SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): ~~June~~July 208, 2005

EXCHANGE BANCSHARES, INC.

(Exact name of Registrant as specified in its Charter)

Ohio

033-54566

34-1721453

(State or other jurisdiction of

incorporation)

(Commission File No.)

(IRS Employer

Identification Number)

237 Main Street, Luckey, Ohio				43443
(Address of principal executive offices)				(Zip Code)

Registrant's telephone number, including area code: (419) 833-3401

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 17.01. ~~ENTRY~~REGULATION ~~INTO~~FD ~~A MATERIAL DEFINITIVE AGREEMENT~~DISCLOSURE

OnSubsequent ~~June~~to ~~20, 2005,~~ Exchange Bancshares, Inc. (the “Company”) ~~issued~~filing aits ~~press~~Form ~~release~~10-KSB ~~announcing~~for ~~that~~the year ended December 31, 2004, the ~~Board~~Company ofreceived ~~Directors~~a ~~has~~comment ~~reached~~letter anfrom ~~agreement~~the ~~with~~Securities ~~Marion~~and ~~Layman~~Exchange toCommission ~~become~~which included questions relating to the ~~President~~accounting and ~~CEO~~reporting of the ~~Company~~valuation allowance for deferred tax assets. After review and ~~its~~analysis, ~~wholly-owned~~on ~~subsidiary~~July 8, ~~The~~2005, ~~Exchange~~the ~~Bank~~Company (filed an Amendment to the ~~“Bank”). Mr.~~Company’s ~~Layman~~Annual ~~will~~Report beon anForm at10-~~will~~KSB ~~employee~~for the year ended December 31, 2004 which includes restated financial statements as of December 31, 2004 and 2003, and for the years then ended. In addition, the Company ~~and~~filed ~~will~~an ~~continue~~Amendment to bethe ~~compensated~~Company’s atQuarterly Report on Form 10-QSB for the ~~same~~quarter ~~per~~ended ~~diem~~March ~~rate~~31, 2005 which includes restated financial statements as heof ~~has~~March ~~been~~31, ~~receiving~~2005 and December 31, 2004, and for the quarters ended March 31, 2005 and 2004. AThese ~~copy~~restatements ofrelate to the ~~press~~Company’s ~~release~~application isof ~~attached~~Statement toof ~~this~~Financial ~~report~~Accounting asStandard ~~Exhibit~~No. 99109, “Accounting for Income Taxes” (“Statement 109”).1.

~~ITEM~~The 5principal application of Statement 109 to the Company’s consolidated financial statements relates to the accounting for the Company’s net operating loss carryforwards and the valuation allowance for deferred tax assets.02 As a result of an updated review and analysis of the requirements of Statement 109 and the consideration of various factors, the Company has restated the 2004 and 2003 consolidated financial statements to reflect an increase in the valuation allowance for deferred tax assets of $196,000 in 2004 (with $117,000 relating to the first quarter of 2004) and $129,000 in 2003. ~~DEPARTURE~~In OFaddition, ~~PRINCIPAL~~the ~~OFFICER;~~Company ~~APPOINTMENT~~has OFrestated ~~PRINCIPAL~~the ~~OFFICER~~consolidated financial statements for the quarter ended March 31, 2005 to reflect an increase in the valuation allowance for deferred tax assets of $35,000. As a result of such restatements, the Company’s previously reported shareholders’ equity at March 31, 2005 has been reduced by $360,000.

On June 20, 2005, the Company issued a press release announcing that effective June 17, 2005 the Company's President and Chief Executive Officer, Victor J. Proffitt, resigned from his positions as President and CEO of the Company and from the Board of Directors. Mr. Proffitt also resigned the same positions with the Bank.

In the same press release, the Company announced the hiring of Marion Layman as the President and CEO of the Company and Bank, effective June 17, 2005. Mr. Layman will retain his position as a member of the Board of Directors. Mr. Layman is 79 years of age. Mr. Layman has served as Chairman of the Board of Directors of the Company since 1993 and previously served as the President and Chief Executive Officer of the Company from 1993 to 2002. In addition, Mr. Layman has been a member of the Board of Directors of The Exchange Bank since 1962 and served as the President and Chief Executive Officer of The Exchange Bank from 1962 to 1994. A copy of the press release is attached to this report as Exhibit 99.1.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS

Exhibit No.		Description
99.1		Press Release dated June 20, 2005

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 hereunto duly authorized.

EXCHANGE BANCSHARES, INC.

Date: ~~June~~July 208, 2005

By: /s/ Marion Layman Marion Layman President and ~~CEO~~Chief Executive Officer By: /s/ Thomas E. Funk Thomas E. Funk Chief Financial Officer

Exhibit 99.1

Exchange Bancshares, Inc. (OTC BB: EBLO) - On June 17, 2005, the Company's President and Chief Executive Officer, Victor J. Proffitt, resigned from his positions as President and CEO with the Company and from the Board of Directors. Mr. Proffitt also resigned the same positions with the Company’s wholly-owned subsidiary, The Exchange Bank.

The Board of Directors is pleased to announce that Marion Layman has agreed to become the new President and Chief Executive Officer of the Company and The Exchange Bank. Mr. Layman has served as Chairman of the Board of Directors of the Company since 1993 and previously served as the President and Chief Executive Officer of the Company from 1993 to 2002. In addition, Mr. Layman has been a member of the Board of Directors of The Exchange Bank since 1962 and served as the President and Chief Executive Officer of The Exchange Bank from 1962 to 1994.

Joseph R. Hirzel, a Director of the Company, said, “The Board is delighted to once again have Mr. Layman serve as President and Chief Executive Officer.” He added, “Mr. Layman’s experience with the Company speaks for itself and the Board is very confident that he will diligently and very capably lead the Company through the process of the proposed merger with Rurban Financial Corp.”

Exchange Bancshares, Inc. is a publicly-held bank holding company based in Luckey, Ohio. Exchange's common stock is quoted on the OTC Bulletin Board under the symbol EBLO. Exchange currently has 750,000 shares of common stock authorized and 586,644 shares outstanding. Exchange's wholly-owned subsidiary, The Exchange Bank, offers a full range of financial services through its 5 offices in Lucas and Wood Counties. Exchange’s website is www.theexchangebank.com.

Certain statements within this document, which are not statements of historical fact, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties and actual results may differ materially from those predicted by the forward-looking statements. These risks and uncertainties include, but are not limited to, risks and uncertainties inherent in the national and regional banking, insurance and mortgage industries, competitive factors specific to markets in which Exchange and its subsidiaries operate, future interest rate levels, legislative and regulatory actions, capital market conditions, general economic conditions, geopolitical events, the loss of key personnel and other factors.

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