UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1998
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File Number: 0-23636
EXCHANGE NATIONAL BANCSHARES, INC.
(Exact name of registrant 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) (Zip Code)
(573) 761-6100
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since
last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. [X] Yes [ ] No
As of August 3, 1998, the registrant had 718,511 shares of common stock,
par value $1.00 per share, outstanding.
Page 1 of 28 pages
Index to Exhibits located on page 27
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARIES
<CAPTION>
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
1998 1997
____________ ____________
<S> <C> <C>
ASSETS
Loans, net of unearned income:
Commercial $ 93,236,241 90,543,151
Real estate -- construction 17,686,000 33,947,000
Real estate -- mortgage 122,969,128 110,011,844
Consumer 44,276,555 44,197,904
____________ ____________
278,167,924 278,699,899
Less allowance for loan losses 4,182,582 3,914,383
____________ ____________
Loans, net 273,985,342 274,785,516
____________ ____________
Investment in debt and equity securities:
Available-for-sale, at estimated market value 68,959,360 78,423,285
Held-to-maturity, estimated market value
of $41,636,000 at June 30, 1998 and
$38,046,500 at December 31, 1997 41,169,525 37,733,903
____________ ____________
Total investment in debt
and equity securities 110,128,885 116,157,188
____________ ____________
Federal funds sold 30,700,000 17,175,000
Cash and due from banks 15,574,666 17,177,050
Premises and equipment 10,467,422 8,654,712
Accrued interest receivable 3,879,766 4,067,232
Intangible assets 11,158,293 11,508,482
Other assets 1,084,989 1,167,014
____________ ____________
$456,979,363 450,692,194
============ ============
</TABLE>
Continued on next page
<PAGE>
<TABLE>
EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARIES
<CAPTION>
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Unaudited)
June 30, December 31,
1998 1997
____________ ____________
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits $ 47,308,745 50,139,102
Time deposits 311,336,507 310,247,693
____________ ____________
Total deposits 358,645,252 360,386,795
Securities sold under agreements to repurchase 27,950,202 21,493,587
Interest-bearing demand notes to U.S. Treasury 3,622,472 3,663,581
Other borrowed money 17,600,568 17,603,568
Accrued interest payable 2,336,750 2,410,635
Deferred tax liability 332,416 289,340
Other liabilities 1,936,903 1,737,086
____________ ____________
Total liabilities 412,424,563 407,584,592
____________ ____________
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 42,362,537 40,986,755
Accumulated other comprehensive income -
unrealized holding gains on investment
in debt and equity securities
available-for-sale, net of tax 192,263 120,847
____________ ____________
Total stockholders' equity 44,554,800 43,107,602
____________ ____________
$456,979,363 450,692,194
============ ============
</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 Six Months Ended
June 30, June 30,
_______________________ _______________________
1998 1997 1998 1997
___________ ___________ ___________ ___________
<S> <C> <C> <C> <C>
Interest income $ 8,020,159 5,393,880 16,113,915 10,635,450
Interest expense 4,341,799 2,594,104 8,765,327 5,126,918
___________ ___________ ___________ ___________
Net interest income 3,678,360 2,799,776 7,348,588 5,508,532
Provision for loan losses 172,500 175,000 345,000 300,000
___________ ___________ ___________ ___________
Net interest income after
provision for loan losses 3,505,860 2,624,776 7,003,588 5,208,532
Noninterest income 588,999 475,000 1,290,838 910,179
Noninterest expense 2,660,065 1,675,521 5,148,034 3,192,878
___________ ___________ ___________ ___________
Income before
income taxes 1,434,794 1,424,255 3,146,392 2,925,833
Income taxes 487,555 466,000 1,052,100 952,000
___________ ___________ ___________ ___________
Net income $ 947,239 958,255 2,094,292 1,973,833
=========== =========== =========== ===========
Basic earnings per share $1.31 1.34 2.91 2.75
===== ===== ===== =====
Dividends per share:
Declared $0.50 0.50 1.00 0.94
===== ===== ===== =====
Paid $0.50 0.44 1.00 0.88
===== ===== ===== =====
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARIES
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
__________________________
1998 1997
___________ ___________
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,094,292 1,973,833
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 345,000 300,000
Depreciation expense 250,551 152,680
Net amortization of debt securities
premiums and discounts 150,914 60,112
Amortization of intangible assets 565,189 21,333
Decrease (increase) in
accrued interest receivable 187,466 (230,624)
Increase in other assets (132,975) (236,666)
Increase (decrease)in accrued interest payable (73,885) 33,523
Increase in other liabilities 200,949 98,078
Net securities (gains) losses (6,491) 2,813
Other, net (180,501) 329,030
Origination of mortgage loans for sale (32,206,903) (9,122,831)
Proceeds from the sale of mortgage loans
held for sale 32,206,903 9,122,831
___________ ___________
Net cash provided by operating activities 3,400,509 2,504,112
___________ ___________
Cash flows from investing activities:
Net increase in loans (277,399) (15,224,406)
Purchases of available-for-sale debt securities (13,779,240) (5,871,620)
Purchases of held-to-maturity debt securities (30,065,529) (3,992,180)
Proceeds from sales of available-for-sale
debt securities -- 362,915
Proceeds from maturities of debt securities:
Available-for-sale 14,816,759 3,385,837
Held-to-maturity 25,011,142 2,689,299
Proceeds from calls of debt securities:
Available-for-sale 8,455,029 125,000
Held-to-maturity 1,559,076 2,000,000
