<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 September 30, 2005 or

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

For the transition period from ___________ to______________

                         Commission File Number: 0-23636

                       EXCHANGE NATIONAL BANCSHARES, INC.
             (Exact name of registrant as specified in its charter)

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

              132 EAST HIGH STREET, JEFFERSON CITY, MISSOURI 65101
               (Address of principal executive offices) (Zip Code)


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

                                      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 an  accelerated  filer (as
defined in rule 12b-2 of the Exchange Act). [X] Yes [ ] No

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 November 9, 2005, the registrant had 4,169,847 shares of common stock, par
value $1.00 per share, outstanding.

                               Page 1 of 49 pages
                      Index to Exhibits located on page 45

<PAGE>

                         PART I - FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

               EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                     SEPTEMBER 30,      DECEMBER 31,
                                                          2005              2004
                                                    ---------------    ---------------
<S>                                                 <C>                <C>
ASSETS
 Loans:
   Commercial                                       $   275,458,035    $   249,497,691
   Real estate - construction                           138,076,764         65,075,185
   Real estate - mortgage                               346,456,673        284,309,203
   Consumer                                              37,993,464         37,985,508
   Unamortized loan origination fees
     and costs, net                                        (414,818)          (230,957)
                                                    ---------------    ---------------
                                                        797,570,118        636,636,630
   Less allowance for loan losses                         8,792,999          7,495,594
                                                    ---------------    ---------------
     Loans, net                                         788,777,119        629,141,036

 Investments in available for sale debt
  and equity securities, at fair value                  212,481,981        171,717,635
 Federal funds sold                                      54,121,886         41,603,952
 Cash and due from banks                                 31,160,201         24,104,458
 Premises and equipment                                  32,133,628         21,276,387
 Accrued interest receivable                              7,185,067          5,289,083
 Mortgage servicing rights                                1,560,406          1,605,930
 Goodwill                                                40,323,775         25,196,736
 Core deposit intangible                                  5,062,157            798,132
 Cash surrender value - life insurance                    1,638,278            106,218
 Other assets                                             5,316,232          3,034,703
                                                    ---------------    ---------------
     Total assets                                   $ 1,179,760,730    $   923,874,270
                                                    ===============    ===============

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:

 Demand deposits                                    $   134,825,932    $    98,156,124
 Time deposits                                          774,657,576        628,493,352
                                                    ---------------    ---------------
   Total deposits                                       909,483,508        726,649,476

 Federal funds purchased and securities
  sold under agreements to repurchase                    64,212,880         34,515,323
 Interest-bearing demand notes to U.S. Treasury           1,431,790            897,470
 Subordinated notes                                      49,486,000         25,774,000
 Other borrowed money                                    52,216,826         39,524,747
 Accrued interest payable                                 3,046,639          1,795,267
 Other liabilities                                        3,876,904          2,947,204
                                                    ---------------    ---------------
     Total liabilities                                1,083,754,547        832,103,487

Stockholders' equity:
   Common stock - $1 par value; 15,000,000 shares
     authorized; 4,298,353 issued                         4,298,353          4,298,353
   Surplus                                               22,030,074         22,014,894
   Retained earnings                                     72,698,882         67,716,511
   Accumulated other comprehensive income (loss),
     net of tax                                            (368,617)           393,534
   Treasury stock, 128,506 shares at cost                (2,652,509)        (2,652,509)
                                                    ---------------    ---------------
   Total stockholders' equity                            96,006,183         91,770,783
                                                    ---------------    ---------------
Total liabilities and stockholders' equity          $ 1,179,760,730    $   923,874,270
                                                    ===============    ===============
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.

                                       2

<PAGE>

              EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED           NINE MONTHS ENDED
                                                           SEPTEMBER 30,                SEPTEMBER 30,
                                                     --------------------------   -------------------------
                                                         2005          2004          2005          2004
                                                     ------------   -----------   -----------   -----------
<S>                                                  <C>            <C>           <C>           <C>
Interest income:
  Interest and fees on loans                          $13,577,646   $ 8,955,054   $35,140,273   $25,772,399
  Interest on debt securities:
    Taxable                                             1,493,402       982,617     3,959,616     3,057,169
    Nontaxable                                            412,270       333,364     1,160,712       963,803
  Interest on federal funds sold                          314,308        86,651       800,468       231,529
  Interest on interest-bearing deposits                     7,952         4,454        28,454        14,179
  Dividends on equity securities                           57,105        42,171       187,801       111,429
                                                      -----------   -----------   -----------   -----------
    Total interest income                              15,862,683    10,404,311    41,277,324    30,150,508
                                                      -----------   -----------   -----------   -----------

Interest Expense:
  NOW accounts                                            559,041       194,459     1,344,402       538,988
  Savings                                                  84,307        80,157       236,196       242,474
  Money market accounts                                 1,017,955       373,740     2,488,617       745,372
  Certificates of deposit:
    $100,000 and over                                     920,511       472,958     2,352,206     1,403,341
    Other time deposits                                 2,396,624     1,429,004     6,167,131     4,377,439
  Federal funds purchased and securities sold
    under agreements to repurchase                        434,293       208,643     1,018,112       564,503
  Subordinated notes                                      772,307       283,881     1,921,916       577,533
  Federal Home Loan borrowings                            516,008       414,220     1,415,560     1,080,364
  Other borrowings                                          5,591         1,676        13,870        64,386
                                                      -----------   -----------   -----------   -----------
    Total interest expense                              6,706,637     3,458,738    16,958,010     9,594,400
                                                      -----------   -----------   -----------   -----------

    Net interest income                                 9,156,046     6,945,573    24,319,314    20,556,108

  Provision for loan losses                               260,500       160,500       733,667       606,500
                                                      -----------   -----------   -----------   -----------

  Net interest income after provision for loan
    losses                                              8,895,546     6,785,073    23,585,647    19,949,608
</TABLE>

Continued on next page

                                       3

<PAGE>

               EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED             NINE MONTHS ENDED
                                                            SEPTEMBER 30,                  SEPTEMBER 30,
                                                     ---------------------------    ---------------------------
                                                         2005           2004            2005           2004
                                                     ------------   ------------    ------------   ------------
<S>                                                  <C>            <C>             <C>            <C>
Noninterest income:
  Service charges on deposit accounts                $  1,251,632   $    771,533    $  2,951,310   $  2,291,653
  Trust department income                                 165,376        147,309         595,341        518,303
  Loss on sales and calls of debt securities                    -        (10,149)              -         (7,612)
  Mortgage loan servicing fees, net                       101,159        125,218         317,958        339,642
  Gain on sale of mortgage loans                          200,936        170,705         507,523        633,006
  Other                                                   292,084        166,914         767,590        594,007
                                                     ------------   ------------    ------------   ------------
    Total noninterest income                            2,011,187      1,371,530       5,139,722      4,368,999
                                                     ------------   ------------    ------------   ------------

Noninterest expense:
  Salaries and employee benefits                        3,899,655      2,811,628      10,220,156      8,387,805
  Occupancy expense                                       431,801        287,162       1,107,907        837,822
  Furniture and equipment expense                         545,208        510,526       1,591,436      1,453,310
  Advertising and promotion                               216,586        143,159         574,254        385,681
  Postage, printing and supplies                          287,863        178,816         706,885        566,142
  Legal, examination, and professional fees               400,997        173,947         985,241        606,425
  Amortization of intangible assets                       329,893         53,778         531,199        161,334
  Processing expense                                      223,671         91,366         508,097        287,942
  Other                                                   733,081        927,121       2,079,695      2,154,014
                                                     ------------   ------------    ------------   ------------
    Total noninterest expense                           7,068,755      5,177,503      18,304,870     14,840,475
                                                     ------------   ------------    ------------   ------------

Income before income taxes                              3,837,978      2,979,100      10,420,499      9,478,132

Income taxes                                            1,186,307        923,366       3,186,411      2,999,631
                                                     ------------   ------------    ------------   ------------

Net income                                           $  2,651,671   $  2,055,734    $  7,234,088   $  6,478,501
                                                     ============   ============    ============   ============

Basic earning per share                              $       0.64   $       0.49    $       1.73   $       1.55
Diluted earnings per share                           $       0.63   $       0.49    $       1.72   $       1.54

Weighed average shares of common stock outstanding
    Basic                                               4,169,847      4,169,847       4,169,847      4,169,847
    Diluted                                             4,196,929      4,201,432       4,198,179      4,205,929

Dividends per share:
    Declared                                         $       0.18   $       0.18    $       0.54   $       0.54
    Paid                                             $       0.18   $       0.18    $       0.54   $       0.54
</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>
                                                                          NINE MONTHS ENDED SEPTEMBER 30,
                                                                         --------------------------------
                                                                              2005              2004
                                                                         --------------    -------------
<S>                                                                      <C>               <C>
Cash flow from operating activities:
Net income                                                                $   7,234,088    $   6,478,501
  Adjustments to reconcile net income to net cash
   cash provided by operating activities:
    Provision for loan losses                                                   733,667          606,500
    Depreciation expense                                                      1,274,082        1,163,300
    Net amortization of debt securities premiums and discounts                  562,590        1,069,620
    Amortization of intangible assets                                           531,199          161,334
    Increase in accrued interest receivable                                    (647,165)        (193,459)
    Increase in cash surrender value - life insurance                           (27,240)          (4,159)
    (Increase) decrease in other assets                                        (287,743)          37,819
    Increase (decrease) in accrued interest payable                           1,053,988          (92,409)
    Increase (decrease) in other liabilities                                    405,951       (2,185,059)
    Loss on sales and calls of debt securities                                        -            7,612
    Origination of mortgage loans for sale                                   30,243,789)     (32,058,389)
    Proceeds from the sale of mortgage loans held for sale                   30,751,312       32,691,395
    Gain on sale of mortgage loans                                             (507,523)        (633,006)
    Loss on disposition of premises and equipment                                   924            4,822
    Other, net                                                                   15,180           15,180
                                                                          -------------    -------------
     Net cash provided by operating activities                               10,849,521        7,069,602

