SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission file number 0-6216
December 31, 1993
BRENTON BANKS, INC.
Incorporated in Iowa I.R.S. Employer Identification
No. 42-0658989
SUITE 300, CAPITAL SQUARE, 400 LOCUST, DES MOINES, IOWA 50309
Registrant's telephone number, including area code: 515-237-5100
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $5 PAR VALUE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days. Yes X . No .
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ X ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 14, 1994, was $85,120,000.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the most recent practicable date, March 14, 1994.
5,254,351 shares Common Stock, $5 par value
DOCUMENTS INCORPORATED BY REFERENCE
The Annual Report to Shareholders for the 1993 calendar year is incorporated
by reference into Part I and Part II hereof to the extent indicated in such
Parts.
The definitive proxy statement of Brenton Banks, Inc. which will be filed not
later than 120 days after the close of the Company's fiscal year ending
December 31, 1993, is incorporated by reference into Part III hereof to the
extent indicated in such Part.
32 Total Pages
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TABLE OF CONTENTS
PART I
Page
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . 4
(A) General Description . . . . . . . . . . . . . . . . 4
(B) Recent Developments . . . . . . . . . . . . . . . . 4
(C) Affiliated Banks . . . . . . . . . . . . . . . . . 5
(D) Bank-Related Subsidiaries and Affiliates . . . . . 6
(E) Executive Officers of the Registrant . . . . . . . 7
(F) Employees . . . . . . . . . . . . . . . . . . . . . 8
(G) Supervision and Regulation . . . . . . . . . . . . 8
(H) Governmental Monetary Policy and Economic
Conditions . . . . . . . . . . . . . . . . . . . . 10
(I) Competition . . . . . . . . . . . . . . . . . . . . 10
(J) Statistical Disclosure . . . . . . . . . . . . . . 12
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . 25
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . 25
Item 4. Submission of Matters to a Vote of Security
Holders . . . . . . . . . . . . . . . . . . . . . . . . 25
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters . . . . . . . . . . . . . . 25
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . 25
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . 25
Item 8. Financial Statements and Supplementary Data . . . . . . 26
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . . . . . 26
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PART III
Item 10. Directors and Executive Officers of the Registrant . . . 26
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . 26
Item 12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . . . . 26
Item 13. Certain Relationships and Related Transactions . . . . . 26
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . . . . . . . 26
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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PART I
Item 1. Business.
(A) General Description.
Brenton Banks, Inc. (the "Parent Company") is a bank holding
company registered under the Bank Holding Company Act of 1956 and a savings
and loan holding company under the Savings and Loan Holding Company Act.
Brenton Banks, Inc. was organized as an Iowa corporation under the name
Brenton Companies in 1948. Subsequently, the Parent Company changed its
corporate name to its current name, Brenton Banks, Inc. On December 31,
1993, the Parent Company had direct control of its 13 affiliated banks and 1
savings bank (hereinafter the "affiliated banks"), all of which are located
in Iowa, 5 of which are national banks organized under the laws of the United
States, 8 of which are state banks incorporated under the laws of the State
of Iowa, and 1 of which is a federal savings bank organized under the laws of
the United States. On December 31, 1993, the affiliated banks were operating
42 banking locations in Iowa. All of the affiliated banks are members of the
Federal Deposit Insurance Corporation and all of the affiliated national
banks are members of the Federal Reserve System.
Brenton Banks, Inc. and its subsidiaries (the "Company") engages in
retail and commercial banking and related financial services. In connection
with this banking industry segment, the Company renders the usual products
and services of retail and commercial banking such as deposits, commercial
loans, personal loans, and trust services. The principal service rendered by
the Company consists of making loans. The principal markets for these loans
are businesses and individuals. These loans are made at the offices of the
affiliated banks and subsidiaries, and some are sold on the secondary market.
The Company also engages in activities that are closely related to banking,
including mortgage banking and investment brokerage.
The Parent Company furnishes specialized services to its affiliated
banks and subsidiaries including supervision, administration and review of
loan portfolios; administration of investment portfolios, insurance programs
and employee benefit plans; performance of examinations and audits;
preparation of tax returns; and assistance with respect to accounting and
operating systems and procedures, personnel, marketing, trust, investment
brokerage services and banking facilities and equipment. Charges for the
services are based on the nature and extent of the services provided.
(B) Recent Developments.
Management Changes. Robert L. DeMeulenaere was elected President
and Director of Brenton Banks, Inc. at the January 19, 1994 Board of
Director's meeting. He succeeds J.C. Brenton as President. J.C. Brenton
continues as Director of Brenton Banks, Inc. Robert L. DeMeulenaere joined
the organization in 1964 at the Davenport bank. In 1972, he moved to the
Cedar Rapids bank as Executive Vice President and in 1982 became President.
In 1985, he moved to Des Moines as Senior Vice President-Metro Bank Division,
and also became President of Brenton Mortgages, Inc. in 1988. He returned to
Cedar Rapids in 1990 as CEO of the Cedar Rapids bank as a result of a major
acquisition. In 1994, he returned to Des Moines to assume his new
responsibilities as President of Brenton Banks, Inc.
Accounting Standards. Effective December 31, 1993, the Company
adopted the Statement of Financial Accounting Standards No. 115. Under this
new accounting standard, the method of classifying investment securities is
based on the Company's intended holding period. Accordingly, securities
which the Company may sell at its discretion prior to maturity are recorded
at their fair value. Additionally, the aggregate unrealized net gains or
losses, including the effect of income tax and minority interest, are
recorded as a component of common stockholders' equity. At December 31,
1993, aggregate unrealized gains totaled $3,036,270.
Weather-Related Concerns. Parts of Iowa experienced record
flooding during the summer of 1993, but the state's economy did not falter
and most Iowans rebounded quickly. The flood had a varied impact in both
metropolitan and agricultural areas of the state. Only a few of the
businesses served by Brenton
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were affected by the flood. In some areas, crop production was reduced 25 to
35 percent from flooding, as well as excessive rainfall and fewer days of
sunshine; other areas were less severely impacted. Due to the strength of
Brenton's borrowers, multi-peril crop insurance, disaster assistance, and
government guarantees, Brenton anticipates that the flood will have very
little impact on its loan portfolio quality.
Growth and Acquisitions. As part of management's strategic growth
plans, Brenton Banks, Inc. investigates acquisition opportunities which
strengthen the Company's presence in current or selected new market areas.
During 1994, the Company intends to continue to expand both its
traditional and non-traditional services. Brenton intends to expand its
mortgage banking business in 1994, by expanding mortgage origination and
centralizing secondary market operations. Also in early 1994, Brenton
purchased an insurance agency in the Tama/Toledo, Iowa area. The intention
is to expand the Tama/Toledo location to include a loan production office.
The Company also intends to open a loan production and investment brokerage
office in Newton, Iowa, as well as a retail Brokerage location in downtown
Des Moines.
On October 1, 1992, Brenton Banks, Inc. merged with Ames Financial
Corporation and acquired its wholly-owned subsidiary, Ames Savings Bank, FSB,
of Ames, Iowa whose name has since been changed to Brenton Savings Bank, FSB.
The institution continues to operate as a federal savings bank, requiring
Brenton Banks, Inc. to also register as a savings and loan holding company.
As a savings and loan holding company, Brenton Banks, Inc. is required to
file certain reports with and be regulated by the Office of Thrift
Supervision. See Supervision and Regulation. Late in 1993, Brenton Savings
Bank received approval to open a new banking office in Ankeny, Iowa. In
addition, the Brenton Savings Bank, FSB has applied to open a banking office
in Iowa City, Iowa. Both Ankeny and Iowa City are rapidly expanding markets
not presently served by Brenton.
Other. The information appearing on pages 2 through 8 of the
Company's Annual Report to Stockholders for the year ended December 31, 1993
(the "Annual Report") filed as Exhibit 13, is incorporated by reference.
(C) Affiliated Banks.
The 14 affiliated banks had 42 banking locations at December 31,
1993, located in 12 of Iowa's 99 counties. These banks serve both
agricultural and metropolitan areas. The location and certain other
information about the affiliated banks are given below:
Brenton Bank, N.A., Des Moines is located in the Des Moines, Iowa,
metropolitan area. Des Moines is the largest city in Iowa and the population
of the metropolitan area is approximately 393,000. In addition to their main
banking office, Brenton Bank, N.A., Des Moines has eight offices. All of
these offices are located in the Des Moines metropolitan area.
Brenton Bank and Trust Company, Adel, is located in Adel, Iowa.
The bank has offices in Dexter, Redfield and Van Meter, Iowa. Brenton State
Bank, Dallas Center, is located in Dallas Center, Iowa and has offices in
Granger, Woodward and Waukee, Iowa. These two affiliated banks service
customers in parts of Polk, Dallas, Madison, Adair, Guthrie, and Boone
counties.
Warren County Brenton Bank and Trust is located in Indianola, Iowa,
and services customers in parts of Polk, Warren, Madison, Marion, Lucas and
Clarke counties.
Brenton National Bank of Perry is located in Perry, Iowa and
services parts of Dallas, Boone, Guthrie and Greene counties.
Brenton State Bank of Jefferson is located in Jefferson, Iowa.
This affiliated bank services customers in Greene County.
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Brenton Bank of Palo Alto County is located in Emmetsburg, Iowa and
has offices in Mallard and Ayrshire, Iowa. This affiliated bank services
Palo Alto County.
Brenton Bank and Trust Company, Clarion, is located in Clarion,
Iowa, and has offices in Eagle Grove and Rowan, Iowa. This affiliated bank
services customers in parts of Wright, Humboldt and Webster counties.
Brenton First National Bank, Davenport, is located in Davenport,
Iowa and services customers in the Quad-Cities metropolitan area with a
population of approximately 351,000. The bank has four offices in Davenport.
Brenton National Bank-Poweshiek County is located in Grinnell, Iowa
and services parts of Poweshiek and Jasper counties.
Brenton Bank and Trust Company, Marshalltown, Iowa is located in
Marshalltown, Iowa and has one office in Marshalltown and one office in
Albion, Iowa. The bank services customers in Marshall County.
Brenton Bank and Trust Company of Cedar Rapids is located in Cedar
Rapids, Iowa and services customers in Linn County, population of
approximately 169,000. The bank has three offices in Cedar Rapids and one
office in Marion, Iowa.
Brenton Bank, N.A. Knoxville is located in Knoxville, Iowa. The
bank services customers of Marion County south of the Des Moines river.
Brenton Savings Bank, FSB is located in Ames, Iowa and has one
office in Ames and one office in Story City. The savings bank serves
customers in Story County.
At December 31, 1993, four of the affiliated banks owned and
operated insurance agencies handling group, fire, crop, homeowner's,
automobile and liability insurance. One of the affiliated banks operates
insurance agency activities through a corporate subsidiary and three of the
affiliated banks conduct the activities directly. In addition, two of the
affiliated banks own and operate real estate agencies. One of the affiliated
banks operates real estate agency activities through a corporate subsidiary,
while the other bank conducts the activities directly. The total commissions
from the insurance and real estate agencies are not substantial in relation
to total other receipts of any of the affiliated banks owning these agencies.
(D) Bank-Related Subsidiaries and Affiliates.
Brenton Brokerage Services, Inc., a wholly owned subsidiary of
Brenton Bank, N.A., Des Moines, was formed in 1992 and provides a full array
of retail investment brokerage services to customers. The company is not
involved with the direct issuance, floatation, underwriting or public sale of
securities. At December 31, 1993, this subsidiary had 25 licensed brokers
serving all Brenton banks.
Brenton Bank Services Corporation, a bank services company owned by
the affiliated banks, provides centralized accounting, operations and
financial reporting services; and coordinates centralized proof services and
the computer processing services for the Company.
Brenton Mortgages, Inc., a wholly-owned subsidiary of the Parent
Company, engages in the mortgage servicing business. This subsidiary
services numerous mortgage loans sold to institutional investors and the
mortgage loan portfolios of the affiliated banks.
Brenton Insurance Services, Inc., a wholly-owned subsidiary of the
Parent Company, provides insurance risk management services for the Company.
Brenton Properties, Inc., a wholly-owned subsidiary of the Parent
Company, owned an office building in Cedar Rapids, Iowa, part of which was
leased to Brenton Bank and Trust Company of Cedar
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Rapids for its main banking facility. Brenton Properties, Inc. was dissolved
in 1993, when the building was sold to Brenton Bank and Trust Company of
Cedar Rapids.
(E) Executive Officers of the Registrant.
The term of office for the executive officers of the Parent Company
is from the date of election until the next Annual Organizational Meeting of
the Board of Directors. The names and ages of the executive officers of the
Parent Company as of March 14, 1994, the Parent Company offices held by these
executive officers on that date, the period during which the executive
officers have served as such and the other positions held with the Company by
these officers during the past five years are set forth below and on the
following page:
<TABLE>
<CAPTION>
Parent Company Position
Name and Address Age Position Commenced Other Positions
________________ ___ ________ _________ _______________
<S> <C> <C> <C> <C>
C. Robert Brenton 63 Chairman of the Board 1990 President of the Parent Company - prior to
Des Moines, Iowa May 1990
William H. Brenton 69 Chairman of the 1990 Chairman of the Board of the Parent Company -
Des Moines, Iowa Executive Committee prior to May 1990
and Vice Chairman of
the Board
Robert L. DeMeulenaere 54 President 1994 President/Treasurer, Brenton Mortgages, Inc.
Des Moines, Iowa - August 1989 to present; CEO, Brenton Bank
and Trust Company of Cedar Rapids - August
1990 to January 1994; Senior Vice President
of the Parent Company - August 1990 to
January 1994; Senior Vice President-Metro
Bank Division of the Parent Company -
February 1986 to January 1990.
Phillip L. Risley 51 Executive Vice 1992 President and CEO, Brenton Bank, N.A.,
Des Moines, Iowa President Des Moines - February 1990 to present; Vice
President - Operations of the Parent
Company - May 1984 to January 1992;
Chairman of the Board, Brenton Bank
Services Corporation - May 1992 to present;
Executive Vice President/Treasurer, Brenton
Information Systems, Inc. - April 1990 to May
1992; President, Brenton Information
Systems, Inc. - prior to April 1990; President,
Brenton Bank, N.A., Des Moines - April 1988
to February 1990
Roger D. Winterhof 48 Senior Vice President - 1984
Des Moines, Iowa Community Bank
Division
Norman D. Schuneman 51 Senior Vice President - 1990 Executive Vice President, Brenton Bank, N.A.,
Des Moines, Iowa Lending Des Moines - July 1985 to present; Vice
President - Loans of the Parent Company -
January 1988 to January 1990
Saulene M. Richer 47 Senior Vice President - 1990 President, Brenton Information Systems, Inc. -
Des Moines, Iowa Marketing/Technology April 1990 to May 1992
John R. Amatangelo 44 Senior Vice President - 1991 President, Brenton Bank Services Corporation
Des Moines, Iowa Operations - May 1992 to present
Steven T. Schuler 42 Chief Financial Officer 1990 Executive Vice President, Brenton Bank
Des Moines, Iowa and Vice President/ 1983 Services Corporation - May 1992 to present
Treasurer/Secretary 1986
</TABLE>
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<TABLE>
<CAPTION>
Parent Company Position
Name and Address Age Position Commenced Other Positions
________________ ___ ________ _________ _______________
<S> <C> <C> <C> <C>
Gary D. Ernst 50 Vice President - Trust 1990
Des Moines, Iowa
Steven F. Schneider 40 Vice President- 1990 President, Brenton Brokerage Services, Inc. -
Des Moines, Iowa Brokerage Services April 1993 to present
</TABLE>
All of the foregoing individuals have been employed by the Company for the
past five years, except for Steven F. Schneider, who was an Investment
Representative of A.G. Edwards & Sons, Inc., Des Moines, Iowa, prior to
February 1990; John R. Amatangelo, who was Senior Vice President and Director
of Operations of Ameritrust Indiana Corporation, Indianapolis, Indiana, from
May 1989 to August 1991, Senior Vice President and General Manager, Banking
Office Support and ATM Administration of MCorp, Dallas, Taxes from September
1988 to May 1989, and Executive Vice President of MBank Brownsville, N.A.,
Brownsville, Texas, prior to September 1988; Saulene M. Richer, who was the
Opportunity Development Director of I.B.M Corporation, Chicago, Illinois from
February 1989 to March 1990, and Branch Manager of I.B.M. Corporation, Des
Moines, Iowa, prior to February 1989; and Gary D. Ernst, who was Senior Vice
President/Senior Trust Officer of First National Bank, Iowa City, Iowa, from
November 1989 to June 1990, President of Massachusetts Fidelity Trust
Company, Cedar Rapids, Iowa from May 1988 to November 1989, and Senior Vice
President/Senior Trust Officer of Peoples Bank and Trust Company, Cedar
Rapids, Iowa, prior to May 1988.
(F) Employees.
On December 31, 1993, the Parent Company had 47 full-time employees
and 4 part-time employees. On December 31, 1993, the Company had 661 full-
time employees and 187 part-time employees. None of the employees of the
Company are represented by unions. The relationship between management and
employees of the Company is considered good.
(G) Supervision and Regulation.
The Company (Brenton Banks, Inc. and its subsidiaries) is
restricted by various regulatory bodies as to the types of activities and
businesses in which it may engage. References to the provisions of certain
statutes and regulations are only brief summaries thereof and are qualified
in their entirety by reference to those statutes and regulations. The Parent
Company cannot predict what other legislation may be enacted or what
regulations may be adopted, or, if enacted or adopted, the effect thereof.
The Parent Company, as a bank holding company, is subject to
regulation under the Bank Holding Company Act of 1956 (the "Act") and is
registered with the Board of Governors of the Federal Reserve System. Under
the Act, the Parent Company is prohibited, with certain exceptions, from
acquiring direct or indirect ownership or control of more than 5% of the
voting shares of any company which is not a bank and from engaging in any
business other than that of banking, managing and controlling banks or
furnishing services to its affiliated banks, except that the Parent Company
may engage in and may own shares of companies engaged in certain businesses
found by the Board of Governors to be so closely related to banking "as to be
a proper incident thereto." The Act does not place territorial restrictions
on the activities of bank-related subsidiaries of bank holding companies.
The Parent Company is required by the Act to file periodic reports of its
operations with the Board of Governors and is subject to examination by the
Board of Governors. Under the Act and the regulations of the Board of
Governors, bank holding companies and their subsidiaries are prohibited from
engaging in certain tie-in arrangements in connection with any extension of
credit or provision of any property or services.
As a savings and loan holding company, Brenton Banks, Inc. is
subject to federal regulation and examination by the Office of Thrift
Supervision (the "OTS"). The OTS has enforcement authority over the Company.
This authority permits the OTS to restrict or prohibit activities that are
determined to be a serious risk to the subsidiary savings institution.
Generally, the activities for a bank holding company are more limited than
the authorized activities for a savings and loan holding company.
The Parent Company, its affiliated banks and its bank-related
subsidiaries are affiliates within the meaning of the Federal Reserve Act and
OTS regulations. As affiliates, they are subject to certain restrictions on
loans by an affiliated bank to the Parent Company, other affiliated banks or
such other
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subsidiaries, on investments by an affiliated bank in their stock or
securities and on an affiliated bank taking such stock and securities as
collateral for loans to any borrower. The Company is also subject to certain
restrictions with respect to direct issuance, flotation, underwriting, public
sale or distribution of certain securities.
The five affiliated banks which are national banks are subject to
the supervision of and are regularly examined by the Comptroller of the
Currency. All other affiliated state banks are subject to the supervision of
and are regularly examined by the Iowa Superintendent of Banking and, because
of their membership in the Federal Deposit Insurance Corporation (the
"FDIC"), are subject to examination by the FDIC. All banks are required to
maintain certain minimum capital ratios established by their primary
regulators. The provisions of the FDIC Improvement Act (the "FDICA")
restrict the activities that insured state chartered banks may engage in to
those activities that are permissible for national banks, except where the
FDIC determines that the activity poses no significant risk to the deposit
insurance fund and the bank remains adequately capitalized. Furthermore, the
FDICIA grants the FDIC the power to take prompt regulatory action against
certain undercapitalized and seriously undercapitalized institutions in order
to preserve the deposit insurance fund.
The affiliated savings bank is subject to the supervision of and is
regularly examined by the OTS and FDIC. In addition to the fees charged to
by the FDIC, the savings bank is assessed fees by the OTS based upon the
savings bank's total assets. As a savings institution, the savings bank is
a member of the Federal Home Loan Bank of Des Moines, must maintain certain
minimum capital ratios established by the OTS and is required to meet a
qualified thrift lender test (the "QTL") to avoid certain restrictions upon
its operations. On December 31, 1993, Brenton Savings Bank, FSB, complied
with the current minimum capital guidelines and met the QTL test, which it
has always met since the test was implemented.
The Company operates within a regulatory structure that
continuously evolves. In the last several years, significant changes have
occurred that affect the Company. The material provisions of these changes
follow.
The FDIC Improvement Act of 1991 (the "FDICIA") was primarily
designed to recapitalize the FDIC's Bank Insurance Fund (the "BIF") and
Savings Association Insurance Fund (the "SAIF"). To accomplish this purpose
the FDIC was: (1) granted additional borrowing authority; (2) granted the
power to levy emergency special assessments on all insured depository
institutions; (3) granted the right to change the BIF and SAIF rates on
deposits on a semiannual basis; and (4) directed to draft regulations that
would provide for "Risk-Based Assessment System" by January 1994. The FDICIA
also imposed additional regulatory standards upon depository institutions and
granted additional authority to the FDIC. The FDICIA generally requires that
all institutions be examined by the FDIC annually. Under the provisions of
the FDICIA, all regulatory authorities are required to examine their
regulatory accounting standards and, to the extent possible, are required to
conform to Generally Accepted Accounting Principles. Finally, the FDICIA
granted to the FDIC, under certain circumstances, the authority to seek
regulatory orders against banks where necessary and when the banks' primary
bank regulatory agency has refused to act. Certain provisions of the FDICIA
were implemented during 1993; therefore, the full extent of the provisions of
the new law and its effect upon the Company are not currently known but are
not expected to have a significant impact upon the Company.
The Company's affiliated banks are assessed fees based on the
banks' deposits by the FDIC, to insure the funds of customers on deposit with
the banks. The deposits acquired from the Resolution Trust Corporation and
the deposits of the savings bank are insured by SAIF, while deposits of the
Company's subsidiary banks are insured by the BIF. The FDIC has implemented
the "Risk-Based Assessment System" which is a system designed to assess
higher FDIC insurance premiums to those institutions that are more likely to
result in a loss to the deposit insurance fund. Currently, both BIF and SAIF
insured institutions are assessed premiums from $.23 to $.31 per $100 of
deposits. All Brenton banks currently pay an FDIC insurance premium rate of
$.23 per $100 of deposits, the lowest rate under the "Risk-Based Assessment
System". The FDIC has authority to increase the base BIF and SAIF rates
under certain circumstances that are set forth in the law.
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According to Iowa's regional interstate banking law, Iowa-based
banks and bank holding companies can acquire banks and bank holding companies
located in certain other states. Additionally, certain non-Iowa based banks
and bank holding companies can acquire Iowa banks and bank holding companies,
provided that the total deposits of all banks and savings and loan
associations (hereinafter "thrifts") controlled by out of state bank holding
companies does not exceed thirty-five percent of the total deposits of all
banks and thrifts in the state. The law allows regional interstate banking
between Iowa and Illinois, Minnesota, Missouri, Nebraska, South Dakota and
Wisconsin.
Bank holding companies and banks may acquire thrifts in any state,
regardless of whether the acquiror can operate a bank in that state. Such
thrifts must conform their activities to those that are permissible for banks
or bank holding companies and their subsidiaries.
In the first quarter of 1990, an Iowa law was enacted suspending
the application of Iowa Banking Law prohibitions against branch banking with
respect to the acquisition of troubled thrifts. This law was extended during
the second quarter of 1993. The suspension of these prohibitions allows
Iowa-based banks and bank holding companies to acquire thrifts in
contravention of existing branch banking restrictions until July 1, 1994.
Generally, banks in Iowa are prohibited from operating offices in
counties other than the county in which the bank's principal office is
located and contiguous counties. However, certain banks located in the same
or different municipalities or urban complexes may consolidate or merge and
retain their existing banking locations by converting to a United Community
Bank. The resulting bank would adopt one principal place of business, and
would retain the remaining banking locations of the merged or consolidated
banks as offices. The Company relied upon the United Community Bank law when
it merged Brenton National Bank, Des Moines and Brenton Bank and Trust,
Urbandale to form Brenton Bank, N.A., Des Moines. Generally, thrifts can
operate offices in any county in Iowa and may, under certain circumstances,
acquire thrifts in other states with the approval of the OTS.
(H) Governmental Monetary Policy and Economic Conditions.
The earnings of the Company are affected by the policies of
regulatory authorities, including the Federal Reserve System. Federal
Reserve System monetary policies have had a significant effect on the
operating results of commercial banks in the past and are expected to
continue to do so in the future. Because of changing conditions in the
economy and in the money markets, as a result of actions by monetary and
fiscal authorities, interest rates, credit availability and deposit levels
may change due to circumstances beyond the control of the Company. Future
policies of the Federal Reserve System and other authorities cannot be
predicted, nor can their effect on future earnings be predicted.
(I) Competition.
The banking business in Iowa is highly competitive and the
affiliated banks compete not only with banks and thrifts, but with sales,
finance and personal loan companies; credit unions; and other financial
institutions which are active in the areas in which the affiliated banks
operate. In addition, the affiliated banks compete for customer funds with
other investment alternatives available through investment brokers, insurance
companies, finance companies and other institutions.
The multi-bank holding companies which own banks in Iowa are in
direct competition with one another. The Company is one of the largest
multi-bank holding companies operating in Iowa based on deposit size. The
largest multi-bank holding company, which is domiciled in Minnesota, has 41
banking locations in various parts of Iowa. The total deposits of this
company's affiliated banks located in Iowa are approximately 208 percent
greater than the total deposits of the Company. Another multi-bank holding
company, domiciled in Wisconsin, has 42 locations in Iowa, and another multi-
bank holding company domiciled in Missouri, has 36 locations in Iowa.
10
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Brenton Banks, Inc. is the second largest multi-bank holding
company domiciled in Iowa. The largest Iowa-based bank holding company has
63 banking locations in the state and deposits approximately 27 percent
greater than the deposits of the Company.
The third largest Iowa-based multi-bank holding company has 24
locations in Iowa and deposits approximately 45 percent less than those of
the Company.
Certain of the subsidiary banks of these multi-bank holding
companies may compete with certain of the Parent Company's affiliated banks
and any other affiliated financial institutions which may be acquired by the
Parent Company. These multi-bank holding companies, other smaller bank
holding companies, chain banking systems and others may compete with the
Parent Company for the acquisition of additional banks.
The Company has also expanded into the related investment brokerage
business in the last several years, placing brokers in many Brenton bank
locations. The Brenton brokers in small communities compete with brokers
from regional and national investment brokerage firms.
11
<PAGE>
Item 1(I) Business - Statistical Disclosure
The following statistical disclosures relative to the consolidated
operations of the Company have been prepared in accordance with Guide 3 of
the Guides for the Preparation and Filing of Reports and Registration
Statements under the Securities Exchange Act of 1934. Average balances were
primarily calculated on a daily basis.
I. Distribution of Assets, Liabilities, and Stockholders' Equity;
Interest Rates and Interest Differential
The following summarizes the average consolidated statement of
condition by major type of account, the interest earned and interest paid and
the average yields and average rates paid for each of the three years ending
December 31, 1993:
<TABLE>
<CAPTION>
1993 1992 1991
______________________________ ______________________________ ______________________________
Interest Average Interest Average Interest Average
Average Income or Yields or Average Income or Yields or Average Income or Yields or
Balance Expense Rates Balance Expense Rates Balance Interest Rates
__________ _________ _________ __________ _________ _________ __________ _________ _________
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning assets
Loans (1,2) $ 802,088 $ 70,310 8.77% $ 736,646 $ 71,077 9.65% $ 727,870 $ 76,563 10.52%
Investment securities held to
maturity:
Taxable investments:
United States Treasury
securities 24,598 1,290 5.24 81,606 5,282 6.47 75,413 5,985 7.94
Securities of United States
government agencies 58,522 3,410 5.83 102,196 7,128 6.98 101,661 9,385 9.23
Mortgage-backed and related
securities 204,130 10,857 5.32 170,480 11,931 7.00 136,559 11,838 8.67
Other investments 12,743 1,071 8.41 30,019 2,098 6.99 28,833 1,909 6.62
Tax-exempt investments:
Obligations of states and
political subdivisions(2) 164,520 11,471 6.97 139,296 10,665 7.66 106,658 9,441 8.85
Investment securities available
for sale 53,174 2,809 5.28 6,512 459 7.05 -- -- --
Loans held for sale 6,165 520 8.43 2,553 238 9.33 -- -- --
Federal funds sold and
securities purchased under
agreements to resell 23,725 486 2.05 27,082 654 2.41 35,154 2,028 5.77
Interest-bearing deposits
with banks 762 22 2.88 6,240 307 4.92 18,335 1,302 7.10
_________ _______ ____ _________ _______ ____ _________ _______ ____
Total interest-earning assets(2) 1,350,427 $102,246 7.57% 1,302,630 $109,839 8.43% 1,230,483 $118,451 9.62%
Allowance for loan losses (9,615) (8,894) (8,819)
Cash and due from banks 46,025 41,715 35,656
Bank premises and equipment 23,045 21,400 18,876
Other assets 26,543 30,422 32,243
_________ _________ _________
Total assets $1,436,425 $1,387,273 $1,308,439
<FN>
(1) The average outstanding balance is net of unearned income and includes nonaccrual loans.
(2) Interest income and yields are stated on a tax equivalent basis using a 35 percent federal income tax rate for 1993, and
a 34 percent rate for 1992 and 1991, and are adjusted to reflect the effect of the nondeductible interest expense of owning tax-
exempt investments. The standard federal income tax rate is used for consistency of presentation.
</TABLE>
12
<PAGE>
Item 1(I) Business - Statistical Disclosure, Continued
I. Distribution of Assets, Liabilities, and Stockholders' Equity;
Interest Rates and Interest Differential, Continued
<TABLE>
<CAPTION>
1993 1992 1991
______________________________ ______________________________ ______________________________
Interest Average Interest Average Interest Average
Average Income or Yields or Average Income or Yields or Average Income or Yields or
Balance Expense Rates Balance Expense Rates Balance Expense Rates
_________ __________ _________ __________ _________ _________ __________ _________ _________
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Liabilities and stockholders'
equity:
Interest-bearing liabilities:
Interest-bearing deposits:
Demand $ 217,754 $ 4,552 2.09% $ 209,642 $ 5,277 2.52% $ 175,595 $ 7,531 4.29%
Savings 299,640 7,697 2.57 260,568 9,385 3.60 235,894 11,521 4.88
Time 622,789 29,940 4.81 646,261 37,781 5.85 654,776 46,903 7.16
Federal funds purchased and
securities sold under
agreements to repurchase 42,715 1,027 2.41 33,240 924 2.78 20,340 963 4.74
Other short-term borrowings 33 1 3.62 2,170 121 5.57 5,361 466 8.70
Long-term borrowings 14,077 1,210 8.60 14,067 1,285 9.14 13,619 1,303 9.57
_________ ______ ____ _________ ______ ____ _________ ______ ____
Total interest-bearing
liabilities 1,197,008 $44,427 3.71% 1,165,948 $54,773 4.70% 1,105,585 $68,687 6.21%
Noninterest-bearing deposits 119,322 112,054 102,795
Accrued expenses and other
liabilities 12,805 13,735 14,739
_________ _________ _________
Total liabilities 1,329,135 1,291,737 1,223,119
Minority interest 4,150 3,845 3,589
Common stockholders' equity 103,140 91,691 81,731
_________ _________ _________
Total liabilities and
stockholders' equity $1,436,425 $1,387,273 $1,308,439
Net interest spread (1) 3.86% 3.73% 3.41%
Net interest income/margin (1) $57,819 4.28% $55,066 4.23% $49,764 4.04%
<FN>
(1) Interest income and yields are stated on a tax equivalent basis using a 35 percent federal income tax rate for 1993 and a
34 percent rate for 1992 and 1991, and are adjusted to reflect the effect of the nondeductible interest expense of owning tax-
exempt investments. The standard federal income tax rate is used for consistency of presentation.
</TABLE>
13
<PAGE>
Item 1(I) Business - Statistical Disclosure, Continued
I. Distribution of Assets, Liabilities, and Stockholders' Equity;
Interest Rates and Interest Differential, Continued
The following shows the changes in interest earned and interest
paid due to changes in volume and changes in rate for each of the two years
ended December 31, 1993:
<TABLE>
<CAPTION>
1993 vs. 1992 1992 vs. 1991
__________________________ __________________________
Variance Variance
due to due to
_______________ _______________
Variance Volume Rate Variance Volume Rate
________ ______ ____ ________ ______ ____
(In thousands) (In thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest Income:
Loans (1,2) $ (767) 6,030 (6,797) (5,486) 913 (6,399)
Investment securities held
to maturity:
Taxable investments:
United States Treasury securities (3,992) (3,139) (853) (703) 464 (1,167)
Securities of United States government
agencies (3,718) (2,684) (1,034) (2,257) 49 (2,306)
Mortgage-backed and related
securities (1,074) 2,100 (3,174) 93 2,621 (2,528)
Other investments (1,027) (1,388) 361 189 80 109
Tax-exempt investments:
Obligations of states and political
subdivisions (2) 806 1,816 (1,010) 1,224 2,618 (1,394)
Investment securities available
for sale 2,350 2,493 (143) 459 459 --
Loans held for sale 282 307 (25) 238 238 --
Federal funds sold and securities purchased
under agreements to resell (168) (76) (92) (1,374) (389) (985)
Interest-bearing deposits with banks (285) (194) (91) (995) (679) (316)
______ _____ ______ ______ _____ ______
(7,593) 5,265 (12,858) (8,612) 6,374 (14,986)
_____ _____ ______ ______ _____ ______
Interest expense:
Interest-bearing deposits:
Demand (725) 198 (923) (2,254) 1,268 (3,522)
Savings (1,688) 1,269 (2,957) (2,136) 1,115 (3,251)
Time (7,841) (1,331) (6,510) (9,122) (603) (8,519)
Federal funds purchased and securities sold
under agreements to repurchase 103 239 (136) (39) 458 (497)
Other short-term borrowings (120) (82) (38) (345) (215) (130)
Long-term borrowings (75) 1 (76) (18) 42 (60)
______ _____ ______ ______ _____ ______
(10,346) 294 (10,640) (13,914) 2,065 (15,979)
______ _____ ______ ______ _____ ______
Net interest income (expense) $ 2,753 4,971 (2,218) $ 5,302 4,309 993
______ _____ ______ ______ _____ ______
Note: The change in interest due to both rate and volume has been allocated
to change due to volume and change due to rate in proportion to the
relationship of the absolute dollar amounts of the change in each.
<FN>
(1) Nonaccrual loans have been included in the analysis of volume and rate variances.
(2) Computed on tax equivalent basis using a 35 percent federal income tax rate for 1993 and a 34 percent rate for 1992
and 1991, and adjusted to reflect the effect of the nondeductible interest expense of owning tax-exempt investments.
</TABLE>
14
<PAGE>
Item 1(I) Business - Statistical Disclosure, Continued
I. Distribution of Assets, Liabilities, and Stockholders' Equity;
Interest Rates and Interest Differential, Continued
Interest Rate Sensitivity Analysis
The following schedule shows the matching of interest sensitive
assets to interest sensitive liabilities by various maturity or repricing
periods as of December 31, 1993. As the schedule shows, the Company is
liability sensitive within the six-month and 1-year time frames. Included in
the three months or less sensitivity category are all interest-bearing demand
and savings accounts. Although these deposits are contractually subject to
immediate repricing, they typically are not synchronized with overall market
rate movements.
<TABLE>
<CAPTION>
3 Months Over 3 Over 6 Total Over 1
or through 6 through 12 within through 5 Over
Less Months Months 1 Year Years 5 Years Total
---- ------ ------ ------ ----- ------- -----
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans (1) $ 191,031 25,744 49,878 266,653 400,540 207,083 874,276
Investment securities:
Available for sale:
Taxable investments 61,395 32,570 39,841 133,806 128,896 4,935 267,637
Tax-exempt investments 11,351 13,454 6,138 30,943 76,394 37,246 144,583
Held to maturity:
Taxable investments 20,129 2,096 4,503 26,728 1,612 2,105 30,445
Tax-exempt investments 700 3,483 12,335 16,518 14,157 5,264 35,939
Loans held for sale 4,349 -- -- 4,349 -- -- 4,349
Federal funds sold and securities purchased under
agreements to resell 41,875 -- -- 41,875 -- -- 41,875
Interest-bearing deposits with banks -- -- -- -- -- -- --
_______ _______ _______ _______ _______ _______ _________
Total interest-earning assets $ 330,830 77,347 112,695 520,872 621,599 256,633 1,399,104
_______ _______ _______ _______ _______ _______ _________
Interest-bearing liabilities:
Interest-bearing deposits:
Demand and savings deposits (2) $ 539,621 -- -- 539,621 -- -- 539,621
Time deposits 119,258 126,591 121,749 367,598 260,013 -- 627,611
Federal funds purchased and securities sold under
agreements to repurchase 37,664 -- -- 37,664 -- -- 37,664
Other short-term borrowings -- -- -- -- -- -- --
Long-term borrowings -- -- 1,000 1,000 13,053 6,002 20,055
_______ _______ _______ _______ _______ _______ _________
Total interest-bearing liabilities $ 696,543 126,591 122,749 945,883 273,066 6,002 1,224,951
_______ _______ _______ _______ _______ _______ _________
Interest sensitivity GAP $(365,713) (49,244) (10,054) (425,011) 348,533 250,631 174,153
_______ _______ _______ _______ _______ _______ _________
Interest sensitivity GAP ratio .47:1 .61:1 .92:1 .55:1 2.28:1 42.76:1 1.14:1
_______ _______ _______ _______ _______ _______ _________
Cumulative interest sensitivity GAP $(365,713) (414,957) (425,011) (425,011) (76,478) 174,153 174,153
_______ _______ _______ _______ _______ _______ _________
Cumulative interest sensitivity GAP ratio .47:1 .50:1 .55:1 .55:1 .94:1 1.14:1 1.14:1
_______ _______ _______ _______ _______ _______ _________
<FN>
(1) Nonaccrual loans have been excluded from the interest rate sensitivity analysis.
(2) Interest-bearing demand and savings deposits are included in the 3 months or less sensitivity category.
</TABLE>
15
<PAGE>
Item 1(I) Business - Statistical Disclosure, Continued
II. Investment Portfolio
The carrying value of investment securities at December 31 for each
of the past three years follows:
<TABLE>
<CAPTION>
Amortized Cost at December 31,
______________________________
1993 1992 1991
____ ____ ____
(In thousands)
<s) <C> <C> <C>
Investment securities available for sale:
Taxable investments:
United States Treasury securities $ 63,777 28,878 --
Securities of United States government agencies 59,181 -- --
Mortgage-backed and related securities 138,744 1,166 --
Other investments 5,925 -- --
Tax-exempt investments:
Obligations of states and political subdivisions 144,583 -- --
_______ _______ _______
412,210 30,044 --
_______ _______ _______
Investment securities held to maturity:
Taxable investments:
United States Treasury securities -- 55,586 59,297
Securities of United States government agencies -- 67,324 52,478
Mortgage-backed and related securities 24,882 225,659 200,339
Other investments 5,563 11,769 23,271
Tax-exempt investments:
Obligations of states and political subdivisions 35,939 150,639 118,952
_______ _______ _______
66,384 510,977 454,337
_______ _______ _______
Total investment securities $478,594 541,021 454,337
_______ _______ _______
</TABLE>
16
<PAGE>
Item 1(I) Business - Statistical Disclosure, Continued
II. Investment Portfolio
The following table shows the maturity distribution and weighted
average yields of investment securities at December 31, 1993:
<TABLE>
(caption>
Investments by Maturity and Yields at December 31, 1993
____________________________________________________________________________
After One After Five
Within but through but through After
One Year Five Years Ten Years Ten Years
_______________ _______________ _______________ _______________
Amount Yield Amount Yield Amount Yield Amount Yield
______ _____ ______ _____ ______ _____ ______ _____
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment securities available for sale:
Taxable investments:
United States Treasury
securities $ 23,935 4.77% $ 38,777 4.49% $ 1,065 4.29% $ -- --%
Securities of United States
government agencies 10,039 7.32 35,060 4.50 13,311 5.01 771 4.50
Mortgage-backed and
related securities 52,012 5.23 79,918 5.10 5,350 6.83 1,464 5.94
Other investments 1,506 4.89 4,419 4.77 -- -- -- --
Tax-exempt investments:
Obligations of states and
political subdivisions 33,762 6.75 65,327 6.30 21,195 9.66 24,299 9.05
_______ ____ _______ ____ ______ ____ ______ ____
121,254 5.73 223,501 5.24 40,921 7.64 26,534 8.74
_______ ____ _______ ____ ______ ____ ______ ____
Investment securities held to maturity:
Taxable investments:
Mortgage-backed and
related securities 9,789 3.96 13,864 4.00 1,229 4.21 -- --
Other investments -- -- 787 4.78 152 6.21 4,624 7.20
Tax-exempt investments:
Obligations of states and
political subdivisions 12,476 5.05 17,463 6.14 3,886 8.47 2,114 8.19
_______ ____ _______ ____ ______ ____ ______ ____
22,265 4.57 32,114 5.18 5,267 7.41 6,738 7.51
_______ ____ _______ ____ ______ ____ ______
Total investment securities $143,519 5.55% $255,615 5.24% $46,188 7.61% $33,272 8.49%
_______ ____ _______ ____ ______ ____ ______ ____
</TABLE>
NOTE: The weighted average yields are calculated on the basis of the cost
and effective yields for each scheduled maturity group. The weighted average
yields for tax-exempt obligations have been adjusted to a fully taxable
basis, assuming a 35 percent federal income tax rate for 1993 and a 34
percent rate for 1992 and 1991, and are adjusted to reflect the effect of the
nondeductible interest expense of owning tax-exempt investments.
As of December 31, 1993, the Company did not have securities from a single
issuer, other than the United States Government or its agencies, which
exceeded 10 percent of consolidated common stockholders' equity.
Maturities of all investment securities are managed to meet the Company's
normal liquidity needs. Investment securities available for sale may be sold
prior to maturity to meet liquidity needs, to respond to market changes or to
adjust the Company's asset/liability position.
17
<PAGE>
Item 1(I) Business - Statistical Disclosure, Continued
III. Loan Portfolio
The following table shows the amount of loans outstanding by type
as of December 31 for each of the past five years:
<TABLE>
<CAPTION>
December 31
____________________________________________________
1993 1992 1991 1990 1989
____ ____ ____ ____ ____
(In thousands)
<S> <C> <C> <C> <C>
1. Real estate loans:
a. Commercial construction and land development $ 24,189 25,180 16,155 16,319 12,309
b. Secured by 1-4 family residential property 349,810 324,124 321,721 315,934 182,227
c. Other 129,574 101,418 96,805 88,572 88,237
2. Loans to financial institutions (primarily bankers'
acceptances) -- 393 4,785 9,969 4,875
3. Loans to farmers 66,574 62,471 60,898 55,856 52,699
4. Commercial and industrial loans 90,521 75,062 93,180 67,575 63,677
5. Loans to individuals for personal expenditures,
net of unearned income 214,401 163,876 151,529 151,261 134,240
6. All other loans 812 930 6,837 1,832 1,294
_______ _______ _______ _______ _______
$875,881 753,454 751,910 707,318 539,558
_______ _______ _______ _______ _______
</TABLE>
18
<PAGE>
Item 1(I) Business - Statistical Disclosure, Continued
III. Loan Portfolio, Continued
The following table shows the maturity distribution of loans as of
December 31, 1993 (excluding real estate loans secured by 1-4 family
residential property and loans to individuals for personal expenditures):
<TABLE>
<CAPTION>
Loans by Maturity at December 31, 1993
________________________________________
After One
Year
Within through After Five
One Year Five Years Years Total
________ __________ _____ _____
(In thousands)
<S> <C> <C> <C> <C>
1. Real estate loans:
a. Commercial construction and land development $ 20,439 3,087 663 24,189
b. Other 34,849 56,101 38,624 129,574
2. Loans to financial institutions -- -- -- --
3. Loans to farmers 47,607 16,225 2,742 66,574
4. Commercial and industrial loans 55,403 29,197 5,921 90,521
5. All other loans 771 41 -- 812
_______ _______ ______ _______
$159,069 104,651 47,950 311,670
_______ _______ ______ _______
</TABLE>
The above loans due after one year which have predetermined and
floating interest rates follow:
Predetermined interest rates $ 94,874
______
Floating interest rates $ 57,727
______
19
<PAGE>
Item 1(I) Business - Statistical Disclosure, Continued
III. Loan Portfolio, Continued
The following schedule shows the dollar amount of loans at December
31 for each of the past five years which were either accounted for on a
nonaccrual basis, had been restructured to below market terms to provide a
reduction or deferral of interest or principal, or were 90 days or more past
due as to interest or principal. Each particular loan has been included in
only the most appropriate category.
