FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 12 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period form ___________________ to _____________________
Commission file number 0-6216
BRENTON BANKS, INC.
(Exact name of registrant as specified in its charter)
Incorporated in Iowa No. 42-0658989
State of other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
Suite 300, Capital Square, 400 Locust, Des Moines, Iowa 50309
(Address of principal executive offices) (Zip Code)
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
(Title of class)
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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 13, 1995, was $87,489,000.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the most recent practicable date, March 13, 1995.
7,916,346 shares Common Stock, $5 par value
DOCUMENTS INCORPORATED BY REFERENCE
The Annual Report to Shareholders for the 1994 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, 1994, is incorporated by reference into Part III hereof to the
extent indicated in such Part.
1 of 246 Total Pages
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TABLE OF CONTENTS
PART I
Page
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(A) General Description . . . . . . . . . . . . . . . . . . . . 5
(B) Recent Developments . . . . . . . . . . . . . . . . . . . . 5
(C) Affiliated Banks . . . . . . . . . . . . . . . . . . . . . 7
(D) Bank-Related Subsidiaries and Affiliates . . . . . . . . . 8
(E) Executive Officers of the Registrant . . . . . . . . . . . 8
(F) Employees . . . . . . . . . . . . . . . . . . . . . . . . . 9
(G) Supervision and Regulation . . . . . . . . . . . . . . . . 10
(H) Governmental Monetary Policy and Economic
Conditions . . . . . . . . . . . . . . . . . . . . . . . . 12
(I) Competition . . . . . . . . . . . . . . . . . . . . . . . . 12
(J) Statistical Disclosure . . . . . . . . . . . . . . . . . . 13
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 27
Item 4. Submission of Matters to a Vote of Security
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters . . . . . . . . . . . . . . . . . . 27
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . 27
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . 27
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . 28
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . . . . . . . . 28
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PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . . 28
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . 28
Item 12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . . . . . . . 28
Item 13. Certain Relationships and Related Transactions . . . . . . . . 28
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . 28
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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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,
1994, the Parent Company had direct control of its 13 affiliated commercial
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, 1994, the affiliated
banks were operating 44 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 audits; preparation of tax
returns; and assistance with respect to accounting and operating systems and
procedures, personnel, marketing, trust, investment brokerage services, cash
management services and banking facilities and equipment. Charges for the
services are based on the nature and extent of the services provided.
(B) Recent Developments.
New Directors. In July 1994, Thomas R. Smith retired from the
Board and Hubert G. Ferguson was elected to fill the position. Prior to his
retirement from active employment, Mr. Ferguson was the National Sales
Manager for Dain Bosworth, headquartered in Minneapolis, Minnesota. In
February 1995, the Board of Directors increased the number of directors from
six to seven and named Gary M. Christensen to fill the position. Mr.
Christensen is the President and Chief Operating Officer of Pella Corporation
in Pella, Iowa.
Stock Split. In May 1994, the Company declared a 3-for-2 stock
split in the form of a stock dividend. This transaction resulted in the
issuance of 2,633,895 shares of common stock and the transfer of $13,169,475
from retained earnings to common stock.
Common Stock Repurchase Plan. In March 1994, the Board of
Directors authorized a plan to repurchase $2,000,000 of the Company's common
stock. As of December 31, 1994, the Company had repurchased 44,800 shares,
at a total cost of $850,950.
Regulatory Developments. During 1994, the "Riegle-Neal Interstate
Banking and Branching Efficiency Act of 1994" (the "Interstate Banking Act")
was enacted. This law amends certain provisions of the federal banking laws
(including the Bank Holding Company Act) to permit the acquisition of banks
by banks or bank holding companies domiciled outside of the home state of the
acquired bank. The law will become effective on June 1, 1997. The Interstate
Banking Act seeks to provide a uniform interstate banking
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law for all 50 states. Provisions of the law allow individual states to
"opt-out" of the provisions of the Interstate Banking Act by expressly
prohibiting merger transactions with out-of-state banks. Also, states are
permitted to impose certain conditions upon interstate mergers. States
electing to opt-out of the Interstate Banking Act must pass such a law prior
to June 1, 1997. In addition, the Interstate Banking Act also permits
certain affiliated financial institutions to act as agents for each other,
establishes limits upon the maximum deposits that may be held by any one
institution in the nation and in any one state and seeks to equalize the
competitive opportunities between the United States and the foreign banks.
Whether Iowa or other states surrounding Iowa will "opt-out" of the
provisions of the Interstate Banking Act prior to June 1, 1997 is unknown.
The full extent of the provisions of the Interstate Banking Act and its
effect upon the Company is unknown at this time.
During the first quarter of 1995, the FDIC proposed a reduction in
the Bank Insurance Fund (BIF) assessments. Under the proposed rate structure
BIF rates would be reduced from current rates of $.23 to $.31 per $100 of
deposits, to $.04 to $.31 per $100 of deposits based upon a risk based
assessment schedule. Such a reduction in insurance premium rates, if
enacted, could result in a 82% decrease in the Company's expense related to
BIF insured deposits. The proposed regulation would not affect the insurance
premiums on deposits insured by the Savings Association Insurance Fund
(SAIF). See Item 1, Section (G), Supervision and Regulation.
Recently, Congress announced the introduction of legislation which
could substantially change the regulatory framework in which banks and other
financial institutions operate. At the present time, it is impossible for
the Company to predict whether such legislation will be enacted and the
nature of the effects on the Company, if enacted.
Growth and Acquisitions. As part of management's strategic growth
plans, Brenton Banks, Inc. investigates growth and expansion opportunities
which strengthen the Company's presence in current or selected new market
areas. During 1995, the Company plans to continue expansion of its
traditional and non-traditional services. There are plans to open a
supermarket branch in Iowa City in 1995, as well as a telebanking center to
be headquartered in Des Moines. In addition, a new savings bank branch
facility in Ankeny will be completed in early 1995.
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 Item 1, Section (G), 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 received
approval to open a banking office in Iowa City, Iowa. Both Ankeny and Iowa
City are rapidly expanding markets not previously served by Brenton.
Restructuring of Organization. In December 1994, the Board of
Directors authorized a restructuring plan, which included merging the
Company's five national banks and eight state banks into a single, state
chartered banking organization under the laws of the state of Iowa. In
addition, the Board approved plans to consolidate banking facilities and
reduce the Company's work force by approximately 10 percent in 1995. A
restructuring charge was recorded in 1994 to cover the costs of implementing
this plan.
Strategic Planning Coordinating Team. In order to facilitate the
Company's strategic planning process, which included the restructuring plan,
a Strategic Planning Coordinating Team was named to direct these efforts.
That team is comprised of Robert L. DeMeulenaere, President, Brenton Banks,
Inc.; Woodward G. Brenton, President & CEO, Brenton First National Bank,
Davenport; Charles N. Funk, Vice President- Investments, Brenton Banks, Inc.;
Ronald D. Larson, President & CEO, Brenton Bank and Trust Company of Cedar
Rapids; Larry A. Mindrup, President & CEO, Brenton Savings Bank, FSB, Ames;
Phillip L. Risley, President & CEO, Brenton Bank, N.A., Des Moines; Steven T.
Schuler, Chief Financial Officer/Treasurer/
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Secretary, Brenton Banks, Inc.; Norman D. Schuneman, Senior Vice President-
Lending, Brenton Banks, Inc.; and Roger D. Winterhof, President & CEO,
Brenton National Bank-Poweshiek County, Grinnell.
Other. The information appearing on pages 2 through 8 of the
Company's Annual Report to Stockholders for the year ended December 31, 1994
(the "Annual Report") filed as Exhibit 13, is incorporated by reference.
(C) Affiliated Banks.
The 14 affiliated banks had 44 banking locations at December 31,
1994, 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 406,000. 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 cus-
tomers 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.
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 357,000. The bank has four offices in the
Davenport metropolitan area.
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 173,000. The bank has four 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.
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Brenton Savings Bank, FSB is located in Ames, Iowa and has offices
in Ames, Story City and Ankeny. The savings bank serves customers in Story
and Polk Counties.
At December 31, 1994, 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 corporate subsidiaries 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.
During 1994, 13 of the Company's subsidiary banks (excluding the
savings bank) established subsidiaries for the purpose of holding the
respective bank's investment portfolio. These wholly-owned subsidiaries hold
and manage the banks investment portfolios in Nevada and are not subject to
state taxation, as Nevada imposes no corporate income taxes.
(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, flotation or underwriting of securities.
At December 31, 1994, this subsidiary had 27 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 banking 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.
(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 13, 1995, 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 64 Chairman of the Board 1990 President of the Parent Company - prior to
Des Moines, Iowa May 1990
William H. Brenton 70 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
</TABLE>
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<TABLE>
<CAPTION>
Parent Company Position
Name and Address Age Position Commenced Other Positions
________________ ___ ________ _________ _______________
<S> <C> <C> <C> <C>
Robert L. DeMeulenaere 55 President 1994 President/Treasurer, Brenton Mortgages, Inc.
Des Moines, Iowa - August 1989 to July, 1994; 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 52 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 49 Senior Vice President 1984 Senior Vice President, Community Bank
Des Moines, Iowa Division - February 1986 to April 1994
Norman D. Schuneman 52 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
John R. Amatangelo 45 Senior Vice President - 1991 President, Brenton Bank Services Corporation
Des Moines, Iowa Operations/Technology - May 1992 to present
Steven T. Schuler 43 Chief Financial Officer/ 1990 Executive Vice President, Brenton Bank
Des Moines, Iowa Treasurer/Secretary 1986 Services Corporation - May 1992 to present
Gary D. Ernst 51 Vice President - Trust 1990
Charles N. Funk 40 Vice President - 1991
Investments
Steven F. Schneider 41 Vice President - 1990 President, Brenton Brokerage Services, Inc. -
Des Moines, Iowa Brokerage Services April 1993 to present
<FN>
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; Gary D. Ernst, who was Senior Vice President/Senior Trust Officer of First National
Bank, Iowa City, Iowa, from November 1989 to June 1990; and Charles N. Funk, who was Senior Vice President, Bank and Trust
Investments of Union National Bank, Wichita, Kansas, from December 1984 to December 1991.
</TABLE>
(F) Employees.
On December 31, 1994, the Parent Company had 57 full-time employees
and 5 part-time employees. On December 31, 1994, the Company had 686 full-
time employees and 213 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.
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(G) Supervision and Regulation.
The Company 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. Furthermore, certain regulatory and legislative changes
are discussed in Item 1, Section (B), Recent Developments.
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. However, 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 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 ("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 of 1991 ("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,
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 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
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operations. On December 31, 1994, 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 those changes
occurring prior to 1994 follow. See Item 1, Section (B), Recent
Developments, for those changes during 1994.
The FDIC Improvement Act of 1991 was primarily designed to
recapitalize the FDIC's Bank Insurance Fund ("BIF") and Savings Association
Insurance Fund ("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 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. FDICIA also imposed additional
regulatory standards upon depository institutions and granted additional
authority to the FDIC. FDICIA generally requires that all institutions be
examined by the FDIC annually. Under the provisions of 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, 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.
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 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 change the base BIF and SAIF rates under
certain circumstances that are set forth in the law. The FDIC has recently
proposed to decrease the BIF insurance premiums assessed in 1995. See Item
1, Section (B), Recent Developments.
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. See Item 1, Section (B), Recent Developments, for information on
the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994.
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 1994. 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, 1995.
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
11
<PAGE>
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. The Company will also rely on this law when
it merges its commercial banks in 1995. Generally, thrifts can operate
offices in any county in Iowa and may, under certain circumstances, acquire
or branch into 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 44
banking locations in various parts of Iowa. The total deposits of this
company's affiliated banks located in Iowa are approximately 270 percent
greater than the total deposits of the Company. Another multi-bank holding
company, domiciled in Wisconsin, has 43 locations in Iowa, and another multi-
bank holding company domiciled in Missouri, has 33 locations in Iowa.
Brenton Banks, Inc. is the second largest multi-bank holding
company domiciled in Iowa. The largest Iowa-based bank holding company has
64 banking locations in the state and deposits approximately 25 percent
greater than the deposits of the Company.
The third largest Iowa-based multi-bank holding company has 32
locations in Iowa and deposits approximately 29 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.
12
<PAGE>
Item 1(J) 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, 1994:
<TABLE>
<CAPTION>
1994 1993 1992
______________________________ ______________________________ ______________________________
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) $ 936,370 $ 76,271 8.14% $ 802,088 $ 70,310 8.77% $ 736,646 $ 71,077 9.65%
Investment securities held to
maturity:
Taxable investments:
United States Treasury
securities -- -- -- 24,598 1,290 5.24 81,606 5,282 6.47
Securities of United States
government agencies 2,001 98 4.92 58,522 3,410 5.83 102,196 7,128 6.98
Mortgage-backed and related
securities 29,834 1,679 5.63 204,130 10,857 5.32 170,480 11,931 7.00
Other investments 3,959 85 2.15 12,743 1,071 8.41 30,019 2,098 6.99
Tax-exempt investments:
Obligations of states and
political subdivisions(2) 44,584 3,433 7.70 164,520 11,471 6.97 139,296 10,665 7.66
Investment securities available
for sale:
United States Treasury
securities 55,580 2,519 4.53 44,605 2,315 5.19 6,512 459 7.05
Securities of United States
government agencies 58,603 3,016 5.15 8,439 486 5.76 -- -- --
<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 34 percent federal income tax rate for 1994 and
1992 and 35 percent rate for 1993, 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(J) Business - Statistical Disclosure, Continued
I. Distribution of Assets, Liabilities, and Stockholders' Equity;
Interest Rates and Interest Differential, Continued
<TABLE>
<CAPTION>
1994 1993 1992
______________________________ ______________________________ ______________________________
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>
Mortgage-backed and related
securities 124,591 6,864 5.51 -- -- -- -- -- --
Other investments 7,255 641 8.87 130 8 6.00 -- -- --
Tax-exempt investments:
Obligations of states and
political subdivisions 132,040 8,412 6.37 -- -- -- -- -- --
Loans held for sale 2,575 193 7.50 6,165 520 8.43 2,553 238 9.33
Federal funds sold and
securities purchased under
agreements to resell 37,666 1,706 4.53 23,725 486 2.05 27,082 654 2.41
Interest-bearing deposits
with banks 124 8 6.65 762 22 2.88 6,240 307 4.92
_________ _______ ____ _________ _______ ____ _________ _______ ____
Total interest-earning assets(1) 1,435,182 $104,925 7.31% 1,350,427 $102,246 7.57% 1,302,630 $109,839 8.43%
Allowance for loan losses (10,502) (9,615) (8,894)
Cash and due from banks 46,301 46,025 41,715
Bank premises and equipment 24,545 23,045 21,400
Other assets 25,663 26,543 30,422
_________ _________ _________
Total assets $1,521,189 $1,436,425 $1,387,273
<FN>
(1) Interest income and yields are stated on a tax equivalent basis using a 34 percent federal income tax rate for 1994 and
1992 and 35 percent rate for 1993, 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>
14
<PAGE>
Item 1(J) Business - Statistical Disclosure, Continued
I. Distribution of Assets, Liabilities, and Stockholders' Equity;
Interest Rates and Interest Differential, Continued
<TABLE>
<CAPTION>
1994 1993 1992
______________________________ ______________________________ ______________________________
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 $ 250,520 $ 5,418 2.16% $ 217,754 $ 4,552 2.09% $ 209,642 $ 5,277 2.52%
Savings 294,715 6,878 2.33 299,640 7,697 2.57 260,568 9,385 3.60
Time 625,981 29,313 4.68 622,789 29,940 4.81 646,261 37,781 5.85
Federal funds purchased and
securities sold under
agreements to repurchase 61,656 2,082 3.38 42,715 1,027 2.41 33,240 924 2.78
Other short-term borrowings 4,860 264 5.42 33 1 3.62 2,170 121 5.57
Long-term borrowings 26,500 1,817 6.86 14,077 1,210 8.60 14,067 1,285 9.14
_________ ______ ____ _________ ______ ____ _________ ______ ____
Total interest-bearing
liabilities 1,264,232 $45,772 3.62% 1,197,008 $44,427 3.71% 1,165,948 $54,773 4.70%
Noninterest-bearing deposits 127,464 119,322 112,054
Accrued expenses and other
liabilities 13,254 12,805 13,735
_________ _________ _________
Total liabilities 1,404,950 1,329,135 1,291,737
Minority interest 4,290 4,150 3,845
Common stockholders' equity 111,949 103,140 91,691
_________ _________ _________
Total liabilities and
stockholders' equity $1,521,189 $1,436,425 $1,387,273
Net interest spread (1) 3.69% 3.86% 3.73%
Net interest income/margin (1) $59,153 4.12% $57,819 4.28% $55,066 4.23%
<FN>
(1) Interest income and yields are stated on a tax equivalent basis using a 34 percent federal income tax rate for 1994 and 1992,
and a 35 percent rate for 1993, 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>
15
<PAGE>
Item 1(J) 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, 1994:
<TABLE>
<CAPTION>
1994 vs. 1993 1993 vs. 1992
__________________________ __________________________
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) $ 5,961 11,185 (5,224) $ (767) 6,030 (6,797)
Investment securities held
to maturity:
Taxable investments:
United States Treasury securities (1,290) (1,290) -- (3,992) (3,139) (853)
Securities of United States government
agencies (3,312) (2,843) (469) (3,718) (2,684) (1,034)
Mortgage-backed and related
securities (9,178) (9,775) 597 (1,074) 2,100 (3,174)
Other investments (986) (474) (512) (1,027) (1,388) 361
Tax-exempt investments:
Obligations of states and political
subdivisions (2) (8,038) (9,126) 1,088 806 1,816 (1,010)
Investment securities available
for sale:
Taxable Investments:
United States Treasury securities 204 522 (318) 1,856 1,969 (113)
Securities of United States government
agencies 2,530 2,587 (57) 486 516 (30)
Mortgage-backed and related securities 6,864 6,864 -- -- -- --
Other investments 633 628 5 8 8 --
Tax-exempt Investments:
Obligations of states and political
subdivisions (2) 8,412 8,412 -- -- -- --
Loans held for sale (327) (275) (52) 282 307 (25)
Federal funds sold and securities purchased
under agreements to resell 1,220 399 821 (168) (76) (92)
Interest-bearing deposits with banks (14) (28) 14 (285) (194) (91)
______ _____ ______ ______ _____ ______
2,679 6,786 (4,107) (7,593) 5,265 (12,858)
_____ _____ ______ _______ _____ ______
Interest expense:
Interest-bearing deposits:
Demand 866 704 162 (725) 198 (923)
Savings (820) (125) (695) (1,688) 1,269 (2,957)
Time (626) 153 (779) (7,841) (1,331) (6,510)
Federal funds purchased and securities sold
under agreements to repurchase 1,055 552 503 103 239 (136)
Other short-term borrowings 4 6 (2) (120) (82) (38)
Long-term borrowings 866 1,082 (216) (75) 1 (76)
______ _____ ______ ______ _____ ______
1,345 2,372 (1,027) (10,346) 294 (10,640)
______ _____ ______ ______ _____ ______
Net interest income (expense) $ 1,334 4,414 (3,080) $ 2,753 4,971 (2,218)
______ _____ ______ ______ _____ ______
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 34 percent federal income tax rate for 1994 and 1992 and a 35 percent rate
for 1993, and adjusted to reflect the effect of the nondeductible interest expense of owning tax-exempt investments.
</TABLE>
16
<PAGE>
Item 1(J) 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, 1994. As the schedule shows, the Company is
liability sensitive within the one-year time frame. 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, management believes a large portion of these accounts
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) $ 200,835 34,917 49,213 284,965 499,466 181,999 966,430
Investment securities:
Available for sale:
Taxable investments 79,198 25,163 37,598 141,959 88,718 934 231,611
Tax-exempt investments 8,255 15,101 10,884 34,240 55,540 27,818 117,598
Held to maturity:
Taxable investments 21,396 2,915 6,266 30,577 14,560 2,676 47,813
Tax-exempt investments 1,707 5,585 12,759 20,051 18,351 8,269 46,671
Loans held for sale 2,104 -- -- 2,104 -- -- 2,104
Federal funds sold and securities purchased under
agreements to resell 59,396 -- -- 59,396 -- -- 59,396
Interest-bearing deposits with banks 64 -- -- 64 -- -- 64
_______ _______ _______ _______ _______ _______ _________
Total interest-earning assets $ 372,955 83,681 116,720 573,356 676,635 221,696 1,471,687
_______ _______ _______ _______ _______ _______ _________
Interest-bearing liabilities:
Interest-bearing deposits:
Demand and savings deposits (2) $ 570,415 -- -- 570,415 -- -- 570,415
Time deposits 107,218 89,080 121,587 317,885 314,017 1,418 633,320
Federal funds purchased and securities sold under
agreements to repurchase 70,704 -- -- 70,704 -- -- 70,704
Other short-term borrowings 5,000 -- 7,000 12,000 -- -- 12,000
Long-term borrowings 0 -- 105 105 22,824 6,010 28,939
_______ _______ _______ _______ _______ _______ _________
Total interest-bearing liabilities $ 753,337 89,080 128,692 971,109 336,841 7,428 1,315,378
_______ _______ _______ _______ _______ _______ _________
Interest sensitivity GAP $(380,382) (5,399) (11,972) (397,753) 339,794 214,268 156,309
_______ _______ _______ _______ _______ _______ _________
Interest sensitivity GAP ratio .50:1 .94:1 .91:1 .59:1 2.01:1 29.85:1 1.12:1
_______ _______ _______ _______ _______ _______ _________
Cumulative interest sensitivity GAP $(380,382) (385,781) (397,753) (397,753) (57,959) 156,309 156,309
_______ _______ _______ _______ _______ _______ _________
Cumulative interest sensitivity GAP ratio .50:1 .54:1 .59:1 .59:1 .96:1 1.12:1 1.12:1
_______ _______ _______ _______ _______ _______ _________
<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>
17
<PAGE>
Item 1(J) 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,
______________________________
1994 1993 1992
____ ____ ____
(In thousands)
<s) <C> <C> <C>
Investment securities available for sale:
Taxable investments:
United States Treasury securities $ 50,641 63,777 28,878
Securities of United States government agencies 66,037 59,181 --
Mortgage-backed and related securities 104,121 138,744 1,166
Other investments 10,812 5,925 --
Tax-exempt investments:
Obligations of states and political subdivisions 117,598 144,583 --
_______ _______ _______
349,209 412,210 30,044
_______ _______ _______
Investment securities held to maturity:
Taxable investments:
United States Treasury securities -- -- 55,586
Securities of United States government agencies 9,444 -- 67,324
Mortgage-backed and related securities 35,282 24,882 225,659
Other investments 3,087 5,563 11,769
Tax-exempt investments:
Obligations of states and political subdivisions 46,671 35,939 150,639
_______ _______ _______
94,484 66,384 510,977
_______ _______ _______
Total investment securities $443,693 478,594 541,021
_______ _______ _______
</TABLE>
18
<PAGE>
Item 1(J) Business - Statistical Disclosure, Continued
II. Investment Portfolio
The following table shows the maturity distribution and weighted
average yields of investment securities at December 31, 1994:
<TABLE>
(caption>
Investments by Maturity and Yields at December 31, 1994
____________________________________________________________________________
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 $ 44,298 4.11% $ 5,337 4.86% $ 1,006 4.29% $ -- --%
Securities of United States
government agencies 28,537 5.41 28,132 5.38 9,368 5.14 -- --
Mortgage-backed and
related securities 24,225 5.97 74,646 5.69 5,112 7.07 138 7.50
Other investments 3,071 4.54 3,228 5.80 -- -- 4,513 7.67
Tax-exempt investments:
Obligations of states and
political subdivisions 33,125 5.89 41,811 6.89 15,954 9.70 26,708 8.70
_______ ____ _______ ____ ______ ____ ______ ____
133,256 5.18 153,154 5.93 31,440 7.74 31,359 8.55
_______ ____ _______ ____ ______ ____ ______ ____
Investment securities held to maturity:
Taxable investments:
Securities of United States
government agencies 1,795 5.82 7,649 5.53 -- -- -- --
Mortgage-backed and
related securities 8,551 6.42 19,504 6.64 3,367 5.68 3,860 5.60
Other investments 1,350 6.10 977 4.84 120 6.27 640 7.11
Tax-exempt investments:
Obligations of states and
olitical subdivisions 17,638 6.21 18,296 6.64 4,565 7.83 6,172 8.70
_______ ____ _______ ____ ______ ____ ______ ____
29,334 6.24 46,426 6.42 8,052 6.91 10,672 7.48
_______ ____ _______ ____ ______ ____ ______ ____
Total investment securities $162,590 5.55% $199,580 6.12% $39,492 7.60% $42,031 8.28%
_______ ____ _______ ____ ______ ____ ______ ____
</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 34 percent federal income tax rate for 1994 and 1992 and a
35 percent rate for 1993, and are adjusted to reflect the effect of the
nondeductible interest expense of owning tax-exempt investments.
As of December 31, 1994, 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.
19
<PAGE>
Item 1(J) 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
____________________________________________________
1994 1993 1992 1991 1990
____ ____ ____ ____ ____
(In thousands)
<S> <C> <C> <C> <C>
1. Real estate loans:
a. Commercial construction and land development $ 26,549 24,189 25,180 16,155 16,319
b. Secured by 1-4 family residential property 389,713 349,810 324,124 321,721 315,934
c. Other 143,960 129,574 101,418 96,805 88,572
2. Loans to financial institutions (primarily bankers'
acceptances) -- -- 393 4,785 9,969
3. Loans to farmers 71,853 66,574 62,471 60,898 55,856
4. Commercial and industrial loans 115,280 90,521 75,062 93,180 67,575
5. Loans to individuals for personal expenditures,
net of unearned income 221,627 214,401 163,876 151,529 151,261
6. All other loans 1,232 812 930 6,837 1,832
_______ _______ _______ _______ _______
$970,214 875,881 753,454 751,910 707,318
_______ _______ _______ _______ _______
</TABLE>
20
<PAGE>
Item 1(J) Business - Statistical Disclosure, Continued
III. Loan Portfolio, Continued
The following table shows the maturity distribution of loans as of
December 31, 1994 (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, 1994
________________________________________
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 $ 21,359 3,717 1,473 26,549
b. Other 38,187 60,202 45,571 143,960
2. Loans to financial institutions -- -- -- --
3. Loans to farmers 44,730 23,918 3,205 71,853
4. Commercial and industrial loans 71,290 36,575 7,415 115,280
5. All other loans 1,196 27 9 1,232
_______ _______ ______ _______
$176,762 124,439 57,673 358,874
_______ _______ ______ _______
</TABLE>
The above loans due after one year which have predetermined and
floating interest rates follow:
Predetermined interest rates $122,965
______
Floating interest rates $ 59,147
______
21
<PAGE>
Item 1(J) 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>
1994 1993 1992 1991 1990
____ ____ ____ ____ ____
(In thousands)
<S> <C> <C> <C> <C> <C>
Nonaccrual $3,784 1,605 1,884 2,931 2,391
Restructured 298 323 448 1,019 1,063
Past due 90 days or more 940 2,085 2,261 1,672 2,006
_____ _____ _____ _____ _____
Nonperforming loans $5,022 4,013 4,593 5,622 5,460
_____ _____ _____ _____ _____
</TABLE>
Interest income recorded during 1994 on nonaccrual and restructured
loans amounted to $321,000. The amount of interest income which would have
been recorded during 1994 if nonaccrual and restructured loans had been
current, in accordance with the original terms, was $537,000.
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, 1994, these loans amounted to approximately $2 million.
As of December 31, 1994, 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 $541,000 and $948,000 at December 31, 1994 and 1993,
respectively.
22
<PAGE>
Item 1(J) 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
_______________________________________________
1994 1993 1992 1991 1990
____ ____ ____ ____ ____
(In thousands)
<S> <C> <C> <C> <C> <C>
Total loans at the end of the year $970,214 875,881 753,454 751,910 707,318
Average loans outstanding 936,370 802,088 736,646 727,870 659,283
_______ _______ _______ _______ _______
Allowance for loan losses -
beginning of the year $ 9,818 9,006 8,548 8,871 8,431
_______ _______ _______ _______ _______
Amount of charge-offs during year:
Real estate loans 83 109 276 110 203
Loans to financial institutions -- -- -- -- --
Loans to farmers 31 68 45 48 90
Commercial and industrial loans 337 54 252 769 455
Loans to individuals for personal expenditures 1,943 1,230 1,304 1,404 1,011
All other loans 48 70 67 5 8
_______ _______ _______ _______ _______
Total charge-offs 2,442 1,531 1,944 2,336 1,767
_______ _______ _______ _______ _______
Amount of recoveries during year:
Real estate loans 101 101 32 60 38
Loans to financial institutions -- -- -- -- --
Loans to farmers 146 81 179 135 130
Commercial and industrial loans 334 248 125 303 505
Loans to individuals for personal expenditures 947 641 635 716 280
All other loans 21 20 20 -- --
_______ _______ _______ _______ _______
Total recoveries 1,549 1,091 991 1,214 953
_______ _______ _______ _______ _______
Net loans charged off during year 893 440 953 1,122 814
_______ _______ _______ _______ _______
Additions to allowance charged to operating expense 1,988 1,252 1,411 799 869
_______ _______ _______ _______ _______
Allowance of acquisitions -- -- -- -- 385
_______ _______ _______ _______ _______
Allowance for loan losses - end of the year $ 10,913 9,818 9,006 8,548 8,871
_______ _______ _______ _______ _______
Ratio of allowance to loans outstanding at end of year 1.12% 1.12 1.20 1.14 1.25
____ ____ ____ ____ ____
Ratio of net charge-offs to average loans outstanding .10% .05 .13 .15 .12
___ ___ ___ ___ ___
</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.
23
<PAGE>
Item 1(J) 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
__________________________________________________________________________________________
1994 1993 1992 1991 1990
_________________ _________________ _________________ _________________ __________________
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 $ 2,600 57.7% $2,400 57.5% $2,200 59.8% $2,002 57.8% $1,967 59.5%
Loans to financial institutions -- -- -- -- -- .1 -- .6 -- 1.4
Loans to farmers 1,400 7.4 1,600 7.6 1,200 8.3 1,500 8.1 1,900 7.9
Commercial and industrial loans 2,800 11.9 2,700 10.3 2,700 10.0 2,600 12.4 3,000 9.6
Loans to individuals for personal
expenditures 4,113 22.8 3,118 24.5 2,906 21.3 2,446 20.2 2,004 21.4
All other loans -- .2 -- .1 -- .5 -- .9 -- .2
_______ _____ _____ _____ _____ _____ _____ _____ _____ _____
$10,913 100.0% $9,818 100.0% $9,006 100.0% $8,548 100.0% $8,871 100.0%
______ _____ _____ _____ _____ _____ _____ _____ _____ _____
</TABLE>
24
<PAGE>
Item 1(J) 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
1994 1993 1992
Amount Rate Amount Rate Amount Rate
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing deposits $ 127,464 --% $ 119,322 --% $ 112,054 --%
Interest-bearing deposits:
Demand 250,520 2.16 217,754 2.09 209,642 2.52
Savings 294,715 2.33 299,640 2.57 260,568 3.60
Time 625,981 4.68 622,789 4.81 646,261 5.85
_________ ____ _________ ____ _________ ____
$1,298,680 $1,259,505 $1,228,525
_________ _________ _________
</TABLE>
The following sets forth the maturity distribution of all time
deposits of $100,000 or more as of December 31, 1994:
Large Time Deposits
by Maturity at
Maturity Remaining December 31, 1994
(In thousands)
Less than 3 months $23,139
Over 3 through 6 months 10,191
Over 6 through 12 months 16,831
Over 12 months 23,188
______
$73,349
______
VI. Return on Equity and Assets
Various operating and equity ratios for the years indicated are
presented below:
<TABLE>
<CAPTION>
Year Ended December 31,
________________________
1994 1993 1992
____ ____ ____
<S> <C> <C> <C>
Return on average total assets:
Net income before deduction of minority interest .70% 1.04% .98%
Return on average equity 9.03 13.82 14.13
Common dividend payout ratio 34.65 22.22 21.00
Average equity to average assets 7.36 7.18 6.61
Equity to assets ratio 6.98 7.59 6.81
Tier 1 leverage capital ratio 7.23 7.36 6.71
Primary capital ratio 8.18 8.31 7.67
____ ____ ____
</TABLE>
25
<PAGE>
Item 1(J) Business - Statistical Disclosure, Continued
VII. Short-Term Borrowings
Information relative to federal funds purchased and securities sold
under agreements to repurchase follows:
<TABLE>
<CAPTION>
1994 1993 1992
____ ____ ____
(Dollars in thousands)
<S> <C> <C> <C>
Amount outstanding at December 31 $70,704 37,664 34,882
Weighted average interest rate at
December 31 4.73% 2.31 2.34
Maximum amount outstanding at any
quarter-end $70,704 66,740 49,125
Average amount outstanding during
the year $61,656 42,715 33,240
Weighted average interest rate during
the year 3.38% 2.41 2.78
______ ______ ______
</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>
1994 1993 1992
____ ____ ____
(Dollars in thousands)
<S> <C> <C> <C>
Amount outstanding at December 31 $12,000 -- 120
Weighted average interest rate at
December 31 5.40% -- 3.15
Maximum amount outstanding at any
quarter-end $12,000 -- 2,840
Average amount outstanding during
the year $ 4,860 33 2,170
Weighted average interest rate during
the year 5.42% 3.63 5.57
______ ______ ______
</TABLE>
26
<PAGE>
Item 2. Properties.
At December 31, 1994, the affiliated banks had 44 banking locations
with approximately 296,000 square feet, all located in Iowa. Of these
banking locations, 33 were owned by the Company - approximately 229,000
square feet; 3 were owned buildings on leased land - approximately 30,000
square feet and 8 were operated under lease contracts with unaffiliated
parties - approximately 37,000 square feet.
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 1,608 holders of record of the Parent
Company's $5 common stock as of March 13, 1995. The closing bid price of the
Parent Company's common stock was $17.75 on March 13, 1995.
The Parent Company increased dividends to common shareholders in
1993 to $.44 per share, a 10 percent increase over $.40 for 1993, after
restatement for the May 1994 3-for-2 stock split. Dividend declarations are
evaluated and determined by the Board of Directors on a quarterly basis. In
January 1995, the Board of Directors declared a dividend of $.11 per common
share. There are currently 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 12 through 17 of the Company's
Annual Report, filed as Exhibit 13 hereto, is incorporated herein by
reference.
27
<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, 1994, 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, 1994, 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, 1994, 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, 1994, 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.
28
<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. These Articles of
Incorporation and Bylaws are incorporated by reference
from Form 10-K of Brenton Banks, Inc., for the year
ended December 31, 1993.
Exhibit 10.1
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 10.2
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 10.3
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 10.4
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 10.5
Summary of the Employee Bonus Plan under which
employees of the Company are eligible to receive a
bonus each year.
Exhibit 10.6
Employment Agreement, dated July 6, 1989, between
William H. Brenton and Brenton Banks, Inc.
Exhibit 10.7
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
300,000 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.
Exhibit 10.8
Long-Term Stock Compensation Plan, Agreements and
related documents, effective for 1994, 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.
29
<PAGE>
Exhibit 10.9
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. This Long-Term Stock
Compensation Plan, Agreements and related documents are
incorporated by reference from Form 10-K of Brenton
Banks, Inc., for the year ended December 31, 1993.
Exhibit 10.10
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 10.11
Standard Agreement for Advances, Pledge and Security
Agreement between Brenton banks and the Federal Home
Loan Bank of Des Moines. These standard Agreement for
Advances, Pledge and Security Agreement are
incorporated by reference from Form 10-K of Brenton
Banks, Inc., for the year ended December 31, 1993.
Exhibit 10.12
Short-term note with American National Bank & Trust
Company of Chicago as of April 30, 1994, setting forth
the terms of the Parent Company's $2,000,000 short-term
debt agreement.
Exhibit 10.13
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 10.14
Item Processing Agreement dated December 1, 1991
between Brenton Bank Services Corporation 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 10.15
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.
30
<PAGE>
Exhibit 10.16
Amendments to the Restated Trust Agreement for Brenton
Banks, Inc. Retirement Plan, effective January 1, 1987,
January 1, 1993 and January 1, 1994.
Exhibit 10.17
Indenture Agreement with respect to Capital Notes dated
April 12, 1993. This Indenture Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc., for the year ended December 31, 1993.
Exhibit 10.18
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 10.19
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 10.20
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 10.21
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 10.22
Indenture Agreement with respect to Capital Notes dated
April 8, 1994.
Exhibit 10.23
Split Dollar Insurance Agreement between the Company,
William H. Brenton Crummy Trust and William H. Brenton
Crummy Trust II, dated November 23, 1994.
Exhibit 10.24
Split Dollar Insurance Agreement between the Company
and Brenton Life Insurance Trust for the benefit of C.
Robert Brenton, dated August 12, 1994.
Exhibit 10.25
Agreement between Robert L. DeMeulenaere and the
Company regarding the change in control arrangements,
dated December 31, 1994.
31
<PAGE>
Exhibit 10.26
Agreement between Larry A. Mindrup and the Company
regarding the change in control arrangements, dated
December 31, 1994.
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 1994 calendar year.
Exhibit 21
Subsidiaries.
Exhibit 23
Consent of KPMG Peat Marwick LLP to the incorporation
of their report dated February 17, 1995, relating to
certain consolidated statements of condition of Brenton
Banks, Inc. into the Registration Statement on Form S-8
of Brenton Banks, Inc.
