfolio. See additional discussion concerning nonperforming loans
under "Financial Condition."
The allowance for loan losses was reduced by net loan charge-offs of
$85,933 for the first quarter of 1997, $270,114 for the second quarter of
1997, and $38,561 for the third quarter of 1997. That compares to net
charge-offs of $26,301 for the first quarter of 1996, $75,480 for the second
quarter of 1996, and $84,507 for the third quarter of 1996. The allowance for
loan losses was increased by a provision charged to expense of $125,000 for
the first quarter of 1997, $175,000 for the second quarter of 1997, and
$225,000 for the third quarter of 1997. That compares to $90,000 for the
first quarter of 1996, $135,000 for the second quarter of 1996, and $80,000
for the third quarter of 1996.
The balance of the allowance for loan losses was $2,437,460 at September
30, 1997 compared to $2,307,068 at December 31, 1996 and $2,297,721 at
September 30, 1996. The allowance for loan losses as a percent of outstanding
loans was 1.27% at September 30, 1997 compared to 1.33% at December 31, 1996
and 1.35% at September 30, 1996.
FINANCIAL CONDITION
Total assets increased $17,540,505 or 6.2% to $301,619,940 at September
30, 1997 compared to $284,079,435 at December 31, 1996. Total liabilities
increased $15,527,907 or 6.4% to $258,926,040 and stockholders' equity
increased $2,012,598 or 4.9% to $42,693,900.
Loans, net of unearned income, increased $19,307,064 or 11.1% to
$192,615,789 at September 30, 1997 compared to $173,308,725 at December 31,
1996. Commercial loans increased $5,250,026 or 13.1%; Real estate
construction loans increased $7,716,697 or 33.9%; real estate mortgage loans
increased $2,978,593 or 3.9%; and consumer loans increased $3,361,748 or 9.8%.
Nonperforming loans, defined as loans 90 days or more past due and loans
on nonaccrual status, totaled $751,000 or 0.39% of total loans at September
30, 1997 compared to $1,092,000 or 0.63% of total loans at December 31, 1996.
Detail of those balances plus other real estate and repossessions is as
follows:
<TABLE>
<CAPTION>
(Dollars expressed in thousands)
September 30, 1997 December 31, 1996
_________________ _________________
% of % of
Gross Gross
Balance Loans Balance Loans
_______ _____ _______ _____
<C> <C> <C> <C>
Loans 90 days or more
past due -
Commercial $ -- --% $ 59 .03%
Real Estate:
Construction 18 .01 122 .07
Mortgage 55 .03 186 .11
Consumer 36 .02 27 .02
______ ____ ______ ____
109 .06 394 .23
______ ____ ______ ____
Loans on nonaccrual
status -
Commercial 51 .03 42 .02
Real Estate:
Construction 313 .16 327 .19
Mortgage 217 .11 268 .15
Consumer 61 .03 61 .04
______ ____ ______ ____
642 .33 698 .40
______ ____ ______ ____
Total nonperforming loans 751 .39% 1,092 .63%
Other real estate 351 ==== 22 ====
Repossessions 90 106
______ ______
Total nonperforming assets $1,192 $1,220
====== ======
</TABLE>
The allowance for loan losses was 324.50% of nonperforming loans at
September 30, 1997 compared to 211.26% of nonperforming loans at December 31,
1996. The September 30, 1997 balances of real estate, and consumer loans 90
days or more past due reflect two and seven loans, respectively, all of which
are well secured and in the process of collection. The September 30, 1997
balances of commercial, real estate, and consumer loans on nonaccrual status
reflect loans to two, five, and seven borrowers, respectively. Approximately
$39,000 of the commercial loans on nonaccrual status at September 30, 1997
were 90% guaranteed by the Small Business Administration.
It is the Company's policy to discontinue the accrual of interest income
on loans when the full collection of interest or principal is in doubt, or
when the payment of interest or principal has become contractually 90 days
past due unless the obligation is both well secured and in the process of
collection. A loan remains on nonaccrual status until the loan is current as
to payment of both principal and interest and/or the borrower demonstrates the
ability to pay and remain current. Interest on loans on nonaccrual status at
September 30, 1997 and 1996, which would have been recorded under the original
terms those loans, was approximately $48,000 and $62,000 for the nine months
ended September 30, 1997 and 1996, respectively. Approximately $24,000 and
$16,000 was actually recorded as interest income on such loans for the nine
months ended September 30, 1997 and 1996, respectively.
The increase in other real estate from December 31, 1996 primarily
reflects real estate which was acquired by the Company in lieu of foreclosure
from a borrower in the construction business. Second quarter 1997 loan losses
relating to that borrower were approximately $221,000.
