FORM 10-K
UNITED STATES
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
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 12 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 200, 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 10, 1997, was $130,708,000
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the most recent practicable date, March 10, 1997.
8,036,541 shares Common Stock, $5 par value
DOCUMENTS INCORPORATED BY REFERENCE
The Appendix to the Proxy Statement for the 1995 calendar year is
incorporated by reference into Part I, Part II Part IV 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, 1996, is incorporated by reference into Part III hereof to the
extent indicated in such Part.
1 of 290 Total Pages
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TABLE OF CONTENTS
PART I
Page
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(A) General Description . . . . . . . . . . . . . . . . . . . . 5
(B) Recent Developments . . . . . . . . . . . . . . . . . . . . 5
(C) Affiliated Banks . . . . . . . . . . . . . . . . . . . . . 7
(D) Bank-Related Subsidiaries and Affiliates . . . . . . . . . 7
(E) Executive Officers and Policymakers of the
Registrant . . . . . . . . . . . . . . . . . . . . . . . . 7
(F) Employees . . . . . . . . . . . . . . . . . . . . . . . . . 9
(G) Supervision and Regulation . . . . . . . . . . . . . . . . 9
(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,
1996, the Parent Company had direct control of 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. Both of the affiliated banks are members of the
Federal Deposit Insurance Corporation.
Brenton Banks, Inc. and its subsidiaries (the "Company") engage in retail,
commercial and agricultural banking and related financial services from 45
locations throughout Iowa. 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 services provided by the Company are accepting deposits and
making loans. The significant loan categories are commercial, commercial
real estate, agribusiness and personal. Commercial loans are made to
business enterprises principally to finance inventory, operations or other
assets at terms generally up to 5 years. The principal risk involves the
customers' management skills and general economic conditions. Commercial
real estate mortgage loans are routinely made for terms up to 20 years for
real property used in a borrower's business. Repayment primarily depends
upon the financial performance and the cashflow of the business enterprise.
Declines in commercial real estate values could ultimately affect the
collectability of these types of loans. Agri-business loans are made to
farmers for financing crop inputs, equipment, livestock and real property
used in farming activities. Agri-business loans are also made to
businesses related to or that support the production and sale of
agricultural products. Weather conditions and government policies have
major influences on agricultural financial performance and ultimately the
borrower's ability to repay loans. Personal loans are made to individuals
primarily on a secured basis to finance such items as residential
mortgages, home improvements, personal property, education and vehicles.
Unsecured personal loans are made on a limited basis. The individual's
credit worthiness and economic conditions affecting the job market are the
primary risks associated with personal loans. Personal loans generally do
not exceed 5 years. For all loan types, the primary criteria used in
determining whether to make a loan is the borrower's ability to repay,
which is based upon a cash flow analysis and willingness to pay supported
by a historical review of credit management.
The principal markets for these loans are businesses and individuals. Iowa
has two primary regional market segments. One market consists of selected
metropolitan areas across the state which consist of service and
manufacturing industries. The other market involves rural areas which are
predominately agricultural in nature. These loans are made by 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, investment, insurance and real estate
brokerage.
(B) Recent Developments.
Common Stock Dividend. On October 7, 1996, the Board of Directors declared
a ten percent common stock dividend to stockholders of record on October
17, 1996. Fractional shares resulting from this stock dividend were paid
in cash.
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Stock Option Plan. On September 5, 1996, a special meeting of stockholders
was held to approve the Brenton Banks, Inc. 1996 Stock Option Plan (the
"Plan"). The Plan, which was approved, authorizes the granting of options
on up to 550,000 shares (all share and per-share data has been adjusted for
the ten percent common stock dividend) of the Company's common stock to key
employees 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
Compensation Committee of the Board of Directors. There were 470,800
options granted under the Plan during 1996 to 42 employees of the Company
with option prices ranging from $22.159 to $23.625 per share.
Common Stock Repurchase Plan. As part of the Company's ongoing stock
repurchase plan, in 1996 the Board of Directors authorized additional stock
repurchases of $10,000,000 of the Company's common stock. For the years
ended December 31, 1996, 1995 and 1994, the Company repurchased 347,700,
258,133 and 44,800 shares, respectively, at total costs of $8,248,331,
$4,830,111 and $850,950.
Regulatory Developments. The Deposit Insurance Funds Act of 1996 ("Funds
Act") was enacted during 1996. The Funds Act required the FDIC to impose a
one-time special assessment on Savings Association Insurance Fund (SAIF)
assessable deposits held by institutions as of March 31, 1995, and equaled
approximately 65.7 basis points per $100 of SAIF-insured deposits. The
Company's assessment totaled $1,288,000. Deposits of Brenton Savings Bank,
FSB, as well as savings and loan deposits acquired from the RTC in 1990 and
1991, were included in this assessment. As a result of the special
assessment, the SAIF was capitalized at the target Designated Reserve Ratio
(DRR) of 1.25 percent of estimated insured deposits on October 1, 1996.
Assessment rates were subsequently lowered to a level to maintain the DRR.
The Funds Act also separated the Financing Corporation (FICO) assessment
to service the interest on its bond obligations from the SAIF assessment.
The amount assessed on individual institutions by FICO will be in addition
to the amount paid for deposit insurance. FICO assessment rates for the
first semiannual period of 1997 were set at 1.30 basis points annually for
Bank Insurance Fund (BIF) assessable deposits and 6.48 basis points
annually for SAIF assessable deposits. These rates are adjustable to
reflect changes in assessments bases for BIF and SAIF.
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 Bank, FSB. The move of this
subsidiary was made to accommodate the funding of residential real estate
loans with borrowings from the Federal Home Loan Bank.
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.
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(C) Affiliated Banks.
The 2 affiliated banks had 44 banking locations at December 31, 1996,
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 Des Moines, Iowa. Des Moines
is the largest city in Iowa. In addition to its main banking location,
Brenton Bank has 40 offices located throughout Iowa and provides services
to customers in numerous counties across the state.
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.
(D) Bank-Related Subsidiaries and Affiliates.
Brenton Investments, 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, 1996,
this subsidiary had 37 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 originates
and services mortgage loans sold to institutional investors and the
mortgage loan portfolios of the affiliated banks.
Brenton Insurance, Inc. and Brenton Realty Services, Ltd. are wholly-owned
subsidiaries of Brenton Bank. These subsidiaries operate real estate
brokerage agencies and insurance brokerage agencies handling individual and
group life, annuity, health, fire, crop, homeowner's, automobile and
liability insurance.
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 10, 1997, 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 66 Chairman of the Board 1990
Des Moines, Iowa
Robert L. DeMeulenaere 57 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
</TABLE>
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<TABLE>
<CAPTION>
Company Position
Name and Address Age Position or Subsidiary Commenced Other Positions
________________ ___ ______________________ _________ _______________
<S> <C> <C> <C> <C>
Larry A. Mindrup 55 Chief Banking Officer - 1995 CEO, Brenton Savings Bank, FSB; Ames - April
Des Moines, Iowa President, Des Moines 1994 to March 1996; 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
Phillip L. Risley 54 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
Perry C. Atwood 42 Chief Sales Officer 1996
Des Moines, Iowa
Woodward G. Brenton 46 Chief Commercial 1995 President and CEO, Brenton First National
Des Moines, Iowa Banking Officer Bank - January 1992 to October 1995; Executive
Vice President, Brenton First National Bank,
Davenport - January 1991 to January 1992
Charles N. Funk 42 Chief Investment/ 1995 Vice President - Investments, Brenton Banks,
Des Moines, Iowa ALCO Officer Inc. - December 1991 to October 1995
Ronald D. Larson 48 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 43 Regional President 1996 Regional President, Agricultural Division,
Perry, Iowa Western Iowa Division Brenton Bank - October 1995 to September
President, Adel 1996 1996; President, Brenton National Bank of
Perry - January 1992 to October 1995
Steven T. Schuler 45 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 54 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
1988 to January 1990
Gary D. Ernst 53 President - Trust 1995 Vice President - Trust of the Parent
Des Moines, Iowa Division Company - June 1990 to December 1995
Mark J. Hoffschneider 45 President, Brenton 1996
Des Moines, Iowa Mortgages, Inc.
Elizabeth M. Piper/Bach 44 President, Brenton 1995
Des Moines, Iowa Investments, Inc.
<FN>
All of the foregoing individuals have been employed by the Company for the past five years, except for Perry C. Atwood, who was
Senior Vice President at Valley National Bank (merged with Bank One) in Phoenix, Arizona from January 1992 to April 1996; also
held positions of Director of Business Banking, Director of Sales and Regional Manager during that time period; Mark J.
Hoffschneider, who was Senior Vice President, Lending at Mercantile Bank, FSB in Davenport, Iowa from March 1991 to March 1996
and 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.
</TABLE>
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(F) Employees.
On December 31, 1996, the Parent Company had 3 full-time employees and 3
part-time employees. On December 31, 1996, the Company had 602 full-time
employees and 177 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 percent 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 which permits
the OTS to restrict or prohibit activities that are determined to be a
serious risk to the subsidiary savings institution. Generally, the
activities for a bank holding company are more limited than the authorized
activities for a savings and loan holding company.
The Parent Company, its affiliated banks and its bank-related subsidiaries
are affiliates within the meaning of the Federal Reserve Act and OTS
regulations. As affiliates, they are subject to certain restrictions on
loans by an affiliated bank to the Parent Company, other affiliated banks
or such other subsidiaries, on investments by an affiliated bank in their
stock or securities and on an affiliated bank taking such stock and
securities as collateral for loans to any borrower. The Company is also
subject to certain restrictions with respect to direct issuance, flotation,
underwriting, public sale or distribution of certain securities.
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 its 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
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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, it is required to
maintain certain minimum capital ratios established by the OTS and must
meet a qualified thrift lender test (the "QTL") to avoid certain
restrictions upon its operations. On December 31, 1996, 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.
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. The
provisions of the law allow states to impose certain "non-discriminatory"
conditions upon interstate mergers, including limits on the concentration
of deposits. According to Iowa's banking law, Iowa-based banks and bank
holding companies can acquire banks and bank holding companies located in
other states. Iowa law prohibits a bank holding company or bank controlled
by a bank holding company from acquiring additional Iowa based banks or
bank holding companies if the total deposits of such bank holding company
and its affiliates would exceed 10 percent of the total deposits of all
banks and thrifts in the state.
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.
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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. There are six other multi-bank
holding companies which operate banks in Iowa, but are domiciled in other
states. The Iowa deposits of these holding companies are of similar size
or greater when compared to Brenton Banks, Inc.
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 investment brokerage business in the
last several years, placing brokers in many Brenton bank locations as well
as individual brokerage offices. 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, 1996:
<TABLE>
<CAPTION>
1996 1995 1994
______________________________ ______________________________ ______________________________
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>
Assets:
Interest-earning assets
Loans (1,2) $ 919,578 $ 79,921 8.69% $ 945,724 $ 82,136 8.68% $ 936,370 $ 76,271 8.14%
Investment securities held to
maturity:
Taxable investments:
Securities of United States
government agencies 38,596 2,362 6.12 27,381 1,570 5.73 2,001 98 4.92
Mortgage-backed and related
securities 3,509 261 7.45 36,214 2,370 6.54 29,834 1,679 5.63
Other investments 4,166 255 6.12 2,364 130 5.49 3,959 85 2.15
Tax-exempt investments:
Obligations of states and
political subdivisions(2) 51,639 3,449 6.68 50,235 4,044 8.05 44,584 3,433 7.70
Investment securities available
for sale:
United States Treasury
securities 36,582 2,109 5.76 42,416 2,271 5.35 55,580 2,519 4.53
Securities of United States
government agencies 77,436 4,606 5.95 79,000 4,939 6.25 58,603 3,016 5.15
<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 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 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>
1996 1995 1994
______________________________ ______________________________ ______________________________
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>
Mortgage-backed and related
securities 207,029 12,780 6.17 113,834 6,658 5.85 124,591 6,864 5.51
Other investments 8,955 568 6.34 9,536 710 7.44 7,255 641 8.87
Tax-exempt investments:
Obligations of states and
political subdivisions (1) 85,471 6,097 7.13 100,859 6,763 6.71 132,040 8,412 6.37
Loans held for sale 7,983 676 8.47 5,908 396 6.70 2,575 193 7.50
Federal funds sold and
securities purchased under
agreements to resell 26,188 1,417 5.41 39,763 2,264 5.69 37,666 1,706 4.53
Interest-bearing deposits
with banks 1,393 68 4.87 1,076 67 6.20 124 8 6.65
_________ _______ ____ _________ _______ ____ _________ _______ ____
Total interest-earning assets(1) 1,468,525 $114,569 7.80% 1,454,310 $114,318 7.86% 1,435,182 $104,925 7.31%
Allowance for loan losses (11,440) (11,166) (10,502)
Cash and due from banks 65,439 57,138 46,301
Premises and equipment 31,728 31,436 24,545
Other assets 28,642 29,508 25,663
_________ _________ _________
Total assets $1,582,894 $1,561,226 $1,521,189
<FN>
(1) Interest income and yields are stated on a tax-equivalent basis using a 34 percent federal income tax
rate 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>
1996 1995 1994
______________________________ ______________________________ ______________________________
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 $ 376,259 $11,194 2.98% $ 355,819 $11,842 3.33% $ 250,520 $ 5,418 2.16%
Savings 241,250 6,134 2.54 231,633 6,638 2.87 294,715 6,878 2.33
Time 583,508 32,179 5.51 626,497 34,595 5.52 625,981 29,313 4.68
Federal funds purchased and
securities sold under
agreements to repurchase 59,276 2,470 4.17 40,237 1,641 4.08 61,656 2,082 3.38
Other short-term borrowings 17,294 1,015 5.87 6,536 371 5.67 4,860 264 5.42
Long-term borrowings 33,094 2,339 7.07 37,264 2,621 7.03 26,500 1,817 6.86
_________ ______ ____ _________ ______ ____ _________ ______ ____
Total interest-bearing
liabilities 1,310,681 $55,331 4.22% 1,297,986 $57,708 4.45% 1,264,232 $45,772 3.62%
Noninterest-bearing deposits 131,051 128,770 127,464
Accrued expenses and other
liabilities 17,521 14,896 13,254
_________ _________ _________
Total liabilities 1,459,253 1,441,652 1,404,950
Minority interest 4,471 4,391 4,290
Common stockholders' equity 119,170 115,183 111,949
_________ _________ _________
Total liabilities and
stockholders' equity $1,582,894 $1,561,226 $1,521,189
Net interest spread (1) 3.58% 3.41% 3.69%
Net interest income/margin (1) $59,238 4.03% $56,610 3.89% $59,153 4.12%
<FN>
(1) Interest income and yields are stated on a tax-equivalent basis using a 34 percent federal income tax rate 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, 1996:
<TABLE>
<CAPTION>
1996 vs. 1995 1995 vs. 1994
__________________________ __________________________
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) $ (2,215) (2,272) 57 $ 5,865 769 5,096
Investment securities held
to maturity:
Taxable investments:
Securities of United States government
agencies 792 680 112 1,472 1,452 20
Mortgage-backed and related
securities (2,109) (2,394) 285 691 392 299
Other investments 125 109 16 45 (45) 90
Tax-exempt investments:
Obligations of states and political
subdivisions (2) (595) 110 (705) 611 450 161
Investment securities available
for sale:
Taxable investments:
United States Treasury securities (162) (328) 166 (248) (658) 410
Securities of United States government
agencies (333) (96) (237) 1,923 1,189 734
Mortgage-backed and related securities 6,122 5,734 388 (206) (614) 408
Other investments (142) (42) (100) 69 180 (111)
Tax-exempt investments:
Obligations of states and political
subdivisions (2) (666) (1,078) 412 (1,649) (2,072) 423
Loans held for sale 280 160 120 203 225 (22)
Federal funds sold and securities purchased
under agreements to resell (847) (739) (108) 558 99 459
Interest-bearing deposits with banks 1 17 (16) 59 60 (1)
_______ _______ _______ _______ _______ _______
251 (139) 390 9,393 1,427 7,966
_______ _______ _______ _______ _______ _______
Interest Expense:
Interest-bearing deposits:
Demand (648) 655 (1,303) 6,424 2,815 3,609
Savings (504) 267 (771) (240) (1,634) 1,394
Time (2,416) (2,371) (45) 5,282 24 5,258
Federal funds purchased and securities sold
under agreements to repurchase 829 793 36 (441) (818) 377
Other short-term borrowings 644 631 13 107 95 12
Long-term borrowings (282) (295) 13 804 756 48
_______ _______ _______ _______ _______ _______
(2,377) (320) (2,057) 11,936 1,238 10,698
_______ _______ _______ _______ _______ _______
Net interest income (expense) $ 2,628 181 2,447 $ (2,543) 189 (2,732)
_______ _______ _______ _______ _______ _______
Note: The change in interest due to both rate and volume has been allocated
to change due to volume and 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 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, 1996. 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)(3) $ 315,296 29,402 62,254 406,952 412,631 119,698 939,281
Investment securities:
Available for sale:
Taxable investments (3) 87,331 39,383 63,539 190,253 154,536 22,355 367,144
Tax-exempt investments 4,018 9,985 9,721 23,724 46,101 24,130 93,955
Held to maturity:
Taxable investments 1,869 10,237 2,147 14,253 6,264 55 20,572
Tax-exempt investments 3,475 4,512 8,779 16,766 27,722 7,695 52,183
________ ______ ______ _______ _______ _______ _______
Total investment securities 96,693 64,117 84,186 244,996 234,623 54,235 533,854
Loans held for sale 5,870 --- --- 5,870 --- --- 5,870
Federal funds sold and securities purchased under
agreements to resell 15,200 -- -- 15,200 -- -- 15,200
Interest-bearing deposits with banks 732 -- -- 732 -- -- 732
_________ _________ _________ _________ ________ _______ _________
Total interest-earning assets $ 433,791 93,519 146,440 673,750 647,254 173,933 1,494,937
_________ _________ _________ _________ ________ _______ _________
Interest-bearing liabilities:
Interest-bearing deposits:
Demand and savings deposits (2) $ 627,069 -- -- 627,069 -- -- 627,069
Time deposits 101,789 108,264 125,477 335,530 237,008 166 572,704
Federal funds purchased and securities sold under
agreements to repurchase 66,826 -- -- 66,826 -- -- 66,826
Other short-term borrowings 6,500 2,500 25,150 34,150 -- -- 34,150
Long-term borrowings -- -- 1,464 1,464 28,622 4,774 34,860
_________ _________ _________ _________ ________ _______ _________
Total interest-bearing liabilities $ 802,184 110,764 152,091 1,065,039 265,630 4,940 1,335,609
_________ _________ _________ _________ ________ _______ _________
Interest sensitivity GAP $ (368,393) (17,245) (5,651) (391,289) 381,624 168,993 159,328
_________ _________ _________ _________ ________ _______ _________
Interest sensitivity GAP ratio .54:1 .84:1 .96:1 .63:1 2.44:1 35.21:1 1.12:1
_________ _________ _________ _________ ________ _______ _________
Cumulative interest sensitivity GAP $ (368,393) (385,638) (391,289) (391,289) (9,665) 159,328 159,328
_________ _________ _________ _________ ________ _______ _________
Cumulative interest sensitivity GAP ratio .54:1 .58:1 .63:1 .63:1 .99:1 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.
(3) Assumed repayments on mortgage-related loans and investments are based upon projected prepayment speeds
which are determined by considering Wall Street estimates.
</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>
December 31,
______________________________
1996 1995 1994
____ ____ ____
(In thousands)
<S> <C> <C> <C>
Investment securities available for sale
(market value):
Taxable investments:
United States Treasury securities $ 41,351 27,775 50,641
Securities of United States government agencies 98,153 72,822 66,037
Mortgage-backed and related securities 219,447 191,028 104,121
Other investments 8,193 9,071 10,812
Tax-exempt investments:
Obligations of states and political subdivisions 93,955 95,674 117,598
_______ _______ _______
461,099 396,370 349,209
_______ _______ _______
Investment securities held to maturity
(amortized cost):
Taxable investments:
Securities of United States government agencies 15,065 48,595 9,444
Mortgage-backed and related securities 3,041 3,653 35,282
Other investments 2,466 6,145 3,087
Tax-exempt investments:
Obligations of states and political subdivisions 52,183 49,689 46,671
_______ _______ _______
72,755 108,082 94,484
_______ _______ _______
Total investment securities $533,854 504,452 443,693
_______ _______ _______
</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, 1996:
<TABLE>
<CAPTION>
Investments by Maturity and Yields at December 31, 1996
____________________________________________________________________________
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 $ 15,489 5.65% $ 25,862 5.91% $ -- --% $ -- --%
Securities of United States
government agencies 28,285 5.66 51,368 6.08 18,500 6.48 -- --
Mortgage-backed and
related securities 64,409 6.17 101,973 6.28 47,467 6.52 5,598 6.44
Other investments 5,901 6.56 2,292 6.02 -- -- -- --
Tax-exempt investments:
Obligations of states and
political subdivisions 16,226 4.27 48,201 5.01 7,749 5.11 21,779 5.55
_______ ____ _______ ____ ______ ____ ______ ____
130,310 5.78 229,696 5.93 73,716 6.36 27,377 5.73
_______ ____ _______ ____ ______ ____ ______ ____
Investment securities held
to maturity:
Taxable investments:
Securities of United States
government agencies 4,926 5.51 -- -- 10,139 6.13 -- --
Mortgage-backed and
related securities 783 7.33 1,338 7.33 920 7.36 -- --
Other investments 1,260 6.34 1,152 5.80 54 7.87 -- --
Tax-exempt investments:
Obligations of states and
political subdivisions 15,275 4.29 26,116 4.58 4,194 5.30 6,598 5.88
_______ ____ _______ ____ ______ ____ ______ ____
22,244 4.79 28,606 4.76 15,307 5.98 6,598 5.88
_______ ____ _______ ____ ______ ____ ______ ____
Total investment securities $152,554 5.63% $258,302 5.80% $89,023 6.29% $33,975 5.76%
_______ ____ _______ ____ ______ ____ ______ ____
</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 and are adjusted to
reflect the effect of the nondeductible interest expense of owning tax-exempt
investments.
As of December 31, 1996, 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
____________________________________________________
1996 1995 1994 1993 1992
____ ____ ____ ____ ____
(In thousands)
<S> <C> <C> <C> <C> <C>
1. Real estate loans:
a. Commercial construction and land development $ 42,693 38,123 26,549 24,189 25,180
b. Secured by 1-4 family residential property 338,010 319,430 389,713 349,810 324,124
c. Other 150,395 163,739 143,960 129,574 101,418
2. Loans to financial institutions (primarily bankers'
acceptances) -- -- -- -- 393
3. Loans to farmers 69,660 68,543 71,853 66,574 62,471
4. Commercial and industrial loans 132,395 119,368 115,280 90,521 75,062
5. Loans to individuals for personal expenditures,
net of unearned income 207,193 199,489 221,627 214,401 163,876
6. All other loans 1,598 1,501 1,232 812 930
_______ _______ _______ _______ _______
$941,944 910,193 970,214 875,881 753,454
_______ _______ _______ _______ _______
</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, 1996 (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, 1996
________________________________________
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 $ 32,941 7,789 1,963 42,693
b. Other 41,290 56,629 52,476 150,395
2. Loans to financial institutions -- -- -- --
3. Loans to farmers 44,606 21,645 3,409 69,660
4. Commercial and industrial loans 83,338 38,981 10,076 132,395
5. All other loans 813 601 184 1,598
_______ _______ ______ _______
$202,988 125,645 68,108 396,741
_______ _______ ______ _______
</TABLE>
The above loans due after one year which have predetermined and
floating interest rates follow:
Predetermined interest rates $ 55,316
_______
Floating interest rates $138,437
_______
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>
1996 1995 1994 1993 1992
____ ____ ____ ____ ____
(In thousands)
<S> <C> <C> <C> <C> <C>
Nonaccrual $2,663 2,639 3,784 1,605 1,884
Restructured 568 178 298 323 448
Past due 90 days or more 2,936 2,802 940 2,085 2,261
_____ _____ _____ _____ _____
Nonperforming loans $6,167 5,619 5,022 4,013 4,593
_____ _____ _____ _____ _____
</TABLE>
Interest income recorded during 1996 on nonaccrual and restructured
loans amounted to $174,000. The amount of interest income which would have
been recorded during 1996, if nonaccrual and restructured loans had been
current in accordance with the original terms, was $363,000.
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, 1996, these loans amounted to approximately $1 million.
As of December 31, 1996, 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 $488,000 and $869,000 at December 31, 1996, and 1995,
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
_______________________________________________
1996 1995 1994 1993 1992
____ ____ ____ ____ ____
(In thousands)
<S> <C> <C> <C> <C> <C>
Total loans at the end of the year $941,944 910,193 970,214 875,881 753,454
Average loans outstanding 919,578 945,724 936,370 802,088 736,646
_______ _______ _______ _______ _______
Allowance for loan losses -
beginning of the year $ 11,070 10,913 9,818 9,006 8,548
_______ _______ _______ _______ _______
Amount of charge-offs during year:
Real estate loans 479 41 83 109 276
Loans to financial institutions -- -- -- -- --
Loans to farmers 365 36 31 68 45
Commercial and industrial loans 594 340 337 54 252
Loans to individuals for personal expenditures 2,623 2,960 1,943 1,230 1,304
All other loans -- -- 48 70 67
_______ _______ _______ _______ _______
Total charge-offs 4,061 3,377 2,442 1,531 1,944
_______ _______ _______ _______ _______
Amount of recoveries during year:
Real estate loans 68 66 101 101 32
Loans to financial institutions -- -- -- -- --
Loans to farmers 138 50 146 81 179
Commercial and industrial loans 95 400 334 248 125
Loans to individuals for personal expenditures 1,118 1,153 947 641 635
All other loans -- -- 21 20 20
_______ _______ _______ _______ _______
Total recoveries 1,419 1,669 1,549 1,091 991
_______ _______ _______ _______ _______
Net loans charged-off during year 2,642 1,708 893 440 953
_______ _______ _______ _______ _______
Additions to allowance charged to operating expense 2,900 1,865 1,988 1,252 1,411
_______ _______ _______ _______ _______
Allowance for loan losses - end of the year $ 11,328 11,070 10,913 9,818 9,006
_______ _______ _______ _______ _______
Ratio of allowance to loans outstanding at end of year 1.20% 1.22 1.12 1.12 1.20
____ ____ ____ ____ ____
Ratio of net charge-offs to average loans outstanding .29% .18 .10 .05 .13
___ ___ ___ ___ ___
</TABLE>
NOTE: The provision for loan losses charged to operating expenses is based
upon management's evaluation of the loan portfolio, past loan loss experience
and the level of the allowance for loan losses necessary to support
management's evaluation of potential losses in the loan portfolio.
Management's evaluation of the allowance for loan losses is based upon
several factors including economic conditions, historical loss and collection
experience, risk characteristics of the loan portfolio, underlying collateral
values, industry risk and credit concentrations.
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
__________________________________________________________________________________________
1996 1995 1994 1993 1992
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 $ 2,200 56.4% $ 2,400 57.3% $2,600 57.7% $2,400 57.5% $2,200 59.8%
Loans to financial institutions -- -- -- -- -- -- -- -- -- .1
Loans to farmers 1,000 7.4 1,300 7.5 1,400 7.4 1,600 7.6 1,200 8.3
Commercial and industrial loans 3,200 14.0 2,900 13.1 2,800 11.9 2,700 10.3 2,700 10.0
Loans to individuals for personal
expenditures 4,928 22.0 4,470 21.9 4,113 22.8 3,118 24.5 2,906 21.3
All other loans -- .2 -- .2 -- .2 -- .1 -- .5
______ _____ ______ _____ _____ _____ _____ _____ _____ _____
$11,328 100.0% $11,070 100.0% $10,913 100.0% $9,818 100.0% $9,006 100.0%
______ _____ ______ _____ _____ _____ _____ _____ _____ _____
</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
__________________________________________
1996 1995 1994
____________ ____________ ____________
Amount Rate Amount Rate Amount Rate
______ ____ ______ ____ ______ ____
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing deposits $ 131,051 --% $ 128,770 --% $ 127,464 --%
Interest-bearing deposits:
Demand 376,259 2.98 355,819 3.33 250,520 2.16
Savings 241,250 2.54 231,633 2.87 294,715 2.33
Time 583,508 5.51 626,497 5.52 625,981 4.68
_________ ____ _________ ____ _________ ____
$1,332,068 $1,342,719 $1,298,680
_________ _________ _________
</TABLE>
The following sets forth the maturity distribution of all time
deposits of $100,000 or more as of December 31, 1996:
Large Time Deposits
by Maturity at
Maturity Remaining December 31, 1996
__________________ ___________________
(In thousands)
Less than 3 months $23,750
Over 3 through 6 months 20,927
Over 6 through 12 months 12,259
Over 12 months 25,075
______
$82,011
______
VI. Return on Equity and Assets
Various operating and equity ratios for the years indicated are
presented below:
<TABLE>
<CAPTION>
Year Ended December 31,
________________________
1996 1995 1994
____ ____ ____
<S> <C> <C> <C>
Return on average total assets:
Net income before deduction of minority interest .92% .71% .70%
Return on average equity 11.76 9.04 9.03
Common dividend payout ratio 26.86 33.58 34.65
Average equity to average assets 7.53 7.38 7.36
Equity to assets ratio 7.41 7.47 7.28
Tier 1 leverage capital ratio 7.62 7.45 7.23
Primary capital ratio 8.33 8.40 8.18
____ ____ ____
</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>
1996 1995 1994
____ ____ ____
(Dollars in thousands)
<S> <C> <C> <C>
Amount outstanding at December 31 $66,826 41,107 70,704
Weighted average interest rate at
December 31 3.74% 4.14 4.73
Maximum amount outstanding at any
quarter-end $73,359 41,107 70,704
Average amount outstanding during
the year $59,276 40,237 61,656
Weighted average interest rate during
the year 4.17% 4.08 3.38
____ ____ ____
</TABLE>
Information relative to other short-term borrowings, which consist
primarily of Federal Home Loan Bank borrowings, follows:
<TABLE>
<CAPTION>
1996 1995 1994
____ ____ ____
(Dollars in thousands)
<S> <C> <C> <C>
Amount outstanding at December 31 $34,150 2,500 12,000
Weighted average interest rate at
December 31 5.97% 4.68 5.40
Maximum amount outstanding at any
quarter-end $34,150 7,000 12,000
Average amount outstanding during
the year $17,294 6,536 4,860
Weighted average interest rate during
the year 5.87% 5.67 5.42
____ ____ ____
</TABLE>
25
<PAGE>
<PAGE>
Item 2. Properties.
At December 31, 1996, the affiliated banks and subsidiaries had 45 service
locations with approximately 305,000 square feet, all located in Iowa. Of
these locations, 30 were owned by the Company - approximately 222,000
square feet; 3 were owned buildings on leased land - approximately 30,000
square feet and 12 were operated under lease contracts with unaffiliated
parties - approximately 53,000 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 23 and 30 of the Corporation's Appendix
to the Proxy Statement, filed as Exhibit 13 hereto, is incorporated herein
by reference.
There were approximately 1,546 holders of record of the Parent Company's $5
common stock as of March 10, 1997. The closing bid price of the Parent
Company's common stock was $27.75 on March 10, 1997.
The Parent Company increased dividends to common shareholders in 1996 to
$.454 per share, a 11.0 percent increase over $.409 for 1995. Dividend
declarations are evaluated and determined by the Board of Directors on a
quarterly basis. In January 1997, the Board of Directors declared a
dividend of $.13 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 11 of the Company's Appendix to the Proxy
Statement, 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 3 through 9 of the Company's Appendix to
the Proxy Statement, filed as Exhibit 13 hereto, is incorporated herein by
reference.
26
<PAGE>
Item 8. Financial Statements and Supplementary Data.
The information appearing on pages 12 through 29 of the Company's Appendix
to the Proxy Statement, 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, 1996, 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, 1996, 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, 1996, 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, 1996, 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 12 through 29 of the Company's Appendix to the
Proxy Statement, 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 Company's Bonus Plans under which
some of the executive officers of the Company
and certain other personnel of the subsidiaries
are eligible to receive a bonus each year.
Exhibit 10.2
1996 Stock Option Plan, Administrative Rules
and Agreement under which officers of the Company
are eligible to receive options to purchase
an aggregate of 550,000 shares of the Company's $5 par
value common stock. This 1996 Stock Option Plan,
Administrative Rules and Agreement is incorporated by
reference from Form 10-Q of Brenton Banks, Inc. for
the quarter ended September 30, 1996.
Exhibit 10.3
Directors' Incentive Plan. This Directors' Incentive
Plan is incorporated by reference from Form 10-Q of
Brenton Banks, Inc. for the quarter ended
September 30, 1995.
Exhibit 10.4
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 10.5
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 330,000 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 10.6
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 10.7
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 10.8
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.
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, 1995.
Exhibit 10.9
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 10.10
Short-term note with American National Bank & Trust
Company of Chicago as of April 30, 1996, setting
forth the terms of the Parent Company's
$2,000,000 short-term debt agreement.
Exhibit 10.11
Data Processing Agreement dated December 1, 1991
by and between ALLTEL Financial Information
Services, Inc., (formerly Systematics, Inc.)
and Brenton Bank (formerly Brenton
Information Systems, Inc.).
29
<PAGE>
Exhibit 10.12
Correspondent Services Agreement dated
November 13, 1996 between Brenton Bank and the
Federal Home Loan Bank of Des Moines.
Exhibit 10.13
Adoption Agreement #003 - Nonstandardized Code
Section 401(k) Profit Sharing Plan, effective
November 14, 1996.
Exhibit 10.14
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 10.15
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 10.16
Indenture Agreement with respect to Capital
Notes dated March 27, 1991.
Exhibit 10.17
Indenture Agreement with respect to Capital
Notes dated August 5, 1991.
Exhibit 10.18
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 10.19
Indenture Agreement with respect to Capital
Notes dated April 10, 1995. This Indenture
Agreement is incorporated by reference from Form
10-K of Brenton Banks, Inc. for the year
ended December 31, 1995.
Exhibit 10.20
Indenture Agreement with respect to Capital
Notes dated April 10, 1996.
30
<PAGE>
Exhibit 10.21
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 10.22
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 10.23
Split Dollar Insurance Agreement between the
Company and Brenton Life Insurance Trust
for the benefit of Junius C. Brenton, dated
January 12, 1997.
Exhibit 10.24
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 10.25
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 10.26
Agreement between Norman D. Schuneman 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, 1995.
Exhibit 10.27
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.
31
<PAGE>
Exhibit 10.28
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.). This Thirteenth Amendment
to Data Processing Agreement is incorporated
by reference from Form 10-K of Brenton Banks, Inc.
for the year ended December 31, 1995.
Exhibit 11
Statement of computation of earnings per share.
Exhibit 12
Statement of computation of ratios.
Exhibit 13
The Appendix to the Proxy Statement for Brenton Banks,
Inc., for the 1996 calendar year.
Exhibit 21
Subsidiaries.
Exhibit 23
Consent of KPMG Peat Marwick LLP to the incorporation
of their report dated February 7, 1997, relating to
certain consolidated financial statements 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 1996.
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 13, 1997
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 13, 1997
By /s/ Robert L. DeMeulenaere
President and Director
ROBERT L. DEMEULENAERE
Principal Executive Officer
Date: March 13, 1997
33
<PAGE>
By /s/ Steven T. Schuler
Chief Financial Officer/Treasurer/Secretary
STEVEN T. SCHULER
Chief Financial Officer
Chief Accounting Officer
Date: March 13, 1997
BOARD OF DIRECTORS
By /s/ William H. Brenton
WILLIAM H. BRENTON
Date: March 13, 1997
By /s/ Junius C. Brenton
JUNIUS C. BRENTON
Date: March 13, 1997
By /s/ R. Dean Duben
R. DEAN DUBEN
Date: March 13, 1997
By /s/ Hubert G. Ferguson
HUBERT G. FERGUSON
Date: March 13, 1997
By /s/ Gary M. Christensen
GARY M. CHRISTENSEN
Date: March 13, 1997
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 Company's Bonus Plans under which some
of the executive officers of the Company and certain
other personnel of the subsidiaries are eligible to
receive a bonus each year. . . . . . . . . . . . . . . . 41
Exhibit 10.2
1996 Stock Option Plan, Administrative Rules and
Agreement under which officers of the Company are
eligible to receive options to purchase an aggregate
of 550,000 shares of the Company's $5 par value common
stock. This 1996 Stock Option Plan, Administrative
Rules and Agreement is incorporated by reference from
Form 10-Q of Brenton Banks, Inc. for the quarter ended
September 30, 1996. . . . . . . . . . . . . . . . . . . . 43
Exhibit 10.3
Directors' Incentive Plan. This Directors' Incentive
Plan is incorporated by reference from Form 10-Q of
Brenton Banks, Inc. for the quarter ended September 30,
1995.. . . . . . . . . . . . . . . . . . . . . . . . . . 44
Exhibit 10.4
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.. . . . . . . . . . . . . . . . . . . . . . . . . . 45
Exhibit 10.5
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
330,000 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. . . . . . . . . . . . . . . 46
35
<PAGE>
Exhibit 10.6
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.. . . . . . . . . . . . 47
Exhibit 10.7
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. . . . . . . . . . . .. 48
Exhibit 10.8
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. 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, 1995.. . . . . . . . . . . . . . . 49
Exhibit 10.9
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.. . . . . . . . . . . . . . . . . . . . 50
Exhibit 10.10
Short-term note with American National Bank & Trust
Company of Chicago as of April 30, 1996, setting forth
the terms of the Parent Company's $2,000,000 short-term
debt agreement. . . . . . . . . . . . . . . . . . . . .. 51
Exhibit 10.11
Data Processing Agreement dated December 1, 1991 by and
between ALLTEL Financial Information Services, Inc.,
(formerly Systematics, Inc.) and Brenton Bank (formerly
Brenton Insurance Systems, Inc.). . . . . . . . . . . . . 55
Exhibit 10.12
Correspondent Services Agreement dated November 13, 1996
between Brenton Bank and the Federal Home Loan Bank of
Des Moines. . . . . . . . . . . . . . . . . . . . . . . . 124
36
<PAGE>
Exhibit 10.13
Adoption Agreement #003 - Nonstandardized Code Section
401(k) Profit Sharing Plan, effective November 14, 1996. .142
Exhibit 10.14
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. . . . . . . . . . . . . . . 183
Exhibit 10.15
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. . . . . . . . . . . . . . . 184
Exhibit 10.16
Indenture Agreement with respect to Capital Notes dated
March 27, 1991. . . . . . . . . . . . . . . . . . . . . ..185
Exhibit 10.17
Indenture Agreement with respect to Capital Notes
dated August 5, 1991. . . . . . . . . . . . . . . . . . . 204
Exhibit 10.18
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.. . . .. 219
Exhibit 10.19
Indenture Agreement with respect to Capital Notes
dated April 10, 1995. This Indenture Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc. for the year ended December 31, 1995.. . . . 220
Exhibit 10.20
Indenture Agreement with respect to Capital Notes
dated April 10, 1996.. . . . . . . . . . . . . . . . . . 221
Exhibit 10.21
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.. . . . . . . . . . . . . . . . . . . . 223
37
<PAGE>
Exhibit 10.22
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. . . . . . . . . . . . . . . . . . . . 224
Exhibit 10.23
Split Dollar Insurance Agreement between the Company
and Brenton Life Insurance Trust for the benefit of
Junius C. Brenton, dated January 12, 1997.. . . . . . . . 225
Exhibit 10.24
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. . . . . . . . . . . . . 237
Exhibit 10.25
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. . . . . . . . . . . . . . . 238
Exhibit 10.26
Agreement between Norman D. Schuneman 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, 1995. . . . . . . . . . . . . . . 239
Exhibit 10.27
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. . . . . . . . . . . . 240
Exhibit 10.28
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.). This Thirteeneth Amendment
to Data Processing Agreement is incorporated by reference
from Form 10-K of Brenton Banks, Inc. for the year ended
December 31, 1995. . . . . . . . . . . . . . . . . . . . .. 241
38
<PAGE>
Exhibit 11
Statement of computation of earnings per share. . . . . . . 242
Exhibit 12
Statement of computation of ratios. . . . . . . . . . . . . 244
Exhibit 13
The Appendix to the Proxy Statement for Brenton Banks,
Inc. for the 1996 calendar year. . . . . . . . . . . . . . 248
Exhibit 21
Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . 286
Exhibit 23
Consent of KPMG Peat Marwick LLP to the incorporation
of their report dated February 7, 1997, relating to
certain consolidated financial statements of Brenton
Banks, Inc. into the Registration Statement on Form S-8
of Brenton Banks, Inc. . . . . . . . . . . . . . . . . . . 288
Exhibit 27
Financial Data Schedule (filed only with Electronic
Transmission). . . . . . . . . . . . . . . . . . . . . . . 290
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 Company's Bonus Plans under which some of the executive
officers of the Company and certain other personnel of the subsidiaries are
eligible to receive a bonus each year.
41
<PAGE>
1996 BRENTON BANKS, INC. BONUS PLANS
For 1996, the Company (Brenton Banks, Inc. and Subsidiaries) has bonus
plans that cover executive officers, line of business managers, subsidiary
presidents, senior managers, market managers, and other key personnel. The
following chart summarizes the main features of these bonus plans:
Bonus potential (as percent of base pay):
Executive officers 30.00%
Line of business managers and
subsidiary presidents 30.00%
Market managers 30.00%
Senior manager and other key
personnel 15.00% to 30.00%
Bonus thresholds:
Bonus achievement is tied to a consolidated earnings threshold of
$14,000,000 whereby no bonus will be paid if this earnings threshold is not
achieved.
Bonus criteria:
Once the bonus threshold is achieved, bonus amounts are paid for
achievement of certain pre-established financial and personal goals, the
most significant of which are as follows:
Consolidated net income
Subsidiary or line of business net income
Sales goals
Growth in loans
Growth in core deposits
Fee income generation
Non-interest income
Non-interest expense
Key personal objectives
Bonus achievements:
Bonus amounts are earned ratably based on actual results compared to a
bonus achievement matrix.
41
<PAGE>
Exhibit 10.2
1996 Stock Option Plan, Administrative Rules and Agreement under which
officers of the Company are eligible to receive options to purchase an
aggregate of 550,000 shares of the Company's $5 par value common stock.
This 1996 Stock Option Plan, Administrative Rules and Agreement is
incorporated by reference from Form 10-Q of Brenton Banks, Inc. for the
quarter ended September 30, 1996.
43
<PAGE>
Exhibit 10.3
Directors' Incentive Plan. This Directors' Incentive Plan is incorporated
by reference from Form 10-Q of Brenton Banks, Inc. for the quarter ended
September 30, 1995.
44
<PAGE>
Exhibit 10.4
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.
45
<PAGE>
Exhibit 10.5
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 330,000 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.
46
<PAGE>
Exhibit 10.6
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.
47
<PAGE>
Exhibit 10.7
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.
48
<PAGE>
Exhibit 10.8
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.
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, 1995.
49
<PAGE>
Exhibit 10.9
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.
50
<PAGE>
Exhibit 10.10
Short-term note with American National Bank & Trust Company of Chicago as
of April 30, 1996 setting forth the terms of the Parent Company's
$2,000,000 short-term debt agreement.
51
<PAGE>
American National Bank
and Trust Company of Chicago
33 North LaSalle Street/Chicago, Illinois 60690/(312) 661-5000
April 30, 1996
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, 1995. This letter is in
reference to the certain Promissory Note dated 4/30/96, 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.
52
<PAGE>
American National Bank
Page 2
April 30, 1996
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, Assistant Vice President of ANB.
American National Bank and Trust
Company of Chicago
By: ____________________________
Its:____________________________
Accepted and agreed to this 30th day of April, 1996.
Brenton Banks, Inc.
By: /s/ Steven T. Schuler
Its: CFO/Treasurer/Secretary
53
<PAGE>
PROMISSORY NOTE (UNSECURED)
PROMISSORY NOTE (UNSECURED)
Chicago, Illinois April 30, 1996
$2,000,000.00 Due April 30, 1997
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 00/100 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, 1997.
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 the rate that would otherwise be in effect plus 3%.
If the rate of interest to be charged by Bank to Borrower hereunder is
that specified in clause (ii) above, 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 on the same day of
each (delete inapplicable provision): (i) month, XXXX, and at maturity,
commencing with the last day of May, 1996, 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. After maturity, accrued interest on
all of Borrower's Liabilities shall be payable on demand.
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.
Any deposits or other sums at any time credited by or payable or due
from Bank to Borrower, or any monies, cash, cash equivalents, securities,
instruments, documents or other assets of Borrower in the possession or
control of bank or its bailee for any purpose, may be reduced to cash and
applied by Bank to or setoff by Bank against Borrower's Liabilities.
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 or declared due
and payable (whether by scheduled maturity, required payment, acceleration,
demand or otherwise); (b) if Borrower or any guarantor of any of Borrower's
Liabilities fails or neglects to perform, keep or observe any term,
provision, condition, covenant, warranty, or representation contained in this
Note; (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 of Borrower's Liabilities
or any person or entity which has granted to Bank a security interest or lien
in and to some or all such person's or entity's real or personal property to
secure the payment of Borrower's Liabilities; (e) if any of Borrower's assets
are attached, seized, subjected to a writ, 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 a notice of lien,
levy or assessment is filed of record or given to Borrower with respect to
all or any of Borrower's assets by any federal, state or local department or
agency; (g) 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 Title 11 of the United States
Code 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
if Borrower or any such guarantor is enjoined, restrained or in any way
prevented by court order from conducting all or any material part of its
business affairs; (h) the death or incompetency of Borrower or any guarantor
of Borrower's Liabilities, or the appointment of a conservator for all or any
portion of Borrower's assets; (i) the revocation, termination or cancellation
of any guaranty of Borrower's Liabilities without written consent of Bank;
(j) 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; (k) if Borrower or any guarantor of
Borrower's Liabilities is in default in the payment of any obligations,
indebtedness or other liabilities to any third party and such default is
declared and is not cured within the time, if any, specified therefor in any
agreement governing the same; (l) if any material statement, report or
certificate made or delivered by Borrower, any of Borrower's partners,
officers, employees or agents or any guarantor of Borrower's Liabilities is
not true and correct; or (m) 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 immediately due and payable.
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, immediately upon demand by Bank, any and all
costs, fees and expenses (including reasonable 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.
This Note shall be deemed to have been submitted by Borrower to Bank and
to have been made at Bank's principal place of business. This Note shall be
governed and controlled by the internal laws of the State of Illinois and not
the law of conflicts.
Advances under this Note may be made by Bank upon oral or written
request of any person authorized to make such requests on behalf of Borrower
("Authorized Person"). Borrower agrees that Bank may act on requests which
Bank in good faith believes to be made by an Authorized Person, regardless of
whether such requests are in fact made by an Authorized Person. Any such
advance shall be conclusively presumed to have been made by Bank to or for
the benefit of Borrower. Borrower does hereby irrevocably confirm, ratify
and approve all such advances by Bank and agrees to indemnify Bank againsts
any and all losses and expenses (including reasonable attorneys' fees) and
shall hold Bank harmless with respect thereto.
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,
SUIT, COUNTERCLAIM 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, SUIT, COUNTERCLAIM OR PROCEEDING
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
Brenton Banks, Inc. Brenton Banks, Inc.
400 Locust, Box 961 By: /s/ Robert L. DeMeulenare (signature)
Des Moines, IA 50304 Its: LEFT BLANK (title)
Address By: /s/ Steven T. Schuler (signature)
FEIN or SSN Its: CFO/Treasurer/Secretary (title)
54
<PAGE>
Exhibit 10.11
Data Processing Agreement dated December 1, 1991 by and between ALLTEL
Financial Information Services, Inc., (formerly Systematics, Inc.) and
Brenton Bank (formerly Brenton Information Systems, Inc.
55
<PAGE>
DATA PROCESSING AGREEMENT
by and between
SYSTEMATICS FINANCIAL SERVICES, INC.
and
BRENTON INFORMATION SYSTEMS, INC.
December 1, 1991
<PAGE>
TABLE OF CONTENTS
1. Services 1
2. Term 1
3. Responsibilities of the Parties 1
3.1 Computer Equipment 2
3.2 Terminals/Communications Cost 2
3.3 Processing Schedule 2
3.4 Client Approval of Program Changes 2
3.5 Confidentiality of Client Data 2
3.6 Delivery 2
3.7 Supplies and Forms 2
3.8 Client's Input Data 3
4. Data Processing Premises and Security 3
4.1 Data Processing Premises 3
4.2 Security Standards 3
5. Software 3
5.1 Additional Licensed Programs 4
5.2 Software Warranty 4
5.3 User Manuals 4
5.4 Third Party Software 4
5.5 Installation of New Systems and Subsystems 5
5.6 Modifications Requested by Client 5
5.7 Regulatory Reporting Requirements 5
6. Education 5
7. Staffing; Computer Use 6
7.1 Resident Technical Staff 6
7.2 Special Computer Use 7
8. Time of Performance 7
<PAGE>
9. Performance Standards and Penalties 8
9.1 Performance Benchmarks 8
9.2 On-Time Delivery - Output to Client 8
9.3 On-Time Delivery - Input from Client 8
9.4 On-Line Uptime 8
9.5 On-Line Response Time 8
9.6 Remedies 9
9.7 Force Majeure 9
9.8 Exclusive Remedy 9
10. Termination 10
10.1 Right to Terminate 10
10.2 Method of Termination 10
10.3 Data, Systems and Programs 10
10.4 Early Termination 10
11. Transitional Cooperation 11
11.1 Offer of Employment 11
11.2 Transition 11
11.3 Equipment 11
11.4 Additional Support 11
12. Backup Files, Storage and Programs 11
12.1 Files and Programs 11
12.2 Storage 12
12.3 Disaster Recovery 12
12.4 Emergency Backup 12
13. Service Bureau Customers 13
13.1 Client's Service Bureau Customers 13
13.2 SI's Service Bureau Customers 13
14. Effective Planning and Communication 13
14.1 Steering Committee 13
14.2 Audit Conference 13
14.3 Annual Executive Review 14
15. Payment and Billing 14
<PAGE>
16. No Interference with Contractual Relationship 15
17. No Waiver of Default 15
18. Processing Priorities 15
19. Mergers and Acquisitions 15
20. Entire Agreement 15
21. Assignment 16
22. Confidential Agreement 16
23. Taxes 16
24. Independent Contractor 16
24.1 Client Supervisory Powers 17
24.2 SI's Employees 17
24.3 SI as an Agent 17
24.4 Workers Compensation 17
25. Client and SI Employees 17
26. Previous Liabilities 17
27. Notices 18
28. Covenant of Good Faith 18
29. Limitation of Liability 18
30. Insurance 18
31. Section Titles 18
32. Counterparts 18
33. Financial Statements 19
34. Governing Law 19
<PAGE>
EXHIBITS
A. Systems Installation Schedule
B. Reports
C. Charges
D. Reporting Schedule
E. Equipment
F. Client-Furnished Equipment and Software
G. Software License Agreement
H. Disaster Recovery Agreement
I. Insurance Coverage
<PAGE>
DATA PROCESSING AGREEMENT
This is an Agreement, dated as of the 1st day of December, 1991
(hereinafter the "Effective Date"), by and between SYSTEMATICS FINANCIAL
SERVICES, INC., an Arkansas corporation, 4001 Rodney Parham Road, Little
Rock, Arkansas 72212-2496 (hereinafter "SI") and
BRENTON INFORMATION SYSTEMS, INC.