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
____ ____ ____ ____ ____
(In thousands)
<S> <C> <C> <C> <C> <C>
Nonaccrual $1,605 1,884 2,931 2,391 3,289
Restructured 323 448 1,019 1,063 1,359
Past due 90 days or more 2,085 2,261 1,672 2,006 2,070
_____ _____ _____ _____ _____
Nonperforming loans $4,013 4,593 5,622 5,460 6,718
_____ _____ _____ _____ _____
</TABLE>
Interest income recorded during 1993 on nonaccrual and restructured
loans amounted to $191,000. The amount of interest income which would have
been recorded during 1993 if nonaccrual and restructured loans had been
current, in accordance with the original terms, was $359,000.
The amounts scheduled above include the entire balance of any
particular loan. Much of the scheduled amount is adequately collateralized,
and thus does not represent the amount of anticipated charge-offs in the
future. The loans scheduled are representative of the entire customer base
of the Company and, therefore, are not concentrated in a specific industry or
geographic area other than the loans to farmers in Iowa. Overdrafts are
loans for which interest does not normally accrue. Since overdrafts are
generally low volume, they were not included in the above schedule, unless
there was serious doubt concerning collection.
The accrual of interest income is stopped when the ultimate
collection of a loan becomes doubtful. A loan is placed on nonaccrual status
when it becomes 90 days past due, unless it is both well secured and in the
process of collection. Once determined uncollectible, previously accrued
interest is charged to the allowance for loan losses.
In addition to the loans scheduled above, management has identified
other loans which, due to a change in economic circumstances or a
deterioration in the financial position of the borrower, present serious
concern as to the ability of the borrower to comply with present repayment
terms. Additionally, management considers the identification of loans
classified for regulatory or internal purposes as loss, doubtful, substandard
or special mention. This serious concern may eventually result in certain of
these loans being classified in one of the above scheduled categories. At
December 31, 1993, these loans amounted to approximately $2 million.
As of December 31, 1993, management is unaware of any other
material interest-earning assets which have been placed on a nonaccrual
basis, have been restructured, or are 90 days or more past due. The amount
of other real estate owned, which has been received in lieu of loan
repayment, amounted to $948,000 and $1,935,000 at December 31, 1993 and 1992,
respectively.
20
<PAGE>
Item 1(I) Business - Statistical Disclosure, Continued
IV. Summary of Loan Loss Experience
The following is an analysis of the allowance for loan losses for
years ended December 31, for each of the past five years:
<TABLE>
<CAPTION>
Year Ended December 31
_______________________________________________
1993 1992 1991 1990 1989
____ ____ ____ ____ ____
(In thousands)
<S> <C> <C> <C> <C> <C>
Total loans at the end of the year $875,881 753,454 751,910 707,318 539,558
Average loans outstanding 802,088 736,646 727,870 659,283 512,822
_______ _______ _______ _______ _______
Allowance for loan losses -
beginning of the year $ 9,006 8,548 8,871 8,431 7,999
_______ _______ _______ _______ _______
Amount of charge-offs during year:
Real estate loans 109 276 110 203 126
Loans to financial institutions -- -- -- -- --
Loans to farmers 68 45 48 90 55
Commercial and industrial loans 54 252 769 455 468
Loans to individuals for personal expenditures 1,230 1,304 1,404 1,011 563
All other loans 70 67 5 8 105
_______ _______ _______ _______ _______
Total charge-offs 1,531 1,944 2,336 1,767 1,317
_______ _______ _______ _______ _______
Amount of recoveries during year:
Real estate loans 101 32 60 38 121
Loans to financial institutions -- -- -- -- --
Loans to farmers 81 179 135 130 258
Commercial and industrial loans 248 125 303 505 376
Loans to individuals for personal expenditures 641 635 716 280 158
All other loans 20 20 -- -- 3
_______ _______ _______ _______ _______
Total recoveries 1,091 991 1,214 953 916
_______ _______ _______ _______ _______
Net loans charged off during year 440 953 1,122 814 401
_______ _______ _______ _______ _______
Additions to allowance charged to operating expense 1,252 1,411 799 869 760
_______ _______ _______ _______ _______
Allowance of acquisitions -- -- -- 385 73
_______ _______ _______ _______ _______
Allowance for loan losses - end of the year $ 9,818 9,006 8,548 8,871 8,431
_______ _______ _______ _______ _______
Ratio of allowance to loans outstanding at end of year 1.12% 1.20 1.14 1.25 1.56
____ ____ ____ ____ ____
Ratio of net charge-offs to average loans outstanding .05% .13 .15 .12 .08
___ ___ ___ ___ ___
</TABLE>
NOTE: The provision for loan losses charged to operating expenses is based
on management's evaluation of the loan portfolio, past loan loss experience
and other factors that deserve current recognition in estimating loan losses.
The allowance for loan losses is maintained at a level necessary to support
management's evaluation of potential losses in the loan portfolio, after
considering various factors including prevailing and anticipated economic
conditions.
21
<PAGE>
Item 1(I) Business - Statistical Disclosure, Continued
IV. Summary of Loan Loss Experience, Continued
In the following summary, the Company has allocated the allowance
for loan losses, according to the amount deemed to be reasonably necessary to
provide for losses within each category of loans. The amount of the
allowance applicable to each category and the percentage of loans in each
category to total loans follows:
<TABLE>
<CAPTION>
Year Ended December 31
__________________________________________________________________________________________
1993 1992 1991 1990 1989
_________________ _________________ _________________ _________________ __________________
Allowance Percent Allowance Percent Allowance Percent Allowance Percent Allowance Percent
for of Loans for of Loans for of Loans for of Loans for of Loans
Loan to Total Loan to Total Loan to Total Loan to Total Loan to Total
Losses Loans Losses Loans Losses Loans Losses Loans Losses Loans
______ _____ ______ _____ ______ _____ ______ _____ _____ _____
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Real estate loans $2,400 57.5% $2,200 59.8% $2,002 57.8% $1,967 59.5% $1,373 52.4%
Loans to financial institutions -- -- -- .1 -- .6 -- 1.4 -- .9
Loans to farmers 1,400 7.6 1,200 8.3 1,500 8.1 1,900 7.9 2,300 9.8
Commercial and industrial loans 2,700 10.3 2,700 10.0 2,600 12.4 3,000 9.6 3,300 11.8
Loans to individuals for personal
expenditures 3,318 24.5 2,906 21.3 2,446 20.2 2,004 21.4 1,458 24.9
All other loans -- .1 -- .5 -- .9 -- .2 -- .2
_____ _____ _____ _____ _____ _____ _____ _____ _____ _____
$9,818 100.0% $9,006 100.0% $8,548 100.0% $8,871 100.0% $8,431 100.0%
_____ _____ _____ _____ _____ _____ _____ _____ _____ _____
</TABLE>
22
<PAGE>
Item 1(I) Business - Statistical Disclosure, Continued
V. Deposits
A classification of the Company's average deposits and average
rates paid for the years indicated follows:
<TABLE>
<CAPTION>
Year Ended December 31
1993 1992 1991
Amount Rate Amount Rate Amount Rate
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing deposits $ 119,322 --% $ 112,054 --% $ 102,795 --%
Interest-bearing deposits:
Demand 217,754 2.09 209,642 2.52 175,595 4.29
Savings 299,640 2.57 260,568 3.60 235,894 4.88
Time 622,789 4.81 646,261 5.85 654,776 7.16
_________ ____ _________ ____ _________ ____
$1,259,505 $1,228,525 $1,169,060
_________ _________ _________
</TABLE>
The following sets forth the maturity distribution of all time
deposits of $100,000 or more as of December 31, 1993:
Large Time Deposits
by Maturity at
Maturity Remaining December 31, 1993
(In thousands)
Less than 3 months $29,155
Over 3 through 6 months 12,652
Over 6 through 12 months 7,927
Over 12 months 12,993
______
$62,727
______
VI. Return on Equity and Assets
Various operating and equity ratios for the years indicated are
presented below:
<TABLE>
<CAPTION>
Year Ended December 31,
________________________
1993 1992 1991
____ ____ ____
<S> <C> <C> <C>
Return on average total assets:
Net income before deduction of minority interest 1.04% .98% .93%
Return on average equity 13.82 14.13 14.27
Common dividend payout ratio 22.22 21.00 21.56
Average equity to average assets 7.18 6.61 6.25
Equity to assets ratio 7.59 6.81 6.37
Tier 1 leverage capital ratio 7.55 6.71 6.21
Primary capital ratio 8.50 7.67 7.23
____ ____ ____
</TABLE>
23
<PAGE>
Item 1(I) Business - Statistical Disclosure, Continued
VII. Short-Term Borrowings
Information relative to federal funds purchased and securities sold
under agreements to repurchase follows:
<TABLE>
<CAPTION>
1993 1992 1991
____ ____ ____
(Dollars in thousands)
<S> <C> <C> <C>
Amount outstanding at December 31 $37,981 34,882 23,590
Weighted average interest rate at
December 31 2.31% 2.34 3.84
Maximum amount outstanding at any
quarter-end $66,740 49,125 25,541
Average amount outstanding during
the year $42,715 33,240 20,340
Weighted average interest rate during
the year 2.41% 2.78 4.74
____ ____ ____
</TABLE>
Information relative to other short-term borrowings, which consist
primarily of notes payable by the Parent Company, Federal Reserve Bank
borrowings and U.S. Treasury - tax depository note options, follows:
<TABLE>
<CAPTION>
1993 1992 1991
____ ____ ____
(Dollars in thousands)
<S> <C> <C> <C>
Amount outstanding at December 31 $ -- 120 4,174
Weighted average interest rate at
December 31 --% 3.15 6.44
Maximum amount outstanding at any
quarter-end $ -- 2,840 6,659
Average amount outstanding during
the year $ 33 2,170 5,361
Weighted average interest rate during
the year 3.62% 5.57 8.70
____ ____ ____
</TABLE>
24
<PAGE>
Item 2. Properties.
At December 31, 1993, the affiliated banks had 42 banking locations
with approximately 281,000 square feet, all located in Iowa. Of these
banking locations, 32 were owned by the Company - approximately 223,000
square feet; 3 were owned buildings on leased land - approximately 30,000
square feet and 7 were operated under lease contracts with unaffiliated
parties - approximately 28,000 square feet. The Company has recently
redesigned most of its banking facilities to enhance the overall appearance
and stimulate marketing and selling of products.
The Company leases certain real estate and equipment under long-
term and short-term leases. The Company owns certain real estate which is
leased to unrelated persons.
Item 3. Legal Proceedings.
The Company (Brenton Banks, Inc. and its subsidiaries) is involved
in various claims and legal actions arising in the ordinary course of
business. In the opinion of management, the ultimate disposition of these
matters will not have a material adverse effect on the Company's financial
position or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders.
There were no matters submitted during the fourth quarter of the
fiscal year covered by this report to a vote of security holders, through the
solicitation of proxies or otherwise.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters.
The information appearing on pages 30 and 37 of the Corporation's
Annual Report, filed as Exhibit 13 hereto, is incorporated herein by
reference.
There were approximately 1,563 holders of record of the Parent
Company's $5 common stock as of March 14, 1994. The closing bid price of the
Parent Company's common stock was $26.75 on March 14, 1994.
The Parent Company increased dividends to common shareholders in
1993 to $.60 per share, a 14.3 percent increase over $.525 for 1992.
Dividend declarations are evaluated and determined by the Board of Directors
on a quarterly basis. In January 1994, the Board of Directors declared a
dividend of $.165 per common share. There are no restrictions on the Parent
Company's present or future ability to pay dividends.
Item 6. Selected Financial Data.
The information appearing on page 19 of the Company's Annual
Report, filed as Exhibit 13 hereto, is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The information appearing on pages 10 through 17 of the Company's
Annual Report, filed as Exhibit 13 hereto, is incorporated herein by
reference.
25
<PAGE>
Item 8. Financial Statements and Supplementary Data.
The information appearing on pages 20 through 36 of the Company's
Annual Report, filed as Exhibit 13 hereto, is incorporated herein by
reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Within the twenty-four months prior to the date of the most recent
financial statements, there has been no change of accountants of the Company.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The definitive proxy statement of Brenton Banks, Inc., which will
be filed not later than 120 days following the close of the Company's fiscal
year ending December 31, 1993, is incorporated herein by reference. See also
Item 1(E) of this Form 10-K captioned "Executive Officers of the Registrant."
Item 11. Executive Compensation.
The definitive proxy statement of Brenton Banks, Inc., which will
be filed not later than 120 days following the close of the Company's fiscal
year ended December 31, 1993, is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The definitive proxy statement of Brenton Banks, Inc., which will
be filed not later than 120 days following the close of the Company's fiscal
year ending December 31, 1993, is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
The definitive proxy statement of Brenton Banks, Inc., which will
be filed not later than 120 days following the close of the Company's fiscal
year ending December 31, 1993, is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
The following exhibits and financial statement schedules are filed
as part of this report:
(a) 1. Financial Statements: See the financial statements on
pages 20 through 36 of the Company's Annual Report,
filed as Exhibit 13 hereto, which are incorporated by
reference herein.
2. Financial Statement Schedules: See Exhibits 11 and 12,
for computation of earnings per share and ratios.
26
<PAGE>
3. Exhibits (not covered by independent auditors' report).
Exhibit 3
The Articles of Incorporation, as amended, and Bylaws,
as amended, of Brenton Banks, Inc.
Exhibit 10
Summary of the Bank Bonus Plans under which some of the
executive officers of the Parent Company and certain
other personnel of the subsidiaries are eligible to
receive a bonus each year.
Exhibit 10(i)
Summary of the Executive Bonus Plan under which some of
the executive officers of the Parent Company are
eligible to receive a bonus each year.
Exhibit 10(ii)
Summary of the Trust Division Bonus Plan under which
one of the executive officers of the Parent Company is
eligible to receive a bonus each year.
Exhibit 10(iii)
Summary of the Brokerage Bonus Plan under which one of
the executive officers of the Parent Company is
eligible to receive a bonus each year.
Exhibit 10(iv)
Summary of the Employee Bonus Plan under which
employees of the Company are eligible to receive a
bonus each year.
Exhibit 10(v)
Employment Agreement, dated July 6, 1989, between
William H. Brenton and Brenton Banks, Inc. This
Employment Agreement is incorporated by reference from
Form 10-K of Brenton Banks, Inc., for the year ended
December 31, 1989.
Exhibit 10(vi)
Non-Qualified Stock Option Plan, Administrative Rules
and Agreement under which officers of the Company are
eligible to receive options to purchase an aggregate of
200,000 shares of the Company's $5 par value common
stock. This Non-Qualified Stock Option Plan,
Administrative Rules and Agreement is incorporated by
reference from Form 10-K of Brenton Banks, Inc., for
the year ended December 31, 1992.
27
<PAGE>
Exhibit 10(vii)
Long-Term Stock Compensation Plan, Agreements and
related documents, effective for 1993, under which
certain of the Company's senior officers and bank
presidents are eligible to receive shares of Brenton
Banks, Inc. stock based upon their service to the
Company and Company performance.
Exhibit 10(viii)
Long-Term Stock Compensation Plan, Agreements and
related documents, effective for 1992, under which
certain of the Company's senior officers and bank
presidents are eligible to receive shares of Brenton
Banks, Inc. stock based upon their service to the
Company and Company performance. This Long-Term Stock
Compensation Plan, Agreements and related documents,
effective for 1992, are incorporated by reference from
Form 10-K of Brenton Banks, Inc., for the year ended
December 31, 1992.
Exhibit 10(ix)
Merger Agreement between Brenton Banks, Inc. and Ames
Financial Corporation, dated June 17, 1992. This
Merger Agreement is incorporated by reference from Form
S-4 of Brenton Banks, Inc. filed on August 13, 1992.
Exhibit 10(x)
Standard Agreement for Advances, Pledge and Security
Agreement between Brenton banks and the Federal Home
Loan Bank of Des Moines.
Exhibit 10(xi)
Short-term note with American National Bank & Trust
Company of Chicago as of April 30, 1993, setting forth
the terms of the Parent Company's $2,000,000 short-term
debt agreement.
Exhibit 10(xii)
Data Processing Agreement dated December 1, 1991 by and
between Systematics, Inc. and Brenton Information
Systems, Inc. This Data Processing Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc., for the year ended December 31, 1991.
Exhibit 10(xiii)
Item Processing Agreement dated December 1, 1991
between Brenton Bank Services, Inc. and the Federal
Home Loan Bank of Des Moines. This Item Processing
Agreement is incorporated by reference from Form 10-K
of Brenton Banks, Inc., for the year ended December 31,
1992.
Exhibit 10(xiv)
Restated Trust Agreement for Brenton Banks, Inc.
Retirement Plan, effective January 1, 1986. This
Restated Trust Agreement is incorporated by reference
from Form 10-K of Brenton Banks, Inc., for the year
ended December 31, 1991.
28
<PAGE>
Exhibit 10(xv)
Amendment to the Restated Trust Agreement for Brenton
Banks, Inc. Retirement Plan, effective May 31, 1989.
The Amendment is incorporated by reference from Form
10-K of Brenton Banks, Inc. for the year ended December
31, 1989.
Exhibit 10(xvi)
Indenture Agreement with respect to Capital Notes dated
April 12, 1993.
Exhibit 10(xvii)
Indenture Agreement with respect to Capital Notes dated
April 14, 1992. This Indenture Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc., for the year ended December 31, 1992.
Exhibit 10(xviii)
Indenture Agreement with respect to Capital Notes dated
August 5, 1991. This Indenture Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc. for the year ended December 31, 1991.
Exhibit 10(xix)
Indenture Agreement with respect to Capital Notes dated
March 27, 1991. This Indenture Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc. for the year ended December 31, 1991.
Exhibit 10(xx)
Indenture Agreement with respect to Capital Notes dated
April 5, 1985. This Indenture Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc. for the year ended December 31, 1991.
Exhibit 11
Statement of computation of earnings per share.
Exhibit 12
Statement of computation of ratios.
Exhibit 13
The Annual Report to Shareholders of Brenton Banks,
Inc., for the 1993 calendar year.
Exhibit 22
Subsidiaries.
Exhibit 24
Consent of KPMG Peat Marwick to the incorporation of
their report dated January 31, 1994, relating to
certain consolidated statements of condition of Brenton
Banks, Inc. into the Registration Statement on Form S-8
of Brenton Banks, Inc.
29
<PAGE>
The Parent Company will furnish to any shareholder upon request a
copy of any exhibit upon payment of a fee of $.50 per page. Requests for
copies of exhibits should be directed to Steven T. Schuler, Chief Financial
Officer and Vice President/Treasurer/Secretary, at Brenton Banks, Inc., P.O.
Box 961, Des Moines, Iowa 50304-0961.
(b) Reports on Form 8-K: No reports on Form 8-K were required
to be filed during the last quarter of 1993.
30
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
BRENTON BANKS, INC.
By /s/ C. Robert Brenton
Chairman of the Board of Directors
C. ROBERT BRENTON
Date: March 16, 1994
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
By /s/ William H. Brenton
Chairman of the Executive Committee,
Vice Chairman of the Board of Directors and Director
WILLIAM H. BRENTON
Principal Executive Officer
Date: March 16, 1994
By /s/ C. Robert Brenton
Chairman of the Board and Director
C. ROBERT BRENTON
Principal Executive Officer
Date: March 16, 1994
31
<PAGE>
By /s/ Junius C. Brenton
President (1990-1993) and Director
JUNIUS C. BRENTON
Principal Executive Officer
Date: March 16, 1994
By /s/ Robert L. DeMeulenaere
President and Director
ROBERT L. DEMEULENAERE
Date: March 16, 1994
By /s/ Steven T. Schuler
Vice President/Treasurer/Secretary
STEVEN T. SCHULER
Chief Financial Officer
Date: March 16, 1994
By /s/ Thea H. Oberlander
Corporate Controller
THEA H. OBERLANDER
Date: March 16, 1994
BOARD OF DIRECTORS
By /s/ R. Dean Duben
R. DEAN DUBEN
Date: March 16, 1994
By /s/ Thomas R. Smith
THOMAS R. SMITH
Date: March 16, 1994
32
<PAGE>
EXHIBIT INDEX
Exhibits Page
Exhibit 3
The Articles of Incorporation, as amended, and
Bylaws, as amended, of Brenton Banks, Inc. . . . . . . . . 37
Exhibit 10
Summary of the Bank Bonus Plans under which some
of the executive officers of the Parent Company
and certain other personnel of the subsidiaries
are eligible to receive a bonus each year. . . . . . . . . 95
Exhibit 10(i)
Summary of the Executive Bonus Plan under which
some of the executive officers of the Parent Company
are eligible to receive a bonus each year. . . . . . . . . 97
Exhibit 10(ii)
Summary of the Trust Division Bonus Plan under
which one of the executive officers of the Parent
Company is eligible to receive a bonus each year. . . . . . 99
Exhibit 10(iii)
Summary of the Brokerage Bonus Plan under which
one of the executive officers of the Parent Company
is eligible to receive a bonus each year. . . . . . . . . . 101
Exhibit 10(iv)
Summary of the Employee Bonus Plan under which
employees of the Company are eligible to receive
a bonus each year. . . . . . . . . . . . . . . . . . . . . 103
Exhibit 10(v)
Employment Agreement, dated July 6, 1989, between
William H. Brenton and Brenton Banks, Inc. This
Employment Agreement is incorporated by reference
from Form 10-K of Brenton Banks, Inc., for the
year ended December 31, 1989. . . . . . . . . . . . . . . . 105
Exhibit 10(vi)
Non-Qualified Stock Option Plan, Administrative
Rules and Agreement under which officers of the
Company are eligible to receive options to purchase
an aggregate of 200,000 shares of the Company's
$5 par value common stock. This Non-Qualified Stock
Option Plan, Administrative Rules and Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc., for the year ended December 31, 1992. . . . . 106
33
<PAGE>
Exhibit 10(vii)
Long-Term Stock Compensation Plan, Agreements
and related documents, effective for 1993, under
which certain of the Company's senior officers and
bank presidents are eligible to receive shares of
Brenton Banks, Inc. stock based upon their service
to the Company and Company performance. . . . . . . . . . . 107
Exhibit 10(viii)
Long-Term Stock Compensation Plan, Agreements and
related documents, effective for 1992, under which
certain of the Company's senior officers and bank
presidents are eligible to receive shares of Brenton
Banks, Inc. stock based upon their service to the
Company and Company performance. This Long-Term
Stock Compensation Plan, Agreements and related
documents, effective for 1992, are incorporated by
reference from Form 10-K of Brenton Banks, Inc.,
for the year ended December 31, 1992. . . . . . . . . . . . 121
Exhibit 10(ix)
Merger Agreement between Brenton Banks, Inc. and
Ames Financial Corporation, dated June 17, 1992.
This Merger Agreement is incorporated by reference
from Form S-4 of Brenton Banks, Inc. filed on
August 13, 1992. . . . . . . . . . . . . . . . . . . . . . 122
Exhibit 10(x)
Standard Agreement for Advances, Pledge and Security
Agreement between Brenton banks and the Federal Home
Loan bank of Des Moines. . . . . . . . . . . . . . . . . . 123
Exhibit 10(xi)
Short-term note with American National Bank & Trust
Company of Chicago as of April 30, 1993, setting forth
the terms of the Parent Company's $2,000,000 short-term
debt agreement. . . . . . . . . . . . . . . . . . . . . . . 128
Exhibit 10(xii)
Data Processing Agreement dated December 1, 1991 by
and between Systematics, Inc. and Brenton Information
Systems, Inc. This Data Processing Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc., for the year ended December 31, 1991. . . . . 130
Exhibit 10(xiii)
Item Processing Agreement dated December 1, 1991
between Brenton Bank Services, Inc. and the Federal
Home Loan Bank of Des Moines. This Item Processing
Agreement is incorporated by reference from Form
10-K of Brenton Banks, Inc., for the year ended
December 31, 1992. . . . . . . . . . . . . . . . . . . . . 131
Exhibit 10(xiv)
Restated Trust Agreement for Brenton Banks, Inc.
Retirement Plan, effective January 1, 1986. This
Restated Trust Agreement is incorporated by
reference from Form 10-K of Brenton Banks, Inc.,
for the year ended December 31, 1991. . . . . . . . . . . . 132
34
<PAGE>
Exhibit 10(xv)
Amendment to the Restated Trust Agreement for
Brenton Banks, Inc. Retirement Plan, effective
May 31, 1989. The Amendment is incorporated by
reference from Form 10-K of Brenton Banks, Inc.
for the year ended December 31, 1989. . . . . . . . . . . . 133
Exhibit 10(xvi)
Indenture Agreement with respect to Capital Notes
dated April 12, 1993. . . . . . . . . . . . . . . . . . . . 134
Exhibit 10(xvii)
Indenture Agreement with respect to Capital Notes
dated April 14, 1992. This Indenture Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc., for the year ended December 31, 1992. . . . . 149
Exhibit 10(xviii)
Indenture Agreement with respect to Capital Notes
dated August 5, 1991. This Indenture Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc. for the year ended December 31, 1991. . . . . . 150
Exhibit 10(xix)
Indenture Agreement with respect to Capital Notes
dated March 27, 1991. This Indenture Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc. for the year ended December 31, 1991. . . . . . 151
Exhibit 10(xx)
Indenture Agreement with respect to Capital Notes
dated April 5, 1985. This Indenture Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc. for the year ended December 31, 1991. . . . . . 152
Exhibit 11
Statement of computation of earnings per share. . . . . . . 153
Exhibit 12
Statement of computation of ratios. . . . . . . . . . . . . 155
Exhibit 13
The Annual Report to Shareholders of Brenton Banks,
Inc., for the 1993 calendar year. . . . . . . . . . . . . . 158
Exhibit 22
Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . 201
35
<PAGE>
Exhibit 24
Consent of KPMG Peat Marwick to the incorporation of
their report dated January 31, 1994, relating to
certain consolidated statements of condition of
Brenton Banks, Inc. into the Registration Statement
on Form S-8 of Brenton Banks, Inc. . . . . . . . . . . . . 204
36
<PAGE>
Exhibit 3
The Articles of Incorporation, as amended, and Bylaws, as amended,
of Brenton Banks, Inc.
37
<PAGE>
RESTATED ARTICLES OF INCORPORATION
OF
BRENTON BANKS, INC.
To the Secretary of State
of the State of Iowa:
Pursuant to the provisions of Section 61 of the Iowa Business
Corporation Act, the undersigned corporation adopts the following restated
articles of incorporation.
ARTICLE I
Name and Place of Business
Section 1. The name of this corporation shall be Brenton Banks, Inc.
Its name prior to the adoption of these Restated Articles of Incorporation
was the same.
Section 2. The principal place of business of this corporation shall be
in the City of Des Moines, County of Polk, State of Iowa.
Section 3. The corporation may establish branch offices and agencies in
Iowa or in other states as the Board of Directors may deem necessary or
expedient.
Section 4. The address of the registered office of the corporation in
the State of Iowa is: 2840 Ingersoll Avenue in the City of Des Moines,
County of Polk, and the name of its registered agent at such address is Wm.
H. Brenton.
ARTICLE II
Objects and Purposes
Section 1. The general nature of the business to be conducted by this
corporation shall be:
(a) To acquire by purchase, subscription, contract or otherwise,
and to hold, own, sell, assign, transfer, exchange, mortgage, pledge, or
otherwise negotiate, or dispose of, and generally to deal in and with
all forms of securities,
38
<PAGE>
including but not limited to, shares, stocks, bonds, debentures, notes,
scrip, mortgages, warrants, contracts, choses in action, obligations,
evidences of indebtedness, certificates of deposit, voting trust
certificates, and certificates of interest issued or created, or to be
issued or created, by corporations, associations, companies,
partnerships, firms, trustees, syndicates, individuals, governments,
states, municipalities, and other political and governmental divisions
and subdivisions, or by any combinations, organizations, or entities
whatsoever, irrespective of their form or the name by which they may be
described, and all trust, participation, and other certificates of, and
receipts evidencing interests in, any such securities; and to make
payment therefore in cash or by the issuance of its stock, bonds, notes,
debentures, other obligations or securities, or by any other lawful
means of payment whatsoever; to receive, collect, and dispose of
interest, dividends, and income upon, of, and from any and all such
securities or evidences of interest therein; to exercise any and all
rights, powers, and privileges of individual ownership or interest
therein, including the right to vote thereon, and to consent and
otherwise act with respect thereto; to do any and all acts and things
for the preservation, protection, improvement, and enhancement in value
of any and all such securities, or evidences of interest therein; to
acquire and become interested in any such securities, or evidences of
interest therein, as aforesaid, by original subscription, underwriting,
participation in syndicates, or otherwise, and irrespective of whether
or not such securities or evidences of interest therein be fully paid or
subject to further payments; to make payments thereon as called for, or
in advance of call, otherwise, and to underwrite or subscribe for the
same, conditionally or otherwise, and with a view to investment, for
resale, or for any other lawful purpose.
(b) To undertake or aid any enterprise and carry out any
transactions whatsoever that may be lawfully undertaken and carried out
by capitalists; and to carry on a general financial business and general
financial operations of all kinds, so far as the same are not prohibited
by the laws of the State of Iowa against the exercise of banking powers
by
39
<PAGE>
corporations, and to operate and maintain an investment service, as well
as to act in the capacity of manager for, and/or consultant to, any
persons, firms, corporations, or associations and to give advice to such
persons, firms, corporations, or associations concerning their business
activities, their investments, the conditions of the various stock and
mercantile markets, and in general to aid and assist them in any manner
that may be desired.
(c) To acquire, own, maintain, and operate a statistical,
informatory, and advisory service to banks, bankers, trust companies,
financial institutions generally, investment companies, and investors
generally; to enter into contracts with banks and bankers, trust
companies, investment companies, financial institutions of all kinds,
and investors generally, for the purpose of supplying and furnishing
financial statistics, information, reports, and opinions concerning the
value of corporate securities and the capital and earnings of
corporations whose securities are dealt in over-the-counter and in the
public exchange and markets.
(d) To make investigations as to the business, affairs, and
property of corporations, partnerships, and various forms of business
enterprises; to make appraisals and valuations of all kinds; and to give
financial advice relative to the methods of procuring additional capital
for business extension, advice relative to the conversion of securities
of one or more corporations into those of another, and generally to
instruct and to aid corporations, partnerships, and individuals on
matters pertaining to new capital structure.
(e) To operate, manage, supervise, direct and control all or any
part of the business and property of any corporation, association,
partnership, combination, organization, entity, or individual, domestic
or foreign, through stock organization, by contract, or otherwise, and
for that purpose to appoint and remunerate any directors, accountants,
or other experts or agents, and to receive for such service fixed or
contingent compensation, or compensation in the form of commissions,
management fees, shares in gross or net receipts or profits, or in any
other manner or upon any other
40
<PAGE>
terms whatsoever, or so to act without direct compensation; and to
promote, participate, or assist in any way in the business of any such
corporation, association, partnership, combination, organization,
entity, or individual.
Section 2. in furtherance and not in limitation of the general powers
conferred by the laws of the State of Iowa, and the purposes and objects
hereinbefore stated, it is expressly provided that the corporation also shall
have the following powers:
(a) To purchase or otherwise acquire, own, hold, use, improve,
manage, mortgage, charge, pledge, sell, convey, lease, exchange,
transfer, dispose of and deal with in any manner whatsoever, any and all
kinds of real and personal property including stock, securities, and
other choses in action issued or created by this or any other
corporation or by any association, firm, entity, individual or
governmental authority. To allow or cause the legal estate and interest
in any businesses or property acquired, established, or carried on by
the corporation, to remain, or to be vested or registered in the name
of, or to be carried on by, any individual or by any foreign or other
corporation formed or to be formed, either upon trust for, or as agents
or nominees of, this corporation, or upon any other terms or conditions
which the board of directors may consider for the benefit of this
corporation; to manage the affairs or take over and carry on the
business of any such corporation either by acquiring the whole or part
of the shares of stock or bonds, debentures, or other securities
thereof, or otherwise; to exercise all or any of the powers of any such
corporation or of holders of shares of stock, debentures, or securities
thereof; and to receive and distribute as profits the dividends and
interest on such shares, stock, debentures, or securities. All
conveyances of real property by the corporation shall be executed by the
chairman, president or any vice-president and counter-signed by the
secretary or any assistant secretary with an impression of the corporate
seal affixed; and all releases of mortgages, liens, judgments or other
claims required by law to be made of record may be executed by the
chairman, president, any vice-president, secretary or any assistant
secretary.
(b) To cause to be formed, to promote, and to aid in the formation
of any corporation to association, domestic or foreign, and to cause or
participate in the merger, consolidation, reorganization, liquidation or
dissolution of any corporation or
41
<PAGE>
association, domestic or foreign, in which, or in the business of
welfare of which, the corporation shall have, directly or indirectly,
any interest.
(c) To do everything necessary, proper, convenient, or incidental
to the accomplishment of the purposes and objects of the corporation or
which is calculated, directly or indirectly, to promote the welfare or
interests of the corporation or enhance the value or render profitable
any if its property or rights.
(d) In general, to carry on any business not contrary to the laws
of the State of Iowa, and to do any and all of the acts and things
hereinbefore or hereinafter set forth to the same extent as natural
persons could do as principal, factor, agent, contractor, trustee or
otherwise, either alone or in company with any person or persons,
entity, syndicate, partnership, association or corporation.
Section 3. The foregoing clauses are to be construed both as purposes
and powers; and it is hereby expressly provided that the enumeration herein
of specific purposes, objects and powers shall not be held to limit or
restrict in any manner the general powers of the corporation. It is the
intention that the purposes, objects and powers specified in each of the
paragraphs of this Article II shall, except as otherwise expressly provided,
in no wise be limited or restricted by the references to or inferences from
the terms of any other clause or paragraph of this Article or of any other
Article in these Restated Articles of Incorporation.
ARTICLE III
Capital Stock
Section 1. The aggregate number of shares which the corporation is
authorized to issue is Two Million (2,000,000), consisting of one class of
common shares. Such shares have a par value of Five Dollars ($5.00) per
share.
Section 2. No holder of the shares of stock of the corporation shall
have any pre-emptive or preferential right of subscription to
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any class of stock of the corporation, whether now or hereafter authorized,
or to any obligations convertible into stock of the corporation, issued or
sold, and all such additional shares of stock or any obligations convertible
into stock of the corporation may be issued and disposed of by the Board of
Directors to such person or persons and upon such term and for such
consideration as the Board of Directors in its absolute discretion may deem
advisable; provided, however, that no stock shall be issued until the
corporation shall have received its full par value in cash or property, as
provided by the laws of the State of Iowa; and when issued, all shares shall
be fully paid and forever nonassessable.
Section 3. At all meetings of stockholders, each stockholder shall be
entitled to one vote for each share of common capital stock held by him,
which may be cast by the stockholder in person or by proxy, and which vote
shall not be cumulative.
Section 4. Upon the vote of a majority of the directors of this
corporation, and of a majority of the votes then appertaining to the total
number of shares of the common stock shares then issued and outstanding, this
corporation may from time to time, by amendment to these Articles, increase
the authorized capital stock of this corporation, or create one or more other
classes of stock with such designations, preferences, voting powers,
restrictions, or qualifications as may be determined by such vote, which may
be the same or different from the designations, preferences, voting powers,
restrictions or qualifications of the classes of stock of this corporation
then authorized or issued, except that no new class of stock shall hereafter
be created which is entitled to dividends or shares in distribution of assets
in priority to or concurrent with, any preferential shares theretofore
authorized and issued, unless the holders of not less than two-thirds (2/3)
of any preferential shares outstanding and the holders of two-thirds (2/3) of
the votes appertaining to each class of common stock shares shall consent
thereto in writing, or by vote in person or by proxy, at a meeting duly
called for that purpose.
ARTICLE IV
Commencement and Duration
The corporate period of this corporation shall begin on the date the
Secretary of State issues a Certificate of Incorporation, and this
corporation shall have perpetual duration.
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ARTICLE V
Directors and Officers
Section 1. The affairs of this corporation shall be conducted by a
Board of Directors consisting of not less than seven nor more than twenty-
five members, who shall be elected by the stockholders at their annual
meeting each year. A director is not required to be a stockholder in this
corporation.
Section 2. The Board of Directors may fill all vacancies occurring
between annual elections in its membership by election of persons to hold
office for the remainder of the term.
Section 3. The Board of Directors may, by resolution or resolutions
passed by a majority of the whole Board, designate one or more committees,
each committee to consist of two or more of the directors of the corporation,
which, to the extent provided in said resolution or resolutions or in the
Bylaws of the corporation, shall have and may exercise the powers of the
Board of Directors in the management of the business and affairs of the
corporation, any may have power to authorize and seal of the corporation to
be affixed to all papers which may require it. Such committee or committees
shall have such name or names as may be stated in the Bylaws of the
corporation or as may be determined from time to time by resolution adopted
by the Board of Directors.
Section 4. Any resolution in writing signed by all the members of the
Board of Directors (or any Committee thereof) shall be and constitute action
by such Board (or committee) with the same force and effect as if the same
had been duly passed by the same vote at a duly called meeting of such
bodies.
Section 5. The officers of this corporation shall be a Chairman,
President, one or more Vice Presidents, a Secretary, one or more Assistant
Secretaries, and a Treasurer, and such other officers as shall be authorized
by the Board of Directors, or provided for in the Bylaws. An officer may
hold more than one office if the Board so decides. The officers shall be
elected by the Board of Directors at the annual meeting to be held
immediately following the annual meeting of stockholders or at a special
meeting called for such purpose and shall hold office at the discretion of
the Board.
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Section 6. An officer is not required to be a director or a stockholder
in this corporation.
Section 7. The duties of the officers shall be those usually performed
by such officers in similar corporations, unless otherwise provided by
resolution of the Board of Directors, or in the Bylaws, or by the
stockholders at any annual or special meeting.
ARTICLE VI
Stockholders' Liability
Section 1. Private property of the stockholders shall be exempt from
corporate debts and liabilities.
Section 2. This Article shall not be changed except by unanimous
consent of all stockholders.
ARTICLE VII
Indemnification of Directors and Officers
The corporation shall indemnify
(1) every director or officer, or former director or former
officer, his heirs, executors and administrators, and
(2) at the discretion of the Board of Directors of the
corporation, any person, or the heirs, executors and administrators of
such person, who shall have served at its request as a director or
officer of any other corporation of which it is a stockholder or
creditor, and from which he is not entitled to be indemnified,
against reasonable expenses actually incurred by him in connection with the
defense of any action, suit or proceeding to which he may be made a party by
reason of his being, or having been, a director or officer of the corporation
or of such other corporation, except in relation to matters as to which he
shall be finally adjudged in such action, suit or proceeding, to be liable
for gross negligence or misconduct in the performance of his duties; in the
event of a settlement, indemnification
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shall be provided only in connection with such matters covered by the
settlement as to which the corporation is advised by independent counsel,
selected by or in the manner designated by the Board of Directors, that the
person to be indemnified did not commit such a breach of duty. The foregoing
right of indemnification shall not be exclusive of other rights to which he
may be entitled.
ARTICLE VIII
Bylaws
The Board of Directors, at its first meeting, shall adopt Bylaws for the
corporation and may alter such Bylaws at any regular or special meeting.
ARTICLE IX
Amendments
Amendment to these Articles, excepting Article III and Article VI, may
be made at any annual meeting of the stockholders, or at any special meeting
called for that purpose, by a vote of the majority of the shares of the
capital stock outstanding.
ARTICLE X
These Restated Articles of Incorporation set forth the provisions of the
Articles of Incorporation as heretofore and hereby amended; have been duly
adopted as required by law; and supersedes the original Articles of
Incorporation and all amendments thereto.
ARTICLE XI
The number of shares of the corporation outstanding at the time of such
adoption was 140,383; and the number of shares entitled to vote thereon was
140,383.
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ARTICLE XII
The designation and number of outstanding shares of each class entitled
to vote thereon as a class were as follows: None.
ARTICLE XIII
The number of shares voted for such amendment was 136,288; and the
number of shares voted against such amendment was none.
ARTICLE XIV
The number of shares of each class entitled to vote thereon as a class
voted for and against such amendment, respectively, was: None.
ARTICLE XV
The manner, if not set forth in such amendment, in which any exchange,
reclassification, or cancellation of issued shares provided for in the
amendment shall be effected, is as follows: These Restated Articles of
Incorporation reclassify the common stock from 400,000 shares of common stock
of Twenty-Five Dollars ($25.00) par value to 2,000,000 shares of common stock
of Five Dollar ($5.00) par value.
ARTICLE XVI
The manner in which such amendment effects a change in the stated
capital, and the amount of stated capital as changed by such amendment, are
as follows: No change.
Dated: May 5, 1972
BRENTON BANKS, Inc.
By: /s/ C. Robert Brenton, President
By: /s/ Betty L. Steel, Secretary
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STATE OF IOWA :
: ss.
COUNTY OF POLK :
On this 5th day of May, 1972, before me, a Notary Public in and for the
State of Iowa, personally appeared C. Robert Brenton and Betty L. Steel, to
be personally known, who being by me duly sworn did say that they are the
President and Secretary, respectively, of said corporation, that the seal
affixed to said instrument is the seal of said corporation, and that said
Restated Articles of Incorporation were signed and sealed on behalf of the
said corporation by authority of its Board of Directors and the said C.
Robert Brenton and Betty L. Steele acknowledged the execution of said
instrument to be the voluntary act and deed of said corporation by it and by
them voluntarily executed.
/s/ Notary Public in and for the
State of Iowa
Seal.
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ARTICLES OF AMENDMENT
TO THE
RESTATED ARTICLES OF INCORPORATION
OF BRENTON BANKS, INC.
TO THE SECRETARY OF STATE OF THE STATE OF IOWA:
Pursuant to the provisions of Section 58 of the Iowa Business
Corporation Act, Section 496A.58 of the Iowa Code, the undersigned
corporation adopts the following Articles of Amendment to its Restated
Articles of Incorporation:
1. The name of the corporation is Brenton Banks, Inc. The effective
date of its incorporation was August 31, 1948.
2. The following amendment to the Restated Articles of Incorporation
was adopted by the shareholders of the corporation on May 9, 1979, in the
manner prescribed by the Iowa Business Corporation Act:
Article III, Section 1 is amended to read as follows:
ARTICLE III
Capital Stock
Section 1. Authorized Common Shares. The aggregate number of shares of
common stock which the corporation is authorized to issue is Five Million
(5,000,000), consisting of one class. Such shares shall have a par value of
Five Dollars ($5.00) per share.
Article III is amended by renumbering the existing Sections 2, 3, and 4
thereof as Sections 3, 4, and 5, respectively, and by adding the following
section as Section 2:
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Section 2. Authorized Preferred Shares. The aggregate number of shares
of preferred stock which the corporation is authorized to issue is Five
Hundred Thousand (500,000) consisting of one class. Such shares shall have a
par value of One Dollar ($l.00) per share.
The preferred shares shall be senior to the common shares, and the
common shares shall be subject to the rights and preferences of the preferred
shares as hereinafter set forth.
The preferred shares may be issued from time to time in one or more
series in any manner permitted by law, as determined from time to time by the
Board of Directors and stated in the resolution or resolutions providing for
the issuance of such shares adopted by the Board of Directors pursuant to
authority hereby vested in it, each series to be appropriately designated,
prior to the issuance of any shares thereof, by some distinguishing letter,
number, or title. All shares of each series of preferred shares shall be
alike in every particular (except as to the dates from which dividends shall
commence to accrue) and all preferred shares shall be of equal rank and have
the same powers, preferences, and rights, and shall be subject to the same
qualifications, limitations, and restrictions, without distinction between
the shares of different series thereof, except only in regard to the
following particulars, which may be different in different series:
(a) the annual rate or rates of dividends payable on shares of such
series and the dates from which such dividends shall commence to accrue;
(b) the amount or amounts payable upon redemption thereof and the
manner in which the same may be redeemed;
(c) the amount or amounts payable to holders thereof upon any voluntary
or involuntary liquidation, dissolution, or winding up of the Corporation;
(d) the provisions of the sinking fund, if any, with respect thereto;
(e) the terms and rates of conversion or exchange thereof if
convertible or exchangeable; and
(f) the provision as to voting rights, if any.