Cash flow from investing activities:

   Net increase in loans                                                    (33,112,348)     (31,954,969)
   Purchase of available-for-sale debt securities                          (481,242,069)    (257,866,701)
   Proceeds from maturities of available-for-sale debt securities           443,465,782      234,016,986
   Proceeds from calls of available-for-sale debt securities                 20,272,500       33,657,425
   Proceeds from sales of available-for-sale debt securities                  1,071,803       10,304,331
   Acquisition of subsidiary, net of cash and cash equivalents acquired     (21,800,539)               -
   Purchase of premises and equipment                                        (5,012,950)      (3,213,705)
   Proceeds from sales of other real estate owned and repossessions           1,760,374          410,643
                                                                          -------------    -------------
     Net cash used in investing activities                                  (74,597,447)     (14,645,990)
                                                                          -------------    -------------
</TABLE>

Continued on next page

                                       5

<PAGE>

              EXCHANGE NATIONAL BANCSHARES, INC. AND SUBSIDIARIES

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                     NINE MONTHS ENDED SEPTEMBER 30,
                                                                      -------------------------------
                                                                           2005             2004
                                                                      --------------   --------------
<S>                                                                    <C>             <C>
Cash flow from financing activities:
   Net increase in demand deposits                                     $ 12,409,368    $ 11,036,567
   Net increase in interest-bearing transaction accounts                 12,400,805      28,650,258
   Net increase (decrease) in time deposits                               8,413,174     (16,982,405)
   Net increase (decrease) in federal funds purchased and securities
      sold under agreements to repurchase                                28,691,634     (39,004,415)
   Net increase in interest-bearing demand notes to U.S. Treasury           513,351         366,230
   Proceeds from subordinated notes                                      23,712,000      25,774,000
   Proceeds from Federal Home Loan Bank borrowings                        3,500,000      17,000,000
   Repayment of Federal Home Loan Bank borrowings                        (4,067,012)       (885,197)
   Repayment of other borrowed money                                              -     (17,950,568)
   Cash dividends paid                                                   (2,251,717)     (2,251,717)
                                                                       ------------    ------------

      Net cash provided by financing activities                          83,321,603       5,752,753

Net increase (decrease) in cash and cash equivalents                     19,573,677      (1,823,635)
Cash and cash equivalents, beginning of period                           65,708,410      57,044,915
                                                                       ------------    ------------

Cash and cash equivalents, end of period                               $ 85,282,087    $ 55,221,280
                                                                       ============    ============

Supplemental disclosure of cash flow information -
   Cash paid during period for:

    Interest                                                           $ 15,904,022    $  9,686,809
    Income taxes                                                          2,620,000       5,352,761

Supplemental schedule of noncash investing activities -
   Other real estate and repossessions
    acquired in settlement of loans                                    $  3,265,115    $    498,734
</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)

                  Nine Months Ended September 30, 2005 and 2004

      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 2004 condensed
consolidated financial statements have been reclassified to conform to the 2005
condensed consolidated presentation. Such reclassifications have no effect on
previously reported net income or stockholders' equity. Operating results for
the period ended September 30, 2005 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2005.

      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 2004 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, 2004 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 September 30,
2005 and December 31, 2004 and the consolidated statements of earnings for the
three and nine periods ended September 30, 2005 and 2004 and cash flows for the
nine months ended September 30, 2005 and 2004.

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 has expanded our presence in the
Kansas City, Missouri metropolitan market.

      The purchase price payable to Drexel Bancshares, Inc. for Bank 10 was cash
aggregating $34,020,000. $23,000,000 of the purchase price was provided from the
issuance of subordinated notes with the balance being paid from cash and liquid
assets on hand.

                                       7
<PAGE>

      The following table summarizes the estimated fair values of the assets
acquired and liabilities assumed at the date of acquisition.

<TABLE>
<CAPTION>
                                                                   AT MAY 2, 2005
                                                                   --------------
<S>                                                                <C>
Cash and cash equivalents                                          $  12,219,465
Loans, net                                                           130,522,517
Investments in available for sale debt
  and equity securities, at fair value                                26,080,340
Premises and equipment                                                 7,119,297
Core deposit intangible                                                4,795,224
Goodwill                                                              15,127,039
                                                                   -------------
Other assets                                                           2,773,923
    Total assets acquired                                            198,637,805

Deposits                                                             149,610,685
Securities sold under agreements
    to repurchase                                                      1,005,923
Other borrwed money                                                   13,280,060
Other liabilities                                                        721,133
                                                                   -------------
    Total liabilities acquired                                       164,617,801
                                                                   -------------

Net assets acquired                                                $  34,020,004
                                                                   =============
</TABLE>

      The $4,795,224 core deposit intangible has been assigned an 8 year useful
life. The $15,127,039 of goodwill is expected to be deductible for income tax
purposes.

      A summary of unaudited pro forma combined financial information for the
three-month period ended September 30, 2004 and nine-month periods ended
September 30, 2005 and 2004 for our Company and Bank 10 as if the transaction
had occurred on January 1, 2004 follows. These pro forma presentations do not
include any expense reductions that may result from the acquisition.

<TABLE>
<CAPTION>
                                                  Three Months Ended               Nine Months Ended
                                                     September 30,                   September 30,
                                                  ------------------    --------------------------------------
                                                        2004                   2005                2004
                                                  ------------------    --------------------------------------
<S>                                               <C>                   <C>                  <C>
Net interest income                               $        8,343,912    $      26,052,171    $      24,872,476

Net income                                                 2,250,503            7,478,232            7,170,986

Basic earnings per share                          $             0.54    $            1.79    $            1.72

Diluted earnings per share                        $             0.54    $            1.78    $            1.70
</TABLE>

                                       8
<PAGE>

EARNINGS PER SHARE

      The following table reflects, for the three-month and nine-month periods
ended September 30, 2005 and 2004, the numerators (net income) and denominators
(average shares outstanding) for the basic and diluted net income per share
computations:

<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED             NINE MONTHS ENDED
                                                         SEPTEMBER 30,                 SEPTEMBER 30,
                                                  ---------------------------   ---------------------------
                                                      2005           2004           2005           2004
                                                  ------------   ------------   ------------   ------------
<S>                                               <C>            <C>            <C>            <C>
Net income, basic and diluted                     $  2,651,671   $  2,055,734   $  7,234,088   $  6,478,501
                                                  ============   ============   ============   ============

Average shares outstanding                           4,169,847      4,169,847      4,169,847      4,169,847
Effect of dilutive stock options                        27,082         31,585         28,332         36,082
                                                  ------------   ------------   ------------   ------------
Average shares outstanding
  including dilutive stock options                   4,196,929      4,201,432      4,198,179      4,205,929
                                                  ============   ============   ============   ============

Basic earning per share                           $       0.64   $       0.49   $       1.73   $       1.55
Diluted earnings per share                        $       0.63   $       0.49   $       1.72   $       1.54
</TABLE>

                                       9
<PAGE>

      Our Company accounts for its stock option plan in accordance with the
provisions of Accounting Principles Board (APB) Opinion No. 25, Accounting for
Stock Issued to Employees, and related interpretations. As such, compensation
expense is recorded on the date of grant only if the current market price of the
underlying stock exceeded the exercise price. SFAS No. 123, Accounting for
Stock-Based Compensation, and SFAS No. 148, Accounting for Stock-Based
Compensation - Transition and Disclosure, an amendment of SFAS No. 123,
establish accounting and disclosure requirements using a fair-value-based method
of accounting for stock-based employee compensation plans. As permitted by
existing accounting standards, our Company has elected to continue to apply the
provision of APB Opinion No. 25, as described above, and has adopted only the
disclosure requirements of SFAS No. 123, as amended by SFAS No. 148. See Impact
of New Accounting Pronouncements in this report for further discussion of this
issue.