Capital Square, Suite 300
Des Moines, Iowa 50304-0961
(hereinafter "Client").
In consideration of the payments to be made and services to be performed
hereunder, the parties agree as follows:
1. Services.
SI will provide to Client the data processing services and products
described in this Agreement and its exhibits. Such services and products
include, but are not limited to, the general management of Client's data
processing, installation and enhancement of SI-developed software systems,
operation of software systems developed by SI and third parties,
programming services, furnishing and operating computer equipment,
providing information in various media forms, and a license to use SI
software systems. The specific services provided and the applicable fees
therefor are described in more detail in this Agreement and its Exhibits.
2. Term.
The term of this Agreement is five (5) years, beginning on the Effective
Date reflected above. The end of such term shall be the "Expiration Date".
At least nine (9) months prior to the Expiration Date, SI will submit to
Client a written proposal for renewal of this Agreement. Client will
respond to such proposal within ninety (90) days following receipt thereof.
3. Responsibilities of the Parties.
SI and Client agree to be responsible for the following matters:
<PAGE>
3.1 Computer Equipment. Except as otherwise provided in this
Agreement (see Exhibit F and Section 2 of Exhibit C), SI will supply all
CPUs, communications controllers, DASD equipment, tape/cartridge equipment,
printers and related peripheral equipment which may be required for its
operation of the Data Center as defined in Section 4.1.
3.2 Terminals/Communications Cost. Client will pay all costs of
installing and utilizing communication or telephone lines, data sets,
modems, ATMs, terminals, and terminal control units, as required for
Client's on-line operations, testing and training. SI will provide the
terminals and personal computers used by its personnel. Client will
provide all personal computers used by its personnel.
3.3 Processing Schedule. SI will process and update Client's data in
accordance with Exhibit D.
3.4 Client Approval of Program Changes. All changes to programs used
to process Client's data affecting input, output, control, audit, or
accounting procedures of Client shall be made only with the approval of
Client.
3.5 Confidentiality of Client Data. All information concerning
Client, its business or customers submitted to SI pursuant to this
Agreement shall be held in confidence by SI and shall not be disclosed. No
person or entity shall be permitted to have access to Client's data without
the written authorization of Client. All of Client's data shall be
available for examination by Client, at any time during regular business
hours, without notice. If SI receives any legal process requiring it to
produce Client's data or that of any of its customers, SI shall notify
Client promptly, and deliver copies of such orders to Client, immediately
and prior to compliance with such process.
SI recognizes Client's absolute ownership of Client information and hereby
releases, in advance, any claim, lien, or encumbrance with respect thereto.
SI agrees that it shall not, in any event, retain or attempt to retain any
Client information in an attempt to secure performance by Client of any of
the terms or conditions of this Agreement.
3.6 Delivery. Client, or its designee, is responsible for delivery
of all input and output data to and from the Data Center (see Section 4.1).
Subject to Client's responsibility for microfilming MICR
<PAGE>
documents prior to delivery to SI, SI is responsible for safekeeping
Client's documents while in SI's possession in the Data Center.
3.7 Supplies and Forms. SI will provide all magnetic tapes, tape
cartridges and impact printer ribbons required to perform SI's processing
responsibilities during the term of this Agreement. Client will provide
all input and output forms, balance control forms, stock paper, and any
forms necessary for SI to meet the processing requirements of Client, as
well as adequate storage therefor.
3.8 Client's Input Data. All magnetic tapes and input data furnished
by Client to SI shall be in machine readable condition, accompanied by
control totals. Client assumes all risk of loss and expenses of
reconstruction of input data, except for loss caused by SI's negligence.
4. Data Processing Premises and Security.
4.1 Data Processing Premises. Client agrees to provide SI with
adequate premises, in good repair, to perform its responsibilities under
this Agreement (hereinafter the "Data Center") and to provide data
processing facilities to Bankers Trust, Inc. and its correspondents (up to
1350 square feet for programmers and CSR's). Without limiting the
generality of the foregoing, Client agrees to supply water, sewer, heat,
lights, telephone lines and equipment, air conditioning, electricity
(including, if desired by Client, an uninterruptable power system, battery
backup and backup generator capacity) and daily janitorial services. SI is
not responsible for any injury or damage to property or persons which
occurs in or around the data center unless it is caused by the negligent or
willful misconduct of SI. Client will provide telephone instruments and
telephone service for SI to communicate with the employees of Client,
Client's service bureau customers, if any, and as required by SI to operate
the Data Center. These instruments and service may be part of a Client
system used by Client personnel.
4.2 Security Standards. SI will adhere to such security standards
with respect to Client's data as may reasonably be imposed by Client,
including prehiring personnel investigative procedures and discharge of
personnel. Client will pay the costs for any modifications or additions to
the data center which are required by such security standards. Client will
reimburse SI for actual costs incurred if adherence to security standards
requested or required by Client increases SI's costs of operation.
<PAGE>
5. Software.
Effective on the Expiration Date (or the earlier Termination Date if this
Agreement is terminated by Client pursuant to the provisions of
Section 9.2), SI will grant and convey to Client and Client will accept a
license to use SI's proprietary application systems ("Software") listed in
Exhibit A, under the terms and conditions set forth in Exhibit G. However,
such software license shall be effective for only that Software delivered
to Client during the term of this Agreement. Client shall be entitled to
obtain other SI-developed software programs upon the execution of a
mutually acceptable license agreement.
5.1 Additional Licensed Programs. The license contemplated by this
Section 5 shall also apply to all SI-developed program modifications,
enhancements, new systems or major subsystems installed for Client's
benefit pursuant to this Agreement. SI will furnish Client, upon request,
a current list of all Software systems and subsystems developed and made
available by SI. SI will give Client ninety (90) days' notice prior to
eliminating updates for a particular system version of any SI-developed
program.
5.2 Software Warranty. Each of the warranties set forth in
Exhibit G, as well as the patent and trademark indemnity provisions of
Exhibit G, shall apply to the Software, and all enhancements, modifications
or changes thereto, furnished or used pursuant to this Agreement.
5.3 User Manuals. Prior to the installation of each Software system,
SI will deliver to Client two copies of the applicable User Manuals, and
thereafter, two copies of standard updates thereto. Client is responsible
for the initial personalization and for the maintenance, reproduction and
distribution of User Manuals. SI hereby consents to the reproduction of
User Manuals by Client solely for the internal use of Client in accordance
with this Agreement.
5.4 Third Party Software. SI will use all computer programs acquired
by Client from third parties or developed by Client without the assistance
of SI exclusively to process Client's data. Additional use of such
programs by SI shall require the written approval of Client. SI reserves
the right to review and/or test such programs, in advance of processing, to
assure compatibility with SI equipment and consistency with SI's processing
techniques. The Resident Staff (see Section 7.1) will provide support and
maintenance services with respect to such programs. Client may purchase
maintenance contracts
<PAGE>
for such programs in its discretion. Client will indemnify SI and hold SI
harmless from any loss, claim, damage or expense, including reasonable
attorneys' fees, resulting from any action brought or claim made by any
third party claiming superior title or right to protection of proprietary
information in respect of any such programs. SI shall observe and abide by
all provisions relating to confidentiality and proprietary information
contained in the License Agreement covering third party software being used
by SI pursuant to this Section.
5.5 Installation of New Systems and Subsystems. SI will install
regulatory changes, updates, new systems and subsystems using the Resident
Staff. SI will present to Client the features of and estimated hours
required to install such systems or subsystems. Client, at its option, may
elect to install the new system or subsystem or to continue use of the then
installed SI-developed system. Client will make every reasonable effort to
install new releases of SI-developed systems as soon as possible after the
new releases are made available to the data center.
5.6 Modifications Requested by Client. If requested by Client, SI
agrees to modify the SI-developed programs installed for Client by SI.
Implementation of such Client-authorized modifications will be performed by
the Resident Staff. Client understands that modifications may require an
increase in the time of performance and/or the Resident Staff to
subsequently install SI-developed updates, new systems or subsystems.
Client will endeavor to minimize the need for such modifications by
standardizing functions within holding company banks and making more
effective use of standard software functions.
5.7 Regulatory Reporting Requirements. During the term of this
Agreement, SI agrees to modify those SI-developed programs installed for
Client so that such programs will comply with the mandatory data processing
output requirements specified by federal regulatory authorities applicable
to Client. Program modifications necessary to meet state and local
regulatory requirements will be provided at Client's request by the
Resident Staff. Client agrees to make SI aware of any local or state
regulatory requirements not included in the requirements established by
federal regulatory authorities.
6. Education.
SI will make available to Client personnel, its standard application
software training courses, which are generally held in Little Rock,
Arkansas, in
<PAGE>
accordance with SI's Education and Training Department schedule, a current
copy of which will be provided to Client upon request. Client personnel
may attend such courses, and any other standard courses generally offered
by SI to its other customers, upon payment of SI's then current published
course fee, subject to normal space availability requirements and
compliance with SI's standard registration and enrollment deadlines and
procedures. Client will pay all of its travel and lodging expenses while
attending SI courses, whether included in Exhibit A or not.
7. Staffing; Computer Use.
7.1 Resident Technical Staff. SI will provide, the staffing level of
technical and analyst personnel set forth in Section 5 of Exhibit C (the
"Resident Staff"). Subject to a reasonable time for replacements in the
event of resignations or terminations, SI will maintain such staffing
levels throughout the term of this Agreement. Duties of the Resident Staff
shall include, but are not limited to, maintaining the systems reflected in
Exhibit A, installing program updates, installing new systems and
subsystems, programming resulting from regulatory changes, user interface,
communication and customer service, systems programming, attending
education classes, Client meetings and research meetings, as well as
Client-requested program modifications and general programming duties.
(a) Project Control - The Resident Staff will use a project management
system for Client projects, and SI will provide Client with output from
such system as frequently as weekly.
(b) Priorities - Client shall have the right to establish all programming
and project priorities. Changes in priorities, however, which require
reassignment of SI Resident Staff to other responsibilities may result in
an enlargement of SI's time to complete certain tasks hereunder.
(c) Resource Change Procedure - At Client's written request, SI will
increase or decrease the Resident Staff, as long as the staffing level is
not less than the minimum number set forth in Exhibit C. SI will promptly
respond to Client's request with a proposed fee schedule adjustment which
shall be reasonable in light of the related costs of salaries, recruiting,
relocation, severance (up to 90 days), and employee benefits which are
affected thereby, subject to provisions of Exhibit C, Section 5.2.
Quotations for increases or decreases in the Resident Staff will be in
minimum increments of one person for a minimum term
<PAGE>
of one year. SI will have up to 120 days to implement agreed changes in
the Resident Staff. If a Resident Staff position is vacated for any reason
other than a Client request as described in this Section 7.1(c) and remains
vacant for more than 120 days, SI shall give Client credit for the salary
and benefits (up to 19% of salary) beginning in the fourth month of the
vacancy. Such credit shall continue until the position is no longer
vacant.
(d) Temporary Non-Resident Personnel - If Client does not wish to re-order
priorities to permit the Resident Staff to perform additional services, or
to direct SI to increase the Resident Staff, Client may request SI to
provide additional non-resident personnel on temporary basis and SI will
provide such non-resident personnel on an as-available basis. SI will
promptly respond with a quotation for such non-resident personnel in
accordance with Section 6 of Exhibit C. If Client wishes to utilize the SI
personnel services quoted, Client will notify SI in writing, authorizing SI
to provide such services.
7.2 Special Computer Use. Client may use any SI computer time which
is available in the Data Center, without additional charge, for the
exclusive purpose of the performance of non-repetitive services requested
by Client or for use with regard to audit functions, provided that Client's
requests for SI to provide such non-repetitive services do not interfere
with SI's responsibilities under this Agreement. In conjunction with such
non-repetitive computer usage, SI will provide a computer operator and
Client will pay SI for related overtime, if any, incurred by such computer
operator.
8. Time of Performance.
The parties agree that timely and accurate submission of input and output
is essential to satisfactory performance under this Agreement. SI's time
of performance shall be enlarged, if and to the extent reasonably
necessary, in the event that: (a) Client fails to submit input data in the
prescribed form or in accordance with the schedules set forth in Exhibit D,
(b) an act of God, malfunction of any equipment which has been properly
maintained and serviced or other cause beyond the control of SI prevents
timely data processing hereunder, (c) special requests by Client or any
governmental agency authorized to regulate or supervise Client impact SI's
normal processing schedule; or (d) if Client fails to provide any
equipment, software, premises or performance called for by this Agreement,
and the same is necessary for SI's performance hereunder. SI agrees to
<PAGE>
propose for evaluation and selection by Client a method by which it can
most effectively comply with any such request. SI will notify Client of
the estimated impact on its processing schedule, if any. In the event of
an error in processing Client's data, SI promptly will correct such error.
Such correction of error shall be without charge to Client unless caused
by the nature of the data submitted by Client or caused by software
provided to SI by Client, and only if additional costs are incurred by SI.
Client carefully will review and inspect all reports prepared by SI, to
balance promptly to the appropriate control totals and within a reasonable
time after any error or out-of-balance control totals should be detectable,
Client agrees to promptly notify SI of any erroneous processing. If Client
fails to so notify SI, it shall be deemed to have waived its rights in
respect of such error and to have assumed all risks in respect thereof.
9. Performance Standards and Penalties.
9.1 Performance Benchmarks. The parties agree that timely and
accurate submission of input and output is essential to satisfactory
performance under this Agreement. The parties acknowledge that the
following is a list of acceptable time performance benchmarks. In the
event any performance is suspected or deemed unacceptable, Client or SI
shall mutually endeavor to research the cause of and initiate action for
correction as soon as practical.
9.2 On-Time Delivery - Output to Client. SI agrees to exercise
diligence to maintain a monthly average of 97.5% on-time delivery of
Client's output reports. SI agrees to submit a written report to Client on
monthly basis with the results of the previous month's performance.
9.3 On-Time Delivery - Input from Client. Client agrees to exercise
diligence to maintain a monthly average of 97% on-time delivery Client's
input data. SI agrees to submit a written report to Client on a monthly
basis with the results of the previous month's performance.
9.4 On-Line Uptime. SI agrees to exercise diligence to maintain a
monthly average of 98.5% on-line uptime, exclusive of scheduled
preventative maintenance, as measured at the SI host computer using SI's
on-line software. SI agrees to submit a written report to Client on a
montly basis with the results of the previous month's performance.
9.5 On-Line Response Time. SI and Client acknowledge the high relative
importance of maintaining mutually acceptable on-line response time
<PAGE>
for users of Client's on-line terminals. SI and Client agree that such on-
line response time (herein defined as the elapsed time between the time
inquiries and "entered" at the terminal and the time a related response is
"received" by the terminal) can be detrimentally affected by factors or
circumstances beyond the control of either SI or Client, and that Client
retains responsibility for final decisions regarding the use of line
speeds, modems, terminal control units, third party on-line software, and
other factors which may materially affect response times. SI will endeavor
to maintain an average on-line response time not to exceed five (5) seconds
per on-line inquiry and 99% of the responses not to exceed ten (10)
seconds. Average response time will be measured at the terminal location
by Client, or by SI at the request of the Client. SIMS or other ad hoc
file transfers are not subject to this response time benchmark. Down time
shall not be considered in measuring on-line response time.
In addition to the following, SI agrees to monitor the "host turn-around"
time (defined herein as the elapsed time between the time an inquiry is
received at the host computer and the time a related response is sent by
the host computer), and will endeavor to maintain a monthly average "host
turn-around time" of less than one (1) second. Such measurement will be
reported to Client monthly.
In the event that either "on-line response time" or "host turn-around time"
is suspected or deemed to be unacceptable to either Client or SI, then
Client and SI shall mutually endeavor to research the cause for such
deficiency, including the securing of assitance from Client's
communications carriers and communications equipment vendors.
9.6 Remedies. In the event that SI fails to meet the performance
benchmarks of 98.5% for on-line up-time set out in Section 9.4 and 97.5%
for on-time delivery of output reports as set out in Section 9.1 in any
three (3) consecutive months, Client shall have the option to give written
notice to SI specifying such failure, within thirty (30) days after the end
of the third month. If, after receipt of such notice, SI then fails to
meet the standards described above for any three months in the next twelve
(12) months after receipt of such notice, then Client shall have the option
to terminate this Agreement upon ninety (90) days written notice.
9.7 Force Majeure. All performance benchmarks calculated hereunder
shall be adjusted as appropriate if such benchmarks are not met because of
causes beyone the control of SI.
<PAGE>
9.8 Exclusive Remedy. The parties agree that remedies provided in
this Section are the exclusive remedies for failure to meet performance
standards established herein.
10. Termination.
In addition to the right to terminate under Section 9.6 above, this
Agreement may be terminated prior to the Expiration Date, as follows:
10.1 Right to Terminate. In addition to any other rights which
either party may have in law or equity, either SI or Client may terminate
this Agreement if the defaulting party fails to cure any default hereunder
within thirty (30) days of written notice from the other party, specifying
the nature and extent of any such default. Termination of this Agreement
shall not relieve either party of any liability for any breach of this
Agreement prior to the Effective Date of such termination.
10.2 Method of Termination. Exercise of the right to terminate under
this Section must be accomplished by specifying in such written notice to
the defaulting party, the nature and extent of such default and fixing a
date, on the last day of a month, not less than 180 days following the date
of receipt of such notice, for cessation of services hereunder (the
"Termination Date").
10.3 Data, Systems and Programs. If this Agreement expires, or if
Client terminates by virtue of SI's default, all licensed systems in
machine readable form and their related program source and object listings,
documentation, instructions or manuals used to process data for Client,
shall remain subject to Exhibit G. In addition, upon Client's request, SI
agrees to provide to Client copies of Client's data files, records and
programs on magnetic media.
10.4 Early Termination. Client may terminate the Agreement, effective
on or after two years from the Effective Date of the Agreement, upon
satisfaction of each of the following conditions: (a) Client shall have
been acquired (as defined herein); (b) within six months after it is
acquired Client shall have notified SI in writing of its intention to
terminate with such notice providing for a Termination Date not less than
twelve (12) months thereafter; and (c) Client shall have paid SI a fee,
which shall accompany the foregoing termination notice, equal to twenty
percent (20%) of the sum of the fees payable pursuant to this Agreement in
respect of the period following the early Termination Date reflected in the
foregoing notice, through and
<PAGE>
including the Expiration Date, with such amount discounted to present value
using a discount rate of eight percent (8%) per annum. This fee shall also
include termination of the Disaster Recovery Agreement (see Exhibit H).
Client and SI agree that this fee may be subject to negotiation if special
circumstances exist at the time of termination.
11. Transitional Cooperation.
After notice of termination and prior to the Termination Date, or for six
months prior to the Expiration Date, SI agrees that:
11.1 Offer of Employment. Client may offer employment to SI's data
center employees, except for the account manager.
11.2 Transition. SI will give full cooperation and support to Client
to assure an orderly and efficient transition to whatever method of
computer processing it may select.
11.3 Equipment. If Client wishes to utilize equipment owned or leased
by SI and installed in the data center, SI will not withdraw any such
equipment without first offering to Client, on a right of first refusal
basis, the right to purchase, or sublease such equipment. With respect to
equipment leased by SI, SI will allow (if and to the extent permitted by
the underlying lease) Client to sublease such equipment from SI at the
exact terms, conditions and costs of the lease then in effect. In
addition, Client may purchase at the Expiration Date or Termination Date,
as applicable, all but not less than all of the equipment owned by SI and
used in the data center, at a price equal to the sum of its net book value
or fair market value, whichever is the greater. Such offer will be made by
SI at least ninety (90) days and accepted or rejected at least sixty (60)
days prior to the Termination Date. Client may, at its option, negotiate
directly with any of the owners of leased equipment, to establish its
direct contractual relationship for equipment, and Client agrees to act
promptly in this regard.
11.4 Additional Support. Client shall have the option, exercisable
within ninety (90) days of delivery of a termination notice by either
party, to request up to 90 days of additional technical support from SI
subsequent to the Termination Date. Client will pay for such services at
SI's then current Hourly Rates.
<PAGE>
12. Backup, Storage, Files and Programs.
12.1 Files and Programs. SI agrees to provide and maintain adequate
backup files on magnetic media of Client data and all programs utilized to
process Client's data.
12.2 Storage. Client agrees to provide off-site storage for backup
data files and programs. Client agrees to pick up the backup data files
and programs from the data center, deliver them to its off-site storage
location, store them, and return them to the data center pursuant to
mutually agreed upon procedures and schedules. If requested by Client, SI
shall provide Client with a quarterly listing of the names of data files
and programs for verification of the items in storage. Client is solely
responsible for the physical security of such files and programs while not
in SI's possession.
12.3 Disaster Recovery. SI's fees expressed herein include Disaster
Recovery services (see Exhibit H) at no additional charge. Such
arrangements are designed to deal with circumstances which are expected to
cause any substantial portion of the capabilities of the data center to be
unavailable for a consecutive period exceeding 72 hours. Emergency backup,
as referred to below, is designed only for difficulties of a shorter
duration.
12.4 Emergency Backup. SI will establish and maintain arrangements
for emergency backup data processing for SI's processing commitments to the
Client under this Agreement. SI's policies and procedures concerning
backup are reflected in SI's Operations Guide. SI does not warrant such
backup will be available at the desired time, in sufficient quantities, or
in a nearby location. SI will work diligently with Client in an emergency
to restore on-line communications, including but not limited to vendor and
supplier contact and identification of alternate sites in which emergency
computing equipment could be installed. Client will pay all expenses
incurred, if any, in connection with emergency processing backup needs.
Client will define in writing from time to time the procedures it wishes SI
to follow regarding the use of emergency backup, and Client shall have the
right, to be exercised in its discretion, to direct SI to utilize such
backup capability, provided Client's processing is behind schedule.
Notwithstanding the foregoing, SI shall not be liable for any failure,
delay or interruption in data processing services pursuant to this
Agreement, in whole or in part, due to acts of God, strikes, or threats
thereof or force majeure or due to causes beyond the control of SI. Upon
written notice from Client, SI agrees to conduct
<PAGE>
appropriate tests of emergency backup arrangements and Client agrees to pay
for all travel, personnel and equipment expenses incurred in connection
with such testing. There shall be no additional personnel charge, however,
for participation in the testing of such backup arrangements by members of
the Resident Staff. Client acknowledges that emergency backup arrangements
hereunder do not constitute disaster recovery capabilities (see
Section 11.3).
13. Service Bureau Customers.
13.1 Client's Service Bureau Customers. Client may continue to
contract with its present service bureau customers, if any, both for
existing and new applications.
13.2 SI's Service Bureau Customers. SI may not process data for any
third parties, other than Bankers Trust and its correspondents, at the Data
Center without written permission from the Client. Such permission, if
granted, will be on an individual customer basis and will be valid for the
remainder of the contract term, for that customer. If SI processes any SI
service bureau customers in the Data Center other than Bankers Trust and
its correspondents, SI shall pay Client five percent (5%) of the additional
revenue received from such service bureau processing, effective for each
such customer with the first month following completion of the related
conversions.
14. Effective Planning and Communication.
14.1 Steering Committee. SI and Client agree that effective planning
and communication are necessary to provide overall direction for Client's
data processing, and that each will work to promote a free and open
exchange of information between SI personnel, Client senior management and
Client user departments. Members of SI's Data Center management and the
Resident Staff may participate actively with Client's management and users
in making and implementing day-to-day plans for Client's data processing.
In addition, a joint data processing steering committee will be established
to facilitate such planning and to encourage a periodic review of
priorities and long-term objectives. SI's account manager and programming
manager shall be non-voting members of such committee. In addition, if
requested by Client, SI's account manager will serve as chairman of the
data processing steering committee, and will solicit input from the other
members for appropriate agenda items. SI will maintain and distribute
copies of minutes of meetings of the data processing steering committee.
Client personnel who shall be members of such
<PAGE>
committee shall include such senior management personnel as Client deems
appropriate from time to time. The data processing steering committee
shall meet regularly (initially, once per month).
14.2 Audit Conference. SI will cooperate fully with Client or its
designee in connection with Client's audit functions or with regard to
examinations by regulatory authorities. Client acknowledges that SI is not
responsible for providing audit services or for auditing Client's records
or data. Following any audit or examination, Client will conduct (in the
case of an internal audit), or instruct its external auditors or examiners
to conduct an exit conference with SI and, at such time, and as soon as
available thereafter, to provide SI with a copy of the applicable portions
of each report regarding SI or SI's services (whether draft or final)
prepared as a result of such audit or examination. Client also agrees to
provide and to instruct its external auditors to provide SI, a copy of the
portions of each written report containing comments concerning SI or the
services performed by SI pursuant to this Agreement.
14.3 Annual Executive Review. At least once during each contract year
of this Agreement, the parties will engage in an Executive Review. Such
Executive Review shall be held between the Chief Executive Officers or
Presidents of each party and other senior management personnel of each
party as designated by the respective Chief Executive Officers or
Presidents. Such Executive Review shall be held at a site which is
mutually agreeable or may be conducted telephonically, by teleconference or
by any means which is mutually agreeable. Each party will bear all its own
costs associated with such Executive Review. The parties shall exchange
agenda items for such review and each item shall be thoroughly discussed.
Such agenda items shall include, but not necessarily be limited to,
performance of the parties during the current year, plans and directions of
the parties during the upcoming year, technological and other changes which
may impact the banking or data processing industries or other forces within
the respective industries which will affect the performance of the
Agreement by either party.
15. Payment and Billing.
Client agrees to pay SI for the services performed hereunder in accordance
with the fees set forth in this Agreement, pursuant to invoices prepared
and delivered to Client. All processing fees shall be payable on the first
day of each month, for services to be rendered during that month except for
Additional Volume Fees specified in Section 3.2 of Exhibit C,
<PAGE>
which shall be reflected in the first monthly invoice after the relevant
usage data is available and payable by Client promptly following receipt
thereof.
16. No Interference with Contractual Relationship.
Client warrants that, as of the date hereof, it is not subject to any
contractual obligation that would prevent Client from entering into this
Agreement, and that SI's offer to provide such services in no way caused or
induced Client to breach any contractual obligation.
17. No Waiver of Default.
The failure of either party to exercise any right of termination hereunder
shall not constitute a waiver of the rights granted herein with respect to
any subsequent default.
18. Processing Priorities.
To comply with the requests of applicable bank regulatory authorities, SI
agrees that Client's processing will have priority over all other
processing in the Data Center. SI agrees that processing for financial
institutions shall have priority over processing for non-financial
institutions, if any. In addition, if any emergency requires a change in
the processing schedule set forth in Exhibit D, SI and Client agree to
negotiate in good faith to adjust the processing schedule and related
priorities in light of then prevailing circumstances.
19. Mergers and Acquisitions.
Upon written request by Client, SI will process additional data resulting
from any merger or acquisition involving either Client or any of its
service bureau customers; subject to Client's payment of additional volume
fees reflected in Section 3 of Exhibit C, and subject to agreement on the
fees, if any, applicable to related conversion and testing services.
Client will notify SI of any such proposed merger or acquisition as soon as
reasonably practicable.
20. Entire Agreement.
This Agreement and the exhibits hereto contain the entire agreement of the
parties and supersedes all prior agreements whether written or oral with
respect to the subject matter hereof. Expiration or termination of any
part of this Agreement shall terminate the entire Agreement except
<PAGE>
for any portion hereof which expressly remains in force and in effect
notwithstanding such termination or expiration. Modification or amendment
of this Agreement or any part thereof may be made only by written
instrument executed by both parties.
21. Assignment.
Neither party hereto shall assign, subcontract, or otherwise convey or
delegate its rights or duties hereunder to any other party without the
prior written consent of the other party to this Agreement, which consent
shall provide that it is subject to all the terms and conditions of this
Agreement. Subject to the provisions of Exhibit G, no such consent shall
be required in the event of a merger, consolidation, sale of substantially
all of the assets, or any other change of control of either party hereto,
in which event, this Agreement shall apply to, inure to the benefit of, and
be binding upon the parties hereto and upon their respective successors in
interest.
22. Confidential Agreement.
This Agreement is a confidential agreement between SI and Client. In no
event may this Agreement be reproduced or copies shown to any third parties
by either Client or SI without the prior written consent of the other
party, except as may be necessary by reason of legal, accounting or
regulatory requirements beyond the reasonable control of SI or Client, as
the case may be, in which event SI and Client agree to exercise diligence
in limiting such disclosure to the minimum necessary under the particular
circumstances.
23. Taxes.
Client will pay directly or reimburse SI for all sales, use or excise
taxes, however designated, levied or based, on amounts payable pursuant to
this Agreement, including state and local privilege or excise taxes based
on gross revenues under this Agreement or taxes on services rendered or
personal property taxes on the systems licensed hereunder. Client shall
not be responsible for any taxes levied on the personal property or net
income of SI. Notwithstanding the foregoing, if taxes not currently in
effect are imposed upon Client which would not have been applicable to
Client in the absence of this Agreement, the foregoing provision shall not
be deemed to supersede Client's right, if any, to rescind the Agreement on
the basis that it has thereby become so economically burdensome as to alter
the essential nature of the Agreement.
<PAGE>
24. Independent Contractor.
It is agreed that SI is an independent contractor and that:
24.1 Client Supervisory Powers. Client has no power to supervise,
give directions or otherwise regulate SI's operations or its employees,
except as herein provided for security of Client's data and detection of
errors in processing.
24.2 SI's Employees. Persons who process Client's data are employees
of SI and SI shall be solely responsible for payment of compensation to
such personnel and for any injury to them in the course of their
employment. SI shall assume full responsibility for payment of all
federal, state and local taxes or contributions imposed or required under
unemployment insurance, social security and income tax laws with respect to
such persons.
24.3 SI as an Agent. SI is not an agent of Client and has no
authority to represent Client as to any matters, except as authorized
herein.
24.4 Workers Compensation. Without limiting the generality of the
foregoing, SI agrees to maintain, throughout the term of this Agreement,
applicable statutory Workers' Compensation insurance with an insurance
company authorized to write such insurance in Iowa covering each employee
who shall perform any service hereunder. SI shall also require that any
sub-contractor engaged by SI to provide services hereunder (a "Sub-
contractor") shall also provide applicable statutory Workers' Compensation
insurance for its employees. SI also agrees to maintain, throughout the
term of this Agreement, employer's liability insurance with a limit of
$100,000, with an insurance company authorized to write such insurance in
Iowa, and SI shall require each Sub-contractor to maintain such insurance
on its employees.
25. Client and SI Employees.
Except as specifically set forth in Section 10, above, both Client and SI
agree not to offer employment to any employee of the other without the
prior written consent of the other.
26. Previous Liabilities.
The parties hereto agree to indemnify the other and hold the other harmless
against any loss (including attorney's fees and expenses) arising
<PAGE>
out of any claims or lawsuits filed or subsequently filed as a result of
the acts of the other party which occurred prior to the Effective Date of
this Agreement.
27. Notices.
All notices, requests and demands, other than routine operational
communications under this Agreement, shall be in writing and shall be
deemed to have been duly given when deposited in the United States mail,
registered or certified postage prepaid, and addressed to the other party
at the address first shown above and to the attention of the president of
said party. Notice of changes of address, if any, shall be given in like
manner.
28. Covenant of Good Faith.
SI and Client agree that, in their respective dealings arising out of or
related to this Agreement, they shall act fairly and in good faith.
29. Limitation of Liability.
If either party shall breach any covenant, agreement or undertaking
required of it by this Agreement, the parties agree that the liability of
the breaching party shall be limited to direct damages caused by said
breach, and shall not include any special, indirect or consequential
damages.
30. Insurance.
A schedule of SI's current insurance coverage has been furnished to Client
prior to the Effective Date of this Agreement and is attached hereto as
Exhibit I.
31. Section Titles.
Section titles as to the subject matter of particular sections herein are
for convenience only and are in no way to be construed as part of this
Agreement or as a limitation of the scope of the particular sections to
which they refer.
32. Counterparts.
This Agreement may be executed in several counterparts, each of which shall
be deemed to be an original, but all of which shall constitute one and the
same instrument.
<PAGE>
33. Audited Financial Statements.
Annually, SI will provide to Client a copy of SI's annual financial
statements which may be on a consolidated basis.
34. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Iowa.
IN WITNESS WHEREOF, this Agreement has been executed by the undersigned
officers, thereunto duly authorized, on the 2nd day of January, 1992.
SYSTEMATICS FINANCIAL BRENTON INFORMATION
SERVICES, INC. SYSTEMS, INC.
By: /s/ By: /s/
Name: Collins A. Andrews Name:-Saulene M. Richer
Title: Executive Vice Title:-SVP/Marketing & Technology
President
Date: 1/2/92 Date: 1/2/92
<PAGE>
Client: Brenton Information Systems, Inc.
Effective Date: December 1, 1991
EXHIBIT "A"
APPLICATION SYSTEMS
1. The following systems currently are installed at the Data Center and
are being used to process Client's data:
1.1 SYSTEMATICS
IMPACS
Savings/Time
Financial Management System
Accounts Payable
Real Estate Loans
Commercial Loans
Installment Credit
Central Information File
Item Reconciliation
SIMS
Transaction System
Tax System
Warehouse Window Transactions
On-Line Collections
Inter-System Transfer
1.2 NON-SYSTEMATICS
Voice Response (Syntellect)
E-Mail (MacKinney)
Platform Automation (Branch Banker)
Atragen
Safe Deposit Boxes
Optical Disk (Pro-Access)
Atchley Systems Compliance (Comply/CTR) System
<PAGE>
2. Client may use any SI-developed application system to process Client
data. Additional cost may be involved in the installation and/ or use of
these applications. Client will not pay additional license fees to use
such software.
<PAGE>
Client: Brenton Information Systems, Inc.
Effective Date: December 1, 1991
EXHIBIT "B"
REPORTS
1. Current Reports.
The reports or output from Client's present systems will be produced by SI
during the term of this Agreement, unless such system(s) are replaced in
accordance with the terms of this Agreement or by mutual agreement between
the parties.
2. SI Reports.
Client may select from among the reports available for each of the
application systems listed in Exhibit A, as set forth in the standard SI
user documentation thereof.
3. Additional Reports.
SI will add or delete from either the SI or current reports at Client's
request, or to change the frequency of their preparation. If the
cumulative effect of changes in requested reports requires personnel and/or
computer equipment in excess of that required without such changes, SI
agrees to notify Client and prepare a price quotation, based upon the costs
of such additional computer equipment. Upon receipt of authorization from
Client in writing, SI will immediately proceed to acquire such additional
personnel and/or equipment and prepare and deliver all such reports.
<PAGE>
Client: Brenton Information Systems, Inc.
Effective Date: December 1, 1991
EXHIBIT "C"
CHARGES
1. Fee Schedule.
Client will pay SI, a minimum fee of $10,650,300.00 payable in monthly
installments as set forth in the following table:
Applicable Period Amount of Monthly Payment
Months 1 - 12 $181,091
Months 13 - 24 $179,280
Months 25 - 36 $177,487
Months 37 - 48 $175,712
Months 49 - 60 $173,955
2. Additional Responsibilities of the Parties.
Except as otherwise provided, Client and/or its service bureau customer(s)
are responsible for the operation of any of its data processing facilities
other than the Data Center. Such facilities are hereinafter termed
"remote". Client and SI agree to provide or perform their respective
responsibilities as indicated in Section 2.1 through 2.4 below and
responsibilities of Client's service bureau customer(s) shall be indicated
as responsibilities of Client.
*This information is considered confidential and has been separately filed
with the Commission
<PAGE>
RESPONSIBILITY
FUNCTION CLIENT SI
2.1 Input Processing.
Key entry of input (other than MICR) X ___
Key entry Equipment and maintenance X ___
(other than MICR)
Key entry of MICR rejects X ___
Key entry equipment and maintenance X ___
for MICR rejects
MICR entry computer operation X ___
MICR reader/sorter operation X ___
MICR entry reconciliation X ___
MICR reject reconciliation X ___
MICR "junk letter" key entry X ___
Key entry or encoding of MICR input X ___
Equipment and maintenance for key entry X ___
or encoding of MICR input
Microfilming MICR input X ___
Equipment and maintenance for X ___
microfilming MICR input
Supplies and development costs for X ___
microfilming MICR input
MICR reader/sorter equipment and maintenance X ___
MICR sorter vendor usage fees X ___
Personal computers used by other than SI X ___
Remote MICR capture/printer operations X ___
Remote MICR capture/printer equipment and X ___
maintenance
In-line microfilm equipment and operation X ___
2.2 Output Processing.
MICR transit item end point separation X ___
MICR transit cash letter preparation X ___
MICR "on us" fine sort by account number X ___
Bursting ___ X
Bursting equipment and maintenance ___ X
Decollation ___ X
Decollation equipment and maintenance ___ X
Check signing X ___
Check signing equipment and maintenance X ___
<PAGE>
RESPONSIBILITY
FUNCTION CLIENT SI
Reports separation by bank ___ X
Delivery to courier ___ X
Remote printing equipment and maintenance X ___
Tracking inventories of paper stock and forms ___ X
2.3 Non-Mainframe Software.
Except as specifically set forth herein, Client will provide and maintain
all non-mainframe software. Where SI provides any such software, it is
listed above in Exhibit A and the following provisions shall apply:
Payment of related license fees X ___
Payment of maintenance and enhancement fees X ___
Modifications necessary for interface with X ___
SI software
2.4 Telecommunications Network Control. SI agrees to: (a) accept reports
of network problems and coorindate with all parties involved (including
vendors) to obtain a resolution to network problems; (b) work with and
coordinate between Client personnel and other data center personnel toward
operation of the on-line network to meet reasonable Client needs; and
(c) work with and coordinate between Client personnel and other data center
personnel in establishing additions and/or making changes to the network.
If Client elects to acquire any equipment or software for on-line network
monitoring or problem resolution,Client agrees to pay the costs thereof.
SI will, from time to time, recommend to Client equipment and software for
network monitoring.
3. Additional Volume Fees.
The fees expressed in Section 1 of Exhibit C are for processing the
applications and base volumes set forth below. Client will pay SI for
additional volumes of work processed in accordance with this Section 3.
Increased volume may result from internal growth, mergers or acquisitions
or a combination thereof.
<PAGE>
3.1 Definitions.
As used herein, the term "Core Accounts" shall mean the number of accounts
on the master file at month-end with respect to the applications marked
with an asterisk (*) in Section 3.2 of this Exhibit C.
3.2 Applications Processed and Core Accounts.
The following applications will be processed by SI for the fees set forth
in this Exhibit C:
Core Applications
* IMPACS
* Demand deposit accounting
* Overdraft checking
* SAVINGS/TIME DEPOSIT
*Savings - Regular
*Savings - Golden
*Christmas Club
*Certificates of deposit
*IRA
* INSTALLMENT CREDIT
* COMMERCIAL LOANS (notes)
* COMMERCIAL LOAN (Customers)
* REAL ESTATE (mortgage loan notes)
* FMS (general ledger)
Other Applications
Tax System
Warehouse System
On-Line Collections
Item Reconciliation
Inter-System Transfer
CIF
SIMS
Transaction System (TS)
Voice Response
Atchley Systems Compliance (Comply/CTR) Systems
SMART
Profitability
<PAGE>
3.3 Base Volumes and Additional Volume Charges.
Client has advised SI that the volume of Core Accounts for Client and its
service bureau customers, if any, at November 1, 1991, was 266,097 Core
Accounts (the "Base Volume of Core Accounts").
If the sum of the Core Accounts for Client and its service bureau customers
exceeds 125% of the Base Volume of Core Accounts, Client will pay SI a
monthly amount equal to the product of the number of Core Accounts in
excess of 359,230, multiplied by $.21 per accounts.
Actual volumes of Core Accounts will be measured on the last day of each
month. If actual volume is less than base volume, no additional volume
charge will apply; no shortfall shall be cumulative; nor shall any credit
apply to any other charge under this Agreement.
Client may request SI to quote the incremental cost of processing
additional volumes from acquisitions and may, at its option, pay either the
incremental cost or .21 per account. Should an acquisition occur that
causes Core Accounts to increase more than fifty percent (50%), (i.e., more
than 399,146), SI and Client will promptly negotiate in good faith to
establish a revised Additional Volume Charge not to exceed $.21 per
account.
Additional volume charges do not cover fees or expenses, if any, which may
be applicable to conversions resulting from acquisitions by Client or its
service bureau customers. SI will provide conversion assistance related to
such acquisitions pursuant to Section 7 of the Agreement.
Volume reductions by Client shall not result in a reduction of fees below
the monthly fees set out in Section 1 of this Exhibit C; however, if
volumes are reduced to a level less than seventy-five percent (75%) of the
Base Volume of Core Accounts, SI and Client will negotiate in good faith to
establish a new base monthly fee.
In addition, Client-requested changes in the output schedule, in third-
party software or in copies made (laser printer, fiche, etc.) may require
personnel and/or equipment additions. If any such Client-requested change
is expected to have such an impact, SI
<PAGE>
will advise Client in writing, and the parties will negotiate in good faith
a mutually agreeable additional charge.
4. DASD Capacity.
If Client wishes to make a material change in the length of data records or
in the amount or kinds of data available in on-line data files, SI will
provide a written quotation of the cost to Client of additional DASD
capacity to support such change(s). If approved by Client, SI will acquire
the additional DASD capacity and the appropriate adjustment will be made to
the fees reflected in Section 1 of this Exhibit C.
5. Resident Staff.
5.1 SI agrees to provide the following Resident Staff during the term
of this Agreement:
Resident Minimum
Programming
Dedicated to New Releases* 3.5 FTE 3.0 FTE
Discretionary** 2.5 FTE 0 FTE
Client Services 3 2
PC Support 2 0
* These resources will keep the SI application systems current to within
one release of the latest release.
** These resources will work on projects as directed by Client.
SI will also provide one additional programmer to Client at no cost to
Client until March 31, 1992.
5.2 Client shall receive a monthly billing credit of at least $11,618
if it elects to eliminate all PC support positions from the Resident Staff.
6. SI Hourly Rates.
The following hourly rates are currently in effect. The SI hourly rates
may be changed by SI upon written notice to Client not more often
<PAGE>
than once during each twelve month period following the Effective Date.
SI's Hourly Rates for programming include all related computer time
required for program testing. Overtime rates are only applicable, if and
to the extent, SI will incur overtime expense. SI fees are computed by
multiplying the actual personnel hours extended on Client's project(s)
including any travel time to and from Client location(s). In addition,
Client agrees to reimburse SI for the actual expense of reasonable travel
and lodging expense, if any, related to hourly rate based services
requested by Client. SI will inform Client, in advance, if overtime or
travel and lodging expense is anticipated to be incurred.
Regular Overtime Minimum
Hourly Rate Hourly Rate Billable
Per Person Per Person Increment
Per Person
Programmer $90.00 N/A 4 Hours
Computer Operators $15.00 $22.50 N/A
In addition, Client will pay all reasonable travel and subsistence costs
incurred by SI's employees in performance of any such additional services.
7. Price Adjustment.
The parties acknowledge that SI's cost of providing services pursuant to
this Agreement are likely to increase, particularly in the areas of data
processing salaries and operating system maintenance. The fees and charges
reflected in this Agreement will be increased, but not decreased, based on
the effect of inflation. Effective with the monthly billing for the
thirteenth month and again annually thereafter, such fees will be adjusted
using a combination of the Consumer Price Index for All Urban Consumers -
Other Goods and Services (the "CPI") and the Employment Cost Index for
White Collar Workers (the "ECI"), both as published by the U.S. Department
of Labor, Bureau of Labor Statistics. The percentage increase in such fees
shall be equal to the sum of:
(a) 0.7 multiplied by the percentage increase in the ECI; and
(b) 0.3 multiplied by the percentage increase in the CPI.
<PAGE>
The percentage increases in the ECI and in the CPI used in computing the
fees that are to become effective with the thirteenth month shall be the
respective percentage increases in those indices over the one-year period
ended July 30, 1992. The percentage increases in those indices used in
computing the fees that are to become effective in the subsequent annual
periods shall be the respective percentage increases in the indices over
the subsequent twelve month periods commencing with the ninth, twenty-
first, etc. contract months.
Method of Calculation of Increase in Monthly Fee
1. ECI Actual - ECI Base x 0.7 = ECI Percentage Increase
2. CPI Actual - CPI Base x 0.3 = CPI Percentage Increase
3. CPI Percentage Increase + ECI Percentage Increase =
Total Blended Increase (not less than zero)
4. (SI Montly Fees x. Total Blended Increase) + SI's Monthly
Fees = Adjusted Fee
Where:
ECI Actual = The ECI Index in effect on the date used to calculate the
increase (i.e., the ninth, twenty-first, twenty-seventh and each succeeding
12th month during the term of this Agreement)
ECI Base = The ECI Index in effect on December 1, 1991
CPI Actual and Base = See ECI definition above
SI's Monthly Fees = All fees payable hereunder
Adjusted Fees = SI's Monthly Fees to be paid during applicable twelve (12)
month period.
8. Non-Systematics Software.
8.1 At Client's request, SI will provide for use at the Data Center,
the Atchley Systems Compliance (Comply/CTR) Software System ("CTR").
Beginning at such time as the CTR System is provided, in addition to all
other fees and charges payable under the Agreement, Client shall pay to SI
a monthly maintenance fee
<PAGE>
of $550.00 for providing and maintaining the CTR System. This monthly
maintenance fee of $550.00 will be divided equally among all institutions
subscribing to use the CTR System. For example, if five (5) institutions
are subscribing to use the CTR System, each institution would pay $110.00
monthly. If one institution subscribes to use the CTR System such
institution would pay $550.00 monthly. In addition, a monthly $135.00
usage fee will be due for each individual institution utilizing the CTR
System, regardless of the number of such institutions. Such monthly fee
shall be in addition to all other fees payable under the Agreement, shall
be reduced by one percent (1%) on the annual anniversary date of the
Agreement, and shall be adjusted in accordance with Section 7 of Exhibit C
of the Agreement.
8.2 SI shall provide and maintain the 24-line Infobot/Monach
Syntellect Voice Response System and Turnkey Voice Response Applications
("Voice Response System"). Client shall provide all necessary telephone
lines, modems or other defined communications devices to support the
operation of the Voice Response System. Client shall pay, in addition to
all other fees payable under this Agreement, a monthly fee of $2,348.00.
Such monthly fee shall in addition to all other fees payable under this
Agreement, shall be reduced by one percent (1%) on the annual anniversary
date of the Agreement and to $1,305 in month 61, and shall be adjusted in
accordance with Section 7 of Exhibit C to the Agreement. Upon the
expiration or termination of this Agreement, Client may purchase this
equipment subject to the provisions of Section 11.3 of the Agreement.
8.3 SI shall replace Client's existing microfiche archival system with
the INFO-SEARCH Report Storage and Information Retrieval System ("INFO-
SEARCH System") described below. Beginning the month after microfiche is
no longer produced by SI for the Client, SI shall credit Client's base
monthly fee payable under Section 1.1 of Exhibit C in the amount of
$6,311.00.
In consideration for providing, installing and maintaining the INFO-SEARCH
System, Client shall pay to SI a monthly fee of $7,377.00 payable
beginning the month after the installation of the INFO-SEARCH System. Such
monthly fee shall be in addition to all other fees payable under the
Agreement, reduced one percent (1%) on the annual anniversary date of the
Agreement, and shall be adjusted in accordance with Section 7 of Exhibit C
of the Agreement.
<PAGE>
Client shall provide all necessary telephone lines, modems or other defined
communications devices to support the INFO-SEARCH System.
Upon expiration or termination of this Agreement, Client may purchase this
equipment subject to the provisions of Section 11.3 of the Agreement.
8.4 SI shall provide for use at the Data Center the Mobius-Infopac
software system. Beginning at such time as Infopac is provided, in
addition to all other fees and charges payable under the Agreement, Client
shall pay to SI a monthly fee of $1,350.00 for providing the software.
This fee will be reduced in month 61 to the then-applicable software
maintenance fee. Such monthly fee shall be in addition to all other fees
payable under the Agreement, shall be reduced by one percent (1%) on the
annual anniversary date of the Agreement, and shall be adjusted in
accordance with Section 7 of Exhibit C of the Agreement.
INFO-SEARCH System Configuration
Description Quantity
Gateway 2000 Personal Computer Two (2)
80386 Processor/33 Megahertz
4MB Memory
Math Coprocessor
300 Megabyte Disk Drive
1.2 Megabyte 5.25" Floppy Drive and/or
1.44 Megabyte 3.5" Floppy Drive
VGA Video Card w/132 Column Capability
VGA Monitor
MSDOS 3.3 Operating System w/Manuals
Formatted w/Disk Manager
Dot Matrix Printer Two (2)
M4 Tape Drive/6250 BPI/16 Bit Board One (1)
Fax Board - AT Compatible
(Internal 4800 Baud Modem) Two (2)
Optical Disk Drive (AT Bus/MCA PC)
(2 each stand-alone/LAN) Four (4)
<PAGE>
FAX Board - MCA Compatible (LAN) Two (2)
Pro-Access Software License
(Stand-alone) Two (2)
Pro-Access Software License - LAN One (1)
PC Anywhere Remote Diagnostics Two (2)
Map Assist Optical Redirector One (1)
<PAGE>
Client: Brenton Information Systems, Inc.
Effective Date: December 1, 1991
EXHIBIT "D"
REPORTING SCHEDULE
This Exhibit D will be completed prior to the Effective Date of this
Agreement. The delivery schedules for input and output in effect on the
execution date of this Agreement are set forth herein. This Exhibit D may
be changed from time to time, by mutual agreement of Client and SI.
1. Client Delivery Schedules
1.1 Client Input to SI.
Time Available
for SI Processing
Daily (Monday through Saturday)
Monetary Input
Inclearings 1:00 to 2:00 p.m. 100%
POD transmission completed by FHLB 11:30 p.m. 100%
Transmission completed from Originator
ACH Tape(s) 8:00 a.m., 3:00 p.m.
Non-Monetary Input
Payroll (Automated Transmission
from CDC/ADP) 5:00 p.m.
BCR Build/Update Entry 3:00 p.m.
ARM Entry 1:00 p.m.
CAPS Input 4:00 p.m.
<PAGE>
1.2 SI Output to Client.
Daily (Monday through Friday) Time Available
for Client Pick-Up
All Application Reports 5:30 a.m. following business
day
Fine Sort, Cycle and Exception Files
(available to FHLB)
Transmission commences 3:00 a.m.