Purchases of premises and equipment (2,063,261) (1,446,417)
Proceeds from sales of other real estate
owned and repossessions 913,077 914,410
___________ ___________
Net cash provided by (used in)
investing activities 4,569,654 (17,057,162)
___________ ___________
</TABLE>
Continued on next page
<PAGE>
<TABLE>
EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARIES
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
Six Months Ended
June 30,
__________________________
1998 1997
___________ ___________
<S> <C> <C>
Cash flows from financing activities:
Net increase (decrease) in demand deposits (2,830,357) 4,007,595
Net decrease in interest-bearing
transaction accounts (770,670) (1,339,131)
Net increase in time deposits 1,859,484 423,551
Net increase in securities sold
under agreements to repurchase 6,456,615 2,104,801
Net increase (decrease) in interest-bearing
demand notes to U.S. Treasury (41,109) 2,563,120
Proceeds from Federal Home Loan Bank borrowings 2,800,000 --
Repayment of bank debt (2,507,932) --
Repayment of other borrowed funds (295,068) --
Cash dividends paid (718,510) (632,289)
___________ ___________
Net cash provided by
financing activities 3,952,453 7,127,647
___________ ___________
Net increase (decrease) in cash and
cash equivalents 11,922,616 (7,425,403)
Cash and cash equivalents, beginning of period 34,352,050 25,171,641
___________ ___________
Cash and cash equivalents, end of period $46,274,666 17,746,238
=========== ===========
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash paid during period for:
Interest $ 8,839,212 5,093,395
Income taxes 1,200,483 1,128,323
Other real estate and repossessions
acquired in settlement of loans 770,590 1,296,030
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Six Months Ended June 30, 1998 and 1997
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 (ENB) and Union
State Bancshares, Inc.(Union) which owns 100% of Union State Bank and Trust of
Clinton (USB). Bancshares acquired ENB on April 7, 1993. The acquisition of
ENB represented a combination of entities under common control and
accordingly, was accounted for in a manner similar to a pooling of interests.
Bancshares acquired Union on November 3, 1997. The acquisition of Union was
accounted for as a purchase transaction. Accordingly, the results of
operations of Union have been included in the condensed consolidated financial
statements since acquisition. A summary of unaudited pro forma combined
financial information for the three and six month periods ended June 30, 1997
for Bancshares and Union as if the transaction had occurred on January 1, 1997
is as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 1997 June 30, 1997
<S> <C> <C>
Net interest income $ 3,524,914 $ 6,976,208
Net income 851,716 1,702,881
Earnings per share 1.19 2.37
</TABLE>
Bancshares adopted the provisions of Statement of Financial Accounting
Standards No. 128, Earnings Per Share, on December 31, 1997. Due to the fact
Bancshares has no dilutive instruments, basic earnings per share and dilutive
earnings per share are equal. Earnings per share is computed by dividing net
income by 718,511, the weighted average number of common shares outstanding
during the three and six month periods ended June 30, 1998 and 1997.
On January 1, 1998 Bancshares adopted the provisions of Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income (SFAS
130), which established standards for reporting and display of comprehensive
income and its components (revenues, expenses, gains and losses) in a full set
of general-purpose financial statements. For the three and six month periods
ended June 30, 1998 and 1997, unrealized holding gains and losses on
investments in debt and equity securities available-for-sale were Bancshares'
<PAGE>
only other comprehensive income component. Comprehensive income for the three
and six month periods ended June 30, 1998 and 1997 is summarized as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
______________________ ________________________
1998 1997 1998 1997
__________ __________ ___________ ___________
<S> <C> <C> <C> <C>
Net income $ 947,239 958,255 2,094,292 1,973,833
Other comprehensive income:
Net unrealized holding
gains (losses) on
investments in debt
and equity securities
available-for-sale 2,356 124,106 75,505 (20,447)
Adjustment for net
securities (gains)
losses realized in net
income, net of
applicable income taxes -- -- (4,089) 1,772
2,356 124,106 71,416 (18,675)
___________ __________ ___________ __________
Comprehensive income $ 949,595 1,082,361 2,165,708 1,955,158
=========== ========== =========== ==========
</TABLE>
In February 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 132, Employers' Disclosures
about Pensions and Other Postretirement Benefits (SFAS 132), which revises
employers' disclosures about pension and other postretirement benefit plans.
SFAS 132 does not change the measurement or recognition of those plans and is
effective for fiscal years beginning after December 15, 1997. The Company
will present the revised information in its December 31, 1998 consolidated
financial statements. The adoption of SFAS 132 is not expected to have a
material impact on the Company's consolidated financial condition or results
of operations.
In June 1998, the FASB issued Statement of Financial Accounting Standards
No.133, Accounting for Derivative Instruments and Hedging Activities (SFAS
133). SFAS 133 establishes standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and for hedging
activities. It requires an entity to recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value. SFAS 133 is effective for all fiscal years
beginning after June 15, 1999. Earlier application of SFAS 133 is encouraged
but should not be applied retroactively to financial statements of prior
periods. The Company is currently evaluating the requirements and impact of
SFAS 133.