Exhibit 27
Financial Data Schedule (filed only with Electronic
Transmission).
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/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 1994.
32
<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 9, 1995
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 9, 1995
By /s/ C. Robert Brenton
Chairman of the Board and Director
C. ROBERT BRENTON
Principal Executive Officer
Date: March 9, 1995
33
<PAGE>
By /s/ Robert L. DeMeulenaere
President and Director
ROBERT L. DEMEULENAERE
Principal Executive Officer
Date: March 9, 1995
By /s/ Steven T. Schuler
Chief Financial Officer/Treasurer/Secretary
STEVEN T. SCHULER
Chief Financial Officer
Date: March 9, 1995
By /s/ Jennifer Hixson Carney
Controller
JENNIFER HIXSON CARNEY
Date: March 9, 1995
BOARD OF DIRECTORS
By /s/ Junius C. Brenton
JUNIUS C. BRENTON
Date: March 9, 1995
By /s/ R. Dean Duben
R. DEAN DUBEN
Date: March 9, 1995
By /s/ Hubert G. Ferguson
HUBERT G. FERGUSON
Date: March 9, 1995
By /s/ Gary M. Christensen
GARY M. CHRISTENSEN
Date: March 9, 1995
34
<PAGE>
EXHIBIT INDEX
Exhibits Page
Exhibit 3
The Articles of Incorporation, as amended, and Bylaws,
as amended, of Brenton Banks, Inc. These Articles of
Incorporation and Bylaws are incorporated by reference
from Form 10-K of Brenton Banks, Inc., for the year
ended December 31, 1993. . . . . . . . . . . . . . . . . . 39
Exhibit 10.1
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. . . . . . . . . . . . . . . . . 40
Exhibit 10.2
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. . . . . . . . . . . 42
Exhibit 10.3
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. . . . . . . . . . 44
Exhibit 10.4
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. . . . . . . . . . . 46
Exhibit 10.5
Summary of the Employee Bonus Plan under which
employees of the Company are eligible to receive a
bonus each year. . . . . . . . . . . . . . . . . . . . . . 48
Exhibit 10.6
Employment Agreement, dated July 6, 1989, between
William H. Brenton and Brenton Banks, Inc. . . . . . . . . 50
Exhibit 10.7
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 300,000 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. . . . . 57
35
<PAGE>
Exhibit 10.8
Long-Term Stock Compensation Plan, Agreements and
related documents, effective for 1994, 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. . . . . . . . . . . . . . 58
Exhibit 10.9
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. This Long-Term
Stock Compensation Plan, Agreements and related
documents are incorporated by reference from Form
10-K of Brenton Banks, Inc., for the year ended
December 31, 1993. . . . . . . . . . . . . . . . . . . . . 72
Exhibit 10.10
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. . . . . . . . . . . . 73
Exhibit 10.11
Standard Agreement for Advances, Pledge and Security
Agreement between Brenton banks and the Federal Home
Loan bank of Des Moines. These standard Agreement
for Advances, Pledge and Security Agreement are
incorporated by reference from Form 10-K of Brenton
Banks, Inc., for the year ended December 31, 1993. . . . . 74
Exhibit 10.12
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. . . . . . . . . . . . . . . . . 75
Exhibit 10.13
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. . . . . . . . . . . . . . . . . . . . . 77
Exhibit 10.14
Item Processing Agreement dated December 1, 1991
between Brenton Bank Services Corporation 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. . . . . . . . . . . . . . . . . . . . . 78
36
<PAGE>
Exhibit 10.15
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. . . . . . . . . . . 79
Exhibit 10.16
Amendments to the Restated Trust Agreement for
Brenton Banks, Inc. Retirement Plan, effective
January 1, 1987, January 1, 1993 and January 1, 1994. . . . 80
Exhibit 10.17
Indenture Agreement with respect to Capital Notes
dated April 12, 1993. This Indenture Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc., for the year ended December 31, 1993. . . . . 112
Exhibit 10.18
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. . . . . 113
Exhibit 10.19
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. . . . . . 114
Exhibit 10.20
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. . . . . . 115
Exhibit 10.21
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. . . . . . 116
Exhibit 10.22
Indenture Agreement with respect to Capital Notes
dated April 8, 1994. . . . . . . . . . . . . . . . . . . . 117
Exhibit 10.23
Split Dollar Insurance Agreement between the Company,
William H. Brenton Crummy Trust and William H.
Brenton Crummy Trust II, dated November 23, 1994. . . . . . 132
37
<PAGE>
Exhibit 10.24
Split Dollar Insurance Agreement between the Company
and Brenton Life Insurance Trust for the benefit of
C. Robert Brenton, dated August 12, 1994. . . . . . . . . . 174
Exhibit 10.25
Agreement between Robert L. DeMeulenaere and the
Company regarding the change in control arrangements,
dated December 31, 1994. . . . . . . . . . . . . . . . . . 184
Exhibit 10.26
Agreement between Larry A. Mindrup and the Company
regarding the change in control arrangements, dated
December 31, 1994. . . . . . . . . . . . . . . . . . . . . 188
Exhibit 11
Statement of computation of earnings per share. . . . . . . 192
Exhibit 12
Statement of computation of ratios. . . . . . . . . . . . . 194
Exhibit 13
The Annual Report to Shareholders of Brenton Banks,
Inc., for the 1994 calendar year. . . . . . . . . . . . . . 197
Exhibit 21
Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . 240
Exhibit 23
Consent of KPMG Peat Marwick LLP to the incorporation
of their report dated February 17, 1995, relating to
certain consolidated statements of condition of Brenton
Banks, Inc. into the Registration Statement on Form S-8
of Brenton Banks, Inc. . . . . . . . . . . . . . . . . . . 244
Exhibit 27
Financial Data Schedule (filed only with Electronic
Transmission). . . . . . . . . . . . . . . . . . . . . . . 246
38
<PAGE>
Exhibit 3
The Articles of Incorporation, as amended, and Bylaws, as amended,
of Brenton Banks, Inc. These Articles of Incorporation and Bylaws
are incorporated by reference from Form 10-K of Brenton Banks,
Inc., for the year ended December 31, 1993.
39
<PAGE>
Exhibit 10.1
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.
40
<PAGE>
1994 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, deposit, or loan 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 10.2
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 1994 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
personal goals, the most significant of which are as follows:
1. Net income of the Company or Division;
2. Asset, deposit, or loan 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 10.3
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.
44
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1994 TRUST DIVISION BONUS PLAN
The following is a summary of the Trust Division Bonus Plan for 1994:
A. The bonus plan covers the Vice President-Trust.
B. The Vice President-Trust may earn up to a maximum of 40.0% 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 10.4
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.
46
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1994 BROKERAGE BONUS PLAN
The following is a summary of the Brokerage Bonus Plan for 1994:
A. The bonus plan covers the Vice President-Brokerage Services.
B. The Vice President-Brokerage Services may earn up to a maximum of 40.0%
of base compensation.
C. The bonus amount is earned ratably based on a tiered achievement scale
relating to pre-tax operating 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 10.5
Summary of the Employee Bonus Plan under which employees of the
Company are eligible to receive a bonus each year.
48
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1994 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 10.6
Employment Agreement, dated July 6, 1989, between William H.
Brenton and Brenton Banks, Inc.
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Employment Agreement
This Agreement is made this sixth day of July, 1989 by and between
Brenton Banks, Inc., an Iowa corporation (Company) and William H. Brenton
(Employee).
Witnesseth:
Whereas, Employee is currently a key employee of the Company holding the
office of Chairman of the Company and serving on significant committees of
the Company and on boards of directors and significant committees of
subsidiaries of the Company, and
Whereas, the retention of Employee's services for and on behalf of the
Company is of material importance to the preservation and enhancement of the
Company's business, and
Whereas, Employee has agreed to remain in the employ of the Company in
return for the Company's promises stated in this Agreement.
Now, Therefore, in consideration of the mutual covenants set forth in
this Agreement the Company and Employee agree as follows:
1. Term of Employment. Company hereby employs Employee on the terms and
conditions set forth in this Agreement and Employee hereby accepts such
employment and agrees to render services to the Company on the terms and
conditions set forth in this Agreement. The term of employment shall
continue until December 31, 1994 unless sooner terminated as provided in
subsequent paragraphs of this Agreement. During the term of employment
Employee shall perform such executive services for the Company as may be
consistent with his title and from time to time assigned to him by the Board
of Directors of the Company. The services of Employee shall be performed
principally in Des Moines, Iowa.
2. Duties and Offices. Until the annual stockholders meeting in May
1990, Employee shall hold his present office of Chairman of the Company and,
subject to the rights of the stockholders, shall be a member of and Chairman
of the Board of Directors of Company. Unless otherwise agreed between
Employee and the Company, Employee while Chairman shall serve on such
committees and subsidiary boards of directors and hold such subsidiary
offices as has been customary for the Chairman of the Company and receive
customary compensation for all such service. From the annual stockholders
meeting in May 1990 until December 31, 1994 Employee shall hold the office of
Vice Chairman of the Company. Unless otherwise agreed between Employee and
the Company, Employee while Vice Chairman shall, if Employee so desires,
serve on subsidiary boards of directors and on committees on which he now
serves or on which Employee desires to serve or on which the Chairman or the
President then serves and, subject to the rights of the stockholders, shall
be a member of the Board of Directors of the Company and receive customary
compensation for all such service. While Vice Chairman and a member of the
Board of Directors he shall serve as Chairman of the Executive Committee of
the Board of Directors. While Vice Chairman, Employee may perform consulting
services for outside companies and individuals provided each engagement is
disclosed to the Company and presents no conflict of interest with the
Company. The Company recognizes that the duties of Vice Chairman will not
require as much time commitment as the duties of Chairman.
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3. Compensation. Employee's base salary through December 31, 1994 shall
be not less than the greater of (a) Employee's base salary for 1989 or (b)
the higher of the base salaries in effect from time to time for C. Robert
Brenton or J. C. Brenton. Employee's base salary shall be increased
commensurate with general increases in the base salaries of other senior
executives. The base salary may be increased from time to time by the Board
of Directors. In addition to base salary, Employee shall be entitled to
participate in bonus, stock option, pension, profit sharing and other
programs available to other senior executives and shall be entitled to other
benefits, expense reimbursement and allowances now or in the future available
to other senior executives, all on a basis not less favorable than the best
available to C. Robert Brenton or J. C. Brenton.
4. Retirement. Employee shall retire on December 31, 1994. Employee
may retire earlier if Employee so desires. Upon retirement, the Company
shall pay Employee $50,000 as a lump sum retirement benefit. In addition,
upon retirement, the Company shall pay Employee as an additional lump sum
retirement benefit the amount, if any, by which $160,000 multiplied by
Employee's years (or fractional years) of service from January 1, 1990,
through the date of retirement exceeds the amount of base salary and bonuses
paid to Employee for such period. After retirement, the Company shall make
an office (with reasonable secretarial help) available for use by Employee
during his lifetime; however, this obligation shall cease at such time as
there is a change in control of the Company as defined in Section 280G of the
Internal Revenue Code. After retirement Employee may serve as a member of
the boards of directors of subsidiary banks as Employee desires and, subject
to the rights of the stockholders, shall, if Employee desires, be a member of
the Board of Directors of the Company and shall receive customary
compensation for all such service.
5. Supplemental Retirement Income. Commencing with Employee's
retirement, the Company shall pay to Employee $50,000 per year in equal
monthly installments, subject to adjustment as provided below. If Employee
dies, such payments shall continue to Employee's spouse. Such payments shall
continue from the date of commencement until December 31, 2004, or, if
earlier, the date on which both Employee and his spouse are deceased. The
amount of such payments shall be adjusted as of the commencement date of the
payments and as of each fifth anniversary of the commencement date to reflect
increases in the Consumers Price Index (or other appropriate index) which
have occurred since the date of this Agreement, but in no event shall the
amount of increase due to such adjustment exceed one-half of the amount of
such payments prior to the adjustment. (For example, if payments commence on
January 1, 1995, and if the Consumer Price Index in December 1994 is 110% of
the Consumer Price Index on the date of this Agreement and in December 1999
is 120% of the Consumer Price Index on the date of this Agreement, then the
amount of such payments would be $55,000 per year for 1995 through 1999 and
$60,000 per year for 2000 through 2004).
6. Death Before Retirement. If Employee dies before retirement and is
survived by his spouse, the payments set forth in paragraph 5 shall be made
to his spouse commencing upon Employee's death but not beyond his spouse's
death, and his spouse shall receive the benefits provided in paragraphs 13
and 15, and shall receive the benefits provided in paragraph 4 as though
Employee had retired upon his date of death.
7. Disability. In the event Employee becomes permanently disabled prior
to retirement, Employee shall retire upon the date of determination of
permanent disability and shall receive the benefits provided in paragraphs 4,
5, 12, 13 and 15.
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Employee shall be deemed permanently disabled if Employee has been absent
from his duties for three consecutive months and a licensed physician chosen
by the Company determines that Employee has a physical or mental condition
which renders him incapable of performing his usual and customary employment
with the Company. In the event of temporary disability while employed,
Employee shall receive disability benefits pursuant to disability plans
applicable to other senior executives.
8. Termination for Just Cause by Company. The Board of Directors of the
Company shall have the right to terminate Employee's employment for just
cause. Upon termination for just cause, Employee shall be deemed to have
retired upon the date of termination and shall receive the benefits provided
in paragraphs 4, 5, 12, 13 and 15. Termination for just cause by the Company
shall mean and be limited to termination for (a) personal dishonesty, breach
of fiduciary duty involving personal profit, conviction of a felony involving
moral turpitude, or (b) the willful and continued failure by Employee to
substantially perform his duties hereunder (other than any such failure
resulting from Employee's incapacity due to physical or mental illness) after
demand for substantial performance is delivered by the Company that
specifically identifies the manner in which the Company believes Employee has
not substantially performed his duties and that gives Employee a reasonable
time to conform his performance of duties to those required under this
Agreement. For purposes of this paragraph, no act or failure to act on
Employee's part shall be considered "willful" unless done or omitted to be
done by him not in good faith and without reasonable belief that his action
or omission was in the best interest of the Company. After termination
pursuant to this paragraph, Employee shall be entitled to compete with the
Company without limitation, except that Employee shall make no use of
confidential information learned during his employment with the Company.
9. Termination For Just Cause by Employee. Employee shall have the
right to terminate his employment for just cause. Commencing upon the
effective date of termination for just cause by the Employee, the Company
shall pay Employee in equal monthly installments until December 31, 1994, the
amounts to which Employee would have been entitled under paragraph 3 if he
had remained employed by the Company under this Agreement, including
participation, or amounts equivalent to participation, in the Company's
qualified pension plan. Commencing January 1, 1995, the Company shall pay to
Employee or his spouse the benefits under paragraph 4, 5, 12, 13 and 15 as
though Employee had retired on December 31, 1994. If Employee dies prior to
December 31, 1994, he shall be deemed to have died before retirement and the
provisions of paragraph 6 shall apply. Termination for just cause by
Employee shall mean and be limited to termination within three months
following (a) the assignment to Employee of any duties inconsistent with
Employee's positions, duties, responsibilities or status within the Company
in effect on the date of this Agreement or as provided in paragraph 2, (b) a
material change in Employee's responsibilities, titles or offices as in
effect on the date of this Agreement or as provided in paragraph 2, (c) the
requirement that Employee perform his services principally at a location
other than Des Moines, Iowa, or (d) a material default by the Company in the
performance of its obligations under this Agreement. After termination
pursuant to this paragraph, Employee shall be entitled to compete with the
Company without limitations, except that Employee shall make no use of
confidential information learned during his employment with the Company.
10. Termination Without Just Cause. The Company shall have the right to
terminate Employee's employment without just cause by giving Employee six
months advance notice of such termination, or in lieu of such notice, by
paying Employee an amount equal to six months base salary then in effect. In
addition, commencing upon
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the effective date of termination, the Company shall pay Employee in equal
monthly installments until December 31, 1994, the amounts to which Employee
would have been entitled under paragraph 3 if he had remained employed by the
Company under this Agreement including participation, or amounts equivalent
to participation, in the Company's qualified pension plan. Commencing
January 1, 1995, the Company shall pay to Employee or his spouse the benefits
under paragraphs 4, 5, 12, 13 and 15 as though Employee had retired on
December 31, 1994. If Employee dies prior to December 31, 1994, he shall be
deemed to have died before retirement and the provisions of paragraph 6 shall
apply. After termination pursuant to this paragraph, Employee shall be
entitled to compete with the Company without limitation, except that Employee
shall make no use of confidential information during his employment with the
Company.
11. Unfunded Agreement. Supplemental retirement benefits to be provided
under this Agreement are unfunded obligations of the Company. Company shall
not be required to segregate any monies from its general funds, to create any
trust, to make any special deposits or to purchase any policies of insurance
with respect to its obligations under this Agreement.
12. Life Insurance. Until Employee reaches age 70, the Company shall
continue in force the present life insurance policy on the life of Employee.
After Employee reaches age 70, the Company shall until December 31, 2004, or
Employee's death, contribute $7,500 per year towards life insurance premiums
under a policy on Employee's life to be selected by Employee.
13. Medical Insurance. Until the completion of payment of the
supplemental retirement income pursuant to paragraph 5, the Company shall pay
for Employee's and Employee's spouse medical insurance under a policy which,
when combined with Medicare benefits, provides coverage not less favorable
than now in effect, subject to requirements of the insuror based upon age.
14. Limitation. In the event of termination for just cause by Employee
pursuant to paragraph 9 or termination without just cause by the Company
pursuant to paragraph 10, if such termination is contingent upon a change in
control as provided in section 28OG of the Internal Revenue Code, and if the
payments provided in paragraph 15, the second sentence of paragraph 9 or the
second sentence in paragraph 10 would constitute an "excess parachute
payment" as defined in section 28OG of the Internal Revenue Code, then in
lieu of such payments the Company shall pay the Employee within 30 days after
such termination an amount equal to 2.9 times the average aggregate annual
compensation paid to Employee by the Company and includible in his gross
income for federal income tax purposes during the five calendar years
preceding the taxable year in which change in control occurs. The
determination whether termination is contingent upon a change in control and
whether such payments would constitute an "excess parachute payment" shall be
made jointly by an independent certified public accountant selected by
Employee and the independent certified public accountants responsible for
preparing the Company's federal income tax return for the year in which such
lump sum payment is made.
15. Additional Benefits. If the Company
(a) prior to January 1, 1995, or
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(b) after December 31, 1994 and prior to January 1, 2000, incident
to or in anticipation of an acquisition of control of the Company as
defined in 12 CFR 225.41,
provides or agrees to provide post employment, severance payments or
retirement benefits to C. Robert Brenton or J. C. Brenton other than payments
pursuant to a qualified plan which are more favorable than those provided
under this Agreement, then Employee, at his option, or his spouse, at her
option if Employee is deceased, may elect to receive payments and benefits
pursuant to the arrangement between the Company and C. Robert Brenton or J.
C. Brenton, including retroactive adjustment in payments and benefits
received by Employee or his spouse prior to the time the Company made such
arrangement. If such arrangement between the Company and C. Robert Brenton
or J. C. Brenton is made on or before December 31, 1994, the Employee or his
spouse may elect to receive payments and benefits fully commensurate with
such arrangement. If such arrangement between the Company and C. Robert
Brenton or J. C. Brenton is made after December 31, 1994, then Employee or
his spouse may elect to receive payments and benefits partially adjusted to
be commensurate with such arrangement; if such arrangement is made during
1995 then the payments and benefits shall be 100% adjusted; during 1996, 80%
adjusted; during 1997, 60% adjusted; during 1998, 40% adjusted, during 1999,
20% adjusted. If any determination under this paragraph requires
determination of actuarial equivalency, such determination shall be made
jointly by an independent certified public accountant selected by Employee or
his spouse if Employee is then deceased and the independent certified public
accountant responsible for preparing the Company's federal income tax return.
As used in this paragraph, "the Company" shall include any entity providing
payments or benefits in connection with any such employment, severance or
retirement.
For Example: If, incident to the acquisition of control, the Company
during 1997 agrees with C. Robert Brenton to pay him a lump sum
retirement benefit of $100,000 and the amount received by Employee upon
his retirement on December 31, 1994, under paragraph 4 was $75,000, then
the Company in 1997 would pay Employee 60% of $25,000, or $15,000
(subject to decrease by the estimators to reflect inflation from 1994 to
1997 and subject to increase by the estimators to reflect the time value
of money from 1994 to 1997). If the Company during 1997 agreed with C.
Robert Brenton to pay him supplemental retirement income of $60,000 per
year until age 85, then the Company would (a) continue payments to
Employee under paragraph 5 of this Agreement until Employee reaches age
85, (b) beginning in 1997 increase such payments from $50,000 to $56,000
(60% of the difference between $60,000 and $50,000), and (c) pay
Employee in 1997 $18,000 (subject to adjustment for inflation and the
time value of money) which is $6,000 for each of the three years from
Employee's retirement date of December 31, 1994 to the beginning of
1997.
16. General Provisions. Benefits under this Agreement shall not be
subject in any manner to alienation sale, transfer, assignment, pledge, or
encumbrance of any kind unless approved by the Board of Directors of the
Company. Any attempt to alienate, sell, transfer, assign, pledge, or
otherwise encumber any benefit, whether presently or hereafter payable, shall
be void unless so approved. Except as required by law, no benefit shall in
any manner be subject to garnishment, attachment, execution, or other legal
process, or be liable for or subject to the debts or liability of Employee or
his spouse.
In the event of litigation regarding this Agreement, the Company shall
reimburse Employee or his spouse for all reasonable attorney fees and
expenses incident to such
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litigation, if Employee or his spouse is the prevailing party. Employee
shall not be required to mitigate the amount of any payment under this
Agreement, by seeking other employment or otherwise. This agreement may not
be amended or otherwise modified without the consent of Employee or, after
his death, his spouse. No waiver of any provision of this Agreement shall be
effective unless in writing signed by the party sought to be charged with
such waiver; the waiver of a provision upon one occasion shall not constitute
the waiver of the same provision on a different occasion. This Agreement
shall be binding upon the successors and assigns of the Company; a successor
of the Company shall include any entity which succeeds to substantially all
the assets of the Company, whether by merger, purchase or otherwise.
This Agreement or the termination of employment pursuant to this
Agreement shall have no adverse effect upon Employee's participation or
rights under pension, profit sharing, stock, option or other plan of the
Company.
17. Notices. Notices under this Agreement shall be effective if hand
delivered to Employee or to the Chairman (other than Employee) or Secretary
of the Company, or if sent certified mail, return receipt requested to
Employee at his then current place of residence or to the Chairman (other
than Employee) or Secretary at the principal offices of the Company.
In Witness Whereof, the parties have executed this Agreement effective
the day and year first above written.
/s/ William H. Brenton
William H. Brenton, Employee
Brenton Banks, Inc.
By /s/ C. Robert Brenton
C. Robert Brenton, President
Approval of Board of Directors
The undersigned, constituting all of the members of the Board of
Directors of Brenton Banks, Inc., hereby approve the foregoing Employment
Agreement.
/s/ C. Robert Brenton
C. Robert Brenton
/s/ J. C. Brenton
J. C. Brenton
/s/ R. Dean Duben
R. Dean Duben
/s/ Thomas R. Smith
Thomas R. Smith
/s/ William H. Brenton
William H. Brenton
(signing but abstaining)
/s/ Steven T. Schuler
Steven T. Schuler
ATTEST
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Exhibit 10.7
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 300,000 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 10.8
Long-Term Stock Compensation Plan, Agreements and related
documents, effective for 1994, 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 10.9
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. This Long-Term Stock Compensation
Plan, Agreement and related documents are incorporated by reference
from Form 10-K of Brenton Banks, Inc., for the year ended
December 31, 1993.
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Exhibit 10.10
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 10.11
Standard Agreement for Advances, Pledge and Security Agreement
between Brenton banks and the Federal Home Loan Bank of Des Moines.
These standard Agreement for Advances, Pledge and Security
Agreement are incorporated by reference from Form 10-K of Brenton
Banks, Inc., for the year ended December 31, 1993.
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Exhibit 10.12
Short-term note with American National Bank & Trust Company of
Chicago as of April 30, 1994, 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, 1994
$2.000.000.00 Due April 30, 1995
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, 1995.
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. Brenton Banks, Inc.
400 Locust, Box 961 By: /s/ Robert L. DeMeulenare (signature)
Des Moines, Iowa 50304 Its: President (title)
Address By: /s/ Steven T. Schuler (signature)
Its: CFO and Vice Pres/Treas./Sec. (title)
F77-3575 R-6-90
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Exhibit 10.13
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 10.14
Item Processing Agreement dated December 1, 1991 between Brenton
Bank Services Corporation 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 10.15
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 10.16
Amendments to the Restated Trust Agreement for Brenton Banks, Inc.
Retirement Plan, effective January 1, 1987, January 1, 1993 and
January 1, 1994.
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First Amendment to Restated Trust Agreement
Brenton Banks, Inc. Employees' Retirement Plan
This Agreement, made by and between Brenton Banks, Inc., a corporation
organized under and existing by virtue of the laws of the State of Iowa
(hereinafter referred to as "Company") and Brenton National Bank, N.A.
(hereinafter referred to as "Trustee").
Whereas, the Company and the Trustee originally entered into a Trust
Agreement effective for the Plan Year ended December 31, 1986; and
Whereas, such Trust Agreement was adopted and maintained for the purpose of
providing retirement benefits to participating employees of the Company; and
Whereas, such Trust Agreement was amended and restated on June 24, 1991,
effective January 1, 1987; and
Whereas, the parties hereto now desire to amend such Trust Agreement in
certain respects, such amendment to be effective January 1, 1987, except
where a later date is specifically provided.
Now, therefore, in consideration of the mutual undertakings herein contained,
it is agreed as follows:
1. That the Plan is hereby amended by adding the following new Section 2.07:
If the Employer maintains the plan of a predecessor Employer, the Plan treats
service of the Employee with the predecessor Employer as service with the
Employer. Furthermore, the Employer is in the process of acquiring Ames
Savings Bank, FSB. In this respect the Plan shall take into account all
service of all Employees with that predecessor employer for purposes of
participation and vesting, effective January 1, 1993.
2. That the Plan is hereby amended by replacing Article V, as it is presently
constituted, with the following new Article V:
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Article V
Employer Contributions and Forfeitures
Part I. Amount of Employer Contributions and Plan Allocations: Sections 5.01
- 5.05
Section 5.01. Contribution Formula.
(A) Contribution Formula.
For each Plan Year, the Employer will contribute to the Trust the following
amounts:
Salary Reduction Contributions. The amount by which the Participants have
elected to reduce their Compensation for the Plan Year under their salary
reduction agreements on file with the Advisory Committee.
Employer Matching Contributions. An amount equal to the lesser of the Salary
Reduction Contribution for each Participant, or two percent (2%) of the
Participant's Compensation for the Plan Year in question. The Employer also
may contribute an additional amount, equal to a percentage the Employer from
time to time may deem advisable of each Participant's Compensation. The
Employer will determine the amount of its matching contributions by
disregarding Participants not entitled to an allocation of Employer matching
contributions.
Qualified Nonelective Contributions. The amount the Employer, in its sole
discretion, designates as qualified nonelective contributions.
Employer Nonelective Contributions. In addition to any and all amounts
contributed pursuant to the above, the Employer shall contribute an amount
equal to the greater of (a) or (b) below:
(a) An amount equal to four percent (4%) of the Compensation of all Plan
Participants for such year exclusive of Compensation paid to Plan
Participants ineligible to share in the allocation of the contribution by
virtue of subparagraphs (B) and (C) of Section 5.05 below; or
(b) The amount authorized as a contribution by resolution of the Board of
Directors of the Employer.
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(B) Termination of Employer Interest in Fund.
Upon the transfer by such Employer of any money or assets under this Plan to
the Trustee, all interest of such Employer therein shall cease and terminate,
and no part of the Fund or income therefrom shall be used for or diverted to
purposes other than for the exclusive benefit of participants and their
beneficiaries as herein provided; provided, however, that if the initial
written determination of the Commissioner of Internal Revenue (or his
delegate) is that the Trust does not qualify under Sections 401(a) and 501(a)
of the Internal Revenue Code of 1986, as amended, then any employer
contributions made prior to such initial determination shall be refunded to
the Employer within one year after disqualification of the Trust.
The Trustee, upon written request from the Employer shall, however, return to
the Employer the amount of the Employer's contribution made by the Employer
by mistake of fact or the amount of the contribution disallowed as a
deduction under Code Section 404; provided no such return to the Employer
shall occur more than one year after:
(a) The Employer made the contribution by mistake of fact;
(b) The disallowance of the contribution as a deduction, and then, only to
the extent of the disallowance.
Section 5.02. Time of Payment of Contribution.
The Employer may pay its contribution for each Plan Year in one or more
installments without interest. The Employer must make its contribution to
the Trustee within the time prescribed by the Code or applicable federal
regulations. Subject to the consent of the Trustee, the Employer may make
its contribution in property rather than cash, provided the contribution of
property is not a prohibited transaction under the Code or under ERISA.
Salary Reduction Contributions are Employer contributions for all purposes
under this Plan, except to the extent the Code or Treasury regulations
prohibit the use of these contributions to satisfy the qualification
requirements of the Code.
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Section 5.03. Contribution allocation.
(A) Method of Allocation.
To make allocations under the Plan, the Advisory Committee must establish a
Salary Reduction Contributions Account, Matching Contributions Account,
Qualified Nonelective Contributions Account and an Employer Contributions
Account for each Participant.
Salary Reduction Contributions. The Advisory Committee will allocate to each
Participant's Salary Reduction Contributions Account the deferral
contributions the employer makes to the Trust on behalf of the Participant.
The Advisory Committee will make this allocation as of the last day of the
sixth month of each plan year and the last day of each Plan Year.
Matching Contributions. The Advisory Committee will allocate matching
contributions as of the last day of the sixth month of each plan year and the
last day of each Plan Year. The Advisory Committee will allocate the
matching contributions to the Matching Contributions Account of the
Participant on whose behalf the Employer makes that contribution.
Qualified Nonelective Contributions. If the Employer, at the time of
contribution, designates a contribution to be a qualified nonelective
contribution for the Plan Year, the Advisory Committee will allocate that
qualified nonelective contribution to the Qualified Nonelective Contributions
Account of each Participant eligible for an allocation of qualified
nonelective contributions. The Advisory Committee will make the allocation
to each eligible Participant's Account in the same ratio that the
Participant's Compensation for the Plan Year bears to the total Compensation
of all eligible Participants for the Plan Year. For purposes of allocating
the qualified nonelective contributions, the term "eligible Participant"
means a Participant who is a Nonhighly Compensated Employee and who satisfies
the conditions of section 5.05.
Employer Nonelective Contributions. Subject to any restoration allocation
required under Section 7.04, the Advisory Committee will allocate and credit
each annual Employer Nonelective Contribution (and Participant forfeitures,
if any) to the Employer Contributions
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Account of each participant who satisfies the conditions of Section 5.05, in
accordance with this paragraph.
First, the Advisory Committee will make simultaneous allocations of Employer
contributions (and Participant forfeitures) in accordance with this
paragraph. The simultaneous allocations must result in an equal allocation
percentage, not exceeding 5.7%, of each Participant's Compensation and of
each Participant's Excess Compensation. The allocation based on a
Participant's Compensation is in the same ratio that the Participant's
Compensation for the Plan Year bears to the total Compensation of all
Participants for the Plan Year. The allocation based on a Participant's
Excess Compensation is in the same ratio that the Participant's Excess
Compensation for the Plan Year bears to the total Excess Compensation of all
Participants for the Plan Year. "Excess Compensation" means Compensation in
excess of the taxable wage base, as determined under Section 230 of the
Social Security Act, in effect on the first day of the Plan Year.
The Advisory Committee then will allocate any remaining Employer
contributions (and Participant forfeitures) in the same ration that each
Participant's Compensation for the Plan Year bears to the total Compensation
of all Participants for the Plan Year.
Section 5.04. Forfeiture Allocation.
The amount of a Participant's Accrued Benefit forfeited under the Plan is a
Participant forfeiture. Subject to any restoration allocation required under
Sections 7.04 or 9.12, the Advisory committee will allocate the amount of a
Participant forfeiture in accordance with Section 5.03 as an Employer
nonelective contribution for the Plan Year in which the forfeiture occurs, as
if the Participant forfeiture were and Employer Nonelective Contribution for
that Plan Year. The Advisory Committee will continue to hold the
undistributed, non-vested portion of a terminated Participant's Accrued
Benefit in his Account solely for his benefit until a forfeiture occurs at
the time specified in Section 7.07, or, if applicable, until the time
specified in Section 9.12. Except as provided under Section 7.04, a
Participant will not share in the allocation of a forfeiture of any portion
of his Accrued Benefit.
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Special rule for Matching Contributions. To the extent any portion of the
Participant's forfeiture is attributable to Matching Contributions, in lieu
of the first paragraph of this Section 5.04, the Advisory Committee will
allocate that portion to reduce Employer Matching Contributions for the Plan
Year in which the forfeiture occurs and, if necessary, to reduce Employer
Matching Contributions in subsequent Plan Years.
Forfeiture of certain Matching Contributions. A Participant will forfeit any
Matching Contributions allocated with respect to excess deferrals or excess
contributions as determined under Part III of this Article V. The Advisory
Committee will allocate these forfeited amounts in accordance with this
Section 5.04.
Section 5.05. Accrual of Benefit.
The Advisory Committee will determine the accrual of benefit (Employer
contributions and Participant forfeiture) on the basis of the Plan Year.
(A) Compensation Taken Into Account.
In allocating an Employer Nonelective Contribution or Qualified Nonelective
Contribution to a Participant's Account, the Advisory Committee, except for
purposes of determining the top heavy minimum contribution under Article VII,
will take into account only the Compensation determined for the portion of
the Plan Year in which the Employee actually is a Participant.
(B) Hours of Service Requirement.
Subject to the top heavy minimum allocation requirement of Article XII, the
Advisory Committee will not allocate any portion of an Employer contribution
for a Plan Year to any Participant's Account if the Participant does not
complete a minimum of 1,000 Hours of Service during the Plan Year, unless the
Participant terminates employment during the Plan Year because of death or
disability or because of the attainment of Normal Retirement Age in the
current Plan Year or in a prior Plan Year. This Hours of Service requirement
does not apply to an allocation of Salary Reduction Contributions or Matching
Contributions.
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(C) Employment Requirement.
A Participant who, during a particular Plan Year, completes the Hours of
Service requirement under Section 5.05(B) will not share in the allocation of
Employer contributions and Participant forfeitures, if any, for that Plan
Year unless he is employed by the Employer on the last day of that Plan Year.
This employment requirement does not apply if the Participant terminates
employment during the Plan Year because of death or disability or because of
the attainment of Normal Retirement Age in the current Plan Year or in a
prior Plan Year. This employment requirement will not apply to allocations
of Salary Reduction Contributions or Matching Contributions.
(D) Special allocation requirements for Qualified Nonelective Contributions.
A Participant may receive an allocation of Qualified Nonelective
Contributions only if the Participant is not a Highly Compensated Employee
(or a family member aggregated with a Highly Compensated Employee).
Part II. Limitations on Allocations: Sections 5.06 - 5.07.
Section 5.06. Limitation on Allocation to Participant's Accounts.
The amount of Annual Additions which the Advisory Committee may allocate
under this Plan on a Participant's behalf for a Limitation Year shall not
exceed the Maximum Permissible Amount. Prior to the determination of the
Participant's actual Compensation for a Limitation Year, the Advisory
Committee may determine the Maximum Permissible Amount on the basis of the
Participant's estimated annual Compensation for such Limitation Year. The
Advisory Committee shall make this determination on a uniform and reasonable
basis for all Participants similarly situated. The Advisory Committee shall
reduce any Employer Contributions (including any allocation of forfeitures)
based on estimated annual Compensation by any Excess Amount carried over from
prior Limitation Years. As soon as is administratively feasible after the
end of the Limitation Year, the Advisory Committee shall determine the
Maximum Permissible Amount for the Limitation Year on the basis of the
Participant's actual compensation for the Limitation Year.
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Disposition of Excess Amount
If the Advisory Committee allocated an Excess Amount to a Participant's
Account for a Limitation Year, the Advisory Committee shall dispose of the
Excess Amount as follows:
(a) If the Plan covers the Participant at the end of the Limitation year,
then the Advisory Committee shall use the Excess Amount(s) to reduce future
Employer contributions under the Plan for the next Limitation Year and for
each succeeding Limitation Year, as is necessary, for the Participant.
(b) If the Plan does not cover the Participant at the end of the Limitation
Year, then the Advisory Committee shall hold the Excess Amount unallocated in
a suspense account. The Advisory Committee shall apply the suspense account
to reduce Employer Contributions for all remaining Participants in the next
Limitation Year, and in each succeeding Limitation year if necessary.
(c) The Advisory Committee shall not distribute an Excess Amount(s) to
Participants or to former Participants.
Section 5.06. Definitions - Article V.