DDA Statements Noon following day
ACH Tape(s) 12:01 a.m. following day
Optical Support 8:00 a.m. - 5:00 p.m.
Weekly (Sat., Sun., Business Day of Week)
ITS Reports Tues. 5:00 a.m. following day
Monthly (EOM Business Day of Month)
Accounts Payable 1st business day following
Billing 1st business day following
Account Analysis 3rd business day following
DDA Statements 1:00 p.m. - 5:00 p.m. following business
day
Savings Statements 5:00 p.m. following business day
Office Reporting 2nd following business day
IL & RE EOM Jobs 2nd following business day
EFT End of Month 2nd following business day
Quarterly (EOQ Business Day of Quarter)
Savings Statements 5:00 p.m. following business day
Year-End
1099 - Int. Processing
(tape output) 2nd business day following EOY
Interest Registers/Notice 2nd business day following
EOY
General Ledger closing - by request
IRA Statements (2nd business day following EOY)
<PAGE>
1.3 Client On-Line Availability.
Mon.-Fri. Saturdays Sundays Holidays
From To From To From To From To
Administrative* 7:30 6:30 7:30 3:30 11:00 4:00 7:30 6:30
a.m. p.m. a.m. p.m. a.m. p.m. a.m. p.m.
except New
Years
Teller Terminal
ATM 5:30 5:00 5:30 5:00 24 hours 5:30 5:00
a.m. a.m. a.m. a.m. a.m. a.m.
FMS Reports 9:30 6:30 9:30 3:30
a.m. p.m. a.m. p.m.
All other
reports 7:30 6:30 7:30 3:30
a.m. p.m. a.m. p.m.
1.4 Additional Schedules - Client.
*Available for Inquiries
Monday, Thursday until 8:00 p.m.
Tuesday, Wednesday until 7:00 p.m.
Friday until 7:30 p.m.
1.5 Batch Processing Update Frequency.
SI will do a batch update of Client's file five (5) times weekly, Monday
through Friday.
<PAGE>
Client: Brenton Information Systems, Inc.
Effective Date: December 1, 1991
EXHIBIT "E"
EQUIPMENT LEASE
To be used only if SI leases equipment to Client
<PAGE>
Client: Brenton Information Systems, Inc.
Effective Date: December 1, 1991
EXHIBIT "F"
CLIENT-FURNISHED EQUIPMENT AND SOFTWARE
Client will furnish to SI the equipment and software ("Equipment" and
"Software") described below under the following terms and conditions:
1. Term of Agreement.
The term of this Exhibit F is the same as the term of this Agreement.
2. Taxes.
Client will pay all taxes, however designated or levied or based on the
Equipment or Software or their use.
3. Risk of Loss; Replacement.
Except for loss or damage caused by the negligence or intentional
misconduct of SI, SI shall not be responsible for any loss or damage to the
Equipment or Software.
If any Equipment or Software furnished hereunder is damaged, destroyed or
malfunctions to the extent that the same cannot be repaired, or Client
elects not to so repair then, provided such damage or malfunction was not
caused by SI as set forth above, Client agrees to acquire and install, as
soon as reasonably practicable, comparable replacement Equipment or
Software.
4. Charges.
No charge shall be payable by SI for its use of the Equipment or Software.
Services provided under the Agreement by SI are acknowledged by Client to
be adequate consideration of Client's agreement to provide such Equipment
and Software.
<PAGE>
5. Insurance.
Client is responsible for the cost of all fire, extended coverage and theft
insurance in an amount covering the Equipment.
6. Maintenance.
Client agrees to enter into and to keep in force during the term hereof, at
Client's sole cost and expense, standard maintenance agreements to keep the
Equipment in good working order, to make all necessary adjustments and
repairs thereto, and to pay all maintenance costs relative to the use of
the Equipment. Client also agrees to purchase software maintenance
agreements from the vendors of each item of Software listed below.
SOFTWARE SCHEDULE
The following is a list of the Software to be provided by Client to SI
pursuant to the Agreement and this Exhibit F. The Termination Date, if
any, represents the date after which Client is no longer obligated to
provide the same to SI.
Equipment
None
Software
Name and Description of Name of Software Termination Date
Software Owner
Paperless Entry
Processing Stockholder Systems 11/30/1996
Corporate Automated
Payment Stockholder Systems 11/30/1996
ListCat Plus MacKinney Systems 11/30/1996
Source Program Compare MacKinney Systems 11/30/1996
<PAGE>
Client: Brenton Information Systems, Inc.
Effective Date: December 1, 1991
EXHIBIT "G"
SOFTWARE LICENSE AGREEMENT
1. Provision of Software.
1.1 SI agrees to license and furnish to Client the SI application
systems listed in Exhibit A to the Agreement if such systems are delivered
prior to the expiration or termination of the Agreement. Such application
systems are hereinafter referred to as the "Software".
2. Documentation.
2.1 For each item of Software, SI shall also deliver to Client a
complete set of standard operational instructions and documentation,
including, but not limited to, the Software source code in machine readable
form; a copy of SI's standard associated control statements used for
operation, development, maintenance and use of the source code, and any
other documentation which is provided by SI to its other similar customers.
Such documentation and other materials are hereinafter referred to as
"Documentation."
2.2 Subject to the provision of Section 4, below, SI agrees to deliver
to Client copies of any revisions, improvements, enhancements,
modifications and updates to the Documentation which are produced by SI.
2.3 Client may copy the Documentation provided hereunder in order to
satisfy its own internal requirements. If Client requests, SI agrees to
furnish additional copies to Client at SI's then standard fee for such
copies.
3. Term and Use Restrictions.
3.1 This is a perpetual license. Client acknowledges that the
licensed Software and all related Documentation constitute valuable assets
<PAGE>
and trade secrets of SI and that all information with respect thereto is
confidential. The Software is licensed to Client only for use by Client
for itself, its subsidiaries and affiliates.
3.2 Client agrees to safeguard the licensed Software with at least the
same degree of care that it exercises with respect to its own confidential
and proprietary information, and shall take all reasonable precautions to
assure that its employees and representatives do not sell, lease, assign,
or otherwise transfer, disclose or make available, in whole or in part, the
licensed Software or Documentation thereof to any third party for any
reason (except for employees of Client, for auditing purposes by
independent certified public accountants, for complying with applicable
governmental laws, regulations or court orders or for the limited
disclosure to customers of Client of user manuals and similar information
which must be disclosed in connection with providing data processing
services by Client). With prior approval of SI, Client may make licensed
Software or Documentation available to any third party that has a valid
license to the same version of the Software, as provided by this Software
License Agreement. SI shall not arbitrarily deny such approval provided
Client has complied with all other provisions of this Software License
Agreement. In no event, however, shall any competitor of SI be furnished
with any information, directly or indirectly, concerning the Software or
the Documentation.
3.3 The licensed Software and all related Documentation and materials
may be used by Client and maintained at one location, only as set forth
below (the "Installation Site") and may not be used by Client or any other
person at any other location or facility; provided, however, that Client
may change the location where it uses the licensed Software upon prior
written notice to SI and delivery of a written certificate that all use of
the licensed Software shall be limited to such new location. The
Installation Site shall be as follows:
Brenton Information Systems, Inc.
Capital Square, Suite 300
Des Moines, Iowa 50304-0961
3.4 All modifications to the licensed Software developed as a result
of joint efforts by SI and Client shall become the exclusive property
<PAGE>
of SI, subject to all of the terms and conditions of this License
Agreement, including the right of Client to use such modifications in
accordance herewith and including the foregoing agreements of Client with
respect to disclosure of and/or access to such modifications.
Modifications to the licensed Software developed solely by Client without
the participation of SI shall be considered to be part of the Software for
purposes of determining Client's obligations under this Section 3;
provided, however, that Client shall have the exclusive right to use any
such modifications it may develop, and SI shall have no right to market
such modifications without Client's express written consent.
3.5 Client further acknowledges and agrees that, in the event of a
breach or threatened breach by Client of any provision of this Section 3,
SI will have no adequate remedy in money or damages and, accordingly, shall
be entitled to appropriate injunctive relief. However, no specification in
this License Agreement of a specific legal or equitable remedy shall be
construed as a waiver or prohibition against any other legal or equitable
remedies in the event of a breach of any provision of this Agreement.
3.6 SI retains title to the Software provided hereunder and does not
convey any rights or proprietary interest therein to Client, other than the
license as specified herein.
3.7 Upon the termination by SI of this License Agreement or any
licenses granted to Client hereunder, Client agrees to promptly cease using
and return to SI all software involved and Documentation related thereto
and all copies thereof. Such return shall also be accompanied by a written
certificate, signed by an appropriate executive officer of Client, to the
effect that all such Software, related Documentation and copies thereof
have been so returned to SI.
3.8 SI hereby acknowledges and agrees that Client shall have the right
to modify any of the Software provided to Client hereunder and may use and
combine such with other programs and/or material to form an updated work.
Such modifications to the licensed Software, either alone or in
combination, shall become part of the licensed Software and shall be
subject to all of the terms and conditions of this License Agreement,
including the right of Client to use such modifications in accordance
herewith and including the agreement of Client to limit the use of, the
disclosure of and/or access to, such modifications.
<PAGE>
3.9 Client acknowledges that all PC-based Software ("Micro Software")
is released in object code only. The following additional provisions shall
be applicable to Micro Software:
(a) Client may copy the Micro Software and use it on multiple
microprocessors solely for the benefit of Client and Client's affiliates
including, but not limited to, Client's parent holding company, its
subsidiaries and affiliates. The documentation for the Micro Software may
be similarly copied and utilized. At Client's option, additional copies
may be made either by Client or by ordering the same from SI at SI's
standard rates.
(b) All other restrictions on use, copying or disclosure of the Software
licensed hereunder shall also apply to the Micro Software and its
documentation. In addition, Client may not provide data processing
services using the Micro Software to any person, firm, or corporation
(other than Client's affiliates and subsidiaries) without the prior written
consent of SI and the payment to SI of additional license fees.
(c) In consideration of the right to make and use the additional copies
granted in Section (a) above, Client agrees and acknowledges that all
support for end-users of the Micro Software will be supplied by Client's
personnel, and that SI is not responsible for providing any Micro Software
support services to end-users.
4. Enhancements.
Within ninety (90) days of its delivery of a termination notice, as
provided in the Agreement, or within ninety (90) days preceding the
Expiration Date, as set forth in the Agreement, Client may elect to
purchase program maintenance from SI for the licensed Software. All
updates, modifications and enhancements (the "Updates") to the Software, if
any, (once incorporated into any Software hereunder) shall be deemed to be
part of the license Software for all purposes hereunder. In the absence of
Client's purchase of program maintenance thereafter, SI shall not be
obligated to deliver Updates or related Documentation to Client. If Client
exercises this option, SI agrees to provide such maintenance and Client
agrees to pay SI its current software maintenance rate(s) then in effect
for such system(s).
<PAGE>
5. Warranties.
5.1 SI warrants to Client that: (i) SI has the right to furnish the
Software, Documentation and other materials provided to Client hereunder
free of all liens, claims, encumbrances and other restrictions; (ii) Client
shall quietly and peacefully possess the Software, Documentation and other
materials provided to Client hereunder, subject to and in accordance with
the provisions of this License Agreement; and (iii) Client's use and
possession of the Software, Documentation and other materials provided to
Client hereunder will not be interrupted or otherwise disturbed by any
entity asserting a claim under or through SI.
5.2 SI warrants and represents that the licensed Software will
perform, on an appropriately configured IBM computer system, in the manner
described in the Documentation thereof.
5.3 EXCEPT AS PROVIDED HEREIN, ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, ARE HEREBY EXPRESSLY DISCLAIMED AND EXCLUDED.
6. General.
6.1 Taxes. Client agrees to pay all taxes levied by a duly
constituted taxing authority against or upon Client's use of the Software
or arising out of this License Agreement; exclusive, however, of taxes
based on SI's income, which taxes shall be paid by SI. Client agrees to
pay any tax for which it is responsible hereunder, which may be levied on
or assessed against Client directly, and, if any such tax is paid by SI, to
reimburse SI therefor, upon receipt by Client of proof of payment
reasonably acceptable to Client.
6.2 Patent and Copyright Infringement. SI agrees to defend and/or
handle, at its own expense, any claim or action brought by any third party
against Client for actual or alleged infringement of any patent, copyright
or similar property right (including, but not limited to, misappropriation
of trade secrets) based upon the Software or Documentation furnished
hereunder by SI. SI further agrees to indemnify and hold Client harmless
from and against any and all liabilities, losses, costs, damages, and
expenses (including reasonable attorneys' fees) associated with any such
claim or action incurred by Client.
<PAGE>
(a) SI shall have the sole right to conduct the defense of any such claim
or action and all negotiations for its settlement or compromise, unless
otherwise mutually agreed to in writing between the parties hereto.
(b) SI agrees to give Client prompt written notice of any written threat,
warning or notice of any such claim or action against SI or any other use
or any supplier or components of the Software covered hereunder, which
could have an adverse impact on Client's use of same, provided SI knows of
such claim or action.
6.3 Limitation of Liability. If either party shall breach any
covenant, agreement or undertaking required of it by this Agreement, the
parties agree that the liability of the breaching party shall be limited to
direct damages caused by said breach, and shall not include any special,
indirect or consequential damages.
6.4 Material Breach. In the event of any material breach of the
Agreement or of this License Agreement by Client, SI may (reserving
cumulatively all other remedies and rights under this License Agreement in
law or in equity) terminate this License Agreement, in whole or in part, by
giving ninety (90) days' prior written notice thereof; provided, however,
that this License Agreement shall not terminate at the end of said ninety
day notice period if Client has substantially cured the breach of which it
has been notified prior to the expiration of said ninety (90) days. In the
event of such a termination by SI pursuant to this Section 6.4, Client will
promptly discontinue its use of the licensed Software and related
Documentation and shall return to SI all copies thereof in its possession
or control. Such return shall also be accompanied by a written
certificate, signed by an appropriate executive officer of Client, to the
effect that all such Software, related Documentation and copies thereof has
been so returned to SI. In addition, Client agrees that monetary damages
will not be sufficient to compensate SI in the event of any actual or
threatened breach by Client of any restriction on Client's use of the
licensed Software or Documentation provided in this License Agreement and
that, in such event, SI shall be entitled to injunctive and other equitable
relief which may be deemed necessary or appropriate by any court of
competent jurisdiction.
6.5 Notices. Any notices or other communications required or
permitted to be given or delivered under this License Agreement
<PAGE>
shall be in writing (unless otherwise specifically provided herein) and
shall be sufficiently given if delivered personally or mailed by first-
class mail, postage prepaid,
If to Client: Brenton Information Systems, Inc.
Capital Square, Suite 300
Des Moines, Iowa 50304-0961
If to SI: Systematics Financial Services, Inc.
4001 Rodney Parham Road
Little Rock, Arkansas 72212-2496
Attention: President
or to such other address as either party may from time to time designate to
the other by written notice. Any such notice or other communication shall
be deemed to be given as of the date it is personally delivered or when
placed in the mails in the manner specified.
6.6 Advertising or Publicity. Neither party shall use the name of the
other in advertising or publicity releases without securing the prior
written consent of the other.
6.7 Assignment. This License Agreement shall be binding upon the
parties and their respective permitted successors and assigns. Neither
party may sell, assign, convey or transfer, by operation of law or
otherwise, any of its rights or obligations hereunder without the prior
written consent of the other party and any such attempted transfer shall be
void.
6.8 Governing Law; Jurisdiction and Venue. The validity of this
License Agreement, the construction and enforcement of its terms, and the
interpretation of the rights and duties of the parties shall be governed by
the laws of the State of Iowa. Client and SI hereby consent and agree that
jurisdiction and venue for any claim or cause of action arising under this
Agreement with respect to the validity, construction or enforcement hereof
shall be properly and exclusively in the state or federal courts located in
Des Moines, Iowa, and expressly waive any and all rights they may have or
which may hereafter arise to contest the propriety of such choice of
jurisdiction and venue.
6.9 Modification, Amendment, Supplement and Waiver. No modification,
amendment, supplement to or waiver of this License
<PAGE>
Agreement or any of its provisions shall be binding upon the parties hereto
unless made in writing and duly signed by both parties or the party to be
charged, as appropriate under the circumstances. A failure or delay of
either party to this License Agreement to enforce at any time any of the
provisions hereof, or to exercise any option which is herein provided, or
to require at any time performance of any of the provisions hereof, shall
in no way be construed to be a waiver of such provision of this License
Agreement.
6.10 Severability. In the event any one or more of the provisions of
this License Agreement shall for any reason be held to be invalid, illegal
or unenforceable, the remaining provisions of this License Agreement shall
be unimpaired, and the invalid, illegal or unenforceable provision shall be
replaced by a mutually acceptable provision, which being valid, legal and
enforceable, comes closest to the intention of the parties underlying the
invalid, illegal or unenforceable provision.
6.11 Headings. The headings in this License Agreement are for
purposes of reference only and shall not in any way limit or affect the
meaning or interpretation of any of the terms hereof.
IN WITNESS WHEREOF, the parties hereto have executed this License Agreement
as of the day, month and year first above written, by the undersigned
officers thereunto duly authorized.
SYSTEMATICS FINANCIAL BRENTON INFORMATION
SERVICES, INC. SYSTEMS, INC.
By: /s/ By: /s/
Name: Collins A. Andrews Name:-Saulene M. Richer
Title: Executive Vice Title:-SVP/Marketing & Technology
President
Date: 1/2/92 Date: 1/2/92
<PAGE>
EXHIBIT H
DISASTER RECOVERY AGREEMENT
This is a Disaster Recovery Agreement (the "Agreement") made and entered
into contemporaneously with the Data Processing Agreement (the "FM
Agreement"), dated as of December 1, 1991, between Systematics Financial
Services, Inc., an Arkansas corporation, 4001 Rodney Parham Road, Little
Rock, Arkansas, 72212-2496 (hereinafter "SI") and
BRENTON INFORMATION SYSTEMS, INC.
Capitol Square, Suite 300
Des Moines, Iowa 50304
(hereinafter "CLIENT").
WHEREAS, SI maintains a computer disaster recovery facility for use by
Subscribing Clients in the event of a Disaster (see definitions, below);
and
WHEREAS, CLIENT wishes to have access to such computer disaster recovery
facility in the event of a Disaster;
NOW THEREFORE, in consideration of the payments to be made and services to
be performed hereunder, the parties agree as follows:
1. Definitions. The terms and phrases listed below shall have the
indicated special meanings when used in this Agreement:
"Disaster Recovery Facility" - The Computer Equipment described in
Attachment 2 and located at SI corporate headquarters.
"Data Center" - CLIENT's IBM-based computer facility located at:
717 Mulberry, Suite 503
Des Moines, Iowa 50309
<PAGE>
"Disaster" - Any interruption in the availability or accessibility of the
Data Center, resulting from causes beyond CLIENT's control and reasonably
expected to last more than seventy-two (72) continuous hours.
"Multiple Disaster" - Disasters experienced by two or more Subscribing
Clients at times when such Subscribing Clients would be entitled to use the
Disaster Recovery Facility at the same time.
"Shell Facility" - Preconditioned space suitable for the installation of
CLIENT's computer equipment, located at 409 Shall Street, Little Rock,
Arkansas.
"Subscribing Client" - Any person, firm or corporation which has entered
into a Disaster Recovery Agreement with SI for use of the Disaster Recovery
Facility.
2. Term.
The term of this Agreement shall begin on December 1, 1991 (the "Effective
Date") and shall be coterminous with the FM Agreement.
3. Disaster Recovery Facility.
3.10 Access. Upon declaration of a Disaster, CLIENT may use the
Disaster Recovery Facility under the appropriate class of service, upon at
least six hours' notice to SI, for a period of up to six (6) consecutive
weeks (the "Recovery Period"). Thereafter, continued use of the Disaster
Recovery Facility, may be permitted except that another Subscribing Client
who experiences a Disaster after CLIENT's Recovery Period shall be granted
priority access to and use of the facility.
3.20 SI Computer Equipment. SI will purchase and maintain in force
maintenance agreements for the equipment described in Attachment 2.
3.30 SI Computer Equipment Change. SI may change or relocate its IBM
compatible computer equipment configuration at any time upon sixty (60)
days prior written notice to CLIENT; provided, however, that no such notice
shall be required if any such change does not adversely affect the
usefulness to CLIENT of the changed configuration as a Disaster Recovery
Facility. If such a change results in the Disaster Recovery Facility
becoming materially unusable to CLIENT for disaster recovery, CLIENT may
terminate this Agreement in accordance with Paragraph 10 herein.
<PAGE>
3.40 Multiple Disasters. In order to reduce the possibility of a
Multiple Disaster, SI will exercise due care and discretion in contracting
with new clients to avoid geographic concentrations that would unduly
increase exposure. When a new contract is contemplated that would result
in a perceived exposure due to a geographic concentration and/or client
size, SI will perform an analysis of said exposure for review by SI
management prior to execution of the proposed contract. In addition, no
agreement will be signed with a prospective client who is currently
experiencing a Disaster.
If a Multiple Disaster occurs, more than one Subscribing Client may be
granted access to the Disaster Recovery Facility. SI will exercise its
best efforts to coordinate the activities of these Subscribing Clients.
3.50 Computer Equipment Compatibility Assurance. CLIENT will appoint
a Disaster Recovery Coordinator who will maintain records of CLIENT
computer equipment sufficient to identify any differences which could
affect successful processing, and will promptly notify SI of any change
which may do so. The Disaster Recovery Coordinator will maintain
documentation for resolution of such differences in the event of a
Disaster. SI will provide CLIENT with one (1) copy of the SI Disaster
Recovery Services Users Guide to assist CLIENT in the understanding and use
of the services provided herein.
CLIENT agrees to conduct a test annually in the Disaster Recovery Facility.
Each test should be an analysis of compatibility consisting of CLIENT's
operating system, applications, and communications software sufficient to
achieve the pre-established mutually agreeable objectives. The test should
be planned for completion within the test time allocation specified in
Attachment 2, although extra time may be authorized by SI if unforeseen
problems occur and there is a reasonable expectation of solution within the
time extension. CLIENT will submit the request for an annual test to SI
using forms and procedures established. SI will schedule the test on a
mutually agreeable date. Data Center personnel will conduct the test with
the assistance of SYSTEMATICS staff, as necessary.
3.60 Non-Disaster Use. The Disaster Recovery Facility will be used by
SI for development and internal accounting, and for testing of other
Subscribing Clients. During any Recovery Period, a Subscribing Client who
has declared a Disaster shall take priority over all such use and may
preempt CLIENTs' test and use of associated services.
<PAGE>
4. Disaster Recovery Plan.
CLIENT agrees to develop or acquire, and to maintain, a specific, written
plan for dealing with its data processing needs during a Disaster (the
"Disaster Recovery Plan"). A current copy of the Disaster Recovery Plan
shall be maintained by CLIENT at its operating facility, at an offsite
backup location, at the Data Center, and at SI's Disaster Recovery
Facility.
5. SI and CLIENT Relationship.
5.10 CLIENT Personnel. CLIENT agrees that trained personnel, with
appropriate levels of authority shall be temporarily located at the
Disaster Recovery Facility during all Recovery Period processing to perform
all CLIENT operations functions. In addition, to the extent that CLIENT
has responsibility under the FM Agreement, CLIENT agrees to provide the
necessary supplies and personnel (at the Disaster Recovery Facility or at
CLIENT's facility, as required) to perform said functions.
5.20 Travel and Living Expenses. CLIENT will pay all travel and
living expenses incurred by either CLIENT or SI for temporary relocation of
personnel as a result of a Disaster and/or testing.
5.30 Additional SI Personnel. CLIENT agrees to pay the amounts
normally charged to other similarly-situated clients of SI for all services
performed by SI that are not otherwise provided for in the FM Agreement or
in this Agreement.
5.40 Processing Frequency. This Agreement does not guarantee that all
applications will be processed as frequently during the Recovery Period as
they are processed under the FM Agreement. The applications processed will
be consistent with the priorities set forth in the Disaster Recovery Plan.
5.50 Time of Performance. SI will use diligence to provide the data
processing services set forth in the FM Agreement at the times required
therein. CLIENT acknowledges, however, that the circumstances of a
Disaster are likely to adversely impact SI's time of performance and that
the provisions of the Time of Performance section of the FM Agreement shall
continue to be applicable during the Recovery Period.
<PAGE>
6. Service Levels.
6.10 Basic Coverage. The basic coverage under this Agreement provides
for access to the Disaster Recovery Facility under the Class of Service
indicated in Attachment 1.
6.20 Planning Service. Planning services, to assist CLIENT in
fulfilling the requirement for a Disaster Recovery Plan under Section 4 of
this Agreement, are provided under the terms and conditions of Attachment
3.
6.30 Shell Facility. Access to and use of the Shell Facility are
provided under the terms and conditions of Attachment 4.
6.40 Online. Availability of local terminals at the Disaster Recovery
Facility is provided as shown in Attachment 2. Backup of CLIENT's online
circuits, if any, is provided under the terms and conditions of the
Addendum for Dialup Analog Kits, or the Addendum for Multiplexer Service,
or the Addendum for Switched T1 Service.
6.50 Remote Terminal Cluster. Availability of a remote terminal
cluster, if any, is provided under the terms and conditions of the Addendum
For Remote Terminal Cluster.
6.60 Reader-Sorter Equipment. Backup of CLIENT reader-sorter
equipment, if any, is provided under the terms and conditions of the
Addendum For Reader-Sorter Support.
6.70 Proof Backup. Backup for CLIENT single-pocket proof equipment,
if any, is provided under the terms and conditions of the Addendum For
Proof Backup.
7. Fees
7.10 Participation Fee. CLIENT will pay the applicable monthly
participation fees for the Class of Service indicated in Attachment 1.
7.20 CLIENT Computer Equipment Change. Upon the installation or
deinstallation of any computer equipment at CLIENT's data center which
changes CLIENT's Class of Service, CLIENT agrees to pay the participation
fees (whether higher or lower) at the new Class of Service rate. If
CLIENT's requirements exceed the capacity of or are incompatible with the
subscribed Class of Service, CLIENT will notify SI. SI and CLIENT will
then have ninety (90) day in which to resolve the capacity or
incompatibility situation, which solution may include an agreement with
third party. If, after ninety
<PAGE>
(90) days from CLIENT's notice to SI, SI and CLIENT have not agreed upon a
mutually satisfactory solution, either party may terminate this Agreeement.
7.30 Facility Access Fee. CLIENT agrees to notify SI verbally and in
writing of its declaration of a Disaster, and such notice shall require
payment of the Disaster Declaration Fee set forth in Attachment 1.
7.40 Facility Usage Fee. During the Recovery Period, CLIENT will also
pay the hourly Facility Usage Fee described in Attachment 1.
7.50 Miscellaneous Fees. CLIENT will pay for miscellaneous SI
services used during the Recovery Period at the rates then charged to other
similarly-situated SI clients.
7.60 Escalation of Fees. SI may periodically adjust its fees for
Disaster Recovery to reflect the various fluctuations in the cost of
supplying services. Such adjustments will occur under the same terms and
conditions as those described in Exhibit C of the FM Agreement.
8. Payment and Billing.
CLIENT agrees to pay the Participation Fee monthly in advance. Other
applicable fees will be invoiced at least monthly. CLIENT agrees to pay
all such fees within thirty days of the respective dates of such invoices.
9. Location Change.
CLIENT may change the location of the Data Center upon prior written notice
to SI.
10. CLIENT Termination.
CLIENT may terminate this Agreement if any change in the SI Computer
Equipment results in the Disaster Recovery Facility becoming materially
unusable to CLIENT for disaster recovery purposes. CLIENT must notify SI
in writing within thirty (30) days of SI's announcement of the equipment
change. Termination is subject to the actual installation of such
equipment and effective as of such equipment change installation date.
11. Security and Confidentiality.
CLIENT agrees to observe SI's security procedures while using the Disaster
Recovery Facility. SI and CLIENT each agree to take such steps and
exercise such precautions to protect the proprietary or confidential
information of the other as each exercises
<PAGE>
in protecting its own most valuable proprietary or confidential
information. SI and CLIENT each agree to indemnify the other and hold the
other harmless from and against any loss, claim, damage or expense
(including attorneys' fees) resulting from or arising out of any
unauthorized use or disclosure of the confidential or proprietary
information of the other.
12. Shared Use.
CLIENT acknowledges that SI is not liable for any loss, claim, damage or
expense directly or indirectly resulting from the shared use of the
Disaster Recovery Facility and related services in the event of a Multiple
Disaster, except to the extent that such loss, claim, damage or expense was
caused by SI's negligence or willful misconduct.
13. Disclaimer of Merchantability.
ALL REPRESENTATIONS AND WARRANTIES OF SI ARE EXPRESSLY SET FORTH HEREIN.
ALL OTHER REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED,
INCLUDING THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE, WITH RESPECT TO THE DISASTER RECOVERY FACILITY AND RELATED
SERVICES OR THEIR USE, ARE HEREBY DISCLAIMED.
14. Forces Beyond SI Control.
SI shall use reasonable and diligent efforts to make the Disaster Recovery
Facility and related services available and operational at all times, and
in so doing shall take reasonable steps to safeguard against events which
could adversely impact the use thereof.
SI is not liable to CLIENT or any other person for claims or damages which
result from any failure beyond SI's control including but not limited to,
acts of God, the public enemy, acts of any federal, state or local
government, fires, floods, tornados, earthquakes or other weather related
disasters, war, strikes, unavailability of computer equipment replacement
parts, disruption of communication service and utility outages.
<PAGE>
15. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Iowa.
IN WITNESS WHEREOF, this Agreement has been executed by the undersigned,
hereunto duly authorized, on the date(s) set forth below.
SYSTEMATICS FINANCIAL BRENTON INFORMATION
SERVICES, INC. SYSTEMS, INC.
By: /s/ By: /s/
Name: Collins A. Andrews Name:-Saulene M. Richer
Title: Executive Vice Title:-SVP/Marketing & Technology
President
Date: 1/2/92 Date: 1/2/92
<PAGE>
ATTACHMENT 1
FEE SCHEDULE
CLIENT's CLASS OF SERVICE is determined by the CPU size (in MIPS) in the
Data Center. The services provided hereunder are indicated below under
Class of Service. Total Monthly Participation Fees are computed below and
are included in the monthly fees shown in Exhibit C.
CLASS OF SERVICE
"Standard" "A" "AA" "AAA"
0-2.0 2.1-4.0 4.1-8.0 8.1-11.0
MIPS MIPS MIPS MIPS
I. Participation Fees:
Basic Service includes: _____ _____ 2,200 _____
Planning Service
Shell Facility
On-Line Processing:
Multiplexer Service _____ _____ 500 _____
Additional SW56KB/DSU _____ _____ 150 _____
TOTAL MONTHLY
PARTICIPATION FEE $_____ $_____ $2,850 $_____
II. Facility Access Fee:$10,000 $10,000 $15,000 $25,000
III. Facility Usage Fee:
Disaster Recovery
Facility (Clock Hour) $200.00 $250.00 $300.00 $500.00
Shell Facility
(SqFt/Day) $ .15 $ .15 $ .15 $ .15
<PAGE>
ATTACHMENT 2
COMPUTER EQUIPMENT LIST
CLASS OF SERVICE "AA" 4381-P13
Quantity IBM Type-Model Description
1 4381-P13 Processor (or Equivalent)
12 3178-C30 Terminals (Local)
16 Volumes 3380 Single Density Disk Drives
(or equivalent)
2 Drives 3420-8 Tape Drives (1600/6250 BPI)
3 Drives 3480 Tape Cartridges
1 3725 Communications Controller
2 4245-20 Printer (2000 LPM)
10 Hours Test Time Ten Wall-Clock Hours
(Non-comulative)
<PAGE>
ATTACHMENT 3
PLANNING SERVICES
Attachement to the Disaster Recovery Agreement between Systematics
Financial Services, Inc. ("SI) and the CLIENT whose name appears on page
H-1 hereof.
1. SI Responsibilities.
SI agrees to provide CLIENT with one (1) copy of SI's Recovery Reference
Manual, four (4) copies of the hardcopy version of SI's Recovery
Procedures Manual (the "Plan"), as well as the version on IBM PC-
compatible diskettes, along with the required software for the
WordPerfect word processing package necessary to utilize the diskette-
based Plan. SI also agrees to provide CLIENT with updates to the Plan
as they are developed. SI will offer a Disaster Recovery Planning
Workshop (the "Workshop") on a regular basis, to assist CLIENT planners
in contingency planning techniques. CLIENT may send no more than four
(4) people to the Workshop. SI will publish a list, at the beginning of
each calendar year, of projected dates for the proposed Workshops, but
reserves the right to cancel or reschedule workshops as appropriate.
2. CLIENT Responsibilities.
CLIENT agrees to customize the Plan to fulfill CLIENT's own requirements
and to incorporate appropriate updates that SI may supply from time to
time. CLIENT also agrees to exercise its best effort in taking
advantage of planning Workshops and other planning aids as appropriate
to CLIENT's requirements. CLIENT acknowledges that familiarity with the
WordPerfect word processing package is required to enhance CLIENT's
productivity in the Workshop and agrees that at least one of CLIENT's
prospective attendees will have acquired satisfactory expertise prior to
the Workshop. CLIENT furthermore acknowledges that the Plan is
confidential and proprietary material and will be returned to SI upon
expiration of this contract.
3. Fees.
Fees for the services provided by SI under this Attachment are included
in the Monthly Participation Fees set out in Attachment 1.
*WORDPERFECT is a registered trademark of WordPerfect Corporation.
<PAGE>
ATTACHMENT 4
SHELL FACILITY
Attachment to the Disaster Recovery Agreement between Systematics
Financial Services, Inc. ("SI") and the CLIENT whose name appears on
page H-1 hereof.
1. SI Disaster Recovery Shell Facility.
1.10 Access and Utilization. Upon declaration of a Disaster,
CLIENT will have access to the Shell Facility for a period of up to nine
(9) months (the "Extended Recovery Period"). In the event of a Multiple
Disaster, more than one Subscribing Client may be granted access to the
Shell Facility pursuant to Section 3.40 of the Agreement. SI may
utilize the facility if a Disaster occurs in any of its own data
centers.
1.20 Computer Equipment. No computer equipment will be installed
prior to the Recovery Period. The party who owned the equipment in the
Data Center will be responsible for procurement, shipment and
installation of all required equipment following the declaration of a
Disaster.
1.30 Specifications. The Shell Facility consists of 17,500 sq. ft.
of space, including 4,500 sq. ft. of raised floor area. Air
conditioning capacity is 600,000 BTU/HR, electrical capacity is 160KVA.
There are 200 telephone pairs into the building, with 20 pairs active.
The remaining non-raised floor area consists of office and storage
space for CLIENT use. CLIENT will pay the fee prescribed in Attachment
1, for the amount of space actually used by CLIENT during the Extended
Recovery Period.
2. CLIENT Personnel.
CLIENT agrees that trained personnel of CLIENT, with appropriate levels
of authority shall be temporarily located at the Shell Facility during
the Extended Recovery Period to perform all CLIENT operations functions.
An SI representative will be present while CLIENT personnel are
occupying the Shell Facility. To the extent that they are available,
qualified SI personnel may be assigned to augment CLIENT's staff at the
rates referenced in Section 5.30 of the Agreement.
<PAGE>
3. Termination.
SI may terminate this Attachment, without the termination of the
Agreement and other attachments, addenda or schedules, upon ninety (90)
days prior written notice to CLIENT. Should this service be supplanted
by another form of service which is useful to CLIENT, CLIENT will be
afforded priority to subscribe to the new service.
<PAGE>
ADDENDUM
FOR
MULTIPLEXER SERVICE
Addendum to the Disaster Recovery Agreement between Sytematics Financial
Services, Inc. ("SI") and the CLIENT whose name appears on page H-1
hereof.
1. CLIENT Responsibility.
CLIENT will provide a location for the installation of an Altenate
Control Point (ACP) for each multi-point circuit that CLIENT desires to
back up, and arrange for installation of an appropriate telephone
company interface, business telephone lines, and appropriate jacks for
each designated circuit.
2. SI Responsibilities.
SI will provide an Infotron muliplexer kit for up to ten (10) circuits,
along with access to one (1) AT&T Accunet 56kb Switched Digital circuit
and DSU ("Multipler Service"), and an additional AT&T 56kb Switched
Digital access and DSU ("Additional SW56KB/DSU"), at the Disaster
Recovery Facility. SI will also provide a matching multiplexer kit for
CLIENT's designated ACP location, and will ship the required kit to
CLIENT as soon as possible after CLIENT has notified SI of a Disaster
declaration. CLIENT agrees to pay the then current prices to purchase
all such equipment and to provide all othe hardware, including modems
compatible with CLIENT circuits, communications links, and any required
software.
3. Testing.
SI will allow CLIENT the use of a multiplexer kit for a period not to
exceed one week per year, and an additional two (2) hours of non-
chargeable test time, for the purpose of on-line testing in comjunction
with other CLIENT tests. SI agrees to air-ship the required kit to
CLIENT during the week prior to the test, and CLIENT will return air-
ship the kit on the first working day following the test. Additional
test time will be chargeable at the rates shown in Attachment 1.
4. Fees.
CLIENT agrees to pay all expenses for the transportation, installation
and utilization of said equipment in annual tests and/or in an actual
Disaster, and to pay the fee prescribed in Attachment 1 monthly in
advance.
Revised 12-20-91
<PAGE>
EXHIBIT I
INSURANCE
The following is a schedule of insurance coverage referred to in
the Agreement.
<TABLE>
<CAPTION>
Type of Insurance
Coverage Limit Company Remarks
<S> <C> <C> <C>
1.Commercial $1,000,000 The Chubb Bodily injury
each occurrence Group and property
damage; combined
limit. $10,000
premises medical
each person
General
Liability $2,000,000 The Chubb Bodily injury/
general aggregate Group property
Contents Variable The Chubb Blanket Coverage
Group $5,000
deductible.
2.Errors and
Omissions $2,000,000 The Chubb $2,000,000 each
Group occurrence and
aggregate.
$250,000
deductible.
(Additional
coverage to the
extent of
$23,000,000 as
set out in 7
below.)
3.Equipment Blanket Coverage The Chubb An all risks
Coverage Group policy covering
owned and leased
equipment for
replacement cost
at each location
w/$25,000
deductible for
all losses from
any one event,
and $10,000
deductible to
breakdown
coverage from
one event.
$500,000 in
transit or
temporary
location. Data
Processing Media
coverage
included.
4.Automobile $1,000,000 The Chubb Scheduled
each occurrence Group vehicles-some
locations.
Hired/non-owned
vehicles Comp.
deductible/$250
Collision
deductible/$250.
5.Worker's Comp.$500,000 The Statutory Limit
Cincinnati required by
Insurance various state
Company laws.
6.Fidelity
Coverage $10,000,000 The Chubb Employee
Blanket Bond Group Dishonesty
$100,000
deductible.
7.Umbrella $25,000,000 The Chubb Fiduciary
Group Liability and
aircraft
coverage
specifically
excluded. Errors
and Omissions
covered to the
extent of
$23,000,000
additional to
amount set out
in 2 above.
*Effective June 1, 1991.
</TABLE>
<PAGE>
Exhibit 10.12
Correspondent Services Agreement dated November 13, 1996 between Brenton
Bank and the Federal Home Loan Bank of Des Moines.
124
<PAGE>
EXECUTION COPY
CORRESPONDENT SERVICES AGREEMENT
This Correspondent Services Agreement ("Agreement"), dated as of November
13, 1996, is entered into by and between Brenton Bank Services Corporation
("Customer"), with principal offices at 6800 Lake Drive, Suite 250 West Des
Moines, Iowa 50266, Brenton Bank ('Settlement Agent') with principal
offices at 400 Locust, Suite 200, Des Moines, Iowa 50309, and the Federal
Home Loan Bank of Des Moines, including all of its Regional Processing
Centers wherever located ("Bank"), with principal offices at 907 Walnut
Street, Des Moines, Iowa 50309.
WHEREAS, Customer desires to authorize the Bank to provide certain
correspondent services, as defined herein for the benefit of each of the
two (2) Brenton Banks, and references herein to Customer shall, where
appropriate, refer to one or more of the Brenton Banks as the case may be;
and
WHEREAS, Bank desires to provide such services; and
WHEREAS, the Bank is permitted to provide such services in accordance with
12 U.S.C. Section 1431 of the Federal Home Loan Bank Act; and
WHEREAS, it is desirable that Brenton Bank acts as Settlement Agent for
Customer.
NOW THEREFORE, Bank and Customer agree as follows:
SECTION 1. AGREEMENT SUBJECT TO MASTER TRANSACTION AGREEMENT. This
Agreement and any service offered hereunder shall be performed according to
the terms of the Master Transaction Agreement ("MTA") entered into between
Bank and Customer unless the terms of this Agreement are inconsistent with
the terms of the MTA in which case, this Agreement controls.
SECTION 2. DEFINITIONS.
2.1. The term "Correspondent Services" as used herein shall mean any
service offered by the Bank's Correspondent Services Department at the time
of entering into this Agreement including but not limited to Image
Processing, Deposit Processing, Inclearing Processing (which may include,
if elected by Customer, encoding of over-the-counter items, cash letter
processing of transit items, exception item pull and sorting, paid item
sorting of exception items, cycle fine sorting, and internal bank item
sorting), Lockbox Processing, Proof of Deposit, and Cash Services.
Correspondent Services shall also include any services added in the future.
2.2. The term "Item" as used in this Agreement shall include checks drawn
on Customer, Customer's internal documents and checks drawn on other
financial institutions. The term "Item" shall not include cash or
negotiable securities.
SECTION 3. CHOICE OF SERVICES. Customer shall elect desired Correspondent
Services by designating the desired service(s) on the attached form and
executing the applicable service schedule(s) ("Service Schedule(s)") with
the Bank. The Service Schedule(s) shall be deemed to be incorporated
herein by reference.
SECTION 4. AUTHORITY TO CHARGE ACCOUNTS; FEES. The Bank may require that
Customer maintain sufficient collected balances with the Bank to cover fees
and other charges for any Correspondent Service(s) chosen by Customer.
Customer authorizes the Bank to make such debits and credits as are
necessary and proper to the Demand Account(s) of Customer
<PAGE>
EXECUTION COPY
in connection with the performance of Correspondent Services under this
Agreement, including charges for the payment of fees for such Correspondent
Services. Cash deposits are subject to the Bank's final verification which
shall be binding. Customer's fees shall be established in the applicable
fee schedule(s) referenced in the Service Schedule(s). Unless otherwise
provided, such fee schedule(s) may not be changed by the Bank from time to
time, during the contract term without the consent of Customer, which will
not be unreasonably withheld. In all events, return item fees and
deposited item fees may be adjusted if the applicable Federal Reserve Bank
fee changes.
SECTION 5. AUTHORIZED ARRANGEMENTS. Customer authorizes the Bank to make
arrangements with the appropriate third parties (such as Federal Reserve
Banks and armored carriers), as the Bank shall determine necessary, in
connection with the Correspondent Service(s) the Bank furnishes hereunder.
SECTION 6. CUSTOMER RESPONSIBILITIES. Customer shall comply with the
circulars, instructions, and other written procedures ( collectively
"Procedures") provided by the Bank from time to time, including all
reasonable applicable deadlines and timeframes. Customer authorizes the
Bank to accept, act upon, and rely upon all orders and instructions given
by one or more of Customer's officers, employees, agents or
representatives. The Bank may require Customer to submit such instructions
in writing. The Bank shall incur no liability to Customer or otherwise as
a result of any action by the Bank in accordance with instructions on which
the Bank in good faith believes it is authorized to rely pursuant to the
terms of this Agreement. It is expressly agreed that the Bank may reject
any orders, instructions, or claims that are not properly prepared or
submitted pursuant to the Procedures.
SECTION 7. LIMITATION OF LIABILITY. The Bank shall have no duties or
responsibilities except those expressly set forth in this Agreement and the
Procedures. Neither the Bank nor any of its directors, officers, employees
or agents shall be liable for any loss Customer incurs arising out of,
based upon or resulting from the Bank's performance or failure to perform
any act hereunder or under the Procedures or in connection herewith or
therewith, unless caused by the negligence or misconduct of the Bank or its
directors, officers, agents or employees. The Bank agrees to exercise
ordinary care in the performance of its duties and responsibilities under
this Agreement and the provision of the Correspondent Services.
SECTION 8. RISK OF LOSS. The Bank will not assume any risk of loss in the
following circumstances:
A. Any loss caused by or resulting from acts of God or any action taken
by any government, foreign or domestic, which renders performance as agreed
upon by the Bank or any courier impractical;
B. Any loss caused by any negligent, dishonest, fraudulent, or criminal
act of any employee or agent of Customer;
C. Any loss to the extent covered by any insurance, whether primary or
excess, carried by Customer;
D. Any loss to the Customer due to failure by the Customer to act in
conformity with the provisions of any Procedures;
E. Any loss caused by the failure to furnish or delay in furnishing any
courier or armored vehicle or render any Correspondent Service if prevented
by wars, fires, strikes, or other
<PAGE>
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labor trouble, acts of God, or other causes beyond its control, when during
the existence of such cases, the Courier determines that in its judgment
the same may endanger the safety of cargo entrusted into Courier's
possession or the safety of its vehicles or employees;
F. Any Item lost, destroyed, or misplaced while in transit before the Item
physically arrives at the premises of the Bank. In the event any Item is
lost, destroyed, or misplaced as aforesaid and such event is not due to
negligence or misconduct by the Bank, Customer shall be solely responsible
for the costs and expenses incurred by the Bank in reconstructing any such
Item and for any damages or other losses that may be incurred by the Bank
due to the collection of such Item. In the event the Bank negligently
loses, destroys, or misplaces an Item after the Item physically arrives at
the premises of the Bank, the Bank shall be liable only for the reasonable
reconstruction costs of the deposit. Reasonable reconstruction costs are
considered to be those costs which arise from the reconstruction of a
microfilmed deposit. When the Customer cannot provide a microfilmed record
of each Item contained in the deposit, the Bank will not be liable for
reconstruction costs in excess of $10,000. In no event shall the Bank be
liable for the face value amount of any lost or missing Item.
G. Any loss which results when the Bank acts as a correspondent for
Customer for direct shipments of coin and currency from a Federal Reserve
Bank regardless of whether the Bank or the Federal Reserve Bank arranges
for transportation of the shipment from the Federal Reserve Bank to the
Customer;
H. Any loss in excess of $5,000,000 shipped by Armored Carrier to any one
office of Customer on any one day or any loss in excess of $50,000 in any
one package shipped by registered mail or insured parcel post to any one
office of Customer on any one day.
I. Any coin and currency loss where Customer failed to properly verify the
amount using dual control verification as set forth in the applicable
Procedures.
J. Any claim arising from a discrepancy in a coin and currency order where
Customer fails to notify the Bank, and if applicable, the Armored Courier
in writing no later than 5 days after the discrepancy is discovered or
should have been discovered. In no case may a claim for a coin and
currency loss be asserted unless it is made within one (1) year of the date
of the loss.
K. Any consequential or incidental damages or loss.
SECTION 9. INDEMNIFICATION. Customer agrees to and does hereby indemnify
and hold the Bank harmless from and against any and all losses, claims,
liability, damages, or expenses (including attorneys' fees) which the Bank
may incur in connection with this Agreement and the Correspondent Services
provided hereunder, excluding any losses, claims, liability, damages, or
expenses caused by the negligence or misconduct of the Bank. Customer's
depositors are not third party beneficiaries of this agreement. Bank shall
indemnify Customer for any liability, damages, or loss for which Customer
is liable to Customer's depositors by reason of Bank's lack of good faith
or failure to exercise ordinary care in the data processing service
provided pursuant to this Agreement. With respect to the Bank's indemnity
obligations herein, the Bank's standards of care, requirement of proximate
cause, and measures of damages shall all be as provided for banks by the
Iowa Uniform Commercial Code with respect to Bank Deposits and Collections;
except, that, it is expressly agreed that the Bank shall in no event be
liable for consequential or incidental damages.
<PAGE>
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SECTION 10. ADDITIONAL LEGAL TERMS. In the event the Bank agrees to
provide Customer with Correspondent Services that impose additional or
modify the legal obligations contained in this Agreement, such additional
or modified obligations shall be set forth in writing in the applicable
Service Schedule(s). It is expressly agreed that, except to the extent
that the Service Schedule(s) modifies or imposes additional legal
obligations, the terms of this Agreement shall apply to the provision of
the Correspondent Services.
SECTION 11. NO WAIVERS. The failure by either party to exercise any right
or privilege granted to it under this Agreement shall not operate as a
waiver of that right or privilege.
SECTION 12. ENTIRE AGREEMENT. This Agreement and all matters incorporated
herein by reference constitute the entire Agreement and understanding
between the parties hereto relating to the subject matter hereof and
supersedes all prior discussions, understandings and agreements, written or
oral, between the parties that relate to such subject matter. Any
modification to this Agreement, excluding the Procedures, shall not be
valid unless it is in writing and signed by both parties hereto. Words
used in this Agreement shall be interpreted according to their ordinary and
usual meaning, despite and excluding any trade, custom, or usage to the
contrary.
SECTION 13. GOVERNING LAW AND JURISDICTION. This Agreement shall be
governed by the Federal Home Loan Bank Act, the rules, regulations,
guidelines, and statements of policy of the Federal Home Loan Bank System
and, except to the extent inconsistent therewith, the laws of the State of
Iowa without giving effect to the choice of law principles therein
included. Customer expressly agrees that any action or proceeding with
respect to the performance or non-performance of any term or condition
contained herein which is brought by or against the Bank shall be resolved
by the United States District Court for the Southern District of Iowa or,
if such action or proceeding may not be brought and maintained in said
court, by an appropriate district court of the State of Iowa for the County
of Polk.
SECTION 14. SEVERABILITY. Should any provision of this Agreement be held
invalid or unenforceable, the remainder of this Agreement shall remain in
effect.
SECTION 15. TERMINATION OF THIS AGREEMENT. The term of this Agreement,
applicable to each Correspondent Service received by Customer, shall be a
period of 5 years and 7 months starting on December 1, 1996 and ending on
June 30, 2002.
Early Termination Upon Acquisition
In the event that Customer, Settlement Agent or Brenton Banks, Inc. is
acquired by a third party during the term of the Agreement and the
Schedule(s), Customer shall have the option to terminate the Agreement and
the Schedule(s) subject to the following:
1. The Customer shall pay to Bank as of the effective date of early
termination an early termination fee equal to 20% of the amount computed by
multiplying a) the average monthly fees (exclusive of proof encoding fees
for which the early termination fee shall be calculated separately)
received from Customer over the 3 month period preceding the termination
date by b) the number of months remaining in the original contract; and
2. Customer shall also pay a separate proof encoding early termination fee
as of the effective date of early termination equal to the sum of (1) and
(2) where:
<PAGE>
EXECUTION COPY
(1) is 20% of the amount computed by multiplying: a)the average monthly
fee over the 3 month period preceding the termination date based on an
encoding fee of 1.6 cents per item by b)the number of months remaining in
the original contract term; and
(2) is the difference between: a) the fees that Customer would have paid
for the portion of the contract period beginning on December 1, 1996 and
ending on the effective date of early termination date if Customer had paid
an encoding fee of 1.6 cents per item and b) the actual monthly fees
received from Customer for proof encoding over the actual portion of the
contract term immediately preceding the early termination date.
