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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended December 31, 2004
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)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of Each Class Name of Each Exchange on Which Registered
- ------------------- -----------------------------------------
None N/A
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, par value $1.00 per share
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [X] No [ ]
The aggregate market value of the 3,292,783 shares of voting and non-voting
common equity of the registrant held by non-affiliates computed by reference to
the $29.20 closing price of such common equity on June 30, 2004, the last
business day of the registrant's most recently completed second fiscal quarter,
was $96,149,264. Aggregate market value excludes an aggregate of 336,720 shares
of common stock held by officers and directors and by each person known by the
registrant to own 5% or more of the outstanding common stock on such date.
Exclusion of shares held by any of these persons should not be construed to
indicate that such person possesses the power, direct or indirect, to direct or
cause the direction of the management or policies of the registrant, or that
such person is controlled by or under common control with the registrant. As of
March 12, 2005, the registrant had 4,298,353 shares of common stock, par value
$1.00 per share, issued and 4,169,847 shares outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference into the
indicated parts of this report: (1) 2004 Annual Report to Shareholders - Part II
and (2) definitive Proxy Statement for the 2005 Annual Meeting of Shareholders
to be filed with the Commission pursuant to Regulation 14A - Part III.
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PART I
ITEM 1. BUSINESS.
GENERAL
Our Company, Exchange National Bancshares, Inc., is a bank holding company
registered under the Bank Holding Company Act of 1956, as amended. Exchange was
incorporated under the laws of the State of Missouri on October 23, 1992, and on
April 7, 1993 it acquired all of the issued and outstanding capital stock of The
Exchange National Bank of Jefferson City, a national banking association,
pursuant to a corporate reorganization involving an exchange of shares. On
November 3, 1997, our Company acquired Union State Bancshares, Inc., and Union's
wholly-owned subsidiary, Union State Bank and Trust of Clinton. Following the
May 4, 2000 acquisition of Calhoun Bancshares, Inc. by Union State Bank, Calhoun
Bancshares' wholly-owned subsidiary, Citizens State Bank of Calhoun, merged into
Union State Bank. The surviving bank in this merger is called Citizens Union
State Bank & Trust. On January 3, 2000, our Company acquired Mid Central
Bancorp, Inc., and Mid Central's wholly-owned subsidiary, Osage Valley Bank. On
October 25, 1999, Exchange established ENB Holdings, Inc. as a wholly-owned
subsidiary for the sole purpose of effecting the June 16, 2000 merger with CNS
Bancorp, Inc. and its subsidiary, City National Savings Bank, FSB. City National
subsequently was merged into Exchange National Bank. ENB Holdings owns 27.4% of
Exchange National Bank with the balance owned by Exchange. On October 17, 2001,
Exchange and Union each received approval from the Federal Reserve and elected
to become a financial holding company.
Except as otherwise provided herein, references herein to "Exchange" or our
"Company" include Exchange and its consolidated subsidiaries, and references
herein to our "Banks" refer to Exchange National Bank, Citizens Union State Bank
and Osage Valley Bank.
RECENT DEVELOPMENTS
DREXEL BANCSHARES TRANSACTION. On February 28, 2005, our Company announced
that it had entered into an agreement to acquire Bank 10, a Missouri state bank
with offices in the Missouri communities of Belton, Drexel, Harrisonville,
Independence and Raymore. The terms and conditions of the proposed acquisition
are provided in an Acquisition Agreement dated January 28, 2005 among our
Company, Drexel Bancshares, Inc., the sole shareholder of Bank 10, and certain
other persons and entities, which Acquisition Agreement was amended by an
Agreement Altering Transaction Structure dated February 28, 2005 between our
Company, Drexel Bancshares and the representative for the shareholders of Drexel
Bancshares.
Under the terms of the Acquisition Agreement, as amended by an Agreement
Altering Transaction Structure, our Company would purchase all of the
outstanding shares of Bank 10's common stock from Drexel Bancshares. The
purchase price payable to Drexel Bancshares for Bank 10 would be cash
aggregating $32,862,000, plus (or minus) any amount by which the book value of
Bank 10 as of the business day preceding the closing date is greater (or less)
than $13,144,800, subject to further adjustments to eliminate any unrealized
gain or loss in Bank 10's investment portfolio and to cause Bank 10's reserve
for loan losses to be at least 1.1% of the amount of its outstanding loans.
Consummation of the proposed acquisition is subject to the receipt of all
requisite regulatory approvals and to the satisfaction of customary closing
conditions.
The summary of the proposed acquisition is not complete and is qualified in
its entirety by reference to the complete text of the Acquisition Agreement and
of the Agreement Altering Transaction Structure, each of which is filed as an
exhibit to this report and incorporated herein by reference.
ISSUANCE OF TRUST PREFERRED SECURITIES. Our Company is in the process of
completing a private placement of $23,000,000 in 30-year floating rate trust
preferred securities (TPS). The interest rate on the TPS will be a fixed rate
for five years then converting to a floating rate. The rate is based on a
specific margin above three-month LIBOR. It is expected that the placement will
be closed on or about March 17,
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2005. Based on the LIBOR rate as of March 9, 2005, the initial interest rate
would be 6.30%. The TPS can be prepaid without penalty at any time after five
years from the issuance date.
The TPS represent preferred interests in a special purpose subsidiary trust
organized by our Company. Our Company will invest approximately $712,000 in
common interests in the trust and the purchaser in the private placement will
purchase $23,000,000 in preferred interests. The proceeds will be used to
purchase from our Company its 30-year deeply subordinated debentures whose terms
mirror those stated above for the TPS. The debentures are guaranteed by our
Company pursuant to a subordinated guarantee. The trustee for the TPS holders
will be U.S. Bank, N.A. The trustee will not have the power to take enforcement
action in the event of a default under the TPS for five years from the date of
default. In the event of default, however, our Company would be precluded from
paying dividends until the default is cured.
The proceeds of the TPS placement will be used by our Company to facilitate
the Bank 10 acquisition and for general corporate purposes. Consummation of the
TPS placement is subject to the satisfaction of customary closing conditions.
DESCRIPTION OF BUSINESS
EXCHANGE. Exchange is a bank holding company registered under the Bank
Holding Company Act that has elected to become a financial holding company. Our
Company's activities currently are limited to ownership, directly or indirectly
through subsidiaries, of the outstanding capital stock of Exchange National
Bank, Citizens Union State Bank and Osage Valley Bank. In addition to ownership
of its subsidiaries, Exchange may seek expansion through acquisition and may
engage in those activities (such as investments in banks or operations that are
financial in nature) in which it is permitted to engage under applicable law. It
is not currently anticipated that Exchange will engage in any business other
than that directly related to its ownership of its banking subsidiaries or other
financial institutions.
UNION. Union is a bank holding company registered under the Bank Holding
Company Act that has elected to become a financial holding company. Union's
activities currently are limited to ownership of the outstanding capital stock
of Citizens Union State Bank. It is not currently anticipated that Union will
engage in any business other than that directly related to its ownership of
Citizens Union State Bank.
MID CENTRAL BANCORP. Mid Central Bancorp is a bank holding company
registered under the Bank Holding Company Act. Mid Central Bancorp's activities
currently are limited to ownership of the outstanding capital stock of Osage
Valley Bank. It is not currently anticipated that Mid Central Bancorp will
engage in any business other than that directly related to its ownership of
Osage Valley Bank.
ENB HOLDINGS. ENB Holdings is a bank holding company registered under the
Bank Holding Company Act. ENB Holdings' activities currently are limited to the
ownership of 27.4% of the outstanding capital stock of Exchange National Bank.
It is not currently anticipated that ENB Holdings will engage in any business
other than that directly related to its minority ownership of Exchange National
Bank.
EXCHANGE NATIONAL BANK. Exchange National Bank, located in Jefferson City,
Missouri, was founded in 1865. Exchange National Bank is the oldest bank in Cole
County, and became a national bank in 1927. Exchange National Bank has seven
banking offices, including its principal office at 132 East High Street in
Jefferson City's central business district, three Jefferson City branch
facilities and a branch facility in each of the Missouri communities of Tipton,
California and St. Robert. See "Item 2. Properties".
Exchange National Bank is a full service bank conducting a general banking
and trust business, offering its customers checking and savings accounts,
electronic cash management services, internet banking, debit cards, certificates
of deposit, trust services, brokerage services, safety deposit boxes and a wide
range of lending services, including credit card accounts, commercial and
industrial loans, single payment personal loans, installment loans and
commercial and residential real estate loans.