The shares of any series of preferred share having voting power shall
not have more than one vote per share, and if the stated dividends and
amounts payable on liquidation are not paid in full, the shares of all
series of the preferred
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shares shall share ratably in the payment of dividends including
accumulations, if any, in accordance with the sums which would be payable on
such shares if all dividends were declared and paid in full, and in any
distribution of assets other than by way of dividends in accordance with the
sums which would be payable on such distribution if all sums payable were
discharged in full.
The designation of each particular series of preferred shares and its
terms in respect of the foregoing particulars shall be fixed and determined
by the Board of Directors in any manner permitted by law and stated in the
resolution or resolutions providing for the issuance of such shares adopted
by the Board of Directors pursuant to authority hereby vested in it, before
any shares of such series are issued, and shall be set forth in full or
summarized on the certificates for such series. The Board of Directors may
from time to time increase the number of shares of any series of preferred
shares already created by providing that any unissued preferred shares shall
constitute part of such series, or may decrease (but not below the number of
shares thereof then outstanding) the number of shares of any series of
preferred shares already created by providing that any unissued shares
previously assigned to such series shall no longer constitute part thereof.
The Board of Directors is hereby empowered to classify or reclassify any
unissued preferred shares by fixing or altering the terms thereof in respect
of the above mentioned particulars and by assigning the same to an existing
or newly created series from time to time before the issuance of such shares.
The holders of preferred shares of each series shall be entitled to
receive, out of any funds legally available for the purpose, when and as
declared by the Board of Directors, cash dividends thereon at such rate per
annum as shall be fixed by resolution of the Board of Directors for such
series, and no more, payable quarterly on the days fixed by the Board of
Directors for the first series. Such dividends shall be cumulative, shall be
deemed to accrue from day to day regardless of whether or not earned or
declared, and shall commence to accrue on each preferred share from such date
or dates as may be fixed by the Board of Directors prior to the issue
thereof. The Corporation in making any dividend payment upon the preferred
shares shall make dividend payments ratably upon all outstanding preferred
shares in proportion to the amount of the dividends accrued thereon to the
date of such dividend payment.
In no event, so long as any preferred shares shall remain outstanding,
shall any dividend whatsoever (other than a dividend payable in shares
ranking junior to the preferred shares as to dividends and assets) be
declared or
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paid upon, nor shall any distribution be made or ordered in respect of, the
common shares or any other class of shares ranking junior to the preferred
shares as to dividends or assets, nor shall any moneys other than the net
proceeds received from the sale of shares ranking junior to the preferred
shares as to dividends and assets be set aside for or applied to the purchase
or redemption (through a sinking fund or otherwise) of common shares or of
any other class of shares ranking junior to the preferred shares as to
dividends or assets, unless all dividends on the preferred shares of all
series for past dividend periods shall have been paid and the full dividend
on all outstanding preferred shares of all series for the then current
dividend period shall have been paid or declared and set apart for payment;
and the Corporation shall have set aside all amounts, if any, theretofore
required to be set aside as and for sinking funds, if any, for the preferred
shares of all series for the then current year, and all defaults, if any, in
complying with any such sinking fund requirements in respect of previous
years shall have been made good.
The Corporation, at the option of the Board of Directors may at any time
redeem the whole, or from time to time may redeem any part, of any series of
preferred shares, by paying therefor in cash the amount which shall have been
determined by the Board of Directors, in the resolution or resolutions
authorizing such series, to be payable upon the redemption of such shares at
such time. Redemption may be made of the whole or any part of the
outstanding shares of any one or more series, in the discretion of the Board
of Directors; if the redemption be a part of a series, the shares to be
redeemed may be selected by lot, or all of the shares of such series may be
redeemed pro rata, in such manner as may be prescribed by resolution of the
Board of Directors.
Subject to the foregoing provisions and to any qualifications,
limitations, or restrictions applicable to any particular series of preferred
shares which may be stated in the resolution or resolutions providing for the
issuance of such series, the Board of Directors shall have authority to
prescribe from time to time the manner in which any series of preferred
shares shall be redeemed.
Upon any liquidation, dissolution, or winding up of the Corporation,
whether voluntary or involuntary, the preferred shares of each series shall
be entitled, before any distribution shall be made to the common shares or to
any other class or shares junior to the preferred shares as to dividends or
assets, to be paid the full preferential amount or amounts fixed by the Board
of Directors for such series as herein authorized; but the preferred shares
shall not be entitled
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to any further payment and any remaining net assets shall be distributed
ratably to all outstanding common shares. If upon such liquidation,
dissolution, or winding up of the Corporation, whether voluntary or
involuntary, the net assets of the Corporation shall be insufficient to
permit the payment to all outstanding preferred shares of all series of the
full preferential amounts to which they are respectively entitled, then the
entire net assets of the Corporation shall be distributed ratably to all
outstanding preferred shares in proportion to the full preferential amount to
which each such share is entitled. Neither a consolidation nor a merger of
the Corporation with or into any other corporation or corporations nor the
sale of all or substantially all of the assets of the Corporation shall be
deemed to be a liquidation, dissolution, or winding up within the meaning of
this clause.
Article III is further amended by amending Article III, Section 4 (as
redesignated; previously Article III, Section 3) to read as follows:
Section 4. Subject to any voting restrictions or limitations placed
upon preferred shares by the Board of Directors pursuant to such power
granted to the Board in Article III, Section 2, at all meetings of
stockholders each stockholder shall be entitled to one vote for each share of
capital stock held by him, which vote may be cast by the stockholder in
person or by proxy, and which vote shall not be cumulative.
Article V, Section I is amended to read as follows:
ARTICLE V
Directors and Officers
Section 1. The affairs of this corporation shall be conducted by a
Board of Directors. The number of members of the Board of Directors shall be
set forth in the Bylaws of the corporation. A director is not required to be
a stockholder in this corporation.
3. The number of shares of the corporation outstanding at the time of
such adoption was 1,107,898; and the number of shares entitled to vote
thereon was 1,107,898.
4. The number of shares voted for the amendment set forth in paragraph
2 was 976,718, and the number of shares voted against such amendment was
5,700.
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5. Such amendment does not provide for an exchange, reclassification or
cancellation of issued shares.
6. Such amendment does not effect a change in the amount of stated
capital.
Dated this 14th day of May, 1979.
BRENTON BANKS, INC.
By /s/ C. Robert Brenton, President
By /s/ Betty L. Steele, Secretary
STATE OF IOWA :
: ss
COUNTY OF POLK :
On this 14th day of May, 1979, before me, the undersigned, a Notary
Public in and for said County and State, personally appeared C. Robert
Brenton and Betty L. Steele, to me personally known, who being by me duly
sworn did say that they are the President and Secretary of said corporation,
respectively, of said corporation, that the seal affixed to said instrument
is the seal of said corporation, and that said instrument was signed and
sealed on behalf of said corporation by authority of its Board of Directors
and the said C. Robert Brenton and Betty L. Steele acknowledged the execution
of said instrument to be the voluntary act and deed of said corporation by it
and by them voluntarily executed.
/s/ Claire Cole
Notary Public
in and for the County and State
Seal.
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STATEMENT OF DIVISION OF
PREFERRED STOCK INTO SERIES
OF BRENTON BANKS, INC.
STATE OF IOWA )
) SS:
COUNTY OF POLK )
TO THE SECRETARY OF STATE OF THE STATE OF IOWA:
Pursuant to Section 15(2) of the Iowa Business Corporation Act, Chapter
496A of the Iowa Code (1979), Brenton Banks, Inc. does hereby submit for
filing with the Iowa Secretary of State the following Statement:
1. The name of the corporation is Brenton Banks, Inc.
2. Attached hereto is a true and correct copy of a resolution adopted
by the Board of Directors of said corporation establishing and designating
the series, and fixing and determining the relative rights and preferences of
a portion of the preferred stock of such corporation.
3. Such resolution was adopted by the Board of Directors of Brenton
Banks, Inc. on October 18, 1979.
4. Such resolution was duly adopted by the Board of Directors of
Brenton Banks, Inc.
Dated this day 18th day of October, 1979.
BRENTON BANKS, INC.
By /s/ C. Robert Brenton, President
By /s/ Betty L. Steele, Secretary
Corporate Seal
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<PAGE>
On this 18th day of October, 1979, before me, the undersigned, a Notary
Public in and for said County and State, personally appeared C. Robert
Brenton and Betty L. Steele, to me personally known, who being by me duly
sworn did say that they are the President and Secretary, respectively, of
said corporation, that the seal affixed to said instrument is the seal of
said corporation, and that said instrument was signed and sealed on behalf of
said corporation by authority of its Board of Directors and the said C.
Robert Brenton and Betty L. Steele acknowledged the execution of said
instrument to be the voluntary act and deed of said corporation by it and by
them voluntarily executed.
/s/ Sandra S. Holan
Notary Public in and for said County
and State
Seal.
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CERTIFICATE OF RESOLUTION ESTABLISHING AND
DESIGNATING THE SERIES A $9.50 CUMULATIVE
PREFERRED STOCK OF
BRENTON BANKS, INC.
BRENTON BANKS, INC., a corporation organized and existing under the laws
of the State of Iowa (the "Company"),
DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors by the
Restated Articles of Incorporation, as amended, of the Company (the "Restated
Articles of Incorporation"), and pursuant to the provisions of I.C.A. Section
496A.15, said Board of Directors at a meeting thereof duly called, convened
and held on October 18, 1979, duly adopted a resolution providing for the
issuance of 60,000 shares of Series A $9.50 Cumulative Preferred Stock, par
value $1.00 per share, which resolution is as follows:
Be It Resolved that, pursuant to the authority vested in the Board of
Directors (the "Board") of Brenton Banks, Inc., (the "Company") by the
Restated Articles of Incorporation, as amended, of the Company, there is
hereby established and authorized to be issued a series of the Company's
Preferred Stock, $1.00 par value, consisting of 60,000 shares, which shall
have the following voting powers, designation, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions:
1. Designation.
The designation of said series of Preferred Stock shall be "Series A
$9.50 Cumulative Preferred Stock" (the "Series A Preferred Stock").
2. Dividends.
The holders of the Series A Preferred Stock shall be entitled to
cumulative cash dividends at the rate of $9.50 per share per annum (and no
more) computed on the basis of a 360-day year of twelve 30-day months, when
and as declared by the Board, out of any funds of the Company at the time
legally available for the payment of cash dividends on shares of the Series
A Preferred Stock, payable quarterly on the fifteenth day of each of the
months of January, April, July and October
Exhibit A
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of each calendar year commencing January 15, 1980 (each such day being
hereinafter called a "dividend payment date"); provided, however, that
dividends in arrears may be paid at any time. Such dividends on each share
of Series A Preferred Stock shall accrue daily, and shall be cumulative, from
the date on which such share of Series A Preferred Stock shall have been
originally issued and shall so accrue and be accumulative whether or not the
Company shall have had net profits or assets legally available for such
dividends in any quarterly dividend payment period. Arrears of dividends
shall not bear interest.
3. Optional Redemptions.
(a) In addition to the requirements of the Redemption Fund set
forth in paragraph 4 and to the rights of redemption set forth
hereinafter, the Company may at any time and from time to time call for
redemption and redeem all or any portion of the then outstanding shares
of the Series A Preferred Stock (in units of 1000 shares or an integral
multiple of 100 in excess thereof) at the then applicable redemption
price per share set forth below, plus a sum of money equivalent to all
accrued and unpaid cumulative dividends (whether or not declared or
earned thereon to and including the date of redemption.
Date of Redemption
Applicable
On or After and Prior to Redemption
October 15, October 15, Price Per Share
1979 1980 $119.00
1980 1981 $119.00
1981 1982 $119.00
1982 1983 $105.00
1983 1984 $104.00
1984 1985 $103.00
1985 1886 $102.00
1986 1987 $101.00
1987 and thereafter $100.00
(b) In addition to the requirements of the Redemption Fund set
forth in paragraph 4 and to the right of redemption pursuant to paragraph
3(a), on each Redemption Fund payment date specified in paragraph 4(a)
(the "Redemption Fund Payment Date") the Company shall have the option
(which shall not be cumulative) to redeem that number of shares of the
Series A Preferred Stock equal to the number of such shares then required
to be redeemed pursuant to paragraph 4, or any part thereof, at a price
per share equal to $100, plus a sum of money equivalent to all accrued
and unpaid cumulative dividends (whether or not declared or earned)
thereof to and including the date of redemption.
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(c) In the event that the Company shall have requested the holders
of the Series A Preferred Stock in writing to consent to a Prohibited
Corporate Action, and the holder or holders of less than the greater of
that percentage of the outstanding Series A Preferred Stock as would be
required under either applicable law or the provisions of paragraph 6(a)
to approve such Prohibited Corporate Action shall, within 30 days from
the date of such request, have consented in writing to such Prohibited
Corporate Action, then the Company may, within 120 days after such 30 day
period (upon the notice and otherwise in the manner specified in
paragraph 5), redeem all but not less than all of the shares of Series A
Preferred Stock then outstanding. The request of the Company for such
consent shall contain a reasonably detailed description of such
transaction being proposed and the terms and provisions with respect
thereto.
In the event the Company shall have failed to obtain the requisite
consent as described above, redemption of Series A Preferred Stock
pursuant to the provisions of this paragraph 3(c) shall be made
concurrently with the completion of such Prohibited Corporate Action and
shall be made at a redemption price of $100 per share, plus, in each
case, all accrued and unpaid cumulative dividends thereon (whether or not
declared or earned) to the date fixed for redemption.
4. Redemption Fund for Series A Preferred Stock
(a) On or before October 15, 1984, and on or before October 15 of
each year thereafter, to and including October 15, 1989, the Company
shall, so long as any shares of Series A Preferred Stock remain
outstanding, set apart out of its funds lawfully available for the
purpose (or to the extent the same are available therefor), as and for a
Redemption Fund for the retirement of the Series A Preferred Stock (the
"Redemption Fund"), that sum in cash which shall be sufficient to redeem,
at a price per share equal to $100 plus all accrued and unpaid cumulative
dividends thereon to the date fixed for such retirement the lesser of (i)
10,000 shares of Series A Preferred Stock; or (ii) the aggregate
outstanding shares of Series A Preferred Stock.
(b) The amounts so set apart for the Redemption Fund shall be
applied by the Company, on October 15 in each of the years 1984 through
1989, inclusive to the redemption (in the manner and upon the notice
specified in paragraph 5) of the maximum number of shares of Series A
Preferred Stock redeemable from such amounts so set apart at said price.
(c) The obligation of the Company to set apart such sum or sums
specified in paragraph 4(a) shall be cumulative so that, if the full
amount required to be set apart as
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<PAGE>
aforesaid in each such year for the Redemption Fund shall not be so set
apart, the deficiency shall be made good and shares of the Series A
Preferred Stock shall be called for redemption and redeemed accordingly,
at any time thereafter as soon a funds shall become lawfully available
therefore, whether or not on a Redemption Fund Payment Date specified in
paragraph 4(a). Optional redemptions pursuant to paragraph 3 or
repurchases, directly or indirectly, by the Company of shares of the
Series A Preferred Stock shall not affect the Company's obligations to
make the Redemption Fund payments required by this paragraph 4; provided,
however, that in the event of any redemption or repurchase of Series A
Preferred Stock other than pursuant to the provisions of paragraphs 3(a),
3(b) or 4 which does not result in the redemption or repurchase of all of
the outstanding shares of Series A Preferred Stock (a "Special
Redemption"), then the redemptions required to be made pursuant to the
provisions of this paragraph 4 shall, after the occurrence of such
Special Redemption be reduced in the same proportions that the number of
share of Series A Preferred Stock outstanding immediately preceding such
Special Redemption has been reduced by such to the end that the remaining
redemptions required to be made pursuant to this paragraph 4 on each of
the shares of Series A Preferred Stock shall be the same as if shares of
Series A Preferred Stock had not been redeemed or repurchased pursuant to
a Special Redemption.
5. Manner and Effect of Redemptions
(a) Notice of any proposed redemption of shares of Series A
Preferred Stock shall be given by the Company by mailing, registered or
certified mail, postage prepaid, such notice not less than thirty nor
more than sixty days prior to the date fixed for such redemption to the
holders of record of shares of Series A Preferred Stock to be redeemed or
purchased, at their respective addresses appearing on the books of the
Company. Said notice shall specify the shares called for redemption, the
redemption price and the place at which and the date on which the shares
called for redemption will, upon presentation and surrender of the
certificates of stock evidencing such shares, be redeemed and the
redemption price therefor paid.
(b) If less than all of the shares of the Series A Preferred Stock
are to be redeemed pursuant to the provisions of this Resolution,
selection of shares to be redeemed shall be pro-rata in accordance with
the number of shares of Series A Preferred Stock held by each holder
thereof.
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(c) If the giving of notice of redemption shall have been completed
as above provided and the deposit of funds shall have been made pursuant
to subparagraph (d) below, the holders of shares of Series A Preferred
Stock shall be entitled to receive the redemption price (including
accrued dividends with respect to the shares called for redemption) on
the date and at the place stated in such notice upon surrender of
certificates for such shares, duly endorsed or accompanied by duly
executed stock transfer powers.
(d) On or prior to the date fixed for any redemption of shares of
Series A Preferred Stock, the Company shall deposit as a trust fund with
Brenton National Bank of Des Moines or any bank or trust company in good
standing, organized under the laws of the United States of America or the
State of Illinois and doing business in Chicago, Illinois with a capital
and surplus of at least fifty million dollars, selected by the Board, a
sum sufficient to redeem on the date fixed for redemption such shares
called for redemption, with irrevocable instructions to said bank or
trust company to pay said sum to the holders of the shares to be redeemed
upon their surrender of their certificates pursuant to subparagraph (c)
of this paragraph 5. From and after the date fixed for redemption, the
shares so called for redemption shall be deemed to be redeemed and
dividends on such stock shall cease to accrue. The holders of such
shares shall cease to be shareholders with respect to such shares and
shall have no rights with respect thereto, from and after the date fixed
for redemption, except the right to receive from said bank or trust
company payment of the redemption price, without interest thereon, upon
the surrender of the certificates of certificates evidencing such shares.
(e) All shares of series A Preferred Stock which shall have been
redeemed, purchased or otherwise acquired by the Company may become
additional authorized but unissued shares of Preferred Stock, but such
shares shall not be reissued as shares of Series A Preferred Stock.
6. Certain Restrictions on Corporate Action
So long as any shares of Series A Preferred Stock shall be outstanding,
and in addition to any other approvals or consents required by law, without
the prior written consent of the holders of not less than 66-2/3% of all
shares of Series A Preferred Stock at the time outstanding:
(a) Prohibited Corporate Actions. The Company shall not be a party
to any Prohibited Corporate Action.
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(b) Dividends on or Redemption of Junior Stock. The Company shall
not declare or pay any dividend or make any other distribution on any
shares of Junior Stock or purchase, redeem or otherwise acquire for any
consideration other than in exchange for or out of the net cash proceeds
of the contemporaneous issue or sale of other shares of Junior stock), or
set aside as a sinking fund or other fund for the redemption or
repurchase of any shares of Junior Stock or any warrants, rights or
options to purchase shares of Junior Stock (all such declarations,
dividends, purchase payments or other distributions or allocations being
herein called "Restricted Stock Payments"), unless at the time of making
payment or declaration of the proposed Restricted Stock Payment (i) all
dividend and Redemption Fund payments applicable to the Series A
Preferred Stock have been currently satisfied, and (ii) after giving
effect to the proposed Restricted Stock Payment the aggregate amount of
Restricted Stock payments made during the period from and after January
1, 1979 to and including the date of the making of the proposed
Restricted Stock Payment, would not exceed the sum of (x) $2,000,000 plus
(y) Consolidated Net Income for such period, on a cumulative basis for
said entire period.
(c) Agreements Restricting Dividends on or Redemption of the Series
A Preferred Stock. The Company shall not (i) enter into any agreement,
indenture or other instrument containing express provisions restricting
or limiting the obligation or right of the Company to make payment of
dividends on shares of the Series A Preferred Stock or payments into the
Redemption Fund described in paragraph 4 or the redemption of the Series
A Preferred Stock therefrom nor (ii) will it permit any subsidiary to
enter into any agreement, indenture or other instruments (other than with
regulatory authorities having jurisdiction over such subsidiary)
containing express provisions restricting or limiting the right of such
Subsidiary to make, payments of dividends on the stock of such Subsidiary
owned by the Company if such provisions are, at the time of entering into
such agreement indenture or other instrument, more restrictive with
respect to the payment of such dividends than the applicable provisions
of any Federal or state statute rule or regulation to which such
Subsidiary may at such time be subject.
(d) Issuance of Parity Stock. The Company shall not create,
authorize or issue any shares of any Parity Stock unless at the time of
issuance thereof and after giving effect thereto and to the application
of the proceeds thereof. Net Income Available for Fixed Charges of the
Company for any period of 12 consecutive calendar months out of the 15
calendar months immediately proceeding the issuance of such Parity Stock
shall have been at least equal to 200% of Pro Forma Fixed Charges for
such period.
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(e) Redemptions of Preferred Stock. If and so long as any
Redemption Fund payment or any quarterly dividend on the Series A
Preferred Stock be in arrears, the Company shall not redeem, purchase or
otherwise acquire, by way of sinking fund payments or purchase fund
payments or otherwise, any other series of Preferred Stock unless funds
shall simultaneously be set apart for the redemption Fund and for the
sinking fund or analogous funds for the redemption of shares of all other
series of Preferred Stock, ratably in accordance with the sums which
would so be set apart if all Redemption Fund payments in arrears and all
sinking or analogous fund payments in arrears for all other series of
Preferred Stock were set aside in full, and the funds so set apart shall
forthwith be applied to the redemption of the maximum number of shares of
each series of Preferred Stock redeemable from the amounts so set apart
at the respective prices applicable thereto. Whenever there shall be
deposited or set aside the whole or any part of the funds required to be
deposited or set aside by the Company as a sinking fund or purchase fund
or other similar fund for the periodic retirement of shares of any other
series of the Company's Preferred Stock, there shall also be deposited or
set aside at the same time the full amount or the same proportionate
part, as the case may be, of the funds, if any, then due to be deposited
or set aside for the Redemption Fund for the periodic retirement of
shares of Series A Preferred Stock then outstanding.
(f) Issuance of Prior Stock. The Company shall not create,
authorize or issue any shares of any Prior Stock.
So long as any shares of Series A Preferred Stock shall be
outstanding and in addition to any other approvals or consents required by
law, without the prior written consent of the holders of 100% of all shares
of Series A Preferred Stock at the time outstanding;
(g) Certain Amendments. The company shall not amend, alter or
repeal any of the provisions of its Restated Article of Incorporation or
of this Resolution in any manner which adversely affects the rights,
preferences or powers, or the qualification, limitations or restrictions
of the Series A Preferred Stock or the holders thereof.
7. Preference on Liquidation, Dissolution or Winding Up.
In the event of any complete or partial liquidation, dissolution or
winding up of the affairs of the Company or any distribution of its assets to
its shareholders, whether voluntary or involuntary, the holders of Series A
Preferred Stock shall be entitled to be paid in full out of any legally
available assets of the Company, before any distribution or payment shall be
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made to the holders of any Junior Stock, (i) is such liquidation, dissolution
or winding up shall be voluntary, a sum in cash equal to
(x) $105 per share if the Voluntary Liquidation Date shall be prior
to October 15, 1982; or
(y) if the Voluntary Liquidation Date shall be on or after October
15, 1982, the redemption price that would have been payable had the
Company, instead, at its option redeemed the same pursuant to paragraph
3(a) on such Voluntary Liquidation Date,
or (ii) if such liquidation, dissolution or winding up shall be involuntary,
a sum in cash equal to $100 per share, plus in each case, full accrued,
unpaid, cumulative dividends, if any, thereon (whether or not earned or
declared) to the date of payment.
As used in this paragraph 7, the term "Voluntary Liquidation Date" shall
mean the date of commencement of the proceedings for any voluntary complete
or partial liquidation, dissolution or winding up of the affairs of the
Company or any voluntary distribution of its assets to its shareholders
(which commencement date shall be deemed to be the earliest date on which the
resolution shall be adopted by the Board or requisite holders of any series
or class of capital stock proposing the voluntary liquidation concerned).
A Prohibited Corporate Action shall not be regarded as a liquidation,
dissolution or winding up of the affairs of the Company within the meaning of
this paragraph 7.
8. Conversion Rights
Shares of the Series A Preferred Stock shall not be convertible into
shares of any other class of capital stock of the Company.
9. Stated Capital for the Series A Preferred Stock.
The Series A Preferred Stock shall have a stated capital per share equal
to its par value.
10. Voting Power.
(a) The holders of the Series A Preferred Stock shall not be
entitled to vote and shall not be entitled to notice of any shareholders'
meeting except as otherwise provided by law or by the provision of
paragraph 6.
(b) If at any time either (i) dividends on the Series A Preferred
Stock shall be in arrears (regardless of the cause of such arrearage) in
respect of any four or more
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quarter-annual dividend payments (or the equivalent), in whole or in
part, or (ii) the Company shall be in default (regardless of the cause of
such default) in any annual (or the equivalent) redemption or sinking
fund payment, in whole or in part, on the Series A Preferred Stock, then
the holders of not less than 51% of all outstanding shares of Series A
Preferred Stock, shall have the right by written instrument filed with
the Secretary of the Company to appoint two observers who shall be
entitled so long as any such event shall continue (w) to receive the same
notice in respect of all meetings (both regular and special) of the Board
and each committee thereof as are required to be furnished to members of
the Board or such committee by law or by the Restated Article of
Incorporation or By-laws of the Company, (x) to attend all meetings of
the Board and each committee thereof and to receive minutes of all
meetings of the Board, (y) to receive all information and reports which
are furnished to members of the Board and each committee thereof and (z)
to participate in all discussions conducted at meetings of the Board and
each committee thereof; but such observers shall not constitute members
of the Board or any committee thereof and shall not be entitled to vote
on any matters presented to the Board or any committee thereof.
11. Definitions.
As used herein the following terms shall have the following meanings:
"Capitalized Lease" shall mean any lease the obligation for Rentals with
respect to which is required to be capitalized on a balance sheet of the
lessee in accordance with generally accepted accounting principles.
"Common Stock" shall include any class of capital stock of the Company
now or hereafter authorized, the right of which to share in distributions
either of earnings or assets of such corporation is without limit as to any
amount or percentage.
"Consolidated Net Income" for any period shall mean the gross revenues of
the Company and its Subsidiaries for such period less all expenses and other
proper charges (including taxes on income), determined on a consolidated
basis in accordance with generally accepted accounting principles
consistently applied and after eliminating earnings or losses attributable to
outstanding Minority Interests, but excluding in any event:
(i) any excess of gains over losses (but not any excess of losses
over gains) on the sale or other disposition of investments (other than
investments
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held in the ordinary course of the banking business) or fixed or capital
assets and any taxes on such excluded gains;
(ii) the proceeds of any life insurance policy;
(iii) net earnings and losses of any Subsidiary of the Company
accrued prior to the date it became a Subsidiary of the Company;
(iv) net earnings and losses of any corporation (other than a
Subsidiary of the Company), substantially all the assets of which have
been acquired in any manner, realized by such other corporation prior to
the date of such acquisition;
(v) net earnings and losses of any corporation (other than a
Subsidiary of the Company) with which the Company or a Subsidiary of the
Company shall have consolidated or which shall have merged into or with
the Company or a Subsidiary of the Company prior to the date of such
consolidation or merger;
(vi) net earnings of any business entity (other than a Subsidiary of
the Company) in which the Company or any Subsidiary of the Company has an
ownership interest unless such net earnings shall have actually been
received by the Company or such Subsidiary in the form of cash
distributions;
(vii) any portion of the net earnings of any Subsidiary of the
Company which for any reason is unavailable for payment of dividends to
the company or any other Subsidiary of the Company;
(viii) earnings resulting from any reappraisal, revaluation or
write-up of assets (other than in the ordinary course of business of a
financial institution);
(ix) any deferred or other credit representing any excess of the
equity in any Subsidiary of the Company at the date of acquisition
thereof over the amount invested in such Subsidiary of the Company;
(x) any gain arising from the acquisition of any securities of the
Company or any Subsidiary of the Company; and
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(xi) any reversal of any contingency reserve, except to the extent
that provision for such contingency reserve shall have been made from
income arising during such period.
"Fixed Charges" for any period shall mean on a consolidated basis the sum
of (i) all interest and all amortization of debt discount and expense in
respect of all indebtedness of the Company and its Subsidiaries (including
imputed interest on Capitalized Leases) other than indebtedness of
Subsidiaries of the Company consisting of deposits included within the
definitions contained in 12 C.F.R. 217.1 and (ii) 33-1/3% of all Rentals in
respect of all leases other than Capitalized Leases payable during such
period by the Company and its Subsidiaries.
"Junior Stock" shall mean and include the Common Stock of the Company and
all other shares of stock of any other class of the Company at any time
created and issued ranking junior the Series A Preferred Stock with respect
to the right to receive dividends and the right tot he distribution of assets
upon liquidation, dissolution or winding up of the Company.
"Minority Interests" shall mean any shares of stock of any class of a
Subsidiary of the Company (other than directors' qualifying shares as
required by law) that are not owned by the Company and/or one or more of its
Subsidiaries, Minority Interests shall be valued by valuing Minority
Interests constituting preferred stock at the voluntary or involuntary
liquidating value of such preferred stock, whichever is great, and by valuing
Minority Interests constituting common stock at the book value of capital and
surplus applicable thereto adjusted, if necessary, to reflect any changes
from the book value of such common stock required by the foregoing method of
valuing Minority Interests in preferred stock.
"Net Income Available for Fixed Charges" for any period shall mean the
sum of (i) Consolidated Net Income during such period plus (to the extent
deducted in determining Consolidated Net Income), (ii) all provisions for any
federal, state or other income taxes made by the Company and its Subsidiaries
during such period and (iii) Fixed Charges during such period.
"Parity Stock" shall mean stock of any other class of the Company ranking
on a parity with the Series A Preferred Stock (including, without limitation,
shares of Series A Preferred Stock which have been redeemed, purchased
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or otherwise acquired by the Company) with respect to the payment of
dividends or the distribution of assets or any securities of any kind
convertible into shares of such Parity Stock.
"Preferred Stock" shall mean the preferred stock of the Company
authorized to be issued pursuant to Section 2 of Article III of the Restated
Articles of Incorporation of the Company.
"Prior Stock" shall mean stock of any other class of the Company ranking
prior to the Series A Preferred Stock with resect to the payment of dividends
or the distribution of assets or any securities of any kind convertible into
shares of such Prior Stock.
"Pro Forma Fixed Charges" for any period shall mean, as of the date of
any determination thereof, the sum of (i) the maximum aggregate amount of
Fixed Charges which would have become payable by the Company and its
subsidiaries in such period plus (ii) the total dividend requirements on all
series and classes of Preferred stock of the Company, determined, in each
case on a pro forma basis giving effect as of the beginning of such period to
the issuance and sale of the Parity Stock then proposed to be issued and the
application of the proceeds thereof.
"Prohibited Corporate Action" shall mean any merger, consolidation or
sale of all or substantially all of the assets of the Company.
"Rentals" shall mean and include all fixed rents (including as such all
payments which the lessee is obligated to make to the lessor on termination
of the lease or surrender of the property) payable by the Company or any of
its Subsidiaries, as lessee or sub-lessee under a lease of real or personal
property, but shall be exclusive of any amounts required to be paid by the
Company or such Subsidiary (whether or not designated as rents or additional
rents) on account of maintenance, repairs, insurance, taxes and similar
charges. Fixed rents under any so-called "percentage leases" shall be
computed solely on the basis of the minimum rents, if any, required to be
paid by the lessee regardless of sales volume or gross revenues.
"Subsidiary" shall mean, as to any particular parent corporation, any
corporation of which more than 50 percent (by number of votes) or the Voting
Stock shall be owned, by such parent corporation and/or one or more
corporations which are themselves subsidiaries of such parent corporation.
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"Voting Stock" shall mean securities of any class or classes, the holders
of which are ordinarily, in the absence of contingencies, entitled to elect
a majority of the corporate directors (or persons performing similar
functions).
IN WITNESS WHEREOF, said BRENTON BANKS, INC., has caused its corporate
seal to be hereunto affixed and this certificate to be signed by C. Robert
Brenton, its President and attested by Betty L. Steele, it Secretary, this
18th day of October 1979.
BRENTON BANKS, INC.
By: /s/ C. Robert Brenton
Its President
[Seal]
Attest:
By /s/ Betty L. Steele
Secretary
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ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF BRENTON BANKS, INC.
TO THE SECRETARY OF STATE
OF THE STATE OF IOWA:
Pursuant to the provisions of Section 58 of the Iowa Business
Corporation Act, the undersigned adopts the following Articles of Amendment
to its Articles of Incorporation:
I
The name of the corporation is Brenton Banks, Inc. The effective date
of its Articles of Incorporation was the 31st day of August, 1948.
II
The following amendment to the Articles of Incorporation was adopted by
the shareholders of the corporation on May 4, 1988, in the manner prescribed
by the Iowa Business Corporation Act.
ARTICLE VII
DIRECTORS' NONLIABILITY AND INDEMNIFICATION
1. Nonliability. A director of this corporation shall not be
personally liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except
for liability (i) for any breach of the director's duty of loyalty
to the corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or
knowing violation of the law, (iii) for any transaction from which
the director derived an improper personal benefit, or (iv) under
Section 496A.44 of the Iowa Business Corporation Act. No amendment
to or repeal of this Article shall apply to or have any effect on
the liability or alleged liability of any director of the
corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment or repeal. If Iowa law
is hereafter changed to permit further elimination or
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limitation of the liability of directors for monetary damages to
the corporation of its shareholders, then the liability of a
director of this corporation shall be eliminated or limited to the
full extent then permitted. The directors of this corporation have
agreed to serve as directors in reliance upon the provisions of
this Article.
2. Indemnification. The corporation shall indemnify a director of
this corporation, and each director of this corporation who is
serving or who has served, at the request of this corporation, as
a director, officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust, other enterprise or
employee benefit plan to the fullest extent possible against
expenses, including attorneys' fees, judgments, penalties, fines,
settlements and reasonable expenses, actually incurred by such
director or person relating to his conduct as a director of this
corporation or as a director, officer, partner, trustee, employee
or agent of another corporation, partnership, joint venture, trust,
other enterprise or employee benefit plan, except that the
mandatory indemnification required by this sentence shall not apply
(i) to a breach of a director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or knowing violation of the
law, (iii) for a transaction from which a director derived an
improper personal benefit, (iv) under Section 496A.44 of the Iowa
Business Corporation Act, or (v) against judgments, penalties,
fines and settlements arising from any proceeding by or in the
right of the corporation, or against expenses in any such case
where such director shall be adjudged liable to the corporation.
III
The number of shares of the corporation outstanding at the time of such
adoption was 2,398,645, and the number of shares entitled to vote thereon was
2,398,645.
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IV
The designation and number of outstanding shares of each class entitled
to vote thereon as a class were as follows: None.
V
The number of shares voted for such amendment was 2,124,600, and
the number of shares voted against such amendment was 13,103.
VI
The number of shares of each class entitled to vote thereon as a class
voted for and against such amendment, respectively, was: None.
VII
The manner, if not set forth in such amendment, in which any exchange,
reclassification, or cancellation of issued shares provided for in the
amendment shall be effected, is as follows: No change.
VIII
The manner in which such amendment effects a change in the amount of
stated capital, and the amount of stated capital as changed by such
amendment, are as follows: No change.
Dated: May 5, 1988.
BRENTON BANKS, INC.
By: /s/ C. Robert Brenton, President
By: /s/ Steven T. Schuler, Secretary
Corporate Seal
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<PAGE>
STATE OF IOWA :
: SS.
COUNTY OF POLK :
On this 5th day of May, 1988, before me a Notary Public in and for the
State of Iowa, personally appeared C. Robert Brenton, to me personally known,
who being by me duly sworn did say that he is President of said corporation,
that the seal affixed to said instrument is the seal of said corporation, and
that said Articles of Amendment were signed and sealed on behalf of said
corporation by authority of its Board of Directors and the said C. Robert
Brenton acknowledged the execution of said instrument to be the voluntary act
and deed of said corporation by it voluntarily executed.
/s/ Janice L. Thoman
Notary Public in and for the
State of Iowa
Seal.
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STATEMENT OF CANCELLATION OF REDEEMABLE SHARES
OF
BRENTON BANKS, INC.
TO THE SECRETARY OF STATE
OF THE STATE OF IOWA:
Pursuant to the provisions of Section 64 of the Iowa Business
Corporation Act, Chapter 496A, Code of Iowa, the undersigned corporation
submits the following statement of cancellation by redemption of redeemable
shares of the corporation.
1. The name of the corporation is Brenton Banks, Inc.
2. The effective date of incorporation was August 31, 1948.
3. Sixty thousand (60,000) shares of $9.50 Cumulative Preferred Series
A stock were canceled through redemption.
4. The aggregate number of issued shares after giving effect to such
cancellation is 2,398,645 common shares.
5. The original name of the corporation was Brenton Companies.
6. The amount of the stated capital of the corporation after giving
effect to such cancellation is $12,226,725.
Dated June 30, 1988.
BRENTON BANKS, INC.
By: /s/ C. Robert Brenton, President
By: /s/ Steven T. Schuler, Secretary
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STATE OF IOWA )
) ss.
COUNTY OF POLK )
On this 5th day of July, 1988, before me, the undersigned a Notary
Public in and for said County and State, personally appeared C. Robert
Brenton and Steven T. Schuler, to me personally known, who, being by me duly
sworn, did say that they are the President and Secretary, respectively, of
said corporation executing the within and foregoing instrument, that the seal
affixed hereto is the seal of said corporation; that said instrument was
signed and sealed on behalf of said corporation by authority of its Board of
Directors; and that the said President and Secretary, as such officers,
acknowledged the execution of said instrument to be the voluntary act and
deed of said corporation, by it and by them voluntarily executed.
/s/ Janice L. Thoman
Notary Public
in and for said County and State
Seal.
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ARTICLES OF AMENDMENT
OF BRENTON BANKS, INC.
TO THE SECRETARY OF STATE OF THE STATE OF IOWA:
Pursuant to Section 1002 or 1006 of the Iowa Business Corporation Act,
the undersigned corporation adopts the following amendment to the
corporation's Restated Articles of Incorporation.
1. The name of the corporation is Brenton Banks, Inc.
2. The following amendment was adopted by the shareholders of the
corporation:
RESOLVED, that Article III, Section 1 of the Restated
Articles of Incorporation, is amended to read as follows:
Section 1. Authorized Common Shares. The aggregate
number of shares of common stock which the corporation is
authorized to issue is Twenty Five Million (25,000,000),
consisting of one class. Such shares shall have a par value
of Five Dollars ($5.00) per share.
3. The date of adoption of the amendment was May 9, 1990.
4. The amendment was approved by the shareholders. The designation,
number of outstanding shares, number of votes entitled to be cast by each
voting group entitled to vote separately on the amendment, and the number of
votes of each voting group indisputably represented at the meeting is as
follows:
VOTES ENTITLED
DESIGNATION SHARES TO BE CAST ON VOTES REPRESENTED
OF GROUP OUTSTANDING AMENDMENT AT MEETING
Common 4,797,290 4,797,290 4,196,958
4A. The total number of votes cast for and against the amendment by
each Voting group entitled to vote separately on the amendment
is as follows:
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VOTING VOTES VOTES
GROUP FOR AGAINST
Common 4,151,304 34,706
4B. The total number of undisputed votes cast for the amendment by
each voting group was:
VOTING VOTES
GROUP FOR
Common 4,151,304
The number of votes cast for the amendment by each voting group was
sufficient for approval by that voting group.
BRENTON BANKS, INC.
By /s/ Junius C. Brenton, President
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ARTICLES OF MERGER
MERGING
AMES FINANCIAL CORPORATION
WITH AND INTO
BRENTON BANKS, INC.
Pursuant to the provisions of Section 1105 of the Iowa Business
Corporation Act, the undersigned corporation adopts the following Articles of
Merger:
1. The Plan and Agreement of Merger (the "Plan") is attached hereto and
by this reference is incorporated herein.
2. (a) The designation, number of outstanding shares and number of
votes entitled to be cast by each voting group entitled to vote separately on
the Plan as to each corporation is as follows:
Number of Number of
Name of Designation Outstanding Votes Entitled
Corporation of Shares Shares to be Cast
Ames Financial
Corporation Common 273,624 273,624
The Plan was adopted by action of the Board of Directors of
Brenton Banks, Inc. without a vote of the shareholders pursuant to the
provisions of Section 1103(7) of the Iowa Business Corporation Act.
(b) The total number undisputed votes cast for the Plan by the
common stockholders of Ames Financial Corporation was 243,385, which number
was sufficient for approval of the Plan by that voting group. The Plan was
adopted by action of the Board of Directors of Brenton Banks, Inc. without a
vote of the shareholders pursuant to the provisions of Section 1103(7) of the
Iowa Business Corporation Act.
3. The merger shall take effect at 12:01 a.m. on October 1,
1992.
Dated this 29th day of September, 1992.
Attest: BRENTON BANKS, INC.
/s/ Steven T. Schuler, Secretary /s/ J. C. Brenton, President
Corporate Seal
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STATE OF IOWA )
) ss.
COUNTY OF POLK )
On this 29th day of September, 1992, before me, the undersigned, a
Notary Public in and for the State of Iowa, personally appeared J. C.
Brenton, to me personally known, who, being by me duly sworn, did say that he
is the President of Brenton Banks, Inc., executing the within and foregoing
instrument, that no seal has been procured by the said corporation; that said
instrument was signed on behalf of said corporation by authority of is Board
of Directors; and that the said J. C. Brenton, as such officer, acknowledged
the execution of said instrument to be the voluntary act and deed of said
corporation, by it and by him voluntarily executed.
/s/ Shirley Kirchner
Notary Public in
and for the State of lowa
Seal.
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PLAN AND AGREEMENT OF MERGER
OF
AMES FINANCIAL CORPORATION
WITH AND INTO
BRENTON BANKS, INC.
THIS PlAN AND AGREEMENT OF MERGER ("Agreement") dated as of September
29, 1992, by and between BRENTON BANKS, Inc. ("Brenton") and AMES FINANCIAL
CORPORATION ("Ames Financial").
WITNESSETH
WHEREAS, Brenton is a corporation duly organized and existing under the
laws of the State or lowa, with authorized capitalization at December 31,
1991 consisting of 25,000,000 shares of $5.00 par value common stock, of
which 4,813,890 shares were duly authorized, fully paid, validly issued,
nonassessable and outstanding and 500,000 shares of $1.00 par value preferred
stock, of which no shares were outstanding; and
WHEREAS, Ames Financial is a corporation duly organized and existing
under the laws of the State of Delaware, with authorized capitalization at
December 31, 1991 consisting of 5,000,000 shares of Ames Financial common
stock, $.01 par value, of which 273,624 shares are duly authorized, validly
issued. fully paid, nonassessable and currently outstanding and 1,000,000
shares of Ames Financial serial preferred stock, $.01 par value, of which no
shares are outstanding; and
WHEREAS, Brenton and Ames Financial are parties to that certain Merger
Agreement (the "Merger Agreement") dated as of June 17, 1992 providing for
the merger (the "Merger") of Ames Financial with and into Brenton in the
manner and with the effect set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein and in the Merger Agreement, it is agreed that,
in accordance with the applicable statutes of the States of Delaware and
lowa, the parties hereto agree as follows:
ARTICLE I
The Merger
Section 1. The Merger. On the Effective Date (as hereinafter defined)
Ames Financial shall be merged with and into Brenton in accordance with the
terms and provisions of this Agreement, the separate existence of Ames
Financial shall cease and the merger shall in all respects have the effect
provided for in Section 259 of the General Corporation Law of the State of
Delaware and Section 1106 of the lowa Business Corporation Act. The Merger
shall be pursuant to the provisions of and with the effect provided in, the
Merger Agreement and the Merger shall become effective on the date (the
"Effective Date") upon which the Articles of Merger are filed with the lowa
Secretary of State or at such later time and/or date as may be provided in
the Articles of Merger.
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Section 2. Name. The name of the surviving corporation in the Merger
("Surviving Corporation") shall be 'BRENTON BANKS, INC.
Section 3. Articles of Incorporation. The Articles of Incorporation of
Brenton in effect immediately prior to the Effective Date shall be and remain
the Articles of Incorporation of the Surviving Corporation until amended as
provided by law and the terms thereof.
