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, 1995
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, 1996, was $101,791,000.
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, 1996.
7,587,070 shares Common Stock, $5 par value
DOCUMENTS INCORPORATED BY REFERENCE
The Annual Report to Shareholders for the 1995 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, 1995, is incorporated by reference into Part III hereof to the
extent indicated in such Part.
1 of 154 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 . . . . . . . . . . . . . . . . . . . . . 6
(D) Bank-Related Subsidiaries and Affiliates . . . . . . . . . 6
(E) Executive Officers and Policymakers of the
Registrant . . . . . . . . . . . . . . . . . . . . . . . . 7
(F) Employees . . . . . . . . . . . . . . . . . . . . . . . . . 8
(G) Supervision and Regulation . . . . . . . . . . . . . . . . 8
(H) Governmental Monetary Policy and Economic
Conditions . . . . . . . . . . . . . . . . . . . . . . . . 10
(I) Competition . . . . . . . . . . . . . . . . . . . . . . . . 10
(J) Statistical Disclosure . . . . . . . . . . . . . . . . . . 12
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 26
Item 4. Submission of Matters to a Vote of Security
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters . . . . . . . . . . . . . . . . . . 26
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . 26
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . 26
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . 27
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . . . . . . . . . 27
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PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . . . 27
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . 27
Item 12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . . . . . . . . 27
Item 13. Certain Relationships and Related Transactions . . . . . . . . . 27
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . 27
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,
1995, the Parent Company had direct control of both its commercial and
savings bank (hereinafter the "affiliated banks"), both located in Iowa. The
commercial bank is a state bank incorporated under the laws of the State of
Iowa and the savings bank is a federal savings bank organized under the laws
of the United States. On December 31, 1995, the affiliated banks were
operating 45 banking locations in Iowa. Both of the affiliated banks are
members of the Federal Deposit Insurance Corporation.
Brenton Banks, Inc. and its subsidiaries (the "Company") engages in
retail, commercial, and agricultural banking and related financial services.
In connection with this banking industry segment, the Company provides the
usual products and services of banking such as deposits, commercial loans,
agribusiness loans, personal loans, and trust services. The principal
service provided 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.
(B) Recent Developments.
Restructuring of Organization. Brenton Banks, Inc. completed its
restructuring plan during 1995. The plan, authorized in December, 1994,
included consolidating the Company's 13 commercial banks into one bank,
reducing the Company's overall personnel levels and closing selected banking
branches. During the third quarter of 1995, the Company completed the merger
of its 13 commercial banks into a single, state chartered banking
organization under the laws of the State of Iowa.
As part of this merger process, Brenton Bank Services Corporation
was liquidated and became part of the one bank, Brenton Bank. Brenton
Mortgages, Inc., formerly a wholly-owned subsidiary of the holding company,
is now a subsidiary of Brenton Savings Banks, FSB. The move of this
subsidiary was made to accommodate the funding of residential real estate
loans with the Federal Home Loan Bank borrowings.
New Directors. 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 Executive
Officer of Pella Corporation in Pella, Iowa.
Common Stock Repurchase Plan. As part of the Company's ongoing
stock repurchase plan, in 1995 the Board of Directors authorized additional
stock repurchases of $5,000,000 of the Company's common stock. For the years
ended December 31, 1995 and 1994, the Company repurchased 258,133 and 44,800
shares, respectively, at a total cost of $4,830,111 and $850,950.
Regulatory Developments. 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. Among the legislation Congress is considering is proposed
legislation to recapitalize the Savings Association Insurance Fund (SAIF).
This proposed legislation would assess a one-time premium, currently
estimated between $1.2 million and $1.5 million, on
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all SAIF deposits and would be expensed when and if legislation is passed.
The Company has approximately $225 million of SAIF deposits.
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. The Company continues expansion of its traditional and non-
traditional services.
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.
Other. The information appearing on pages 2 through 7 of the
Company's Annual Report to Stockholders for the year ended December 31, 1995
(the "Annual Report") filed as Exhibit 13, is incorporated by reference.
(C) Affiliated Banks.
The 2 affiliated banks had 45 banking locations at December 31,
1995, located in 13 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.
The main office of Brenton Bank is located in the Des Moines, Iowa,
metropolitan area. Des Moines is the largest city in Iowa. In addition to
their main banking location, Brenton Bank has 42 offices located throughout
Iowa and provides services to customers in numerous counties across the
state. See page 39 of the Company's Annual Report, filed as Exhibit 13
hereto, for individual office locations.
Brenton Savings Bank, FSB is located in Ames, Iowa and has offices
in Ames and Story City. The savings bank serves customers in Story County.
At December 31, 1995, Brenton Bank owned and operated real estate
agencies and insurance agencies handling group, fire, crop, homeowner's,
automobile and liability insurance. These activities are conducted through
separate corporate subsidiaries as well as directly in offices of the bank.
The total commissions from the insurance and real estate agencies were not
substantial in relation to total other receipts of Brenton Bank.
During 1994, the Company established out-of-state investment
subsidiaries to manage the investment portfolios of each Brenton bank,
excluding the savings bank. These subsidiaries provided an opportunity to
lower the amount of state franchise taxes paid by the Company. Effective
July 1, 1995, the state of Iowa enacted legislation that eliminated the tax
benefits derived from these subsidiaries. The Company dissolved these
subsidiaries on June 30, 1995.
(D) Bank-Related Subsidiaries and Affiliates.
Brenton Brokerage Services, Inc., a wholly owned subsidiary of
Brenton Bank, 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, 1995, this subsidiary had 28 licensed brokers serving all Brenton banks.
Brenton Mortgages, Inc., a wholly-owned subsidiary of Brenton
Savings Bank, FSB, 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.
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Brenton Insurance Services, Inc., a wholly-owned subsidiary of the
Parent Company, provides insurance risk management services for the Company.
(E) Executive Officers and Policymakers of the Registrant.
The term of office for the executive officers and policymakers of
the 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 and policymakers of the Company as of March 13, 1996, the offices
held by these executive officers and policymakers on that date, the period
during which the 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>
Company Position
Name and Address Age Position or Subsidiary Commenced Other Positions
________________ ___ ______________________ _________ _______________
<S> <C> <C> <C> <C>
C. Robert Brenton 65 Chairman of the Board 1990
Des Moines, Iowa
Robert L. DeMeulenaere 56 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
Larry A. Mindrup 54 Chief Banking Officer - 1995 CEO, Brenton Savings Bank, FSB; Ames - April
Des Moines, Iowa President, Des Moines 1994 to present; President, Brenton Bank,
N.A., Des Moines - May 1995 to September
1995; President, Brenton Savings Bank, FSB,
Ames - April 1994 to April 1995; President,
Trust Officer and Director, Brenton National
Bank - Poweshiek County - January 1991 to
March 1994
Woodward G. Brenton 45 Chief Commercial 1995 President and CEO, Brenton First National
Des Moines, Iowa Banking Officer Bank - January 1992 to October 1995; Executive
President, Davenport 1992 Vice President, Brenton First National Bank,
Davenport - January 1991 to January 1992
Charles N. Funk 41 Chief Investment/ 1995 Vice President - Investments, Brenton Banks,
Des Moines, Iowa ALCO Officer Inc. - December 1991 to October 1995
Ronald D. Larson 47 Regional President 1995 President, Brenton Bank and Trust Company,
Cedar Rapids, Iowa Eastern Iowa Division Marshalltown - January 1991 to July 1993
President, Cedar Rapids 1993
Marc J. Meyer 42 Regional President 1995 Executive Vice President, Brenton National
Perry, Iowa Agricultural Division Bank of Perry - January 1991 to January 1992
President, Perry 1992
Phillip L. Risley 53 Chief Administrative 1995 Executive Vice President of the Parent
Des Moines, Iowa Officer Company - January 1992 to December 1995;
Cashier 1995 President and CEO, Brenton Bank, N.A.,
Des Moines - February 1990 to May 1995;
Vice President - Operations of the Parent
Company - May 1984 to January 1992;
Chairman of the Board, Brenton Bank
Services Corporation - May 1992 to
September 1995; Executive Vice President/
Treasurer, Brenton Information Systems,
Inc. - April 1990 to May 1992
</TABLE>
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<TABLE>
<CAPTION>
Company Position
Name and Address Age Position or Subsidiary Commenced Other Positions
________________ ___ ______________________ _________ _______________
<S> <C> <C> <C> <C>
Steven T. Schuler 44 Chief Financial Officer/ 1990 Executive Vice President, Brenton Bank
Des Moines, Iowa Treasurer/Secretary 1986 Services Corporation - May 1992 to
September 1995
Norman D. Schuneman 53 Chief Credit Officer 1995 Senior Vice President - Lending of the
Des Moines, Iowa Parent Company - January 1990 to
December 1995; Executive Vice President,
Brenton Bank, N.A., Des Moines - July
1985 to October 1995; Vice President -
Loans of the Parent Company - January
1988 to January 1990
Gary D. Ernst 52 President - Trust 1995 Vice President - Trust of the Parent
Des Moines, Iowa Division Company - June 1990 to December 1995
Elizabeth M. Piper/Bach 43 President, Brokerage 1995
Des Moines, Iowa
<FN>
All of the foregoing individuals have been employed by the Company for the past five years, except for Elizabeth M.
Piper/Bach, who was Vice President and Director of Investment Management Consulting and Training for John G. Kinnard & Co.
from 1993 to 1995 and Vice President and Director of the Investment Management Group of Dain Bosworth in Minneapolis,
Minnesota prior to 1993 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, 1995, the Parent Company had 56 full-time employees
and 4 part-time employees. On December 31, 1995, the Company had 612 full-
time employees and 137 part-time employees. None of the employees of the
Company are represented by unions. The relationship between management and
employees of the Company is considered good.
(G) Supervision and Regulation.
The Company 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
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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.
Brenton Bank is a state bank subject to the supervision of and
regular examination by the Iowa Superintendent of Banking and, because of its
membership in the Federal Deposit Insurance Corporation ("FDIC"), is subject
to examination by the FDIC. Brenton Bank is required to maintain certain
minimum capital ratios established by their primary regulator. The
provisions of the FDIC Act restrict the activities that insured state
chartered banks may engage in to those activities that are permissible for
national banks, except where the FDIC determines that the activity poses no
significant risk to the deposit insurance fund and the bank remains
adequately capitalized. Furthermore, the FDIC Act 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
regular examination 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
operations. On December 31, 1995, 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'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 commercial bank 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, SAIF insured
institutions are assessed premiums from $.23 to $.31 per $100 of deposits.
All SAIF insured deposits of the Company are subject to a FDIC insurance
premium rate of $.23 per $100 of deposits, the lowest rate under the "Risk-
Based Assessment System". In September 1995, the FDIC suspended BIF deposit
insurance premiums for all well capitalized banks and retroactively refunded
assessments to May 1995. This was a result of the full funding of reserves
required by the FDIC to insure the deposits of the banking industry. Brenton
Bank qualified as a well capitalized bank and is not subject to any FDIC
insurance premium on BIF deposits. See Item 1, Section (B), Recent
Developments, for proposed legislation on SAIF deposits.
According to Iowa's regional interstate banking law, Iowa-based
banks and bank holding companies can acquire banks and bank holding companies
located in certain other states. Additionally, certain non-Iowa based banks
and bank holding companies can acquire Iowa banks and bank holding companies,
provided that the total deposits of all banks and savings and loan
associations (hereinafter "thrifts") controlled by out of state bank holding
companies does not exceed thirty-five percent of the total deposits of all
banks and thrifts in the state. The law allows regional interstate banking
between Iowa and Illinois, Minnesota, Missouri, Nebraska, South Dakota and
Wisconsin. Bank holding companies and banks may acquire thrifts in any
state, regardless of whether the acquiror can operate a bank in that state.
Such thrifts must conform their activities to those that are permissible for
banks or bank holding companies and their subsidiaries.
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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 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.
Generally, banks in Iowa are prohibited from operating offices in
counties other than the county in which the bank's principal office is
located and contiguous counties. However, certain banks located in the same
or different municipalities or urban complexes may consolidate or merge and
retain their existing banking locations by converting to a United Community
Bank. The resulting bank would adopt one principal place of business, and
would retain the remaining banking locations of the merged or consolidated
banks as offices. The Company relied upon the United Community Bank law when
it merged its 13 commercial banks into one state chartered bank 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. Brenton Banks, Inc. is the largest
multi-bank holding company domiciled in Iowa. The second largest Iowa-based
multi-bank holding company has 33 locations in Iowa and deposits
approximately 29 percent less than those of the Company. There are four
other multi-bank holding companies, which operate banks in Iowa, but are
domiciled in other states. One such holding company, domiciled in Minnesota,
has 44 banking locations located in various parts of Iowa. Two Missouri
based multi-bank holding companies operate banks in Iowa, one has 33 banking
locations and the other has 27 banking locations. Another multi-bank holding
company, domiciled in Wisconsin, has 44 locations in Iowa.
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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 compete with brokers from regional and
national investment brokerage firms.
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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, 1995:
<TABLE>
<CAPTION>
1995 1994 1993
______________________________ ______________________________ ______________________________
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) $ 945,724 $ 82,136 8.68% $ 936,370 $ 76,271 8.14% $ 802,088 $ 70,310 8.77%
Investment securities held to
maturity:
Taxable investments:
United States Treasury
securities -- -- -- -- -- -- 24,598 1,290 5.24
Securities of United States
government agencies 27,381 1,570 5.73 2,001 98 4.92 58,522 3,410 5.83
Mortgage-backed and related
securities 36,214 2,370 6.54 29,834 1,679 5.63 204,130 10,857 5.32
Other investments 2,364 130 5.49 3,959 85 2.15 12,743 1,071 8.41
Tax-exempt investments:
Obligations of states and
political subdivisions(2) 50,235 4,044 8.05 44,584 3,433 7.70 164,520 11,471 6.97
Investment securities available
for sale:
United States Treasury
securities 42,416 2,271 5.35 55,580 2,519 4.53 44,605 2,315 5.19
Securities of United States
government agencies 79,000 4,939 6.25 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 1995 and
1994 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>
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Item 1(J) Business - Statistical Disclosure, Continued
I. Distribution of Assets, Liabilities, and Stockholders' Equity;
Interest Rates and Interest Differential, Continued
<TABLE>
<CAPTION>
1995 1994 1993
______________________________ ______________________________ ______________________________
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 113,834 6,658 5.85 124,591 6,864 5.51 -- -- --
Other investments 9,536 710 7.44 7,255 641 8.87 130 8 6.00
Tax-exempt investments:
Obligations of states and
political subdivisions (1) 100,859 6,763 6.71 132,040 8,412 6.37 -- -- --
Loans held for sale 5,908 396 6.70 2,575 193 7.50 6,165 520 8.43
Federal funds sold and
securities purchased under
agreements to resell 39,763 2,264 5.69 37,666 1,706 4.53 23,725 486 2.05
Interest-bearing deposits
with banks 1,076 67 6.20 124 8 6.65 762 22 2.88
_________ _______ ____ _________ _______ ____ _________ _______ ____
Total interest-earning assets(1) 1,454,310 $114,318 7.86% 1,435,182 $104,925 7.31% 1,350,427 $102,246 7.57%
Allowance for loan losses (11,166) (10,502) (9,615)
Cash and due from banks 57,138 46,301 46,025
Bank premises and equipment 31,436 24,545 23,045
Other assets 29,508 25,663 26,543
_________ _________ _________
Total assets $1,561,226 $1,521,189 $1,436,425
<FN>
(1) Interest income and yields are stated on a tax equivalent basis using a 34 percent federal income tax rate for 1995 and
1994 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>
1995 1994 1993
______________________________ ______________________________ ______________________________
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 $ 355,819 $11,842 3.33% $ 250,520 $ 5,418 2.16% $ 217,754 $ 4,552 2.09%
Savings 231,633 6,638 2.87 294,715 6,878 2.33 299,640 7,697 2.57
Time 626,497 34,595 5.52 625,981 29,313 4.68 622,789 29,940 4.81
Federal funds purchased and
securities sold under
agreements to repurchase 40,237 1,641 4.08 61,656 2,082 3.38 42,715 1,027 2.41
Other short-term borrowings 6,536 371 5.67 4,860 264 5.42 33 1 3.62
Long-term borrowings 37,264 2,621 7.03 26,500 1,817 6.86 14,077 1,210 8.60
_________ ______ ____ _________ ______ ____ _________ ______ ____
Total interest-bearing
liabilities 1,297,986 $57,708 4.45% 1,264,232 $45,772 3.62% 1,197,008 $44,427 3.71%
Noninterest-bearing deposits 128,770 127,464 119,322
Accrued expenses and other
liabilities 14,896 13,254 12,805
_________ _________ _________
Total liabilities 1,441,652 1,404,950 1,329,135
Minority interest 4,391 4,290 4,150
Common stockholders' equity 115,183 111,949 103,140
_________ _________ _________
Total liabilities and
stockholders' equity $1,561,226 $1,521,189 $1,436,425
Net interest spread (1) 3.41% 3.69% 3.86%
Net interest income/margin (1) $56,610 3.89% $59,153 4.12% $57,819 4.28%
<FN>
(1) Interest income and yields are stated on a tax equivalent basis using a 34 percent federal income tax rate for 1995 and 1994
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>
14
<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, 1995:
<TABLE>
<CAPTION>
1995 vs. 1994 1994 vs. 1993
__________________________ __________________________
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) $ 5,865 769 5,096 $ 5,961 11,185 (5,224)
Investment securities held
to maturity:
Taxable investments:
United States Treasury securities -- -- -- (1,290) (1,290) --
Securities of United States government
agencies 1,472 1,452 20 (3,312) (2,843) (469)
Mortgage-backed and related
securities 691 392 299 (9,178) (9,775) 597
Other investments 45 (45) 90 (986) (474) (512)
Tax-exempt investments:
Obligations of states and political
subdivisions (2) 611 450 161 (8,038) (9,126) 1,088
Investment securities available
for sale:
Taxable Investments:
United States Treasury securities (248) (658) 410 204 522 (318)
Securities of United States government
agencies 1,923 1,189 734 2,530 2,587 (57)
Mortgage-backed and related securities (206) (614) 408 6,864 6,864 --
Other investments 69 180 (111) 633 628 5
Tax-exempt Investments:
Obligations of states and political
subdivisions (2) (1,649) (2,072) 423 8,412 8,412 --
Loans held for sale 203 225 (22) (327) (275) (52)
Federal funds sold and securities purchased
under agreements to resell 558 99 459 1,220 399 821
Interest-bearing deposits with banks 59 60 (1) (14) (28) 14
_______ _______ _______ _______ _______ _______
9,393 1,427 7,966 2,679 6,786 (4,107)
_______ _______ _______ _______ _______ _______
Interest expense:
Interest-bearing deposits:
Demand 6,424 2,815 3,609 866 704 162
Savings (240) (1,634) 1,394 (820) (125) (695)
Time 5,282 24 5,258 (626) 153 (779)
Federal funds purchased and securities sold
under agreements to repurchase (441) (818) 377 1,055 552 503
Other short-term borrowings 107 95 12 4 6 (2)
Long-term borrowings 804 756 48 866 1,082 (216)
_______ _______ _______ _______ _______ _______
11,936 1,238 10,698 1,345 2,372 (1,027)
_______ _______ _______ _______ _______ _______
Net interest income (expense) $ (2,543) 189 (2,732) $ 1,334 4,414 (3,080)
_______ _______ _______ _______ _______ _______
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 1995 and 1994 and a 35 percent rate
for 1993, and adjusted to reflect the effect of the nondeductible interest expense of owning tax-exempt investments.
