UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ 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 or other jurisdiction of (I.R.S. Employer Identification)
incorporation or organization)
Suite 200, Capital Square, 400 Locust, Des Moines, Iowa 50309
(Address of principle executive offices) (zip code)
515-237-5100
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed
since last report)
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 the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date, May 3, 2000.
20,357,371 shares of Common Stock, $2.50 par value
<PAGE>
<TABLE>
PART 1 - Item 1. Financial Statements
<CAPTION>
Brenton Banks, Inc. and Subsidiaries
Consolidated Statements of Condition
(Unaudited)
March 31, December 31,
2000 1999
_________ ____________
</CAPTION>
<S> <C> <C>
Assets:
Cash and due from banks $ 78,844,325 85,064,053
Interest-bearing deposits with banks 2,626,954 2,361,784
Federal funds sold 22,300,000 ---
Investment securities:
Available for sale 541,783,285 556,191,355
Held to maturity (approximate market value of
$24,659,000 and $25,351,000 at March 31, 2000,
and December 31, 1999, respectively) 24,554,469 25,201,876
Total investment securities 566,337,754 581,393,231
Loans held for sale 15,625,198 26,201,221
Loans 1,156,025,736 1,195,986,791
Allowance for loan losses (14,997,668) (14,413,104)
Loans, net 1,141,028,068 1,181,573,687
Premises and equipment 38,582,959 37,978,240
Accrued interest receivable 15,858,727 15,856,895
Other assets 57,277,037 55,025,590
Total assets $1,938,481,022 1,985,454,701
Liabilities and Stockholders' Equity:
Deposits:
Noninterest-bearing $ 197,376,813 189,333,019
Interest-bearing:
Demand 138,771,055 145,131,184
Savings 645,921,868 640,963,380
Time 577,986,371 554,655,720
Total deposits 1,560,056,107 1,530,083,303
Federal funds purchased and securities sold under agreements
to repurchase 132,488,747 166,806,442
Other short-term borrowings 64,240,000 110,423,584
Accrued expenses and other liabilities 17,054,072 13,896,056
Long-term borrowings 26,744,000 27,704,000
Total liabilities 1,800,582,926 1,848,913,385
Minority interest in consolidated subsidiaries 4,637,134 4,607,865
Redeemable preferred stock, $1 par; 500,000 shares
authorized; issuable in series, none issued --- ---
Common stockholders' equity:
Common stock, $2.50 par; 50,000,000 shares authorized;
20,357,371 and 20,354,454 shares issued and outstanding at
March 31, 2000, and December 31, 1999, respectively 50,893,427 50,886,135
Capital surplus 21,148 ---
Retained earnings 89,496,259 86,682,119
Accumulated other comprehensive income (loss)--unrealized
gains (losses) on securities available for sale (7,149,872) (5,634,803)
Total common stockholders' equity 133,260,962 131,933,451
Total liabilities and stockholders' equity $1,938,481,022 1,985,454,701
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
PART 1 - Item 1. Financial Statements
<CAPTION>
Brenton Banks, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Three Months Ended
March 31,
2000 1999
____ ____
</CAPTION>
<S> <C> <C>
Interest Income
Interest and fees on loans $ 25,129,467 22,342,324
Interest and dividends on investments:
Available for sale-taxable 6,059,257 6,531,217
Available for sale-tax-exempt 1,839,870 1,788,474
Held to maturity-taxable 17,464 37,935
Held to maturity-tax-exempt 302,544 495,804
Total interest and dividends on investments 8,219,135 8,853,430
Interest on federal funds sold 71,026 36,593
Other interest income 36,579 39,049
Total interest income 33,456,207 31,271,396
Interest Expense
Interest on deposits 13,737,386 12,697,515
Interest on federal funds purchased
and securities sold under agreements
to repurchase 1,732,840 1,253,850
Interest on other short-term borrowings 1,483,293 1,431,039
Interest on long-term borrowings 426,399 638,064
Total interest expense 17,379,918 16,020,468
Net interest income 16,076,289 15,250,928