Section 4. By-Laws. The By-Laws or Brenton in effect immediately prior
to the Effective Date shall be and remain the By-Laws of the Surviving
Corporation until amended as provided by law and the terms thereof.
Section 5. Officers and Directors. From and after the Effective Date of
the Merger, the directors and officers of the Surviving Corporation shall be
those persons who are the directors and officers of Brenton at the Effective
Date of the Merger, and they shall continue to hold office from and after the
Effective Date of the Merger as provided in the Articles of Incorporation and
Bylaws of the Surviving Corporation.
ARTICLE II
Conversion of Shares
Section 1. Brenton Shares. The shares of capital stock of Brenton
issued and outstanding as of the Effective Date of the Merger shall continue
to be issued and outstanding shares of the Surviving Corporation.
Section 2. Conversion of Ames Financial Shares. As of the Effective
Date, by virtue of the Merger and without any action on the part of the
holder of any common stock of Ames Financial ("Ames Financial Share" or "Ames
Financial Shares"):
a. Each outstanding Ames Financial Share (other than any shares as to
which appraisal rights have been perfected) shall be converted into the right
to receive 1.358 shares of the $5.00 par value common stock of Brenton
("Brenton Common Stock" or "Brenton Shares").
b. From and after the Effective Date, the holders of certificates
formerly representing Ames Financial Shares shall cease to have any rights
with respect thereto other than any appraisal rights perfected pursuant to
Section 262 of the General Corporation Law of the State of Delaware.
Section 3. Fractional Shares. No fractional shares of Brenton Common
Stock shall be issued to any holder of Ames Financial Shares. In lieu
thereof, each such holder who would be entitled to a fraction of a share of
Brenton Common Stock shall receive, at the time of surrender of the
certificate or certificates representing such holder's Ames Financial Shares,
an amount in cash equal to the market value per share of the common stock of
Brenton, calculated by taking the Average Bid Price for the last five trading
dates preceding the Effective Date on which actual trades occurred multiplied
by the fraction of a share of Brenton Common Stock to which such holder
otherwise would be entitled. No such holder shall be entitled to dividends,
voting rights, interest on the value of, or any other rights in respect of a
fractional share.
Section 4. Surrender of Ames Financial Shares. The following shall
apply to the surrender of Ames Financial Shares.
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a. Prior to the Effective Date, Brenton shall appoint Harris Bank and
Trust Company, Chicago, Illinois or its successor, or any other bank or trust
company (having capital of at least $50 million) mutually acceptable to Ames
Financial and Brenton, as exchange agent (the "Exchange Agent") for the
purpose of exchanging some or all of the certificates representing the
Brenton Shares. At the Effective Date, Brenton shall issue and deliver to
the holders of Ames Financial Shares who have surrendered to Brenton for
cancellation their certificates for Ames Financial Shares such cash and such
certificates representing the Brenton Shares as shall be required by this
Agreement to be delivered to the holders of such Ames Financial Shares.
After the Effective Date Brenton shall Issue and deliver to the Exchange
Agent such cash and such certificates representing the Brenton Shares as
shall be required by this Agreement to be delivered to holders of Ames
Financial Shares who have not surrendered to Brenton for cancellation their
certificates for Ames Financial Shares as or the Effective Date. At or as
soon as practicable after the Effective Date each holder of Ames Financial
Shares converted pursuant to Section 2(a) of this Article II, upon surrender
to Brenton or to the Exchange Agent, as the case may be, of one or more
certificates for such Ames Financial Shares for cancellation, will be
entitled to receive a certificate representing the number of Brenton Shares
determined in accordance with Section 2(a) of this Article II and a payment
in cash with respect to tractional shares, if any, determined in accordance
with Section 3 of this Article II. Each certificate representing the Brenton
Shares: (1) shall be dated as to the Effective Date; (2) may bear the Rule
144 Restrictive Legend (as that term is defined in section 8.4 of the Merger
Agreement) and (3) may bear the Rule 145 Restrictive Legend (as that term is
defined in Section 8.5 of the Merger Agreement).
b. No dividends or other distributions of any kind which are declared
payable to stockholders of record of the Brenton Shares after the Effective
Date will be paid to persons entitled to receive such certificates for
Brenton Shares until such persons surrender their certificates representing
Ames Financial Shares. Upon surrender of such certificates representing Ames
Financial Shares, the holder thereto shall be paid, without interest any
dividends or other distributions with respect to the Brenton Shares as to
which the record date and payment date occurred on or after the Effective
Date and on or before the date of surrender.
c. If any certificate for Brenton Shares is to be issued in a name
other than that in which the certificate for Ames Financial Shares
surrendered in exchange therefor is registered, it shall be a condition of
such exchange that: (1) the person requesting such exchange shall pay to the
Exchange Agent any transfer costs, taxes or other expenses required by reason
of the issuance of certificates for such Brenton Shares in a name other than
the registered holder of the certificate surrendered, or such persons shall
establish that such costs, taxes and expenses have been paid or are not
applicable and (2) the person requesting such exchange shall establish, to
the satisfaction of Brenton and its counsel, that the requirements of Section
9.14 of the Merger Agreement, if applicable, have been complied with.
d. All dividends or distributions, and any cash to be paid pursuant to
Section 3 of this Article II in lieu of fractional shares, if held by the
Exchange Agent for payment or delivery to the holders of unsurrendered
certificates representing Ames Financial Shares and unclaimed at the end of
one year from the Effective Date, shall together with any interest earned
thereon) at such time be paid or redelivered by the Exchange Agent to
Brenton, and after such time any holder of a certificate representing Ames
Financial Shares who has not surrendered such certificate to the Exchange
Agent shall, subject to applicable law, look as a general creditor only to
Brenton for payment or delivery of such dividends or distributions or cash,
as the case may be.
Section 5. No Further Transfers of Ames Financial Shares. As of the
Effective date the stock transfer books of Ames Financial shall be closed and
no transfer of Ames Financial shares theretofore outstanding shall thereafter
be made.
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Section 6. Adjustments. If, between the date of this Agreement and the
Effective Date, the outstanding Brenton Common Stock shall have been changed
into a different number of shares or a different class by reason of any
reclassification, recapitalization, split up, combination, exchange of shares
or readjustment, or a stock dividend thereon shall be declared with a record
date within such period, the number of Brenton Shares to be issued and
delivered in the Merger in exchange for each outstanding Ames Financial shall
be correspondingly adjusted.
Section 7. Treatment of Stock Options. Each person holding one or more
options to purchase Ames Financial Shares pursuant to the Ames Financial
Stock Option and Incentive Plan (the "Ames Option Plan") shall, subject to
any adjustments under Section 16(b) of the Securities Exchange Act of 1934,
exercise his or her option to acquire Ames Financial Shares prior to the
Effective Date. If Ames Financial is not in receipt of funds from any such
person in payment of the options exercised prior to the Effective Date, then
such person shall be deemed to have allowed the options held by him or her
under the Ames Option Plan to lapse and such options shall thereafter be
null, void and of no further force or effect.
ARTICLE III
Miscellaneous
Section 1. Governing Law. This Agreement, the Merger Agreement, the
Merger and the Surviving Corporation shall be governed by the laws of the
State of lowa.
Section 2. Conditions. The obligations of the parties to effect the
Merger shall be subject to all of the terms and conditions contained in the
Merger Agreement.
Section 3. Termination. At any time prior to the filing of the
Articles of Merger with the lowa Secretary of State, this Agreement may be
terminated by the mutual consent of the Boards of Directors of Ames Financial
and Brenton or may be terminated as provided in the Merger Agreement. This
Agreement shall terminate automatically upon the termination of the Merger
Agreement.
Section 4. Amendment. This Agreement and the Merger Agreement may be
amended by the Boards of Directors of Brenton and Ames Financial at any time
prior to the Effective Date without the approval of the shareholders of Ames
Financial with respect to any of their terms except the terms relating to:
(1) the amount or kind of consideration to be delivered to the Ames Financial
shareholders in the Merger; (2) the Articles of Incorporation of Brenton or
(3) the terms or conditions of this Agreement or the Merger Agreement if such
amendment would adversely affect the shareholders of Ames Financial.
Section 5. Shareholder Approval. This Agreement, the Merger Agreement
and the Merger shall be subject to approval by the affirmative vote of a
majority of the outstanding shares of Ames Financial common stock at a
meeting of stockholders duly called and held. The consummation of the Merger
shall be subject to the satisfaction, unless duly waived, of the conditions
set forth in Sections 9 and 10 of the Merger Agreement.
Section 6. Notices. Any notice or other communication required or
permitted under this agreement shall be effective only if it is in writing
and delivered personally, or by Federal Express, or by facsimile or sent by
first class United States mail, postage prepaid, registered or, certified
mail, address as follows:
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If to Brenton, to:
Mr. J. C. Brenton, President
Brenton Banks, Inc.
Suite 300, Capital Square
400 Locust Street
Des Moines. Iowa 50304-0961
Facsimile No. (515) 237-5221
with copy to:
W. Kendall Brown, Esq.
Brown, Winick, Graves, Donnelly,
Baskerville & Schoenebaum
Suite 1100, Two Ruan Center
601 Locust Street
Des Moines, Iowa 50309
Facsimile No. (515) 283-0231
If to Ames Financial, to:
Mr. Keith E. Dickson, Chairman
Ames Financial Corporation
424 Main Street
Ames, Iowa 50010
Facsimile No. (515) 232-3318
with copy to:
Donald L. Smith, Esq.
Smith, Nutty, Sharp, Benson & Jahn
618 Douglas Avenue
Ames, Iowa 50010
Facsimile No. (515) 232-0137
or to such other address or facsimile number as either party may designate by
notice to the other, and shall be deemed to have been given upon receipt.
Section 7. Further Assurances. From time to time as and when required
by the Surviving Corporation and to the extent permitted by law, the officers
and directors of Ames Financial last in office shall execute and deliver such
assignments, deeds and other instruments and shall take or cause to be taken
such further or other action as shall be necessary in order to vest or
perfect in or to confirm of record or otherwise to the Surviving Corporation
title to, and possession of, all of the assets, rights, franchises and
interests of Ames Financial in and of every type of property (real, personal
and mixed) and chooses in action, and otherwise to carry out the purposes of
this Agreement; and the proper officers and directors of the Surviving
Corporation are fully authorized to take any and all such action in the name
of Ames Financial or otherwise.
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IN WITNESS WHEREOF, Brenton and Ames Financial, pursuant to the approval
and authority duly given by resolutions adopted by their respective Boards of
Directors, have each caused this Plan and Agreement of Merger to be executed
by its respective President or Chairman (and, if applicable, its corporate
seal to be affixed hereto) and to be attested to by its Secretary.
ATTEST BRENTON BANKS, INC.
/s/ Steven T. Schuler, Secretary /s/ J. C. Brenton, President
Corporate Seal
ATTEST
AMES FINANCIAL CORPORATION
/s/ Karen Jacobson, Secretary /s/ Keith E. Dickson, Chairman
Corporate Seal
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CERTIFICATE OF SECRETARY OF AMES FINANCIAL CORPORATION
I, Karen Jacobson, Secretary of Ames Financial Corporation, a
corporation organized and existing under the laws of the State of Delaware
("Ames Financial"), hereby certify, as such secretary (and under the seal of
such corporation) that the Plan and Agreement of Merger dated June 17, 1992
between Ames Financial and Brenton Banks, Inc. to which this certificate is
attached was duly submitted to the shareholders of Ames Financial at a
special meeting of said shareholders called and held after at least twenty
(20) days' notices by mail as provided in Section 251 of the General
Corporation Law of the State of Delaware on the 16th day of September, 1992,
for the purpose or considering and taking action upon the proposed Plan and
Agreement of Merger; that 273,624 shares of common stock, with a par value of
$.01, of Ames Financial were on said date issued and outstanding; that the
proposed Plan and Agreement of Merger was approved by the affirmative vote of
the holders of a majority of the total number of shares of the outstanding
common stock of Ames Financial entitled to vote thereon, and that thereby the
Plan and Agreement of Merger was at such meeting duly adopted as the act of
the shareholders of Ames Financial and the duly adopted agreement of such
corporation.
WITNESS my hand (and the seal of Ames Financial) on this 30th day of
September, 1992.
/s/ Karen Jacobson, Secretary
Ames Financial Corporation
Corporate Seal
CERTIFICATE OF SECRETARY OF BRENTON BANKS, INC.
I, Steven T. Schuler, Secretary of Brenton Banks, Inc. a corporation
organized and existing under the laws of the State of lowa ("Brenton"),
hereby certify, as such secretary (and under the seal of such corporation)
that the Plan and Agreement of Merger dated June 17, 1992 between Ames
Financial and Brenton Banks, Inc. to which this certificate is attached was
duly adopted pursuant to subsection (d) of Section 251 of the General
Corporation Law of the State of Delaware and that the conditions specified in
the first sentence of said subsection (d) of Section 251 of the General
Corporation Law of the State of Delaware have been satisfied.
WITNESS my hand (and the seal of Brenton) on this 30th day of September,
1992.
/s/ Steven T. Schuler, Secretary
Brenton Banks, Inc.
Corporate Seal
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BRENTON BANKS, INC.
BY-LAWS
ARTICLE I. MEETINGS OF STOCKHOLDERS
1. All meetings of stockholders shall be held in Des Moines, Iowa.
2. Annual meetings of stockholders shall be held on the first Wednesday
following the first Monday in May of each year.
3. Any stockholder proposal for action at the annual meeting, including
nominations for the Board of Directors, must be submitted in writing to the
Secretary of the Corporation at least five (5) days prior to the date of the
annual meeting to be considered and voted upon at the meeting. Any such
stockholder proposal or nomination for the Board of Directors must be
accompanied by a written statement describing the purpose of the proposal or
the qualifications of the nominee. Such a statement shall not exceed five
hundred (500) words.
4. Special meetings of stockholders may be called by the Chairman, the Vice
Chairman, the President, or by a majority of the Directors or by stockholders
representing two-thirds of the outstanding stock of the corporation.
5. Written or printed notice stating the place, day, and hour of the
meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called, shall be delivered not less than ten nor more
than sixty days before the date of the meeting, either personally or by mail
or at the direction of the Chairman, the Vice Chairman, the President, the
secretary, or the officer or person calling the meeting to each shareholder
of record entitled to vote at such meeting, but such notice may be waived in
writing by any stockholder. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail addressed to the
shareholder at his/her address as it appears on the stock transfer books of
the Corporation, with postage thereon prepaid.
6. At any meeting of stockholders, holders of a majority of the outstanding
shares shall constitute a quorum for the transaction of business.
7. The Chairman, or in his absence the Vice Chairman, at any meeting of the
stockholders, shall have the power and authority to prescribe appropriate
rules and procedures for the maintenance of order and the conduct of the
meeting; including, but not limited to, requirements for identification of
speakers, limitation on the time allotted to questions, comments and debate,
variance from the agenda, and procedures for dealing with disruptive
individuals.
ARTICLE II. DIRECTORS
1. The Board of Directors of the Corporation shall consist of not less than
five, nor more than eleven members, who shall be elected by the stockholders
at their annual meeting. The Board of Directors shall, from time to time,
designate the number of directors of the Corporation within such range.
Directors shall hold office for a term of one year, or until their successors
are elected and qualified, but may be removed at any time by a majority vote
of the stockholders.
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2. Stockholder nominations for the Board of Directors shall be made in
accordance with Article I, Section 3, of these ByLaws.
3. The Board of Directors shall have the general management and control of
the business and affairs of the Corporation, and may exercise all the powers
possessed by the Corporation.
4. The Board of Directors shall meet immediately after adjournment of the
annual meeting of stockholders, and at such other times and places as the
Board may determine and as called by the Chairman, the Vice Chairman or the
President.
5. At all meetings of the Board it shall be necessary for a majority of all
the Directors to be present to constitute a quorum for the transaction of
business, but a lesser number may adjourn the meeting to a future time and
convenient place.
6. The Board of Directors may, by resolution or resolutions passed by a
majority of the whole Board, designate one or more committees, each committee
to consist of two or more of the Directors of the Corporation, which to the
extent provided in said resolution or resolutions, shall have and may
exercise the powers of the Board of Directors in the management of the
business and affairs of the Corporation, and may have power to authorize the
seal of the Corporation to be affixed to all papers which may require it.
Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the Board of Directors.
The committee or committees shall keep regular minutes of their proceedings
and report the same to the Board when required.
7. The Board of Directors may appoint an Executive Committee. The Vice
Chairman shall be a member of and chairman of the Executive Committee. The
Board of Directors shall, from time to time, designate the number of
Executive Committee members of the Corporation. The Executive Committee shall
not have authority to alter or amend the by-Laws, but shall exercise all
other powers of the Board of Directors between the meeting of said Board,
except the power to fill vacancies in their own membership, which vacancy
shall be filled by the Board of Directors. The Executive Committee shall meet
at stated times or on notice to all by the Committee Chair. It shall fix its
own rules of procedure. A majority shall constitute a quorum, but an
affirmative vote of a majority of the whole committee shall be necessary in
every case. The Executive Committee shall keep regular minutes of
proceedings.
8. Any resolution in writing signed by all the members of the Board of
Directors (or any Committee thereof) shall be and constitute action by such
Board (or Committee) with the same force and effect as if the same had been
duly passed by the same vote at a duly called meeting of such bodies.
ARTICLE III. OFFICERS
1. The officers of the corporation shall be a Chairman, a Vice Chairman, a
President, one or more Vice Presidents, a Secretary, one or more Assistant
Secretaries, and a Treasurer, and such other officers as shall be authorized
by the Board of Directors. Officers shall be elected by the Board of
Directors and shall hold office at the pleasure of the Board. One person may
hold one or more offices, if the Board so determines.
2. The Chairman shall exercise the general supervision and direction of the
affairs of the Company. He shall preside as Chairman of all meetings of the
stockholders,
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of the Board of Directors, and, in the absence of the Vice Chairman, of the
Executive Committee, or he may direct another officer to preside in his
place. He may, with the Secretary, sign all certificates of stock and execute
all contracts and instruments which the Board of Directors shall lawfully
authorize and direct.
3. The Vice Chairman shall, in the absence of the Chairman, have all powers
and duties of the Chairman. As Committee Chair, he shall preside at all
meetings of the Executive Committee, or he may direct another officer to
preside in his place. He shall have such other powers and duties as may be
prescribed from time to time by the Board of Directors or the Chairman,
including those prescribed in any employment agreement.
4. The President shall work with all business affairs incident to the
activities and direction of the Company. He may, with the secretary, sign all
certificates of stock and execute all contracts and instruments which the
Board of Directors shall lawfully authorize and direct.
5. The Board of Directors may elect an Executive Vice President, who shall
have the powers and duties incident to that office and shall have such other
powers and duties as may be prescribed from time to time by the Chairman, the
Vice Chairman or the President. He shall, in the incapacity of the Chairman,
the Vice Chairman and of the President, perform such duties of the Chairman,
the Vice Chairman and of the President as the Board of Directors or the
Executive Committee shall prescribe. He may, with the Secretary, execute
contracts and instruments which the Board of Directors shall lawfully
authorize and direct.
6. Each Vice President shall have the powers and duties incident to that
office and shall have such other powers and duties as may be prescribed from
time to time by the Chairman, the Vice Chairman or the President. In the
event of the inactivity of the Chairman, of the Vice Chairman and of the
President, a Vice President designated by the Board of Directors or the
Executive Committee shall perform such duties of the Chairman, of the Vice
Chairman and of the President as the Board of Directors or the Executive
Committee shall prescribe. Any Vice President may execute contracts in the
name of the company.
7. The Secretary shall be ex-officio secretary of the Board of Directors and
the Executive Committee. He shall keep the minutes of all meetings of the
stockholders, the Board of Directors and the Executive Committee, and, when
required, of all other standing committees; and attend to serving and giving
all notices of the company. He shall have charge of the corporate seal, the
stock certificate books and such other books, records, and papers as the
Board of Directors and Executive Committee may direct; keep a stock book
containing the names alphabetically arranged of all persons who are
stockholders of the company, showing their place of residence, the number of
shares of stock held by them respectively and the time when they respectively
became owners thereof.
8. Each Assistant Secretary shall have the powers and duties incident to
that office and shall have such other powers and duties as may be prescribed
by the Secretary. In the event of the incapacity of the Secretary, an
Assistant Secretary designated by the Board of Directors and/ or the
Executive Committee shall perform such duties of the Secretary as the Board
of Directors and/or the Executive Committee shall prescribe.
9. The Treasurer shall keep or cause to be kept full and accurate accounts
of all receipts and disbursements in books belonging to the company, and
shall have the
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care and custody of all funds and securities of the company and deposit such
funds in the name of the company in such bank or banks as the Board of
Directors and/or the Executive Committee or the Chairman or the Vice Chairman
or the President may designate. The Treasurer is authorized to sign all
checks, drafts, notes, bills of exchange, orders for the payment of money,
and any negotiable instruments of the company, but no such instrument shall
be signed in blank. He shall disburse the funds of the company as may be
ordered by the Board of Directors, the Executive Committee, the Chairman, the
Vice Chairman or the President. The Treasurer shall at all reasonable times
exhibit the books and accounts to any directors, and he shall give such bonds
for the faithful performance of his duties as the Board of Directors, the
Executive Committee, the Chairman, the Vice Chairman or the President may
determine, and he shall perform such other duties as may be incident to his
office.
ARTICLE IV. SEAL
The corporate seal of the company shall be circular in shape, and shall be
engraved with the name of the company and the state of incorporation around
the margin, and the words "CORPORATE SEAL" across the center.
ARTICLE V. CAPITAL STOCK
1. Certificates of stock shall be in a form adopted by the Board of
Directors and shall be signed by the Chairman, the Vice Chairman or President
and the Secretary or Assistant Secretary and be attested by the corporate
seal. All certificates shall be numbered consecutively; and the name of the
stockholder, his place of residence, the number of shares, and the dates of
acquisition and transfer shall be entered by the Secretary upon the records
of the company, and such record shall constitute the sole and exclusive
evidence of who, as stockholders, shall have the right to receive dividends
and to vote at stockholders' meetings.
2. Title to a certificate and to the shares represented thereby can be
transferred only, (a) by delivery of the certificate endorsed either in blank
or to a specified person by the person appearing by the certificate to be the
owner of the shares represented thereby, or b) by delivery of the certificate
and a separate document containing a written assignment of the certificate or
a power of attorney to sell, assign, or transfer the same or the shares
represented thereby, signed by the person appearing by the certificate to be
the owner of the shares represented thereby. Such assignment or power of
attorney may be either in blank or to a specified person.
ARTICLE VI. EXECUTION OF INSTRUMENTS, LOANS
1. Execution of Instruments. Any checks, drafts, bills of exchange,
acceptances, bonds, notes or other obligations or evidences of indebtedness
of the company, and also all deeds, mortgages, indentures, bills of sale,
conveyances, endorsements, assignments, transfers, stock powers, or other
instruments of transfer, contracts, agreements, dividend and other orders,
powers of attorney, proxies, waivers, consents, returns, reports,
certificates, demands, notices of documents and other instruments of writing
of any nature may be signed, executed, verified, acknowledged and delivered
by such officers, agents, or employees of the company, or any of them, and in
such manner, as shall be provided in the Articles of Incorporation or as from
time to time may be determined by the Board of Directors.
2. Loans. When so authorized by the Board of Directors any officer or agent
of the company may effect loans and advances at any time for the company
secured by
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mortgage or pledge of the company's property or otherwise, and may do every
act and thing necessary or proper in connection therewith. Such authority may
be general or confined to specific instances.
ARTICLE VII. DIVIDENDS
The Board of Directors, in its discretion from time to time may declare
dividends upon the capital stock from the surplus and net profits of the
company, subject to all the provisions of the Articles of Incorporation.
ARTICLE VIII. FISCAL YEAR
The fiscal year of this corporation shall begin on the first day of January
and terminate on the last day of December of each year, except that the first
year shall begin on August 31, 1948.
ARTICLE IX. OTHER OFFICERS AND THEIR DUTIES
The Board of Directors, upon exercising any power to appoint additional
officers, may prescribe their duties and compensation and determine as to the
securities for the faithful performance of their duties to be given by them,
which prescription as to duties and securities may be made in the form of
By-Laws or by resolution of the Board, as it shall determine.
ARTICLE X. INDEMNIFICATION OF DIRECTORS AND OFFICERS
This corporation shall indemnify an officer of this corporation and each
officer of this corporation who is serving or who has served, at the request
of this corporation, as a director, officer, partner, trustee, employee, or
agent of another corporation, partnership, joint venture, trust, other
enterprise or employee benefit plan, to the fullest extent possible against
expenses, including attorneys' fees, judgments, penalties, fines,
settlements, and reasonable expenses, actually incurred by such officer or
person relating to his conduct as an officer of this corporation or as a
director, officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust, other enterprise or employee
benefit plan, except that the mandatory indemnification required by this
sentence shall not apply (i) to a breach of an officer's duty of loyalty to
the corporation or its stockholders, (ii) for acts of omissions not in good
faith or which involve intentional misconduct or knowing violation of the
law, (iii) for a transaction from which the officer derived an improper
personal benefit, (iv) under Section 496A.44 of the Iowa Business Corporation
Act, or (v) against judgments, penalties, fines, and settlements arising from
any proceeding by or in the right of the corporation, or against expenses in
any such case where such officer shall be adjudged liable to the corporation.
ARTICLE XI. OTHER INTERESTS-OF-OFFICERS OR DIRECTORS
1. No Director shall vote on a question in which he is interested, except
the election of a President or other officer or employee, but in the absence
of fraud, no contract or other transaction of the corporation shall be
affected or invalidated in any way by the fact that any of the officers or
Directors of the corporation are in any way interested in or connected with
any other party to said contract or transaction or are themselves parties to
said contract or transaction, provided that such interest shall be fully
disclosed or otherwise known to the Board of Directors at the meeting of said
Board at which such contract or transaction is authorized or confirmed, and
provided further that at the meeting of the Board of Directors authorizing or
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confirming such contract or transaction there shall be present a quorum of
Directors not so interested or connected and such contract or transaction
shall be approved by a majority of such quorum, which majority shall consist
of Directors not so interested or connected. The mere ownership of stock in
another corporation by a Director shall not disqualify him to vote in respect
of any transaction between this corporation and such other corporation.
2. Inasmuch as the officers and Directors of this corporation may be men of
large and diversified business interest, and connected with other
corporations with which, from time to time, this corporation may have
business dealings, no contract or other transaction between this corporation
and any other corporation shall be affected by the fact that any of the
officers or directors of this corporation are interested in or are directors
or officers of such other corporation, if such contract or transaction be
made, authorized or confirmed by the Board of Directors in the manner
provided in the preceding paragraph, or by any committee of this corporation
having the requisite authority, by vote of a majority of the members of such
committee not so interested; and any officer or director individually may be
a party to or may be interested in any contract or transaction of this
corporation, provided that such contract or transaction shall be approved or
ratified by the Board of Directors or by any committee of this corporation
having the requisite authority, in the manner herein set forth.
ARTICLE XII. AMENDMENTS
The Board of Directors may alter these By-Laws of the corporation at any
regular or special meeting.
AS AMENDED July 6, 1989.
Resolved that the foregoing are adopted as the amended and substituted
By-laws of the corporation as of the above date.
/s/ C. Robert Brenton /s/ J.C. Brenton
/s/ R. Dean Duben /s/ Thomas R. Smith
/s/ William H. Brenton
CONSTITUTING ALL OF THE MEMBERS OF THE BOARD OF DIRECTORS
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Exhibit 10
Summary of the Bank Bonus Plans under which some of the executive
officers of the Parent Company and certain other personnel of the
subsidiaries are eligible to receive a bonus each year.
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1993 BANK BONUS PLANS
Bank Bonus Plans are in place for all subsidiary banks. The plans vary
somewhat from bank to bank. However, the following general structure exists
in all plans:
A. Applies to bank presidents and certain other bank personnel.
B. Bank presidents and other bank personnel can earn up to a maximum of
32.5% of their salary.
C. Based on meeting certain pre-established financial and personal goals,
the most significant of which are as follows:
1. Net income;
2. Net interest margin;
3. Net noninterest margin;
4. Noninterest income;
5. Asset growth;
6. Asset quality; and
7. Key personal objectives tied to bank financial or mission measurement
goals.
D. Bonus amounts are earned ratably based on tiered achievement scales
negotiated between the bank's management and senior management of the
holding company.
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Exhibit 10(i)
Summary of the Executive Bonus Plan under which some of the
executive officers of the Parent Company are eligible to receive a
bonus each year.
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BRENTON BANKS, INC. (PARENT COMPANY)
EXECUTIVE BONUS PLAN
The Executive Bonus Plans for 1993 cover certain executive officers. The
specific provisions of each plan differs somewhat by executive; however, the
following general structure exists for all plans:
A. Executives can earn up to a maximum of 32.5% of their salary.
B. The bonus is based on meeting certain pre-established financial or
mission goals, the most significant of which are as follows:
1. Net income of the Company or Division;
2. Asset growth;
3. Net noninterest margin; and
4. Key personal financial objectives tied to the area of responsibility.
C. Bonus amounts are earned ratably based on tiered achievement scales.
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Exhibit 10(ii)
Summary of the Trust Division Bonus Plan under which one of the
executive officers of the Parent Company is eligible to receive a
bonus each year.
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1993 TRUST DIVISION BONUS PLAN
The following is a summary of the Trust Division Bonus Plan for 1993:
A. The bonus plan covers the Vice President-Trust.
B. The Vice President-Trust may earn up to a maximum of 32.5% of base
compensation.
C. The bonus amount is earned ratably based on a tiered achievement scale
relating to net pre-tax earnings of the Trust Division.
D. The tiered achievement scale is negotiated between the Vice
President-Trust and the Chairman of the Board.
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Exhibit 10(iii)
Summary of the Brokerage Bonus Plan under which one of the
executive officers of the Parent Company is eligible to receive a
bonus each year.
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1993 BROKERAGE BONUS PLAN
The following is a summary of the Brokerage Bonus Plan for 1993:
A. The bonus plan covers the Vice President-Brokerage Services.
B. The Vice President-Brokerage Services may earn up to a maximum of 32.5%
of base compensation.
C. The bonus amount is earned ratably based on a tiered achievement scale
relating to net pre-tax earnings of the brokerage operation.
D. The tiered achievement scale is negotiated between the Vice
President-Brokerage Services and the Chairman of the Board.
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Exhibit 10(iv)
Summary of the Employee Bonus Plan under which employees of the
Company are eligible to receive a bonus each year.
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1993 EMPLOYEE BONUS PLANS
The Employee Bonus Plans are in place for all employees of the Company who
are not covered by any other bonus plans. The plans vary somewhat from
subsidiary to subsidiary. The main provisions of these bonus plans follow:
A. Employees are eligible for the plans if they have been employed at lease
6 months and are on the payroll at year-end.
B. Employees can earn a maximum of 7% of their base salary.
C. The plans are based on achieving certain Company goals relating to net
income and the employee's individual performance. Bonuses are earned
ratably based on tiered achievement scales.
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Exhibit 10(v)
Employment Agreement, dated July 6, 1989, between William H.
Brenton and Brenton Banks, Inc. This Employment Agreement is
incorporated by reference from Form 10-K of Brenton Banks, Inc.,
for the year ended December 31, 1989.
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Exhibit 10(vi)
Non-Qualified Stock Option Plan, Administrative Rules and Agreement
under which officers of the Company are eligible to receive options
to purchase an aggregate of 200,000 shares of the Company's $5 par
value common stock. This Non-Qualified Stock Option Plan,
Administrative Rules and Agreement is incorporated by reference
from Form 10-K of Brenton Banks, Inc., for the year ended December
31, 1992.
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Exhibit 10(vii)
Long-Term Stock Compensation Plan, Agreements and related
documents, effective for 1993, under which certain of the Company's
senior officers and bank presidents are eligible to receive shares
of Brenton Banks, Inc. stock based upon their service to the
Company and Company performance.
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BRENTON BANKS, INC.
Long-Term Stock Compensation Plan
Grant Agreement
This Grant Agreement made on the date set forth below, by and between
Brenton Banks, Inc., an Iowa Corporation (the "Company") and Phillip L.
Risley, an employee of the Company or a Subsidiary thereof (the "Grantee").
The Company desires to carry out the purpose of its Long-Term Stock
Compensation Plan by awarding Restricted Stock Grants and Incentive Stock
Grants to the Grantee pursuant to the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants set forth in
this Agreement and for good and valuable consideration, the Company and the
Employee have agreed, and do by this Agreement agree, as follows:
1. Terms. Those terms defined in the Brenton Banks, Inc., Long-Term Stock
Compensation Plan or in the Administrative Rules adopted thereunder
shall have the same meaning when used in this Agreement.
2. Restricted Stock Grant. The Company by this Agreement irrevocably
awards the Grantee the rights to acquire 2,033 shares of the Company's
Stock pursuant to the terms of a Restricted Stock Grant, set forth in
the provisions of the Plan (a copy of which is attached hereto as
Exhibit A), the Administrative Rules adopted pursuant to the Plan (a
copy of which are attached hereto as Exhibit B), and the Resolution of
the Company's Board of Directors (a copy of which is attached hereto as
Exhibit C).
3. Incentive Stock Grant. The Company by this Agreement irrevocably awards
the Grantee the rights to acquire 3775 shares of the Company's Stock
pursuant to the terms of a Incentive Stock Grant, set forth in the
provisions of the Plan (a copy of which is attached hereto as Exhibit
A), the Administrative Rules adopted pursuant to the Plan (a copy of
which are attached hereto as Exhibit B), the Resolution of the Company's
Board of Directors (a copy of which is attached hereto as Exhibit C) and
the Performance Criteria adopted by the Board (a copy of which is
attached hereto as Exhibit D).
4. Terms. All of the terms, conditions and provisions contained in the
Plan, Administrative Rules, Resolutions of the Board and Performance
Criteria set forth in Exhibits A, B, C, and D shall be incorporated
herein by this reference, and shall govern the provisions of awards set
forth in this Agreement.
5. Stock Legend. The Grantee hereby consents to the imposition of an
appropriate legend upon the Stock issued pursuant to the Grants. The
legend shall be in the form prescribed by the Company's legal counsel if
said counsel deems it necessary.
6. Notices. Any notices provided for under this Agreement shall be in
writing and shall be delivered in person to the party to be notified or
sent by certified mail. Notices sent to the Company shall be addressed
to Brenton Banks, Inc., 300 Capital Square, Des Moines, Iowa, 50309.
Notices sent to the Grantee shall be sent to the Grantee's address as it
appears in the Company's regular records.
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7. Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Grantee. No waiver, modification or
amendment of any of the terms of this Agreement shall be effective
unless set forth in a written agreement signed by the Company and the
Grantee.
In Witness Whereof, the parties have executed this Agreement on the 8th
day of February, 1994.
BRENTON BANKS, INC.
By_____________________________________
Its____________________________________
COMPANY
_______________________________________
Phillip L. Risley
GRANTEE
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BRENTON BANKS, INC.
Long-Term Stock Compensation Plan
1. Purpose. The Long-Term Stock Compensation Plan (the "Plan") is intended
to advance the interests of Brenton Banks, Inc. (the "Company"), it
shareholders, and its subsidiaries by providing financial incentives to key
management personnel and by encouraging and enabling selected officers and
other key employees upon whose judgment, initiative and effort the Company is
largely dependent for the successful conduct of its business, to acquire and
retain a proprietary interest in the Company by ownership of its stock.
2. Definitions.
2.1 "Board" means the Board of Directors of the Company.
2.2 "Stock" means the Company's $5.00 par value Common Stock or, in
the event that the Company issues a different class of stock with the same or
higher dividend and liquidation rights as the Company's $5.00 Common Stock
but with lesser voting rights, such stock.
2.3 "Date of Grant" means the date on which the Board authorizes a
grant under the Plan.
2.4 "Grant" means the right to acquire Common Stock and/or cash
awarded under the Plan (including both Incentive Stock Grants and Restricted
Stock Grants).
2.5 "Incentive Stock Grant" means a Grant of Stock pursuant to the
provisions of Section 6.2.
2.6 "Restricted Stock Grant" means a Grant of Stock pursuant to the
provisions of Section 6.1.
2.7 "Grantee" means a person to whom a Grant has been awarded under
the Plan.
2.8 "Disability" or "Disabled" shall be as defined under the Company's
disability plan, if any, or under the Social Security Rules.
2.9 "Subsidiary" or "Subsidiaries" means a subsidiary corporation or
corporations of the Company as defined in Section 425 of the Internal Revenue
Code.
2.10 "Successor" means the legal representative of the estate of a
deceased Grantee or the person or persons who acquire the right to exercise
a Grant by bequest or inheritance or otherwise by reason of the death or
disability of any Grantee.
2.11 "Administrative Rules" means Rules adopted by a majority vote of
the Board to interpret the provisions of the Plan or to impose other terms,
conditions and restrictions on the Grant, issuance and transfer of Grants
and Stock issued pursuant to the award of Grants. Administrative Rules
shall, upon adoption, become part of this Plan as if originally stated
herein. The Rules adopted by the Board shall be passed by resolution and
kept at the Company's main office.
2.12 "Change in Control" shall mean a change in the ownership of 50% or
more of the Company's par Value $5.00 Common Stock as certified by the
Secretary of the Company.
2.13 "Performance Criteria" shall mean the criteria established by the
Board pursuant to Section 6.2.3 of the Plan.
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2.14 "Qualified Contingent Vesting Event" shall mean an event described
in Sections 6.2.4.2, 6.2.4.3, and 6.2.4.4.
3. Administration of Plan. The Plan shall be administered by the Board.
Grants to members of the Board may be granted only by a majority of the
disinterested members of the Board. The Board shall have full and final
authority in its discretion, subject to the provisions of the Plan, to
determine the individuals to whom and the time or times at which Grants shall
be made and the number of shares of Stock covered by each Grant; to determine
the Performance Criteria with respect to Incentive Stock Grants; to construe
and interpret the Plan; to determine the terms and provisions of the
respective Grant agreements and to make all other determinations and take all
other actions deemed necessary or advisable for the proper administration of
the Plan. All such actions and determinations shall be conclusively binding
for all purposes and upon all persons.
4. Stock Subject to Grant. The aggregate number of shares of the Company's
Stock which may be issued upon the exercise of Grants made under the Plan
shall not exceed 240,000, subject to adjustment under the provisions of
Section 11. The shares of Stock to be granted may be authorized but unissued
shares, shares issued and reacquired by the Company or shares bought on the
market for the purposes of the Plan. In the event any Grant shall, for any
reason, terminate or expire or be surrendered to the Company, the shares
subject to such Grant shall again be available to be awarded under the Plan.
5. Participants. Grants may be awarded under the Plan to officers,
directors and key employees of the Company or of any of its Subsidiaries.
6. Terms and Conditions of Grants. Any Grant under the Plan shall be
evidenced by an agreement executed by the Company and the applicable Grantee
and shall contain such terms and be in such form as the Board may from time
to time approve, subject to the following limitations and conditions:
6.1 Restricted Stock Grants.
6.1.1 Authorized Shares. The aggregate number of shares that
may be awarded to employees under the Plan pursuant to Restricted Stock
Grants shall not exceed 84,000 shares of Stock. In the event any
Restricted Stock Grant shall, for any reason, be forfeited, terminated,
expire or be surrendered to the Company, the shares subject to such
Restricted Stock Grant shall again be available to be awarded as a
Restricted Stock Grant under the Plan.
6.1.2 Restricted Stock Grants. Restricted Stock may be awarded
by the Board to participants of the Company chosen by the Board in its
sole discretion. The amount of each award shall be subject to the terms
and conditions set forth in an agreement between the Company and the
Grantee containing the terms and conditions of the award, which shall be
consistent with the provisions set forth in this Plan and the
Administrative Rules adopted by the Board. All Restricted Stock Grants
that do not vest pursuant to the provisions of Section 6.1.3 shall be
forfeited.
6.1.3 Vesting of Restricted Stock Grants. Restricted Stock
Grants shall vest with the Grantee following the Grantee's completion of
three (3) successive calendar years of employment with the Company or
any Subsidiary, with said years being specified by the Board. The
Restricted Stock Grants awarded to Grantees shall be considered vested
or forfeited on the January 1st following completion of the third
successive calendar year of employment with the Company or any
Subsidiary.
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6.1.4 Notwithstanding the foregoing:
6.1.5 Termination of Employment. Upon termination of a
Grantee's employment with the Company or with any of its Subsidiaries
for reasons other than death, disability, retirement after age 65 or
retirement before age 65 with Board approval, the Grantee's and the
Company's rights, duties and obligations under the Restricted Stock
Grant shall be terminated and the Restricted Stock Grants shall be
forfeited.
6.1.6 Death or Disability of Grantee. If a Grantee to whom a
Restricted Stock Grant shall have been awarded, shall die or become
disabled while the Grantee is employed by the Company or one or more of
its Subsidiaries, such Restricted Stock Grant shall thereupon be 100%
vested.
6.1.7 Retirement of Grantee. In the event that a Grantee to
whom a Restricted Stock Grant shall have been awarded shall retire upon
or after the age of 65, any Restricted Stock Grant held by such retired
Grantee shall thereupon be 100% vested. In the event Grantee retires
prior to age 65, with the approval of the Board in its sole discretion,
the Restricted Stock Grant will become (i) one-third (1/3) vested if the
retirement occurs after the completion of the first calendar year
specified by the Board but prior to the completion of the second
calendar year specified by the Board and (ii) 100% vested if the
retirement occurs after the completion of the second calendar year
specified by the Board. If the Grantee retires prior to the age of 65
without the approval of the Board, the provisions of Section 6.1.4.1
shall control.
6.1.8 Change in Control of the Company. In the event of a
Change in Control of the Company, the outstanding Restricted Stock
Grants shall thereupon be 100% vested, and, to the extent permitted by
law, the Grantees shall be permitted to participate in the sale or
merger resulting in the Change in Control.
6.1.9 Incentive Stock Grants.
6.1.10 Authorized Shares. The aggregate number of shares that
may be awarded to employees under the Plan pursuant to Incentive Stock
Grants shall not exceed 156,000 shares of Stock. In the event any
Incentive Stock Grant shall, for any reason, be forfeited, terminate or
expire or be surrendered to the Company, the shares subject to such
Incentive Stock Grant shall again be available to be awarded as a
Incentive Stock Grant under the Plan.
6.1.11 Incentive Stock Grants. Incentive Stock Grants may be
awarded by the Board to participants of the Company chosen by the Board
in its sole discretion. The amount of each award shall be subject to
the terms and conditions set forth in an agreement between the Company
and the Grantee containing the terms and conditions of the award, which
shall be consistent with the provisions set forth in this Plan and the
Administrative Rules adopted by the Board. All Incentive Stock Grants
that do not vest pursuant to the provisions of Section 6.2.3 shall be
forfeited.
6.1.12 Vesting of Incentive Stock Grants. Incentive Stock Grants
shall vest with the Grantee following: (a) the Grantee's completion of
three (3) successive calendar years of employment, with said years
specified by the Board; and (b) the Company achieving the Performance
Criteria specified by the Board on the Grant Date. The number of
shares vested pursuant to any Grant, if any, shall be determined
pursuant to the Performance Criteria set by the Board. The Stock
awarded pursuant to Incentive Stock Grant shall be considered vested or
forfeited on the January 1st following completion of the third
successive calendar year specified by the Board.
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6.1.13 Performance Criteria. The Performance Criteria shall be
set by the Board. The Performance Criteria shall be the same for each
Grantee receiving a Grant on a particular Grant Date, provided that the
Performance Criteria set with respect to a particular Grant Date may be
different from Performance Criteria set for prior or subsequent Grant
Dates. The Board shall determine the Performance Criteria prior to or
during the first year of the performance period specified by the Board.
6.1.14 Performance in Excess of 100% of Incentive Stock Grant.
The Board may establish Performance Criteria in amounts that exceed 100%
of the Performance Stock Granted to the Grantees. In the event that the
Performance Criteria set by the Board exceed 100% of the Stock to be
awarded by a Grant, any and all amounts in excess of 100% shall be paid
in cash to the Grantee based upon the Fair Market Value of the Stock on
the date Incentive Stock Grant Vests. For the purposes hereof, "Fair
Market Value" shall be as determined by the Board and such determination
shall be binding upon the Company and upon the Grantee. The Board may
make such determination: (i) in the case of Stock not then listed and
traded upon a recognized securities exchange, upon the basis of the mean
between the closing bid and asked quotations for such stock on the date
the Incentive Stock Grants vest (as reported by the Wall Street Journal
"NASDAQ Bid and Asked Quotations" National Market Listings or as
reported by NASDAQ if not reported in the Wall Street Journal) or in the
event that there shall be no bid or asked quotations on such date, then
upon the basis of the bid and asked quotations nearest preceding such
date, or (ii) in the case the Stock shall then be listed and traded upon
a recognized securities exchange, upon the basis of the mean between the
highest and lowest selling prices at which shares of Stock were traded
on such recognized securities exchange on the date the Incentive Stock
Grants vest, as reported in the Wall Street Journal or, if the Stock was
not traded on said date, the date nearest preceding such date, and (iii)
upon any other factors which the Board shall deem appropriate.