</TABLE>
15
<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, 1995. 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) $ 262,988 29,799 45,930 338,717 410,101 158,736 907,554
Investment securities:
Available for sale:
Taxable investments 95,496 26,116 52,950 174,562 121,747 2,274 298,583
Tax-exempt investments 4,886 9,921 4,154 18,961 40,559 36,155 95,675
Held to maturity:
Taxable investments 19,377 11,751 16,894 48,022 10,601 1,884 60,507
Tax-exempt investments 1,755 5,657 13,163 20,575 20,778 8,335 49,688
Loans held for sale 8,707 -- -- 8,707 -- -- 8,707
Federal funds sold and securities purchased under
agreements to resell 37,600 -- -- 37,600 -- -- 37,600
Interest-bearing deposits with banks 265 -- -- 265 -- -- 265
_________ _________ _________ _________ ________ _______ _________
Total interest-earning assets $ 431,074 83,244 133,091 647,409 603,786 207,384 1,458,579
_________ _________ _________ _________ ________ _______ _________
Interest-bearing liabilities:
Interest-bearing deposits:
Demand and savings deposits (2) $ 614,797 -- -- 614,797 -- -- 614,797
Time deposits 114,510 90,152 143,802 348,464 252,214 3,247 603,925
Federal funds purchased and securities sold under
agreements to repurchase 41,107 -- -- 41,107 -- -- 41,107
Other short-term borrowings -- -- 2,500 2,500 -- -- 2,500
Long-term borrowings -- -- 917 917 31,443 5,818 38,178
_________ _________ _________ _________ ________ _______ _________
Total interest-bearing liabilities $ 770,414 90,152 147,219 1,007,785 283,657 9,065 1,300,507
_________ _________ _________ _________ ________ _______ _________
Interest sensitivity GAP $ (339,340) (6,908) (14,128) (360,376) 320,129 198,319 158,072
_________ _________ _________ _________ ________ _______ _________
Interest sensitivity GAP ratio .56:1 .92:1 .90:1 .64:1 2.13:1 22.88:1 1.12:1
_________ _________ _________ _________ ________ _______ _________
Cumulative interest sensitivity GAP $ (339,340) (346,248) (360,376) (360,376) (40,247) 158,072 158,072
_________ _________ _________ _________ ________ _______ _________
Cumulative interest sensitivity GAP ratio .56:1 .60:1 .64:1 .64:1 .97:1 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>
16
<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,
______________________________
1995 1994 1993
____ ____ ____
(In thousands)
<S> <C> <C> <C>
Investment securities available for sale:
Taxable investments:
United States Treasury securities $ 27,775 50,641 63,777
Securities of United States government agencies 72,822 66,037 59,181
Mortgage-backed and related securities 191,028 104,121 138,744
Other investments 9,071 10,812 5,925
Tax-exempt investments:
Obligations of states and political subdivisions 95,674 117,598 144,583
_______ _______ _______
396,370 349,209 412,210
_______ _______ _______
Investment securities held to maturity:
Taxable investments:
Securities of United States government agencies 48,595 9,444 --
Mortgage-backed and related securities 3,653 35,282 24,882
Other investments 6,145 3,087 5,563
Tax-exempt investments:
Obligations of states and political subdivisions 49,689 46,671 35,939
_______ _______ _______
108,082 94,484 66,384
_______ _______ _______
Total investment securities $504,452 443,693 478,594
_______ _______ _______
</TABLE>
17
<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, 1995:
<TABLE>
(caption>
Investments by Maturity and Yields at December 31, 1995
____________________________________________________________________________
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 $ 14,632 5.60% $ 13,143 6.01% $ -- --% $ -- --%
Securities of United States
government agencies 11,977 6.05 56,562 5.74 4,283 5.42 -- --
Mortgage-backed and
related securities 55,650 6.45 100,308 6.57 17,902 6.98 17,168 6.81
Other investments 6,780 7.32 2,291 5.80 -- -- -- --
Tax-exempt investments:
Obligations of states and
political subdivisions 19,220 6.12 36,446 7.47 14,878 9.48 25,130 8.42
_______ ____ _______ ____ ______ ____ ______ ____
108,259 6.28 208,750 6.46 37,063 7.80 42,298 7.76
_______ ____ _______ ____ ______ ____ ______ ____
Investment securities held to maturity:
Taxable investments:
Securities of United States
government agencies 12,043 6.03 15,623 6.37 20,929 4.89 -- --
Mortgage-backed and
related securities 972 5.43 1,152 4.83 732 5.52 797 5.35
Other investments 3,249 5.74 2,157 6.44 50 6.90 689 7.06
Tax-exempt investments:
Obligations of states and
political subdivisions 18,586 6.87 20,372 6.75 4,250 8.55 6,481 8.98
_______ ____ _______ ____ ______ ____ ______ ____
34,850 6.44 39,304 6.53 25,961 5.51 7,967 8.45
_______ ____ _______ ____ ______ ____ ______ ____
Total investment securities $143,109 6.32% $248,054 6.47% $63,024 6.86% $50,265 7.87%
_______ ____ _______ ____ ______ ____ ______ ____
</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 1995 and 1994, 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, 1995, 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.
18
<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
____________________________________________________
1995 1994 1993 1992 1991
____ ____ ____ ____ ____
(In thousands)
<S> <C> <C> <C> <C> <C>
1. Real estate loans:
a. Commercial construction and land development $ 38,123 26,549 24,189 25,180 16,155
b. Secured by 1-4 family residential property 319,430 389,713 349,810 324,124 321,721
c. Other 163,739 143,960 129,574 101,418 96,805
2. Loans to financial institutions (primarily bankers'
acceptances) -- -- -- 393 4,785
3. Loans to farmers 68,543 71,853 66,574 62,471 60,898
4. Commercial and industrial loans 119,368 115,280 90,521 75,062 93,180
5. Loans to individuals for personal expenditures,
net of unearned income 199,489 221,627 214,401 163,876 151,529
6. All other loans 1,501 1,232 812 930 6,837
_______ _______ _______ _______ _______
$910,193 970,214 875,881 753,454 751,910
_______ _______ _______ _______ _______
</TABLE>
19
<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, 1995 (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, 1995
________________________________________
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 $ 30,487 6,316 1,320 38,123
b. Other 46,155 65,866 51,718 163,739
2. Loans to financial institutions -- -- -- --
3. Loans to farmers 39,235 22,861 6,447 68,543
4. Commercial and industrial loans 69,402 34,972 14,994 119,368
5. All other loans 371 571 559 1,501
_______ _______ ______ _______
$185,650 130,586 75,038 391,274
_______ _______ ______ _______
</TABLE>
The above loans due after one year which have predetermined and
floating interest rates follow:
Predetermined interest rates $ 96,299
_______
Floating interest rates $109,325
_______
20
<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>
1995 1994 1993 1992 1991
____ ____ ____ ____ ____
(In thousands)
<S> <C> <C> <C> <C> <C>
Nonaccrual $2,639 3,784 1,605 1,884 2,931
Restructured 178 298 323 448 1,019
Past due 90 days or more 2,802 940 2,085 2,261 1,672
_____ _____ _____ _____ _____
Nonperforming loans $5,619 5,022 4,013 4,593 5,622
_____ _____ _____ _____ _____
</TABLE>
Interest income recorded during 1995 on nonaccrual and restructured
loans amounted to $136,000. The amount of interest income which would have
been recorded during 1995 if nonaccrual and restructured loans had been
current, in accordance with the original terms, was $418,000.
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, 1995, these loans amounted to approximately $2 million.
As of December 31, 1995, 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 $869,000 and $502,000 at December 31, 1995 and 1994,
respectively.
21
<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
_______________________________________________
1995 1994 1993 1992 1991
____ ____ ____ ____ ____
(In thousands)
<S> <C> <C> <C> <C> <C>
Total loans at the end of the year $910,193 970,214 875,881 753,454 751,910
Average loans outstanding 945,724 936,370 802,088 736,646 727,870
_______ _______ _______ _______ _______
Allowance for loan losses -
beginning of the year $ 10,913 9,818 9,006 8,548 8,871
_______ _______ _______ _______ _______
Amount of charge-offs during year:
Real estate loans 41 83 109 276 110
Loans to financial institutions -- -- -- -- --
Loans to farmers 36 31 68 45 48
Commercial and industrial loans 340 337 54 252 769
Loans to individuals for personal expenditures 2,960 1,943 1,230 1,304 1,404
All other loans -- 48 70 67 5
_______ _______ _______ _______ _______
Total charge-offs 3,377 2,442 1,531 1,944 2,336
_______ _______ _______ _______ _______
Amount of recoveries during year:
Real estate loans 66 101 101 32 60
Loans to financial institutions -- -- -- -- --
Loans to farmers 50 146 81 179 135
Commercial and industrial loans 400 334 248 125 303
Loans to individuals for personal expenditures 1,153 947 641 635 716
All other loans -- 21 20 20 --
_______ _______ _______ _______ _______
Total recoveries 1,669 1,549 1,091 991 1,214
_______ _______ _______ _______ _______
Net loans charged off during year 1,708 893 440 953 1,122
_______ _______ _______ _______ _______
Additions to allowance charged to operating expense 1,865 1,988 1,252 1,411 799
_______ _______ _______ _______ _______
Allowance for loan losses - end of the year $ 11,070 10,913 9,818 9,006 8,548
_______ _______ _______ _______ _______
Ratio of allowance to loans outstanding at end of year 1.22% 1.12 1.12 1.20 1.14
____ ____ ____ ____ ____
Ratio of net charge-offs to average loans outstanding .18% .10 .05 .13 .15
___ ___ ___ ___ ___
</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.
22
<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
__________________________________________________________________________________________
1995 1994 1993 1992 1991
_________________ _________________ _________________ _________________ __________________
Allowance Percent Allowance Percent Allowance Percent Allowance Percent Allowance Percent
for of Loans for of Loans for of Loans for of Loans for of Loans
Loan to Total Loan to Total Loan to Total Loan to Total Loan to Total
Losses Loans Losses Loans Losses Loans Losses Loans Losses Loans
______ _____ ______ _____ ______ _____ ______ _____ _____ _____
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Real estate loans $ 2,400 57.3% $ 2,600 57.7% $2,400 57.5% $2,200 59.8% $2,002 57.8%
Loans to financial institutions -- -- -- -- -- -- -- .1 -- .6
Loans to farmers 1,300 7.5 1,400 7.4 1,600 7.6 1,200 8.3 1,500 8.1
Commercial and industrial loans 2,900 13.1 2,800 11.9 2,700 10.3 2,700 10.0 2,600 12.4
Loans to individuals for personal
expenditures 4,470 21.9 4,113 22.8 3,118 24.5 2,906 21.3 2,446 20.2
All other loans -- .2 -- .2 -- .1 -- .5 -- .9
______ _____ ______ _____ _____ _____ _____ _____ _____ _____
$11,070 100.0% $10,913 100.0% $9,818 100.0% $9,006 100.0% $8,548 100.0%
______ _____ ______ _____ _____ _____ _____ _____ _____ _____
</TABLE>
23
<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
__________________________________________
1995 1994 1993
____________ ____________ ____________
Amount Rate Amount Rate Amount Rate
______ ____ ______ ____ ______ ____
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing deposits $ 128,770 --% $ 127,464 --% $ 119,322 --%
Interest-bearing deposits:
Demand 355,819 3.33 250,520 2.16 217,754 2.09
Savings 231,633 2.87 294,715 2.33 299,640 2.57
Time 626,497 5.52 625,981 4.68 622,789 4.81
_________ ____ _________ ____ _________ ____
$1,342,719 $1,298,680 $1,259,505
_________ _________ _________
</TABLE>
The following sets forth the maturity distribution of all time
deposits of $100,000 or more as of December 31, 1995:
Large Time Deposits
by Maturity at
Maturity Remaining December 31, 1995
__________________ ___________________
(In thousands)
Less than 3 months $14,411
Over 3 through 6 months 21,395
Over 6 through 12 months 13,653
Over 12 months 14,555
______
$64,014
______
VI. Return on Equity and Assets
Various operating and equity ratios for the years indicated are
presented below:
<TABLE>
<CAPTION>
Year Ended December 31,
________________________
1995 1994 1993
____ ____ ____
<S> <C> <C> <C>
Return on average total assets:
Net income before deduction of minority interest .71% .70% 1.04%
Return on average equity 9.04 9.03 13.82
Common dividend payout ratio 33.58 34.65 22.22
Average equity to average assets 7.38 7.36 7.18
Equity to assets ratio 7.55 6.98 7.59
Tier 1 leverage capital ratio 7.45 7.23 7.36
Primary capital ratio 8.40 8.18 8.31
____ ____ ____
</TABLE>
24
<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>
1995 1994 1993
____ ____ ____
(Dollars in thousands)
<S> <C> <C> <C>
Amount outstanding at December 31 $41,107 70,704 37,664
Weighted average interest rate at
December 31 4.14% 4.73 2.31
Maximum amount outstanding at any
quarter-end $41,107 70,704 66,740
Average amount outstanding during
the year $40,237 61,656 42,715
Weighted average interest rate during
the year 4.08% 3.38 2.41
____ ____ ____
</TABLE>
Information relative to other short-term borrowings, which consist
primarily of Federal Home Loan Bank borrowings, follows:
<TABLE>
<CAPTION>
1995 1994 1993
____ ____ ____
(Dollars in thousands)
<S> <C> <C> <C>
Amount outstanding at December 31 $2,500 12,000 --
Weighted average interest rate at
December 31 4.68% 5.40 --
Maximum amount outstanding at any
quarter-end $7,000 12,000 --
Average amount outstanding during
the year $6,536 4,860 33
Weighted average interest rate during
the year 5.67% 5.42 3.63
____ ____ ____
</TABLE>
25
<PAGE>
<PAGE>
Item 2. Properties.
At December 31, 1995, the affiliated banks had 45 banking locations
with approximately 301,000 square feet, all located in Iowa. Of these
banking locations, 32 were owned by the Company - approximately 236,000
square feet; 3 were owned buildings on leased land - approximately 30,000
square feet and 10 were operated under lease contracts with unaffiliated
parties - approximately 35,000 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 36 of the Corporation's
Annual Report, filed as Exhibit 13 hereto, is incorporated herein by
reference.
There were approximately 1,575 holders of record of the Parent
Company's $5 common stock as of March 13, 1996. The closing bid price of the
Parent Company's common stock was $22.875 on March 13, 1996.
The Parent Company increased dividends to common shareholders in
1995 to $.45 per share, a 2.3 percent increase over $.44 for 1994. Dividend
declarations are evaluated and determined by the Board of Directors on a
quarterly basis. In January 1996, the Board of Directors declared a dividend
of $.12 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.
26
<PAGE>
Item 8. Financial Statements and Supplementary Data.
The information appearing on pages 20 through 35 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, 1995, 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, 1995, 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, 1995, 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, 1995, 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 35 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.
27
<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 policymakers 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 policymakers of the Parent Company is eligible to
receive a bonus each year.
Exhibit 10.5
Director's Incentive Plan. This Director's Incentive
Plan is incorporated by reference from Form 10-Q of
Brenton Banks, Inc., for the quarter ended September
30, 1995.
Exhibit 10.6
Employment Agreement, dated July 6, 1989, between
William H. Brenton and Brenton Banks, Inc. This
Employment Agreement is incorporated by reference
from Form 10-K of Brenton Banks, Inc., for the year
ended December 31, 1994.
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.
28
<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. 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, 1994.
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
Long-Term Stock Compensation Plan, Agreements and
related documents, effective for 1995, under which
certain of the Company's senior officers and bank
presidents are eligible to receive shares of Brenton
Banks, Inc. stock based upon their service to the
Company and Company performance.
Exhibit 10.12
Standard Agreement for Advances, Pledge and Security
Agreement between Brenton Banks and the Federal Home
Loan Bank of Des Moines. This standard Agreement for
Advances, Pledge and Security Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc., for the year ended December 31, 1993.
Exhibit 10.13
Short-term note with American National Bank & Trust
Company of Chicago as of April 30, 1995, setting forth
the terms of the Parent Company's $2,000,000 short-term
debt agreement.
Exhibit 10.14
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.
29
<PAGE>
Exhibit 10.15
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 10.16
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.
Exhibit 10.17
Amendments to the Restated Trust Agreement for Brenton
Banks, Inc. Retirement Plan, effective January 1, 1987,
January 1, 1993 and January 1, 1994. These Amendments
to the Restated Trust Agreement are incorporated by
reference from Form 10-K of Brenton Banks, Inc., for
the year ended December 31, 1994.
Exhibit 10.18
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 10.19
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 10.20
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 10.21
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 10.22
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.
30
<PAGE>
Exhibit 10.23
Indenture Agreement with respect to Capital Notes dated
April 8, 1994. This Indenture Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc., for the year ended December 31, 1994.
Exhibit 10.24
Indenture Agreement with respect to Capital Notes
dated April 10, 1995.
Exhibit 10.25
Split Dollar Insurance Agreement between the Company,
William H. Brenton Crummy Trust and William H. Brenton
Crummy Trust II, dated November 23, 1994. This Split
Dollar Insurance Agreement is incorporated by reference
from Form 10-K of Brenton Banks, Inc., for the year
ended December 31, 1994.
Exhibit 10.26
Split Dollar Insurance Agreement between the Company
and Brenton Life Insurance Trust for the benefit of C.
Robert Brenton, dated August 12, 1994. This Split
Dollar Insurance Agreement is incorporated by reference
from Form 10-K of Brenton Banks, Inc., for the year
ended December 31, 1994.
Exhibit 10.27
Agreement between Robert L. DeMeulenaere and the
Company regarding the change in control arrangements,
dated December 31, 1994. This Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc., for the year ended December 31, 1994.
Exhibit 10.28
Agreement between Larry A. Mindrup and the Company
regarding the change in control arrangements, dated
December 31, 1994. This Agreement is incorporated by
reference from Form 10-K of Brenton Banks, Inc., for
the year ended December 31, 1994.
Exhibit 10.29
Agreement between Norman D. Schuneman and the Company
regarding the change in control arrangements, dated
December 31, 1994.
31
<PAGE>
Exhibit 10.30
Twelfth Amendment to Data Processing Agreement dated
July 1, 1995 by and between ALLTEL Financial
Information Services, Inc. (formerly Systematics, Inc.
and Systematics Financial Services, Inc.) and Brenton
Banks Services Corp. (formerly Brenton Information
Systems, Inc.). This Twelfth Amendment to Data
Processing Agreement is incorporated by reference from
Form 10-Q of Brenton Banks, Inc., for the quarter ended
September 30, 1995.
Exhibit 10.31
Thirteenth Amendment to Data Processing Agreement dated
December 1, 1995 by and between ALLTEL Financial
Information Services, Inc. (formerly Systematics
Financial Services, Inc.) and Brenton Bank (formerly
Brenton Banks Services Corp.).
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 1995 calendar year.
Exhibit 21
Subsidiaries.
Exhibit 23
Consent of KPMG Peat Marwick LLP to the incorporation
of their report dated February 9, 1996, 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 1995.
