-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Mqe5ypLVVrf6l71bEzoi/RvkyiK0yVQw8hub+nsY6H8NOLWdgp+W11wPfGXRZbdL 5af6I4ABg0Gy3FLd/0bnxw== 0000893847-97-000002.txt : 19970509 0000893847-97-000002.hdr.sgml : 19970509 ACCESSION NUMBER: 0000893847-97-000002 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970508 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EXCHANGE NATIONAL BANCSHARES INC CENTRAL INDEX KEY: 0000893847 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 431626350 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-23636 FILM NUMBER: 97597906 BUSINESS ADDRESS: STREET 1: 132 E HIGH ST CITY: JEFFERSON CITY STATE: MO ZIP: 65101 BUSINESS PHONE: 3147616100 10QSB 1 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 PART I - FINANCIAL INFORMATION Item 1. Financial Statements EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
March 31, December 31, 1997 1996 ____________ ____________ 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 ============ ============
Continued on next page EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED) (Unaudited) March 31, December 31, 1997 1996 ____________ ____________ 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 ============ ============
See accompanying notes to condensed consolidated financial statements. EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) Three Months Ended March 31, _______________________ 1997 1996 ___________ ___________ 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 ===== =====
See accompanying notes to condensed consolidated financial statements. EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, __________________________ 1997 1996 ___________ ___________ 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) ___________ ___________
Continued on next page EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (Unaudited) Three Months Ended March 31, __________________________ 1997 1996 ___________ ___________ 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
See accompanying notes to condensed consolidated financial statements. 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.
(Dollars expressed in thousands) Three Months Ended March 31, _______________ 1997 1996 _______ _______ 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 ======= =======
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:
(Dollars expressed in thousands) Three Months Ended March 30, Increase (decrease) ________________ __________________ 1997 1996 Amount % _______ _______ ________ ________ 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 % ======= ======= =======
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.
(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/ ________ __________ _______ ________ __________ _______ 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 ======== ========
Continued on next page
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/ ________ __________ _______ ________ __________ _______ 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.
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.
(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 ________ ________ _________ 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.
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:
(Dollars expressed in thousands) March 31, 1997 December 31, 1996 _________________ _________________ % of % of Gross Gross Balance Loans Balance Loans _______ _____ _______ _____ 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 ====== ======
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, 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. 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. 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 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. EX-27 2
9 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. 0000893847 EXCHANGE NATIONAL BANCSHARES, INC. 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 14,161 35 11,500 0 52,191 30,074 29,976 183,005 2,346 296,340 230,908 21,557 2,637 0 0 0 719 40,519 296,340 3,889 1,240 113 5,242 2,334 2,533 2,709 125 (3) 1,517 1,502 1,016 0 0 1,016 1.41 1.41 4.20 1,184 330 0 5,987 2,307 127 41 2,346 2,003 0 343
-----END PRIVACY-ENHANCED MESSAGE-----