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 1997 condensed
consolidated financial statements have been reclassified to conform with the
1998 condensed consolidated presentation. Such reclassifications have no
effect on previously reported net income. Operating results for the period
ended June 30, 1998 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1998.
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 1997 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, 1997 as
Exhibit 13.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE STATEMENTS MADE IN
THIS REPORT ON FORM 10-Q ARE FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE WORDS "SHOULD", "EXPECT", "ANTICIPATE", "BELIEVE",
"INTEND", "MAY", "HOPE", "FORECAST" AND SIMILAR EXPRESSIONS MAY IDENTIFY
FORWARD LOOKING STATEMENTS. 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, 1997,
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 June 30, 1998 of $947,000 decreased
$11,000 when compared to the second quarter of 1997. Earnings per common
share for the second quarter of 1998 of $1.31 decreased 3 cents or 2.2% when
compared to the second quarter of 1997. Net income for the six months ended
June 30, 1998 of $2,094,000 increased $120,000 when compared to the first six
months of 1997. The inclusion of Union's results in the second quarter and
first six months of 1998 contributed approximately $107,000 and $252,000,
respectively, to consolidated net income.
<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 Six Months
Ended Ended
June 30, June 30,
_______________ _______________
1998 1997 1998 1997
_______ _______ _______ _______
<S> <C> <C> <C> <C>
Interest income $ 8,020 5,394 16,114 10,636
Fully taxable equivalent (FTE) adjustment 134 96 285 192
_______ _______ _______ _______
Interest income (FTE basis) 8,154 5,490 16,399 10,828
Interest expense 4,343 2,594 8,766 5,127
_______ _______ _______ _______
Net interest income (FTE basis) 3,811 2,896 7,633 5,701
Provision for loan losses 172 175 345 300
_______ _______ _______ _______
Net interest income after provision
for loan losses (FTE basis) 3,639 2,721 7,288 5,401
Noninterest income 589 475 1,291 910
Noninterest expense 2,660 1,676 5,148 3,193
_______ _______ _______ _______
Earnings before income taxes
(FTE basis) 1,568 1,520 3,431 3,118
_______ _______ _______ _______
Income taxes 487 466 1,052 952
FTE adjustment 134 96 285 192
_______ _______ _______ _______
Income taxes (FTE basis) 621 562 1,337 1,144
_______ _______ _______ _______
Net income $ 947 958 2,094 1,974
======= ======= ======= =======
</TABLE>
<PAGE>
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS
ENDED JUNE 30, 1997
Net interest income on a fully taxable equivalent basis increased
$915,000 or 31.6% to $3,811,000 or 3.65% of average earning assets for the
second quarter of 1998 compared to $2,896,000 or 4.26% of average earning
assets for the same period of 1997. The provision for possible loan losses
for the three months ended June 30, 1998 was $172,000 compared to $175,000 for
the same period of 1997.
Noninterest income and noninterest expense for the three month periods
ended June 30, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
(Dollars expressed in thousands)
Three Months
Ended
June 30, Increase (decrease)
________________ __________________
1998 1997 Amount %
_______ _______ ________ ________
<S> <C> <C> <C> <C>
Noninterest Income
Service charges on deposit accounts $ 262 176 86 48.9 %
Trust department income 85 64 21 32.8
Mortgage loan servicing fees 97 79 18 22.8
Gain on sales of mortgage loans 70 31 39 125.8
Credit card fees 24 82 (58) (70.7)
Other 51 43 8 18.6
_______ _______ _______
$ 589 475 114 24.0 %
======= ======= =======
Noninterest Expense
Salaries and employee benefits $ 1,352 879 473 53.8 %
Occupancy expense 125 87 38 43.7
Furniture and equipment expense 187 150 37 24.7
FDIC insurance assessment 18 7 11 157.1
Advertising and promotion 114 107 7 6.5
Postage, printing, and supplies 137 101 36 35.6
Legal, examination, and
professional fees 137 76 61 80.3
Credit card expenses 16 68 (52) (76.5)
Credit investigation and loan
collection expenses 46 33 13 39.4
Amortization of intangible assets 191 10 181 1810.0
Other 337 158 179 113.3
_______ _______ _______
$ 2,660 1,676 984 58.7 %
======= ======= =======
</TABLE>
<PAGE>
Noninterest income increased $114,000 or 24.0% to $589,000 for the second
quarter of 1998 compared to $475,000 for the same period of 1997. The
inclusion of Union's results in the second quarter of 1998 represented
approximately $128,000 of the increase in noninterest income. Gains on sales
of mortgage loans increased $39,000 or 125.8% due to an increase in the volume
of loans originated and sold to the secondary market from $7,950,000 for the
second quarter of 1997 to $12,879,000 for the second quarter of 1998. The
$58,000 or 70.7% decrease in credit card fees reflected ENB's decision to
change its merchant credit card operations provider which also resulted in a
corresponding decrease in credit card expenses.
Noninterest expense increased $984,000 or 58.7% to $2,660,000 for the
second quarter of 1998 compared to $1,676,000 for the second quarter of 1997.