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 14, 1996
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/ C. Robert Brenton
Chairman of the Board and Director
C. ROBERT BRENTON
Principal Executive Officer
Date: March 14, 1996
33
<PAGE>
By /s/ Robert L. DeMeulenaere
President and Director
ROBERT L. DEMEULENAERE
Principal Executive Officer
Date: March 14, 1996
By /s/ Steven T. Schuler
Chief Financial Officer/Treasurer/Secretary
STEVEN T. SCHULER
Chief Financial Officer
Date: March 14, 1996
BOARD OF DIRECTORS
By /s/ William H. Brenton
WILLIAM H. BRENTON
Date: March 14, 1996
By /s/ Junius C. Brenton
JUNIUS C. BRENTON
Date: March 14, 1996
By /s/ R. Dean Duben
R. DEAN DUBEN
Date: March 14, 1996
By /s/ Hubert G. Ferguson
HUBERT G. FERGUSON
Date: March 14, 1996
By /s/ Gary M. Christensen
GARY M. CHRISTENSEN
Date: March 14, 1996
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. . . . . . . . . . . . . . . . . . 40
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. . . . . . . . . . . . . . . . . 41
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. . . . . . . . . . . 43
Exhibit 10.3
Summary of the Trust Division Bonus Plan under which
one of the policymakers of the Parent Company is eligible
to receive a bonus each year. . . . . . . . . . . . . . . 45
Exhibit 10.4
Summary of the Brokerage Bonus Plan under which one
of the policymakers of the Parent Company is eligible to
receive a bonus each year. . . . . . . . . . . . . . . . . 47
Exhibit 10.5
Director's Incentive Plan. This Director's Incentive
Plan is incorporated by reference from Form 10-Q of
Brenton Banks, Inc., for the quarter ended September 30,
1995. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Exhibit 10.6
Employment Agreement, dated July 6, 1989, between
William H. Brenton and Brenton Banks, Inc. This
Employment Agreement is incorporated by reference
from Form 10-K of Brenton Banks, Inc., for the year
ended December 31, 1994. . . . . . . . . . . . . . . . . . 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. . . . . 51
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. 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, 1994. . . . . . . . . . . . . . . . . . . . . 52
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. . . . . . . . . . . . . . . . . . . . . 53
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. . . . . . . . . . . . 54
Exhibit 10.11
Long-Term Stock Compensation Plan, Agreements and
related documents, effective for 1995, 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. . . . . . . . . . . . . . 55
Exhibit 10.12
Standard Agreement for Advances, Pledge and Security
Agreement between Brenton Banks and the Federal Home
Loan Bank of Des Moines. This standard Agreement
for Advances, Pledge and Security Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc., for the year ended December 31, 1993. . . . . 69
Exhibit 10.13
Short-term note with American National Bank & Trust
Company of Chicago as of April 30, 1995, setting
forth the terms of the Parent Company's $2,000,000
short-term debt agreement. . . . . . . . . . . . . . . . . 70
36
<PAGE>
Exhibit 10.14
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. . . . . . . . . . . . . . . . . . . . . 74
Exhibit 10.15
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. . . . . . . . . . . . . . . . . . . . . 75
Exhibit 10.16
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. . . . . . . . . . . 76
Exhibit 10.17
Amendments to the Restated Trust Agreement for
Brenton Banks, Inc. Retirement Plan, effective
January 1, 1987, January 1, 1993 and January 1, 1994.
These Amendments to the Restated Trust Agreement
are incorporated by reference from Form 10-K of
Brenton Banks, Inc., for the year ended December 31,
1994. . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Exhibit 10.18
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. . . . . 78
Exhibit 10.19
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. . . . . 79
Exhibit 10.20
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. . . . . 80
Exhibit 10.21
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. . . . . 81
37
<PAGE>
Exhibit 10.22
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. . . . . 82
Exhibit 10.23
Indenture Agreement with respect to Capital Notes
dated April 8, 1994. This Indenture Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc., for the year ended December 31, 1994. . . . . 83
Exhibit 10.24
Indenture Agreement with respect to Capital Notes
dated April 10, 1995. . . . . . . . . . . . . . . . . . . 84
Exhibit 10.25
Split Dollar Insurance Agreement between the Company,
William H. Brenton Crummy Trust and William H.
Brenton Crummy Trust II, dated November 23, 1994.
This Split Dollar Insurance Agreement is incorporated by
reference from Form 10-K of Brenton Banks, Inc.,
for the year ended December 31, 1994. . . . . . . . . . . . 86
Exhibit 10.26
Split Dollar Insurance Agreement between the Company
and Brenton Life Insurance Trust for the benefit of
C. Robert Brenton, dated August 12, 1994. This Split
Dollar Insurance Agreement is incorporated by reference
from Form 10-K of Brenton Banks, Inc., for the year ended
December 31, 1994. . . . . . . . . . . . . . . . . . . . . 87
Exhibit 10.27
Agreement between Robert L. DeMeulenaere and the
Company regarding the change in control arrangements,
dated December 31, 1994. This Agreement is incorporated
by reference from Form 10-K of Brenton Banks, Inc., for
the year ended December 31, 1994. . . . . . . . . . . . . . 88
Exhibit 10.28
Agreement between Larry A. Mindrup and the Company
regarding the change in control arrangements, dated
December 31, 1994. This Agreement is incorporated by
reference from Form 10-K of Brenton Banks, Inc., for
the year ended December 31, 1994. . . . . . . . . . . . . . 89
Exhibit 10.29
Agreement between Norman D. Schuneman and the Company
regarding the change in control arrangements, dated
December 31, 1994. . . . . . . . . . . . . . . . . . . . . 90
38
<PAGE>
Exhibit 10.30
Twelfth Amendment to Data Processing Agreement dated
July 1, 1995 by and between ALLTEL Financial Information
Services, Inc. (formerly Systematics, Inc. and
Systematics Financial Services, Inc.) and Brenton Banks
Services Corp. (formerly Brenton Information Systems,
Inc.). This Twelfth Amendment to Data Processing Agreement
is incorporated by reference from Form 10-Q of Brenton
Banks, Inc., for the quarter ended September 30, 1995. . . 93
Exhibit 10.31
Thirteenth Amendment to Data Processing Agreement dated
December 1, 1995 by and between ALLTEL Financial
Information Services, Inc. (formerly Systematics
Financial Services, Inc.) and Brenton Bank (formerly
Brenton Banks Services Corp.). . . . . . . . . . . . . . . 94
Exhibit 11
Statement of computation of earnings per share. . . . . . . 102
Exhibit 12
Statement of computation of ratios. . . . . . . . . . . . . 104
Exhibit 13
The Annual Report to Shareholders of Brenton Banks,
Inc., for the 1995 calendar year. . . . . . . . . . . . . . 107
Exhibit 21
Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . 150
Exhibit 23
Consent of KPMG Peat Marwick LLP to the incorporation
of their report dated February 9, 1996, relating to
certain consolidated statements of condition of Brenton
Banks, Inc. into the Registration Statement on Form S-8
of Brenton Banks, Inc. . . . . . . . . . . . . . . . . . . 152
Exhibit 27
Financial Data Schedule (filed only with Electronic
Transmission). . . . . . . . . . . . . . . . . . . . . . . 154
39
<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.
40
<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.
41
<PAGE>
1995 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.
Bonus percentage potential tied to consolidated earnings threshold of
$14,250,000 and a specific bank earnings threshold. For senior bank
officers, no bonus potential if earnings do not reach the thresholds.
For other bank officers, a partial phase out of bonus potential if
earnings do not reach the thresholds.
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 income/margin;
3. Net noninterest margin;
4. Noninterest income;
5. Core deposit growth;
6. Commercial and consumer loan growth;
7. Asset quality; and
8. 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.
42
<PAGE>
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.
43
<PAGE>
BRENTON BANKS, INC. (Parent Company)
EXECUTIVE BONUS PLAN
The Executive Bonus Plans for 1995 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.
Bonus percentage potential tied to consolidated earnings threshold of
$14,250,000. No bonus potential if earnings do not reach the thresholds,
except where individually negotiated discretionary bonuses exist.
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. Net interest income/margin;
3. Noninterest income;
4. Noninterest margin;
5. Core deposit growth;
6. Commercial and consumer loan growth;
7. Asset quality; and
8. 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
policymakers of the Parent Company is eligible to receive a
bonus each year.
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1995 TRUST DIVISION BONUS PLAN
The following is a summary of the Trust Division Bonus Plan for 1995:
A. The bonus plan covers the President-Trust Division.
B. The President-Trust Division 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 President-Trust
Division and the Chairman of the Board.
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Exhibit 10.4
Summary of the Brokerage Bonus Plan under which one of the
policymakers of the Parent Company is eligible to receive a
bonus each year.
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1995 BROKERAGE BONUS PLAN
The following is a summary of the Brokerage Bonus Plan for 1995:
A. The bonus plan covers the President-Brokerage Services.
B. The 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 President-
Brokerage Services and the Chairman of the Board.
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Exhibit 10.5
Director's Incentive Plan. This Director's Incentive
Plan is incorporated by reference from Form 10-Q of
Brenton Banks, Inc., for the quarter ended
September 30, 1995.
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Exhibit 10.6
Employment Agreement, dated July 6, 1989, between William H.
Brenton and Brenton Banks, Inc. This Employment Agreement
is incorporated by reference from Form 10-K of Brenton Banks,
Inc., for the year ended December 31, 1994.
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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. 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, 1994.
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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
Long-Term Stock Compensation Plan, Agreements and related
documents, effective for 1995, 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 2,923 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 5,429 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 15th
day of February, 1995.
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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<PAGE>
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 1995, 1996 and 1997. All Grants shall vest or be
forfeited, pursuant to the provisions of the Plan, on or before January
1, 1998.
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 1995,
1996 and 1997. All Incentive Stock Grants shall vest or be
forfeited, pursuant to the provisions of the Plan, on or before
March 15, 1998.
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
68
<PAGE>
Exhibit 10.12
Standard Agreement for Advances, Pledge and Security Agreement
between Brenton Banks and the Federal Home Loan Bank of Des Moines.
This standard Agreement for Advances, Pledge and Security
Agreement is incorporated by reference from Form 10-K of Brenton
Banks, Inc., for the year ended December 31, 1993.
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<PAGE>
Exhibit 10.13
Short-term note with American National Bank & Trust Company of
Chicago as of April 30, 1995, setting forth the terms of the Parent
Company's $2,000,000 short-term debt agreement.
70
<PAGE>
American National Bank
and Trust Company of Chicago
33 North LaSalle Street/Chicago, Illinois 60690/(312) 661-5000
April 30, 1995
Brenton Banks, Inc.
Capital Square
400 Locust
Des Moines, Iowa 50304
Gentlemen:
This letter will replace the previous Letter Agreement regarding the negative
pledge on Brenton Bank stock dated April 30, 1994. This letter is in
reference to the certain Promissory Note dated 4/30/95, both by Brenton
Banks, Inc. ("Brenton") in favor of American National Bank and Trust Company
of Chicago ("ANB") in connection with a commitment in the amount of
$2,000,000 to be extended by ANB to Brenton and any subsequent renewals and
modification ("Commitment").
In consideration of ANB providing the Commitment, Brenton hereby covenants
that it will not create, assume or suffer to exist, any Lien upon the stock
of a Subsidiary bank.
For the purpose of this Letter Agreement, the following definitions shall
apply:
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, and
the filing of or agreement to give any financing statement under the
Uniform Commercial Code of any jurisdiction).
"Subsidiary" shall mean a corporation with respect to which more than
50% of the outstanding shares of stock of each class having ordinary
voting power (other than stock having such power only by reason of the
happening of a contingency) is at the time owned by Brenton or by one or
more Subsidiaries of Brenton.
71
<PAGE>
Page 2
April 30, 1995
If the foregoing correctly states your understanding of our agreement, please
execute the enclosed copy of the Letter Agreement in the space indicated and
return it to Catherine Bunch, Correspondent Banking Officer of ANB.
American National Bank and Trust
Company of Chicago
By: /s/ Catherine A. Bunch
Its: Officer
Accepted and agreed to this 30th day of April, 1995
Brenton Banks, Inc.
By: /s/ Steven T. Schuler (hand written)
Steven T. Schuler (printed)
Its: Chief Financial Officer/Treasurer/Secretary
72
<PAGE>
PROMISSORY NOTE (UNSECURED)
Grid Note Max Chicago, Illinois April 30, 1995
$2,000,000.00 Due April 30, 1996
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.
Borrower's obligations and liabilities to Bank under this Note
("Borrowers Liabilities") shall be due and payable on April 30, 1996.
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% 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 (ii) 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, IA 50304 Its: President (title)
Address By: /s/ Steven T. Schuler (signature)
Its: Chief Financial Officer/Treasurer/
Secretary (title)
F77-3575 R-6-90
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<PAGE>
Exhibit 10.14
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.
74
<PAGE>
Exhibit 10.15
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.
75
<PAGE>
Exhibit 10.16
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.
76
<PAGE>
Exhibit 10.17
Amendments to the Restated Trust Agreement for Brenton Banks, Inc.
Retirement Plan, effective January 1, 1987, January 1, 1993 and
January 1, 1994. These Amendments to the Restated Trust Agreement
are incorporated by reference from Form 10-K of Brenton Banks,
Inc., for the year ended December 31, 1994.
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<PAGE>
Exhibit 10.18
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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<PAGE>
Exhibit 10.19
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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<PAGE>
Exhibit 10.20
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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<PAGE>
Exhibit 10.21
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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<PAGE>
Exhibit 10.22
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.
82
<PAGE>
Exhibit 10.23
Indenture Agreement with respect to Capital Notes dated
April 8, 1994. This Indenture Agreement is incorporated
by reference from Form 10-K of Brenton Banks, Inc., for
the year ended December 31, 1994.
83
<PAGE>
Exhibit 10.24
Indenture Agreement with respect to Capital Notes dated
April 10, 1995.
84
<PAGE>
This Indenture Agreement contains the same terms, conditions and
provisions as set forth in the Indenture Agreement dated April 8,
1994 (Exhibit 10.23, which is incorporated by reference from Form
10-K of Brenton Banks, Inc., for the year ended December 31, 1994),
except for series number, maturity date and date executed.
85
<PAGE>
Exhibit 10.25
Split Dollar Insurance Agreement between the Company,
William H. Brenton Crummy Trust and William H. Brenton
Crummy Trust II, dated November 23, 1994. This Split
Dollar Insurance Agreement is incorporated by reference
from Form 10-K of Brenton Banks, Inc., for the year ended
December 31, 1994.
86
<PAGE>
Exhibit 10.26
Split Dollar Insurance Agreement between the Company
and Brenton Life Insurance Trust for the benefit of
C. Robert Brenton, dated August 12, 1994. This Split
Dollar Insurance Agreement is incorporated by
reference from Form 10-K of Brenton Banks, Inc., for
the year ended December 31, 1994.
87
<PAGE>
Exhibit 10.27
Agreement between Robert L. DeMeulenaere and the Company
regarding the change in control arrangements, dated
December 31, 1994. This Agreement is incorporated by
reference from Form 10-K of Brenton Banks, Inc., for
the year ended December 31, 1994.
88
<PAGE>
Exhibit 10.28
Agreement between Larry A. Mindrup and the Company
regarding the change in control arrangements, dated
December 31, 1994. This Agreement is incorporated
by reference from Form 10-K of Brenton Banks, Inc.,
for the year ended December 31, 1994.
89
<PAGE>
Exhibit 10.29
Agreement between Norman D. Schuneman and the Company
regarding the change in control arrangements, dated
December 31, 1994.
90
<PAGE>
RESOLUTION TO BE ADOPTED BY
BOARD OF DIRECTORS
BRENTON BANKS, INC.
RESOLVED, That the Board (Robert L. DeMeulenaere abstained) ratifies the
special pay arrangements (ATTACHMENT A) between management, Robert L.
DeMeulenaere, Larry A. Mindrup and Norman D. Schuneman.
91
<PAGE>
ATTACHMENT A
NORMAN D. SCHUNEMAN AGREEMENT
12/31/94
It is the intent of Brenton Banks, Inc. to pay Norm Schuneman $375,000 if the
Company is sold and he is released one year after the sale. If he is
released after one year of the sale, however, within two years of the sale,
he will receive $187,500.00. The payment may be made over a 24 month period
of time.
If his pay is decreased, he would receive an amount for each year up to three
years which, when added to his new salary, will equal his old salary.
This Agreement is null and void three years from the above date.
/s/
Robert L. DeMeulenaere, President
BRENTON BANKS, INC.
92
<PAGE>
Exhibit 10.30
Twelfth Amendment to Data Processing Agreement dated
July 1, 1995 by and between ALLTEL Financial Information
Services, Inc. (formerly Systematics, Inc. and Systematics
Financial Services, Inc.) and Brenton Banks Services Corp.
(formerly Brenton Information Systems, Inc.). This
Twelfth Amendment to Data Processing Agreement is
incorporated by reference from Form 10-Q of Brenton Banks,
Inc., for the quarter ended September 30, 1995.
93
<PAGE>
Exhibit 10.31
Thirteenth Amendment to Data Processing Agreement dated
December 1, 1995 by and between ALLTEL Financial
Information Services, Inc. (formerly Systematics
Financial Services, Inc.) and Brenton Bank (formerly
Brenton Banks Services Corp.).
94
<PAGE>
THIRTEENTH AMENDMENT
TO
DATA PROCESSING AGREEMENT
This Thirteenth Amendment ("Thirteenth Amendment") is effective as of
the 1st day of December, 1995 ("Thirteenth Amendment Effective Date") and
amends and supplements that certain Data Processing Agreement ("Agreement")
dated as of the first day of December, 1991 by and between Brenton Bank
(formerly Brenton Banks Services Corp.) ("Client") and ALLTEL Financial
Information Services, Inc. (formerly Systematics Financial Services, Inc.)
("ALLTEL Financial").
W I T N E S S E T H:
WHEREAS, Client desires ALLTEL Financial to provide certain one-time
services to define and implement Client's Standard Hardware and Software
Configuration and to provide ongoing management of Client's distributed
computer environment; and
WHEREAS, ALLTEL Financial is willing to provide such services pursuant
to the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties agree as follows:
1. ALLTEL Financial shall assist Client in the definition of Client's
Standard Hardware and Software Configuration by performing the following one
time tasks:
(i) defining the hardware and software standards and
requirements;
(ii) establishing a process for managing the computer
network;
(iii) planning for implementation of the Standard
Hardware and Software Configuration;
(iv) implementing the Standard Hardware and Software
Configuration in a pilot mode and defining the
procedure and schedule for utilization.
2. ALLTEL Financial shall coordinate and implement the following tasks
for the Standard Hardware and Software Configuration as directed by Client:
(i) upgrade of existing hardware to established
standards;
(ii) upgrade of existing software to current releases;
(iii) training of personnel on software standards;
(iv) installation of additional hardware and software
as needed;
(v) definition of Client's ongoing training program.
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<PAGE>
3. ALLTEL Financial shall perform an annual review of Client's LAN/WAN
environment and present the recommendations resulting from such review to
Client's senior management.
4. ALLTEL Financial shall assist Client in the establishment of a
strategic technology plan which shall include business strategies for each of
Client's business areas, alternative delivery systems, a plan for the
connection of Client's locations, a plan for central coordination of critical
network resources and the ongoing revision and review of the strategic
technology plan as appropriate.
5. ALLTEL Financial shall provide the following services ("DCS
Services") beginning on the Thirteenth Amendment Effective Date and
continuing until the earlier to occur of the termination of the DCS Services
pursuant to Section 7 below or the expiration or termination of the
Agreement:
(i) Equipment and Software Services. ALLTEL Financial
shall acquire, install, maintain, replace and
provide inventory control of information
technology equipment and software for Client. The
financial responsibility for the procurement,
maintenance and replacement of such equipment and
software shall be Client's.
(ii) LAN/WAN Administration. ALLTEL Financial shall
manage and administer Client's local area networks
and wide area network connections and will
coordinate with Client's vendor(s) for support of
the wide area networks. ALLTEL Financial shall
provide Client an annual review of Client's
LAN/WAN networks which shall include suggestions
for upgrades, modifications or other changes.
ALLTEL Financial shall work with Client to develop
a migration plan for implementing and upgrading
the LANs to support Client's business plans.
