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 March 31, 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 May 1, 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 22 pages
Index to Exhibits located on page 21
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
March 31, December 31,
1997 1996
____________ ____________
<S> <C> <C>
ASSETS
Loans, net of unearned income:
Commercial $ 43,140,431 40,208,276
Real estate -- construction 25,489,448 22,737,000
Real estate -- mortgage 77,858,880 76,070,524
Consumer 33,991,521 34,292,925
Bankers acceptances 2,524,701 --
____________ ____________
183,004,981 173,308,725
Less allowance for loan losses 2,346,135 2,307,068
____________ ____________
Loans, net 180,658,846 171,001,657
____________ ____________
Investments in debt and equity securities:
Available-for-sale, at estimated market value 52,190,814 51,023,834
Held-to-maturity, estimated market value
of $29,976,541 at March 31, 1997 and
$29,659,353 at December 31, 1996 30,073,771 29,599,537
____________ ____________
Total investments in debt
and equity securities 82,264,585 80,623,371
____________ ____________
Federal funds sold 11,500,000 13,500,000
Cash and due from banks 14,196,301 11,671,641
Premises and equipment 3,626,047 3,341,650
Accrued interest receivable 2,786,863 2,543,421
Deferred income taxes 733,162 649,306
Other assets 574,121 748,389
____________ ____________
$296,339,925 284,079,435
============ ============
</TABLE>
Continued on next page
<PAGE>
<TABLE>
EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARY
<CAPTION>
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Unaudited)
March 31, December 31,
1997 1996
____________ ____________
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits $ 35,646,094 32,834,946
Time deposits 195,262,073 195,188,826
____________ ____________
Total deposits 230,908,167 228,023,772
Securities sold under agreements to repurchase 20,048,519 12,303,391
Interest-bearing demand notes to U.S. Treasury 1,508,453 1,034,432
Accrued interest payable 1,041,195 1,008,681
Other liabilities 1,595,636 1,027,857
____________ ____________
Total liabilities 255,101,970 243,398,133
____________ ____________
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 39,396,407 38,696,973
Unrealized holding losses on investments
in debt and equity securities
available-for-sale (158,452) (15,671)
____________ ____________
Total stockholders' equity 41,237,955 40,681,302
____________ ____________
$296,339,925 284,079,435
============ ============
</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
March 31,
_______________________
1997 1996
___________ ___________
<S> <C> <C>
Interest income $ 5,241,570 4,855,972
Interest expense 2,532,814 2,347,487
___________ ___________
Net interest income 2,708,756 2,508,485
Provision for loan losses 125,000 90,000
___________ ___________
Net interest income after
provision for loan losses 2,583,756 2,418,485
Noninterest income 435,179 411,027
Noninterest expense 1,517,357 1,495,181
___________ ___________
Income before
income taxes 1,501,578 1,334,331
Income taxes 486,000 431,000
___________ ___________
Net income $ 1,015,578 903,331
=========== ===========
Earnings per common share $1.41 1.26
===== =====
Dividends per share:
Declared $0.44 0.38
===== =====
Paid $0.44 0.38
===== =====
</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)
Three Months Ended
March 31,
__________________________
1997 1996
___________ ___________
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,015,578 903,331
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 125,000 90,000
Depreciation expense 73,489 67,031
Net amortization of debt securities
premiums and discounts 32,103 27,717
Increase in accrued interest receivable (243,442) (130,717)
Decrease in other assets 174,268 307,933
Increase in accrued interest payable 32,514 102,461
Increase in other liabilities 567,779 548,529
Net securities losses 2,813 --
Other, net (43,263) 20,474
Origination of mortgage loans for sale (4,151,379) (6,200,852)
Proceeds from the sale of mortgage loans
held for sale 4,151,379 6,200,852
___________ ___________
Net cash provided by operating activities 1,736,839 1,936,759
___________ ___________
Cash flows from investing activities:
Net increase in loans (10,337,584) (4,174,914)
Purchases of available-for-sale debt securities (3,517,427) (19,316,774)
Purchases of held-to-maturity debt securities (2,992,180) (1,276,149)
Proceeds from sales of available-for-sale
debt securities 362,915 --
Proceeds from maturities of debt securities:
Available-for-sale 1,614,524 2,195,321
Held-to-maturity 1,504,401 1,631,561
Proceeds from calls of debt securities:
Available-for-sale 125,000 1,500,000
Held-to-maturity 1,000,000 200,000