For purposes of Article V, the following terms shall mean:
(a) "Annual Addition" - The sum of the following amounts allocated on behalf
of a Participant for a Limitation year, of (i) all Employer Contributions;
(ii) all forfeitures; and (iii) all Employee contributions. Except to the
extent provided in Treasury Regulations, Annual Additional include excess
contributions described in Code Section 401(k); excess aggregate
contributions described in Code Section 401(m); and excess deferrals
described in Code Section 402(g), irrespective of whether the Plan
distributes or forfeits such excess amounts. For the purposes of this
Article V, Annual Additions also shall include Excess Amounts re-applied to
reduce Employer contributions under Section 5.04. Annual Additions also
include amounts allocated to an individual medical account (as defined in
Code Section 415(1)(2) included as part of a defined benefit plan maintained
by the Employer. Furthermore, the Annual Additions include contributions
paid or accrued after December 31, 1985,
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for taxable years ending after December 31, 1985, attributable to post-
retirement medical benefits allocated to the separate account of a key
employee (as defined in Code Section 419A(d)(3) under a welfare benefit fund
(Code Section 419(e)) maintained by the Employer, but only for purposes of
the dollar limitation applicable to the Maximum Permissible Amount.
(b) "Compensation" - For purposes of applying the limitations of this
Article V, "Compensation" means Compensation as defined in Section 2.01(7),
disregarding elective contributions and any exclusions from Compensation,
other than the exclusions described in Paragraphs (1), (2), (3) and (4) of
Section 2.01(7).
(c) "Maximum Permissible Amount" - For a Limitation Year, the Maximum
Permissible Amount with respect to any Participant shall be the lesser of (i)
$30,000 (or, if greater, one-fourth of the defined benefit dollar limitation
under Code Section 415(b)(1)(A)), or (ii) twenty-five percent (25%) of the
Participant's Compensation for the Limitation Year. If there is a short
Limitation Year because of a change in Limitation Year, the Advisory
Committee will multiply the $30,000 limitation by the following fraction:
Number of months in the short Limitation Year
_____________________________________________
12
(d) "Employer" - In the case of a group of employers which constitutes a
controlled group of corporations (as defined in Code Section 414(b) as
modified by Code Section 415(h)), which constitutes trades or businesses
(whether or not incorporated) which are under common control (as defined in
Code Section 414(c), as modified by Code Section 415(h)) or which constitutes
an affiliated service group as defined by Code Section 414(m), all such
employers shall be considered a single employer for purposes of applying the
limitations of this Article V.
(e) "Excess Amount" - The excess of the Participant's Annual Additions
credited to the Participant's Account for the Limitation Year over the
Maximum Permissible Amount.
(f) "Limitation Year" - The Plan Year. If the Employer amends the
Limitation Year to a different 12 consecutive month period, the new
Limitation Year must begin on a date within the Limitation Year for which the
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Employer makes the amendment, creating a short Limitation Year.
(g) "Defined contribution plan" - A retirement plan which provides for an
individual account for each participant and for benefits based solely on the
amount contributed to the participant's account, and any income, expenses,
gains and losses, and any forfeitures of accounts of other participants which
the Advisory Committee may allocate to such participant's account. The
Advisory Committee shall treat as a defined contribution plan an individual
medical account (as defined in Code Section 415(1)(1)) included as part of a
defined benefit plan maintained by the Employer and, for taxable years ending
after December 31, 1985, a welfare benefit fund under Code Section 419(e)
maintained by the Employer to the extent there are post-retirement medical
benefits allocated to the separate account of a key employee (as defined in
Code Section 419A(d)(3)). The Advisory Committee shall treat all defined
contribution plans (whether or not terminated) maintained by the Employer as
a single plan.
Part III. Provisions Relating to the Code Section 401(k)
Arrangement: Sections 5.08 - 5.13
Section 5.08. 401(k) Arrangement.
The Employer makes the Salary Reduction Contributions described in Section
5.01 pursuant to a 401(k) arrangement. An Employee who is eligible to
participate in the 401(k) arrangement may file a Salary Reduction Agreement
with the Advisory Committee. The Salary Reduction Agreement may not be
effective earlier than the following date which occurs last: (i) the
Employee's Plan Entry Date (or, in the case of a reemployed Employee, his
reparticipation date under Article IV; (ii) the execution date of the
Employee's Salary Reduction Agreement; or (iii) the effective date of the
Code Section 401(k) arrangement. A Salary Reduction Agreement must specify
the amount of Compensation or percentage of Compensation the Employee wishes
to defer. The Salary Reduction Agreement will apply only to Compensation
which becomes currently available to the Employee after the effective date of
the Salary Reduction Agreement. The Employer will apply a reduction election
to all Compensation (and to increases in such Compensation).
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An Employee's Salary Reduction Contributions for the Plan Year, subject to
the elective deferral limitation of Section 5.10, may not be less than 1% nor
greater than 9% of his Compensation for the entire Plan Year, provided,
however, effective July 1, 1992, a Nonhighly Compensated Employee's Salary
Reduction Contribution may not exceed 15% of Compensation. An Employee may
modify his Salary Reduction Agreement, either to reduce or to increase the
amount of deferral contributions, as of any Plan Entry Date. The Employee
will make this modification by filing a new Salary Reduction Agreement with
the Advisory Committee. An Employee may revoke a Salary Reduction Agreement
as of any Plan Entry Date. An Employee who revokes his salary reduction
agreement may file a new Salary Reduction Agreement effective as of any Plan
Entry Date.
Section 5.09. Definitions Relating to Code Section 401(k) Arrangement.
(a) "Highly Compensated Employee: means an Eligible Employee who satisfies
the definition in Section 2.01 of the Plan. Family members aggregated as a
single Employee under Section 2.01 constitute a single Highly Compensated
Employee, whether a particular family member is a Highly Compensated Employee
or a Nonhighly Compensated Employee without the application of family
aggregation.
(b) "Nonhighly Compensated employee" means an Eligible employee who is not a
Highly Compensated Employee and who is not a family member treated as a
Highly Compensated Employee.
(c) "Eligible Employee" means, for purposes of the ADP test described in
Section 5.11, an Employee who is eligible to participate in the Code Section
401(k) arrangement, irrespective of whether the Employer actually makes
deferral contributions on behalf of the Employee. For purposes of the ADP
test described in Section 5.12, and "Eligible Employee" means a Participant
who is eligible to receive an allocation of Employer Matching Contributions
(or would be eligible if he made the type of contributions necessary to
receive an allocation of matching contributions) and a Participant who is
eligible to make employee contributions, irrespective of whether he actually
makes employee contributions.
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(d) "Highly Compensated Group" means the group of Eligible Employees who are
Highly Compensated Employees for the Plan Year.
(e) "Nonhighly Compensated Group" means the group of Eligible Employees who
are Nonhighly Compensated Employees for the Plan Year.
(f) "Compensation" means, except as specifically provided under this Article
V, Compensation as defined for nondiscrimination purposes in Section 2.01 of
the Plan. For Plan Years beginning prior to the later of January 1, 1992, or
60 days after the Treasury issues final regulations under Code Sections
401(k) and 401(m), the Plan may limit Compensation taken into account to
Compensation received only for the portion of the Plan Year in which the
Employee was an Eligible Employee and only for the portion of the Plan Year
in which the Plan or the Code Section 401(k) arrangement was in effect. For
subsequent Plan Years, Compensation must include Compensation for the entire
Plan Year, irrespective of whether the Plan or the Code Section 401(k)
arrangements was in effect for the entire Plan Year or whether the Employee
begins, resumes or ceases to be an Eligible Employee during the Plan Year.
(g) "Salary Reduction Contributions" means the sum of the Salary Reduction
Contributions the Employer contributes to the Trust on behalf of an Eligible
Employee, pursuant to Section 5.01.
(h) "Elective Deferrals" are the Salary Reduction Contributions the Employer
contributes to the Trust at the election of an Eligible employee. If the
Code Section 401(k) arrangement includes a cash or deferred feature, any
portion of a cash or deferred contribution contributed to the Trust because
of the Employee's failure to make a cash election is an elective deferral,
but any portion of a cash or deferred contribution over which the Employee
does not have a cash election is not an elective deferral. Elective
deferrals do not include amounts which have become currently available to the
Employee prior to the election nor amounts designated as nondeductible
employee contributions at the time of deferral or contribution.
(i) "Matching contributions" are contributions made by the Employer on
account of elective deferrals under a Code Section 401(k) arrangement.
Matching contributions
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also include Participant forfeitures allocated on account of such elective
deferrals.
(j) "Nonelective contributions" are contributions made by the Employer which
are not subject to a deferral election by an Employee and which are not
matching contributions.
(k) "Qualified matching contributions" are matching contributions which are
100% Nonforfeitable at all times and which are subject to the distribution
restrictions described in paragraph (m). Matching contributions are not 100%
Nonforfeitable at all times if the Employee has a 100% Nonforfeitable
interest because of his Years of Service taken into account under a vesting
schedule.
(l) "Qualified nonelective contributions" are nonelective contributions which
are 100% Nonforfeitable at all times and which are subject to the
distribution restrictions described in paragraph m. Nonelective
contributions are not 100% Nonforfeitable at all times if the Employee has a
100% Nonforfeitable interest because of his Years of Service taken into
account under a vesting schedule. Any nonelective contributions allocated to
a Participant's Qualified Nonelective Contributions Account under the Plan
automatically satisfy the definition of qualified nonelective contributions.
(m) "Distribution restrictions" means the Employee may not receive a
distribution of the specified contributions (nor earnings on those
contributions) except in the event of (1) the Participant's death,
disability, termination of employment, attainment of age 59 1/2, (2)
financial hardship satisfying the requirements of Code Section 401(k) and the
applicable Treasure regulations, (3) plan termination, without establishment
of a successor defined contribution plan (other than an ESOP), (4) a sale of
substantially all of the assets (within the meaning of Code Section 409(d)
(2) used in a trade or business, but only to an employee who continues
employment with the corporation acquiring those assets, or (5) a sale by a
corporation of its interest in a subsidiary (within the meaning of Code
Section 409(d) (3)), but only to an employee who continues employment with
the subsidiary. For Plan Years beginning after December 31, 1988, s
distribution on account of financial hardship, as described in clause (2),
may not include earnings on elective deferrals.
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credited as of a date later than December 31, 1988, and may not include
qualified contributions, irrespective of when credited. A distribution
described in clauses (3), (4) or (5), if made after March 31, 1988, must be
a lump sum distribution, as required under Code Section 401(k) (10).
(n) "Employee contributions" are contributions made by a Participant on an
after-tax basis, whether voluntary or mandatory, and designated, at the time
of contribution, as an employee (or nondeductible) contribution. Elective
deferrals and deferral contributions are not employee contributions.
Participant nondeductible contributions, made pursuant to Section 6.01 of the
Plan, are employee contributions.
Section 5.10. Annual Elective Deferral Limitation.
(A) Annual Elective Deferral Limitation.
An Employee's elective deferrals for a calendar year beginning after December
31, 1986, may not exceed the 402(g) limitation. The 401(g) limitation is the
greater of $7,000 or the adjusted amount determined by the Secretary of the
treasury. If the Employer determines the Employee's elective deferrals to
the Plan for a calendar year would exceed the 403(g) limitation, the Employer
will not make any additional elective deferrals with respect to that Employee
for the remainder of that calendar year, paying in cash to the Employee any
amounts which would result in the Employee's elective deferrals for the
calendar year exceeding the 402(g) limitations. If the Advisory Committee
determines an Employee's elective deferrals already contributed to the Plan
for a calendar year exceed the 402(g) limitation, the Advisory Committee will
distribute the amount in excess of the 402(g) limitation (the "excess
deferral"), as adjusted for allocable income, no later than April 15 of the
following calendar year. If the Advisory Committee distributes the excess
deferral by the appropriate April 15, it may make the distribution
irrespective of any other provision under this Plan or under the Code. The
Advisory Committee will reduce the amount of excess deferrals for a calendar
year distributable to the Employee by the amount of excess contributions (as
determined in Section 5.11), if any, previously distributed to the Employee
for the Plan Year beginning in that calendar year.
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If an Employee participates in another plan under which he makes elective
deferrals pursuant to a Code Section 401(k) arrangement, elective deferrals
under a Simplified Employee Pension, or salary reduction contributions to a
tax-sheltered annuity, irrespective of whether the Employer maintains the
other plan, he may provide the Advisory Committee a written claim for excess
deferrals made for a calendar year. The Employee must submit the claim no
later than the March 1 following the close of the particular calendar year
and the claim must specify the amount of the Employee's elective deferrals
under this Plan which are excess deferrals. If the Advisory Committee
receives a timely claim, it will distribute the excess deferral (as adjusted
for allocable income) the Employee has assigned to this Plan, in accordance
with the distribution procedure described in the immediately preceding
paragraph.
(B) Allocable Income
For purposes of making a distribution of excess deferrals, allocable income
means net income or net loss allocable to the excess deferrals for the
calendar year in which the Employee made the excess deferral and for the "gap
period" measured from the beginning of the next calendar year to the date of
the distribution. If the distribution of the excess deferral occurs during
the calendar year in which the Employee made the excess deferral, the
Advisory Committee will treat as a "gap period" the period from the first day
of that calendar year to the date of the distribution. The Advisory
Committee will determine allocable income in the same manner as described in
Section 5.11 for excess contributions, except the numerator of the allocation
fraction will be the amount of the Employee's excess deferrals and the
denominator of the allocation fraction will be the Employee's Accrued Benefit
attributable to his elective deferrals.
Section 5.11. Actual Deferral Percentage ("ADP") Test.
For each Plan year, the Advisor Committee must determine whether the Plan's
Code Section 401(k) arrangement satisfies either of the following ADP tests:
(i) The average ADP for the Highly Compensated Group does not exceed 1.25
times the average ADP of the Nonhighly Compensated Group; or
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(ii) The average ADP for the Highly Compensated Group does not exceed the
average ADP for the Nonhighly Compensated Group by more than two percentage
points (or the lesser percentage permitted by the multiple use limitation in
Section 5.13) and the average ADP for the Highly Compensated Group is not
more than twice the average ADP for the Nonhighly Compensated Group.
(A) Calculation of ADP.
The average ADP for a group is the average of the separate ADPs calculated
for each Eligible Employee who is a member of that group. An Eligible
Employee's ADP for a Plan Year is the ratio of the Eligible Employee's Salary
Reduction Contributions for the Plan Year to the Employee's Compensation for
the Plan Year. For aggregated family members treated as a single Highly
Compensated Employee, the ADP of the family unit is the ADP determined by
combining the Salary Reduction Contributions and Compensation of all
aggregated family members. A Nonhighly Compensated Employee's ADP does not
included elective deferrals made to this Plan or to any other Plan maintained
by the Employer, to the extent such elective deferrals exceed the 402(g)
limitation described in Section 5.01.
The Advisory Committee may determine (in a manner consistent with Treasury
regulations) the ADPs of the Eligible Employees by taking into account
qualified nonelective contributions or maintained by the Employer. The
Advisory Committee may not include qualified nonelective contributions in the
ADP test unless the allocation of nonelective contributions is
nondiscriminatory when the Advisory Committee takes into account all
nonelective contributions (including the qualified nonelective contributions)
and also when the Advisory Committee takes into account the nonelective
contributions not used in either the ADP test described in this Section 5.11
or the ACP test described in Section 5.12. For Plan years beginning after
December 31, 1989, the Advisory Committee may not include in the ADP test any
qualified nonelective contributions or qualified matching contributions under
another qualified plan unless that plan has the same plan year as this Plan.
The Advisory Committee must maintain records to demonstrate compliance with
the ADP test, including the extent to which the Plan used qualified
nonelective
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contributions or qualified matching contributions to satisfy the test.
(B) Special Aggregation Rule for Highly Compensated Employees.
To determine the ADP of any Highly Compensated Employee, the deferral
contributions taken into account must include any elective deferrals made by
the Highly Compensated Employee under any other Code Section 401(k)
arrangement maintained by the Employer, unless the elective deferrals are to
an ESOP. If the plans containing the Code Section 401(k) arrangements have
different plan year, the Advisory Committee will determine the combined
deferral contributions on the basis of the plan years ending in the same
calendar year.
(C) Aggregation of Certain Section 401(k) Arrangements.
If the Employer treats two plans as a unit for coverage of nondiscrimination
purposes, the Employer must combine the Code Section 401(k) arrangements
under such plans to determine whether either plan satisfies the ADP test.
This aggregation rule applies to the ADP determination for all Eligible
Employees, irrespective of whether an Eligible Employee is a Highly
Compensated Employee or a Nonhighly Compensated Employee. The Advisory
Committee also may elect to aggregate the Code Section 401(k) arrangements
under plans which the Employer does not treat as a unit for coverage or
nondiscrimination purposes. For plan Years beginning after December 31,
1989, an aggregation of Code Section 401(k) arrangements under this paragraph
does not apply to plans which have different play years and, for Plan Years
beginning after December 31, 1988, the Advisory Committee may not aggregate
an ESOP (of the ESOP portion of a plan) with a non-ESOP plan (or non-ESOP
portion of a plan).
(D) Characterization of Excess Contributions.
If, pursuant to this Section 5.11, the Advisory Committee has elected to
include qualified matching contributions in the average ADP, the Advisory
Committee will treat excess contributions as attributable proportionately to
deferral contributions and to qualified matching contributions allocated on
the basis of those deferral contributions. If the total amount of a Highly
Compensated Employee's excess contributions for the Plan Year exceeds his
deferral contributions or
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qualified matching contributions for the Plan Year, the Advisory Committee
will treat the remaining portion of his excess contributions as attributable
to qualified nonelective contributions. The Advisory Committee will reduce
the amount of excess contributions for a Plan Year distributable to a Highly
Compensated Employee by the amount of excess deferrals (as defined in Section
5.09), if any, previously distributed to that Employee for the Employee's
taxable year ending in that Plan Year.
(E) Distribution of Excess Contributions.
If the Advisory Committee determines the Plan fails to satisfy the ADP test
for a Plan Year, it must distribute the excess contributions, as adjusted for
allocable income, during the next Plan Year. However, the Employer will
incur an excise tax equal to 10% of the amount of excess contributions for a
Plan Year not distributed to the appropriate Highly Compensated Employees
during the first 2 1/2 months of that next Plan Year. The excess
contributions are the amount of deferral contributions made by the Highly
Compensated Employees which causes the Plan to fail to satisfy the ADP test.
The Advisory Committee will distribute to each Highly Compensated Employee
his respective share of the excess contributions. The Advisory Committee
will determine the respective shares of excess contributions by starting with
the Highly Compensated Employee(s) who has the greatest ADP, reducing his ADP
to the next highest ADP, then, if necessary, reducing the ADP of the Highly
Compensated Employee(s) at the next highest ADP level (including the ADP of
the Highly Compensated Employee(s) whose ADP the Advisory Committee already
has reduced), and continuing in this manner until the average ADP for the
Highly Compensated Group satisfies the ADP test. If the Highly Compensated
Employee is part of an aggregated family group, the Advisory Committee, in
accordance with the applicable Treasury regulations, will determine each
aggregated family member's allocable share of the excess contributions
assigned to the family unit.
(F) Allocable Income.
To determine the amount of the corrective distribution required under this
Section 5.11, the Advisory Committee must calculate the allocable income for
the Plan Year in which the excess contributions arose and for the "Gap
period" measured from the beginning of the next Plan Year to the date of the
distribution.
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"Allocable income" means net income or net loss. To calculate allocable
income for the Plan Year, the Advisory Committee: (1) first will determine
the net income or net loss for the Plan Year on the Highly Compensated
Employee's Accrued Benefit attributable to Deferral Contributions; and (2)
then will multiply this net income or net loss by the following fraction:
Amount of the Highly Compensated Employee's excess contributions
______________________________________________________________
Accrued Benefit attributable to deferral contributions
The Accrued Benefit attributable to Deferral Contributions includes the
Accrued Benefit attributable to Salary Reduction Contributions, Qualified
Matching Contributions and Qualified Nonelective Contributions taken into
account in the ADP test for the Plan Year or for any prior Plan year. For
purposes of the denominator of the fraction, the Advisory Committee will
calculate the Accrued Benefit attributable to Deferral contributions as of
the last day of the Plan Year (without regard to the net income or net loss
for the Plan Year on that Accrued Benefit).
To calculate allocable income for the "Gap period," the Advisory Committee
will perform the same calculation as described in the preceding paragraph,
except in clause (1) the Advisory Committee will determine, as of the last
day of the month preceding the date of distribution, the net income or net
loss for the "gap period" and in clause (2) will calculate the Accrued
Benefit attributable to deferral contributions as of the day before the
distribution. If the Plan does not perform a valuation on the last day of
the month preceding the date of distribution, the Advisory Committee, in lieu
or the calculation described in this Paragraph, will calculate allocable
income for each month in the "gap period": as equal to 10% of the allocable
income for the Plan Year. Under this alternate calculation, the Advisory
Committee will disregard the month in which the distribution occurs, if the
Plan makes the distribution no later than the 15th day of that month.
Section 5.12. Nondiscrimination Rules for Employer Matching Contributions/
Employee Contributions.
For Plan Years beginning after December 31, 1986, the Advisory Committee must
determine whether the annual Employer Matching Contributions (other than
Qualified Matching Contributions use in the ADP test), if any, and
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the Employee contributions, if any, satisfy one of the following average
contribution percentage ("ACP") tests:
(i) The ACP for the Highly Compensated Group does not exceed 1.25 times the
ACP of the Nonhighly Compensated Group; or
(ii) The ACP for the Highly Compensated Group does not exceed the ACP for the
Nonhighly Compensated Group by more than two percentage points (or the lesser
percentage permitted by the multiple use limitation in Section 5.13) and the
ACP for the Highly Compensated Group is not more than twice the ACP for the
Nonhighly Compensated Group.
(A) Calculation of ACP.
The average contribution percentage for a group is the average of the
separate contribution percentages calculated for each Eligible Employee who
is a member of that group. An Eligible Employee's contribution percentage
for a Plan Year is the ratio of the Eligible Employee's aggregate
contributions for the Plan Year to the Employee's Compensation for the Plan
Year. "Aggregate contributions" are Matching Contributions (other than
Qualified Matching Contributions used in the ADP test) and Employee
Contributions. For aggregated family members treated as a single Highly
Compensated Employee, the contribution percentage of the family unit is the
contribution percentage determined by combining the aggregate contributions
and Compensation of all aggregated family members.
The Advisory Committee, in a manner consistent with Treasury regulations, may
determine the contribution percentages of the Eligible Employees by taking
into account qualified nonelective contributions (other than Qualified
Nonelective Contributions used in the ADP test under Section 5.11) or
elective deferrals, or both, made to this Plan or to any other qualified Plan
maintained by the Employer. The Advisory Committee may not include qualified
nonelective contributions in the ACP test unless the allocation of
nonelective contributions is nondiscriminatory when the Advisory Committee
takes into account all nonelective contributions (including the qualified
nonelective contributions) and also when the Advisory Committee takes into
account only the nonelective contributions not used in either the ADP test
described in Section 5.11 or the ACP test described in
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Section 5.12. The Advisory Committee may not include elective deferrals in
the ACP test, unless the Plan which includes the elective deferrals satisfies
the ADP test both with and without the elective deferrals included in this
ACP test. For Plan Years beginning after December 31, 1989, the Advisory
Committee may not include in the ACP test any qualified nonelective
contributions or elective deferrals under another qualified plan unless that
Plan has the same plan year as this Plan. The Advisory Committee must
maintain records to demonstrate compliance with the ACP test, including the
extent to which the Plan used qualified nonelective contributions or elective
deferrals to satisfy the test.
(B) Special Aggregation Rule for Highly Compensated Employees.
To determine the contribution percentage of any Highly Compensated Employee,
the aggregate contributions taken into account must include any matching
contributions (other than qualified matching contributions used in the ADP
test) and any employee contributions made on his behalf to any other plan
maintained by the Employer, unless the other plan is an ESOP. If the plans
have different play years, the Advisory Committee will determine the combined
aggregate contributions on the basis of the plan years ending in the same
calendar year.
(C) Distribution of Excess Aggregate Contributions.
The Advisory Committee will determine excess aggregate contributions after
determining excess deferrals under Section 5.10 and excess contributions
under Section 5.11. If the Advisory Committee determines the Plan fails to
satisfy the ACP test for a Plan Year, it must distribute the excess aggregate
contributions, as adjusted for allocable income, during the next Plan Year.
However, the Employer will incur an excise tax equal to 10% of the amount of
excess aggregate contributions for a Plan Year not distrusted to the
appropriate Highly Compensated Employees during the first 2 1/2 months of
that next Plan Year. The excess aggregate contributions are the amount of
the aggregate contributions allocated on behalf of the Highly Compensated
Employees which causes the Plan to fail to satisfy the ACP test. The
Advisory Committee will distribute to each Highly Compensated Employee his
respective shares of excess aggregate contributions by starting with the
Highly Compensated
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Employee(s) who has the greatest contribution percentage, reducing his
contribution percentage to the next highest contribution percentage then, if
necessary, reducing the contribution percentage (including the contribution
percentage of the Highly Compensated Employee(s) at the next highest
contribution percentage (including the contribution percentage of the Highly
Compensated Employee(s) whose contribution percentage the Advisory Committee
already has reduced), and continuing in this manner until the ACP for the
Highly Compensated Group satisfies the ACP test. If the Highly Compensated
Employee is part of an aggregated family group, the Advisory Committee, in
accordance with the applicable Treasury regulations, will determine each
aggregated family member's allocable share of the excess aggregate
contributions assigned to the family unit.
(D) Allocable Income
To determine the amount of the corrective distribution required under this
Section 5.12, the Advisory Committee must calculate the allocable income for
the Plan Year in which the excess aggregate contributions arose and for the
"gap period" measured from the beginning of the next Plan Year to the date of
the distribution. "Allocable income" means net income or net loss. The
Advisory Committee will determine allocable income in the same manner as
described in Section 5.11 for excess contributions, except the numerator of
the allocation fraction will be the Highly Compensated Employee's excess
aggregate contributions and the denominator of the allocation fraction will
be the Employee's Accrued Benefit attributable to aggregate contributions
and, if applicable, to Qualified Nonelective Contributions and Elective
Deferrals included in the ACP test for the Plan Year or for any prior Plan
Year.
(E) Characterization of Excess Aggregate Contributions.
The Advisory Committee will treat a Highly Compensated Employee's allocable
share of excess aggregate contributions in the following priority: (1) first
as attributable to his employee contributions which are voluntary
contributions, if any; (2) then as matching contributions allocable with
respect to excess contributions determined under the ADP test; (3) then on a
pro rata basis to matching contributions and to the deferral contributions
relating to those matching
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contributions which the Advisory Committee has included in the ACP test; (4)
then on a pro rata basis to the employee contributions which are mandatory
contributions, if any, and to the matching contributions allocated on the
basis of those mandatory contributions; and (5) last to qualified nonelective
contributions used in the ACP test. To the extent the Highly Compensated
Employee's excess aggregate contributions are attributable to matching
contributions, and he is not 100% vested in his Accrued Benefit attributable
to matching contributions, the Advisory Committee will distribute only the
vested portion and forfeit the nonvested portion. The vested portion of the
Highly Compensated Employee's excess aggregate contributions attributable to
Employer matching contributions is the total amount of such excess aggregate
contributions (as adjusted for allocable income) multiplied by his vested
percentage (determined as of the last day of the Plan Year for which the
Employer made the matching contribution). The Plan will allocate forfeited
excess aggregate contributions to reduce Employer matching contributions for
the Plan Year in which the forfeiture occurs.
Section 5.13. Multiple Use Limitation.
For Plan Years beginning after December 31, 1988, if at least one Highly
Compensated Employee is includible in the ADP test and in the ACP test, the
sum of the Highly Compensated Group's ADP and ACP may not exceed the multiple
use limitation.
The multiple use limitation is the sum of (i) and (ii):
(i) 125% of the greater of: (a) the ADP of the Nonhighly Compensated Group
under the Code Section 401(k) arrangement; or (b) the ACP of the Nonhighly
Compensated Group for the Plan Year beginning with or within the Plan Year of
the Code Section 401(k) arrangement.
(ii) 2% plus the lesser of (i) (a) or (i) (b), but no more than twice the
lesser of (i) (a) or (i) (b).
The Advisory Committee, in lieu of determining the multiple use limitation as
the sum of (i) and (ii), may elect to determine the multiple use limitation
as the sum of (iii) and (iv).
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(iii) 125% of the lesser of: (a) the ADP of the Nonhighly Compensated Group
under the Code Section 401(k) arrangement; or (b) the ACP of the Nonhighly
Compensated Group for the Plan year beginning with or within the Plan Year of
the Code Section 401(k) arrangement.
(iv) 2% plus the greater of (iii) (a) or (iii) (b), but no more than twice
the greater of (iii) (a) or (iii) (b).
This Section 5.13 does not apply unless, prior to application of the multiple
use limitation, the ADP and the ACP of the Highly Compensated Group each
exceeds 125% of the respective percentages for the Nonhighly Compensated
Group.
The Advisory Committee will determine whether the Plan satisfies the multiple
use limitation after applying the ADP test under Section 5.11 and the ACP
test under Section 5.12 and after making any corrective distributions
required by those Sections. If, after applying this Section 5.13 the
Advisory Committee determines the Plan has failed to satisfy the multiple use
limitation, the Advisory Committee will correct the failure by treating the
excess amount as excess aggregate contributions under Section 5.12. This
Section 5.13 does not apply unless, prior to application of the multiple use
limitation, the ADP and the ACP of the Highly Compensated Group each exceeds
125% of the respective percentages for the Nonhighly Compensated Group.
3. That the Plan is hereby amended by replacing that portion of
the first paragraph of Section 7.02 which precedes the vesting schedule with
the following:
(a) A Participant's Accrued Benefit derived from Salary Reduction
Contributions, Employer Matching Contributions and Qualified Nonelective
Contributions under Section 5.01 shall always be one hundred percent (100%)
Nonforfeitable. A Participant's Accrued Benefit derived from Employer
Nonelective Contributions under Section 5.01 shall be one hundred percent
(100%) Nonforfeitable upon and after his attaining Normal Retirement Age (if
employed by the Employer on or after that date), or if his employment
terminates as a result of death or disability. If a Participant's employment
terminates prior to Normal Retirement Age for any reason other than death or
disability, then for each year of
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Service he shall receive a Nonforfeitable percentage of his Accrued Benefit
(forfeiting the balance) derived from Employer Nonelective Contributions
equal to the following:
In Witness Whereof, the Company and the Trustee have executed this instrument
as of the ___ day of ___________________, 1992.
Brenton Banks, Inc. Brenton Bank, N.A.
By /s/ C. Robert Brenton By /s/ Stacy G. Van Blair
Its ___________________________ Its Vice President/Trust Officer
Company Trustee
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Second Amendment To Restated Trust Agreement
Brenton Banks, Inc. Employees' Retirement Plan
This Agreement, made by and between Brenton Banks, Inc., a corporation
organized under and existing by virtue of the laws of the State of Iowa
(hereinafter referred to as "Company") and Brenton National Bank, N.A.
(hereinafter referred to as "Trustee").
Whereas, the Company and the Trustee originally entered into a Trust
agreement effective for the Plan Year ended December 31, 1986; and
Whereas, such Trust Agreement was amended and restated on June 24, 1991,
effective January 1, 1987; and
Whereas, the parties hereto now desire to amend such Trust Agreement in
certain respects, such amendment to be effective January 1, 1993;
Now, Therefore, in consideration of the mutual undertakings herein contained,
It Is Agreed as follows:
1. That the Plan is hereby amended by replacing the third paragraph of
section 5.01(A) of the Plan, relating to Employer Matching Contributions,
with the following:
Employer Matching Contributions. An amount equal to 100% of each
Participant's first tier of Salary Reduction Contributions for the Plan Year,
plus 50% of each participant's second tier of Salary Reduction Contributions
for the Plan Year. The Advisory Committee will treat as the first tier of
Salary Reduction Contributions, an amount not exceeding 2% of each
Participants Compensation. The Advisory Committee will treat as the second
tier of Salary Reduction Contributions an amount equal to the Participant's
Salary Reduction Contributions in excess of 2% of participant's Compensation,
but not exceeding 4% of each participant's Compensation. The Employer also
may contribute an additional amount, equal to a percentage the Employer from
time to time may deem advisable of each Participant's Compensation. The
Employer will determine the amount of its matching contributions by
disregarding Participants not entitled to an allocation of Employer matching
contributions.
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2. That Section 5.08 of the Plan is hereby amended by replacing "15%" in the
first sentence of the second paragraph thereof with "13%".
3. That Section 7.01 of the Plan is hereby amended by replacing the first
sentence thereof with the following:
A Participant's Normal Retirement Age is sixty-two (62) years of age.
In Witness Whereof, the Company and the Trustee have executed this instrument
as of the 31st day of December, 1992.
Brenton Banks, Inc. Brenton Bank, N.A.
By /s/ C. Robert Brenton By /s/ Stacy G. Van Blair
Its ___________________________ Its Vice President/Trust Officer
Company Trustee
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Third Amendment to Restated Trust Agreement
Brenton Banks, Inc. Employees' Retirement Plan
This Agreement, made by and between Brenton Banks, Inc., a corporation
organized under and existing by virtue of the laws of the State of Iowa
(hereinafter referred to as "Company") and Brenton Bank, N.A. (hereinafter
referred to as "Trustee").
Whereas, the Company and the Trustee originally entered into a Trust
Agreement effective for the Plan Year ended December 31, 1986; and
Whereas, such Trust Agreement was amended and restated on June 24, 1991,
effective January 1, 1987; and
Whereas, the parties hereto now desire to amend such Trust Agreement in
certain respects, such amendment to be effective January 1, 1994;
Now, therefore, in consideration of the mutual undertakings herein contained,
it is agreed as follows:
1. That the Plan is hereby amended by replacing the first sentence in section
2.01(7) of the Plan relating to the definition of "Compensation," with the
following:
The term "Compensation" shall mean all wages, salaries, and other payments
for personal services actually rendered in the course of employment with the
Employer, including bonuses, commissions, overtime pay, incentive pay,
benefit payments under the Company's short-term disability plan and salary
reduction contributions voluntarily authorized as contributions to this Plan
or to the Employer's Cafeteria Plan by eligible employees. This definition
of Compensation does not include: stock options, club dues, automobile,
educational assistance, moving expenses, split dollar life insurance,
severance pay, or benefits under the Employer's employee stock purchase
program, long term stock compensation program, group term life insurance
plan, employee P.C. purchase plan or other similar fringe benefits. For any
self-employed individual "Compensation" shall mean Earned Income.
2. That Section 5.02 of the Plan is hereby amended by replacing "4%" in
subparagraph (a) thereof with "4.5%".
In Witness Whereof, the Company and the Trustee have executed this instrument
as of the 18th day of July, 1994.
Brenton Banks, Inc. Brenton Bank, N.A.
By /s/ C. Robert Brenton By /s/ Stacy G. Van Blair
Its ___________________________ Its Vice President/Trust Officer
Company Trustee
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Fourth Amendment to Restated Trust Agreement
Brenton Banks, Inc. Employees' Retirement Plan
This Agreement, made by and between Brenton Banks, Inc., a corporation
organized under and existing by virtue of the laws of the State of Iowa
(hereinafter referred to as "Company") and Brenton Bank, N.A. (hereinafter
referred to as "Trustee").
Whereas, the Company and the Trustee originally entered into a Trust
Agreement effective for the Plan Year ended December 31, 1986; and
Whereas, such Trust Agreement was amended and restated on June 24, 1991,
effective January 1, 1987; and
Whereas, the parties hereto now desire to amend such Trust Agreement in
certain respects;
Now, therefore, in consideration of the mutual undertakings herein contained,
it is agreed as follows:
1. That Section 5.01 of the Plan is hereby amended effective January 1, 1994
by replacing "4%" in subparagraph (a) thereof with "4.5%". (This amendment
was included in the Third Amendment to the Plan, but contained in incorrect
section reference.)
2. That the Plan be amended by adding the following Appendix to the Plan:
Appendix to the Plan
Article A
This Article is necessary to comply with the Unemployment Compensation
Amendments Act of 1992.
Section A-1. Application. This Article applies to distributions made on or
after January 1, 1993. Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a distributee's election under this
Article, a distributee may elect, at the time and in the manner prescribed by
the Plan Administrator, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by the
distributee in a direct rollover.
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Section A-2. Definitions.
(a) "Eligible rollover distribution." An eligible rollover distribution is
any distribution of all or any portion of the balance to the credit of the
distributee, except that an eligible rollover distribution does not include:
any distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or life
expectancy) of the distributee or the joint lives (or joint life expec-
tancies) of the distributee and the distributee's designated beneficiary, or
for a specified period of ten years or more; any distribution to the extent
such distribution is required under Code Section 401(a)(9); and the portion
of any distribution that is not includible in gross income (determined
without regard to the exclusion of net unrealized appreciation with respect
to employer securities).
(b) "Eligible retirement plan." An eligible retirement plan is an individual
retirement account described in Code Section 408(a), an individual retirement
annuity described in Code Section 408(b), an annuity plan described in Code
Section 403(a), or a qualified trust described in Code Section 401(a), that
accepts the distributee's eligible rollover distribution. However, in the
case of an eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account or individual
retirement annuity.
(c) "Distributee." A distributee includes an Employee or former Employee. In
addition, the Employee's or former Employee's surviving spouse and the
employee's or former Employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in Code Section
414(p), are distributees with regard to the interest of the spouse or former
spouse.
(d) "Direct rollover." A direct rollover is a payment by the Plan to the
eligible retirement plan specified by the distributee.
Article B
This Article is necessary to comply with the Omnibus Budget Reconciliation
Act of 1993 (OBRA '93).