Provision for loan losses 1,050,000 1,050,000
Net interest income after provision for
loan losses 15,026,289 14,200,928
Noninterest Income
Service charges on deposit accounts 2,479,492 2,108,255
Investment brokerage commissions 1,261,398 1,024,816
Fiduciary income 974,226 1,065,918
Mortgage banking income 725,553 1,638,097
Insurance commissions and fees 268,134 284,513
Other service charges, collection and exchange
charges, commissions and fees 1,233,749 1,261,230
Net realized gains from securities available
for sale 28,204 62,936
Other operating income 557,591 349,212
Total noninterest income 7,528,347 7,794,977
Noninterest Expense
Compensation 7,026,795 7,244,346
Employee benefits 1,471,497 1,760,661
Occupancy expense of premises, net 1,731,743 1,482,723
Furniture and equipment expense 1,400,630 1,106,652
Data processing expense 755,372 690,902
Marketing 305,907 417,395
Supplies 285,900 313,597
Other operating expense 3,213,511 2,644,552
Total noninterest expense 16,191,355 15,660,828
Income before income taxes and minority interest 6,363,281 6,335,077
Income taxes 1,590,585 1,589,339
Income before minority interest 4,772,696 4,745,738
Minority interest 184,332 167,508
Net income $ 4,588,364 4,578,230
Per common share:
Net income-basic $ 0.23 0.22
Net income-diluted 0.22 0.22
Cash dividends 0.087 0.086
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
PART 1 - Item 1. Financial Statements
<CAPTION>
Brenton Banks, Inc. and Subsidiaries
Consolidated Statements of Cash Flow
(Unaudited)
For the three months ended March 31,
2000 1999
_____________ _______________
</CAPTION>
<S> <C> <C>
Operating Activities:
Net income $ 4,588,364 4,578,230
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses 1,050,000 1,050,000
Depreciation and amortization 1,794,655 1,197,508
Net realized gains from securities available for sale (28,204) (62,936)
Investment securities amortization and accretion 327,164 687,217
Net increase in loans held for sale 10,576,023 37,220,884
Net increase in accrued interest receivable and other
assets (1,526,146) (2,631,194)
Net increase (decrease) in accrued expenses, other
liabilities and minority interest 3,254,585 (2,101,995)
Net cash provided by operating activities 20,036,441 39,937,714
Investing Activities:
Investment securities available for sale:
Purchases (21,874,509) (50,496,605)
Maturities 26,514,339 34,100,983
Sales 6,944,924 9,799,060
Investment securities held to maturity:
Purchases --- (872,303)
Maturities 652,959 2,500,289
Net decrease in loans 2,020,019 603,828
Sale of loans 37,475,600 ---
Sale of deposits (3,790,380) ---
Purchases of premises and equipment (2,286,244) (2,115,934)
Proceeds from sales of premises and equipment 103,962 ---
Net cash provided (used) by investing activities 45,760,670 (6,480,682)
Financing Activities:
Net increase (decrease) in noninterest-bearing,
interest-bearing demand and savings deposits 8,767,566 (5,839,774)
Net increase (decrease) in time deposits 21,737,828 (9,473,495)
Net decrease in federal funds purchased and
securities sold under agreements to repurchase (31,067,695) (47,573,080)
Net increase (decrease) in other short-term borrowings (47,183,584) 15,600,000
Proceeds of long-term borrowings 40,000 15,000
Repayment of long-term borrowings --- ---
Dividends on common stock (1,774,224) (1,780,224)
Proceeds from issuance of common stock under
the employee stock purchase plan 28,440 243,573
Payment for shares reacquired under common stock
repurchase plan --- (1,011,562)
Net cash used by financing activities (49,451,669) (49,819,562)
Net increase (decrease) in cash and cash equivalents 16,345,442 (16,362,530)
Cash and cash equivalents at the beginning of the year 87,425,837 84,627,337
Cash and cash equivalents at the end of the period $ 103,771,279 68,264,807
</TABLE>
<TABLE>
<CAPTION>
Supplemental Cash Flow Information
(Unaudited)
</CAPTION>
<S> <C> <C>
Interest paid during the period $ 16,168,000 15,366,685
