<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

For the quarterly period ended March 31, 2006

                                       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)

<TABLE>
<S>                                                          <C>
                   MISSOURI                                      43-1626350
       (State or other jurisdiction of                        (I.R.S. Employer
      of incorporation or organization)                      Identification No.)
</TABLE>

<TABLE>
<S>                                                               <C>
132 EAST HIGH STREET, JEFFERSON CITY, MISSOURI                      65101
   (Address of principal executive offices)                       (Zip Code)
</TABLE>

                                 (573) 761-6100
              (Registrant's telephone number, including area code)

                                       N/A
             (Former name, former address and former fiscal year, if
                           changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

[X] Yes [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):

Large accelerated filer [ ]   Accelerated filer [X]   Non-accelerated filer [ ]

Indicate by check mark whether the registrant is a shell company (as defined in
rule 12b-2 of the Exchange Act). [ ] Yes [X] No

As of May 10, 2006, the registrant had 4,169,847 shares of common stock, par
value $1.00 per share, outstanding.

                               Page 1 of 43 pages
                      Index to Exhibits located on page 39


                                        1

<PAGE>

                         PART I - FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

               EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                    MARCH 31, 2006   DECEMBER 31, 2005
                                                    --------------   -----------------
<S>                                                 <C>              <C>
ASSETS
   Loans:                                           $  826,693,351    $  813,534,876
   Less allowance for loan losses                        9,384,783         9,084,774
                                                    --------------    --------------
      Loans, net                                       817,308,568       804,450,102
   Investments in available for sale debt
      and equity securities, at fair value             200,595,384       179,691,826
   Federal funds sold                                   16,358,933        12,447,981
   Cash and due from banks                              31,451,426        35,282,568
   Premises and equipment                               33,059,785        32,890,908
   Accrued interest receivable                           7,647,176         7,772,573
   Mortgage servicing rights                             1,486,547         1,536,331
   Goodwill                                             40,323,775        40,323,775
   Core deposit intangible                               4,510,763         4,786,460
   Cash surrender value - life insurance                 1,699,559         1,682,836
   Other assets                                          5,622,359         5,605,116
                                                    --------------    --------------
      Total assets                                  $1,160,064,275    $1,126,470,476
                                                    ==============    ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
   Demand deposits                                  $  133,647,595    $  134,364,788
   Time deposits                                       743,818,277       747,090,418
                                                    --------------    --------------
      Total deposits                                   877,465,872       881,455,206
   Federal funds purchased and securities
      sold under agreements to repurchase               56,027,169        36,995,735
   Interest-bearing demand notes to U.S. Treasury          372,179         1,098,337
   Subordinated notes                                   49,486,000        49,486,000
   Advances from Federal Home Loan Bank                 69,303,472        52,179,661
   Accrued interest payable                              3,351,299         3,124,365
   Other liabilities                                     5,745,973         5,398,307
                                                    --------------    --------------
      Total liabilities                              1,061,751,964     1,029,737,611
Stockholders' equity:
   Common stock - $1 par value; 15,000,000 shares
      authorized; 4,298,353 issued                       4,298,353         4,298,353
   Surplus                                              22,072,467        22,030,074
   Retained earnings                                    75,942,056        74,129,117
   Accumulated other comprehensive income (loss),
      net of tax                                        (1,348,056)       (1,072,170)
   Treasury stock, 128,506 shares at cost               (2,652,509)       (2,652,509)
                                                    --------------    --------------
      Total stockholders' equity                        98,312,311        96,732,865
                                                    --------------    --------------
   Total liabilities and stockholders' equity       $1,160,064,275    $1,126,470,476
                                                    ==============    ==============
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.


                                       2

<PAGE>

               EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARIES

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED
                                                              MARCH 31,
                                                      -------------------------
                                                          2006          2005
                                                      -----------   -----------
<S>                                                   <C>           <C>
Interest income:
   Interest and fees on loans                         $14,724,479   $ 9,736,094
   Interest on debt securities:
      Taxable                                           1,400,870     1,121,606
      Nontaxable                                          484,133       342,914
   Interest on federal funds sold                          93,554       252,652
   Interest on interest-bearing deposits                   26,291        15,922
   Dividends on equity securities                          63,539        58,190
                                                      -----------   -----------
      Total interest income                            16,792,866    11,527,378
                                                      -----------   -----------
Interest Expense:
   NOW accounts                                           390,569       355,545
   Savings                                                 77,774        71,245
   Money market accounts                                1,134,006       644,726
   Certificates of deposit:
      $100,000 and over                                 1,058,128       620,082
      Other time deposits                               2,714,061     1,659,442
   Federal funds purchased and securities sold
      under agreements to repurchase                      510,861       268,122
   Subordinated notes                                     841,739       403,065
   Advances from Federal Home Loan Bank                   602,523       414,690
   Other borrowed money                                     4,659         3,350
                                                      -----------   -----------
      Total interest expense                            7,334,320     4,440,267
                                                      -----------   -----------
      Net interest income                               9,458,546     7,087,111
Provision for loan losses                                 317,500       235,500
                                                      -----------   -----------
Net interest income after provision for loan losses     9,141,046     6,851,611
</TABLE>

Continued on next page


                                       3
<PAGE>

               EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARIES

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED
                                                            MARCH 31,
                                                     -----------------------
                                                        2006         2005
                                                     ----------   ----------
<S>                                                  <C>          <C>
Noninterest income:
   Service charges on deposit accounts               $1,360,830   $  680,509
   Trust department income                              179,710      182,011
   Loss on sales and calls of debt securities           (18,351)          --
   Mortgage loan servicing fees, net                    114,682      112,767
   Gain on sale of mortgage loans                       112,234      129,696
   Other                                                276,806      226,361
                                                     ----------   ----------
      Total noninterest income                        2,025,911    1,331,344
                                                     ----------   ----------
   Noninterest expense:
   Salaries and employee benefits                     4,345,246    2,885,789
   Occupancy expense                                    452,342      289,770
   Furniture and equipment expense                      519,627      504,229
   Postage, printing and supplies                       292,373      164,151
   Legal, examination, and professional fees            294,223      251,096
   Amortization of intangible assets                    275,697       53,778
   Processing expense                                   212,783       89,247
   Other                                                919,301      737,198
                                                     ----------   ----------
      Total noninterest expense                       7,311,592    4,975,258
                                                     ----------   ----------
Income before income taxes                            3,855,365    3,207,697
Income taxes                                          1,166,758      970,083
                                                     ----------   ----------
Net income                                           $2,688,607   $2,237,614
                                                     ==========   ==========
Basic earning per share                              $     0.64   $     0.54
Diluted earnings per share                           $     0.64   $     0.53

Weighed average shares of common stock outstanding
   Basic                                              4,169,847    4,169,847
   Diluted                                            4,203,607    4,199,268

Dividends per share:
   Declared                                          $     0.21   $     0.18
   Paid                                              $     0.21   $     0.18
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.


                                       4

<PAGE>

               EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                              THREE MONTHS ENDED
                                                                                  MARCH 31,
                                                                         ---------------------------
                                                                             2006           2005
                                                                         ------------   ------------
<S>                                                                      <C>            <C>
Cash flow from operating activities:
Net income                                                               $  2,688,607   $  2,237,614
   Adjustments to reconcile net income to net cash
      cash provided by operating activities:
      Provision for loan losses                                               317,500        235,500
      Depreciation expense                                                    435,333        396,814
      Net amortization of debt securities premiums and discounts               31,553        233,672
      Amortization of intangible assets                                       275,697         53,778
      Non-cash compensation expense for stock option grants                    42,393             --
      (Increase) decrease in accrued interest receivable                      125,397       (430,211)
      Increase in cash surrender value - life insurance                       (16,723)            --
      (Increase) decrease in other assets                                      94,323       (285,952)
      Increase in accrued interest payable                                    226,934        249,097
      Increase in other liabilities                                           347,666        727,262
      Loss on sales and calls of debt securities                               18,351             --
      Origination of mortgage loans for sale                               (6,138,550)    (9,117,814)
      Proceeds from the sale of mortgage loans held for sale                6,250,784      9,247,510
      Gain on sale of mortgage loans                                         (112,234)      (129,696)
      Loss on disposition of premises and equipment                                --            674
      Other, net                                                                   --         15,180
                                                                         ------------   ------------
         Net cash provided by operating activities                          4,587,031      3,433,428

Cash flow from investing activities:
   Net increase in loans                                                  (13,175,966)    (5,053,259)
   Purchase of available-for-sale debt securities                         (36,981,708)   (81,885,227)
   Proceeds from maturities of available-for-sale debt securities          13,003,919     18,998,012
   Proceeds from calls of available-for-sale debt securities                  610,038      7,872,500
   Proceeds from sales of available-for-sale debt securities                1,993,120      1,071,803
   Purchase of premises and equipment                                        (613,549)    (1,405,439)
   Proceeds from dispositions of premises and equipment                         9,339             --
   Proceeds from sales of other real estate owned and repossessions            83,501         67,037
                                                                         ------------   ------------
         Net cash used in investing activities                            (35,071,306)   (60,334,573)
                                                                         ------------   ------------
</TABLE>