Early Termination for Customer Convenience
In the event that Customer desires to terminate the Agreement and the
Schedule(s) at its convenience prior to the expiration of the term, then
Customer shall have the option to terminate the Agreement and the
Schedule(s) subject to the following:
1. Customer shall have no right to terminate the contract for convenience
during the first two (2) years of the contract.
2. After the first 2 years of the contract term, Customer may terminate
the contract for its convenience as follows: Customer must give the Bank 6
months prior written notice of its intent to exercise this option. Then,
Customer shall pay the Bank an early termination fee as of the effective
date of early termination equal to 50% of the revenue that the Bank would
have received over the remaining contract term for all services provided to
Customer.
Customer and the Bank acknowledge and agree that the early termination fees
computed as provided in section 15 are in lieu of Bank's losses and costs
arising from such an early termination, that such costs are incapable of
calculation as of the effective date of the Agreement, and that the fees
listed herein are reasonable liquidated damages and are not a penalty.
In the event Customer is placed under the control of a state or federally
appointed conservator, receiver, or other legal custodian, the Bank may
immediately give written notice of termination to such conservator,
receiver, or other legal custodian unless instructed otherwise in writing
by such conservator, receiver, or other legal custodian, such termination
to be effective on the date of such notice.
SECTION 16. PERFORMANCE STANDARDS. The Bank will establish
telecommunications with Customer or its service agency as specified and at
no additional cost to Customer so that the Bank can electronically transfer
Customer's transactions to the Customer or its service agency. These
transmissions will be at no cost to the Customer only as long as the
Customer or its service agency remain in the same metropolitan area as the
Bank. The Bank will complete the last transmission of data by 12:30 am
with a goal of 11:30 p.m. provided that the Customer is able to accept
transmission delivery.
The Bank and Customer agree that timely and accurate submission of input
and output is essential to satisfactory performance under this Agreement
and the Schedule(s). The following are the performance standards to be
measured:
a. The transmission time schedules described above will be met.
b. Proof encoding accuracy rate of 99.985% with a goal of 99.993%.
<PAGE>
EXECUTION COPY
c. Statement finesort accuracy of 99.985% with a goal of 99.993%.
d. Statement rendering accuracy of 99.96% with a goal of 99.98%.
SECTION 17. REMEDIES. If the Bank fails to meet the performance standards
in Article 16, Customer shall notify in writing the Bank the specific
nature of the performance failure. The Bank shall have two (2) months from
the receipt of notice to cure the failure to perform. If the failure to
perform is not cured within the cure period, or if the Bank fails to
perform any of the other provisions hereof after two months written notice,
Customer may terminate this Agreement with ninety (90) days written notice
to the Bank. If Customer terminates due to the Bank's failure to cure its
performance failure, then the fees for "Early Termination" set forth in
section 15 of this Agreement shall not apply. The Bank may terminate this
Agreement if Customer fails to pay any fees under this Agreement for two
consecutive months and fails to cure within two (2) months after written
notice from the Bank of the failure to pay any fees. Termination shall not
relieve either party of its indemnification obligations hereunder.
IN WITNESS WHEREOF, Customer and Bank, each acting through its respective
duly authorized representative(s), have caused this Agreement to be signed
in their names and delivered as of the date first above written.
FEDERAL HOME LOAN BANK Brenton Bank Services Corporation
OF DES MOINES Full Corporate Name of Customer
By:__________________________ By:__________________________
Title: Senior Vice President Title: Vice President
David G. Reeves Max A. Reckling
Typed Name of Signer Typed Name of Signer
By:__________________________ By:__________________________
Title:_______________________ Title:_______________________
_____________________________ _____________________________
Typed Name of Signer Typed Name of Signer
<PAGE>
Correspondent Services Selected:
X Image Processing: Printing, verifying and
mailing statement text and check images
and electronic retrieval of images.
____________ Cash Services: Receiving orders and arranging
delivery and pick-up of currency and coin for
Customer.
____________ Lockbox Processing: Receiving, screening,
capturing, and balancing Items deposited
in the Bank's lockbox on behalf of
Customer and electronic transmission
of information to Customer or its
data servicer.
X Proof of Deposit: Capture and balancing
of over-the-counter customer Items;
transmission of posting data and float
information to the data servicer;
finesorting, etc.
X Inclearing Processing: Acting as
Customer's agent, capture and transmission
(if Customer directs) of inclearing items to
data servicer; return item handling; bulk
filing, finesorting, truncation, exception
processing, etc.
X Deposit Processing: Encoding and processing of
transit checks.
X Statement Rendering
Customer acknowledges that the attached Schedule(s) are subject to the
terms and conditions of the Correspondent Services Agreement ("Agreement")
and other agreements incorporated therein. Customer acknowledges that if
the Bank approves the attached Schedule(s) by signing below, this will
constitute the agreement of the Customer and the Bank to the Correspondent
Service(s) on the terms set forth herein and that this Schedule will become
part of the Agreement.
FEDERAL HOME LOAN BANK ___________________________
OF DES MOINES (Corporate Name of Customer)
By:________________________ By:________________________
Title: Senior Vice President Title: Vice President
Date: November 13, 1996 Date: November 13, 1996
<PAGE>
Schedule to the Correspondent Services Agreement dated November 13, 1996 ,
by and between the Federal Home Loan Bank of Des Moines and Brenton Bank
Services Corporation.
I. Proof of Deposit Options:
MICR Encoding Yes X No._____
Transit Item Processing Yes X No _____
Automated Exception Pull Yes X No _____
(based on data provided by the data
servicer)
Cycle Sort Yes X No _____
(based on data provided by the data
servicer or by MICR line identification)
Fine Sorting
Item Type:
On-Us Debits Yes X No _____
Frequency Daily
On-Us Credits Yes X No _____
Frequency Daily
General Ledger Tickets Yes X No _____
Frequency Daily
Cash Tickets Yes _____ No X
Frequency ________
Other On-Us Items (Identify) Yes X No _____
Savings, IRAs, Installment Credit Frequency Daily
and Safe Deposit Box per current
process
Serial Sorting Yes X No _____
Posting File Format:
All Items File Yes X No _____
or
Float File Yes _____ No _____
On-Us Return Item Handling Yes X No _____
Large Dollar Notification Yes _____ No _____
<PAGE>
II. Pricing
The schedule of fees for performing these services is set forth in Exhibit
A. These fees are fixed during the first three years of the Agreement with
price increases in years four (4) and five (5), each in an amount not to
exceed the annualized increase in the Consumer Price Index - All Urban
Consumers (CPI-U) - U.S. City Average All Items. In the event of a
decrease in the CPI-U after year three (3), the fees set forth in Exhibit A
shall be paid.
III. Term
The term for provision of this service shall be for a period of five (5)
years and 7 months starting on 12-1-96 and ending 6-30-2002.
IV. Other
1. The Bank reserves the right to charge Customer at $75 per hour for any
custom programming requested by the Customer.
2. The Customer will provide all proof machine endorsement stamps
necessary to identify the Customer as the bank of first deposit.
3. The Bank will microfilm the front and back of all over-the-counter
items received form Customer and all Customer inclearings received from the
Federal Reserve Bank and clearinghouse institutions at no additional cost
to Customer. Bank will retain a copy of such microfilm and will deliver
original to Customer. Microfiche of output reporting will also be provided
at no cost to Customer as will tape input for optical archive. Superfiche
will be provided on either microfiche or tape, but not on both.
This Service Schedule may not be modified except with the express written
consent of the Bank and Customer.
<PAGE>
Schedule to the Correspondent Services Agreement dated _______________ , by
and between the Federal Home Loan Bank of Des Moines and Brenton Bank
Services Corporation.
I. Image Processing Options:
Create Image Statement Pages Yes _____ No _____
Archive - Create CD ROM Yes _____ No _____
Handle Statement Inserts Yes _____ No _____
Use FHLB Supplied Text Paper Yes _____ No _____
Simplex or Duplex Printing
(Choose One) Simplex _____ Duplex ____
II. Pricing
See Attached Exhibit C.
The fees shown in attached Exhibit C shall expire on December 31, 1997 if
the conversion to image processing has not begun during the calendar year
1997. If image processing begins prior to December 31, 1997, then Customer
shall pay the fees set forth in Exhibit C for the period beginning on the
date image processing is first provided to Customer and ending on November
30, 1999. Thereafter, Customer shall pay the Bank's standard fees then in
effect. If image conversion occurs after December 31, 1997, then
Customer's image processing fees will be based on the Bank's standard fees
in effect at the time conversion takes place.
III. Term
The term for provision of this service shall coincide with the terms of POD
processing.
IV. Other
Detailed procedure and handling instructions will be developed and mutually
agreed upon prior to conversion.
This Service Schedule may not be modified except with the express written
consent of the Bank and Customer
<PAGE>
Schedule to the Correspondent Services Agreement dated November 13, 1996,
by and between the Federal Home Loan Bank of Des Moines and Brenton Bank
Services Corporation.
Statement Rendering Services:
I. Pricing
The schedule of fees for performing these services is set forth in Exhibit
D. These fees are fixed during the first three years of the Agreement with
price increases in years four (4) and five (5) each in an amount not to
exceed the annualized increase in the Consumer Price Index - All Urban
Consumers (CPI-U) - U.S. City Average All Items. In the event of a
decrease in the CPI-U after year three (3), the fees set forth in Exhibit D
shall be paid.
II. Term
The term for provision of this service shall coincide with POD Processing.
III. Other
Except for "crippled statements", the statement rendering process shall be
completed and the statements available for return to the customer or
delivery to the post office within two business days after receipt of the
DDA statements. ("Crippled Statements" are defined as statements not
containing the correct number of enclosures or for any reason the statement
and its contents will be handled according to mutually agreed upon
procedures.
The Service Schedule may not be modified except with the express written
consent of the Bank and Customer.
<PAGE>
Federal
Home Loan Bank
Des Moines
Schedule to the Correspondent Services Agreement dated 11/13/96, by and
between the Federal Home Loan Bank of Des Moines and BRENTON BANK SERVICES
CORPORATION
I. Inclearing Processing Options: In addition to the Settlement and
Capture of Items, we elect to receive the following ancillary services.
Options may be changed at any time by notifying the Bank in writing.
Truncation Yes _____ No _____
Optional X
Fine Sorting Yes X No _____
If yes, indicate frequency:
Daily _____
Monthly _____ Date of Month_____________________
Cycle X Cycle Dates 2-19 and end of month
Sequence Numbers Sort Yes X No _____
Account Separators Yes X No _____
Large Item Verification
Items $ 100M and Over Yes X No _____
Process and Microfilm Counter Items Yes X No _____
Return Microfilm Yes X No _____
Settlement Yes X No _____
Truncated Items Returned Yes X No _____
Truncated Items Returned Sorted
or Unsorted (Check One) Sorted _____ Unsorted X
Return Item Processing
Regulation J Notice Yes _____ No _____
Settlement Yes X No _____
Qualified Yes X No _____
Non-Qualified Yes _____ No _____
Statement Rendering Yes X No _____
FHLB 10/30/96
<PAGE>
Federal
Home Loan Bank
Des Moines
II. Pricing
The schedule of fees for performing these services is set forth in Exhibit
A. These fees are fixed during the first three years of the Agreement with
price increases in years four (4) and five (5), each in an amount not to
exceed the annualized increase in the Consumer Price Index-All Urban
Consumers (CPI-U) - U.S. City Average All Items. In the event of a decrease
in the CPI-U after year three (3), the fees set forth in Exhibit A shall be
paid.
III. Term
The term for provision of this service shall be a period of 5 years and 7
months starting on 12-1-96 and ending on 6-30-2002.
This Service Schedule may not be modified except with the express written
consent of the Bank and Customer.
FHLB 10/30/96
<PAGE>
Exhibit A
Federal
Home Loan Bank
Des Moines
ITEM PROCESSING FEE SCHEDULE
FOR
BRENTON BANKS
POD Processing Fees ** Encoding Fee:
Encoding $0.014 per item** Year 1 - $0.014 per item
Year 2 - $0.014 per item
POD Capture $0.007 per item Year 3 - $0.016 per item
Year 4 - $0.018 per item
Inclearings Capture $0.005 per item Year 5 - $0.018 per item
Exception / Cycle Sort $0.0015 per item
Finesort $0.0045 per item
Reject Re-Entry $0.04 per item **
Reject Repair (On-Us Items) $0.05 per item
Deposit Processing Fees
Deposited Item Charges:
Local Items $0.0025 per item
Regional Items $0.0125 per item
Transit Items $0.050 per item
Relationship Fees -
Deposit Slips $0.35
Forward Collection Return Items*
Local Items $0.20 per item
Regional Items $0.20 per item
Transit Items $0.50 per item
Deposit / Customers
Corrections $0.25 per correction
Other Standard Relationship
Fees See attached Demand Deposit
Fee Schedule (Exhibit B)
* Subject to change if Federal Reserve Bank fees change.
*** Up to a maximum of .9% of total prime volume
<PAGE>
Exhibit B
Federal Home Loan Bank of Des Moines
Demand Account Analysis Fee Schedule
September 1, 1996
Account Maintenance $ 25.00
Account Reconciliation 35.00
Electronic Cash Manager (ECM) Connect charges
Non-ECM Distribution of Reports 75.00
Drafts Paid
Truncated 0.045
Non-Truncated 0.055
Stop Payments 7.00
Ledger Entries - Credits 0.35
Ledger Entries - Debits 0.15
Bank Wires In 3.00
Bank Wires Out 4.00
ACH Settlement Charges 1.00
Special Cut-Off Statements 10.00
Account Reconciliation Tape Issues 0.015
Issue Encoding 0.0225
Pre-Encoded Issues 0.015
Collections
Bonds/Coupons Per Envelope
Local/Government 5.00
Out-of-Town 7.00
Domestic/Checks 15.00 (Plus Actual)
Foreign 25.00 (Plus Actual)
Miscellaneous Actual
Demand 4/93,6/94,2/96,4/96,9/96
<PAGE>
Exhibit c
Federal
Home Loan Bank
Des Moines
Image Products and Services Fee Schedule
For
Brenton Banks
RETAIL / CONSUMER ACCOUNTS - Per account $0.38
(includes capture, printing image and text
pages and statement rendition)
COMMERCIAL / BUSINESS ACCOUNTS
Base Fee Per Account $0.38
(includes capture,3 sides of printing and statement rendition)
Per side to print over 3 sides $0.13
(Note: the per account fee for retail and commercial accounts
assumes the use of negative confirmation techniques. )
ARCHIVE:
Archival Per Item $.005
CD ROM 9.00
Viewing Software $950
STATEMENT INSERTS $.01
OTHER FEES:
Minimum Monthly Billing $500
One-Time set-up fee $1,500 to $3,000
Maintenance Fee $25 / hour
One hour minimum
Data Processor Interface Fee Actual / Negotiated
Postage Actual / Passthrough
Statement Text Paper Customer Supplied or
Passthrough
Image Page Paper Actual / Passthrough
<PAGE>
Exhibit D
Federal
Home Loan Bank
Des Moines
STATEMENT RENDERING FEE SCHEDULE
FOR
BRENTON BANKS
Statements Per Month, Non-Truncated
First 5,000 $0.18
Next 5,000 $0.165
Over 10,000 $0.15
Statements Per Month - Truncated $0.05
Statement Inserts $0.01
Statement Printing (Laser Printer)
Customer provided paper $0.03 /page
FHLB provided paper $0.04 /page
Custom forms / logos Actual cost
Courier, Postage and Envelopes Actual cost
<PAGE>
Exhibit 10.13
Adoption Agreement #003 - Nonstandardized Code Section 401(k) Profit
Sharing Plan, effective November 14, 1996.
142
<PAGE>
ADOPTION AGREEMENT #003
NONSTANDARDIZED CODE SECTION 401(k) PROFIT SHARING PLAN
The undersigned, BRENTON BANKS, INC. ("Employer"), by executing this
Adoption Agreement, elects to become a participating Employer in the
BRENTON BANK Defined Contribution Master Plan (basic plan document #01) by
adopting the accompanying Plan and Trust in full as if the Employer were a
signatory to that Agreement. The Employer makes the following elections
granted under the provisions of the Master Plan.
ARTICLE I
DEFINITIONS
1.02 TRUSTEE. The Trustee executing this Adoption Agreement is: (Choose
(a) or (b))
[ x ] (a) A discretionary Trustee. See Section 10.03[A] of the Plan.
[ ] (b) A nondiscretionary Trustee. See Section 10.03[B] of the Plan.
[Note: The Employer may not elect Option (b) if a Custodian executes the
Adoption Agreement.]
1.03 PLAN. The name of the Plan as adopted by the Employer is BRENTON
BANKS, INC. EMPLOYEES' RETIREMENT PLAN.
1.07 EMPLOYEE. The following Employees are not eligible to participate in
the Plan: (Choose (a) or at least one of (b) through (g))
[ X ] (a) No exclusions.
[ ] (b) Collective bargaining employees (as defined in Section 1.07 of
the Plan). [Note: If the Employer excludes union employees from the Plan,
the Employer must be able to provide evidence that retirement benefits were
the subject of good faith bargaining.]
[ ] (c) Nonresident aliens who do not receive any earned income (as
defined in Code Section 911(d)(2)) from the Employer which constitutes
United States source income (as defined in Code Section 861(a)(3)).
[ ] (d) Commission Salesmen.
[ ] (e) Any Employee compensated on a salaried basis.
[ ] (f) Any Employee compensated on an hourly basis.
[ ] (g) (Specify) _________________________.
Leased Employees. Any Leased Employee treated as an Employee under Section
1.31 of the Plan, is: (Choose (h) or (i))
[ X ] (h) Not eligible to participate in the Plan.
[ ] (i) Eligible to participate in the Plan, unless excluded by reason
of an exclusion classification elected under this Adoption Agreement
Section 1.07.
<PAGE>
Related Employers. If any member of the Employer's related group (as
defined in Section 1.30 of the Plan) executes a Participation Agreement to
this Adoption Agreement, such member's Employees are eligible to
participate in this Plan, unless excluded by reason of an exclusion
classification elected under this Adoption Agreement Section 1.07. In
addition: (Choose (j) or (k))
[ X ] (j) No other related group member's Employees are eligible to
participate in the Plan.
[ ] (k) The following nonparticipating related group member's Employees
are eligible to participate in the Plan unless excluded by reason of an
exclusion classification elected under this Adoption Agreement Section
1.07: __________________.
1.12 COMPENSATION.
Treatment of elective contributions. (Choose (a) or (b))
[ X ] (a) "Compensation" includes elective contributions made by the
Employer on the Employee's behalf.
[ ] (b) "Compensation" does not include elective contributions.
Modifications to Compensation definition. (Choose (c) or at least one of
(d) through (j))
[ ] (c) No modifications other than as elected under Options (a) or
(b).
[ ] (d) The Plan excludes Compensation in excess of $_____________.
[ ] (e) In lieu of the definition in Section 1.12 of the Plan,
Compensation means any earnings reportable as W-2 wages for Federal income
tax withholding purposes, subject to any other election under this Adoption
Agreement Section 1.12.
[ ] (f) The Plan excludes bonuses.
[ ] (g) The Plan excludes overtime.
[ ] (h) The Plan excludes Commissions.
[ ] (i) Compensation will not include Compensation from a related
employer (as defined in Section 1.30 of the Plan) that has not executed a
Participation Agreement in this Plan unless, pursuant to Adoption Agreement
Section 1.07, the Employees of that related employer are eligible to
participate in this Plan.
[ X ] (j) (Specify) The term "Compensation" shall mean all wages,
salaries, and other payments for personal services actually rendered in the
course of employment with the Employer, including bonuses, commissions,
overtime pay, incentive pay, benefit payments under the Company's short-
term disability plan and salary reduction contributions voluntarily
authorized as contributions to this Plan or to the Employer's Cafeteria
Plan by eligible employees. This definition of compensation does not
include: stock options, club dues, automobile, educational assistance,
moving expenses, split dollar life insurance, severance pay, or benefits
under the Employer's employee stock purchase program, long term stock
compensation program, group term life insurance plan, employee P.C.
purchase plan or other similar fringe benefits. For any self employed
individual, "Compensation" shall mean Earned Income.
<PAGE>
If, for any Plan Year, the Plan uses permitted disparity in the
contribution or allocation formula elected under Article III, any election
of Options (f), (g), (h) or (j) is ineffective for such Plan Year with
respect to any Nonhighly Compensated Employee.
Special definition for matching contributions. "Compensation" for purposes
of any matching contribution formula under Article III means: (Choose (k)
or (l) only if applicable)
[ x ] (k) Compensation as defined in this Adoption Agreement Section
1.12.
[ ] (l) (Specify)______________________________.
Special definition for salary reduction contributions. An Employee's
salary reduction agreement applies to his Compensation determined prior to
the reduction authorized by that salary reduction agreement, with the
following exceptions: (Choose (m) or at least one of (n) or (o), if
applicable)
[ X ] (m) No exceptions.
[ ] (n) If the Employee makes elective contributions to another plan
maintained by the Employer, the Advisory Committee will determine the
amount of the Employee's salary reduction contribution for the withholding
period: (Choose (1) or (2))
[ ] (1) After the reduction for such period of elective contributions
to the other plan(s).
[ ] (2) Prior to the reduction for such period of elective
contributions to the other plan(s).
[ ] (o) (Specify)_____________________________.
1.17 PLAN YEAR/LIMITATION YEAR.
Plan Year. Plan Year means: (Choose (a) or (b))
[ X ] (a) The 12 consecutive month period ending every December 31.
[ ] (b) (Specify)__________________________.
Limitation Year. The Limitation Year is: (Choose (c) or (d))
[ x ] (c) The Plan Year.
[ ] (d) The 12 consecutive month period ending every _____.
1.18 EFFECTIVE DATE.
New Plan. The "Effective Date" of the Plan is N/A.
Restated Plan. The restated Effective Date is January 1, 1996.
This Plan is a substitution and amendment of an existing retirement plan(s)
originally established December 22, 1986. [Note: See the Effective Date
Addendum.]
1.27 HOUR OF SERVICE. The crediting method for Hours of Service is:
(Choose (a) or (b))
[ x ] (a) The actual method.
<PAGE>
[ ] (b) The equivalency method, except:
[ ] (1) No exceptions.
[ ] (2) The actual method applies for purposes of: (Choose at least
one)
[ ] (i) Participation under Article II.
[ ] (ii) Vesting under Article V.
[ ] (iii) Accrual of benefits under Section 3.06.
[Note: On the blank line, insert "daily," "weekly," "semi-monthly payroll
periods" or "monthly."]
1.29 SERVICE FOR PREDECESSOR EMPLOYER. In addition to the predecessor
service the Plan must credit by reason of Section 1.29 of the Plan, the
Plan credits Service with the following predecessor employer(s): Ames
Savings Bank, FSB . Service with the designated predecessor employer(s)
applies: (Choose at least one of (a) or (b); (c) is available only in
addition to (a) or (b))
[ x ] (a) For purposes of participation under Article II.
[ x ] (b) For purposes of vesting under Article V.
[ ] (c) Except the following Service: ________________________.
[Note: If the Plan does not credit any predecessor service under this
provision, insert "N/A" in the first blank line. The Employer may attach a
schedule to this Adoption Agreement, in the same format as this Section
1.29, designating additional predecessor employers and the applicable
service crediting elections.]
1.31 LEASED EMPLOYEES. If a Leased Employee is a Participant in the Plan
and also participates in a plan maintained by the leasing organization:
(Choose (a) or (b))
[N/A] (a) The Advisory Committee will determine the Leased Employee's
allocation of Employer contributions under Article III without taking into
account the Leased Employee's allocation, if any, under the leasing
organization's plan.
[ ] (b) The Advisory Committee will reduce a Leased Employee's
allocation of Employer nonelective contributions (other than designated
qualified nonelective contributions) under this Plan by the Leased
Employee's allocation under the leasing organization's plan, but only to
the extent that allocation is attributable to the Leased Employee's service
provided to the Employer. The leasing organization's plan:
[ ] (1) Must be a money purchase plan which would satisfy the
definition under Section 1.31 of a safe harbor plan, irrespective of
whether the safe harbor exception applies.
[ ] (2) Must satisfy the features and, if a defined benefit plan, the
method of reduction described in an addendum to this Adoption Agreement,
numbered 1.31.
<PAGE>
ARTICLE II
EMPLOYEE PARTICIPANTS
2.01 ELIGIBILITY.
Eligibility conditions. To become a Participant in the Plan, an Employee
must satisfy the following eligibility conditions: (Choose (a) or (b) or
both; (c) is optional as an additional election)
[ X ] (a) Attainment of age 21 (specify age, not exceeding 21).
[ X ] (b)Service requirement. (Choose one of (1) through (3))
[ ] (1) One Year of Service.
[ ] (2) ____months (not exceeding 12) following the Employee's
Employment Commencement Date.
[ X ] (3) One Hour of Service.
[ X ] (c) Special requirements for non-401(k) portion of plan. (Make
elections under (1) and under (2))
(1) The requirements of this Option (c) apply to participation in: (Choose
at least one of (i) through (iii))
[ X ] (i) The allocation of Employer nonelective contributions and
Participant forfeitures.
[ X ] (ii) The allocation of Employer matching contributions (including
forfeitures allocated as matching contributions).
[ X ] (iii) The allocation of Employer qualified nonelective
contributions.
(2) For participation in the allocations described in (1), the eligibility
conditions are: (Choose at least one of (i) through (iv))
[ X ] (i) 1 (one or two) Year(s) of Service, without an intervening Break
in Service (as described in Section 2.03(A) of the Plan) if the requirement
is two Years of Service.
[ ] (ii) ____ months (not exceeding 24) following the Employee's
Employment Commencement Date.
[ ] (iii) One Hour of Service.
[ X ] (iv) Attainment of age 21 (Specify age, not exceeding 21).
Plan Entry Date. "Plan Entry Date" means the Effective Date and: (Choose
(d), (e) or (f))
[ X ] (d) Semi-annual Entry Dates. The first day of the Plan Year and
the first day of the seventh month of the Plan Year.
[ ] (e) The first day of the Plan Year.
[ ] (f) (Specify entry dates) _______________________.
<PAGE>
Time of Participation. An Employee will become a Participant (and, if
applicable, will participate in the allocations described in Option
(c)(1)), unless excluded under Adoption Agreement Section 1.07, on the Plan
Entry Date (if employed on that date): (Choose (g), (h) or (i))
[ X ] (g) immediately following
[ ] (h) immediately preceding
[ ] (i) nearest
the date the Employee completes the eligibility conditions described in
Options (a) and (b) (or in Option (c)(2) if applicable) of this Adoption
Agreement Section 2.01. [Note: The Employer must coordinate the selection
of (g), (h) or (i) with the "Plan Entry Date" selection in (d), (e) or (f).
Unless otherwise excluded under Section 1.07, the Employee must become a
Participant by the earlier of: (1) the first day of the Plan Year beginning
after the date the Employee completes the age and service requirements of
Code Section 410(a); or (2) 6 months after the date the Employee completes
those requirements.]
Dual eligibility. The eligibility conditions of this Section 2.01 apply
to: (Choose (j) or (k))
[ X ] (j) All Employees of the Employer, except: (Choose (1) or (2))
[ X ] (1) No exceptions.
[ ] (2) Employees who are Participants in the Plan as of the Effective
Date.
[ ] (k) Solely to an Employee employed by the Employer after _______.
If the Employee was employed by the Employer on or before the specified
date, the Employee will become a Participant: (Choose (1), (2) or (3))
[ ] (1) On the latest of the Effective Date, his Employment
Commencement Date or the date he attains age ____ (not to exceed 21).
[ ] (2) Under the eligibility conditions in effect under the Plan prior
to the restated Effective Date. If the restated Plan required more than
one Year of Service to participate, the eligibility condition under this
Option (2) for participation in the Code Section 401(k) arrangement under
this Plan is one Year of Service for Plan Years beginning after December
31, 1988. [For restated plans only]
[ ] (3) (Specify) __________________.
2.02 YEAR OF SERVICE - PARTICIPATION.
Hours of Service. An Employee must complete: (Choose (a) or (b))
[ X ] (a) 1,000 Hours of Service
[ ] (b) _____ Hours of Service
during an eligibility computation period to receive credit for a Year of
Service. [Note: The Hours of Service requirement may not exceed 1,000.]
<PAGE>
Eligibility computation period. After the initial eligibility computation
period described in Section 2.02 of the Plan, the Plan measures the
eligibility computation period as: (Choose (c) or (d))
[ ] (c) The 12 consecutive month period beginning with each anniversary
of an Employee's Employment Commencement Date.
[ x ] (d) The Plan Year, beginning with the Plan Year which includes the
first anniversary of the Employee's Employment Commencement Date.
2.03 BREAK IN SERVICE - PARTICIPATION. The Break in Service rule described
in Section 2.03(B) of the Plan: (Choose (a) or (b))
[ x ] (a) Does not apply to the Employer's Plan.
[ ] (b) Applies to the Employer's Plan.
2.06 ELECTION NOT TO PARTICIPATE. The Plan: (Choose (a) or (b))
[ x ] (a) Does not permit an eligible Employee or a Participant to elect
not to participate.
[ ] (b) Does permit an eligible Employee or a Participant to elect not
to participate in accordance with Section 2.06 and with the following
rules: (Complete (1), (2), (3) and (4))
(1) An election is effective for a Plan Year if filed no later than
______.
(2) An election not to participate must be effective for at least ____
Plan Year(s).
(3) Following a re-election to participate, the Employee or Participant:
[ ] (i) May not again elect not to participate for any subsequent Plan
Year.
[ ] (ii) May again elect not to participate, but not earlier than the
_____ Plan Year following the Plan Year in which the re-election first was
effective.
(4) (Specify)_________________. [Insert "N/A" if no other rules apply].
ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES
3.01 AMOUNT.
Part I. [Options (a) through (g)] Amount of Employer's contribution. The
Employer's annual contribution to the Trust will equal the total amount of
deferral contributions, matching contributions, qualified nonelective
contributions and nonelective contributions, as determined under this
Section 3.01. (Choose any combination of (a), (b), (c) and (d), or choose
(e))
[ x ] (a) Deferral contributions (Code Section 401(k) arrangement).
(Choose (1) or (2) or both)
[ x ] (1) Salary reduction arrangement. The Employer must contribute the
amount by which the Participants have reduced their Compensation for the
Plan Year, pursuant to their salary reduction agreements on file with the
Advisory Committee. A reference in the Plan to salary reduction
contributions is a reference to these amounts.
<PAGE>
[ ] (2) Cash or deferred arrangement. The Employer will contribute on
behalf of each Participant the portion of the Participant's proportionate
share of the cash or deferred contribution which he has not elected to
receive in cash. See Section 14.02 of the Plan. The Employer's cash or
deferred contribution is the amount the Employer may from time to time deem
advisable which the Employer designates as a cash or deferred contribution
prior to making that contribution to the Trust.
[ x ] (b) Matching contributions. The Employer will make matching
contributions in accordance with the formula(s) elected in Part II of this
Adoption Agreement Section 3.01.
[ x ] (c) Designated qualified nonelective contributions. The Employer,
in its sole discretion, may contribute an amount which it designates as a
qualified nonelective contribution.
[ x ] (d) Nonelective contributions. (Choose any combination of (1)
through (4))
[ x ] (1) Discretionary contribution. The amount (or additional amount)
the Employer may from time to time deem advisable.
[ ] (2) The amount (or additional amount) the Employer may from time to
time deem advisable, separately determined for each of the following
classifications of Participants: (Choose (i) or (ii))
[ ] (i) Nonhighly Compensated Employees and Highly Compensated
Employees.
[ ] (ii) (Specify classifications) ___________.
Under this Option (2), the Advisory Committee will allocate the amount
contributed for each Participant classification in accordance with Part II
of Adoption Agreement Section 3.04, as if the Participants in that
classification were the only Participants in the Plan.
[ x ] (3) 4.5% of the Compensation of all Participants under the Plan,
determined for the Employer's taxable year for which it makes the
contribution. [Note: The percentage selected may not exceed 15%.]
[ ] (4) _____% of Net Profits but not more than $_______.
[ ] (e) Frozen Plan. This Plan is a frozen Plan effective _____. The
Employer will not contribute to the Plan with respect to any period
following the stated date.
Net Profits. The Employer: (Choose (f) or (g))
[ x ] (f) Need not have Net Profits to make its annual contribution under
this Plan.
[ ] (g) Must have current or accumulated Net Profits exceeding $_____
to make the following contributions: (Choose at least one)
[ ] (1) Cash or deferred contributions described in Option (a)(2).
[ ] (2) Matching contributions described in Option (b), except: _____.
[ ] (3) Qualified nonelective contributions described in Option (c).
[ ] (4) Nonelective contributions described in Option (d).
<PAGE>
The term "Net Profits" means the Employer's net income or profits for any
taxable year determined by the Employer upon the basis of its books of
account in accordance with generally accepted accounting practices
consistently applied without any deductions for Federal and state taxes
upon income or for contributions made by the Employer under this Plan or
under any other employee benefit plan the Employer maintains. The term "Net
Profits" specifically excludes ___________________. [Note: Enter "N/A" if
no exclusions apply.]
If the Employer requires Net Profits for matching contributions and the
Employer does not have sufficient Net Profits under Option (g), it will
reduce the matching contribution under a fixed formula on a prorata basis
for all Participants. A Participant's share of the reduced contribution
will bear the same ratio as the matching contribution the Participant would
have received if Net Profits were sufficient bears to the total matching
contribution all Participants would have received if Net Profits were
sufficient. If more than one member of a related group (as defined in
Section 1.30) execute this Adoption Agreement, each participating member
will determine Net Profits separately but will not apply this reduction
unless, after combining the separately determined Net Profits, the
aggregate Net Profits are insufficient to satisfy the matching contribution
liability. "Net Profits" includes both current and accumulated Net
Profits.
Part II. [Options (h) through (j)] Matching contribution formula. [Note:
If the Employer elected Option (b), complete Options (h), (i) and (j).]
[ x ] (h) Amount of matching contributions. For each Plan Year, the
Employer's matching contribution is: (Choose any combination of (1), (2),
(3), (4) and (5))
[ ] (1) An amount equal to _____% of each Participant's eligible
contributions for the Plan Year.
[ x ] (2) An amount equal to 100% of each Participant's first tier of
eligible contributions for the Plan Year, plus the following matching
percentage(s) for the following subsequent tiers of eligible contributions
for the Plan 50% for the second tier.
[ ] (3) Discretionary formula.
[ ] (i) An amount (or additional amount) equal to a matching percentage
the Employer from time to time may deem advisable of the Participant's
eligible contributions for the Plan Year.
[ ] (ii) An amount (or additional amount) equal to a matching
percentage the Employer from time to time may deem advisable of each tier
of the Participant's eligible contributions for the Plan Year.
[ ] (4) An amount equal to the following percentage of each
Participant's eligible contributions for the Plan Year, based on the
Participant's Years of Service:
Number of Years of Service Matching Percentage
_____ _____
_____ _____
_____ _____
_____ _____
The Advisory Committee will apply this formula by determining Years of
Service as follows: ____________________.
<PAGE>
[ ] (5) A Participant's matching contributions may not: (Choose (i) or
(ii))
[ ] (i) Exceed ___________________.
[ ] (ii) Be less than _____________.
Related Employers. If two or more related employers (as defined in Section
1.30) contribute to this Plan, the related employers may elect different
matching contribution formulas by attaching to the Adoption Agreement a
separately completed copy of this Part II. Note: Separate matching
contribution formulas create separate current benefit structures that must
satisfy the minimum participation test of Code Section 401(a)(26).]
[ x ] (i) Definition of eligible contributions. Subject to the
requirements of Option (j), the term "eligible contributions" means:
(Choose any combination of (1) through (3))
[ x ] (1) Salary reduction contributions.
[ ] (2) Cash or deferred contributions (including any part of the
Participant's proportionate share of the cash or deferred contribution
which the Employer defers without the Participant's election).
[ ] (3) Participant mandatory contributions, as designated in Adoption
Agreement Section 4.01. See Section 14.04 of the Plan.
[ x ] (j) Amount of eligible contributions taken into account. When
determining a Participant's eligible contributions taken into account under
the matching contributions formula(s), the following rules apply: (Choose
any combination of (1) through (4))
[ ] (1) The Advisory Committee will take into account all eligible
contributions credited for the Plan Year.
[ ] (2) The Advisory Committee will disregard eligible contributions
exceeding ____________.
[ x ] (3) The Advisory Committee will treat as the first tier of eligible
contributions, an amount not exceeding: 2% .
The subsequent tiers of eligible contributions are: 2% .
[ ] (4) (Specify) __________.
Part III. [Options (k) and (l)]. Special rules for Code Section 401(k)
Arrangement. (Choose (k) or (l), or both, as applicable)
[ x ] (k) Salary Reduction Agreements. The following rules and
restrictions apply to an Employee's salary reduction agreement: (Make a
selection under (1), (2), (3) and (4))
(1) Limitation on amount. The Employee's salary reduction contributions:
(Choose (i) or at least one of (ii) or (iii))
[ ] (i) No maximum limitation other than as provided in the Plan.
<PAGE>
[ x ] (ii) May not exceed 13% of Compensation for the Plan Year, subject
to the annual additions limitation described in Part 2 of Article III and
the 402(g) limitation described in Section 14.07 of the Plan.
[ ] (iii) Based on percentages of Compensation must equal at least
_____.
(2) An Employee may revoke, on a prospective basis, a salary reduction
agreement: (Choose (i), (ii), (iii) or (iv))
[ ] i) Once during any Plan Year but not later than _____ of the Plan
Year.
[ ] (ii) As of any Plan Entry Date.
[ x ] (iii) As of the first day of any month.
[ ] (iv) (Specify, but must be at least once per Plan Year) _____.
(3) An Employee who revokes his salary reduction agreement may file a new
salary reduction agreement with an effective date: (Choose (i), (ii), (iii)
or (iv))
[ ] (i) No earlier than the first day of the next Plan Year.
[ x ] (ii) As of any subsequent Plan Entry Date.
[ ] (iii) As of the first day of any month subsequent to the month in
which he revoked an Agreement.
[ ] (iv) (Specify, but must be at least once per Plan Year following
the Plan Year of revocation) _______________.
(4) A Participant may increase or may decrease, on a prospective basis,
his salary reduction percentage or dollar amount: (Choose (i), (ii), (iii)
or (iv))
[ ] (i) As of the beginning of each payroll period.
[ ] (ii) As of the first day of each month.
[ x ] (iii) As of any Plan Entry Date.
[ ] (iv) (Specify, but must permit an increase or a decrease at least
once per Plan Year) __________.
[ ] (l) Cash or deferred contributions. For each Plan Year for which
the Employer makes a designated cash or deferred contribution, a
Participant may elect to receive directly in cash not more than the
following portion (or, if less, the 402(g) limitation described in Section
14.07 of the Plan) of his proportionate share of that cash or deferred
contribution: (Choose (1) or (2))
[ ] (1) All or any portion.
[ ] (2) _____%.
<PAGE>
3.04 CONTRIBUTION ALLOCATION. The Advisory Committee will allocate
deferral contributions, matching contributions, qualified nonelective
contributions and nonelective contributions in accordance with Section
14.06 and the elections under this Adoption Agreement Section 3.04.
Part I. [Options (a) through (d)]. Special Accounting Elections. (Choose
whichever elections are applicable to the Employer's Plan)
[ x ] (a) Matching Contributions Account. The Advisory Committee will
allocate matching contributions to a Participant's: (Choose (1) or (2); (3)
is available only in addition to (1))
[ x ] (1) Regular Matching Contributions Account.
[ ] (2) Qualified Matching Contributions Account.
[ ] (3) Except, matching contributions under Option(s) of Adoption
Agreement Section 3.01 are allocable to the Qualified Matching
Contributions Account.
[ x ] (b) Special Allocation Dates for Salary Reduction Contributions.
The Advisory Committee will allocate salary reduction contributions as of
the Accounting Date and as of the following additional allocation dates:
June 30.
[ x ] (c) Special Allocation Dates for Matching Contributions. The
Advisory Committee will allocate matching contributions as of the
Accounting Date and as of the following additional allocation dates: June
30.
[ x ] (d) Designated Qualified Nonelective Contributions - Definition of
Participant. For purposes of allocating the designated qualified
nonelective contribution, "Participant" means: (Choose (1), (2) or (3))
[ ] (1) All Participants.
[ x ] (2) Participants who are Nonhighly Compensated Employees for the
Plan Year.
[ ] (3) (Specify) __________.
Part II. Method of Allocation - Nonelective Contribution. Subject to any
restoration allocation required under Section 5.04, the Advisory Committee
will allocate and credit each annual nonelective contribution (and
Participant forfeitures treated as nonelective contributions) to the
Employer Contributions Account of each Participant who satisfies the
conditions of Section 3.06, in accordance with the allocation method
selected under this Section 3.04. If the Employer elects Option (e)(2),
Option (g)(2) or Option (h), for the first 3% of Compensation allocated to
all Participants, "Compensation" does not include any exclusions elected
under Adoption Agreement Section 1.12 (other than the exclusion of elective
contributions), and the Advisory Committee must take into account the
Participant's Compensation for the entire Plan Year. (Choose an allocation
method under (e), (f), (g) or (h); (i) is mandatory if the Employer elects
(f), (g) or (h); (j) is optional in addition to any other election.)
[ ] (e) Nonintegrated Allocation Formula. (Choose (1) or (2))
[ ] (1) The Advisory Committee will allocate the annual nonelective
contributions in the same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for the
Plan Year.
<PAGE>
[ ] (2) The Advisory Committee will allocate the annual nonelective
contributions in the same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for the
Plan Year. For purposes of this Option (2), "Participant" means, in
addition to a Participant who satisfies the requirements of Section 3.06
for the Plan Year, any other Participant entitled to a top heavy minimum
allocation under Section 3.04(B), but such Participant's allocation will
not exceed 3% of his Compensation for the Plan Year.
[ x ] (f) Two-Tiered Integrated Allocation Formula - Maximum Disparity.
First, the Advisory Committee will allocate the annual Employer nonelective
contributions in the same ratio that each Participant's Compensation plus
Excess Compensation for the Plan Year bears to the total Compensation plus
Excess Compensation of all Participants for the Plan Year. The allocation
under this paragraph, as a percentage of each Participant's Compensation
plus Excess Compensation, must not exceed the applicable percentage (5.7%,
5.4% or 4.3%) listed under the Maximum Disparity Table following Option
(i).
The Advisory Committee then will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for the
Plan Year.
[ ] (g) Three-Tiered Integrated Allocation Formula. First, the
Advisory Committee will allocate the annual Employer nonelective
contributions in the same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for the
Plan Year. The allocation under this paragraph, as a percentage of each
Participant's Compensation may not exceed the applicable percentage (5.7%,
5.4% or 4.3%) listed under the Maximum Disparity Table following Option
(i). Solely for purposes of the allocation in this first paragraph,
"Participant" means, in addition to a Participant who satisfies the
requirements of Section 3.06 for the Plan Year: (Choose (1) or (2))
[ ] (1) No other Participant.
[ ] (2) Any other Participant entitled to a top heavy minimum
allocation under Section 3.04(B), but such Participant's allocation under
this Option (g) will not exceed 3% of his Compensation for the Plan Year.
As a second tier allocation, the Advisory Committee will allocate the
nonelective contributions in the same ratio that each Participant's Excess
Compensation for the Plan Year bears to the total Excess Compensation of
all Participants for the Plan Year. The allocation under this paragraph,
as a percentage of each Participant's Excess Compensation, may not exceed
the allocation percentage in the first paragraph.
Finally, the Advisory Committee will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for the
Plan Year.
[ ] (h) Four-Tiered Integrated Allocation Formula. First, the Advisory
Committee will allocate the annual Employer nonelective contributions in
the same ratio that each Participant's Compensation for the Plan Year bears
to the total Compensation of all Participants for the Plan Year, but not
exceeding 3% of each Participant's Compensation. Solely for purposes of
this first tier allocation, a "Participant" means, in addition to any
Participant who satisfies the requirements of Section 3.06 for the Plan
Year, any other Participant entitled to a top heavy minimum allocation
under Section 3.04(B) of the Plan.
<PAGE>
As a second tier allocation, the Advisory Committee will allocate the
nonelective contributions in the same ratio that each Participant's Excess
Compensation for the Plan Year bears to the total Excess Compensation of
all Participants for the Plan Year, but not exceeding 3% of each
Participant's Excess Compensation.
As a third tier allocation, the Advisory Committee will allocate the annual
Employer contributions in the same ratio that each Participant's
Compensation plus Excess Compensation for the Plan Year bears to the total
Compensation plus Excess Compensation of all Participants for the Plan
Year. The allocation under this paragraph, as a percentage of each
Participant's Compensation plus Excess Compensation, must not exceed the
applicable percentage (2.7%, 2.4% or 1.3%) listed under the Maximum
Disparity Table following Option (i).
The Advisory Committee then will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for the
Plan Year.
[ x ] (i) Excess Compensation. For purposes of Option (f), (g) or (h),
"Excess Compensation" means Compensation in excess of the following
Integration Level: (Choose (1) or (2))
[ x ] (1) 100% (not exceeding 100%) of the taxable wage base, as
determined under Section 230 of the Social Security Act, in effect on the
first day of the Plan Year: (Choose any combination of (i) and (ii) or
choose (iii))
[ ] (i) Rounded to _____ (but not exceeding the taxable wage base).
[ ] (ii) But not greater than $_____.
[ x ] (iii) Without any further adjustment or limitation.
[ ] (2) $_____ [Note: Not exceeding the taxable wage base for the Plan
Year in which this Adoption Agreement first is effective.]
Maximum Disparity Table. For purposes of Options (f), (g) and (h), the
applicable percentage is:
<TABLE>
<CAPTION>
Integration Level (as Applicable Percentages for Applicable
Percentages
percentage of taxable Option (f) or Option (g) for Option (h)
wage base)
<S> <C> <C>
100% 5.7% 2.7%
More than 80% but less than 100% 5.4% 2.4%
More than 20% (but not less than
$10,001) and not more than 80% 4.3% 1.3%
20% (or $10,000, if greater)
or less 5.7% 2.7%
</TABLE>
[ ] (j) Allocation offset. The Advisory Committee will reduce a
Participant's allocation otherwise made under Part II of this Section 3.04
by the Participant's allocation under the following qualified plan(s)
maintained by the Employer: _____________________.
<PAGE>
The Advisory Committee will determine this allocation reduction: (Choose
(1) or (2))
[ ] (1) By treating the term "nonelective contribution" as including
all amounts paid or accrued by the Employer during the Plan Year to the
qualified plan(s) referenced under this Option (j). If a Participant under
this Plan also participates in that other plan, the Advisory Committee will
treat the amount the Employer contributes for or during a Plan Year on
behalf of a particular Participant under such other plan as an amount
allocated under this Plan to that Participant's Account for that Plan Year.
The Advisory Committee will make the computation of allocation required
under the immediately preceding sentence before making any allocation of
nonelective contributions under this Section 3.04.
[ ] (2) In accordance with the formula provided in an addendum to this
Adoption Agreement, numbered 3.04(j).
Top Heavy Minimum Allocation - Method of Compliance. If a Participant's
allocation under this Section 3.04 is less than the top heavy minimum
allocation to which he is entitled under Section 3.04(B): (Choose (k) or
(l))
[ x ] (k) The Employer will make any necessary additional contribution to
the Participant's Account, as described in Section 3.04(B)(7)(a) of the
Plan.
[ ] (l) The Employer will satisfy the top heavy minimum allocation
under the following plan(s) it maintains: ___________. However, the
Employer will make any necessary additional contribution to satisfy the top
heavy minimum allocation for an Employee covered only under this Plan and
not under the other plan(s) designated in this Option (l). See Section
3.04(B)(7)(b) of the Plan.
If the Employer maintains another plan, the Employer may provide in an
addendum to this Adoption Agreement, numbered Section 3.04, any
modifications to the Plan necessary to satisfy the top heavy requirements
under Code Section 416.
Related employers. If two or more related employers (as defined in Section
1.30) contribute to this Plan, the Advisory Committee must allocate all
Employer nonelective contributions (and forfeitures treated as nonelective
contributions) to each Participant in the Plan, in accordance with the
elections in this Adoption Agreement Section 3.04: (Choose (m) or (n))
[ X ] (m) Without regard to which contributing related group member
employs the Participant.
[ ] (n) Only to the Participants directly employed by the contributing
Employer. If a Participant receives Compensation from more than one
contributing Employer, the Advisory Committee will determine the
allocations under this Adoption Agreement Section 3.04 by prorating among
the participating Employers the Participant's Compensation and, if
applicable, the Participant's Integration Level under Option (i).
3.05 FORFEITURE ALLOCATION. Subject to any restoration allocation
required under Sections 5.04 or 9.14, the Advisory Committee will allocate
a Participant forfeiture in accordance with Section 3.04: (Choose (a) or
(b); (c) and (d) are optional in addition to (a) or (b))
[ x ] (a) As an Employer nonelective contribution for the Plan Year in
which the forfeiture occurs, as if the Participant forfeiture were an
additional nonelective contribution for that Plan Year.
<PAGE>
[ ] (b) To reduce the Employer matching contributions and nonelective
contributions for the Plan Year: (Choose (1) or (2))
[ ] (1) in which the forfeiture occurs.
[ ] (2) immediately following the Plan Year in which the forfeiture
occurs.
[ ] (c) To the extent attributable to matching contributions: (Choose
(1), (2) or (3))
[ ] (1) In the manner elected under Options (a) or (b).
[ ] (2) First to reduce Employer matching contributions for the Plan
Year: (Choose (i) or (ii))
[ ] (i) in which the forfeiture occurs,
[ ] (ii) immediately following the Plan Year in which the forfeiture
occurs,
then as elected in Options (a) or (b).
[ ] (3) As a discretionary matching contribution for the Plan Year in
which the forfeiture occurs, in lieu of the manner elected under Options
(a) or (b).
[ ] (d) First to reduce the Plan's ordinary and necessary
administrative expenses for the Plan Year and then will allocate any
remaining forfeitures in the manner described in Options (a), (b) or (c),
whichever applies. If the Employer elects Option (c), the forfeitures used
to reduce Plan expenses: (Choose (1) or (2))
[ ] (1) relate proportionately to forfeitures described in Option (c)
and to forfeitures described in Options (a) or (b).