Approximately $745,000 or 75.7% of the total increase in noninterest expense
reflected the inclusion of Union's results in the second quarter of 1998. The
remaining $239,000 represents an 14.3% increase in noninterest expense as
compared to the second quarter of 1997 and primarily related to increased
salaries and employee benefits. Excluding the increase attributable to Union,
salaries and employee benefits increased $130,000 or 14.8% compared to the
second quarter of 1997. This increase resulted from Exchange's establishment
of an executive incentive program and the adjustment of salaries to market
levels. Amortization of intangible assets increased $181,000 or 1710.0% to
$191,000 for the second quarter of 1998 compared to $10,000 for the second
quarter of 1997. In addition to the increase included in Union's operating
results, the Company incurred $38,000 of expense related to the amortization
of consulting/noncompete agreements associated with the acquisition of Union
during the second quarter of 1998 with no similar amount in 1997.
Income taxes as a percentage of earnings before income taxes as reported
in the condensed consolidated financial statements was 34.0% for the second
quarter of 1998 compared to 32.7% for the second quarter of 1997. 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 39.6% for the second quarter of 1998 and
37.0% for the second quarter of 1997.
<PAGE>
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS
ENDED JUNE 30, 1997
Net interest income on a fully taxable equivalent basis increased
$1,932,000 or 33.9% to $7,633,000 or 3.66% of average earning assets for the
first six months of 1998 compared to $5,701,000 or 4.23% of average earning
assets for the same period of 1997. The provision for possible loan losses
for the six months ended June 30, 1998 was $345,000 compared to $300,000 for
the same period of 1997.
Noninterest income and noninterest expense for the six month periods ended
June 30, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
(Dollars expressed in thousands)
Six Months
Ended
June 30, Increase (decrease)
________________ __________________
1998 1997 Amount %
_______ _______ ________ ________
<S> <C> <C> <C> <C>
Noninterest Income
Service charges on deposit accounts $ 495 347 148 42.7 %
Trust department income 272 92 180 195.7
Mortgage loan servicing fees 192 155 37 23.9
Gain on sales of mortgage loans 157 53 104 196.2
Net gain (loss) on sales and calls
of debt securities 6 (3) 9 300.0
Credit card fees 59 180 (121) (67.2)
Other 110 86 24 27.9
_______ _______ _______
$ 1,291 910 381 41.9 %
======= ======= =======
Noninterest Expense
Salaries and employee benefits $ 2,694 1,745 949 54.4 %
Occupancy expense 242 159 83 52.2
Furniture and equipment expense 391 270 121 44.8
FDIC insurance assessment 35 14 21 150.0
Advertising and promotion 172 142 30 21.1
Postage, printing, and supplies 283 172 111 64.5
Legal, examination, and
professional fees 205 145 60 41.4
Credit card expenses 39 151 (112) (74.2)
Credit investigation and loan
collection expenses 88 65 23 35.4
Amortization of intangible assets 400 21 379 1804.8
Other 599 309 290 93.9
_______ _______ _______
$ 5,148 3,193 1,955 61.2 %
======= ======= =======
</TABLE>
Noninterest income increased $381,000 or 41.9% to $1,291,000 for the
first six months of 1998 compared to $910,000 for the same period of 1997.
Approximately $257,000 or 67.5% of the increase in noninterest income
reflected the inclusion of Union's results in the first six months of 1998.
The remainder of the increase primarily reflected an increase in trust
department income at ENB, which included an unusually large estate
distribution fee. Gains on sales of mortgage loans increased $104,000 or
196.2% due to an increase in volume of loans originated and sold to the
secondary market from $9,123,000 for the first six months of 1997 to
$32,207,000 for the first six months of 1998. The $121,000 or 67.2% decrease
in credit card fees reflected ENB's decision to change its merchant credit
card operations provider which also resulted in a significant decrease in
credit card expenses.
Noninterest expense increased $1,955,000 or 61.2% to $5,148,000 for the
first six months of 1998 compared to $3,193,000 for the first six months of
1997. Approximately $1,540,000 or 78.8% of the total increase in noninterest
expense reflected the inclusion of Union's results in the first six months of
1998. The remaining $415,000 represents an 13.0% increase in noninterest
expense as compared to the first six months of 1997 and primarily related to
increased salaries and employee benefits. Excluding the increase attributable
to Union, salaries and employee benefits increased $275,000 or 15.8% compared
to the first six months of 1997. This increase resulted from Exchange's
establishment of an executive incentive program and the adjustment of salaries
to market levels. Amortization of intangible assets increased $378,000 or
1800.0% to $399,000 for the first six months of 1998 compared to $21,000 for
the first six months of 1997. In addition to the increase included in Union's
operating results, the Company incurred $75,000 of expense related to the
amortization of consulting/noncompete agreements associated with the
acquisition of Union during the first six months of 1998 with no similar
amount in 1997.
Income taxes as a percentage of earnings before income taxes as reported
in the condensed consolidated financial statements was 33.4% for the first six
months of 1998 compared to 32.5% for the first six months of 1997. 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 39.0% for the first six months of 1998 and
36.7% for the first six months of 1997.