Continued on next page


                                       5

<PAGE>


               EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARIES

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                              THREE MONTHS ENDED
                                                                                  MARCH 31,
                                                                         ---------------------------
                                                                             2006           2005
                                                                         ------------   ------------
<S>                                                                      <C>            <C>
Cash flow from financing activities:
   Net decrease in demand deposits                                       $   (717,193)  $ (3,014,731)
   Net increase (decrease) in interest-bearing transaction accounts        (4,091,822)    14,110,187
   Net increase in time deposits                                              819,681        183,869
   Net increase in federal funds purchased and securities sold under
      agreements to repurchase                                             19,031,434     16,772,714
   Net decrease in interest-bearing demand notes to U.S. Treasury            (726,158)      (191,745)
   Proceeds from subordinated notes                                                --     23,712,000
   Proceeds from Federal Home Loan Bank borrowings                         47,409,734             --
   Repayment of Federal Home Loan Bank borrowings                         (30,285,923)      (270,848)
   Cash dividends paid                                                       (875,668)      (750,573)
                                                                         ------------   ------------
      Net cash provided by financing activities                            30,564,085     50,550,873
   Net increase (decrease) in cash and cash equivalents                        79,810     (6,350,272)
   Cash and cash equivalents, beginning of period                          47,730,549     65,708,410
                                                                         ------------   ------------
   Cash and cash equivalents, end of period                              $ 47,810,359   $ 59,358,138
                                                                         ============   ============
Supplemental disclosure of cash flow information - Cash paid during
   period for:
      Interest                                                           $  7,107,386   $  4,191,170
      Income taxes                                                            225,000         70,000
Supplemental schedule of noncash investing activities -
   Other real estate and repossessions acquired in settlement of loans   $         --   $    385,821
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.


                                       6
<PAGE>

               EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

                   Three Months Ended March 31, 2006 and 2005

     The accompanying unaudited condensed consolidated financial statements
include all adjustments that in the opinion of management are necessary in order
to make those statements not misleading. Certain amounts in the 2005 condensed
consolidated financial statements have been reclassified to conform to the 2006
condensed consolidated presentation. Such reclassifications have no effect on
previously reported net income or stockholders' equity. Operating results for
the period ended March 31, 2006 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2006.

     It is suggested that these unaudited condensed consolidated interim
financial statements be read in conjunction with our Company's audited
consolidated financial statements included in its 2005 Annual Report to
Shareholders under the caption "Consolidated Financial Statements" and
incorporated by reference into its Annual Report on Form 10-K for the year ended
December 31, 2005 as Exhibit 13.

     The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the rules and regulations of the Securities and
Exchange Commission. Certain information and note disclosures normally included
in financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed and
omitted. Our Company believes that these financial statements contain all
adjustments (consisting of normal recurring accruals) necessary to present
fairly our Company's consolidated financial position as of March 31, 2006 and
December 31, 2005 and the consolidated statements of earnings for the three
months ended March 31, 2006 and 2005 and cash flows for the three months ended
March 31, 2006 and 2005.

ACQUISITION

     On May 2, 2005 our Company acquired 100 percent of the outstanding common
shares of Bank 10 from Drexel Bancshares, Inc. of Belton, Missouri. Accordingly,
the results of operations of Bank 10 have been included in the condensed
consolidated financial statements since the date of acquisition. Bank 10 has
branches in Belton, Drexel, Independence, Harrisonville, and Raymore, Missouri.
As a result of this acquisition our Company expanded our presence in the Kansas
City, Missouri metropolitan market.


                                        7

<PAGE>

     A summary of unaudited pro forma combined financial information for the
three-month period ended March 31, 2005 for our Company and Bank 10 as if the
transaction had occurred on January 1, 2005 follows.

<TABLE>
<CAPTION>
                              Three Months
                                  Ended
                             March 31, 2005
                             --------------
<S>                          <C>
Net interest income            $8,533,579
Net income                      2,389,523
Basic earnings per share       $     0.57
Diluted earnings per share           0.57
</TABLE>

EARNINGS PER SHARE

     The following table reflects, for the three-month periods ended March 31,
2006 and 2005, the numerators (net income) and denominators (average shares
outstanding) for the basic and diluted net income per share computations:

<TABLE>
<CAPTION>
                                         THREE MONTHS ENDED
                                             MARCH 31,
                                      -----------------------
                                         2006         2005
                                      ----------   ----------
<S>                                   <C>          <C>
Net income, basic and diluted         $2,688,607   $2,237,614
                                      ==========   ==========
Average shares outstanding             4,169,847    4,169,847
Effect of dilutive stock options          33,760       29,421
                                      ----------   ----------
Average shares outstanding
   including dilutive stock options    4,203,607    4,199,268
                                      ==========   ==========
Basic earning per share               $     0.64   $     0.54
Diluted earnings per share            $     0.64   $     0.53
</TABLE>


                                        8

<PAGE>

SHARE-BASED COMPENSATION

     Our Company maintains a stock-based incentive program which is discussed in
more detail in the "Stock Option Plans" section which follows. Prior to 2006,
our Company applied the intrinsic value-based method, as outlined in Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees,"
("APB No. 25") and related interpretations, in accounting for stock options
granted under these programs. Under the intrinsic value-based method, no
compensation expense was recognized if the exercise price of our Company's
employee stock options equaled the market price of the underlying stock on the
date of the grant. Accordingly, prior to 2006, no compensation cost was
recognized in the consolidated statements of income for stock options granted to
employees, since all options granted under our Company's share incentive
programs had an exercise price equal to the fair value of the underlying common
stock on the date of the grant.

     Effective January 1, 2006, our Company adopted Statement of Financial
Accounting Standards No. 123(R) (SFAS No.123(R)) Share-Based Payment. This
statement replaces SFAS No. 123 Accounting for Stock-Based Compensation and
supersedes APB No. 25. SFAS No. 123(R) requires that all stock-based
compensationbe recognized as an expense in the financial statements and that
such cost bemeasured at the fair value of the award. This statement was adopted
using the modified prospective method of application, which requires our
Company to recognize compensation expense on a prospective basis. Therefore,
prior period financial statements have not been restated. Under this method, in
addition to reflecting compensation expense for new share-based awards, expense
is also recognized to reflect the remaining service period of awards that had
been included in pro forma disclosures in prior periods. SFAS No. 123(R) also
requires that excess tax benefits related to stock option exercises be reflected
as financing cash inflows instead of operating cash inflows. For the three
months ended March 31, 2006, there were no stock options exercised.

     Total stock-based compensation expense in the first quarter of 2006 was
$42,000 ($28,000 after tax), or $0.01 for basic and diluted earnings per share,
respectively. As of March 31, 2006, the total unrecognized compensation expense
related to non-vested stock awards was $588,000 and the related weighted average
period over which it is expected to be recognized is approximately 2.3 years.


                                        9

<PAGE>

     The following table illustrates the effect on net income and earnings per
share if the fair value recognition provisions of SFAS No. 123(R) had been
applied in 2005:

<TABLE>
<CAPTION>
                                                    THREE MONTHS
                                                       ENDED
                                                   MARCH 31, 2005
                                                   --------------
<S>                                                <C>
Net income, as reported                              $2,237,614
   Add: share-based compensation expense
      included in reported net income,
      net of related tax effects                             --
   Less: total share-based employee compensation
      expense associated with stock options
      determined under fair value method for all
      option awards, net of related tax effects         (26,501)
                                                     ----------
   Pro forma net income                              $2,211,113
                                                     ==========
Pro forma earnings per common share:
   As reported basic                                 $     0.54
   Pro forma basic                                         0.53
   As reported diluted                                     0.53
   Pro forma diluted                                       0.53
</TABLE>


                                       10

<PAGE>

STOCK OPTION PLANS

     On December 4, 2000, the Incentive Stock Option Committee of the board of
directors (the "Committee") approved our Company's stock option plan, which
provides for the grant of options to purchase up to 450,000 shares of our
Company's common stock to officers and other key employees of our Company and
its subsidiaries. Terms and conditions (including price, exercise date, and
number of shares to which the option relates) are determined by the Committee.
All options granted to date have been granted at an exercise price equal to fair
value of the underlying shares at the grant date and vest over periods ranging
from one to five years except for options granted with respect to 4,821 shares
in 2002 that vested immediately.

The following table summarizes our Company's stock option activity for the three
months ended March 31, 2006:

<TABLE>
<CAPTION>
                                                                  WEIGHTED
                                         WEIGHTED   AGGREGATE     AVERAGE
                                          AVERAGE   INTRINSIC   CONTRACTUAL
                                         EXERCISE     VALUE         TERM
                               OPTIONS     PRICE      (000)      (IN YEARS)
                               -------   --------   ---------   -----------
<S>                            <C>       <C>        <C>         <C>
Outstanding, January 1, 2006   160,809    $24.54
Granted                         46,380     29.95
Exercised                           --        --
Expired                             --        --
Forfeited                           --        --
                               -------
Outstanding, March 31, 2006    207,189     25.75       $974         7.5
                               =======
Exercisable, March 31, 2006    112,137     21.90        919         6.3
</TABLE>

     The weighted average remaining contractual life of options outstanding at
March 31, 2006 was approximately 7.5 years.

     The weighted average grant date fair values of stock options granted during
the quarter ended March 31, 2006 and the weighted average significant
assumptions used to determine those fair values, using the Black-Scholes
option-pricing model are as follows:

<TABLE>
<S>                                        <C>
Options granted during 2006:
   Grant date fair value per share         $6.13
Significant assumptions:
   Risk-free interest rate at grant date    4.61%
   Expected annual rate of
      quarterly dividends                   2.80
   Expected stock price volatility            20
   Expected life to exercise (years)        6.25
</TABLE>

     Compensation expense associated with stock option grants is amortized on a
straight-line basis over the vesting period of each option, which is generally
four years.