(iii) Help Desk Services. ALLTEL Financial shall
provide help desk functions with a comprehensive
set of services to support Client's PC end users.
Such comprehensive set of services would include
using the help desk to order equipment, check on
equipment status, report on equipment, software or
operational problem, ask for basic assistance on
systems supported by the help desk, provide help
with logons, security and other system services,
request services, check on status of outstanding
service requests and obtain information on
products and services.
(iv) Training Advisory Services. ALLTEL Financial
shall develop a training program for Client's end
users. ALLTEL Financial shall coordinate with
Client to define the needs of the end users and
the technology needs of major users. Training
will be built in the
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<PAGE>
application implementation plan for the Standard
Hardware and Software Configuration described
above. ALLTEL Financial will coordinate the
ongoing training requirements for Client during
the term of this Agreement.
(v) Applications Management. ALLTEL Financial shall
provide technical support services for all
applications listed in Item 8 of this Thirteenth
Amendment. Such services would include
installation and testing of new releases,
customization services consistent with Client's
standards, troubleshooting, coordination with
software providers and technical support for the
help desk.
(vi) Management Functions. ALLTEL Financial shall
provide certain management functions including
vendor management, call tracking and service
history and monthly activity reporting.
(vii) Disaster Recovery Plan. ALLTEL Financial shall
assist Client in developing a disaster recovery
plan after the specific configuration
specifications for Client's network environment
have been completed.
(viii) Consulting. ALLTEL Financial will provide Client
consulting services on a mutually agreed basis.
6. To provide the DCS Services to Client, ALLTEL Financial shall
provide the following staff ("DCS Staff"): Help Desk Personnel (2); PC
Technical Specialists, LAN/WAN Staff (3); Project Manager for eighteen months
(1). Client shall be afforded the opportunity to interview prospective DCS
Staff applicants, examine such applicant's qualifications, and provide
comments to ALLTEL Financial. ALLTEL Financial shall give due regard to such
comments by Client and will take appropriate action within the discretion of
ALLTEL Financial.
In the event the service requirements related to Client's Standard
Hardware and Software Configuration or the applications supported pursuant to
this Thirteenth Amendment either increases or decreases, Client and ALLTEL
Financial mutually agree to adjust staffing levels.
97
<PAGE>
7. In consideration of the provision of the DCS Services by ALLTEL
Financial, Client shall, in addition to all other fees payable under the
Agreement, pay ALLTEL Financial in accordance with the following schedule:
CONTRACT YEAR MONTHLY FEE
ONE 12-95 to 11-96 $38,333
TWO 12-96 to 11-97 $34,167
THREE 12-97 to 11-98 $32,083
FOUR 12-98 to 11-99 $32,083
FIVE 12-99 to 11-2000 $32,083
SIX 12-2000 to 11-2001 $32,083
SEVEN 12-2001 to 6-2002 $32,083
For the purposes of this Section only, a "Contract Year" is a twelve
month period beginning on the Thirteenth Amendment Effective Date or each
anniversary of the Thirteenth Amendment Effective Date and continuing until
the next anniversary or the expiration of the Agreement, whichever occurs
first.
The fees set out in this Section shall be adjusted in accordance with
Section 7 of Exhibit C to the Agreement as amended in the Eleventh and
Twelfth Amendments. The fees set out in this Section shall be included in
any calculations of any fees for termination pursuant to Sections 10.4 or
10.5 of the Agreement. Section 7.1 (c) of the Agreement shall not apply to
the personnel provided under this Thirteenth Amendment.
The DCS Services and the parties' obligations under this Thirteenth
Amendment may be terminated, without cause, by Client prior to the expiration
or termination of the Agreement upon the satisfaction of each of the
following conditions:
(a) Client shall give written notice ("Early Termination Notice") to
ALLTEL Financial of Client's intention to terminate the DCS Services pursuant
to this Section;
(b) Such Early Termination Notice shall specify a date ("Early
Termination Date") which is at least six (6) months after the receipt by
ALLTEL Financial of the Early Termination Notice;
(c) The Early Termination Date may not occur prior to the second annual
anniversary of the Thirteenth Amendment Effective Date;
98
<PAGE>
(d) Client shall pay a fee with the Early Termination Notice equal to
the following percentages of the fees payable under this Thirteenth Amendment
between the Early Termination Date and the Expiration Date:
Applicable Period Percent of Remaining Fees
from Early Termination Date
Months 01 - 24 No Termination
Months 25 - 48 30%
Months 49 - 60 25%
Months 61 and after 20%
(e) Client shall reimburse ALLTEL Financial for any expenses incurred
as a result of such termination including but not limited to severance pay
and relocation of the DCS Staff and the book value of software and/or
hardware purchased by ALLTEL Financial for the performance of the DCS
Services. Upon such termination, Client may offer employment to members of
the DCS Staff, to be effective only after the Early Termination Date.
8. The applications to be supported by the DCS Services include the
following or others mutually agreed upon by the parties:
Banking Applications:
FTI's LoanCalc
Customer Insight - MCIF
Loan Mor
Call Management Software
Leasing Software
Insurance Software
Branch Banker
TISA Software
IRA Software
Office Systems Applications Components (or any replacements)
WordPerfect
Lotus 1-2-3
Paradox
Harvard Graphics
SMART Mail (host based)
Noteworks
99
<PAGE>
ALLTEL Financial applications
SIMS
ALMS
FMS Report Writer
On-Line Collections
3270 Communications Software
Attachmate - Gateway
Irma - direct host connect
9. ALLTEL Financial may subcontract any or all of the DCS Services but
shall remain responsible to Client for the performance of all the DCS
Services.
10. Proposed Support Standards for the DCS Services are attached hereto
in Exhibit 13-A. Such Support Standards shall be reviewed by each party,
modified, if needed and agreed to by the parties within ninety (90) days of
the Thirteenth Amendment Effective Date. This Thirteenth Amendment is
subject to Sections 9.6, 9.7, and 9.8 of the Agreement if ALLTEL Financial
fails to reasonably perform to the agreed to Support Standards for these DCS
Services.
11. All references in the Agreement to "Systematics" or "SI" shall be
deemed to refer to ALLTEL Financial.
12. All terms and conditions of the Agreement not amended herein remain
in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Thirteenth Amendment
by their duly authorized representatives as of the Thirteenth Amendment
Effective Date.
ALLTEL FINANCIAL INFORMATION BRENTON BANK
SERVICES, INC.
BY: /s/ J. Michael Hill BY: /s/ John R. Amatangelo
NAME: J. Michael Hill NAME: John R. Amatangelo
TITLE: Senior Vice President TITLE: President - Operations
and Technology Division
100
<PAGE>
EXHIBIT 13-A
PROPOSED SUPPORT STANDARDS
OBJECTIVE STANDARD
Response to phone calls The Help Desk will have a live
person answering calls from 8:00
a.m. to 5:00 p.m. M-F and an on
call person 24 hours a day, seven
days a week. Ninety-five percent
of calls will be returned within
30 minutes. If the Help Desk
technicians are on the phone or
busy, the user will have the
option to leave a voice message or
roll to an attendant who will page
a technician.
Hardware repairs All DCS hardware issues will be
forwarded to a technician within
one hour of call from user. The
technician will respond to user
within 4 hours after notification.
The DCS hardware problem will be
resolved within 48 hours for
standard configuration
workstations. Requests for repair
of non-standard configurations
will be resolved as soon as
possible.
Critical Problems All critical DCS hardware issues
will be assigned to a technician
immediately and the technician
will be dispatched within 1 hour
of the call. The technician will
be on-site within 2 hours (unless
geographical location will not
allow). The problem will be
resolved within 12 hours of
initial call if hardware part is
available immediately; otherwise
the problem will be resolved
within 12 hours of component
availability.
Standard Pricing ALLTEL Financial will submit
pricing request to vendor on "same
day" of Client request.
Ordering Place order within 24 hours of
receiving proper authorization.
Installation of hardware, Within 5 working days of item
software, and individual received.
upgrades
Special projects - new LAN To be completed by date agreed
installs, new applications, upon by ALLTEL Financial and
and major new application Client.
release, etc.
101
<PAGE>
Exhibit 11
Statement of computation of earnings per share.
102
<PAGE>
<TABLE>
Statements re: Computation of Earnings Per Share
Brenton Banks, Inc.
<CAPTION>
December 31, 1995 1994 1993
<S> <C> <C> <C>
Net income $10,407,354 $10,107,387 $14,249,970
Average common shares outstanding 7,673,175 7,889,889 7,848,795
Average shares under long-term
stock compensation plan 79,691 61,398 69,765
Average common equivalent
shares outstanding 7,752,866 7,951,866 7,918,560
Earnings per share 1.34 1.27 1.80
</TABLE>
Note: Amounts are restated to reflect the May 1994 3-for-2 stock split
in the form of a stock dividend.
103
<PAGE>
Exhibit 12
Statement of computation of ratios.
104
<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, 1995 1994 1993
<S> <C> <C> <C>
Return on average total assets:
Net income (before deduction of
minority interest) $ 11,058 10,698 14,918
* divided by *
Average assets $ 1,561,226 1,521,189 1,436,425
Ratio 0.71% 0.70% 1.04%
Return on average common
stockholders' equity:
Net income $ 10,407 10,107 14,250
* divided by *
Average common stockholders'
equity $ 115,183 111,949 103,140
Ratio 9.04% 9.03% 13.82%
Common dividend payout ratio:
Cash dividends per share $ 0.45 0.44 0.40
* divided by *
Net income per share $ 1.34 1.27 1.80
Ratio 33.58% 34.65% 22.22%
Average equity to average assets:
Average equity $ 115,183 111,949 103,140
* divided by *
Average assets $ 1,561,226 1,521,189 1,436,425
Ratio 7.38% 7.36% 7.18%
Equity to assets ratio:
Common stockholders' equity $ 119,534 110,430 112,418
* divided by *
Total assets $ 1,582,779 1,581,327 1,480,596
Ratio 7.55% 6.98% 7.59%
</TABLE>
105
<PAGE>
<TABLE>
<CAPTION>
December 31, 1995 1994 1993
<S> <C> <C> <C>
Tier 1 leverage capital ratio:
Common stockholders' equity $ 119,534 110,430 112,418
Minority interest 4,434 4,220 4,407
Unrealized (gains) losses on
assets available for sale (1,358) 5,117 (3,036)
Less: intangibles (5,282) (5,499) (5,499)
Tier 1 capital $ 117,328 114,268 108,290
* divided by *
Total assets $ 1,582,779 1,581,327 1,480,596
Unrealized (gains) losses on
assets available for sale (1,358) 5,117 (3,036)
Less: intangibles (5,282) (5,499) (5,499)
Tier 1 assets $ 1,576,139 1,580,945 1,472,061
Ratio 7.45% 7.23% 7.36%
Primary capital to assets:
Common equity $ 119,534 110,430 112,418
Minority interest 4,434 4,220 4,407
Unrealized (gains) losses on
assets available for sale (1,358) 5,117 (3,036)
Allowance for loan losses 11,070 10,913 9,818
Primary capital $ 133,680 130,680 123,607
* divided by *
Total assets $ 1,582,779 1,581,327 1,480,596
Unrealized (gains) losses on
assets available for sale (1,358) 5,117 (3,036)
Allowance for loan losses 11,070 10,913 9,818
Allowable assets $ 1,592,491 1,597,357 1,487,378
Ratio 8.40% 8.18% 8.31%
</TABLE>
106
<PAGE>
Exhibit 13
The Annual Report to Shareholders of Brenton Banks, Inc., for the
1995 calendar year.
107
<PAGE>
Cover - blue background with picture of "Tiger Bank" with the words:
Brenton Bank
One Bank,
Unlimited Opportunities
BRENTON BANKS, INC.
1995 Annual Report
<PAGE>
After 114 years of growth and success, we have become one. Brenton Bank is
now one bank instead of many. We share one vision instead of many. We are
better positioned than ever before to build on our long heritage of service,
strength and leadership. And a world of opportunities await.
Brenton Banks, Inc. is Iowa's largest, home-based bank holding company, with
$1.6 billion in assets and 45 offices serving metropolitan markets and
regional economic centers across the state. The Company offers a complete
range of financial products and services -- including retail, agricultural
and commercial banking; trust and investment management services; investment,
insurance and real estate brokerage; mortgage banking; cash management and
international banking services, as well as our own proprietary mutual funds.
The Company's stock trades on the NASDAQ national market system under the
symbol BRBK or BrentB.
CONTENTS
Financial Highlights 1
Message To Our Shareholders 2
A Closer Look 8
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 35
Stock Information 36
Corporate Structure 37
Board Of Directors 38
Brenton Banks and Locations 39
On the cover: Derek Johnson and Kristi Sickels, students at Marshalltown's
J.C. Hoglan Elementary School, learn the benefits of saving from Brenton
Bank's Diane Gilliland. Hoglan School's "Tiger Bank", which began in 1994
as a result of a business partnership between Brenton Bank and Hoglan School,
underscores our commitment to serving local communities and helping children
build futures of unlimited opportunity.
<PAGE>
ONE BANK, UNLIMITED OPPORTUNITIES Nineteen Ninety Five Annual Report
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Brenton Banks, Inc. and Subsidiaries
1995 1994 1993
<S> <C> <C> <C>
Operating Results
Net interest income $ 53,332,143 55,450,526 54,228,718
Provision for loan losses 1,864,801 1,987,909 1,251,588
Total noninterest income 17,846,740 16,592,988 17,863,271
Total noninterest expense 55,051,267 56,656,922 50,414,942
Income before income taxes
and minority interest 14,262,815 13,398,683 20,425,459
Net income 10,407,354 10,107,387 14,249,970
Per Common and Common
Equivalent Share***
Net income $ 1.34 1.27 1.80
Cash dividends .45 .44 .40
Book value, including
unrealized gains (losses)* 15.62 14.03 14.27
Book value, excluding
unrealized gains (losses)** 15.44 14.68 13.88
Closing bid price 21.25 18.25 17.50
At December 31
Assets $1,582,779,320 1,581,326,849 1,480,596,046
Loans 910,193,212 970,214,498 875,881,387
Nonperforming loans 5,619,000 5,022,000 4,013,000
Deposits 1,361,942,715 1,340,283,110 1,294,363,694
Common stockholders'
equity* 119,533,631 110,430,345 112,417,665
Ratios
Return on average common
stockholders' equity (ROE) 9.04% 9.03 13.82
Return on average assets
(including minority
interest)(ROA) .71 .70 1.04
Net interest margin 3.89 4.12 4.28
Net noninterest margin (2.38) (2.61) (2.31)
Primary capital to assets** 8.40 8.18 8.31
Tier 1 leverage capital
ratio** 7.45 7.23 7.36
Nonperforming loans as a
percent of loans .62 .52 .46
Net charge-offs as a
percent of average loans .18 .10 .05
Allowance for loan losses
as a percent of non-
performing loans 197.01 217.30 244.65
<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.
</TABLE>
<PAGE>
Message To Our Shareholders
Analysts may argue the point. But from our perspective, the most important
number in this entire document may be the smallest number of all.
One.
Because in 1995, the 13 community banks of Brenton Banks, Inc. became one.
Together with our Ames savings bank, we adopted a single, unified vision of
the future. We became one team of financial professionals, dedicated to
providing the highest quality products and services for our neighbors and
colleagues across the state of Iowa. We planned, invested and accomplished
much, as we positioned your Company for significant growth and success in
the months and years ahead. Along the way, we produced positive financial
results.
Net income for 1995 rose 3.0 percent to $10.407 million, compared to
$10.107 million in 1994. Earnings per common share were $1.34, up 5.5
percent from $1.27 for the prior year. The increase in earnings per share
was partially due to the Company's repurchase of 258,000 shares under our
common stock repurchase plan. During the year, stockholders' equity grew
8.2 percent to $119.534 million, compared to $110.430 million on December 31,
1994. Book value per common and common equivalent share, increased to $15.62,
up 11.3 percent from $14.03 for the previous year.
Overall asset quality remained strong, with nonperforming loans of just .62
percent of total loans. On December 31, 1995, the reserve for loan losses
stood at a solid 197.01 percent of nonperforming loans and 1.22 percent of
total loans. For the year, net interest income declined 3.8 percent to
$53.332 million, compared to $55.451 million for 1994. The net interest
margin fell to 3.89 percent for 1995, compared to 4.12 percent for the
prior year. The lower margin resulted from interest-bearing liability rates
rising faster than rates for interest-earning assets.
To better control future interest rate risk and improve earnings performance,
management began to revise the loan portfolio's composition in 1995, selling
portfolio real estate loans and developing more commercial and direct
consumer loan business. Our "Strategy for Success" calls for significant
lending growth in 1996, thanks to the increased lending capacity created by
the merger, as well our growing ability to serve more customers in each of
our communities.
Graph showing Net Income Per Common Share (1991-1995):
<TABLE>
<CAPTION>
91 92 93 94 95
<S> <C> <C> <C> <C> <C>
$1.50 1.67 1.80 1.27 1.34
</TABLE>
Graph showing Dividends Per Common Share (1991-1995):
<TABLE>
<CAPTION>
91 92 93 94 95
<S> <C> <C> <C> <C> <C>
$0.32 0.35 0.40 0.44 0.45
</TABLE>
Graph showing Total Assets (in millions) (1991-1995):
<TABLE>
<CAPTION>
91 92 93 94 95
<S> <C> <C> <C> <C> <C>
$1,361 1,431 1,481 1,581 1,583
</TABLE>
<PAGE>
Picture of banker with a customer and the words:
We planned, invested and accomplished much, as we positioned
your company for significant growth and success in the months
and year ahead.
Caption to picture reads:
Don Van Houweling, President, Van Wall Equipment, Inc. in Perry visits with
Marc Meyer, President - Brenton Agricultural Banking and Brenton Bank -
Perry. Brenton was founded as an ag banking company in 1881, and our long
experience in serving the needs of both production agriculture and
agribusiness has enabled us to develop quality products and services that
add value for our customers.
<PAGE>
Picture of Bank President and community leader. Caption to picture reads:
Working in partnership with other community leaders, Craig Agan, Marketing
Director of Knoxville's National Sprint Car Hall of Fame and Mike Cruzen,
President, Brenton Bank - Knoxville, have helped create a winning image of
the city for racing fans across America.
<PAGE>
Serving more customers more profitably is at the very heart of our
strategic plan, which recognizes not only the growing global competition
in today's financial services industry, but also the unique opportunities
Brenton enjoys as Iowa's largest home-based banking company. For more than
114 years, no other company has been more committed to serving the needs of
Iowa farmers, businesses, families and communities. In 1995, our unmatched
experience translated into a number of initiatives designed to ensure our
ongoing leadership well into the 21st century.
The Company merged its 13 commercial banks into a single bank with a unified
mission and clear set of objectives. We elected a new, "One Bank" board of
directors representing the diverse needs and experience of clients across
Iowa. By consolidating certain operations, streamlining management and
combining assets, Brenton became better positioned to serve and to prosper.
Cost savings in many areas have already been realized and efficient new
processes and technologies are now in place.
As part of the merger process, the Company established a line of business
management structure designed to help customers profit from our expertise in
a wide range of financial areas -- including commercial and agricultural
banking, retail banking, trust and investment management services, private
banking, mortgage banking, investment, insurance and real estate brokerage.
Rather than a company of banking generalists, we have become a statewide
resource of financial services specialists, enabling us to bring additional
value to every customer relationship. As part of this effort, we are making
- -- and will continue to make -- significant investments in educating and
motivating our people to forge new partnerships, create new efficiencies and
deliver higher quality products and services.