6.1.15 Notwithstanding the foregoing:
6.1.16 Termination of Employment. Upon termination of a
Grantee's employment with the Company or with any of its Subsidiaries
for reasons other than death, disability, retirement after age 65 or
retirement before age 65 with Board approval, the Grantee's and the
Company's rights, duties and obligations under the Incentive Stock Grant
shall be terminated and the Incentive Stock Grant shall be forfeited.
6.1.17 Death or Disability of Grantee. If a Grantee to whom an
Incentive Stock Grant shall have been awarded shall die or become
disabled while he shall be employed by the Company or one or more of its
Subsidiaries, such Incentive Stock Grant shall thereupon be vested in
accordance with the provisions of Section 6.2.5 and said death or
disability shall be deemed to be a Qualified Contingent Vesting Event.
6.1.18 Retirement of Grantee. In the event that a Grantee to
whom an Incentive Stock Grant shall have been awarded shall retire upon
or after the age of 65, such Incentive Stock Grant held by such retired
Grantee shall thereupon be vested in accordance with the provisions of
Section 6.2.5 and said retirement shall be deemed to be a Qualified
Contingent Vesting Event. In the event Grantee retires prior to age 65,
the Incentive Stock Grant may become vested in accordance with the
provisions of Section 6.2.5 upon the approval of the Board in its sole
discretion; and upon such approval by the Board said retirement shall be
deemed to be a Qualified Contingent Vesting Event. If the Grantee
retires prior to the age of 65 without the approval of the Board, the
provisions of Section 6.2.4.1 shall control.
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6.1.19 Change in Control of the Company. In the event of a
Change in Control of the Company, such Incentive Stock Grants shall
thereupon be vested in accordance with the provisions of Section 6.2.5,
and said Change in Control shall be deemed to be a Qualified Contingent
Vesting Event. Furthermore, to the extent permitted by law, the
Grantees shall be permitted to participate in the sale or merger
resulting in the Change in Control.
6.1.20 Contingent Vesting Rules. Pursuant to the provisions of
Sections 6.2.4.2, 6.2.4.3, and 6.2.4.4 the Incentive Stock Grants shall
vest upon the occurrence of a Qualified Contingent Vesting Event, in
accordance with the terms set forth below.
6.1.21 If a Qualified Contingent Vesting Event occurs prior to
the completion of the first year of the performance period specified by
the Board, all of the Incentive Stock Grants shall be forfeited and none
of the Incentive Stock Grants shall thereafter become vested in the
Grantee.
6.1.22 If a Qualified Contingent Vesting Event occurs after the
completion of the first year of the performance period specified by the
Board but prior to the completion of the second year of the performance
period specified by the Board, the Grantee shall be entitled to receive
one-third (1/3) of the Incentive Stock Grant that would vest if the
Performance Criteria was applied to the financial results of the Company
for the first fiscal year of the performance period. All other
Incentive Stock Grants not vested pursuant to the provisions of the
preceding sentence shall be forfeited.
6.1.23 If a Qualified Contingent Vesting Event occurs after the
completion of the second year of the performance period specified by the
Board, but prior to the completion of the third year of the performance
period specified by the Board, the Grantee shall be entitled to receive
100% of the Incentive Stock Grant that would vest if the Performance
Criteria was applied to the financial results of the Company for the
first and second fiscal years of the performance period. All other
Incentive Stock Grants not vested pursuant to the provisions of the
preceding sentence shall be forfeited.
7. Delivery of Stock. Stock and any cash payments (if applicable) to be
delivered to a Grantee pursuant to the vesting of a Grant, shall be delivered
to the Grantee within 90 days of the date the Grant vests. In the event that
a Grantee is unable to accept the Stock due to death, disability or
otherwise, the Stock and any cash payments (if applicable) shall be
delivered to the Grantee's Successor.
8. Fractional Shares. No factional shares of Stock shall be issued to any
participant pursuant to the terms of the Plan. The vesting of any Grant
shall be rounded to the nearest whole share. In the event that 50% or more
of a share shall vest pursuant to the terms of the Plan, the Participant
shall be vested with the next whole share; to the extent that less than 50%
of a share shall vest, the participant shall rounded down to the next whole
share and the percentage of the share shall be disregarded.
9. Shareholder Rights. Neither a Grantee nor his Successor shall have any
of the rights of a shareholder (including but not limited to voting or
dividend rights) of the Company until the Grants have vested and the stock
certificates evidencing the shares awarded by the Grants are properly
delivered to such Grantee or his Successor; provided, however, that the
Grantee shall be entitled to receive a cash payment (in the form of a bonus
or death benefit) from the Company equal to the amount of any dividends which
would have been payable on the Stock if the Stock had been issued to the
Grantee on the date the Grant vested.
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10. No Alteration of Employment Terms. The Grant to an eligible person does
not alter in any way the Company's or the relevant Subsidiary's existing
rights to terminate such person's employment at any time for any reason, nor
does it confer upon such person any rights or privileges except as
specifically provided for in the Plan.
11. Adjustments. In the event that the outstanding shares of Stock of the
Company are hereafter increased or decreased or changed into or exchanged for
a different number or kind of shares or other securities of the Company or of
another corporation, by reason of a recapitalization, reclassification, stock
split-up, combination of shares, or dividend or other distribution payable in
capital stock, appropriate adjustment shall be made by the Board in the
number and kind of shares as to which Grants may be made under the Plan. In
addition, there shall be appropriate adjustments made in the number and kind
of shares of Stock as to which outstanding Grants shall be issued, to the end
that the proportionate interest of the holder of the Grant shall, to the
extent practicable, be maintained as before the occurrence of such event.
Such adjustment in outstanding Grants shall be made through a change in the
total number or kind of shares awarded in the Grant.
12. Restrictions on Issuing Shares. The issuance of Stock pursuant to the
vesting of a Grant shall be subject to the condition that, if at any time the
Company shall determine in its discretion that the satisfaction of
withholding tax or other withholding liabilities, or that the listing,
registration, or qualification of any shares otherwise deliverable upon such
exercise upon any securities exchange or under any state or federal law, or
that the consent or approval of any regulatory body, is necessary or
desirable as a condition of, or in connection with, the delivery of the Stock
pursuant thereto, then in any such event, such delivery shall be deferred
until such time as such withholding, listing, registration, qualification,
consent or approval shall have been effected or obtained free of any
conditions not acceptable to the Company.
13. Suspension and/or Termination of Plan. The Board may at any time
suspend or terminate the Plan. Unless previously terminated by the Board, no
further Grants shall be awarded under the Plan after December 31, 1995. No
Grants may be awarded during any suspension or termination of the Plan. No
suspension or termination of the Plan shall, without a Grantee's consent,
alter or impair any of the rights or obligations under any Grant theretofore
awarded to such Grantee under the Plan.
14. Nontransferability of Grants. No Grant awarded under the Plan shall be
transferable otherwise than by bequest or by laws of descent and
distribution, and during the lifetime of the Grant only the Grantee or
Grantee's Successor may receive stock or cash from the Grant.
15. Effectiveness of the Plan. The Plan shall become effective only after
the Board shall, by the affirmative vote of a majority of its members, have
approved the Plan.
16. Time of Awarding Grants. Nothing contained in the Plan nor in any
resolution adopted or to be adopted by the Board of Directors or the
stockholders of the Company nor any action taken by the Board shall
constitute a Grant. A Grant shall take place only when a written Agreement
is duly executed by the Company and the Grantee to whom such Grant shall be
awarded.
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ADMINISTRATIVE RULES
FOR BRENTON BANKS, INC.
LONG-TERM STOCK COMPENSATION PLAN
1. Definitions. Those terms defined in the Plan shall have the same
meaning when used in these Rules.
2. Withholding Taxes. Prior to issuing any Stock pursuant to the terms of
a Grant, a Grantee shall be required to make adequate provisions for the
withholding of any and all applicable State, Federal and local taxes
(hereinafter "Withholding Taxes"). The manner in which Withholding Taxes
shall be remitted to the appropriate taxing authorities shall be by a cash
payment to the Company from the Grantee in an amount equal to the amount of
Withholding Taxes that must be remitted to the respective taxing authorities
unless the Grantee elects to pay the withholding taxes pursuant to an
alternative method described in either Section 2.1 or 2.2 hereof. After the
Grantee determines whether the alternative method will apply, the Board, in
its sole discretion, shall determine which alternative method is applied to
the particular Grantee.
2.1 Loan. The Grantee may obtain a loan from the Company or one of
the Company's subsidiaries in an amount equal to the amount of Withholding
Taxes that must be remitted to the respective taxing authorities. Any loan
to a Grantee must be made with interest payable at prime and the loan being
due and payable on December 31 of the year in which the withholding taxes are
due and payable. All loans made to a Grantee must comply with all federal
and applicable state banking laws. Nothing contained in this paragraph shall
require any subsidiary of the Company to make a loan to a Grantee.
2.2 Exchange of Stock. The Grantee may exchange the right to receive
a portion of the Stock issuable pursuant to a Grant for an amount of cash
equal in value to the amount of Withholding Taxes that must be remitted to
the respective taxing authorities based upon the Fair Market Value of the
Stock at the time of withholding.
3. Performance Criteria. The performance criteria established by the Board
shall have the following meanings and shall be interpreted in accordance with
the following rules.
3.1 "Average Annual Earnings Per Share Growth (EPS)" shall be
determined by dividing the sum of the "Annual Percentage Growth Rates in EPS"
for each of the years contained in the performance period by the total number
of years in the performance period.
3.2 "Annual Percentage Growth Rates in EPS" shall mean annual
percentage growth in the Company's Earnings Per Share (for consolidated
financial reporting purposes) after the effect of adjusting earnings for the
financial statement expense of Grants under the Plan pursuant to Generally
Accepted Accounting Principles.
3.3 "Earnings Per Share" shall be the primary earnings per share of
the Company for consolidated financial reporting purposes.
The following example shall illustrate the definitions set forth above:
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During the years 1991, 1992, 1993 and 1994 the Company's Earnings Per
Share are $1.80, $2.10, $2.31 and $2.60 respectively. After adjustment
for the financial statement expense of Grants under the Plan, the
Company's earnings per share are $1.80, $1.90, $2.20 and $2.40 for 1991,
1992, 1993 and 1994 respectively. The Annual Percentage Growth Rate in
EPS for 1992 is computed by subtracting the 1991 adjusted earning per
share ($1.80) from the adjusted 1992 earning per share ($1.90) and
dividing that number by the 1991 adjusted earning per share ($1.80).
Therefore, the Annual Percentage Growth Rate in EPS for 1992 is 5.55%.
The Annual Percentage Growth Rate in EPS for 1993 and 1994 (computed in
the same manner) is 15.78% and 9.09% respectively. The Average Annual
Earning Per Share Growth for the years 1992, 1993 and 1994 is 10.13%
((5.55 + 15.78 + 9.09)/3)
4. Restricted Stock Grants - Vesting and Forfeiture Rules. The following
examples are intended to act as an illustration of the Board's intentions
with respect to Restrictive Stock Grant awards pursuant to the Plan. All of
the examples set forth below are based upon the following facts:
Employee X is granted a restricted stock Grant in 1992. The terms of
the Grant entitle the employee to receive 100 shares of Stock if the X
is employed with the Company or any Subsidiary on January 1, 1995.
4.1 Death or Disability. On June 15, 1992, Employee X becomes
disabled or dies. Employee X becomes fully vested in the 100 shares of
Stock.
4.2 Termination. On November 15, 1994, Employee X is terminated by
the Company. Because Employee X is not employed by the Company on January 1,
1995 and has not been continuously employed by Company the for three
consecutive years, none of the Restricted Stock Grants shall vest.
5. Incentive Stock Grants - Vesting and Forfeiture Rules. The following
examples are intended to act as an illustration of the Board's intentions
with respect to Incentive Stock Grants awarded pursuant to the Plan. All of
the examples set forth below are based upon the following facts:
Employee X is granted an Incentive Stock Grant in 1992. The terms of
the Grant entitle the employee to receive up to 100 shares of Stock if
(1) X is employed with the Company or any Subsidiary on January 1, 1995;
and (2) the Company meets or exceeds certain Performance Criteria. The
Performance Criteria adopted by the Board specify that if the Average
Earnings Per Share Growth of the Company's Stock is below 7.50% - none
of the Incentive Stock Grants will vest; if the Average Earnings Per
Share Growth of the Company's Stock is from 7.50% to 8.74% - 50% of the
Incentive Stock Grants will vest; if the Average Earnings Per Share
Growth of the Company's Stock is from 8.75% to 9.99% - 75% of the
Incentive Stock Grants will vest; if the Average Earnings Per Share
Growth of the Company's Stock is from 10.00% to 11.99% - 100% of the
Incentive Stock Grants will vest. The Company's Earnings Per Share
Growth for the years 1992, 1993 and 1994 are 10.00%, 9.25% and 7.25%
respectively.
5.1 Achievement of Company performance goals. Employee X continues to
work for the Company through January 1, 1995. The Average Earnings Per Share
is 8.83% ((10% + 9.25% + 7.25%)/3). Therefore, in January of 1995, Employee
X will have 75% of the Stock granted pursuant to the Incentive Stock Grant
vested. The number of shares that will be delivered to Employee X is
determined by multiplying the percentage of vested Incentive Stock Grants by
the total number of shares Granted in the Incentive Stock Grant (75% X 100
shares = 75 shares).
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5.2 Qualified Contingent Vesting Event - Year Two of the Performance
Period. Employee X continues to be employed by the Company through June 1,
1993, at which time a Qualified Contingent Vesting Event occurs. On June 1,
1993, the Company would apply the performance criteria to the financial
results of the Company for the first fiscal year - 1992. The Average Earning
Per Share as of December 31, 1992 would be 10% (10%/1). A 10% Average
Earnings Per Share will result in 100% of the Incentive Stock Grant vesting.
However, pursuant to Section 6.2.5.2. of the Plan, only one-third (1/3) of
the Incentive Stock Grants will vest if the Qualified Contingent Vesting
Event occurs during the second year of performance period. Therefore, the
number of shares that will be delivered to Employee X is determined by
multiplying the percentage of vested Incentive Stock Grants pursuant to
measurement via Performance Criteria by the total number of shares Granted in
the Incentive Stock Grant and by one-third (100% X 100 shares X 1/3 = 33
shares).
5.3 Qualified Contingent Vesting Event - Year Three of the
Performance Period. Employee X continues to be employed by the Company
through June 1, 1994, at which time a Qualified Contingent Vesting Event
occurs. On June 1, 1994, the Company would apply the performance criteria to
the financial results of the Company for the first and second fiscal years -
1992 and 1993. The Average Earning Per Share would be 9.625% ((10% +
9.25%)/2). A 9.625% Average Earnings Per Share will result in 75% of the
Incentive Stock Grant vesting. Pursuant to Section 6.2.5.3. of the Plan,
100% of the Incentive Stock Grants will vest if the Qualified Contingent
Vesting Event occurs during the third year of the performance period.
Therefore, the number of shares that will be delivered to Employee X is
determined by multiplying the percentage of vested Incentive Stock Grants
pursuant to measurement via Performance Criteria by the total number of
shares Granted in the Incentive Stock Grant (75% X 100 shares = 75 shares).
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RESOLUTIONS ADOPTED
BY THE
BRENTON BANKS, INC.
BOARD OF DIRECTORS
At a regular meeting of the Board of Directors of the Company the
following resolutions were unanimously adopted by the Board of Directors.
Resolved, that pursuant to the provisions of the Company's Long-Term
Stock Compensation Plan, the Board approves the awarding of Grants to the
employees of the Company upon the terms and conditions set forth below.
1. That Restricted Stock Grants are to be awarded to those employees
listed on Exhibit A attached hereto, in the amounts set forth in the
column titled "Restricted Shares". The Restricted Stock Grants shall be
subject to the terms and conditions set forth in the Plan. The Board
further specifies that the three successive calendar years of
employment, the completion of which the Restricted Stock Grants are
conditioned upon, are 1994, 1995 and 1996. All Grants shall vest or be
forfeited, pursuant to the provisions of the Plan, on or before January
1, 1997.
2. That Incentive Stock Grants are to be awarded to those employees
listed on Exhibit A attached hereto, in the amounts set forth in the
column titled "Performance Shares". The Incentive Stock Grants shall be
subject to the terms and conditions set forth in the Plan,
Administrative Rules and those set forth below.
a. The Board hereby specifies that the three successive calendar
years of employment (the "Performance Period"), the completion of
which the Incentive Stock Grants are conditioned upon, are 1994,
1995 and 1996. All Incentive Stock Grants shall vest or be
forfeited, pursuant to the provisions of the Plan, on or before
March 15, 1997.
b. The Board further specifies that the Performance Criteria that
the Company must achieve prior to the vesting of any of the
Incentive Stock Grants shall be as set forth on Exhibit B attached
hereto.
To the extent that a Grant fails to vest, the shares shall be deemed to
be forfeited pursuant to the terms of the Plan.
Those terms defined in the Company's Long Term Stock Compensation Plan
or Rules adopted thereunder by the Board shall have the same meaning when
used in this Resolution.
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EXHIBIT B
Average Annual Earnings
Per Share Growth over the Tiered Achievement
Three Year Performance Period Scale
Less than 7.5% . . . . . . . . . . . . . . . . . . . . . . . . 0% vested
7.50% to 8.74% . . . . . . . . . . . . . . . . . . . . . . . . 50% vested
8.75% to 9.99% . . . . . . . . . . . . . . . . . . . . . . . . 75% vested
10.00% to 11.99% . . . . . . . . . . . . . . . . . . . . . . . 100% vested
12.00% to 13.99% . . . . . . . . . . . . . . . . . . . . . . . 115% vested
14.00% to 15.99% . . . . . . . . . . . . . . . . . . . . . . . 130% vested
Greater than 16.00% . . . . . . . . . . . . . . . . . . . . . 150% vested
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Exhibit 10(viii)
Long-Term Stock Compensation Plan, Agreements and related
documents, effective for 1992, under which certain of the Company's
senior officers and bank presidents are eligible to receive shares
of Brenton Banks, Inc. stock based upon their service to the
Company and Company performance. This Long-Term Stock Compensation
Plan, Agreements and related documents, effective for 1992, are
incorporated by reference from Form 10-K of Brenton Banks, Inc.,
for the year ended December 31, 1992.
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Exhibit 10 (ix)
Merger Agreement between Brenton Banks, Inc. and Ames Financial
Corporation, dated June 17, 1992. This Merger Agreement is
incorporated by reference from Form S-4 of Brenton Banks, Inc.
filed on August 13, 1992.
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Exhibit (10x)
Standard Agreement for Advances, Pledge and Security Agreement
between Brenton banks and the Federal Home Loan Bank of Des Moines.
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FEDERAL HOME LOAN BANK OF DES MOINES
DES MOINES, IOWA
AGREEMENT FOR ADVANCES, PLEDGE AND SECURITY AGREEMENT
BLANKET PLEDGE
This Agreement for Advances, Pledge and Security Agreement
("Agreement"), effective the _____ day of ______________, 19___, is entered
between ______________________________________ ("Member"), with principal
offices at ______________________________________________ and the Federal
Home Loan Bank of Des Moines, ("Bank"), with principal offices at 907 Walnut,
Des Moines, Iowa 50309.
WHEREAS, The Bank in accordance with the Federal Home Loan Bank Act,
regulations and directives of the Federal Housing Finance Board, and policies
promulgated by its own Board, makes available advances to its members. The
available advances are set forth by the Bank in a statement of "Credit
Policy," as may be amended from time to time.
WHEREAS, The Member may, from time to time, apply for an advance or
advances which may be available to it.
NOW THEREFORE, For valuable consideration and with respect to each and
every such advance, the Parties agree as follows:
SECTION 1. CONFIRMATION OF ADVANCE. To be bound by the terms and
conditions set forth herein, in the confirmation of advance issued with
respect to each advance, and in the Bank's Credit Policy as may be amended
from time to time. A confirmation of advance shall mean a writing or machine
readable electronic transmission in such form or forms as may be determined
by the Bank from time to time.
SECTION 2. PAYMENT TO THE BANK. To repay each and any advance together
with interest thereon according to the confirmation of each such advance
communicated to the Member by the Bank, together with any unpaid costs and
expenses in connection therewith. Such payment shall be made at the office
of the Bank in Des Moines, Iowa, or at such other place as the Bank, or its
successors or assigns, may from time to time appoint in writing.
The default rate on past due principal and interest may, at the option
of the Bank, be at a rate 1% per annum higher than the then current rate
being charged by the Bank for advances.
SECTION 3. ASSIGNMENT TO BANK OF SECURITY INTEREST IN BANK STOCK. The
Member hereby assigns, transfers and pledges to the Bank, its successors or
assigns, all stock of the Federal Home Loan Bank of Des Moines owned by the
Member as collateral security for payment of any and all indebtedness,
whether in the nature of an advance or otherwise, of the Member to the Bank,
its successors and assigns.
SECTION 4. ASSIGNMENT OF SECURITY INTEREST IN OTHER COLLATERAL. As
additional collateral security for any and all such advances, Member assigns,
transfers, and pledges to the Bank, its successors or assigns, each and every
note or other instrument evidencing a debt and any mortgage, deed of trust,
title, or document of title securing it; all securities (including, but not
limited to mortgage-backed securities issued or guaranteed by the Federal
Home Loan Mortgage Corporation, the Federal National Mortgage Association,
obligations of or guaranteed by the United States or an agency thereof, share
certificates or other participation interests in any securities trust,
mortgage loan participation certificates); all contract for deeds; all
chattel paper; any chose in action; all general intangibles; all deposit
accounts; certificates of deposit; and proceeds from any of the above
(hereinafter " Collateral"). With respect to such Collateral, Member
undertakes and agrees as follows:
A. That such security interest shall extend to after acquired Collateral
of a similar nature;
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B. That the Member shall be at liberty to use, commingle, and dispose of
all or part of the Collateral, and to collect, compromise, and dispose of the
proceeds of the Collateral without being required to account for the proceeds
or replace the Collateral subject only to its obligation to maintain the
Collateral as herein provided;
C. To keep and maintain such Collateral free and clear of pledges,
liens, and encumbrances to others at the required collateral maintenance
level. The "required collateral maintenance level" means the amount of
collateral the member is required to maintain free and clear of pledge,
liens, and encumbrance to others as set forth from time to time in the Credit
Policy;
D. To assemble and deliver Collateral to the Bank or its authorized
agents immediately upon demand of the Bank; and as specified by the Bank in
its Credit Policy from time to time, and to pay for the safekeeping
collateral as established by the Bank;
E. To make, execute, and deliver to the Bank such assignments,
endorsements, listings, powers, financing statements or other instruments as
the Bank may reasonably request respecting such Collateral.
SECTION 5. DUTY TO USE REASONABLE CARE. In the event Member delivers
security to Bank or its Agent pursuant to paragraph 4 above, the duty of the
Bank with respect to said security shall be solely to use reasonable care in
the custody and preservation of the security in its possession.
SECTION 6. ADDITIONAL SECURITY. Member shall assign additional or
substituted Collateral for such advances at any time the Bank shall deem it
necessary for the Bank's protection.
SECTION 7. EVENTS OF DEFAULT. The Bank may consider the Member in
default hereunder upon the occurrence of any of he following events or
conditions:
A. Failure of the Member to pay any interest, or repay any principal, of
any advances as herein required; or
B. Breach or failure to perform by the Member of any covenant, promise,
condition, obligation or liability contained or referred to herein, or any
other agreement to which the Member and the Bank are parties; or
C. Proof being made that any representations, statements or warranty
made or furnished in any manner to the Bank by or on behalf of the Member in
connection with all or part of any advance was false in any material respect
when made or furnished; or
D. Loss, theft, damage, destruction, sale or encumbrance to or of any of
the Collateral except as herein permitted, or the making of any levy, seizure
or attachment thereof or therein; or
E. Any tax levy, attachment, garnishment, levy of execution or other
process issued against the Member or the Collateral; or
F. Any suspension of payment by the Member to any creditor or any events
which result in acceleration to the maturity of any indebtedness of the
Member to others under any Indenture, agreement or undertaking; or
G. Application for, or appointment of, a receiver of any part of the
property of the Member, or in case of adjudication of insolvency, or
assignment, for benefit of creditors, or general transfer of assets by the
Member, or if management of the Member is taken over by any supervisory
authority, or in case of any other form of liquidation, merger, sale of
assets or voluntary dissolution, or upon termination of the membership of the
Member in the Federal Home Loan Bank of Des Moines, or in the case of
advances made under the provisions of 12 U.S.C. paragraph 1431(g)(4), if at
any time thereafter the creditor liabilities of the Member, excepting its
liabilities to the Bank, are increased in any manner to an amount exceeding
5% of its net assets; or
H. Determination by the Bank that a material adverse change has occurred
in the financial condition of the Member from that disclosed at the time of
the making of any advance, or from the condition of the Member as theretofore
most recently disclosed to the Bank in any manner, or
I. If the Bank reasonably and in good faith deems itself insecure even
though the Member is not otherwise in default.
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SECTION 8. BANK REMEDIES IN THE EVENT OF DEFAULT. At any time after any
default as herein before provided, the Bank may, at its option, declare the
entire amount of any and all advances to be immediately due and payable. The
Bank shall have all of the remedies of a secured party under the Uniform
Commercial Code of the State of Iowa. In addition thereto, the Bank may take
immediate possession of any of the Collateral or any part thereof wherever
the same may be found. The Member agrees to pay all the costs and expenses of
the Bank in the collection of the secured indebtedness and enforcement of the
Bank's rights hereunder including, without limitation, reasonable attorney's
fees. The Bank may sell the Collateral or any part thereof in such manner
and for such price as the Bank deems appropriate without any liability for
any loss due to decrease in the market value of the Collateral during the
period held. The Bank shall have the right to purchase all or part of the
Collateral at public or private sale. If any notification of intended
disposition of any of the Collateral is required by law, such notification
shall be deemed reasonable and properly given if mailed, postage prepaid, at
least five days before any such disposition to the address of the Member
appearing on the records of the Bank. The proceeds of any sale shall be
applied in the following order: First, to pay all costs and expenses of
every kind for the care, collection, safekeeping, sale, foreclosure, delivery
or otherwise respecting the Collateral (including expenses incurred in the
protection of the Bank's title to or lien upon or right in any of the
Collateral, expenses for legal services of any kind in connection therewith
or in making any such sale or sales, insurance, commission for sales and
guaranty); then to interest on all indebtedness of the Member to the Bank;
then to the principal amount of any such indebtedness whether or not such
indebtedness is due or accrued. The Bank, at its discretion, may apply any
surplus to indebtedness of Member to third parties claiming a secondary
security interest in the Collateral. Any remaining surplus shall be paid to
the Member.
SECTION 9. APPOINTMENT OF BANK AS ATTORNEY-IN-FACT. In the event of
default, and without limiting any other rights the Bank might have as a
secured party under the Uniform Commercial Code of Iowa, or the laws of any
jurisdiction under which Bank might be exercising rights hereunder, and under
this Agreement, Member does hereby make, constitute and appoint Bank its true
and lawful attorney-in-fact to deal with the Collateral and, in its name and
stead to release, collect, compromise, settle and release or record any
mortgage of deed or trust which is a part of such Collateral as fully as the
Member could do if acting for itself. The powers herein granted are coupled
with an interest, and are irrevocable, and full power of substitution is
granted to the Bank in the premises.
SECTION 10. AUDIT AND VERIFICATION OF COLLATERAL. In extension and not
in limitation of all requirements of law respecting examination of the Member
by or on behalf of the Bank, the Member agrees that all Collateral pledged
hereunder shall always be subject to audit and verification by or on behalf
of the Bank in its corporate capacity.
SECTION 11. RESOLUTION TO BE FURNISHED BY MEMBER. Member agrees to
furnish to the Bank from time to time a certified copy of resolution of its
Board of Directors or other governing body authorizing such of the Member's
officers, as the Member shall select, to apply for advances from the Bank.
Unless the Bank shall be otherwise notified in writing, the Bank may honor
applications made by such officers other than in writing; but, in such event
the Member shall confirm such application for advance in writing on forms
furnished by the Bank. But the Member shall forever be estopped to deny its
obligation to repay such advance whether or not an application in writing is
ever received by the Bank so long only as the advance is made in good faith
by the Bank on the request of an officer or employee so authorized by the
Member.
SECTION 12. APPLICABILITY OF BANK ACT. In addition to the terms and
conditions herein specifically set forth, all advances are subject to the
rights, powers, privileges and duties conferred upon the Federal Housing
Finance Board, the Federal Home Loan Banks, and on member institutions by the
Act of Congress entitled, "Federal Home Loan Bank Act, as amended."
SECTION 13. JURISDICTION. In any action or proceeding brought by the
Bank or the Member in order to enforce any right or remedy under this
Agreement, Member will submit to the jurisdiction of the United States
District Court for the Southern District of Iowa, or if such action or
proceeding may not be brought in Federal Court, the jurisdiction of the Iowa
District Court in Polk County.
If any action or proceeding is brought by the Member seeking to obtain
relief against the Bank arising out of this Agreement and such relief is not
granted by a court of competent jurisdiction, the Member will pay all
attorney's fees and court costs incurred by the Bank in connection therewith.
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SECTION 14. CHOICE OF LAW. This Agreement shall be construed and
enforced according to the law of the State of Iowa, except that the rate of
interest on advances hereunder shall be governed by the provisions of 12
U.S.C. paragraph 1430 (as amended).
SECTION 15. AGREEMENT CONSTITUTES ENTIRE AGREEMENT. This Agreement
embodies the entire Agreement and understanding between the parties hereto
relating to the subject matter hereof and supersedes all prior agreements
between such parties that relate to the subject matter except that: The
Credit Policy as duly adopted by the Bank's Board of Directors from time to
time shall be incorporated herein, unless agreed to in writing by both
parties. Advances made by the Bank to Member prior to the execution of this
Agreement shall continue to be governed exclusively by the terms of the prior
agreements pursuant to which such advances were made, except that (i) any
default thereunder shall constitute default hereunder, (ii) Collateral
furnished as security hereunder shall also secure such prior advances and
(iii) the rights and obligations with respect to such Collateral shall be
governed by the terms of this Agreement.
SECTION 16. SECTION HEADINGS. Section headings are not to be considered
part of this Agreement. Section headings are solely for convenience of
reference, and shall not effect the meaning or interpretation of this
Agreement or any of its provisions.
SECTION 17. SEVERABILITY OF SECTIONS. If any section or portion thereof
is deemed void in any legal proceeding, the remainder of the Agreement shall
remain in full force and effect.
SECTION 18. The person signing this document on behalf of the Member
represents that its execution was authorized by appropriate action of the
directors of the Member which was completed on the _____ day of __________,
19___, and that such action is duly reflected in the records of the Member.
______________________________________ FEDERAL HOME LOAN BANK OF DES MOINES
(Full Corporate Name of Member)
By: ______________________________ By: ____________________________
Title: ______________________________ Title: ____________________________
Date: ______________________________ Date: ____________________________
By: ______________________________ By: ____________________________
Title: ______________________________ Title: ____________________________
Date: ______________________________ Date: ____________________________
Revised 5/91
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Exhibit 10(xi)
Short-term note with American National Bank & Trust Company of
Chicago as of April 30, 1993, setting forth the terms of the Parent
Company's $2,000,000 short-term debt agreement.
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PROMISSORY NOTE (UNSECURED)
PROMISSORY NOTE (UNSECURED)
Grid Note Maximum Chicago, Illinois April 30, 1993
$2.000.000.00 Due April 30, 1994
FOR VALUE RECEIVED the undersigned (jointly and severally if more than
one) ("Borrower"), promises to pay to the order of AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO ("Bank") at its principal place of business in
Chicago, Illinois or such other place as Bank may designate from time to time
hereafter, the principal sum of TWO MILLION AND NO/100 Dollars, or such
lesser principal sum as may then be owed by Borrower to Bank hereunder.
Borrowers obligations and liabilities to Bank under this Note
("Borrowers Liabilities") shall be due and payable on April 30, 1994.
The unpaid principal balance of Borrower's Liabilities due hereunder
shall bear interest from the date hereof until paid, computed as follows
(DELETE INAPPLICABLE PROVISIONS): (i)XXXXX (ii) at a daily rate equal to the
daily rate equivalent of 0.0% per annum (computed on the basis of a 360-day
year and actual days elapsed) in excess of the rate of interest announced or
published publicly from time to time by Bank as its prime or base rate of
interest (the "BASE RATE"); provided, however, that in the event that any of
Borrower's Liabilities are not paid when due, the unpaid amount of Borrower's
Liabilities shall bear interest after the due date until paid at a rate equal
to the sum of (a) the rate in effect prior to the due date and (b) 3%.
If the rate of interest to be charged by Bank to Borrower hereunder is
that specified in clause (ii) such rate shall fluctuate hereafter from time
to time concurrently with, and in an amount equal to, each increase or
decrease in the Base Rate, whichever is applicable.
Accrued interest shall be payable by Borrower to Bank with each
principal installment of Borrower's Liabilities due hereunder, or as billed
by Bank to Borrower, at Bank's principal place of business, or at such other
place as Bank may designate from time to time hereafter.
Borrower warrants and represents to Bank that Borrower shall use the
proceeds represented by this Note solely for proper business purposes, and
consistently with all applicable laws and statutes.
The occurrence of any one of the following events shall constitute a
default by the Borrower ("Event of Default") under this Note: (a) if Borrower
fails pay any of Borrower's Liabilities when due and payable; (b) if Borrower
fails to perform, keep or observe any term, provision, condition, covenant,
warranty, or representation contained in this Note which is required to be
performed, kept, or observed by Borrower; (c) occurrence of a default or an
event of default under any agreement, instrument or document heretofore, now
or at any time hereafter delivered by or on behalf of Borrower to Bank; (d)
occurrence of a default or an event of default under any agreement,
instrument or document heretofore, now or at any time hereafter delivered to
Bank by any guarantor or Borrower's Liabilities; (e) if any of Borrower's
assets are attached, seized, subjected to a writ of distress warrant, or are
levied upon or become subject to any lien or come within the possession of
any receiver, trustee, custodian or assignee for the benefit of creditors;
(f) if Borrower or any guarantor of Borrower's Liabilities becomes insolvent
or generally fails to pay, or admits in writing its inability to pay, debts
as they become due, if a petition under any section or chapter of the
Bankruptcy Reform Act of 1978 or any similar law or regulation is filed by or
against Borrower or any such guarantor, if Borrower or any such guarantor
shall make an assignment for the benefit of creditors, if any case or
proceeding is filed by or against Borrower or any such guarantor for its
dissolution or liquidation, or upon the death or incompetency of Borrower or
any such guarantor, or the appointment of a conservator for all or any
portion of Borrower's assets; or (g) if a contribution failure occurs with
respect to any pension plan maintained by Borrower or any corporation, trade
or business that is, along with Borrower, a member of a controlled group of
corporations or a controlled group of trades or businesses (as described in
Sections 414(b) and (c) of the Internal Revenue Code of 1986 or Section 4001
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")
sufficient to give rise to a lien under Section 302(f) of ERISA; or (h) if
Bank Is reasonably insecure.
Upon the occurrence of an Event of Default, at Bank's option, without
notice by Bank to or demand by Bank of Borrower, all of Borrower's
Liabilities shall be due and payable forthwith.
All of Bank's rights and remedies under this Note are cumulative and
non-exclusive. The acceptance by Bank of any partial payment made hereunder
after the time when any of Borrower's Liabilities become due and payable will
not establish a custom, or waive any rights of Bank to enforce prompt payment
hereof. Bank's failure to require strict performance by Borrower of any
provision of this Note shall not waive, affect or diminish any right of Bank
thereafter to demand strict compliance and performance therewith. Any waiver
of an Event of Default hereunder shall not suspend, waive or affect any other
Event of Default hereunder. Borrower and every endorser waive presentment,
demand and protest and notice of presentment, protest, default, non-payment,
maturity, release, compromise, settlement, extension or renewal of this Note,
and hereby ratify and confirm whatever Bank may do in this regard. Borrower
further waives any and all notice or demand to which Borrower might be
entitled with respect to this Note by virtue of any applicable statute or law
(to the extent permitted by law).
Borrower agrees to pay, upon Bank's demand therefor, any and all costs,
fees and expenses (including attorneys' fees, costs and expenses) incurred by
Bank (i) in enforcing any of Bank's rights hereunder, and (i) in representing
Bank in any litigation, contest, suit or dispute, or to commence, defend or
intervene or to take any action with respect to any litigation, contest, suit
or dispute (whether instituted by Bank, Borrower or any other person) in any
way relating to this Note or Borrower's Liabilities, and to the extent not
paid the same shall become part of Borrower's Liabilities hereunder.
This Note shall be deemed to have been submitted by Borrower to Bank at
Bank's principal place of business and shall be deemed to have been made
thereat. This Note shall be governed and controlled by the laws of the State
of Illinois as to interpretation, enforcement, validity, construction,
effect, choice of law and in all other respects.
TO INDUCE BANK TO ACCEPT THIS NOTE, BORROWER, IRREVOCABLY, AGREES THAT,
SUBJECT TO BANK'S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN
ANY WAY, MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO THIS NOTE
SHALL BE LITIGATED IN COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE
OF ILLINOIS. BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY
LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID CITY AND STATE. BORROWER
HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY
LITIGATION BROUGHT AGAINST BORROWER BY BANK IN ACCORDANCE WITH THIS
PARAGRAPH.
BORROWER IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING (I) TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR IN CONNECTION WITH
THIS NOTE OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR
WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR (II) ARISING
FROM ANY DISPUTE OR CONTROVERSY IN CONNECTION WITH OR RELATED TO THIS NOTE OR
ANY SUCH AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT, AND AGREES THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.
C/O Brenton Banks, Inc.
400 Locust, Box 961
Des Moines, Iowa 50304
Address
Brenton Banks, Inc.
By: /s/ J.C. Brenton (signature)
Its: President (title)
By: /s/ Steven T. Schuler (signature)
Its: CFO & Vice Pres/Treas/Sec. (title)
F77-3575 R-6-90
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Exhibit 10(xii)
Data Processing Agreement dated December 1, 1991 by and between
Systematics, Inc. and Brenton Information Systems, Inc. This Data
Processing Agreement is incorporated by reference from Form 10-K of
Brenton Banks, Inc., for the year ended December 31, 1991.
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Exhibit 10(xiii)
Item Processing Agreement dated December 1, 1991 between Brenton
Bank Services, Inc. and the Federal Home Loan Bank of Des Moines.
This Item Processing Agreement is incorporated by reference from
Form 10-K of Brenton Banks, Inc., for the year ended December 31,
1992.
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Exhibit 10(xiv)
Restated Trust Agreement for Brenton Banks, Inc. Retirement Plan,
effective January 1, 1986. This Restated Trust Agreement is
incorporated by reference from Form 10-K of Brenton Banks, Inc.,
for the year ended December 31, 1991.
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Exhibit 10(xv)
Amendment to the Restated Trust Agreement for Brenton Banks, Inc.
Retirement Plan, effective May 31, 1989. The Amendment is
incorporated by reference from Form 10-K of Brenton Banks, Inc. for
the year ended December 31, 1989.
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Exhibit (10xvi)
Indenture Agreement with respect to Capital Notes dated April 12,
1993.
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I N D E N T U R E A G R E E M E N T
W I T H R E S P E C T
T O C A P I T A L N O T E S
D A T E D A P R I L 1 2 , 1 9 9 3
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INDENTURE AGREEMENT
THIS INDENTURE AGREEMENT is made as of the 12th day of April, 1993,
between BRENTON BANKS, INC., a corporation organized and existing under the
laws of Iowa with its principal place of business in the City of Des Moines,
Iowa, hereinafter called the "Company," and BANKERS TRUST COMPANY, a state
banking corporation organized under the laws of the State of Iowa, with its
principal place of business in the City of Des Moines, Iowa, hereinafter
called the "Trustee."
W I T N E S S E T H:
WHEREAS, Company is duly authorized by its Articles of Incorporation and
By-Laws to borrow money for its corporate purposes; and,
WHEREAS, Company was heretofore duly authorized by a unanimous
affirmative vote of its directors at a meeting duly called and held for such
purpose to borrow the sum of $5,000,000 for use in connection with its
ordinary operations and to issue its Capital Notes in the total sum of
$5,000,000, with the same to be secured by an appropriate Indenture Agreement
with Bankers Trust Company, Des Moines, Iowa, as Trustee for the Capital Note
holders.
NOW, THEREFORE, in consideration of One Dollar ($1.00) in hand paid to
Trustee, and in consideration of the purchase and acceptance of Capital Notes
of Company by various purchasers, Company hereby covenants and declares that
its Capital Notes in the maximum principal sum of $5,000,000, and hereinafter
more fully described, shall be issued by it upon and subject to the following
terms, conditions, and covenants, and Trustee by its execution hereof agrees
to act as Trustee for all such Capital Note holders under and pursuant to the
terms of this Agreement.
ARTICLE I
Capital Notes
1.01 Company shall issue its Capital Notes, in the maximum total
principal sum of $5,000,000 with the same being in the series, maturing on
the dates, and bearing interest at the rates enumerated on Exhibit A attached
hereto, which said Capital Notes shall constitute those issued under and
pursuant to this Indenture. Such Capital Notes shall be issued in
denominations of multiples of $1,000.
1.02 The Capital Notes to be issued under and pursuant to the terms
hereof shall be in the form attached hereto as Exhibit B.
1.03 All Capital Notes issued pursuant to this Indenture shall be
issued directly to the registered owners as to principal and interest, and
shall be transferable by the registered owner in person or by duly authorized
attorney at the office of the Company upon surrender and cancellation of the
original Capital Note, at which time a new registered Capital Note(s) shall
be executed and delivered by Company in lieu thereof with the same registered
in the name of the transferee or transferees. Each Capital Note issued in
consummation of an assignment and transfer of an original issue, or any
subsequent Capital Notes issued and outstanding under the terms hereof, shall
be appropriately recorded by both Company and by Trustee.
1.04 All Capital Notes issued under and pursuant to this Indenture
shall be certified by Trustee and shall not be valid for any purpose until so
certified. Whenever a Capital Note is surrendered for transfer
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or assignment and a new Capital Note issued in lieu thereof, the same shall
be certified at that time by Trustee prior to its delivery to the registered
owner or owners.
1.05 All Capital Notes issued under the terms hereof shall have equal
priority as to principal. Upon the happening of an "event of default," all
interest due and unpaid on that date on all Capital Notes issued and
outstanding shall have priority over any principal amounts of such Capital
Notes, and shall be paid ratably either in money or property among the
Capital Note holders to whom the said unpaid interest is due and owing, and
no payment of principal shall be made until all said unpaid interest has been
paid and discharged in full. Following payment of the interest, the
principal sums due and unpaid on all Capital Notes issued and outstanding as
of that date shall then be paid. For the purpose of principal payment,
whether by virtue of distribution of money or property, priority with respect
thereto shall be equal between all such outstanding Capital Notes.
1.06 Any Capital Note issued under the terms hereof which has been
lost, destroyed, or stolen shall be replaced by Company with an identical new
Capital Note, certified by Trustee, upon proof of loss, destruction, or theft
satisfactory to Company and Trustee and the giving of a bond to secure
Company and Trustee from loss, if and to the extent required by Company and
Trustee.
1.07 Any Capital Note surrendered to Company by the holder thereof on
payment or redemption shall be promptly cancelled by Company and after
cancellation delivered to Trustee for recordation and return to Company. A
Capital Note surrendered upon an assignment or transfer shall also be so
cancelled by Company and delivered to Trustee for recordation and return to
Company.
1.08 All Capital Notes issued pursuant to the terms hereof shall bear
interest, payable semi-annually on June 1 and December 1 of each year prior
to maturity, call for redemption or redemption pursuant to Section 1.11
hereof. No payment of principal shall be made until all unpaid interest has
been paid and discharged in full. Following payment of the interest, the
principal sums due and unpaid on all Capital Notes issued and outstanding as
of that date shall be paid. For the purpose of principal payments, whether
by virtue of distribution of money or property, priority with respect thereto
shall be equal in all respects between all such outstanding Capital Notes.
1.09 Capital Notes issued and outstanding under the terms hereof shall
be paid on maturity to the extent that payment is not prohibited by the terms
hereof, and after payment of all interest due and payable on any such
outstanding Capital Notes at that time.