NET INTEREST INCOME
The increases in fully taxable equivalent net interest income for the
three and six month periods ended June 30, 1998 compared to the same periods
in 1997 primarily reflect the inclusion of Union's results in the 1998
periods, net of interest expense on debt issued in connection with the
acquisition of Union. Approximately $948,000 and $1,898,000 of the total
increase in fully taxable equivalent net interest income for the three and six
month periods, respectively, reflected Union's net interest income, net of
acquisition debt interest expense.
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 and six month
periods ended June 30, 1998 and 1997.
<PAGE>
<TABLE>
<CAPTION>
(Dollars expressed in thousands)
Three Months Ended Three Months Ended
June 30, 1998 June 30, 1997
___________________________ ___________________________
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 $ 93,120 $2,071 8.92% $ 44,770 $1,014 9.08%
Real estate 140,943 3,017 8.59 104,280 2,276 8.75
Consumer 43,420 962 8.89 34,884 795 9.14
Money market/3/ -- -- -- 1,591 22 5.55
Investment
securities:/4/
U.S. Treasury and
U.S. Government
agencies 85,667 1,272 5.96 63,468 952 6.02
State and municipal 27,673 474 6.86 17,142 331 7.74
Other 1,611 25 6.22 1,607 27 6.74
Federal funds sold 25,748 330 5.14 5,250 73 5.58
Interest-bearing
deposits 236 3 5.10 -- -- --
________ ______ ________ ______
Total interest
earning assets 418,418 8,154 7.82 272,992 5,490 8.07
All other assets 40,400 18,836
Allowance for loan
losses (4,130) (2,341)
________ ________
Total assets $454,688 $289,487
======== ========
</TABLE>
Continued on next page
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
June 30, 1998 June 30, 1997
___________________________ ___________________________
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 $ 54,465 $ 345 2.54% $ 28,008 $ 187 2.68%
Savings 34,093 310 3.65 22,547 221 3.93
Money market 38,364 377 3.94 32,083 333 4.16
Deposits of
$100,000 and over 26,919 369 5.50 13,140 179 5.46
Other time deposits 159,551 2,233 5.61 100,174 1,427 5.71
________ ______ ________ ______
Total time deposits 313,392 3,634 4.65 195,952 2,347 4.80
Securities sold under
agreements to
repurchase 28,829 405 5.62 17,277 234 5.43
Interest-bearing demand
notes to U.S. Treasury 1,207 10 3.32 1,313 13 3.97
Federal Home Loan Bank
advances and other
short-term borrowings 5,899 90 6.12 -- -- --
Long-term debt 11,700 204 6.99 -- -- --
________ ______ ________ ______
Total interest-
bearing
liabilities 361,027 4,343 4.82 214,542 2,594 4.85
______ ______
Demand deposits 45,223 31,382
Other liabilities 4,298 1,930
________ ________
Total liabilities 410,548 247,854
Stockholders' equity 44,140 41,633
________ ________
Total liabilities
and stockholders'
equity $454,688 $289,487
======== ========
Net interest income $ 3,811 $ 2,896
======= =======
Net interest margin/5/ 3.65% 4.26%
__________ ==== ====
/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 $134,000 in 1998
and $97,000 in 1997.
/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>
<TABLE>
<CAPTION>
(Dollars expressed in thousands)
Six Months Ended Six Months Ended
June 30, 1998 June 30, 1997
___________________________ ___________________________
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 $ 91,517 $4,030 8.88% $ 43,361 $1,945 9.05%
Real estate 141,480 6,068 8.65 102,560 4,448 8.75
Consumer 43,776 1,926 8.87 34,528 1,571 9.18
Money market/3/ -- -- -- 1,449 39 5.43
Investment
securities:/4/
U.S. Treasury and
U.S. Government
agencies 88,662 2,666 6.06 64,030 1,915 6.03
State and municipal 27,488 977 7.16 17,037 657 7.78
Other 1,574 51 6.53 1,956 67 6.91
Federal funds sold 25,753 671 5.25 6,887 185 5.42
Interest-bearing
deposits 270 10 7.47 49 1 4.12
________ ______ ________ ______
Total interest
earning assets 420,520 16,399 7.86 271,857 10,828 8.03
All other assets 40,736 18,432
Allowance for loan
losses (4,073) (2,331)
________ ________
Total assets $457,183 $287,958
======== ========
</TABLE>
Continued on next page
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 1998 June 30, 1997
___________________________ ___________________________
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 $ 55,336 $ 701 2.55% $ 28,371 $ 375 2.67%
Savings 34,036 616 3.65 22,736 446 3.96
Money market 38,845 758 3.94 32,264 667 4.17
Deposits of
$100,000 and over 27,564 754 5.52 13,600 368 5.46
Other time deposits 158,948 4,451 5.65 99,459 2,825 5.73
________ ______ ________ ______
Total time deposits 314,729 7,280 4.66 196,430 4,681 4.81
Securities sold under
agreements to
repurchase 30,292 847 5.63 16,486 424 5.19
Interest-bearing demand
notes to U.S. Treasury 909 24 5.32 1,009 22 4.40
Federal Home Loan Bank
advances and other
short-term borrowings 5,595 170 6.13 -- -- --
Long-term debt 12,726 445 7.05 -- -- --
________ ______ ________ ______
Total interest-
bearing
liabilities 364,251 8,766 4.85 213,925 5,127 4.83
______ ______
Demand deposits 44,756 30,770
Other liabilities 4,276 1,913
________ ________
Total liabilities 413,283 246,608
Stockholders' equity 43,900 41,350
________ ________
Total liabilities
and stockholders'
equity $457,183 $287,958
======== ========
Net interest income $ 7,633 $ 5,701
======= =======
Net interest margin/5/ 3.66% 4.23%
__________ ==== ====
/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 $285,000 in 1998
and $193,000 in 1997.