In addition to other applicable limitations set forth in the plan, and
notwithstanding any other provision of the plan to the contrary, for plan
years beginning on or after
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January 1, 1994, the annual compensation of each employee taken into account
under the plan shall not exceed the OBRA '93 annual compensation limit. The
OBRA '93 annual compensation limit is $150,000, as adjusted by the
Commissioner for increases in the cost of living in accordance with Section
401(a)(17)(B) of the Internal Revenue Code. The cost-of-living adjustment in
effect for a calendar year applies to any period, not exceeding 12 months,
over which compensation is determined (determination period) beginning in
such calendar year. If a determination period consists of fewer than 12
months, the OBRA '93 annual compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in the determination
period, and the denominator of which is 12.
For plan years beginning on or after January 1, 1994, any reference in this
plan to the limitation under Section 401(a)(17) of the Code shall mean the
OBRA '93 annual compensation limit set forth in this provision.
If compensation for any prior determination period is taken into account in
determining an employee's benefits accruing in the current plan year, the
compensation for that prior determination period is subject to the OBRA '93
annual compensation limit in effect for that prior determination period. For
this purpose, for determination periods beginning before the first day of the
first plan year beginning on or after January 1, 1994, the OBRA '93 annual
compensation limit is $150,000.
In Witness Whereof, the Company and the Trustee have executed this instrument
as of the 20th day of December, 1994.
BRENTON BANKS, INC. BRENTON BANK, N.A.
By /s/ Steven T. Schuler By /s/
Its CFO/Treasurer/Secretary Its Vice President
Company Trustee
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Exhibit 10.17
Indenture Agreement with respect to Capital Notes dated
April 12, 1993. This Indenture Agreement is incorporated
by reference from Form 10-K of Brenton Banks, Inc., for
the year ended December 31, 1993.
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Exhibit 10.18
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.
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Exhibit 10.19
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.
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Exhibit 10.20
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.
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Exhibit 10.21
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.
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Exhibit 10.22
Indenture Agreement with respect to Capital Notes dated
April 8, 1994.
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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 8 , 1 9 9 4
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INDENTURE AGREEMENT
THIS INDENTURE AGREEMENT is made as of the 8th day of April, 1994,
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 8th day of April,
1994.
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BRENTON BANKS, INC. BANKERS TRUST COMPANY
By____________________________ By___________________________
Robert L. DeMeulenaere, President Bryan Hall, Trust Officer
ATTEST:
By____________________________
Steven T. Schuler,
Chief Financial Officer and
Treasurer/Secretary
STATE OF IOWA )
) ss.
COUNTY OF POLK )
On this ___ day of ___________________, 1994, before me, a Notary Public
in and for Polk County, Iowa, personally appeared Robert L. DeMeulenaere,
President, and Steven T. Schuler, Chief Financial Officer and
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/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 _____________________, 1994, 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
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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
128
<PAGE>
5.00% Capital Notes
Series SS-22 through SS-33
Due 1998 through 2009
5.25% Capital Notes
Series TT-22 through TT-33
Due 1998 through 2009
5.50% Capital Notes
Series UU-22 through UU-33
Due 1998 through 2009
5.75% Capital Notes
Series VV-22 through VV-33
Due 1998 through 2009
6.00% Capital Notes
Series G-22 through G-33
Due 1998 through 2009
6.25% Capital Notes
Series Q-22 through Q-33
Due 1998 through 2009
6.50% Capital Notes
Series J-22 through J-33
Due 1998 through 2009
6.75% Capital Notes
Series K-22 through K-33
Due 1998 through 2009
7.00% Capital Notes
Series M-22 through M-33
Due 1998 through 2009
7.25% Capital Notes
Series N-22 through N-33
Due 1998 through 2009
7.50% Capital Notes
Series R-22 through R-33
Due 1998 through 2009
7.75% Capital Notes
Series T-22 through T-33
Due 1998 through 2009
8.00% Capital Notes
Series U-22 through U-33
Due 1998 through 2009
8.25% Capital Notes
Series V-22 through V-33
Due 1998 through 2009
8.50% Capital Notes
Series W-22 through W-33
Due 1998 through 2009
8.75% Capital Notes
Series X-22 through X-33
Due 1998 through 2009
9.00% Capital Notes
Series Y-22 through Y-33
Due 1998 through 2009
9.25% Capital Notes
Series B-22 through B-33
Due 1998 through 2009
9.50% Capital Notes
Series A-22 through A-33
Due 1998 through 2009
9.75% Capital Notes
Series C-22 through C-33
Due 1998 through 2009
10.00% Capital Notes
Series D-22 through D-33
Due 1998 through 2009
10.25% Capital Notes
Series E-22 through E-33
Due 1998 through 2009
10.50% Capital Notes
Series F-22 through F-33
Due 1998 through 2009
10.75% Capital Notes
Series H-22 through H-33
Due 1998 through 2009
11.00% Capital Notes
Series I-22 through I-33
Due 1998 through 2009
11.25% Capital Notes
Series L-22 through L-33
Due 1998 through 2009
11.50% Capital Notes
Series O-22 through O-33
Due 1998 through 2009
11.75% Capital Notes
Series S-22 through S-33
Due 1998 through 2009
12.00% Capital Notes
Series Z-22 through Z-33
Due 1998 through 2009
12.25% Capital Notes
Series P-22 through P-33
Due 1998 through 2009
12.50% Capital Notes
Series SS-22 through SS-33
Due 1998 through 2009
12.75% Capital Notes
Series AA-22 through AA-33
Due 1998 through 2009
13.00% Capital Notes
Series BB-22 through BB-33
Due 1998 through 2009
129
<PAGE>
O
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 8, 1994,
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)
130
<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.
131
<PAGE>
Exhibit 10.23
Split Dollar Insurance Agreement between the Company,
William H. Brenton Crummy Trust and William H. Brenton
Crummy Trust II, dated November 23, 1994.
132
<PAGE>
Split Dollar Insurance Agreement
Collateral Assignment
AGREEMENT, made and entered into this 23rd day of November, 1994, by and
between Brenton Banks, Inc., Des Moines, Iowa ("Company"), and the William H.
Brenton Crummey Trust and the William H. Brenton Crummey Trust II,
irrevocable trusts, for the benefit of William H. Brenton and William H.
Brenton ("Owner"), Des Moines, Iowa.
WHEREAS, William H. Brenton is a valued Employee of the Company, and
Company wishes to provide additional inducement for William H. Brenton's
continued involvement with the Company, and as additional compensation,
Company wishes to assist William H. Brenton with respect to a personal life
insurance program by entering into this Split Dollar Insurance Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties hereto agree as follows:
1. Policy. The life insurance policy (the "Policy") with which this
Agreement deals is identified in Exhibit "A" attached hereto and by this
reference incorporated herein. In the event that this Agreement deals with
multiple life insurance policies, each policy shall be identified in a
separate Exhibit "A" attached hereto, and all references herein to the Policy
shall include all policies with respect to which a separate Exhibit "A" is
attached hereto.
2. Ownership. The Owner shall at all times be the owner of the
Policy, and shall have the sole right to exercise all ownership rights
granted to the owner by the terms of the Policy. It is the express intention
of the parties hereto to reserve to the Owner all rights in the Policy
granted by the terms of the Policy, including, but not limited to, the right
to borrow against the Policy, the right to assign the Owner's interest in the
Policy, the right to change the beneficiary of the Policy, the right to
exercise settlement options, and the right to surrender or cancel the Policy
(in whole or in part). The Company shall not have nor exercise any right in
and to the Policy which could in any way endanger, defeat or impair any of
the rights of the Owner in the Policy. The only rights in and to the Policy
granted to the Company shall be its security interest in the cash value of
the Policy and its right to receive a portion of the death benefit of the
Policy, all as provided herein.
3. Premiums. Premiums on the Policy shall be paid by the parties
hereto as set forth in Exhibit "B" attached hereto and by this reference
incorporate herein.
4. Interest of Company in the Policy. The Company's interest in the
Policy shall be limited to the following rights in the cash value and to a
portion of the death benefit of the Policy as set forth below:
a. In the event the Policy is totally surrendered or
canceled by the Owner, the Company shall receive from the
surrender proceeds of the Policy: (i) the aggregate amount
of cumulative premiums paid by the Company, plus (ii) an
amount, not less than zero, which is calculated by taking
5.2 percent per annum of the total amount of cumulative
premiums paid by the Company to date less $300,000.00
("Amount Due Company").
b. Upon the death of William H. Brenton, or, if the
Policy is a survivorship life insurance product, upon the
death of the survivor of William H. Brenton and William H.
Brenton's spouse, while the Policy remains in force, the
Company shall receive from the death benefit proceeds of
the Policy the Amount Due Company.
133
<PAGE>
c. In the event of the termination of this Agreement,
the Company shall be repaid by the Owner the Amount Due
Company.
d. In the event the Owner obtains a policy loan with
respect to the Policy or in the event the Policy is partially
surrendered and such loan or partial surrender causes the net
cash surrender value of the Policy to be a sum less than the
Amount Due Company, the Owner will repay to the Company a
portion of any Policy loan proceeds or partial surrender
proceeds to the Company so as to cause the net cash surrender
value of the Policy following the policy loan or partial
surrender to be equal to or exceed the Amount Due Company.
As used in this Agreement, the term "net cash surrender value" shall mean the
cash surrender value of the Policy, less the amount of any then existing
loans or withdrawals against the Policy obtained by the Owner. As used in
this Agreement, the term "the aggregate amount of cumulative premiums paid by
the Company" shall mean the aggregate amount of premiums paid by the Company
net of any repayment to the Company of such amount.
5. Collateral Assignment. Contemporaneously herewith the Owner has
assigned the Policy as collateral security to secure payment of the amounts
payable to Company identified herein under a form of Collateral Assignment
which has been filed with the insurance company issuing the Policy. In the
event of a total or partial surrender of the Policy, termination of this
Agreement or upon the death of William H. Brenton, or, if the Policy is a
survivorship life insurance product, upon the death of the survivor of
William H. Brenton and William H. Brenton's spouse, the amounts payable to
the Company identified herein shall be paid to the Company in accordance with
the terms of such Collateral Assignment.
6. Death of William H. Brenton. Upon the death of William H. Brenton,
or, if the Policy is a survivorship life insurance product, upon the death of
the survivor of William H. Brenton and William H. Brenton's spouse, the
balance of the death benefit under the Policy in excess of the amount payable
to the Company under the provisions hereof, if any, shall be paid directly to
the beneficiary or beneficiaries designated by the Owner in the manner and in
the amounts provided by the beneficiary designation of the Policy filed with
the insurance company issuing the Policy.
7. Termination. This Agreement may be terminated at any time upon the
mutual agreement of the parties hereto.
8. Assignment by Owner. In the event the Owner shall transfer all
interest in the Policy to a transferee, then all of the Owner's interest in
the Policy and in this Agreement shall be vested in the transferee, who shall
become a substituted party hereto and who shall become bound by the
provisions hereof, and the Owner shall have no further interest in the Policy
or in this Agreement.
9. Assignment by Company. The Company shall not assign any of its
rights in the Policy or in this Agreement to anyone other than the Owner (or
the Owner's transferee, if the Owner has transferred its rights in the
Policy) without the prior written consent of the Owner (or the Owner's
transferee, if the Owner has transferred its rights in the Policy). Any
attempted assignment or transfer by the Company in violation of this
paragraph shall be null and void and of no force and effect.
10. Insurer Liability. The insurance company which issues the Policy
shall not be deemed to be bound by the provisions of this Agreement nor to
have notice of the terms of this Agreement. Any and all liability of the
insurance company issuing the Policy shall be determined solely by reference
to the terms of the Policy, any applicable riders to the Policy, the
beneficiary designation with respect to the Policy, the Collateral Assignment
with respect to the Policy and any other documents filed with the insurance
company and accepted and acknowledged by the insurance company.
134
<PAGE>
11. Split Dollar Plan. This Agreement is intended to qualify the
ownership of the Policy as a collateral assignment method split dollar life
insurance employee benefit plan as described in Revenue Ruling 64-328, and
shall be administered so as to qualify as such a plan.
12. Entire Agreement. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter hereof and cannot be
amended, altered, modified, except by a written instrument signed by each of
the parties hereto.
13. Notices. Any notice, consent or demand required or permitted to be
given under the provisions of this Agreement by one party to another shall be
in writing, shall be signed by the party giving the notice, and shall be
given either by delivery to the other party personally, or by mailing, by
United States certified mail, postage prepaid, to the other party, addressed
to the other party's last known mailing address as shown on the records of
the Company. In the event such notice is given by mailing, the date of
mailing shall be deemed the date of the giving of such notice, consent or
demand.
14. Binding on Successors and Assigns. This Agreement shall bind and
inure to the benefit of the parties and their respective heirs, successors
and assigns.
15. Governing Law. This Agreement shall be deemed made in the state of
Iowa Business Corporation Act, the this Agreement and the rights of the
parties hereunder shall be governed by and construed in accordance with the
laws of the state of Iowa Business Corporation Act.
16. Severability. In the event a particular provision of this
Agreement is held to be invalid under applicable law, effect shall
nevertheless be given to all valid provisions hereof to further the
objectives of this Agreement.
17. Interpretation. Where appropriate in this Agreement, words used in
the singular shall include the plural, and words used in the masculine or
neuter shall include the feminine.
18. Named Fiduciary and Plan Administrator. For the purposes of the
Employee Retirement Security Act of 1974 (ERISA), the Company shall be the
"Named Fiduciary" and Plan Administrator of the split dollar insurance plan
for which this Agreement is hereby designated the written plan instrument.
The Company, as Named Fiduciary, shall have authority to control and manage
the operation and administration of this Agreement, and it shall be
responsible for establishing and carrying out a funding policy and method
consistent with the objectives of this Agreement. Any decision by the
Company denying a claim for benefits under this Agreement shall be stated in
writing, set forth specific reasons for the denial, and be delivered or
mailed to the claimant. All claim procedures under this split dollar
insurance plan shall be performed in compliance with the requirements of
ERISA.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the year and date first above written.
Brenton Banks, Inc.
Company
By /s/ Steven T. Schuler
Its CFO/Treasurer/Sec.
135
<PAGE>
Brenton Bank, N. A., Trustee of the
William H. Brenton Crummy Trust
Owner
By /s/ Gary Ernst
Its Vice Pres. Sr. Trust Officer
Brenton Bank, N.A. Trustee of the
William H. Brenton Crummy Trust II
Owner
By /s/ Gary Ernst
Its Vice Pres. Sr. Trust Officer
William H. Brenton
Owner
/s/ William H. Brenton
136
<PAGE>
EXHIBIT "A"
Policy Number: 117215X
Issued by: EMC Insurance Companies
Providing for initial death benefit proceeds of $ 300,000
This policy is a life insurance policy on the life of William H.
Brenton. The policy also provides a death benefit on the life of Natalie G.
Brenton in the amount of $150,000.
137
<PAGE>
EXHIBIT "A"
Policy Number: 119921
Issued by: EMC Insurance Companies
Providing for initial death benefit proceeds of $ 400,000
This policy is a life insurance policy on the life of William H.
Brenton.
138
<PAGE>
EXHIBIT "A"
Policy Number: 137577
Issued by: EMC Insurance Companies
Providing for initial death benefit proceeds of $ 400,000
This policy is a life insurance policy on the life of William H.
Brenton.
139
<PAGE>
EXHIBIT "A"
Policy Number: 121476
Issued by: EMC Insurance Companies
Providing for initial death benefit proceeds of $ 450,000
This policy is a life insurance policy on the life of William H.
Brenton. The policy also provides a death benefit on the life of Natalie G.
Brenton in the amount of $350,000.
140
<PAGE>
EXHIBIT "A"
Policy Number: 146078
Issued by: EMC Insurance Companies
Providing for initial death benefit proceeds of $ 500,000
This policy is a life insurance policy on the life of William H.
Brenton.
141
<PAGE>
EXHIBIT "A"
Policy Number: 7890362
Issued by: Penn Mutual Life Insurance Company
Providing for initial death benefit proceeds of $ 500,000
This policy is a survivorship life insurance policy on the lives of
William H. Brenton and Natalie G. Brenton, William H. Brenton's wife, which
pays a death benefit only upon the death of the survivor of William H.
Brenton and Natalie G. Brenton.
142
<PAGE>
EXHIBIT "A"
Policy Number: 4239293
Issued by: Principal Mutual Life Insurance Company
Providing for initial death benefit proceeds of $ 500,000
This policy is a life insurance policy on the life of William H.
Brenton.
143
<PAGE>
EXHIBIT "A"
Policy Number: 4239294
Issued by: Principal Mutual Life Insurance Company
Providing for initial death benefit proceeds of $ 500,000
This policy is a life insurance policy on the life of Natalie G.
Brenton.
144
<PAGE>
EXHIBIT "A"
Policy Number: 44243450
Issued by: Equitable Variable Life Insurance Company
Providing for initial death benefit proceeds of $ 750,000
This policy is a life insurance policy on the life of William H.
Brenton.
145
<PAGE>
EXHIBIT "B"
Premiums
The Company shall pay the following premiums due on each Policy.
<TABLE>
<CAPTION>
Policy Number Premiums Paid
<S> <C>
EMC Insurance Companies
117215X $ 3,700
119921 7,758
137577 9,120
121476 11,390
146078 20,300
Penn Mutual Life Insurance Company
7890362 6,532
Principal Mutual Life Insurance Company
4239293 6,300
4239294 5,100
Equitable Variable Life Insurance Company
44243450 43,800
________
Total premiums paid $114,000
________
________
</TABLE>
146
<PAGE>
Collateral Assignment
THIS ASSIGNMENT is made and entered into this ________ day of December,
1994, by the undersigned as owner (the "Owner") of a certain life insurance
policy number 117215X (the "Policy") issued by EMC Insurance Companies (the
"Insurer") upon the life of William H. Brenton, and Brenton Bank, Inc. (the
"Assignee").
WHEREAS, William H. Brenton ("Employee") is a valued Employee of the
Assignee, and
WHEREAS, Owner has entered into a Split Dollar Agreement with the
Assignee (the "Agreement"), and
WHEREAS, in consideration of the Assignee agreeing to make certain
premium payments, the Owner agrees to grant the Assignee a security interest
in the Policy as collateral security for the repayment of the cumulative
premiums paid by the Assignee.
NOW, THEREFORE, the undersigned Owner hereby assigns, transfers and sets
over to the Assignee the following specific rights in the Policy subject to
the following terms and conditions:
1. This Assignment is made, and the Policy is to be held, as
collateral security for all liabilities of the Owner to the Assignee, either
now existing or that may hereafter arise, pursuant to the terms of the
Agreement.
2. The Assignee's interest in the Policy shall be strictly limited to:
a. The right to be repaid from the surrender proceeds
of the Policy: (i) the aggregate amount of cumulative premiums
paid by the Company, plus (ii) an amount, not less than zero,
which is calculated by taking 5.2 percent per annum of the
total amount of cumulative premiums paid by the Company to date
less $300,000.00 ("Amount Due Company") in the event the Policy
is totally surrendered or canceled by the Owner.
b. The right to be repaid from the death benefit proceeds
of the Policy the Amount Due Company upon the death of the
Employee, or, if the Policy is a survivorship life insurance
product, upon the death of the survivor of the Employee and
the Employee's spouse, while the Policy remains in force.
c. The right to be repaid the Amount Due Company in the
event of the termination of the Agreement.
d. The right to be repaid a portion of any Policy loan
proceeds or partial surrender proceeds paid to the Assignee
so as to cause the net cash surrender value of the Policy to
be equal to or exceed the Amount Due Company in the event the
Owner obtains a Policy loan or in the event the Policy is
partially surrendered and such loan or partial surrender
causes the net cash surrender value of the Policy to be a
sum less than the Amount Due Company.
As used in this Assignment, the term "net cash surrender value" shall mean
the cash surrender value of the Policy, less the amount of any then existing
loans or withdrawals against the Policy obtained by the Owner. As used in
this Assignment, the term "the aggregate amount of cumulative premiums paid
by the Assignee" shall mean the aggregate amount of premiums paid by the
Assignee net of any repayment to the Assignee of such amount.
147
<PAGE>
3. The Owner shall retain all incidents of ownership in the Policy,
including, but not limited to, the sole and exclusive rights to: borrow
against the Policy; make withdrawals from the Policy; assign Owner interest
in the Policy; change the beneficiary of the Policy; exercise settlement
options; and, surrender or cancel the Policy (in whole or in part). All of
these incidents of ownership shall be exercisable by the Owner unilaterally
and without the consent of any other person.
4. The Assignee shall, upon request, if the Policy is in the
possession of the Assignee, forward the Policy to the Insurer, without
unreasonable delay, for change of beneficiary, any election of optional mode
of settlement, or the exercise of any other right reserved by the Owner.
5. The Insurer is hereby authorized to recognize the Assignee's
claims, including the validity or the amount of any liabilities of the Owner
to the Assignee under the Agreement, the existence of any default therein,
the giving of any notice required therein or herein, or the application to be
made by the Assignee of any amounts to be paid to the Assignee. Upon the
Insurer giving prior written notice to Owner of the proposed payment of
amounts to the Assignee, the receipt of the Assignee for any sums received by
it shall be a full discharge and release therefore to the Insurer.
6. The Insurer shall be fully protected in recognizing a request made
by the Owner for surrender or cancellation of the Policy, in whole or in
part, or in recognizing a request made by the Owner for any loans against the
Policy permitted by the terms of the Policy. In the event this request is
made, upon prior written notice thereof to the Assignee the Insurer may pay
the proceeds of any surrender, cancellation, or loan to the sole order of the
Owner, or as the Owner shall direct.
7. Upon the full payment of the liabilities of the Owner to the
Assignee pursuant to the Agreement, the Assignee shall execute an appropriate
release of this Collateral Assignment.
8. It is the express intention of the Owner to assign a limited
interest in the Policy to the Assignee as security for certain premium
payments made by the Assignee, without giving the Assignee any incidents of
ownership in the Policy within the meaning of section 2042 of the Internal
Revenue Code (and regulations thereunder), or any similar provision of
subsequent law. All provisions of this Collateral Assignment (and of the
Agreement) shall be construed and exercised so as to effect this intention.
IN WITNESS WHEREOF, the Owner and Assignee have executed this Assignment
and the Insurer has acknowledged its acceptance of this Assignment effective
the day and year first above written.
William H. Brenton
Owner
___________________________________________
Brenton Banks, Inc.
Assignee
By ________________________________________
Its _______________________________________
148
<PAGE>
ACCEPTED:
EMC Insurance Companies
Insurer
By_________________________________________
Its________________________________________
149
<PAGE>
Collateral Assignment
THIS ASSIGNMENT is made and entered into this ________ day of December,
1994, by the undersigned as owner (the "Owner") of a certain life insurance
policy number 119921 (the "Policy") issued by EMC Insurance Companies (the
"Insurer") upon the life of William H. Brenton, and Brenton Bank, Inc. (the
"Assignee").
WHEREAS, William H. Brenton ("Employee") is a valued Employee of the
Assignee, and
WHEREAS, Owner has entered into a Split Dollar Agreement with the
Assignee (the "Agreement"), and
WHEREAS, in consideration of the Assignee agreeing to make certain
premium payments, the Owner agrees to grant the Assignee a security interest
in the Policy as collateral security for the repayment of the cumulative
premiums paid by the Assignee.
NOW, THEREFORE, the undersigned Owner hereby assigns, transfers and sets
over to the Assignee the following specific rights in the Policy subject to
the following terms and conditions:
1. This Assignment is made, and the Policy is to be held, as
collateral security for all liabilities of the Owner to the Assignee, either
now existing or that may hereafter arise, pursuant to the terms of the
Agreement.
2. The Assignee's interest in the Policy shall be strictly limited to:
a. The right to be repaid from the surrender proceeds
of the Policy: (i) the aggregate amount of cumulative premiums
paid by the Company, plus (ii) an amount, not less than zero,
which is calculated by taking 5.2 percent per annum of the total
amount of cumulative premiums paid by the Company to date less
$300,000.00 ("Amount Due Company") in the event the Policy is
totally surrendered or canceled by the Owner.
b. The right to be repaid from the death benefit proceeds
of the Policy the Amount Due Company upon the death of the
Employee, or, if the Policy is a survivorship life insurance
product, upon the death of the survivor of the Employee and the
Employee's spouse, while the Policy remains in force.
c. The right to be repaid the Amount Due Company in the
event of the termination of the Agreement.
d. The right to be repaid a portion of any Policy loan
proceeds or partial surrender proceeds paid to the Assignee so
as to cause the net cash surrender value of the Policy to be
equal to or exceed the Amount Due Company in the event the
Owner obtains a Policy loan or in the event the Policy is
partially surrendered and such loan or partial surrender
causes the net cash surrender value of the Policy to be a
sum less than the Amount Due Company.
As used in this Assignment, the term "net cash surrender value" shall mean
the cash surrender value of the Policy, less the amount of any then existing
loans or withdrawals against the Policy obtained by the Owner. As used in
this Assignment, the term "the aggregate amount of cumulative premiums paid
by the Assignee" shall mean the aggregate amount of premiums paid by the
Assignee net of any repayment to the Assignee of such amount.
150
<PAGE>
3. The Owner shall retain all incidents of ownership in the Policy,
including, but not limited to, the sole and exclusive rights to: borrow
against the Policy; make withdrawals from the Policy; assign Owner interest
in the Policy; change the beneficiary of the Policy; exercise settlement
options; and, surrender or cancel the Policy (in whole or in part). All of
these incidents of ownership shall be exercisable by the Owner unilaterally
and without the consent of any other person.
4. The Assignee shall, upon request, if the Policy is in the
possession of the Assignee, forward the Policy to the Insurer, without
unreasonable delay, for change of beneficiary, any election of optional mode
of settlement, or the exercise of any other right reserved by the Owner.
5. The Insurer is hereby authorized to recognize the Assignee's
claims, including the validity or the amount of any liabilities of the Owner
to the Assignee under the Agreement, the existence of any default therein,
the giving of any notice required therein or herein, or the application to be
made by the Assignee of any amounts to be paid to the Assignee. Upon the
Insurer giving prior written notice to Owner of the proposed payment of
amounts to the Assignee, the receipt of the Assignee for any sums received by
it shall be a full discharge and release therefore to the Insurer.
6. The Insurer shall be fully protected in recognizing a request made
by the Owner for surrender or cancellation of the Policy, in whole or in
part, or in recognizing a request made by the Owner for any loans against the
Policy permitted by the terms of the Policy. In the event this request is
made, upon prior written notice thereof to the Assignee the Insurer may pay
the proceeds of any surrender, cancellation, or loan to the sole order of the
Owner, or as the Owner shall direct.
7. Upon the full payment of the liabilities of the Owner to the
Assignee pursuant to the Agreement, the Assignee shall execute an appropriate
release of this Collateral Assignment.
8. It is the express intention of the Owner to assign a limited
interest in the Policy to the Assignee as security for certain premium
payments made by the Assignee, without giving the Assignee any incidents of
ownership in the Policy within the meaning of section 2042 of the Internal
Revenue Code (and regulations thereunder), or any similar provision of
subsequent law. All provisions of this Collateral Assignment (and of the
Agreement) shall be construed and exercised so as to effect this intention.
IN WITNESS WHEREOF, the Owner and Assignee have executed this Assignment
and the Insurer has acknowledged its acceptance of this Assignment effective
the day and year first above written.
Brenton Bank, N.A. Trustee of the
William H. Brenton Crummy Trust
Owner
By_________________________________________
Its________________________________________
Brenton Banks, Inc.
Assignee
By ________________________________________
Its _______________________________________
151
<PAGE>
ACCEPTED:
EMC Insurance Companies
Insurer
By________________________________________
Its_______________________________________
152
<PAGE>
Collateral Assignment
THIS ASSIGNMENT is made and entered into this ________ day of December,
1994, by the undersigned as owner (the "Owner") of a certain life insurance
policy number 137577 (the "Policy") issued by EMC Insurance Companies (the
"Insurer") upon the life of William H. Brenton, and Brenton Bank, Inc. (the
"Assignee").
WHEREAS, William H. Brenton ("Employee") is a valued Employee of the
Assignee, and
WHEREAS, Owner has entered into a Split Dollar Agreement with the
Assignee (the "Agreement"), and
WHEREAS, in consideration of the Assignee agreeing to make certain
premium payments, the Owner agrees to grant the Assignee a security interest
in the Policy as collateral security for the repayment of the cumulative
premiums paid by the Assignee.
NOW, THEREFORE, the undersigned Owner hereby assigns, transfers and sets
over to the Assignee the following specific rights in the Policy subject to
the following terms and conditions:
1. This Assignment is made, and the Policy is to be held, as
collateral security for all liabilities of the Owner to the Assignee, either
now existing or that may hereafter arise, pursuant to the terms of the
Agreement.
2. The Assignee's interest in the Policy shall be strictly limited to:
a. The right to be repaid from the surrender proceeds
of the Policy: (i) the aggregate amount of cumulative premiums
paid by the Company, plus (ii) an amount, not less than zero,
which is calculated by taking 5.2 percent per annum of the
total amount of cumulative premiums paid by the Company to
date less $300,000.00 ("Amount Due Company") in the event the
Policy is totally surrendered or canceled by the Owner.
b. The right to be repaid from the death benefit proceeds
of the Policy the Amount Due Company upon the death of the
Employee, or, if the Policy is a survivorship life insurance
product, upon the death of the survivor of the Employee and
the Employee's spouse, while the Policy remains in force.
c. The right to be repaid the Amount Due Company in the
event of the termination of the Agreement.
d. The right to be repaid a portion of any Policy loan
proceeds or partial surrender proceeds paid to the Assignee
so as to cause the net cash surrender value of the Policy to
be equal to or exceed the Amount Due Company in the event the
Owner obtains a Policy loan or in the event the Policy is
partially surrendered and such loan or partial surrender causes
the net cash surrender value of the Policy to be a sum less
than the Amount Due Company.
As used in this Assignment, the term "net cash surrender value" shall mean
the cash surrender value of the Policy, less the amount of any then existing
loans or withdrawals against the Policy obtained by the Owner. As used in
this Assignment, the term "the aggregate amount of cumulative premiums paid
by the Assignee" shall mean the aggregate amount of premiums paid by the
Assignee net of any repayment to the Assignee of such amount.
153
<PAGE>
3. The Owner shall retain all incidents of ownership in the Policy,
including, but not limited to, the sole and exclusive rights to: borrow
against the Policy; make withdrawals from the Policy; assign Owner interest
in the Policy; change the beneficiary of the Policy; exercise settlement
options; and, surrender or cancel the Policy (in whole or in part). All of
these incidents of ownership shall be exercisable by the Owner unilaterally
and without the consent of any other person.
4. The Assignee shall, upon request, if the Policy is in the
possession of the Assignee, forward the Policy to the Insurer, without
unreasonable delay, for change of beneficiary, any election of optional mode
of settlement, or the exercise of any other right reserved by the Owner.
5. The Insurer is hereby authorized to recognize the Assignee's
claims, including the validity or the amount of any liabilities of the Owner
to the Assignee under the Agreement, the existence of any default therein,
the giving of any notice required therein or herein, or the application to be
made by the Assignee of any amounts to be paid to the Assignee. Upon the
Insurer giving prior written notice to Owner of the proposed payment of
amounts to the Assignee, the receipt of the Assignee for any sums received by
it shall be a full discharge and release therefore to the Insurer.
6. The Insurer shall be fully protected in recognizing a request made
by the Owner for surrender or cancellation of the Policy, in whole or in
part, or in recognizing a request made by the Owner for any loans against the
Policy permitted by the terms of the Policy. In the event this request is
made, upon prior written notice thereof to the Assignee the Insurer may pay
the proceeds of any surrender, cancellation, or loan to the sole order of the
Owner, or as the Owner shall direct.
7. Upon the full payment of the liabilities of the Owner to the
Assignee pursuant to the Agreement, the Assignee shall execute an appropriate
release of this Collateral Assignment.
8. It is the express intention of the Owner to assign a limited
interest in the Policy to the Assignee as security for certain premium
payments made by the Assignee, without giving the Assignee any incidents of
ownership in the Policy within the meaning of section 2042 of the Internal
Revenue Code (and regulations thereunder), or any similar provision of
subsequent law. All provisions of this Collateral Assignment (and of the
Agreement) shall be construed and exercised so as to effect this intention.
IN WITNESS WHEREOF, the Owner and Assignee have executed this Assignment
and the Insurer has acknowledged its acceptance of this Assignment effective
the day and year first above written.
Brenton Bank, N.A. Trustee of the
William H. Brenton Crummy Trust
Owner
By_________________________________________
Its________________________________________
Brenton Banks, Inc.
Assignee
By ________________________________________
Its _______________________________________
154
<PAGE>
ACCEPTED:
EMC Insurance Companies
Insurer
By________________________________________
Its_______________________________________
155
<PAGE>
Collateral Assignment
THIS ASSIGNMENT is made and entered into this ________ day of December,
1994, by the undersigned as owner (the "Owner") of a certain life insurance
policy number 121476 (the "Policy") issued by EMC Insurance Companies (the
"Insurer") upon the life of William H. Brenton, and Brenton Bank, Inc. (the
"Assignee").
WHEREAS, William H. Brenton ("Employee") is a valued Employee of the
Assignee, and
WHEREAS, Owner has entered into a Split Dollar Agreement with the
Assignee (the "Agreement"), and
WHEREAS, in consideration of the Assignee agreeing to make certain
premium payments, the Owner agrees to grant the Assignee a security interest
in the Policy as collateral security for the repayment of the cumulative
premiums paid by the Assignee.
NOW, THEREFORE, the undersigned Owner hereby assigns, transfers and sets
over to the Assignee the following specific rights in the Policy subject to
the following terms and conditions:
1. This Assignment is made, and the Policy is to be held, as
collateral security for all liabilities of the Owner to the Assignee, either
now existing or that may hereafter arise, pursuant to the terms of the
Agreement.
2. The Assignee's interest in the Policy shall be strictly limited to:
a. The right to be repaid from the surrender proceeds of
the Policy: (i) the aggregate amount of cumulative premiums
paid by the Company, plus (ii) an amount, not less than zero,
which is calculated by taking 5.2 percent per annum of the total
amount of cumulative premiums paid by the Company to date less
$300,000.00 ("Amount Due Company") in the event the Policy is
totally surrendered or canceled by the Owner.
b. The right to be repaid from the death benefit proceeds
of the Policy the Amount Due Company upon the death of the
Employee, or, if the Policy is a survivorship life insurance
product, upon the death of the survivor of the Employee and
the Employee's spouse, while the Policy remains in force.
c. The right to be repaid the Amount Due Company in
the event of the termination of the Agreement.
d. The right to be repaid a portion of any Policy loan
proceeds or partial surrender proceeds paid to the Assignee
so as to cause the net cash surrender value of the Policy
to be equal to or exceed the Amount Due Company in the event
the Owner obtains a Policy loan or in the event the Policy is
partially surrendered and such loan or partial surrender causes
the net cash surrender value of the Policy to be a sum less
than the Amount Due Company.
As used in this Assignment, the term "net cash surrender value" shall mean
the cash surrender value of the Policy, less the amount of any then existing
loans or withdrawals against the Policy obtained by the Owner. As used in
this Assignment, the term "the aggregate amount of cumulative premiums paid
by the Assignee" shall mean the aggregate amount of premiums paid by the
Assignee net of any repayment to the Assignee of such amount.
156
<PAGE>
3. The Owner shall retain all incidents of ownership in the Policy,
including, but not limited to, the sole and exclusive rights to: borrow
against the Policy; make withdrawals from the Policy; assign Owner interest
in the Policy; change the beneficiary of the Policy; exercise settlement
options; and, surrender or cancel the Policy (in whole or in part). All of
these incidents of ownership shall be exercisable by the Owner unilaterally
and without the consent of any other person.
4. The Assignee shall, upon request, if the Policy is in the
possession of the Assignee, forward the Policy to the Insurer, without
unreasonable delay, for change of beneficiary, any election of optional mode
of settlement, or the exercise of any other right reserved by the Owner.
5. The Insurer is hereby authorized to recognize the Assignee's
claims, including the validity or the amount of any liabilities of the Owner
to the Assignee under the Agreement, the existence of any default therein,
the giving of any notice required therein or herein, or the application to be
made by the Assignee of any amounts to be paid to the Assignee. Upon the
Insurer giving prior written notice to Owner of the proposed payment of
amounts to the Assignee, the receipt of the Assignee for any sums received by
it shall be a full discharge and release therefore to the Insurer.
6. The Insurer shall be fully protected in recognizing a request made
by the Owner for surrender or cancellation of the Policy, in whole or in
part, or in recognizing a request made by the Owner for any loans against the
Policy permitted by the terms of the Policy. In the event this request is
made, upon prior written notice thereof to the Assignee the Insurer may pay
the proceeds of any surrender, cancellation, or loan to the sole order of the
Owner, or as the Owner shall direct.
7. Upon the full payment of the liabilities of the Owner to the
Assignee pursuant to the Agreement, the Assignee shall execute an appropriate
release of this Collateral Assignment.
8. It is the express intention of the Owner to assign a limited
interest in the Policy to the Assignee as security for certain premium
payments made by the Assignee, without giving the Assignee any incidents of
ownership in the Policy within the meaning of section 2042 of the Internal
Revenue Code (and regulations thereunder), or any similar provision of
subsequent law. All provisions of this Collateral Assignment (and of the
Agreement) shall be construed and exercised so as to effect this intention.
IN WITNESS WHEREOF, the Owner and Assignee have executed this Assignment
and the Insurer has acknowledged its acceptance of this Assignment effective
the day and year first above written.
William H. Brenton
Owner
___________________________________________
Brenton Banks, Inc.