      The following table illustrates, for the three-month and nine-month
periods ended September 30, 2005 and 2004, the effect on net income if the
fair-value-based method had been applied to all outstanding and unvested awards
in each period:

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED                NINE MONTHS ENDED
                                                           SEPTEMBER 30,                    SEPTEMBER 30,
                                                  ------------------------------    ------------------------------
                                                      2005             2004             2005             2004
                                                  -------------    -------------    -------------    -------------
<S>                                               <C>              <C>              <C>              <C>
Net income:
  As reported                                     $   2,651,671    $   2,055,734    $   7,234,088    $   6,478,501
  Add total stock-based employee
    compensation expense included
    in reported net income, net of tax                        -                -                -                -
  Deduct total stock-based employee
    compensation expense determined
    under fair-value-based method for
    all awards, net of tax                              (35,700)         (34,058)        (107,099)        (102,171)
                                                  -------------    -------------    -------------    -------------
  Pro forma net income                            $   2,615,971    $   2,021,676    $   7,126,989    $   6,376,330
                                                  =============    =============    =============    =============

Pro forma earnings per common share:
  As reported basic                               $        0.64    $        0.49    $        1.73    $        1.55
  Pro forma basic                                          0.63             0.48             1.71             1.53

  As reported diluted                                      0.63             0.49             1.72             1.54
  Pro forma diluted                                        0.62             0.48             1.70             1.52
</TABLE>

                                       10
<PAGE>

COMPREHENSIVE INCOME

      For the three-month and nine-month periods ended September 30, 2005 and
2004, 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 and nine-month periods ended
September 30, 2005 and 2004 is summarized as follows:

<TABLE>
<CAPTION>
                                                                   THREE MONTHS ENDED            NINE MONTHS ENDED
                                                                      SEPTEMBER 30,                SEPTEMBER 30,
                                                               --------------------------    ---------------------------
                                                                  2005           2004           2005            2004
                                                               -----------    -----------    -----------    ------------
<S>                                                            <C>            <C>            <C>            <C>
Net income                                                     $ 2,651,671    $ 2,055,734    $ 7,234,088    $  6,478,501
  Other comprehensive income (loss):
    Net unrealized holding gains (losses) on
     investments in debt and equity securities
     available-for-sale, net of taxes                             (434,674)     1,192,322       (762,151)       (615,420)
    Adjustment for net securities gains realized in net
     income, net of applicable income taxes                              -          6,597              -           4,948
                                                               -----------    -----------    -----------    ------------
        Total other comprehensive income (loss)                   (434,674)     1,198,919       (762,151)       (610,472)
                                                               -----------    -----------    -----------    ------------
        Comprehensive income                                   $ 2,216,997    $ 3,254,653    $ 6,471,937    $  5,868,029
                                                               ===========    ===========    ===========    ============
</TABLE>

INTANGIBLE ASSETS

      The gross carrying amount and accumulated amortization of our Company's
amortizable core deposit intangible asset as of September 30, 2005 and December
31, 2004 is as follows:

<TABLE>
<CAPTION>
                                          SEPTEMBER 30, 2005                    DECEMBER 31, 2004
                                   ---------------------------------   ---------------------------------
                                    Gross Carrying      Accumulated     Gross Carrying     Accumulated
                                         Amount         Amortization        Amount         Amortization
                                   ----------------   --------------   ----------------   --------------
<S>                                <C>                <C>              <C>                <C>
Core deposit intangible            $      7,060,224       (1,998,067)         2,265,000       (1,466,868)
                                   ================   ==============   ================   ==============
</TABLE>

      The aggregate amortization expense of core deposit intangible subject to
amortization for the three-month and nine-month periods ended September 30, 2005
and 2004 is as follows:

<TABLE>
<CAPTION>
                                          THREE MONTHS ENDED                    NINE MONTHS ENDED
                                            SEPTEMBER 30,                          SEPTEMBER 30,
                                   ---------------------------------   ---------------------------------
                                        2005              2004                2005            2004
                                   ----------------   --------------   ----------------   --------------
<S>                                <C>                <C>              <C>                <C>
Aggregate amortization expense     $        329,893           53,778   $        531,199          161,334
                                   ================   ==============   ================   ==============
</TABLE>

                                       11
<PAGE>

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

<TABLE>
<S>                                <C>
Estimated amortization expense:
   For year ending 2005            $    806,896
   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
</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>
                                                        SEPTEMBER 30,
                                             ---------------------------------
                                                 2005                 2004
                                             -------------         -----------
<S>                                          <C>                   <C>
Balance, beginning of period                 $   1,605,930           1,591,289
Originated mortgage servicing rights               294,888             347,592
Amortization                                      (340,412)           (313,613)
                                             -------------         -----------
Balance, end of period                       $   1,560,406           1,625,268
                                             =============         ===========

Mortgage loans serviced                      $ 219,336,200         214,569,000
                                             =============         ===========

Mortgage servicing rights as a
  percentage of loans serviced                        0.71%               0.76%
                                             =============         ===========
</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 2005            $  454,000
   For year ending 2006               454,000
   For year ending 2007               454,000
   For year ending 2008               198,000
   For year ending 2009                   -0-
</TABLE>

                                       12

<PAGE>

     Our Company's goodwill associated with the purchase of subsidiaries by
reporting segments for the periods ended September 30, 2005 and December 31,
2004 is summarized as follows:

<TABLE>
<CAPTION>
                                                 SEPTEMBER 30, 2005
                              -----------------------------------------------------------
                                             CITIZENS
                               THE EXCHANGE UNION STATE   OSAGE
                              NATIONAL BANK  BANK AND     VALLEY
                               OF JEFFERSON  TRUST OF    BANK OF
                                  CITY        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>

<TABLE>
<CAPTION>
                                                                          DECEMBER 31, 2004
                                           -----------------------------------------------------------------------------
                                                                     CITIZENS
                                           THE EXCHANGE             UNION STATE          OSAGE
                                           NATIONAL BANK             BANK AND            VALLEY
                                           OF JEFFERSON              TRUST OF            BANK OF
                                               CITY                  CLINTON             WARSAW                 TOTAL
                                           -------------            -----------         ---------             ----------
<S>                                        <C>                      <C>                 <C>                   <C>
Goodwill associated with the
  purchase of subsidiaries                  $ 4,382,098              16,701,762         4,112,876             25,196,736
                                           =============            ===========         =========             ==========
</TABLE>

                                       13

<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. Retirement
benefits are payable for life, but not less than 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 and nine-month periods ended September 30, 2005 and 2004:

<TABLE>
<CAPTION>
                                                                               ESTIMATED                        ACTUAL
                                                                                 2005                            2004
                                                                               ---------                      ----------
<S>                                                                            <C>                            <C>
Service cost - benefits earned during the year                                 $ 308,105                      $  292,059
Interest cost on projected benefit obligations                                   245,214                         242,384
Expected return on plan assets                                                  (369,604)                       (374,586)
Net amortization and deferral                                                    (26,632)                        (35,512)
Recognized net gains                                                                   -                          (6,695)
                                                                               ---------                      ----------
Net periodic pension cost - annual                                             $ 157,083                      $  117,650
                                                                               =========                      ==========

Net periodic pension cost - three months
  ended September 30 (actual)                                                  $  39,271                      $   31,615
                                                                               =========                      ==========

Net periodic pension cost - nine months
  ended September 30 (actual)                                                  $ 117,812                      $   94,845
                                                                               =========                      ==========
</TABLE>

     Our Company does not expect to make any contribution to the plan during
2005.

                                       14

<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.

                                       15

<PAGE>

<TABLE>
<CAPTION>
                                                                              SEPTEMBER 30, 2005
                               -----------------------------------------------------------------------------------------------------
                                 THE EXCHANGE
                               NATIONAL BANK OF    CITIZENS UNION
                                 OF JEFFERSON       STATE BANK AND    OSAGE VALLEY                    CORPORATE AND
                                     CITY         TRUST OF CLINTON   BANK OF WARSAW      BANK 10          OTHER            TOTAL
                               ----------------  ------------------  --------------   --------------  -------------   --------------
<S>                            <C>               <C>                 <C>              <C>             <C>             <C>
Balance sheet information
   Loans, net of allowance
     for loan losses           $    376,048,969  $      228,409,969  $  52,439,717    $  131,878,464  $           -   $  788,777,119
   Debt and equity Securities       104,494,086          38,834,169     36,091,924        31,575,802      1,486,000      212,481,981
   Goodwill                           4,382,098          16,701,762      4,112,876        15,127,039              -       40,323,775
   Intangible assets                          -             636,798              -         4,425,359              -        5,062,157
   Total assets                     549,976,692         329,255,538     98,116,772       200,089,109      2,322,619    1,179,760,730
   Deposits                         414,736,647         269,454,020     79,838,239       151,235,965     (5,781,363)     909,483,508
   Stockholders' equity        $     50,665,216  $       42,009,646  $  10,009,739    $   34,875,142    (41,553,560)  $   96,006,183
                               ================  ==================  ==============   ==============  =============   ==============
</TABLE>

<TABLE>
<CAPTION>

                                                                        DECEMBER 31, 2004
                               ---------------------------------------------------------------------------------------
                                THE EXCHANGE
                               NATIONAL BANK       CITIZENS UNION
                                OF JEFFERSON        STATE BANK AND    OSAGE VALLEY    CORPORATE AND
                                    CITY          TRUST OF CLINTON   BANK OF WARSAW       OTHER            TOTAL
                               --------------    ------------------  --------------   -------------   --------------
<S>                            <C>               <C>                 <C>              <C>             <C>
Balance sheet information
   Loans, net of allowance
     for loan losses           $  366,749,286    $      213,808,231  $   48,583,519   $           -   $  629,141,036
   Debt and equity Securities      99,466,264            36,449,804      35,027,567         774,000      171,717,635
   Goodwill                         4,382,098            16,701,762       4,112,876               -       25,196,736
   Intangible assets                        -               798,132               -               -          798,132
   Total assets                   513,839,636           311,756,271      97,507,515         770,848      923,874,270
   Deposits                       406,897,725           256,351,275      81,077,272     (17,676,796)     726,649,476
   Stockholders' equity        $   49,643,120    $       39,954,448  $    9,654,137   $  (7,480,922)  $   91,770,783
                               ==============    ==================  ==============   =============   ===============