Income taxes paid during the period --- ---
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
PART 1 - Item 1. Financial Statements
<CAPTION>
Brenton Banks, Inc. and Subsidiaries
Consolidated Statements of Changes in Common Stockholders' Equity
(Unaudited)
For the three months ended March 31,
2000 1999
_____________ _______________
</CAPTION>
<S> <C> <C>
Common Stock
Beginning of year balance $ 50,886,135 46,880,953
Issuance of shares of common stock
under the employee stock purchase plan 7,292 33,647
Shares reacquired under the common
stock repurchase plan --- (162,500)
End of period balance 50,893,427 46,752,100
Capital Surplus
Beginning of year balance --- ---
Issuance of shares of common stock
under the employee stock purchase plan 21,148 209,926
Shares reacquired under the common
stock repurchase plan --- (209,926)
End of period balance 21,148 ---
Retained Earnings
Beginning of year balance 86,682,119 85,010,569
Net income 4,588,364 4,578,230
Dividends on common stock (1,774,224) (1,780,224)
Shares reacquired under the common
stock repurchase plan --- (639,136)
End of period balance 89,496,259 87,169,439
Total Stockholders' Equity before Accumulated
Other Comprehensive Income (Loss) 140,410,834 133,921,539
Accumulated Other Comprehensive Income (Loss)
Beginning of year balance (5,634,803) 3,318,797
Change in unrealized holding gains (losses)
on securities available for sale (1,515,069) (1,486,482)
End of period balance (7,149,872) 1,832,315
Total Stockholders' Equity $ 133,260,962 135,753,854
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
PART 1 - Item 1. Financial Statements
<CAPTION>
Brenton Banks, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months Ended
March 31,
2000 1999
_________ ________
</CAPTION>
<S> <C> <C>
Net Income $ 4,588,364 4,578,230
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on securities
available for sale:
Unrealized holding gains (losses) arising
during the period (net of deferred tax
of $898,465 and $879,571, respectively) (1,497,442) (1,447,336)
Less: reclassification adjustment for net
realized gains included in net income (net
of tax expenses of $10,577 and $23,790,
respectively) (17,627) (39,146)
__________ __________
Other comprehensive income (loss), net of tax (1,515,069) (1,486,482)
__________ __________
Comprehensive income $ 3,073,295 3,091,748
========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
PART 1 -- ITEM 1. FINANCIAL STATEMENTS
BRENTON BANKS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
1. Adjustments and Reclassifications
The accompanying financial statements for the interim periods were prepared
without audit. In the opinion of management, all adjustments which were
necessary for a fair presentation of financial position and results of
operations have been made. These adjustments were of a normal recurring
nature.
2. Additional Footnote Information
In reviewing these financial statements, reference should be made to the notes
to consolidated financial statements contained in the Appendix to the Proxy
Statement for the year ended December 31, 1999.
3. 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 and federal funds sold.
4. Changes in Accounting Policies
There have been no changes in accounting policy in the first quarter of 2000.
5. Income Taxes
Federal income tax expense for the three months ended March 31, 2000, and 1999,
was computed using the consolidated effective federal income tax rates.
For the first three months of 2000 and 1999, the Company also recognized income
tax expense pertaining to state franchise taxes payable individually by the
subsidiary banks.
6. Common Stock Transaction
On May 24, 1999, the Board of Directors declared a 10 percent common stock
dividend for stockholders of record on June 1, 1999. The stock dividend
certificates were distributed on June 18, 1999. Fractional shares resulting
from this stock dividend were paid in cash.