                                       11

<PAGE>

COMPREHENSIVE INCOME

     For the three-month periods ended March 31, 2006 and 2005, unrealized
holding gains and losses on investments in debt and equity securities
available-for-sale were our Company's only other comprehensive income component.
Comprehensive income for the three-month periods ended March 31, 2006 and 2005
is summarized as follows:

<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED
                                                                     MARCH 31,
                                                             ------------------------
                                                                2006          2005
                                                             ----------   -----------
<S>                                                          <C>          <C>
Net income                                                   $2,688,607   $ 2,237,614
   Other comprehensive loss:
      Net unrealized holding losses on
         investments in debt and equity securities
         available-for-sale, net of taxes                      (287,814)   (1,066,741)
      Adjustment for net securities losses realized in net
         income, net of applicable income taxes                  11,928            --
                                                             ----------   -----------
            Total other comprehensive loss                     (275,886)   (1,066,741)
                                                             ----------   -----------
            Comprehensive income                             $2,412,721   $ 1,170,873
                                                             ==========   ===========
</TABLE>

INTANGIBLE ASSETS

     The gross carrying amount and accumulated amortization of our Company's
amortizable core deposit intangible assets as of March 31, 2006 and December 31,
2005 is as follows:

<TABLE>
<CAPTION>
                                       MARCH 31, 2006                 DECEMBER 31, 2005
                               ------------------------------   -----------------------------
                               Gross Carrying     Accumulated   Gross Carrying    Accumulated
                                   Amount        Amortization       Amount       Amortization
                               --------------    ------------   --------------   ------------
<S>                            <C>               <C>            <C>              <C>
Amortized intangible assets:
   Core deposit intangible       $7,060,224       (2,549,461)      7,060,224      (2,273,764)
                                 ==========       ==========       =========      ==========
</TABLE>

     The aggregate amortization expense of core deposit intangible subject to
amortization for the three-month period ended March 31, 2006 and 2005 is as
follows:

<TABLE>
<CAPTION>
                                    THREE MONTHS
                                  ENDED MARCH 31,
                                 -----------------
                                   2006      2005
                                 --------   ------
<S>                              <C>        <C>
Aggregate amortization expense   $275,697   53,778
                                 ========   ======
</TABLE>


                                       12

<PAGE>

     The estimated amortization expense for the next five years is as follows:

<TABLE>
<S>                               <C>
Estimated amortization expense:
   For year ending 2006           $1,032,583
   For year ending 2007              922,337
   For year ending 2008              701,443
   For year ending 2009              626,111
   For year ending 2010              526,477
</TABLE>

     Our Company's mortgage servicing rights are amortized in proportion to the
related estimated net servicing income over the estimated lives of the related
mortgages, which is seven years. Changes in mortgage servicing rights, net of
amortization, for the periods indicated were as follows:

<TABLE>
<CAPTION>
                                                MARCH 31,
                                       --------------------------
                                           2006           2005
                                       ------------   -----------
<S>                                    <C>            <C>
Balance, beginning of period           $  1,536,331     1,605,930
Originated mortgage servicing rights         53,745        83,551
Amortization                               (103,529)     (101,189)
                                       ------------   -----------
Balance, end of period                 $  1,486,547     1,588,292
                                       ============   ===========
Mortgage loans serviced                $219,697,000   215,881,000
                                       ============   ===========
Mortgage servicing rights as a
   percentage of loans serviced                0.68%         0.74%
                                       ============   ===========
</TABLE>

     The estimated amortization expense of mortgage servicing rights for the
next five years is as follows:

<TABLE>
<S>                               <C>
Estimated amortization expense:
   For year ending 2006           $427,000
   For year ending 2007            362,000
   For year ending 2008            309,000
   For year ending 2009            229,000
   For year ending 2010            153,000
</TABLE>


                                       13

<PAGE>

     Our Company's goodwill associated with the purchase of subsidiaries by
reporting segments as of March 31, 2006 and December 31, 2005 is summarized as
follows:

<TABLE>
<CAPTION>
                                THE EXCHANGE    CITIZENS UNION     OSAGE
                                NATIONAL BANK     STATE BANK       VALLEY
                                     OF            AND TRUST      BANK OF
                               JEFFERSON CITY     OF CLINTON       WARSAW      BANK 10       TOTAL
                               --------------   --------------   ---------   ----------   ----------
<S>                            <C>              <C>              <C>         <C>          <C>
Goodwill associated with the
   purchase of subsidiaries      $4,382,098       16,701,762     4,112,876   15,127,039   40,323,775
                                 ==========       ==========     =========   ==========   ==========
</TABLE>


                                       14

<PAGE>

DEFINED BENEFIT RETIREMENT PLAN

     The Exchange National Bank of Jefferson City provides a noncontributory
defined benefit pension plan in which all full-time employees become
participants upon the later of the completion of one year of qualified service
or the attainment of age 21, and in which they continue to participate as long
as they continue to be full-time employees, until their retirement, death, or
termination of employment prior to normal retirement date. The normal retirement
benefits provided under the plan vary depending upon the participant's rate of
compensation, length of employment, and social security benefits. Monthly
retirement benefits are payable for life with payments guaranteed for the first
ten years. Plan assets consist of U.S. Treasury and government agency
securities, corporate common stocks and bonds, real estate mortgages, and demand
deposits. Disclosure information is based on a measurement date of November 1
for the corresponding year.

     The following table represents the components of the net periodic pension
costs for the three month periods ended March 31, 2006 and 2005, respectively:

<TABLE>
<CAPTION>
                                                 ESTIMATED     ACTUAL
                                                    2006        2005
                                                 ---------   ---------
<S>                                              <C>         <C>
Service cost - benefits earned during the year   $ 615,293   $ 471,319
Interest cost on projected benefit obligations     317,852     276,245
Expected return on plan assets                    (342,134)   (368,873)
Net amortization and deferral                           --     (26,632)
Amortization of prior service cost                  78,628      39,315
Amortization of net gains                           (2,601)         --
                                                 ---------   ---------
Net periodic pension cost - annual               $ 667,038   $ 391,374
                                                 =========   =========
Net periodic pension cost - three months
   ended March 31 (actual)                       $ 167,202   $  97,844
                                                 =========   =========
</TABLE>

     Our Company does not expect to make any contribution to the plan during
2006.


                                       15

<PAGE>

SEGMENTS

     Through the respective branch network, Exchange National Bank, Citizens
Union State Bank, Osage Valley Bank, and Bank 10 provide similar products and
services in four defined geographic areas. The products and services offered
include a broad range of commercial and personal banking services, including
certificates of deposit, individual retirement and other time deposit accounts,
checking and other demand deposit accounts, interest checking accounts, savings
accounts and money market accounts. Loans include real estate, commercial,
installment and other consumer loans. Other financial services include automatic
teller machines, trust services, credit related insurance, and safe deposit
boxes. The revenues generated by each business segment consist primarily of
interest income, generated from the loan and debt and equity security
portfolios, and service charges and fees, generated from the deposit products
and services. The geographic areas are defined to be communities surrounding
Jefferson City, Clinton, Warsaw and Belton, Missouri. The products and services
are offered to customers primarily within their respective geographical areas.
The business segments results that follow are consistent with our Company's
internal reporting system which is consistent, in all material respects, with
accounting principles generally accepted in the United States of America and
practices prevalent in the banking industry.


                                       16
<PAGE>

<TABLE>
<CAPTION>
                                                                   MARCH 31, 2006
                             -----------------------------------------------------------------------------------------
                                              CITIZENS
                             THE EXCHANGE       UNION
                               NATIONAL      STATE BANK        OSAGE
                                BANK OF          AND          VALLEY
                               JEFFERSON      TRUST OF        BANK OF      BANK 10 OF      CORPORATE
                                 CITY          CLINTON         WARSAW        BELTON        AND OTHER         TOTAL
                             ------------   ------------   ------------   ------------   ------------   --------------
<S>                          <C>            <C>            <C>            <C>            <C>            <C>
Balance sheet information:
Loans, net of allowance
   for loan losses           $377,748,517   $242,180,691   $ 54,421,057   $142,958,303   $         --   $  817,308,568
Debt and equity securities     92,761,103     43,508,901     33,666,649     29,172,731      1,486,000      200,595,384
Goodwill                        4,382,098     16,701,762      4,112,876     15,127,039             --       40,323,775
Intangible assets                      --        529,242             --      3,981,521             --        4,510,763
Total assets                  515,092,502    331,620,864    100,849,682    210,224,056      2,277,171    1,160,064,275
Deposits                      388,656,001    266,883,889     85,087,844    145,226,684     (8,388,546)     877,465,872
Stockholders' equity         $ 49,934,170   $ 43,323,462   $  9,485,153   $ 34,973,771   $(39,404,245)  $   98,312,311
                             ============   ============   ============   ============   ============   ==============
</TABLE>