Assignee
By ________________________________________
Its _______________________________________
157
<PAGE>
ACCEPTED:
EMC Insurance Companies
Insurer
By_________________________________________
Its________________________________________
158
<PAGE>
Collateral Assignment
THIS ASSIGNMENT is made and entered into this ________ day of December,
1994, by the undersigned as owner (the "Owner") of a certain life insurance
policy number 146078 (the "Policy") issued by EMC Insurance Companies (the
"Insurer") upon the life of William H. Brenton, and Brenton Bank, Inc. (the
"Assignee").
WHEREAS, William H. Brenton ("Employee") is a valued Employee of the
Assignee, and
WHEREAS, Owner has entered into a Split Dollar Agreement with the
Assignee (the "Agreement"), and
WHEREAS, in consideration of the Assignee agreeing to make certain
premium payments, the Owner agrees to grant the Assignee a security interest
in the Policy as collateral security for the repayment of the cumulative
premiums paid by the Assignee.
NOW, THEREFORE, the undersigned Owner hereby assigns, transfers and sets
over to the Assignee the following specific rights in the Policy subject to
the following terms and conditions:
1. This Assignment is made, and the Policy is to be held, as
collateral security for all liabilities of the Owner to the Assignee, either
now existing or that may hereafter arise, pursuant to the terms of the
Agreement.
2. The Assignee's interest in the Policy shall be strictly limited to:
a. The right to be repaid from the surrender proceeds
of the Policy: (i) the aggregate amount of cumulative premiums
paid by the Company, plus (ii) an amount, not less than zero,
which is calculated by taking 5.2 percent per annum of the total
amount of cumulative premiums paid by the Company to date less
$300,000.00 ("Amount Due Company") in the event the Policy is
totally surrendered or canceled by the Owner.
b. The right to be repaid from the death benefit proceeds
of the Policy the Amount Due Company upon the death of the
Employee, or, if the Policy is a survivorship life insurance
product, upon the death of the survivor of the Employee and
the Employee's spouse, while the Policy remains in force.
c. The right to be repaid the Amount Due Company in the
event of the termination of the Agreement.
d. The right to be repaid a portion of any Policy loan
proceeds or partial surrender proceeds paid to the Assignee
so as to cause the net cash surrender value of the Policy to
be equal to or exceed the Amount Due Company in the event
the Owner obtains a Policy loan or in the event the Policy
is partially surrendered and such loan or partial surrender
causes the net cash surrender value of the Policy to be a
sum less than the Amount Due Company.
As used in this Assignment, the term "net cash surrender value" shall mean
the cash surrender value of the Policy, less the amount of any then existing
loans or withdrawals against the Policy obtained by the Owner. As used in
this Assignment, the term "the aggregate amount of cumulative premiums paid
by the Assignee" shall mean the aggregate amount of premiums paid by the
Assignee net of any repayment to the Assignee of such amount.
159
<PAGE>
3. The Owner shall retain all incidents of ownership in the Policy,
including, but not limited to, the sole and exclusive rights to: borrow
against the Policy; make withdrawals from the Policy; assign Owner interest
in the Policy; change the beneficiary of the Policy; exercise settlement
options; and, surrender or cancel the Policy (in whole or in part). All of
these incidents of ownership shall be exercisable by the Owner unilaterally
and without the consent of any other person.
4. The Assignee shall, upon request, if the Policy is in the
possession of the Assignee, forward the Policy to the Insurer, without
unreasonable delay, for change of beneficiary, any election of optional mode
of settlement, or the exercise of any other right reserved by the Owner.
5. The Insurer is hereby authorized to recognize the Assignee's
claims, including the validity or the amount of any liabilities of the Owner
to the Assignee under the Agreement, the existence of any default therein,
the giving of any notice required therein or herein, or the application to be
made by the Assignee of any amounts to be paid to the Assignee. Upon the
Insurer giving prior written notice to Owner of the proposed payment of
amounts to the Assignee, the receipt of the Assignee for any sums received by
it shall be a full discharge and release therefore to the Insurer.
6. The Insurer shall be fully protected in recognizing a request made
by the Owner for surrender or cancellation of the Policy, in whole or in
part, or in recognizing a request made by the Owner for any loans against the
Policy permitted by the terms of the Policy. In the event this request is
made, upon prior written notice thereof to the Assignee the Insurer may pay
the proceeds of any surrender, cancellation, or loan to the sole order of the
Owner, or as the Owner shall direct.
7. Upon the full payment of the liabilities of the Owner to the
Assignee pursuant to the Agreement, the Assignee shall execute an appropriate
release of this Collateral Assignment.
8. It is the express intention of the Owner to assign a limited
interest in the Policy to the Assignee as security for certain premium
payments made by the Assignee, without giving the Assignee any incidents of
ownership in the Policy within the meaning of section 2042 of the Internal
Revenue Code (and regulations thereunder), or any similar provision of
subsequent law. All provisions of this Collateral Assignment (and of the
Agreement) shall be construed and exercised so as to effect this intention.
IN WITNESS WHEREOF, the Owner and Assignee have executed this Assignment
and the Insurer has acknowledged its acceptance of this Assignment effective
the day and year first above written.
Brenton Bank, N.A. Trustee of the
William H. Brenton Crummy Trust
Owner
By_________________________________________
Its________________________________________
Brenton Banks, Inc.
Assignee
By ________________________________________
Its _______________________________________
160
<PAGE>
ACCEPTED:
EMC Insurance Companies
Insurer
By_________________________________________
Its________________________________________
161
<PAGE>
Collateral Assignment
THIS ASSIGNMENT is made and entered into this ________ day of December,
1994, by the undersigned as owner (the "Owner") of a certain life insurance
policy number 4239293 (the "Policy") issued by Principal Mutual Life
Insurance Company (the "Insurer") upon the life of William H. Brenton, and
Brenton Bank, Inc. (the "Assignee").
WHEREAS, William H. Brenton ("Employee") is a valued Employee of the
Assignee, and
WHEREAS, Owner has entered into a Split Dollar Agreement with the
Assignee (the "Agreement"), and
WHEREAS, in consideration of the Assignee agreeing to make certain
premium payments, the Owner agrees to grant the Assignee a security interest
in the Policy as collateral security for the repayment of the cumulative
premiums paid by the Assignee.
NOW, THEREFORE, the undersigned Owner hereby assigns, transfers and sets
over to the Assignee the following specific rights in the Policy subject to
the following terms and conditions:
1. This Assignment is made, and the Policy is to be held, as
collateral security for all liabilities of the Owner to the Assignee, either
now existing or that may hereafter arise, pursuant to the terms of the
Agreement.
2. The Assignee's interest in the Policy shall be strictly limited to:
a. The right to be repaid from the surrender proceeds
of the Policy: (i) the aggregate amount of cumulative premiums
paid by the Company, plus (ii) an amount, not less than zero,
which is calculated by taking 5.2 percent per annum of the
total amount of cumulative premiums paid by the Company to
date less $300,000.00 ("Amount Due Company") in the event
the Policy is totally surrendered or canceled by the Owner.
b. The right to be repaid from the death benefit
proceeds of the Policy the Amount Due Company upon the death
of the Employee, or, if the Policy is a survivorship life
insurance product, upon the death of the survivor of the
Employee and the Employee's spouse, while the Policy remains
in force.
c. The right to be repaid the Amount Due Company in the
event of the termination of the Agreement.
d. The right to be repaid a portion of any Policy loan
proceeds or partial surrender proceeds paid to the Assignee
so as to cause the net cash surrender value of the Policy to
be equal to or exceed the Amount Due Company in the event the
Owner obtains a Policy loan or in the event the Policy is
partially surrendered and such loan or partial surrender
causes the net cash surrender value of the Policy to be a
sum less than the Amount Due Company.
As used in this Assignment, the term "net cash surrender value" shall mean
the cash surrender value of the Policy, less the amount of any then existing
loans or withdrawals against the Policy obtained by the Owner. As used in
this Assignment, the term "the aggregate amount of cumulative premiums paid
by the Assignee" shall mean the aggregate amount of premiums paid by the
Assignee net of any repayment to the Assignee of such amount.
162
<PAGE>
3. The Owner shall retain all incidents of ownership in the Policy,
including, but not limited to, the sole and exclusive rights to: borrow
against the Policy; make withdrawals from the Policy; assign Owner interest
in the Policy; change the beneficiary of the Policy; exercise settlement
options; and, surrender or cancel the Policy (in whole or in part). All of
these incidents of ownership shall be exercisable by the Owner unilaterally
and without the consent of any other person.
4. The Assignee shall, upon request, if the Policy is in the
possession of the Assignee, forward the Policy to the Insurer, without
unreasonable delay, for change of beneficiary, any election of optional mode
of settlement, or the exercise of any other right reserved by the Owner.
5. The Insurer is hereby authorized to recognize the Assignee's
claims, including the validity or the amount of any liabilities of the Owner
to the Assignee under the Agreement, the existence of any default therein,
the giving of any notice required therein or herein, or the application to be
made by the Assignee of any amounts to be paid to the Assignee. Upon the
Insurer giving prior written notice to Owner of the proposed payment of
amounts to the Assignee, the receipt of the Assignee for any sums received by
it shall be a full discharge and release therefore to the Insurer.
6. The Insurer shall be fully protected in recognizing a request made
by the Owner for surrender or cancellation of the Policy, in whole or in
part, or in recognizing a request made by the Owner for any loans against the
Policy permitted by the terms of the Policy. In the event this request is
made, upon prior written notice thereof to the Assignee the Insurer may pay
the proceeds of any surrender, cancellation, or loan to the sole order of the
Owner, or as the Owner shall direct.
7. Upon the full payment of the liabilities of the Owner to the
Assignee pursuant to the Agreement, the Assignee shall execute an appropriate
release of this Collateral Assignment.
8. It is the express intention of the Owner to assign a limited
interest in the Policy to the Assignee as security for certain premium
payments made by the Assignee, without giving the Assignee any incidents of
ownership in the Policy within the meaning of section 2042 of the Internal
Revenue Code (and regulations thereunder), or any similar provision of
subsequent law. All provisions of this Collateral Assignment (and of the
Agreement) shall be construed and exercised so as to effect this intention.
IN WITNESS WHEREOF, the Owner and Assignee have executed this Assignment
and the Insurer has acknowledged its acceptance of this Assignment effective
the day and year first above written.
Brenton Bank, N.A. Trustee of the
William H. Brenton Crummy Trust
Owner
By_________________________________________
Its________________________________________
Brenton Banks, Inc.
Assignee
By ________________________________________
Its _______________________________________
163
<PAGE>
ACCEPTED:
Principal Mutual Life Insurance Company
Insurer
By_________________________________________
Its________________________________________
164
<PAGE>
Collateral Assignment
THIS ASSIGNMENT is made and entered into this ________ day of December,
1994, by the undersigned as owner (the "Owner") of a certain life insurance
policy number 4239294 (the "Policy") issued by Principal Mutual Life
Insurance Company (the "Insurer") upon the life of Natalie G. Brenton, wife
of William H. Brenton, and Brenton Bank, Inc. (the "Assignee").
WHEREAS, William H. Brenton ("Employee") is a valued Employee of the
Assignee, and
WHEREAS, Owner has entered into a Split Dollar Agreement with the
Assignee (the "Agreement"), and
WHEREAS, in consideration of the Assignee agreeing to make certain
premium payments, the Owner agrees to grant the Assignee a security interest
in the Policy as collateral security for the repayment of the cumulative
premiums paid by the Assignee.
NOW, THEREFORE, the undersigned Owner hereby assigns, transfers and sets
over to the Assignee the following specific rights in the Policy subject to
the following terms and conditions:
1. This Assignment is made, and the Policy is to be held, as
collateral security for all liabilities of the Owner to the Assignee, either
now existing or that may hereafter arise, pursuant to the terms of the
Agreement.
2. The Assignee's interest in the Policy shall be strictly limited to:
a. The right to be repaid from the surrender proceeds
of the Policy: (i) the aggregate amount of cumulative premiums
paid by the Company, plus (ii) an amount, not less than zero,
which is calculated by taking 5.2 percent per annum of the
total amount of cumulative premiums paid by the Company to
date less $300,000.00 ("Amount Due Company") in the event
the Policy is totally surrendered or canceled by the Owner.
b. The right to be repaid from the death benefit
proceeds of the Policy the Amount Due Company upon the death
of the Employee, or, if the Policy is a survivorship life
insurance product, upon the death of the survivor of the
Employee and the Employee's spouse, while the Policy remains
in force.
c. The right to be repaid the Amount Due Company in
the event of the termination of the Agreement.
d. The right to be repaid a portion of any Policy
loan proceeds or partial surrender proceeds paid to the
Assignee so as to cause the net cash surrender value of
the Policy to be equal to or exceed the Amount Due Company
in the event the Owner obtains a Policy loan or in the event
the Policy is partially surrendered and such loan or partial
surrender causes the net cash surrender value of the Policy
to be a sum less than the Amount Due Company.
As used in this Assignment, the term "net cash surrender value" shall mean
the cash surrender value of the Policy, less the amount of any then existing
loans or withdrawals against the Policy obtained by the Owner. As used in
this Assignment, the term "the aggregate amount of cumulative premiums paid
by the Assignee" shall mean the aggregate amount of premiums paid by the
Assignee net of any repayment to the Assignee of such amount.
165
<PAGE>
3. The Owner shall retain all incidents of ownership in the Policy,
including, but not limited to, the sole and exclusive rights to: borrow
against the Policy; make withdrawals from the Policy; assign Owner interest
in the Policy; change the beneficiary of the Policy; exercise settlement
options; and, surrender or cancel the Policy (in whole or in part). All of
these incidents of ownership shall be exercisable by the Owner unilaterally
and without the consent of any other person.
4. The Assignee shall, upon request, if the Policy is in the
possession of the Assignee, forward the Policy to the Insurer, without
unreasonable delay, for change of beneficiary, any election of optional mode
of settlement, or the exercise of any other right reserved by the Owner.
5. The Insurer is hereby authorized to recognize the Assignee's
claims, including the validity or the amount of any liabilities of the Owner
to the Assignee under the Agreement, the existence of any default therein,
the giving of any notice required therein or herein, or the application to be
made by the Assignee of any amounts to be paid to the Assignee. Upon the
Insurer giving prior written notice to Owner of the proposed payment of
amounts to the Assignee, the receipt of the Assignee for any sums received by
it shall be a full discharge and release therefore to the Insurer.
6. The Insurer shall be fully protected in recognizing a request made
by the Owner for surrender or cancellation of the Policy, in whole or in
part, or in recognizing a request made by the Owner for any loans against the
Policy permitted by the terms of the Policy. In the event this request is
made, upon prior written notice thereof to the Assignee the Insurer may pay
the proceeds of any surrender, cancellation, or loan to the sole order of the
Owner, or as the Owner shall direct.
7. Upon the full payment of the liabilities of the Owner to the
Assignee pursuant to the Agreement, the Assignee shall execute an appropriate
release of this Collateral Assignment.
8. It is the express intention of the Owner to assign a limited
interest in the Policy to the Assignee as security for certain premium
payments made by the Assignee, without giving the Assignee any incidents of
ownership in the Policy within the meaning of section 2042 of the Internal
Revenue Code (and regulations thereunder), or any similar provision of
subsequent law. All provisions of this Collateral Assignment (and of the
Agreement) shall be construed and exercised so as to effect this intention.
IN WITNESS WHEREOF, the Owner and Assignee have executed this Assignment
and the Insurer has acknowledged its acceptance of this Assignment effective
the day and year first above written.
Brenton Bank, N.A. Trustee of the
William H. Brenton Crummy Trust
Owner
By_________________________________________
Its________________________________________
Brenton Banks, Inc.
Assignee
By ________________________________________
Its _______________________________________
166
<PAGE>
ACCEPTED:
Principal Mutual Life Insurance Company
Insurer
By_________________________________________
Its________________________________________
167
<PAGE>
Collateral Assignment
THIS ASSIGNMENT is made and entered into this ________ day of December,
1994, by the undersigned as owner (the "Owner") of a certain life insurance
policy number 44243450 (the "Policy") issued by Equitable Variable Life
Insurance Company (the "Insurer") upon the life of William H. Brenton, and
Brenton Bank, Inc. (the "Assignee").
WHEREAS, William H. Brenton ("Employee") is a valued Employee of the
Assignee, and
WHEREAS, Owner has entered into a Split Dollar Agreement with the
Assignee (the "Agreement"), and
WHEREAS, in consideration of the Assignee agreeing to make certain
premium payments, the Owner agrees to grant the Assignee a security interest
in the Policy as collateral security for the repayment of the cumulative
premiums paid by the Assignee.
NOW, THEREFORE, the undersigned Owner hereby assigns, transfers and sets
over to the Assignee the following specific rights in the Policy subject to
the following terms and conditions:
1. This Assignment is made, and the Policy is to be held, as
collateral security for all liabilities of the Owner to the Assignee, either
now existing or that may hereafter arise, pursuant to the terms of the
Agreement.
2. The Assignee's interest in the Policy shall be strictly limited to:
a. The right to be repaid from the surrender proceeds
of the Policy: (i) the aggregate amount of cumulative premiums
paid by the Company, plus (ii) an amount, not less than zero,
which is calculated by taking 5.2 percent per annum of the
total amount of cumulative premiums paid by the Company to
date less $300,000.00 ("Amount Due Company") in the event
the Policy is totally surrendered or canceled by the Owner.
b. The right to be repaid from the death benefit
proceeds of the Policy the Amount Due Company upon the
death of the Employee, or, if the Policy is a survivorship
life insurance product, upon the death of the survivor of
the Employee and the Employee's spouse, while the Policy
remains in force.
c. The right to be repaid the Amount Due Company
in the event of the termination of the Agreement.
d. The right to be repaid a portion of any Policy
loan proceeds or partial surrender proceeds paid to the
Assignee so as to cause the net cash surrender value of
the Policy to be equal to or exceed the Amount Due Company
in the event the Owner obtains a Policy loan or in the
event the Policy is partially surrendered and such loan
or partial surrender causes the net cash surrender value
of the Policy to be a sum less than the Amount Due Company.
As used in this Assignment, the term "net cash surrender value" shall mean
the cash surrender value of the Policy, less the amount of any then existing
loans or withdrawals against the Policy obtained by the Owner. As used in
this Assignment, the term "the aggregate amount of cumulative premiums paid
by the Assignee" shall mean the aggregate amount of premiums paid by the
Assignee net of any repayment to the Assignee of such amount.
168
<PAGE>
3. The Owner shall retain all incidents of ownership in the Policy,
including, but not limited to, the sole and exclusive rights to: borrow
against the Policy; make withdrawals from the Policy; assign Owner interest
in the Policy; change the beneficiary of the Policy; exercise settlement
options; and, surrender or cancel the Policy (in whole or in part). All of
these incidents of ownership shall be exercisable by the Owner unilaterally
and without the consent of any other person.
4. The Assignee shall, upon request, if the Policy is in the
possession of the Assignee, forward the Policy to the Insurer, without
unreasonable delay, for change of beneficiary, any election of optional mode
of settlement, or the exercise of any other right reserved by the Owner.
5. The Insurer is hereby authorized to recognize the Assignee's
claims, including the validity or the amount of any liabilities of the Owner
to the Assignee under the Agreement, the existence of any default therein,
the giving of any notice required therein or herein, or the application to be
made by the Assignee of any amounts to be paid to the Assignee. Upon the
Insurer giving prior written notice to Owner of the proposed payment of
amounts to the Assignee, the receipt of the Assignee for any sums received by
it shall be a full discharge and release therefore to the Insurer.
6. The Insurer shall be fully protected in recognizing a request made
by the Owner for surrender or cancellation of the Policy, in whole or in
part, or in recognizing a request made by the Owner for any loans against the
Policy permitted by the terms of the Policy. In the event this request is
made, upon prior written notice thereof to the Assignee the Insurer may pay
the proceeds of any surrender, cancellation, or loan to the sole order of the
Owner, or as the Owner shall direct.
7. Upon the full payment of the liabilities of the Owner to the
Assignee pursuant to the Agreement, the Assignee shall execute an appropriate
release of this Collateral Assignment.
8. It is the express intention of the Owner to assign a limited
interest in the Policy to the Assignee as security for certain premium
payments made by the Assignee, without giving the Assignee any incidents of
ownership in the Policy within the meaning of section 2042 of the Internal
Revenue Code (and regulations thereunder), or any similar provision of
subsequent law. All provisions of this Collateral Assignment (and of the
Agreement) shall be construed and exercised so as to effect this intention.
IN WITNESS WHEREOF, the Owner and Assignee have executed this Assignment
and the Insurer has acknowledged its acceptance of this Assignment effective
the day and year first above written.
Brenton Bank, N.A. Trustee of the
William H. Brenton Crummy Trust
Owner
By_________________________________________
Its________________________________________
Brenton Banks, Inc.
Assignee
By ________________________________________
Its _______________________________________
169
<PAGE>
ACCEPTED:
Equitable Variable Life Insurance Company
Insurer
By_________________________________________
Its________________________________________
170
<PAGE>
Collateral Assignment
THIS ASSIGNMENT is made and entered into this ________ day of
________________________, ________, by the undersigned as owner (the "Owner")
of a certain life insurance policy number 7890362 (the "Policy") issued by
Penn Mutual Life Insurance Company (the "Insurer") upon the lives of William
H. Brenton and Natalie G. Brenton, and Brenton Bank, Inc. (the "Assignee").
WHEREAS, William H. Brenton ("Employee") is a valued Employee of the
Assignee, and
WHEREAS, Owner has entered into a Split Dollar Agreement with the
Assignee (the "Agreement"), and
WHEREAS, in consideration of the Assignee agreeing to make certain
premium payments, the Owner agrees to grant the Assignee a security interest
in the Policy as collateral security for the repayment of the cumulative
premiums paid by the Assignee.
NOW, THEREFORE, the undersigned Owner hereby assigns, transfers and sets
over to the Assignee the following specific rights in the Policy subject to
the following terms and conditions:
1. This Assignment is made, and the Policy is to be held, as
collateral security for all liabilities of the Owner to the Assignee, either
now existing or that may hereafter arise, pursuant to the terms of the
Agreement.
2. The Assignee's interest in the Policy shall be strictly limited to:
a. The right to be repaid from the surrender proceeds
of the Policy: (i) the aggregate amount of cumulative premiums
paid by the Company, plus (ii) an amount, not less than zero,
which is calculated by taking 5.2 percent per annum of the
total amount of cumulative premiums paid by the Company to
date less $300,000.00 ("Amount Due Company") in the event the
Policy is totally surrendered or canceled by the Owner.
b. The right to be repaid from the death benefit
proceeds of the Policy the Amount Due Company upon the
death of the Employee, or, if the Policy is a survivorship
life insurance product, upon the death of the survivor of
the Employee and the Employee's spouse, while the Policy
remains in force.
c. The right to be repaid the Amount Due Company
in the event of the termination of the Agreement.
d. The right to be repaid a portion of any Policy
loan proceeds or partial surrender proceeds paid to the
Assignee so as to cause the net cash surrender value of
the Policy to be equal to or exceed the Amount Due Company
in the event the Owner obtains a Policy loan or in the
event the Policy is partially surrendered and such loan
or partial surrender causes the net cash surrender value
of the Policy to be a sum less than the Amount Due Company.
As used in this Assignment, the term "net cash surrender value" shall mean
the cash surrender value of the Policy, less the amount of any then existing
loans or withdrawals against the Policy obtained by the Owner. As used in
this Assignment, the term "the aggregate amount of cumulative premiums paid
by the Assignee" shall mean the aggregate amount of premiums paid by the
Assignee net of any repayment to the Assignee of such amount.
171
<PAGE>
3. The Owner shall retain all incidents of ownership in the Policy,
including, but not limited to, the sole and exclusive rights to: borrow
against the Policy; make withdrawals from the Policy; assign Owner interest
in the Policy; change the beneficiary of the Policy; exercise settlement
options; and, surrender or cancel the Policy (in whole or in part). All of
these incidents of ownership shall be exercisable by the Owner unilaterally
and without the consent of any other person.
4. The Assignee shall, upon request, if the Policy is in the
possession of the Assignee, forward the Policy to the Insurer, without
unreasonable delay, for change of beneficiary, any election of optional mode
of settlement, or the exercise of any other right reserved by the Owner.
5. The Insurer is hereby authorized to recognize the Assignee's
claims, including the validity or the amount of any liabilities of the Owner
to the Assignee under the Agreement, the existence of any default therein,
the giving of any notice required therein or herein, or the application to be
made by the Assignee of any amounts to be paid to the Assignee. Upon the
Insurer giving prior written notice to Owner of the proposed payment of
amounts to the Assignee, the receipt of the Assignee for any sums received by
it shall be a full discharge and release therefore to the Insurer.
6. The Insurer shall be fully protected in recognizing a request made
by the Owner for surrender or cancellation of the Policy, in whole or in
part, or in recognizing a request made by the Owner for any loans against the
Policy permitted by the terms of the Policy. In the event this request is
made, upon prior written notice thereof to the Assignee the Insurer may pay
the proceeds of any surrender, cancellation, or loan to the sole order of the
Owner, or as the Owner shall direct.
7. Upon the full payment of the liabilities of the Owner to the
Assignee pursuant to the Agreement, the Assignee shall execute an appropriate
release of this Collateral Assignment.
8. It is the express intention of the Owner to assign a limited
interest in the Policy to the Assignee as security for certain premium
payments made by the Assignee, without giving the Assignee any incidents of
ownership in the Policy within the meaning of section 2042 of the Internal
Revenue Code (and regulations thereunder), or any similar provision of
subsequent law. All provisions of this Collateral Assignment (and of the
Agreement) shall be construed and exercised so as to effect this intention.
IN WITNESS WHEREOF, the Owner and Assignee have executed this Assignment
and the Insurer has acknowledged its acceptance of this Assignment effective
the day and year first above written.
Brenton Bank, N.A. Trustee of the
William H. Brenton Crummy Trust
Owner
By_________________________________________
Its________________________________________
Brenton Banks, Inc.
Assignee
By ________________________________________
Its _______________________________________
172
<PAGE>
ACCEPTED:
Penn Mutual Life Insurance Company
Insurer
By_________________________________________
Its________________________________________
173
<PAGE>
Exhibit 10.24
Split Dollar Insurance Agreement between the Company
and Brenton Life Insurance Trust for the benefit of
C. Robert Brenton, dated August 12, 1994.
174
<PAGE>
<PAGE>
Split Dollar Insurance Agreement
Collateral Assignment
AGREEMENT, made and entered into this 12th day of August, 1994, by and
between Brenton Banks, Inc., Des Moines, Iowa ("Company"), and Brenton Life
Insurance Trust, an irrevocable trust, ("Owner") for the benefit of C. Robert
Brenton, Des Moines, Iowa.
WHEREAS, C. Robert Brenton is a valued Employee of the Company, and
Company wishes to provide additional inducement for C. Robert Brenton's
continued involvement with the Company, and as additional compensation,
Company wishes to assist C. Robert Brenton with respect to a personal life
insurance program by entering into this Split Dollar Insurance Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties hereto agree as follows:
1. Policy. The life insurance policy (the "Policy") with which this
Agreement deals is identified in Exhibit "A" attached hereto and by this
reference incorporated herein. In the event that this Agreement deals with
multiple life insurance policies, each policy shall be identified in a
separate Exhibit "A" attached hereto, and all references herein to the Policy
shall include all policies with respect to which a separate Exhibit "A" is
attached hereto.
2. Ownership. The Owner shall at all times be the owner of the
Policy, and shall have the sole right to exercise all ownership rights
granted to the owner by the terms of the Policy. It is the express intention
of the parties hereto to reserve to the Owner all rights in the Policy
granted by the terms of the Policy, including, but not limited to, the right
to borrow against the Policy, the right to assign the Owner's interest in the
Policy, the right to change the beneficiary of the Policy, the right to
exercise settlement options, and the right to surrender or cancel the Policy
(in whole or in part). The Company shall not have nor exercise any right in
and to the Policy which could in any way endanger, defeat or impair any of
the rights of the Owner in the Policy. The only rights in and to the Policy
granted to the Company shall be its security interest in the cash value of
the Policy and its right to receive a portion of the death benefit of the
Policy, all as provided herein.
3. Premiums. Premiums on the Policy shall be paid by the parties
hereto as set forth in Exhibit "B" attached hereto and by this reference
incorporate herein.
4. Interest of Company in the Policy. The Company's interest in the
Policy shall be limited to the following rights in the cash value and to a
portion of the death benefit of the Policy as set forth below:
a. In the event the Policy is totally surrendered or
canceled by the Owner, the Company shall receive from the
surrender proceeds of the Policy: (i) the aggregate amount
of cumulative premiums paid by the Company, plus (ii) an
amount, not less than zero, which is calculated by taking
5.2 percent per annum of the total amount of cumulative
premiums paid by the Company to date less $300,000.00
("Amount Due Company").
b. Upon the death of C. Robert Brenton, or, if the
Policy is a survivorship life insurance product, upon the
death of the survivor of C. Robert Brenton and C. Robert
Brenton's spouse, while the Policy remains in force, the
Company shall receive from the death benefit proceeds of
the Policy the Amount Due Company.
175
<PAGE>
c. In the event of the termination of this Agreement,
the Company shall be repaid by the Owner the Amount Due
Company.
d. In the event the Owner obtains a policy loan with
respect to the Policy or in the event the Policy is partially
surrendered and such loan or partial surrender causes the net
cash surrender value of the Policy to be a sum less than the
Amount Due Company, the Owner will repay to the Company a
portion of any Policy loan proceeds or partial surrender
proceeds to the Company so as to cause the net cash surrender
value of the Policy following the policy loan or partial
surrender to be equal to or exceed the Amount Due Company.
As used in this Agreement, the term "net cash surrender value" shall mean the
cash surrender value of the Policy, less the amount of any then existing
loans or withdrawals against the Policy obtained by the Owner. As used in
this Agreement, the term "the aggregate amount of cumulative premiums paid by
the Company" shall mean the aggregate amount of premiums paid by the Company
net of any repayment to the Company of such amount.
5. Collateral Assignment. Contemporaneously herewith the Owner has
assigned the Policy as collateral security to secure payment of the amounts
payable to Company identified herein under a form of Collateral Assignment
which has been filed with the insurance company issuing the Policy. In the
event of a total or partial surrender of the Policy, termination of this
Agreement or upon the death of C. Robert Brenton, or, if the Policy is a
survivorship life insurance product, upon the death of the survivor of C.
Robert Brenton and C. Robert Brenton's spouse, the amounts payable to the
Company identified herein shall be paid to the Company in accordance with the
terms of such Collateral Assignment.
6. Death of C. Robert Brenton. Upon the death of C. Robert Brenton,
or, if the Policy is a survivorship life insurance product, upon the death of
the survivor of C. Robert Brenton and C. Robert Brenton's spouse, the balance
of the death benefit under the Policy in excess of the amount payable to the
Company under the provisions hereof, if any, shall be paid directly to the
beneficiary or beneficiaries designated by the Owner in the manner and in the
amounts provided by the beneficiary designation of the Policy filed with the
insurance company issuing the Policy.
7. Termination. This Agreement may be terminated at any time upon the
mutual agreement of the parties hereto.
8. Assignment by Owner. In the event the Owner shall transfer all
interest in the Policy to a transferee, then all of the Owner's interest in
the Policy and in this Agreement shall be vested in the transferee, who shall
become a substituted party hereto and who shall become bound by the
provisions hereof, and the Owner shall have no further interest in the Policy
or in this Agreement.
9. Assignment by Company. The Company shall not assign any of its
rights in the Policy or in this Agreement to anyone other than the Owner (or
the Owner's transferee, if the Owner has transferred its rights in the
Policy) without the prior written consent of the Owner (or the Owner's
transferee, if the Owner has transferred its rights in the Policy). Any
attempted assignment or transfer by the Company in violation of this
paragraph shall be null and void and of no force and effect.
10. Insurer Liability. The insurance company which issues the Policy
shall not be deemed to be bound by the provisions of this Agreement nor to
have notice of the terms of this Agreement. Any and all liability of the
insurance company issuing the Policy shall be determined solely by reference
to the terms of the Policy, any applicable riders to the Policy, the
beneficiary designation with respect to the Policy, the Collateral Assignment
with respect to the Policy and any other documents filed with the insurance
company and accepted and acknowledged by the insurance company.
176
<PAGE>
11. Split Dollar Plan. This Agreement is intended to qualify the
ownership of the Policy as a collateral assignment method split dollar life
insurance employee benefit plan as described in Revenue Ruling 64-328, and
shall be administered so as to qualify as such a plan.
12. Entire Agreement. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter hereof and cannot be
amended, altered, modified, except by a written instrument signed by each of
the parties hereto.
13. Notices. Any notice, consent or demand required or permitted to be
given under the provisions of this Agreement by one party to another shall be
in writing, shall be signed by the party giving the notice, and shall be
given either by delivery to the other party personally, or by mailing, by
United States certified mail, postage prepaid, to the other party, addressed
to the other party's last known mailing address as shown on the records of
the Company. In the event such notice is given by mailing, the date of
mailing shall be deemed the date of the giving of such notice, consent or
demand.
14. Binding on Successors and Assigns. This Agreement shall bind and
inure to the benefit of the parties and their respective heirs, successors
and assigns.
15. Governing Law. This Agreement shall be deemed made in the state of
Iowa Business Corporation Act, the this Agreement and the rights of the
parties hereunder shall be governed by and construed in accordance with the
laws of the state of Iowa Business Corporation Act.
16. Severability. In the event a particular provision of this
Agreement is held to be invalid under applicable law, effect shall
nevertheless be given to all valid provisions hereof to further the
objectives of this Agreement.
17. Interpretation. Where appropriate in this Agreement, words used in
the singular shall include the plural, and words used in the masculine or
neuter shall include the feminine.
18. Named Fiduciary and Plan Administrator. For the purposes of the
Employee Retirement Security Act of 1974 (ERISA), the Company shall be the
"Named Fiduciary" and Plan Administrator of the split dollar insurance plan
for which this Agreement is hereby designated the written plan instrument.
The Company, as Named Fiduciary, shall have authority to control and manage
the operation and administration of this Agreement, and it shall be
responsible for establishing and carrying out a funding policy and method
consistent with the objectives of this Agreement. Any decision by the
Company denying a claim for benefits under this Agreement shall be stated in
writing, set forth specific reasons for the denial, and be delivered or
mailed to the claimant. All claim procedures under this split dollar
insurance plan shall be performed in compliance with the requirements of
ERISA.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the year and date first above written.
Brenton Banks, Inc.
Company
By /s/ Steven T. Schuler
Its CFO/Treasurer/Sec.
177
<PAGE>
Brenton Bank, N. A., Trustee of the
Brenton Life Insurance Trust
Owner
By /s/ Gary Ernst
Its Vice Pres. Sr. Trust Officer
178
<PAGE>
EXHIBIT "A"
Policy Number: 44209399
Issued by: Equitable Variable Life Insurance Company
Providing for initial death benefit proceeds of $3,500,000.
This policy is a survivorship life insurance policy on the lives of C.
Robert Brenton and Babette C. Brenton, C. Robert Brenton's wife, which pays
a death benefit only upon the death of the survivor of C. Robert Brenton and
Babette C. Brenton.
179
<PAGE>
EXHIBIT "B"
Premiums
The Company shall pay all of the premiums due on the Policy.
180
<PAGE>
Collateral Assignment
THIS ASSIGNMENT is made and entered into this ________ day of
________________________, ________, by the undersigned as owner (the "Owner")
of a certain life insurance policy number 44209399 (the "Policy") issued by
Equitable Variable Life Insurance Company (the "Insurer") upon the lives of
C. Robert Brenton and Babette C. Brenton, and Brenton Bank, Inc. (the
"Assignee").
WHEREAS, C. Robert Brenton ("Employee") is a valued Employee of the
Assignee, and
WHEREAS, Owner has entered into a Split Dollar Agreement with the
Assignee (the "Agreement"), and
WHEREAS, in consideration of the Assignee agreeing to make certain
premium payments, the Owner agrees to grant the Assignee a security interest
in the Policy as collateral security for the repayment of the cumulative
premiums paid by the Assignee.
NOW, THEREFORE, the undersigned Owner hereby assigns, transfers and sets
over to the Assignee the following specific rights in the Policy subject to
the following terms and conditions:
1. This Assignment is made, and the Policy is to be held, as
collateral security for all liabilities of the Owner to the Assignee, either
now existing or that may hereafter arise, pursuant to the terms of the
Agreement.
2. The Assignee's interest in the Policy shall be strictly limited to:
a. The right to be repaid from the surrender proceeds of
the Policy: (i) the aggregate amount of cumulative premiums paid
by the Company, plus (ii) an amount, not less than zero, which
is calculated by taking 5.2 percent per annum of the total amount
of cumulative premiums paid by the Company to date less $300,000.00
("Amount Due Company") in the event the Policy is totally surrendered
or canceled by the Owner.
b. The right to be repaid from the death benefit proceeds of
the Policy the Amount Due Company upon the death of the Employee,
or, if the Policy is a survivorship life insurance product, upon
the death of the survivor of the Employee and the Employee's
spouse, while the Policy remains in force.
c. The right to be repaid the Amount Due Company in the
event of the termination of the Agreement.
d. The right to be repaid a portion of any Policy loan
proceeds or partial surrender proceeds paid to the Assignee so
as to cause the net cash surrender value of the Policy to be
equal to or exceed the Amount Due Company in the event the Owner
obtains a Policy loan or in the event the Policy is partially
surrendered and such loan or partial surrender causes the net
cash surrender value of the Policy to be a sum less than the
Amount Due Company.