/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.
<PAGE>
The following table presents, on a fully taxable equivalent basis, an
analysis 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>
<TABLE>
<CAPTION>
(Dollars expressed in thousands)
Three Months Ended June
30, 1998 Compared to Three
Months Ended June 30, 1997
_______________________________
Change due to
Total ____________________
Change Volume Rate
________ ________ _________
<S> <C> <C> <C>
Interest income on a fully
taxable equivalent basis:
Loans: /1/
Commercial $ 1,057 1,075 (18)
Real estate /2/ 741 786 (45)
Consumer 167 190 (23)
Money market (22) (11) (11)
Investment securities:
U.S. Treasury and U.S.
Government agencies 320 330 (10)
State and municipal /2/ 143 185 (42)
Other (2) -- (2)
Federal funds sold 257 263 (6)
Interest-bearing deposits 3 3 --
_______ _______ ________
Total interest income 2,664 2,821 (157)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended June
30, 1998 Compared to Three
Months Ended June 30, 1997
_______________________________
Change due to
Total ____________________
Change Volume Rate
________ ________ _________
<S> <C> <C> <C>
Interest expense:
NOW accounts 158 168 (10)
Savings 89 106 (17)
Money market 44 63 (19)
Deposits of
$100,000 and over 190 189 1
Other time deposits 806 831 (25)
Securities sold under
agreements to repurchase 171 163 8
Interest-bearing demand
notes to U.S. Treasury (3) (1) (2)
Federal Home Loan Bank
advances and other
short-term borrowings 90 90 --
Long-term debt 204 204 --
_______ _______ ________
Total interest expense 1,749 1,813 (64)
_______ _______ ________
Net interest income on a fully
taxable equivalent basis $ 915 1,008 (93)
___________ ======= ======= ========
/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 federal statutory income tax rate of 34%, net of
nondeductible interest expense. Such adjustments totaled $134,000 in
1998 and $97,000 in 1997.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
(Dollars expressed in thousands)
Six Months Ended June
30, 1998 Compared to Six
Months Ended June 30, 1997
_______________________________
Change due to
Total ____________________
Change Volume Rate
________ ________ _________
<S> <C> <C> <C>
Interest income on a fully
taxable equivalent basis:
Loans: /1/
Commercial $ 2,085 2,121 (36)
Real estate /2/ 1,620 1,670 (50)
Consumer 355 409 (54)
Money market (39) (39) --
Investment securities:
U.S. Treasury and U.S.
Government agencies 751 741 10
State and municipal /2/ 320 376 (56)
Other (16) (12) (4)
Federal funds sold 486 492 (6)
Interest-bearing deposits 9 8 1
_______ _______ ________
Total interest income 5,571 5,766 (195)
Interest expense:
NOW accounts 326 342 (16)
Savings 170 207 (37)
Money market 91 130 (39)
Deposits of
$100,000 and over 386 382 4
Other time deposits 1,626 1,667 (41)
Securities sold under
agreements to repurchase 423 384 39
Interest-bearing demand
notes to U.S. Treasury 2 (3) 5
Federal Home Loan Bank
advances and other
short-term borrowings 170 170 --
Long-term debt 445 445 --
_______ _______ ________
Total interest expense 3,639 3,724 (85)
_______ _______ ________
Net interest income on a fully
taxable equivalent basis $ 1,932 2,042 (110)
___________ ======= ======= ========
/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 $285,000 in
1998 and $193,000 in 1997.
</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 increased by net loan recoveries of
$21,855 for the first quarter of 1998 and reduced by net loan charge-offs of
$98,656 for the second quarter of 1998. That compares to net charge-offs of
$85,933 for the first quarter of 1997 and $270,114 for the second quarter of
1997. The allowance for loan losses was increased by a provision charged to
expense of $172,500 for the first quarter of 1998 and $172,500 for the second
quarter of 1998. That compares to $125,000 for the first quarter of 1997 and
$175,000 for the second quarter of 1997.
The balance of the allowance for loan losses was $4,182,582 at June 30,
1998 compared to $3,914,383 at December 31, 1997 and $2,251,021 at June 30,
1997. The allowance for loan losses as a percent of outstanding loans was
1.50% at June 30, 1998 compared to 1.40% at December 31, 1997 and 1.20% at
June 30, 1997.
FINANCIAL CONDITION
Total assets increased $6,287,169 or 1.4% to $456,979,363 at June 30, 1998
compared to $450,692,194 at December 31, 1997. Total liabilities increased
$4,839,971 or 1.2% to $412,424,563 and stockholders' equity increased
$1,447,198 or 3.4% to $44,554,800.