<TABLE>
<CAPTION>
                                                                 DECEMBER 31, 2005
                             -----------------------------------------------------------------------------------------
                                              CITIZENS
                             THE EXCHANGE       UNION
                               NATIONAL      STATE BANK        OSAGE
                                BANK OF          AND          VALLEY
                               JEFFERSON      TRUST OF        BANK OF      BANK 10 OF      CORPORATE
                                 CITY          CLINTON        WARSAW         BELTON        AND OTHER         TOTAL
                             ------------   ------------   ------------   ------------   ------------   --------------
<S>                          <C>            <C>            <C>            <C>            <C>            <C>
Balance sheet information
Loans, net of allowance
   for loan losses           $374,467,039   $238,347,946   $ 53,132,834   $138,502,283   $         --    $  804,450,102
Debt and equity securities     71,830,503     42,305,412     34,234,784     29,835,127      1,486,000       179,691,826
Goodwill                        4,382,098     16,701,762      4,112,876     15,127,039             --        40,323,775
Intangible assets                      --        583,020             --      4,203,440             --         4,786,460
Total assets                  487,322,716    329,366,100    102,071,064    205,092,903      2,617,693     1,126,470,476
Deposits                      391,682,694    265,370,183     84,823,313    148,430,696     (8,851,680)      881,455,206
Stockholders' equity         $ 49,732,241   $ 42,602,916   $  9,415,739   $ 34,410,079   $(39,428,110)   $   96,732,865
                             ============   ============   ============   ============   ============    ==============
</TABLE>


                                       17

<PAGE>

<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED MARCH 31, 2006
                               -----------------------------------------------------------------------------
                                               CITIZENS
                               THE EXCHANGE      UNION
                                 NATIONAL     STATE BANK      OSAGE
                                  BANK OF         AND        VALLEY
                                 JEFFERSON     TRUST OF      BANK OF    BANK 10 OF   CORPORATE
                                   CITY         CLINTON      WARSAW       BELTON     AND OTHER      TOTAL
                               ------------   ----------   ----------   ----------   ---------   -----------
<S>                            <C>            <C>          <C>          <C>          <C>         <C>
Statement of earnings:
   Total interest income        $7,741,073    $4,646,317   $1,249,550   $3,130,650   $  25,276   $16,792,866
   Total interest expense        3,054,113     1,739,422      676,420    1,041,914     822,451     7,334,320
                                ----------    ----------   ----------   ----------   ---------   -----------
   Net interest income           4,686,960     2,906,895      573,130    2,088,736    (797,175)    9,458,546
   Provision for loan losses       225,000        75,000       10,500        7,000          --       317,500
   Noninterest income              979,511       425,616      141,109      498,581     (18,906)    2,025,911
   Noninterest expense           2,863,097     2,085,538      509,768    1,691,910     161,279     7,311,592
   Income taxes                    827,400       347,891       41,743      284,224    (334,500)    1,166,758
                                ----------    ----------   ----------   ----------   ---------   -----------
   Net income (loss)            $1,750,974    $  824,082   $  152,228   $  604,183   $(642,860)  $ 2,688,607
                                ==========    ==========   ==========   ==========   =========   ===========
</TABLE>

<TABLE>
<CAPTION>
                                               THREE MONTHS ENDED MARCH 31, 2005
                               ----------------------------------------------------------------
                                               CITIZENS
                               THE EXCHANGE      UNION
                                 NATIONAL     STATE BANK      OSAGE
                                  BANK OF         AND        VALLEY
                                 JEFFERSON     TRUST OF      BANK OF    CORPORATE
                                   CITY         CLINTON      WARSAW     AND OTHER      TOTAL
                               ------------   ----------   ----------   ---------   -----------
<S>                            <C>            <C>          <C>          <C>         <C>
Statement of earnings:
   Total interest income        $6,576,008    $3,794,507   $1,144,759   $  12,104   $11,527,378
   Total interest expense        2,411,675     1,201,629      485,623     341,340     4,440,267
                                ----------    ----------   ----------   ---------   -----------
   Net interest income           4,164,333     2,592,878      659,136    (329,236)    7,087,111
   Provision for loan losses       150,000        75,000       10,500          --       235,500
   Noninterest income              869,074       383,572       95,375     (16,677)    1,331,344
   Noninterest expense           2,683,542     1,736,459      430,591     124,666     4,975,258
   Income taxes                    695,400       349,685       86,128    (161,130)      970,083
                                ----------    ----------   ----------   ---------   -----------
   Net income (loss)            $1,504,465    $  815,306   $  227,292   $(309,449)  $ 2,237,614
                                ==========    ==========   ==========   =========   ===========
</TABLE>


                                       18
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE STATEMENTS MADE IN
THIS REPORT ON FORM 10-Q ARE FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE WORDS "SHOULD", "EXPECT", "ANTICIPATE", "BELIEVE", "INTEND",
"MAY", "HOPE", "FORECAST" AND SIMILAR EXPRESSIONS MAY IDENTIFY FORWARD LOOKING
STATEMENTS. IN PARTICULAR, STATEMENTS CONCERNING OUR COMPANY'S ABILITY TO EXPAND
ITS PRESENCE IN THE KANSAS CITY, MISSOURI METROPOLITAN MARKET, CONCERNING OUR
EXPECTED CONTRIBUTIONS TO ANY OF OUR BANK'S BENEFIT PLANS, CONCERNING OUR
AMORTIZATION OF CORE DEPOSIT INTANGIBLES OR OTHER ASSETS, THAT THE PERIODIC
REVIEW OF OUR LOAN PORTFOLIO KEEPS MANAGEMENT INFORMED OF POSSIBLE LOAN PROBLEMS
AND THAT THE ALLOWANCE FOR LOAN LOSSES ADEQUATELY COVERS ANY EXPOSURE ON
SPECIFIC CREDITS ARE ALL FORWARD-LOOKING STATEMENTS. OUR COMPANY'S ACTUAL
RESULTS, FINANCIAL CONDITION, OR BUSINESS COULD DIFFER MATERIALLY FROM ITS
HISTORICAL RESULTS, FINANCIAL CONDITION, OR BUSINESS, OR FROM THE RESULTS OF
OPERATIONS, FINANCIAL CONDITION, OR BUSINESS CONTEMPLATED BY SUCH
FORWARD-LOOKING STATEMENTS. FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE CONTEMPLATED BY THE FORWARD LOOKING STATEMENTS HEREIN
INCLUDE MARKET CONDITIONS AS WELL AS CONDITIONS SPECIFICALLY AFFECTING THE
BANKING INDUSTRY GENERALLY AND FACTORS HAVING A SPECIFIC IMPACT ON OUR COMPANY
INCLUDING, BUT NOT LIMITED TO, FLUCTUATIONS IN INTEREST RATES AND IN THE
ECONOMY; THE IMPACT OF LAWS AND REGULATIONS APPLICABLE TO OUR COMPANY AND
CHANGES THEREIN; COMPETITIVE CONDITIONS IN THE MARKETS IN WHICH OUR COMPANY
CONDUCTS ITS OPERATIONS, INCLUDING COMPETITION FROM BANKING AND NON-BANKING
COMPANIES WITH SUBSTANTIALLY GREATER RESOURCES THAN OUR COMPANY, SOME OF WHICH
MAY OFFER AND DEVELOP PRODUCTS AND SERVICES NOT OFFERED BY OUR COMPANY; AND THE
ABILITY OF OUR COMPANY TO RESPOND TO CHANGES IN TECHNOLOGY. ADDITIONAL FACTORS
THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES WERE DISCUSSED UNDER THE
CAPTION "FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS, FINANCIAL
CONDITION, OR BUSINESS," IN OUR COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED DECEMBER 31, 2005, AS WELL AS THOSE DISCUSSED ELSEWHERE IN OUR
COMPANY'S REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.


                                       19

<PAGE>

OVERVIEW

     This overview of management's discussion and analysis highlights selected
information in this report and may not contain all of the information that is
important to you. For a more complete understanding of trends, events,
commitments, uncertainties, liquidity, capital resources and critical accounting
estimates, you should carefully read this entire report. These have an impact on
our Company's financial condition and results of operation.

     BUSINESS STRATEGY: In 1865, The Exchange National Bank of Jefferson City
opened for business serving the loan and deposit needs of citizens living in
Missouri's State Capitol of Jefferson City. Leveraging off of its strong equity
position, Exchange National Bank's Board of Directors established Exchange
National Bancshares, Inc., a multi-bank holding company on October 23, 1992. On
April 7, 1993, Exchange National Bancshares, Inc. acquired The Exchange National
Bank of Jefferson City. On November 3, 1997, our Company acquired Union State
Bancshares, Inc. and its wholly-owned subsidiary, Union State Bank and Trust of
Clinton, Missouri. 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 of Warsaw, Missouri. On June 16, 2000, our Company
acquired CNS Bancorp, Inc. and its subsidiary, City National Savings Bank, FSB,
Jefferson City, Missouri. City National subsequently was merged into Exchange
National Bank. On June 26, 2003 our Company purchased the Springfield, Missouri
branch of Missouri State Bank. Following the purchase, this branch was merged
into Citizens Union State Bank and Trust. Finally, on May 2, 2005, our Company
acquired Bank 10 of Belton, Missouri.