By developing alternative delivery systems and consolidating backroom and
support operations, your Company began to realize additional economies of
scale in 1995, while freeing local bankers to focus on their customers and
become even more involved in their communities. Two additional grocery
store branches were opened in Iowa City and Cedar Rapids. Brenton Direct,
a new telephone banking center, was developed and staffed to provide higher
levels of service and
Words centered in the middle of the page:
Rather than a company of banking generalists, we have become a statewide
resource of financial services specialists, enabling us to bring additional
value to every customer relationship.
<PAGE>
expanded hours of operation, including evenings and weekends. We expanded
and enhanced the diversified commercial services area, which provides cash
management and other valuable banking services for commercial customers.
Several of these initiatives produced immediate returns, with 1995
noninterest income growing by 5.4 percent to $17.850 million, excluding
securities gains and losses. Brokerage commissions rose 5.7 percent, due to a
strong market and higher volume. Service charges on deposits grew 2.3
percent. Insurance commissions and fees jumped 10.6 percent, as a result of
both higher sales of credit-related insurance and increased insurance agency
sales. Fiduciary revenues were up 12.2 percent, thanks to increased volumes
in personal trusts, investment management fees and employee benefit plans.
Noninterest expenses for the year fell 2.8 percent to $55.051 million,
compared to $56.657 million for 1994. a one time $2.6 million restructuring
charge related to the implementation of the Company's strategic plan was
taken in 1994. Results for 1995 included savings in salaries and employee
benefits, lower FDIC premium assessments on deposits and a reduction in
data processing costs. These savings were partially offset by increased
occupancy expenses related to new bank facilities in Ames, Ankeny and
Davenport and new branch openings in Iowa City and Cedar Rapids, as well
as $1.8 million in consulting and professional fees tied to the merger and
restructuring.
To say that we literally reinvented our business in 1995 would be an
understatement. And in 1996 and beyond, shareholders, customers and
employees alike, will benefit from the efficiencies, opportunities and
advantages created through our merger and restructuring. More than a
simple consolidation for economy's sake, the new Brenton organization
represents a rededication to the spirit and philosophies that have served
us so well through the years. Building shareholder value. Serving
customers and communities well. Being a leader in local economic
development. And setting our sights on a future even stronger than our past.
If you're searching for a banking organization that can serve your long-term
objectives of service, value, growth, experience and true partnership, look
no further than Brenton.
We are the one.
/s/
C. Robert Brenton
Chairman of the Board
/s/
Robert L. DeMeulenaere
President
<PAGE>
Picture of banker and community leader looking at blueprints in an office.
Caption to picture reads:
John Hand, President, Brenton Bank - Emmetsburg and Dave Nixon, Campaign
Chairman for the Wellness Center Project, review blueprints for the city's
new library and wellness center complex. The facility, which will be located
in a single building on the Iowa Lakes Community College campus, will serve
local residents and help attract new economic development to the area.
Brenton Bank participated in the planning and fundraising efforts and
purchased $620,000 in municipal bonds that helped finance the project.
Words on blue background following picture reads:
More than a simple consolidation for economy's sake, the new Brenton
organization represents a rededication to the spirit and philosophies that
have served us so well through the years.
<PAGE>
A CLOSER LOOK: Implementing Our Strategy For Success
It's a classic case of high tech, high touch.
On the one hand, customers want access to banking products and services
outside of regular banking hours. For certain activities or to seek
information, they'd rather call on the phone than visit a branch. And who can
blame them? On the other hand, personal bankers have long been chained to
their desks by paperwork and regulatory details. Without question, their time
could be better spent getting to know and understand the needs of our
customers -- and serving them well.
In 1995, Brenton made significant investments in technology and process
improvements designed to provide better service for customers, greater
efficiency for our enterprise and additional opportunities for our local
bankers to become more involved in their communities.
Brenton's new 28,000 sq. ft. Operations & Technology Center consolidates
technical and customer support services for all 45 offices in a single
location. The facility, which also houses the Company's data processing
partner, handles collections, loan and deposit support, statementing,
lockbox services and more. It is also home to Brenton Direct, a new
telephone banking center, which is on the leading edge of our "Strategy
for Success."
Much more than an automated information line, Brenton Direct is a resource
of personalized information and service. It is staffed by experienced
banking professionals who are available to serve customer needs during and
after normal banking hours, including evenings and weekends. In addition to
helping existing customers, Brenton Direct is positioned to help the Company
attract new customers in new communities, enabling us to serve our entire
Iowa market. The facility, which began operation in April, 1995, is already
handling an average of 30,000 calls per month.
Working in partnership with local community boards of directors, Brenton
will continue its long heritage of providing leadership in local economic
development. Brenton bankers have always lived and worked in the communities
we serve, and we have always stood ready to contribute time, effort and
financial resources to worthwhile local groups, projects and activities. We
will continue to share, participate and invest in our communities. Indeed,
our commitment is even stronger than it has been in the past.
Strong growth in direct consumer lending is forecast for 1996, as our
company-wide retail banking strategy becomes fully implemented. The plan
calls for local bank presidents to lead our efforts
Words centered in the middle of the page:
We are committed to getting closer to our customers and communities -- to
listening, serving, and satisfying all of their financial needs.
<PAGE>
to proactively reach out to current and prospective customers through
personal calling, targeted direct mail and telephone follow-up. We are
committed to getting closer to our customers and communities -- to
listening, serving and satisfying all of their financial needs. The
development of new support processes and personnel frees front line bankers
to become fully involved in this effort.
Led by commercial loan growth and higher cash management revenues, the
commercial side of our business experienced substantial growth in 1995,
particularly in the metropolitan markets of Des Moines, Davenport,
Cedar Rapids and Ames. We expect this growth to continue in 1996, as we
provide more training, support and incentives for our commercial officers.
Brenton offers a full line of commercial banking products and services, from
lending and cash management to international services. In partnership with
our Trust Division, we also work to provide a strong package of employee
benefit and corporate trust products and services.
By establishing a separate line of business for agricultural banking, the
Company continued to build on its 114-year heritage of service to Iowa farmers
and agribusinesses. Our roots are in agricultural banking. We know the
business of farming. And our experienced ag banking officers work to develop
long-term, mutually profitable partnerships with our farm customers. On
November 11, 1995, the Brenton Center for Agricultural Instruction and
Technology Transfer was dedicated at Iowa State University in Ames. The center,
which was supported in part through a gift from the Brenton family, is a
resource of information, instruction and outreach services for students,
farmers and agri-businesses across Iowa and around the world.
Increased volumes in employee benefit plans, personal trusts and investment
management fees produced 12.2 percent growth in fiduciary revenues during 1995.
Working in partnership with personal bankers and commercial officers, Trust is
projecting even stronger growth in the year ahead. With our proven record of
customer service and investment performance, Brenton is well positioned to
serve the expanding 401(k) market. Assets in Brenton's four proprietary mutual
funds totaled more than $103 million at year-end 1995.
While total mortgage volume was down in 1995, primarily due to a slowdown
in refinancing, we project substantial growth in 1996, as rates continue to
trend lower. We also
Words centered in the middle of the page:
On November 11, 1995, the Brenton Center for Agricultural Instruction and
Technology Transfer was dedicated at Iowa State University in Ames.
<PAGE>
expect to profit from last year's restructuring of our mortgage operations.
We consolidated processing from 14 bank locations to two regional processing
centers. The recent conversion to new servicing software and the purchase of
laptop computers has positioned our originators to get away from their desks
and go out in the field to develop new business. We introduced an
alternative documentation system that enables us to approve loans in four
days or less, subject to appraisals. In addition, we are now retaining the
servicing rights to most residential loans that we originate. As a result,
we not only realize the full economic value of the servicing process, we
also maintain valuable customer contact over the full life of the loan.
Our full-service investment broker-dealer continues to grow, with revenues
increasing by 5.7 percent in 1995. The operation provides a full range of
investment products to serve client needs -- including stocks, unit
investment trusts, individual bonds, mutual funds, insurance and annuities.
Brenton investment executives focus on planning and tailoring total
financial solutions. The objective is to create long-term, mutually
rewarding relationships with current and prospective customers.
Brenton Insurance, our independent agency, produced double-digit growth
for the third consecutive year. Working out of free-standing offices as well
as in-bank locations, the operation markets personal and commercial lines of
property and casualty coverages, life and health insurance and selected group
plans. The growth of our insurance business reflects your Company's objective
to serve the total financial needs of our customers. Significant additional
insurance revenue is budgeted for 1996.
At Brenton, our greatest strength has always been our people. That is
why, each year, we celebrate their success and recognize their
accomplishments. At our One Bank Celebration on November 18, we honored the
following individuals and banks for their outstanding efforts and
contributions to the overall success of our enterprise: Deb Hall of Cedar
Rapids, Outstanding Teller; Myrna Bayer of Marshalltown, Outstanding Customer
Service Person; Joyce Larson of Brokerage, Outstanding Sales Person; Allen
Shafer of Cedar Rapids, Outstanding Lender; LaRae Bouchard of Operations and
Technology, Outstanding Administrative/Financial/Support Person; and John
Maier of Brenton Mortgage, Outstanding Administrative/Financial/Support
Person. The Brenton Award of Progress was presented to our Clarion bank.
Marshalltown was named our Outstanding Bank for 1995.
Words centered in the middle of the page:
The objective is to create long-term, mutually rewarding relationships
with current and prospective customers.
<PAGE>
Bankers meeting customer at customer's hardware store. Caption to
picture reads:
Jerry Logan, President, Logan Contractors Supply, Inc., meets with Woody
Brenton, President - Commercial Banking and Doug Schulte, Assistant
Vice-President, Brenton Trust Division. From commercial lending and cash
management programs to employee benefits and insurance services, Brenton
provides a complete package of sophisticated financial products and services
for business customers across Iowa.
<PAGE>
Management's Discussion and Analysis
For 1995, Brenton Banks, Inc. and subsidiaries (the "Company") reported net
income of $10,407,354 compared to 1994 earnings of $10,107,387.
Capital Resources Common stockholders'equity totaled $119,533,631 as of
December 31, 1995, an 8.2 percent increase from the prior year. This
increase was primarily due to current year earnings and the equity
adjustment required by Statement of Financial Accounting Standard (SFAS)
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, 1995, aggregate unrealized gains from
assets available for sale totaled $1,358,402, while at December 31, 1994,
aggregate unrealized losses totaled $5,117,046. This resulted in a net
increase of $6,475,448 in common stockholders' equity in 1995. The Board
of Directors increased 1995 dividends to common stockholders 2.3 percent over
1994 to $.45 per share, a dividend payout ratio of 33.6 percent of earnings
per share. Dividends for 1995 totaled $3,498,220. As part of the
Company's ongoing stock repurchase plan, the Board of Directors authorized
additional stock repurchases of $5,000,000 of the Company's common stock in
1995. For the year ended December 31, 1995, the Company repurchased 258,133
shares at a total cost of $4,830,111. The Board has extended this plan for
1996. The Company's risk-based core capital ratio was 11.60 percent at
December 31, 1995, and the total risk-based capital ratio was 12.69 percent.
These ratios 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 7.45 percent at
December 31, 1995, exceeding the regulatory minimum requirement range of 3.00
to 5.00 percent. Each of these capital calculations excludes unrealized gains
or losses on assets available for sale. The debt-to-equity ratio of Brenton
Banks, Inc. (the "Parent Company") was 10.4 percent at December 31, 1995,
compared to 11.5 percent at the end of 1994. This decrease was primarily due
to higher equity created by the SFAS 115 adjustment and current year
earnings. The Parent Company's $2 million line of credit with a regional bank
was unused throughout 1995. Long-term borrowings of the Parent Company at
December 31, 1995 consisted entirely of $12,435,000 of capital notes.
Brenton Banks, Inc. common stock closed 1995 at a bid price of $21.25 per
share, representing 136 percent of the book value per share of $15.62. The
year-end stock price represented a price-to-1995-earnings multiple of 15.9
times. 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.
Asset-Liability Management The Company has a fully integrated asset-
liability management system to assist in managing the balance sheet. This
system performs simulations of the effects of various
Graph showing Primary Capital Ratio (1991-1995):
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
7.23% 7.67 8.31 8.18 8.40
</TABLE>
Graph showing Tier 1 Leverage Capital Ratio (1991-1995)
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
6.21% 6.71 7.36 7.23 7.45
</TABLE>
Graph showing Net Interest Margin (1991-1995):
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
4.04% 4.23 4.28 4.12 3.89
</TABLE>
<PAGE>
interest rate scenarios on net interest income and is used to project the
results of alternative investment decisions. Management performs analysis of
the simulations to manage interest rate risk, the net interest margin and
levels of net interest income. The asset-liability simulations indicate
that net interest income will be maximized in a stable interest rate
environment. The Company currently believes that net interest income would
fall by less than 5 percent if interest rates immediately increased or
decreased by 300 basis points, which is within the Company policy limit.
Many steps have been taken over the past year to restructure the Company's
balance sheet in a way that will lessen the impact of interest rate
fluctuations on net interest income. The Company has increased its variable
rate consumer loans by $33.4 million since December 31, 1994. The Company
has also reduced its reliance on residential real estate loans with longer
repricing periods. This was done by securitizing approximately $56 million
of these loans during 1995. As of December 31, 1995, $26 million of these
loan pools had been sold at a loss of approximately $400,000, and $30 million
were held in the Company's available for sale investment portfolio. In
addition to normal balance sheet instruments, the Company has utilized
Federal Home Loan Bank borrowings and interest rate swaps to reduce interest
rate risk.
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 28.0 percent of the Company's total
assets at December 31, 1995. Net cash provided from operations of the
Company is another major source of liquidity and totaled $14,991,191 in 1995,
$16,279,907 in 1994 and $20,429,680 in 1993. These strong cash flows from
operations are expected to continue in the foreseeable future. The Company
has historically maintained a stable deposit base and a relatively low level
of large deposits which results in low dependence on volatile liabilities.
At December 31, 1995, the Company had borrowings of $28,150,000 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 high levels of potentially liquid assets, strong
cash flows from operations and low dependence on volatile liabilities
provided strong liquidity for the Company at December 31, 1995. The Parent
Company, whose primary funding sources are management fees and dividends from
its subsidiaries, had sufficient cash flow and liquidity at December 31,
1995. Dividends of approximately $15 million were available to be paid to the
Parent Company by subsidiary banks without reducing capital ratios below
regulatory minimums. At the end of 1995, the Parent Company had $7.5 million
of short-term investments, as well as additional borrowing capacity.
Results of Operations - 1995 Compared to 1994 Net Income For the year
ended December 31, 1995, Brenton recorded net income of $10,407,354.
Earnings per common share were $1.34 compared to $1.27 for 1994. The
Company's total assets were consistent with 1994 levels of $1.6 billion on
December 31, 1995. Return on average assets (ROA) was .71 percent in 1995,
compared to .70 percent in 1994. The return on average equity (ROE) was
9.04 percent, compared to 9.03 percent one year earlier.
Net Interest Income Net interest income declined $2,118,383 or 3.8 percent
to $53,332,143 for 1995. Although average earning assets increased 1.3 percent
from 1994, average interest-bearing liabilities increased 2.7 percent. In
addition, the average rate earned on earning assets rose 55 basis points,
while the average rate paid on interest-bearing liabilities increased 83 basis
points. The net interest spread, which is the difference between the rate
earned on assets and the rate paid on liabilities, fell to 3.41 percent from
3.69 percent last year. Net interest margin, which is tax equivalent net
interest income as a percent of average earning
<PAGE>
assets, declined 23 basis points in 1995 and averaged 3.89 percent,
compared to 4.12 percent in 1994. The Company does not expect further net
interest margin compression. With the focus on commercial and consumer loan
growth, the goal is for improvement in net interest income and net interest
margin.
Loan Quality Brenton's loan quality remained strong in 1995. The
Company's nonperforming loans were a low 0.62 percent of loans or $5,619,000
at December 31, 1995, up from $5,022,000 or 0.52 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. The increase in nonperforming loans from one year ago
was due to an increase in commercial and consumer loans that were 90 days
or more past due. Nonaccrual and renegotiated loans are below the levels
of one year ago. The allowance for loan losses, which totaled $11.1
million, represented 197.01 percent of nonperforming loans at the end of
1995, compared to 217.3 percent one year ago. The provision for loan
losses totaled $1,864,801 for the year ended December 31, 1995, compared
to $1,987,909 for 1994. The Company's net charge-offs to average loans were
0.18 percent for 1995 compared to 0.10 percent for 1994. Loan losses for 1995
were concentrated in the consumer loan portfolio. Quality control and risk
management are carefully balanced with goals for loan growth. The Company has
a formal structure for reviewing and approving new loans, with all loans
greater than $1,000,000 being approved by the senior loan approval committee.
Documentation and loan quality reviews are performed routinely by internal
loan review personnel, as well as by regulatory examiners. The allowance
for loan losses represents the reserve available to absorb potential loan
losses within the loan 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 by lending officers
and internal loan review personnel. Using a standard evaluation process,
individual loan officers evaluate loan characteristics, the borrower's
financial condition and collateral values. From these assessments, the
Reserve Adequacy Committee reviews the loan portfolio quality, quantifies
the results and reviews the calculations of the required allowance for
loan losses. In addition, the Reserve Adequacy Committee approves
charge-offs and subsequent collection and action plans for problem credits.
Management believes the allowance for loan losses at December 31, 1995, was
sufficient to absorb all potential loan losses within the portfolio,
recognizing that the adequacy of the reserve is subject to future economic
events and uncertainties. Beginning January 1, 1995, the Financial
Accounting Standards Board mandated a standard that fundamentally
changed certain accounting procedures for impaired loans, including the
determination of the allowance for loan losses and financial disclosures.
This new Standard has not had a material effect on the 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
Graph showing Return on Average Assets (1991-1995):
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
0.93% 0.98 1.04 0.70 0.71
</TABLE>
Graph showing Return on Average Equity (1991-1995):
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
14.27% 14.13 13.82 9.03 9.04
</TABLE>
<PAGE>
average assets. For 1995, the net noninterest margin was (2.38) percent
compared to (2.61) percent in 1994. Although this is a positive trend, the
Company is aggressively working on further reductions by developing fee-based
services and reducing the growth of operating expenses.
Noninterest Income Generating noninterest income is a key component to
the Company's earnings performance, particularly when lower net interest
margins cause reductions in net interest income. For 1995, total noninterest
income (excluding securities transactions) increased 5.4 percent to
$17,849,743 from $16,932,612 one year ago. The increases were seen in
substantially all noninterest income categories. Service charges on
deposit accounts rose 2.3 percent in 1995, compared to one year earlier.
This increase occurred in the fourth quarter of 1995, when the Company
implemented standardized service charges and initiatives to reduce the amount
of waived charges and fees. Insurance commissions and fees increased 10.6
percent to $2,339,817 in 1995. This was due to higher sales of credit-related
insurance and higher sales from insurance agency operations. Secondary market
real estate loan income also rose and posted a 22.9 percent increase from one
year earlier. Secondary market income for 1995 totaled $1,153,066.
Fiduciary income rose 12.2 percent to $2,425,105 in 1995 compared to
$2,160,492 in 1994. This increase was due to a growing customer base in the
areas of personal trusts, investment management, employee benefit plans and
the Brenton Family of Mutal Funds. Higher revenues were the result of this
growth and favorable market conditions. Securities transactions created an
additional increase in noninterest income. Securities losses for 1995 totaled
$3,003 compared to 1994 losses of $339,624. Offsetting the overall increase
in noninterest income was a 20.6 percent decline in other operating income.
The major cause for the decline was $232,454 of net losses on the sale of
loans in 1995 compared to 1994 gains of $167,519.