</TABLE>

                                       16

<PAGE>

<TABLE>
<CAPTION>

                                                                   THREE MONTHS ENDED SEPTEMBER 30, 2005
                               -----------------------------------------------------------------------------------------------------
                                 THE EXCHANGE
                               NATIONAL BANK OF     CITIZENS UNION
                                  OF JEFFERSON       STATE BANK AND    OSAGE VALLEY                    CORPORATE AND
                                      CITY         TRUST OF CLINTON   BANK OF WARSAW      BANK 10          OTHER           TOTAL
                               -----------------  ------------------  --------------   --------------  --------------  -------------
<S>                            <C>                <C>                 <C>              <C>             <C>             <C>
Statement of earnings:                         -                   -               -                -                -             -
   Total interest income             $ 7,385,816         $ 4,253,749     $ 1,189,612      $ 3,010,549      $    22,957   $15,862,683
   Total interest expense              3,038,120           1,535,350         566,348          806,968          759,851     6,706,637
                                     -----------         -----------     -----------      -----------      -----------   -----------
   Net interest income                 4,347,696           2,718,399         623,264        2,203,581         (736,894)    9,156,046
   Provision for loan losses             150,000             100,000          10,500                -                -       260,500
   Noninterest income                    962,434             471,212         142,425          456,897          (21,781)    2,011,187
   Noninterest expense                 2,804,965           1,980,370         468,353        1,711,758          103,309     7,068,755
   Income taxes                          751,300             336,846          74,228          318,873         (294,940)    1,186,307
                                     -----------         -----------     -----------      -----------      -----------   -----------
   Net income (loss)                 $ 1,603,865         $   772,395     $   212,608      $   629,847      $  (567,044)  $ 2,651,671
                                     ===========         ===========     ===========      ===========      ===========   ===========

</TABLE>

<TABLE>
<CAPTION>

                                                          THREE MONTHS ENDED SEPTEMBER 30, 2004
                              -------------------------------------------------------------------------------------
                                 THE EXCHANGE
                                 NATIONAL BANK      CITIZENS UNION
                                 OF JEFFERSON        STATE BANK AND    OSAGE VALLEY     CORPORATE AND
                                     CITY          TRUST OF CLINTON   BANK OF WARSAW       OTHER          TOTAL
                               -----------------  ------------------  --------------   --------------  ------------
<S>                            <C>                <C>                 <C>              <C>             <C>
Statement of earnings:
   Total interest income             $ 5,918,842     $ 3,389,362       $ 1,087,712     $     8,395      $10,404,311
   Total interest expense              1,973,396         832,989           403,318         249,035        3,458,738
                                     -----------     -----------       -----------     -----------      -----------
   Net interest income                 3,945,446       2,556,373           684,394        (240,640)       6,945,573
   Provision for loan losses              75,000          75,000            10,500               -          160,500
   Noninterest income                    907,290         389,161            97,883         (22,804)       1,371,530
   Noninterest expense                 2,885,627       1,819,326           424,921          47,629        5,177,503
   Income taxes                          606,050         324,505           101,391        (108,580)         923,366
                                     -----------     -----------       -----------     -----------      -----------
   Net income (loss)                 $ 1,286,059     $   726,703       $   245,465     $  (202,493)     $ 2,055,734
                                     ===========     ===========       ===========     ===========      ===========
</TABLE>

                                       17

<PAGE>

<TABLE>
<CAPTION>
                                                       NINE MONTHS ENDED SEPTEMBER 30, 2005
                             -----------------------------------------------------------------------------------------
                             THE EXCHANGE
                             NATIONAL BANK   CITIZENS UNION
                             OF JEFFERSON    STATE BANK AND    OSAGE VALLEY                CORPORATE AND
                                 CITY       TRUST OF CLINTON  BANK OF WARSAW    BANK 10        OTHER         TOTAL
                             -------------  ----------------  --------------  -----------  -------------  ------------
<S>                          <C>            <C>               <C>             <C>          <C>            <C>
Statement of earnings:
  Total interest income      $  20,939,384    $ 12,054,443     $  3,507,457   $ 4,719,373   $    56,667   $ 41,277,324
  Total interest expense         8,107,399       4,078,417        1,570,217     1,406,170     1,795,807     16,958,010
                             -------------    ------------     ------------   -----------   -----------   ------------
  Net interest income           12,831,985       7,976,026        1,937,240     3,313,203    (1,739,140)    24,319,314
  Provision for loan losses        450,000         250,000           31,500         2,167             -        733,667
  Noninterest income             2,848,791       1,233,627          363,541       754,117       (60,354)     5,139,722
  Noninterest expense            8,207,836       5,706,328        1,347,651     2,712,541       330,514     18,304,870
  Income taxes                   2,242,100         986,869          248,423       438,109      (729,090)     3,186,411
                             -------------    ------------     ------------   -----------   -----------   ------------
  Net income (loss)          $   4,780,840    $  2,266,456     $    673,207   $   914,503   $(1,400,918   $  7,234,088
                             =============    ============     ============   ===========   ===========   ============
</TABLE>

<TABLE>
<CAPTION>
                                                 NINE MONTHS ENDED SEPTEMBER 30, 2004
                             ----------------------------------------------------------------------------
                             THE EXCHANGE
                             NATIONAL BANK   CITIZENS UNION
                             OF JEFFERSON    STATE BANK AND    OSAGE VALLEY   CORPORATE AND
                                 CITY       TRUST OF CLINTON  BANK OF WARSAW      OTHER         TOTAL
                             -------------  ----------------  --------------  -------------  ------------
<S>                          <C>            <C>               <C>             <C>            <C>
Statement of earnings:
  Total interest income      $  17,170,080    $ 9,769,148      $ 3,227,069    $   (15,789)   $ 30,150,508
  Total interest expense         5,338,561      2,520,571        1,205,613        529,655       9,594,400
                             -------------    -----------       ----------    -----------    ------------
  Net interest income           11,831,519      7,248,577        2,021,456       (545,444)     20,556,108
  Provision for loan losses        350,000        225,000           31,500              -         606,500
  Noninterest income             2,931,787      1,214,069          289,477        (66,334)      4,368,999
  Noninterest expense            8,374,690      4,994,407        1,271,807        199,571      14,840,475
  Income taxes                   1,950,100      1,040,347          292,864       (283,680)      2,999,631
                             -------------    -----------       ----------     ----------    ------------
  Net income (loss)          $   4,088,516    $ 2,202,892       $  714,762    $  (527,669)   $  6,478,501
                             =============    ===========       ==========    ===========    ============
</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, 2004, 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, Citizens Union State Bank, Osage Valley Bank, and Bank 10 provide similar
products and

                                       20

<PAGE>

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 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 September 30, 2005 of $2,652,000
increased $596,000 when compared to the third quarter of 2004. Diluted earnings
per common share for the third quarter of 2005 of $0.63 increased 14 cents or
28.6% when compared to the third quarter of 2004. Net income for the nine months
ended September 30, 2005 of $7,234,000 increased $756,000 when compared to the
third quarter of 2004. Diluted earnings per common share for the third quarter
of 2005 of $1.72 increased 18 cents or 11.7% when compared to the third quarter
of 2004.

     The net interest income contribution of the Bank 10 acquisition discussed
below represents Bank 10's actual net interest income for the periods reduced by
the interest expense on $23,712,000 of subordinated notes and the imputed
interest expense on the approximately $11,020,000 of cash used in the
transaction. The imputed interest expense on the cash used is calculated using
the average federal funds sold rate for the applicable periods.

     Net interest income (on a tax equivalent basis) was $9,399,000, or 3.53% of
average earning assets, for the three months ended September 30, 2005, compared
to $7,114,000, or 3.40% of average earning assets, for the same period in 2004.
Approximately, $1,731,000 of the $2,285,000 increase in net interest income for
the three months ended September 30, 2005 as compared to the same period in 2004
is related to the acquisition. 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.

     Net interest income (on a tax equivalent basis) was $24,947,000, or 3.41%
of average earning assets, for the nine months ended September 30, 2005,
compared to $21,042,000, or 3.39% of average earning assets, for the same period
in 2004. Approximately, $2,545,000 of the $3,905,000 increase in net interest
income for the nine months ended September 30, 2005 as compared to the same
period in 2004 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 September 30,
2005 were $1,054,992,000, an increase of $225,890,000 or 27.3%, compared to
average interest-earning assets of $829,102,000 for the same period of 2004. The
acquisition of Bank 10 represents approximately $165,712,000 of the increase in
interest-earning assets. In addition to the increase due to the acquisition,
average loans outstanding increased approximately $52,041,000.

     The yield on average interest-earning assets increased to 6.06% for the
three month period ended September 30, 2005 compared to 5.06% for the same
period in 2004. The rate paid on interest-bearing liabilities also increased to
2.85% in 2005 compared to 1.94% in 2004.

     Average interest-earning assets for the nine months ended September 30,
2005 were $977,483,000, an increase of $151,064,000 or 18.3%, compared to
average interest-earning assets of $826,419,000 for the same period of 2004. The
acquisition of Bank 10 represents

                                       22

<PAGE>

approximately $92,989,000 of the increase in interest-earning assets. In
addition to the increase due to the acquisition, average loans outstanding
increased approximately $55,870,000.

     The yield on average interest-earning assets increased to 5.73% for the
nine month period ended September 30, 2005 compared to 4.94% for the same period
in 2004. The rate paid on interest-bearing liabilities also increased to 2.65%
in 2005 compared to 1.80% in 2004.

THREE MONTHS ENDED SEPTEMBER 30, 2005 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 2004

     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 $2,285,000 or 32.1% to $9,399,000 or 3.53% of
average earning assets for the third quarter of 2005 compared to $7,114,000 or
3.40% of average earning assets for the same period of 2004. The provision for
loan losses was $260,000 and $160,000 the three months ended September 30, 2005
and 2004 respectively. The increase in the provision for loan losses reflects a
higher level of charge-offs during the third quarter of 2005 compared to 2004 as
well as an increase in loan balances. Net charge-offs were $845,000 for the
third quarter of 2005 compared to $48,000 for the third quarter of 2004. See
Lending and Credit Management in this report for further discussion of third
quarter 2005 charge-offs.