Loans, net of unearned income, decreased $531,975 or 0.2% to $278,167,924
at June 30, 1998 compared to $278,699,899 at December 31, 1997. Commercial
loans increased $2,693,090 or 3.0%; real estate construction loans decreased
$16,261,000 or 47.9%; real estate mortgage loans increased $12,957,284 or
11.8%; and consumer loans increased $78,651 or 0.2%.
<PAGE>
Nonperforming loans, defined as loans on nonaccrual status, loans 90 days
or more past due, and restructured loans totaled $1,011,000 or 0.36% of total
loans at June 30, 1998 compared to $1,117,000 or 0.40% of total loans at
December 31, 1997. Detail of those balances plus repossessions is as follows:
<TABLE>
<CAPTION>
(Dollars expressed in thousands)
June 30, 1998 December 31, 1997
_________________ _________________
% of % of
Gross Gross
Balance Loans Balance Loans
_______ _____ _______ _____
<S> <C> <C> <C> <C>
Loans on nonaccrual
status -
Commercial $ 67 .02% $ 111 .04%
Real Estate:
Construction 258 .09 385 .14
Mortgage 244 .09 274 .10
Consumer 77 .03 57 .02
______ ____ ______ ____
646 .23 827 .30
______ ____ ______ ____
Loans 90 days or more
past due -
Commercial 153 .05 48 .02
Real Estate:
Construction -- -- -- --
Mortgage 100 .04 112 .04
Consumer 19 .01 30 .01
______ ____ ______ ____
272 .10 190 .07
______ ____ ______ ____
Restructured loans 93 .03 100 .03
______ ____ ______ ____
Total nonperforming loans 1,011 .36% 1,117 .40%
==== ====
Other real estate 145 295
Repossessions 109 101
______ ______
Total nonperforming assets $1,265 $1,513
====== ======
</TABLE>
The allowance for loan losses was 413.71% of nonperforming loans at June
30, 1998 compared to 350.40% of nonperforming loans at December 31, 1997. The
increase in loans 90 days or more past due from December 31, 1997 to March 31,
1998 primarily reflects one credit which was paid in full in May, 1998. In
addition, in April and May, 1998 properties aggregating approximately $399,000
of the $498,000 March 31, 1998 balance of other real estate were either sold
or placed under a contract to sell.
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
June 30, 1998 and 1997, which would have been recorded under the original
terms those loans, was approximately $30,000 and $28,000 for the six months
ended June 30, 1998 and 1997, respectively. Approximately $3,000 and $8,000
was actually recorded as interest income on such loans for the six months
ended June 30, 1998 and 1997, 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 June 30, 1998 included in the table above, which were considered
"impaired", management has identified additional loans totaling approximately
$5,467,000 which are not included in the nonaccrual table above but are
considered by management to be "impaired". Management believes that the loans
are well secured and all have performed according to their contractual terms
during the first six months of 1998. The $5,467,000 of loans identified by
management as being "impaired" reflected various commercial, commercial real
estate, real estate, and consumer loans ranging in size from approximately
$2,000 to approximately $2,900,000. The average balance of nonaccrual and
other "impaired" loans for the first six months of 1998 was approximately
$6,211,000. At June 30, 1998 the allowance for loan losses on impaired loans
was $275,000 compared to $225,000 at December 31, 1997.
As of June 30, 1998 and December 31, 1997 approximately $1,078,000 and
$2,928,000, respectively, of loans not included in the nonaccrual table above
or identified by management as being "impaired" were classified by management
as having more than normal risk.
Investments in debt and equity securities classified as available-for-sale
decreased $9,463,925 or 12.1% to $68,959,360 at June 30, 1998 compared to
$78,423,285 at December 31, 1997. Investments classified as
available-for-sale are carried at fair value. At December 31, 1997 the market
valuation account for the available-for-sale investments of $191,820 increased
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
$120,847 was reflected as a separate positive component of stockholders'
equity. During 1998, the market valuation account was increased $113,360 to
$305,180 to reflect the fair value of available-for-sale investments at June
30, 1998 and the net after tax decrease resulting from the change in the
market valuation adjustment of $71,416 increased the stockholders' equity
component to $192,263 at June 30, 1998.
Investments in debt securities classified as held-to-maturity increased
$3,435,622 or 9.1% to $41,169,525 at June 30, 1998 compared to $37,733,903 at
December 31, 1997. Investments classified as held-to-maturity are carried at
amortized cost. At June 30, 1998 and December 31, 1997 the aggregate fair
value of Bancshares' held-to-maturity investment portfolio was approximately
$466,000 and $313,000, respectively, more than its aggregate carrying value.
Cash and cash equivalents, which consist of cash and due from banks and
Federal funds sold, increased $11,922,616 or 34.7% to $46,274,666 at June 30,
1998 compared to $34,352,050 at December 31, 1997. That increase primarily
reflected an increase of $5,997,237 from investment activities and an increase
of $6,456,615 in securities sold under agreement to repurchase.