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Exchange National Bank's deposit accounts are insured by the Federal
Deposit Insurance Corporation (the "FDIC") to the extent provided by law, and it
is a member of the Federal Reserve System. Exchange National Bank's operations
are supervised and regulated by the Office of the Comptroller of the Currency
(the "OCC"), the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board") and the FDIC. A periodic examination of Exchange National Bank
is conducted by representatives of the OCC. Such regulations, supervision and
examinations are principally for the benefit of depositors, rather than for the
benefit of the holders of Exchange National Bank's common stock. See "Regulation
Applicable to Bank Holding Companies " and "Regulation Applicable to our Banks".
CITIZENS UNION STATE BANK. Citizens Union State Bank was founded in 1932 as
a Missouri bank known as Union State Bank of Clinton. Union State Bank converted
from a Missouri bank to a Missouri trust company on August 16, 1989, changing
its name to Union State Bank and Trust of Clinton. On May 4, 2000, Union State
Bank merged with Citizens State Bank of Calhoun and changed its name to Citizens
Union State Bank and Trust. Citizens Union State Bank has eleven banking
offices, including its principal office at 102 North Second Street in Clinton,
Missouri, four Clinton branch facilities, and a branch facility in each of the
Missouri communities of Springfield, Branson, Collins, Lee's Summit, Osceola and
Windsor. See "Item 2. Properties".
Citizens Union State Bank is a full service bank conducting a general
banking and trust business, offering its customers checking and savings
accounts, internet banking, debit cards, certificates of deposit, trust
services, brokerage services, safety deposit boxes and a wide range of lending
services, including commercial and industrial loans, single payment personal
loans, installment loans and commercial and residential real estate loans.
Citizens Union State Bank's deposit accounts are insured by the FDIC to the
extent provided by law. Citizens Union State Bank's operations are supervised
and regulated by the FDIC and the Missouri Division of Finance. Periodic
examinations of Citizens Union State Bank are conducted by representatives of
the FDIC and the Missouri Division of Finance. Such regulations, supervision and
examinations are principally for the benefit of depositors, rather than for the
benefit of the holders of Citizens Union State Bank's common stock. See
"Regulation Applicable to Bank Holding Companies" and "Regulation Applicable to
our Banks".
OSAGE VALLEY BANK. Osage Valley Bank was founded in 1891 as a Missouri
state bank. Osage Valley Bank has two banking offices, including its principal
office at 200 Main Street in Warsaw, Missouri and a branch facility in Warsaw,
Missouri. See "Item 2. Properties".
Osage Valley Bank is a full service bank conducting a general banking
business, offering its customers checking and savings accounts, internet
banking, debit cards, certificates of deposit, safety deposit boxes and a wide
range of lending services, including commercial and industrial loans, single
payment personal loans, installment loans and commercial and residential real
estate loans.
Osage Valley Bank's deposit accounts are insured by the FDIC to the extent
provided by law. Osage Valley Bank's operations are supervised and regulated by
the FDIC and the Missouri Division of Finance. Periodic examinations of Osage
Valley Bank are conducted by representatives of the FDIC and the Missouri
Division of Finance. Such regulations, supervision and examinations are
principally for the benefit of depositors, rather than for the benefit of the
holders of Osage Valley Bank's common stock. See "Regulation Applicable to Bank
Holding Companies " and "Regulation Applicable to our Banks".
EMPLOYEES
As of December 31, 2004, Exchange and its subsidiaries had approximately
251 full-time and 41 part-time employees. None of its employees is presently
represented by any union or collective bargaining group, and our Company
considers its employee relations to be satisfactory.
4
COMPETITION
Bank holding companies and their subsidiaries and affiliates encounter
intense competition from nonbanking as well as banking sources in all of their
activities. Our Banks' competitors include other commercial banks, thrifts,
savings banks, credit unions and money market mutual funds. Thrifts and credit
unions now have the authority to offer checking accounts and to make corporate
and agricultural loans and were granted expanded investment authority by recent
federal regulations. In addition, large national and multinational corporations
have in recent years become increasingly visible in offering a broad range of
financial services to all types of commercial and consumer customers. In our
Banks' respective service areas, new competitors, as well as the expanding
operations of existing competitors, have had, and are expected to continue to
have, an adverse impact on our Banks' market share of deposits and loans in such
service areas.
Exchange National Bank experiences substantial competition for deposits and
loans within both its primary service area of Jefferson City and its secondary
service area of the nearby communities in Cole, Moniteau, and Pulaski Counties.
Exchange National Bank's principal competition for deposits and loans comes from
twelve other banks and fourteen credit unions within its primary service area of
Jefferson City. Based on publicly available information, management believes
that Exchange National Bank is the second largest (in terms of deposits) of the
banks within Cole County. The main competition for Exchange National Bank's
trust services is from other commercial banks.
The areas in which Citizens Union State Bank competes for deposits and
loans are its primary service areas of Clinton, Springfield, Branson, Collins,
Lee's Summit, Osceola and Windsor, Missouri and its secondary service area of
the nearby communities in Henry, St. Clair, Greene and Jackson Counties.
Citizens Union State Bank's principal competition for deposits and loans comes
from seven other banks within its primary service area and, to an increasing
extent, sixty-nine other banks in nearby communities. Based on publicly
available information, management believes that Citizens Union State Bank is the
largest (in terms of deposits) of the banks within Henry County. The main
competition for Citizens Union State Bank's trust services is from the trust
departments of other commercial banks in the Kansas City area.
Osage Valley Bank competes for deposits and loans in its primary service
area of Warsaw, Missouri and its secondary service area of the nearby
communities in Benton County. Osage Valley Bank's principal competition for
deposits and loans comes from banks within its primary service area of Warsaw
and in nearby communities. Based on publicly available information, management
believes that Osage Valley Bank is the largest (in terms of deposits) of the
five banks within Benton County.
REGULATION APPLICABLE TO BANK HOLDING COMPANIES
GENERAL. As a registered bank holding company and a financial holding
company under the Bank Holding Company Act (the "BHC Act") and the
Gramm-Leach-Bliley Act (the "GLB Act"), Exchange is subject to supervision and
examination by the Federal Reserve Board (the "FRB"). The FRB has authority to
issue cease and desist orders against bank holding companies if it determines
that their actions represent unsafe and unsound practices or violations of law.
In addition, the FRB is empowered to impose civil money penalties for violations
of banking statutes and regulations. Regulation by the FRB is intended to
protect depositors of our Banks, not the shareholders of Exchange.
LIMITATION ON ACQUISITIONS. The BHC Act requires a bank holding company to
obtain prior approval of the FRB before:
- taking any action that causes a bank to become a controlled subsidiary
of the bank holding company;
- acquiring direct or indirect ownership or control of voting shares of
any bank or bank holding company, if the acquisition results in the
acquiring bank holding company having control of more than 5% of the
outstanding shares of any class of voting securities of such bank or
bank holding
5
company, and such bank or bank holding company is not majority-owned
by the acquiring bank holding company prior to the acquisition;
- acquiring substantially all of the assets of a bank; or
- merging or consolidating with another bank holding company.
LIMITATION ON ACTIVITIES. The activities of bank holding companies are
generally limited to the business of banking, managing or controlling banks, and
other activities that the FRB has determined to be so closely related to banking
or managing or controlling banks as to be a proper incident thereto. In
addition, under the GLB Act, a bank holding company, all of whose controlled
depository institutions are "well capitalized" and "well managed" (as defined in
federal banking regulations) and which obtains "satisfactory" Community
Reinvestment Act ratings, may declare itself to be a "financial holding company"
and engage in a broader range of activities.
A financial holding company may affiliate with securities firms and
insurance companies and engage in other activities that are financial in nature
or incidental or complementary to activities that are financial in nature.
"Financial in nature" activities include:
- securities underwriting, dealing and market making;
- sponsoring mutual funds and investment companies;
- insurance underwriting and insurance agency activities;
- merchant banking; and
- activities that the FRB determines to be financial in nature or
incidental to a financial activity; or which is complementary to a
financial activity and does not pose a safety and soundness risk.
A financial holding company that desires to engage in activities that are
financial in nature or incidental to a financial activity but not previously
authorized by the FRB must obtain approval from the FRB before engaging in such
activity. Also, a financial holding company may seek FRB approval to engage in
an activity that is complementary to a financial activity, if it shows that the
activity does not pose a substantial risk to the safety and soundness of its
insured depository institutions or the financial system.