                                       23

<PAGE>

     Noninterest income and noninterest expense for the three-month periods
ended September 30, 2005 and 2004 were as follows:

(DOLLARS EXPRESSED IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED
                                                                     SEPTEMBER 30,             INCREASE (DECREASE)
                                                              --------------------------    --------------------------
                                                                  2005           2004          AMOUNT               %
                                                              -----------   ------------    -----------          -----
<S>                                                           <C>           <C>             <C>                  <C>
NONINTEREST INCOME

Service charges on deposit accounts                           $     1,252   $        772    $       480           62.2%
Trust department income                                               165            147             18           12.2
Net gain (loss) on sales of calls of debt securities                    -            (10)            10          100.0
Mortgage loan servicing fees, net                                     101            125            (24)         (19.2)
Gain on sale of mortgage loans                                        201            171             30           17.5
Other                                                                 292            167            125           74.9
                                                              -----------   ------------    -----------          -----
                                                              $     2,011   $      1,372    $       639           46.6%
                                                              ===========   ============    ===========          =====

NONINTEREST EXPENSE

Salaries and employee benefits                                $     3,899        $ 2,812    $     1,087           38.7%
Occupancy expense                                                     432            287            145           50.5
Furniture and equipment expense                                       545            511             34            6.7
Advertising and promotion                                             217            143             74           51.7
Postage, printing and supplies                                        288            179            109           60.9
Legal, examination, and professional fees                             401            174            227          130.5
Amortization - CDI                                                    330             54            276          511.1
Processing expense                                                    224             91            133          146.2
Other                                                                 733            927           (194)         (20.9)
                                                              -----------   ------------    -----------          -----
                                                              $     7,069   $      5,178    $     1,891           36.5%
                                                              ===========   ============    ===========          =====
</TABLE>

     Noninterest income increased $639,000 or 46.6% to $2,011,000 for the third
quarter of 2005 compared to $1,372,000 for the same period of 2004. The
acquisition of Bank 10 contributed $457,000 of the increase in noninterest
income during the third quarter. Excluding income due to the acquisition,
service charges on deposit accounts increased $65,000 or 8.4% 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 increased $30,000 or 17.5% due
to recognition of higher funding gains recognized on sale of mortgage loans. The
dollar volume of mortgage loans sold was consistent for the two periods at
approximately $11,000,000. Other noninterest income increased $83,000 or 49.7%
due to the receipt in 2004 of a refund of vendor charges that incurred in prior
years.

                                       24

<PAGE>

     Noninterest expense increased $1,891,000 or 36.5% to $7,069,000 for the
third quarter of 2005 compared to $5,178,000 for the third quarter of 2004.
Approximately $1,712,000 of the increase in noninterest expense is attributed to
the acquisition of Bank 10. Excluding costs associated with the acquisition,
salaries and benefits increased $258,000 or 9.2%, occupancy expense increased
$37,000 or 12.9%, advertising and promotion increased $26,000 or 18.2%, legal,
examination, and professional fees increased $142,000 or 81.6%, processing
expense increased $58,000 or 63.7% and other noninterest expense decreased
$340,000 or 36.7%. The increase in salaries and employees benefits represents
normal salary increases and additional hires as well as increased health care
costs. The increase in occupancy expense reflects additional costs associated
with two new branch facilities. The increase in advertising and promotion
reflects additional advertising and promotion in new market areas. The increase
in legal, examination, and professional fees reflects increases in accruals to
cover expected costs associated with Sarbanes-Oxley compliance, internal audit
and benefit consulting. The increase in processing expense is related to costs
associated with switching to a new ATM network. These costs include one-time
conversion costs as well as higher monthly costs. The decrease in other
noninterest expense reflects a $318,000 IRS settlement that was paid in the
third quarter 2004 related to income that had been deferred for tax purposes but
not for financial reporting.

     Income taxes as a percentage of earnings before income taxes as reported in
the condensed consolidated financial statements were 30.9% for the third quarter
of 2005 compared to 31.0% for the third quarter of 2004. The reduction in the
effective tax rate is due to an increase in tax-exempt income as a percentage of
total income in the current year.

NINE MONTHS ENDED SEPTEMBER 30, 2005 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
2004

     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 $3,905,000 or 18.6% to $24,947,000 or 3.41%
of average earning assets for the nine months of 2005 compared to $21,042,000 or
3.39% of average earning assets for the same period of 2004. The provision for
loan losses was $734,000 and $607,000 for the nine months ended September 30,
2005 and 2004 respectively. The increase in the provision for loan losses
reflects a high level of charge-offs during the current year compared to the
prior year.

                                       25

<PAGE>

     Noninterest income and noninterest expense for the nine-month periods ended
September 30, 2005 and 2004 were as follows:

(DOLLARS EXPRESSED IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                  NINE MONTHS ENDED
                                                                     SEPTEMBER 30,             INCREASE (DECREASE)
                                                              --------------------------    --------------------------
                                                                 2005           2004          AMOUNT               %
                                                              -----------   ------------    -----------          -----
<S>                                                           <C>           <C>             <C>                  <C>
NONINTEREST INCOME

Service charges on deposit accounts                           $     2,951   $      2,292    $       659           28.8%
Trust department income                                               595            518             77           14.9
Net gain (loss) on sales of calls of debt securities                    -             (8)             8          100.0
Mortgage loan servicing fees, net                                     318            340            (22)          (6.5)
Gain on sale of mortgage loans                                        508            633           (125)         (19.7)
Other                                                                 768            594            174           29.3
                                                              -----------   ------------    -----------          -----
                                                                  $ 5,140        $ 4,369          $ 771           17.6%
                                                              ===========   ============    ===========          =====

NONINTEREST EXPENSE

Salaries and employee benefits                                    $10,220        $ 8,388        $ 1,832           21.8%
Occupancy expense                                                   1,108            838            270           32.2
Furniture and equipment expense                                     1,592          1,453            139            9.6
Advertising and promotion                                             574            386            188           48.7
Postage, printing and supplies                                        707            566            141           24.9
Legal, examination, and professional fees                             985            606            379           62.5
Amortization - CDI                                                    531            161            370          229.8
Processing expense                                                    508            288            220           76.4
Other                                                               2,080          2,154            (74)          (3.4)
                                                              -----------   ------------    -----------          -----
                                                                  $18,305       $ 14,840        $ 3,465           23.3%
                                                              ===========   ============    ===========          =====
</TABLE>

     Noninterest income increased $771,000 or 17.6% to $5,140,000 for the nine
months of 2005 compared to $4,369,000 for the same period of 2004. $754,000 of
the increase in noninterest income resulted from the acquisition of Bank 10.
Excluding noninterest income associated with the acquisition, service charge
income decreased $26,000 or 1.1%. Trust department income increased $77,000 or
14.9% when compared to the same period in 2004 due primarily to a large
distribution fee collected during 2005. Gain on sales of mortgage loans
decreased $125,000 or 19.7% due to a decrease in volume of loans originated and
sold to the secondary market from approximately $32,058,000 in the first nine
months of 2004 to approximately $30,244,000 for the first nine months of 2005.
The decrease reflects both lower mortgage servicing rights recorded and lower
funding gains recognized on the sales.

                                       26

<PAGE>

     Noninterest expense increased $3,465,000 or 23.3% to $18,305,000 for the
first nine months of 2005 compared to $14,840,000 for the same period of 2004.
Approximately $2,713,000 of the increase in noninterest expense is attributed to
the acquisition of Bank 10. Excluding costs associated with the acquisition,
salaries and benefits increased $456,000 or 5.4%, occupancy expense increased
$103,000 or 12.3%, advertising and promotion increased $109,000 or 28.2%, legal,
examination, and professional fees increased $273,000 or 45.0%, processing
expense increased $91,000 or 31.6% and other noninterest expense decreased
$308,000 or 14.3%. The increase in salaries and benefits reflects normal salary
increases, additional hires and higher health insurance premiums. The increases
in occupancy expense and furniture and equipment expense primarily reflect
additional costs associated with two new branch facilities. The increase in
advertising and promotion expense reflects additional advertising and promotion
in new market areas. The increase in legal, examination, and professional fees
reflects additional costs incurred with the acquisition and higher audit costs
associated with Sarbanes-Oxley compliance, internal audit and benefit
consulting. The increase in processing expense is related to costs associated
with switching to a new ATM network. The decrease in other noninterest expense
reflects a $318,000 IRS settlement that was paid in the third quarter 2004
related to income that had been deferred for tax purposes but not for financial
reporting.

     Income taxes as a percentage of earnings before income taxes as reported in
the condensed consolidated financial statements were 30.6% for the first nine
months of 2005 compared to 31.6% for the same period of 2004. The reduction in
the effective tax rate is due to an increase in tax-exempt income as a
percentage of total income in the current year.

NET INTEREST INCOME

     Fully taxable equivalent net interest income increased $2,285,000 or 32.1%
and $3,905,000 or 18.6% respectively for the three and nine month periods ended
September 30, 2005 compared to the same periods in 2004. The increase in net
interest income for the periods ended September 30, 2005 compared to the periods
ended September 30, 2004 was the result of increased earning assets.

                                       27
<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 September 30, 2005 and 2004.