Purchases of premises and equipment (357,886) (177,615)
Proceeds from sales of other real estate
owned and repossessions 598,658 196,817
___________ ___________
Net cash used in
investing activities (11,999,579) (19,221,753)
___________ ___________
</TABLE>
Continued on next page
<PAGE>
<TABLE>
EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARY
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
Three Months Ended
March 31,
__________________________
1997 1996
___________ ___________
<S> <C> <C>
Cash flows from financing activities:
Net increase in demand deposits 2,811,148 24,516
Net increase (decrease) in interest-bearing
transaction accounts (272,138) 1,552,106
Net increase in time deposits 345,385 2,253,993
Net increase in securities sold
under agreements to repurchase 7,745,128 15,028,651
Net increase in interest-bearing
demand notes to U.S. Treasury 474,021 1,691,760
Cash dividends paid (316,144) (273,035)
___________ ___________
Net cash provided by
financing activities 10,787,400 20,277,991
___________ ___________
Net increase in cash and cash equivalents 524,660 2,992,997
Cash and cash equivalents, beginning of period 25,171,641 30,057,476
___________ ___________
Cash and cash equivalents, end of period $25,696,301 33,050,473
=========== ===========
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash paid during period for:
Interest $ 2,500,300 2,245,026
Income taxes 25,113 --
Other real estate and repossessions
acquired in settlement of loans 574,615 231,657
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Three Months Ended March 31, 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.
Earnings per share amounts are based on 718,511 weighted average shares
outstanding for the three month periods ended March 31, 1997 and 1996.
In June 1996, the Financial Accounting Standards Board 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 extends the "available-for-sale" or "trading" approach in
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities (SFAS 115) to nonsecurity financial
assets that can contractually be prepaid or otherwise settled in such a way
that the holder of the asset would not recover substantially all of its
recorded investment. Thus, nonsecurity financial assets (no matter how
acquired) such as loans, other receivables, interest only strips or residual
interests in securitization trusts (for example, tranches subordinate to other
tranches, cash reserve accounts or rights to future interest from serviced
assets that exceed contractually specified servicing fees) that are subject to
prepayment risk that could prevent recovery of substantially all of the
recorded amount are to be reported at fair value with the change in fair value
accounted for depending on the asset's classification as "available-for-sale"
or "trading." SFAS 125 also amends SFAS 115 to prevent a security from being
classified as held-to-maturity if the security can be prepaid or otherwise
settled in such a way that the holder of the security would not recover
substantially all of its recorded investment.
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 Financial Accounting Standards Board 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 31, 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.
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 period ended
March 31, 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 March 31, 1997 of $1,016,000
increased $113,000 when compared to the first quarter of 1996. Earnings per
common share for the first quarter of 1997 of $1.41 increased 15 cents or
11.9% when compared to the first quarter of 1996.
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
Ended
March 31,
_______________
1997 1996
_______ _______
<S> <C> <C>
Interest income $ 5,242 4,856
Fully taxable equivalent (FTE) adjustment 96 90
_______ _______
Interest income (FTE basis) 5,338 4,946
Interest expense 2,533 2,347
_______ _______
Net interest income (FTE basis) 2,805 2,599
Provision for loan losses 125 90
_______ _______
Net interest income after provision
for loan losses (FTE basis) 2,680 2,509
Noninterest income 435 411
Noninterest expense 1,517 1,496
_______ _______
Earnings before income taxes
(FTE basis) 1,598 1,424
_______ _______
Income taxes 486 431
FTE adjustment 96 90
_______ _______
Income taxes (FTE basis) 582 521
_______ _______
Net income $ 1,016 903
======= =======
</TABLE>
Net interest income on a fully taxable equivalent basis increased $206,000
or 7.9% to $2,805,000 or 4.20% of average earning assets for the first quarter
of 1997 compared to $2,599,000 or 4.13% of average earning assets for the same
period of 1996. The provision for possible loan losses for the three months
ended March 31, 1997 was $125,000 compared to $90,000 for the same period of
1996.