[ ] (2) relate first to forfeitures described in Option .
Allocation of forfeited excess aggregate contributions. The Advisory
Committee will allocate any forfeited excess aggregate contributions (as
described in Section 14.09): (Choose (e), (f) or (g))
[ ] (e) To reduce Employer matching contributions for the Plan Year:
(Choose (1) or (2))
[ ] (1) in which the forfeiture occurs.
[ ] (2) immediately following the Plan Year in which the forfeiture
occurs.
[ ] (f) As Employer discretionary matching contributions for the Plan
Year in which forfeited, except the Advisory Committee will not allocate
these forfeitures to the Highly Compensated Employees who incurred the
forfeitures.
[ x ] (g) In accordance with Options (a) through (d), whichever
applies, except the Advisory Committee will not allocate these forfeitures
under Option (a) or under Option (c)(3) to the Highly Compensated Employees
who incurred the forfeitures.
<PAGE>
3.06 ACCRUAL OF BENEFIT.
Compensation taken into account. For the Plan Year in which the Employee
first becomes a Participant, the Advisory Committee will determine the
allocation of any cash or deferred contribution, designated qualified
nonelective contribution or nonelective contribution by taking into
account: (Choose (a) or (b))
[ ] (a) The Employee's Compensation for the entire Plan Year.
[ x ] (b) The Employee's Compensation for the portion of the Plan Year in
which the Employee actually is a Participant in the Plan.
Accrual Requirements. Subject to the suspension of accrual requirements of
Section 3.06(E) of the Plan, to receive an allocation of cash or deferred
contributions, matching contributions, designated qualified nonelective
contributions, nonelective contributions and Participant forfeitures, if
any, for the Plan Year, a Participant must satisfy the conditions described
in the following elections: (Choose (c) or at least one of (d) through (f))
[ ] (c) Safe harbor rule. If the Participant is employed by the
Employer on the last day of the Plan Year, the Participant must complete at
least one Hour of Service for that Plan Year. If the Participant is not
employed by the Employer on the last day of the Plan Year, the Participant
must complete at least 501 Hours of Service during the Plan Year.
[ x ] (d) Hours of Service condition. The Participant must complete the
following minimum number of Hours of Service during the Plan Year: (Choose
at least one of (1) through (5))
[ x ] (1) 1,000 Hours of Service.
[ ] (2) (Specify, but the number of Hours of Service may not exceed
1,000) ____________.
[ x ] (3) No Hour of Service requirement if the Participant terminates
employment during the Plan Year on account of: (Choose (i), (ii) or (iii))
[ x ] (i) Death.
[ x ] (ii) Disability.
[ x ] (iii) Attainment of Normal Retirement Age in the current Plan Year
or in a prior Plan Year.
[ ] (4) _____ Hours of Service (not exceeding 1,000) if the Participant
terminates employment with the Employer during the Plan Year, subject to
any election in Option (3).
[ x ] (5) No Hour of Service requirement for an allocation of the
following contributions: Employer match and employee salary deferral.
[ x ] (e) Employment condition. The Participant must be employed by the
Employer on the last day of the Plan Year, irrespective of whether he
satisfies any Hours of Service condition under Option (d), with the
following exceptions: (Choose (1) or at least one of (2) through (5))
[ ] (1) No exceptions.
[ x ] (2) Termination of employment because of death.
<PAGE>
[ x ] (3) Termination of employment because of disability.
[ x ] (4) Termination of employment following attainment of Normal
Retirement Age.
[ x ] (5) No employment condition for the following contributions:
Employer match and employee salary deferral.
[ ] (f) (Specify other conditions, if applicable):_________________.
Suspension of Accrual Requirements. The suspension of accrual requirements
of Section 3.06(E) of the Plan: (Choose (g), (h) or (i))
[ x ] (g) Applies to the Employer's Plan.
[ ] (h) Does not apply to the Employer's Plan.
[ ] (i) Applies in modified form to the Employer's Plan, as described
in an addendum to this Adoption Agreement, numbered Section 3.06(E).
Special accrual requirements for matching contributions. If the Plan
allocates matching contributions on two or more allocation dates for a Plan
Year, the Advisory Committee, unless otherwise specified in Option (l),
will apply any Hours of Service condition by dividing the required Hours of
Service on a prorata basis to the allocation periods included in that Plan
Year. Furthermore, a Participant who satisfies the conditions described in
this Adoption Agreement Section 3.06 will receive an allocation of matching
contributions (and forfeitures treated as matching contributions) only if
the Participant satisfies the following additional condition(s): (Choose
(j) or at least one of (k) or (l))
[ x ] (j) No additional conditions.
[ ] (k) The Participant is not a Highly Compensated Employee for the
Plan Year. This Option (k) applies to: (Choose (1) or (2))
[ ] (1) All matching contributions.
[ ] (2) Matching contributions described in Option(s) _____ of Adoption
Agreement Section 3.01.
[ ] (l) (Specify) __________________.
3.15 MORE THAN ONE PLAN LIMITATION. If the provisions of Section 3.15
apply, the Excess Amount attributed to this Plan equals: (Choose (a), (b)
or (c))
[ ] (a) The product of:
(i) the total Excess Amount allocated as of such date (including any
amount which the Advisory Committee would have allocated but for the
limitations of Code Section 415), times
(ii) the ratio of (1) the amount allocated to the Participant as of such
date under this Plan divided by (2) the total amount allocated as of such
date under all qualified defined contribution plans (determined without
regard to the limitations of Code Section 415).
<PAGE>
[ x ] (b) The total Excess Amount.
[ ] (c) None of the Excess Amount.
3.18 DEFINED BENEFIT PLAN LIMITATION.
Application of limitation. The limitation under Section 3.18 of the Plan:
(Choose (a) or (b))
[ ] (a) Does not apply to the Employer's Plan because the Employer does
not maintain and never has maintained a defined benefit plan covering any
Participant in this Plan.
[ x ] (b) Applies to the Employer's Plan. To the extent necessary to
satisfy the limitation under Section 3.18, the Employer will reduce:
(Choose (1) or (2))
[ ] (1) The Participant's projected annual benefit under the defined
benefit plan under which the Participant participates.
[ x ] (2) Its contribution or allocation on behalf of the Participant to
the defined contribution plan under which the Participant participates and
then, if necessary, the Participant's projected annual benefit under the
defined benefit plan under which the Participant participates.
[Note: If the Employer selects (a), the remaining options in this Section
3.18 do not apply to the Employer's Plan.]
Coordination with top heavy minimum allocation. The Advisory Committee
will apply the top heavy minimum allocation provisions of Section 3.04(B)
of the Plan with the following modifications: (Choose (c) or at least one
of (d) or (e))
[ x ] (c) No modifications.
[ ] (d) For Non-Key Employees participating only in this Plan, the top
heavy minimum allocation is the minimum allocation described in Section
3.04(B) determined by substituting ____% (not less than 4%) for "3%,"
except: (Choose (i) or (ii))
[ ] (i) No exceptions.
[ ] (ii) Plan Years in which the top heavy ratio exceeds 90%.
[ ] (e) For Non-Key Employees also participating in the defined benefit
plan, the top heavy minimum is: (Choose (1) or (2))
[ ] (1) 5% of Compensation (as determined under Section 3.04(B) or the
Plan) irrespective of the contribution rate of any Key Employee, except:
(Choose (i) or (ii))
[ ] (i) No exceptions.
[ ] (ii) Substituting "7 1/2%" for "5%" if the top heavy ratio does not
exceed 90%.
[ ] (2) 0%. [Note: The Employer may not select this Option (2) unless
the defined benefit plan satisfies the top heavy minimum benefit
requirements of Code Section 416 for these Non-Key Employees.]
<PAGE>
Actuarial Assumptions for Top Heavy Calculation. To determine the top
heavy ratio, the Advisory Committee will use the following interest rate
and mortality assumptions to value accrued benefits under a defined benefit
plan: N/A.
If the elections under this Section 3.18 are not appropriate to satisfy the
limitations of Section 3.18, or the top heavy requirements under Code Section
416, the Employer must provide the appropriate provisions in an addendum to
this Adoption Agreement.
ARTICLE IV
PARTICIPANT CONTRIBUTIONS
4.01 PARTICIPANT NONDEDUCTIBLE CONTRIBUTIONS. The Plan: (Choose (a) or
(b); (c) is available only with (b))
[ x ] (a) Does not permit Participant nondeductible contributions.
[ ] (b) Permits Participant nondeductible contributions, pursuant to
Section 14.04 of the Plan.
[ ] (c) The following portion of the Participant's nondeductible
contributions for the Plan Year are mandatory contributions under Option
(i)(3) of Adoption Agreement Section 3.01: (Choose (1) or (2))
[ ] (1) The amount which is not less than: ________________.
[ ] (2) The amount which is not greater than: _____________.
Allocation dates. The Advisory Committee will allocate nondeductible
contributions for each Plan Year as of the Accounting Date and the
following additional allocation dates: (Choose (d) or (e))
[ ] (d) No other allocation dates.
[ ] (e) (Specify) ___________________.
As of an allocation date, the Advisory Committee will credit all
nondeductible contributions made for the relevant allocation period.
Unless otherwise specified in (e), a nondeductible contribution relates to
an allocation period only if actually made to the Trust no later than 30
days after that allocation period ends.
4.05 PARTICIPANT CONTRIBUTION - WITHDRAWAL/DISTRIBUTION. Subject to the
restrictions of Article VI, the following distribution options apply to a
Participant's Mandatory Contributions Account, if any, prior to his
Separation from Service: (Choose (a) or at least one of (b) through (d))
[N/A] (a) No distribution options prior to Separation from Service.
[ ] (b) The same distribution options applicable to the Deferral
Contributions Account prior to the Participant's Separation from Service,
as elected in Adoption Agreement Section 6.03.
[ ] (c) Until he retires, the Participant has a continuing election to
receive all or any portion of his Mandatory Contributions Account if:
(Choose (1) or at least one of (2) through (4))
[ ] (1) No conditions.
<PAGE>
[ ] (2) The mandatory contributions have accumulated for at least _____
Plan Years since the Plan Year for which contributed.
[ ] (3) The Participant suspends making nondeductible
contributions for a period of ___ months.
[ ] (4) (Specify) ____________.
[ ] (d) (Specify) _____________.
ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING
5.01 NORMAL RETIREMENT. Normal Retirement Age under the Plan is: (Choose
(a) or (b))
[ x ] (a) 62 [State age, but may not exceed age 65].
[ ] (b) The later of the date the Participant attains _____ years of
age or the _____ anniversary of the first day of the Plan Year in which the
Participant commenced participation in the Plan. [The age selected may not
exceed age 65 and the anniversary selected may not exceed the 5th.]
5.02 PARTICIPANT DEATH OR DISABILITY. The 100% vesting rule under Section
5.02 of the Plan: (Choose (a) or choose one or both of (b) and (c))
[ ] (a) Does not apply.
[ x ] (b) Applies to death.
[ x ] (c) Applies to disability.
5.03 VESTING SCHEDULE.
Deferral Contributions Account/Qualified Matching Contributions
Account/Qualified Nonelective Contributions Account/Mandatory Contributions
Account. A Participant has a 100% Nonforfeitable interest at all times in
his Deferral Contributions Account, his Qualified Matching Contributions
Account, his Qualified Nonelective Contributions Account and in his
Mandatory Contributions Account.
Regular Matching Contributions Account/Employer Contributions Account.
With respect to a Participant's Regular Matching Contributions Account and
Employer Contributions Account, the Employer elects the following vesting
schedule: (Choose (a) or (b); (c) and (d) are available only as additional
options)
[ ] (a) Immediate vesting. 100% Nonforfeitable at all times. [Note:
The Employer must elect Option (a) if the eligibility conditions under
Adoption Agreement Section 2.01(c) require 2 years of service or more than
12 months of employment.]
<PAGE>
[ x ] (b) Graduated Vesting Schedules.
Top Heavy Schedule
(Mandatory)
Years of Nonforfeitable
Service Percentage
Less than 1 0%
1 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
Non Top Heavy Schedule
(Optional)
Years of Nonforfeitable
Service Percentage
Less than 1 0%
1 0%
2 0%
3 20%
4 40%
5 60%
6 80%
7 or more 100%
[ x ] (c) Special vesting election for Regular Matching Contributions
Account. In lieu of the election under Options (a) or (b), the Employer
elects the following vesting schedule for a Participant's Regular Matching
Contributions Account: (Choose (1) or (2))
[ x ] (1) 100% Nonforfeitable at all times.
[ ] (2) In accordance with the vesting schedule described in the
addendum to this Adoption Agreement, numbered 5.03(c). [Note: If the
Employer elects this Option (c)(2), the addendum must designate the
applicable vesting schedule(s) using the same format as used in Option
(b).]
[Note: Under Options (b) and (c)(2), the Employer must complete a Top Heavy
Schedule which satisfies Code Section 416. The Employer, at its option,
may complete a Non Top Heavy Schedule. The Non Top Heavy Schedule must
satisfy Code Section 411(a)(2). Also see Section 7.05 of the Plan.]
[ x ] (d) The Top Heavy Schedule under Option (b) (and, if applicable,
under Option (c)(2)) applies: (Choose (1) or (2))
[ ] (1) Only in a Plan Year for which the Plan is top heavy.
[ x ] (2) In the Plan Year for which the Plan first is top heavy and then
in all subsequent Plan Years. [Note: The Employer may not elect Option (d)
unless it has completed a Non Top Heavy Schedule.]
Minimum vesting. (Choose (e) or (f))
[ x ] (e) The Plan does not apply a minimum vesting rule.
[ ] (f) A Participant's Nonforfeitable Accrued Benefit will never
be less than the lesser of $_____ or his entire Accrued Benefit, even
if the application of a graduated vesting schedule under Options (b) or (c)
would result in a smaller Nonforfeitable Accrued Benefit.
Life Insurance Investments. The Participant's Accrued Benefit attributable
to insurance contracts purchased on his behalf under Article XI is: (Choose
(g) or (h))
[N/A] (g) Subject to the vesting election under Options (a), (b) or (c).
<PAGE>
[ ] (h) 100% Nonforfeitable at all times, irrespective of the vesting
election under Options (b) or (c)(2).
5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/
RESTORATION OF FORFEITED ACCRUED BENEFIT. The deemed cash-out rule
described in Section 5.04(C) of the Plan: (Choose (a) or (b))
[ x ] (a) Does not apply.
[ ] (b) Will apply to determine the timing of forfeitures for 0% vested
Participants. A Participant is not a 0% vested Participant if he has a
Deferral Contributions Account.
5.06 YEAR OF SERVICE - VESTING.
Vesting computation period. The Plan measures a Year of Service on the
basis of the following 12 consecutive month periods: (Choose (a) or (b))
[ x ] (a) Plan Years.
[ ] (b) Employment Years. An Employment Year is the 12 consecutive
month period measured from the Employee's Employment Commencement Date and
each successive 12 consecutive month period measured from each anniversary
of that Employment Commencement Date.
Hours of Service. The minimum number of Hours of Service an Employee must
complete during a vesting computation period to receive credit for a Year
of Service is: (Choose (c) or (d))
[ x ] (c) 1,000 Hours of Service.
[ ] (d) _____ Hours of Service. [Note: The Hours of Service
requirement may not exceed 1,000.]
5.08 INCLUDED YEARS OF SERVICE - VESTING. The Employer specifically
excludes the following Years of Service: (Choose (a) or at least one of (b)
through (e))
[ x ] (a) None other than as specified in Section 5.08(a) of the Plan.
[ ] (b) Any Year of Service before the Participant attained the age of
___. [Note: The age selected may not exceed age 18.]
[ ] (c) Any Year of Service during the period the Employer did not
maintain this Plan or a predecessor plan.
[ ] (d) Any Year of Service before a Break in Service if the number of
consecutive Breaks in Service equals or exceeds the greater of 5 or the
aggregate number of the Years of Service prior to the Break. This
exception applies only if the Participant is 0% vested in his Accrued
Benefit derived from Employer contributions at the time he has a Break in
Service. Furthermore, the aggregate number of Years of Service before a
Break in Service do not include any Years of Service not required to be
taken into account under this exception by reason of any prior Break in
Service.
[ ] (e) Any Year of Service earned prior to the effective date of ERISA
if the Plan would have disregarded that Year of Service on account of an
Employee's Separation from Service under a Plan provision in effect and
adopted before January 1, 1974.
<PAGE>
ARTICLE VI
TIME AND METHOD OF PAYMENTS OF BENEFITS
Code Section 411(d)(6) Protected Benefits. The elections under this
Article VI may not eliminate Code Section 411(d)(6) protected benefits. To
the extent the elections would eliminate a Code Section 411(d)(6) protected
benefit, see Section 13.02 of the Plan. Furthermore, if the elections
liberalize the optional forms of benefit under the Plan, the more liberal
options apply on the later of the adoption date or the Effective Date of
this Adoption Agreement.
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT.
Distribution date. A distribution date under the Plan means the 60th day
following each semi-annual valuation date . [Note: The Employer must
specify the appropriate date(s). The specified distribution dates
primarily establish annuity starting dates and the notice and consent
periods prescribed by the Plan. The Plan allows the Trustee an
administratively practicable period of time to make the actual distribution
relating to a particular distribution date.]
Nonforfeitable Accrued Benefit Not Exceeding $3,500. Subject to the
limitations of Section 6.01(A)(1), the distribution date for distribution
of a Nonforfeitable Accrued Benefit not exceeding $3,500 is: (Choose (a),
(b), (c), (d) or (e))
[ ] (a) ___________ of the _________ Plan Year beginning after the
Participant's Separation from Service.
[ x ] (b) the first distribution date following the Participant's
Separation from Service.
[ ] (c) __________ of the Plan Year after the Participant incurs _____
Break(s) in Service (as defined in Article V).
[ ] (d) _________ following the Participant's attainment of Normal
Retirement Age, but not earlier than __________ days following his
Separation from Service.
[ ] (e) (Specify) __________.
Nonforfeitable Accrued Benefit Exceeds $3,500. See the elections under
Section 6.03.
Disability. The distribution date, subject to Section 6.01(A)(3), is:
(Choose (f), (g) or (h))
[ ] (f) __________ after the Participant terminates employment because
of disability.
[ x ] (g) The same as if the Participant had terminated employment
without disability.
[ ] (h) (Specify) ________.
Hardship. (Choose (i) or (j))
[ x ] (i) The Plan does not permit a hardship distribution to a
Participant who has separated from Service.
<PAGE>
[ ] (j) The Plan permits a hardship distribution to a Participant who
has separated from Service in accordance with the hardship distribution
policy stated in: (Choose (1), (2) or (3))
[ ] (1) Section 6.01(A)(4) of the Plan.
[ ] (2) Section 14.11 of the Plan.
[ ] (3) The addendum to this Adoption Agreement, numbered Section 6.01.
Default on a Loan. If a Participant or Beneficiary defaults on a loan made
pursuant to a loan policy adopted by the Advisory Committee pursuant to
Section 9.04, the Plan: (Choose (k), (l) or (m))
[ x ] (k) Treats the default as a distributable event. The Trustee, at
the time of the default, will reduce the Participant's Nonforfeitable
Accrued Benefit by the lesser of the amount in default (plus accrued
interest) or the Plan's security interest in that Nonforfeitable Accrued
Benefit. To the extent the loan is attributable to the Participant's
Deferral Contributions Account, Qualified Matching Contributions Account or
Qualified Nonelective Contributions Account, the Trustee will not reduce
the Participant's Nonforfeitable Accrued Benefit unless the Participant has
separated from Service or unless the Participant has attained age 59 1/2.
[ ] (l) Does not treat the default as a distributable event. When an
otherwise distributable event first occurs pursuant to Section 6.01 or
Section 6.03 of the Plan, the Trustee will reduce the Participant's
Nonforfeitable Accrued Benefit by the lesser of the amount in default (plus
accrued interest) or the Plan's security interest in that Nonforfeitable
Accrued Benefit.
[ ] (m) (Specify) __________.
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. The Advisory Committee will
apply Section 6.02 of the Plan with the following modifications: (Choose
(a) or at least one of (b), (c), (d) and (e))
[ ] (a) No modifications.
[ ] (b) Except as required under Section 6.01 of the Plan, a lump sum
distribution is not available: ___________.
[ x ] (c) An installment distribution: (Choose (1) or at least one of (2)
or (3))
[ ] (1) Is not available under the Plan.
[ ] (2) May not exceed the lesser of _____ years or the maximum period
permitted under Section 6.02.
[ x ] (3) (Specify) option is available in which a participant may elect
to take a partial distribution on a semi annual basis with a $1,000 minimum
per semi-annual distribution.
[ x ] (d) The Plan permits the following annuity options: purchase and
delivery of a single premium annuity contract.
Any Participant who elects a life annuity option is subject to the
requirements of Sections 6.04(A), (B), (C) and (D) of the Plan. See
Section 6.04(E). [Note: The Employer may specify additional annuity
options in an addendum to this Adoption Agreement, numbered 6.02(d).]
<PAGE>
[ ] (e) If the Plan invests in qualifying Employer securities, as
described in Section 10.03(F), a Participant eligible to elect distribution
under Section 6.03 may elect to receive that distribution in Employer
securities only in accordance with the provisions of the addendum to this
Adoption Agreement, numbered 6.02(e).
6.03 BENEFIT PAYMENT ELECTIONS.
Participant Elections After Separation from Service. A Participant who is
eligible to make distribution elections under Section 6.03 of the Plan may
elect to commence distribution of his Nonforfeitable Accrued Benefit:
(Choose at least one of (a) through (c))
[ ] (a) As of any distribution date, but not earlier than __________ of
the _________ Plan Year beginning after the Participant's Separation from
Service.
[ x ] (b) As of the following date(s): (Choose at least one of Options
(1) through (6))
[ ] (1) Any distribution date after the close of the Plan Year in which
the Participant attains Normal Retirement Age.
[ x ] (2) Any distribution date following his Separation from Service
with the Employer.
[ ] (3) Any distribution date in the __________ Plan Year(s) beginning
after his Separation from Service.
[ ] (4) Any distribution date in the Plan Year after the Participant
incurs _____ Break(s) in Service (as defined in Article V).
[ ] (5) Any distribution date following attainment of age _____ and
completion of at least _____ Years of Service (as defined in Article V).
[ ] (6) (Specify) ___________.
[ ] (c) (Specify) __________.
The distribution events described in the election(s) made under Options
(a), (b) or (c) apply equally to all Accounts maintained for the
Participant unless otherwise specified in Option (c).
Participant Elections Prior to Separation from Service - Regular Matching
Contributions Account and Employer Contributions Account. Subject to the
restrictions of Article VI, the following distribution options apply to a
Participant's Regular Matching Contributions Account and Employer
Contributions Account prior to his Separation from Service: (Choose (d) or
at least one of (e) through (h))
[ x ] (d) No distribution options prior to Separation from Service.
[ ] (e) Attainment of Specified Age. Until he retires, the Participant
has a continuing election to receive all or any portion of his
Nonforfeitable interest in these Accounts after he attains: (Choose (1) or
(2))
[ ] (1) Normal Retirement Age.
[ ] (2) _____ years of age and is at least ____% vested in these
Accounts. [Note: If the percentage is less than 100%, see the special
vesting formula in Section 5.03.]
<PAGE>
[ ] (f) After a Participant has participated in the Plan for a period
of not less than _____ years and he is 100% vested in these Accounts, until
he retires, the Participant has a continuing election to receive all or any
portion of the Accounts. [Note: The number in the blank space may not be
less than 5.]
[ ] (g) Hardship. A Participant may elect a hardship distribution
prior to his Separation from Service in accordance with the hardship
distribution policy: (Choose (1), (2) or (3); (4) is available only as an
additional option)
[ ] (1) Under Section 6.01(A)(4) of the Plan.
[ ] (2) Under Section 14.11 of the Plan.
[ ] (3) Provided in the addendum to this Adoption Agreement, numbered
Section 6.03.
[ ] (4) In no event may a Participant receive a hardship distribution
before he is at least _____% vested in these Accounts. [Note: If the
percentage in the blank is less than 100%, see the special vesting formula
in Section 5.03.]
[ ] (h) (Specify) ___________.
[Note: The Employer may use an addendum, numbered 6.03, to provide
additional language authorized by Options (b)(6), (c), (g)(3) or (h) of
this Adoption Agreement Section 6.03.]
Participant Elections Prior to Separation from Service - Deferral
Contributions Account, Qualified Matching Contributions Account and
Qualified Nonelective Contributions Account. Subject to the restrictions
of Article VI, the following distribution options apply to a Participant's
Deferral Contributions Account, Qualified Matching Contributions Account
and Qualified Nonelective Contributions Account prior to his Separation
from Service: (Choose (i) or at least one of (j) through (l))
[ x ] (i) No distribution options prior to Separation from Service.
[ ] (j) Until he retires, the Participant has a continuing election to
receive all or any portion of these Accounts after he attains: (Choose (1)
or (2))
[ ] (1) The later of Normal Retirement Age or age 59 1/2.
[ ] (2) Age _____ (at least 59 1/2).
[ ] (k) Hardship. A Participant, prior to this Separation from
Service, may elect a hardship distribution from his Deferral Contributions
Account in accordance with the hardship distribution policy under Section
14.11 of the Plan.
[ ] (l) (Specify) _____________. [Note: Option (l) may not permit in
service distributions prior to age 59 1/2 (other than hardship) and may not
modify the hardship policy described in Section 14.11.]
<PAGE>
Sale of trade or business/subsidiary. If the Employer sells substantially
all of the assets (within the meaning of Code Section 409(d)(2)) used in a
trade or business or sells a subsidiary (within the meaning of Code Section
409(d)(3)), a Participant who continues employment with the acquiring
corporation is eligible for distribution from his Deferral Contributions
Account, Qualified Matching Contributions Account and Qualified Nonelective
Contributions Account: (Choose (m) or (n))
[ x ] (m) Only as described in this Adoption Agreement Section 6.03 for
distributions prior to Separation from Service.
[ ] (n) As if he has a Separation from Service. After March 31, 1988,
a distribution authorized solely by reason of this Option (n) must
constitute a lump sum distribution, determined in a manner consistent with
Code Section 401(k)(10) and the applicable Treasury regulations.
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES.
The annuity distribution requirements of Section 6.04: (Choose (a) or (b))
[ x ] (a) Apply only to a Participant described in Section 6.04(E) of the
Plan (relating to the profit sharing exception to the joint and survivor
requirements).
[ ] (b) Apply to all Participants.
ARTICLE IX
ADVISORY COMMITTEE - DUTIES WITH RESPECT TO PARTICIPANTS' ACCOUNTS
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. If a distribution (other than
a distribution from a segregated Account and other than a corrective
distribution described in Sections 14.07, 14.08, 14.09 or 14.10 of the
Plan) occurs more than 90 days after the most recent valuation date, the
distribution will include interest at: (Choose (a), (b) or (c))
[ ] (a) _____% per annum. [Note: The percentage may equal 0%.]
[ ] (b) The 90 day Treasury bill rate in effect at the beginning of the
current valuation period.
[ x ] (c) (Specify) All distributions will include interest from the last
valuation date up through date of actual distribution at current money
market rates.
9.11 ALLOCATION AND DISTRIBUTION OF NET INCOME GAIN OR LOSS. Pursuant
to Section 14.12, to determine the allocation of net income, gain or loss:
(Complete only those items, if any, which are applicable to the Employer's
Plan)
[ x ] (a) For salary reduction contributions, the Advisory Committee
will: (Choose (1), (2), (3), (4) or (5))
[ ] (1) Apply Section 9.11 without modification.
[ ] (2) Use the segregated account approach described in Section 14.12.
[ ] (3) Use the weighted average method described in Section 14.12,
based on a _____ weighting period.
[ x ] (4) Treat as part of the relevant Account at the beginning of the
valuation period 50% of the salary reduction contributions: (Choose (i) or
(ii))
[ x ] (i) made during that valuation period.
<PAGE>
[ ] (ii) made by the following specified time: __________.
[ ] (5) Apply the allocation method described in the addendum to this
Adoption Agreement numbered 9.11(a).
[ x ] (b) For matching contributions, the Advisory Committee will:
(Choose (1), (2), (3) or (4))
[ ] (1) Apply Section 9.11 without modification.
[ ] (2) Use the weighted average method described in Section 14.12,
based on a __________ weighting period.
[ x ] (3) Treat as part of the relevant Account at the beginning of the
valuation period 50% of the matching contributions allocated during the
valuation period.
[ ] (4) Apply the allocation method described in the addendum to this
Adoption Agreement numbered 9.11(b).
[ ] (c) For Participant nondeductible contributions, the Advisory
Committee will: (Choose (1), (2), (3), (4) or (5))
[ ] (1) Apply Section 9.11 without modification.
[ ] (2) Use the segregated account approach described in Section 14.12.
[ ] (3) Use the weighted average method described in Section 14.12,
based on a __________ weighting period.
[ ] (4) Treat as part of the relevant Account at the beginning of the
valuation period _____% of the Participant nondeductible contributions:
(Choose (i) or (ii))
[ ] (i) made during that valuation period.
[ ] (ii) made by the following specified time: __________.
[ ] (5) Apply the allocation method described in the addendum to this
Adoption Agreement numbered 9.11(c).
ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES
10.03 INVESTMENT POWERS. Pursuant to Section 10.03[F] of the Plan, the
aggregate investments in qualifying Employer securities and in qualifying
Employer real property: (Choose (a) or (b))
[N/A] (a) May not exceed 10% of Plan assets.
[ ] (b) May not exceed _____% of Plan assets. [Note: The percentage
may not exceed 100%.]
10.14 VALUATION OF TRUST. In addition to each Accounting Date, the Trustee
must value the Trust Fund on the following valuation date(s): (Choose (a)
or (b))
[ ] (a) No other mandatory valuation dates.
[ x ] (b) (Specify) June 30.
<PAGE>
EFFECTIVE DATE ADDENDUM
(Restated Plans Only)
The Employer must complete this addendum only if the restated Effective
Date specified in Adoption Agreement Section 1.18 is different than the
restated effective date for at least one of the provisions listed in this
addendum. In lieu of the restated Effective Date in Adoption Agreement
Section 1.18, the following special effective dates apply: (Choose
whichever elections apply)
[ ] (a) Compensation definition. The Compensation definition of
Section 1.12 (other than the $200,000 limitation) is effective for Plan
Years beginning after _________. [Note: May not be effective later than
the first day of the first Plan Year beginning after the Employer executes
this Adoption Agreement to restate the Plan for the Tax Reform Act of 1986,
if applicable.]
[ x ] (b) Eligibility conditions. The eligibility conditions specified
in Adoption Agreement Section 2.01 are effective for Plan Years beginning
after December 31, 1996.
[ ] (c) Suspension of Years of Service. The suspension of Years of
Service rule elected under Adoption Agreement Section 2.03 is effective for
Plan Years beginning after _____.
[ ] (d) Contribution/allocation formula. The contribution formula
elected under Adoption Agreement Section 3.01 and the method of allocation
elected under Adoption Agreement Section 3.04 is effective for Plan Years
beginning after _____.
[ ] (e) Accrual requirements. The accrual requirements of Section 3.06
are effective for Plan Years beginning after _____.
[ ] (f) Employment condition. The employment condition of Section 3.06
is effective for Plan Years beginning after _____.
[ ] (g) Elimination of Net Profits. The requirement for the Employer
not to have net profits to contribute to this Plan is effective for Plan
Years beginning after _____. [Note: The date specified may not be earlier
than December 31, 1985.]
[ ] (h) Vesting Schedule. The vesting schedule elected under Adoption
Agreement Section 5.03 is effective for Plan Years beginning after _____.
[ ] (i) Allocation of Earnings. The special allocation provisions
elected under Adoption Agreement Section 9.11 are effective for Plan Years
beginning after _____.
[ ] (j) (Specify) __________.
For Plan Years prior to the special Effective Date, the terms of the Plan
prior to its restatement under this Adoption Agreement will control for
purposes of the designated provisions. A special Effective Date may not
result in the delay of a Plan provision beyond the permissible Effective
Date under any applicable law requirements.
<PAGE>
Execution Page
The Trustee (and Custodian, if applicable), by executing this Adoption
Agreement, accepts its position and agrees to all of the obligations,
responsibilities and duties imposed upon the Trustee (or Custodian) under
the Master Plan and Trust. The Employer hereby agrees to the provisions of
this Plan and Trust, and in witness of its agreement, the Employer by its
duly authorized officers, has executed this Adoption Agreement, and the
Trustee (and Custodian, if applicable) signified its acceptance, on
this 14th day of November, 1996.
Name and EIN of Employer: BRENTON BANKS, INC. 42-0658989
Signed: /s/ Steven T. Schuler CFO/Treasurer/Secretary
Name(s) of Trustee: Brenton Bank
Signed: /s/ Vice Pres/Trust Officer
Name of Custodian: ____________________
Signed: _______________________________
[Note: A Trustee is mandatory, but a Custodian is optional. See Section
10.03 of the Plan.]
Plan Number. The 3-digit plan number the Employer assigns to this Plan for
ERISA reporting purposes (Form 5500 Series) is: 001.
Use of Adoption Agreement. Failure to complete properly the elections in
this Adoption Agreement may result in disqualification of the Employer's
Plan. The 3-digit number assigned to this Adoption Agreement (see page 1)
is solely for the Master Plan Sponsor's recordkeeping purposes and does not
necessarily correspond to the plan number the Employer designated in the
prior paragraph.
Master Plan Sponsor. The Master Plan Sponsor identified on the first page
of the basic plan document will notify all adopting employers of any
amendment of this Master Plan or of any abandonment or discontinuance by
the Master Plan Sponsor of its maintenance of this Master Plan. For
inquiries regarding the adoption of the Master Plan, the Master Plan
Sponsor's intended meaning of any plan provisions or the effect of the
opinion letter issued to the Master Plan Sponsor, please contact the
Master Plan Sponsor at the following address and telephone number:
P.O. BOX 10478 DES MOINES, IA 50306 (515) 237-5160.
Reliance on Opinion Letter. The Employer may not rely on the Master Plan
Sponsor's opinion letter covering this Adoption Agreement. For reliance on
the Plan's qualification, the Employer must obtain a determination letter
from the applicable IRS Key District office.
<PAGE>
PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)
The undersigned Employer, by executing this Participation Agreement, elects
to become a Participating Employer in the Plan identified in Section 1.03
of the accompanying Adoption Agreement, as if the Participating Employer
were a signatory to that Agreement. The Participating Employer accepts,
and agrees to be bound by, all of the elections granted under the
provisions of the Master Plan as made by BRENTON BANKS, INC., the Signatory
Employer to the Execution Page of the Adoption Agreement.
1. The Effective Date of the undersigned Employer's participation in the
designated Plan is: January 1, 1996.
2. The undersigned Employer's adoption of this Plan constitutes:
[ ] (a) The adoption of a new plan by the Participating Employer.
[ x ] (b) The adoption of an amendment and restatement of a plan
currently maintained by the Employer, identified as Brenton Banks, Inc.
Employees' Retirement Plan, and having an original effective date of
January 1, 1986.
Dated this 14th day of November , 1996.
Name of Participating Employer: Brenton Bank
Signed: /s/ Steven T. Schuler
Participating Employer's EIN: 42-0994231
Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.
Name of Signatory Employer: BRENTON BANKS, INC.
Accepted: 11-14-96
[Date] Signed: /s/ Steven T. Schuler
Name(s) of Trustee: Brenton Bank
Accepted: 11-14-96
[Date] Signed: /s/ VP/TO
[Note: Each Participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for important
Master Plan information.]
<PAGE>
PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)
The undersigned Employer, by executing this Participation Agreement, elects
to become a Participating Employer in the Plan identified in Section 1.03
of the accompanying Adoption Agreement, as if the Participating Employer
were a signatory to that Agreement. The Participating Employer accepts,
and agrees to be bound by, all of the elections granted under the
provisions of the Master Plan as made by BRENTON BANKS, INC., the Signatory
Employer to the Execution Page of the Adoption Agreement.
1. The Effective Date of the undersigned Employer's participation in the
designated Plan is: January 1, 1996.
2. The undersigned Employer's adoption of this Plan constitutes:
[ ] (a) The adoption of a new plan by the Participating Employer.
[ x ] (b) The adoption of an amendment and restatement of a plan
currently maintained by the Employer, identified as Brenton Banks, Inc.
Employees' Retirement Plan, and having an original effective date of
January 1, 1986.
Dated this 14th day of November , 1996.
Name of Participating Employer: Brenton Savings Bank, FSB
Signed: /s/ Kevin Z. Geis
Participating Employer's EIN: 42-0114100
Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.
Name of Signatory Employer: BRENTON BANKS, INC.
Accepted: 11-14-96
[Date] Signed: /s/ Steven T. Schuler
Name(s) of Trustee: Brenton Bank
Accepted: 11-14-96
[Date] Signed: /s/ VP/TO
[Note: Each Participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for important
Master Plan information.]
<PAGE>
PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)
The undersigned Employer, by executing this Participation Agreement, elects
to become a Participating Employer in the Plan identified in Section 1.03
of the accompanying Adoption Agreement, as if the Participating Employer
were a signatory to that Agreement. The Participating Employer accepts,
and agrees to be bound by, all of the elections granted under the
provisions of the Master Plan as made by BRENTON BANKS, INC., the Signatory
Employer to the Execution Page of the Adoption Agreement.
1. The Effective Date of the undersigned Employer's participation in the
designated Plan is: January 1, 1996.
2. The undersigned Employer's adoption of this Plan constitutes:
[ ] (a) The adoption of a new plan by the Participating Employer.
[ x ] (b) The adoption of an amendment and restatement of a plan
currently maintained by the Employer, identified as Brenton Banks, Inc.
Employees' Retirement Plan, and having an original effective date of
January 1, 1986.
Dated this 14th day of November , 1996.
Name of Participating Employer: Brenton Insurance Services, Inc.
Signed: /s/ Steven T. Schuler
Participating Employer's EIN: 42-1012438
Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.
Name of Signatory Employer: BRENTON BANKS, INC.
Accepted: 11-14-96
[Date] Signed: /s/ Steven T. Schuler
Name(s) of Trustee: Brenton Bank
Accepted: 11-14-96
[Date] Signed: /s/ VP/TO
[Note: Each Participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for important
Master Plan information.]
<PAGE>
PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)
The undersigned Employer, by executing this Participation Agreement, elects
to become a Participating Employer in the Plan identified in Section 1.03
of the accompanying Adoption Agreement, as if the Participating Employer
were a signatory to that Agreement. The Participating Employer accepts,
and agrees to be bound by, all of the elections granted under the
provisions of the Master Plan as made by BRENTON BANKS, INC., the Signatory
Employer to the Execution Page of the Adoption Agreement.
1. The Effective Date of the undersigned Employer's participation in the
designated Plan is: January 1, 1996.
2. The undersigned Employer's adoption of this Plan constitutes:
[ ] (a) The adoption of a new plan by the Participating Employer.
[ x ] (b) The adoption of an amendment and restatement of a plan
currently maintained by the Employer, identified as Brenton Banks, Inc.
Employees' Retirement Plan, and having an original effective date of
January 1, 1986.
Dated this 14th day of November, 1996.
Name of Participating Employer: Brenton Insurance, Inc.
Signed: /s/
Participating Employer's EIN: 42-1231828
Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.
Name of Signatory Employer: BRENTON BANKS, INC.
Accepted: 11-14-96
[Date] Signed: /s/ Steven T. Schuler
Name(s) of Trustee: Brenton Bank
Accepted: 11-14-96
[Date] Signed: /s/ VP/TO
[Note: Each Participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for important
Master Plan information.]
<PAGE>
PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)
The undersigned Employer, by executing this Participation Agreement, elects
to become a Participating Employer in the Plan identified in Section 1.03
of the accompanying Adoption Agreement, as if the Participating Employer
were a signatory to that Agreement. The Participating Employer accepts,
and agrees to be bound by, all of the elections granted under the
provisions of the Master Plan as made by BRENTON BANKS, INC., the Signatory
Employer to the Execution Page of the Adoption Agreement.
1. The Effective Date of the undersigned Employer's participation in the
designated Plan is: January 1, 1996.
2. The undersigned Employer's adoption of this Plan constitutes:
[ ] (a) The adoption of a new plan by the Participating Employer.
[ x ] (b) The adoption of an amendment and restatement of a plan
currently maintained by the Employer, identified as Brenton Banks, Inc.
Employees' Retirement Plan, and having an original effective date of
January 1, 1986.
Dated this 14th day of November , 1996.
Name of Participating Employer: Brenton Investments, Inc.
Signed: /s/ Elizabeth Piper/Bach
Participating Employer's EIN: 42-1378382
Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.
Name of Signatory Employer: BRENTON BANKS, INC.
Accepted: 11-14-96
[Date] Signed: /s/ Steven T. Schuler
Name(s) of Trustee: Brenton Bank
Accepted: 11-14-96
[Date] Signed: /s/ VP/TO
[Note: Each Participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for important
Master Plan information.]
<PAGE>
PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)
The undersigned Employer, by executing this Participation Agreement, elects
to become a Participating Employer in the Plan identified in Section 1.03
of the accompanying Adoption Agreement, as if the Participating Employer
were a signatory to that Agreement. The Participating Employer accepts,
and agrees to be bound by, all of the elections granted under the
provisions of the Master Plan as made by BRENTON BANKS, INC., the Signatory
Employer to the Execution Page of the Adoption Agreement.
1. The Effective Date of the undersigned Employer's participation in the
designated Plan is: January 1, 1996.
2. The undersigned Employer's adoption of this Plan constitutes:
[ ] (a) The adoption of a new plan by the Participating Employer.
[ x ] (b) The adoption of an amendment and restatement of a plan
currently maintained by the Employer, identified as Brenton Banks, Inc.
Employees' Retirement Plan, and having an original effective date of
January 1, 1986.
Dated this 14th day of November , 1996.
Name of Participating Employer: Brenton Realty Services, Inc.
Signed: /s/
Participating Employer's EIN: 42-1231886
Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.
Name of Signatory Employer: BRENTON BANKS, INC.
Accepted: 11-14-96
[Date] Signed: /s/ Steven T. Schuler
Name(s) of Trustee: Brenton Bank
Accepted: 11-14-96
[Date] Signed: /s/ VP/TO
[Note: Each Participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for important
Master Plan information.]
<PAGE>
PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)
The undersigned Employer, by executing this Participation Agreement, elects
to become a Participating Employer in the Plan identified in Section 1.03
of the accompanying Adoption Agreement, as if the Participating Employer
were a signatory to that Agreement. The Participating Employer accepts,
and agrees to be bound by, all of the elections granted under the
provisions of the Master Plan as made by BRENTON BANKS, INC., the Signatory
Employer to the Execution Page of the Adoption Agreement.
1. The Effective Date of the undersigned Employer's participation in the
designated Plan is: January 1, 1996.
2. The undersigned Employer's adoption of this Plan constitutes:
[ ] (a) The adoption of a new plan by the Participating Employer.
[ x ] (b) The adoption of an amendment and restatement of a plan
currently maintained by the Employer, identified as Brenton Banks, Inc.
Employees' Retirement Plan, and having an original effective date of
January 1, 1986.
Dated this 14th day of November , 1996.
Name of Participating Employer: Brenton Savings Financial Services, Inc.
Signed: /s/ Kevin Z. Geis
Participating Employer's EIN: 42-1206701
Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.
Name of Signatory Employer: BRENTON BANKS, INC.
Accepted: 11-14-96
[Date] Signed: /s/ Steven T. Schuler
Name(s) of Trustee: Brenton Bank
Accepted: 11-14-96
[Date] Signed: /s/ VP/TO
[Note: Each Participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for important
Master Plan information.]
<PAGE>
PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)
The undersigned Employer, by executing this Participation Agreement, elects
to become a Participating Employer in the Plan identified in Section 1.03
of the accompanying Adoption Agreement, as if the Participating Employer
were a signatory to that Agreement. The Participating Employer accepts,
and agrees to be bound by, all of the elections granted under the
provisions of the Master Plan as made by BRENTON BANKS, INC., the Signatory
Employer to the Execution Page of the Adoption Agreement.
1. The Effective Date of the undersigned Employer's participation in the
designated Plan is: January 1, 1996.
2. The undersigned Employer's adoption of this Plan constitutes:
[ ] (a) The adoption of a new plan by the Participating Employer.
[ x ] (b) The adoption of an amendment and restatement of a plan currently
maintained by the Employer, identified as Brenton Banks, Inc. Employees'
Retirement Plan, and having an original effective date of January 1, 1986.
Dated this 14th day of November , 1996.
Name of Participating Employer: Brenton Mortgages, Inc.
Signed: /s/ Steven T. Schuler
Participating Employer's EIN: 42-1014357
Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.
Name of Signatory Employer: BRENTON BANKS, INC.
Accepted: 11-14-96
[Date] Signed: /s/ Steven T. Schuler
Name(s) of Trustee: Brenton Bank
Accepted: 11-14-96
[Date] Signed: /s/ VP/TO
[Note: Each Participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for important
Master Plan information.]
PARTICIPATION AGREEMENT
<PAGE>
PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)
The undersigned Employer, by executing this Participation Agreement, elects
to become a Participating Employer in the Plan identified in Section 1.03
of the accompanying Adoption Agreement, as if the Participating Employer
were a signatory to that Agreement. The Participating Employer accepts,
and agrees to be bound by, all of the elections granted under the
provisions of the Master Plan as made by BRENTON BANKS, INC., the Signatory
Employer to the Execution Page of the Adoption Agreement.
1. The Effective Date of the undersigned Employer's participation in the
designated Plan is: January 1, 1996.
2. The undersigned Employer's adoption of this Plan constitutes:
[ ] (a) The adoption of a new plan by the Participating Employer.
[ x ] (b) The adoption of an amendment and restatement of a plan
currently maintained by the Employer, identified as Brenton Banks, Inc.
Employees' Retirement Plan, and having an original effective date of
January 1, 1986.
Dated this 14th day of November , 1996.
Name of Participating Employer: Brenton Brothers Inc.
Signed: /s/ C. Robert Brenton
Participating Employer's EIN: 42-1142851
Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.
Name of Signatory Employer: BRENTON BANKS, INC.
Accepted: 11-14-96
[Date] Signed: /s/ Steven T. Schuler
Name(s) of Trustee: Brenton Bank
Accepted: 11-14-96
[Date] Signed: /s/ VP/TO
[Note: Each Participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for important
Master Plan information.]
<PAGE>
Exhibit 10.14
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.
183
<PAGE>
Exhibit 10.15
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.
184
<PAGE>
Exhibit 10.16
Indenture Agreement with respect to Capital Notes dated March 27, 1991.
185
<PAGE>
CAPITAL NOTES INDENTURES DATED AFTER 1985 AND PRIOR TO 1991,
THAT HAVE CAPITAL NOTES OUTSTANDING UNDER THEIR TERMS, ARE
SUBSTANTIALLY SIMILAR TO THE FOLLOWING CAPITAL NOTE INDENTURE.
<PAGE>
I N D E N T U R E A G R E E M E N T
W I T H R E S P E C T
T O C A P I T A L N O T E S
D A T E D M A R C H 2 7, 1 9 9 1
<PAGE>
INDENTURE AGREEMENT
THIS INDENTURE AGREEMENT is made as of the 27th day of March, 1991,
between BRENTON BANKS, INC., a corporation organized and existing under the
laws of Iowa with its principal place of business in the City of Des Moines,
Iowa, hereinafter called the "Company," and BANKERS TRUST COMPANY, a state
banking corporation organized under the laws of the State of Iowa, with its
principal place of business in the City of Des Moines, Iowa, hereinafter
called the "Trustee."
W I T N E S S E T H:
WHEREAS, Company is duly authorized by its Articles of Incorporation and
By-Laws to borrow money for its corporate purposes; and,
WHEREAS, Company was heretofore duly authorized by a unanimous
affirmative vote of its directors at a meeting duly called and held for such
purpose to borrow the sum of $2,000,000 for use in connection with its
ordinary operations and to issue its Capital Notes in the total sum of
$2,000,000, with the same to be secured by an appropriate Indenture Agreement
with Bankers Trust Company, Des Moines, Iowa, as Trustee for the Capital Note
holders.
NOW, THEREFORE, in consideration of One Dollar ($1.00) in hand paid to
Trustee, and in consideration of the purchase and acceptance of Capital Notes
of Company by various purchasers, Company hereby covenants and declares that
its Capital Notes in the maximum principal sum of $2,000,000, and hereinafter
more fully described, shall be issued by it upon and subject to the following
terms, conditions, and covenants, and Trustee by its execution hereof agrees
to act as Trustee for all such Capital Note holders under and pursuant to the
terms of this Agreement.
ARTICLE I
Capital Notes
1.01 Company shall issue its Capital Notes, in the maximum total
principal sum of $2,000,000 with the same being in the series, maturing on
the dates, and bearing interest at the rates enumerated on Exhibit A attached
hereto, which said Capital Notes shall constitute those issued under and
pursuant to this Indenture. Such Capital Notes shall be issued in
denominations of multiples of $1,000.
1.02 The Capital Notes to be issued under and pursuant to the terms
hereof shall be in the form attached hereto as Exhibit B.
<PAGE>
1.03 All Capital Notes issued pursuant to this Indenture shall be
issued directly to the registered owners as to principal and interest, and
shall be transferable by the registered owner in person or by duly authorized
attorney at the office of the Company upon surrender and cancellation of the
original Capital Note, at which time a new registered Capital Note(s) shall
be executed and delivered by Company in lieu thereof with the same registered
in the name of the transferee or transferees. Each Capital Note issued in
consummation of an assignment and transfer of an original issue, or any
subsequent Capital Notes issued and outstanding under the terms hereof, shall
be appropriately recorded by both Company and by Trustee.
1.04 All Capital Notes issued under and pursuant to this Indenture
shall be certified by Trustee and shall not be valid for any purpose until so
certified. Whenever a Capital Note is surrendered for transfer or assignment
and a new Capital Note issued in lieu thereof, the same shall be certified at
that time by Trustee prior to its delivery to the registered owner or owners.
1.05 All Capital Notes issued under the terms hereof shall have equal
priority as to principal. Upon the happening of an "event of default," all
interest due and unpaid on that date on all Capital Notes issued and
outstanding shall have priority over any principal amounts of such Capital
Notes, and shall be paid ratably either in money or property among the
Capital Note holders to whom the said unpaid interest is due and owing, and
no payment of principal shall be made until all said unpaid interest has been
paid and discharged in full. Following payment of the interest, the
principal sums due and unpaid on all Capital Notes issued and outstanding as
of that date shall then be paid. For the purpose of principal payment,
whether by virtue of distribution of money or property, priority with respect
thereto shall be equal between all such outstanding Capital Notes.