Noninterest Expense Total noninterest expense decreased 2.8 percent in
1995 to $55,051,267 from $56,656,922 one year ago. Included in 1994
expense was a one-time restructuring charge of $2,645,000. The restructuring
charge was taken to cover costs related to the Company's strategic plan that
included consolidating the Company's 13 commercial banks, reducing Brenton's
overall personnel levels and closing selected banking branches. A summary
of the estimated costs expensed in 1994 and the actual costs incurred in
1995 follows:
<TABLE>
<CAPTION>
1994 Estimated Costs 1995 Actual Costs
<S> <C> <C>
Salaries and wages $1,089,000 $ 565,263
Employee benefits 289,000 83,409
Occupancy expenses 192,000 --
Data processing expense 527,500 389,432
Abandonment losses 267,000 164,945
Legal, regulatory and other 280,500 409,085
$2,645,000 $1,612,134
</TABLE>
The difference between the estimated costs recorded in 1994 and the actual
costs incurred was reversed, thereby reducing or charging the above expense
categories in 1995. The major restructuring charge reversals occurred in
salaries and wages and employee benefit categories. The actual costs were
well below original estimates due to employee attrition, which assisted in
meeting necessary salary reductions without incurring severance. In addition,
occupancy costs and abandonment losses were lower than original estimates.
This was due to a planned branch closing that did not occur in 1995, but is
expected to occur in 1996. Another branch which was expected to be abandoned
was sold with the Company incurring no loss. Salary expense declined
approximately $710,000 from one year ago after eliminating the effects of the
restructuring charge, due to overall staff reductions. The number of
full-time equivalent employees decreased by 13.6 percent when comparing year-
end 1995 personnel levels to year-end 1994. The decrease in salaries was
offset by increases in incentives, insurance sales commissions and executive
compensation plan expenses. The reductions in salaries and wages led to a
proportionate decline in employee benefits. The increases in occupancy and
furniture and equipment expense were due primarily to rents and depreciation
for new and renovated banking offices in Ames, Ankeny, Cedar Rapids,
Davenport and Iowa City. The Company invested approximately $7 million in
<PAGE>
these new facilities. Data processing expenses were unchanged from last
year after eliminating the impact of the restructuring charge. Advertising
expenses were also unchanged from one year ago. In September 1995, the FDIC
refunded assessments retroactively to May 1995 and lowered deposit insurance
premiums for all well capitalized banks. This was a result of the full
funding of reserves required by the FDIC to insure the deposits of the
banking industry. This reduced 1995 expenses by $1,124,169, in comparison to
1994. The Company continues to pay the lowest rates available under the
FDIC's risk-based premium system. At the present time, Congress is
considering proposed legislation to recapitalize the Savings Association
Insurance Fund (SAIF). This proposed legislation would assess a one-time
premium, currently estimated between $1.2 million and $1.5 million, on all
SAIF deposits and would be expensed when and if legislation is passed. The
Company has approximately $225 million of SAIF deposits. Other operating
expenses rose $2.5 million or 22.6 percent after eliminating the impact of
the restructuring charge. A large part of this increase relates to payments
made to EDS, a management consulting firm that was hired to reengineer the
retail and commercial banking processes and assist in developing a formalized
program for enhancing noninterest income. In addition, the Company has
contracted with other consultants to perform sales training and develop
management reporting systems. In 1995, the Company also recorded
approximately $1 million for estimated costs related to branch closings
anticipated in 1996.
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 22.5 percent for 1995
compared to 20.2 percent for 1994. In 1994, the Company established
out-of-state investment subsidiaries to manage the investment portfolios of
each Brenton bank. These subsidiaries provided an opportunity to lower the
amount of state franchise taxes paid by the Company. Effective July 1, 1995,
the state of Iowa enacted legislation that eliminated the tax benefits derived
from these subsidiaries. The Company dissolved these subsidiaries on
June 30, 1995.
Effect of New Accounting Standards Two new Statements of Financial
Accounting Standards (SFAS) were issued in 1995, but will not be effective
until 1996: SFAS No. 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of," and SFAS No. 123
"Accounting for Stock-Based Compensation." The adoption of both SFAS 121
and SFAS 123 is not expected to have a material effect on the Company's
future financial statements.
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. The Company's ROA, excluding the one-time charge, was .81 percent in
1994, compared to 1.04 percent in 1993. The ROE, excluding the restructuring
charge, was 10.51 percent, compared to 13.82 percent one year earlier. The
restructuring charge reduced ROA to .70 percent and reduced ROE to 9.03
percent.
Net Interest Income Net interest income rose 2.3 percent to $55,450,526
for 1994. This growth was prompted by an increase in average earning assets,
primarily from a 16.7 percent increase in average loans in 1994. During
1994, the Company's net interest margin declined 16 basis points from one
year earlier and averaged 4.12 percent.
Loan Quality Nonperforming loans of $5,022,000 at the end of 1994
represented 0.52 percent of loans, up 25.1 percent from one year earlier.
Provision expense for loan losses increased $736,321 in 1994. This
provision increased the allowance for loan losses to $10,913,043 at
<PAGE>
December 31, 1994, representing 217.30 percent of nonperforming loans.
Net loans charged off for 1994 represented a low 0.10 percent of average
loans.
Noninterest Income For 1994, total noninterest income (excluding
securities transactions) declined 2.0 percent to $16,932,612 from
$17,268,103 one year prior. Service charges received on deposit accounts
declined about $422,000 from 1993. Higher interest rates caused a 56.1
percent decline in secondary market real estate loan fees, which totaled
$938,332 in 1994. 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.
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.
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 was a
one-time, pre-tax restructuring charge of $2,645,000. Without the
restructuring charge, noninterest expense increased 7.1 percent from the
prior year. The following comparisons exclude the restructuring charge.
Salaries and benefits rose $1,063,409 from 1993 to 1994. The majority of this
increase was 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 expenses increased in 1994 by $959,493.
This was primarily due to rents associated with new offices for banking,
brokerage and real estate brokerage activities, and depreciation expense for
remodeled facilities and new technology. Data processing expenses were
unchanged from 1993. FDIC deposit insurance rose 5.7 percent in 1994, due to
increasing deposit levels. During 1994, Brenton initiated several promotional
campaigns offering brokerage services, no-fee checking accounts and home
equity loans. These campaigns, along with local community events, added
16.5 percent to advertising and promotion expenses. Other operating
expenses rose 11.5 percent. This increase was a result of many new activities
including costs for new banking offices, acquisition of real estate and
insurance agencies, expanded cash management services and the introduction of
the Brenton Family of Mutual Funds. Growth and expansion activities in 1994
added an additional $1.75 million of recurring noninterest expense.
Income Taxes The Company's income tax strategies include reducing income
taxes by purchasing assets that produce tax-exempt income. 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 provide an opportunity to lower the amount of state
franchise taxes paid by the Company.
Graph showing Nonperforming Loans (in thousands) (1991-1995):
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
$5,622 4,593 4,013 5,022 5,619
</TABLE>
Graph showing Net Noninterest Margin (1991-1995);
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
2.26% 2.31 2.31 2.61 2.38
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Average Balances and Rates
Brenton Banks, Inc. and Subsidiaries
Average Balances
(In thousands) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Assets:
Cash and due from banks $ 57,138 46,301 46,025 41,715 35,656
Interest-bearing deposits with
banks 1,076 124 762 6,240 18,335
Federal funds sold and
securities purchased under
agreements to resell 39,763 37,666 23,725 27,082 35,154
Trading account securities -- 116 -- -- --
Investment securities:
Available for sale-taxable 244,786 245,913 53,174 6,512 --
Available for sale-tax-exempt 100,859 132,040 -- -- --
Held to maturity-taxable 65,959 35,794 299,993 384,301 342,466
Held to maturity-tax-exempt 50,235 44,584 164,520 139,296 106,658
Loans held for sale 5,908 2,575 6,165 2,553 --
Loans 945,724 936,370 802,088 736,646 727,870
Allowance for loan losses (11,166) (10,502) (9,615) (8,894) (8,819)
Bank premises and equipment 31,436 24,545 23,045 21,400 18,876
Other 29,508 25,663 26,543 30,422 32,243
$1,561,226 1,521,189 1,436,425 1,387,273 1,308,439
Liabilities and Stockholders'
Equity:
Deposits:
Noninterest-bearing $ 128,770 127,464 119,322 112,054 102,795
Interest-bearing:
Demand 355,819 250,520 217,754 209,642 175,595
Savings 231,633 294,715 299,640 260,568 235,894
Time 626,497 625,981 622,789 646,261 654,776
Total deposits 1,342,719 1,298,680 1,259,505 1,228,525 1,169,060
Federal funds purchased and
securities sold under
agreements to repurchase 40,237 61,656 42,715 33,240 20,340
Other short-term borrowings 6,536 4,860 33 2,170 5,361
Accrued expenses and other
liabilities 14,896 13,254 12,805 13,735 14,739
Long-term borrowings 37,264 26,500 14,077 14,067 13,619
Total liabilities 1,441,652 1,404,950 1,329,135 1,291,737 1,223,119
Minority interest 4,391 4,290 4,150 3,845 3,589
Common stockholders' equity 115,183 111,949 103,140 91,691 81,731
$1,561,226 1,521,189 1,436,425 1,387,273 1,308,439
Summary of Average Interest
Rates
Average rates earned:
Interest-bearing deposits with
banks 6.20% 6.65 2.88 4.92 7.10
Trading account securities -- 6.36 -- -- --
Federal funds sold and
securities purchased under
agreements to resell 5.69 4.53 2.05 2.41 5.77
Investment securities:
Available for sale-taxable 5.96 5.30 5.28 6.63 --
Available for sale-tax exempt
(tax equivalent basis) 6.71 6.37 -- -- --
Held to maturity-taxable 6.17 5.20 5.54 6.88 8.50
Held to maturity-tax-exempt
(tax equivalent basis) 8.05 7.70 6.97 7.66 8.85
Loans held for sale 6.71 7.50 8.43 9.33 --
Loans 8.69 8.14 8.77 9.65 10.52
Average rates paid:
Deposits 4.37% 3.55 3.70 4.70 6.19
Federal funds purchased and
securities sold under
agreements to repurchase 4.08 3.38 2.41 2.78 4.74
Other short-term borrowings 5.67 5.42 3.63 5.57 8.70
Long-term borrowings 7.03 6.86 8.60 9.14 9.57
Average yield on
interest-earning assets 7.86% 7.31 7.57 8.43 9.62
Average rate paid on
interest-bearing liabilities 4.45 3.62 3.71 4.70 6.21
Net interest spread 3.41 3.69 3.86 3.73 3.41
Net interest margin 3.89 4.12 4.28 4.23 4.04
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Selected Financial Data
Brenton Banks, Inc. and Subsidiaries
Year-end Balances
(In thousands)
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total assets $1,582,779 1,581,327 1,480,596 1,431,140 1,360,942 1,274,301 961,370 921,207 908,933 956,505
Interest-earning
assets 1,461,218 1,475,473 1,400,709 1,323,252 1,267,402 1,181,172 883,721 845,571 836,029 865,364
Interest-bearing
liabilities 1,300,508 1,315,378 1,224,951 1,181,013 1,141,008 1,052,597 769,717 733,133 728,597 771,416
Demand deposits 143,220 136,548 127,132 137,212 115,479 125,626 113,349 118,392 116,830 123,883
Long-term
borrowings 38,178 28,939 20,055 13,284 13,634 12,675 14,701 16,215 17,509 18,759
Preferred stock -- -- -- -- -- -- -- -- 2,000 3,000
Common
stockholders'
equity** 119,534 110,430 112,418 97,430 86,712 77,258 63,522 56,401 49,618 44,976
Results of
operations
(In thousands)
Interest income $ 111,040 101,223 98,656 106,560 115,561 106,826 85,722 76,745 74,774 84,321
Interest expense 57,708 45,772 44,427 54,773 68,687 64,431 49,102 43,180 43,149 52,920
Net interest
income 53,332 55,451 54,229 51,787 46,874 42,395 36,620 33,565 31,625 31,401
Provision for
loan losses 1,865 1,988 1,252 1,411 799 869 760 1,214 2,132 11,605
Net interest
income after
provision for
loan losses 51,467 53,463 52,977 50,376 46,075 41,526 35,860 32,351 29,493 19,796
Noninterest
income 17,847 16,593 17,863 14,684 12,715 11,554 10,113 10,367 9,064 16,483
Noninterest
expense 55,051 56,657 50,415 46,591 42,284 37,820 32,781 32,066 32,952 32,558
Income before
income taxes
and minority
interest 14,263 13,399 20,425 18,469 16,506 15,260 13,192 10,652 5,605 3,721
Income taxes 3,205 2,701 5,508 4,884 4,308 4,388 4,016 2,527 408 116
Minority interest 651 591 667 632 539 533 472 422 290 84
Net income 10,407 10,107 14,250 12,953 11,659 10,339 8,704 7,703 4,907 3,521
Preferred stock
dividend
requirement -- -- -- -- -- -- -- 81 265 360
Net income
available to
common
stockholders $ 10,407 10,107 14,250 12,953 11,659 10,339 8,704 7,622 4,642 3,161
Average common
shares
outstanding* 7,753 7,952 7,919 7,783 7,758 7,745 7,196 7,196 7,196 7,196
Per common and
common
equivalent
share*
Net income $ 1.34 1.27 1.80 1.67 1.50 1.33 1.21 1.06 .65 .44
Cash dividends .450 .440 .400 .350 .323 .273 .22 .117 .000 000
Common
stockholders'
equity** 15.62 14.03 14.27 12.47 11.16 9.97 8.83 7.84 6.89 6.25
Selected
operating
ratios
Return on
average assets
(including
minority
interest) .71% .70 1.04 .98 .93 .95 1.00 .90 .57 .38
Return on
average common
stockholders'
equity 9.04 9.03 13.82 14.13 14.27 14.39 14.50 14.34 9.78 7.35
Common dividend
payout 33.58 34.65 22.22 21.00 21.56 20.50 18.23 11.01 .00 .00
Allowance for
loan losses
as a percent
of loans 1.22 1.12 1.12 1.20 1.14 1.25 1.55 1.60 1.75 2.09
Net charge-offs
to average
loans
outstanding .18 .10 .05 .13 .15 .12 .08 .18 .75 2.61
<FN>
*Restated for 3-for-2 stock split effective in 1994 and 2-for-1 stock split effective in 1990.
**Including unrealized gains (losses) on assets available for sale.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Condition
Brenton Banks, Inc. and Subsidiaries
December 31 1995 1994
<S> <C> <C>
Assets:
Cash and due from banks (note 2) $ 71,159,078 58,387,727
Interest-bearing deposits with banks 265,072 64,255
Federal funds sold and securities purchased
under agreements to resell 37,600,000 59,396,428
Investment securities:
Available for sale (note 3) 396,370,443 349,208,773
Held to maturity (market value of
$109,131,000 and $92,284,000 at
December 31, 1995 and 1994, respectively)
(note 3) 108,082,213 94,484,134
Investment securities 504,452,656 443,692,907
Loans held for sale 8,707,309 2,104,492
Loans (note 4) 910,193,212 970,214,498
Allowance for loan losses (note 5) (11,069,869) (10,913,043)
Loans, net 899,123,343 959,301,455
Bank premises and equipment (notes 6 and 10) 32,849,842 27,103,630
Accrued interest receivable 14,494,261 13,064,921
Other assets (note 8) 14,127,759 18,211,034
$1,582,779,320 1,581,326,849
Liabilities and Stockholders' Equity:
Deposits (note 7):
Noninterest-bearing $ 143,220,373 136,547,995
Interest-bearing:
Demand 399,308,392 315,369,233
Savings 215,488,846 255,046,184
Time 603,925,104 633,319,698
Total deposits 1,361,942,715 1,340,283,110
Federal funds purchased and securities sold
under agreements to repurchase 41,107,411 70,703,736
Other short-term borrowings (note 9) 2,500,000 12,000,000
Accrued expenses and other liabilities 15,083,453 14,749,917
Long-term borrowings (note 10) 38,177,803 28,939,413
Total liabilities 1,458,811,382 1,466,676,176
Minority interest in consolidated subsidiaries 4,434,307 4,220,328
Redeemable preferred stock, $1 par;
500,000 shares authorized; issuable in series,
none issued -- --
Common stockholders' equity (notes 12, 13
and 15):
Common stock, $5 par; 25,000,000 shares
authorized; 7,653,252 and 7,871,546 shares
issued at December 31, 1995 and 1994,
respectively 38,266,260 39,357,730
Capital surplus 2,020,518 5,210,344
Retained earnings 77,888,451 70,979,317
Unrealized gains (losses) on assets
available for sale 1,358,402 (5,117,046)
Total common stockholders' equity 119,533,631 110,430,345
$1,582,779,320 1,581,326,849
<FN>
Commitments and contingencies (notes 16 and 17).