A financial holding company may acquire a company (other than a bank
holding company, bank or savings association) engaged in activities that are
financial in nature or incidental to activities that are financial in nature
without prior approval from the FRB. Prior FRB approval is required, however,
before the financial holding company may acquire control of more than 5% of the
voting shares or substantially all of the assets of a bank holding company, bank
or savings association. In addition, under the FRB's merchant banking
regulations, a financial holding company is authorized to invest in companies
that engage in activities that are not financial in nature, as long as the
financial holding company makes its investment with the intention of limiting
the duration of the investment, does not manage the company on a day-to-day
basis, and the company does not cross-market its products or services with any
of the financial holding company's controlled depository institutions.
If any subsidiary bank of a financial holding company ceases to be
"well-capitalized" or "well-managed," the FRB has authority to order the
financial holding company to divest its subsidiary banks. Alternatively, the
financial holding company may elect to limit its activities and the activities
of its subsidiaries to those permissible for a bank holding company that is not
a financial holding company. If any subsidiary bank of a financial holding
company receives a rating under the Community Reinvestment Act (the "CRA") of
less than "satisfactory", then the financial holding company is prohibited from
engaging in new activities or acquiring companies other than bank holding
companies, banks or savings associations until the rating is raised to
"satisfactory" or better.
6
REGULATORY CAPITAL REQUIREMENTS. The FRB has promulgated capital adequacy
guidelines for use in its examination and supervision of bank holding companies.
If a bank holding company's capital falls below minimum required levels, then
the bank holding company must implement a plan to increase its capital, and its
ability to pay dividends and make acquisitions of new bank subsidiaries is
restricted.
The FRB's capital adequacy guidelines provide for the following types of
capital:
- Tier 1 capital, also referred to as core capital, which includes:
- common shareholders' equity;
- qualifying noncumulative perpetual preferred stock and related
surplus;
- qualifying cumulative perpetual preferred stock and related
surplus (limited to a maximum of 25% of Tier 1 capital elements);
and
- minority interests in the equity accounts of consolidated
subsidiaries.
Goodwill is excluded from Tier 1 capital. Most intangible assets are
also deducted from Tier 1 capital.
- Tier 2 capital, also referred to as supplementary capital, which
includes:
- allowances for loan and lease losses (limited to 1.25% of
risk-weighted assets);
- most perpetual preferred stock and any related surplus;
- certain hybrid capital instruments, perpetual debt and mandatory
convertible debt securities; and
- intermediate-term preferred stock and intermediate-term
subordinated debt instruments (subject to limitations).
The maximum amount of supplementary capital that qualifies as Tier 2
capital is limited to 100% of Tier 1 capital.
- Total capital, which includes:
- Tier 1 capital;
- plus, qualifying Tier 2 capital;
- minus, investments in unconsolidated subsidiaries, reciprocal
holdings of bank holding company capital securities, and deferred
tax assets and other deductions.
The FRB's capital adequacy guidelines require that a bank holding company
maintain a Tier 1 leverage ratio equal to at least 4% of its average total
consolidated assets, a Tier 1 risk-based capital ratio equal to 4% of its
risk-weighted assets and a total risk-based capital ratio equal to 8% of its
risk-weighted assets.
On December 31, 2004, Exchange was in compliance with all of the FRB's
capital adequacy guidelines. Exchange's capital ratios on December 31, 2004 are
shown below:
Tier 1 Risk-Based Total Risk-Based Capital
Leverage Ratio (4% Capital Ratio (4% Ratio (8% minimum
minimum requirement) minimum requirement) requirement)
-------------------- -------------------- ------------------------
Exchange 10.39% 13.47% 14.58%
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INTERSTATE BANKING AND BRANCHING. Under the Riegle-Neal Interstate Banking
and Branching Efficiency Act of 1994 (the "Riegle-Neal Act"), a bank holding
company is permitted to acquire the stock or substantially all of the assets of
banks located in any state regardless of whether such transaction is prohibited
under the laws of any state. The FRB will not approve an interstate acquisition
if, as a result of the acquisition, the bank holding company would control more
than 10% of the total amount of insured deposits in the United States or would
control more than 30% of the insured deposits in the home state of the acquired
bank. The 30% of insured deposits state limit does not apply if the acquisition
is the initial entry into a state by a bank holding company or if the home state
waives such limit. The Riegle-Neal Act also authorizes banks to merge across
state lines, thereby creating interstate branches. Banks are also permitted to
acquire and to establish de novo branches in other states where authorized under
the laws of those states.
Under the Riegle-Neal Act, individual states may restrict interstate
acquisitions in two ways. A state may prohibit an out-of-state bank holding
company from acquiring a bank located in the state unless the target bank has
been in existence for a specified minimum period of time (not to exceed five
years). A state may also establish limits on the total amount of insured
deposits within the state which are controlled by a single bank holding company,
provided that such deposit limit does not discriminate against out-of-state bank
holding companies.
SOURCE OF STRENGTH. FRB policy requires a bank holding company to serve as
a source of financial and managerial strength to its subsidiary banks. Under
this "source of strength doctrine," a bank holding company is expected to stand
ready to use its available resources to provide adequate capital funds to its
subsidiary banks during periods of financial stress or adversity, and to
maintain resources and the capacity to raise capital which it can commit to its
subsidiary banks. Furthermore, the FRB has the right to order a bank holding
company to terminate any activity that the FRB believes is a serious risk to the
financial safety, soundness or stability of any subsidiary bank.
LIABILITY OF COMMONLY CONTROLLED INSTITUTIONS. Under cross-guaranty
provisions of the Federal Deposit Insurance Act (the "FDIA"), bank subsidiaries
of a bank holding company are liable for any loss incurred by the Bank Insurance
Fund (the "BIF"), the federal deposit insurance fund for banks, in connection
with the failure of any other bank subsidiary of the bank holding company.
MISSOURI BANK HOLDING COMPANY REGULATION. Missouri prohibits any bank
holding company from acquiring ownership or control of any bank or Missouri
depository trust company that has Missouri deposits if, after such acquisition,
the bank holding company would hold or control more than 13% of total Missouri
deposits. Because of this restriction, a bank holding company, prior to
acquiring control of a bank or depository trust company that has deposits in
Missouri, must receive the approval of the Missouri Division of Finance.
REGULATION APPLICABLE TO OUR BANKS
GENERAL. Exchange National Bank, a national bank, is subject to regulation
and examination by the OCC and the FDIC. Citizens Union State Bank, a Missouri
state non-member depository trust company, is subject to the regulation of the
Missouri Division of Finance and the FDIC. Osage Valley Bank, a Missouri state
non-member bank, is subject to the regulation of the Missouri Division of
Finance and the FDIC. Each of the OCC and the FDIC is empowered to issue cease
and desist orders against our Banks if it determines that activities of any of
our Banks represents unsafe and unsound banking practices or violations of law.
In addition, the OCC and the FDIC have the power to impose civil money penalties
for violations of banking statutes and regulations. Regulation by these agencies
is designed to protect the depositors of the bank, not shareholders of Exchange.
BANK REGULATORY CAPITAL REQUIREMENTS. The OCC and the FDIC have adopted
minimum capital requirements applicable to national banks and state non-member
banks, respectively, which are similar to the capital adequacy guidelines
established by the FRB for bank holding companies. Federal banking laws
8
classify an insured financial institution in one of the following five
categories, depending upon the amount of its regulatory capital:
- "well-capitalized" if it has a total Tier 1 leverage ratio of 5% or
greater, a Tier 1 risk-based capital ratio of 6% or greater and a
total risk-based capital ratio of 10% or greater (and is not subject
to any order or written directive specifying any higher capital
ratio);
- "adequately capitalized" if it has a total Tier 1 leverage ratio of 4%
or greater (or a Tier 1 leverage ratio of 3% or greater, if the bank
has a CAMELS rating of 1), a Tier 1 risk-based capital ratio of 4% or
greater and a total risk-based capital ratio of 8% or greater;
- "undercapitalized" if it has a total Tier 1 leverage ratio that is
less than 4% (or a Tier 1 leverage ratio that is less than 3%, if the
bank has a CAMELS rating of 1), a Tier 1 risk-based capital ratio that
is less than 4% or a total risk-based capital ratio that is less than
8%;
- "significantly undercapitalized" if it has a total Tier 1 leverage
ratio that is less than 3%, a Tier 1 risk based capital ratio that is
less than 3% or a total risk-based capital ratio that is less than 6%;
and
- "critically undercapitalized" if it has a Tier 1 leverage ratio that
is equal to or less than 2%.
Federal banking laws require the federal regulatory agencies to take prompt
corrective action against undercapitalized financial institutions.