(DOLLARS EXPRESSED IN THOUSANDS)

<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED                 THREE MONTHS ENDED
                                                     SEPTEMBER 30, 2005                 SEPTEMBER 30, 2004
                                             ----------------------------------  --------------------------------
                                                            INTEREST     RATE                  INTEREST    RATE
                                               AVERAGE      INCOME/     EARNED/    AVERAGE     INCOME/    EARNED/
                                               BALANCE     EXPENSE/1/   PAID/1/    BALANCE    EXPENSE/1/  PAID/1/
                                             ------------  ----------  --------  -----------  ----------  -------
<S>                                          <C>           <C>         <C>       <C>          <C>         <C>
ASSETS
Loans:/2/
  Commercial                                 $    271,383  $    4,504    6.58%   $   234,451  $    3,384    5.73%
  Real estate                                     481,297       8,275    6.82        334,966       4,831    5.72
  Consumer                                         37,864         828    8.68         36,982         760    8.15
Investment securities:/3/
  U.S Treasury and
    U.S. Gov't Agencies                           170,148       1,419    3.31        161,157         983    2.42
  State and municipal                              51,690         700    5.37         32,392         482    5.90
  Other                                             7,227          57    3.13          5,538          42    3.01
Federal funds sold                                 34,345         314    3.63         22,153          87    1.56
Interest-bearing deposits                           1,038           8    3.06          1,463           4    1.08
                                             ------------  ----------            -----------  ----------

  Total interest earning assets                 1,054,992      16,105    6.06        829,102      10,573    5.06

All other assets                                  119,875                             77,954
Allowance for loan losses                          (9,260)                            (8,692)

                                             ------------                        -----------
  Total assets                               $  1,165,607                        $   898,364
                                             ============                        ===========

LIABILITIES AND
  STOCKHOLDERS' EQUITY
  NOW accounts                               $    134,709  $      559    1.65%   $   110,422  $      195    0.70%
  Savings                                          58,658          84    0.57         55,578          80    0.57
  Money market                                    154,386       1,018    2.62         93,982         374    1.58
  Deposits of $100 and over                       114,478         920    3.19         82,725         473    2.27
  Other time deposits                             313,517       2,397    3.03        241,677       1,428    2.34
                                             ------------  ----------            -----------  ----------
    Total time deposits                           775,748       4,978    2.55        584,384       2,550    1.73
  Federal funds purchased and
    securities sold under
    agreements to repurchase                       54,525         434    3.16         59,968         209    1.38
  Interest-bearing demand
    notes to US Treasury                              677           6    3.52            654           2    1.21
  Subordinated notes                               49,486         772    6.19         25,774         284    4.37
  Other borrowed money                             52,396         516    3.91         38,262         414    4.29
                                             ------------  ----------            -----------  ----------
    Total interest-bearing liabilities            932,832       6,706    2.85        709,042       3,459    1.94
  Demand deposits                                 129,622                             93,370
  Other liabilities                                 7,184                              5,727
                                             ------------                        -----------
    Total liabilities                           1,069,638                            808,139
  Stockholders' equity                             95,969                             90,225
                                             ------------                        -----------
  Total liabilities and
    stockholders' equity                     $  1,165,607                        $   898,364
                                             ============                        ===========

Net interest income                                        $    9,399                         $    7,114
                                                           ==========                         ==========

Net interest margin/4/                                                   3.53%                              3.40%
                                                                         ====                               ====
</TABLE>

/1/   Interest income and yields are presented on a fully taxable equivalent
      basis using the Federal statutory income tax rate. Such adjustments were
      $243,000 in 2005 and $169,000 in 2004.

/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.

                                       28

<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 nine month periods ended
September 30, 2005 and 2004.

<TABLE>
<CAPTION>
                                                     NINE MONTHS ENDED                  NINE MONTHS ENDED
                                                     SEPTEMBER 30, 2005                 SEPTEMBER 30, 2004
                                             ----------------------------------  --------------------------------
                                                            INTEREST     RATE                  INTEREST    RATE
                                               AVERAGE      INCOME/     EARNED/    AVERAGE     INCOME/    EARNED/
                                               BALANCE     EXPENSE/1/   PAID/1/    BALANCE    EXPENSE/1/  PAID/1/
                                             ------------  ----------  --------  -----------  ----------  -------
<S>                                          <C>           <C>         <C>       <C>          <C>         <C>

ASSETS
Loans:/2/
   Commercial                                $    260,333  $   12,393    6.36%   $   224,145  $    9,463    5.62%
   Real estate                                    424,908      20,577    6.47        330,650      14,084    5.67
   Consumer                                        37,124       2,259    8.14         38,057       2,267    7.94
Investment securities:/3/
   U.S Treasury and
     U.S. Gov't Agencies                          168,682       3,886    3.08        172,247       3,057    2.36
   State and municipal                             42,669       1,774    5.56         30,718       1,407    6.10
   Other                                            6,613         188    3.80          4,984         112    2.99
Federal funds sold                                 35,565         800    3.01         23,509         232    1.31
Interest-bearing deposits                           1,589          28    2.36          2,109          14    0.88
                                             ------------  ----------            -----------  ----------

   Total interest earning assets                  977,483      41,905    5.73        826,419      30,636    4.94

All other assets                                  101,138                             76,352
Allowance for loan losses                          (8,547)                            (8,529)
                                             ------------                        -----------
   Total assets                              $  1,070,074                        $   894,242
                                             ============                        ===========

LIABILITIES AND
   STOCKHOLDERS' EQUITY
   NOW accounts                              $    130,778  $    1,344    1.37%   $   116,481  $      539    0.62%
   Savings                                         55,323         236    0.57         56,638         242    0.57
   Money market                                   140,555       2,489    2.37         80,144         745    1.24
   Deposits of $100 and over                      103,412       2,352    3.04         85,207       1,404    2.20
   Other time deposits                            286,226       6,167    2.88        247,856       4,378    2.35
                                             ------------  ----------            -----------  ----------
     Total time deposits                          716,294      12,588    2.35        586,326       7,308    1.66
   Federal funds purchased and
     securities sold under
     agreements to repurchase                      50,368       1,018    2.70         68,681         565    1.10
   Interest-bearing demand
     notes to US Treasury                             700          14    2.67            647           4    0.82
   Subordinated debentures                         42,972       1,922    5.98         25,774         577    2.98
   Other borrowed money                            46,626       1,416    4.06         26,943       1,140    5.64
                                             ------------  ----------            -----------  ----------
     Total interest-bearing liabilities           856,960      16,958    2.65        708,371       9,594    1.80
   Demand deposits                                112,934                             89,924
   Other liabilities                                6,178                              5,926
                                             ------------                        -----------
     Total liabilities                            976,072                            804,221
   Stockholders' equity                            94,002                             90,021
                                             ------------                        -----------
   Total liabilities and
     stockholders' equity                    $  1,070,074                        $   894,242
                                             ============                        ===========
Net interest income                                        $   24,947                         $    21,042
                                                           ==========                         ===========

Net interest margin/4/                                                   3.41%                              3.39%
                                                                         ====                               ====

</TABLE>

/1/   Interest income and yields are presented on a fully taxable equivalent
      basis using the Federal statutory income tax rate. Such adjustments were
      $628,000 in 2005 and $485,000 in 2004.

/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.

                                       29
<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 SEPTEMBER 30, 2005
                                                                                  COMPARED TO
                                                                     THREE MONTHS ENDED SEPTEMBER 30, 2004
                                                                     -------------------------------------
                                                                                       CHANGE DUE TO
                                                                     TOTAL        -----------------------
                                                                     CHANGE       VOLUME /3/      RATE /4/
                                                                     ------       ----------      --------
<S>                                                                  <C>          <C>             <C>
INTEREST INCOME ON A FULLY TAXABLE EQUIVALENT BASIS:
Loans:/1/
  Commercial                                                         $1,120            574           546
  Real estate /2/                                                     3,444          2,391         1,053
  Consumer                                                               68             18            50
Investment securities:/3/
  U.S Treasury and
    U.S. Gov't Agencies                                                 436             58           378
  State and municipal /2/                                               218            264           (46)
  Other                                                                  15             14             1
Federal funds sold                                                      227             67           160
Interest-bearing deposits                                                 4             (1)            5
                                                                     ------          -----         -----

    Total interest income                                             5,532          3,385         2,147

INTEREST EXPENSE:
  NOW accounts                                                       $  364             51           313
  Savings                                                                 4              4            --
  Money market                                                          644            318           326
  Deposits of $100 and over                                             447            218           229
Other time deposits                                                     969            487           482
  Federal funds purchased and
   securities sold under
   agreements to repurchase                                             225            (21)          246
  Interest-bearing demand notes
   of U.S. Treasury                                                       4              -             4
  Subordinated debentures                                               488            336           152
  Other borrowed money                                                  102            142           (40)
                                                                     ------          -----         -----

    Total interest expense                                            3,247          1,535         1,712
                                                                     ------          -----         -----

Net interest income on a fully
   taxable equivalent basis                                          $2,285          1,850           435
                                                                     ======          =====         =====
</TABLE>

/1/ Interest income and yields are presented on a fully taxable equivalent basis
using the Federal statutory income tax rate. Such adjustments were $243,000 in
2005 and $169,000 in 2004.

/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.