A loan is considered "impaired" when it is probable a creditor will be
unable to collect all amounts due - both principal and interest - according to
the contractual terms of the loan agreement. In addition to nonaccrual loans
at September 30, 1997 included in the table above, which were considered
"impaired", management has identified additional loans totaling approximately
$4,789,000 which are not included in the nonaccrual table above but are
considered by management to be "impaired". Approximately $2,948,000 of those
loans represented commercial and real estate loans to a group of borrowers
that operate in an industry that has experienced some adverse economic trends
due to change in that industry's regulatory environment, and approximately
$1,071,000 of those loans represented a commercial real estate development
which has experienced cash flow problems. Management believes that the loans
are well secured and all have performed according to their contractual terms
during the first nine months of 1997. Another approximately $401,000 of the
$4,789,000 of "impaired" loans represented commercial and real estate loans to
a commercial retail operation that has experienced cash flow problems. The
remainder of loans identified by management as being "impaired" reflected
commercial loans to three borrowers totaling approximately $175,000,
one real estate loan totaling approximately $40,000, and thirteen consumer
loans totaling approximately $154,000. The average balance of "impaired"
loans for the first nine months of 1997 was approximately $5,167,000. At
September 30, 1997 the allowance for loan losses on impaired loans was
$242,447 compared to $277,149 at December 31, 1996.
As of September 30, 1997 approximately $1,728,000 of additional loans not
included in the nonaccrual table or identified by management as being
"impaired" were classified by management as having potential credit problems
which raised doubts as to the ability of the borrower to comply with present
loan repayment terms. Of the $1,728,000 of "classified" loans at September
30, 1997, $185,000 represented three commercial loans; $1,202,000 represented
eight real estate loans ranging in size from approximately $18,000 to
$439,000; and $341,000 represented forty seven installment loans to
individuals.
Investments in debt and equity securities classified as available-for-sale
increased $257,597 or 0.5% to $51,281,431 at September 30, 1997 compared to
$51,023,834 at December 31, 1996. Investments classified as
available-for-sale are carried at fair value. At December 31, 1996 the market
valuation account for the available-for-sale investments of $24,875 decreased
the amortized cost of those investments to their fair value on that date and
the net after tax increase resulting from the market valuation adjustment of
$15,671 was reflected as a separate negative component of stockholders'
equity. During 1997, the market valuation account was increased $126,648 to a
positive balance of $101,773 to reflect the fair value of available-for-sale
investments at September 30, 1997 and the net after tax increase resulting
from the change in the market valuation adjustment of $79,788 increased the
stockholders' equity component to a positive balance of $64,117 at September
30, 1997. The increase in fair value compared to amortized cost resulted from
a decrease in current market rates from December 31, 1996 to September 30,
1997.
Investments in debt securities classified as held-to-maturity increased
$1,110,150 or 3.8% to $30,709,687 at September 30, 1997 compared to
$29,599,537 at December 31, 1996. Investments classified as held-to-maturity
are carried at amortized cost. At September 30, 1997 the aggregate fair value
of the Company's held-to-maturity investment portfolio was approximately
$274,000 more than its aggregate carrying value. At December 31, 1996 the
aggregate fair value of the held-to-maturity investment portfolio was
approximately $60,000 more than its aggregate carrying value.
Cash and cash equivalents, which consist of cash and due from banks and
Federal funds sold, decreased $5,623,739 or 22.3% to $19,547,902 at September
30, 1997 compared to $25,171,641 at December 31, 1996.
Premises and equipment increased $1,809,006 or 54.1% to $5,150,656 at
September 30, 1997 compared to $3,341,650 at December 31, 1996. The increase
reflected expenditures for premises and equipment of $2,078,897 less
depreciation expense of $236,707 and a net loss on disposition of fixed assets
of $33,184. The expenditures for premises and equipment reflected
approximately $760,000 in construction costs for a permanent East Bank
facility and approximately $1,117,000 in progress payments towards the
renovation and expansion of the Company's main bank building located in
downtown Jefferson City. During the third quarter of 1997 it was decided that
the planned two story expansion project should be increased to three stories.
The renovation and expansion project, which is expected to continue into 1998,
is now anticipated to cost no more than $4,700,000.
Total deposits increased $2,830,989 or 1.2% to $230,854,761 at September
30, 1997 compared to $228,023,772 at December 31, 1996 due to a $1,585,039
increase in demand deposits and a $1,245,950 increase in time deposits. The
increase in demand deposits primarily reflected normal fluctuations. Average
demand deposits decreased approximately 0.5% for the first nine months of 1997
compared to the first nine months of 1996. The increase in time deposits
primarily reflected an increase in under $100,000 certificates of deposit
which was offset in part by decreases in other areas.
Securities sold under agreements to repurchase increased $10,105,168 to
$22,408,559 at September 30, 1997 compared to $12,303,391 at December 31, 1996
due primarily to funds obtained from a local hospital, and the Missouri
Department of Corrections.
The increase in stockholders' equity reflects net income of $2,967,465
plus $79,788 in unrealized holding gains on investments in debt and equity
securities available-for-sale, less dividends declared of $1,034,655.