Noninterest income and noninterest expense for the three month periods
ended March 31, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
(Dollars expressed in thousands)
Three Months
Ended
March 30, Increase (decrease)
________________ __________________
1997 1996 Amount %
_______ _______ ________ ________
<S> <C> <C> <C> <C>
Noninterest Income
Service charges on deposit accounts $ 171 161 10 6.2 %
Trust department income 28 26 2 7.7
Mortgage loan servicing fees 76 69 7 10.1
Gain on sales of mortgage loans 22 34 (12) (35.3)
Net loss on sales and calls
of debt securities (3) -- (3) --
Credit card fees 98 86 12 14.0
Other 43 35 8 22.9
_______ _______ _______
$ 435 411 24 5.8 %
======= ======= =======
Noninterest Expense
Salaries, wages, and
employee benefits $ 866 861 5 0.6 %
Occupancy expense 72 70 2 2.9
Furniture and equipment expense 120 102 18 17.6
FDIC insurance assessment 7 1 6 600.0
Advertising and promotion 35 47 (12) (25.5)
Postage, printing, and supplies 71 81 (10) (12.3)
Legal, examination, and
professional fees 69 72 (3) (4.2)
Credit card expenses 83 73 10 13.7
Credit investigation and loan
collection expenses 32 24 8 33.3
Other 162 165 (3) (1.8)
_______ _______ _______
$ 1,517 1,496 21 1.4 %
======= ======= =======
</TABLE>
Noninterest income increased $24,000 or 5.8% to $435,000 for the first
quarter of 1997 compared to $411,000 for the same period of 1996. Increases
in service charges on deposit accounts, credit card fees, mortgage loan
service fees, and other noninterest income all reflected increased volume.
Gains on sales of mortgage loans decreased $12,000 due to a decrease in volume
of loans originated and sold to the secondary market from approximately
$6,200,000 for the first quarter of 1996 to approximately $4,150,000 for the
first quarter of 1997. 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.
Noninterest expense increased $21,000 or 1.4% to $1,517,000 for the first
quarter of 1997 compared to $1,496,000 for the first quarter of 1996. The
$18,000 increase in furniture and equipment expense primarily reflects
increases in depreciation expense and maintenance agreements in connection
with expanded data processing capabilities. The $5,000 or 0.6% 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 reduction in officer staff and
recruiting expense. The 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 quarter of 1996 the Company was assessed at the
minimum FDIC assessment level of $500 per quarter in effect at that time.
Income taxes as a percentage of earnings before income taxes as reported
in the condensed consolidated financial statements was 32.4% for the first
quarter of 1997 compared to 32.3% for the first 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 36.4% for the first quarter of 1997 and 36.6% for the
first quarter of 1996.
NET INTEREST INCOME
The increase in fully taxable equivalent net interest income for the three
month period ended March 31, 1997 primarily reflects growth in average total
loans outstanding.
The following table presents 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 month periods
ended March 31, 1997 and 1996.