As used in this Assignment, the term "net cash surrender value" shall mean
the cash surrender value of the Policy, less the amount of any then existing
loans or withdrawals against the Policy obtained by the Owner. As used in
this Assignment, the term "the aggregate amount of cumulative premiums paid
by the Assignee" shall mean the aggregate amount of premiums paid by the
Assignee net of any repayment to the Assignee of such amount.
181
<PAGE>
3. The Owner shall retain all incidents of ownership in the Policy,
including, but not limited to, the sole and exclusive rights to: borrow
against the Policy; make withdrawals from the Policy; assign Owner interest
in the Policy; change the beneficiary of the Policy; exercise settlement
options; and, surrender or cancel the Policy (in whole or in part). All of
these incidents of ownership shall be exercisable by the Owner unilaterally
and without the consent of any other person.
4. The Assignee shall, upon request, if the Policy is in the
possession of the Assignee, forward the Policy to the Insurer, without
unreasonable delay, for change of beneficiary, any election of optional mode
of settlement, or the exercise of any other right reserved by the Owner.
5. The Insurer is hereby authorized to recognize the Assignee's
claims, including the validity or the amount of any liabilities of the Owner
to the Assignee under the Agreement, the existence of any default therein,
the giving of any notice required therein or herein, or the application to be
made by the Assignee of any amounts to be paid to the Assignee. Upon the
Insurer giving prior written notice to Owner of the proposed payment of
amounts to the Assignee, the receipt of the Assignee for any sums received by
it shall be a full discharge and release therefore to the Insurer.
6. The Insurer shall be fully protected in recognizing a request made
by the Owner for surrender or cancellation of the Policy, in whole or in
part, or in recognizing a request made by the Owner for any loans against the
Policy permitted by the terms of the Policy. In the event this request is
made, upon prior written notice thereof to the Assignee the Insurer may pay
the proceeds of any surrender, cancellation, or loan to the sole order of the
Owner, or as the Owner shall direct.
7. Upon the full payment of the liabilities of the Owner to the
Assignee pursuant to the Agreement, the Assignee shall execute an appropriate
release of this Collateral Assignment.
8. It is the express intention of the Owner to assign a limited
interest in the Policy to the Assignee as security for certain premium
payments made by the Assignee, without giving the Assignee any incidents of
ownership in the Policy within the meaning of section 2042 of the Internal
Revenue Code (and regulations thereunder), or any similar provision of
subsequent law. All provisions of this Collateral Assignment (and of the
Agreement) shall be construed and exercised so as to effect this intention.
IN WITNESS WHEREOF, the Owner and Assignee have executed this Assignment
and the Insurer has acknowledged its acceptance of this Assignment effective
the day and year first above written.
Brenton Bank, N.A. Trustee of the
Brenton Life Insurance Trust
Owner
By ________________________________________
Its _______________________________________
Brenton Banks, Inc.
Assignee
By ________________________________________
Its _______________________________________
182
<PAGE>
ACCEPTED:
Equitable Variable Life Insurance Company
Insurer
By ________________________________________
Its _______________________________________
183
<PAGE>
Exhibit 10.25
Agreement between Robert L. DeMeulenaere and the Company
regarding the change in control arrangements, dated
December 31, 1994.
184
<PAGE>
AGREEMENT
This Agreement ("Agreement") effective this 31st day of December, 1994, by
and between Brenton Banks, Inc., an Iowa bank holding company with its
principal place of business in Des Moines, Iowa ("Employer") and Robert L.
DeMeulenaere ("Employee").
Whereas, Employer desires to provide certain employment security to Employee,
a key employee of Employer, to induce Employee to continue his employment
with Employer and enhance his ability to perform effectively without undue
distraction should Employer become a target of an attempted acquisition,
takeover or merger; and
Whereas, in an effort to induce Employee to remain in the employ of Employer
and in consideration of his continuing employment, Employer desires to enter
into this Agreement for the payment of certain benefits in the event that
Employee employment is terminated or subject to a significant change as
provided herein, following a change of control of Employer.
Now, therefore, in consideration of the promises herein contained, and for
other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. Term. Except as otherwise provided, this Agreement shall remain in full
force and effect until the earlier of the death or disability of Employee, or
the expiration of the Employee's rights to receive any benefits payable
pursuant to this Agreement.
2. Entitlement to Benefits. Employee shall be entitled to benefits if the
Employee is employed by Employer when a Change in Control of Employer occurs
and, within three years thereafter, there is a Termination of Existing
Employment of Employee.
3. Change of Control. For purposes of this Agreement, a Change of Control
of Employer shall mean any transaction or series of transactions, the result
of which is: (a) a direct or indirect acquisition of all or substantially all
of the assets of the Employer; (b) a change in ownership whereby the
stockholders of Employer immediately prior to such transaction(s) own less
than a majority of the combined voting power of all issued and outstanding
securities of Employer or its successor following the transaction(s); or
(c) a person and their affiliates own a greater number of shares of the
Company than the Brenton Family. Transactions resulting in a Change of
Control shall include but not be limited to direct acquisitions of assets or
securities or indirect acquisitions by merger, consolidation, or other legal
reorganization of Employer. The "Brenton Family" for purposes of this
section, shall include all descendants of Harold Brenton and their spouses
and affiliates including but not limited to any shares owned by trusts,
corporations or persons which the descendants of Harold Brenton have control
over or are for the benefit of said descendants or their spouses.
185
<PAGE>
4. Termination of Existing Employment. For purposes of this Agreement, a
Termination of Existing Employment shall occur if there is a substantial
reduction in duties in Employee's employment or such employment is terminated
by Employer, Employer's subsidiary, a successor to Employer or such
successor's subsidiary.
5. Calculation of Benefits. Upon a Termination of Existing Employment
within one year of a Change in Control, Employee shall be entitled to receive
Benefits in the amount of Five Hundred Thousand Dollars ($500,000); upon a
Termination of Existing Employment more than one year but prior to three
years following a Change in Control, the Benefits to be received by the
Employee shall be reduced by $10,417 for each full month the Employee remains
employed by the Company beyond the 12th month following the change in
control. No benefits shall accrue to the Employee if there is a Termination
of Existing Employment more than three years following a Change in Control.
For example, if the Employee is terminated during the 17th month following
the change in control, the Employee will receive $458,332 ($500,000 - ((16-
12) x $10417)). The benefits payable hereunder shall be paid to the Employee
within 10 days following the event causing the payment to become due.
6. Ratable Decrease in Benefits with Age. The Benefits calculated under
Paragraph 5 above shall remain unchanged for any Change of Control that
occurs before Employee reaches age 61. In the event that a Change of Control
occurs after Employee turns 61, the Benefits calculated thereunder shall be
reduced by 20% during the year Employee is age 61, reduced by 40% during the
year Employee is age 62, reduced by 60% during the year Employee is age 63,
reduced by 80% during the year Employee is age 64, and Employee shall no
longer be entitled to receive benefits if a Change in Control occurs after
Employee turns age 65. For example, a Change of Control and Termination of
Existing Employment occurs when Employee is age 62 and the Benefits
calculated in accordance with Paragraph 5 above are $500,000, the Benefits
are decreased by 40% to $300,000. In the preceding example, if the
Termination of Existing Employment occurred during the twenty-fifth month
following the Change of Control and the Employee is age 64, the Benefits in
the amount of $374,996 calculated in accordance with Paragraph 5 would be
decreased by 80% to $74,999.20.
7. Limitation on Benefits. Notwithstanding the foregoing, in the event that
the amount of Benefits payable to Employee exceeds 2.9 times the Employee's
"base amount" allocated to the payment hereunder as determined under I.R.C.
Section 280G(b)(3)(B), the Benefits payable to Employee shall be limited to
2.9 times the Employee's "base amount" allocated to the payment hereunder as
determined under I.R.C. Section 280G(b)(3)(B).
8. No Reduction in Salary. If, following a Change in Control, the Employee
remains employed by Employer or its successor, the Employer or its successor
may not, for a period of three years following the Change of Control, reduce
the Employee's salary below the salary level paid immediately prior to the
Change in Control.
186
<PAGE>
9. No Contract of Employment. The rights and obligations created hereunder
shall have no effect on Employee's status as an employee at will of Employer.
Employee acknowledges that this Agreement creates no right to be employed by
Employer and shall be construed solely as creating additional financial
security in the event of a Change of Control of Employer.
10. Binding Agreement. This Agreement shall be binding on Employer, its
successors and assigns.
11. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Iowa.
12. Waiver. Following a Change of Control, no successor to Employer shall
request or require Employee to release, modify, waive or discharge his rights
hereunder. Failure of Employee to enforce his rights hereunder at the time
of any breach or non-compliance with any condition or provision of this
Agreement by Employer, its successors or assigns, shall not be deemed to be
a waiver of such provision and shall have no effect on the enforcement of the
same or any other condition herein contained.
13. Severability. In the event that any provision of this Agreement is
deemed to be invalid or unenforceable, such invalid or unenforceable
provision shall be deemed to be modified in such a manner as to make it valid
and enforceable and shall have no affect on the validity or enforceability of
any other provision of this Agreement.
14. Prior Agreements. This Agreement shall supersede all prior agreements
between the parties relating to Change of Control of Employer, and all such
prior agreements, whether oral or written, are hereby canceled, terminated,
and revoked.
Wherefore, the parties hereto have caused this Agreement to be executed as of
the day and year first above written.
Brenton Banks, Inc., Employee
By________________________________________ __________________________________
C. Robert Brenton, Chairman of the Board Robert L. DeMeulenaere
187
<PAGE>
Exhibit 10.26
Agreement between Larry A. Mindrup and the Company
regarding the change in control arrangements, dated
December 31, 1994.
188
<PAGE>
AGREEMENT
This Agreement ("Agreement") effective this 31st day of December, 1994, by
and between Brenton Banks, Inc., an Iowa bank holding company with its
principal place of business in Des Moines, Iowa ("Employer") and Larry A.
Mindrup ("Employee").
Whereas, Employer desires to provide certain employment security to Employee,
a key employee of Employer, to induce Employee to continue his employment
with Employer and enhance his ability to perform effectively without undue
distraction should Employer become a target of an attempted acquisition,
takeover or merger; and
Whereas, in an effort to induce Employee to remain in the employ of Employer
and in consideration of his continuing employment, Employer desires to enter
into this Agreement for the payment of certain benefits in the event that
Employee employment is terminated or subject to a significant change as
provided herein, following a change of control of Employer.
Now, therefore, in consideration of the promises herein contained, and for
other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. Term. Except as otherwise provided, this Agreement shall remain in full
force and effect until the earlier of the death or disability of Employee, or
the expiration of the Employee's rights to receive any benefits payable
pursuant to this Agreement.
2. Entitlement to Benefits. Employee shall be entitled to benefits if the
Employee is employed by Employer when a Change in Control of Employer occurs
and, within three years thereafter, there is a Termination of Existing
Employment of Employee.
3. Change of Control. For purposes of this Agreement, a Change of Control
of Employer shall mean any transaction or series of transactions, the result
of which is: (a) a direct or indirect acquisition of all or substantially all
of the assets of the Employer; (b) a change in ownership whereby the
stockholders of Employer immediately prior to such transaction(s) own less
than a majority of the combined voting power of all issued and outstanding
securities of Employer or its successor following the transaction(s); or
(c) a person and their affiliates own a greater number of shares of the
Company than the Brenton Family. Transactions resulting in a Change of
Control shall include but not be limited to direct acquisitions of assets or
securities or indirect acquisitions by merger, consolidation, or other legal
reorganization of Employer. The "Brenton Family" for purposes of this
section, shall include all descendants of Harold Brenton and their spouses
and affiliates including but not limited to any shares owned by trusts,
corporations or persons which the descendants of Harold Brenton have control
over or are for the benefit of said descendants or their spouses.
189
<PAGE>
4. Termination of Existing Employment. For purposes of this Agreement, a
Termination of Existing Employment shall occur if there is a substantial
reduction in duties in Employee's employment or such employment is terminated
by Employer, Employer's subsidiary, a successor to Employer or such
successor's subsidiary.
5. Calculation of Benefits. Upon a Termination of Existing Employment
within one year of a Change in Control, Employee shall be entitled to receive
Benefits in the amount of Three Hundred Fifty Thousand Dollars ($350,000);
upon a Termination of Existing Employment more than one year but prior to
three years following a Change in Control, the Benefits to be received by the
Employee shall be reduced by $7,290 for each full month the Employee remains
employed by the Company beyond the 12th month following the change in
control. No benefits shall accrue to the Employee if there is a Termination
of Existing Employment more than three years following a Change in Control.
For example, if the Employee is terminated during the 17th month following
the change in control, the Employee will receive $320,840 ($350,000 - ((16-
12) x $7,290)). The benefits payable hereunder shall be paid to the Employee
within 10 days following the event causing the payment to become due.
6. Ratable Decrease in Benefits with Age. The Benefits calculated under
Paragraph 5 above shall remain unchanged for any Change of Control that
occurs before Employee reaches age 61. In the event that a Change of Control
occurs after Employee turns 61, the Benefits calculated thereunder shall be
reduced by 20% during the year Employee is age 61, reduced by 40% during the
year Employee is age 62, reduced by 60% during the year Employee is age 63,
reduced by 80% during the year Employee is age 64, and Employee shall no
longer be entitled to receive benefits if a Change in Control occurs after
Employee turns age 65. For example, a Change of Control and Termination of
Existing Employment occurs when Employee is age 62 and the Benefits
calculated in accordance with Paragraph 5 above are $350,000, the Benefits
are decreased by 40% to $210,000. In the preceding example, if the
Termination of Existing Employment occurred during the twenty-fifth month
following the Change of Control and the Employee is age 64, the Benefits in
the amount of $262,520 calculated in accordance with Paragraph 5 would be
decreased by 80% to $52,504.
7. Limitation on Benefits. Notwithstanding the foregoing, in the event that
the amount of Benefits payable to Employee exceeds 2.9 times the Employee's
"base amount" allocated to the payment hereunder as determined under I.R.C.
Section 280G(b)(3)(B), the Benefits payable to Employee shall be limited to
2.9 times the Employee's "base amount" allocated to the payment hereunder as
determined under I.R.C. Section 280G(b)(3)(B).
8. No Reduction in Salary. If, following a Change in Control, the Employee
remains employed by Employer or its successor, the Employer or its successor
may not, for a period of three years following the Change of Control, reduce
the Employee's salary below the salary level paid immediately prior to the
Change in Control.
190
<PAGE>
9. No Contract of Employment. The rights and obligations created hereunder
shall have no effect on Employee's status as an employee at will of Employer.
Employee acknowledges that this Agreement creates no right to be employed by
Employer and shall be construed solely as creating additional financial
security in the event of a Change of Control of Employer.
10. Binding Agreement. This Agreement shall be binding on Employer, its
successors and assigns.
11. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Iowa.
12. Waiver. Following a Change of Control, no successor to Employer shall
request or require Employee to release, modify, waive or discharge his rights
hereunder. Failure of Employee to enforce his rights hereunder at the time
of any breach or non-compliance with any condition or provision of this
Agreement by Employer, its successors or assigns, shall not be deemed to be
a waiver of such provision and shall have no effect on the enforcement of the
same or any other condition herein contained.
13. Severability. In the event that any provision of this Agreement is
deemed to be invalid or unenforceable, such invalid or unenforceable
provision shall be deemed to be modified in such a manner as to make it valid
and enforceable and shall have no affect on the validity or enforceability of
any other provision of this Agreement.
14. Prior Agreements. This Agreement shall supersede all prior agreements
between the parties relating to Change of Control of Employer, and all such
prior agreements, whether oral or written, are hereby canceled, terminated,
and revoked.
Wherefore, the parties hereto have caused this Agreement to be executed as of
the day and year first above written.
Brenton Banks, Inc. Employee
By________________________________________ ________________________________
C. Robert Brenton, Chairman of the Board Larry A. Mindrup
191
<PAGE>
Exhibit 11
Statement of computation of earnings per share.
192
<PAGE>
<TABLE>
Statements re: Computation of Earnings Per Share
Brenton Banks, Inc.
<CAPTION>
December 31, 1994 1993 1992
<S> <C> <C> <C>
Net income $10,107,387 $14,249,970 $12,953,094
Average common shares outstanding 7,889,889 7,848,795 7,780,353
Average shares under long-term
stock compensation plan 61,397 69,765 2,843
Average common equivalent
shares outstanding 7,951,286 7,918,560 7,783,196
Earnings per share 1.27 1.80 1.67
</TABLE>
Note: Amounts are restated to reflect the May 1994 3-for-2 stock split
in the form of a stock dividend.
193
<PAGE>
Exhibit 12
Statement of computation of ratios.
194
<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, 1994 1993 1992
<S> <C> <C> <C>
Return on average total assets:
Net income (before deduction of
minority interest) $ 10,698 14,918 13,585
* divided by *
Average assets $ 1,521,189 1,436,425 1,387,273
Ratio 0.70% 1.04% 0.98%
Return on average common
stockholders' equity:
Net income $ 10,107 14,250 12,953
* divided by *
Average common stockholders'
equity $ 111,949 103,140 91,691
Ratio 9.03% 13.82% 14.13%
Common dividend payout ratio:
Cash dividends per share $ 0.44 0.40 0.35
* divided by *
Net income per share $ 1.27 1.80 1.67
Ratio 34.65% 22.22% 21.00%
Average equity to average assets:
Average equity $ 111,949 103,140 91,691
* divided by *
Average assets $ 1,521,189 1,436,425 1,387,273
Ratio 7.36% 7.18% 6.61%
Equity to assets ratio:
Common stockholders' equity $ 110,430 112,418 97,430
* divided by *
Total assets $ 1,581,327 1,480,596 1,431,140
Ratio 6.98% 7.59% 6.81%
</TABLE>
195
<PAGE>
<TABLE>
<CAPTION>
December 31, 1994 1993 1992
<S> <C> <C> <C>
Tier 1 leverage capital ratio:
Common stockholders' equity $ 110,430 112,418 97,430
Minority interest 4,220 4,407 3,987
Unrealized gains (losses) on
assets available for sale 5,117 (3,036) (17)
Less: intangibles (5,499) (5,499) (5,834)
Tier 1 capital $ 114,268 108,290 95,566
* divided by *
Total assets $ 1,581,327 1,480,596 1,431,140
Unrealized gains (losses) on
assets available for sale 5,117 (3,036) (17)
Less: intangibles (5,499) (5,499) (5,834)
Tier 1 assets $ 1,580,945 1,472,061 1,425,289
Ratio 7.23% 7.36% 6.71%
Primary capital to assets:
Common equity $ 110,430 112,418 97,430
Minority interest 4,220 4,407 3,987
Unrealized gains (losses) on
assets available for sale 5,117 (3,036) (17)
Allowance for loan losses 10,913 9,818 9,006
Primary capital $ 130,680 123,607 110,406
* divided by *
Total assets $ 1,581,327 1,480,596 1,431,140
Unrealized gains (losses) on
assets available for sale 5,117 (3,036) (17)
Allowance for loan losses 10,913 9,818 9,006
Allowable assets $ 1,597,357 1,487,378 1,440,129
Ratio 8.18% 8.31% 7.67%
</TABLE>
196
<PAGE>
Exhibit 13
The Annual Report to Shareholders of Brenton Banks, Inc., for the
1994 calendar year.
197
<PAGE>
Cover - blue background, with the words:
Brenton Banks, Inc.
1994
Strategy for Success
Annual Report
198
<PAGE>
Corporate Profile
Brenton Banks, Inc. is a bank holding company headquartered in Des Moines,
Iowa. Assets total $1.6 billion with another $.5 billion under trust agreement
and $.2 billion in investment brokerage accounts.
Brenton Banks, Inc. operates 14 banks, including one savings bank, in
44 banking facilities across Iowa. Markets served include 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, Brenton Banks, Inc. operates full-
service investment brokerage, trust, mortgage, insurance and real estate
subsidiaries.
The first Brenton Bank was founded in Dallas Center, Iowa, in 1881.
Brenton Banks, Inc. incorporated in 1948 as Iowa's first bank holding
company.
The Company's common stock trades on the Nasdaq National Market under
the symbol BRBK.
Contents
Financial Highlights 1
Message To Our Shareholders 2
Strategic Planning Process 5
President's Message 6
5-Year Review 8
A Closer Look 9
Management's Discussion and Analysis 12
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
Graph showing Net Income for 1990-1994 with additional bar showing Net Income
for 1994 prior to restructuring charge.
<TABLE>
<CAPTION>
Net Income*
(In thousands)
90 91 92 93 94 94
<S> <C> <C> <C> <C> <C> <C>
$10,339 11,659 12,953 14,250 11,766 10,107
<FN>
*1994 graph presentation reflects
amounts before and after the
one-time restructuring charge.
</TABLE>
199
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights
Brenton Banks, Inc. and Subsidiaries
1994**** 1994**** 1993 1992
<S> <C> <C> <C> <C>
After Before
Operating Results Restructure Restructure
Net interest income $ 55,450,526 55,450,526 54,228,718 51,786,369
Provision for loan losses 1,987,909 1,987,909 1,251,588 1,410,730
Total noninterest income 16,592,988 16,592,988 17,863,271 14,684,040
Total noninterest expense 56,656,922 54,011,922 50,414,942 46,590,756
Income before income
taxes and minority
interest 13,398,683 16,043,683 20,425,459 18,468,923
Net income 10,107,387 11,765,802 14,249,970 12,953,094
Per Common and Common
Equivalent Share***
Net income $ 1.27 1.48 1.80 1.67
Cash dividends .44 .44 .40 .35
Book value, including
unrealized gains
(losses)* 14.03 14.03 14.27 12.47
Book value, excluding
unrealized gains
(losses)** 14.68 14.68 13.88 12.47
Closing bid price 18.25 18.25 17.50 17.33
At December 31
Assets $1,581,326,849 1,581,326,849 1,480,596,046 1,431,139,829
Loans 970,214,498 970,214,498 875,881,387 753,454,137
Nonperforming loans 5,022,000 5,022,000 4,013,000 4,593,000
Deposits 1,340,283,110 1,340,283,110 1,294,363,694 1,269,940,325
Common stockholders'
equity* 110,430,345 110,430,345 112,417,665 97,430,163
Ratios
Return on average common
stockholders' equity
(ROE) 9.03% 10.51% 13.82% 14.13%
Return on average assets
(including minority
interest) (ROA) .70 .81 1.04 .98
Net interest margin 4.12 4.12 4.28 4.23
Net noninterest margin (2.61) (2.44) (2.31) (2.31)
Primary capital to assets** 8.18 8.18 8.31 7.67
Tier 1 leverage capital
ratio** 7.23 7.23 7.36 6.71
Nonperforming loans as
a percent of loans .52 .52 .46 .61
Net charge-offs as a
percent of average loans .10 .10 .05 .13
Allowance for loan losses
as a percent of
nonperforming loans 217.30 217.30 244.65 196.09
<FN>
* including unrealized gains (losses) on assets available for sale
** excluding unrealized gains (losses) on assets available for sale
*** restated for the May 1994, 3-for-2 stock split
**** amounts shown for 1994, before and after the restructuring charge, are
for comparison only
</TABLE>
Graph showing Total Assets for 1990-1994.
Total Assets
(In millions)
<TABLE>
<CAPTION>
90 91 92 93 94
<S> <C> <C> <C> <C> <C>
$1,274 1,361 1,431 1,481 1,581
</TABLE>
Graph showing Nonperforming Loans from 1990-1994.
Nonperforming Loans
(In thousands)
<TABLE>
<CAPTION>
90 91 92 93 94
<S> <C> <C> <C> <C> <C>
$5,460 5,622 4,593 4,013 5,022
</TABLE>
Graph showing Primary and Leverage Capital Ratios from 1990-1994.
Primary Capital Ratio
<TABLE>
<CAPTION>
90 91 92 93 94
<S> <C> <C> <C> <C> <C>
6.98% 7.23% 7.67% 8.31% 8.18%
</TABLE>
Tier 1 Leverage
Capital Ratio
<TABLE>
<CAPTION>
90 91 92 93 94
<S> <C> <C> <C> <C> <C>
5.86% 6.21% 6.71% 7.36% 7.23%
</TABLE>
200
<PAGE>
Message To Our Shareholders
Strategic planning. For Brenton Banks, Inc. in 1994, it meant
examining industry trends, defining key issues and goals, and formulating
action plans to address those issues. Driven by a powerful corporate vision of
being one of Iowa's premier financial institutions, Brenton's new strategic
plan now provides a roadmap that will guide us toward future growth and
prosperity.
Operating earnings for 1994 were the third highest in the Company's
history. For the first time in six years, Brenton Banks, Inc.'s earnings fell
short of annual growth objectives. However, our 1994 achievements, coupled
with a new strategic plan, lay the foundation for future success.
Financial Results
Net Income for the year fell 29 percent to $10.1 million, which
compares to $14.2 million for 1993. The 1994 earnings include a $1.7 million
one-time restructuring charge to cover items included in the Company's
strategic plan. Earnings per common share before the restructuring charge
(which amounts to $.21 per share), were $1.48, compared to $1.80 one year ago.
The Company's return on average assets (ROA), excluding the one-time
charge, was .81 percent, compared to 1.04 percent in 1993. Similarly, the
adjusted return on average equity (ROE) was 10.51 percent, compared with
13.82 percent one year ago.
The decline in operating earnings was caused primarily
by: a lower net interest margin; growth in noninterest expenses; and
securities losses versus securities gains in 1993. Additionally, rising
interest rates caused secondary market loan fees to fall 56.1 percent from
the record level of 1993.
Total Loan Growth & Quality A key Company focus, loans grew 16.7
percent on average in 1994. Brenton's loan quality remains exceptional and is
ranked among the top five peer Midwest bank holding companies*. Nonperforming
loans remained low at .52 percent of loans, and the reserve for loan losses
was a solid 217.3 percent of nonperforming loans and 1.1 percent of total
loans.
* According to the 3rd-quarter 1994 Midwest Regional
Banking Review issued by Stifel, Nicolaus & Co., Inc.
Stock & Dividend Information During 1994, the Company paid dividends
per common share totaling $.44 for the year, a 10 percent increase over 1993.
To position the Company's common stock for growth in share price,
increase shareholder access to stock information, and enhance stock
visibility, Brenton moved its common stock to the Nasdaq National Market in
February 1994. In May, a 3-for-2 stock split in the form of a stock dividend
increased outstanding shares by 50 percent while reducing the per-share stock
price.
During 1994, the Company repurchased 44,800 shares of the Company's
common stock, at a total cost of $851,000. Recently, the Board approved an
additional stock repurchase of up to $2.5 million of Brenton stock.
Circle centered in the page with the words:
Brenton's focus has been on investing in THE future, introducing and
expanding initiatives that emphasize customer relationships, enhance products
and service delivery, in order to assure long-term earnings growth
Graph showing Annual Dividends per Common Share for 1990-1994.
Annual Dividends Per
Common Share
<TABLE>
<CAPTION>
90 91 92 93 94
<S> <C> <C> <C> <C> <C>
$0.273 0.323 0.350 0.400 0.440
</TABLE>
201
<PAGE>
Pictured (left to right) are
* C. Robert Brenton,
Chairman of the Board,
* William H. Brenton, Chairman of the Executive Committee & Vice Chairman
of the Board, and
* Robert L. DeMeulenaere, President.
1994 Achievements In 1994, Brenton focused on investing in the
future, introducing or expanding a number of initiatives, each designed to
emphasize customer relationships, enhance product and service delivery, and
help assure long-term earnings growth. Among these, Brenton:
* Opened new, non-traditional offices, including two investment
brokerage offices and a full-service bank branch inside a major supermarket;
* Expanded into two vibrant new markets by opening or announcing new
savings bank offices in Ankeny and Iowa City;
* Constructed a major new Davenport banking facility in one of the
city's key growth areas;
* Introduced the Brenton Family of Mutual Funds to provide customers
another solid investment opportunity, which will also contribute to the
Company's fee income;
* Expanded corporate services, including cash management services, as
a means to becoming a one-stop financial resource for Iowa's businesses;
* Strengthened the Brenton Mortgage distribution network to promote
mortgage lending in several of our markets.
A Closer Look, beginning on page 9 of this Annual Report, provides a
more in-depth look at these and other efforts.
Becoming One Statewide Banking Organization: Supporting Our Strategy
for Success An intense 1994 planning process involved 14 Brenton teams
analyzing and recommending changes throughout the organization. The result is
a dynamic new strategic plan that will guide our Company toward increased
operational efficiencies, stronger customer relationships, and a strengthened
sales focus.
To create the structure that supports implementation of this plan,
Brenton will combine its 13 commercial bank charters into one statewide
banking organization in 1995. Brenton
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<PAGE>
Savings Bank, FSB, of Ames will remain a separate entity, enabling the Company
to retain expanded branching opportunities available to savings banks.
The consolidation will streamline operations and reduce expenses by
as much as $2.5 million a year while allowing each location to retain local
decision making, customer focus, and community involvement _ all critical
components in the Company's Mission of becoming Iowa's premier financial
services institution.
A Robust State Economy* Iowa's economy continues to be strong and is
expected to generate "better than modest growth" in 1995, according to the
Iowa Economic Forecasting Council's December 1994 report.
* According to The Economic Index
published January 22, 1995 by The Des Moines Register
For the month of December 1994, Iowa's unemployment rate of 3.2
percent remained historically low, largely due to five-year growth trends in
non-farm employment and manufacturing work hours. Consumer confidence was
reflected in a $3.8 million increase in sales tax receipts over 1993 for the
three months ended December 31, and in a $2.8 million increase in December
housing permits issued in major Iowa communities. While 1994's near-record
soybean and corn crop harvests drove market prices down, the net effect was
increased cash flows for farmers - and for the state of Iowa.
All totaled, Iowa's strong economic environment offers the economic
support that will help fuel our organization's growth in the years ahead.
The Future Guided by our "Strategy for Success," we continue to focus
on becoming a total financial services provider. This, we believe, is what
will define the successful financial institutions in the year 2000, and
beyond. As we move toward the year 2000, Brenton Banks, Inc. will:
* Pursue expansion opportunities that fit into our culture and growth
strategy;
* Further diversify services to bring customers the financial
products and services they need while emphasizing relationship banking;
* Manage our balance sheet on a consolidated basis, enabling us to
focus on its composition and improve our net interest margin;
* Implement enhanced expense management tools to maximize operational
efficiencies.
All of these efforts are currently underway, and more are on the
horizon. As always, we appreciate your continued confidence as we work for
the common good of the Company, our customers, our employees and you, our
valued shareholders.
Sincerely,
/s/
C. Robert Brenton
Chairman of the Board
/s/
William H. Brenton
Chairman of the Executive Committee
& Vice Chairman of the Board
/s/
Robert L. DeMeulenaere
President
Of Special Note Hubert G. Ferguson, well known for his role as Senior Vice
President-National Sales Manager for a major Midwest brokerage firm, was
named to the Brenton Banks, Inc. Board of Directors in July 1994. Mr.
Ferguson brings more than 30 years experience and achievements in the
brokerage industry, and replaces veteran Brenton banker and Board member
Thomas R. Smith, who retired from the Board in 1994.
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<PAGE>
Picture of Strategic Planning Coordinating Team
Strategic Planning Process
Brenton's "Strategy for Success" was guided by the members of the Company's
central Strategic Planning Coordinating Team, comprised of (l-r): * Ronald D.
Larson, President & CEO, Brenton Bank and Trust Company of Cedar Rapids; *
Woodward G. Brenton, President & CEO, Brenton First National Bank, Davenport;
* Roger D. Winterhof, President & CEO, Brenton National Bank - Poweshiek
County, Grinnell; * Charles N. Funk, Vice President - Investments; * Norman
D. Schuneman, Senior Vice President - Lending; * Steven T. Schuler, Chief
Financial Officer Treasurer / Secretary; * Larry A. Mindrup, President & CEO,
Brenton Savings Bank, FSB - Ames; and * Phillip L. Risley, President & CEO,
Brenton Bank, N.A., Des Moines.
The Strategic Planning Process involved 14 Brenton strategic planning teams,
each focused on a critical aspect of the Company's operations. Nearly 100
team members dedicated hundreds of hours to identify and recommend
improvements that will cumulatively enhance operating efficiencies,
strengthen customer relationships and facilitate a more dynamic sales
approach. Through these teams' efforts, the Company now has a powerful
strategic direction for the future.
Picture of Team Leaders.
Team focuses, their leaders, and others integral to this critical process
include (Seated, l-r): * Cost Management - Doug Gulling, Senior Vice
President, Brenton Bank Services Corporation; * Employee Recruitment,
Training & Retention - Mary Sweeney, Vice President / Human Resources,
Brenton Banks, Inc.; * Integrated Delivery of Services - Steve Schneider,
President & CEO, Brenton Brokerage Services, Inc.; * Decision-Making
Processes - Bruce Seymour, President, Brenton State Bank - Dallas Center; *
Controller's Office - Jennifer Carney, Controller; * Sales Culture-
Relationship Banking - Saulene Richer, Senior Vice President, Brenton
Banks, Inc.; * Technology - John Amatangelo, President & CEO, Brenton Bank
Services Corporation; * Revenue Growth and New Business Lines - Jim Lowrance,
President, Brenton Bank and Trust Co. - Marshalltown. (Standing, l-r): *
Deposit and Asset Growth - Daryl Petty, President, Brenton Bank and Trust
Co., Adel; * Balance Sheet Management - Marc Meyer, President, Brenton
National Bank of Perry; * Marketing - Catherine Reed, Vice President-
Marketing Director, Brenton Banks, Inc.; * Team Management & Empowerment -
Kenneth Brenton, President, Brenton Mortgages, Inc.; * Brenton Trust &
Investment Management Division - Gary Ernst, Vice President & Senior Trust
Officer; * Bank Consolidation - Marsha Findlay, Executive Vice President &
COO, Brenton First National Bank, Davenport.
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President's Message
The year 1994 - my 30th year with Brenton and my first as Company president -
was a year of progress, tremendous change, and some disappointment at Brenton
Banks, Inc. It was the year in which the Company focused on developing a
dynamic strategic plan that establishes a long-term direction for the
Company.
As mentioned in the Message to Our Shareholders, our "Strategy for
Success" encompasses many initiatives, each building upon the Company's
113-year tradition of Brenton family involvement and values .organizational
strength and stability .commitment to exceptional customer service, community
partnership, and responsiveness to change.
Recognizing today's competitive banking environment and the
fundamental changes in the industry, the Company began the strategic planning
process by implementing a team approach to managing our business. Our
strategic plan is the result of 100 Brenton associates involved in 14 teams
investing hundreds of hours to carefully analyze, recommend, and begin to
implement changes that will insure our success in the future.
The result is our "Strategy for Success," a plan that represents one
of the most intense and comprehensive planning efforts in our Company's
history. It's our blueprint for the future. Spanning all aspects of our
organization, it reinforces Brenton's commitment to our customers, employees,
communities, and shareholders. Among its components:
Create a Strong Sales Culture Numerous new initiatives address our commitment
to expanding customer relationships. We agreed to manage our Company as a
sales organization, focusing on the customer and the needs of
the customer.
Delivery Systems
By the end of the century, fewer than 40 percent of customers will
prefer to use branches. Most will demand non-branch delivery systems for
accessing financial services. New delivery systems to meet the customers'
expectations are part of the strategic plan. In 1995, we will open a
Telebanking Center which will allow customers to bank by phone. In the
future, we will continue to explore other non-branch delivery options.
Cost Management
With an objective of maximizing revenue, the Company is now
introducing or enhancing its programs for cost management. New technology and
internal expertise will enable us to expand our analytical capabilities in
the areas of industry and competitor trends, marketing programs, product and
customer profitability.
A separate, expense-reduction effort will include a company-wide re-
engineering initiative. This endeavor will examine, redefine, and restructure
our business in a way that reduces costs while keeping our customers' desires
and needs at the center of all decision making.
Become One Statewide Banking Organization
To provide the structure that will enable us to achieve our
objectives in sales, relationship banking, and profitability, Brenton Banks,
Inc. will apply for regulatory approval to combine all 14 Brenton Banks into
a single, statewide financial services organization. Brenton Savings Bank,
FSB, Ames, will retain its charter in order to take advantage of statewide
branching opportunities available to savings banks. Through this
consolidation, which is to be completed in 1995, customers will gain the
benefit of being able to bank at any Brenton bank location across Iowa. The
Company and its shareholders will benefit from streamlined, more efficient
operations. Employees will benefit by focusing on one common strategy. The
new bank will be the second largest in the state and the 284th largest bank
in the United States.
Circle centered in the page with the words:
Brenton's "Strategy For Success" builds upon the Company's 113-year tradition
of Brenton family involvement and values, organizational strength and
stability, commitment to exceptional customer service and relationship
banking, and responsiveness to change
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<PAGE>
Our strategic plan is truly a well-formulated, dynamic and exciting
blueprint that will guide Brenton Banks, Inc. into the next century as a
sales, customer-driven and profitable financial institution. It builds on the
Company's tradition of stability, growth, financial success, its Iowa roots,
and its strong ethics and values. Our strategic plan represents a proactive
response to a future of continued, rapid change.
With our strategic planning complete, and with the enthusiastic
support of our Board of Directors, bank presidents, senior officers, and
entire staff, Brenton Banks, Inc. is postured to achieve continuous success
in the future. We are beginning an exciting new journey!
Sincerely,
/s/
Robert L. DeMeulenaere
President, Brenton Banks, Inc.