     MATERIAL CHALLENGES AND RISKS: Our Company may experience difficulties
managing growth and effectively integrating newly established branches. As part
of our general strategy, our Company may continue to acquire banks and establish
de novo branches that we believe provide a strategic fit. To the extent that our
Company does grow, there can be no assurances that we will be able to adequately
and profitably manage such growth. The successes of our Company's growth
strategy will depend primarily on the ability of our banking subsidiaries to
generate an increasing level of loans and deposits at acceptable risk levels and
on acceptable terms without significant increases in non-interest expenses
relative to revenues generated. Our Company's financial performance also
depends, in part, on our ability to manage various portfolios and to
successfully introduce additional financial products and services. Furthermore,
the success of our Company's growth strategy will depend on our ability to
maintain sufficient regulatory capital levels and on general economic conditions
that are beyond our control.

     REVENUE SOURCE: Through the respective branch network, Exchange National
Bank of Jefferson City, Citizens Union State Bank and Trust of Clinton, Osage
Valley Bank of Warsaw, and Bank 10 of Belton provide similar products and
services in four defined geographic areas. The products and services offered
include a broad range of commercial and personal banking services, including
certificates of deposit, individual retirement and other time deposit accounts,
checking and other demand deposit accounts, interest checking accounts, savings
accounts, and


                                       20

<PAGE>

money market accounts. Loans include real estate, commercial, installment, and
other consumer loans. Other financial services include automatic teller
machines, trust services, credit related insurance, and safe deposit boxes. The
revenues generated by each business segment consist primarily of interest
income, generated primarily from the loan and debt and equity security
portfolios, and service charges and fees, generated from the deposit products
and services. The geographic areas are defined to be communities surrounding
Jefferson City, Clinton, Warsaw, and Belton, Missouri. The products and services
are offered to customers primarily within their respective geographical areas.
The business segment results are consistent with our Company's internal
reporting system which is consistent, in all material respects, with generally
accepted accounting principles and practices prevalent in the banking industry.

     Much of our Company's business is commercial, commercial real estate
development, and mortgage lending. Our Company has experienced continued strong
loan demand in the communities within which we operate even during economic
slowdowns. Our Company's income from mortgage brokerage activities is directly
dependent on mortgage rates and the level of home purchases and refinancing.

     Our Company's primary source of revenue is net interest income derived
primarily from lending and deposit taking activities. A secondary source of
revenue is investment income. Our Company also derives income from trust,
brokerage, credit card and mortgage banking activities and service charge
income.

     Our Company has prepared the unaudited condensed consolidated financial
statements in this report in accordance with accounting principles generally
accepted in the United States of America (U.S. GAAP). In preparing the
consolidated financial statements in accordance with U.S. GAAP, our Company
makes estimates and assumptions that affect the reported amount of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenue and expenses during
the reporting period. There can be no assurances that actual results will not
differ from those estimates.

     We have identified the accounting policy related to the allowance for loan
losses as critical to the understanding of our Company's results of operations,
since the application of this policy requires significant management assumptions
and estimates that could result in materially different amounts being reported
if conditions or underlying circumstances were to change. The impact and any
associated risks related to these policies on our business operations are
discussed in the "Lending and Credit Management" section below.


                                       21

<PAGE>

RESULTS OF OPERATIONS

     Net income for the three months ended March 31, 2006 of $2,689,000
increased $451,000 when compared to the first quarter of 2005. Diluted earnings
per common share for the first quarter of 2006 of $0.64 increased 11 cents or
20.8% when compared to the first quarter of 2005.

     Net interest income (on a tax equivalent basis) was $9,723,000, or 3.83% of
average earning assets, for the three months ended March 31, 2006, compared to
$7,270,000, or 3.34% of average earning assets, for the same period in 2005.
Approximately, $2,089,000 of the $2,453,000 increase in net interest income for
the three months ended March 31, 2006 is related to the acquisition of Bank 10.
The balance of the increase in net interest income was the result of an increase
in average interest-earning assets and an increase in net interest margin.

     Average interest-earning assets for the three months ended March 31, 2006
were $1,030,315,000, an increase of $148,633,000 or 16.9%, compared to average
interest-earning assets of $881,682,000 for the same period of 2005. The
acquisition of Bank 10 represents approximately $171,896,000 of the increase in
interest-earning assets. In addition to the increase due to the acquisition of
Bank 10, average loans outstanding increased approximately $39,611,000 while
other earning assets decreased $62,874,000. The decrease in other earning assets
reflects the use of excess liquidity to fund loan growth and the purchase of
Bank 10.

     The yield on average interest-earning assets increased to 6.71% for the
three month period ended March 31, 2006 compared to 5.39% for the same period in
2005. The rate paid on interest-bearing liabilities also increased to 3.27% in
2006 compared to 2.36% in 2005. These increased in rates reflect the general
increases in market rates as a result of the Federal Reserve Bank's rate
activity over the last year.

THREE MONTHS ENDED MARCH 31, 2006 COMPARED TO THREE MONTHS ENDED MARCH 31, 2005

     Our Company's primary source of earnings is net interest income, which is
the difference between the interest earned on interest earning assets and the
interest paid on interest bearing liabilities. Net interest income on a fully
taxable equivalent basis increased $2,453,000 or 33.7% to $9,723,000 or 3.83% of
average earning assets for the first quarter of 2006 compared to $7,270,000 or
3.34% of average earning assets for the same period of 2005. The provision for
loan losses was $318,000 and $236,000 for the three months ended March 31, 2006
and 2005 respectively. The increase in the provision for loan losses reflects a
higher level of charge-offs during the first quarter of 2006 compared to 2005 as
well as an increase in loan balances. Net charge-offs were $17,000 for the first
quarter of 2006 compared to $2,000 for the first quarter of 2005. See Lending
and Credit Management in this report for further discussion of first quarter
2006 charge-offs.


                                       22

<PAGE>

     Noninterest income and noninterest expense for the three-month periods
ended March 31, 2006 and 2005 were as follows:

(DOLLARS EXPRESSED IN THOUSANDS)

<TABLE>
<CAPTION>
                                                       THREE MONTHS ENDED
                                                            MARCH 31,       INCREASE (DECREASE)
                                                       ------------------   -------------------
NONINTEREST INCOME                                       2006       2005      AMOUNT     %
------------------                                     ---------   ------     ------   -----
<S>                                                    <C>         <C>      <C>        <C>
Service charges on deposit accounts                     $1,361     $  681     $  680    99.9%
Trust department income                                    180        182         (2)   (1.1)
Net gain (loss) on sales of calls of debt securities       (18)         0        (18)     NM
Mortgage loan servicing fees, net                          114        113          1     0.9
Gain on sale of mortgage loans                             112        130        (18)  (13.8)
Other                                                      277        225         52    23.1
                                                        ------     ------     ------   -----
                                                        $2,026     $1,331     $  695    52.2%
                                                        ======     ======     ======   =====
NONINTEREST EXPENSE
Salaries and employee benefits                          $4,345     $2,886     $1,459   50.6%
Occupancy expense                                          452        290        162    55.9
Furniture and equipment expense                            520        504         16     3.2
Postage, printing and supplies                             292        164        128    78.0
Legal, examination, and professional fees                  294        251         43    17.1
Amortization - CDI                                         276         54        222   411.1
Processing expense                                         213         89        124   139.3
Other                                                      919        737        182    24.7
                                                        ------     ------     ------   -----
                                                        $7,311     $4,975     $2,336   47.0%
                                                        ======     ======     ======   =====
</TABLE>

     Noninterest income increased $695,000 or 52.2% to $2,026,000 for the first
quarter of 2006 compared to $1,331,000 for the same period of 2005. The
acquisition of Bank 10 contributed $499,000 to the increase in noninterest
income during the first quarter. Excluding income due to the acquisition,
service charges on deposit accounts increased $230,000 or 33.8% as a result of
increased overdraft and insufficient check fee income, ATM fee income, and debit
card fee income. Gain on sale of mortgage loans decreased $18,000 or 13.8% due
to a decrease in volume of loans originated and sold to the secondary market
from approximately $9,118,000 in the first quarter of 2005 to approximately
$6,139,000 for the first quarter of 2006.


                                       23

<PAGE>

     Noninterest expense increased $2,336,000 or 47.0% to $7,311,000 for the
first quarter of 2006 compared to $4,975,000 for the first quarter of 2005.
Approximately $1,692,000 of the increase in noninterest expense is attributed to
the acquisition of Bank 10. Excluding costs associated with the acquisition,
salaries and benefits increased $491,000 or 17.2%, occupancy expense increased
$58,000 or 20.0%, postage, printing, and supplies increased $56,000 or 34.1%,
processing expense increased $28,000 or 31.5% and other noninterest expense
increased $62,000 or 8.4%. In addition to the increase in salaries and employees
benefits represented by normal salary increases and additional hires, $42,000 of
the increase reflects share-based compensation expense recorded as a result of
the adoption of SFAS No. 123R, $103,000 reflects increased pension expense and
$72,000 represents increased profit sharing expense. The increase in occupancy
expense reflects additional costs associated with three new branch facilities.
The increase in postage, printing, and supplies reflects both higher postage
rates and additional mail volume. The increase in processing expense generally
reflects higher costs associated with the various data processing systems
utilized by our Company. The increase in other noninterest expense reflects
higher expenses in various other categories including, but not limited to,
telephone and communications expense, correspondent bank charges, corporate
dues, education, and miscellaneous charge-offs.

     Income taxes as a percentage of earnings before income taxes as reported in
the condensed consolidated financial statements were 30.3% for the first quarter
of 2006 compared to 30.2% for the first quarter of 2005.