<PAGE>
<TABLE>
<CAPTION>
(Dollars expressed in thousands)
Three Months Ended Three Months Ended
March 31, 1997 March 31, 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 $ 41,936 $ 931 9.00% $ 37,989 $ 864 9.15%
Real estate 100,819 2,172 8.74 85,438 1,913 9.01
Consumer 34,169 776 9.21 31,194 714 9.21
Money market/3/ 1,307 17 5.28 -- -- --
Investment
securities:/4/
U.S. Treasury and
U.S. Government
agencies 64,600 963 6.05 58,835 827 5.65
State and municipal 16,930 326 7.81 15,097 295 7.86
Other 2,309 40 7.03 3,207 51 6.40
Federal funds sold 8,578 112 5.30 21,166 282 5.36
Interest-bearing
deposits 63 1 6.44 -- -- --
________ ______ ________ ______
Total interest
earning assets 270,711 5,338 8.00 252,926 4,946 7.87
All other assets 18,023 16,981
Allowance for loan
losses (2,322) (2,218)
________ ________
Total assets $286,412 $267,689
======== ========
</TABLE>
Continued on next page
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1997 March 31, 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 $ 28,739 $ 188 2.65% $ 28,697 $ 191 2.68%
Savings 22,927 225 3.98 21,466 211 3.95
Money market 32,446 334 4.17 30,644 319 4.19
Deposits of
$100,000 and over 14,066 189 5.45 7,312 98 5.39
Other time deposits 98,735 1,398 5.74 91,120 1,324 5.84
________ ______ ________ ______
Total time deposits 196,913 2,334 4.81 179,239 2,143 4.81
Securities sold under
agreements to
repurchase 15,686 190 4.91 16,819 194 4.64
Interest-bearing
demand notes
to U.S. Treasury 702 9 5.20 772 10 5.21
________ ______ ________ ______
Total interest-
bearing
liabilities 213,301 2,533 4.82 196,830 2,347 4.80
______ ______
Demand deposits 30,152 30,508
Other liabilities 1,895 1,656
________ ________
Total liabilities 245,348 228,994
Stockholders' equity 41,064 38,695
________ ________
Total liabilities
and stockholders'
equity $286,412 $267,689
======== ========
Net interest income $ 2,805 $ 2,599
======= =======
Net interest margin 4.20% 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 $96,000 in 1997 and
$90,000 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.
</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 March
31, 1997 Compared to Three
Months Ended March 31, 1996
_______________________________
Change due to
Total ____________________
Change Volume Rate
________ ________ _________
<S> <C> <C> <C>
Interest income on a fully
taxable equivalent basis:
Loans: /1/
Commercial $ 67 88 (21)
Real estate /2/ 259 333 (74)
Consumer 62 68 (6)
Money market 17 17 --
Investment securities:
U.S. Treasury and U.S.
Government agencies 136 84 52
State and municipal /2/ 31 35 (4)
Other (11) (15) 4
Federal funds sold (170) (165) (5)
Interest-bearing deposits 1 1 --
_______ _______ ________
Total interest income 392 446 (54)
Interest expense:
NOW accounts (3) -- (3)
Savings 14 14 --
Money market 15 19 (4)
Deposits of
$100,000 and over 91 91 --
Other time deposits 74 109 (35)
Securities sold under
agreements to repurchase (4) (14) 10
Interest-bearing demand
notes to U.S. Treasury (1) (1) --
_______ _______ ________
Total interest expense 186 218 (32)
_______ _______ ________
Net interest income on a fully
taxable equivalent basis $ 206 228 (22)
___________ ======= ======= ========
/1/ Non-accruing loans are included in the average amounts outstanding.
/2/ 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 totaled $96,000 in 1997
and $90,000 in 1996.
</TABLE>
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 compared to net charge-offs of $26,301
for the first 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
compared to $90,000 for the first quarter of 1996.
The balance of the allowance for loan losses was $2,346,135 at March 31,
1997 compared to $2,307,068 at December 31, 1996 and $2,242,708 at March 31,
1996. The allowance for loan losses as a percent of outstanding loans,
excluding bankers acceptances, was 1.30% at March 31, 1997 compared to 1.33%
at December 31, 1996 and 1.42% at March 31, 1996.
FINANCIAL CONDITION
Total assets increased $12,260,490 or 4.3% to $296,339,925 at March 31,
1997 compared to $284,079,435 at December 31, 1996. Total liabilities
increased $11,703,837 or 4.8% to $255,101,970 and stockholders' equity
increased $556,653 or 1.4% to $41,237,955.
Loans, net of unearned income, increased $9,696,256 or 5.7% to
$183,004,981 at March 31, 1997 compared to $173,308,725 at December 31, 1996.
Commercial loans increased $2,932,155 or 7.3%; Real estate construction loans
increased $2,752,448 or 12.1%; real estate mortgage loans increased $1,788,356
or 2.4%; and consumer loans decreased $301,404 or 0.9%. During the first
quarter of 1997 short-term investments in bankers acceptances increased
$2,524,701.