1.06 Any Capital Note issued under the terms hereof which has been
lost, destroyed, or stolen shall be replaced by Company with an identical new
Capital Note, certified by Trustee, upon proof of loss, destruction, or theft
satisfactory to Company and Trustee and the giving of a bond to secure
Company and Trustee from loss, if and to the extent required by Company and
Trustee.
1.07 Any Capital Note surrendered to Company by the holder thereof on
payment or redemption shall be promptly cancelled by Company and after
cancellation delivered to Trustee for recordation and return to Company. A
Capital Note surrendered upon an assignment or transfer shall also be so
cancelled by Company and delivered to Trustee for recordation and return to
Company.
<PAGE>
1.08 All Capital Notes issued pursuant to the terms hereof shall bear
interest, payable semi-annually on June 1 and December 1 of each year prior
to maturity, call for redemption or redemption pursuant to Section 1.11
hereof. No payment of principal shall be made until all unpaid interest has
been paid and discharged in full. Following payment of the interest, the
principal sums due and unpaid on all Capital Notes issued and outstanding as
of that date shall be paid. For the purpose of principal payments, whether
by virtue of distribution of money or property, priority with respect thereto
shall be equal in all respects between all such outstanding Capital Notes.
1.09 Capital Notes issued and outstanding under the terms hereof shall
be paid on maturity to the extent that payment is not prohibited by the terms
hereof, and after payment of all interest due and payable on any such
outstanding Capital Notes at that time.
1.10 Any Capital Note issued pursuant to this Indenture may be
redeemed in whole or in part by Company, on any interest payment date after
eight (8) years from the date of issuance of such Capital Note, in advance of
maturity at any time thirty (30) days after notice by Company of its election
to do so by paying all interest due thereon together with the principal
amount thereof.
1.11 Upon the death of an individual registered holder or of an
individual bearing a certain designated relationship to the registered
holder, a Capital Note will be redeemed by the Company at the option of
certain designated person(s) exercised as provided herein at face plus all
interest accrued on the Capital Note to the date of redemption. An option
shall arise upon the death of an individual who is (i) sole registered
holder, (ii) a joint tenant registered holder, (iii) a tenant in common
registered holder, (iv) a life tenant registered holder, (v) the sole grantor
of a revocable trust which is a registered holder, (vi) a participant in an
IRA or other retirement plan solely for the benefit of one participant which
is a registered holder, or (vii) the ward of a conservatorship or
custodianship which is a registered holder. No option to require redemption
of a Capital Note shall arise except as specifically set forth above.
Upon the death of an individual who is the sole registered holder
of a Capital Note, such option shall be exercisable by the deceased holder's
personal representative(s). Upon the death of a registered holder who holds
a Capital Note in joint tenancy, such option shall be exercisable by the
surviving joint tenant(s). Upon the death of a registered holder who holds a
Capital Note in tenancy in common, such option shall be exercisable jointly
by the personal representative(s) of the deceased holder and by the remaining
tenant(s) in common. Upon the death of a registered
<PAGE>
holder who has a life estate in a Capital Note, such option shall be
exercisable by the remainderman(men). Upon the death of an individual who is
the sole grantor of a revocable trust which is a registered holder, such
option shall be exercisable by the trustee(s) of the trust. Upon the death
of the participant in an IRA or other retirement plan solely for the benefit
of one participant which is a registered holder, such option shall be
exercisable by the beneficiary(ies) of such IRA or retirement plan. Upon the
death of a ward of a conservatorship or custodianship which is a registered
holder, such option shall be exercisable by the personal representative(s) of
such ward's estate. In the event more than one person is entitled to
exercise the option, such option shall be exercisable only with the
concurrence of all persons entitled to exercise the option.
The option shall be exercisable for a period of 9 months
following the date of death of the individual whose death gives rise to the
option. The option shall be exercised by the person(s) entitled to exercise
the option giving written notice to the Company of the exercise of the option
at the Company's principal executive offices. Prior to the redemption of the
Capital Note, the person(s) entitled to exercise the option shall furnish the
Company with such documentation or evidence as the Company shall require to
establish such person's(s') entitlement to exercise the redemption option.
The Company shall be under no duty to notify the person(s) entitled to
exercise the option of the existence of this redemption option or of any
facts which come to the attention of the Company which would give any person
the right to exercise the option.
1.12 In the event any Capital Note is not presented for surrender and
cancellation on maturity or when called for redemption by Company, Company
shall deposit a sum equal to the amount due thereon, with Trustee in trust
for payment thereof, and no interest shall be due and payable to the holder
of such Capital Note from and after its maturity or redemption date. Such
payment by Company to Trustee shall be made within thirty (30) days after the
due date. Thereafter, Trustee shall pay over said sum to the owner upon
delivery and surrender of the pertinent Capital Note(s) for redemption and
cancellation.
1.13 Nothing contained in this Indenture or in any of the Capital
Notes shall be construed to cause the Capital Notes issued hereunder to
become immediately due and payable in the event of any consolidation or
merger of the Company with or into any other corporation or corporations
(whether or not affiliated with the Company), or successive consolidations or
mergers in which the Company or its successor or successors shall be a party
or parties, or any sale or conveyance of the property of the Company as an
<PAGE>
entirety or substantially as an entirety, to any other corporation (whether
or not affiliated with the Company) or the purchase of stock and subsequent
liquidation of the assets into the purchasing entity (hereinafter "purchase
and liquidation") authorized to acquire and operate the same if the following
are delivered to the Trustee: (1) an opinion by a certified public
accountant appointed by the successor corporation or entity opining that the
net worth of the successor corporation or entity following the acquisition,
merger, consolidation, sale of assets, or purchase and liquidation determined
on a pro forma basis using the successor corporation's or entity's and the
Company's most recent year-end financial statements preceding the date of the
acquisition, merger, consolidation, sale of assets, or purchase and
liquidation is in excess of the net worth of the Company as reflected on the
Company's most recent year-end financial statements preceding the date of the
acquisition, merger, consolidation, sale of assets, or purchase and
liquidation; (2) an Assumption Agreement in which the successor corporation
or entity expressly assumes the due and punctual performance and observance
of all of the covenants and conditions of this Indenture to be performed by
the Company; and (3) an opinion of counsel appointed by the successor
corporation or entity that the Assumption Agreement is a valid and binding
obligation of such successor corporation or entity enforceable in accordance
with its terms and the Capital Notes are valid and binding obligations of the
successor corporation or entity.
In case of any such consolidation, merger, sale, conveyance, or
purchase and liquidation and upon the assumption by the successor
corporation, such successor corporation shall succeed to and be substituted
for the Company, with the same effect as if it had been named herein as the
Company.
1.14 Any notices which Company is required to give under the terms of
this Indenture, or which are deemed necessary or proper by Company, shall be
given by first class mail with postage prepaid addressed to each Capital Note
holder at the address shown for him on the books and records of Company, and
notices so given shall be deemed given upon the date of the mailing thereof.
ARTICLE II
Covenants of Company
2.01 Company covenants and agrees to pay all principal and interest as
the same becomes due and payable upon any Capital Notes issued and
outstanding under the terms of this Indenture; provided, however, that
principal shall only be paid by it upon surrender of the appropriate Capital
Notes for cancellation, or if not surrendered, by payment to Trustee as
provided in this Indenture.
<PAGE>
2.02 Subject to the provisions of Section 1.13 hereof, Company
covenants to continue the operation of its business, all as required and
permitted by its Articles of Incorporation and By-Laws, and to at all times
maintain sufficient assets and property to continue such general operations
so long as any of its Capital Notes remain issued and outstanding under the
terms hereof.
2.03 Company covenants to meet all requirements relative to issuance
of said Capital Notes, payment of principal and interest thereon from the
sources specified, and all other conditions relating thereto as provided in
Article I hereof.
2.04 Company further covenants to furnish Trustee true copies of all
quarterly and annual reports normally prepared by Company.
2.05 On an annual basis Company covenants to furnish trustee with a
certificate indicating whether there has been an "event of default", as
defined in Article III hereof, on the Capital Notes. Said statement shall be
certified by an officer of the Company that it is true and accurate according
to the Company's best knowledge and belief. The Company shall deliver the
certificate to the Trustee within ninety (90) days of the Company's fiscal
year end.
2.06. The Company further covenants to furnish Trustee a quarterly
statement listing the current capital noteholders. Said statement shall be
certified by an officer of the Company to be true and accurate according to
the Company's best knowledge and belief.
ARTICLE III
Defaults: Rights, Remedies, and Duties of
Trustee and Capital Note Holders
3.01 An "event of default" shall constitute any one of the following:
a. Failure of Company to pay interest or principal or any part
thereof, within thirty (30) days after due;
b. Failure of Company to fully perform any other covenant or
obligation made and to be kept or performed by Company by virtue of this
Indenture which is not remedied within sixty (60) days after notice of such
failure from Trustee or from the holders of twenty-five percent (25%) of the
principal amount of all
<PAGE>
Capital Notes issued and outstanding under the terms hereof at that time.
c. Adjudication of Company as a bankrupt or insolvent in any
state or federal court, or appointment by any court of a receiver to take
over and conduct the business, affairs, and property of Company, or
commencement of liquidation of Company, either voluntary or involuntary,
pursuant to any bankruptcy, insolvency or receivership.
3.02 Subject to the provisions of Section 4.01(e), upon the happening
of an "event of default," Trustee shall declare all principal and interest on
all Capital Notes of Company then issued and outstanding under the terms
hereof due and payable at once by written notice to Company, and thereafter,
Trustee may sue at law or in equity or proceed in any other manner authorized
by law to enforce payment of all sums due on any such outstanding Capital
Notes and to establish and enforce all rights and priorities of every kind
and nature of the holders of all such Capital Notes and of such Trustee.
3.03 Subject to the provisions of Section 4.01(e), upon the occurrence
of an "event of default" as defined in this Indenture, Trustee, within thirty
(30) days after knowledge thereof, shall give written notice thereof to all
registered owners of Capital Notes outstanding under the terms of this
Indenture at that time, said notice to be by ordinary first class mail
addressed to each owner at the address shown on Trustee's records. Failure to
give notices under the terms hereof, however, shall not make Trustee liable
for any claim resulting therefrom.
3.04 In any action or proceeding in which rights of Capital Note
holders in and to the assets and property of Company are or may be affected,
or to enforce payment of interest or principal due under this Indenture or
any of the Capital Notes issued pursuant to the same, or to otherwise enforce
performance by Company of any obligations made or to be performed by it under
the terms hereof or of Capital Notes issued pursuant to this Indenture,
Trustee shall act for and on behalf of all Capital Note Holders, and shall
file and make proof of debts, claims, petitions, pleadings, and all other
instruments, and may take all action and steps deemed necessary or proper to
enforce, protect, and preserve all rights and properties of the holders of
outstanding Capital Notes.
3.05 Trustee may employ counsel as in its discretion deemed proper in
the case of any "event of default" of Company, or any other actions as in
this Indenture described or provided for with respect to Trustee either in
its own right or for and on behalf of
<PAGE>
Capital Note holders, and Company shall pay all fees and expenses of such
counsel and of Trustee in any such acts, actions, or proceedings taken by
Trustee under terms hereof.
3.06 All moneys collected or received by Trustee by virtue of any act,
action, or proceeding taken under the terms hereof or received by Trustee for
and on behalf of Capital Note holders shall be disbursed as follows:
a. In payment of all costs, expenses, charges, and fees of
Trustee, including counsel and attorney's fees;
b. In payment of all principal and interest due and unpaid on
the Capital Notes issued and outstanding at that time. If there are
insufficient funds to fully pay all such principal and interest, the funds
available shall be applied and paid first ratably to the payment of unpaid
interest and then ratably to the payment of principal;
c. The remainder, if any, to Company.
3.07 In case of an "event of default" by Company by virtue of which
the Trustee may elect to institute an action or proceeding on behalf of the
Capital Note holders against Company, if Trustee does not institute an action
within thirty (30) days after its elective right to so do has accrued, the
holders of Capital Notes totaling twenty-five percent (25%) of the principal
amount of all such Capital Notes then issued and outstanding by written
demand given to Trustee may require Trustee to institute any action or
proceeding which they direct Trustee to initiate, provided however, that
Trustee, before bringing any such action, may, as is hereinafter more fully
spelled out, require adequate security from such Capital Note holders to
protect it against any loss by virtue of expenses, charges, and fees incident
to any action so required. In the event that two or more groups of holders
of Capital Notes each of which holds Capital Notes totaling twenty-five
percent (25%) of the principal amount of all such Capital Notes then issued
and outstanding direct the trustee to proceed in a conflicting manner(s), the
trustee may interplead the funds into or may seek a declaratory determination
of the conflict(s) from the District Court for Polk County, Iowa.
3.08 No holder of any Capital Note issued hereunder shall have the
right to institute any suit, action, or proceeding in equity or at law for
the execution of any trust or power hereof or for the endorsement or any
remedy under this Indenture or any Capital Note issued hereunder unless:
<PAGE>
a. Such holder shall have previously given the Trustee written
notice of some existing "event of default" and of the continuance thereof;
b. The holders of twenty-five percent (25%) in principal amount
of the Capital Notes at the time outstanding shall have requested the Trustee
to exercise such power or right of action after the right to do so has
accrued hereunder and have afforded the Trustee a reasonable opportunity to
proceed upon such request;
c. Such holders shall have offered to Trustee indemnity
satisfactory to it against the costs, expenses, and liabilities to be
incurred thereby; and
d. The Trustee shall have failed or refused to comply with such
request within a period of sixty (60) days. Compliance with the foregoing
conditions shall at the option of the Trustee be a condition precedent to the
exercise of the powers and trusts of this Indenture and to any action or
proceeding for the enforcement of any remedy hereunder, and no holder of any
Capital Note shall have any right to enforce any right on account of this
Indenture or his Capital Note, except in the manner herein provided, and in
any event all proceedings hereunder at law or in equity shall be instituted
and maintained for the ratable benefit of all holders of outstanding Capital
Notes in the manner and with the interest priority provided for in Section
1.05 and Section 3.06, and any other applicable provisions hereof.
ARTICLE IV
Trustee, Its Rights and Duties,
and Successor Trustees
4.01 The Trustee, for itself and its successors, hereby accepts the
trust created by this Indenture and assumes the duties imposed, but upon the
following terms and conditions:
a. Trustee shall be entitled to reasonable compensation for all
services from time to time rendered by it under and by virtue of the terms of
this Indenture including an acceptance fee, together with all expenses from
time to time incurred by it, including fees paid for counsel and for legal
services. The parties hereto shall agree upon Trustee's fees for ordinary
services from time to time hereunder. In the event the parties
<PAGE>
do not agree, or in the event of extraordinary services by virtue of events
of default or liquidation of Company, or any other matter which may require
extraordinary services from Trustee, Trustee's compensation may be fixed by
an appropriate court. Company covenants to pay all compensation to which
Trustee may be entitled, including expenses and fees from time to time,
promptly upon demand.
b. Trustee shall not be responsible for the correctness of any
recitals in this Indenture of any Capital Notes issued under and pursuant to
the same (except certificates and authentications by Trustee).
c. Trustee may employ and consult with counsel whenever deemed
necessary, and the opinion of such counsel shall be full and complete
authorization and protection to and for Trustee in respect of any action
taken or suffered by it in good faith and in accordance with the opinion of
such counsel.
d. Trustee may rely upon the correctness of any
certificate or statement, of the President or a Vice President of Company
furnished from time to time under the terms hereof and shall not be liable in
any way for any act done or any omission to act in reliance on any such
certificate or statement.
e. Trustee hereunder shall have no responsibility for
determining when or whether an "Event of Default" has occurred except for
those events of default which would come to its knowledge and attention in
the ordinary course of business under this form of Trust Indenture.
4.02 Trustee shall not be liable for any act of commission or omission
on its part in connection with the discharge and performance of its duties
and obligations under this Indenture and any Capital Notes issued pursuant
hereto, except to the extent that any such act or omission shall constitute
willful misconduct or negligence, and reliance upon certificates and
statements of Company, the President or a Vice President thereof, opinions of
counsel (whether counsel for Company or not), and good faith errors in
judgment by a responsible officer or officers of Trustee shall not be held to
be negligent in any case.
4.03 Trustee shall keep at all times a current list of the names and
addresses of registered Capital Note holders, issued and outstanding under
the terms of this Indenture. Company shall
<PAGE>
promptly notify Trustee of all changes in names or addresses of Capital Note
holders known to it.
4.04 Trustee may resign whenever it may elect to so do, sixty (60)
days after a written notice of its intention to so do has been served on
Company and on all Capital Note owners shown by the records of Trustee
(notices in all cases to be by ordinary, first class mail with the date of
service thereof), and in the event Trustee shall resign, or in the event
Trustee shall be dissolved and cease to do business as a bank or trust
company, Company shall designate by an appropriate written instrument a
successor Trustee which shall be a state or national bank or trust company
with its principal office in the state of Iowa. Any successor trustee
appointed by Company under the terms hereof shall have all rights, powers,
and duties of the original Trustee as herein provided, and whenever in this
Indenture the word "Trustee" appears or the Trustee is referred to, it shall
mean and includes any and all successor Trustees who may be appointed
hereunder.
4.05 Trustee shall not be in any manner precluded from buying,
selling, owning, or dealing in Capital Notes issued pursuant to this
agreement, either in its own right or as agent for others, as fully and
completely as any other individual, firm, or corporation could do.
4.06 Trustee or Company may (and on written request of owners of
twenty-five percent (25%) in principal amount of outstanding Capital Notes
shall) call a meeting of all Capital Note owners for any appropriate purpose.
Such meeting shall be called by giving a written notice of the time and
place thereof by ordinary, first class mail to all Capital Note owners whose
names and addresses are first shown in the records of Trustee, mailed not
less than five (5) days prior to the date fixed for such meeting. The Company
shall pay for the costs of calling and holding said meeting.
4.07 In any case in which Trustee is required or may deem it proper
or advisable to give a notice to Company, a Capital Note holder or any other
person, firm, or agency, such notice shall be given by ordinary, first class
mail, addressed to the last known post office address of any such person,
firm, or agency, and the time of service thereof shall be the time of mailing
thereof.
ARTICLE V
5.01 The Company and Trustee may make arrangements varying, amending
or changing this Indenture as Company and Trustee shall from time to time
deem proper without the approval of the noteholders, provided only that no
such amendment shall adversely affect
<PAGE>
any rights or interests of owners of Capital Notes then issued and
outstanding under and pursuant to this Indenture.
5.02 Upon the execution of any Supplemental Indenture pursuant to the
provisions of this Article V, this Indenture shall be and be deemed to be
modified and amended in accordance therewith and the respective rights,
limitations of rights, obligations, duties, and immunities under this
Indenture of the Trustee, the Company, and the holders of Capital Notes shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and
conditions of any such Supplemental Indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
IN WITNESS WHEREOF, Brenton Banks, Inc. has caused this Indenture to be
executed in its name and on its behalf by its President, duly attested by its
Secretary, with its corporate seal hereto attached, and Bankers Trust
Company, Des Moines, Iowa, to evidence its acceptance of the trusts hereby
created, has caused this instrument to be signed in its name and on its
behalf by a duly authorized officer, all on or as of this 27th day of March,
1991.
BRENTON BANKS, INC. BANKERS TRUST COMPANY
By /s/ By /s/
Junius C. Brenton Bryan Hall, Trust Officer
President
ATTEST:
By /s/
Steven T. Schuler,
Chief Financial Officer and
Vice President/Treasurer/Secretary
STATE OF IOWA )
) ss.
COUNTY OF POLK )
On this 28th day of March, 1991, before me, a Notary Public in and for
Polk County, Iowa, personally appeared Junius C. Brenton, President, and
Steven T. Schuler, Chief Financial Officer and Vice
President/Treasurer/Secretary, of Brenton Banks,
<PAGE>
Inc., the corporation which executed the above and foregoing instrument, who
being to me known as the identical persons who signed the foregoing
instrument, and by me duly sworn, each for himself, did say that they are
respectively the President and the Chief Financial Officer/Vice President/
Secretary/Treasurer of said corporation, and that said instrument was by them
signed and sealed on behalf of the said corporation by authority of its Board
of Directors, and each of them acknowledged the execution of said instrument
to be the voluntary act and deed of said corporation, by it and each of them
voluntarily executed.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed my
Notarial Seal the day and year last above written.
/s/ Judith L. Neckulle
Notary Public in and for Polk County
STATE OF IOWA )
) ss.
COUNTY OF POLK )
On this 27 day of March, 1991, before me, a Notary Public in and for
Polk County, Iowa, personally appeared Bryan Hall, of Bankers Trust Company,
the corporation which executed the above and foregoing instrument, who being
to me known as the identical person who signed the foregoing instrument, and
by me duly sworn, did say that he is the Trust Officer of said corporation,
and that said instrument was by him signed and sealed on behalf of the said
corporation by authority of its Board of Directors, and he acknowledged the
execution of said instrument to be the voluntary act and deed of said
corporation, by it and by him voluntarily executed.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed my
Notarial Seal the day and year last above written.
/s/ John D. Hunter
Notary Public in and for Polk County
<PAGE>
EXHIBIT A
7.00% Capital Notes
Series M-19 through M-30
Due 1995 through 2006
7.25% Capital Notes
Series N-19 through N-30
Due 1995 through 2006
7.50% Capital Notes
Series R-19 through R-30
Due 1995 through 2006
7.75% Capital Notes
Series T-19 through T-30
Due 1995 through 2006
8.00% Capital Notes
Series U-19 through U-30
Due 1995 through 2006
8.25% Capital Notes
Series V-19 through V-30
Due 1995 through 2006
8.50% Capital Notes
Series W-19 through W-30
Due 1995 through 2006
8.75% Capital Notes
Series X-19 through X-30
Due 1995 through 2006
9.00% Capital Notes
Series Y-19 through Y-30
Due 1995 through 2006
9.25% Capital Notes
Series B-19 through B-30
Due 1995 through 2006
9.50% Capital Notes
Series A-19 through A-30
Due 1995 through 2006
9.75% Capital Notes
Series C-19 through C-30
Due 1995 through 2006
10.00% Capital Notes
Series D-19 through D-30
Due 1995 through 2006
10.25% Capital Notes
Series E-19 through E-30
Due 1995 through 2006
10.50% Capital Notes
Series F-19 through F-30
Due 1995 through 2006
10.75% Capital Notes
Series H-19 through H-30
Due 1995 through 2006
11.00% Capital Notes
Series I-19 through I-30
Due 1995 through 2006
11.25% Capital Notes
Series L-19 through L-30
Due 1995 through 2006
11.50% Capital Notes
Series O-19 through O-30
Due 1995 through 2006
11.75% Capital Notes
Series S-19 through S-30
Due 1995 through 2006
12.00% Capital Notes
Series Z-19 through Z-30
Due 1995 through 2006
12.25% Capital Notes
Series P-19 through P-30
Due 1995 through 2006
12.50% Capital Notes
Series SS-19 through SS-30
Due 1995 through 2006
12.75% Capital Notes
Series AA-19 through AA-30
Due 1995 through 2006
13.00% Capital Notes
Series BB-19 through BB-30
Due 1995 through 2006
13.25% Capital Notes
Series CC-19 through CC-30
Due 1995 through 2006
13.50% Capital Notes
Series DD-19 through DD-30
Due 1995 through 2006
13.75% Capital Notes
Series EE-19 through EE-30
Due 1995 through 2006
14.00% Capital Notes
Series FF-19 through FF-30
Due 1995 through 2006
<PAGE>
EXHIBIT "B"
KNo. _______________
BRENTON BANKS, INC.
DES MOINES, IOWA
$__________________
REGISTERED CAPITAL NOTE (SERIES _______________________ CALLABLE)
Brenton Banks, Inc., a corporation organized and existing under the laws
of the State of Iowa, hereinafter referred to as the Corporation, for value
received hereby promises to pay to the registered holder hereof, upon
presentation of this Capital Note, the sum of $___________________ on the 1st
day of June,______________, at the main office of the Corporation in the City
of Des Moines, Iowa. The Corporation further agrees to pay interest on the
principal amount from the __________ day of ____________________, until paid,
at the rate of _______% per annum, payable semi-annually on the first day of
June and December of each year.
The Corporation shall, upon request of the registered holder hereof, mail
a check representing the interest hereon, or the principal when due, to the
registered holder at his address appearing on the books of registration.
The Capital Note is subject to being called on any interest payment date
occurring more than eight (8) years after the date of issuance hereof, at the
option of the Corporation on not less than thirty (30) days' prior written
notice given by the Corporation by ordinary mail to the holder of the Capital
Note at such holder's address appearing on the books of registration, at 100%
of the principal amount of this Capital Note, together with interest accrued
and unpaid on this Capital Note, to the date fixed for such call.
Upon the death of an individual registered holder or of an individual
bearing a certain designated relationship to the registered holder, a Capital
Note will be redeemed by the Company at the option of certain designated
person(s) exercised as provided herein at face plus all interest accrued on
the Capital Note to the date of redemption. An option shall arise upon the
death of an individual who is (i) sole registered holder, (ii) a joint tenant
registered holder, (iii) a tenant in common registered holder, (iv) a life
tenant registered holder, (v) the sole grantor of a revocable trust which is
a registered holder, (vi) a participant in an IRA or other retirement plan
solely for the benefit of one participant which is a registered holder, or
(vii) the ward of a conservatorship or custodianship which is a registered
holder. No option to require redemption of a Capital Note shall arise except
as specifically set forth above.
Upon the death of an individual who is the sole registered holder of a
Capital Note, such option shall be exercisable by the deceased holder's
personal representative(s). Upon the death of a registered holder who holds a
Capital Note in joint tenancy, such option shall be exercisable by the
surviving joint tenant(s). Upon the death of a registered holder who holds a
Capital Note in tenancy in common, such option shall be exercisable jointly
by the personal representative(s) of the deceased holder and by the remaining
tenant(s) in common. Upon the death of a registered holder who has a life
estate in a Capital Note, such option shall be exercisable by the
remainderman(men). Upon the death of an individual who is the sole grantor of
a revocable trust which is a registered holder, such option shall be
exercisable by the trustee(s) of the trust. Upon the death of the participant
in an IRA or other retirement plan solely for the benefit of one participant
which is a registered holder, such option shall be exercisable by the
beneficiary(ies) of such IRA or retirement plan. Upon the death of a ward of
a conservatorship or custodianship which is a registered holder, such option
shall be exercisable by the personal representative(s) of such ward's estate.
In the event more than one person is entitled to exercise the option, such
option shall be exercisable only with the concurrence of all persons entitled
to exercise the option.
The option shall be exercisable for a period of 9 months following the
date of death of the individual whose death gives rise to the option. The
option shall be exercised by the person(s) entitled to exercise the option
giving written notice to the Company of the exercise of the option at the
Company's principal executive offices. Prior to the redemption of the Capital
Note, the person(s) entitled to exercise the option shall furnish the Company
with such documentation or evidence as the Company shall require to establish
such person's(s') entitlement to exercise the redemption option. The Company
shall be under no duty to notify the person(s) entitled to exercise the
option of the existence of this redemption option or of any facts which come
to the attention of the Company which would give any person the right to
exercise the option.
This Capital Note is one of an authorized issue of fully registered
Capital Notes of Brenton Banks, Inc., issued in multiples of $1,000 and
limited to the aggregate principal amount of $2,000,000 at any one time
outstanding, all issued pursuant to an Indenture dated April 10, 1990,
executed and delivered by the Corporation to the Trustee, to which Indenture
reference is hereby made for a description of rights, duties and obligations
thereunder of the Corporation, the Trustee and the Owners of the Capital
Notes.
In the event of default in the payment of principal of, or interest on,
this Capital Note, the total principal amount of this Capital Note, and all
interest hereof, shall become due and payable and the Corporation shall
immediately pay the same.
Books for the registry hereof are maintained at the office of the
Corporation or at the agency of the Corporation established for that purpose
in the city of Des Moines, Iowa. This Capital Note is transferable by the
registered holder hereof in person, or by his duly authorized attorney, at
the office or agency of the Corporation for such purpose in the city of Des
Moines, Iowa, upon surrender for cancellation of this Capital Note at said
office or agency. Thereupon, a new Capital Note for a like principal amount,
or new Capital Notes in such authorized denominations and registered in such
name or names, as shall have been requested, shall be issued and delivered.
No transfer hereof shall be valid unless made on the Corporation's books,
at the office of the Corporation or the agency established for that purpose,
in accordance with the provisions of the foregoing paragraph. The Corporation
and its agents may deem and treat the person in whose name this Capital Note
is registered as the absolute owner of the Capital Note for the purpose of
receiving payment hereof and interest due hereon, but the Corporation may, at
any time, require the presentation hereof as a condition precedent to such
payment.
No recourse shall be had for the payment of the principal of, or interest
upon, this Capital Note, against any shareholder, officer, or director of the
Corporation, by reason of any matter prior to the delivery of this Note, or
otherwise, all such liability, by the acceptance hereof, and as a part of the
consideration of this issue hereof, being expressly waived.
In the event any Capital Note is not presented for payment when due or
when called by the Corporation, the Corporation shall deposit a sum equal to
the amount due thereon with Trustee in trust for payment thereof and neither
the Corporation nor Trustee shall thereafter be liable for any interest
thereon.
This Capital Note and any subsequent Capital Note issued on transfer and
surrender hereunder shall not be valid for any purpose until duly certified
by the Trustee under the Indenture supporting the name.
This Capital Note is not a deposit and is not insured by the Federal
Deposit Insurance Corporation.
IN WITNESS WHEREOF, the Corporation has caused this Capital Note to be
executed by its President or other authorized officer, and its corporate seal
affixed hereto, at Des Moines, Iowa, on the day and year appearing below.
Corporate Seal:
Date: ________________________________
BRENTON BANKS, INC.
By: __________________________________
(Chairman, Vice Chairman or President)
ATTEST:
______________________________________
(Secretary, Assistant Secretary Treasurer)
<PAGE>
REGISTRATION
(No writing on this registered Capital Note except by an officer or agent of
the Corporation)
Date of In Whose Registry
Registration Name Registered Address Officer
_____________ ________________ ___________ __________
_____________ ________________ ___________ __________
_____________ ________________ ___________ __________
_____________ ________________ ___________ __________
TRUSTEE'S CERTIFICATE
The foregoing Capital Note is hereby certified by the undersigned Bank as
Trustee as one of the series of Capital Notes of Brenton Banks, Inc.,
described in the Indenture referred to therein, made between the Corporation
and this Bank as Trustee.
Dated as of this _______ day of ____________________, ______.
_______________________________
(Trustee)
By_____________________________
Its____________________________
(Title)
ASSIGNMENT
For value received I hereby assign to __________________________________ the
within registered Capital Note and hereby irrevocably appoint _____________
____________________________________ attorney to transfer the registered
Capital Note on the books of the within named Corporation with full power of
substitution in the premises.
Dated:_________________________
Signatures guaranteed by the __________________________
Signature (in whose name
_______________________________ registered)
(Bank)
__________________________
_______________________________ Signature (in whose name
Signature registered)
_______________________________
Date Office & Title
The transfer of any notes represented by this certificate to any person who
is not then a bona fide resident of the State of Iowa purchasing such notes
for the purpose of investment and not for resale is restricted pursuant to
the terms of a subscription form executed by the original holder of such
notes.
<PAGE>
Exhibit 10.17
<PAGE>
I N D E N T U R E A G R E E M E N T
W I T H R E S P E C T
T O C A P I T A L N O T E S
D A T E D A U G U S T 5, 1 9 9 1
<PAGE>
INDENTURE AGREEMENT
THIS INDENTURE AGREEMENT is made as of the 5th day of August, 1991,
between BRENTON BANKS, INC., a corporation organized and existing under the
laws of Iowa with its principal place of business in the City of Des Moines,
Iowa, hereinafter called the "Company," and BANKERS TRUST COMPANY, a state
banking corporation organized under the laws of the State of Iowa, with its
principal place of business in the City of Des Moines, Iowa, hereinafter
called the "Trustee."
WHEREAS, Company is duly authorized by its Articles of Incorporation and
By-Laws to borrow money for its corporate purposes; and,
WHEREAS, Company was heretofore duly authorized by a unanimous
affirmative vote of its directors at a meeting duly called and held for such
purpose to amend its "Capital Note Registration Statement" in the amount of
$2,000,000, to a Capital Note Registration Statement in the amount of
$5,000,000;
WHEREAS, Company was heretofore duly authorized by unanimous affirmative
vote of its directors at a meeting duly called and held for such purpose to
borrow the additional sum of $3,000,000 for use in connection with its
ordinary operations and to issue its Capital Notes in the total sum of
$5,000,000, with all Capital Notes issued after the Amendment to the
Registration Statement to be secured by this Indenture Agreement with Bankers
Trust Company, Des Moines, Iowa, as Trustee for the Capital Note holders;
NOW, THEREFORE, in consideration of One Dollar ($1.00) in hand paid to
Trustee, and in consideration of the purchase and acceptance of Capital Notes
of Company by various purchasers, Company hereby covenants and declares that
its Capital Notes issued after the Amendment to its Capital Note Registration
Statement in the maximum principal sum of $3,000,000, and hereinafter more
duly described shall be issued by it upon and subject to the following terms,
conditions, and covenants, and Trustee by its execution hereof agrees to act
as Trustee for all such Capital Note holders under and pursuant to the terms
of this Agreement.
ARTICLE I
Capital Notes
1.01 Company shall issue its Capital Notes, in the maximum total
principal sum of $3,000,000 with the same being in the series, maturing on
the dates, and bearing interest at the rates enumerated on Exhibit A attached
hereto, which said Capital Notes shall constitute those issued under and
pursuant to this Indenture. Such Capital Notes shall be issued in
denominations of multiples of $1,000.
<PAGE>
1.02 The Capital Notes to be issued under and pursuant to the terms
hereof shall be in the form attached hereto as Exhibit B.
1.03 All Capital Notes issued pursuant to this Indenture shall be
issued directly to the registered owners as to principal and interest, and
shall be transferable by the registered owner in person or by duly authorized
attorney at the office of the Company upon surrender and cancellation of the
original Capital Note, at which time a new registered Capital Note(s) shall
be executed and delivered by Company in lieu thereof with the same registered
in the name of the transferee or transferees. Each Capital Note issued in
consummation of an assignment and transfer of an original issue, or any
subsequent Capital Notes issued and outstanding under the terms hereof, shall
be appropriately recorded by both Company and by Trustee.
1.04 All Capital Notes issued under and pursuant to this Indenture
shall be certified by Trustee and shall not be valid for any purpose until so
certified. Whenever a Capital Note is surrendered for transfer or assignment
and a new Capital Note issued in lieu thereof, the same shall be certified at
that time by Trustee prior to its delivery to the registered owner or owners.
1.05 All Capital Notes issued under the terms hereof shall have equal
priority as to principal. Upon the happening of an "event of default," all
interest due and unpaid on that date on all Capital Notes issued and
outstanding shall have priority over any principal amounts of such Capital
Notes, and shall be paid ratably either in money or property among the
Capital Note holders to whom the said unpaid interest is due and owing, and
no payment of principal shall be made until all said unpaid interest has been
paid and discharged in full. Following payment of the interest, the
principal sums due and unpaid on all Capital Notes issued and outstanding as
of that date shall then be paid. For the purpose of principal payment,
whether by virtue of distribution of money or property, priority with respect
thereto shall be equal between all such outstanding Capital Notes.
1.06 Any Capital Note issued under the terms hereof which has been
lost, destroyed, or stolen shall be replaced by Company with an identical new
Capital Note, certified by Trustee, upon proof of loss, destruction, or theft
satisfactory to Company and Trustee and the giving of a bond to secure
Company and Trustee from loss, if and to the extent required by Company and
Trustee.
1.07 Any Capital Note surrendered to Company by the holder thereof on
payment or redemption shall be promptly canceled by Company and after
cancellation delivered to Trustee for recordation and return to Company. A
Capital Note surrendered upon an assignment or transfer shall also be so
canceled by Company and delivered to Trustee for recordation and return to
Company.
1.08 All Capital Notes issued pursuant to the terms hereof shall bear
interest, payable semi-annually on June 1 and December
<PAGE>
1 of each year prior to maturity, call for redemption or redemption pursuant
to Section 1.11 hereof. No payment of principal shall be made until all
unpaid interest has been paid and discharged in full. Following payment of
the interest, the principal sums due and unpaid on all Capital Notes issued
and outstanding as of that date shall be paid. For the purpose of principal
payments, whether by virtue of distribution of money or property, priority
with respect thereto shall be equal in all respects between all such
outstanding Capital Notes.
1.09 Capital Notes issued and outstanding under the terms hereof shall
be paid on maturity to the extent that payment is not prohibited by the terms
hereof, and after payment of all interest due and payable on any such
outstanding Capital Notes at that time.
1.10 Any Capital Note issued pursuant to this Indenture may be
redeemed in whole or in part by Company, on any interest payment date after
eight (8) years from the date of issuance of such Capital Note, in advance of
maturity at any time thirty (30) days after notice by Company of its election
to do so by paying all interest due thereon together with the principal
amount thereof.
1.11 Upon the death of an individual registered holder or of an
individual bearing a certain designated relationship to the registered
holder, a Capital Note will be redeemed by the Company at the option of
certain designated person(s) exercised as provided herein at face plus all
interest accrued on the Capital Note to the date of redemption. An option
shall arise upon the death of an individual who is (i) sole registered
holder, (ii) a joint tenant registered holder, (iii) a tenant in common
registered holder, (iv) a life tenant registered holder, (v) the sole grantor
of a revocable trust which is a registered holder, (vi) a participant in an
IRA or other retirement plan solely for the benefit of one participant which
is a registered holder, or (vii) the ward of a conservatorship or
custodianship which is a registered holder. No option to require redemption
of a Capital Note shall arise except as specifically set forth above.
Upon the death of an individual who is the sole registered holder
of a Capital Note, such option shall be exercisable by the deceased holder's
personal representative(s). Upon the death of a registered holder who holds
a Capital Note in joint tenancy, such option shall be exercisable by the
surviving joint tenant(s). Upon the death of a registered holder who holds a
Capital Note in tenancy in common, such option shall be exercisable jointly
by the personal representative(s) of the deceased holder and by the remaining
tenant(s) in common. Upon the death of a registered holder who has a life
estate in a Capital Note, such option shall be exercisable by the
remainderman(men). Upon the death of an individual who is the sole grantor
of a revocable trust which is a registered holder, such option shall be
exercisable by the trustee(s) of the trust. Upon the death of the
participant in an IRA or other retirement plan solely for the benefit of one
participant which is a registered holder, such option shall be exer-
<pager>
cisable by the beneficiary(ies) of such IRA or retirement plan. Upon the
death of a ward of a conservatorship or custodianship which is a registered
holder, such option shall be exercisable by the personal representative(s) of
such ward's estate. In the event more than one person is entitled to
exercise the option, such option shall be exercisable only with the
concurrence of all persons entitled to exercise the option.
The option shall be exercisable for a period of 9 months
following the date of death of the individual whose death gives rise to the
option. The option shall be exercised by the person(s) entitled to exercise
the option giving written notice to the Company of the exercise of the option
at the Company's principal executive offices. Prior to the redemption of the
Capital Note, the person(s) entitled to exercise the option shall furnish the
Company with such documentation or evidence as the Company shall require to
establish such person's(s') entitlement to exercise the redemption option.
The Company shall be under no duty to notify the person(s) entitled to
exercise the option of the existence of this redemption option or of any
facts which come to the attention of the Company which would give any person
the right to exercise the option.
1.12 In the event any Capital Note is not presented for surrender and
cancellation on maturity or when called for redemption by Company, Company
shall deposit a sum equal to the amount due thereon, with Trustee in trust
for payment thereof, and no interest shall be due and payable to the holder
of such Capital Note from and after its maturity or redemption date. Such
payment by Company to Trustee shall be made within thirty (30) days after the
due date. Thereafter, Trustee shall pay over said sum to the owner upon
delivery and surrender of the pertinent Capital Note(s) for redemption and
cancellation.
1.13 Nothing contained in this Indenture or in any of the Capital
Notes shall be construed to cause the Capital Notes issued hereunder to
become immediately due and payable in the event of any consolidation or
merger of the Company with or into any other corporation or corporations
(whether or not affiliated with the Company), or successive consolidations or
mergers in which the Company or its successor or successors shall be a party
or parties, or any sale or conveyance of the property of the Company as an
entirety or substantially as an entirety, to any other corporation (whether
or not affiliated with the Company) or the purchase of stock and subsequent
liquidation of the assets into the purchasing entity (hereinafter "purchase
and liquidation") authorized to acquire and operate the same if the following
are delivered to the Trustee: (1) an opinion by a certified public
accountant appointed by the successor corporation or entity opining that the
net worth of the successor corporation or entity following the acquisition,
merger, consolidation, sale of assets, or purchase and liquidation determined
on a pro forma basis using the successor corporation's or entity's and the
Company's most recent year-end financial statements preceding the date of the
acquisition, merger, consoli-
<PAGE>
dation, sale of assets, or purchase and liquidation is in excess of the net
worth of the Company as reflected on the Company's most recent year-end
financial statements preceding the date of the acquisition, merger,
consolidation, sale of assets, or purchase and liquidation; (2) an Assumption
Agreement in which the successor corporation or entity expressly assumes the
due and punctual performance and observance of all of the covenants and
conditions of this Indenture to be performed by the Company; and (3) an
opinion of counsel appointed by the successor corporation or entity that the
Assumption Agreement is a valid and binding obligation of such successor
corporation or entity enforceable in accordance with its terms and the
Capital Notes are valid and binding obligations of the successor corporation
or entity.
In case of any such consolidation, merger, sale, conveyance, or
purchase and liquidation and upon the assumption by the successor
corporation, such successor corporation shall succeed to and be substituted
for the Company, with the same effect as if it had been named herein as the
Company.
1.14 Any notices which Company is required to give under the terms of
this Indenture, or which are deemed necessary or proper by Company, shall be
given by first class mail with postage prepaid addressed to each Capital Note
holder at the address shown for him on the books and records of Company, and
notices so given shall be deemed given upon the date of the mailing thereof.
ARTICLE II
Covenants of Company
2.01 Company covenants and agrees to pay all principal and interest as
the same becomes due and payable upon any Capital Notes issued and
outstanding under the terms of this Indenture; provided, however, that
principal shall only be paid by it upon surrender of the appropriate Capital
Notes for cancellation, or if not surrendered, by payment to Trustee as
provided in this Indenture.
2.02 Subject to the provisions of Section 1.13 hereof, Company
covenants to continue the operation of its business, all as required and
permitted by its Articles of Incorporation and By-Laws, and to at all times
maintain sufficient assets and property to continue such general operations
so long as any of its Capital Notes remain issued and outstanding under the
terms hereof.
2.03 Company covenants to meet all requirements relative to issuance
of said Capital Notes, payment of principal and interest thereon from the
sources specified, and all other conditions relating thereto as provided in
Article I hereof.
2.04 Company further covenants to furnish Trustee true copies of all
quarterly and annual reports normally prepared by Company.
<PAGE>
2.05 On an annual basis Company covenants to furnish trustee with a
certificate indicating whether there has been an "event of default", as
defined in Article III hereof, on the Capital Notes. Said statement shall be
certified by an officer of the Company that it is true and accurate according
to the Company's best knowledge and belief. The Company shall deliver the
certificate to the Trustee within ninety (90) days of the Company's fiscal
year end.
2.06. The Company further covenants to furnish Trustee a quarterly
statement listing the current capital note holders. Said statement shall be
certified by an officer of the Company to be true and accurate according to
the Company's best knowledge and belief.
ARTICLE III
Defaults: Rights, Remedies, and Duties of
Trustee and Capital Note Holders
3.01 An "event of default" shall constitute any one of the following:
a. Failure of Company to pay interest or principal or any part
thereof, within thirty (30) days after due;
b. Failure of Company to fully perform any other covenant or
obligation made and to be kept or performed by Company by virtue of this
Indenture which is not remedied within sixty (60) days after notice of such
failure from Trustee or from the holders of twenty-five percent (25%) of the
principal amount of all Capital Notes issued and outstanding under the terms
hereof at that time.
c. Adjudication of Company as a bankrupt or insolvent in any
state or federal court, or appointment by any court of a receiver to take
over and conduct the business, affairs, and property of Company, or
commencement of liquidation of Company, either voluntary or involuntary,
pursuant to any bankruptcy, insolvency or receivership.
3.02 Subject to the provisions of Section 4.01(e), upon the happening
of an "event of default," Trustee shall declare all principal and interest on
all Capital Notes of Company then issued and outstanding under the terms
hereof due and payable at once by written notice to Company, and thereafter,
Trustee may sue at law or in equity or proceed in any other manner authorized
by law to enforce payment of all sums due on any such outstanding Capital
Notes and to establish and enforce all rights and priorities of every kind
and nature of the holders of all such Capital Notes and of such Trustee.
<PAGE>
3.03 Subject to the provisions of Section 4.01(e), upon the occurrence
of an "event of default" as defined in this Indenture, Trustee, within thirty
(30) days after knowledge thereof, shall give written notice thereof to all
registered owners of Capital Notes outstanding under the terms of this
Indenture at that time, said notice to be by ordinary first class mail
addressed to each owner at the address shown on Trustee's records. Failure to
give notices under the terms hereof, however, shall not make Trustee liable
for any claim resulting therefrom.
3.04 In any action or proceeding in which rights of Capital Note
holders in and to the assets and property of Company are or may be affected,
or to enforce payment of interest or principal due under this Indenture or
any of the Capital Notes issued pursuant to the same, or to otherwise enforce
performance by Company of any obligations made or to be performed by it under
the terms hereof or of Capital Notes issued pursuant to this Indenture,
Trustee shall act for and on behalf of all Capital Note Holders, and shall
file and make proof of debts, claims, petitions, pleadings, and all other
instruments, and may take all action and steps deemed necessary or proper to
enforce, protect, and preserve all rights and properties of the holders of
outstanding Capital Notes.
3.05 Trustee may employ counsel as in its discretion deemed proper in
the case of any "event of default" of Company, or any other actions as in
this Indenture described or provided for with respect to Trustee either in
its own right or for and on behalf of Capital Note holders, and Company shall
pay all fees and expenses of such counsel and of Trustee in any such acts,
actions, or proceedings taken by Trustee under terms hereof.
3.06 All moneys collected or received by Trustee by virtue of any act,
action, or proceeding taken under the terms hereof or received by Trustee for
and on behalf of Capital Note holders shall be disbursed as follows:
a. In payment of all costs, expenses, charges, and fees of
Trustee, including counsel and attorney's fees;
b. In payment of all principal and interest due and unpaid on
the Capital Notes issued and outstanding at that time. If there are
insufficient funds to fully pay all such principal and interest, the funds
available shall be applied and paid first ratably to the payment of unpaid
interest and then ratably to the payment of principal;
c. The remainder, if any, to Company.
3.07 In case of an "event of default" by Company by virtue of which
the Trustee may elect to institute an action or proceeding on behalf of the
Capital Note holders against Company, if Trustee does not institute an action
within thirty (30) days after its elective
<PAGE>
right to so do has accrued, the holders of Capital Notes totaling twenty-five
percent (25%) of the principal amount of all such Capital Notes then issued
and outstanding by written demand given to Trustee may require Trustee to
institute any action or proceeding which they direct Trustee to initiate,
provided however, that Trustee, before bringing any such action, may, as is
hereinafter more fully spelled out, require adequate security from such
Capital Note holders to protect it against any loss by virtue of expenses,
charges, and fees incident to any action so required. In the event that two
or more groups of holders of Capital Notes each of which holds Capital Notes
totaling twenty-five percent (25%) of the principal amount of all such
Capital Notes then issued and outstanding direct the trustee to proceed in a
conflicting manner(s), the trustee may interplead the funds into or may seek
a declaratory determination of the conflict(s) from the District Court for
Polk County, Iowa.
3.08 No holder of any Capital Note issued hereunder shall have the
right to institute any suit, action, or proceeding in equity or at law for
the execution of any trust or power hereof or for the endorsement or any
remedy under this Indenture or any Capital Note issued hereunder unless:
a. Such holder shall have previously given the Trustee written
notice of some existing "event of default" and of the continuance thereof;
b. The holders of twenty-five percent (25%) in principal amount
of the Capital Notes at the time outstanding shall have requested the Trustee
to exercise such power or right of action after the right to do so has
accrued hereunder and have afforded the Trustee a reasonable opportunity to
proceed upon such request;
c. Such holders shall have offered to Trustee indemnity
satisfactory to it against the costs, expenses, and liabilities to be
incurred thereby; and
d. The Trustee shall have failed or refused to comply with such
request within a period of sixty (60) days. Compliance with the foregoing
conditions shall at the option of the Trustee be a condition precedent to the
exercise of the powers and trusts of this Indenture and to any action or
proceeding for the enforcement of any remedy hereunder, and no holder of any
Capital Note shall have any right to enforce any right on account of this
Indenture or his Capital Note, except in the manner herein provided, and in
any event all proceedings hereunder at law or in equity shall be instituted
and maintained for the ratable benefit of all holders of outstanding Capital
Notes in the manner and with the interest priority provided for in Section
1.05 and Section 3.06, and any other applicable provisions hereof.
<PAGE>
ARTICLE IV
Trustee, Its Rights and Duties,
and Successor Trustees
4.01 The Trustee, for itself and its successors, hereby accepts the
trust created by this Indenture and assumes the duties imposed, but upon the
following terms and conditions:
a. Trustee shall be entitled to reasonable compensation for all
services from time to time rendered by it under and by virtue of the terms of
this Indenture including an acceptance fee, together with all expenses from
time to time incurred by it, including fees paid for counsel and for legal
services. The parties hereto shall agree upon Trustee's fees for ordinary
services from time to time hereunder. In the event the parties do not agree,
or in the event of extraordinary services by virtue of events of default or
liquidation of Company, or any other matter which may require extraordinary
services from Trustee, Trustee's compensation may be fixed by an appropriate
court. Company covenants to pay all compensation to which Trustee may be
entitled, including expenses and fees from time to time, promptly upon
demand.
b. Trustee shall not be responsible for the correctness of any
recitals in this Indenture of any Capital Notes issued under and pursuant to
the same (except certificates and authentications by Trustee).
c. Trustee may employ and consult with counsel whenever deemed
necessary, and the opinion of such counsel shall be full and complete
authorization and protection to and for Trustee in respect of any action
taken or suffered by it in good faith and in accordance with the opinion of
such counsel.
d. Trustee may rely upon the correctness of any
certificate or statement, of the President or a Vice President of Company
furnished from time to time under the terms hereof and shall not be liable in
any way for any act done or any omission to act in reliance on any such
certificate or statement.
e. Trustee hereunder shall have no responsibility for
determining when or whether an "Event of Default" has occurred except for
those events of default which would come to its knowledge and attention in
the ordinary course of business under this form of Trust Indenture.