No material changes in the Company's liquidity or capital resources have
occurred since December 31, 1996.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit No. Description
2.1 Acquisition Agreement dated July 11, 1997, as amended August 25,
1997, by and among Exchange National Bancshares, Inc., ENBUSB
Acquisition Company, Inc., Union State Bank & Trust of Clinton,
Union State Bancshares, Inc., and certain shareholders of Union
State Bancshares, Inc. (filed on November 7, 1997 as Exhibit 2.1
to the Company's Current Report on Form 8-K dated November 3,
1997 and incorporated herein by reference).
2.2 Merger Agreement, dated as of October 22, 1997 by and between
Union State Bancshares, Inc. and ENBUSB Acquisition Company, Inc.
(filed on November 7, 1997 as Exhibit 2.2 to the Company's
Current Report on Form 8-K dated November 3, 1997 and
incorporated herein by reference).
3.1 Articles of Incorporation of the Company (filed as
Exhibit 3(a) to the Company's Registration Statement on
Form S-4 (Registration No. 33-54166) and incorporated
herein by reference).
3.2 Bylaws of the Company (filed as Exhibit 3(b) to the
Company's Registration Statement on Form S-4
(Registration No. 33-54166) and incorporated herein by
reference).
4 Specimen certificate representing shares of the
Company's $1.00 par value common stock (filed as Exhibit
4 to the Company's Registration Statement on Form S-4
(Registration No. 33-54166) and incorporated herein by
reference).
27 Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the third quarter of
1997.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
EXCHANGE NATIONAL BANCSHARES, INC.
Date By /s/ Donald L. Campbell
___________________________________
Donald L. Campbell, Chairman of the
Board of Directors, President and
November 10, 1997 Principal Executive Officer
By /s/ Carl A. Brandenburg, Sr.
___________________________________
Carl A. Brandenburg, Sr., Treasurer
November 10, 1997 and Chief Financial Officer
<PAGE>
EXCHANGE NATIONAL BANCSHARES, INC.
INDEX TO EXHIBITS
September 30, 1997 Form 10-QSB
Exhibit No. Description Page No.
2.1 Acquisition Agreement dated July 11, 1997, as amended
August 25, 1997, by and among Exchange National
Bancshares, Inc., ENBUSB Acquisition Company, Inc.,
Union State Bank & Trust of Clinton, Union State
Bancshares, Inc., and certain shareholders of Union
State Bancshares, Inc. (filed on November 7, 1997 as
Exhibit 2.1 to the Company's Current Report on Form
8-K dated November 3, 1997 and incorporated herein
by reference). **
2.2 Merger Agreement, dated as of October 22, 1997 by and
between Union State Bancshares, Inc. and ENBUSB
Acquisition Company, Inc. (filed on November 7, 1997
as Exhibit 2.2 to the Company's Current Report on Form
8-K dated November 3, 1997 and incorporated herein
by reference). **
3.1 Articles of Incorporation of the Company (filed as
Exhibit 3(a) to the Company's Registration Statement
on Form S-4 (Registration No. 33-54166) and
incorporated herein by reference). **
3.2 Bylaws of the Company (filed as Exhibit 3(b) to the
Company's Registration Statement on Form S-4
(Registration No. 33-54166) and incorporated herein
by reference). **
4 Specimen certificate representing shares of the
Company's $1.00 par value common stock (filed as
Exhibit 4 to the Company's Registration Statement on
Form S-4 (Registration No. 33-54166) and incorporated
herein by reference). **
27 Financial Data Schedule 29
** Incorporated by reference.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S QUARTERLY REPORT ON FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000893847
<NAME> EXCHANGE NATIONAL BANCSHARES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 9,067
<INT-BEARING-DEPOSITS> 81
<FED-FUNDS-SOLD> 10,400
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 51,281
<INVESTMENTS-CARRYING> 30,710
<INVESTMENTS-MARKET> 30,984
<LOANS> 192,616
<ALLOWANCE> 2,438
<TOTAL-ASSETS> 301,620
<DEPOSITS> 230,855
<SHORT-TERM> 25,581
<LIABILITIES-OTHER> 2,490
<LONG-TERM> 0
0
0
<COMMON> 719
<OTHER-SE> 41,975
<TOTAL-LIABILITIES-AND-EQUITY> 301,620
<INTEREST-LOAN> 12,261
<INTEREST-INVEST> 3,683
<INTEREST-OTHER> 250
<INTEREST-TOTAL> 16,194
<INTEREST-DEPOSIT> 7,091
<INTEREST-EXPENSE> 7,816
<INTEREST-INCOME-NET> 8,378
<LOAN-LOSSES> 525
<SECURITIES-GAINS> (3)
<EXPENSE-OTHER> 4,857
<INCOME-PRETAX> 4,397
<INCOME-PRE-EXTRAORDINARY> 2,967
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,967
<EPS-PRIMARY> 4.13
<EPS-DILUTED> 4.13
<YIELD-ACTUAL> 4.24
<LOANS-NON> 642
<LOANS-PAST> 109
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 6,517
<ALLOWANCE-OPEN> 2,307
<CHARGE-OFFS> 522
<RECOVERIES> 128
<ALLOWANCE-CLOSE> 2,438
<ALLOWANCE-DOMESTIC> 1,858
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 580
</TABLE>