On December 31, 2004, each of our Banks was in compliance with its federal
banking agency's minimum capital requirements. The capital ratios and
classifications of each of our Banks as of December 31, 2004 is shown on the
following chart.
Tier 1 Risk-Based Total Risk-Based
Leverage Ratio Capital Ratio Capital Ratio Classification
-------------- ----------------- ---------------- ----------------
Exchange National
Bank 8.98% 11.66% 12.84% Well-Capitalized
Citizens Union
State Bank 8.19% 9.64% 10.68% Well-Capitalized
Osage Valley Bank 6.28% 10.54% 11.47% Well-Capitalized
All of our Banks must be well-capitalized for Exchange to remain a
financial holding company.
DEPOSIT INSURANCE AND ASSESSMENTS. The deposits of our Banks are insured by
the BIF administered by the FDIC, in general up to a maximum of $100,000 per
insured depositor. Under federal banking regulations, insured banks are required
to pay semi-annual assessments to the FDIC for deposit insurance. The FDIC's
risk-based assessment system requires that BIF members pay varying assessment
rates depending upon the level of the institution's capital and the degree of
supervisory concern over the institution. The FDIC's assessment rates range from
zero cents to 27 cents per $100 of insured deposits. The FDIC has authority to
increase the annual assessment rate and there is no cap on the annual assessment
rate which the FDIC may impose.
LIMITATIONS ON INTEREST RATES AND LOANS TO ONE BORROWER. The rate of
interest a bank may charge on certain classes of loans is limited by state and
federal law. At certain times in the past, these limitations have resulted in
reductions of net interest margins on certain classes of loans. Federal and
state laws impose additional restrictions on the lending activities of banks.
The maximum amount that a Missouri state-chartered bank may lend to any one
person or entity is generally limited to 15% of the unimpaired capital of
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the bank located in a city having a population of 100,000 or more, 20% of the
unimpaired capital of the bank located in a city having a population of less
than 100,000 and over 7,000, and 25% of the unimpaired capital of the bank if
located elsewhere in the state.
PAYMENT OF DIVIDENDS. Our Banks are subject to federal and state laws
limiting the payment of dividends. Under the FDIA, an FDIC-insured institution
may not pay dividends while it is undercapitalized or if payment would cause it
to become undercapitalized. The National Bank Act and Missouri banking law also
prohibit the declaration of a dividend out of the capital and surplus of the
bank. These laws and regulations are not expected to have a material effect upon
the current dividend policies of our Banks.
COMMUNITY REINVESTMENT ACT. Our Banks are subject to the CRA and
implementing regulations. CRA regulations establish the framework and criteria
by which the bank regulatory agencies assess an institution's record of helping
to meet the credit needs of its community, including low- and moderate-income
neighborhoods. CRA ratings are taken into account by regulators in reviewing
certain applications made by Exchange and its banking subsidiaries.
LIMITATIONS ON TRANSACTIONS WITH AFFILIATES. Exchange and its non-bank
subsidiaries are "affiliates" within the meaning of the Federal Reserve Act. The
amount of loans or extensions of credit which our Banks may make to non-bank
affiliates, or to third parties secured by securities or obligations of the
non-bank affiliates, are substantially limited by the Federal Reserve Act and
the FDIA. Such acts further restrict the range of permissible transactions
between a bank and an affiliated company. A bank and its subsidiaries may engage
in certain transactions, including loans and purchases of assets, with an
affiliated company only if the terms and conditions of the transaction,
including credit standards, are substantially the same as, or at least as
favorable to the bank as, those prevailing at the time for comparable
transactions with non-affiliated companies or, in the absence of comparable
transactions, on terms and conditions that would be offered to non-affiliated
companies.
OTHER BANKING ACTIVITIES. The investments and activities of our Banks are
also subject to regulation by federal banking agencies regarding investments in
subsidiaries, investments for their own account (including limitations on
investments in junk bonds and equity securities), loans to officers, directors
and their affiliates, security requirements, anti-tying limitations, anti-money
laundering, financial privacy and customer identity verification requirements,
truth-in-lending, the types of interest bearing deposit accounts which it can
offer, trust department operations, brokered deposits, audit requirements,
issuance of securities, branching and mergers and acquisitions.
CHANGES IN LAWS AND MONETARY POLICIES
RECENT LEGISLATION. On July 30, 2002, President Bush signed into law the
Sarbanes-Oxley Act of 2002. The stated goals of the Sarbanes-Oxley Act are to
increase corporate responsibility, to provide the enhanced penalties for
accounting and auditing improprieties at publicly traded companies and to
protect investors by improving the accuracy and reliability of corporate
disclosures made pursuant to the securities laws. The proposed changes are
intended to allow shareholders to monitor the performance of companies and
directors more easily and efficiently.
The Sarbanes-Oxley Act generally applies to all companies that file or are
required to file periodic reports with the SEC under the Securities and Exchange
Act of 1934. Further, the Sarbanes-Oxley Act includes very specified additional
disclosure requirements and new corporate governance rules, requires the SEC,
securities exchanges and the NASDAQ Stock Market to adopt extensive additional
disclosure, corporate governance and other related rules and mandates further
studies of certain issues by the SEC and the Comptroller General. Given the
extensive SEC role in implementing rules relating to many of the Sarbanes-Oxley
Act's new requirements, the final scope of these requirements remains to be
determined.
10
The Sarbanes-Oxley Act addresses, among other matters: audit committees;
certification of financial statements by the chief executive officer and the
chief financial officer; the forfeiture of bonuses and profits made by directors
and senior officers in the twelve month period covered by restated financial
statements; a prohibition on insider trading during pension plan black out
periods; disclosure of off-balance sheet transactions; a prohibition on personal
loans to directors and officers (excluding federally insured financial
institutions); expedited filing requirements for stock transaction reports by
officers and directors; the formation of a public accounting oversight board;
auditor independence; and various increased criminal penalties for violations of
securities laws.
Management has taken various measures to comply with the requirements of
the Sarbanes-Oxley Act. However, given the extensive role of the SEC in
implementing rules relating to many of the Act's new requirements, the final
scope of these requirements remains to be determined.
FUTURE LEGISLATION. Various pieces of legislation, including proposals to
change substantially the financial institution regulatory system, are from time
to time introduced and considered by the Missouri state legislature and the
United States Congress. This legislation may change banking statutes and the
operating environment of Exchange in substantial and unpredictable ways. If
enacted, this legislation could increase or decrease the cost of doing business,
limit or expand permissible activities or affect the competitive balance among
banks, savings associations, credit unions and other financial institutions.
Exchange cannot predict whether any of this potential legislation will be
enacted and, if enacted, the effect that it, or any implementing regulations,
could have on Exchange's business, results of operations or financial condition.
FISCAL MONETARY POLICIES. Exchange's business and earnings are affected
significantly by the fiscal and monetary policies of the federal government and
its agencies. Exchange is particularly affected by the policies of the FRB,
which regulates the supply of money and credit in the United States. Among the
instruments of monetary policy available to the FRB are:
- conducting open market operations in United States government
securities;
- changing the discount rates of borrowings of depository institutions;
- imposing or changing reserve requirements against depository
institutions' deposits; and
- imposing or changing reserve requirements against certain borrowings
by bank and their affiliates.
These methods are used in varying degrees and combinations to directly
affect the availability of bank loans and deposits, as well as the interest
rates charged on loans and paid on deposits. The policies of the FRB have a
material effect on Exchange's business, results of operations and financial
condition.
The references in the foregoing discussion to various aspects of statutes
and regulation are merely summaries, which do not purport to be complete and
which are qualified in their entirety by reference to the actual statutes and
regulations.
AVAILABLE INFORMATION
The address of our principal executive offices is 132 East High Street,
Jefferson City, MO 65101 and our telephone number at this location is (573)
761-6100. Our common stock trades on the Nasdaq national market under the symbol
"EXJF".
We electronically file certain documents with the Securities and Exchange
Commission (SEC). We file annual reports on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K (as appropriate), along with any related
amendments and supplements. From time-to-time, we also may file registration and
related statements pertaining to equity or debt offerings. You may read and
download our SEC filings over the internet from several commercial document
retrieval services as well as at the SEC's
11
internet website (www.sec.gov). You may also read and copy our SEC filings at
the SEC's public reference room located at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549. Please call the SEC 1-800-SEC-0330 for further
information concerning the public reference room and any applicable copy
charges.