4.02 Trustee shall not be liable for any act of commission or omission
on its part in connection with the discharge and perfor-
<PAGE>
mance of its duties and obligations under this Indenture and any Capital
Notes issued pursuant hereto, except to the extent that any such act or
omission shall constitute willful misconduct or negligence, and reliance upon
certificates and statements of Company, the President or a Vice President
thereof, opinions of counsel (whether counsel for Company or not), and good
faith errors in judgment by a responsible officer or officers of Trustee
shall not be held to be negligent in any case.
4.03 Trustee shall keep at all times a current list of the names and
addresses of registered Capital Note holders, issued and outstanding under
the terms of this Indenture. Company shall promptly notify Trustee of all
changes in names or addresses of Capital Note holders known to it.
4.04 Trustee may resign whenever it may elect to so do, sixty (60)
days after a written notice of its intention to so do has been served on
Company and on all Capital Note owners shown by the records of Trustee
(notices in all cases to be by ordinary, first class mail with the date of
service thereof), and in the event Trustee shall resign, or in the event
Trustee shall be dissolved and cease to do business as a bank or trust
company, Company shall designate by an appropriate written instrument a
successor Trustee which shall be a state or national bank or trust company
with its principal office in the state of Iowa. Any successor trustee
appointed by Company under the terms hereof shall have all rights, powers,
and duties of the original Trustee as herein provided, and whenever in this
Indenture the word "Trustee" appears or the Trustee is referred to, it shall
mean and includes any and all successor Trustees who may be appointed
hereunder.
4.05 Trustee shall not be in any manner precluded from buying,
selling, owning, or dealing in Capital Notes issued pursuant to this
agreement, either in its own right or as agent for others, as fully and
completely as any other individual, firm, or corporation could do.
4.06 Trustee or Company may (and on written request of owners of
twenty-five percent (25%) in principal amount of outstanding Capital Notes
shall) call a meeting of all Capital Note owners for any appropriate purpose.
Such meeting shall be called by giving a written notice of the time and
place thereof by ordinary, first class mail to all Capital Note owners whose
names and addresses are first shown in the records of Trustee, mailed not
less than five (5) days prior to the date fixed for such meeting. The Company
shall pay for the costs of calling and holding said meeting.
4.07 In any case in which Trustee is required or may deem it proper
or advisable to give a notice to Company, a Capital Note holder or any other
person, firm, or agency, such notice shall be given by ordinary, first class
mail, addressed to the last known post office address of any such person,
firm, or agency, and the time of service thereof shall be the time of mailing
thereof.
<PAGE>
ARTICLE V
5.01 The Company and Trustee may make arrangements varying, amending
or changing this Indenture as Company and Trustee shall from time to time
deem proper without the approval of the note holders, provided only that no
such amendment shall adversely affect any rights or interests of owners of
Capital Notes then issued and outstanding under and pursuant to this
Indenture.
5.02 Upon the execution of any Supplemental Indenture pursuant to the
provisions of this Article V, this Indenture shall be and be deemed to be
modified and amended in accordance therewith and the respective rights,
limitations of rights, obligations, duties, and immunities under this
Indenture of the Trustee, the Company, and the holders of Capital Notes shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and
conditions of any such Supplemental Indenture shall be and be deemed to be
part of the terms and conditions of this Supplemental Indenture for any and
all purposes.
IN WITNESS WHEREOF, Brenton Banks, Inc. has caused this Supplemental
Indenture to be executed in its name and on its behalf by its President, duly
attested by its Secretary, with its corporate seal hereto attached, and
Bankers Trust Company, Des Moines, Iowa, to evidence its acceptance of the
trusts hereby created, has caused this instrument to be signed in its name
and on its behalf by a duly authorized officer, all on or as of this 5th day
of August, 1991.
BRENTON BANKS, INC. BANKERS TRUST COMPANY
By /s/ By /s/
Junius C. Brenton, Bryan Hall, Trust Officer
President
ATTEST:
By /s/
Steven T. Schuler,
Chief Financial Officer and
Vice President/Treasurer/Secretary
<PAGE>
STATE OF IOWA )
) ss.
COUNTY OF POLK )
On this 8th day of August, 1991, before me, a Notary Public in and for
Polk County, Iowa, personally appeared Junius C. Brenton, President, and
Steven T. Schuler, Chief Financial Officer and Vice
President/Treasurer/Secretary, of Brenton Banks, Inc., the corporation which
executed the above and foregoing instrument, who being to me known as the
identical persons who signed the foregoing instrument, and by me duly sworn,
each for himself, did say that they are respectively the President and the
Chief Financial Officer/Vice President/Secretary/Treasurer of said
corporation, and that said instrument was by them signed and sealed on behalf
of the said corporation by authority of its Board of Directors, and each of
them acknowledged the execution of said instrument to be the voluntary act
and deed of said corporation, by it and each of them voluntarily executed.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed my
Notarial Seal the day and year last above written.
(Seal) /s/ Pamela J. Slippy
Notary Public in and for Polk County
STATE OF IOWA )
) ss.
COUNTY OF POLK )
On this 2nd day of August, 1991, before me, a Notary Public in and for
Polk County, Iowa, personally appeared Bryan Hall, of Bankers Trust Company,
the corporation which executed the above and foregoing instrument, who being
to me known as the identical person who signed the foregoing instrument, and
by me duly sworn, did say that he is the Trust Officer of said corporation,
and that said instrument was by him signed and sealed on behalf of the said
corporation by authority of its Board of Directors, and he acknowledged the
execution of said instrument to be the voluntary act and deed of said
corporation, by it and by him voluntarily executed.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed my
Notarial Seal the day and year last above written.
(Seal) /s/ Nancy J. Anderson
Notary Public in and for Polk County
<PAGE>
7.00% Capital Notes
Series M-19 through M-30
Due 1995 through 2006
7.25% Capital Notes
Series N-19 through N-30
Due 1995 through 2006
7.50% Capital Notes
Series R-19 through R-30
Due 1995 through 2006
7.75% Capital Notes
Series T-19 through U-30
Due 1995 through 2006
8.00% Capital Notes
Series U-19 through U-30
Due 1995 through 2006
8.25% Capital Notes
Series V-19 through V-30
Due 1995 through 2006
8.50% Capital Notes
Series W-19 through W-30
Due 1995 through 2006
8.75% Capital Notes
Series X-19 through X-30
Due 1995 through 2006
9.00% Capital Notes
Series Y-19 through Y-30
Due 1995 through 2006
9.25% Capital Notes
Series B-19 through B-30
Due 1995 through 2006
9.50% Capital Notes
Series A-19 through A-30
Due 1995 through 2006
9.75% Capital Notes
Series C-19 through C-30
Due 1995 through 2006
10.00% Capital Notes
Series D-19 through D-30
Due 1995 through 2006
10.25% Capital Notes
Series E-19 through E-30
Due 1995 through 2006
10.50% Capital Notes
Series F-19 through F-30
Due 1995 through 2006
10.75% Capital Notes
Series H-19 through H-30
Due 1995 through 2006
11.00% Capital Notes
Series I-19 through I-30
Due 1995 through 2006
11.25% Capital Notes
Series L-19 through L-30
Due 1995 through 2006
11.50% Capital Notes
Series O-19 through O-30
Due 1995 through 2006
11.75% Capital Notes
Series S-19 through S-39
Due 1995 through 2006
12.00% Capital Notes
Series Z-19 through Z-30
Due 1995 through 2006
12.25% Capital Notes
Series P-19 through P-30
Due 1995 through 2006
12.50% Capital Notes
Series SS-19 through SS-30
Due 1995 through 2006
12.75% Capital Notes
Series AA-19 through AA-30
Due 1995 through 2006
13.00% Capital Notes
Series BB-19 through BB-30
Due 1995 through 2006
13.25% Capital Notes
Series CC-19 through CC-30
Due 1995 through 2006
13.50% Capital Notes
Series DD-19 through DD-30
Due 1995 through 2006
13.75% Capital Notes
Series EE-19 through EE-30
Due 1995 through 2006
14.00% Capital Notes
Series FF-19 through FF-30
Due 1995 through 2006
<PAGE>
Exhibit 10.18
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.
219
<PAGE>
Exhibit 10.19
Indenture Agreement with respect to Capital Notes dated April 10, 1995.
This Indenture Agreement is incorporated by reference from Form 10-K of
Brenton Banks, Inc., for the year ended December 31, 1995.
220
<PAGE>
Exhibit 10.20
Indenture Agreement with respect to Capital Notes dated April 10, 1996.
221
<PAGE>
This Indenture Agreement contains the same terms, conditions and provisions
as set forth in the Indenture Agreement dated April 10, 1995 (Exhibit
10.21, which is incorporated by reference from Form 10-K of Brenton Banks,
Inc., for the year ended December 31, 1995), except for series number,
maturity date and date executed.
222
<PAGE>
Exhibit 10.21
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.
223
<PAGE>
Exhibit 10.22
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 year ended December 31, 1994.
224
<PAGE>
Exhibit 10.23
Split Dollar Insurance Agreement between the Company and Brenton Life
Insurance Trust for the benefit of Junius C. Brenton, dated January 12,
1997.
225
<PAGE>
Split Dollar Insurance Agreement
Collateral Assignment
AGREEMENT, made and entered into this 12th day of January, , by and between
Brenton Banks, Inc., Des Moines, Iowa ("Company"), and Brenton Life
Insurance Trust, an irrevocable trust, ("Owner") for the benefit of Junius
C. Brenton, Des Moines, Iowa.
WHEREAS, Junius C. Brenton is a valued Director of the Company, and Company
wishes to provide additional inducement for Junius C. Brenton's continued
involvement with the Company, and as additional compensation, Company
wishes to assist Junius C. Brenton with respect to a personal life
insurance program by entering into this Split Dollar Insurance Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties hereto agree as follows:
1. Policy. The life insurance policy (the "Policy") with which this
Agreement deals is identified in Exhibit "A" attached hereto and by this
reference incorporated herein. In the event that this Agreement deals with
multiple life insurance policies, each policy shall be identified in a
separate Exhibit "A" attached hereto, and all references herein to the
Policy shall include all policies with respect to which a separate Exhibit
"A" is attached hereto.
2. Ownership. The Owner shall at all times be the owner of the Policy,
and shall have the sole right to exercise all ownership rights granted to
the owner by the terms of the Policy. It is the express intention of the
parties hereto to reserve to the Owner all rights in the Policy granted by
the terms of the Policy, including, but not limited to, the right to borrow
against the Policy, the right to assign the Owner's interest in the Policy,
the right to change the beneficiary of the Policy, the right to exercise
settlement options, and the right to surrender or cancel the Policy (in
whole or in part). The Company shall not have nor exercise any right in
and to the Policy which could in any way endanger, defeat or impair any of
the rights of the Owner in the Policy. The only rights in and to the
Policy granted to the Company shall be its security interest in the cash
value of the Policy and its right to receive a portion of the death benefit
of the Policy, all as provided herein.
3. Premiums. Premiums on the Policy shall be paid by the parties hereto
as set forth in Exhibit "B" attached hereto and by this reference
incorporate herein.
<PAGE>
4. Interest of Company in the Policy. The Company's interest in the
Policy shall be limited to the following rights in the cash value and to a
portion of the death benefit of the Policy as set forth below:
a. In the event the Policy is totally surrendered or canceled by
the Owner, the Company shall receive from the surrender proceeds of
the Policy: (I) the aggregate amount of cumulative premiums paid by
the Company, plus (ii) an amount, not less than zero, which is
calculated by taking 5.2 percent per annum of the total amount of
cumulative premiums paid by the Company to date less $150,000.00
("Amount Due Company").
b. Upon the death of the survivor of Junius C. Brenton and
Junius C. Brenton's spouse, while the Policy remains in force, the
Company shall receive from the death benefit proceeds of the Policy
the Amount Due Company.
c. In the event of the termination of this Agreement, the
Company shall be repaid by the Owner the Amount Due Company.
d. In the event the Owner obtains a policy loan with respect to
the Policy or in the event the Policy is partially surrendered and
such loan or partial surrender causes the net cash surrender value of
the Policy to be a sum less than the Amount Due Company, the Owner
will repay to the Company a portion of any Policy loan proceeds or
partial surrender proceeds to the Company so as to cause the net cash
surrender value of the Policy following the policy loan or partial
surrender to be equal to or exceed the Amount Due Company.
As used in this Agreement, the term "net cash surrender value" shall mean
the cash surrender value of the Policy, less the amount of any then
existing loans or withdrawals against the Policy obtained by the Owner. As
used in this Agreement, the term "the aggregate amount of cumulative
premiums paid by the Company" shall mean the aggregate amount of premiums
paid by the Company net of any repayment to the Company of such amount.
5. Collateral Assignment. Contemporaneously herewith the Owner has
assigned the Policy as collateral security to secure payment of the amounts
payable to Company identified herein under a form of Collateral Assignment
which has been filed with the insurance company issuing the Policy. In the
event of a total or partial surrender of the Policy, termination of this
Agreement or upon the death of the survivor of Junius C. Brenton and Junius
C. Brenton's spouse, the amounts payable
<PAGE>
to the Company identified herein shall be paid to the Company in accordance
with the terms of such Collateral Assignment.
6. Upon the death of the survivor of Junius C. Brenton and Junius C.
Brenton's spouse, the balance of the death benefit under the Policy in
excess of the amount payable to the Company under the provisions hereof, if
any, shall be paid directly to the beneficiary or beneficiaries designated
by the Owner in the manner and in the amounts provided by the beneficiary
designation of the Policy filed with the insurance company issuing the
Policy.
7. Termination. This Agreement may be terminated at any time upon the
mutual agreement of the parties hereto.
8. Assignment by Owner. In the event the Owner shall transfer all
interest in the Policy to a transferee, then all of the Owner's interest in
the Policy and in this Agreement shall be vested in the transferee, who
shall become a substituted party hereto and who shall become bound by the
provisions hereof, and the Owner shall have no further interest in the
Policy or in this Agreement.
9. Assignment by Company. The Company shall not assign any of its rights
in the Policy or in this Agreement to anyone other than the Owner (or the
Owner's transferee, if the Owner has transferred its rights in the Policy)
without the prior written consent of the Owner (or the Owner's transferee,
if the Owner has transferred its rights in the Policy). Any attempted
assignment or transfer by the Company in violation of this paragraph shall
be null and void and of no force and effect.
10. Insurer Liability. The insurance company which issues the Policy shall
not be deemed to be bound by the provisions of this Agreement nor to have
notice of the terms of this Agreement. Any and all liability of the
insurance company issuing the Policy shall be determined solely by
reference to the terms of the Policy, any applicable riders to the Policy,
the beneficiary designation with respect to the Policy, the Collateral
Assignment with respect to the Policy and any other documents filed with
the insurance company and accepted and acknowledged by the insurance
company.
11. Split Dollar Plan. This Agreement is intended to qualify the ownership
of the Policy as a collateral assignment method split dollar life insurance
Director benefit plan as described in Revenue Ruling 64-328, and shall be
administered so as to qualify as such a plan.
<PAGE>
12. Entire Agreement. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof and cannot be
amended, altered, modified, except by a written instrument signed by each
of the parties hereto.
13. Notices. Any notice, consent or demand required or permitted to be
given under the provisions of this Agreement by one party to another shall
be in writing, shall be signed by the party giving the notice, and shall be
given either by delivery to the other party personally, or by mailing, by
United States certified mail, postage prepaid, to the other party,
addressed to the other party's last known mailing address as shown on the
records of the Company. In the event such notice is given by mailing, the
date of mailing shall be deemed the date of the giving of such notice,
consent or demand.
14. Binding on Successors and Assigns. This Agreement shall bind and inure
to the benefit of the parties and their respective heirs, successors and
assigns.
15. Governing Law. This Agreement shall be deemed made in the state of
Iowa, the this Agreement and the rights of the parties hereunder shall be
governed by and construed in accordance with the laws of the state of Iowa.
16. Severability. In the event a particular provision of this Agreement is
held to be invalid under applicable law, effect shall nevertheless be given
to all valid provisions hereof to further the objectives of this Agreement.
17. Interpretation. Where appropriate in this Agreement, words used in the
singular shall include the plural, and words used in the masculine or
neuter shall include the feminine.
18. Named Fiduciary and Plan Administrator. For the purposes of the
Director Retirement Security Act of 1974 (ERISA), the Company shall be the
"Named Fiduciary" and Plan Administrator of the split dollar insurance plan
for which this Agreement is hereby designated the written plan instrument.
The Company, as Named Fiduciary, shall have authority to control and
manage the operation and administration of this Agreement, and it shall be
responsible for establishing and carrying out a funding policy and method
consistent with the objectives of this Agreement. Any decision by the
Company denying a claim for benefits under this Agreement shall be stated
in writing, set forth specific reasons for the denial, and be delivered or
mailed to the claimant. All claim procedures under this split dollar
insurance plan shall be performed in compliance with the requirements of
ERISA.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
year and date first above written.
Brenton Banks, Inc.
Company
By /s/ Steven T. Schuler
Its CFO/Treasurer/Secretary
Owner
By __________________________
Kenneth R. Brenton, Trustee of the
Brenton Family Life Insurance Trust
<PAGE>
EXHIBIT "A"
Policy Number: 53595674
Issued by: Manulife Financial
Providing for initial death benefit proceeds of $2,000,000.
This policy is a survivorship life insurance policy on the lives of Junius
C. Brenton and Sue Rutledge Brenton, Junius C. Brenton's wife, which pays a
death benefit only upon the death of the survivor of Junius C. Brenton and
Sue Rutledge Brenton.
<PAGE>
EXHIBIT "B"
Premiums
The Company shall pay annually $48,314 of the premiums due on the Policy
for 6 years.
<PAGE>
Collateral Assignment
THIS ASSIGNMENT is made and entered into this 12th day of January, 1997, by
the undersigned as owner (the "Owner") of a certain life insurance policy
number 53595674 (the "Policy") issued by Manulife Financial (the "Insurer")
upon the lives of Junius C. Brenton and Sue Rutledge Brenton, and Brenton
Bank, Inc. (the "Assignee").
WHEREAS, Junius C. Brenton ("Director") is a valued Director of the
Assignee, and
WHEREAS, Owner has entered into a Split Dollar Agreement with the Assignee
(the "Agreement"), and
WHEREAS, in consideration of the Assignee agreeing to make certain premium
payments, the Owner agrees to grant the Assignee a security interest in the
Policy as collateral security for the repayment of the Amount Due Company.
NOW, THEREFORE, the undersigned Owner hereby assigns, transfers and sets
over to the Assignee the following specific rights in the Policy subject to
the following terms and conditions:
1. This Assignment is made, and the Policy is to be held, as collateral
security for all liabilities of the Owner to the Assignee, either now
existing or that may hereafter arise, pursuant to the terms of the
Agreement.
2. The Assignee's interest in the Policy shall be strictly limited to:
a. The right to be repaid from the surrender proceeds of the Policy:
(I) the aggregate amount of cumulative premiums paid by the Company, plus
(ii) an amount, not less than zero, which is calculated by taking 5.2
percent per annum of the total amount of cumulative premiums paid by the
Company to date less $150,000.00 ("Amount Due Company") in the event the
Policy is totally surrendered or canceled by the Owner.
b. The right to be repaid from the death benefit proceeds of the
Policy the Amount Due Company upon the death of the survivor of the
Director and the Director's spouse, while the Policy remains in force.
c. The right to be repaid the Amount Due Company in the event of
the termination of the Agreement.
d. The right to be repaid a portion of any Policy loan proceeds
or partial surrender proceeds paid to the Owner so as to cause the net
<PAGE>
cash surrender value of the Policy to be equal to or exceed the Amount
Due Company in the event the Owner obtains a Policy loan or in the
event the Policy is partially surrendered and such loan or partial
surrender causes the net cash surrender value of the Policy to be a
sum less than the Amount Due Company.
As used in this Assignment, the term "net cash surrender value" shall mean
the cash surrender value of the Policy, less the amount of any then
existing loans or withdrawals against the Policy obtained by the Owner. As
used in this Assignment, the term "the aggregate amount of cumulative
premiums paid by the Assignee" shall mean the aggregate amount of premiums
paid by the Assignee net of any repayment to the Assignee of such amount.
3. The Owner shall retain all incidents of ownership in the Policy,
including, but not limited to, the sole and exclusive rights to: borrow
against the Policy; make withdrawals from the Policy; assign Owner interest
in the Policy; change the beneficiary of the Policy; exercise settlement
options; and, surrender or cancel the Policy (in whole or in part). All of
these incidents of ownership shall be exercisable by the Owner unilaterally
and without the consent of any other person.
4. The Assignee shall, upon request, if the Policy is in the possession of
the Assignee, forward the Policy to the Insurer, without unreasonable
delay, for change of beneficiary, any election of optional mode of
settlement, or the exercise of any other right reserved by the Owner.
5. The Insurer is hereby authorized to recognize the Assignee's claims,
including the validity or the amount of any liabilities of the Owner to the
Assignee under the Agreement, the existence of any default therein, the
giving of any notice required therein or herein, or the application to be
made by the Assignee of any amounts to be paid to the Assignee. Upon the
Insurer giving prior written notice to Owner of the proposed payment of
amounts to the Assignee, the receipt of the Assignee for any sums received
by it shall be a full discharge and release therefore to the Insurer.
6. The Insurer shall be fully protected in recognizing a request made by
the Owner for surrender or cancellation of the Policy, in whole or in part,
or in recognizing a request made by the Owner for any loans against the
Policy permitted by the terms of the Policy. In the event this request is
made, upon prior written notice thereof to the Assignee the Insurer may pay
the proceeds of any surrender, cancellation, or loan to the sole order of
the Owner, or as the Owner shall direct.
<PAGE>
7. Upon the full payment of the liabilities of the Owner to the Assignee
pursuant to the Agreement, the Assignee shall execute an appropriate
release of this Collateral Assignment.
8. It is the express intention of the Owner to assign a limited interest
in the Policy to the Assignee as security for certain premium payments made
by the Assignee, without giving the Assignee any incidents of ownership in
the Policy within the meaning of section 2042 of the Internal Revenue Code
(and regulations thereunder), or any similar provision of subsequent law.
All provisions of this Collateral Assignment (and of the Agreement) shall
be construed and exercised so as to effect this intention.
IN WITNESS WHEREOF, the Owner and Assignee have executed this Assignment
and the Insurer has acknowledged its acceptance of this Assignment
effective the day and year first above written.
Owner
By _______________________________
Kenneth R. Brenton, Trustee of the
Brenton Family Life Insurance Trust
Assignee
Brenton Banks, Inc.
By /s/ Steven T. Schuler
Its CFO/Treasurer/Secretary
<PAGE>
ACCEPTED:
Insurer
Manulife Financial
By _________________________
Its ________________________
<PAGE>
Exhibit 10.24
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.
237
<PAGE>
Exhibit 10.25
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.
238
<PAGE>
Exhibit 10.26
Agreement between Norman D. Schuneman and the Company regarding the change
in control of 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, 1995.
239
<PAGE>
Exhibit 10.27
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 Septmber 30, 1995.
240
<PAGE>
Exhibit 10.28
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
Bank Services Corp.). This Thirteenth Amendment to Data Processing
Agreement is incorporated by reference from Form 10-K of Brenton Banks,
Inc. for the year ended December 31, 1995.
241
<PAGE>
Exhibit 11
Statement of computation of earnings per share.
242
<PAGE>
<TABLE>
Statements re: Computation of Earnings Per Share
Brenton Banks, Inc.
<CAPTION>
December 31, 1996 1995 1994
<S> <C> <C> <C>
Net income $14,015,430 $10,407,354 $10,107,387
Average common shares outstanding 8,223,543 8,440,493 8,679,515
Average shares under long-term
stock compensation plan 88,877 87,660 67,538
Average common equivalent
shares outstanding 8,312,420 8,528,153 8,747,053
Earnings per share $ 1.69 1.22 1.15
</TABLE>
Note: Amounts are restated to reflect the 10% common stock dividend
effective in 1996.
243
<PAGE>
Exhibit 12
Statement of computation of ratios.
244
<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, 1996 1995 1994
<S> <C> <C> <C>
Return on average total assets:
Net income (before deduction of
minority interest) $ 14,618 11,058 10,698
* divided by *
Average assets $ 1,582,894 1,561,226 1,521,189
Ratio 0.92% 0.71% 0.70%
Return on average common
stockholders' equity:
Net income $ 14,015 10,407 10,107
* divided by *
Average common stockholders'
equity $ 119,170 115,183 111,949
Ratio 11.76% 9.04% 9.03%
Common dividend payout ratio:
Cash dividends per share $ 0.454 0.409 0.400
* divided by *
Net income per share $ 1.69 1.22 1.15
Ratio 26.86% 33.58% 34.65%
Average equity to average assets:
Average equity $ 119,170 115,183 111,949
* divided by *
Average assets $ 1,582,894 1,561,226 1,521,189
Ratio 7.53% 7.38% 7.36%
Equity to assets ratio:
Common stockholders' equity
excluding unrealized gains
(losses) on assets available
for sale $ 120,877 118,175 115,547
* divided by *
Total assets excluding
unrealized gains (losses) on
assets available for sale $ 1,631,018 1,581,421 1,586,444
Ratio 7.41% 7.47% 7.28%
245
<PAGE>
December 31, 1996 1995 1994
Tier 1 leverage capital ratio:
Common stockholders' equity
excluding unrealized gains
(losses) on assets available
for sale $ 120,877 118,175 115,547
Minority interest 4,615 4,434 4,220
Less: intangibles (2,704) (5,282) (5,499)
Less: minimum MSR's to be
deducted (115) -- --
Tier 1 capital $ 122,673 117,327 114,268
* divided by *
Quarterly average total assets
excluding unrealized gains
(losses) on assets available
for sale 1,613,223 1,582,779 1,581,327
Less: intangibles (2,704) (5,282) (5,499)
Less: minimum MSR's to be
deducted (115) -- --
Tier 1 assets $ 1,610,404 1,577,497 1,575,828
Ratio 7.62% 7.45% 7.23%
Primary capital to assets:
Common stockholders' equity
excluding unrealized gains
(losses) on assets available
for sale $ 120,877 118,175 115,547
Minority interest 4,615 4,434 4,220
Allowance for loan losses 11,328 11,070 10,913
Primary capital $ 136,820 133,679 130,680
* divided by *
Total assets excluding
unrealized gains (losses) on
assets available for sale $ 1,631,018 1,581,421 1,586,444
Allowance for loan losses 11,328 11,070 10,913
Allowable assets $ 1,642,346 1,592,491 1,597,357
Ratio 8.33% 8.40% 8.18%
Net Noninterest Margin:
Noninterest income $ 23,327 17,847 16,593
Less: Securities gains (losses) 321 (3) (340)
Less: Noninterest expense 56,091 55,051 56,657
Net noninterest income (33,085) (37,201) (39,724)
* divided by *
Year-to-date average assets $ 1,582,894 1,561,226 1,521,189
Ratio -2.09% -2.38% -2.61%
246
<PAGE>
December 31, 1996 1995 1994
Efficiency Ratio:
Noninterest expense $ 56,091 55,051 56,657
* divided by *
Noninterest income 23,327 17,847 16,593
Less: Securities gains
(losses) 321 (3) (340)
Less: Loan gains (losses) 84 (232) 168
T.E. net interest income 59,238 56,610 59,153
Subtotal 82,160 74,692 75,918
Ratio 68.27% 73.70% 74.63%
</TABLE>
247
<PAGE>
Exhibit 13
The Appendix to the Proxy for Brenton Banks, Inc. for the 1996 calendar year.
248
<PAGE>
BRENTON BANKS, INC.
APPENDIX TO THE PROXY STATEMENT
FISCAL YEAR 1996
<PAGE>
TABLE OF CONTENTS
PAGE
General Information 1
Financial Highlights 2
Management's Discussion and Analysis 3
Consolidated Average Balances and Rates 9
Selected Financial Data 10
Consolidated Statements of Condition 11
Consolidated Statements of Operations 12
Consolidated Statements of Cash Flows 13
Consolidated Statements of Changes in
Common Stockholders' Equity 14
Notes to Consolidated Financial Statements 15
Management's Report 28
Independent Auditors' Report 28
Stock Information 29
Corporate Structure 30
<PAGE>
BRENTON BANKS, INC.
GENERAL INFORMATION
Brenton Banks, Inc. (the "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 of Brenton Companies in 1948.
Subsequently, the Company's name was changed to its current name,
Brenton Banks, Inc.
Brenton Banks, Inc. is Iowa's largest, home-based bank
holding company, with 45 service locations in 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 under the symbol BRBK or BrentB.
<PAGE>
<TABLE>
<CAPTION>
BRENTON BANKS, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
1996 1995 1994
<S> <C> <C> <C>
Operating Results
Net interest income $ 56,052,142 53,332,143 5,450,526
Provision for loan losses 2,900,000 1,864,801 1,987,909
Total noninterest income 23,327,441 17,846,740 16,592,988
Total noninterest expense 56,090,571 55,051,267 56,656,922
Income before income taxes
and minority interest 20,389,012 14,262,815 13,398,683
Net income 14,015,430 10,407,354 10,107,387
Per Common and Common
Equivalent Share***
Net income $ 1.69 1.22 1.15
Cash dividends .454 .409 .40
Book value, including
unrealized gains
(losses)* 15.08 14.20 12.75
Book value, excluding
unrealized gains
(losses)** 14.95 14.04 13.35
Closing bid price 27.63 19.32 16.59
At December 31
Assets $1,632,095,082 1,582,779,320 1,581,326,849
Loans 941,943,513 910,193,212 970,214,498
Nonperforming loans 6,167,000 5,619,000 5,022,000
Deposits 1,353,057,111 1,361,942,715 1,340,283,110
Common stockholders'
equity 121,954,229 119,533,631 110,430,345
Ratios
Return on average common
stockholders' equity
(ROE) 11.76% 9.04 9.03
Return on average assets
(including minority
interest) (ROA) .92 .71 .70
Net interest margin 4.03 3.89 4.12
Net noninterest margin (2.09) (2.38) (2.61)
Efficiency ratio 68.27 73.70 74.63
Loan to deposit ratio 69.62 66.83 72.39
Allowance for loan losses
to total loans 1.20 1.22 1.12
Primary capital to
assets** 8.33 8.40 8.18
Equity to assets** 7.41 7.47 7.28
Tier 1 leverage capital
ratio** 7.62 7.45 7.23
Nonperforming loans as a
percent of loans .65 .62 .52
Net charge-offs as a
percent of average loans .29 .18 .10
Allowance for loan losses
as a percent of
nonperforming loans 183.69 197.01 217.30
<FN>
* Including unrealized gains (losses) on securities
available for sale.
** Excluding unrealized gains (losses) on securities
available for sale.
*** Restated for the 10% common stock dividend effective in
1996.
</TABLE>
<PAGE>
Management's Discussion and Analysis
For 1996, Brenton Banks, Inc. and subsidiaries (the "Company")
reported net income of $14,015,430 compared to 1995 earnings of
$10,407,354.
Capital Resources
Common stockholders' equity totaled $121,954,229 as of
December 31, 1996, a 2.0 percent increase from the prior year.
In October 1996, the Board of Directors (the "Board") declared
a 10 percent common stock dividend. As a result of this action,
each shareholder received one additional share of common stock for
every 10 shares they owned. Fractional shares were paid in cash.
All per-share data has been restated to reflect the 10 percent
common stock dividend. Cash dividends for 1996 totaled $3,748,653
or $.454 per common share, which represents an increase of 11.0
percent over 1995 dividends of $.409 per share. The dividend
payout ratio for 1996 was 26.9 percent of earnings per share.
As part of the Company's ongoing stock repurchase plan,
347,700 shares of common stock were repurchased during 1996 at a
cost of $8,248,331. The Board had given the Company authorization
to repurchase up to $10 million during 1996. Since the inception
of the plan in 1994, the Company has repurchased 650,633 shares at
a total cost of $13,929,392. The Board has extended this plan for
1997 by authorizing up to an additional $10 million for stock
repurchase.
The Company continues to monitor its capital position to
balance the goals of maximizing return on average equity, while
maintaining adequate capital levels for regulatory purposes. The
Company's risk-based core capital ratio at December 31, 1996, was
11.57 percent and the total risk-based capital ratio was 12.64
percent. These ratios exceeded the minimum regulatory requirements
of 4.00 and 8.00 percent, respectively. The Company's tier 1
leverage capital ratio, which measures capital excluding intangible
assets, was 7.62 percent at December 31, 1996, exceeding the
regulatory minimum requirement for well-capitalized institutions of
5.0 percent.
The debt-to-equity ratio of Brenton Banks, Inc. (the "Parent
Company") was 9.2 percent at December 31, 1996, compared to 10.4
percent at the end of 1995. The Parent Company's $2 million line
of credit with a regional bank was unused throughout 1996. Long-
term borrowings of the Parent Company at December 31, 1996,
consisted entirely of $11,248,000 of capital notes.
Brenton Banks, Inc. common stock closed on December 31, 1996,
at a bid price of $27.63, an increase of 43.0 percent over the
prior year-end. The closing price at December 31, 1996, was 183
percent of the book value per share of $15.08. The year-end stock
price represented a price-to-1996-earnings multiple of 16.3 times.
Brenton Banks, Inc. continues to pursue acquisition and
expansion opportunities which will enhance the financial
performance of the Company as well as 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.
Forward-looking Information
Forward-looking information relating to the financial results
or strategies of the Company are referenced throughout Management's
Discussion and Analysis. The following paragraphs identify
forward-looking statements and the risks that need to be considered
when reading those statements.
Forward-looking statements include such words as believe,
expect, anticipate, target, goal, objective or other words with
similar meaning. The Company is under no obligation to update such
forward-looking information statements.
The risks involved in the operations and strategies of the
Company include competition from other financial institutions,
changes in interest rates, changes in economic or market conditions
and changes in regulations from the federal and state regulators.
These risks, which are not all inclusive, cannot be estimated.
Asset-Liability Management
The Company has a fully-integrated asset-liability management
system to assist in managing the balance sheet. The process, which
is used to project the results of alternative investment decisions,
includes the development of simulations that reflect the effects of
various interest rate scenarios on net interest income. Management
analyzes the simulations to manage interest rate risk, the net
interest margin and levels of net interest income.
The goal is to structure the balance sheet so net interest
margin fluctuates in a narrow range during periods of changing
interest rates. The Company currently believes that net interest
income would fall by less than 4 percent if interest rates
increased or decreased by 300 basis points over a one-year time
horizon. This is within the Company's policy limits.
<PAGE>
The slope of the yield curve is also a major determinant in
the net interest income of the Company. Generally, the steeper the
intermediate treasury to LIBOR curve, the better the prospects for
net interest income improvement.
The Company continues to reduce its reliance on residential
real estate loans with long repricing periods. When appropriate
for interest rate management purposes, the Company will consider
securitization of real estate loans. Another key to interest rate
risk management is continuing to increase variable rate loans as a
percent of total earning assets.
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 investment securities available for sale
are readily marketable assets. Maturities of all investment
securities are managed to meet the Company's normal liquidity
needs. Investment securities available for sale may be sold prior
to maturity to meet liquidity needs, to respond to market changes
or to adjust the Company's interest rate risk position. Federal
funds sold and assets available for sale comprised 29.5 percent of
the Company's total assets at December 31, 1996.
Net cash provided from operations of the Company is another
major source of liquidity and totaled $14,997,716 in 1996,
$8,388,374 in 1995 and $18,524,837 in 1994. 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 result in a low
dependence on volatile liabilities. At December 31, 1996, the
Company had borrowings of $57,700,000 from the Federal Home Loan
Bank ("FHLB") of Des Moines, of which $52,700,000 were used as a
means of providing long-term, fixed-rate funding for certain fixed-
rate assets and managing interest rate risk. The remaining
$5,000,000 represents an advance on a variable rate, short-term
$10,000,000 line of credit used to fund mortgage loans originated
for sale. The Company had additional borrowing capacity available
from the FHLB of approximately $80 million at December 31, 1996.
The combination of high levels of potentially liquid assets,
strong cash flows from operations, low dependence on volatile
liabilities and additional borrowing capacity provided strong
liquidity for the Company at December 31, 1996.
The Parent Company had sufficient cash flow and liquidity at
December 31, 1996. The primary funding source for the Parent
Company is dividends from its subsidiaries. Dividends of
approximately $16 million were available to be paid to the Parent
Company by subsidiary banks without reducing capital ratios below
regulatory minimums. At the end of 1996, the Parent Company had
$5.6 million of interest-bearing deposits with banks, as well as
additional borrowing capacity.
Results of Operations - 1996 Compared to 1995
Net Income
For the year ended December 31, 1996, Brenton Banks, Inc.
recorded net income of $14,015,430, an increase of 34.7 percent
over 1995, which totaled $10,407,354. Earnings per common share
were $1.69 compared to $1.22 for 1995. Return on average assets
(ROA) was .92 percent in 1996, compared to .71 percent in 1995.
The return on average equity (ROE) was 11.76 percent, compared to
9.04 percent one year earlier.
Net Interest Income
Net interest income rose 5.1 percent to $56,052,142 for 1996.
Both average earning assets and average interest-bearing
liabilities increased 1.0 percent from 1995. The Company
experienced a favorable change in the mix of earning assets and
interest-bearing liabilities which contributed to an increase in
net interest margin of 14.1 basis points over 1995. The average
rate earned on earning assets declined 5.9 basis points, while the
average rate paid on interest-bearing liabilities declined 22.4
basis points.
The net interest spread, which is the difference between the
rate earned on assets and the rate paid on liabilities, rose to
3.58 percent from 3.41 percent last year. Net interest margin,
which is tax equivalent net interest income as a percentage of
average earning assets, averaged 4.03 percent in 1996 compared to
3.89 percent in 1995. To improve net interest margin and lessen
interest rate risk, the Company continued its strategy of de-
emphasizing portfolio real estate loans and developing more
commercial and consumer loan business.
Loan Quality
Loan quality remains strong with nonperforming loans at
December 31, 1996 totaling $6,167,000 or .65 percent of loans.
This compares to .62 percent at December 31, 1995, or $5,619,000.
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 majority of the increase in
nonperforming loans was related to two loans that were restructured
within the commercial loan portfolio.
<PAGE>
The allowance for loan losses, which totaled $11.3 million,
represented 183.69 percent of nonperforming loans at the end of
1996, compared to 197.01 percent one year ago. The provision for
loan losses totaled $2,900,000 for the year ended December 31,
1996, compared to $1,864,801 for 1995. The increase of $1,035,199
in provision is primarily related to a 933,535, or 54.7 percent,
increase in net loan charge-offs during 1996. The Company's net
charge-offs as a percent of average loans were .29 percent for 1996
compared to .18 percent for 1995. Loan losses for 1996 were
concentrated in the consumer loan portfolio.
Loan quality control and risk management are carefully
balanced with goals for loan growth. The Company has a formal
structure for reviewing and approving all loans. 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 a reserve available
to absorb estimated possible future 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 larger individual loans by lending
officers and internal loan review personnel.
Using the Company's standard evaluation process, individual
loan officers evaluate loan characteristics, the borrower's
financial condition and collateral values. From these assessments,
the Reserve Adequacy Committee performs quarterly reviews of 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
reviews subsequent collection action plans for problem credits.
Management believes the allowance for loan losses at December
31, 1996, was sufficient to absorb potential loan losses within the
portfolio.
Net Noninterest Margin
To measure operating efficiency, the Company uses the net
noninterest margin, which is the difference between noninterest
income and noninterest expense as a percent of average assets. For
1996, the net noninterest margin improved to (2.09) percent
compared to (2.38) percent in 1995. Another ratio that the Company
utilizes to measure productivity is the efficiency ratio. This
ratio divides noninterest expense by the sum of tax-equivalent net
interest income plus noninterest income (excluding gains and losses
on the sale of securities and loans). At December 31, 1996, the
Company's efficiency ratio was 68.27 percent, compared to 73.70
percent one year ago. To enhance operating efficiency throughout
the organization, the Company continues to focus on cost management
and the development of strategic improvements in noninterest income
and expense.
Noninterest Income
The Company achieved record levels of noninterest income in
1996. For 1996, total noninterest income (excluding securities
transactions) increased 28.9 percent to $23,006,185 from
$17,849,743 one year ago. Noninterest income (excluding securities
gains and losses) for 1996 represented 1.45 percent of average
assets and 41.04 percent of total operating income, which were the
highest levels in the history of the Company. All categories of
noninterest income reflect strong gains from the prior year.
Service charges on deposit accounts rose 21.0 percent in 1996
compared to one year ago. This growth related to full
implementation of standardized service charges as well as a new
focus on collecting a higher percentage of fees assessed.
Investment brokerage commissions totaled $3,766,436 for 1996,
an increase of 23.7 percent over the 1995 total of $3,044,107.
Strong financial markets and successful new sales initiatives drove
the increase in this category.
Insurance commissions and fees increased 24.6 percent to
$2,915,666 in 1996 due primarily to higher sales of both credit-
related insurance and insurance agency operations.
Mortgage banking income totaled $2,168,593 for 1996 compared
to $1,427,342 in 1995, an increase of 51.9 percent. This increase
is attributable to a higher volume of real estate mortgage loan
originations, which totaled $110.8 million, and a greater
percentage of loans being sold into the secondary market with the
servicing rights being retained.
Fiduciary income rose 13.2 percent to $2,744,530 in 1996
compared to $2,425,105 in 1995. This increase in revenue is
related to increased volumes of personal trusts, investment
management fees and employee benefit plans.
Other operating income increased by $1,288,140 when comparing
1996 to 1995. Gains on the sale of loans of $83,440 were recorded
in 1996 versus losses in 1995 of $232,454.
Securities transactions produced an additional increase in
noninterest income. Securities gains of $321,256 were recorded in
1996 versus losses of $3,003 in 1995.
<PAGE>
The growth in various noninterest income categories has
enabled the Company to reach targeted levels of total income. The
Company will continue to focus on providing a broad array of
financial products and services to our customers that generate fee
income. The continued growth rate of fee income could be
vulnerable to future economic conditions and competition by other
financial institutions that cannot be estimated by the Company.
Noninterest Expense
Total noninterest expense increased 1.9 percent in 1996 to
$56,090,571 from $55,051,267 one year ago. Noninterest expense for
1996 includes a nonrecurring charge for a special assessment by the
FDIC. This assessment is based upon all deposits insured by the
Savings Association Insurance Fund (SAIF) as of March 31, 1995, and
equals approximately 65.7 basis points per $100 of SAIF-insured
deposits. Brenton's assessment was $1,288,000. Excluding this
one-time assessment, noninterest expense would have actually
decreased by .5 percent.
Salaries and wages, the largest component of noninterest
expense, increased $2,645,244 or 11.6 percent over 1995. This
increase is primarily related to commissions paid on higher sales
of fee-related products, expense tied to a stock performance plan
and severance costs. Fixed salaries, those that are not based on
commissions, actually decreased by 6.6 percent. The number of
full-time equivalent employees decreased by 3.8 percent and 13.6
percent at December 31, 1996 and 1995, respectively. The total
increase in salaries and wages led to a proportionate increase in
employee benefits.
Several new facilities and remodeling projects were completed
in the past two years, which explain the combined increase in the
categories of occupancy and furniture and equipment expense.
Occupancy expense totaled $5,502,904 for 1996, compared to
$4,912,417 for 1995. Increases within the occupancy category were
associated with rents, leases and depreciation expense related to
these new facilities. Results for 1996 include the first full year
of expense for these new facilities.
Furniture and equipment expense actually decreased $21,871
from the prior year. Depreciation expense increased by $197,130
due to technology updates throughout the Company. Decreases in
repairs and maintenance, and furniture and equipment rentals offset
the increase in depreciation expense. The Company continues to
focus on using technology to improve efficiency and provide better
service to our customers. During 1996, 62.8 percent of the
Company's capital expenditures were in the technology area.
Data processing expense totaled $2,591,485, an increase of 8.9
percent compared to 1995. This increase is related to new data
servicing contracts in 1996 for mortgage loan processing and
personal computer network maintenance and support. The expense
associated with core main frame processing actually decreased which
offset the cost of the new contracts.
Expense related to the FDIC deposit assessments increased 1.0
percent in 1996 to $1,801,646, which includes the previously
discussed one-time $1,288,000 assessment to fully fund SAIF. This
assessment related to the deposits insured by SAIF, which
represented approximately 16.4 percent of the Company's total
deposits at the end of 1996. The Company continues to pay the
lowest premiums available under the FDIC's risk-based premium
system.
Other operating expenses decreased $2.6 million or 21.2
percent when comparing 1996 results to 1995. This decline is the
result of benefits derived in 1996 from the 1995 merger of the
Company's 13 commercial banks into one bank charter, cost control
measures and one time costs incurred in 1995.
The Company continues to focus on cost management and
evaluates all major expense items in an effort to control the
growth rate of noninterest expenses.
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 28.3 percent for 1996 compared to 22.5
percent for 1995.
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.
<PAGE>
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 fell to 3.41 percent in 1995 from 3.69
percent in 1994. Net interest margin declined 23 basis points in
1995 and averaged 3.89 percent, compared to 4.12 percent in 1994.
Loan Quality
Brenton's loan quality remained strong in 1995. The Company's
nonperforming loans were a low .62 percent of loans or $5,619,000
at December 31, 1995, up from $5,022,000 and .52 percent from one
year earlier. 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 1994 levels.
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 for 1994. 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 .18 percent for 1995 compared to .10 percent for
1994.
Beginning January 1, 1995, the Financial Accounting Standards
Boards mandated a standard that 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.
Noninterest Income
For 1995, total noninterest income (excluding securities
transactions) increased 5.4 percent to $17,849,743 from $16,932,612
one year earlier. Noninterest income (excluding securities gains
and losses) for 1995 represented 1.14 percent of average assets and
33.47 percent of total operating income. 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 primarily due to higher sales of both credit-
related insurance and insurance agency operations.
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 Mutual
Funds.
Securities transactions produced 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 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>
<PAGE>
The difference between the estimated costs recorded in 1994
and the actual costs incurred was reversed, thereby reducing or
crediting the above expense categories in 1995. The major
restructuring charge reversals occurred in salaries and wages and
employee benefit categories. These actual costs were well below
original estimates due to employee attrition, which assisted in
meeting necessary salary reductions without incurring severance
costs. In addition, occupancy costs and abandonment losses were
lower than original estimates, due to a planned branch closing that
was estimated for 1995, but did not occur until 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
stock 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 these new
facilities.
Data processing expenses were unchanged from last year after
eliminating the impact of the restructuring charge. Advertising
and promotion expenses were also unchanged from one year earlier.
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.
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 re-engineer the retail and
commercial banking process 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.
Income Taxes
The Company's income tax strategies include reducing income
taxes by purchasing securities and originating loans that produce
tax-exempt income. 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.
<PAGE>
<TABLE>
<CAPTION>
BRENTON BANKS, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES AND RATES
Average Balances (In thousands) 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Assets:
Cash and due from banks $ 65,439 57,138 46,301 46,025 41,715
Interest-bearing deposits
with banks 1,393 1,076 124 762 6,240
Federal funds sold and
securities purchased under
agreements to resell 26,188 39,763 37,666 23,725 27,082
Trading account securities --- --- 116 --- ---
Investment securities:
Available for sale-taxable 330,002 244,786 245,913 53,174 6,512
Available for sale-tax-exempt 85,471 100,859 132,040 --- ---
Held to maturity-taxable 46,271 65,959 35,794 299,993 384,301
Held to maturity-tax-exempt 51,639 50,235 44,584 164,520 139,296
Loans held for sale 7,983 5,908 2,575 6,165 2,553
Loans 919,578 945,724 936,370 802,088 736,646
Allowance for loan losses (11,440) (11,166) (10,502) (9,615) (8,894)
Premises and equipment 31,728 31,436 24,545 23,045 21,400
Other 28,642 29,508 25,663 26,543 30,422
__________ _________ _________ _________ _________
$ 1,582,894 1,561,226 1,521,189 1,436,425 1,387,273
Liabilities and Stockholders'
Equity:
Deposits
Noninterest-bearing $ 131,051 128,770 127,464 119,322 112,054
Interest-bearing:
Demand 376,259 355,819 250,520 217,754 209,642
Savings 241,250 231,633 294,715 299,640 260,568
Time 583,508 626,497 625,981 622,789 646,261
__________ _________ _________ _________ _________
Total deposits 1,332,068 1,342,719 1,298,680 1,259,505 1,228,525
Federal funds purchased and
securities sold under agreements
to repurchase 59,276 40,237 61,656 42,715 33,240
Other short-term borrowings 17,295 6,536 4,860 33 2,170
Accrued expenses and other
liabilities 17,520 14,896 13,254 12,805 13,735
Long-term borrowings 33,094 37,264 26,500 14,077 14,067
__________ _________ _________ _________ _________
Total liabilities 1,459,253 1,441,652 1,404,950 1,329,135 1,291,737
Minority interest 4,471 4,391 4,290 4,150 3,845
Common stockholders' equity 119,170 115,183 111,949 103,140 91,691
__________ _________ _________ _________ _________
$ 1,582,894 1,561,226 1,521,189 1,436,425 1,387,273
Summary of Average Interest Rates
Average rates earned:
Interest-bearing deposits with
banks 4.87% 6.20 6.65 2.88 4.92
Trading account securities --- --- --- 6.36 ---
Federal funds sold and securities
purchased under agreements to
resell 5.41 5.69 4.53 2.05 2.41
Investment securities:
Available for sale-taxable 6.08 5.96 5.30 5.28 6.63
Available for sale-tax exempt
(tax equivalent basis) 7.13 6.71 6.37 --- ---
Held to maturity-taxable 6.22 6.17 5.20 5.54 6.88
Held to maturity-tax-exempt
(tax equivalent basis) 6.68 8.05 7.70 6.97 7.66
Loans held for sale 8.47 6.71 7.50 8.43 9.33
Loans 8.69 8.69 8.14 8.77 9.65
Average rates paid:
Deposits 4.12% 4.37 3.55 3.70 4.70
Federal funds purchased and
securities sold under agreements
to repurchase 4.17 4.08 3.38 2.41 2.78
Other short-term borrowings 5.87 5.67 5.42 3.63 5.57
Long-term borrowings 7.07 7.03 6.86 8.60 9.14
Average yield on interest-earning
assets 7.80% 7.86 7.31 7.57 8.43
Average rate paid on interest-
bearing liabilities 4.22 4.45 3.62 3.71 4.70
Net interest spread 3.58 3.41 3.69 3.86 3.73
Net interest margin 4.03 3.89 4.12 4.28 4.23
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BRENTON BANKS, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
Year-end Balances
(In thousands) 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total assets $1,632,095 1,582,779 1,581,327 1,480,596 1,431,140 1,360,942 1,274,301 961,370 921,207 908,933
Interest-earning assets 1,497,600 1,461,218 475,473 1,400,709 1,323,252 1,267,402 1,181,172 883,721 845,571 836,029
Interest-bearing liabilities 1,335,609 1,300,508 1,315,378 1,224,951 1,181,013 1,141,008 1,052,597 769,717 733,133 728,597
Demand deposits 153,284 143,220 136,548 127,132 137,212 115,479 125,626 113,349 118,392 116,830
Long-term borrowings 34,860 38,178 28,939 20,055 13,284 13,634 12,675 14,701 16,215 17,509
Preferred stock --- --- --- --- --- --- --- --- --- 2,000
Common stockholders'
equity** 121,954 119,534 110,430 112,418 97,430 86,712 77,258 63,522 56,401 49,618
Results of operations
(In thousands)
Interest income $ 111,383 111,040 101,223 98,656 106,560 115,561 106,826 85,722 76,745 74,774
Interest expense 55,331 57,708 45,772 44,427 54,773 68,687 64,431 49,102 43,180 43,149
Net interest income 56,052 53,332 55,451 54,229 51,787 46,874 42,395 36,620 33,565 31,625
Provision for loan losses 2,900 1,865 1,988 1,252 1,411 799 869 760 1,214 2,132
Net interest income after
provision for loan losses 53,152 51,467 53,463 52,977 50,376 46,075 41,526 35,860 32,351 29,493
Noninterest income 23,327 17,847 16,593 17,863 14,684 12,715 11,554 10,113 10,367 9,064
Noninterest expense 56,090 55,051 56,657 50,415 46,591 42,284 37,820 32,781 32,066 32,952
Income before income
taxes and minority
interest 20,389 14,263 13,399 20,425 18,469 16,506 15,260 13,192 10,652 5,605
Income taxes 5,771 3,205 2,701 5,508 4,884 4,308 4,388 4,016 2,527 408
Minority interest 603 651 591 667 632 539 533 472 422 290
Net income 14,015 10,407 10,107 14,250 12,953 11,659 10,339 8,704 7,703 4,907
Preferred stock dividend
requirement --- --- --- --- --- --- --- --- 81 265
Net income available
to common stockholders $ 14,015 10,407 10,107 14,250 12,953 11,659 10,339 8,704 7,622 4,642
Average common shares
outstanding
(In thousands)* 8,312 8,528 8,747 8,711 8,561 8,534 8,520 7,916 7,916 7,916
Per common and common
equivalent share*
Net income $ 1.69 1.22 1.15 1.64 1.52 1.36 1.21 1.10 .96 .59
Cash dividends .454 .409 .400 .364 .318 .294 .248 .200 .106 .000
Common stockholders'
equity*** 14.95 14.04 13.35 12.62 11.34 10.15 9.06 8.03 7.13 6.26
Selected operating ratios
Return on average assets
(including minority
interest) .92% .71 .70 1.04 .98 .93 .95 1.00 .90 .57
Return on average common
stockholders' equity 11.76 9.04 9.03 13.82 14.13 14.27 14.39 14.50 14.34 9.78
Equity to assets*** 7.41 7.47 7.28 7.40 6.81 6.37 6.06 6.61 6.12 5.46
Common dividend payout 26.86 33.58 34.65 22.22 21.00 21.56 20.50 18.23 11.01 .00
Allowance for loan losses
as a percent of loans 1.20 1.22 1.12 1.12 1.20 1.14 1.25 1.55 1.60 1.75
Net charge-offs to average
loans outstanding .29 .18 .10 .05 .13 .15 .12 .08 .18 .75
<FN>
* Restated for 10% common stock dividend effective in 1996, 3-for-2 stock split effective in 1994 and 2-for-1 stock split
effective in 1990.