                                       24

<PAGE>

NET INTEREST INCOME

     Fully taxable equivalent net interest income increased $2,453,000 or 33.7%
for the three month period ended March 31, 2006 compared to the same period in
2005. The increase in net interest income for the period ended March 31, 2006
compared to the period ended March 31, 2005 was the result of increased earning
assets and margin.


                                       25
<PAGE>

     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, 2006 and 2005.

(DOLLARS EXPRESSED IN THOUSANDS)

<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED                  THREE MONTHS ENDED
                                                     MARCH 31, 2006                      MARCH 31, 2005
                                           ---------------------------------   -------------------------------
                                                         INTEREST      RATE                INTEREST      RATE
                                             AVERAGE      INCOME/    EARNED/    AVERAGE     INCOME/    EARNED/
                                             BALANCE    EXPENSE/1/   PAID/1/    BALANCE   EXPENSE/1/   PAID/1/
                                           ----------   ----------   -------   --------   ----------   -------
<S>                                        <C>          <C>          <C>       <C>        <C>          <C>
ASSETS
Loans:/2/                                  $  821,412     $14,762     7.29%    $640,104     $ 9,768     6.19%
Investment securities:/3/
   U.S Treasury and
      U.S. Gov't Agencies                     136,913       1,370     4.06      158,942       1,122     2.86
   State and municipal                         53,585         736     5.57       34,048         493     5.87
   Other                                        7,169          69     3.90        5,668          58     4.15
Federal funds sold                              8,571          94     4.45       39,929         253     2.57
Interest-bearing deposits                       2,665          26     3.96        2,991          16     2.17
                                           ----------     -------              --------     -------
   Total interest earning assets            1,030,315      17,057     6.71      881,682      11,710     5.39
All other assets                              123,069                            78,763
Allowance for loan losses                      (9,248)                           (7,609)
                                           ----------                          --------
   Total assets                            $1,144,136                          $952,836
                                           ==========                          ========
LIABILITIES AND STOCKHOLDERS' EQUITY
   NOW accounts                            $  113,049     $   391     1.40%    $125,645     $   356     1.15%
   Savings                                     55,112          78     0.57       50,428          71     0.57
   Money market                               157,184       1,134     2.93      125,227         645     2.09
   Deposits of $100 and over                  115,460       1,059     3.72       90,540         620     2.78
   Other time deposits                        310,519       2,713     3.54      252,180       1,659     2.67
                                           ----------     -------              --------     -------
      Total time deposits                     751,324       5,375     2.90      644,020       3,351     2.11
   Federal funds purchased and
      securities sold under
      agreements to repurchase                 52,021         511     3.98       48,969         268     2.22
   Interest-bearing demand
      notes to US Treasury                        480           4     3.38          662           3     1.84
   Subordinated notes                          49,486         842     6.90       29,726         403     5.50
   Advances from Federal Home Loan Bank        57,122         602     4.27       39,432         415     4.27
                                           ----------     -------              --------     -------
      Total interest-bearing liabilities      910,433       7,334     3.27      762,809       4,440     2.36
   Demand deposits                            127,499                            92,280
   Other liabilities                            8,305                             5,034
                                           ----------                          --------
      Total liabilities                     1,046,237                           860,123
   Stockholders' equity                        97,899                            92,713
                                           ----------                          --------
   Total liabilities and
      stockholders' equity                 $1,144,136                          $952,836
                                           ==========                          ========
Net interest income                                       $ 9,723                           $ 7,270
                                                          =======                           =======
Net interest margin/4/                                                3.83%                             3.34%
                                                                      ====                              ====
</TABLE>

/1/  Interest income and yields are presented on a fully taxable equivalent
     basis using the Federal statutory income tax rate. Such adjustments were
     $265,000 in 2006 and $182,000 in 2005.

/2/  Non-accruing loans are included in the average amounts outstanding.

/3/  Average balances based on amortized cost.

/4/  Net interest income divided by average total interest earning assets.


                                       26

<PAGE>

     The following table presents, on a fully taxable equivalent basis, an
analysis of changes in net interest income resulting from changes in average
volumes of earning assets and interest bearing liabilities and average rates
earned and paid. The change in interest due to the combined rate/volume variance
has been allocated to rate and volume changes in proportion to the absolute
dollar amounts of change in each.

(DOLLARS EXPRESSED IN THOUSANDS)

<TABLE>
<CAPTION>
                                   THREE MONTHS ENDED MARCH 31, 2006
                                              COMPARED TO
                                   THREE MONTHS ENDED MARCH 31, 2005
                                   ---------------------------------
                                                  CHANGE DUE TO
                                      TOTAL   ---------------------
                                     CHANGE   VOLUME /3/   RATE /4/
                                     ------   ----------   --------
<S>                                <C>        <C>          <C>
INTEREST INCOME ON A FULLY
   TAXABLE EQUIVALENT BASIS:
Loans:/1/                            $4,994      3,069       1,925
Investment securities:/3/
   U.S Treasury and
      U.S. Gov't Agencies               248       (172)        420
   State and municipal /2/              243        269         (26)
   Other                                 11         14          (3)
Federal funds sold                     (159)      (274)        115
Interest-bearing deposits                10         (2)         12
                                     ------     ------      ------
      Total interest income           5,347      2,904       2,443
INTEREST EXPENSE:
   NOW accounts                      $   35        (39)         74
   Savings                                7          7          --
   Money market                         489        191         298
   Deposits of $100 and over            439        197         242
   Other time deposits                1,054        436         618
   Federal funds purchased and
      securities sold under
      agreements to repurchase          243         18         225
   Interest-bearing demand notes
      of U.S. Treasury                    1         (1)          2
   Subordinated debentures              439        317         122
   Other borrowed money                 187        186           1
                                     ------     ------      ------
      Total interest expense          2,894      1,312       1,582
                                     ------     ------      ------
Net interest income on a fully
   taxable equivalent basis          $2,453      1,592         861
                                     ======     ======      ======
</TABLE>

/1/  Interest income and yields are presented on a fully taxable equivalent
     basis using the Federal statutory income tax rate. Such adjustments were
     $265,000 in 2006 and $182,000 in 2005.

/2/  Non-accruing loans are included in the average amounts outstanding.

/3/  Change in volume multiplied by yield/rate of prior period.

/4/  Change in yield/rate multiplied by volume of prior period.


                                       27
<PAGE>

LENDING AND CREDIT MANAGEMENT

     Interest earned on the loan portfolio is a primary source of interest
income for our Company. Net loans represented 70.4% of total assets as of March
31, 2006 compared to 71.4% as of December 31, 2005 and 64.9% as of March 31,
2005.

     Lending activities are conducted pursuant to written loan policies approved
by our Banks' Boards of Directors. Larger credits are reviewed by our Banks'
Discount Committees. These committees are comprised of members of senior
management.

     Our Company generally does not retain long-term fixed rate residential
mortgage loans in its portfolio. Fixed rate loans conforming to standards
required by the secondary market are offered to qualified borrowers, but are not
funded until our Company has a non-recourse purchase commitment from the
secondary market at a predetermined price. At March 31, 2006, our Company was
servicing approximately $219,697,000 of loans sold to the secondary market.

     Mortgage loans retained in our Company's portfolio generally include
provisions for rate adjustments at one to three year intervals. Commercial loans
and real estate construction loans generally have maturities of less than one
year. Installment loans to individuals are primarily fixed rate loans with
maturities from one to five years.

     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, value of underlying collateral and other relevant
factors. The allowance for loan losses which is reported as a deduction from
loans is available for loan charge-offs. This 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 which loans should be considered to be "impaired". Management follows
the guidance provided in Statement of Financial Accounting Standards No. 114,
Accounting by Creditors for Impairment of a Loan, (SFAS 114) in identifying and
measuring loan impairment. If management determines that it is probable that all
amounts due on a loan will not be collected under the original terms of the loan
agreement, the loan is considered to be impaired. Once a loan has been
identified as impaired management generally measures impairment based upon the
fair value of the underlying collateral. 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 probable losses inherent in the loan portfolio.


                                       28

<PAGE>

     The allowance for loan losses was decreased by net loan charge-offs of
$17,000 for the first quarter of 2006 compared to $2,000 for the first quarter
of 2005. The allowance for loan losses was increased by a provision charged to
expense of $318,000 for the first quarter of 2005. That compares to a provision
of $236,000 for the first quarter of 2005.

     The balance of the allowance for loan losses was $9,385,000 at March 31,
2006 compared to $9,085,000 at December 31, 2005 and $7,729,000 at March 31,
2005. $1,216,000 of the increase in the allowance for loan losses from March 31,
2005 to 2006 represents the balance of Bank 10's allowance acquired in the
acquisition. The allowance for loan losses as a percent of outstanding loans was
1.14% at March 31, 2006 compared to 1.12% at December 31, 2005 and 1.21% at
March 31, 2005. The decrease in the allowances for loan losses as a percent of
outstanding loans reflects both the increase in loan balances as a result of the
Bank 10 acquisition as well as the charge-off of loans for which management had
made previous provisions in the allowance.