Our internet website address is www.exchangebancshares.com. Under the
"Documents" section of our website (www.exchangebancshares.com), we make
available our public filings with the SEC, including our Annual Report on Form
10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, or any
amendments to those reports filed or furnished to the SEC pursuant to Section
13(a) of the Securities Exchange Act of 1934. Our Company will provide a copy of
any of our public filings, excluding exhibits, free of charge upon written
request made to Kathleen L. Bruegenhemke, Exchange National Bancshares, Inc.,
132 East High Street, Jefferson City, MO 65101. Please note that any internet
addresses provided in this report are for information purposes only and are not
intended to be hyperlinks. Accordingly, no information found and/or provided at
such internet addresses is intended or deemed to be incorporated by reference
herein.
ITEM 2. PROPERTIES.
None of Exchange, Union, Mid Central Bancorp or ENB Holdings owns or leases
any property.
The principal offices of Exchange, ENB Holdings and Exchange National Bank
are located at 132 East High Street in the central business district of
Jefferson City, Missouri. The building, which is owned by Exchange National
Bank, is a three-story structure constructed in 1927. A 1998 renovation and
expansion project increased usable office space from 14,000 square feet to
approximately 33,000 square feet. All of this office space is currently used by
Exchange and Exchange National Bank. Management believes that this facility is
adequately covered by insurance.
Exchange National Bank also owns a branch banking facility at 3701 West
Truman Boulevard in Jefferson City. This facility has approximately 21,000
square feet of usable office space, all of which is used for Exchange National
Bank operations, and has full drive-in facilities. Exchange National Bank owns a
second branch banking facility, which is located at 217 West Dunklin Street in
Jefferson City. This facility is a one-story building which has approximately
2,400 square feet of usable office space, all of which is used for Exchange
National Bank operations. In addition, Exchange National Bank has established a
branch banking facility at 800 Eastland Drive in Jefferson City with
approximately 4,100 square feet of usable office space, all of which is used for
Exchange National Bank's operations. In 2001, Exchange National Bank renovated
1,800 square feet of office space at 128 East High Street in Jefferson City for
use as additional operations. Management believes that the condition of these
banking facilities presently is adequate for Exchange National Bank's business
and that these facilities are adequately covered by insurance.
Exchange National Bank also owns a branch in each of the California, Tipton
and St. Robert communities. The California branch located at 1000 West Buchanan
Street was constructed in 2002 and it is a single story structure with 2,270
square feet of usable office space. All of the California branch's office space
is used for Exchange National Bank's operations. The Tipton branch which is
located at 445 South Moreau is a single story structure with 1,962 square feet
of usable office space all of which is used for Exchange National Bank's
operations. The Tipton branch was constructed in the mid 1970's. The St. Robert
branch located at 595 Missouri Avenue is a single story structure with 2,236
square feet of usable office space. The St. Robert branch was constructed in the
late 1960's. All of the St. Robert office space is used for Exchange National
Bank's operations.
The principal offices of Union and Citizens Union State Bank are located at
102 North Second Street in Clinton, Missouri. The bank building, which is owned
by Citizens Union State Bank, is a one-story structure constructed in 1972. It
has approximately 5,000 square feet of usable office space, all of which is
currently used for Union's and Citizens Union State Bank's operations. Citizens
Union State Bank also operates ten branch banking facilities, of which eight are
owned by it. Citizens Union State Bank owns its downtown Clinton branch, which
is located at 115 North Main Street. This facility has approximately 1,500
12
square feet of usable office space, all of which is used in Citizens Union State
Bank operations. Citizens Union State Bank owns a second branch banking
facility, which is located at 1603 East Ohio in Clinton. This facility is a
two-story building which has approximately 5,760 square feet of usable office
space, all of which is used for Citizens Union State Bank operations. Citizens
Union State Bank owns its third branch banking facility, which is located at 608
East Ohio Street in Clinton. This facility is a one-story building which has
approximately 3,500 square feet of usable office space, all of which is used for
Citizens Union State Bank's operations. Citizens Union State Bank leases its
fourth Clinton branch banking facility, which is located inside the Wal-Mart
store at 1712 East Ohio. Citizens Union State Bank leases approximately 600
square feet of space at this facility under a five-year lease expiring in
January 2004, with two five-year renewal options granted to Citizens Union State
Bank. Citizens Union State Bank owns one Springfield, Missouri branch banking
facility located at 321 West Battlefield. The facility is a two-story building
constructed in 1986 which has approximately 12,500 square feet of usable office
space. The entire upper level (6,600 square feet) is leased to a non-affiliate
with the remaining usable office space used for Citizens Union State Bank
operations. Citizens Union State Bank owns one Osceola, Missouri branch banking
facility located at 4th and Chestnut. This facility is a one-story building
which has approximately 1,580 square feet of usable office space, all of which
is used for Citizens Union State Bank operations. Citizens Union State Bank owns
a 1,500 square foot branch banking facility located at the intersection of
Highways 13 and 54 in Collins, Missouri. In addition to its existing facilities,
Citizens Union State Bank has a branch facility at 125 South Main in Windsor,
Missouri. This facility has 3,600 square feet of office space of which 2,800
square feet is used for operations of Citizens Union State Bank. In 2004,
management opened temporary branch facilities at 4675 Gretna Road in Branson and
1006 S.W. Blue Parkway, Lee's Summit. Permanent facility construction projects
are anticipated to be completed in the second and third quarter of 2005,
respectively. Management believes that the condition of these banking facilities
presently is adequate for Citizens Union State Bank's business and that these
facilities are adequately covered by insurance.
The principal offices of Mid Central Bancorp and Osage Valley Bank are
located at 200 Main Street in Warsaw, Missouri. The bank building, which is
owned by Osage Valley Bank, is a two-story structure constructed in 1891. It has
approximately 8,900 square feet of usable office space, all of which is
currently used for Osage Valley Bank's operations. Osage Valley Bank also
operates one branch banking facility, which is owned by it. Osage Valley Bank's
branch facility is a one-story structure located at 2102 Long View Drive in
Warsaw, Missouri, and it has approximately 1,000 square feet of usable office
space, all of which is used for Osage Valley Bank operations. Management
believes that the condition of these banking facilities presently is adequate
for Osage Valley Bank's business and that these facilities are adequately
covered by insurance.
ITEM 3. LEGAL PROCEEDINGS.
None of Exchange or its subsidiaries is involved in any material pending
legal proceedings, other than routine litigation incidental to their business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of the holders of our Company's common
stock during the fourth quarter of the year ended December 31, 2004.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES.
Pursuant to General Instruction G(2) to Form 10-K, the information required
by this Item, other than that referred to below, is incorporated herein by
reference to the information under the caption "Market Price
13
of and Dividends on Equity Securities and Related Matters" in our Company's 2004
Annual Report to Shareholders.
We refer you to Item 12 of this report under the caption "Securities
Authorized For Issuance Under Equity Compensation Plans" for certain equity plan
information.
OUR PURCHASES OF EQUITY SECURITIES
The following table summarizes the purchases made by or on behalf of our
Company or certain affiliated purchasers of shares of our common stock during
the fourth quarter of the year ended December 31, 2004:
(d) Maximum Number
(a) Total (b) (c) Total Number of (or Approximate Dollar
Number of Average Shares (or Units) Value) of Shares (or
Shares (or Price Paid Purchased as Part of Units) that May Yet Be
Units) per Share Publicly Announced Purchased Under the
Period Purchased (or Unit) Plans or Programs * Plans or Programs *
- ------------------- ---------- ---------- -------------------- ----------------------
October 1-31, 2004 0 -- -- --
November 1-30, 2004 0 -- -- --
December 1-31, 2004 0 -- -- --
Total 0 -- -- --
- ----------
* On August 22, 2001, our Company announced that our Board of Directors
authorized the purchase, through open market transactions, of up to
$2,000,000 market value of our Company's common stock. Management was given
discretion to determine the number and pricing of the shares to be
purchased, as well as, the timing of any such purchases. On November 26,
2002, our Company announced that our Board of Directors authorized an
additional $2,000,000 for the purchase of our Company's stock through open
market transactions.
ITEM 6. SELECTED FINANCIAL DATA.
Pursuant to General Instruction G(2) to Form 10-K, the information required
by this Item is incorporated herein by reference to the report of the
independent auditors and the information under the caption "Selected
Consolidated Financial Data" in Exchange's 2004 Annual Report to Shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.
Pursuant to General Instruction G(2) to Form 10-K, certain information
required by this Item is incorporated herein by reference to the information
under the caption "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in Exchange's 2004 Annual Report to Shareholders.