Nonperforming loans, defined as loans 90 days or more past due and loans
on nonaccrual status, totaled $1,514,000 or 0.84% of total loans, excluding
bankers acceptances, at March 31, 1997 compared to $1,092,000 or 0.63% of
total loans at December 31, 1996. Detail of those balances plus repossessions
is as follows:
<TABLE>
<CAPTION>
(Dollars expressed in thousands)
March 31, 1997 December 31, 1996
_________________ _________________
% of % of
Gross Gross
Balance Loans Balance Loans
_______ _____ _______ _____
<S> <C> <C> <C> <C>
Loans 90 days or more
past due -
Commercial $ 72 .04% $ 59 .03%
Real Estate:
Construction 121 .06 122 .07
Mortgage 122 .07 186 .11
Consumer 15 .01 27 .02
______ ____ ______ ____
330 .18 394 .23
______ ____ ______ ____
Loans on nonaccrual
status -
Commercial 154 .09 42 .02
Real Estate:
Construction 776 .43 327 .19
Mortgage 210 .12 268 .15
Consumer 44 .02 61 .04
______ ____ ______ ____
1,184 .66 698 .40
______ ____ ______ ____
Total nonperforming loans 1,514 .84% 1,092 .63%
==== ====
Other real estate 25 22
Repossessions 79 106
______ ______
Total nonperforming assets $1,618 $1,220
====== ======
</TABLE>
The allowance for loan losses was 154.96% of nonperforming loans at March
31, 1997 compared to 211.26% of nonperforming loans at December 31, 1996. The
March 31, 1997 balances of commercial, real estate, and consumer loans 90 days
or more past due reflect three, four, and five loans, respectively, all of
which are well secured and in the process of collection. The increase in
loans on nonaccrual status from December 31, 1996 to March 31, 1997 primarily
reflects the addition of approximately $582,000 of commercial and real estate
(both construction and mortgage) loans to a borrower who is experiencing
losses in the construction business. The March 31, 1997 balances of
commercial, real estate, and consumer loans on nonaccrual status reflect loans
to three, four, and seven borrowers, respectively. One of the commercial
loans on nonaccrual status at March 31, 1997, which totaled $41,000, is 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
March 31, 1997 and 1996, which would have been recorded under the original
terms those loans, was approximately $29,000 and $20,000 for the three months
ended March 31, 1997 and 1996, respectively. Approximately $17,000 and $5,000
was actually recorded as interest income on such loans for the three months
ended March 31, 1997 and 1996, respectively.
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 March 31, 1997 included in the table above, which were considered
"impaired", management has identified additional loans totaling approximately
$4,312,000 which are not included in the nonaccrual table above but are
considered by management to be "impaired". Approximately $3,895,000 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. Management believes
that the loans are well secured and all have performed according to their
contractual terms during the first quarter of 1997. The remainder of loans
identified by management as being "impaired" reflected commercial loans to
four borrowers totaling approximately $260,000, one real estate loan totaling
approximately $41,000, and fourteen consumer loans totaling approximately
$116,000. The average balance of "impaired" loans for the first three months
of 1997 was approximately $5,546,000. At March 31, 1997 the allowance for
loan losses on impaired loans was $457,779 compared to $277,149 at December
31, 1996.
As of March 31, 1997 approximately $1,675,000 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 $1,675,000 of "classified" loans at March 31,
1997, $146,000 represented two commercial loans; $1,172,000 represented seven
real estate loans ranging in size from approximately $52,000 to $451,000; and
$357,000 represented forty three installment loans to individuals.
Investments in debt and equity securities classified as available-for-sale
increased $1,166,980 or 2.3% to $52,190,814 at March 31, 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 decreased $226,637 to a
negative balance of $251,512 to reflect the fair value of available-for-sale
investments at March 31, 1997 and the net after tax decrease resulting from
the change in the market valuation adjustment of $142,781 decreased the
stockholders' equity component to a negative balance of $158,452 at March 31,
<PAGE>
1997. The decrease in fair value compared to amortized cost resulted from a
increase in current market rates from December 31, 1996 to March 31, 1997.