** Including unrealized gains (losses) on securities available for sale.
*** Excluding unrealized gains (losses) on securities available for sale
</table
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
BRENTON BANKS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
December 31 1996 1995
<S> <C> <C>
Assets:
Cash and due from banks (note 2) $ 76,900,524 71,159,078
Interest-bearing deposits with banks 731,554 265,072
Federal funds sold and securities purchased
under agreements to resell 15,200,000 37,600,000
Investment securities:
Available for sale (note 3) 461,099,272 396,370,443
Held to maturity (market value of
$73,316,000 and $109,131,000
at December 31, 1996 and 1995,
respectively (note 3) 72,754,985 108,082,213
Investment securities 533,854,257 504,452,656
Loans held for sale 5,870,298 8,707,309
Loans (notes 4, 9 and 10) 941,943,513 910,193,212
Allowance for loan losses (note 5) (11,328,359) (11,069,869)
Loans, net 930,615,154 899,123,343
Premises and equipment (notes 6 and 10) 30,379,446 32,849,842
Accrued interest receivable 14,417,786 14,494,261
Other assets (note 8) 24,126,063 14,127,759
$ 1,632,095,082 1,582,779,320
Liabilities and Stockholders' Equity:
Deposits (note 7):
Noninterest-bearing $ 153,284,094 143,220,373
Interest-bearing:
Demand 99,277,477 399,308,392
Savings 527,791,360 215,488,846
Time 572,704,180 603,925,104
Total deposits 1,353,057,111 1,361,942,715
Federal funds purchased and securities sold
under agreements to repurchase 66,826,120 41,107,411
Other short-term borrowings (note 9) 34,150,000 2,500,000
Accrued expenses and other liabilities 16,633,068 15,083,453
Long-term borrowings (note 10) 34,860,024 38,177,803
Total liabilities 1,505,526,323 1,458,811,382
Minority interest in consolidated subsidiaries 4,614,530 4,434,307
Redeemable preferred stock, $1 par; 500,000
shares authorized; issuable in series, none
issued --- ---
Common stockholders' equity (notes 12, 13, 14
and 16):
Common stock, $5 par; 25,000,000 shares
authorized; 8,085,684 and 7,653,252 shares
issued and outstanding at December 31, 1996
and 1995, respectively 40,428,420 38,266,260
Capital surplus --- 2,020,518
Retained earnings 80,448,768 77,888,451
Unrealized gains on securities available for
sale 1,077,041 1,358,402
Total common stockholders' equity 121,954,229 119,533,631
$ 1,632,095,082 1,582,779,320
<FN>
Commitments and contingencies (notes 17 and 18).
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BRENTON BANKS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31 1996 1995 1994
<S> <C> <C> <C>
Interest Income:
Interest and fees on loans (note 4) $ 80,301,707 82,525,850 76,456,964
Interest and dividends on investments:
Available for sale-taxable 20,063,114 14,577,652 13,032,050
Available for sale-tax-exempt 4,250,463 4,446,824 5,530,626
Held to maturity-taxable 2,878,982 4,069,617 1,862,628
Held to maturity-tax-exempt 2,404,155 3,090,185 2,619,333
Interest on federal funds sold and
securities purchased under agreements
to resell 1,416,539 2,263,734 1,705,717
Other interest income 68,157 66,705 15,636
___________ ___________ ___________
Total interest income 111,383,117 111,040,567 101,222,954
Interest Expense:
Interest on deposits (note 7) 49,507,425 53,075,352 41,609,766
Interest on federal funds purchased and
securities sold under agreements to
repurchase 2,469,939 1,641,516 2,082,077
Interest on other short-term borrowings
(note 9) 1,015,110 370,642 263,658
Interest on long-term borrowings (note 10) 2,338,501 2,620,914 1,816,927
___________ ___________ ___________
Total interest expense 55,330,975 57,708,424 45,772,428
Net interest income 56,052,142 53,332,143 55,450,526
Provision for loan losses (note 5) 2,900,000 1,864,801 1,987,909
___________ ___________ ___________
Net interest income after provision for
loan losses 53,152,142 51,467,342 53,462,617
Noninterest Income:
Service charges on deposit accounts 6,712,874 5,547,796 5,424,547
Investment brokerage commissions 3,766,436 3,044,107 2,879,401
Insurance commissions and fees 2,915,666 2,339,817 2,115,085
Fiduciary income 2,744,530 2,425,105 2,160,492
Mortgage banking income 2,168,593 1,427,342 1,216,690
Other service charges, collection and
exchange charges, commissions and fees 2,779,502 2,435,132 2,342,210
Net gains (losses) from securities
available for sale (note 3) 321,256 (3,003) (339,624)
Other operating income 1,918,584 630,444 794,187
___________ ___________ ___________
Total noninterest income 23,327,441 17,846,740 16,592,988
Noninterest Expense:
Salaries and wages 25,460,464 22,815,220 24,595,274
Employee benefits (note 15) 4,245,682 4,158,580 4,960,665
Occupancy expense of premises, net
(notes 6 and 17) 5,502,904 4,912,417 4,702,208
Furniture and equipment expense
(notes 6 and 17) 3,725,150 3,747,021 3,060,557
Data processing expense (note 18) 2,591,485 2,379,920 3,083,819
FDIC deposit insurance assessment 1,801,646 1,783,213 2,907,382
Advertising and promotion 1,756,473 1,741,390 1,772,852
Supplies 1,409,690 1,326,928 1,386,639
Other operating expense 9,597,077 12,186,578 10,187,526
___________ ___________ ___________
Total noninterest expense 56,090,571 55,051,267 56,656,922
Income before income taxes and
minority interest 20,389,012 14,262,815 13,398,683
Income taxes (note 8) 5,770,600 3,204,687 2,700,640
___________ ___________ ___________
Income before minority interest 14,618,412 11,058,128 10,698,043
Minority interest 602,982 650,774 590,656
___________ ___________ ___________
Net income $ 14,015,430 10,407,354 10,107,387
Per common and common equivalent share
(note 13):
Net income $ 1.69 1.22 1.15
Cash dividends .454 .409 .400
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BRENTON BANKS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
Years Ended December 31 1996 1995 1994
<S> <C> <C> <C>
Operating Activities:
Net income $ 14,015,430 10,407,354 10,107,387
Adjustments to reconcile net income to
net cash provided by operating
activities:
Provision for loan losses 2,900,000 1,864,801 1,987,909
Depreciation and amortization 4,301,776 4,097,022 3,387,034
Deferred income taxes 949,396 (25,181) (1,257,325)
Net (gains) losses from securities
available for sale (321,256) 3,003 339,624
Net (increase) decrease in loans held
for sale 2,837,011 (6,602,817) 2,244,930
Increase in accrued interest receivable
and other assets (11,420,210) (1,678,132) (1,477,154)
Increase in accrued expenses, other
liabilities and minority interest 1,735,569 322,324 3,192,432
_____________ ____________ ____________
Net cash provided by operating activities 14,997,716 8,388,374 18,524,837
Investing Activities:
Investment securities available for sale:
Purchases (289,895,560) (242,871,379) (122,339,026)
Maturities 150,480,123 278,575,538 154,659,319
Sales 67,547,581 5,577,835 21,484,178
Investment securities held to maturity:
Purchases (45,046,248) (121,543,300) (59,384,073)
Maturities 79,614,914 59,896,255 26,687,613
Net (increase) decrease in loans (26,364,596) 28,502,974 (95,225,841)
Purchases of premises and equipment (2,734,491) (9,733,181) (6,920,455)
Proceeds from sales of premises and
equipment 1,356,634 360,470 26,578
_____________ ____________ ____________
Net cash used by investing activities (65,041,643) (1,234,788) (81,011,707)
Financing Activities:
Net increase in noninterest-bearing,
interest-bearing demand and savings
deposits 22,335,320 51,054,199 40,210,540
Net increase (decrease) in time deposits (31,220,924) (29,394,594) 5,708,876
Net increase (decrease) in federal funds
purchased and securities sold under
agreements to repurchase 25,718,709 (29,596,325) 33,039,408
Net increase (decrease) in other
short-term borrowings 15,500,000 (9,500,000) 12,000,000
Proceeds of long-term borrowings 14,604,000 12,429,000 22,176,030
Repayment of long-term borrowings (1,771,779) (3,190,610) (13,291,530)
Dividends on common stock (3,748,653) (3,498,220) (3,471,901)
Proceeds from issuance of common stock
under the employee stock purchase plan 71,675 --- ---
Proceeds from issuance of common stock
under the stock option plan 290,748 187,213 385,767
Proceeds from issuance of common stock
under the long-term stock compensation
plan 334,834 361,602 ---
Payment for shares acquired under common
stock repurchase plan (8,248,331) (4,830,111) (850,950)
Payment for fractional shares resulting
from stock dividend (13,744) --- (4,307)
_____________ ____________ ____________
Net cash provided (used) by financing
activities 33,851,855 (15,977,846) 95,901,933
_____________ ____________ ____________
Net increase (decrease) in cash and
cash equivalents (16,192,072) (8,824,260) 33,415,063
Cash and cash equivalents at the
beginning of the year 109,024,150 117,848,410 84,433,347
_____________ ____________ ____________
Cash and cash equivalents at the end
of the year $ 92,832,078 109,024,150 117,848,410
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BRENTON BANKS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS' EQUITY
Common Capital Retained Unrealized
Stock Surplus Earnings Gains (Losses) Total
<S> <C> <C> <C> <C> <C>
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
$.400 per share* --- --- (3,471,901) --- (3,471,901)
3-for-2 stock split
in the form of a
stock dividend
(note 13) 13,169,475 --- (13,169,475) --- ---
Fractional shares
resulting from
stock split --- --- (4,307) --- (4,307)
Issuance of shares of
common stock under
the stock option
plan (note 16) 146,500 239,267 --- --- 385,767
Shares reacquired
under stock
repurchase plan
(note 13) (224,000) (626,950) --- --- (850,950)
Balance, December 31,
1994 39,357,730 5,210,344 70,979,317 (5,117,046) 110,430,345
Net income --- --- 10,407,354 --- 10,407,354
Net change in
unrealized gains
(losses) --- --- --- 6,475,448 6,475,448
Dividends on common
stock
$.409 per share** --- --- (3,498,220) --- (3,498,220)
Issuance of shares of
common stock under
the stock option
plan (note 16) 98,750 88,463 --- --- 187,213
Issuance of shares of
common stock under
the stock compensation
plan (note 16) 100,445 261,157 --- --- 361,602
Shares reacquired under
stock repurchase plan
(note 13) (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
Net income --- --- 14,015,430 --- 14,015,430
Net change in
unrealized gains
(losses) --- --- --- (281,361) (281,361)
Dividends on common
stock
$.454 per share** --- --- (3,748,653) --- (3,748,653)
10% common stock
dividend (note 13) 3,684,215 --- (3,684,215) --- ---
Fractional shares
resulting from
stock dividend --- --- (13,744) --- (13,744)
Issuance of shares of
common stock under
the stock option
plan (note 16) 128,000 162,748 --- --- 290,748
Issuance of shares of
common stock under
the stock compensation
plan (note 16) 73,590 261,244 --- --- 334,834
Issuance of shares
of common stock
under the employee
stock purchase plan
(note 16) 14,855 56,820 --- --- 71,675
Shares reacquired under
stock repurchase plan
(note 13) (1,738,500) (2,501,330) (4,008,501) --- (8,248,331)
Balance, December 31,
1996 $40,428,420 --- 80,448,768 1,077,041 121,954,229
<FN>
* Reflects the 10% common stock dividend effective in 1996 and the 3-for-2 stock
split effective in 1994.
** Reflects the 10% common stock dividend effective in 1996.
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
BRENTON BANKS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(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, insurance 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
$4,696,000 and $5,023,000 at December 31, 1996, and 1995,
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 of mortgage-backed securities are
adjusted for actual and projected prepayments.
Net gains or losses on the sale of securities are shown in
the statements of operations. Gains or losses are computed using
the specific security identification method.
Loans Loans are carried primarily at the unpaid principal
balance. Interest income on loans is accrued and recorded as
income based on contractual interest rates and daily outstanding
principal balances, except on discounted loans where unearned
income is recorded as income over the life of the loans based on
the interest method.
The accrual of interest income is stopped when the ultimate
collection of a loan becomes doubtful. A loan is placed on
nonaccrual status when it becomes 90 days past due, if it is
neither well secured or in the process of collection. Once
determined uncollectible, previously accrued interest is charged
to the allowance for loan losses.
Loans held for sale include real estate mortgage loans
originated with the intent to sell. These loans are carried at
the lower of aggregate cost or fair value.
Allowance for Loan Losses The allowance for loan losses is
maintained at a level necessary to support management's
evaluation of potential losses in the loan portfolio, after
considering various factors including prevailing and anticipated
economic conditions. Loan losses or recoveries are charged or
credited directly to the allowance account.
Premises and Equipment 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 $488,000 and $869,000 at December 31,
1996, and 1995, respectively. Such property is carried at the
lower of cost or estimated fair value, less selling costs.
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.
The effects of current or deferred taxes are recognized as a
current and deferred tax liability or asset based on current tax
laws. Accordingly, income tax expense in the consolidated
statements of operations includes charges or credits to properly
reflect the current and deferred tax asset or liability.
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 accounting
securities.
<PAGE>
Income Per Common and Common Equivalent Share Income per common
and common equivalent share computations are based on the
weighted average number of common and common stock equivalent
shares outstanding. In October 1996, the Company declared a 10
percent common stock dividend and 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 dividends, was 8,312,420 for 1996, 8,528,153 for 1995
and 8,747,053 for 1994.
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.
Changes in Accounting Policies:
Accounting by Creditors for Impairment of a Loan Effective
January 1, 1995, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 114, "Accounting by Creditors
for Impairment of a Loan," and its amendment SFAS No. 118 "Income
Recognition and Disclosures." The allowance for loan losses is
maintained at a level considered appropriate to support
management's evaluation of potential losses in the loan
portfolio. Management's evaluation is based upon several factors
including economic conditions, historical loss and collection
experience, risk characteristics of the portfolio, underlying
collateral values, industry risk and credit concentrations.
Under the Company's credit policies, all nonaccrual and
restructured commercial, agricultural, commercial real estate and
construction loans are considered to meet the definition of
impaired loans under SFAS 114 and 118. In determining when a
loan is impaired, management considers the delinquency status of
the borrower, the borrower's ability to generate cash and the
fair market value of the collateral. Specific allowances are
established for any impaired commercial, agricultural, commercial
real estate or construction loan where the recorded investment
exceeds the measured value of the loan. On a practical basis,
the measured value of a loan is obtained by using the observable
market price of a loan or the fair value of the collateral, if
the loan is collateral dependent. Otherwise, the measured value
of a loan is based upon the present value of expected future cash
flows discounted at the loan's effective interest rate. Impaired
loans are charged-off on the basis of management's ongoing
evaluation, but generally when it is deemed probable that the
borrower cannot generate sufficient funds to comply with
contractual terms in the normal course of business. Cash
received on impaired loans is applied to principal until
principal is satisfied or until the borrower demonstrates the
ability to perform according to agreed-upon terms.
SFAS 114 and 118 do not apply to smaller balance,
homogeneous loans which the Company has identified as loans to
consumers, such as home equity, installment and 1-4 family
residential loans. Delinquency status is used to identify risks
within the various consumer loan portfolios. Consumer loans are
generally charged-off when such loans are deemed to be
uncollectible or 90 days past due, whichever occurs first.
Accounting for Mortgage Servicing Rights Effective October 1,
1995, the Company adopted SFAS No. 122, "Accounting for Mortgage
Servicing Rights." This statement requires capitalization of
purchased mortgage servicing rights as well as internally
originated mortgage servicing rights. These mortgage servicing
rights are amortized over the estimated servicing period of the
related loans.
Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of Effective January 1, 1996, the
Company adopted SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed of."
This statement 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. The adoption of SFAS No.
121 did not have a material effect on the Company.
Accounting for Stock-Based Compensation Prior to January 1,
1996, the Company accounted for its stock option plan in
accordance with the provisions of Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations. As such, compensation
expense would be recorded on the date of the grant only if the
current market price of the underlying stock exceeded the
exercise price. Effective January 1, 1996, the Company adopted
SFAS No. 123, "Accounting for Stock-Based Compensation," which
permits entities to recognize as expense over the vesting period
the fair value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 also allows entities to continue to
apply the provisions of APB Opinion No. 25 and provide pro forma
net income and pro forma earnings per share disclosures for
employee stock option grants made in 1995 and future years as if
the fair-value-based method defined in SFAS No. 123 had been
applied. The Company has elected to continue to apply the
provisions of
<PAGE>
APB Opinion No. 25 and provide the pro forma disclosure
provisions of SFAS No. 123.
(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 $5,538,000 at December 31, 1996.
(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
December 31, 1996 (In thousands) Cost Gains Losses Value
<S> <C> <C> <C> <C>
Investment securities available for sale:
Taxable investments:
U.S. Treasury securities $ 41,330 76 (55) 41,351
Securities of U.S. government agencies 98,357 143 (347) 98,153
Mortgage-backed and related securities 218,865 1,398 (816) 219,447
Other investments 8,213 --- (20) 8,193
Tax-exempt investments:
Obligations of states and political
subdivisions 92,519 1,606 (170) 93,955
_______ _____ _____
$459,284 3,223 (1,408) 461,099
Investment securities held to maturity:
Taxable investments:
Securities of U.S. government agencies $ 15,065 63 (112) 15,016
Mortgage-backed and related securities 3,041 72 --- 3,113
Other investments 2,466 15 (6) 2,475
Tax-exempt investments:
Obligations of states and political
subdivisions 52,183 681 (152) 52,712
_______ _____ _____ ______
$ 72,755 831 (270) 73,316
December 31, 1995
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
</TABLE>
<PAGE>
Proceeds from the sale of available for sale securities were
$67,548,000, $5,578,000 and $21,484,000 in 1996, 1995 and 1994,
respectively. Gross gains of $558,000 in 1996, $19,000 in 1995
and $68,000 in 1994 and gross losses of $237,000 in 1996, $22,000
in 1995 and $408,000 in 1994 were realized on those sales.
Other investments at December 31, 1996 and 1995, 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 at December 31, 1995.
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.
The scheduled maturities of investment securities at
December 31, 1996 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 estimated 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 $130,194 130,310
Due after one year through
five years 228,980 229,696
Due after five years through
ten years 73,354 73,716
Due after ten years 26,756 27,377
$459,284 461,099
Investment securities held to maturity:
Due in one year or less $ 22,244 22,264
Due after one year through
five years 28,606 28,691
Due after five years through
ten years 15,307 15,388
Due after ten years 6,598 6,973
$ 72,755 73,316
</TABLE>
Investment securities carried at $246,552,000 and $163,418,000 at
December 31, 1996 and 1995, respectively, were pledged to secure
public and other funds on deposit and for other purposes.
(4) Loans
A summary of loans follows:
<TABLE>
<CAPTION>
(In thousands) December 31, 1996 1995
<S> <C> <C>
Real estate loans:
Commercial construction
and land development $ 42,693 38,123
Secured by 1-4 family
residential property 338,010 319,430
Other 150,395 163,739
Loans to farmer 69,660 68,543
Commercial and industrial loans 132,395 119,368
Loans to individuals for personal
expenditures, net of unearned
income of $59 and $313
at December 31, 1996 and
1995, respectively 207,197 199,489
All other loans 1,594 1,501
$941,944 910,193
</TABLE>
The Company originates commercial, real estate, agribusiness and
personal loans with customers throughout Iowa. The portfolio has
unavoidable geographic risk as a result.
Total non-performing loans and assets at December 31 were:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
<S> <C> <C>
Impaired loans and leases:
Non-accrual $2,663 2,639
Restructured 568 178
Total impaired loans and leases 3,231 2,817
Loans and leases past due 90 days
or more 2,936 2,802
Total non-performing loans 6,167 5,619
Other real estate owned 488 869
Total non-performing assets $6,655 6,488
</TABLE>
The average balances of impaired loans for the years ended
December 31, 1996 and 1995 were $3,378,000 and $3,353,000,
respectively. The allowance for loan losses related to impaired
loans at December 31, 1996 and 1995 was $481,000 and $425,000,
respectively. Impaired loans of $456,000 and $384,000 were not
subject to a related allowance for loan losses at December 31,
1996 and 1995, respectively, because of the net realizable value
of loan collateral, guarantees and other factors.
The effect of non-accrual and restructured loans on interest
income for each of the three years ended December 31 was:
<TABLE>
<CAPTION>
(In thousands) 1996 1995 1994
<S> <C> <C> <C>
Interest income
As originally contracted $363 418 537
As recognized 174 136 321
Reduction of interest income $189 282 216
</TABLE>
<PAGE>
Loan customers of the Company include certain executive
officers, directors and principal shareholders, and their related
interests and associates. All loans to this group were made in
the ordinary course of business at prevailing terms and
conditions. The aggregate indebtedness of all executive
officers, directors and principal shareholders of Brenton Banks,
Inc. and its significant subsidiaries, and indebtedness of
related interests and associates of this group (except where the
indebtedness of such persons was less than $60,000) included in
loans follows:
<TABLE>
<CAPTION>
(In thousands) Amount
<S> <C>
Balance at December 31, 1995 $ 4,824
Additional loans 2,488
Loan payments (1,475)
Balance at December 31, 1996 $ 5,837
</TABLE>
Mortgage Servicing Rights The fair market value of capitalized
servicing rights at December 31, 1996 was approximately
$1,145,000. To determine the fair value of the servicing rights,
the Company used comparable market prices. There were no charges
to the impairment account. In determining the fair market value
and potential impairment at the end of 1996, the Company
disaggregated the portfolio into its predominate risk factor;
that being interest rate. The fair value of the portfolio was
determined by calculating the present value of future cash flows.
The Company incorporated assumptions that market participants
would use in estimating future net servicing income which include
estimates of the cost of servicing per loan, the discount rate,
float value, an inflation rate, ancillary income per loan,
prepayment speeds and default rates.
Capitalized servicing rights on originated loan servicing is as
follows:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
<S> <C> <C>
Beginning of year balance $ 252 ---
Additions from Originations 962 266
Amortization (188) (14)
Impairment --- ---
Balance at end of year $1,026 252
</TABLE>
(5) Allowance for Loan Losses
A summary of activity in the allowance for loan losses follows:
<TABLE>
<CAPTION>
(In thousands) 1996 1995 1994
<S> <C> <C> <C>
Balance at beginning of year $11,070 10,913 9,818
Provision 2,900 1,865 1,988
Recoveries 1,419 1,669 1,549
Loans charged off (4,061) (3,377) (2,442)
Balance at end of year $11,328 11,070 10,913
</TABLE>
(6) Premises and Equipment
A summary of premises and equipment follows:
<TABLE>
<CAPTION>
(In thousands) December 31, 1996 1995
<S> <C> <C>
Land $ 2,952 3,614
Buildings and leasehold
improvements 30,876 32,045
Furniture and equipment 23,463 21,756
Construction in progress 275 33
57,566 57,448
Less accumulated depreciation 27,187 24,598
$30,379 32,850
</TABLE>
Depreciation expense included in operating expenses amounted to
$3,848,000, $3,626,000 and $2,938,000 in 1996, 1995 and 1994,
respectively.
(7) Deposits
Time deposits include deposits in denominations of $100,000 or
more of $82,011,000 and $64,014,000 at December 31, 1996, and
1995, respectively.
A summary of interest expense by deposit classification
follows:
<TABLE>
<CAPTION>
(In thousands) 1996 1995 1994
<S> <C> <C> <C>
Demand $11,194 11,842 5,418
Savings 6,134 6,638 6,878
Time deposits
of $100,000 or more 3,935 4,193 3,110
Other time deposits 28,244 30,402 26,204
$49,507 53,075 41,610
</TABLE>
The Company made cash interest payments of $55,455,000,
$55,229,000 and $46,850,000 on deposits and borrowings in 1996,
1995 and 1994, respectively.
At December 31, 1996, the scheduled maturities of time deposits
are as follows (in thousands):
1997 $335,530
1998 166,631
1999 42,068
2000 26,120
2001 and thereafter 2,355
$572,704
<PAGE>
(8) Income Taxes
The current and deferred income tax provisions included in the
consolidated statements of operations follow:
<TABLE>
<CAPTION>
1996 (In thousands) Current Deferred Total
<S> <C> <C> <C>
Federal $3,754 894 4,648
State 1,067 56 1,123
$4,821 950 5,771
1995
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
</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 $4,250,000, $2,500,000
and $2,671,000 to the IRS, and $435,000, $737,000 and $1,226,000
to the state of Iowa in 1996, 1995 and 1994, 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 35 percent
in 1996 and 34 percent in 1995 and 1994, and income tax expense
follow:
<TABLE>
<CAPTION>
(In thousands) 1996 1995 1994
<S> <C> <C> <C>
At statutory rate $ 7,136 4,849 4,556
Increase (reduction) due to:
Tax-exempt interest (2,556) (2,566) (2,768)
State taxes, net of
federal benefit 730 365 503
Nondeductible interest expense
to own tax-exempts 426 431 363
Other, net 35 126 47
$ 5,771 3,205 2,701
</TABLE>
Accumulated deferred income tax assets are included in other
assets in the consolidated statements of condition. There was no
valuation allowance at December 31, 1996, or 1995. A summary of
the temporary differences resulting in deferred income taxes and
the related tax effect on each follows:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
<S> <C> <C>
Allowance for loan losses $3,962 3,985
Unrealized (gains) losses on
securities available for sale (670) (694)
Deposit base intangibles (315) (259)
Premises and equipment (588) (452)
Stock compensation plan 682 372
Real estate mortgage
loan points deferred (300) (479)
Alternative minimum tax credit
carry-forward --- 442
Other, net (251) 531
$2,520 3,446
</TABLE>
(9) Other Short-Term Borrowings
The Company had short-term borrowings with the Federal Home Loan
Bank of Des Moines (FHLB) totaling $34,150,000 and $2,500,000 at
December 31, 1996, and 1995, respectively. The average rate on
these borrowings at December 31, 1996 was 5.97 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 line of credit
of $2,000,000 which was unused at December 31, 1996. 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, 1996 1995
<S> <C> <C>
Capital notes, 6.00% to 10.00%
Total Parent Company $ 11,248 12,435
Borrowings from FHLB, average rate
of 6.18% at December 31, 1996 23,550 25,650
Mortgage debt, average rate of
6.75% at December 31, 1996 62 93
$ 34,860 38,178
</TABLE>
Mortgage debt was secured by real property with a carrying value
of $77,000 at December 31, 1996. 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,
1996, follow:
<TABLE>
<CAPTION>
Parent
(In thousands) Company Consolidated
<S> <C> <C>
1997 $ 1,457 1,464
1998 1,097 15,105
1999 1,671 11,268
2000 853 853
2001 1,396 1,396
Thereafter 4,774 4,774
$11,248 34,860
</TABLE>
<PAGE>
(11) Fair Value of Financial Instruments
The estimated fair values of the Company's financial instruments
were as follows:
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
Recorded Fair Recorded Fair
(In thousands) Amount Value Amount Value
<S> <C> <C> <C> <C>
Financial assets:
Cash and due from banks $ 76,901 76,901 71,159 71,159
Interest-bearing deposits with
banks 732 732 265 265
Federal funds sold and securities
purchased under agreements to
resell 15,200 15,200 37,600 37,600
Investment securities 533,854 534,415 504,452 505,501
Loans held for sale 5,870 5,870 8,707 8,707
Loans, net 930,615 929,113 899,123 910,338
Financial liabilities:
Deposits $ 1,353,057 1,360,457 1,361,943 1,367,680
Federal funds purchased, securities
sold under agreements to repurchase
and other short-term borrowings 100,976 100,976 43,607 43,607
Long-term borrowings 34,860 35,025 38,178 40,610
Off-balance-sheet assets (liabilities):
Commitments to extend credit $ --- --- --- ---
Letters of credit --- (59) --- (63)
Interest rate swaps --- (69) --- (224)
</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.
(12) Regulatory Capital
The Company is subject to various regulatory capital requirements
administered by both federal and state banking agencies. Failure
to comply with minimum capital requirements could result in
actions taken by regulators that could have a direct material
impact on the Company's financial statements. Under the capital
adequacy guidelines established by regulators, the Company must
meet specific capital guidelines that involve the measurement of
the Company's assets, liabilities and certain off-balance sheet
items. The Company's capital amounts and classification are also
subject to qualitative judgments by the regulators as it relates
to components, risk weightings and other factors.
Quantitative measures established by regulators to ensure
capital adequacy require the Company to maintain minimum amounts
and ratios (set forth in the following table) of total and tier 1
capital to risk weighted assets and of tier 1 capital to average
assets.
<PAGE>
As of December 31, 1996, management believes the Company is
well-capitalized, as defined under the regulatory framework for
prompt corrective action. To be categorized as well-capitalized,
the Company must maintain minimum total risk-based, tier 1 risk-
based and tier 1 leverage ratios as set forth in the table. The
Company's actual capital amounts and ratios are also presented in
the table.
<TABLE>
<CAPTION>
To Be Well-
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
Amount Ratio Amount Ratio Amount Ratio
(Dollar amounts in thousands)
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1996:
Total Capital
(to Risk Weighted Assets):
Consolidated $134,026 12.64% $84,816 > 8.0% N/A
_
Brenton Bank 128,138 12.80 80,099 > 8.0 $100,124 > 10.0%
_ _
Tier 1 Capital
(to Risk Weighted Assets):
Consolidated 122,673 11.57 42,408 > 4.0 N/A
_
Brenton Bank 117,476 11.73 40,050 > 4.0 60,075 > 6.0
_ _
Tier 1 Capital
(to Average Assets):
Consolidated 122,673 7.62 48,312 > 3.0 N/A
_
Brenton Bank 117,476 7.90 59,490 > 4.0 74,362 > 5.0
_ _
</TABLE>
(13) Common Stock Transactions
In October 1996, the Company declared a 10 percent common stock
dividend. This transaction resulted in the issuance of 736,843
shares of common stock and the transfer of $3,684,215 from
retained earnings to common stock. Fractional shares resulting
from this stock dividend were paid in cash. 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 these
transactions.
As part of the Company's ongoing stock repurchase plan, in
1996 the Board of Directors increased the amount authorized for
common stock repurchases in 1996 to $10 million. For the years
ended December 31, 1996, 1995 and 1994, the Company repurchased
347,700, 258,133 and 44,800 shares, respectively, at a total cost
of $8,248,331, $4,830,111 and $850,950.
(14) Dividend Restrictions
The Parent Company derives a substantial portion of its cash
flow, including that available for dividend payments to
stockholders, from the subsidiary banks in the form of dividends
received. 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, 1996,
were approximately $16 million.
(15) Employee Retirement Plan
The Company provides a defined contribution retirement plan for
the benefit of employees. The plan is a combination profit
sharing and 401(k) plan. All employees 21 years of age or older
and employed by the Company for at least one year are eligible
for the plan. The Company contributes 4 1/2 percent of eligible
compensation of all participants to the profit sharing portion of
the plan, and matches employee contributions to the 401(k)
portion of the plan up to a maximum of 3 percent of each
employee's eligible compensation. Retirement plan costs charged
to operating expenses in 1996, 1995 and 1994 amounted to
$1,284,000, $1,263,000 and $1,367,000, respectively. The Company
offers no material post-retirement benefits.
(16) Stock Plans
In 1996, the Company adopted the 1996 Stock Option Plan (the
"Plan"). The Plan authorizes the granting of options on up to
550,000 shares of the Company's common stock to key employees 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
performance vesting requirements, but if vesting is not achieved
from performance vesting, 100 percent vesting occurs nine years
and six months following the grant date. Options expire ten
years and one month following the grant date.
At December 31, 1996, there were 79,200 shares available for
grant under the Plan. The per-share weighted average fair value
of stock options granted during 1996 was $6.60 based on the date
of grant using the Company's option pricing model with the
following weighted average assumptions: expected dividend yield
of 2.15 percent, risk-free interest rate of 6.85 percent,
expected life of 7.5 years and expected volatility of stock price
of 18 percent.
The Company applies APB Opinion No. 25 in accounting for its
Plan and, accordingly, no compensation cost has been recognized
for its stock options in the financial statements. Had the
Company determined compensation cost based on the fair value at
the grant date for its stock options under SFAS No. 123, the
Company's net income and earnings per share would have been
reduced to the pro forma amounts indicated below:
1996
Net income As reported $14,015,430
Pro forma 13,768,662
Earnings per share As reported $1.69
Pro forma 1.66
Pro forma net income reflects only options granted in 1996.
Therefore, the full impact of calculating compensation cost for
stock options under SFAS No. 123 is not reflected in the pro
forma net income amounts presented above because compensation
cost is reflected over the options' expected life of 7.5 years.
There were 470,800 shares granted under the Plan in 1996
with a weighted average exercise price of $22.166. At December
31, 1996, the range of exercise prices and weighted average
remaining contractual life of outstanding options was $22.159 -
$23.625 and 9.7 years, respectively. No options were
exercisable at December 31, 1996.
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
were 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
$1,302,000, $425,000 and $(102,000) for 1996, 1995 and 1994,
respectively and changes in outstanding grant shares during 1996
were as follows (restated for the 10 percent common stock
dividend effective in 1996 and the 3-for-2 stock split effective
in 1994):
<TABLE>
<CAPTION>
Performance 1992 to 1993 to 1994 to 1995 to
Period 1994 1995 1996 1997
<S> <C> <C> <C> <C>
December 31, 1993 100,642 86,509 --- ---
Granted - 1994 --- --- 99,323 ---
Forfeited - 1994 --- (2,188) --- ---
December 31, 1994 100,642 84,321 99,323 ---
Granted - 1995 --- --- --- 98,033
Forfeited - 1995 --- (9,216) (14,724) (7,287)
Expired - 1995 (65,418) --- --- ---
Vested - 1995 (35,224) --- --- ---
December 31, 1995 --- 75,105 84,599 90,746
Forfeited - 1996 --- --- (9,524) (10,369)
Expired - 1996 --- (48,819) --- ---
Vested - 1996 --- (26,286) --- ---
Outstanding grant
shares at
December 31, 1996 --- --- 75,075 80,377
</TABLE>
For the performance period 1994 to 1996, 26,278 shares vested and
48,797 shares expired on January 1, 1997.
The Company's 1987 nonqualified stock option plan permits
the Board of Directors to grant options to purchase up to 330,000
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 1996,
1995 and 1994 were as follows (restated for the 10 percent common
stock dividend effective in 1996 and the 3-for-2 stock split
effective in 1994):
<TABLE>
<CAPTION>
Exercisable Outstanding Option Price
Options Options Per Share
<S> <C> <C> <C>
December 31, 1993 187,110 202,950 $4.02-8.60
Granted - 1994 --- 9,240 17.86
Vested - 1994 7,920 --- 7.99-8.60
Exercised - 1994 (40,535) (40,535) 4.02-7.99
December 31, 1994 154,495 171,655 4.02-17.86
Vested - 1995 3,300 --- 7.99-8.60
Exercised - 1995 (21,725) (21,725) 4.02
Forfeited - 1995 --- (13,860) 7.99-17.86
December 31, 1995 136,070 136,070 4.02-8.60
Exercised - 1996 (26,800) (26,800) 4.02
December 31, 1996
(13,860 shares available
for grant) 109,270 109,270 $4.02-8.60
</TABLE>
On May 6, 1997, the shares available for grant will expire.
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 1996, 16,612 shares of common stock were purchased
by employees under this plan.
<PAGE>
(17) Lease Commitments
Rental expense included in the consolidated statements of
operations amounted to $1,919,000, $1,937,000 and $1,799,000 in
1996, 1995 and 1994, respectively. Future minimum rental
commitments for all noncancelable leases with terms of one year
or more total approximately $1,200,000 per year through 2001,
$600,000 per year through 2006, $200,000 per year through 2011,
and $40,000 per year through 2013, with a total commitment of
$10,500,000.
(18) Commitments and Contingencies
In the normal course of business, the Company is party to
financial instruments necessary to meet the financial 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. The Company
had outstanding commitments to extend credit of $221 million and
$166 million at December 31, 1996, and 1995, respectively.
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. Outstanding standby letters of credit totaled
$11,770,000 and $20,513,000 at December 31, 1996, and 1995,
respectively. The Company does not anticipate losses as a result
of issuing commitments to extend credit or standby letters of
credit.
The Company enters into interest rate swap agreements as
part of its asset/liability management strategy to manage
interest-rate risk. The notional value of these agreements was
$16,205,000 and $10,960,000 at December 31, 1996, and 1995,
respectively. 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.
The Company maintains a 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 $2,412,000 in 1997 and $2,389,000 in 1998 through
2001 and $1,194,000 in 2002. These fixed payments will be
adjusted for inflation and volume fluctuations.
The Company is involved with various claims and legal
actions arising in the ordinary course of business. In the
opinion of management, the ultimate disposition of these matters
will not have a material adverse effect on the Company's
financial statements.
(19) Restructuring Charge
During the fourth quarter of 1994, the Company finalized plans
for a strategic restructuring program. This plan resulted in a
special charge of $2.6 million ($1.7 million after tax or $.19
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>
(20) Brenton Banks, Inc. (Parent Company) Condensed Financial
Information
<TABLE>
<CAPTION>
Statements of Condition
December 31 (In thousands) 1996 1995
<S> <C> <C>
Assets
Interest-bearing deposits with banks $ 5,638 128
Short-term investments --- 7,500
Advances to bank subsidiaries --- 117
Investments in:
Bank subsidiaries 124,383 119,325
Bank-related subsidiaries 45 43
Excess cost over net assets 1,826 1,900
Premises and equipment 618 1,375
Other assets 3,168 3,186
________ _______
$ 135,678 133,574
Liabilities and Stockholders' Equity
Accrued expenses payable
and other liabilities $ 2,476 1,605
Long-term borrowings 11,248 12,435
Common stockholders' equity 121,954 119,534
_______ _______
$ 135,678 133,574
</TABLE>
<TABLE>
<CAPTION>
Statements of Operations
Years Ended December 31 (In thousands) 1996 1995 1994
<S> <C> <C> <C>
Income
Dividends from subsidiaries $ 10,766 8,997 11,691
Interest income 341 442 317
Management fees --- 1,634 1,222
Other operating income 43 2,644 2,128
________ ______ ______
11,150 13,717 15,358
Expense
Salaries and benefits 1,884 4,021 3,466
Interest on long-term borrowings 970 1,046 1,044
Other operating expense 655 2,006 2,263
________ ______ ______
3,509 7,073 6,773
Income before income taxes and
equity in undistributed earnings
of subsidiaries 7,641 6,644 8,585
Income taxes (1,040) (759) (1,083)
Income before equity in undistributed
earnings of subsidiaries 8,681 7,403 9,668
Equity in undistributed earnings of subsidiaries 5,334 3,004 439
________ ______ ______
Net income $ 14,015 10,407 10,107
</table
<PAGE>
(20) Brenton Banks, Inc. (Parent Company) Condensed Financial
Information
</TABLE>
<TABLE>
<CAPTION>
Statements of Cash Flows
Years Ended December 31 (In thousands) 1996 1995 1994
<S> <C> <C> <C>
Operating Activities
Net income $ 14,015 10,407 10,107
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in undistributed earnings of subsidiaries (5,334) (3,004) (439)
Depreciation and amortization 163 230 230
(Increase) decrease in other assets 18 49 (370)
Increase (decrease) in accrued expenses
payable and other liabilities 871 (148) (373)
________ ______ ______
Net cash provided by operating activities 9,733 7,534 9,155
Investing Activities
(Increase) decrease in short-term investments 7,500 1,000 (5,000)
Redemption (purchase) of subsidiary equity, net (7) 156 (200)
Principal collected from or (advances to)
subsidiaries 115 (97) (270)
Purchase of premises and equipment, net 669 (512) (648)
________ ______ ______
Net cash provided (used) by investing activities 8,277 547 (6,118)
Financing Activities
Net proceeds (repayment) of long-term borrowings (1,187) (209) 622
Proceeds from issuance of common stock under the
long-term stock compensation plan 335 362 ---
Proceeds from issuance of common stock under the
stock option plan 291 188 386
Proceeds from issuance of common stock under the
employee stock purchase plan 72 --- ---
Payment for shares acquired under common stock
repurchase plan (8,248) (4,830) (851)
Payment for fractional shares in stock dividends (14) --- (4)
Dividends on common stock (3,749) (3,498) (3,472)
________ ______ ______
Net cash used by financing activities (12,500) (7,987) (3,319)
Net increase (decrease) in cash and interest-
bearing deposits 5,510 94 (282)
Cash and interest-bearing deposits at the
beginning of the year 128 34 316
Cash and interest-bearing deposits at the end
of the year $ 5,638 128 34
</TABLE>
<PAGE>
(21) Unaudited Quarterly Financial Information
The following is a summary of unaudited quarterly financial
information (in thousands, except per common and common
equivalent share data):
<TABLE>
<CAPTION>
1996
Three months ended March 31 June 30 Sept. 30 Dec. 31
<S> <C> <C> <C> <C>
Interest income $ 27,370 27,512 27,923 28,578
Interest expense 13,701 13,645 13,813 14,172
_______ ______ ______ ______
Net interest income 13,669 13,867 14,110 14,406
Provision for loan losses 700 800 600 800
_______ ______ ______ ______
Net interest income after
provision for loan losses 12,969 13,067 13,510 13,606
Noninterest income 5,552 5,622 5,776 6,377
Noninterest expense 13,355 13,471 14,685 14,579
_______ ______ ______ ______
Income before income taxes
and minority interest 5,166 5,218 4,601 5,404
Income taxes 1,446 1,497 1,275 1,553
Minority interest 140 153 153 157
_______ ______ ______ ______
Net income $ 3,580 3,568 3,173 3,694
Per common and common
equivalent share:
Net income $ .42 .43 .39 .45
</TABLE>
<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 $ .28 .30 .36 .28
<FN>
* See footnote 19 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.
Robert L. DeMeulenaere
President
Steven T. Schuler
Chief Financial Officer/Treasurer/Secretary
INDEPENDENT AUDITORS' 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, 1996, and 1995, 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,
1996. 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, 1996, and 1995, and the results of their operations
and their cash flows for each of the years in the three-year
period ended December 31, 1996, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Des Moines, Iowa
February 7, 1997
<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 1,562 common stockholders of record on December 31, 1996.
<TABLE>
<CAPTION>
MARKET AND DIVIDEND INFORMATION
1996 High Low Dividends
<S> <C> <C> <C> <C>
1st quarter $22.05 19.09 .109
2nd quarter 22.05 20.68 .109
3rd quarter 22.73 21.36 .118
4th quarter 28.00 22.50 .118
</TABLE>
<TABLE>
<CAPTION>
1995 High Low Dividends
<S> <C> <C> <C> <C>
1st quarter $17.05 16.14 .10
2nd quarter 17.27 16.14 .10
3rd quarter 18.64 16.25 .10
4th quarter 20.68 17.50 .109
</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 October 1996 10% common 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: Brent B
Market Makers
ABN AMRO Chicago Corporation
Herzog, Heine, Geduld, Inc.
Howe, Barnes Investments, Inc.
Keefe, Bruyette & Woods, Inc.
Stifel, Nicolaus & Co., Inc.
Wedbush Morgan Securities, 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 200, Capital Square
400 Locust Street
Des Moines, Iowa 50309
Telephone 515/237-5100
Annual Shareholders' Meeting
Wednesday, May 7, 1997, 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 and Schoenebaum, P.L.C.
Suite 1100, Two Ruan Center
601 Locust Street
Des Moines, Iowa 50309
Independent Auditors
KPMG Peat Marwick LLP
2500 Ruan Center
666 Grand Avenue
Des Moines, Iowa 50309
<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
Chief Executive Officer/President
Larry A. Mindrup
Chief Banking Officer
President, Des Moines
Phillip L. Risley
Chief Administrative Officer/Cashier
Perry C. Atwood
Chief Sales Officer
Woodward G. Brenton
Chief Commercial Banking Officer
Charles N. Funk
Chief Investment/ALCO Officer
Ronald D. Larson
Regional President Eastern Iowa
Division
President, Cedar Rapids
Marc J. Meyer
Regional President Western Iowa
Division
President, Adel
Steven T. Schuler
Chief Financial Officer/Treasurer/
Secretary
Norman D. Schuneman
Chief Credit Officer
Steven D. Agan
President, Knoxville
John H. Anderson
President, Davenport
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
Dennis H. Hanson
President, Grinnell
Richard H. Jones
President, Perry
V. Blaine Lenz
President, Eagle Grove
James L. Lowrance
President, Marshalltown
Clay A. Miller
President, Clarion
Jeffrey J. Nolan
President, Jefferson
Clark H. Raney
President, Indianola
Gary D. Ernst
President, Trust Division
Marsha A. Findlay
Senior Vice President, Des Moines
Senior Retail Banking Officer
Mark J. Hoffschneider
President, Brenton Mortgages
Douglas F. Lenehan
President, Diversified Commercial
Services Division
Loras J. Neuroth
President, Brenton Insurance
Elizabeth M. Piper/Bach
President, Brenton Investments
Catherine Reed
Senior Marketing Officer
Thomas J. Vincent
President, Agricultural Banking
Division
<PAGE>
Exhibit 21
Subsidiaries.
286
<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 Investments, 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
287
<PAGE>
Exhibit 23
Consent of KPMG Peat Marwick LLP to the incorporation of
their report dated February 7, 1997, relating to certain
consolidated financial statements of Brenton Banks, Inc.
into the Registration Statement on Form S-8 of Brenton
Banks, Inc.
288
<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 7, 1997,
relating to the consolidated statements of condition of Brenton Banks, Inc.
and subsidiaries as of December 31, 1996 and 1995 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, 1996 which report appears in the December 31, 1996, 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
289
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
DECEMBER 31, 1996 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 76,900,524
<INT-BEARING-DEPOSITS> 731,554
<FED-FUNDS-SOLD> 15,200,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 461,099,272
<INVESTMENTS-CARRYING> 72,754,985
<INVESTMENTS-MARKET> 73,316,000
<LOANS> 941,943,513
<ALLOWANCE> 11,328,359
<TOTAL-ASSETS> 1,632,095,082
<DEPOSITS> 1,353,057,111
<SHORT-TERM> 100,976,120
<LIABILITIES-OTHER> 21,247,598
<LONG-TERM> 34,860,024
<COMMON> 40,428,420
0
0
<OTHER-SE> 81,525,809
<TOTAL-LIABILITIES-AND-EQUITY> 1,632,095,082
<INTEREST-LOAN> 80,301,707
<INTEREST-INVEST> 29,596,714
<INTEREST-OTHER> 1,484,696
<INTEREST-TOTAL> 111,383,117
<INTEREST-DEPOSIT> 49,507,425
<INTEREST-EXPENSE> 5,823,550
<INTEREST-INCOME-NET> 56,052,142
<LOAN-LOSSES> 2,900,000
<SECURITIES-GAINS> 321,256
<EXPENSE-OTHER> 56,693,553
<INCOME-PRETAX> 19,786,030
<INCOME-PRE-EXTRAORDINARY> 19,786,030
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,015,430
<EPS-PRIMARY> 1.69
<EPS-DILUTED> 1.69
<YIELD-ACTUAL> 7.58
<LOANS-NON> 2,663,000
<LOANS-PAST> 2,936,000
<LOANS-TROUBLED> 568,000
<LOANS-PROBLEM> 6,167,000
<ALLOWANCE-OPEN> 11,069,869
<CHARGE-OFFS> 4,061,211
<RECOVERIES> 1,419,701
<ALLOWANCE-CLOSE> 11,328,359
<ALLOWANCE-DOMESTIC> 11,328,359
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