1.10 Any Capital Note issued pursuant to this Indenture may be
redeemed in whole or in part by Company, on any interest payment date after
eight (8) years from the date of issuance of such Capital Note, in advance of
maturity at any time thirty (30) days after notice by Company of its election
to do so by paying all interest due thereon together with the principal
amount thereof.
1.11 Upon the death of an individual registered holder or of an
individual bearing a certain designated relationship to the registered
holder, a Capital Note will be redeemed by the Company at the option of
certain designated person(s) exercised as provided herein at face plus all
interest accrued on the Capital Note to the date of redemption. An option
shall arise upon the death of an individual who is (i) sole registered
holder, (ii) a joint tenant registered holder, (iii) a tenant in common
registered holder, (iv) a life tenant registered holder, (v) the sole grantor
of a revocable trust which is a registered holder, (vi) a participant in an
IRA or other retirement plan solely for the benefit of one participant which
is a registered holder, or (vii) the ward of a conservatorship or
custodianship which is a registered holder. No option to require redemption
of a Capital Note shall arise except as specifically set forth above.
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Upon the death of an individual who is the sole registered holder
of a Capital Note, such option shall be exercisable by the deceased holder's
personal representative(s). Upon the death of a registered holder who holds
a Capital Note in joint tenancy, such option shall be exercisable by the
surviving joint tenant(s). Upon the death of a registered holder who holds
a Capital Note in tenancy in common, such option shall be exercisable jointly
by the personal representative(s) of the deceased holder and by the remaining
tenant(s) in common. Upon the death of a registered holder who has a life
estate in a Capital Note, such option shall be exercisable by the
remainderman(men). Upon the death of an individual who is the sole grantor
of a revocable trust which is a registered holder, such option shall be
exercisable by the trustee(s) of the trust. Upon the death of the
participant in an IRA or other retirement plan solely for the benefit of one
participant which is a registered holder, such option shall be exercisable by
the beneficiary(ies) of such IRA or retirement plan. Upon the death of a
ward of a conservatorship or custodianship which is a registered holder, such
option shall be exercisable by the personal representative(s) of such ward's
estate. In the event more than one person is entitled to exercise the
option, such option shall be exercisable only with the concurrence of all
persons entitled to exercise the option.
The option shall be exercisable for a period of 9 months
following the date of death of the individual whose death gives rise to the
option. The option shall be exercised by the person(s) entitled to exercise
the option giving written notice to the Company of the exercise of the option
at the Company's principal executive offices. Prior to the redemption of the
Capital Note, the person(s) entitled to exercise the option shall furnish the
Company with such documentation or evidence as the Company shall require to
establish such person's(s') entitlement to exercise the redemption option.
The Company shall be under no duty to notify the person(s) entitled to
exercise the option of the existence of this redemption option or of any
facts which come to the attention of the Company which would give any person
the right to exercise the option.
1.12 In the event any Capital Note is not presented for surrender and
cancellation on maturity or when called for redemption by Company, Company
shall deposit a sum equal to the amount due thereon, with Trustee in trust
for payment thereof, and no interest shall be due and payable to the holder
of such Capital Note from and after its maturity or redemption date. Such
payment by Company to Trustee shall be made within thirty (30) days after the
due date. Thereafter, Trustee shall pay over said sum to the owner upon
delivery and surrender of the pertinent Capital Note(s) for redemption and
cancellation.
1.13 Nothing contained in this Indenture or in any of the Capital
Notes shall be construed to cause the Capital Notes issued hereunder to
become immediately due and payable in the event of any consolidation or
merger of the Company with or into any other corporation or corporations
(whether or not affiliated with the Company), or successive consolidations or
mergers in which the Company or its successor or successors shall be a party
or parties, or any sale or conveyance of the property of the Company as an
entirety or substantially as an entirety, to any other corporation (whether
or not affiliated with the Company) or the purchase of stock and subsequent
liquidation of the assets into the purchasing entity (hereinafter "purchase
and liquidation") authorized to acquire and operate the same if the following
are delivered to the Trustee: (1) an opinion by a certified public
accountant appointed by the successor corporation or entity opining that the
net worth of the successor corporation or entity following the acquisition,
merger, consolidation, sale of assets, or purchase and liquidation determined
on a pro forma basis using the successor corporation's or entity's and the
Company's most recent year-end financial statements preceding the date of the
acquisition, merger, consolidation, sale of assets, or purchase and
liquidation is in excess of the net worth of the Company as reflected on the
Company's most recent year-end financial statements preceding the date of the
acquisition, merger, consolidation, sale of assets, or purchase and
liquidation; (2) an Assumption Agreement in which the successor corporation
or entity expressly assumes the due and punctual performance and observance
of all of the covenants and conditions of this Indenture to be performed by
the Company; and (3) an opinion of counsel appointed by the successor
corporation or entity that the Assumption Agreement is a valid and binding
obligation of such
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successor corporation or entity enforceable in accordance with its terms and
the Capital Notes are valid and binding obligations of the successor
corporation or entity.
In case of any such consolidation, merger, sale, conveyance, or
purchase and liquidation and upon the assumption by the successor
corporation, such successor corporation shall succeed to and be substituted
for the Company, with the same effect as if it had been named herein as the
Company.
1.14 Any notices which Company is required to give under the terms of
this Indenture, or which are deemed necessary or proper by Company, shall be
given by first class mail with postage prepaid addressed to each Capital Note
holder at the address shown for him on the books and records of Company, and
notices so given shall be deemed given upon the date of the mailing thereof.
ARTICLE II
Covenants of Company
2.01 Company covenants and agrees to pay all principal and interest as
the same becomes due and payable upon any Capital Notes issued and
outstanding under the terms of this Indenture; provided, however, that
principal shall only be paid by it upon surrender of the appropriate Capital
Notes for cancellation, or if not surrendered, by payment to Trustee as
provided in this Indenture.
2.02 Subject to the provisions of Section 1.13 hereof, Company
covenants to continue the operation of its business, all as required and
permitted by its Articles of Incorporation and By-Laws, and to at all times
maintain sufficient assets and property to continue such general operations
so long as any of its Capital Notes remain issued and outstanding under the
terms hereof.
2.03 Company covenants to meet all requirements relative to issuance
of said Capital Notes, payment of principal and interest thereon from the
sources specified, and all other conditions relating thereto as provided in
Article I hereof.
2.04 Company further covenants to furnish Trustee true copies of all
quarterly and annual reports normally prepared by Company.
2.05 On an annual basis Company covenants to furnish trustee with a
certificate indicating whether there has been an "event of default", as
defined in Article III hereof, on the Capital Notes. Said statement shall be
certified by an officer of the Company that it is true and accurate according
to the Company's best knowledge and belief. The Company shall deliver the
certificate to the Trustee within ninety (90) days of the Company's fiscal
year end.
2.06. The Company further covenants to furnish Trustee a quarterly
statement listing the current capital noteholders. Said statement shall be
certified by an officer of the Company to be true and accurate according to
the Company's best knowledge and belief.
ARTICLE III
Defaults: Rights, Remedies, and Duties of
Trustee and Capital Note Holders
3.01 An "event of default" shall constitute any one of the following:
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a. Failure of Company to pay interest or principal or any part
thereof, within thirty (30) days after due;
b. Failure of Company to fully perform any other covenant or
obligation made and to be kept or performed by Company by virtue of this
Indenture which is not remedied within sixty (60) days after notice of
such failure from Trustee or from the holders of twenty-five percent
(25%) of the principal amount of all Capital Notes issued and
outstanding under the terms hereof at that time.
c. Adjudication of Company as a bankrupt or insolvent in any
state or federal court, or appointment by any court of a receiver to
take over and conduct the business, affairs, and property of Company, or
commencement of liquidation of Company, either voluntary or involuntary,
pursuant to any bankruptcy, insolvency or receivership.
3.02 Subject to the provisions of Section 4.01(e), upon the happening
of an "event of default," Trustee shall declare all principal and interest on
all Capital Notes of Company then issued and outstanding under the terms
hereof due and payable at once by written notice to Company, and thereafter,
Trustee may sue at law or in equity or proceed in any other manner authorized
by law to enforce payment of all sums due on any such outstanding Capital
Notes and to establish and enforce all rights and priorities of every kind
and nature of the holders of all such Capital Notes and of such Trustee.
3.03 Subject to the provisions of Section 4.01(e), upon the occurrence
of an "event of default" as defined in this Indenture, Trustee, within thirty
(30) days after knowledge thereof, shall give written notice thereof to all
registered owners of Capital Notes outstanding under the terms of this
Indenture at that time, said notice to be by ordinary first class mail
addressed to each owner at the address shown on Trustee's records. Failure to
give notices under the terms hereof, however, shall not make Trustee liable
for any claim resulting therefrom.
3.04 In any action or proceeding in which rights of Capital Note
holders in and to the assets and property of Company are or may be affected,
or to enforce payment of interest or principal due under this Indenture or
any of the Capital Notes issued pursuant to the same, or to otherwise enforce
performance by Company of any obligations made or to be performed by it under
the terms hereof or of Capital Notes issued pursuant to this Indenture,
Trustee shall act for and on behalf of all Capital Note Holders, and shall
file and make proof of debts, claims, petitions, pleadings, and all other
instruments, and may take all action and steps deemed necessary or proper to
enforce, protect, and preserve all rights and properties of the holders of
outstanding Capital Notes.
3.05 Trustee may employ counsel as in its discretion deemed proper in
the case of any "event of default" of Company, or any other actions as in
this Indenture described or provided for with respect to Trustee either in
its own right or for and on behalf of Capital Note holders, and Company shall
pay all fees and expenses of such counsel and of Trustee in any such acts,
actions, or proceedings taken by Trustee under terms hereof.
3.06 All moneys collected or received by Trustee by virtue of any act,
action, or proceeding taken under the terms hereof or received by Trustee for
and on behalf of Capital Note holders shall be disbursed as follows:
a. In payment of all costs, expenses, charges, and fees of
Trustee, including counsel and attorney's fees;
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b. In payment of all principal and interest due and unpaid on
the Capital Notes issued and outstanding at that time. If there are
insufficient funds to fully pay all such principal and interest, the
funds available shall be applied and paid first ratably to the payment
of unpaid interest and then ratably to the payment of principal;
c. The remainder, if any, to Company.
3.07 In case of an "event of default" by Company by virtue of which
the Trustee may elect to institute an action or proceeding on behalf of the
Capital Note holders against Company, if Trustee does not institute an action
within thirty (30) days after its elective right to so do has accrued, the
holders of Capital Notes totaling twenty-five percent (25%) of the principal
amount of all such Capital Notes then issued and outstanding by written
demand given to Trustee may require Trustee to institute any action or
proceeding which they direct Trustee to initiate, provided however, that
Trustee, before bringing any such action, may, as is hereinafter more fully
spelled out, require adequate security from such Capital Note holders to
protect it against any loss by virtue of expenses, charges, and fees incident
to any action so required. In the event that two or more groups of holders
of Capital Notes each of which holds Capital Notes totaling twenty-five
percent (25%) of the principal amount of all such Capital Notes then issued
and outstanding direct the trustee to proceed in a conflicting manner(s), the
trustee may interplead the funds into or may seek a declaratory determination
of the conflict(s) from the District Court for Polk County, Iowa.
3.08 No holder of any Capital Note issued hereunder shall have the
right to institute any suit, action, or proceeding in equity or at law for
the execution of any trust or power hereof or for the endorsement or any
remedy under this Indenture or any Capital Note issued hereunder unless:
a. Such holder shall have previously given the Trustee written
notice of some existing "event of default" and of the continuance thereof;
b. The holders of twenty-five percent (25%) in principal amount
of the Capital Notes at the time outstanding shall have requested the Trustee
to exercise such power or right of action after the right to do so has
accrued hereunder and have afforded the Trustee a reasonable opportunity to
proceed upon such request;
c. Such holders shall have offered to Trustee indemnity
satisfactory to it against the costs, expenses, and liabilities to be
incurred thereby; and
d. The Trustee shall have failed or refused to comply with such
request within a period of sixty (60) days. Compliance with the foregoing
conditions shall at the option of the Trustee be a condition precedent to the
exercise of the powers and trusts of this Indenture and to any action or
proceeding for the enforcement of any remedy hereunder, and no holder of any
Capital Note shall have any right to enforce any right on account of this
Indenture or his Capital Note, except in the manner herein provided, and in
any event all proceedings hereunder at law or in equity shall be instituted
and maintained for the ratable benefit of all holders of outstanding Capital
Notes in the manner and with the interest priority provided for in Section
1.05 and Section 3.06, and any other applicable provisions hereof.
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ARTICLE IV
Trustee, Its Rights and Duties,
and Successor Trustees
4.01 The Trustee, for itself and its successors, hereby accepts the
trust created by this Indenture and assumes the duties imposed, but upon the
following terms and conditions:
a. Trustee shall be entitled to reasonable compensation for all
services from time to time rendered by it under and by virtue of the terms of
this Indenture including an acceptance fee, together with all expenses from
time to time incurred by it, including fees paid for counsel and for legal
services. The parties hereto shall agree upon Trustee's fees for ordinary
services from time to time hereunder. In the event the parties do not agree,
or in the event of extraordinary services by virtue of events of default or
liquidation of Company, or any other matter which may require extraordinary
services from Trustee, Trustee's compensation may be fixed by an appropriate
court. Company covenants to pay all compensation to which Trustee may be
entitled, including expenses and fees from time to time, promptly upon
demand.
b. Trustee shall not be responsible for the correctness of any
recitals in this Indenture of any Capital Notes issued under and pursuant to
the same (except certificates and authentications by Trustee).
c. Trustee may employ and consult with counsel whenever deemed
necessary, and the opinion of such counsel shall be full and complete
authorization and protection to and for Trustee in respect of any action
taken or suffered by it in good faith and in accordance with the opinion of
such counsel.
d. Trustee may rely upon the correctness of any
certificate or statement, of the President or a Vice President of Company
furnished from time to time under the terms hereof and shall not be liable in
any way for any act done or any omission to act in reliance on any such
certificate or statement.
e. Trustee hereunder shall have no responsibility for
determining when or whether an "Event of Default" has occurred except for
those events of default which would come to its knowledge and attention in
the ordinary course of business under this form of Trust Indenture.
4.02 Trustee shall not be liable for any act of commission or omission
on its part in connection with the discharge and performance of its duties
and obligations under this Indenture and any Capital Notes issued pursuant
hereto, except to the extent that any such act or omission shall constitute
willful misconduct or negligence, and reliance upon certificates and
statements of Company, the President or a Vice President thereof, opinions of
counsel (whether counsel for Company or not), and good faith errors in
judgment by a responsible officer or officers of Trustee shall not be held to
be negligent in any case.
4.03 Trustee shall keep at all times a current list of the names and
addresses of registered Capital Note holders, issued and outstanding under
the terms of this Indenture. Company shall promptly notify Trustee of all
changes in names or addresses of Capital Note holders known to it.
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4.04 Trustee may resign whenever it may elect to so do, sixty (60)
days after a written notice of its intention to so do has been served on
Company and on all Capital Note owners shown by the records of Trustee
(notices in all cases to be by ordinary, first class mail with the date of
service thereof), and in the event Trustee shall resign, or in the event
Trustee shall be dissolved and cease to do business as a bank or trust
company, Company shall designate by an appropriate written instrument a
successor Trustee which shall be a state or national bank or trust company
with its principal office in the state of Iowa. Any successor trustee
appointed by Company under the terms hereof shall have all rights, powers,
and duties of the original Trustee as herein provided, and whenever in this
Indenture the word "Trustee" appears or the Trustee is referred to, it shall
mean and includes any and all successor Trustees who may be appointed
hereunder.
4.05 Trustee shall not be in any manner precluded from buying,
selling, owning, or dealing in Capital Notes issued pursuant to this
agreement, either in its own right or as agent for others, as fully and
completely as any other individual, firm, or corporation could do.
4.06 Trustee or Company may (and on written request of owners of
twenty-five percent (25%) in principal amount of outstanding Capital Notes
shall) call a meeting of all Capital Note owners for any appropriate purpose.
Such meeting shall be called by giving a written notice of the time and place
thereof by ordinary, first class mail to all Capital Note owners whose names
and addresses are first shown in the records of Trustee, mailed not less than
five (5) days prior to the date fixed for such meeting. The Company shall pay
for the costs of calling and holding said meeting.
4.07 In any case in which Trustee is required or may deem it proper
or advisable to give a notice to Company, a Capital Note holder or any other
person, firm, or agency, such notice shall be given by ordinary, first class
mail, addressed to the last known post office address of any such person,
firm, or agency, and the time of service thereof shall be the time of mailing
thereof.
ARTICLE V
5.01 The Company and Trustee may make arrangements varying, amending
or changing this Indenture as Company and Trustee shall from time to time
deem proper without the approval of the noteholders, provided only that no
such amendment shall adversely affect any rights or interests of owners of
Capital Notes then issued and outstanding under and pursuant to this
Indenture.
5.02 Upon the execution of any Supplemental Indenture pursuant to the
provisions of this Article V, this Indenture shall be and be deemed to be
modified and amended in accordance therewith and the respective rights,
limitations of rights, obligations, duties, and immunities under this
Indenture of the Trustee, the Company, and the holders of Capital Notes shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and
conditions of any such Supplemental Indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
IN WITNESS WHEREOF, Brenton Banks, Inc. has caused this Indenture to be
executed in its name and on its behalf by its President, duly attested by its
Secretary, with its corporate seal hereto attached, and Bankers Trust
Company, Des Moines, Iowa, to evidence its acceptance of the trusts hereby
created, has caused this instrument to be signed in its name and on its
behalf by a duly authorized officer, all on or as of this 12th day of April,
1993.
143
<PAGE>
BRENTON BANKS, INC. BANKERS TRUST COMPANY
By____________________________ By___________________________
Junius C. Brenton, President Bryan Hall, Trust Officer
ATTEST:
By____________________________
Steven T. Schuler,
Chief Financial Officer and
Vice President/Treasurer/Secretary
STATE OF IOWA )
) ss.
COUNTY OF POLK )
On this ___ day of ___________________, 1993, before me, a Notary Public
in and for Polk County, Iowa, personally appeared Junius C. Brenton,
President, and Steven T. Schuler, Chief Financial Officer and Vice
President/Treasurer/Secretary, of Brenton Banks, Inc., the corporation which
executed the above and foregoing instrument, who being to me known as the
identical persons who signed the foregoing instrument, and by me duly sworn,
each for himself, did say that they are respectively the President and the
Chief Financial Officer/Vice President/Secretary/Treasurer of said
corporation, and that said instrument was by them signed and sealed on behalf
of the said corporation by authority of its Board of Directors, and each of
them acknowledged the execution of said instrument to be the voluntary act
and deed of said corporation, by it and each of them voluntarily executed.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed my
Notarial Seal the day and year last above written.
_____________________________
_____________________, Notary Public in
and for Polk County
STATE OF IOWA )
) ss.
COUNTY OF POLK )
On this ____ day of _____________________, 1993, before me, a Notary
Public in and for Polk County, Iowa, personally appeared Bryan Hall, of
Bankers Trust Company, the corporation which executed the above and foregoing
instrument, who being to me known as the identical person who signed the
foregoing
144
<PAGE>
instrument, and by me duly sworn, did say that he is the Trust Officer of
said corporation, and that said instrument was by him signed and sealed on
behalf of the said corporation by authority of its Board of Directors, and he
acknowledged the execution of said instrument to be the voluntary act and
deed of said corporation, by it and by him voluntarily executed.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed my
Notarial Seal the day and year last above written.
_____________________________
_____________________, Notary Public in
and for Polk County
145
<PAGE>
5.00% Capital Notes
Series SS-21 through SS-32
Due 1997 through 2008
5.25% Capital Notes
Series TT-21 through TT-32
Due 1997 through 2008
5.50% Capital Notes
Series UU-21 through UU-32
Due 1997 through 2008
5.75% Capital Notes
Series VV-21 through VV-32
Due 1997 through 2008
6.00% Capital Notes
Series G-21 through G-32
Due 1997 through 2008
6.25% Capital Notes
Series Q-21 through Q-32
Due 1997 through 2008
6.50% Capital Notes
Series J-21 through J-32
Due 1997 through 2008
6.75% Capital Notes
Series K-21 through K-32
Due 1997 through 2008
7.00% Capital Notes
Series M-21 through M-32
Due 1997 through 2008
7.25% Capital Notes
Series N-21 through N-32
Due 1997 through 2008
7.50% Capital Notes
Series R-21 through R-32
Due 1997 through 2008
7.75% Capital Notes
Series T-21 through T-32
Due 1997 through 2008
8.00% Capital Notes
Series U-21 through U-32
Due 1997 through 2008
8.25% Capital Notes
Series V-21 through V-32
Due 1997 through 2008
8.50% Capital Notes
Series W-21 through W-32
Due 1997 through 2008
8.75% Capital Notes
Series X-21 through X-32
Due 1997 through 2008
9.00% Capital Notes
Series Y-21 through Y-32
Due 1997 through 2008
9.25% Capital Notes
Series B-21 through B-32
Due 1997 through 2008
9.50% Capital Notes
Series A-21 through A-32
Due 1997 through 2008
9.75% Capital Notes
Series C-21 through C-32
Due 1997 through 2008
10.00% Capital Notes
Series D-21 through D-32
Due 1997 through 2008
10.25% Capital Notes
Series E-21 through E-32
Due 1997 through 2008
10.50% Capital Notes
Series F-21 through F-32
Due 1997 through 2008
10.75% Capital Notes
Series H-21 through H-32
Due 1997 through 2008
11.00% Capital Notes
Series I-21 through I-32
Due 1997 through 2008
11.25% Capital Notes
Series L-21 through L-32
Due 1997 through 2008
11.50% Capital Notes
Series O-21 through O-32
Due 1997 through 2008
11.75% Capital Notes
Series S-21 through S-32
Due 1997 through 2008
12.00% Capital Notes
Series Z-21 through Z-32
Due 1997 through 2008
12.25% Capital Notes
Series P-21 through P-32
Due 1997 through 2008
12.50% Capital Notes
Series SS-21 through SS-32
Due 1997 through 2008
12.75% Capital Notes
Series AA-21 through AA-32
Due 1997 through 2008
13.00% Capital Notes
Series BB-21 through BB-32
Due 1997 through 2008
146
<PAGE>
N
No. _______________
BRENTON BANKS, INC.
DES MOINES, IOWA
$__________________
REGISTERED CAPITAL NOTE (SERIES _______________________ CALLABLE)
Brenton Banks, Inc., a corporation organized and existing under the laws
of the State of Iowa, hereinafter referred to as the Corporation, for value
received hereby promises to pay to the registered holder hereof, upon
presentation of this Capital Note, the sum of $___________________ on the 1st
day of June,______________, at the main office of the Corporation in the City
of Des Moines, Iowa. The Corporation further agrees to pay interest on the
principal amount from the __________ day of ____________________, until paid,
at the rate of _______% per annum, payable semi-annually on the first day of
June and December of each year.
The Corporation shall, upon request of the registered holder hereof, mail
a check representing the interest hereon, or the principal when due, to the
registered holder at his address appearing on the books of registration.
The Capital Note is subject to being called on any interest payment date
occurring more than eight (8) years after the date of issuance hereof, at the
option of the Corporation on not less than thirty (30) days' prior written
notice given by the Corporation by ordinary mail to the holder of the Capital
Note at such holder's address appearing on the books of registration, at 100%
of the principal amount of this Capital Note, together with interest accrued
and unpaid on this Capital Note, to the date fixed for such call.
Upon the death of an individual registered holder or of an individual
bearing a certain designated relationship to the registered holder, a Capital
Note will be redeemed by the Company at the option of certain designated
person(s) exercised as provided herein at face plus all interest accrued on
the Capital Note to the date of redemption. An option shall arise upon the
death of an individual who is (i) sole registered holder, (ii) a joint tenant
registered holder, (iii) a tenant in common registered holder, (iv) a life
tenant registered holder, (v) the sole grantor of a revocable trust which is
a registered holder, (vi) a participant in an IRA or other retirement plan
solely for the benefit of one participant which is a registered holder, or
(vii) the ward of a conservatorship or custodianship which is a registered
holder. No option to require redemption of a Capital Note shall arise except
as specifically set forth above.
Upon the death of an individual who is the sole registered holder of a
Capital Note, such option shall be exercisable by the deceased holder's
personal representative(s). Upon the death of a registered holder who holds
a Capital Note in joint tenancy, such option shall be exercisable by the
surviving joint tenant(s). Upon the death of a registered holder who holds a
Capital Note in tenancy in common, such option shall be exercisable jointly
by the personal representative(s) of the deceased holder and by the remaining
tenant(s) in common. Upon the death of a registered holder who has a life
estate in a Capital Note, such option shall be exercisable by the
remainderman(men). Upon the death of an individual who is the sole grantor of
a revocable trust which is a registered holder, such option shall be
exercisable by the trustee(s) of the trust. Upon the death of the participant
in an IRA or other retirement plan solely for the benefit of one participant
which is a registered holder, such option shall be exercisable by the
beneficiary(ies) of such IRA or retirement plan. Upon the death of a ward of
a conservatorship or custodianship which is a registered holder, such option
shall be exercisable by the personal representative(s) of such ward's estate.
In the event more than one person is entitled to exercise the option, such
option shall be exercisable only with the concurrence of all persons entitled
to exercise the option.
The option shall be exercisable for a period of 9 months following the
date of death of the individual whose death gives rise to the option. The
option shall be exercised by the person(s) entitled to exercise the option
giving written notice to the Company of the exercise of the option at the
Company's principal executive offices. Prior to the redemption of the Capital
Note, the person(s) entitled to exercise the option shall furnish the Company
with such documentation or evidence as the Company shall require to establish
such person's(s') entitlement to exercise the redemption option. The Company
shall be under no duty to notify the person(s) entitled to exercise the
option of the existence of this redemption option or of any facts which come
to the attention of the Company which would give any person the right to
exercise the option.
This Capital Note is one of an authorized issue of fully registered
Capital Notes of Brenton Banks, Inc., issued in multiples of 51,000 and
limited to the aggregate principal amount of $5,000,000 at any one time
outstanding, all issued pursuant to an Indenture dated April 12, 1993,
executed and delivered by the Corporation to the Trustee, to which Indenture
reference is hereby made for a description of rights, duties and obligations
thereunder of the Corporation, the Trustee and the Owners of the Capital
Notes.
In the event of default in the payment of principal of, or interest on,
this Capital Note, the total principal amount of this Capital Note, and all
interest hereof, shall become due and payable and the Corporation shall
immediately pay the same.
Books for the registry hereof are maintained at the office of the
Corporation or at the agency of the Corporation established for that purpose
in the city of Des Moines, Iowa. This Capital Note is transferable by the
registered holder hereof in person, or by his duly authorized attorney, at
the office or agency of the Corporation for such purpose in the city of Des
Moines, Iowa, upon surrender for cancellation of this Capital Note at said
office or agency. Thereupon, a new Capital Note for a like principal amount,
or new Capital Notes in such authorized denominations and registered in such
name or names, as shall have been requested, shall be issued and delivered.
No transfer hereof shall be valid unless made on the Corporation's books,
at the office of the Corporation or the agency established for that purpose,
in accordance with the provisions of the foregoing paragraph. The Corporation
and its agents may deem and treat the person in whose name this Capital Note
is registered as the absolute owner of the Capital Note for the purpose of
receiving payment hereof and interest due hereon, but the Corporation may, at
any time, require the presentation hereof as a condition precedent to such
payment.
No recourse shall be had for the payment of the principal of, or interest
upon, this Capital Note, against any shareholder, officer, or director of the
Corporation, by reason of any matter prior to the delivery of this Note, or
otherwise, all such liability, by the acceptance hereof, and as a part of the
consideration of this issue hereof, being expressly waived.
In the event any Capital Note is not presented for payment when due or
when called by the Corporation, the Corporation shall deposit a sum equal to
the amount due thereon with Trustee in trust for payment thereof and neither
the Corporation nor Trustee shall thereafter be liable for any interest
thereon.
This Capital Note and any subsequent Capital Note issued on transfer and
surrender hereunder shall not be valid for any purpose until duly certified
by the Trustee under the Indenture supporting the name.
This Capital Note is not a deposit and is not insured by the Federal
Deposit Insurance Corporation.
IN WITNESS WHEREOF, the Corporation has caused this Capital Note to be
executed by its Chairman, Vice Chairman, President, or Treasurer, and
attested to by another authorized officer, and its corporate seal affixed
hereto, at Des Moines, Iowa, on the day and year appearing below.
Corporate Seal:
Date: ________________________________
BRENTON BANKS, INC.
By: __________________________________
(Chairman, Vice Chairman, President or Treasurer)
ATTEST:
______________________________________
(Secretary, Asst. Secretary Treasurer, Asst. Treasurer, Controller or Asst.
Controller)
147
<PAGE>
REGISTRATION
(No writing on this registered Capital Note except by an officer or agent of
the Corporation)
Date of In Whose Registry
Registration Name Registered Address Officer
______________ ________________ _______________ ________________
______________ ________________ _______________ ________________
______________ ________________ _______________ ________________
______________ ________________ _______________ ________________
TRUSTEE'S CERTIFICATE
The foregoing Capital Note is hereby certified by the undersigned Bank as
Trustee as one of the series of Capital Notes of Brenton Banks, Inc.,
described in the Indenture referred to therein, made between the Corporation
and this Bank as Trustee.
Dated as of this _______ day of ____________________, ______.
_______________________________
(Trustee)
By_____________________________
Its____________________________
(Title)
ASSIGNMENT
For value received I hereby assign to __________________________________ the
within registered Capital Note and hereby irrevocably appoint _____________
____________________________________ attorney to transfer the registered
Capital Note on the books of the within named Corporation with full power of
substitution in the premises.
Dated:_________________________
Signatures guaranteed by the ____________________________________
Signature (in whose name registered)
_______________________________
(Bank)
_______________________________ ____________________________________
Signature Signature (in whose name registered)
_______________________________
Date Office & Title
The transfer of any notes represented by this certificate to any person who
is not then a bona fide resident of the State of Iowa purchasing such notes
for the purpose of investment and not for resale is restricted pursuant to
the terms of a subscription form executed by the original holder of such
notes.
148
<PAGE>
Exhibit 10(xvii)
Indenture Agreement with respect to Capital Notes dated April 14,
1992. This Indenture Agreement is incorporated by reference from
Form 10-K of Brenton Banks, Inc., for the year ended December 31,
1992.
149
<PAGE>
Exhibit 10(xviii)
Indenture Agreement with respect to Capital Notes dated August 5,
1991. This Indenture Agreement is incorporated by reference from
Form 10-K of Brenton Banks, Inc. for the year ended December 31,
1991.
150
<PAGE>
Exhibit 10(xix)
Indenture Agreement with respect to Capital Notes dated March 27,
1991. This Indenture Agreement is incorporated by reference from
Form 10-K of Brenton Banks, Inc. for the year ended December 31,
1991.
151
<PAGE>
Exhibit 10(xx)
Indenture Agreement with respect to Capital Notes dated April 5,
1985. This Indenture Agreement is incorporated by reference from
Form 10-K of Brenton Banks, Inc. for the year ended December 31,
1991.
152
<PAGE>
Exhibit 11
Statement of computation of earnings per share.
153
<PAGE>
<TABLE>
Statements re: Computation of Earnings Per Share
Brenton Banks, Inc.
<CAPTION>
December 31, 1993 1992 1991 1990
<S> <C> <C> <C> <C>
Net income $14,249,970 $12,953,094 $11,659,427 $10,338,585
Average common shares outstanding 5,232,530 5,186,902 5,171,675 5,162,827
Average shares under long-term
stock compensation plan 46,510 1,895 0 0
Average common equivalent
shares outstanding 5,279,040 5,188,797 5,171,675 5,162,827
Earnings per share 2.70 2.50 2.25 2.00
</TABLE>
154
<PAGE>
Exhibit 12
Statement of computation of ratios.
155
<PAGE>
<TABLE>
Statements re: Computation of Ratios
Item 1(l) Business - Statistical Disclosure VI. Return on Equity and Assets
Brenton Banks, Inc.
<CAPTION>
(Dollars in thousands)
December 31, 1993 1992 1991 1990
<S> <C> <C> <C> <C>
Return on average total assets:
Net income (before deduction of
minority interest) $ 14,918 13,585 12,198 10,872
* divided by *
Average assets $ 1,436,425 1,387,273 1,308,439 1,145,785
Ratio 1.04% 0.98% 0.93% 0.95%
Return on average common
stockholders' equity:
Net income $ 14,250 12,953 11,659 10,339
* divided by *
Average common stockholders'
equity $ 103,140 91,691 81,731 71,824
Ratio 13.82% 14.13% 14.27% 14.39%
Common dividend payout ratio:
Cash dividends per share $ 0.600 0.525 0.485 0.410
* divided by *
Net income per share $ 2.70 2.50 2.25 2.00
Ratio 22.22% 21.00% 21.56% 20.50%
Average equity to average assets:
Average equity $ 103,140 91,691 81,731 71,824
* divided by *
Average assets $ 1,436,425 1,387,273 1,308,439 1,145,785
Ratio 7.18% 6.61% 6.25% 6.27%
Equity to assets ratio:
Common stockholders' equity $ 112,418 97,430 86,712 77,258
* divided by *
Total assets $ 1,480,596 1,431,140 1,360,942 1,274,301
Ratio 7.59% 6.81% 6.37% 6.06%
</TABLE>
156
<PAGE>
<TABLE>
<CAPTION>
December 31, 1993 1992 1991 1990
<S> <C> <C> <C> <C>
Tier 1 leverage capital ratio:
Common stockholders' equity $ 112,418 97,430 86,712 77,258
Minority interest 4,407 3,987 3,716 3,481
Less: intangibles (5,499) (5,834) (6,314) (6,420)
Tier 1 capital $ 111,326 95,583 84,114 74,319
* divided by *
Total assets $ 1,480,596 1,431,140 1,360,942 1,274,301
Less: intangibles (5,499) (5,834) (6,314) (6,420)
Tier 1 assets $ 1,475,097 1,425,306 1,354,628 1,267,881
Ratio 7.55% 6.71% 6.21% 5.86%
Primary capital to assets:
Common equity $ 112,418 97,430 86,712 77,258
Minority interest 4,407 3,987 3,716 3,481
Allowance for loan losses 9,818 9,006 8,548 8,871
Primary capital $ 126,643 110,423 98,976 89,610
* divided by *
Total assets $ 1,480,596 1,431,140 1,360,942 1,274,301
Allowance for loan losses 9,818 9,006 8,548 8,871
Allowable assets $ 1,490,414 1,440,146 1,369,490 1,283,172
Ratio 8.50% 7.67% 7.23% 6.98%
</TABLE>
157
<PAGE>
Exhibit 13
The Annual Report to Shareholders of Brenton Banks, Inc., for the
1993 calendar year.
158
<PAGE>
Blue background, with the words, "Growth, Change, Service, Excellence"
repeated 4 times, fading into the background, to display the depth
of the importance of those to the Company.
159
<PAGE>
CORPORATE PROFILE
Brenton Banks, Inc. is a multi-bank holding company headquartered
in Des Moines, Iowa. Assets total $1.5 billion with another $.6
billion under trust agreement and $.2 billion in investment
brokerage accounts.
Brenton Banks, Inc. operates 13 commercial banks and one savings
bank in 42 banking facilities across Iowa, including the major
metropolitan areas of Des Moines, Cedar Rapids, Davenport and Ames. The
Company's 10 community banks are in highly productive trade areas
and county seat communities. In addition to banking, investment
brokerage and trust business, Brenton Banks, Inc. operates mortgage,
insurance and real estate subsidiaries.
The first Brenton Bank was founded in Dallas Center, Iowa in 1881.
Brenton Banks, Inc., incorporated in 1948, was Iowa's first bank
holding company.
The Company's common stock is publicly traded on Nasdaq National
Market under the symbol BRBK, and is also listed in various
newspapers as BrentB.
Contents
Financial Highlights 1
Message to Shareholders 2
Management Changes 5
A Closer Look 7
Management's Discussion and Analysis 10
Consolidated Average Balances and Rates 18
Selected Financial Data 19
Consolidated Financial Statements and Notes 20
Management's Report 35
Independent Auditor's Report 36
Stock Information 37
Corporate Structure 38
Brenton Banks and Assets 39
160
<PAGE>
FINANCIAL HIGHLIGHTS
Brenton Banks, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Operating Results 1993 1992 1991
<S> <C> <C> <C>
Net interest income $54,228,718 51,786,369 46,873,888
Provision for loan losses 1,251,588 1,410,730 799,157
Total noninterest income 17,863,271 14,684,040 12,714,549
Total noninterest expense 50,414,942 46,590,756 42,283,746
Income before income taxes and minority interest 20,425,459 18,468,923 16,505,534
Net income 14,249,970 12,953,094 11,659,427
<CAPTION>
Per Common and Common Equivalent Share 1993 1992 1991
<S> <C> <C> <C>
Net income $ 2.70 2.50 2.25
Cash dividends .600 .525 .485
Book value, including unrealized gains (losses)* 21.40 18.71 16.74
Book value, excluding unrealized gains (losses)** 20.82 18.71 16.75
Closing bid price 26.25 26.00 20.75
<CAPTION>
At December 31 1993 1992 1991
<S> <C> <C> <C>
Assets $ 1,480,596,046 1,431,139,829 1,360,941,588
Loans 875,881,387 753,454,137 751,909,813
Nonperforming loans 4,013,000 4,593,000 5,622,000
Deposits 1,294,363,694 1,269,940,325 1,215,088,230
Common stockholders' equity* 112,417,665 97,430,163 86,712,022
<CAPTION>
Ratios 1993 1992 1991
<S> <C> <C> <C>
Return on average common stockholders' equity (ROE) 13.82% 14.13 14.27
Return on average assets (including minority interest) (ROA) 1.04 .98 .93
Net interest margin 4.28 4.23 4.04
Net noninterest margin (2.31) (2.31) (2.26)
Primary capital to assets* 8.50 7.67 7.23
Tier 1 leverage capital ratio* 7.55 6.71 6.21
Nonperforming loans as a percent of loans .46 .61 .75
Net charge-offs as a percent of average loans .05 .13 .15
Allowance for loan losses as a percent of nonperforming loans 244.65 196.09 152.05
</TABLE>
* including unrealized gains (losses) on assets available for sale
** excluding unrealized gains (losses) on assets available for sale
<TABLE>
<CAPTION>
Net Income (In thousands) 89 90 91 92 93
<S> <C> <C> <C> <C> <C>
$8,704 10,339 11,659 12,953 14,250
<CAPTION>
Return on Average Equity 89 90 91 92 93
<S> <C> <C> <C> <C> <C>
14.50% 14.39 14.27 14.13 13.82
<CAPTION>
Net Interest Margin 89 90 91 92 93
<S> <C> <C> <C> <C> <C>
4.38% 4.11 4.04 4.23 4.28
<CAPTION>
Return on Average Assets 89 90 91 92 93
<S> <C> <C> <C> <C> <C>
1.00% .95 .93 .98 1.04
</TABLE>
161
<PAGE>
MESSAGE TO THE SHAREHOLDERS
The year 1993 was excellent for our Company. This is true from both a
financial and an operational standpoint.
We are proud of our Company's financial gains in 1993. Earnings
reached record levels for the sixth consecutive year at $14.25
million, a 10.0 percent increase over 1992. Earnings per common
share were $2.70 for 1993, compared with $2.50 for 1992. Our goal
is to grow earnings per share by ten percent per year. This year
earnings per share grew 8.0 percent, compared to 11.1 percent in
1992 and 12.5 percent in 1991.
Our common stock ended the year at a bid price of $26.25, which
represents 123 percent of book value and 9.7 times current year's
earnings. Dividends paid in 1993 rose 14.3 percent to $.60 per
share, a payout of 22.2 percent of earnings per share. The January
1994 dividend was increased to $.165 per common share.
We are proud that our loan quality remains excellent. This is
reflected by net loans charged off for the year of only 0.05
percent of average loans. Also, nonperforming loans represented a
low 0.46 percent of loans at the end of the year. Both the net
loans charged off and nonperforming loan experience rank Brenton
in the top ten percent among our midwestern peers.
Our deposit growth slowed in 1993. Growth in noninterest income
through brokerage, insurance, trust and mortgage services is
designed to provide diversification and increased earnings, even
if deposit growth remains slow. These services are discussed
further in A Closer Look.
Our plan for the Company is to remain independent and to expand
our presence into new geographic markets. This will be
accomplished through acquisitions, branch expansion and a wider
array of financial services. A number of initiatives are currently
underway in this area.
The Iowa economy has remained robust, despite the occurrence of
unprecedented flooding and its negative impact on agriculture. The
average work week, housing permits, sales tax receipts, non-farm
employment and bank loans set record levels for Iowa through
December 1993, while unemployment dropped to record lows.*
Our goal is to provide premier service to consumer, commercial,
and agricultural customers through community and metro banking
affiliates. We emphasize local authority, supported by the
centralized services of the Parent Company and its service
providers. This, we feel, is the best combination for Brenton. We
function in a setting of strong centralized controls in the areas
of credit, investment, and bank regulation. A well developed and
extensive financial reporting system, which reports and compares
performance, is the communication link between the Parent Company
and our subsidiaries.
Our Company is bound together by a common and measurable Mission
statement. Our strength is in the highly capable and experienced
group of professional bankers both at our affiliate and Parent
Company levels. We are very confident and proud of the collective
leadership within Brenton.
We will continue to remain conservative in the way we lend money
and the way we borrow money for new corporate endeavors. Our
excellent loan quality and low debt-to-equity ratios demonstrate
these strengths.
Thank you, our shareholders, for your investment in Brenton Banks,
Inc. Your continued confidence and support energizes our goal to
be Iowa's premier banking organization. We strive to offer the
best service to our customers and the greatest value to you, our
shareholders.
C. Robert Brenton
Chairman of the Board
William H. Brenton
Chairman of the Executive Committee and
Vice Chairman of the Board
J.C. (Buz) Brenton
President
* Source Des Moines Register, January 30, 1994
162
<PAGE>
(picture of William H. Brenton, J.C. Brenton, and C. Robert
Brenton)
Pictured (left to right) are William H. Brenton, Chairman of the
Executive Committee & Vice Chairman of the Board, J.C. Brenton,
President, and C. Robert Brenton, Chairman of the Board.
(picture of Robert L. DeMeulenaere)
Pictured is Robert L. DeMeulenaere, elected President of Brenton
Banks, Inc. at the January 19, 1994 Board of Director's meeting.
He succeeds J.C. Brenton as President. Mr. DeMeulenaere joined the
organization in 1964 at the Davenport bank. In 1972, he moved to
the Cedar Rapids bank as Executive Vice President and in 1982
became President. In 1985, he moved to Des Moines as Senior Vice
President-Metro Bank Division and also became President of Brenton
Mortgages, Inc. in 1988. He returned to Cedar Rapids in 1990 as CEO of the
Cedar Rapids bank as a result of a major acquisition. In 1994, he returned
to Des Moines to assume his new responsibilities with Brenton Banks, Inc.
as President.
163
<PAGE>
(picture of executives - caption on following page)
164
<PAGE>
MANAGEMENT CHANGES
In June, 1993, J.C. (Buz) Brenton announced his intention to step
down from his duties as President of the Company at year-end. He
also announced that Robert L. DeMeulenaere, thirty-year employee
of the Company and recent President of the Cedar Rapids affiliate,
would be elected President in January, 1994.
Dear Brenton Associates:
I wish to announce to you that at this year-end I will step down
as President of our Company. Bob DeMeulenaere will replace me as
President.
I will remain on the Board of our Company, but otherwise be
inactive except to be available for counsel or other help as
needed and as my time will permit.
There will be a period of time when Bob DeMeulenaere will report
to me. He will be elected as President at this year-end and move
to the corporate offices. I plan to take office space within
Capital Square so as to be accessible but not engaged actively,
except to participate on the Board of Directors and in the affairs
of the Company, once Bob ceases to report to me.
Bill and Bob Brenton's jobs and titles will remain the same.
This move from active banking is part of a plan I have held, and
shared with my brothers, for three or four years. There is much to
try to do in life of a worthwhile nature. I wish to direct my
energies more fully toward environmental and humanitarian affairs,
if possible.
I want you to know that I have and do love my work, my Company,
and you, my associates. My relations with my brothers, always
have, and continue to be, a strength for me and, I believe, the
Company.
In Bob DeMeulenaere, we have a leader who is exceptionally well
qualified in background, character, and intellect to do the job.
He commands the highest respect within the Company and the
industry.
The future is bright indeed!
Yours,
J.C. (Buz) Brenton
President
Brenton Banks, Inc.