Pictured are Award Recipients and Awards including Outstanding Bank of the
Year Award, Most Improved Bank Award, Employee of the Year Awards.
Special awards were presented to these Brenton employees and banks for their
outstanding efforts and contributions in 1993. (Standing, l-r): *
Representing the "Most Outstanding Bank" honored for exemplary performance
during 1994 - Bruce Seymour, President, Brenton State Bank, Dallas Center; *
Outstanding Teller: Wielka Cosgrove, Lead Teller, Cedar Rapids; * Outstanding
Lender: Richard Samek, Assistant Vice President / Consumer Loans, Cedar
Rapids; * Outstanding Administrative / Financial / Support (Brenton Banks,
Inc. / Brenton Bank Service Corporation): Claudia James, Bank Accounting
Manager; * Outstanding Customer Contact: John Anderson, Assistant Vice
President / Private Banking, Davenport. (Seated, l-r): * Outstanding
Administrative / Financial / Support (Individual Bank): Diane Burns, Loan
Assistant, Marshalltown; * Representing the "Most Improved Bank" honored for
exemplary performance during 1993 - Ronald Larson, President and CEO, Brenton
Bank and Trust Co., Cedar Rapids.
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<PAGE>
5-Year Review
Building on a Solid Foundation
Since Brenton Banks, Inc. became Iowa's first bank holding company in
1948, the Company has continued to grow and expand. For consumer, commercial
and agricultural customers, the Company has steadily introduced new financial
services and banking locations throughout the state. For our investors,
Brenton Banks, Inc. has represented a conservative and consistent investment
- dividends per share have risen 276 percent since 1989.
In recent years, the company's traditions of strength, stability and
growth are reflected in numerous accomplishments, summarized below. These
achievements combine with those of 1994 to lay a solid foundation on which
the Company can continue to build. These efforts, we believe, will help us
continue our tradition of enhancing shareholder value in the years ahead.
1993
Total Assets: $1.48 billion
Banking Locations: 42
* Product offerings expand through the introduction of
annuity investments, commercial leasing services,
and international banking services. Cash management
services are centralized to enhance sales efforts.
* Product sales and customer convenience are strengthened
with Brenton Brokerage Services' addition of nine full-time
brokers and the relocation of Des Moines' 42nd and
University office to the growing suburb of Clive.
* Brenton Banks, Inc. receives approval to open a new
savings bank office in Ankeny, Iowa.
1992
Total Assets: $1.43 billion
Banking Locations: 41
* Brenton enters the growing markets of Ames and Story City through the
acquisition of the three offices of Ames Savings Bank, FSB.
* A sophisticated Marketing Customer Information File (MCIF)
system is installed to facilitate expanded customer
relationships through marketing efforts.
* To create "retail" banking environments that foster product sales,
15 Brenton locations are remodeled or renovated.
* Brenton Brokerage Services becomes a registered broker-dealer and expands
to 12 full-time brokers.
1991
Total Assets: $1.25 billion
Banking Locations: 39
* Brenton acquires the Perry office of American Federal Savings
Association of Iowa.
* Technological improvements and operational efficiencies become major
focuses for the Company, leading to the implementation of platform
automation, optical storage and centralization of bank operations.
1990
Total Assets: $1.12 billion
Banking Locations: 40
* The Company expands its statewide presence through the acquisition of $124
million in deposits of four
BancIowa Federal Savings Bank
branches in Cedar Rapids; the Emmetsburg
branch of First Federal Savings & Loan
Association of Estherville; and the Indianola
branch of First Central Federal Savings Bank.
1989
Total Assets: $961 million
Banking Locations: 36
* Brenton Banks, Inc. sets Company earnings record of $8.7 million
and ranks 16th among the top 25 companies in terms of most improved
bank stock price in the nation by American Banker.
* Leads effort to pass regional interstate banking legislation,
which was signed into law in February 1990.
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<PAGE>
A Closer Look
Expansion. Diversification. Service and Sales. Operational
efficiencies. Community involvement. These are some of the elements that will
guide Brenton Banks, Inc. toward our mission of being a truly high-
performance, premier financial institution. To ensure continued progress in
each of these areas, the Company will be directed by its powerful new
strategic plan.
Expansion
Contributing to a future of growth and profitability are the
Company's strategic efforts to expand into new markets, enhance existing
delivery systems and improve customer access to products and services. Among
the successes in 1994, Brenton Banks, Inc.:
* Opened new, non-traditional distribution channels including a Cedar
Rapids' supermarket bank branch located within Econo Foods, a Nash-Finch
affiliate. In addition, the Company opened new Brenton Brokerage offices in
downtown Des Moines and Newton to accommodate its growing customer base.
Brenton Brokerage now has 29 brokers serving 19 of our bank offices and one
independent location.
* Expanded the banking franchise with the April opening of a savings
bank location in Ankeny. The company also received regulatory approval for a
new savings bank office in Iowa City, which will open in 1995. To position
itself for growth in the Davenport/Bettendorf area, a new banking facility
was opened in one of the city's key growth areas.
* Strengthened the Brenton Mortgages distribution system. This
enables Brenton Mortgages to enhance relationships with realtors and
contractors, who often guide buyers' choice of lenders. The Company also now
employs two full-time appraisers, who generate fees for the Company while
reducing dependence on third-party appraisers.
* Developed a Secondary Market Department for Brenton Mortgages. The
Company is enhancing its ability to sell mortgage loans into the secondary
market. It is also now operationally equipped to retain loan servicing, which
adds value in terms of maintaining customer relationships and increasing fee
income.
Diversification
Brenton Banks, Inc. continued to diversify its product lines and move
toward being a one-stop financial resource for consumer, commercial and
agribusiness customers in 1994. This promotes relationship banking while
fueling opportunities for income growth. For example:
* The Brenton Family of Mutual Funds was introduced in October.
Offered through Brenton Brokerage and managed by Brenton Trust & Investment
Management, the four Brenton Mutual Funds are: Brenton U.S. Government Mon
ey Market Fund, Brenton Intermediate U.S. Government Securities Fund, Brenton
Intermediate Tax-Free Fund and the Brenton Value Equity Fund.
* Brenton's first-quarter 1994 purchase of a Tama / Toledo insurance
agency added six insurance representatives and is expected to generate
future growth in insurance commissions
Circle centered on the page with the words:
To achieve our mission of being a premier financial institution, Brenton
Banks, Inc. is focused on expansion, diversification, service & sales,
operational efficiencies, and community involvement. In each of these areas,
the Company made significant progress in 1994
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<PAGE>
and fees. Additionally, the Company continues to expand opportunities to
offer bank customers a wider range of insurance products, such as life
insurance and annuities.
* Commercial services were expanded as a means to enhance long-term,
growth-oriented relationships with commercial customers. In addition to
successfully pursuing a higher volume of commercial loans, Brenton Banks,
Inc. expanded cash management services, which are now available at all
Brenton bank locations.
Service & Sales
A number of 1994 initiatives reflect the Company's focus on
customers, service, sales and relationship building:
* Education and training. An ag-gressive training schedule added to
employees' skills in the areas of finance, technology, sales and customer
service.
* The introduction of the "Brenton Step-Up Approval Program," which
enhances customer convenience by providing 48-hour approval on mortgage loan
applications. Brenton Mortgages also began development of a "construction-
permanent" loan, a progressive product that eliminates home buyers' need to
secure permanent financing once construction is complete.
* Initial development of extended-hours telephone banking. To be
introduced in 1995, Brenton Bank, N.A., Des Moines will introduce a telephone
banking center that will allow customers to access account information,
apply for loans, and conduct transactions over the phone. Telephone banking
will ultimately benefit Brenton bank customers throughout the state.
* Began development of Brenton's point-of-purchase VisaRegistration
Mark debit card, which is planned for introduction during 1995.
Operational Efficiencies
Brenton Banks, Inc. has long recognized that being a lower-cost
financial services provider is crucial to organizational longevity and
profitability. In 1994, the Company continued to pursue opportunities to
reduce expenses without sacrificing current, high customer-service levels.
For instance, Brenton Mortgages began evaluating systems and technology
improvements that will increase capacity. In another cost-saving move, the
Company completed standardization of all Brenton bank deposit products.
Community Involvement The 13 Brenton banks and one savings bank
annually provide contributions of time and money to their communities,
helping make them vibrant areas in which to live and work. Throughout
Brenton Banks, Inc., giving back to the markets we serve and going beyond
the Community Reinvestment Act (CRA) requirements is the norm; officers
and employees willingly volunteer their time and expertise to community
boards, committees and charitable causes.
Circle centered on the page with the words:
"We must plan for the future, because people who stay in the present
will remain in the past."
Abraham Lincoln
209
<PAGE>
Picture of Brenton "Superbank".
Expanding into non-traditional delivery systems is one way Brenton is
enhancing customer convenience, service and sales. In November 1994, Brenton
opened its "SuperBank" branch in Cedar Rapids' EconoFoods SuperCenter, which,
at 106,000 square feet, is Iowa's largest grocery store. The bank branch is
open seven days and 60 hours per week, and offers the full range of Brenton
deposit and loan products.
Picture of Brenton employee reading book to class.
Every day, the efforts of Brenton employees reflect the Company's commitment
to giving back to the communities it serves. Here, Suzie German reads to Mrs.
Kunce's 1st grade class at Fairview School in Grinnell, Iowa.
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<PAGE>
Management's Discussion and Analysis
For 1994, Brenton Banks, Inc. and subsidiaries (the "Company")
reported net income of $10,107,387 compared to 1993 earnings of $14,249,970.
Included in net income was a one-time, after-tax restructuring charge of
$1,658,415 related to the Company's strategic plan.
Capital Resources
Common stockholders' equity totaled $110,430,345 as of December 31,
1994, a 1.8 percent decline from the prior year. This decline was primarily
due to the equity adjustment required by Statement of Financial Accounting
Standard (FAS) No. 115. Under this accounting standard, which was adopted
December 31, 1993, the method of classifying investment securities is
based on the company's intended holding period. Accordingly, securities that
the Company may sell at its discretion prior to maturity are recorded at
their fair value. The aggregate unrealized net gains or losses (including the
income tax and minority interest effect) are recorded as a component of
stockholders' equity. At December 31, 1994, aggregate unrealized losses from
assets available for sale totaled $5,117,046, while at December 31, 1993,
aggregate unrealized gains totaled $3,036,270. This resulted in a net change
of $8,153,316 in 1994.
The Board of Directors increased 1994 dividends to common
stockholders 10.0 percent over 1993 to $.44 per share, a dividend payout
ratio of 34.6 percent of earnings per share. Additionally, in an effort to
make Brenton stock more affordable to individual investors, the Company
declared a 3-for-2 stock split in the form of a stock dividend in May 1994.
In March 1994, the Board of Directors authorized a plan to repurchase
up to $2,000,000 of the Company's common stock. As of December 31, 1994, the
Company had repurchased 44,800 shares at a total cost of $850,950.
The Company's risk-based core capital ratio was 11.45 percent at
December 31, 1994, and the total risk-based capital ratio was 12.54 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 7.23 percent at December 31, 1994,
exceeding the regulatory minimum requirement range of 3.00 to 5.00 percent.
These capital calculations exclude unrealized gains or losses on assets
available for sale.
The debt-to-equity ratio of Brenton Banks, Inc. (the "Parent
Company") was 11.5 percent at December 31, 1994, compared to 10.7 percent at
the end of 1993. This increase was primarily due to lower equity created by
the FAS 115 adjustment. The Parent Company's available $2 million line of
credit with a regional bank was unused throughout 1994. Long-term borrowings
of the Parent Company at December 31, 1994 consisted entirely of $12,644,000
of capital notes.
Brenton Banks, Inc. common stock closed 1994 at a bid price of $18.25
per share, representing 1.30 times the book value per share of $14.03 on the
same date. The year-end stock price represented a price-to-1994-earnings
multiple of 14.4 times. The price-to-earnings ratio, excluding the one-time
restructuring charge from earnings per share, was a multiple of 12.3.
Brenton Banks, Inc. continues to pursue acquisition and expansion
opportunities that strengthen the Company's presence in current and new
markets. There are currently no pending acquisitions that would require
Brenton Banks, Inc. to secure capital from public or private markets.
Graph showing Return on Average Assets for 1990-1994 with additional bar
showing 1994 Return on Average Assets without restructuring charge.
Return on Average Assets*
<TABLE>
<CAPTION>
90 91 92 93 94 94
<S> <C> <C> <C> <C> <C> <C>
.95% .93% .98% 1.04% .81% .70%
<FN>
*1994 graph presentation reflects
amounts before and after the
one-time restructuring charge.
</TABLE>
Graph showing Return on Average Equity for 1990-1994 with additional bar
showing 1994 Return on Average Equity without restructuring charge.
Return on Average Equity*
<TABLE>
<CAPTION>
90 91 92 93 94 94
<S> <C> <C> <C> <C> <C> <C>
14.39% 14.27% 14.13% 13.82% 10.51% 9.03%
<FN>
*1994 graph presentation reflects
amounts before and after the
one-time restructuring charge.
</TABLE>
211
<PAGE>
Asset-Liability Management The Company has fully implemented an asset-
liability management system. This system simulates the effect of various
interest rate scenarios on net income and is 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. The Company's stable one-year GAP position continued to be negative
at December 31, 1994, meaning fewer assets are scheduled to reprice within
one year than liabilities. The Company does not rely on GAP management to
control interest rate risk, instead preferring simulation as a better
management tool. The asset-liability simulations indicate that net interest
margin will improve in a declining interest rate environment and decrease in
a rising rate environment.
In 1994, as in the past, balance sheet composition was evaluated on a
bank-by-bank basis, which resulted in 14 separate evaluations of
asset-liability management. As part of Brenton's strategic plan, assets and
liabilities will be managed on a consolidated basis, which management
believes will enhance earnings over time.
Liquidity
The Company actively monitors and manages its liquidity position
with the objective of maintaining sufficient cash flows to fund operations
and meet customer commitments. Federal funds sold, loans held for sale, and
investments available for sale are readily marketable assets. 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 interest rate risk position. Federal funds sold and assets
available for sale comprised 29.7 percent of the Company's total assets at
December 31, 1994.
Net cash provided from Company operations is another major source of
liquidity and totaled $16,279,907 in 1994; $20,429,680 in 1993; and
$17,822,173 in 1992. This trend of strong cash flow 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. In 1994, the
Company had borrowings of $28 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 and managing interest rate risk.
The combination of a high level of potentially liquid assets, strong
cash from operations, and low dependence on volatile liabilities provides
strong liquidity for the Company at December 31, 1994.
The Parent Company, whose primary funding sources are management fees
and dividends from its banking subsidiaries, had sufficient cash flow and
liquidity at December 31, 1994. Dividends totaling $19 million were available
to be paid to the Parent Company by subsidiary banks without reducing capital
ratios below regulatory minimums. At the end of 1994, the Parent Company had
$8.5 million of short-term investments as well as additional borrowing
capacity.
Results of Operations - 1994 Compared to 1993
Net Income
For the year ended December 31, 1994, Brenton recorded net income
of $10,107,387, which included an after-tax restructuring charge of
$1,658,415 related to the Company's strategic plan. Earnings per common share
before the restructuring charge were $1.48 compared to $1.80 for 1993. The
restructuring charge totaled $.21 per share, reducing final 1994 earnings per
share to $1.27.
The Company's total assets grew 6.8 percent to $1.6 billion at
December 31, 1994. Return on average assets (ROA), excluding the one-time
charge, was 0.81 percent in 1994, compared to 1.04 percent in 1993. The
return on average equity (ROE), excluding the restructuring charge, was 10.51
percent, compared to 13.82 percent one year earlier. The restructuring charge
reduced ROA 0.11 percent and reduced ROE 1.48 percent.
Net Interest Income
Net interest income rose 2.3 percent to $55,450,526 for
1994. This growth resulted from an increase in average earning assets,
primarily due to a 16.7 percent increase in average loans in 1994. Loans,
which typically earn higher yields than investment securities, earned an
average of 8.14 percent in 1994. Investment securities yielded an average
5.83 percent on a tax equivalent basis. The net interest spread, which is the
difference between the rate earned on assets and the rate paid on
liabilities, fell to 3.69 percent from 3.86 percent last year.
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<PAGE>
During 1994, the Company's net interest margin declined 16 basis
points and averaged 4.12 percent. To aid in reversing the 1994 trend of lower
net interest margins, there is a focus on managing the Company's balance
sheet on a consolidated basis, which should enhance earnings over time.
Loan Quality Brenton's loan quality remains very 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 0.52 percent of loans or
$5,022,000 at December 31, 1994, up from $4,013,000 and 0.46 percent 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 fourth among 36 Midwestern peer banks with
its 0.40 percent ratio of nonperforming loans to loans at the end of the
third quarter of 1994, according to the Stifel, Nicolaus & Co., Inc.,
September 30, 1994, Midwest Regional Banking Review.
The allowance for loan losses represented 217.3 percent of
nonperforming loans at the end of 1994, compared to 244.65 percent one year
ago. The Company's net charge-offs to average loans, which ranked ninth among
the 36 peer banking organizations at September 30, 1994, were 0.10 percent
for 1994 compared to 0.05 percent for 1993. With continued growth in loan
volume, the Company increased the provision for loan losses, which totaled
$1,987,909 for the year ended December 31, 1994, compared to $1,251,588 for
1993.
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
major loans to be routinely reviewed by qualified loan examiners.
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, the evaluation of individual loans at each bank.
Through the Company's loan administration process, individual banks
evaluate loan characteristics, borrower's financial condition, and collateral
values. From these assessments, the loan portfolio quality is quantified and
the bank calculates a required allowance for loan losses. This process is
expanded into a reserve adequacy analysis 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, 1994 was sufficient to absorb
possible loan losses within the portfolio.
Beginning January 1, 1995, the Financial Accounting Standards Boards
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 1994, the net
noninterest margin, before the restructuring charge, was 2.44
Graphs showing Net Interest Margin Provisions for Loan Losses and Net
Charge Offs.
Net Interest Margin
<TABLE>
<CAPTION>
90 91 92 93 94
<S> <C> <C> <C> <C> <C>
4.11% 4.04% 4.23% 4.28% 4.12%
</TABLE>
Provision for
Loan Losses
(In thousands)
<TABLE>
<CAPTION>
90 91 92 93 94
<S> <C> <C> <C> <C> <C>
$869 799 1,411 1,252 1,988
</TABLE>
Net Charge-offs
(In thousands)
<TABLE>
<CAPTION>
90 91 92 93 94
<S> <C> <C> <C> <C> <C>
$814 1,122 953 440 893
</TABLE>
213
<PAGE>
percent compared to 2.31 percent in 1993. The restructuring charge negatively
impacted the net noninterest margin 0.17 percent. To reduce this margin,
which is a significant goal, the Company must continue to increase its asset
base, develop fee-based services, and manage the growth of operating expenses
to a lower level.
Noninterest Income
Generating noninterest income is a key component to the
Company's earning performance, particularly when compressed net interest
margins cause modest growth in net interest earnings. For 1994, total
noninterest income (excluding securities transactions) declined 2.0 percent
to $16,932,612 from $17,268,103 one year ago. Two significant areas created
the decline in noninterest income in 1994.
The first was lower service charges received on deposit accounts,
which declined about $422,000 or 7.22 percent from 1993. Reducing fees
charged for certain deposit account products is a trend that will continue in
the future and is being experienced throughout the banking industry. The
second area was a significant decline in secondary market real estate loan
fees. The higher interest rates during the past year caused a 56.1 percent
reduction in loan fees, which totaled $938,332 in 1994, compared to
$2,139,492 in 1993, when the lowest interest rates in 25 years produced
record levels of residential loan refinancings and originations.
Securities transactions caused an additional decline in noninterest
income. In response to the rising interest rate environment, securities were
sold from the investment portfolio at a net loss of $339,624, compared to net
gain of $595,168 in 1993. The objective in selling securities in 1994 was to
reduce interest rate risk in the balance sheet and enhance future earnings.
Offsetting the overall decline in noninterest income was a 22.2
percent growth in insurance commissions, which resulted primarily from the
acquisition of an insurance agency in Tama/Toledo, Iowa, and a 13.0 percent
rise in fiduciary income.
Noninterest Expense
Total noninterest expense rose 12.4 percent in 1994 to $56,656,922
from $50,414,942 one year ago. Included in 1994 expense is a one-time pre-tax
restructuring charge of $2,645,000. The restructuring charge was recorded
after the Company's Board of Directors approved an overall strategic plan
that includes plans to consolidate the Company's 13 commercial
banks, reduce Brenton's overall personnel levels, and close selected banking
branches. The restructuring charge is comprised of the following costs:
<TABLE>
<S> <C>
Salaries and wages $1,089,000
Employee benefits 289,000
Occupancy expense 192,000
Data processing expense 527,500
Abandonment losses 267,000
Legal, regulatory and other 280,500
$2,645,000
</TABLE>
This restructuring plan is part of the Company's effort to streamline
its operations and fully implement a sales culture. The actions associated
with the plan will be substantially completed during 1995. A component of
this plan will be to reduce the growth rate of noninterest expense.
Without the restructuring charge, noninterest expense increased 7.1
percent from 1993 to 1994. The following analyses of other expenses excludes
the restructuring charge:
Salaries and benefits rose $1,063,409 from 1993 to 1994. The majority
of this increase is related to expansion of mortgage services, cash
management, and investment brokerage as well as the opening of new branches.
The increase in salaries created a proportionate rise in employee benefits
expense.
Occupancy and furniture and equipment expense increased in 1994 by
$959,493. This 14.5 percent increase is primarily due to rents for new
offices for banking, brokerage, and real estate activities, as well as
depreciation expense for remodeling facilities and new technology.
Data processing expenses were unchanged from last year at $2,556,319.
FDIC deposit insurance rose 5.7 percent in 1994, due to increasing deposit
levels. All Brenton banks pay an
214
<PAGE>
FDIC insurance premium rate of $.23 per $100 of deposits, the lowest rate
under the FDIC's risk-based premium system.
During 1994, Brenton initiated several promotional campaigns offering
brokerage services, checking accounts, and home equity loans. These
campaigns, along with local community event sponsorships throughout the
state, added 16.5 percent to advertising and promotion expenses.
Other operating expenses rose 11.5 percent. Included in this increase
were the following new activities:
* Costs for listing Brenton Banks, Inc. stock on the Nasdaq National
Market;
* Costs related to new offices, such as a new savings bank facility
in Ankeny and a new branch in the EconoFoods supermarket in Cedar Rapids;
* The acquisition of real estate agencies in Marshalltown
and Adel;
* Expanded cash management services, now available at all Brenton
locations;
* The acquisition of an insurance agency in Tama/Toledo;
* The introduction of the Brenton Family of Mutual Funds;
* Expanded Brokerage activities, including two new independent
offices.
These growth and expansion activities added an additional $1.75
million of recurring noninterest expense to the Company in 1994. Management
expects these new activities to enhance revenues in future years.
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 expense as a
percent of income, before income tax and minority interest, was 20.2 percent
for 1994 compared to 27.0 percent for 1993. This decline in effective rate
was due to lower overall Company earnings and reduced state franchise taxes.
In 1994, the Company established out-of-state investment subsidiaries
to manage the investment portfolios for each Brenton bank. These subsidiaries
provide an opportunity to lower the amount of state franchise taxes paid by
the Company.
Results of Operations - 1993 Compared to 1992
Acquisition 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.
Graph showing Net Noninterest Margin for 1990-1994 with additional bar
showing Net Noninterest Margin without restructuring charge.
Net Noninterest Margin*
<TABLE>
<CAPTION>
90 91 92 93 94 94
<S> <C> <C> <C> <C> <C> <C>
2.29% 2.26% 2.31% 2.31% 2.61% 2.44%
<FN>
*1994 graph presentation reflects
amounts before and after the
one-time restructuring charge.
</TABLE>
215
<PAGE>
Net Income
The Company's record earnings of $14,249,970 in 1993 was a 10.0
percent increase over $12,953,094 in 1992. Earnings per share also grew 7.8
percent to $1.80 for 1993 compared to $1.67 for 1992. The Company's ROA
improved to 1.04 percent from 0.98 percent in 1992. The ROE was 13.82
percent, down from 14.13 percent for 1992, the result of an increase in
equity capital.
Net Interest Income
Net interest income rose 4.7 percent over 1992 to $54,228,718
and was prompted by growth in interest-earning assets and declining
interest rates. The net interest margin was 4.28 percent for 1993
compared to 4.23 percent one year earlier.
Loan Quality
Nonperforming loans of $4,013,000 at the end of 1993 represented
0.46 percent of loans, down 12.6 percent from $4,593,000 one year earlier.
Provision expense for loan losses declined $159,142 in 1993. This provision
increased the allowance for loan losses to $9,817,864 at December 31, 1993,
representing 244.65 percent of nonperforming loans and 1.12 percent of loans.
Net loans charged off for 1993 represented a low 0.05 percent of average
loans.
Noninterest Income
Noninterest income rose 21.7 percent from 1992 to $17,863,271 for
1993. The Company capitalized on mortgage loan origination during an interest
rate environment that encouraged new home building and refinancing. Mortgage
fees on residential mortgage loans sold into the secondary market rose nearly
$800,000 in 1993 from the 1992 level.
Brenton Brokerage Services, Inc. became a licensed broker dealer in
April 1992 and capitalized on mutual funds sales, spurred by lower interest
rates on traditional deposit products. This resulted in an 88.1 percent
increase in investment brokerage commissions, which totaled $3 million in
1993.
Noninterest Expense
Noninterest expense rose 8.2 percent to $50,414,942 in 1993. Over
half of this increase was related to higher salaries and benefit expense,
which in part resulted from increased commission-based compensation on
investment brokerage sales and secondary market real estate loan origination.
Facilities remodeling and technological enhancements were fully
implemented in 1993. As a result, expenses related to occupancy and furniture
and equipment rose 9.3 percent. Also in 1993, the Company initiated
promotional campaigns and added technological enhancements to improve sales
of products and services. As a result, advertising and promotion expenses
increased 16.9 percent.
Data processing expense and FDIC deposit insurance assessments were
both down slightly from 1992. 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 strategy includes reducing taxes by
purchasing assets that produce tax-exempt income. 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
related to 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.
Pie chart showing Loan Composition for 1994.
1994
<TABLE>
<CAPTION>
Loan Composition
<S> <C>
Real Estate 57.7%
Consumer 22.8%
Commercial 11.9%
Loans to Farmers 7.4%
Other .1%
</TABLE>
216
<PAGE>
<TABLE>
<CAPTION>
Consolidated Average Balances and Rates
Brenton Banks, Inc. and Subsidiaries
Average Balances (In thousands) 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Assets:
Cash and due from banks $ 46,301 46,025 41,715 35,656 36,012
Interest-bearing deposits with banks 124 762 6,240 18,335 13,562
Federal funds sold and securities purchased under
agreements to resell 37,666 23,725 27,082 35,154 40,095
Trading account securities 116 -- -- -- --
Investment securities:
Available for sale-taxable 245,913 53,174 6,512 -- --
Available for sale-tax-exempt 132,040 -- -- -- --
Held to maturity-taxable 35,794 299,993 384,301 342,466 303,243
Held to maturity-tax-exempt 44,584 164,520 139,296 106,658 58,507
Loans held for sale 2,575 6,165 2,553 -- --
Loans 936,370 802,088 736,646 727,870 659,283
Allowance for loan losses (10,502) (9,615) (8,894) (8,819) (8,763)
Bank premises and equipment 24,545 23,045 21,400 18,876 17,003
Other 25,663 26,543 30,422 32,243 26,843
$1,521,189 1,436,425 1,387,273 1,308,439 1,145,785
Liabilities and Stockholders' Equity:
Deposits:
Noninterest-bearing $ 127,464 119,322 112,054 102,795 102,225
Interest-bearing:
Demand 250,520 217,754 209,642 175,595 152,434
Savings 294,715 299,640 260,568 235,894 205,433
Time 625,981 622,789 646,261 654,776 560,679
Total deposits 1,298,680 1,259,505 1,228,525 1,169,060 1,020,771
Federal funds purchased and securities sold
under agreements to repurchase 61,656 42,715 33,240 20,340 18,912
Other short-term borrowings 4,860 33 2,170 5,361 3,027
Accrued expenses and other liabilities 13,254 12,805 13,735 14,739 14,432
Long-term borrowings 26,500 14,077 14,067 13,619 13,347
Total liabilities 1,404,950 1,329,135 1,291,737 1,223,119 1,070,489
Minority interest 4,290 4,150 3,845 3,589 3,472
Common stockholders' equity 111,949 103,140 91,691 81,731 71,824
$1,521,189 1,436,425 1,387,273 1,308,439 1,145,785
Summary of Average Interest Rates
Average rates earned:
Interest-bearing deposits with banks 6.65% 2.88 4.92 7.10 8.69
Trading account securities 6.36 -- -- -- --
Federal funds sold and securities purchased
under agreements to resell 4.53 2.05 2.41 5.77 7.84
Investment securities:
Available for sale-taxable 5.30 5.28 6.63 -- --
Available for sale-tax exempt (tax equivalent basis) 6.37 -- -- -- --
Held to maturity-taxable 5.20 5.54 6.88 8.50 8.93
Held to maturity-tax-exempt (tax equivalent basis) 7.70 6.97 7.66 8.85 9.74
Loans held for sale 7.50 8.43 9.33 -- --
Loans 8.14 8.77 9.65 10.52 10.85
Average rates paid:
Deposits 3.55% 3.70 4.70 6.19 6.71
Federal funds purchased and securities sold under agreements
to repurchase 3.38 2.41 2.78 4.74 6.16
Other short-term borrowings 5.42 3.63 5.57 8.70 10.18
Long-term borrowings 6.86 8.60 9.14 9.57 10.16
Average yield on interest-earning assets 7.31% 7.57 8.43 9.62 10.11
Average rate paid on interest-bearing liabilities 3.62 3.71 4.70 6.21 6.76
Net interest spread 3.69 3.86 3.73 3.41 3.35
Net interest margin 4.12 4.28 4.23 4.04 4.11
</TABLE>
217
<PAGE>
<TABLE>
<CAPTION>
Selected Financial Data
Brenton Banks, Inc. and Subsidiaries
Year-end Balances
(In thousands) 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total assets $1,581,327 1,480,596 1,431,140 1,360,942 1,274,301 961,370 921,207 908,933 956,505 963,190
Interest-earning
assets 1,475,473 1,400,709 1,323,252 1,267,402 1,181,172 883,721 845,571 836,029 865,364 880,666
Interest-bearing
liabilities 1,315,378 1,224,951 1,181,013 1,141,008 1,052,597 769,717 733,133 728,597 771,416 785,851
Demand deposits 136,548 127,132 137,212 115,479 125,626 113,349 118,392 116,830 123,883 117,624
Long-term
borrowings 28,939 20,055 13,284 13,634 12,675 14,701 16,215 17,509 18,759 19,707
Preferred stock -- -- -- -- -- -- -- 2,000 3,000 4,000
Common stockholders'
equity 110,430 112,418 97,430 86,712 77,258 63,522 56,401 49,618 44,976 41,815
Results of operations
(In thousands)
Interest income $ 101,223 98,656 106,560 115,561 106,826 85,722 76,745 74,774 84,321 96,181
Interest expense 45,772 44,427 54,773 68,687 64,431 49,102 43,180 43,149 52,920 63,175
Net interest income 55,451 54,229 51,787 46,874 42,395 36,620 33,565 31,625 31,401 33,006
Provision for loan
losses 1,988 1,252 1,411 799 869 760 1,214 2,132 11,605 17,320
Net interest income
after provision
for loan losses 53,463 52,977 50,376 46,075 41,526 35,860 32,351 29,493 19,796 15,686
Noninterest income 16,593 17,863 14,684 12,715 11,554 10,113 10,367 9,064 16,483 9,306
Noninterest expense 56,657 50,415 46,591 42,284 37,820 32,781 32,066 32,952 32,558 30,427
Income (loss) before
income taxes and
minority interest 13,399 20,425 18,469 16,506 15,260 13,192 10,652 5,605 3,721 (5,435)
Income taxes 2,701 5,508 4,884 4,308 4,388 4,016 2,527 408 116 (887)
Minority interest 591 667 632 539 533 472 422 290 84 39
Net income (loss) 10,107 14,250 12,953 11,659 10,339 8,704 7,703 4,907 3,521 (4,587)
Preferred stock
dividend
requirement -- -- -- -- -- -- 81 265 360 455
Net income (loss)
available to
common
stockholders $ 10,107 14,250 12,953 11,659 10,339 8,704 7,622 4,642 3,161 (5,042)
Average common shares
outstanding* 7,952 7,919 7,783 7,758 7,745 7,196 7,196 7,196 7,196 7,196
Per common and common
equivalent share*
Net income (loss) $ 1.27 1.80 1.67 1.50 1.33 1.21 1.06 .65 .44 (.70)
Cash dividends .440 .400 .350 .323 .273 .22 .117 .000 .000 .135
Common stockholders
equity 14.03 14.27 12.47 11.16 9.97 8.83 7.84 6.89 6.25 5.81
Selected operating
ratios
Return on average
assets
(including minority
interest) .70% 1.04 .98 .93 .95 1.00 .90 .57 .38 (.47)
Return on average
common
stockholders'
equity 9.03 13.82 14.13 14.27 14.39 14.50 14.34 9.78 7.35 (11.03)
Common dividend payout 34.65 22.22 21.00 21.56 20.50 18.23 11.01 .00 .00 N/M
Allowance for loan
losses as a
percent of loans 1.12 1.12 1.20 1.14 1.25 1.55 1.60 1.75 2.09 1.95
Net charge-offs to
average loans
outstanding .10 .05 .13 .15 .12 .08 .18 .75 2.61 2.54
<FN>
*Restated for 3-for-2 stock split effective in 1994 and 2-for-1 stock split
effective in 1990.
N/M - Not meaningful, Company incurred a net loss.
</TABLE>
218
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Condition
Brenton Banks, Inc. and Subsidiaries
December 31 1994 1993
<S> <C> <C>
Assets:
Cash and due from banks (note 3) $ 58,387,727 42,548,497
Interest-bearing deposits with banks 64,255 --
Federal funds sold and securities purchased under agreements to resell 59,396,428 41,875,000
Trading account securities -- 9,850
Investment securities:
Available for sale (note 4) 349,208,773 412,209,721
Held to maturity (market value of $92,284,000 and $66,892,000
at December 31, 1994 and 1993, respectively) (note 4) 94,484,134 66,384,042
Investment securities 443,692,907 478,593,763
Loans held for sale 2,104,492 4,349,422
Loans (note 5) 970,214,498 875,881,387
Allowance for loan losses (note 6) (10,913,043) (9,817,864)
Loans, net 959,301,455 866,063,523
Bank premises and equipment (notes 7 and 11) 27,103,630 23,147,521
Accrued interest receivable 13,064,921 12,815,884
Other assets (note 9) 18,211,034 11,192,586
$1,581,326,849 1,480,596,046
Liabilities and Stockholders' Equity:
Deposits (note 8):
Noninterest-bearing $ 136,547,995 127,131,654
Interest-bearing:
Demand 315,369,233 232,005,404
Savings 255,046,184 307,615,814
Time 633,319,698 627,610,822
Total deposits 1,340,283,110 1,294,363,694
Federal funds purchased and securities sold under agreements to repurchase 70,703,736 37,664,328
Other short-term borrowings (note 10) 12,000,000 --
Accrued expenses and other liabilities 14,749,917 11,688,256
Long-term borrowings (note 11) 28,939,413 20,054,913
Total liabilities 1,466,676,176 1,363,771,191
Minority interest in consolidated subsidiaries 4,220,328 4,407,190
Redeemable preferred stock, $1 par; 500,000 shares authorized;
issuable in series, none issued -- --
Common stockholders' equity (notes 13, 14 and 16):
Common stock, $5 par; 25,000,000 shares authorized;
7,871,546 and 5,253,151 shares issued at December 31, 1994 and 1993,
respectively 39,357,730 26,265,755
Capital surplus 5,210,344 5,598,027
Retained earnings 70,979,317 77,517,613
Unrealized gains (losses) on assets available for sale (5,117,046) 3,036,270
Total common stockholders' equity 110,430,345 112,417,665
$1,581,326,849 1,480,596,046
<FN>
Commitments and contingencies (notes 17 and 18)
See accompanying notes to consolidated financial statements.