FORWARD-LOOKING STATEMENTS
This report, including information included or incorporated by reference in
this report, contains certain forward-looking statements with respect to the
financial condition, results of operations, plans, objectives, future
performance and business of our Company and its subsidiaries, including, without
limitation:
- statements that are not historical in nature, and
14
- statements preceded by, followed by or that include the words
"believes," "expects," "may," "will," "should," "could,"
"anticipates," "estimates," "intends" or similar expressions.
Forward-looking statements are not guarantees of future performance or
results. They involve risks, uncertainties and assumptions. Actual results may
differ materially from those contemplated by the forward-looking statements due
to, among others, the following factors:
- competitive pressures among financial services companies may increase
significantly,
- costs or difficulties related to the integration of the business of
Exchange and its acquisition targets may be greater than expected,
- changes in the interest rate environment may reduce interest margins,
- general economic conditions, either nationally or in Missouri, may be
less favorable than expected,
- legislative or regulatory changes may adversely affect the business in
which Exchange and its subsidiaries are engaged,
- technological changes may be more difficult or expensive than
anticipated, and
- changes may occur in the securities markets.
We have described under " Factors That May Affect Future Results of
Operations, Financial Condition or Business" additional factors that could cause
actual results to be materially different from those described in the
forward-looking statements. Other factors that we have not identified in this
report could also have this effect. You are cautioned not to put undue reliance
on any forward-looking statement, which speak only as of the date they were
made.
FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS, FINANCIAL CONDITION OR
BUSINESS
We are identifying important risks and uncertainties that could affect our
Company's results of operations, financial condition or business and that could
cause them to differ materially from our Company's historical results of
operations, financial condition or business, or those contemplated by
forward-looking statements made herein or elsewhere, by, or on behalf of, our
Company. Factors that could cause or contribute to such differences include, but
are not limited to, those factors described below.
BECAUSE EXCHANGE PRIMARILY SERVES MISSOURI, A DECLINE IN THE LOCAL ECONOMIC
CONDITIONS COULD LOWER EXCHANGE'S Profitability. The profitability of Exchange
is dependant on the profitability of its banking subsidiaries, which operate out
of central Missouri. The financial condition of these banks is affected by
fluctuations in the economic conditions prevailing in the portion of Missouri in
which their operations are located. Accordingly, the financial conditions of
both Exchange and its banking subsidiaries would be adversely affected by
deterioration in the general economic and real estate climate in Missouri.
An increase in unemployment, a decrease in profitability of regional
businesses or real estate values or an increase in interest rates are among the
factors that could weaken the local economy. With a weaker local economy:
- customers may not want or need the products and services of Exchange's
banking subsidiaries,
- borrowers may be unable to repay their loans,
- the value of the collateral security of our banks' loans to borrowers
may decline, and
- the overall quality of our banks' loan portfolio may decline.
15
Making mortgage loans and consumer loans is a significant source of profits
for Exchange's banking subsidiaries. If individual customers in the local area
do not want these loans, profits may decrease. Although our banks could make
other investments, our banks may earn less revenue on these investments than on
loans. Also, our banks' losses on loans may increase if borrowers are unable to
make payments on their loans.
INTEREST RATE CHANGES MAY REDUCE THE PROFITABILITY OF EXCHANGE AND ITS
BANKING SUBSIDIARIES. The primary source of earnings for Exchange's banking
subsidiaries is net interest income. To be profitable, our banks have to earn
more money in interest and fees on loans and other interest-earning assets than
they pay as interest on deposits and other interest-bearing liabilities and as
other expenses. If prevailing interest rates decrease, as has already happened
on several occasions since January 2001, the amount of interest our banks earn
on loans and investment securities may decrease more rapidly than the amount of
interest our banks have to pay on deposits and other interest-bearing
liabilities. This would result in a decrease in the profitability of Exchange
and its banking subsidiaries, other factors remaining equal.
Changes in the level or structure of interest rates also affect
- our banks' ability to originate loans,
- the value of our banks' loan and securities portfolios,
- our banks' ability to realize gains from the sale of loans and
securities,
- the average life of our banks' deposits, and
- our banks' ability to obtain deposits.
Fluctuations in interest rates will ultimately affect both the level of
income and expense recorded on a large portion of our banks' assets and
liabilities, and the market value of all interest-earning assets, other than
interest-earning assets that mature in the short term. Our banks' interest rate
management strategy is designed to stabilize net interest income and preserve
capital over a broad range of interest rate movements by matching the interest
rate sensitivity of assets and liabilities. Although Exchange believes that its
banks' current mix of loans, mortgage-backed securities, investment securities
and deposits is reasonable, significant fluctuations in interest rates may have
a negative effect on the profitability of our banks.
THE PROFITABILITY OF EXCHANGE'S BANKING SUBSIDIARIES DEPENDS ON THEIR ASSET
QUALITY AND LENDING RISKS. Success in the banking industry largely depends on
the quality of loans and other assets. The loan officers of Exchange's banking
subsidiaries are actively encouraged to identify deteriorating loans. Loans are
also monitored and categorized through an analysis of their payment status. Our
banks' failure to timely and accurately monitor the quality of their loans and
other assets could have a materially adverse effect on the operations and
financial condition of Exchange and its banking subsidiaries. There is a degree
of credit risk associated with any lending activity. Our banks attempt to
minimize their credit risk through loan diversification. Although our banks'
loan portfolios are varied, with no undue concentration in any one industry,
substantially all of the loans in the portfolios have been made to borrowers in
central and west central Missouri. Therefore, the loan portfolios are
susceptible to factors affecting the central and west central Missouri area and
the level of non-performing assets is heavily dependant upon local conditions.
There can be no assurance that the level of our banks' non-performing assets
will not increase above current levels. High levels of non-performing assets
could have a materially adverse effect on the operations and financial condition
of Exchange and its banking subsidiaries.
THE PROVISIONS FOR PROBABLE LOAN LOSSES OF EXCHANGE'S BANKING SUBSIDIARIES
MAY NEED TO BE INCREASED. Each of Exchange's banking subsidiaries make a
provision for loan losses based upon management's analysis of probable losses in
the loan portfolio and consideration of prevailing economic conditions. Each of
our banks may need to increase the provision for loan losses through additional
provisions in the future if the financial condition of any of its borrowers
deteriorates or if real estate values
16
decline. Furthermore, various regulatory agencies, as an integral part of their
examination process, periodically review the loan portfolio, provision for loan
losses, and real estate acquired by foreclosure of each of our banks. Such
agencies may require our banks to recognize additions to the provisions for loan
losses based on their judgments of information available to them at the time of
the examination. Any additional provisions for probable loan losses, whether
required as a result of regulatory review or initiated by Exchange itself, may
materially alter the financial outlook of Exchange and its banking subsidiaries.
IF EXCHANGE AND ITS BANKS ARE UNABLE TO SUCCESSFULLY COMPETE FOR CUSTOMERS
IN EXCHANGE'S MARKET AREA, THEIR FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COULD BE ADVERSELY AFFECTED. Exchange's banking subsidiaries face substantial
competition in making loans, attracting deposits and providing other financial
products and services. Our banks have numerous competitors for customers in
their market area. Such competition for loans comes principally from:
- other commercial banks
- savings banks
- savings and loan associations
- mortgage banking companies
- finance companies
- credit unions
Competition for deposits comes principally from:
- other commercial banks
- savings banks
- savings and loan associations
- credit unions
- brokerage firms
- insurance companies
- money market mutual funds
- mutual funds (such as corporate and government securities funds)
Many of these competitors have greater financial resources and name
recognition, more locations, more advanced technology and more financial
products to offer than our banks. Competition from larger institutions may
increase due to an acceleration of bank mergers and consolidations in Missouri
and the rest of the nation. In addition, the Gramm-Leach-Bliley Act removes many
of the remaining restrictions in federal banking law against cross-ownership
between banks and other financial institutions, such as insurance companies and
securities firms. The law will likely increase the number and financial strength
of companies that compete directly with our banks. The profitability of our
banks depends of their continued ability to attract new customers and compete in
Missouri. New competitors, as well as the expanding operations of existing
competitors, have had, and are expected to continue to have, an adverse impact
on our banks' market share of deposits and loans in our banks' respective
service areas. If our banks are unable to successfully compete, their financial
condition and results of operations will be adversely affected.
EXCHANGE AND ITS BANKING SUBSIDIARIES MAY BE ADVERSELY AFFECTED BY CHANGES
IN LAWS AND REGULATIONS AFFECTING THE FINANCIAL SERVICES INDUSTRY. Banks and
bank holding companies such as Exchange are subject to regulation by both
federal and state bank regulatory agencies. The regulations, which are designed
to protect borrowers and promote certain social policies, include limitations on
the operations of banks and bank holding companies, such as minimum capital
requirements and restrictions on dividend payments. The regulatory authorities
have extensive discretion in connection with their supervision and enforcement
activities and their examination policies, including the imposition of
restrictions on the operation of a bank, the classification of assets by an
institution and requiring an increase in a bank's allowance for loan losses.