Investments in debt securities classified as held-to-maturity increased
$474,234 or 1.6% to $30,073,771 at March 31, 1997 compared to $29,599,537 at
December 31, 1996. Investments classified as held-to-maturity are carried at
amortized cost. At March 31, 1997 and December 31, 1996 the aggregate fair
value of the Company's held-to-maturity investment portfolio was approximately
$97,000 and $60,000, respectively, less than its aggregate carrying value.
Cash and cash equivalents, which consist of cash and due from banks and
Federal funds sold, increased $524,660 or 2.1% to $25,696,301 at March 31,
1997 compared to $25,171,641 at December 31, 1996.
Premises and equipment increased $284,397 or 8.5% to $3,626,047 at March
31, 1997 compared to $3,341,650 at December 31, 1996. The increase reflected
expenditures for premises and equipment of $357,886 and depreciation expense
of $73,489. The expenditures for premises and equipment primarily reflected
approximately $305,000 in construction costs for a permanent East Bank
facility. It is presently anticipated that the Company will start renovating
and expanding its main bank building located in downtown Jefferson City during
the second quarter of 1997. The renovation and expansion project is expected
to continue on into 1998 and its cost is anticipated to be no more than
$4,000,000.
Total deposits increased $2,884,395 or 1.3% to $230,908,167 at March 31,
1997 compared to $228,023,772 at December 31, 1996 due primarily to normal
fluctuations in demand deposits. Average demand deposits decreased
approximately 1.2% for the first three months of 1997 compared to the first
three months of 1996.
Securities sold under agreements to repurchase increased $7,745,128 to
$20,048,519 at March 31, 1997 compared to $12,303,391 at December 31, 1996 due
primarily to funds obtained from the Cole County Court, a local hospital, and
the Missouri Department of Corrections.
The increase in stockholders' equity reflects net income of $1,015,578
less dividends declared of $316,144, and $142,781 in unrealized holding losses
on investments in debt and equity securities available-for-sale.
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
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 first 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
May 7, 1997 Principal Executive Officer
By /s/ Carl A. Brandenburg, Sr.
___________________________________
Carl A. Brandenburg, Sr., Treasurer
May 7, 1997 and Chief Financial Officer
<PAGE>
EXCHANGE NATIONAL BANCSHARES, INC.
INDEX TO EXHIBITS
March 31, 1997 Form 10-QSB
Exhibit No. Description Page No.
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 22
** 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 MARCH
31, 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 14,161
<INT-BEARING-DEPOSITS> 35
<FED-FUNDS-SOLD> 11,500
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 52,191
<INVESTMENTS-CARRYING> 30,074
<INVESTMENTS-MARKET> 29,976
<LOANS> 183,005
<ALLOWANCE> 2,346
<TOTAL-ASSETS> 296,340
<DEPOSITS> 230,908
<SHORT-TERM> 21,557
<LIABILITIES-OTHER> 2,637
<LONG-TERM> 0
0
0
<COMMON> 719
<OTHER-SE> 40,519
<TOTAL-LIABILITIES-AND-EQUITY> 296,340
<INTEREST-LOAN> 3,889
<INTEREST-INVEST> 1,240
<INTEREST-OTHER> 113
<INTEREST-TOTAL> 5,242
<INTEREST-DEPOSIT> 2,334
<INTEREST-EXPENSE> 2,533
<INTEREST-INCOME-NET> 2,709
<LOAN-LOSSES> 125
<SECURITIES-GAINS> (3)
<EXPENSE-OTHER> 1,517
<INCOME-PRETAX> 1,502
<INCOME-PRE-EXTRAORDINARY> 1,016
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,016
<EPS-PRIMARY> 1.41
<EPS-DILUTED> 1.41
<YIELD-ACTUAL> 4.20
<LOANS-NON> 1,184
<LOANS-PAST> 330
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 5,987
<ALLOWANCE-OPEN> 2,307
<CHARGE-OFFS> 127
<RECOVERIES> 41
<ALLOWANCE-CLOSE> 2,346
<ALLOWANCE-DOMESTIC> 2,003
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 343
</TABLE>