</TABLE>
219
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Operations
Brenton Banks, Inc. and Subsidiaries
Years Ended December 31 1994 1993 1992
<S> <C> <C> <C>
Interest Income:
Interest and fees on loans (note 5) $ 76,456,964 70,816,746 71,364,279
Interest and dividends on investments:
Available for sale-taxable 13,032,050 3,143,004 431,746
Available for sale-tax-exempt 5,530,626 -- --
Held to maturity-taxable 1,862,628 16,293,759 26,373,085
Held to maturity-tax-exempt 2,619,333 7,894,225 7,429,582
Interest on federal funds sold and securities purchased
under agreements to resell 1,705,717 485,912 653,886
Other interest income 15,636 21,934 307,248
Total interest income 101,222,954 98,655,580 106,559,826
Interest Expense:
Interest on deposits (note 8) 41,609,766 42,188,138 52,443,250
Interest on federal funds purchased and securities sold
under agreements to repurchase 2,082,077 1,027,324 923,853
Interest on other short-term borrowings (note 10) 263,658 1,200 120,912
Interest on long-term borrowings (note 11) 1,816,927 1,210,200 1,285,442
Total interest expense 45,772,428 44,426,862 54,773,457
Net interest income 55,450,526 54,228,718 51,786,369
Provision for loan losses (note 6) 1,987,909 1,251,588 1,410,730
Net interest income after provision for loan losses 53,462,617 52,977,130 50,375,639
Noninterest Income:
Service charges on deposit accounts 5,424,547 5,846,770 5,735,963
Insurance commissions and fees 2,115,085 1,730,387 1,695,699
Other service charges, collection and exchange charges,
commissions and fees 3,558,900 4,120,732 3,175,552
Investment brokerage commissions 2,879,401 3,010,004 1,600,324
Fiduciary income 2,160,492 1,912,442 1,758,203
Net gains (losses) from securities available for sale (note 4) (339,624) 595,168 79,474
Other operating income 794,187 647,768 638,825
Total noninterest income 16,592,988 17,863,271 14,684,040
Noninterest Expense:
Salaries and wages 24,595,274 22,952,044 20,894,947
Employee benefits (note 15) 4,960,665 4,162,486 3,609,995
Occupancy expense of premises, net (notes 7 and 17) 4,702,208 3,988,525 3,710,772
Furniture and equipment expense (notes 7 and 17) 3,060,557 2,622,747 2,339,605
Data processing expense (note 18) 3,083,819 2,526,280 2,532,410
FDIC deposit insurance assessment 2,907,382 2,749,969 2,750,378
Advertising and promotion 1,772,852 1,521,712 1,301,545
Other operating expense 11,574,165 9,891,179 9,451,104
Total noninterest expense 56,656,922 50,414,942 46,590,756
Income before income taxes and minority interest 13,398,683 20,425,459 18,468,923
Income taxes (note 9) 2,700,640 5,507,849 4,884,145
Income before minority interest 10,698,043 14,917,610 13,584,778
Minority interest 590,656 667,640 631,684
Net income $10,107,387 14,249,970 12,953,094
Per common and common equivalent share (note 13):
Net income $ 1.27 1.80 1.67
Cash dividends .44 .40 .35
<FN>
See accompanying notes to consolidated financial statement.
</TABLE>
220
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
Brenton Banks, Inc. and Subsidiaries
Years Ended December 31 1994 1993 1992
<S> <C> <C> <C>
Operating Activities:
Net income $ 10,107,387 14,249,970 12,953,094
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses 1,987,909 1,251,588 1,410,730
Depreciation and amortization 3,387,034 3,100,977 2,780,907
Deferred income taxes (1,257,325) (531,013) (88,728)
Net (gains) losses from securities held for sale 339,624 (595,168) (79,474)
(Increase) decrease in accrued interest receivable
and other assets (1,477,154) 2,456,544 3,104,394
Increase (decrease) in accrued expenses, other liabilities
and minority interest 3,192,432 496,782 (2,258,750)
Net cash provided from operating activities 16,279,907 20,429,680 17,822,173
Investing Activities:
Investment securities available for sale:
Purchases (122,339,026) (166,637,785) --
Maturities 154,659,319 34,834,992 --
Sales 21,484,178 98,446,394 37,841,160
Investment securities held to maturity:
Purchases (59,384,073) (132,198,518) (407,542,480)
Maturities 26,687,613 233,316,414 283,315,958
Net (increase) decrease in loans held for sale 2,244,930 147,839 (4,497,261)
Net increase in loans (95,225,841) (122,867,264) (2,496,838)
Purchases of bank premises and equipment (6,893,877) (3,487,797) (4,864,458)
Net cash used by investing activities (78,766,777) (58,445,725) (98,243,919)
Financing Activities:
Net increase in noninterest-bearing, interest-bearing
demand and savings deposits 40,210,540 19,464,320 92,823,328
Net increase (decrease) in time deposits 5,708,876 4,959,049 (37,971,233)
Net increase in federal funds purchased
and securities sold under agreements to repurchase 33,039,408 2,782,728 11,291,161
Net increase (decrease) in other short-term borrowings 12,000,000 (119,784) (4,053,769)
Proceeds of long-term borrowings 22,176,030 9,337,000 2,293,000
Repayment of long-term borrowings (13,291,530) (2,565,942) (2,643,637)
Dividends on common stock (3,471,901) (3,138,307) (2,577,619)
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 385,767 461,185 341,756
Payment for shares acquired under common stock repurchase plan (850,950) -- --
Payment for fractional shares in 3-for-2 stock split (4,307) -- --
Net cash provided from financing activities 95,901,933 31,541,443 59,502,987
Net increase (decrease) in cash and cash equivalents 33,415,063 (6,474,602) (20,918,759)
Cash and cash equivalents at the beginning of the year 84,433,347 90,907,949 111,826,708
Cash and cash equivalents at the end of the year $117,848,410 84,433,347 90,907,949
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
221
<PAGE>
<TABLE>
Consolidated Statements of Changes in Common Stockholders' Equity
Brenton Banks, Inc. and Subsidiaries
Common Capital Retained Unrealized
Stock Surplus Earnings Gains (Losses) Total
<S> <C> <C> <C> <C> <C>
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
$.35 per share* -- -- (2,577,619) -- (2,577,619)
Issuance of shares of common stock
under the stock option plan (note 16) 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
$.40 per share* -- -- (3,138,307) -- (3,138,307)
Issuance of shares of common stock
under the stock option plan (note 16) 161,000 300,185 -- -- 461,185
Issuance of 13,081 shares of common stock
under the employee stock purchase plan
(note 16) 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
Net income -- -- 10,107,387 -- 10,107,387
Net change in unrealized gains (losses) -- -- -- (8,153,316) (8,153,316)
Dividends on common stock
$.44 per share -- -- (3,471,901) -- (3,471,901)
3-for-2 stock split in the form of a
stock dividend (note 13) 13,169,475 -- (13,169,475) -- --
Fractional shares resulting from stock
split -- -- (4,307) -- (4,307)
Issuance of shares of common stock
under the stock option plan (note 16) 146,500 239,267 -- -- 385,767
Shares reacquired under
stock repurchase plan (note 13) (224,000) (626,950) -- -- (850,950)
Balance, December 31, 1994 $39,357,730 5,210,344 70,979,317 (5,117,046) 110,430,345
<FN>
*Reflects the 3-for-2 stock split in the form of a stock dividend in May 1994
See accompanying notes to consolidated financial statements.
</TABLE>
222
<PAGE>
Notes to Consolidated Financial Statements
Brenton Banks, Inc. and Subsidiaries
December 31, 1994, 1993 and 1992
(1) Summary of Significant Accounting Policies and Related Matters
The accounting and reporting policies of Brenton Banks, Inc. and 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 $5,499,000 and $5,411,000 at December
31, 1994 and 1993, respectively.
Investment Securities Investment securities are classified 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.
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 non-accrual 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.
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 $502,000 and $948,000 at December 31,
1994 and 1993, 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.
223
<PAGE>
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. In May 1994, the Company
declared a 3-for-2 stock split in the form of a stock dividend. The average
number of shares, after considering stock plans, the merger and the stock
split was 7,951,866 for 1994, 7,918,560 for 1993 and 7,783,195 for 1992.
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 Company'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.
Interest Rate Swaps Amounts paid or received, related to outstanding swap
contracts that are used in the asset/liability management process, are
recognized into earnings, as an adjustment to interest income over the
estimated life of the related assets. Gains or losses associated with the
termination of interest rate swap agreements for identified positions are
deferred and amortized over the remaining lives of the related assets as a
adjustment to yield.
Effect of New Financial Accounting Standards Statement of Financial
Accounting Standards (SFAS 119), "Disclosures about Derivative Financial
Instruments and Fair Value of Financial Instruments," was adopted by the
Company for the year ended December 31, 1994. SFAS 119 requires disclosures
about certain derivative financial instruments and additional information
about certain other financial instruments.
SFAS 114, "Accounting by Creditors for Impairment of a Loan," will be
effective for the Company beginning January 1, 1995 and requires measurement
of certain covered loans at the present value of expected future cash flows
discounted at the loan's observable market price or the fair value of
collateral if the loan is collateral dependent. The Company expects to adopt S
FAS 114 when required, and management believes adoption will not have a
material effect on the financial position and results of operations nor will
adoption require additional capital resources.
(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
557,070 shares of common stock (after the 3-for-2 stock split in the form of
a stock dividend) 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 $4,845,000 at December 31, 1994.
224
<PAGE>
(4) Investment Securities
<TABLE>
The amortized cost and estimated fair value of investment securities follow.
The estimated fair value of investment securities has been determined using
available quoted market prices for similar securities.
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
December 31, 1994 (In thousands)
Investment securities available for sale:
Taxable investments:
U.S. Treasury securities $ 51,198 -- (557) 50,641
Securities of U.S. government agencies 66,848 100 (911) 66,037
Mortgage-backed and related securities 108,491 156 (4,526) 104,121
Other investments 10,890 -- (78) 10,812
Tax-exempt investments:
Obligations of states
and political subdivisions 119,986 664 (3,052) 117,598
$357,413 920 (9,124) 349,209
Investment securities held to maturity:
Taxable investments:
Securities of U.S. government agencies $ 9,444 -- (127) 9,317
Mortgage-backed and related securities 35,282 5 (995) 34,292
Other investments 3,087 -- (35) 3,052
Tax-exempt investments:
Obligations of states
and political subdivisions 46,671 130 (1,178) 45,623
$ 94,484 135 (2,335) 92,284
December 31, 1993
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
</TABLE>
Gross gains of $68,000 and gross losses of $408,000 were recorded on sales of
investment securities held for sale in 1994, gross gains of $944,000 and
gross losses of $349,000 were recorded in 1993, and gross gains of $424,000
and gross losses of $345,000 were recorded in 1992.
Other investments at December 31, 1994 and 1993 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 $9,549,000 and $10,316,000 at December 31, 1994
and 1993, respectively.
225
<PAGE>
The scheduled maturities of investment securities at December 31,
1994 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>
Estimated
Amortized Fair
(In thousands) Cost Value
<S> <C> <C>
Investment securities available for sale:
Due in one year or less $139,038 133,582
Due after one year through
five years 158,086 153,143
Due after five years through
ten years 31,935 31,439
Due after ten years 28,354 31,045
$357,413 349,209
Investment securities held to maturity:
Due in one year or less $ 29,334 28,949
Due after one year through
five years 46,426 45,237
Due after five years through
ten years 8,052 7,841
Due after ten years 10,672 10,257
$ 94,484 92,284
</TABLE>
Investment securities carried at $153,405,000 and $95,641,000 at December 31,
1994 and 1993, respectively, were pledged to secure public and other funds on
deposit and for other purposes.
(5) Loans
<TABLE>
<CAPTION>
A summary of loans follows:
(In thousands) December 31, 1994 1993
<S> <C> <C>
Real estate loans:
Commercial construction
and land development $ 26,549 24,189
Secured by 1-4 family
residential property 389,713 349,810
Other 143,960 129,574
Loans to farmers 71,853 66,574
Commercial and industrial loans 115,280 90,521
Loans to individuals for personal
expenditures, net of unearned
income of $751 and $741
at December 31, 1994 and
1993, respectively 221,627 214,401
All other loans 1,232 812
$970,214 875,881
</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, 1994 and 1993, the Company had nonaccrual loans of
$3,784,000 and $1,605,000, respectively, and restructured loans of $298,000
and $323,000, respectively. Interest income recorded during 1994 and 1993 on
nonaccrual and restructured loans was $321,000 and $191,000, respectively.
Interest income which would have been recorded if these loans had been
current in accordance with original terms was $537,000 in 1994 and $359,000
in 1993.
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, 1993 $8,361
Additional loans 3,957
Loan payments (2,775)
Balance at December 31, 1994 $9,543
</TABLE>
(6) Allowance for Loan Losses
A summary of activity in the allowance for loan losses follows:
<TABLE>
<CAPTION>
(In thousands) 1994 1993 1992
<S> <C> <C> <C>
Balance at beginning of year $ 9,818 9,006 8,548
Provision 1,988 1,252 1,411
Recoveries 1,549 1,091 991
Loans charged off (2,442) (1,531) (1,944)
Balance at end of year $10,913 9,818 9,006
</TABLE>
(7) Bank Premises and Equipment
A summary of bank premises and equipment follows:
<TABLE>
<CAPTION>
(In thousands) December 31, 1994 1993
<S> <C> <C>
Land $ 3,204 2,971
Buildings and leasehold
improvements 24,791 22,956
Furniture and equipment 18,137 15,538
Construction in progress 2,472 471
48,604 41,936
Less accumulated depreciation 21,500 18,788
$27,104 23,148
</TABLE>
Depreciation expense included in operating expenses amounted to $2,938,000,
$2,621,000 and $2,301,000 in 1994, 1993 and 1992, respectively.
226
<PAGE>
(8) Deposits
Time deposits included deposits in denominations of $100,000 or more of
$73,349,000 and $62,727,000 at December 31, 1994 and 1993, respectively.
A summary of interest expense by deposit classification follows:
<TABLE>
<CAPTION>
(In thousands) 1994 1993 1992
<S> <C> <C> <C>
Demand $ 5,418 4,552 5,277
Savings 6,878 7,697 9,385
Time deposits
of $100,000 or more 3,110 2,091 2,169
Other time deposits 26,204 27,848 35,612
$41,610 42,188 52,443
</TABLE>
The Company made cash interest payments of $46,850,000, $44,141,000 and
$56,647,000 on deposits and borrowings in 1994, 1993 and 1992, respectively.
(9) Income Taxes
The current and deferred income tax provisions included in the consolidated
statements of operations follow:
<TABLE>
<CAPTION>
1994 (In thousands) Current Deferred Total
<S> <C> <C> <C>
Federal $3,037 (1,099) 1,938
State 921 (158) 763
$3,958 (1,257) 2,701
1993
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
</TABLE>
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
$2,671,000, $4,514,000 and $3,486,000 to the IRS, and $1,226,000, $1,301,000
and $713,000 to the state of Iowa in 1994, 1993 and 1992, 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 reasons for the difference between the amount computed by
applying the statutory federal income tax rate of 34 percent in 1994 and 1992
and 35 percent in 1993, and income tax expense follow:
<TABLE>
<CAPTION>
(In thousands ) 1994 1993 1992
<S> <C> <C> <C>
At statutory rate $4,556 7,149 6,279
Increase (reduction):
Tax-exempt interest (2,768) (2,766) (2,541)
State taxes, net of
federal benefit 503 764 667
Nondeductible interest expense
to own tax-exempts 363 361 377
Other, net 47 -- 102
$2,701 5,508 4,884
</TABLE>
Accumulated deferred income tax debits are included in other assets in the
consolidated statements of condition. There was no valuation allowance at
December 31, 1994 or 1993. A summary of the temporary differences resulting
in deferred income taxes and the related tax effect of each follows:
<TABLE>
<CAPTION>
(In thousands) 1994 1993
<S> <C> <C>
Provision for loan losses $3,750 3,384
Unrealized (gains) losses on
assets available for sale 3,191 (1,790)
Restructuring charge 970 --
Depreciation (541) (563)
Stock compensation plan 418 461
Real estate mortgage
loan points deferred (357) --
Other, net (125) (94)
$7,306 1,398
</TABLE>
(10) Other Short-Term Borrowings
At December 31,1994, the Company had short-term borrowings with the Federal
Home Loan Bank of Des Moines (FHLB) totaling $12,000,000. The notes were at
an average rate of 5.40 percent. These borrowings were secured by residential
mortgage loans equal to 170 percent of the borrowings and FHLB stock. The
Company had no short-term borrowings at December 31, 1993.
The Parent Company has arranged an unsecured, available line of
credit of $2,000,000 which was unused at December 31, 1994. 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, 1994 1993
<S> <C> <C>
Capital notes, 6.00% to 10.00%
Total Parent Company $12,644 12,022
Borrowings from FHLB, average rate
of 5.97% at December 31, 1994 16,150 8,000
Mortgage debt, average rate of
7.44% at December 31, 1994 100 33
Other, 8% at December 31, 1994 45 --
$28,939 20,055
</TABLE>
227
<PAGE>
Mortgage debt was secured by real property with a carrying value of $119,000
at December 31, 1994. Borrowings from the FHLB were secured by residential
mortgage loans equal to 170 percent of the borrowings and FHLB stock.
The mortgage debt and borrowings from the FHLB were direct
obligations of the individual subsidiaries.
Scheduled maturities of long-term borrowings at
December 31, 1994 follow:
<TABLE>
<CAPTION>
Parent
(In thousands) Company Consolidated
<S> <C> <C>
1995 $ 53 106
1996 950 3,458
1997 1,603 13,762
1998 1,177 2,686
1999 1,750 1,800
Thereafter 7,111 7,127
$12,644 28,939
</TABLE>
(12) Fair Value of Financial Instruments
The estimated fair values of the Comapny's financial instruments were as
follows:
<TABLE>
<CAPTION>
December 31, 1994 December 31, 1993
Recorded Fair Recorded Fair
Amount Value Amount Value
(in thousands)
<S> <C> <C> <C> <C>
Financial assets:
Cash and due from banks $ 58,388 58,388 42,548 42,548
Interest-bearing deposits with banks 64 64 - -
Federal funds sold and securities purchased
under agreements to resell 59,396 59,396 41,875 41,875
Investment securities 443,693 441,493 478,604 479,112
Loans, net 959,301 950,861 866,064 885,878
Financial liabilities:
Deposits 1,340,283 1,341,969 1,294,364 1,303,840
Federal funds purchased, securities sold
under agreements repurchase and other
short term borrowings 82,704 82,704 37,664 37,664
Long term borrowings 28,939 28,061 20,055 20,963
Off-balance-sheet assets (liabilities):
Commitments to extend credit $ -- -- -- --
Letters of credit -- (42) -- (44)
Interest rate swap -- 51 -- --
</TABLE>
The recorded amount of cash and due from banks and interest-bearing deposits
with banks approximates fair value.
The recorded amount of federal funds sold and securities
purchased under agreements to resell approximates fair value as a
result of the short-term nature of the instruments.
The estimated fair value of investment securities has been determined
using available quoted market prices for similar securities.
The estimated fair value of loans is net of an adjustment for credit
risk. 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.
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 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.
The recorded amount of the federal funds purchased,
securities sold under agreements to repurchase and short-term
borrowings approximates fair value as a result of the short-term nature of
these instruments.
The estimated fair value of long-term borrowings was determined using
a present value discounted cash flow with a discount rate approximating the
current market for similar borrowings.
The fair value of commitments to extend credit and standby letters of
credit are estimated using the fees currently charged to enter into similar
agreements.
The fair value of interest rate swaps(used for hedging purposes) is
the estimated amount that the Company would receive or pay to terminate the
swap agreements at the reporting date.
228
<PAGE>
(13) Common Stock Transactions
In May 1994, the Company declared a 3-for-2 stock split in the form of a 100
percent stock dividend. This transaction resulted in the issuance of
2,633,895 shares of common stock and the transfer of $13,169,475 from
retained earnings to common stock. Net income and cash dividends per share
information in the financial statements have been retroactively restated to
reflect this transaction.
In March 1994, the Board of Directors authorized a plan to repurchase
$2,000,000 of the Company's common stock. As of December 31, 1994, the
Company had repurchased 44,800 shares at a total cost of $850,950.
The Company acquired all outstanding shares of Ames Financial
Corporation and its wholly owned subsidiary Ames Savings Bank, FSB in
exchange for 557,070 shares of common stock (after the 3-for-2 stock split)
on October 1, 1992. The merger was accounted for using the
pooling-of-interests method.
(14) 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, 1994 were approximately $19 million.
(15) 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 1\2 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 1994, 1993 and 1992
amounted to $1,367,000, $1,211,000 and $952,000, respectively. The Company
offers no material post-retirement benefits.
(16) Stock Plans
The Company's long-term stock compensation plan for key management personnel
provides for 360,000 shares of the Company's common stock (after the May
1994, 3-for-2 stock split in the form of a stock dividend) 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, 91,493 shares were granted covering the
performance period of 1992 through 1994, 78,644 were granted for 1993 through
1995, and 90,293 were granted for 1994 through 1996. The total stock
compensation expense associated with this plan was $(102,000), $683,000 and
$560,000 for 1994, 1993 and 1992 respectively.
The Company's nonqualified stock option plan permits the Board of
Directors to grant options to purchase up to 300,000 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. No options were available
for grant at December 31, 1994.
Changes in options outstanding and exercisable during 1994, 1993 and
1992 were as follows (restated for the May 1994, 3-for-2 stock split in the
form of a stock dividend):
<TABLE>
<CAPTION>
Exercisable Outstanding Option Price
Options Options Per Share
<S> <C> <C> <C>
December 31, 1991 188,700 267,150 $4.42-9.46
Vested-1992 53,400 -- 4.42-9.46
Exercised-1992 (33,900) (33,900) 4.42
Forfeited-1992 -- (450) 4.42
December 31, 1992 208,200 232,800 4.42-9.46
Vested-1993 10,200 -- 6.42-9.46
Exercised-1993 (48,300) (48,300) 4.42
December 31, 1993 170,100 184,500 4.42-9.46
Granted-1994 -- 8,400 19.63
Vested-1994 7,200 -- 8.79-9.46
Exercised-1994 (36,850) (36,850) 4.42-8.79
December 31, 1994 140,450 156,050 $4.42-19.63
</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 1994, 22,551 shares of common stock were purchased by
employees under this plan (after restatement for the May 1994 3-for-2 stock
split).
229
<PAGE>
(17) Lease Commitments
Rental expense included in the consolidated statements of operations amounted
to $1,799,000, $1,373,000 and $1,345,000 in 1994, 1993 and 1992,
respectively. Future minimum rental commitments for all noncancelable leases
with terms of one year or more total approximately $1,100,000 per year
through 1999, $500,000 per year through 2004, $400,000 per year through 2009,
and $40,000 per year through 2014, with a total commitment of $10,370,000.
(18) 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, 1994 the Company had
outstanding commitments to extend credit of $154 million.
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, 1994 there were
$8,388,000 of standby letters of credit outstanding. 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 $1,280,000 at December 31, 1994, involving the
exchange of a fixed for a floating rate interest payment stream. The interest
rate swap agreement subjects the Company to market risk associated with
changes in interest rates, as well as the risk of default by the counterparty
to the agreement. The credit worthiness of the counterparty was evaluated by
the Company's loan committee prior to entering into the agreement. The
agreement runs through October 1998.
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. Thi
s 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 $2,330,000 in 1995 and
$2,117,000 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.
(19) Restructuring Charge
During the fourth quarter of 1994, the Company finalized plans to implement a
strategic restructuring program. As part of this plan, the Company will
combine its 13 commercial banks into a single, statewide banking
organization, consolidate facilities, and realign the Company's work force.
This plan resulted in a special charge of $2.6 million ($1.7 million after
tax or $.21 per share), in 1994. Costs associated with the restructuring
include severance costs for terminated employees (approximately 70 to 90
employees in various positions), data processing costs, regulatory fees and
legal fees related to the conversion to a single bank, and abandonment losses
on facilities and equipment.
230
<PAGE>
(20) Brenton Banks, Inc. (Parent Company) Condensed Financial Information
Statements of Condition
<TABLE>
<CAPTION>
December 31 (In thousands) 1994 1993
<S> <C> <C>
Assets
Cash and deposits $ 34 316
Short-term investments 8,500 3,500
Advances to bank subsidiaries 720 450
Investments in:
Bank subsidiaries 109,012 116,595
Bank-related subsidiaries 332 264
Excess cost over net assets 1,974 2,048
Premises and equipment 1,020 528
Other assets 3,235 2,865
$124,827 126,566
Liabilities and Stockholders' Equity
Accrued expenses payable
and other liabilities $ 1,753 2,126
Long-term borrowings 12,644 12,022
Common stockholders' equity 110,430 112,418
$124,827 126,566
</TABLE>
Statements of Operations
<TABLE>
<CAPTION>
Years Ended December 31 (In thousands) 1994 1993 1992
<S> <C> <C> <c)
Income
Dividends from subsidiaries $11,691 8,150 7,643
Interest income 317 84 33
Management fees 1,222 1,580 1,507
Other operating income 2,128 1,881 1,769
15,358 11,695 10,952
Expense
Salaries and benefits 3,466 3,976 3,886
Interest on short-term borrowings -- -- 98
Interest on long-term borrowings 1,044 1,108 1,108
Other operating expense 2,263 1,998 2,298
6,773 7,082 7,390
Income before income taxes and
equity in undistributed
earnings of subsidiaries 8,585 4,613 3,562
Income taxes (1,083) (1,175) (1,259)
Income before equity in
undistributed earnings of
subsidiaries 9,668 5,788 4,821
Equity in undistributed
earnings of subsidiaries 439 8,462 8,132
Net income $10,107 14,250 12,953
</TABLE>
231
<PAGE>
(20) Brenton Banks, Inc. (Parent Company) Condensed Financial Information
Statements of Cash Flows
<TABLE>
<CAPTION>
Years Ended December 31 (In thousands) 1994 1993 1992
Operating Activities
<S> <C> <C> <C>
Net income $10,107 14,250 12,953
Adjustments to reconcile net
income to net cash provided
from operating activities:
Equity in undistributed
earnings of subsidiaries (439) (8,462) (8,132)
Depreciation and amortization 230 188 169
Increase in other assets (370) (1,154) (345)
Increase (decrease) in
accrued expenses payable
and other liabilities (373) 641 479
Net cash provided from
operating activities 9,155 5,463 5,124
Investing Activities
Increase in short-term investments (5,000) (3,500) --
Redemption (purchase) of subsidiary
equity, net (200) 886 (26)
Principal collected from or
(advances to) subsidiaries (270) (400) 150
Purchase of premises and
equipment, net (648) (119) (129)
Net cash used by investing activities (6,118) (3,133) (5)
Financing Activities
Net decrease in short-term borrowings -- -- (3,950)
Net proceeds (repayment) of
long-term borrowings 622 (74) 1,097
Proceeds from issuance of common
stock under the stock option plan 386 822 342
Payment for shares acquired
under common stock repurchase plan (851) -- --
Payment for fractional shares
in 3-for-2 stock split (4) -- --
Dividends on common stock (3,472) (3,138) (2,578)
Net cash used by financing activities (3,319) (2,390) (5,089)
Net increase (decrease) in
cash and interest-bearing deposits (282) (60) 30
Cash and interest-bearing
deposits at the beginning
of the year 316 376 346
Cash and interest-bearing
deposits at the end of the year $ 34 316 376
</TABLE>
232
<PAGE>
(21) 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>
1994
<CAPTION>
Three months ended March 31 June 30 Sept. 30 Dec. 31
<S> <C> <C> <C> <C>
Interest income $23,857 24,867 25,682 26,817
Interest expense 10,427 10,815 11,610 12,920
Net interest income 13,430 14,052 14,072 13,897
Provision for loan losses 404 426 440 718
Net interest income after
provision for loan losses 13,026 13,626 13,632 13,179
Noninterest income 4,406 4,185 3,958 4,043
Noninterest expense 13,515 13,502 13,677 15,963
Income before income taxes
and minority interest 3,917 4,309 3,913 1,259
Income taxes 888 1,055 958 (201)
Minority interest 136 147 146 162
Net income $ 2,893 3,107 2,809 1,298
Per common and common
equivalent share:
Net income $ .37 .39 .35 .16
</TABLE>
<TABLE>
1993
<CAPTION>
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 $ .39 .47 .47 .47
</TABLE>
233
<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 judgments 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.
/s/
Robert L. DeMeulenaere
President
/s/
Steven T. Schuler
Chief Financial Officer/Treasurer/Secretary
/s/
Jennifer Hixson Carney
Controller
234
<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, 1994 and 1993,
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, 1994. 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 overal
l 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, 1994 and 1993, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1994 in conformity with generally
accepted accounting principles.
/s/
KPMG Peat Marwick LLP
Des Moines, Iowa
February 17, 1995
235
<PAGE>
Stock Information
Brenton Banks, Inc. common stock is traded on the Nasdaq National Market and
quotations are furnished by the Nasdaq System. There were 1,632 common
stockholders of record on December 31, 1994.
Market and Dividend Information
<TABLE>
<CAPTION>
High Low Dividends
<S> <C> <C> <C>
1994 1st quarter $18 3\8 17 1\2 .11
2nd quarter 20 17 5\8 .11
3rd quarter 20 1\2 19 .11
4th quarter 19 1\2 17 1\2 .11
1993 1st quarter $20 5\6 17 1\3 .097
2nd quarter 20 1\6 17 1\2 .097
3rd quarter 20 17 .100
4th quarter 19 1\2 17 1\2 .107
</TABLE>
The above table sets forth the high and low sales prices and
cash dividends per share for the Company's common stock, after
the effect of the May 1994, 3-for-2 stock split in the form of
a stock dividend.
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.
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/Treasurer/Secretary, at the corporate headquaters.
Stockholder Information
Corporate Headquarters
Suite 300, Capital Square
400 Locust Street
Des Moines, Iowa 50309
Telephone 515/237-5100
Annual Shareholders' Meeting
May 12, 1995, 5:00 p.m.
Des Moines Convention Center
501 Grand Avenue
Des Moines, Iowa 50309
Transfer Agent/Registrar/
Dividend Disbursing Agent
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, Illinois 60690
Legal Counsel
Brown, Winick, Graves, Baskerville
and Schoenebaum, P.L.C.
Suite 1100, Two Ruan Center
601 Locust Street
Des Moines, Iowa 50309
Independent Auditors
KPMG Peat Marwick LLP
2500 Ruan Center
666 Grand Avenue
Des Moines, Iowa 50309
Annual Report Design
Designgroup, Inc.
Photography: Pat Drickey
236
<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
Past 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
Hubert G. Ferguson
Financial Services Consultant,
Minneapolis, Minnesota
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
Norman D. Schuneman
Senior Vice President-Lending
John R. Amatangelo
Senior Vice President-Operations/Technology
Steven T. Schuler
Chief Financial Officer/Treasurer/Secretary
Gary D. Ernst
Vice President-Trust
Charles N. Funk
Vice President-Investments
Steven F. Schneider
Vice President-Brokerage Services
Officers
Douglas F. Lenehan
Vice President-
Commercial Services/Cash Management
Catherine Reed
Vice President-Marketing Director
Charles G. Riepe
Vice President-Corporate and
International Banking
Mary F. Sweeney
Vice President-Human Resources
Jennifer Carney
Controller
David K. Horner
Vice President-Audit
Todd A. Stumberg
Vice President-Loan Review
Louise E. Mickelson
Compliance Officer
Kristi Straeb
Marketing Officer
Sara J. Harrison
Assistant Vice President
Leah I. Trent
Administrative Officer
Pamela J. Slippy
Administrative Officer/
Assistant Secretary to the Board
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
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 and CEO
Brenton Savings Bank, FSB,
Ames
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
Roger D. Winterhof
President and CEO
Brenton National Bank-Poweshiek County,
Grinnell
237
<PAGE>
Brenton Banks and Assets
Community Banks
1. Brenton Bank and Trust Company
Main Bank: Adel
Other Communities: Dexter, Redfield
and Van Meter
Assets: $86,678
2. Brenton Bank and Trust Company
Main Bank: Clarion
Other Communities: Eagle Grove
and Rowan
Assets: $52,629
3. Brenton State Bank
Main Bank: Dallas Center
Other Communities: Granger,
Waukee and Woodward
Assets: $71,368
4. Brenton Bank of Palo Alto County
Main Bank: Emmetsburg
Other Communities: Ayrshire
and Mallard
Assets: $57,868
5. Brenton National Bank-
Poweshiek County
Main Bank: Grinnell
Assets: $116,112
6.Warren County Brenton Bank and Trust
Main Bank: Indianola
Assets: $46,518
7. Brenton State Bank of Jefferson
Main Bank: Jefferson
Assets: $56,457
8. Brenton Bank, N.A. Knoxville
Main Bank: Knoxville
Assets: $64,476
9. Brenton Bank and Trust Company
Main Bank: Marshalltown
Other Locations: Meadowlane
Other Communities: Albion
Assets: $137,026
10. Brenton National Bank of Perry
Main Bank: Perry
Assets: $85,285
Metro Banks
11. Brenton Savings Bank, fsb
Main Bank: Ames, Main Street
Other Metro Location: North Grand
Other Communities: Story City, Ankeny
Assets: $115,977
12. Brenton Bank and Trust Company
of Cedar Rapids
Main Bank: Cedar Rapids, First Avenue
Other Metro Locations: Southwest, Northeast, EconoFoods and Marion
Assets: $171,206
13. Brenton First National Bank
Main Bank: Davenport, Brady Street
Other Metro Locations: 53rd and Utica Ridge, Village Shopping Center, and
West
Assets: $159,651
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: $363,374
(assets in thousands)
Map depicting United States with Iowa highlighted. Also map of Iowa and
location of all Banks.
238
<PAGE>
Back cover - blue background with the words:
Brenton Banks, Inc.
Suite 300, Capital Square
400 Locust Street
Des Moines, Iowa 50309
Telephone 515/237-5100
239
<PAGE>
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 material 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 the Annual Report, page 198 of the
10-K.
2. Bar graph, second unnumbered page of the Annual Report, showing Net
Income from 1990-1994 on the inside front cover of the Annual Report,
page 199 of the 10-K.
3. Bar graph showing Total Assets in millions from 1990-1994;
Nonperforming Loans in thousands from 1990-1994; and Primary Capital
Ratio and Tier 1 Leverage Capital Ratio expressed as percentages from
1990-1994, on page 1 of the Annual Report, page 200 of the 10-K.
3a. Circle with text, centered on page, on page 2 of the Annual Report,
page 201 of the 10-K.
4. Bar graph showing Annual Dividends Per Common Share from 1990-1994
contained on page 2 of the Annual Report, page 201 of the 10-K.
5. Photograph on page 3 of the Annual Report, page 202 of the 10-K.
6. Two photographs on page 5 of the Annual Report, page 204 of the
10-K.
6a. Circle with text, centered on page, on page 6 of the Annual Report,
Page 205 of 10-K.
7. Photographs on page 7 of the Annual Report, page 206 of the 10-K.
7a. Circle with text, centered on page, on page 9 of the Annual Report,
page 208 of the 10-K.
7b. Circle with text, centered on page, on page 10 of the Annual Report,
page 209 of the 10-K.
8. Two photographs on page 11 of the Annual Report, page 210 of the
10-K.
9. Bar graphs showing the Return on Average Assets and Return on
Average Equity from 1990-1994, both expressed in terms of a percentage,
on page 12 of the Annual Report, page 211 of the 10-K.
10. Bar graph showing the Net Interest Margin from 1990-1994, expressed
in terms of a percentage, and a bar graph showing the Provision for
Loan Losses and Net Charge-offs, expressed in thousands, on page 14 of
the Annual Report, page 213 of the 10-K.
11. Bar graph showing the Net Noninterest Margin from 1990-1994, expressed
in terms of a percentage, on page 16 of the Annual Report, page 215 of the
10-K.
12. Pie chart showing Loan Composition for 1994, in terms of
percentages, on page 17 of the Annual Report, page 216 of the 10-K.
13. Map on page 39 of the Annual Report, page 238 of the 10-K.
<PAGE>
Exhibit 21
Subsidiaries.
240
<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
241
<PAGE>
Name Under which Subsidiary Jurisdiction in
Does Business and Location which Incorporated or
of Subsidiary Organized
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 Insurance Agency, Inc. Iowa
Jefferson, Iowa
Brenton Mortgages, Inc. Iowa
Des Moines, Iowa
Brenton Independent Insurance
Services Corp. Iowa
Marshalltown, Iowa
Brenton Independent Insurance
Services of Tama County, Inc. Iowa
Toledo, Iowa
Brenton Realty Services, Ltd. Iowa
Marshalltown, Iowa
Brenton Adel Investment Co. Nevada
Las Vegas, Nevada
Brenton Clarion Investment Co. Nevada
Las Vegas, Nevada
242
<PAGE>
Name Under which Subsidiary Jurisdiction in
Does Business and Location which Incorporated or
of Subsidiary Organized
Brenton Dallas Center Investment Co. Nevada
Las Vegas, Nevada
Brenton Emmetsburg Investment Co. Nevada
Las Vegas, Nevada
Brenton Grinnell Investment Co. Nevada
Las Vegas, Nevada
Brenton Indianola Investment Co. Nevada
Las Vegas, Nevada
Brenton Jefferson Investment Co. Nevada
Las Vegas, Nevada
Brenton Knoxville Investment Co. Nevada
Las Vegas, Nevada
Brenton Marshalltown Investment Co. Nevada
Las Vegas, Nevada
Brenton Perry Investment Co. Nevada
Las Vegas, Nevada
Brenton Ames Investment Co. Nevada
Las Vegas, Nevada
Brenton Cedar Rapids Investment Co. Nevada
Las Vegas, Nevada
Brenton Davenport Investment Co. Nevada
Las Vegas, Nevada
Brenton Des Moines Investment Co. Nevada
Las Vegas, Nevada
243
<PAGE>
Exhibit 23
Consent of KPMG Peat Marwick LLP to the incorporation of
their report dated February 17, 1995, relating to certain
consolidated statements of condition of Brenton Banks, Inc.
into the Registration Statement on Form S-8 of Brenton
Banks, Inc.
244
<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 February 17, 1995,
relating to the consolidated statements of condition of Brenton Banks, Inc.
and subsidiaries as of December 31, 1994 and 1993 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, 1994 which report appears in the December 31, 1994 annual report
on Form 10-K of Brenton Banks, Inc.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Des Moines, Iowa
March 23, 1995
245
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
DECEMBER 31, 1994 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 58,387,727
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0
0
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