These regulations are not necessarily designed to maximize the profitability of
banking institutions. Future changes in the banking laws and regulations could
have a material adverse effect on the operations and financial condition of
Exchange and its banking subsidiaries.
THE SUCCESS OF EXCHANGE AND ITS BANKS LARGELY DEPENDS ON THE EFFORTS OF
THEIR EXECUTIVE OFFICERS. The success of Exchange and its banking subsidiaries
has been largely dependant on the efforts of James Smith and David Turner and
the other executive officers. These individuals are expected to continue to
17
perform their services. However, the loss of the services of Messrs. Smith or
Turner, or any of the other key executive officers could have a materially
adverse effect on Exchange and its banks.
EXCHANGE CANNOT PREDICT HOW CHANGES IN TECHNOLOGY WILL AFFECT ITS BUSINESS.
The financial services market, including banking services, is increasingly
affected by advances in technology, including developments in:
- telecommunications
- data processing
- automation
- Internet-based banking
- telebanking
- debit cards and so-called "smart cards"
The ability of Exchange's banking subsidiaries to compete successfully in
the future will depend on whether they can anticipate and respond to
technological changes. To develop these and other new technologies our Banks
will likely have to make additional capital investments. Although our Banks
continually invest in new technology, there can be no assurance that our Banks
will have sufficient resources or access to the necessary proprietary technology
to remain competitive in the future.
ADDITIONAL FACTORS. Additional risks and uncertainties that may affect the
future results of operations, financial condition or business of our Company and
its banking subsidiaries include, but are not limited to: (i) adverse publicity,
news coverage by the media, or negative reports by brokerage firms, industry and
financial analysts regarding our Banks or our Company; and (ii) changes in
accounting policies and practices.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Our Company's exposure to market risk is reviewed on a regular basis by our
Banks' Asset/Liability Committees and Boards of Directors. Interest rate risk is
the potential of economic losses due to future interest rate changes. These
economic losses can be reflected as a loss of future net interest income and/or
a loss of current fair market values. The objective is to measure the effect on
net interest income and to adjust the balance sheet to minimize the inherent
risk while at the same time maximizing income. Management realizes certain risks
are inherent and that the goal is to identify and minimize those risks. Tools
used by our Bank's management include the standard GAP report subject to
different rate shock scenarios. At December 31, 2004, the rate shock scenario
models indicated that annual net interest income could change by as much as
3.61% should interest rates rise or fall within 200 basis points from their
current level over a one year period. However there are no assurances that the
change will not be more or less than this estimate.
Pursuant to General Instruction G(3) to Form 10-K, the information required
by this Item, other than that provided above, is incorporated herein by
reference to (i) the information under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Interest
Sensitivity and Liquidity" and (ii) the information under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Quantitative and Qualitative Disclosures About Market Risk", in
each case, in our Company's 2004 Annual Report to Shareholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Pursuant to General Instruction G(2) to Form 10-K, the information required
by this Item is incorporated herein by reference to the report of the
independent auditors and the information under the caption "Consolidated
Financial Statements" in Exchange's 2004 Annual Report to Shareholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
18
ITEM 9A. CONTROLS AND PROCEDURES.
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.
Our Company's management has evaluated, with the participation of our
principal executive and principal financial officers, the effectiveness of our
disclosure controls and procedures as of December 31, 2004. Based upon and as of
the date of that evaluation, our principal executive officer and principal
financial officer concluded that our disclosure controls and procedures were
effective to ensure that information required to be disclosed in the reports we
file and submit under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported as and when required. It should be noted that
any system of disclosure controls and procedures, however well designed and
operated, can provide only reasonable, and not absolute, assurance that the
objectives of the system are met. In addition, the design of any system of
disclosure controls and procedures is based in part upon assumptions about the
likelihood of future events. Because of these and other inherent limitations of
any such system, there can be no assurance that any design will always succeed
in achieving its stated goals under all potential future conditions, regardless
of how remote.
INTERNAL CONTROLS OVER FINANCIAL REPORTING.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING.
Our Company's management is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term is defined in
Securities Exchange Act Rules 13a-15(f). Under the supervision and with the
participation of our management, including our principal executive officer and
principal financial officer, we conducted an evaluation of the effectiveness of
our internal control over financial reporting based on the framework in Internal
Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on our evaluation under the
framework in Internal Control - Integrated Framework, our Company's management
concluded that our internal control over financial reporting was effective as of
December 31, 2004. Our management's assessment of the effectiveness of our
internal control over financial reporting as of December 31, 2004 has been
audited by KPMG LLP, an independent registered public accounting firm, as stated
in their report which is included herein.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders
Exchange National Bancshares, Inc.:
We have audited management's assessment, included in the accompanying Form 10-K,
that Exchange National Bancshares, Inc. and subsidiaries (the Company)
maintained effective internal control over financial reporting as of December
31, 2004, based on criteria established in Internal Control--Integrated
Framework, issued by the Committee of Sponsoring Organizations of the Treadway
Commission. The Company's management is responsible for maintaining effective
internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting. Our responsibility
is to express an opinion on management's assessment and an opinion on the
effectiveness of the Company's internal control over financial reporting based
on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, evaluating
19
management's assessment, testing and evaluating the design and operating
effectiveness of internal control, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
A company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
In our opinion, management's assessment that Exchange National Bancshares, Inc.
maintained effective internal control over financial reporting as of December
31, 2004, is fairly stated, in all material respects, based on criteria
established in Internal Control--Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Also, in our opinion,
Exchange National Bancshares, Inc. maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2004,
based on criteria established in Internal Control--Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated balance sheets of
Exchange National Bancshares, Inc. as of December 31, 2004 and 2003, and the
related consolidated statements of income, stockholder's equity and
comprehensive income, and cash flows for each of the years in the three-year
period ended December 31, 2004, and our report dated March 11, 2005 expressed an
unqualified opinion on those consolidated financial statements.
/s/ KPMG LLP
St. Louis, Missouri
March 11, 2005
CHANGES IN INTERNAL CONTROLS.
There has been no change in our Company's internal control over financial
reporting that occurred during the fiscal quarter ended December 31, 2004 that
has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
None.
20
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Pursuant to General Instruction G(3) to Form 10-K, the information required
by this Item, other than that referred to below, is incorporated herein by
reference to (i) the information under the caption "Election of Directors--The
Board of Directors," (ii) the information under the caption "Election of
Directors--Nominees and Directors Continuing in Office," (iii) the information
under the caption "Executive Compensation and Other Information--Executive
Officers," (iv) the information under the caption "Election of
Directors--Meetings of the Board and Committees," and (v) the information under
the caption "Section 16(a) Beneficial Ownership Reporting Compliance," in each
case, in Exchange's definitive Proxy Statement for its 2005 Annual Meeting of
Shareholders to be filed pursuant to Regulation 14A.
CODE OF ETHICS
Our Company has adopted a Code of Business Conduct and Ethics for
directors, officers and employees including, our principal executive officer,
principal financial officer, principal accounting officer, controller and
persons performing similar functions. A copy of this Code of Business Conduct
and Ethics has been filed as an exhibit to this Annual Report on Form 10-K for
the year ended December 31, 2003. In addition, this Code is available on our
internet website (www.exchangebancshares.com) under "Governance Documents." Any
substantive amendments to this Code, or any waivers granted for our principal
executive officer, principal financial officer, principal accounting officer,
controller and persons performing similar functions will be disclosed in a
report on Form 8-K.
ITEM 11. EXECUTIVE COMPENSATION.