<PAGE>
Part 1 -- Item 1
Page 2 of 2
7. Income Per Share
Basic net income per common share amounts are computed by dividing net income
by the weighted average number of common shares outstanding during the period.
The weighted average number of common shares outstanding for the three months
ended March 31, 2000, and 1999, was 20,356,377 and 20,614,026, respectively.
Diluted net income per common share amounts are computed by dividing net income
by the weighted average number of common shares and all dilutive potential
common shares outstanding during the period. The weighted average number of
common shares and all dilutive potential common shares outstanding for the
three months ended March 31, 2000, and 1999, was 20,460,630 and 20,957,822,
respectively.
8. Segment Information
The Company has one reportable operating segment: banking. The banking segment
generates revenues through personal, business, agricultural and commercial
lending, management of the investment securities portfolio, providing deposit
account services and providing trust services. The Company evaluates the
banking segment's performance on the basis of profit.
Included in "all other" in the table below are mortgage banking, investment
brokerage, insurance sales and real estate brokerage. All operations are
concentrated in the state of Iowa.
The following table presents a summary of the Company's operating segments for
the three months ended March 31, 2000, and 1999 (in thousands):
<TABLE>
<CAPTION>
All Parent Intersegment Reported
Banking Other Company Eliminations Balances
_______________________________________________________________
</CAPTION>
<S> <C> <C> <C> <C> <C>
2000
____________________________
Net interest income $ 15,910 230 (64) --- 16,076
Noninterest income from
nonaffiliates 5,081 2,419 28 --- 7,528
Noninterest income from
affiliates 28 --- 3,030 (3,058) ---
Income before income taxes
and minority interest 6,473 172 2,747 (3,029) 6,363
1999
____________________________
Net interest income $ 14,926 474 (149) --- 15,251
Noninterest income from
nonaffiliates 4,605 3,167 23 --- 7,795
Noninterest income from
affiliates 57 --- 4,356 (4,413) ---
Income before income taxes
and minority interest 6,103 698 3,889 (4,355) 6,335
</TABLE>
<PAGE>
Part 1 -- Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Introduction
The following presentation describes Brenton Banks, Inc. and Subsidiaries
("Brenton" or the "Company") results of operations for the three-month periods
ended March 31, 2000, and 1999, capital resources, market risk management,
asset/liability management, liquidity management, the impact of recently issued
accounting standards and a look towards the future. This discussion should be
read in conjunction with the Consolidated Financial Statements of the Company
and the notes thereto, which are included elsewhere in this report.
Forward-Looking Information
Forward-looking information relating to the financial results or strategies of
the Company is 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 and other financial service
providers, 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.
Results of Operations
The three months ended March 31, 2000, compared to the three months ended March
31, 1999.
Net Income
Brenton Banks, Inc. recorded net income of $4,588,364 for the three months
ended March 31, 2000. Earnings were 7.9 percent above the prior quarter and
were slightly above the net income of $4,578,230 reported for the first three
months of last year, which was the highest earnings quarter in 1999.
Improvements in net interest income, service charges on deposit accounts and
lower compensation related expense were offset by lower mortgage banking
revenue and increased operating expenses. Net income was also affected by
several one-time income and expense items, including a $254,619 payment to the
State of Iowa's sinking fund for Brenton's proportionate share of the uninsured
public funds at Hartford-Carlisle Savings Bank. Diluted net income per common
share held steady at $.22 per share for the first quarter of both years.
<PAGE>
Part 1 -- Item 2
Page 2 of 8
The Company's annualized return on average equity (ROE), including unrealized
gains (losses) on securities available for sale, was 13.88 percent for the
first three months of 2000, compared to 13.65 percent for the same period last
year. The annualized return on average assets (ROA) was .98 percent, which
compared to 1.01 percent for the first three months of 1999.
Net Interest Income
Net interest income rose 5.4 percent to $16,076,289, compared to $15,250,928
for the first three months of 1999 due to favorable volume and rate variances.