                                       29

<PAGE>

     Nonperforming loans, defined as loans on nonaccrual status, loans 90 days
or more past due and still accruing, and restructured loans totaled $8,624,000
or 1.04% of total loans at March 31, 2006 compared to $9,050,000 or 1.11% of
total loans at December 31, 2005. Detail of those balances plus other real
estate and repossessions is as follows:

(DOLLARS EXPRESSED IN THOUSANDS)

<TABLE>
<CAPTION>
                                           MARCH 31, 2006        DECEMBER 31, 2005
                                       ---------------------   ---------------------
                                                     % OF                    % OF
                                       BALANCE   GROSS LOANS   BALANCE   GROSS LOANS
                                       -------   -----------   -------   -----------
<S>                                    <C>       <C>           <C>       <C>
Nonaccrual loans:
   Commercial                          $ 5,386       0.65%     $ 5,705       0.70%
   Real estate:
      Construction                       1,803       0.22        1,760       0.22
      Mortgage                             849       0.10        1,090       0.13
   Consumer                                 55       0.01           56       0.01
                                       -------       ----      -------       ----
                                         8,093       0.98        8,611       1.06
                                       -------       ----      -------       ----
Loans contractually past-due 90 days
   or more and still accruing:
   Commercial                               --         --          238       0.03
   Real estate:
      Construction                          --         --           --         --
      Mortgage                             517       0.06          187       0.02
   Consumer                                 14         --           14         --
                                       -------       ----      -------       ----
                                           531       0.06          439       0.05
                                       -------       ----      -------       ----
   Restructured loans                       --         --           --         --
                                       -------       ----      -------       ----
   Total nonperforming loans             8,624       1.04%       9,050       1.11%
                                                     ====                    ====
   Other real estate                     1,484                   1,568
   Repossessions                            --                      --
                                       -------                 -------
   Total nonperforming assets          $10,108                 $10,618
                                       =======                 =======
</TABLE>

     The allowance for loan losses was 108.82% of nonperforming loans at March
31, 2006 compared to 100.39% of nonperforming loans at December 31, 2005. There
has been no material change in the overall level of nonperforming assets since
the prior year-end.

     It is our 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 which would have been
recorded under the original terms of those loans, was approximately $540,000 and
$267,000 for the three months ended March 31, 2006 and 2005, respectively.
Approximately $8,000 and $3,000 was actually recorded as interest income on such
loans for the three months ended March 31, 2006 and 2005, 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
included in the table above, which were considered impaired, management has
identified approximately $1,894,000 of additional loans as being


                                       30

<PAGE>

impaired at March 31, 2006. The average balance of nonaccrual and other impaired
loans for the first three months of 2006 was approximately $10,333,000. At March
31, 2006 the portion of the allowance for loan losses allocated (both
asset-specific and percentage) to impaired loans was $2,382,000 compared to
$2,392,000 at December 31, 2005. The balance of impaired loans with no specific
loan loss allocations was approximately $1,369,000 at March 31, 2006 compared to
approximately $1,217,000 at December 31, 2005.

     As of March 31, 2006 and December 31, 2005 approximately $17,631,000 and
$16,387,000 of loans not included in the nonaccrual table above or identified by
management as being impaired were classified by management as having more than
normal risk which raised doubts as to the ability of the borrower to comply with
present loan repayment terms. The increase in loans having more than normal risk
is primarily represented by two large commercial real estate credits. These two
credits had documentation exceptions causing them to be classified by regulatory
authorities as substandard and special mention. The loans are well secured and
performing in accordance with the terms of the loan agreements. In addition to
the classified list, our Company also maintains an internal watch list of loans,
which for various reasons, not all related to credit quality, management is
monitoring more closely than the average loan in the portfolio. Loans may be
added to this list for reasons that are temporary and correctable, such as the
absence of current financial statements of the borrower, or a deficiency in loan
documentation. Other loans are added as soon as any problem is detected which
might affect the borrower's ability to meet the terms of the loan. This could be
initiated by the delinquency of a scheduled loan payment, a deterioration in the
borrower's financial condition identified in a review of periodic financial
statements, a decrease in the value of the collateral securing the loan, or a
change in the economic environment within which the borrower operates. Once the
loan is placed on our Company's watch list, its condition is monitored closely.
Any further deterioration in the condition of the loan is evaluated to determine
if the loan should be assigned to a higher risk category.

     The allowance for loan losses is available to absorb probable loan losses
regardless of the category of loan to be charged off. The allowance for loan
losses consists of three components: asset-specific reserves, reserves based on
expected loss estimates, and unallocated reserves. The asset-specific component
applies to loans evaluated individually for impairment and is based on
management's best estimate of discounted cash repayments and proceeds from
liquidating collateral. The actual timing and amount of repayments and the
ultimate realizable value of the collateral may differ from management's
estimate.

     The expected loss component is generally determined by applying percentages
to pools of loans by asset type. These pre-established percentages are based
upon standard bank regulatory classification percentages as well as average
historical loss percentages. These expected loss estimates are sensitive to
changes in delinquency status, realizable value of collateral, and other risk
factors.

     The unallocated portion of the allowance is based on management's
evaluation of conditions that are not directly reflected in the determination of
the asset-specific component and the expected loss component discussed above.
The evaluation of inherent loss with respect to these conditions is subject to a
higher degree of uncertainty because they may not be identified


                                       31

<PAGE>

with specific problem credits or portfolio segments. Conditions evaluated in
connection with the unallocated portion of the allowance include general
economic and business conditions affecting our key lending areas, credit quality
trends (including trends in substandard loans expected to result from existing
conditions), collateral values, specific industry conditions within portfolio
segments, bank regulatory examination results, and findings of our internal loan
review department.

     The underlying assumptions, estimates and assessments used by management to
determine these components are continually evaluated and updated to reflect
management's current view of overall economic conditions and relevant factors
impacting credit quality and inherent losses. Changes in such estimates could
significantly impact the allowance and provision for credit losses. Our Company
could experience credit losses that are different from the current estimates
made by management.

     At March 31, 2006, management allocated $8,624,000 of the $9,385,000 total
allowance for loan losses to specific loans and loan categories and $761,000 was
unallocated. This is in comparison to at December 31, 2005, management allocated
$8,062,000 of the $9,085,000 total allowance for loan losses to specific loans
and loan categories and $1,023,000 was unallocated. Considering the size of
several of our Company's lending relationships and the loan portfolio in total,
management believes that the March 31, 2006 allowance for loan losses is
adequate. Our Company does not lend funds for the type of transactions defined
as "highly leveraged" by bank regulatory authorities or for foreign loans. Our
Company does not have any interest-earning assets which would have been included
in nonaccrual, past due, or restructured loans if such assets were loans.

FINANCIAL CONDITION

     Total assets increased $33,594,000 or 3.0% to $1,160,064,000 at March 31,
2006 compared to $1,126,470,000 at December 31, 2005. Total liabilities
increased $32,014,000 or 3.1% to $1,061,752,000. Stockholders' equity increased
$1,579,000 or 1.6% to $98,312,000. The increase in assets reflects growth in
both the loan portfolio and the investment portfolio. The increase in
liabilities reflects increases in securities sold under agreements to repurchase
and other borrowed funds.

     Loans increased $13,158,000 to $826,693,000 at March 31, 2006 compared to
$813,535,000 at December 31, 2005. Commercial loans increased $1,235,000; real
estate construction loans increased $18,685,000; real estate mortgage loans
decreased $3,055,000; and consumer loans decreased $3,707,000. The increase in
commercial loans and real estate construction loans represents continued strong
loan demand in all our market areas. The decrease in real estate mortgage loans
reflects generally higher mortgage rates in the market since year-end. The
decrease in consumer loans reflects the low rates that existed in the consumer
auto market that was fueled by manufacturers' financing programs which generally
tend to offer more favorable financing rates than our Company. Our Company chose
to not aggressively pursue consumer auto loans during the periods presented and
as such this portion of the loan portfolio declined in balance.


                                       32

<PAGE>

     Investment in debt securities classified as available-for-sale increased
$20,903,000 or 11.6% to $200,595,000 at March 31, 2006 compared to $179,692,000
at December 31, 2005. Investments classified as available-for-sale are carried
at fair value. During 2006 the market valuation account decreased $421,000 to
($2,060,000) to reflect the fair value of available-for-sale investments at
March 31, 2006 and the net after tax decrease resulting from the change in the
market valuation adjustment of $276,000 decreased the stockholders' equity
component to ($1,348,000) at March 31, 2006. The increase in debt securities
represents securities purchased as collateral for increased public funds.

     At December 31, 2005 the market valuation account for the
available-for-sale investments of ($1,639,000) 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 ($1,072,000) was
reflected as a separate component of stockholders' equity.

     Cash and cash equivalents, which consist of cash and due from banks and
Federal funds sold, increased $80,000 or 0.2% to $47,810,000 at March 31, 2006
compared to $47,731,000 at December 31, 2005. Further discussion of this
increase may be found in the section of this report titled "Sources and Uses of
Funds".

     Premises and equipment increased $169,000 or 0.5% to $33,060,000 at March
31, 2006 compared to $32,891,000 at December 31, 2005. The increase reflects
purchases of premises and equipment $614,000 offset by depreciation expense of
$435,000.

     Total deposits decreased $3,989,000 or .45% to $877,466,000 at March 31,
2006 compared to $881,455,000 at December 31, 2005.

     Federal funds purchased and securities sold under agreements to repurchase
increased $19,031,000 or 51.4% to $56,027,000 at March 31, 2006 compared to
$36,996,000 at December 31, 2005. The balance represents an increase in public
fund repurchase agreements.