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Operations
Brenton Banks, Inc. and Subsidiaries
Years Ended December 31 1995 1994 1993
<S> <C> <C> <C>
Interest Income:
Interest and fees on loans (note 4) $ 82,525,850 76,456,964 70,816,746
Interest and dividends on
investments:
Available for sale-taxable 14,577,652 13,032,050 3,143,004
Available for sale-tax-exempt 4,446,824 5,530,626 --
Held to maturity-taxable 4,069,617 1,862,628 16,293,759
Held to maturity-tax-exempt 3,090,185 2,619,333 7,894,225
Interest on federal funds sold
and securities purchased under
agreements to resell 2,263,734 1,705,717 485,912
Other interest income 66,705 15,636 21,934
Total interest income 111,040,567 101,222,954 98,655,580
Interest Expense:
Interest on deposits (note 7) 53,075,352 41,609,766 42,188,138
Interest on federal funds purchased
and securities sold under
agreements to repurchase 1,641,516 2,082,077 1,027,324
Interest on other short-term
borrowings (note 9) 370,642 263,658 1,200
Interest on long-term borrowings
(note 10) 2,620,914 1,816,927 1,210,200
Total interest expense 57,708,424 45,772,428 44,426,862
Net interest income 53,332,143 55,450,526 54,228,718
Provision for loan losses (note 5) 1,864,801 1,987,909 1,251,588
Net interest income after
provision for loan losses 51,467,342 53,462,617 52,977,130
Noninterest Income:
Service charges on deposit accounts 5,547,796 5,424,547 5,846,770
Insurance commissions and fees 2,339,817 2,115,085 1,730,387
Other service charges, collection
and exchange charges, commissions
and fees 3,862,474 3,558,900 4,120,732
Investment brokerage commissions 3,044,107 2,879,401 3,010,004
Fiduciary income 2,425,105 2,160,492 1,912,442
Net gains (losses) from securities
available for sale (note 3) (3,003) (339,624) 595,168
Other operating income 630,444 794,187 647,768
Total noninterest income 17,846,740 16,592,988 17,863,271
Noninterest Expense:
Salaries and wages 22,815,220 24,595,274 22,952,044
Employee benefits (note 14) 4,158,580 4,960,665 4,162,486
Occupancy expense of premises,
net (notes 6 and 16) 4,912,417 4,702,208 3,988,525
Furniture and equipment expense
(notes 6 and 16) 3,747,021 3,060,557 2,622,747
Data processing expense (note 17) 2,379,920 3,083,819 2,526,280
FDIC deposit insurance assessment 1,783,213 2,907,382 2,749,969
Advertising and promotion 1,741,390 1,772,852 1,521,712
Other operating expense 13,513,506 11,574,165 9,891,179
Total noninterest expense 55,051,267 56,656,922 50,414,942
Income before income taxes
and minority interest 14,262,815 13,398,683 20,425,459
Income taxes (note 8) 3,204,687 2,700,640 5,507,849
Income before minority interest 11,058,128 10,698,043 14,917,610
Minority interest 650,774 590,656 667,640
Net income $ 10,407,354 10,107,387 14,249,970
Per common and common equivalent
share (note 12):
Net income $ 1.34 1.27 1.80
Cash dividends .45 .44 .40
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
Brenton Banks, Inc. and Subsidiaries
Years Ended December 31 1995 1994 1993
<S> <C> <C> <C>
Operating Activities:
Net income $ 10,407,354 10,107,387 14,249,970
Adjustments to reconcile net
income to net cash provided
by operating activities:
Provision for loan losses 1,864,801 1,987,909 1,251,588
Depreciation and amortization 4,097,022 3,387,034 3,100,977
Deferred income taxes (25,181) (1,257,325) (531,013)
Net (gains) losses from
securities held for sale 3,003 339,624 (595,168)
(Increase) decrease in accrued
interest receivable and
other assets (1,678,132) (1,477,154) 2,456,544
Increase in accrued expenses,
other liabilities and
minority interest 322,324 3,192,432 496,782
Net cash provided by operating
activities 14,991,191 16,279,907 20,429,680
Investing Activities:
Investment securities available
for sale:
Purchases (242,871,379) (122,339,026) (166,637,785)
Maturities 278,575,538 154,659,319 34,834,992
Sales 5,577,835 21,484,178 98,446,394
Investment securities held to
maturity:
Purchases (121,543,300) (59,384,073) (132,198,518)
Maturities 59,896,255 26,687,613 233,316,414
Net (increase) decrease in
loans held for sale (6,602,817) 2,244,930 147,839
Net (increase) decrease in
loans 28,502,974 (95,225,841) (122,867,264)
Purchases of bank premises
and equipment (9,372,711) (6,893,877) (3,487,797)
Net cash used by investing
activities (7,837,605) (78,766,777) (58,445,725)
Financing Activities:
Net increase in noninterest-
bearing, interest-bearing
demand and savings deposits 51,054,199 40,210,540 19,464,320
Net increase (decrease)
in time deposits (29,394,594) 5,708,876 4,959,049
Net increase (decrease)
in federal funds purchased
and securities sold under
agreements to repurchase (29,596,325) 33,039,408 2,782,728
Net increase (decrease) in
other short-term borrowings (9,500,000) 12,000,000 (119,784)
Proceeds of long-term
borrowings 12,429,000 22,176,030 9,337,000
Repayment of long-term
borrowings (3,190,610) (13,291,530) (2,565,942)
Dividends on common stock (3,498,220) (3,471,901) (3,138,307)
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 187,213 385,767 461,185
Proceeds from issuance
of common stock under the
long-term stock compensation
plan 361,602 -- --
Payment for shares acquired
under common stock repurchase
plan (4,830,111) (850,950) --
Payment for fractional shares
in 3-for-2 stock split -- (4,307) --
Net cash provided (used) by
financing activities (15,977,846) 95,901,933 31,541,443
Net increase (decrease) in
cash and cash equivalents (8,824,260) 33,415,063 (6,474,602)
Cash and cash equivalents at
the beginning of the year 117,848,410 84,433,347 90,907,949
Cash and cash equivalents at
the end of the year $ 109,024,150 117,848,410 84,433,347
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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, 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 15) 161,000 300,185 -- -- 461,185
Issuance of shares of common
stock under the employee stock
purchase plan (note 15) 65,405 295,789 -- -- 361,194
Balance, December 31, 1993 26,265,755 5,598,027 77,517,613 3,036,270 112,417,665
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 12) 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 15) 146,500 239,267 -- -- 385,767
Shares reacquired under
stock repurchase
plan (note 12) (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
Net income -- -- 10,407,354 -- 10,407,354
Net change in unrealized
gains (losses) -- -- -- 6,475,448 6,475,448
Dividends on common stock
$.45 per share -- -- (3,498,220) -- (3,498,220)
Issuance of shares of
common stock under the
stock option plan
(note 15) 98,750 88,463 -- -- 187,213
Issuance of shares of
common stock under the
stock compensation
plan (note 15) 100,445 261,157 -- -- 361,602
Shares reacquired under
stock repurchase plan
(note 12) (1,290,665) (3,539,446) -- -- (4,830,111)
Balance, December 31, 1995 $38,266,260 2,020,518 77,888,451 1,358,402 119,533,631
<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>
<PAGE>
Notes to Consolidated Financial Statements
Brenton Banks, Inc. and Subsidiaries
December 31, 1995, 1994 and 1993
(1) Summary of Significant Accounting Policies and Related Matters
Nature of Operations Brenton Banks, Inc. and subsidiaries (the Company)
engage in retail, commercial, and agricultural banking and related financial
services from 45 locations throughout the state of Iowa. The Company provides
the usual products and services of banking such as deposits, commercial
loans, agribusiness loans, personal loans, and trust services. The Company
also engages in activities that are closely related to banking, including
mortgage banking and investment brokerage.
The accounting and reporting policies of 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 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 $5,282,000 and $5,499,000 at December 31, 1995,
and 1994, 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 $869,000 and $502,000 at December 31,
1995, and 1994, respectively. Such property is carried at the lower of cost
or estimated fair value. Periodic appraisals are obtained to support
carrying values. Net expense of ownership and declines in carrying values
are charged to operating expenses.
Employee Retirement Plan All employees of the Company are eligible, after
meeting certain requirements, for inclusion in the defined contribution
retirement plan. The plan is a combination profit sharing and 401(k) plan.
Retirement plan costs are expensed as the Company contributes to the plan.
The Company does not provide any material post-retirement benefits.
Income Taxes The Company files a consolidated federal income tax return.
Federal income taxes are allocated to the Parent Company and each subsidiary
on the basis of its taxable income or loss included in the consolidated
return.
When income and expense are recognized in different periods for
financial and income tax reporting purposes, deferred taxes are provided for
such temporary differences unless limited.
<PAGE>
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 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 and the stock split,
was 7,752,866 for 1995, 7,951,866 for 1994 and 7,918,560 for 1993.
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 an
adjustment to yield.
Use of Estimates in the Preparation of Financial Statements The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. A significant estimate that is
particularly sensitive to change relates to the allowance for loan losses.
Effect of New Financial Accounting Standards Effective January 1, 1995, the
Company adopted Statement of Financial Accounting Standards (SFAS) 114,
"Accounting by Creditors for Impairment of a Loan," and its amendment
SFAS 118 "Income Recognition and Disclosures." Under the Company's credit
policies, all nonaccrual and restructured loans are considered to meet the
definition of impaired loans under SFAS 114 and 118. Loan impairment is
measured based on the present value of expected future cash flows discounted
at the loan's effective interest rate, except where more practical, at the
observable market price of the loan or the fair value of the collateral if
the loan is collateral dependent. The adoption of SFAS 114 and 118 did not
have a material effect on the financial position or results of operations
of the Company.
Effective October 1, 1995, the Company adopted SFAS 122, "Accounting
for Mortgage Servicing Rights, an Amendment of FASB Statement No. 65." The
adoption of SFAS 122 did not have a material effect on the financial position
or results of operations of the Company.
Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of," was issued in March 1995 and requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset is not
recoverable. Adoption of SFAS 121 is required for fiscal years beginning
after December 15, 1995. The adoption of SFAS 121 is not expected to have a
material effect on the Company's future financial statements.
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," was issued in October 1995 and requires that the
impact of the fair value of employee stock-based compensation plans on net
income and earnings per share be disclosed on a pro forma basis in a footnote
to the consolidated financial statements for awards granted after December
15, 1994, if the accounting for such awards continues to be in accordance
with the Accounting Principles Board Opinion No. 25, "Accounting for Stock
issued to Employees". Alternatively, SFAS 123 permits that the fair value of
employee stock-based compensation plans be recorded as a component of
compensation expense in the statement of income as of the date of grant of
awards related to such plans. Adoption of SFAS 123 is required for fiscal
years beginning after December 15, 1995. The adoption of SFAS 123 is not
expected to have a material effect on the Company's future financial
statements.
(2) 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 $25,022,000 at December 31, 1995.
<PAGE>
(3) Investment Securities
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.
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
December 31, 1995 (In thousands)
Investment securities available for sale:
Taxable investments:
U.S. Treasury securities $ 27,621 161 (7) 27,775
Securities of U.S. government agencies 72,705 214 (97) 72,822
Mortgage-backed and related securities 190,953 927 (852) 191,028
Other investments 9,089 -- (18) 9,071
Tax-exempt investments:
Obligations of states and
political subdivisions 94,014 1,893 (233) 95,674
$394,382 3,195 (1,207) 396,370
Investment securities held to maturity:
Taxable investments:
Securities of U.S. government agencies $ 48,595 375 (44) 48,926
Mortgage-backed and related securities 3,653 32 (2) 3,683
Other investments 6,145 25 (4) 6,166
Tax-exempt investments:
Obligations of states and political
subdivisions 49,689 794 (127) 50,356
$108,082 1,226 (177) 109,131
December 31, 1994
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
</TABLE>
Gross gains of $19,000 and gross losses of $22,000 were recorded on sales of
investment securities held for sale in 1995, gross gains of $68,000 and gross
losses of $408,000 were recorded in 1994, and gross gains of $944,000 and
gross losses of $349,000 were recorded in 1993.
Other investments at December 31, 1995, and 1994, 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 $7,269,000 and $9,549,000 at December 31,
1995, and 1994, respectively.
Under provisions of the Financial Accounting Standards Board Special
Report entitled "A Guide to Implementation of Statement 115 on Accounting for
Certain Investments in Debt and Equity Securities," the Company transferred
securities with amortized costs of $48,049,000 in December 1995 from held to
maturity to available for sale. Unrealized gains related to such securities
transferred were $315,000.
<PAGE>
The scheduled maturities of investment securities at December 31, 1995
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 $108,311 108,259
Due after one year through five years 208,035 208,751
Due after five years through ten years 36,408 37,063
Due after ten years 41,628 42,297
$394,382 396,370
Investment securities held to maturity:
Due in one year or less $ 34,851 34,857
Due after one year through five years 39,304 39,441
Due after five years through ten years 25,960 26,441
Due after ten years 7,967 8,392
$108,082 109,131
<FN>
Investment securities carried at $163,418,000 and $153,405,000 at December
31, 1995 and 1994, respectively, were pledged to secure public and other
funds on deposit and for other purposes.
</TABLE>
(4) Loans
A summary of loans follows:
<TABLE>
<CAPTION>
(In thousands) December 31, 1995 1994
<S> <C> <C>
Real estate loans:
Commercial construction
and land development $ 38,123 26,549
Secured by 1-4 family
residential property 319,430 389,713
Other 163,739 143,960
Loans to farmers 68,543 71,853
Commercial and industrial loans 119,368 115,280
Loans to individuals for personal
expenditures, net of unearned
income of $313 and $751
at December 31, 1995 and
1994, respectively 199,489 221,627
All other loans 1,501 1,232
$910,193 970,214
</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, 1995, and 1994, the Company had nonaccrual loans of
$2,639,000 and $3,784,000, respectively, and restructured loans of $178,000
and $298,000, respectively. The average balance of nonaccrual and
restructured loans for the year ended December 31, 1995 was $3,353,000, and
the allowance for loan losses related to these impaired loans was $425,000.
Interest income recorded during 1995, 1994 and 1993 on nonaccrual and
restructured loans was $136,000, $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 $418,000 in 1995, $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, 1994 $5,334
Additional loans 2,154
Loan payments (589)
Balance at December 31, 1995 $6,899
</TABLE>
(5) Allowance for Loan Losses
A summary of activity in the allowance for loan losses follows:
<TABLE>
<CAPTION>
(In thousands) 1995 1994 1993
<S> <C> <C> <C>
Balance at beginning of year $10,913 9,818 9,006
Provision 1,865 1,988 1,252
Recoveries 1,669 1,549 1,091
Loans charged off (3,377) (2,442) (1,531)
Balance at end of year $11,070 10,913 9,818
</TABLE>
(6) Bank Premises and Equipment
A summary of bank premises and equipment follows:
<TABLE>
<CAPTION>
(In thousands) December 31, 1995 1994
<S> <C> <C>
Land $ 3,614 3,204
Buildings and leasehold improvements 32,045 24,791
Furniture and equipment 21,756 18,137
Construction in progress 33 2,472
57,448 48,604
Less accumulated depreciation 24,598 21,500
$32,850 27,104
</TABLE>
Depreciation expense included in operating expenses amounted to $3,626,000,
$2,938,000 and $2,621,000 in 1995, 1994 and 1993,respectively.
<PAGE>
(7) Deposits
Time deposits included deposits in denominations of $100,000 or more of
$64,014,000 and $73,349,000 at December 31, 1995, and 1994, respectively.
A summary of interest expense by deposit classification follows:
<TABLE>
<CAPTION>
(In thousands) 1995 1994 1993
<S> <C> <C> <C>
Demand $11,842 5,418 4,552
Savings 6,638 6,878 7,697
Time deposits of $100,000
or more 4,193 3,110 2,091
Other time deposits 30,402 26,204 27,848
$53,075 41,610 42,188
</TABLE>
The Company made cash interest payments of $55,229,000, $46,850,000 and
$44,141,000 on deposits and borrowings in 1995, 1994 and 1993, respectively.
(8) Income Taxes
The current and deferred income tax provisions included in the consolidated
statements of operations follow:
<TABLE>
<CAPTION>
1995 (In thousands) Current Deferred Total
<S> <C> <C> <C>
Federal $2,728 (76) 2,652
State 502 51 553
$3,230 (25) 3,205
1994
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
</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
$2,500,000, $2,671,000 and $4,514,000 to the IRS, and $737,000, $1,226,000
and $1,301,000 to the state of Iowa in 1995, 1994 and 1993, 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 1995 and 1994 and 35
percent in 1993, and income tax expense follow:
<TABLE>
<CAPTION>
(In thousands) 1995 1994 1993
<S> <C> <C> <C>
At statutory rate $ 4,849 4,556 7,149
Increase (reduction):
Tax-exempt interest (2,566) (2,768) (2,766)
State taxes, net of federal
benefit 365 503 764
Nondeductible interest expense
to own tax-exempts 431 363 361
Other, net 126 47 --
$ 3,205 2,701 5,508
</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, 1995, or 1994. A summary of the temporary differences resulting
in deferred income taxes and the related tax effect of each follows:
<TABLE>
<CAPTION>
(In thousands) 1995 1994
<S> <C> <C>
Provision for loan losses $3,985 3,750
Unrealized (gains) losses on
assets available for sale (694) 3,191
Restructuring charge -- 970
Depreciation (452) (541)
Stock compensation plan 372 418
Real estate mortgage loan
points deferred (479) (357)
Alternative minimum tax credit
carry-forward 442 --
Other, net 272 (125)
$3,446 7,306
</TABLE>
(9) Other Short-Term Borrowings
The Company had short-term borrowings with the Federal Home Loan Bank of Des
Moines (FHLB) totaling $2,500,000 and $12,000,000 at December 31, 1995, and
1994, respectively. The average rate on these borrowings at December 31,
1995, was 4.68 percent. These borrowings were secured by residential mortgage
loans equal to 150 percent of the borrowings and FHLB stock.
The Parent Company has arranged an unsecured, available line of credit of
$2,000,000 which was unused at December 31, 1995. It is at the prime
interest rate and is subject to annual review and renewal.
(10) Long-Term Borrowings
Long-term borrowings consisted of the following:
<TABLE>
<CAPTION>
(In thousands) December 31, 1995 1994
<S> <C> <C>
Capital notes, 6.00% to 10.00%
Total Parent Company $12,435 12,644
Borrowings from FHLB, average rate
of 6.42% at December 31, 1995 25,650 16,150
Mortgage debt, average rate of
7.47% at December 31, 1995 93 100
Other -- 45
$38,178 28,939
</TABLE>
<PAGE>
Mortgage debt was secured by real property with a carrying value of $115,000
at December 31, 1995. Borrowings from the FHLB were secured by residential
mortgage loans equal to 150 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, 1995, follow:
<TABLE>
<CAPTION>
Parent
(In thousands) Company Consolidated
<S> <C> <C>
1996 $ 910 918
1997 1,603 17,762
1998 1,177 10,687
1999 1,736 1,786
2000 1,213 1,216
Thereafter 5,796 5,809
$12,435 38,178
</TABLE>
(11) Fair Value of Financial Instruments
The estimated fair values of the Company's financial instruments were as
follows:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
Recorded Fair Recorded Fair
(In thousands) Amount Value Amount Value
<S> <C> <C> <C> <C>
Financial assets:
Cash and due from banks $ 71,159 71,159 58,388 58,388
Interest-bearing deposits with banks 265 265 64 64
Federal funds sold and securities
purchased under agreements to resell 37,600 37,600 59,396 59,396
Investment securities 504,452 505,501 443,693 441,493
Loans held for sale 8,707 8,707 2,104 2,104
Loans, net 899,123 910,338 959,301 950,861
Financial liabilities:
Deposits $1,361,943 1,367,680 1,340,283 1,341,969
Federal funds purchased, securities
sold under agreements to repurchase
and other short-term borrowings 43,607 43,607 82,704 82,704
Long-term borrowings 38,178 40,610 28,939 28,061
Off-balance-sheet assets (liabilities):
Commitments to extend credit $ -- -- -- --
Letters of credit -- (63) -- (42)
Interest rate swaps -- (224) -- 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.
<PAGE>
(12) 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.
As part of the Company's ongoing stock repurchase plan, in 1995 the
Board of Directors authorized additional stock repurchases of $5,000,000 of
the Company's common stock. For the years end December 31, 1995, and 1994,
the Company repurchased 258,133 and 44,800 shares, respectively, at a total
cost of $4,830,111 and $850,950.
(13) Dividend Restrictions
The Parent Company derives a substantial portion of its cash flow, including
that available for dividend payments to stockholders, from the subsidiary
banks in the form of dividends received. State 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, 1995, were approximately $15 million.
(14) Employee Retirement Plan
The Company provides a defined contribution retirement plan for the benefit
of employees. The plan is a combination profit sharing and 401(k) plan. All
employees 21 years of age or older and employed by the Company for at least
one year are eligible for the plan. The Company contributes 4 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 1995, 1994 and 1993
amounted to $1,263,000, $1,367,000 and $1,211,000, respectively. The Company
offers no material post-retirement benefits.
(15) Stock Plans
A total of 349,551 shares were granted over the past four years to key
management personnel under the Company's long-term stock compensation plan.
Under provisions of the plan, no grants will be made after 1995. 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. The total stock compensation
expense associated with this plan was $425,000, $(102,000) and $683,000
for 1995, 1994 and 1993, respectively and changes in the outstanding grant
shares during 1995 were as follows (restated for the May 1994, 3-for-2
stock split in the form of a stock dividend):
<TABLE>
<CAPTION>
Performance 1992 to 1993 to 1994 to 1995 to
Period 1994 1995 1996 1997
<S> <C> <C> <C> <C>
December 31, 1992 91,493 -- -- --
Granted - 1993 -- 78,644 -- --
December 31, 1993 91,493 78,644 -- --
Granted - 1994 -- -- 90,293 --
Forfeited - 1994 -- (1,989) -- --
December 31, 1994 91,493 76,655 90,293 --
Granted - 1995 -- -- -- 89,121
Forfeited - 1995 -- (8,378) (13,385) (6,625)
Expired - 1995 (59,471) -- -- --
Vested - 1995 (32,022) -- -- --
Outstanding grant
shares at
December 31, 1995 -- 68,277 76,908 82,496
</TABLE>
For the performance period 1993 to 1995, 23,897 shares vested and 44,380
shares expired on January 1, 1996.
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.