(picture of the following executives on facing page)
Front Row: (l-r) Phillip L. Risley, Executive Vice President;
Roger D. Winterhof, Senior Vice President-Community Bank Division;
Larry Mindrup, President, Brenton National Bank-Poweshiek County,
Grinnell, and Community Bank Area Manager
Second Row: (l-r) John R. Amatangelo, Senior Vice President-
Operations; Saulene M. Richer, Senior Vice President-
Marketing/Technology;
Steven T. Schuler, Chief Financial Officer & Vice
President/Treasurer/Secretary
Third Row: (l-r) Steven F. Schneider, Vice President-Brokerage
Services; Charles N. Funk, Vice President-Investments; Gary D.
Ernst, Vice President-Trust
Fourth Row: (l-r) Norman D. Schuneman, Senior Vice President-
Lending; Mary F. Sweeney, Vice President-Human Resources
165
<PAGE>
(photo of a male and female customer at a desk, with a Brenton
broker behind the desk. There is a sign which reads: Brenton
Brokerage. No photo caption)
166
<PAGE>
A CLOSER LOOK
Over the past several years, significant changes have been made at
the Company. The purpose of this section of The Annual Report is
to provide to shareholders, prospective shareholders and customers
an overview of our Company and its direction.
Brenton Bank's, Inc. Mission
In 1989, the Company adopted a Mission which we think is unique in
that it demands measurement throughout our system.
Our Mission is to be the premier banking organization in Iowa in:
* Service to customers;
* Products that appeal to customers;
* Professional appearance of our people and facilities; and
* As a place to work.
We will make measured progress in these areas on an annual basis.
We also strive to be leading community citizens.
Our profit objective is to rank in the top quarter of similar
sized bank holding companies. In this way, we seek to
substantially enhance shareholder value while remaining strong for
our customers, employees and communities.
Over the past several years, our staff has focused its attention
and energy on accomplishing the objectives identified in our
Mission. Our Mission, which we continually measure and document, gives
us a unity of purpose and focus. We utilize comparisons, surveys and
information-sharing to maintain our commitment to strive for improvement
and achieve success. This concentration of effort has directly benefitted
our customers, employees and shareholders.
Growth and Expansion
In 1993, average balance sheet growth equalled 3.5 percent, which
was below that of recent years. The current low interest rate
environment causes deposit funds to move from traditional bank
investments to annuities, mutual funds, stock market and insurance
products. As interest rates increase and Brenton is able to pay
higher rates on deposits and receive higher yields on loans and
investments, there will again be an inflow into traditional bank
deposit products.
We have recognized the need to offer off-balance-sheet products
directly to our customers as an alternative investment for those
seeking a higher rate of return. For this reason, Brenton greatly
expanded its brokerage business in 1993. Last year the number of
Brenton brokers grew by one-third and brokerage sales increased
88.1 percent, contributing $.8 million to the Company's pretax net
income. Brenton is also strengthening its offerings in the mutual
funds area and has a goal of developing its own proprietary funds.
Annuity products are now being offered by all of our banks and
life insurance products will be offered in 1994.
In addition to internal growth, Brenton is pursuing expansion. Our
expansion goals are designed to increase market share in our
metropolitan markets and to expand into new regional economic
centers in Iowa.
Late in 1993, Brenton received approval to open a new banking
office in Ankeny, Iowa. This office will be affiliated with our
Ames subsidiary, Brenton Savings Bank, FSB. In addition, we have
applied for a banking office charter in Iowa City, Iowa. Both
Ankeny and Iowa City are rapidly expanding markets not presently
served by Brenton. In early 1994, Brenton also purchased an
insurance agency in the Tama/Toledo, Iowa area. Our intentions are
to expand the Tama/Toledo location to include lending services.
During 1994, Brenton will open a loan production and investment
167
<PAGE>
brokerage office in Newton, Iowa. Brenton Brokerage Services, Inc.
will also be opening a retail location in downtown Des Moines.
Changes and Enhancements
During 1993, our Company undertook and completed a number of new
initiatives. We completed the centralization of our operations
from individual banks into Brenton Bank Services Corporation,
which began in 1992. This has increased the Company's ability to
control costs and standardize products and services.
Standardization will greatly enhance our ability to market
products and services in a concentrated and professional manner.
Operational enhancements allow us to take advantage of technology
in developing customer information. These are significant steps for Brenton.
Excellence
Brenton has recently remodeled the majority of its facilities. The
improvements were designed to enhance the marketing and selling of
products and services. Strategically placed graphic sales displays
were included in virtually all banking locations. Cumulatively,
the remodeling projects were a major effort to enhance our overall
appearance and stimulate sales.
During 1993, Brenton completed the centralization of its Human
Resource activities under the direction of Vice President-Human
Resources, Mary F. Sweeney. The standardization of our benefit
programs and policies has strengthened our relationship with our
most valuable asset, our business associates.
By the end of 1993, all of our banks were offering a new checking
account, the Select Account. This deposit product is priced based
on the customer's total banking relationship with Brenton. It is
very appealing for those customers using more than one Brenton
service and therefore, provides the opportunity to turn single-
service customers into multiple-service customers. We feel this
account will quickly grow to be the backbone of our relationship
with the majority of our deposit customers.
Leasing and international banking services both expanded in 1993.
We consider them integral to our commercial and agricultural
product offerings and intend them to be a growing contribution to
our noninterest income.
Last year we made a major commitment to the area of corporate cash
management, with the hiring of Douglas F. Lenehen, Vice President-
Cash Management Services, and the addition of computer hardware
and specialized software. These services are needed and desired by
most Brenton business customers, so we consider this an important
addition.
In 1993, we decided to expand our mortgage banking operation.
Although our banks have been making residential mortgages for
years, we have experienced increased activity over the past three
years. We have added specialized real estate loan originators in
many Brenton locations and sold more than $121 million of loans to
the secondary market in 1993. These activities, with the exception
of mortgage servicing, have been decentralized. We feel that
substantive additional income is possible by expanding mortgage
origination and centralizing our secondary market operations. The
planning process for this mortgage banking expansion began in
1993, with implementation commencing in 1994.
Measured by any standard, credit quality remains a hallmark at
Brenton. We are very proud of our lending record. With strong loan
administration and control, managed by Senior Vice President-
Lending, Norman D. Schuneman, we are confident we will maintain
our sound loan portfolio over the years.
Asset-Liability management under the guidance of Vice President-
Investments, Charles N. Funk, made significant progress during
1993. Asset-Liability management is the management of the
relationship between the repricing of loans and investments and
their chief funding source, primarily deposits. By the end of
1993, Brenton had installed a standardized mechanism for
projecting earnings variances, given various changes of general
interest rates in the economy. This information allows us to
arrive at better conclusions regarding loan and deposit pricing
and maturity decisions. This new system of measuring interest rate
risk significantly improves our planning process.
This culmination of expansion, new products, improved appearance
and more technical analysis provides us the competitive advantages
needed to excel in our industry and accomplish our Mission.
168
<PAGE>
(photo of a meeting being conducted by a Brenton Trust Officer,
showing six of the participants at round tables. No photo
caption.)
169
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
For 1993 and the sixth consecutive year, Brenton Banks, Inc. and
subsidiaries (the "Company") reported record earnings. Net income
for the year was $14,249,970, a 10.0 percent increase over 1992.
Earnings per common and common equivalent share rose to $2.70 for
1993, up 8.0 percent from $2.50 in 1992.
Capital Resources
The Company's record earnings contributed to the 15.4 percent
growth in common stockholders' equity, which totaled $112,417,665
at December 31, 1993. Share issuances under the Employee Stock
Purchase Plan added $361,194 to the Company's equity while the
exercise of previously granted stock options added $461,185.
Effective December 31, 1993, the Company adopted the Statement of
Financial Accounting Standards No. 115. Under this new accounting
standard, the method of classifying investment securities is based
on the Company's intended holding period. Accordingly, securities
which the Company may sell at its discretion prior to maturity are
recorded at their fair value. Additionally, the aggregate
unrealized net gains, including the effect of income tax and
minority interest, are recorded as a component of common
stockholders' equity. At December 31, 1993, aggregate unrealized
gains totaled $3,036,270.
Because of the Company's strong earnings performance, the Board of
Directors increased 1993 dividends to common stockholders 14.3
percent over 1992 to $.60 per share, a dividend payout ratio of
22.2 percent of earnings per share. In January 1994, the Board
declared a dividend of $.165 per share, which was up 13.8 percent
from the first quarter of 1993 and 3.1 percent from the prior
quarter.
The Company's risk-based core capital ratio was 12.64 percent at
December 31, 1993, and the total risk-based capital ratio was
13.75 percent. These exceeded the minimum regulatory requirements
of 4.00 percent and 8.00 percent respectively. The Company's tier
1 leverage ratio, which measures capital excluding intangible
assets, was 7.55 percent at December 31, 1993, exceeding the
regulatory minimum requirement range of 3.00 to 5.00 percent. Each
of these capital calculations includes unrealized gains on assets
available for sale.
The debt-to-equity ratio of Brenton Banks, Inc. (the "Parent
Company") was 10.7 percent at December 31, 1993, compared to 12.4
percent at the end of 1992. The Parent Company's available $2
million line of credit with a regional bank was unused at the end
of 1993. Long-term borrowings of the Parent Company consisted
entirely of $12,022,000 of capital notes.
Brenton Banks, Inc. common stock closed 1993 at a bid price of
$26.25 per share, representing 1.23 times the book value per share
of $21.40 on the same date. The year-end stock price represented a
price-to-1993-earnings multiple of 9.7 times.
<TABLE>
<CAPTION>
Annual Dividends per Common Share 89 90 91 92 93
<S> <C> <C> <C> <C> <C>
$.33 .41 .485 .525 .60
<CAPTION>
89 90 91 92 93
<S> <C> <C> <C> <C> <C>
Primary Capital Ratio 7.77% 6.98 7.23 7.67 8.50
Tier 1 Leverage Capital Ratio 6.73% 5.86 6.21 6.71 7.55
</TABLE>
170
<PAGE>
Liquidity
The objective of liquidity management is to maintain sufficient
cash flows to fund operations and meet customer commitments.
Insufficient liquidity can cause higher costs of obtaining funds
when needed, while excess liquidity can lead to the loss of income
opportunity.
Federal funds sold, trading account securities, and assets
available for sale are readily marketable. Maturities of all
investment securities are managed to meet the Company's normal
liquidity needs. Investment securities available for sale may be
sold prior to maturity to meet liquidity needs, to respond to
market changes, or to adjust the Company's asset-liability
position. Federal funds sold, trading account securities, and
assets available for sale comprised 30.7 percent of the Company's
total assets.
Net cash provided from Company operations is another major source
of liquidity. The net cash provided from operating activities was
$20,429,680 in 1993; $17,822,173 in 1992; and $16,067,732 in 1991.
This trend of strong cash from operations is expected to continue
into the foreseeable future.
The Company's stable deposit base and relatively low levels of
large deposits resulted in low dependence on volatile liabilities.
During 1993, the Company chose to borrow $8 million from the
Federal Home Loan Bank of Des Moines as a means of providing long-
term fixed-rate funding for certain fixed-rate assets.
The combination of a high level of potentially liquid assets,
strong cash from operations, and low dependence on volatile
liabilities provided excellent liquidity for the Company at
December 31, 1993.
The Parent Company, whose primary funding sources are management
fees and dividends from the banking subsidiaries, had sufficient
cash flow and liquidity at December 31, 1993. Dividends totaling
$30 million were available to be paid to the Parent Company by
subsidiary banks without reducing capital ratios below regulatory
minimums. At the end of 1993, the Parent Company had $3.5 million
of short-term investments and additional borrowing capacity.
Brenton Banks, Inc. continues to pursue its growth mission by
seeking acquisition opportunities that strengthen the Company's
presence in current and selected new market areas. There are
currently no pending acquisitions that would require Brenton
Banks, Inc. to secure capital from public or private markets.
Asset-Liability Management
During the last 18 months, the Company has improved the
sophistication of its asset-liability management system. This new
system simulates the effect of various interest rate scenarios on
net income. This analysis process is also used to project the
results of alternative investment decisions. Management performs
in-depth analyses of the simulations to manage interest rate risk
and the Company's net interest margin.
At December 31, 1993, the Company's stable one-year GAP position
was negative at .55:1, meaning fewer assets are scheduled to
reprice within one year than liabilities. This situation suggests
that a decline in interest rates may benefit the Company and that
a rise in interest rates may negatively impact net interest
income. The negative GAP position is largely the result of
treating interest-bearing demand and savings accounts as
immediately repriceable based on their contractual terms. The
Company can partly neutralize the effect of interest rate changes
by controlling the timing of rate changes on these deposit
accounts.
171
<PAGE>
(photo of a Brenton Real Estate Originator, with a male and female
couple in a home construction scene.)
172
<PAGE>
Results of Operations - 1993 Compared to 1992
Net Income
Brenton recorded its sixth consecutive year of record net income
with $14,249,970 in 1993, a 10.0 percent increase over $12,953,094
in 1992. This continued improvement was attributable to an
increase in net interest income and fee-and commission-based
diversified services.
The Company's total assets grew 3.5 percent to $1.5 billion at
1993. Return on average assets (ROA) improved to 1.04 percent in
1993, compared to 0.98 percent for 1992. Due to the Company's
increasing equity position, the return on average equity (ROE) was
13.82 percent, compared to 14.13 percent one year earlier.
Net Interest Income
Net interest income rose 4.7 percent to $54,228,718 for 1993. This
increase was partially due to the higher net interest margin of
4.28 percent, compared to 4.23 percent last year. Influenced by
the falling interest rate environment, the Company experienced a
more rapid decline in rates paid on deposits and other liabilities
than in yields earned on assets. Loans, which typically earn
higher yields than investment securities, rose 16.2 percent. On a
tax equivalent basis for 1993, loans earned an average rate of
8.77 percent while investment securities yielded an average 6.05
percent. The net interest spread, which is the difference between
the rate earned on assets and the rate paid on liabilities, rose
to 3.86 percent from 3.73 percent last year.
During the course of 1993, the Company's net interest margin
declined 19 basis points. The goal to continue expansion of net
interest income is, therefore, centered on growth in interest-
earning assets. The majority of this growth is sought in loans.
Loan Quality
Brenton's loan quality remains strong compared to its peers and is
the foundation of the Company's financial performance.
Demonstrating this, the Company's nonperforming loans were a low
0.46 percent of loans or $4,013,000 at December 31, 1993, down
12.6 percent from $4,593,000 one year ago. Nonperforming loans
include loans on nonaccrual status, loans that have been
renegotiated to below market interest rates or terms, and loans
past due 90 days or more. Brenton ranked second among 33
Midwestern peer banks with its 0.61 percent ratio of nonperforming
loans to loans at the end of 1992, according to the Stifel,
Nicolaus & Co., Inc. December 31, 1992 Midwest Regional Banking
Review. By December 31, 1993, this ratio had improved to 0.46
percent.
<TABLE>
<CAPTION>
89 90 91 92 93
<S> <C> <C> <C> <C> <C>
Provision for Loan Losses $760 869 799 1,411 1,252
Net Charge-offs (In thousands) $401 814 1,122 953 440
<CAPTION>
Nonperforming Loans (In thousands) 89 90 91 92 93
<S> <C> <C> <C> <C> <C>
$6,718 $5,460 $5,622 $4,593 $4,013
</TABLE>
173
<PAGE>
The allowance for loan losses represented 244.65 percent of
nonperforming loans at the end of 1993, compared to 196.09 percent
one year ago. The Company's net charge-offs to average loans,
which ranked best among the 33 peer banking organizations for
1992, improved from 0.13 percent for 1992 to 0.05 percent for
1993. This high-quality loan portfolio led to a modest provision
expense for loan losses, which represented 0.16 percent of average
loans in 1993.
Though parts of Iowa experienced record flooding during the summer
of 1993, the state's economy did not falter and most Iowans
rebounded quickly. The flood had a varied impact in both
metropolitan and agricultural areas of the state. Only a few of
the businesses served by Brenton were affected by the flood. In
some areas, crop production was reduced 25 to 35 percent from
flooding, as well as excessive rainfall and fewer days of
sunshine; other areas were less severely impacted. Due to the
strength of Brenton's borrowers, multi-peril crop insurance,
disaster assistance, and government guarantees, Brenton
anticipates that the flood will have very little impact on its
loan portfolio quality.
Quality control and risk management are carefully balanced with
goals for loan growth. The Company's rigorous loan evaluation and
approval system requires large loans to be approved by a team of
top Company officers and all loans to be routinely reviewed by
qualified loan examiners.
To limit the risk exposure of commercial real estate loans, the
Company closely monitors and restricts its loans for commercial
multi-tenant buildings and speculative land-development loans.
Instead, the Company concentrates on owner-occupied residential
and commercial mortgages used to finance facilities built and
occupied by the customer. Additionally, Brenton believes that
loan quality is enhanced by maintaining full-service banking
relationships with borrowing customers.
The allowance for loan losses is the amount available to absorb
actual loan losses within the portfolio. The allowance is based on
management's judgment after considering various factors such as
the current and anticipated economic environment, historical loan
loss experience, and most importantly, individual loan evaluations
at each bank.
Through the Company's loan evaluation process, individual banks
evaluate loan characteristics, the borrower's financial condition,
and collateral value. From these evaluations, the loan portfolio
quality is quantified and the bank assesses and computes the
required allowance for loan losses. This process is expanded into
an adequacy analysis of the allowance on a Company-wide basis.
The adequacy of the allowance is subject to future events and
uncertainties. Because of the in-depth analysis process,
management believes the allowance for loan losses at December 31,
1993 was sufficient to absorb possible loan losses within the
present portfolio.
<TABLE>
<CAPTION>
Total Assets (In millions) 89 90 91 92 93
<S> <C> <C> <C> <C> <C>
$961 1,274 1,361 1,431 1,481
<CAPTION>
Net Noninterest Margin 89 90 91 92 93
<S> <C> <C> <C> <C> <C>
2.46% 2.29 2.26 2.31 2.31
</TABLE>
174
<PAGE>
<TABLE>
<CAPTION>
Loan Composition
<S> <C>
Real Estate 57.5%
Consumer 24.5%
Commercial 10.3%
Loans to Farmers 7.6%
Other .1%
</TABLE>
Beginning in 1995, the Financial Accounting Standards Board will
mandate a standard that will fundamentally change certain
accounting procedures for impaired loans, including the
determination of the allowance for loan losses and financial
disclosures. This new Standard is not expected to have a material
effect on the future financial statements of the Company.
Net Noninterest Margin
To measure operating efficiency, the Company uses the net
noninterest margin, which is the difference between noninterest
income and noninterest expense as a percent of average assets. For
1993 and 1992, the net noninterest margin was 2.31 percent. To
reduce this margin, which is a significant goal, the Company must
continue to increase its asset base, develop fee-based services,
and use new technology and procedures to enhance operational
efficiencies.
Noninterest Income
Over the last several years, Brenton has expanded its fee-based
services, including trust, investment brokerage, secondary market
real estate loan origination, insurance, and farm management.
These services were the basis of the Company's 21.7 percent
growth in noninterest income during 1993 and are expected to
continue to grow.
Investment brokerage commissions grew 88.1 percent to $3.0 million
for the year, compared to $1.6 million for 1992. After considering
related expenses, investment brokerage contributed $.8 million to
the Company's pre-tax net income, compared to $.3 million last
year. The number of full-time brokers grew by one-third in 1993
and management expects that number to continue growing. The
brokerage business is a natural extension of the banking business,
as it allows Brenton to expand the array of financial services
provided to existing customers.
Other charges and fees rose 29.8 percent for the year, largely
from a 59.6 percent, or nearly $800,000, increase in fees on real
estate loans originated for the secondary market. Three years ago,
the Company was originating under $20 million of mortgage loans
for sale into the secondary market. In 1993, the volume was more
than six times that amount, totaling over $121 million. To respond
to the increased demand for new real estate loans and refinancings
prompted by current low interest rates, Brenton added specialized
real estate loan originators in several of its locations.
Fiduciary income from trust services rose 8.8 percent to $1.9
million in 1993 through the addition of new employee benefit and
personal trusts, and growth of existing trusts. At the end of
1993, the Company's trust department managed $607 million in
assets.
Securities transactions also influenced the increase in
noninterest income. Management realigned a portion of the
investment portfolio that is available for sale in response to the
interest rate environment, realizing securities gains of $595,168.
The main purpose of this realignment was to diversify reinvestment
risk and reduce interest rate risk in the investment portfolio.
175
<PAGE>
Noninterest Expense
Total noninterest expense rose 8.2 percent in 1993 to $50,414,942
from $46,590,756 one year ago. The 9.8 percent increase in
salaries and wages, which stems partly from commissions related to
increased investment brokerage and secondary market real estate loan
origination, comprised more than half of the total noninterest expense
increase. This increase in salaries caused a proportionate rise in the
related benefits expense. Also in 1993, the Company increased its
matching contribution to the employee 401(k) plan by 1 percent of salaries.
Brenton has recently redesigned most of its facilities and added
technological enhancements to improve the marketing and selling of
products and services. These projects are a major effort to enhance
Brenton's overall image and stimulate sales. As a result, expenses
related to occupancy, furniture, and equipment rose 9.3 percent.
During 1993, Brenton initiated several successful promotion
campaigns in offering new products that serve Brenton customers.
These campaigns, along with various event sponsorships throughout
the state, added 16.9 percent to the advertising and promotion
expenses.
Data processing expense and FDIC deposit insurance assessments
were both down slightly from last year. All Brenton banks pay an
FDIC insurance premium rate of $.23 per $100 of deposits, the
lowest rate under the FDIC's risk-based premium system. Other
operating expense rose only 4.7 percent, with expenses related to
any given category increasing only modestly.
Income Taxes
The Company's income tax strategies include reducing income taxes
by purchasing securities and originating loans that produce tax-
exempt income. The goal is to maintain the maximum level of tax-
exempt assets in order to benefit the Company on both a tax
equivalent yield basis and in income tax savings. The effective
rate of income tax as a percent of income before income tax and
minority interest was 27.0 percent for 1993 compared to 26.4
percent for 1992.
In January 1993, the Company adopted a new accounting standard
relating income taxes. This standard allows the Company to
recognize deferred tax benefits based on the likelihood of
realization of those benefits in future years. Also during 1993,
the Company's effective federal income tax rate rose because of
statutory federal changes. Neither of these items had a material
effect on the financial statements of the Company.
Results of Operations - 1992 Compared to 1991
Acquisitions
On October 1, 1992, Brenton Banks, Inc. merged with Ames Financial
Corporation and acquired its wholly-owned subsidiary, Ames Savings
Bank, FSB of Ames, Iowa. With its name changed to Brenton Savings
Bank, FSB, the institution continues to operate as a federal savings
bank. The merger transaction, accounted for as a pooling-of-interests,
resulted in the restatement of historical information to reflect
combined results of Brenton and Ames Financial Corporation. The merger
was accomplished by a stock-for-stock exchange. No bank borrowings
were required since the only cash paid was for fractional shares of
common stock.
Net Income
The Company's record earnings of $12,953,094 in 1992 was an 11.1
percent increase over $11,659,427 in 1991. Earnings per share also
grew 11.1 percent to $2.50 for 1992 compared to $2.25 for 1991.
The Company's ROA improved to .98 percent from .93 percent in
1991. The ROE was 14.13 percent, down slightly from 14.27 percent
for 1991, the result of an increase in equity capital.
Net Interest Income
Net interest income rose 10.5 percent over 1991 to $51,786,369,
and was prompted by growth in interest-earning assets and
declining interest rates. The net interest margin was 4.23 percent
for 1992 compared to 4.04 percent one year earlier.
Loan Quality
Nonperforming loans of $4,593,000 at the end of 1992 represented
0.61 percent of loans. While remaining low, the provision expense
for loan losses rose $611,573 in 1992. This provision increased
the allowance for loan losses to $9,006,290 at December 31, 1992,
representing 196.09 percent of nonperforming loans and 1.20
percent of loans. Net loans charged off for 1992 represented a low
0.13 percent of average loans.
Noninterest Income
Noninterest income rose 15.5 percent from 1991 to $14,684,040 for
1992. The Company capitalized on mortgage origination during an
interest rate environment that encouraged new home building and
refinancing. Mortgage fees on residential mortgage loans sold into
the secondary market totaled $1,449,807 for 1992, more than four
times that of 1991.
Brenton Brokerage Services, Inc. became a licensed broker dealer
in April 1992, and experienced excellent growth in personnel and
sales volume during the year. Investment brokerage commissions
totaled $1,600,324 for 1992, a 76.9 percent increase over 1991.
Noninterest Expense
Noninterest expense rose 10.2 percent to $46,590,756 in 1992.
Brenton implemented several changes to improve operating
efficiency and control the growth of noninterest expenses. Initial
costs, which significantly impacted this increase, were necessary
to fully incorporate these efficiencies.
Improvements in Brenton's computer technology designed to improve
customer service and streamline operations resulted in a 36.7
percent increase in equipment depreciation over 1991.
The transition to centralized backroom operations in 1992 added
some expense because of some necessary initial parallel
operations. As part of this centralization effort, the proof and
item capture functions were out-sourced to the Federal Home Loan
Bank of Des Moines in November 1991. While providing overall cost
savings, this shifted expenses of $581,154 from salaries and
benefits, occupancy expense, and furniture and equipment expense
to other operating expenses in 1992.
The October 1992 merger with Ames Financial Corporation caused
one-time legal, accounting, and regulatory costs of $332,500.
A long-term stock incentive plan for the Company's senior officers
and bank presidents was approved and implemented during the fourth
quarter of 1992. This plan provides financial incentives based on
service to the Company and Company performance over the next
several years. In addition, it encourages senior managers to
pursue maximizing shareholder value by providing them an
opportunity to own Brenton stock. This stock compensation expense
was $560,000 for 1992.
Noninterest expense categories all increased with the exception of
electronic data processing fees, which decreased through
negotiations of Brenton's contract for data processing services.
Federal Deposit Insurance Corporation assessments rose 13.8
percent to $2,750,378. All Brenton banks pay an FDIC insurance
premium rate of $.23 per $100 of deposits, the lowest rate under
the FDIC's risk-based premium system.
Income Taxes
The Company's income tax strategy includes reducing taxes by
purchasing assets which produce tax-exempt income. The effective
rate of income tax as a percent of income before income tax and
minority interest was 26.4 percent for 1992, compared to 26.1
percent for 1991.
177
<PAGE>
CONSOLIDATED AVERAGE BALANCES AND RATES
CONSOLIDATED AVERAGE BALANCES AND RATES
Brenton Banks, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Average Balances (In thousands) 1993 1992 1991 1990 1989
Assets
<S> <C> <C> <C> <C> <C>
Cash and due from banks $ 46,025 41,715 35,656 36,012 34,061
Interest-bearing deposits with banks 762 6,240 18,335 13,562 5,823
Federal funds sold and securities purchased under
agreements to resell 23,725 27,082 35,154 40,095 24,889
Investment securities:
Available for sale 53,174 6,512 _ _ -
Held to maturity-taxable 299,993 384,301 342,466 303,243 285,237
Held to maturity-tax exempt 164,520 139,296 106,658 58,507 29,892
Loans held for sale 6,165 2,553 _ _ -
Loans 802,088 736,646 727,870 659,283 512,822
Allowance for loan losses (9,615) (8,894) (8,819) (8,763) (8,226)
Bank premises and equipment 23,045 21,400 18,876 17,003 15,027
Other 26,543 30,422 32,243 26,843 21,976
$1,436,425 1,387,273 1,308,439 1,145,785 921,501
<CAPTION>
Liabilities and Stockholders' Equity:
<S> <C> <C> <C> <C> <C>
Deposits:
Noninterest-bearing $ 119,322 112,054 102,795 102,225 100,985
Interest-bearing:
Demand 217,754 209,642 175,595 152,434 121,226
Savings 299,640 260,568 235,894 205,433 191,153
Time 622,789 646,261 654,776 560,679 404,868
Total deposits 1,259,505 1,228,525 1,169,060 1,020,771 818,232
Federal funds purchased and securities sold
under agreements to repurchase 42,715 33,240 20,340 18,912 13,459
Other short-term borrowings 33 2,170 5,361 3,027 246
Accrued expenses and other liabilities 12,805 13,735 14,739 14,432 9,966
Long-term borrowings 14,077 14,067 13,619 13,347 16,222
Total liabilities 1,329,135 1,291,737 1,223,119 1,070,489 858,125
Minority interest 4,150 3,845 3,589 3,472 3,350
Common stockholders' equity 103,140 91,691 81,731 71,824 60,026
$1,436,425 1,387,273 1,308,439 1,145,785 921,501
<CAPTION>
Summary of Average Interest Rates
Average rates earned:
<S> <C> <C> <C> <C> <C>
Interest-bearing deposits with banks 2.88% 4.92 7.10 8.69 9.29
Federal funds sold and securities purchased
under agreements to resell 2.05 2.41 5.77 7.84 9.08
Investment securities:
Available for sale 5.28 6.63 _ _ _
Held to maturity_taxable 5.54 6.88 8.50 8.93 8.56
Held to maturity_tax-exempt (tax equivalent basis) 6.97 7.66 8.85 9.74 10.54
Loans held for sale 8.43 9.33 _ _ _
Loans 8.77 9.65 10.52 10.85 10.99
<CAPTION>
Average rates paid:
<S> <C> <C> <C> <C> <C>
Deposits 3.70% 4.70 6.19 6.71 6.47
Federal funds purchased and securities
sold under agreements to repurchase 2.41 2.78 4.74 6.16 6.88
Other short-term borrowings 3.63 5.57 8.70 10.18 9.05
Long-term borrowings 8.60 9.14 9.57 10.16 10.77
Average yield on interest-earning assets 7.57% 8.43 9.62 10.11 10.10
Average rate paid on interest-bearing liabilities 3.71 4.70 6.21 6.76 6.57
Net interest spread 3.86 3.73 3.41 3.35 3.53
Net interest margin 4.28 4.23 4.04 4.11 4.38
</TABLE>
178
<PAGE>
SELECTED FINANCIAL DATA
SELECTED FINANCIAL DATA
Brenton Banks, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Year-end balances
(In thousands) 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total assets $1,480,596 1,431,140 1,360,942 1,274,301 961,370 921,207 908,933 956,505 963,190 991,097
Interest-earning assets 1,400,709 1,323,252 1,267,402 1,181,172 883,721 845,571 836,029 865,364 880,666 900,785
Interest-bearing
liabilities 1,224,951 1,181,013 1,141,008 1,052,597 769,717 733,133 728,597 771,416 785,851 804,428
Liabilities
Demand deposits 127,132 137,212 115,479 125,626 113,349 118,392 116,830 123,883 117,624 116,831
Long-term borrowings 20,055 13,284 13,634 12,675 14,701 16,215 17,509 18,759 19,707 19,729
Preferred stock _ _ _ _ _ - 2,000 3,000 4,000 5,000
Common stockholders' 112,418 97,430 86,712 77,258 63,522 56,401 49,618 44,976 41,815 47,832
equity
<CAPTION>
Results of operations
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest income $ 98,656 106,560 115,561 106,826 85,722 76,745 74,774 84,321 96,181 102,731
Interest expense 44,427 54,773 68,687 64,431 49,102 43,180 43,149 52,920 63,175 71,968
Net interest income 54,229 51,787 46,874 42,395 36,620 33,565 31,625 31,401 33,006 30,763
Provision for loan losses 1,252 1,411 799 869 760 1,214 2,132 11,605 17,320 7,375
Net interest income after 52,977 50,376 46,075 41,526 35,860 32,351 29,493 19,796 15,686 23,388
provision for loan losses
Noninterest income 17,863 14,684 12,715 11,554 10,113 10,367 9,064 16,483 9,306 8,002
Noninterest expense 50,415 46,591 42,284 37,820 32,781 32,066 32,952 32,558 30,427 29,352
Income (loss) before 20,425 18,469 16,506 15,260 13,192 10,652 5,605 3,721 (5,435) 2,038
income taxes and
minority interest
Income taxes 5,508 4,884 4,308 4,388 4,016 2,527 408 116 (887) (1,804)
Minority interest 667 632 539 533 472 422 290 84 39 248
Net income (loss) 14,250 12,953 11,659 10,339 8,704 7,703 4,907 3,521 (4,587) 3,594
Preferred stock dividend _ _ _ _ _ 81 265 360 455 550
requirement
Net income (loss) $ 14,250 12,953 11,659 10,339 8,704 7,622 4,642 3,161 (5,042) 3,044
available to
common stockholders
Average common shares 5,279 5,189 5,172 5,163 4,797 4,797 4,797 4,797 4,797 4,797
outstanding*
<CAPTION>
Per common and common equivalent share*
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net income (loss) $ 2.70 2.50 2.25 2.00 1.81 1.59 .97 .66 (1.05) .63
Cash dividends .600 .525 .485 .410 .330 .175 .000 .000 .203 .314
Common stockholders' 21.40 18.71 16.74 14.96 13.24 11.76 10.34 9.38 8.72 9.97
equity
<CAPTION>
Selected operating ratios
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Return on average assets 1.04% .98 .93 .95 1.00 .90 .57 .38 (.47) .40
(including minority
interest)
Return on average common 13.82 14.13 14.27 14.39 14.50 14.34 9.78 7.35 (11.03) 6.41
stockholders' equity
Common dividend payout 22.22 21.00 21.56 20.50 18.23 11.01 .00 .00 N/M 49.84
Allowance for loan 1.12 1.20 1.14 1.25 1.55 1.60 1.75 2.09 1.95 1.05
losses as a percent
of loans
Net charge-offs to average .05 .13 .15 .12 .08 .18 .75 2.61 2.54 1.18
loans outstanding
*Restated for 2-for-1 stock split effective in 1990.
N/M - Not meaningful, Company incurred a net loss.
</TABLE>
179
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES
CONSOLIDATED STATEMENTS OF CONDITION
Brenton Banks, Inc. and Subsidiaries
December 31
<TABLE>
<CAPTION>
Assets 1993 1992
<S> <C> <C>
Cash and due from banks (note 3) $ 42,548,497 66,410,098
Interest-bearing deposits with banks _ 2,372,851
Federal funds sold and securities purchased under agreements to resell 41,875,000 22,125,000
Trading account securities 9,850 _
Investment securities:
Available for sale (note 4) 412,209,721 29,825,757
Held to maturity (market value of $66,892,000 and $517,151,000
at December 31, 1993 and 1992, respectively) (note 4) 66,384,042 510,976,506
Investment securities 478,593,763 540,802,263
Loans held for sale 4,349,422 4,497,261
Loans (note 5) 875,881,387 753,454,137
Allowance for loan losses (note 6) (9,817,864) (9,006,290)
Loans, net 866,063,523 744,447,847
Bank premises and equipment (notes 7 and 11) 23,147,521 22,280,589
Accrued interest receivable 12,815,884 13,454,136
Other assets (note 9) 11,192,586 14,749,784
$1,480,596,046 1,431,139,829
<CAPTION>
Liabilities and Stockholders' Equity
<S> <C> <C>
Deposits (note 8):
Noninterest-bearing $ 127,131,654 137,212,165
Interest-bearing:
Demand 232,005,404 213,825,352
Savings 307,615,814 296,251,035
Time 627,610,822 622,651,773
Total deposits 1,294,363,694 1,269,940,325
Federal funds purchased and securities sold under agreements to repurchase 37,664,328 34,881,600
Other short-term borrowings (note 10) _ 119,784
Accrued expenses and other liabilities 11,688,256 11,496,858
Long-term borrowings (note 11) 20,054,913 13,283,855
Total liabilities 1,363,771,191 1,329,722,422
Minority interest in consolidated subsidiaries 4,407,190 3,987,244
Redeemable preferred stock, $1 par; 500,000 shares authorized;
issuable in series, none issued _ _
Common stockholders' equity (notes 12, 13 and 15):
Common stock, $5 par; 25,000,000 shares authorized;
5,253,151 and 5,207,870 shares issued at
December 31, 1993 and 1992, respectively 26,265,755 26,039,350
Capital surplus 5,598,027 5,002,053
Retained earnings 77,517,613 66,405,950
Unrealized gains (losses) on assets available for sale 3,036,270 (17,190)
Total common stockholders' equity 112,417,665 97,430,163
$1,480,596,046 1,431,139,829
</TABLE>
Commitments and contingencies (notes 16 and 17).
See accompanying notes to consolidated financial statements.
180
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
Brenton Banks, Inc. and Subsidiaries
Years Ended December 31
<TABLE>
<CAPTION>
Interest Income 1993 1992 1991
<S> <C> <C> <C>
Interest and fees on loans (note 5) $70,816,746 71,364,279 76,545,213
Interest and dividends on investments:
Taxable 19,436,763 26,804,831 29,116,364
Tax-exempt 7,894,225 7,429,582 6,569,424
Interest on interest-bearing deposits with banks 21,934 307,248 1,302,070
Interest on federal funds sold and securities purchased under
agreements to resell 485,912 653,886 2,028,373
Total interest income 98,655,580 106,559,826 115,561,444
<CAPTION>
Interest Expense
<S> <C> <C> <C>
Interest on deposits (note 8) 42,188,138 52,443,250 65,954,608
Interest on federal funds purchased and securities
sold under agreements to repurchase 1,027,324 923,853 963,419
Interest on other short-term borrowings (note 10) 1,200 120,912 466,157
Interest on long-term borrowings (note 11) 1,210,200 1,285,442 1,303,372
Total interest expense 44,426,862 54,773,457 68,687,556
Net interest income 54,228,718 51,786,369 46,873,888
Provision for loan losses (note 6) 1,251,588 1,410,730 799,157
Net interest income after provision for loan losses 52,977,130 50,375,639 46,074,731
<CAPTION>
Noninterest Income
<S> <C> <C> <C>
Service charges on deposit accounts 5,846,770 5,735,963 5,784,257
Insurance commissions and fees 1,730,387 1,695,699 1,467,639
Other service charges, collection and exchange charges,
commissions and fees 4,120,732 3,175,552 2,146,847
Investment brokerage commissions 3,010,004 1,600,324 904,704
Fiduciary income 1,912,442 1,758,203 1,629,495
Net gains (losses) from securities available for sale (note 4) 595,168 79,474 (21,587)
Other operating income 647,768 638,825 803,194
Total noninterest income 17,863,271 14,684,040 12,714,549
<CAPTION>
Noninterest Expense
<S> <C> <C> <C>
Salaries and wages 22,952,044 20,894,947 18,570,522
Employee benefits (note 14) 4,162,486 3,609,995 3,270,760
Occupancy expense of premises, net (notes 7 and 16) 3,988,525 3,710,772 3,596,108
Furniture and equipment expense (notes 7 and 16) 2,622,747 2,339,605 1,920,159
Data processing expense (note 17) 2,526,280 2,532,410 2,808,215
FDIC deposit insurance assessment 2,749,969 2,750,378 2,416,652
Advertising and promotion 1,521,712 1,301,545 1,221,589
Other operating expense 9,891,179 9,451,104 8,479,741
Total noninterest expense 50,414,942 46,590,756 42,283,746
Income before income taxes and minority interest 20,425,459 18,468,923 16,505,534
Income taxes (note 9) 5,507,849 4,884,145 4,307,625
Income before minority interest 14,917,610 13,584,778 12,197,909
Minority interest 667,640 631,684 538,482
Net income $14,249,970 12,953,094 11,659,427
<CAPTION>
Per common and common equivalent share (note 12):
<S> <C> <C> <C>
Net income $ 2.70 2.50 2.25
Cash dividends .600 .525 .485
</TABLE>
See accompanying notes to consolidated financial statements.
181
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Brenton Banks, Inc. and Subsidiaries
Years Ended December 31
<TABLE>
<CAPTION>
Operating Activities 1993 1992 1991
<S> <C> <C> <C>
Net income $ 14,249,970 12,953,094 11,659,427
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses 1,251,588 1,410,730 799,157
Depreciation and amortization 3,100,977 2,780,907 2,257,965
Deferred income taxes (531,013) (88,728) 478,681
Net (gains) losses from securities held for sale (595,168) (79,474) 21,587
Decrease in accrued interest receivable and other assets 2,456,544 3,104,394 2,102,323
Increase (decrease) in accrued expenses, other liabilities
and minority interest 496,782 (2,258,750) (1,251,408)
Net cash provided from operating activities 20,429,680 17,822,173 16,067,732
<CAPTION>
Investing Activities
<S> <C> <C> <C>
Cash used for acquisitions from the RTC _ _ (333,500)
Cash and cash equivalents of RTC acquisitions _ _ 16,110,116
Investment securities available for sale:
Purchases (166,637,785) _ _
Maturities 34,834,992 _ _
Sales 98,446,394 37,841,160 _
Investment securities held to maturity:
Purchases (132,198,518) (407,542,480) (305,134,642)
Maturities 233,316,414 283,315,958 250,101,854
Sales _ _ 8,466,321
Net (increase) decrease in loans held for sale 147,839 (4,497,261) _
Net increase in loans (122,867,264) (2,496,838) (45,659,105)
Purchases of bank premises and equipment (3,487,797) (4,864,458) (3,611,388)
Net cash used by investing activities (58,445,725) (98,243,919) (80,060,344)
<CAPTION>
Financing Activitie
<S> <C> <C> <C>
Net increase in noninterest-bearing, interest-bearing
demand and savings deposits 19,464,320 92,823,328 45,184,386
Net increase (decrease) in time deposits 4,959,049 (37,971,233) 15,045,923
Net increase in federal funds purchased
and securities sold under agreements to repurchase 2,782,728 11,291,161 4,458,260
Net decrease in other short-term borrowings (119,784) (4,053,769) (3,375,754)
Proceeds of long-term borrowings 9,337,000 2,293,000 2,626,000
Repayment of long-term borrowings (2,565,942) (2,643,637) (1,666,344)
Dividends on common stock (3,138,307) (2,577,619) (2,330,688)
Proceeds from issuance of common stock under
the employee stock purchase plan 361,194 _ _
Proceeds from issuance of common stock under
the stock option plan 461,185 341,756 143,694
Net cash provided from financing activities 31,541,443 59,502,987 60,085,477
Net decrease in cash and cash equivalents (6,474,602) (20,918,759) (3,907,135)
Cash and cash equivalents at the beginning of the year 90,907,949 111,826,708 115,733,843
Cash and cash equivalents at the end of the period $ 84,433,347 90,907,949 111,826,708
</TABLE>
See accompanying notes to consolidated financial statements.
182
<PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS' EQUITY
Brenton Banks, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Common Stock Capital Surplus Retained Earnings Unrealized Gains(Losses) To
<S> <C> <C> <C> <C> <C>
Balance,
December 31, 1990 $25,825,400 4,730,553 46,701,736 _ 77,257,689
Net income _ _ 11,659,427 _ 11,659,427
Net change
in unrealized
gains (losses) _ _ _ (18,100) (18,100)
Dividends on common stock
$.485 per share _ _ (2,330,688) _ (2,330,688)
Issuance of 13,400
shares of common stock
under the stock option
plan (note 15) 67,000 76,694 _ _ 143,694
Balance,
December 31, 1991 25,892,400 4,807,247 56,030,475 (18,100) 86,712,022
Net income _ _ 12,953,094 _ 12,953,094
Net change in
unrealized gains
(losses) _ _ _ 910 910
Dividends on common stock
$.525 per share _ _ (2,577,619) _ (2,577,619)
Issuance of 22,600
shares of common stock
under the stock option
plan (note 15) 113,000 188,756 _ _ 301,756
Issuance of common stock
under the Ames Financial
Corporation stock
option plan 33,950 6,050 _ _ 40,000
Balance,
December 31, 1992 26,039,350 5,002,053 66,405,950 (17,190) 97,430,163
Net income _ _ 14,249,970 _ 14,249,970
Net change in unrealized
gains (losses) _ _ - 3,053,460 3,053,460
Dividends on common stock
$.60 per share _ _ (3,138,307) - (3,138,307)
Issuance of 32,200 shares
of common stock under
the stock option plan
(note 15) 161,000 300,185 _ _ 461,185
Issuance of 13,081 shares
of common stock under
the employee stock
purchase plan (note 15) 65,405 295,789 _ _ 361,194
Balance,
December 31, 1993 $26,265,755 5,598,027 77,517,613 3,036,270 112,417,665
</TABLE>
See accompanying notes to consolidated financial statements.
183
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Brenton Banks, Inc. and Subsidiaries December 31, 1993, 1992 and 1991
(1) Summary of Significant Accounting Policies and Related Matters
The accounting and reporting policies of Brenton Banks, Inc. and
its subsidiaries (the Company) conform with generally accepted
accounting principles and general practices within the banking
industry. The following describe the more significant accounting
policies:
The Principles of Consolidation The Company provides banking and
related services to domestic markets. The consolidated financial
statements include the accounts of Brenton Banks, Inc. (the Parent
Company) and its subsidiaries. All material intercompany accounts
and transactions have been eliminated in the consolidated
financial statements. Certain reclassifications were made in the
financial statements to agree with the current year presentation.