                                       30
<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>
                                                                     NINE MONTHS ENDED SEPTEMBER 30, 2005
                                                                                    COMPARED TO
                                                                     NINE MONTHS ENDED SEPTEMBER 30, 2004
                                                                     -------------------------------------
                                                                                       CHANGE DUE TO
                                                                      TOTAL       -----------------------
                                                                      CHANGE      VOLUME /3/      RATE /4/
                                                                     --------     ----------      --------
<S>                                                                  <C>          <C>             <C>
INTEREST INCOME ON A FULLY TAXABLE EQUIVALENT BASIS:

Loans:/1/
  Commercial                                                         $  2,930         1,636         1,294
  Real estate /2/                                                       6,493         4,387         2,106
  Consumer                                                                 (8)          (57)           49
Investment securities:/3/
  U.S Treasury and
    U.S. Gov't Agencies                                                   829           (64)          893
  State and municipal /2/                                                 367           506          (139)
  Other                                                                    76            43            33
Federal funds sold                                                        568           162           406
Interest-bearing deposits                                                  14            (4)           18
                                                                     --------         -----         -----

    Total interest income                                              11,269         6,609         4,660

INTEREST EXPENSE:
  NOW accounts                                                       $    805            73           732
  Savings                                                                  (6)           (6)           --
  Money market                                                          1,744           793           951
  Deposits of $100 and over                                               948           341           607
Other time deposits                                                     1,789           740         1,049
  Federal funds purchased and
   securities sold under
   agreements to repurchase                                               453          (185)          638
  Interest-bearing demand notes
   of U.S. Treasury                                                        10            --            10
  Subordinated debentures                                               1,345           539           806

  Other borrowed money                                                    276           664          (388)
                                                                     --------         -----         -----

    Total interest expense                                              7,364         2,959         4,405
                                                                     --------         -----         -----

Net interest income on a fully
   taxable equivalent basis                                          $  3,905         3,650           255
                                                                     ========         =====         =====
</TABLE>

/1/ Interest income and yields are presented on a fully taxable equivalent basis
using the Federal statutory income tax rate. Such adjustments were $628,000 in
2005 and $485,000 in 2004.

/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.

                                       31
<PAGE>

LENDING AND CREDIT MANAGEMENT

      Interest earned on the loan portfolio is a primary source of interest
income for our Company. Net loans represented 66.8% of total assets as of
September 30, 2005 compared to 68.1% as of December 31, 2004 and 68.5% as of
September 30, 2004.

      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 September 30, 2005, our Company
was servicing approximately $219,336,000 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.

                                       32

<PAGE>

      The allowance for loan losses was decreased by net loan charge-offs of
$2,000, $48,000, and $854,000 for the first, second, and third quarters of 2005
compared to $57,000, $15,000, and $48,000 for the first, second, and third
quarters of 2004. The allowance for loan losses was increased by a provision
charged to expense of $236,000 for the first quarter of 2005, $237,000 for the
second quarter of 2005, and $260,000 for the third quarter of 2005. That
compares to a provision of $236,000 for the first quarter of 2004, $210,000 for
the second quarter of 2004, and $160,000 for the third quarter of 2004. The
$854,000 charge-off during the third quarter of 2005 is primarily represented by
a $448,000 charge-off on an auto dealership, a $217,000 charge-off on a real
estate foreclosure and a $110,000 commercial loan charge-off. Management had
previously allocated $667,000 of the allowance for loan losses to these
particular credits.

      The balance of the allowance for loan losses was $8,793,000 at September
30, 2005 compared to $7,496,000 at December 31, 2004 and $8,754,000 at September
30, 2004. $1,418,000 of the increase in the allowance for loan losses represents
the balance of Bank 10's allowance acquired in the acquisition. The allowance
for loan losses as a percent of outstanding loans was 1.10% at September 30,
2005 compared to 1.18% at December 31, 2004 and 1.42% at September 30, 2004. 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.

                                       33

<PAGE>

      Nonperforming loans, defined as loans on nonaccrual status, loans 90 days
or more past due and still accruing, and restructured loans totaled $6,762,000
or 0.85% of total loans at September 30, 2005 compared to $6,092,000 or 0.96% of
total loans at December 31, 2004. Detail of those balances plus other real
estate and repossessions is as follows:

(DOLLARS EXPRESSED IN THOUSANDS)

<TABLE>
<CAPTION>
                                                         SEPTEMBER 30, 2005              DECEMBER 31, 2004
                                                    ---------------------------      ------------------------
                                                                     % OF GROSS                    % OF GROSS
                                                    BALANCE             LOANS        BALANCE         LOANS
                                                    -------          ----------      -------       ----------
<S>                                                 <C>              <C>             <C>           <C>
Nonaccrual loans:
 Commercial                                         $ 5,563                0.70 %    $ 4,213             0.67 %
 Real estate
  Construction                                           15                   -            -                -
  Mortgage                                              841                0.11        1,246             0.20
 Consumer                                                55                0.01           30                -
                                                    -------          ----------      -------       ----------
                                                      6,474                0.82        5,489             0.87
                                                    -------          ----------      -------       ----------
Loans contractually past-due 90 days or
 more and still accruing:
 Commercial                                             142                0.02           12                -
 Real estate
  Construction                                            -                   -            -                -
  Mortgage                                               94                0.01          591             0.09
 Consumer                                                52                0.01            -                -
                                                    -------          ----------      -------       ----------
                                                        288                0.04          603             0.09
                                                    -------          ----------      -------       ----------

 Restructured loans                                       -                   -            -                -
                                                    -------          ----------      -------       ----------
 Total nonperforming loans                            6,762                0.86 %      6,092             0.96 %
                                                                     ==========                    ==========

 Other real estate                                    1,577                               30
 Repossessions                                            -                               42
                                                    -------                          -------
 Total nonperforming assets                         $ 8,339                          $ 6,164
                                                    =======                          =======
</TABLE>

The allowance for loan losses was 130.05% of nonperforming loans at September
30, 2005 compared to 123.05% of nonperforming loans at December 31, 2004. The
$1,350,000 increase in commercial nonaccrual loans is primarily represented by
one large commercial loan to a retail auto dealer. The increase in other real
estate owned primarily reflects the foreclosures on one large residential
property of approximately $1,236,000 and one commercial property of $212,000.

      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 at September 30, 2005
and 2004, which would have been recorded under the original terms of those
loans, was approximately $489,000 and $350,000 for the nine months ended
September 30, 2005 and 2004, respectively. Approximately $43,000 and $50,000 was
actually recorded as interest income on such loans for the nine months ended
September 30, 2005 and 2004, respectively.

                                       34
<PAGE>

      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 one additional commercial loan of approximately $142,000 as being
impaired at September 30, 2005. The average balance of nonaccrual and other
impaired loans for the first nine months of 2005 was approximately $5,807,000.
At September 30, 2005 the portion of the allowance for loan losses allocated
(both asset-specific and percentage) to impaired loans was $1,485,000 compared
to $1,681,000 at December 31, 2004. The balance of impaired loans with no
specific loan loss allocations was approximately $5,014,000 at September 30,
2005 compared to approximately $5,225,000 at December 31, 2004.

      As of September 30, 2005 and December 31, 2004 approximately $21,139,000
and $12,879,000 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.

                                       35

<PAGE>

      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 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 September 30, 2005, management allocated $6,685,000 of the $8,793,000
total allowance for loan losses to specific loans and loan categories and
$2,108,000 was unallocated. Considering the size of several of our Company's
lending relationships and the loan portfolio in total, management believes that
the September 30, 2005 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 $255,887,000 or 27.7% to $1,179,761,000 at
September 30, 2005 compared to $923,874,000 at December 31, 2004. Total
liabilities increased $251,652,000 or 30.2% to $1,083,755,000. Stockholders'
equity increased $4,235,000 or 4.6% to $96,006,000. The increase in both total
assets and total liabilities is primarily the result of our Company's
acquisition of Bank 10 and issuance of additional subordinated debentures. A
discussion of the Bank 10 transaction may be found in the section of this report
titled "Overview - Recent Events - Bank 10 Transaction."

      Loans increased $160,933,000 to $797,570,000 at September 30, 2005
compared to $636,637,000 at December 31, 2004. Approximately $133,309,000 of the
increase in loans reflects loans of Bank 10. Excluding loans acquired in the
acquisition of Bank 10, commercial loans increased $14,695,000; real estate
construction loans increased $27,052,000; real estate mortgage loans decreased
$11,146,000; and consumer loans decreased $2,977,000. The increase in commercial
loans and real estate construction loans represents continued strong loan
demand, especially in the Jefferson City market. The decrease in real estate
mortgage loans is primarily represented by the payoff of one large commercial
real estate loan that was refinanced in the

                                       36

<PAGE>

commercial finance market. The decrease in consumer loans was also due to the
payoff of one very large personal consumer credit.

      Investment in debt securities classified as available-for-sale increased
$40,764,000 or 23.7% to $212,482,000 at September 30, 2005 compared to
$171,718,000 at December 31, 2004. Investments classified as available-for-sale
are carried at fair value. $29,223,000 of the increase reflects securities of
Bank 10. During 2005 the market valuation account decreased $1,185,000 to
($580,000) to reflect the fair value of available-for-sale investments at
September 30, 2005 and the net after tax decrease resulting from the change in
the market valuation adjustment of $762,000 decreased the stockholders' equity
component to ($369,000) at September 30, 2005.

      At December 31, 2004 the market valuation account for the
available-for-sale investments of $605,000 increased the amortized cost of those
investments to their fair value on that date and the net after tax increase
resulting from the market valuation adjustment of $394,000 was reflected as a
separate positive component of stockholders' equity.

      Cash and cash equivalents, which consist of cash and due from banks and
Federal funds sold, increased $19,574,000 or 29.8% to $85,282,000 at September
30, 2005 compared to $65,708,000 at December 31, 2004. Approximately $6,730,000
of the increase represents cash and cash equivalents of Bank 10. Further
discussion of this increase may be found in the section of this report titled
"Sources and Uses of Funds".

      Premises and equipment increased $10,858,000 or 51.0% to $32,134,000 at
September 30, 2005 compared to $21,276,000 at December 31, 2004. The increase
reflects $7,119,000 of premises and equipment acquired in the Bank 10
transaction and purchases of premises and equipment of $5,012,000 offset by
depreciation expense of $1,274,000. The purchase of premises and equipment
primarily reflects construction costs and equipment purchases for two additional
branches located in Branson and Lee's Summit, Missouri.