Changes in options outstanding and exercisable during 1995, 1994 and
1993 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, 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 19.65
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 4.42-19.65
Vested - 1995 3,000 -- 8.79-9.46
Exercised - 1995 (19,750) (19,750) 4.42
Forfeited - 1995 -- (12,600) 8.79-19.65
December 31, 1995
(12,600 shares
available for grant) 123,700 123,700 $4.42-9.46
</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 on four
defined purchase dates during the year. During 1995, 21,032 shares of common
stock were purchased by employees under this plan.
<PAGE>
(16) Lease Commitments
Rental expense included in the consolidated statements of operations amounted
to $1,937,000, $1,799,000 and $1,373,000 in 1995, 1994 and 1993,
respectively. Future minimum rental commitments for all noncancelable leases
with terms of one year or more total approximately $1,200,000 per year
through 2000, $500,000 per year through 2005, $200,000 per year through 2010,
and $40,000 per year through 2015, with a total commitment of $9,700,000.
(17) Commitments and Contingencies
In the normal course of business, the Company is party to financial
instruments necessary to meet the financing needs of customers, which are not
reflected on the consolidated statements of condition. These financial
instruments include commitments to extend credit, standby letters of credit
and interest rate swaps. The Company's risk exposure in the event of
nonperformance by the other parties to these financial instruments is
represented by the contractual amount of these instruments. The Company uses
the same credit policies in making commitments as it does in making loans.
Commitments to extend credit are legally binding agreements to lend
to customers. Commitments generally have fixed expiration dates and may
require payment of a fee. Based upon management's credit assessment of the
customer, collateral may be obtained. The type and amount of collateral
varies, but may include real estate under construction, property, equipment
and other business assets. In many cases, commitments expire without being
drawn upon, so the total amount of commitments does not necessarily represent
future liquidity requirements. At December 31, 1995, the Company had
outstanding commitments to extend credit of $166 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, 1995, there
were $20,513,000 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.
The Company has entered into two interest rate swap agreements with a
notional value of $10,960,000 at December 31, 1995, involving the exchange of
a fixed for a floating rate interest payment stream. The interest rate swap
agreements subject 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 counterparties was evaluated by the
Company's loan committee prior to entering into the agreements. The
agreements run through 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.
This distribution to savers would have priority over distribution to the
Parent Company. The Company does not anticipate such a liquidation.
During 1995, the Company amended the data processing agreement with ALLTEL
Financial Information Services, Inc. (ALLTEL), formerly Systematics,
Inc., whereby ALLTEL manages and operates the Company's data processing
facility. The contract involves fixed payments of $2,250,000 in 1996 and
$2,400,000 in 1997 through 2001 and $1,200,000 in 2002. These fixed payments
will be adjusted for inflation and volume fluctuations.
Congress is considering proposed legislation to recapitalize the Savings
Association Insurance Fund (SAIF). This proposed legislation would assess
a one-time premium on all SAIF deposits and would be expensed when and
if legislation is passed. The Company has approximately $225 million of SAIF
deposits.
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.
(18) Restructuring Charge
During the fourth quarter of 1994, the Company finalized plans for a
strategic restructuring program. This plan resulted in a special charge of
$2.6 million ($1.7 million after tax or $.21 per share), in 1994. A summary
of the estimated costs expensed in 1994 and the actual costs incurred in 1995
follows:
<TABLE>
<CAPTION>
1994 Estimated 1995 Actual
Costs Costs
<S> <C> <C>
Salaries and wages $1,089,000 $ 565,263
Employee benefits 289,000 83,409
Occupancy expense 192,000 --
Data processing expense 527,500 389,432
Abandonment losses 267,000 164,945
Legal, regulatory and other 280,500 409,085
$2,645,000 $1,612,134
</TABLE>
The difference between the estimated costs recorded in 1994 and the actual
costs incurred was credited or charged to the above expense categories in the
fourth quarter of 1995.
<PAGE>
(19) Brenton Banks, Inc. (Parent Company) Condensed Financial Information
Statements of Condition
<TABLE>
<CAPTION>
December 31 (In thousands) 1995 1994
<S> <C> <C>
Assets
Cash and deposits $ 128 34
Short-term investments 7,500 8,500
Advances to bank subsidiaries 165 720
Investments in:
Bank subsidiaries 119,325 109,012
Bank-related subsidiaries 43 332
Excess cost over net assets 1,900 1,974
Premises and equipment 1,375 1,020
Other assets 3,138 3,235
$133,574 124,827
Liabilities and Stockholders'
Equity
Accrued expenses payable
and other liabilities $ 1,605 1,753
Long-term borrowings 12,435 12,644
Common stockholders' equity 119,534 110,430
$133,574 124,827
</TABLE>
Statements of Operations
<TABLE>
<CAPTION>
Years Ended December 31
(In thousands) 1995 1994 1993
<C> <C> <C> <C>
Income
Dividends from subsidiaries $ 8,997 11,691 8,150
Interest income 442 317 84
Management fees 1,634 1,222 1,580
Other operating income 2,644 2,128 1,881
13,717 15,358 11,695
Expense
Salaries and benefits 4,021 3,466 3,976
Interest on long-term borrowings 1,046 1,044 1,108
Other operating expense 2,006 2,263 1,998
7,073 6,773 7,082
Income before income taxes and
equity in undistributed earnings
of subsidiaries 6,644 8,585 4,613
Income taxes (759) (1,083) (1,175)
Income before equity in undistributed
earnings of subsidiaries 7,403 9,668 5,788
Equity in undistributed earnings of
subsidiaries 3,004 439 8,462
Net income $10,407 10,107 14,250
</TABLE>
<PAGE>
(19) Brenton Banks, Inc. (Parent Company) Condensed Financial Information
Statements of Cash Flows
<TABLE>
<CAPTION>
Years Ended December 31
(In thousands) 1995 1994 1993
<S> <C> <C> <C>
Operating Activities
Net income $10,407 10,107 14,250
Adjustments to reconcile net
income to net cash provided
by operating activities:
Equity in undistributed earnings
of subsidiaries (3,004) (439) (8,462)
Depreciation and amortization 230 230 188
(Increase) decrease in other assets 49 (370) (1,154)
Increase (decrease) in accrued
expenses payable and other
liabilities (148) (373) 641
Net cash provided by operating
activities 7,534 9,155 5,463
Investing Activities
(Increase) decrease in short-term
investments 1,000 (5,000) (3,500)
Redemption (purchase) of subsidiary
equity, net 156 (200) 886
Advances to subsidiaries (97) (270) (400)
Purchase of premises and equipment,
net (512) (648) (119)
Net cash provided (used) by
investing activities 547 (6,118) (3,133)
Financing Activities
Net proceeds (repayment) of
long-term borrowings (209) 622 (74)
Proceeds from issuance of common
stock under the long-term
stock compensation plan 362 -- --
Proceeds from issuance of common
stock under the stock option plan 188 386 822
Payment for shares acquired under
common stock repurchase plan (4,830) (851) --
Payment for fractional shares
in 3-for-2 stock split -- (4) --
Dividends on common stock (3,498) (3,472) (3,138)
Net cash provided (used) by
financing activities (7,987) (3,319) (2,390)
Net increase (decrease) in cash
and interest-bearing deposits 94 (282) (60)
Cash and interest-bearing deposits
at the beginning of the year 34 316 376
Cash and interest-bearing deposits
at the end of the year $ 128 34 316
</TABLE>
<PAGE>
(20) Unaudited Quarterly Financial Information
The following is a summary of unaudited quarterly financial information.
(In thousands, except per common and common equivalent share data)
<TABLE>
<CAPTION>
1995
Three months ended March 31 June 30 Sept. 30 Dec. 31*
<S> <C> <C> <C> <C>
Interest income $26,611 27,852 28,442 28,135
Interest expense 13,597 14,807 14,670 14,634
Net interest income 13,014 13,045 13,772 13,501
Provision for loan losses 460 459 486 460
Net interest income after
provision for loan losses 12,554 12,586 13,286 13,041
Noninterest income 4,271 4,499 4,379 4,697
Noninterest expense 13,681 13,736 13,402 14,232
Income before income taxes
and minority interest 3,144 3,349 4,263 3,506
Income taxes 573 661 1,143 828
Minority interest 121 124 122 283
Net income $ 2,450 2,564 2,998 2,395
Per common and common
equivalent share:
Net income $ .31 .33 .39 .31
</TABLE>
<TABLE>
<CAPTION>
1994
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
<FN>
*See footnote 18 regarding the restructure charge.
</TABLE>
<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
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, 1995, and 1994,
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, 1995. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Brenton Banks, Inc. and subsidiaries at December 31, 1995, and 1994, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with generally
accepted accounting principles.
/s/
KPMG Peat Marwick LLP
Des Moines, Iowa
February 9, 1996
<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 1,605 common
stockholders of record on December 31, 1995.
<TABLE>
<CAPTION>
Market and Dividend Information
1995 High Low Dividends
<S> <C> <C> <C>
1st quarter $18 3\4 17 3\4 .11
2nd quarter 19 17 3\4 .11
3rd quarter 20 1\2 17 7\8 .11
4th quarter 22 3\4 19 1\4 .12
</TABLE>
<TABLE>
<CAPTION>
1994 High Low Dividends
<S> <C> <C> <C>
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
</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 Investments, Inc.
Keefe, Bruyette & Woods, Inc.
Principal Financial Securities
S.J. Wolfe & Co.
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 headquarters.
Stockholder Information
Corporate Headquarters
Suite 300, Capital Square
400 Locust Street
Des Moines, Iowa 50309
Telephone 515/237-5100
Annual Shareholders' Meeting
May 8, 1996, 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, Gross,
Baskerville, Schoenebaum
and Walker, 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
Design: Designgroup, Inc.
Photography: Scott Sinklier
<PAGE>
Corporate Structure
BRENTON BANKS, INC.
BOARD OF DIRECTORS
C. Robert Brenton
Chairman of the Board
Brenton Banks, Inc.
William H. Brenton
Past Chairman (21 Years)
Past Chairman, Executive
Committee (5 Years)
Past President (5 Years)
Brenton Banks, Inc.
J.C. Brenton
Past President
Brenton Banks, Inc.
Gary M. Christensen
President & CEO
Pella Corporation
Robert L. DeMeulenaere
President
Brenton Banks, Inc.
R. Dean Duben
Vice Chairman of the Board
Brenton Bank, Davenport
Hubert G. Ferguson
Financial Services Consultant,
New Brighton, Minnesota
BRENTON BANKS, INC.
EXECUTIVE OFFICERS
C. Robert Brenton
Chairman of the Board
Robert L. DeMeulenaere
President
Steven T. Schuler
Chief Financial Officer/Treasurer/Secretary
BRENTON BANK
SENIOR OFFICERS AND
LINE OF BUSINESS MANAGERS
C. Robert Brenton
Chairman of the Board
Robert L. DeMeulenaere
President
Larry A. Mindrup
Chief Banking Officer
President, Des Moines
Woodward G. Brenton
Chief Commercial Banking Officer
President, Davenport
Charles N. Funk
Chief Investment/ALCO Officer
Ronald D. Larson
Regional President Eastern Iowa Division
President, Cedar Rapids
Marc J. Meyer
Regional President Agricultural Division
President, Perry
Phillip L. Risley
Chief Administrative Officer
Cashier
Steven T. Schuler
Chief Financial Officer/Treasurer/Secretary
Norman D. Schuneman
Chief Credit Officer
John H. Anderson
Chief Operating Officer, Davenport
Michael A. Cruzen
President, Knoxville
Thomas J. Friedman
President, Ankeny
Kevin Z. Geis
President, Brenton Savings Bank, FSB
Ames
Robert L. German
President, Dallas Center
John M. Hand
President, Emmetsburg
Michael D. Hunter
President, Jefferson
V. Blaine Lenz
President, Eagle Grove
James L. Lowrance
President, Marshalltown
Clay A. Miller
President, Clarion
Daryl K. Petty
President, Adel
Clark H. Raney
President, Indianola
Roger D. Winterhof
President, Grinnell
John R. Amatangelo
President, Operations and
Technology Division
Kenneth R. Brenton
President, Brenton Mortgages
Gary D. Ernst
President, Trust Division
Marsha A. Findlay
Senior Vice President, Des Moines
Senior Retail Banking Officer
Douglas F. Lenehan
President, Diversified Commercial Services Division
Loras J. Neuroth
President, Brenton Insurance
Elizabeth M. Piper/Bach
President, Brokerage
Catherine Reed
Senior Marketing Officer
<PAGE>
Board Of Directors - One Bank
Pictures (three pictures showing Bank Directors):
Robert L. DeMeulenaere, President
Brenton Banks, Inc., Des Moines
John Kibbie, Farmer and State Senator
Emmetsburg
James L. Daubendiek, President
Jefferson Telephone Co., Jefferson
Ron Swanson, Farmer
Clarion
Dr. Beverly Nelson, Executive Vice President
Valley Community College and State
Representative, Marshalltown
Richard J. Oggero, Chairman
Weitz Co., Inc., Des Moines
Paul Buchanan, Co-owner
Weise Corp., Perry
James E. Van Werden, Attorney
Adel
Gayle Nelson Vogel, Attorney
Knoxville
C. Robert Brenton, Chairman
Brenton Banks, Inc., Des Moines
William H. Brenton, Director
Brenton Banks, Inc., Des Moines
Arlen Schrum, CPA
Schull & Co., Indianola
Bruce G. Kelly, Chief Executive Officer
Employers Mutual Co., Des Moines
Douglas Pyle, CPA Partner
D. D. Pyle Co., Ames
Not Pictured:
James Altorfer, President
Altorfer Machinery, Cedar Rapids
Charles A. Ruhl, Jr., Executive Vice President
Ruhl & Ruhl Realtors, Davenport
<PAGE>
Front of the back cover - blue background with picture depicting State of Iowa
and the locations of bank offices within Iowa.
Brenton Bank Locations - Iowa
Adel Dexter
Albion Eagle Grove
Ames, 424 Main Street Emmetsburg
Ames, North Grand Mall Granger
Ankeny Grinnell
Ayrshire Indianola
Cedar Rapids, 150 First Avenue, NE Iowa City
Cedar Rapids, 31010 Williams Blvd., SW Jefferson
Cedar Rapids, 1800 51st Street, NE Johnston
Cedar Rapids, 2300 Edgewood Road, SW Knoxville
Clarion Mallard
Clive, 10101 University Marion
Clive, 13631 University Marshalltown, 102 South Center
Dallas Center Marshalltown, 1724 South Center
Davenport, 1606 Brady Perry
Davenport, Village Shopping Center Redfield
Davenport, West Third and Division Rowan
Davenport, 53rd and Utica Ridge Story City
Des Moines, 400 Locust Street Urbandale
Des Moines, 29th & Ingersoll Van Meter
Des Moines, 2805 Beaver Waukee
Des Moines, S.W. 9th and McKinley Woodward
Des Moines, 4303 Fleur
<PAGE>
Back cover - black background with the words:
Brenton Banks, Inc.
Suite 300, Capital Square
400 Locust Street
Des Moines, Iowwa 50309
Telephone 515/237-5100
<PAGE>
Appendix to Annual Report
Referencing Graphic and Image Material
All graphic and image material has been described in text of the annual
report. Set forth below is a listing of such material.
1. Cover - first unnumbered page of the Annual Report.
2. Bar graphs, second page of the Annual Report, showing Net Income Per
Common Share from 1991-1995; Dividends Per Common Share from 1991-1995;
and Total Assets (in millions) from 1991-1995.
3. Photograph on page 3 of the Annual Report.
4. Photograph on page 4 of the Annual Report.
5. Text, centered on page, on page 5 of the Annual Report.
6. Photograph on page 7 of the Annual Report.
7. Text, centered on page, on page 8 of the Annual Report.
8. Text, centered on page, on page 9 of the Annual Report.
9. Text, centered on page, on page 10 of the Annual Report.
10. Photograph on page 11 of the Annual Report.
11. Bar graph showing Primary Capital Ratio and Tier 1 Leverage Capital
Ratio expressed as percentages from 1991-1995, on page 12 of the Annual
Report, and Net Interest Margin for 1991-1995.
12. Bar graph showing the Return on Average Assets and Return on Average
Equity from 1991-1995, both expressed in terms of a percentage, on page 14
of the Annual Report.
13. Bar graph showing the Nonperforming Loans (in thousands) and Net
Noninterest Margin from 1991-1995, on page 17 of the Annual Report.
14. Three photographs on page 38 of the Annual Report.
15. Map on page 39 of the Annual Report.
<PAGE>
Exhibit 21
Subsidiaries.
150
<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 Savings Bank, FSB United States
Ames, Iowa
Brenton Bank Iowa
Des Moines, Iowa
Non-Bank Subsidiaries
Brenton Brokerage Services, Inc. Iowa
Des Moines, Iowa
Brenton Insurance Services, Inc. Iowa
Des Moines, Iowa
Brenton Mortgages, Inc. Iowa
Des Moines, Iowa
Brenton Insurance Inc. Iowa
Marshalltown, Iowa
Brenton Independent Insurance Iowa
Services of Tama County, Inc.
Toledo, Iowa
Brenton Realty Services, Ltd. Iowa
Marshalltown, Iowa
151
<PAGE>
Exhibit 23
Consent of KPMG Peat Marwick LLP to the incorporation of
their report dated February 9, 1996, relating to certain
consolidated statements of condition of Brenton Banks, Inc.
into the Registration Statement on Form S-8 of Brenton
Banks, Inc.
152
<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 9, 1996,
relating to the consolidated statements of condition of Brenton Banks, Inc.
and subsidiaries as of December 31, 1995 and 1994 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, 1995 which report appears in the December 31, 1995 annual report
on Form 10-K of Brenton Banks, Inc.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Des Moines, Iowa
March 25, 1996
153
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
DECEMBER 31, 1995 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-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 71,159
<INT-BEARING-DEPOSITS> 265,000
<FED-FUNDS-SOLD> 37,600,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 396,370,000
<INVESTMENTS-CARRYING> 108,082,000
<INVESTMENTS-MARKET> 109,131,000
<LOANS> 918,901,000
<ALLOWANCE> 11,070,000
<TOTAL-ASSETS> 1,582,779,000
<DEPOSITS> 1,361,943,000
<SHORT-TERM> 43,607,000
<LIABILITIES-OTHER> 19,518,000
<LONG-TERM> 38,178,000
<COMMON> 38,266,000
0
0
<OTHER-SE> 81,267,000
<TOTAL-LIABILITIES-AND-EQUITY> 1,582,779,000
<INTEREST-LOAN> 82,526,000
<INTEREST-INVEST> 26,184,000
<INTEREST-OTHER> 2,330,000
<INTEREST-TOTAL> 111,040,000
<INTEREST-DEPOSIT> 53,075,000
<INTEREST-EXPENSE> 4,633,000
<INTEREST-INCOME-NET> 53,332,000
<LOAN-LOSSES> 1,865,000
<SECURITIES-GAINS> (3,000)
<EXPENSE-OTHER> 55,702,000
<INCOME-PRETAX> 13,612,000
<INCOME-PRE-EXTRAORDINARY> 13,612,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,407,000
<EPS-PRIMARY> 1.34
<EPS-DILUTED> 1.34
<YIELD-ACTUAL> 7.64
<LOANS-NON> 2,639,000
<LOANS-PAST> 2,802,000
<LOANS-TROUBLED> 178,000
<LOANS-PROBLEM> 5,619,000
<ALLOWANCE-OPEN> 10,913,000
<CHARGE-OFFS> 3,377,000
<RECOVERIES> 1,669,000
<ALLOWANCE-CLOSE> 11,070,000
<ALLOWANCE-DOMESTIC> 11,070,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