Pursuant to General Instruction G(3) to Form 10-K, the information required
by this Item is incorporated herein by reference to (i) the information under
the caption "Executive Compensation and Other Information--Report on Executive
Compensation," (ii) the information under the caption "Executive Compensation
and Other Information--Compensation Committee Interlocks and Insider
Participation," (iii) the information under the caption "Executive Compensation
and Other Information--Executive Compensation," (iv) the information under the
caption "Executive Compensation and Other Information--Option Grants," (v) the
information under the caption "Executive Compensation and Other
Information--Option Exercises and Holdings," (vi) the information under the
caption "Executive Compensation and Other Information-- Profit-Sharing 401(k)
Plan," (vii) the information under the caption "Executive Compensation and Other
Information--Stock Option Plan," (viii) the information under the caption
"Executive Compensation and Other Information--Pension Plan," (ix) the
information under the caption "Executive Compensation and Other
Information--Smith Employment Agreement," (x) the information under the caption
"Executive Compensation and Other Information--Change of Control Agreement,"
(xi) the information under the caption "Executive Compensation and Other
Information--Company Performance," and (xii) the information under the caption
"Election of Directors--Compensation of Directors", in each case, in Exchange's
definitive Proxy Statement for its 2005 Annual Meeting of Shareholders to be
filed pursuant to Regulation 14A.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Pursuant to General Instruction G(3) to Form 10-K, the information required
by this Item, other than that presented below, is incorporated herein by
reference to the information under the caption "Ownership of Common Stock" in
Exchange's definitive Proxy Statement for its 2005 Annual Meeting of
Shareholders to be filed pursuant to Regulation 14A.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
21
Our Company has only one equity compensation plan for its employees
pursuant to which options, rights or warrants may be granted. See Note 16 to the
Consolidated Financial Statements for further information on the material terms
of this plan. The following is a summary of the shares reserved for issuance
pursuant to outstanding options, rights or warrants granted under equity
compensation plans as of December 31, 2004:
Number of securities remaining
Number of securities to Weighted-average available for future issuance
be issued upon exercise exercise price of under equity compensation plans
of outstanding options, outstanding options, (excluding securities reflected
Plan category warrants and rights warrants and rights in column (a))
- ------------------------------- ----------------------- -------------------- --------------------------------
(a) (b) (c)
Equity compensation plans
approved by security holders 125,391* $23.44 303,217
Equity compensation plans not
approved by security holders -- -- --
Total 125,391* $23.44 303,217
- ----------
* Consists of shares reserved for issuance pursuant to outstanding stock
option grants under our Company's Incentive Stock Option Plan.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Pursuant to General Instruction G(3) to Form 10-K, the information required
by this Item is incorporated herein by reference to the information under the
caption "Transactions with Directors and Officers" in Exchange's definitive
Proxy Statement for its 2005 Annual Meeting of Shareholders to be filed pursuant
to Regulation 14A.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Pursuant to General Instruction G(3) to Form 10-K, the information required
by this Item is incorporated herein by reference to the information under the
captions (i) "Ratification of Selection of Independent Auditors--Independent
Auditors' Fees" and (ii) "Ratification of Selection of Independent
Auditors--Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services", in each case, in Exchange's definitive Proxy Statement for its 2005
Annual Meeting of Shareholders to be filed pursuant to Regulation 14A.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits, Financial Statements and Financial Statement Schedules:
1. Financial Statements:
The following consolidated financial statements of our Company and reports
of our Company's independent auditors, included in our Annual Report to
Shareholders for the year ended December 31, 2004 under the caption
"Consolidated Financial Statements", are incorporated herein by reference:
Report of Independent Registered Public Accounting Firm.
22
Consolidated Balance Sheets as of December 31, 2004 and 2003.
Consolidated Statements of Income for the years ended December 31,
2004, 2003 and 2002.
Consolidated Statements of Stockholders' Equity and Comprehensive
Income for the years ended December 31, 2004, 2003 and 2002.
Consolidated Statements of Cash Flows for the years ended December 31,
2004, 2003 and 2002.
Notes to Consolidated Financial Statements.
2. Financial Statement Schedules:
Financial statement schedules have been omitted because they either are not
required or are not applicable or because equivalent information has been
included in the financial statements, the notes thereto or elsewhere herein.
3. Exhibits:
Exhibit No. Description
- ----------- -----------
2.1 Acquisition Agreement, dated January 28, 2005 among Exchange National
Bancshares, Inc., 2005 Acquisition Company, Inc., Drexel Bancshares,
Inc., and the shareholders of Drexel Bancshares, Inc. (filed with our
Company's Current Report on Form 8-K dated February 28, 2005 as Exhibit
2.1 and incorporated herein by reference).
2.1.1 Agreement Altering Transaction Structure, dated February 28, 2005, among
Exchange National Bancshares, Inc., Drexel Bancshares, Inc., and the
shareholder representative of the shareholders of Drexel Bancshares,
Inc. (filed with our Company's Current Report on Form 8-K dated February
28, 2005 as Exhibit 2.1.1 and incorporated herein by reference).
3.1 Articles of Incorporation of our Company (filed as Exhibit 3(a) to our
Company's Registration Statement on Form S-4 (Registration No. 33-54166)
and incorporated herein by reference).
3.2 Bylaws of our Company (filed with our Company's Annual Report on Form
10-K for the year ended December 31, 2000 as Exhibit 3.2 and
incorporated herein by reference).
4 Specimen certificate representing shares of our Company's $1.00 par
value common stock (filed with our Company's Annual Report on Form 10-K
for the year ended December 31, 1999 as Exhibit 4 and incorporated
herein by reference).
10.1 Employment Agreement, dated November 3, 1997, between the Registrant and
James E. Smith (filed with the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1997 as Exhibit 10.4 and incorporated
herein by reference).*
10.2 Exchange National Bancshares, Inc. Incentive Stock Option Plan (filed
with our Company's Annual Report on Form 10-K for the year ended
December 31, 1999 as Exhibit 10.2 and incorporated herein by reference).
10.3 Form of Change of Control Agreement and schedule of parties thereto
(filed with our Company's Annual Report on Form 10-K for the year ended
December 31, 2000 as Exhibit 10.3 and incorporated herein by
reference).*
13 The Registrant's 2004 Annual Report to Shareholders (only those portions
of this Annual Report to Shareholders which are specifically
incorporated by reference into this Annual Report on Form 10-K shall be
deemed to be filed with the Commission).
23
14 Code of Business Conduct and Ethics of our Company (filed with our
Company's Annual Report on Form 10-K for the year ended December 31,
2003 as Exhibit 14 and incorporated herein by reference).
21 List of Subsidiaries (filed with our Company's Annual Report on Form
10-K for the year ended December 31, 2000 as Exhibit 21 and incorporated
herein by reference).
23 Consent of Independent Registered Public Accounting Firm.
24 Power of Attorney (included on the signature page to this Annual Report
on Form 10-K).
31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and
Rule 15d-14(a) of the Securities Exchange Act, as amended.
31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and
Rule 15d-14(a) of the Securities Exchange Act, as amended.
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
- ----------
* Management contracts or compensatory plans or arrangements required to be
identified by Item 15(a).
(b) Exhibits.
See exhibits identified above under Item 15(a)3.
(c) Financial Statement Schedules.
See financial statement schedules identified above under Item 15(a)2, if
any.
24
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: March 15, 2005 By /s/ James E. Smith
-------------------------------------
James E. Smith, Chairman of the
Board and Chief Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints James E. Smith and Richard G. Rose, or
either of them, his attorneys-in-fact, for such person in any and all
capacities, to sign any amendments to this report and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
either of said attorneys-in-fact, or substitute or substitutes, may do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date Signature and Title
- ---- -------------------
March 15, 2005 /s/ James E. Smith
------------------------------------
James E. Smith,
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
March 15, 2005 /s/ Richard G. Rose
------------------------------------
Richard G. Rose,
Treasurer
(Principal Financial Officer and Principal Accounting Officer)
March 15, 2005 /s/ David T. Turner
------------------------------------
David T. Turner,
Director
March 15, 2005 /s/ James R. Loyd
-----------------------------------
James R. Loyd,
Director
March 15, 2005 /s/ Charles G. Dudenhoeffer, Jr.
------------------------------------
Charles G. Dudenhoeffer, Jr.,
Director
March 15, 2005 /s/ David R. Goller
------------------------------------
David R. Goller,
Director
March 15, 2005 /s/ Philip D. Freeman
------------------------------------
Philip D. Freeman,
Director
March 15, 2005 /s/ Kevin L. Riley
------------------------------------
Kevin L. Riley,
Director
March 15, 2005 /s/ Gus S. Wetzel, II
------------------------------------
Gus S. Wetzel, II,
Director
25
EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
13 The Registrant's 2004 Annual Report to Shareholders (only those
portions of this Annual Report to Shareholders which are
specifically incorporated by reference into this Annual Report on
Form 10-K shall be deemed to be filed with the Commission).
23 Consent of Independent Registered Public Accounting Firm.
24 Power of Attorney (included on the signature page to this Annual
Report on Form 10-K).
31.1 Certification of Chief Executive Officer pursuant to Rule
13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as
amended.
31.2 Certification of Chief Financial Officer pursuant to Rule
13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as
amended.
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
26