Premises and equipment increased $1,812,710 or 20.9% to $10,467,422 at
June 30, 1998 compared to $8,654,712 at December 31, 1997. The increase
reflected expenditures for premises and equipment of $2,063,261 and
depreciation expense of $250,551. The expenditures for premises and equipment
primarily reflected construction costs for renovating and expanding ENB's main
bank building located in downtown Jefferson City. The renovation and
expansion project is expected to be completed in the first quarter of 1999 and
its cost is anticipated to be no more than $5,000,000.
Total deposits decreased $1,741,543 or 0.5% to $358,645,252 at June 30,
1998 compared to $360,386,795 at December 31, 1997. Demand deposits decreased
$2,830,357 due to normal fluctuations and time deposits increased $1,088,814.
Securities sold under agreements to repurchase increased $6,456,615 to
$27,950,202 at June 30, 1998 compared to $21,493,587 at December 31, 1997 due
primarily to funds obtained from the Jefferson City School district.
The increase in stockholders' equity reflects net income of $2,094,292
less dividends declared of $718,510, and $71,416 in unrealized holding gains
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, 1997.
Costs of Year 2000 Compliance
The Board of Directors of Bancshares has directed the management of ENB
and USB to consolidate their data processing operations. ENB and USB each
presently maintains its own unique enterprise server and software from
different vendors. During August 1998 a decision was made on which brand of
enterprise server and which software will be utilized for the consolidation.
It is anticipated that all new equipment and software purchased for the
consolidation will be fully Year 2000 compliant. ENB was anticipating that it
would spend approximately $500,000 in 1998 to upgrade its fully depreciated
enterprise server and teller systems and to replace and expand its network
servers as a part of its ongoing business expense. Specific costs of Year
2000 compliance other than those related to the consolidation decision center
around customer education-related issues, non-compliant network operating
systems, electronic banking processes and testing software. Bancshares
anticipates those Year 2000 costs to be approximately $70,000.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
No response is provided to this item pursuant to Instruction 1. to
Paragraph 305 of Regulation S-K.
<PAGE>
PART II - OTHER INFORMATION
Item 4. At the annual meeting of the shareholders of Exchange National
Bancshares, Inc. held on June 10, 1998, the shareholders re-elected
three Class III Directors, namely, Donald L. Campbell, Kevin L. Riley,
and David T. Turner to serve terms expiring at the annual meeting of
shareholders in 2001, and ratified the Board of Directors selection of
KPMG Peat Marwick LLP as the Company's independent auditors for the
year ending December 31, 1998. Class I Directors, namely, Charles G.
Dudenhoeffer, Jr. and Philip D. Freeman, and Class II Directors,
namely, David R. Goller and James R. Loyd continue to serve terms
expiring at the annual meetings of shareholders in 1999 and 2000,
respectively.
The following is a summary of votes cast. No broker non-votes
were received.
Withhold
Authority/
For Against Abstentions
_________ ____________ ___________
Election of Directors:
Donald L. Campbell 564,114 1,880 N/A
Kevin L. Riley 565,704 290 N/A
David T. Turner 565,064 930 N/A
Ratification of KPMG Peat
Marwick LLP as
independent auditors 565,914 -- 80
N/A = not applicable
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 3.2 to the
Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1997 (Commission file number
0-23636) and incorporated herein by reference).
<PAGE>
Exhibit No. Description
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 second quarter of
1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly 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
August 11, 1998 Principal Executive Officer
By /s/ Richard G. Rose
___________________________________
Richard G. Rose, Treasurer
August 11, 1998
<PAGE>
EXCHANGE NATIONAL BANCSHARES, INC.
INDEX TO EXHIBITS
June 30, 1998 Form 10-Q
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 3.2 to the
Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1997 (Commission file
number 0-23636) 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 28
** 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-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30,
1998 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-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 15,354
<INT-BEARING-DEPOSITS> 220
<FED-FUNDS-SOLD> 30,770
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 68,959
<INVESTMENTS-CARRYING> 41,170
<INVESTMENTS-MARKET> 41,636
<LOANS> 278,168
<ALLOWANCE> 4,183
<TOTAL-ASSETS> 456,979
<DEPOSITS> 358,645
<SHORT-TERM> 31,573
<LIABILITIES-OTHER> 4,606
<LONG-TERM> 17,601
0
0
<COMMON> 719
<OTHER-SE> 43,836
<TOTAL-LIABILITIES-AND-EQUITY> 456,979
<INTEREST-LOAN> 6,042
<INTEREST-INVEST> 1,645
<INTEREST-OTHER> 333
<INTEREST-TOTAL> 8,020
<INTEREST-DEPOSIT> 3,633
<INTEREST-EXPENSE> 4,342
<INTEREST-INCOME-NET> 3,678
<LOAN-LOSSES> 173
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,660
<INCOME-PRETAX> 1,435
<INCOME-PRE-EXTRAORDINARY> 947
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 947
<EPS-PRIMARY> 1.31
<EPS-DILUTED> 1.31
<YIELD-ACTUAL> 3.65
<LOANS-NON> 646
<LOANS-PAST> 272
<LOANS-TROUBLED> 93
<LOANS-PROBLEM> 6,545
<ALLOWANCE-OPEN> 4,109
<CHARGE-OFFS> 136
<RECOVERIES> 37
<ALLOWANCE-CLOSE> 4,183
<ALLOWANCE-DOMESTIC> 2,755
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,427
</TABLE>