The excess cost over underlying net assets of consolidated
subsidiaries and other intangible assets are being amortized over
10 to 40 years and are included in other assets in the
consolidated statements of condition. Intangible assets totaled
$5,411,000 and $5,834,000 at December 31, 1993 and 1992,
respectively.
Investment Securities The Company adopted Statement of Financial
Accounting Standards No. 115, effective December 31, 1993. Under
this new Standard, the method of classifying investment securities
is based on the Company's intended holding period. Securities
which may be sold prior to maturity, to meet liquidity needs, to
respond to market changes or to adjust the Company's asset-
liability position, are classified as available for sale. Securities
which the Company intends to hold to maturity are classified as held
to maturity.
Investment securities available for sale are recorded at fair
value. The aggregate unrealized gains or losses, net of the income
tax and minority interest effect, are recorded as a component of
common stockholders' equity. Securities held to maturity are
recorded at cost, adjusted for amortization of premiums and
accretion of discounts. The timing of the amortization and
accretion for mortgage-backed securities are adjusted for actual
and projected prepayments.
Prior to the adoption of the new Standard, the Company isolated
certain securities which could be sold as part of the Company's
asset-liability management strategy. These securities were
classified as available for sale and accounted for using the
aggregate lower of cost or fair value.
Net gains or losses on the sales of securities are shown in the
statements of operations. Gains or losses are computed using the
specific security identification method.
Loans Loans are carried primarily at the unpaid principal
balance. Interest income on loans is accrued and recorded as
income based on contractual interest rates and daily outstanding
principal balances, except on discounted loans where unearned
income is recorded as income over the life of the loans based on
the interest method.
The accrual of interest income is stopped when the ultimate
collection of a loan becomes doubtful. A loan is placed on
nonaccrual status when it becomes 90 days past due, if it is
neither well secured or in the process of collection. Once
determined uncollectible, previously accrued interest is charged
to the allowance for loan losses.
Loans held for sale include real estate mortgage loans originated
with the intent to sell. These loans are carried at the lower of
aggregate cost or fair value.
Allowance for Loan Losses The allowance for loan losses is
maintained at a level necessary to support management's evaluation
of potential losses in the loan portfolio, after considering
various factors including prevailing and anticipated economic
conditions. Loan losses or recoveries are charged or credited
directly to the allowance account.
Bank Premises and Equipment Bank premises and equipment are
stated at cost less accumulated depreciation. Depreciation is
provided predominantly by the straight-line method over estimated
useful lives of 8 to 40 years for buildings and leasehold
improvements, and 3 to 25 years for furniture and equipment.
184
<PAGE>
Other Real Estate Owned Included in other assets is property
acquired through foreclosure, acceptance of deed in lieu of
foreclosure or other transfers in settlement of outstanding loans
and related contract sales of such property until the contract is
transferred to earning assets based upon sufficient equity in the
asset. Amounts totaled $948,000 and $1,935,000 at December 31,
1993 and 1992, respectively. Such property is carried at the lower
of cost or estimated fair value. Periodic appraisals are obtained
to support carrying values. Net expense of ownership and declines
in carrying values are charged to operating expenses.
Employee Retirement Plan All employees of the Company are
eligible, after meeting certain requirements, for inclusion in the
defined contribution retirement plan. The plan is a combination
profit sharing and 401(k) plan. Retirement plan costs are expensed
as the Company contributes to the plan. The Company does not
provide any material post-retirement benefits.
Income Taxes The Company files a consolidated federal income tax
return. Federal income taxes are allocated to the Parent Company
and each subsidiary on the basis of its taxable income or loss
included in the consolidated return.
When income and expense are recognized in different periods for
financial and income tax reporting purposes, deferred taxes are
provided for such temporary differences unless limited.
Statements of Cash Flows In the statements of cash flows, cash
and cash equivalents include cash and due from banks, interest-
bearing deposits with banks, federal funds sold and securities
purchased under agreements to resell and trading account
securities.
Income Per Common and Common Equivalent Share Income per common
and common equivalent share computations are based on the weighted
average number of common and common stock equivalent shares
outstanding. In October 1992, the Company merged with Ames
Financial Corporation. The average number of shares, after
considering the stock plans and the merger was 5,279,040 for 1993,
5,188,797 for 1992 and 5,171,675 for 1991.
Fair Value of Financial Instruments Fair value estimates are made
at a specific point in time, based on relevant market information
and information about the financial instrument. These estimates do
not reflect any premium or discount that could result from
offering the Bank's entire holdings of a particular financial
instrument for sale at one time. Unless included in assets
available for sale, it is the Company's general practice and
intent to hold its financial instruments to maturity and not to
engage in trading or sales activities.
Fair value estimates are based on judgments regarding future
expected loss experience, current economic conditions, risk
characteristics of various financial instruments and other factors.
These estimates are subjective in nature and involve uncertainties and
matters of significant judgment and therefore cannot be determined
with precision. Changes in assumptions could significantly affect the
estimates.
Estimated fair values have been determined by the Company using
the best available data, and an estimation method suitable for
each category of financial instruments. These methods are
presented in each applicable footnote. The recorded value of cash
and cash equivalents approximates market value. Likewise, the
recorded value approximates market value for federal funds
purchased and securities sold under agreements to repurchase,
because of the structure of those instruments.
(2) Acquisitions
The Company acquired all outstanding shares of Ames Financial
Corporation (Ames) and its wholly owned subsidiary Ames Savings
Bank, FSB in exchange for 371,380 shares of common stock on
October 1, 1992. The merger was accounted for using the pooling-
of-interests method and, accordingly, the consolidated financial
statements were restated to include the financial position and
results of operations of Ames for all periods presented.
(3) Cash and Due From Banks
The subsidiary banks are required by federal banking regulations
to maintain certain cash and due from banks reserves. This reserve
requirement amounted to $4,818,000 at December 31, 1993.
185
<PAGE>
(4) Investment Securities
The Company adopted Statement of Financial Accounting Standards
No. 115, relating to the classification of investment securities,
effective December 31, 1993. As a result, $412,210,000 of
securities were established as available for sale.
The amortized cost and estimated fair value of investment securities
follow. The estimated fair value of investment securities has been
valued using available quoted market prices for similar securities.
<TABLE>
<CAPTION>
December 31, 1993 (In thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value
<S> <C> <C> <C> <C>
Investment securities available for sale:
Taxable investments:
U.S. Treasury securities $ 63,418 418 (59) 63,777
Securities of U.S. government agencies 58,645 566 (30) 59,181
Mortgage-backed and related securities 137,951 1,354 (561) 138,744
Other investments 5,930 21 (26) 5,925
Tax-exempt investments:
Obligations of states
and political subdivisions 141,325 3,419 (161) 144,583
$407,269 5,778 (837) 412,210
Investment securities held to maturity:
Taxable investments:
Mortgage-backed and related securities $ 24,882 227 (3) 25,106
Other investments 5,563 _ (6) 5,557
Tax-exempt investments:
Obligations of states and
political subdivisions 35,939 473 (183) 36,229
$ 66,384 700 (192) 66,892
<CAPTION>
December 31, 1992
<S> <C> <C> <C> <C>
Investment securities available for sale:
Taxable investments:
U.S. Treasury investments $ 28,660 218 _ 28,878
Mortgage-backed and related securities 1,166 _ _ 1,166
$ 29,826 218 _ 30,044
Investment securities held to maturity:
Taxable investments:
U.S. Treasury securities $ 55,586 885 _ 56,471
Securities of U.S. government agencies 67,324 1,170 (96) 68,398
Mortgage-backed and related securities 225,659 2,545 (614) 227,590
Other investments 11,769 98 (17) 11,850
Tax-exempt investments:
Obligations of states and
political subdivisions 150,639 2,532 (329) 152,842
$510,977 7,230 (1,056) 517,151
</TABLE>
186
<PAGE>
Gross gains of $944,000 and gross losses of $349,000 were recorded
on sales of investment securities held for sale in 1993, gross
gains of $424,000 and gross losses of $345,000 were recorded in
1992, and no gains and losses of $22,000 were recorded in 1991.
Other investments at December 31, 1993 and 1992 consisted
primarily of corporate bonds. U.S. Government agencies originate
or guarantee primarily all of the mortgage-backed and related
securities. The amortized cost of obligations of states and
political subdivisions included industrial development revenue
bonds of $10,316,000 and $7,850,000 at December 31, 1993 and 1992,
respectively.
The scheduled maturities of investment securities at December 31,
1993 follow. Actual maturities may differ from scheduled
maturities because issuers may have the right to call obligations
without penalties. The maturities of mortgage-backed securities
have been included in the period of anticipated payment
considering historical prepayment rates.
<TABLE>
<CAPTION>
(In thousands) Amortized Cost Estimated Fair Value
<S> <C> <C>
Investment securities available for sale:
Due in one year or less $120,613 121,255
Due after one year through
five years 221,943 223,501
Due after five years through
ten years 39,118 40,920
Due after ten years 25,595 26,534
$407,269 412,210
Investment securities held to maturity:
Due in one year or less $ 22,265 22,258
Due after one year through
five years 32,114 32,367
Due after five years through
ten years 5,267 5,477
Due after ten years 6,738 6,790
$ 66,384 66,892
</TABLE>
Investment securities carried at $95,641,000 and $92,598,000 at
December 31, 1993 and 1992, respectively, were pledged to secure
public and other funds on deposit and for other purposes.
(5) Loans
A summary of loans follows:
<TABLE>
<CAPTION>
(In thousands) December 31, 1993 1992
<S> <C> <C>
Real estate loans:
Commercial construction
and land development $ 24,189 25,180
Secured by 1-4 family
residential property 349,810 324,124
Other 129,574 101,418
Loans to financial institutions
(primarily bankers' acceptances) _ 393
Loans to farmers 66,574 62,471
Commercial and industrial loans 90,521 75,062
Loans to individuals for personal
expenditures, net of unearned
income of $741 and $1,373
at December 31, 1993 and
1992, respectively 214,401 163,876
All other loans 812 930
$875,881 753,454
</TABLE>
The Company originates commercial, real estate, agribusiness and
personal loans with customers throughout Iowa. The portfolio has
unavoidable geographic risk as a result.
At December 31, 1993 and 1992, the Company had nonaccrual loans of
$1,605,000 and $1,884,000, respectively, and restructured loans of
$323,000 and $448,000, respectively. Interest income recorded
during 1993 and 1992 on nonaccrual and restructured loans was
$191,000 and $151,000, respectively. Interest income which would
have been recorded if these loans had been current in accordance
with original terms was $359,000 in 1993 and $432,000 in 1992.
The estimated fair value of loans, net of an adjustment for credit
risk was $886 million at December 31, 1993 and $752 million at
December 31, 1992. For loans with floating interest rates, it is
presumed that estimated fair values generally approximate the
recorded book balances. Real estate loans secured by 1-4 family
residential property were valued using trading prices for similar
pools of mortgage-backed securities. Other fixed rate loans were
valued using a present value discounted cash flow with a discount
rate approximating the market for similar assets.
187
<PAGE>
Loan customers of the Company include certain executive officers,
directors and principal shareholders, and their related interests
and associates. All loans to this group were made in the ordinary
course of business at prevailing terms and conditions. The
aggregate indebtedness of all executive officers, directors and
principal shareholders of Brenton Banks, Inc. and its significant
subsidiaries, and indebtedness of related interests and associates
of this group (except where the indebtedness of such persons was
less than $60,000) included in loans follows:
<TABLE>
<CAPTION>
(In thousands) Amount
<S> <C>
Balance at December 31, 1992 $ 5,486
Additional loans 2,817
Loan payments (1,103)
Balance at December 31, 1993 $ 7,200
</TABLE>
(6) Allowance for Loan Losses
A summary of activity in the allowance for loan losses follows:
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
<S> <C> <C> <C>
Balance at beginning of year $ 9,006 8,548 8,871
Provision 1,252 1,411 799
Recoveries 1,091 991 1,214
Loans charged off (1,531) (1,944) (2,336)
Balance at end of year $9,818 9,006 8,548
</TABLE>
(7) Bank Premises and Equipment
A summary of bank premises and equipment follows:
<TABLE>
<CAPTION>
(In thousands) December 31, 1993 1992
<S> <C> <C>
Land $ 2,971 2,949
Buildings and leasehold
improvements 22,956 1,609
Furniture and equipment 15,538 13,512
Construction in progress 471 442
41,936 38,512
Less accumulated depreciation 18,788 16,231
$23,148 22,281
</TABLE>
Depreciation expense included in operating expenses amounted to
$2,621,000, $2,301,000 and $1,824,000 in 1993, 1992 and 1991,
respectively.
(8) Deposits
Time deposits included deposits in denominations of $100,000 or
more of $62,727,000 and $42,999,000 at December 31, 1993 and 1992,
respectively.
Deposit liabilities with no stated maturities have an estimated
fair value equal to the recorded balance. Deposits with stated
maturities have been valued using a present value discounted cash
flow with a discount rate approximating the current market for
similar deposits. The estimated fair value of deposits was $1.304
billion at December 31, 1993, and $1.280 billion at December 31,
1992. The fair value estimate does not include the benefit that
results from the low-cost funding provided by the deposit
liabilities compared to the cost of borrowing funds in the market.
The Company believes the value of these depositor relationships to
be significant.
A summary of interest expense by deposit classification follows:
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
<S> <C> <C> <C>
Demand $ 4,552 5,277 7,531
Savings 7,697 9,385 11,521
Time deposits
of $100,000 or more 2,091 2,169 2,763
Other time deposits 27,848 35,612 44,140
$42,188 52,443 65,955
</TABLE>
The Company made cash interest payments of $44,141,000,
$56,647,000 and $69,473,000 on deposits and borrowings in 1993,
1992 and 1991, respectively.
(9) Income taxes
The current and deferred income tax provisions included in the
consolidated statements of operations follow:
<TABLE>
<CAPTION>
1993 (In thousands) Current Deferred Total
<S> <C> <C> <C>
Federal $4,855 (523) 4,332
State 1,184 (8) 1,176
$6,039 (531) 5,508
1992
Federal $3,965 (91) 3,874
State 1,008 2 1,010
$4,973 (89) 4,884
1991
Federal $3,062 390 3,452
State 767 89 856
$3,829 479 4,308
</TABLE>
188
<PAGE>
Since the income tax returns are filed after the issuance of the
financial statements, amounts reported are subject to revision
based on actual amounts used in the income tax returns. The
Company made cash income tax payments of $4,514,000, $3,486,000
and $2,930,000 to the IRS, and $1,301,000, $713,000 and $1,055,000
to the State of Iowa in 1993, 1992 and 1991, respectively. Cash
income tax payments for a year include estimated payments for
current year income taxes and final payments for prior year income
taxes. State income tax expense relates to state franchise taxes
payable individually by the subsidiary banks.
The Company adopted the use of Statement of Financial Accounting
Standards No. 109, relating to accounting for income taxes,
effective January 1, 1993. These rules had an immaterial impact on
the financial statements of the Company upon its adoption.
Accumulated deferred income tax debits are included in other
assets in the consolidated statements of condition. There was no
valuation allowance at the date of adoption or at December 31,
1993. A summary of the temporary differences resulting in deferred
income taxes and the related tax effect of each follows:
<TABLE>
<CAPTION>
(In thousands) 1993 1992
<S> <C> <C>
Provision for loan losses $ 3,384 2,952
Unrealized gains on securities
available for sale (1,790) _
Depreciation (563) (450)
Stock compensation plan 461 198
Other, net (94) (43)
$1,398 2,657
</TABLE>
The reasons for the difference between the amount computed by
applying the statutory federal income tax rate of 35 percent in
1993 and 34 percent in 1992 and 1991, and income tax expense
follow:
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
<S> <C> <C> <C>
At statutory rate $ 7,149 6,279 5,612
Increase (reduction):
Tax-exempt interest (2,766) (2,541) (2,247)
State taxes, net of
federal benefit 764 667 565
Nondeductible interest expense
to own tax-exempts 361 377 340
Other, net - 102 38
$ 5,508 4,884 4,308
</TABLE>
(10) Other Short-term Borrowings
The Company had no short-term borrowings at December 31, 1993. At
December 31, 1992, $120,000 was borrowed from the U.S. Treasury,
under a tax depository note option with an average rate of 3.15%.
The estimated fair value of that borrowing approximated the
recorded balance.
The Parent Company has arranged an unsecured, available line of
credit of $2,000,000 which was unused at December 31, 1993. It is
at the prime interest rate and is subject to annual review and
renewal.
(11) Long-term Borrowings
Long-term borrowings consisted of the following:
<TABLE>
<CAPTION>
(In thousands) December 31, 1993 1992
<S> <C> <C>
Capital notes, 6.25% to 11.50% $ 12,022 11,907
Contracts payable, 10.00% _ 179
Other, 8.75% _ 10
Total Parent Company 12,022 12,096
Borrowings from FHLB, average rate
of 4.84% at December 31, 1993 8,000 _
Mortgage debt, average rate of
9.40% at December 31, 1993 33 1,188
$ 20,055 13,284
</TABLE>
Mortgage debt was secured by real property with a carrying value
of $41,000 at December 31, 1993. Borrowings from the Federal Home
Loan Bank of Des Moines (FHLB) were secured by residential
mortgage loans equal to 170 percent of the borrowing and FHLB
stock.
The estimated fair value of long-term borrowings of $21 million
and $14 million at December 31, 1993 and 1992, respectively, was
valued using a present value discounted cash flow with a discount
rate approximating the current market for similar borrowings.
The mortgage debt and borrowings from the FHLB were direct
obligations of the individual subsidiaries.
Scheduled maturities of long-term borrowings at December 31, 1993
follow:
<TABLE>
<CAPTION>
(In thousands) Parent Company Consolidated
<S> <C> <C>
1994 $ 996 999
1995 53 2,056
1996 1,067 3,570
1997 1,603 3,604
1998 1,177 2,678
Thereafter 7,126 7,148
$ 12,022 20,055
</TABLE>
189
<PAGE>
(12) Common Stock Transactions
The Company acquired all outstanding shares of Ames Financial
Corporation and its wholly owned subsidiary Ames Savings Bank, FSB
in exchange for 371,380 shares of common stock on October 1, 1992.
The merger was accounted for using the pooling-of-interests
method.
(13) Dividend Restrictions
The Parent Company derives a substantial portion of its cash flow,
including that available for dividend payments to stockholders,
from the subsidiary banks in the form of dividends received.
National banks, state banks and savings banks are subject to
certain statutory and regulatory restrictions that affect dividend
payments.
Based on minimum regulatory capital guidelines as published by
those regulators, the maximum dividends which could be paid by the
subsidiary banks to the Parent Company at December 31, 1993
approximated $30 million.
(14) Employee Retirement Plan
The Company provides a defined contribution retirement plan for
the benefit of employees. The plan is a combination profit sharing
and 401(k) plan. All employees 21 years of age or older and
employed by the Company for at least one year are eligible for the
plan. The Company contributes 4 percent of eligible compensation
of all participants to the profit sharing portion of the plan, and
matches employee contributions to the 401(k) portion of the plan
up to a maximum of 3 percent of each employee's eligible
compensation. Retirement plan costs charged to operating expenses
in 1993, 1992 and 1991 amounted to $1,211,000, $952,000 and
$856,000, respectively. The Company offers no material post-
retirement benefits.
(15) Stock Plans
The Company's long-term stock compensation plan for key management
personnel plan provides for 240,000 shares of the Company's common
stock to be reserved for grant over a four year period. Each grant
of shares covers a three year performance period, 35 percent of
which vests upon completion of employment for the performance
period and 65 percent of which vests based on a tiered achievement
scale tied to financial performance goals established by the Board
of Directors. Under the plan, 60,995 shares were granted covering
the performance period of 1992 through 1994, and 52,429 were
granted for 1993 through 1995. The total stock compensation
expense associated with this plan was $683,000 and $560,000 for
1993 and 1992 respectively.
The Company's nonqualified stock option plan permits the Board of
Directors to grant options to purchase up to 200,000 shares of the
Company's $5 par value common stock. The options may be granted to
officers of the Company. The price at which options may be
exercised cannot be less than the fair market value of the shares
at the date the options are granted. The options are subject to
certain vesting requirements and maximum exercise periods, as
established by the Board of Directors.
Changes in options outstanding and exercisable during 1993, 1992
and 1991 were as follows:
<TABLE>
<CAPTION>
Exercisable Options Outstanding Options Option Price per Share
<S> <C> <C> <C>
December 31, 1990 100,100 191,500 $6.63-14.19
Vested--1991 39,100 _ 6.63-14.19
Exercised--1991 (13,400) (13,400) 6.63
December 31, 1991 125,800 178,100 6.63-14.19
Vested--1992 35,600 _ 6.63-14.19
Exercised--1992 (22,600) (22,600) 6.63
Forfeited--1992 _ (300) 6.63
December 31, 1992 138,800 155,200 6.63-14.19
Vested--1993 6,800 _ 9.63-14.19
Exercised--1993 (32,200) (32,200) 6.63
December 31, 1993
(5,600 shares
available for grant) 113,400 123,000 $6.63-14.19
</TABLE>
The Company's Employee Stock Purchase Plan allows employees to
purchase the Company's common stock at 85 percent of the current
market price. During 1993, 13,081 shares of common stock were
purchased by employees under this plan.
190
<PAGE>
(16) Lease Commitments
Rental expense included in the consolidated statements of
operations amounted to $1,373,000, $1,345,000 and $1,530,000 in
1993, 1992 and 1991, respectively. Future minimum rental
commitments for all noncancelable leases with terms of one year or
more total approximately $800,000 per year through 2002, with a
total commitment of $7,393,000.
(17) Commitments and Contingencies
In the normal course of business, the Company is party to
financial instruments necessary to meet the financing needs of
customers, which are not reflected on the consolidated statements
of condition. These financial instruments include commitments to
extend credit, standby letters of credit and interest rate swaps.
The Company's risk exposure in the event of nonperformance by the
other parties to these financial instruments is represented by the
contractual amount of these instruments. The Company uses the same
credit policies in making commitments as it does in making loans.
Commitments to extend credit are legally binding agreements to
lend to customers. Commitments generally have fixed expiration
dates and may require payment of a fee. Based upon management's
credit assessment of the customer, collateral may be obtained. The
type and amount of collateral varies, but may include real estate
under construction, property, equipment and other business assets.
In many cases, commitments expire without being drawn upon, so the
total amount of commitments does not necessarily represent future
liquidity requirements. At December 31, 1993 the Company had
outstanding commitments to extend credit of $116 million. Since
commitments are generally priced at market rates of interest at
the time of funding, the estimated fair value approximates the
outstanding commitment balance.
Standby letters of credit are conditional commitments issued by
the Company guaranteeing the financial performance of a customer
to a third party. The credit risk involved in issuing letters of
credit is essentially the same as that involved in extending
loans. At December 31, 1993 there were $8,842,000 of standby
letters of credit outstanding. The stated amount of standby
letters of credit approximates the estimated fair value. The
Company does not anticipate losses as a result of issuing
commitments to extend credit or standby letters of credit.
During 1993, the Company entered into an interest rate swap
agreement with a notional value of $1,600,000, involving the
exchange of a fixed and floating rate interest stream. The
estimated fair value of the swap approximated the book value at
the end of 1993.
Brenton Savings Bank, FSB converted from a mutual savings and loan
association to a federal stock savings bank in 1990, at which time
a $4 million liquidation account was established. Each eligible
savings account holder, who had maintained a deposit account since
the conversion, would be entitled to a distribution if the savings
bank were completely liquidated. This distribution to savers would
have priority over distribution to the Parent Company. The Company
does not anticipate such a liquidation.
Effective December 1991, the Company entered into a five-year data
processing facilities management agreement with Systematics, Inc.,
whereby Systematics, Inc. manages and operates the Company's data
processing facility. The contract involves fixed payments of
$2,568,000 in 1994, $2,546,000 in 1995 and $2,315,000 in 1996.
These fixed payments will be adjusted for inflation and volume
fluctuations.
The Company is involved with various claims and legal actions
arising in the ordinary course of business. In the opinion of
management, the ultimate disposition of these matters will not
have a material adverse effect on the Company's financial
statements.
191
<PAGE>
(18) Brenton Banks, Inc. (Parent Company) Condensed Financial
Information
Statements of Condition
<TABLE>
<CAPTION>
December 31 (In thousands) 1993 1992
<S> <C> <C>
Assets
Cash and deposits $ 316 376
Short-term investments 3,500 -
Advances to bank subsidiaries 450 50
Investments in:
Bank subsidiaries 116,595 105,065
Bank-related subsidiaries 264 1,164
Excess cost over net assets 2,048 2,121
Premises and equipment 528 524
Other assets 2,865 1,711
$126,566 111,011
Liabilities and Stockholders' Equity
Accrued expenses payable
and other liabilities $ 2,126 1,485
Long-term borrowings 12,022 12,096
Common stockholders' equity 112,418 97,430
$126,566 111,011
</TABLE>
Statements of Operations
<TABLE>
<CAPTION>
Years Ended December 31 (In thousands) 1993 1992 1991
<S> <C> <C> <C>
<CAPTION>
Income
Dividends from subsidiaries $ 8,150 7,643 6,147
Interest income 84 33 44
Management fees 1,580 1,507 1,797
Other operating income 1,881 1,769 1,958
11,695 10,952 9,946
Expense
Salaries and benefits 3,976 3,886 3,205
Interest on short-term borrowings _ 98 452
Interest on long-term borrowings 1,108 1,108 1,074
Other operating expense 1,998 2,298 1,494
7,082 7,390 6,225
Income before income taxes and equity
in undistributed earnings of subsidiaries 4,613 3,562 3,721
Income taxes (1,175) (1,259) (898)
Income before equity in undistributed
earnings of subsidiaries 5,788 4,821 4,619
Equity in undistributed earnings
of subsidiaries 8,462 8,132 7,040
Net income $14,250 12,953 11,659
</TABLE>
192
<PAGE>
(18) Brenton Banks, Inc. (Parent Company) Condensed Financial
Information (continued)
Statements of Cash Flows
<TABLE>
<CAPTION>
Years Ended December 31 (In thousands) 1993 1992 1991
<S> <C> <C> <C>
Operating Activities
Net income $ 14,250 12,953 11,659
Adjustments to reconcile net income
to net cash provided from operating activities:
Equity in undistributed earnings
of subsidiaries (8,462) (8,132) (7,040)
Depreciation and amortization 188 169 161
Increase in other assets (1,154) (345) (62)
Increase (decrease) in accrued expenses
payable and other liabilities 641 479 (307)
Net cash provided from operating activities 5,463 5,124 4,411
Investing Activities
Increase in short-term investments (3,500) _ _
Redemption (purchase) of subsidiary equity, net 886 (26) (328)
Principal collected or (advances to) subsidiaries (400) 150 400
Purchase of premises and equipment, net (119) (129) (136)
Net cash used by investing activities (3,133) (5) (64)
Financing Activities
Net decrease in short-term borrowings _ (3,950) (3,400)
Net proceeds (repayment) of long-term borrowings (74) 1,097 1,152
Proceeds from issuance of common stock
under the stock option plans 822 342 144
Dividends on common stock (3,138) (2,578) (2,331)
Net cash provided from (used by) financing activities (2,390) (5,089) (4,435)
Net increase (decrease) in cash and
interest-bearing deposits (60) 30 (88)
Cash and interest-bearing deposits at the
beginning of the year 376 346 434
Cash and interest-bearing deposits at the
end of the year $ 316 376 346
</TABLE>
193
<PAGE>
(19) Unaudited Quarterly Financial Information
The following is a summary of unaudited quarterly financial
information.
(In thousands, except per common and common equivalent share data)
<TABLE>
<CAPTION>
1993
Three months ended March 31 June 30 Sept. 30 Dec. 31
<S> <C> <C> <C> <C>
Interest income $24,597 24,830 24,688 24,541
Interest expense 11,287 11,067 11,064 11,009
Net interest income 13,310 13,763 13,624 13,532
Provision for loan losses 444 295 290 223
Net interest income after
provision for loan losses 12,866 13,468 13,334 13,309
Noninterest income 4,085 4,418 4,509 4,851
Noninterest expense 12,581 12,601 12,493 12,740
Income before income taxes and
minority interest 4,370 5,285 5,350 5,420
Income taxes 1,122 1,452 1,465 1,469
Minority interest 139 169 176 183
Net income $ 3,109 3,664 3,709 3,768
Per common and common
equivalent share:
Net income $ .59 .70 .70 .71
<CAPTION>
1992
Three months ended March 31 June 30 Sept. 30 Dec. 31
<S> <C> <C> <C> <C>
Interest income $27,534 26,881 26,530 25,615
Interest expense 15,102 14,232 13,245 12,194
Net interest income 12,432 12,649 13,285 13,421
Provision for loan losses 328 337 335 411
Net interest income after
provision for loan losses 12,104 12,312 12,950 13,010
Noninterest income 3,349 3,513 3,647 4,175
Noninterest expense 11,138 11,187 11,797 12,469
Income before income taxes
and minority interest 4,315 4,638 4,800 4,716
Income taxes 1,164 1,157 1,340 1,223
Minority interest 144 158 163 167
Net income $ 3,007 3,323 3,297 3,326
Per common and common
equivalent share:
Net income $ .58 .64 .64 .64
</TABLE>
194
<PAGE>
MANAGEMENT'S REPORT
The management of Brenton Banks, Inc. is responsible for the
content of the consolidated financial statements and other
information included in this annual report. Management believes
that the consolidated financial statements have been prepared in
conformity with generally accepted accounting principles
appropriate to reflect, in all material respects, the substance of
events and transactions that should be included. In preparing the
consolidated financial statements, management has made judgements
and estimates of the expected effects of events and transactions
that are accounted for or disclosed.
Management of the Company believes in the importance of
maintaining a strong internal accounting control system, which is
designed to provide reasonable assurance that assets are
safeguarded and transactions are appropriately authorized. The
Company maintains a staff of qualified internal auditors who
perform periodic reviews of the internal accounting control
system. Management believes that the internal accounting control
system provides reasonable assurance that errors or irregularities
that could be material to the consolidated financial statements
are prevented or detected and corrected on a timely basis.
The Board of Directors has established an Audit Committee to
assist in assuring the maintenance of a strong internal accounting
control system. The Audit Committee meets periodically with
management, the internal auditors and the independent auditors to
discuss the internal accounting control system and the related
internal and external audit efforts. The internal auditors and the
independent auditors have free access to the Audit Committee
without management present. There were no matters considered to be
reportable conditions under Statement of Auditing Standards No. 60
by the independent auditors.
The consolidated financial statements of Brenton Banks, Inc. and
subsidiaries are examined by independent auditors. Their role is
to render an opinion on the fairness of the consolidated financial
statements based upon audit procedures they consider necessary in
the circumstances.
Brenton Banks, Inc.
J. C. (Buz) Brenton
President (1990-1993)
Robert L. DeMeulenaere
President
Steven T. Schuler
Chief Financial Officer and
Vice President/Treasurer/Secretary
Thea H. Oberlander
Corporate Controller
195
<PAGE>
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Shareholders of Brenton Banks, Inc.:
We have audited the accompanying consolidated statements of
condition of Brenton Banks, Inc. and subsidiaries as of December
31, 1993 and 1992, and the related consolidated statements of
operations, changes in common stockholders' equity and cash flows
for each of the years in the three-year period ended December 31,
1993. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these consolidated financial statements
based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Brenton Banks, Inc. and subsidiaries at December 31,
1993 and 1992, and the results of their operations and their cash
flows for each of the years in the three-year period ended
December 31, 1993 in conformity with generally accepted accounting
principles.
As discussed in note 1 to the consolidated financial statements,
the Company changed its method of accounting for investment
securities to adopt the provisions of Statement of Financial
Accounting Standards No.115 on December 31, 1993. As discussed in
note 9 to the consolidated financial statements, the Company
changed its method of accounting for income taxes to adopt the
provisions of Statement of Financial Accounting Standards No. 109
on January 1, 1993.
KPMG Peat Marwick
Des Moines, Iowa
January 31, 1994
196
<PAGE>
STOCK INFORMATION
Brenton Banks, Inc. common stock is traded on the Nasdaq Small-Cap
Market and quotations are furnished by the Nasdaq System. In
February 1994, the Company began trading on the Nasdaq National
Market. There were 1,564 common stockholders of record on December
31, 1993.
MARKET AND DIVIDEND INFORMATION
<TABLE>
<CAPTION>
1993 High Low Dividends
<S> <C> <C> <C>
1st quarter $31 1/4 26 .145
2nd quarter 30 1/4 26 1/4 .145
3rd quarter 30 25 1/2 .15
4th quarter 29 1/4 26 1/4 .16
<CAPTION>
1992
<S> <C> <C> <C>
1st quarter $24 1/4 20 3/4 .125
2nd quarter 23 1/2 22 .13
3rd quarter 25 1/4 23 .135
4th quarter 27 25 .135
</TABLE>
The above table sets forth the high and low sales prices and cash
dividends per share for the Company's common stock.
The market quotations, reported by Nasdaq, represent prices
between dealers and do not include retail markup, markdown or
commissions.
Nasdaq Symbol: BRBK
Wall Street Journal and
Other Newspapers: BrentB
Market Makers
The Chicago Corporation
Herzog Heine Geduld, Inc.
Howe, Barnes & Johnson, Inc.
Keefe, Bruyette & Woods, Inc.
Stifel, Nicolaus & Co., Inc.
S.J. Wolfe & Co.
FORM 10-K
COPIES OF BRENTON BANKS, INC. ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION FORM 10-K WILL BE MAILED WHEN AVAILABLE WITHOUT CHARGE TO
SHAREHOLDERS UPON WRITTEN REQUEST TO STEVEN T. SCHULER, CHIEF FINANCIAL
OFFICER AND VICE PRESIDENT/TREASURER/SECRETARY, AT THE CORPORATE
HEADQUARTERS.
STOCKHOLDER INFORMATION
Corporate Headquarters
Suite 300, Capital Square
400 Locust Street
Des Moines, Iowa 50309
Telephone 515/237-5100
Annual Shareholders' Meeting
May 20, 1994, 5:00 p.m.
Des Moines Convention Center
501 Grand Avenue
Des Moines, Iowa 50309
Corporate Structure
Transfer Agent/Registrar/
Dividend Disbursing Agent
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, Illinois 60690
Legal Counsel
Brown, Winick, Graves, Donnelly,
Baskerville and Schoenebaum
Suite 1100, Two Ruan Center
601 Locust Street
Des Moines, Iowa 50309
Independent Auditors
KPMG Peat Marwick
2500 Ruan Center
666 Grand Avenue
Des Moines, Iowa 50309
Annual Report Design
Designgroup, Inc.
Photography: Bill Nellans
197
<PAGE>
CORPORATE STRUCTURE
DIRECTORS
C. Robert Brenton
Chairman of the Board
Brenton Banks, Inc.
William H. Brenton
Chairman of the Executive Committee
& Vice Chairman of the Board
Brenton Banks, Inc.
J.C. Brenton
President (1990-1993)
Brenton Banks, Inc.
Robert L. DeMeulenaere
President
Brenton Banks, Inc.
R. Dean Duben
Vice Chairman of the Board
Brenton First National Bank,
Davenport
Thomas R. Smith
Tom Smith and Associates,
Marshalltown
EXECUTIVE OFFICERS
C. Robert Brenton
Chairman of the Board
William H. Brenton
Chairman of the Executive Committee
& Vice Chairman of the Board
Robert L. DeMeulenaere
President
Phillip L. Risley
Executive Vice President
Roger D. Winterhof
Senior Vice President-Community
Bank Division
Norman D. Schuneman
Senior Vice President-Lending
Saulene M. Richer
Senior Vice President-Marketing/Technology
John R. Amatangelo
Senior Vice President-Operations
Steven T. Schuler
Chief Financial Officer &
Vice President/Treasurer/Secretary
Gary D. Ernst
Vice President-Trust
Steven F. Schneider
Vice President-Brokerage Services
OFFICERS
Charles N. Funk
Vice President-Investments
Charles G. Riepe
Vice President-Corporate and
International Banking
Mary F. Sweeney
Vice President-Human Resources
Thea H. Oberlander
Corporate Controller
David K. Horner
Vice President-Audit
Todd A. Stumberg
Vice President-Loan Review
V. Beth McGeough
Vice President-Marketing
Ruth O. Rasmussen
Office Manager/Assistant Treasurer
Jennifer H. Carney
Senior Auditor
Louise E. Mickelson
Compliance Officer
Leah I. Trent
Administrative Officer
BANK PRESIDENTS & CHIEF EXECUTIVE OFFICERS
Woodward G. Brenton
President and CEO
Brenton First National Bank,
Davenport
James H. Crane
President
Brenton Bank of Palo Alto County,
Emmetsburg
Michael A. Cruzen
President
Brenton Bank, N.A. Knoxville
William L. Homan
President and CEO
Brenton Savings Bank, FSB,
Ames
Michael D. Hunter
President
Brenton State Bank of Jefferson
Ronald D. Larson
President and CEO
Brenton Bank and Trust Company of
Cedar Rapids
James L. Lowrance
President
Brenton Bank and Trust Company,
Marshalltown
Marc J. Meyer
President
Brenton National Bank of Perry
Clay A. Miller
President
Brenton Bank and Trust Company,
Clarion
Larry A. Mindrup
President
Brenton National Bank-Poweshiek County,
Grinnell
Daryl K. Petty
President
Brenton Bank and Trust Company, Adel
Clark H. Raney
President
Warren County Brenton Bank and Trust,
Indianola
Phillip L. Risley
President and CEO
Brenton Bank, N.A., Des Moines
Bruce L. Seymour
President
Brenton State Bank, Dallas Center
198
<PAGE>
BRENTON BANKS AND ASSETS
COMMUNITY BANKS
1. Brenton Bank and Trust Company
Main Bank: Adel
Other Communities: Dexter, Redfield
and Van Meter
Assets: $85,722
2. Brenton Bank and Trust Company
Main Bank: Clarion
Other Communities: Eagle Grove
and Rowan
Assets: $55,764
3. Brenton State Bank
Main Bank: Dallas Center
Other Communities: Granger,
Waukee and Woodward
Assets: $69,957
4. Brenton Bank of Palo Alto County
Main Bank: Emmetsburg
Other Communities: Ayrshire
and Mallard
Assets: $57,494
5. Brenton National Bank-
Poweshiek County
Main Bank: Grinnell
Assets: $115,976
6. Warren County Brenton Bank
and Trust
Main Bank: Indianola
Assets: $45,082
7. Brenton State Bank of Jefferson
Main Bank: Jefferson
Assets: $57,282
8. Brenton Bank, N.A. Knoxville
Main Bank: Knoxville
Assets: $63,304
9. Brenton Bank and Trust Company
Main Bank: Marshalltown
Other Locations: Meadowlane
Other Communities: Albion
Assets: $98,315
10. Brenton National Bank of Perry
Main Bank: Perry
Assets: $82,823
METRO BANKS
11. Brenton Savings Bank, fsb
Main Bank: Ames, Main Street
Other Metro Location: North Grand
Other Community: Story City
Assets: $100,112
12. Brenton Bank and Trust Company
of Cedar Rapids
Main Bank: Cedar Rapids, First Ave.
Other Metro Locations: Southwest, Northeast and Marion
Assets: $170,570
13. Brenton First National Bank
Main Bank: Davenport, Brady Street
Other Metro Locations: 53rd and Utica Ridge, Village Shopping
Center and West
Assets: $150,838
14. Brenton Bank, N.A.
Main Bank: Des Moines, Capital Square
Other Metro Locations: Country Club, Ingersoll, Johnston,
Northwest, South,
Urbandale, Wakonda and West
Assets: $328,047
(assets in thousands)
Map of the United States in the upper left corner, showing the
outline of Iowa. Main map in the center is a map of Iowa, with
counties where the Company has banking locations enlarged and drawn
above the map. The enlarged counties include dots designating Brenton
bank locations. See listing of bank locations and assets on the
same page.
Iowa
Community Banks
Metro Banks
Offices
199
<PAGE>
BRENTON BANKS, INC.
Suite 300, Capital Square
400 Locust Street
Des Moines, Iowa 50309
Telephone 515/237-5100
200
Appendix to Annual Report
Referencing Graphic and Image Material
All graphic and image material has been described in the text of
the annual report. Set forth below is a listing of such mateial
with a reference to the description of such material in the text of
the Annual Report and 10-K.
1. Cover - first unnumbered page of annual report, page 159 of the
10-K.
2. Bar graphs of net Income, Return on Average Equity, Net interest
Margin and Return on Average assets (all in thousands) - page 1 of
Annual Report, page 161 of 10-K.
3. 2 Photos on page three of Annual Report, page 163 of 10-K.
4. Photograph on page 4 of Annual Report, page 164 of 10-K.
5. Photograph on page 6 of Annual Report, page 166 of 10-K.
6. Photograph on page 9 of Annual Report, page 169 of 10-K.
7. Bar graphs of Annual Dividends per Commn Share, Primary
Capital Ratio and Tier 1 Leverage Capital Ratio on page 10 of
Annual Report, page 170 of 10-K.
8. Photograph on page 12 of Annual Report, page 127 of 10-K.
9. Bar graphs of Provision for Loan Loses, Net Charge-offs and
Nonperforming loans (all in thousands) on page 13 of Annual Report,
page 173 of 10-K.
10. Bar graphs of total assets (in millions) and Net Noninterest
Margin on page 14 of Annual Report and page 174 of 10-K.
11. Pie chart of Loan Composition on page 15 of Annual Report,
page 175 of 10-K.
12. Map on page 39 of Annual Report, page 199 of 10-K.
[MODULE-CONTENT]
[/TEXT]
[/DOCUMENT]
</DOCUMENT
<PAGE>
Exhibit 22
Subsidiaries.
201
<PAGE>
Subsidiaries
The subsidiaries of Brenton Banks, Inc., their location, the
jurisdiction in which they are incorporated or organized, and the names under
which subsidiaries do business are:
Name Under which Subsidiary Jurisdiction in
Does Business and Location which Incorporated or
of Subsidiary Organized
Banks
Brenton Bank and Trust Company Iowa
Adel, Iowa
Brenton Savings Bank, FSB United States
Ames, Iowa
Brenton Bank and Trust Company of
Cedar Rapids Iowa
Cedar Rapids, Iowa
Brenton Bank and Trust Company Iowa
Clarion, Iowa
Brenton State Bank Iowa
Dallas Center, Iowa
Brenton First National Bank United States
Davenport, Iowa
Brenton Bank, N.A. United States
Des Moines, Iowa
Brenton Bank of Palo Alto County Iowa
Emmetsburg, Iowa
Brenton National Bank - Poweshiek County United States
Grinnell, Iowa
Warren County Brenton Bank and Trust Iowa
Indianola, Iowa
Brenton State Bank of Jefferson Iowa
Jefferson, Iowa
Brenton Bank, N.A. Knoxville United States
Knoxville, Iowa
202
<PAGE>
Brenton Bank and Trust Company Iowa
Marshalltown, Iowa
Brenton National Bank of Perry United States
Perry, Iowa
Non-Bank Subsidiaries
Brenton Bank Services Corporation Iowa
Des Moines, Iowa
Brenton Brokerage Services, Inc. Iowa
Des Moines, Iowa
Brenton Insurance Services, Inc. Iowa
Des Moines, Iowa
Brenton Mortgages, Inc. Iowa
Des Moines, Iowa
Brenton Independent Insurance
Services Corp. Iowa
Marshalltown, Iowa
Brenton Realty Services, Ltd. Iowa
Marshalltown, Iowa
203
<PAGE>
Exhibit 24
Consent of KPMG Peat Marwick to the incorporation of their report
dated January 31, 1994, relating to certain consolidated statements
of condition of Brenton Banks, Inc. into the Registration Statement
on Form S-8 of Brenton Banks, Inc.
204
<PAGE>
AUDITORS' CONSENT
The Board of Directors
Brenton Banks, Inc.:
We consent to incorporation by reference in the Registration Statement on
Form S-8 of Brenton Banks, Inc. of our report dated January 31, 1994,
relating to the consolidated statements of condition of Brenton Banks, Inc.
and subsidiaries as of December 31, 1993 and 1992 and the related
consolidated statements of operations, changes in common stockholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 1993 which report appears in the December 31, 1993 annual report
on Form 10-K of Brenton Banks, Inc.
____________________________________
KPMG Peat Marwick
Des Moines, Iowa
March 25, 1994
205