      Goodwill increased $15,127,000 or 60.0% to 40,324,000 at September 30,
2005 compared to $25,197,000 at December 31, 2004. The increase reflects the
difference between the purchase price of Bank 10 and the fair value of the
identifiable net assets acquired.

      Core deposit intangible increased $4,264,000 or 534.2% to $5,062,000 at
September 30, 2005 compared to $798,000 at December 31, 2004. The increase
reflects a core deposit intangible of $4,795,000 recorded as part of the Bank 10
acquisition. This intangible asset is being amortized on an accelerated basis
over an estimated life of eight years. Additional discussion of intangible
assets can be found in the "Intangible Assets" section that follows.

      Total deposits increased $182,835,000 or 25.2% to $909,484,000 at
September 30, 2005 compared to $726,649,000 at December 31, 2004. $151,236,000
of the increase represents deposits of Bank 10. The balance of the increase
primarily reflects increased public fund deposits.

      Federal funds purchased and securities sold under agreements to repurchase
increased $29,698,000 or 86.0% to $64,213,000 at September 30, 2005 compared to
$34,515,000 at

                                       37

<PAGE>

December 31, 2004. $911,000 of the increase represents securities sold under
agreements to repurchase of Bank 10. The balance represents an increase in
public fund repurchase agreements.

      Subordinated notes increased $23,712,000 or 92.0% to $49,486,000 at
September 30, 2005 compared to $25,774,000 at December 31, 2004. Our Company
issued $23,712,000 of subordinated notes in March 2005. The proceeds were used
to provide part of the finding for the acquisition of Bank 10.

      Other borrowed money increased $12,692,000 or 32.1% to $52,217,000 at
September 30, 2005 compared to $39,525,000 at December 31, 2004. The increase
reflects $13,259,000 of Federal Home Loan Bank advances acquired in the Bank 10
acquisition reduced by regular amortizing payments due on Federal Home Loan Bank
advances.

      The increase in stockholders' equity reflects net income of $7,234,000
less dividends declared of $2,252,000 and ($762,000) 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, 2004.

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

                                       38

<PAGE>

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 September 30, 2005, the amounts of available
credit from the FHLB totaled $110,489,000. As of September 30, 2005, the Banks
had $52,217,000 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 September
30, 2005.

SOURCES AND USES OF FUNDS

      For the nine months ended September 30, 2005 and 2004, net cash provided
by operating activities was $10,849,000 and $7,070,000, respectively. $756,000
of the increase in net cash provided by operating activities reflects a higher
level of net income. Approximately $2,733,000 reflects a decrease in income tax
payments. Our Company paid $2,620,000 in income taxes for the nine-month period
ended September 30, 2005 compared to $5,353,000 for the nine-month period ended
September 30, 2004. The higher income tax payment in 2004 reflects taxes paid as
a result of an IRS settlement related to income that had been deferred for tax
purposes but not for financial reporting.

      Net cash used in investing activities was $74,597,000 in 2005 versus
$14,646,000 in 2004. The primary increase in cash used in investing activities
reflects our Company's purchase of Bank 10. The cash used in this purchase, net
of cash and cash equivalents acquired, was $21,801,000. In addition, $1,799,000
more cash was used for purchase of premises and equipment in 2005 versus 2004.
Net cash used in securities investment activities was $16,432,000 in 2005
compared to net cash provided of $20,112,000 for the same period of 2004.

      Net cash provided by financing activities was $83,322,000 in 2005 versus
$5,753,000 in 2004. Increases in deposits accounted for approximately
$33,223,000 of the cash provided by financing activities in 2005 and
approximately $22,704,000 in 2004. An additional $23,712,000 of cash was
provided by the issuance of subordinated debentures. The proceeds from the
issuance of these subordinated debentures were used to finance as part of the
purchase of Bank 10. During the same period of 2004 our Company issued
$25,774,000 of subordinated debentures and used those proceeds to reduce other
borrowed money by $17,951,000. Securities sold under agreements to repurchase
increased $28,691,000 in 2005 compared to a $39,004,000 decrease during the same
period of 2004.

IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS

      In November 2003, the Emerging Issues Tasks Force (EITF) reached a
consensus on certain disclosure requirements under EITF Issue No 03-1, The
Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments. The disclosure requirements apply to investment in debt and
marketable equity securities that are accounted under SFAS No. 115, Accounting
for Certain Investments in Debt and Equity Securities. Effective for fiscal
years ending after December 15, 2003, companies are required to disclose
information about debt or marketable equity securities with market values below
carrying values. Our Company has adopted the disclosure requirements of EITF
Issue No. 03-1 and they are included in Note 5 of

                                       39

<PAGE>

our audited consolidated financial statements included in our 2004 Annual Report
to Shareholders under the caption "Consolidated Financial Statements" and
incorporated by reference in our Annual Report on Form 10-K for the year ended
December 31, 2004.

      In March 2004, the Emerging Issues Task Force, (EITF) came to a consensus
regarding EITF 03-1. Securities in scope are those subject to SFAS 115. The EITF
adopted a three-step model that requires management to determine if impairment
exists, decide whether it is other than temporary, and record other than
temporary losses in earnings.

      In September 2004, the FASB approved a Staff Position to delay the
requirement to record impairment losses under EITF 03-1, but broadened the
delay's scope to include additional types of securities. As proposed, the delay
would have applied only to those debt securities described in paragraph 16 of
EITF 03-1. The approved delay applies to all securities within the scope of EITF
03-1 and is expected to end when new guidance is issued and comes into effect.

      In December 2003, the Accounting Standards Executive Committee, (AcSEC)
issued SOP 03-3, Accounting for Certain Loans or Debt Securities Acquired in a
Transfer, effective for loans acquired in fiscal years beginning after December
15, 2004. The scope of SOP 03-3 applies to "problem" loans that have been
acquired, either individually in a portfolio, in an acquisition. These loans
must have evidence of credit deterioration and the purchaser must not expect to
collect contractual cash flows. SOP 03-3 updates Practice Bulletin (PB) No. 6,
Amortization of Discounts on Certain Acquired Loans, for more recently issued
literature, including FASB Statements No. 114, Accounting by Creditors for
Impairment of a Loan; No. 115, Accounting for Certain Investments in Debt and
Equity Securities; and No. 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities. Additionally, it addresses
FASB Statement No. 91, Accounting for Nonrefundable Fees and Costs Associated
with Originating or Acquiring Loans and Initial Direct Costs of Leases, which
requires that discounts be recognized as an adjustment of yield over a loan's
life.

      SOP 03-3 states that an institution may no longer display discounts on
purchased loans within the scope of SOP 03-3 on the balance sheet and may not
carry over the allowance for loan losses related to such loans. For those loans
within the scope of SOP 03-3, this Statement clarifies that a buyer cannot carry
over the seller's allowance for loan losses for the acquisition of loans with
credit deterioration. Loans acquired with evidence of deterioration in credit
quality since origination will need to be accounted for under a new method using
an income recognition model. This prohibition also applies to purchases of
problem loans not included in a purchase business combination, which would
include syndicated loans purchased in the secondary market and loans acquired in
portfolio sales. The application of SOP 03-3 did not have a material effect on
our Company's financial statements with the acquisition of Bank 10.

      In December 2004, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No 123 (Revised 2004), Share-Based
Payment. This Statement addresses the accounting for transactions in which an
entity exchanges its equity instruments for goods or services. The Statement
eliminates the ability to account for share-based compensation transactions
using APB Opinion No. 25, Accounting for Stock Issued to Employees, and
generally requires instead that such transactions be accounted for using a
fair-value-based

                                       40

<PAGE>

method. For public entities, the cost of employee services received in exchange
for an award of equity instruments, such as stock options, will be measured
based on the grant-date fair value of those instruments, and that cost will be
recognized over the period during which an employee is required to provide
service in exchange for the award (usually the vesting period). This Statement
is effective for public entities as of the beginning of the first annual
reporting period that begins after September 15, 2005 and will be effective for
our Company as of January 1, 2006. See the note to condensed consolidated
financial statements titled Earnings per Share for the pro forma net income and
net income per share amounts for the quarters ended September 30, 2005 and 2004
as if we had used a fair value based method similar to the methods required
under SFAS 123R to measure compensation expense for employee stock incentive
awards.

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 September 30, 2005, the rate shock
scenario models indicated that annual net interest income could decrease or
increase by as much as 7.5% should interest rates rise or fall, respectively,
within 200 basis points from their current level over a one year period compared
to 13.1% at December 31, 2004. 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.

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 September 30, 2005. 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.

                                       41

<PAGE>

      There has been no change in our Company's internal control over financial
reporting that occurred during the fiscal quarter ended September 30, 2005 that
has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.

                                       42

<PAGE>

                           PART II - OTHER INFORMATION

<TABLE>
<S>                                                                         <C>
Item 1.  Legal Proceedings                                                  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>

                                       43

<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
                          -------------------------------------------------
November 9, 2005          James E. Smith, Chairman of the Board
                          and Chief Executive Officer (Principal
                          Executive Officer)

                          /s/ Richard G. Rose
                          -------------------------------------------------
November 9, 2005          Richard G. Rose, Treasurer (Principal Financial
                          Officer and Principal Accounting Officer)
</TABLE>

                                       44

<PAGE>

                       EXCHANGE NATIONAL BANCSHARES, INC.

                                INDEX TO EXHIBITS

                          September 30, 2005 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 Company               46
                pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2            Certificate of the Chief Financial Officer of our Company               47
                pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1            Certificate of the Chief Executive Officer of our Company               48
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2            Certificate of the Chief Financial Officer of our Company               49
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
</TABLE>

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**  Incorporated by reference.

                                       45