     Other borrowed money increased $17,124,000 or 32.8% to $69,303,000 at March
31, 2006 compared to $52,179,000 at December 31, 2005. The increase reflects new
borrowings of $47,000,000 reduced by repayments of $30,286,000. $8,000,000 of
the net increase reflects an advance funding of a future maturity in order to
lock in a lower funding rate. The balance of the net increases reflects funding
of loan growth.

     The increase in stockholders' equity reflects net income of $2,688,000 less
dividends declared of $875,000 and ($276,000) change in unrealized holding
losses, net of taxes, on investment in debt and equity securities
available-for-sale.

     No material changes in our Company's liquidity or capital resources have
occurred since December 31, 2005.


                                       33

<PAGE>

LIQUIDITY

     The role of liquidity management is to ensure funds are available to meet
depositors' withdrawal and borrowers' credit demands while at the same time
maximizing profitability. This is accomplished by balancing changes in demand
for funds with changes in the supply of those funds. Liquidity to meet the
demands is provided by maturing assets, short-term liquid assets that can be
converted to cash and the ability to attract funds from external sources,
principally depositors. Due to the nature of services offered by our Company,
management prefers to focus on transaction accounts and full service
relationships with customers. Management believes it has the ability to increase
deposits at any time by offering rates slightly higher than the market rate.

     Our Banks' Asset/Liability Committees (ALCO), primarily made up of senior
management, have direct oversight responsibility for our Company's liquidity
position and profile. A combination of daily, weekly and monthly reports
provided to management detail the following: internal liquidity metrics,
composition and level of the liquid asset portfolio, timing differences in
short-term cash flow obligations, available pricing and market access to the
financial markets for capital and exposure to contingent draws on our Company's
liquidity.

     Our Company has a number of sources of funds to meet liquidity needs on a
daily basis. The deposit base, consisting of consumer and commercial deposits
and large dollar denomination ($100,000 and over) certificates of deposit, is a
source of funds.

     Other sources of funds available to meet daily needs include the sales of
securities under agreements to repurchase and funds made available under a
treasury tax and loan note agreement with the federal government. Also, the
Banks are members of the Federal Home Loan Bank of Des Moines (FHLB). As members
of the FHLB, the Banks have access to credit products of the FHLB. At March 31,
2006, the amounts of available credit from the FHLB totaled $58,874,000. As of
March 31, 2006, the Banks had $69,303,000 in outstanding borrowings with the
FHLB. The Banks have federal funds purchased lines with correspondent banks
totaling $45,000,000 and agreements with unaffiliated banks to sell and
repurchase securities of $10,000,000. Finally, our Company has a $20,000,000
line of credit with a correspondent bank. This line of credit had no balance in
use as of March 31, 2006.

SOURCES AND USES OF FUNDS

     For the three months ended March 31, 2006 and 2005, net cash provided by
operating activities was $4,587,000 and $3,433,000, respectively. $451,000 of
the increase in net cash provided by operating activities reflects a higher
level of net income. Approximately $556,000 represents the change in accrued
interest receivable.

     Net cash used in investing activities was $35,071,000 in 2006 versus
$60,335,000 in 2005. The primary decrease in cash used in investing activities
reflects lower purchases of debt securities during the first quarter of 2006
versus the same period in 2005.


                                       34

<PAGE>

     Net cash provided by financing activities was $30,564,000 in 2006 versus
$50,551,000 in 2005. The decrease in cash proved by financing activities in 2006
compared to 2005 is primarily represented by a $23,712,000 issuance of
subordinated notes in the first quarter of 2005 to partially fund the purchase
of Bank 10. In addition, an increase in interest-bearing transaction accounts
provided approximately $14,110,000 of cash during the first quarter of 2005
compared to a decrease in interest-bearing accounts of approximately $4,000,000
during the first quarter of 2006.

IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS

     In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of
Financial Assets an amendment of FASB Statement No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities
("SFAS No. 156"). SFAS No. 156 requires all separately recognized servicing
assets and liabilities to be initially measured at fair value. In addition,
entities are permitted to choose to either subsequently measure servicing rights
at fair value and report changes in fair value in earnings, or amortize
servicing rights in proportion to and over the estimated net servicing income or
loss and assess the rights for impairment. Beginning with fiscal year in which
an entity adopts SFAS No. 156, it may elect to subsequently measure a class of
servicing assets and liabilities at fair value. Post adoption, an entity may
make this election as of the beginning of any fiscal year. An entity that elects
to subsequently measure a class of servicing assets and liabilities at fair
value should apply that election to all new and existing recognized servicing
assets and liabilities within that class. The effect of remeasuring an existing
class of servicing assets and liabilities at fair value is to be reported as a
cumulative-effect adjustment to retained earnings as of the beginning of the
period of adoption. SFAS No. 156 is effective as of the beginning of an entity's
first fiscal year that begins after September 15, 2006. The statement also
requires additional disclosures. Our Company is currently evaluating the impact
of the adoption of SFAS No. 156; however, it is not expected to have a material
impact on our Company's financial position or results of operations.

ITEM 3. 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 Banks' management include the standard GAP report subject to
different rate shock scenarios. At March 31, 2006, the rate shock scenario
models indicated that annual net interest income could decrease or increase by
as much as 4.5% should interest rates rise or fall, respectively, within 200
basis points from their current level over a one year period compared to 8.3% at
December 31, 2005. However there are no assurances that the change will not be
more or less than this estimate. Management further believes this is an
acceptable level of risk.


                                       35

<PAGE>

ITEM 4. 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 March 31, 2006. Based upon and as of
the date of that evaluation, our principal executive and principal financial
officers 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.

     There has been no change in our Company's internal control over financial
reporting that occurred during the fiscal quarter ended March 31, 2006 that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.


                                       36
<PAGE>

                           PART II - OTHER INFORMATION

<TABLE>
<S>                                                                    <C>
Item 1.  Legal Proceedings                                             NONE

Item 1A. Risk Factors                                                  NONE

ITEM 2.  Unregistered Sales of Equity Securities and Use of Proceeds   NONE

ITEM 3.  Defaults Upon Senior Securities                               NONE

ITEM 4.  Submission of Matters to a Vote of Security Holders           NONE

Item 5.  Other Information                                             NONE

Item 6.  Exhibits
</TABLE>

<TABLE>
<CAPTION>
Exhibit No.   Description
-----------   -----------
<S>           <C>
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 as Exhibit 3.2 to our Company's
              Annual Report on Form 10-K for the fiscal year ended December 31,
              2002 (Commission file number 0-23636) and incorporated herein by
              reference).

4             Specimen certificate representing shares of our Company's $1.00
              par value common stock (filed as Exhibit 4 to our Company's Annual
              Report on Form 10-K for the fiscal year ended December 31, 1999
              (Commission file number 0-23636) and incorporated herein by
              reference).

31.1          Certificate of the Chief Executive Officer of our Company pursuant
              to Section 302 of the Sarbanes-Oxley Act of 2002

31.2          Certificate of the Chief Financial Officer of our Company pursuant
              to Section 302 of the Sarbanes-Oxley Act of 2002

32.1          Certificate of the Chief Executive Officer of our Company pursuant
              to Section 906 of the Sarbanes-Oxley Act of 2002

32.2          Certificate of the Chief Financial Officer of our Company pursuant
              to Section 906 of the Sarbanes-Oxley Act of 2002
</TABLE>


                                       37

<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                        EXCHANGE NATIONAL BANCSHARES, INC.

<TABLE>
<CAPTION>
    Date
    ----
<S>                                     <C>


                                        /s/ James E. Smith
                                        ----------------------------------------
May 10, 2006                            James E. Smith, Chairman of the Board
                                        and Chief Executive Officer (Principal
                                        Executive Officer)


                                        /s/ Richard G. Rose
                                        ----------------------------------------
May 10, 2006                            Richard G. Rose, Treasurer (Principal
                                        Financial Officer and Principal
                                        Accounting Officer)
</TABLE>


                                       38

<PAGE>

                       EXCHANGE NATIONAL BANCSHARES, INC.

                                INDEX TO EXHIBITS

                            March 31, 2006 Form 10-Q

<TABLE>
<CAPTION>
Exhibit No.   Description                                               PAGE NO.
-----------   -----------                                               --------
<S>           <C>                                                       <C>
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 as Exhibit 3.2 to our           **
              Company's Annual Report on Form 10-K for the fiscal
              year ended December 31, 2002 (Commission file number
              0-23636) and incorporated herein by reference).

4             Specimen certificate representing shares of our              **
              Company's $1.00 par value common stock (filed as
              Exhibit 4 to our Company's Annual Report on Form 10-K
              for the fiscal year ended December 31, 1999 (Commission
              file number 0-23636) and incorporated herein by
              reference).

31.1          Certificate of the Chief Executive Officer of our            40
              Company pursuant to Section 302 of the Sarbanes-Oxley
              Act of 2002

31.2          Certificate of the Chief Financial Officer of our            41
              Company pursuant to Section 302 of the Sarbanes-Oxley
              Act of 2002

32.1          Certificate of the Chief Executive Officer of our            42
              Company pursuant to Section 906 of the Sarbanes-Oxley
              Act of 2002

32.2          Certificate of the Chief Financial Officer of our            43
              Company pursuant to Section 906 of the Sarbanes-Oxley
              Act of 2002
</TABLE>

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**   Incorporated by reference.


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