The yield on earning assets increased 32 basis points while the rate paid on
interest-bearing liabilities increased 20 basis points. Net interest margin
improved 10 basis points from 3.70 percent for the first three months of 1999
to 3.80 percent for the current quarter. Average earning assets increased 1.6
percent, while average interest-bearing liabilities increased 2.7 percent from
the first three months of 1999 to the first three months of 2000.
Loan Quality
At March 31, 2000, total loans had grown 12.0 percent to $1.16 billion from
$1.03 billion a year earlier, with improvements in all major categories. A
$50.6 million (27.4 percent) increase in average indirect consumer loans, a
$46.3 million (19.0 percent) increase in average commercial loans and a $44.2
million (18.6 percent) increase in average direct consumer loans led the
growth.
Loan quality remained strong with nonperforming loans declining to $8,511,000,
or .74 percent of total loans, at March 31, 2000, compared to $10,389,000, or
1.01 percent, at March 31, 1999. 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 allowance for loan
losses, which totaled $15.0 million, represented 176.22 percent of
nonperforming loans and 1.30 percent of total loans at March 31, 2000. At
March 31, 1999, the same ratios were 139.47 percent and 1.40 percent,
respectively.
The provision for loan losses totaled $1,050,000 for the three months ended
March 31, 2000, and 1999. Annualized year-to-date net charge-offs were .16
percent of average loans for the first three months of 2000, compared with .29
percent for the same period last year and .36 percent for all of 1999.
The Company has a formal structure for reviewing and approving loans. Loan
quality control and risk management are carefully balanced with goals for loan
growth. Management believes the allowance for loan losses at March 31, 2000,
was sufficient to absorb probable loan losses within the portfolio.
<PAGE>
Part 1 -- Item 2
Page 3 of 8
Noninterest Income
Noninterest income for the three months ended March 31, 2000, was $7,500,143
(excluding securities gains and losses), a 3.0 percent decline from $7,732,041
one year ago. Increases in service charges on deposits, investment brokerage
commissions and other income were offset by lower mortgage banking revenues.
Compared to the same period a year ago, service charges on deposits were up
$371,237, or 17.6 percent. This growth was the result of increased account
analysis income from business accounts, revised fee schedules and an increase
in the client base due to the acquisition of offices in Pella and Knoxville in
late 1999.
Investment brokerage commissions increased by $236,582, or 23.1 percent, as per
broker revenue improved over the prior year.
Other operating income increased $208,379 from one year ago to $557,591 because
of several one-time gains, including a gain on the sale of two banking offices
in the first quarter and a gain on the sale of loans.
Mortgage banking revenues declined 55.7 percent to total $725,553 for the first
three months of 2000 compared to $1,638,097 for 1999. Rising mortgage interest
rates led to a decline in mortgage loan origination volume and mortgage banking
revenues. Residential real estate loan closings for the first quarter of 2000
totaled $65 million, compared to $117 million for the first quarter of 1999.
Portfolio real estate loans totaling $37.5 million were sold in the first three
months of 2000, resulting in capitalized servicing income of $337,000.
Securities transactions produced gains of $28,204 compared to gains of $62,936
for the same period in 1999.
Noninterest Expense
Expense management continues to be an area of focus in 2000. Noninterest
expense growth for the three months ended March 31, 2000, was held to 3.4
percent compared to the first three months of 1999 and totaled $16,191,355.
Compensation expense, the largest component of noninterest expense, declined
3.0 percent over the prior year partially due to lower variable compensation
costs related to lower mortgage loan origination volume. Also contributing to
the reduction in compensation costs was a 6.7 percent decline in the number of
full-time equivalent employees from March 31, 1999.
Benefits expense declined $289,164 as a result of reduced compensation expense
and lower bonus payments in the first three months of 2000.
<PAGE>
Part 1 -- Item 2
Page 4 of 8
Occupancy expense increased 16.8 percent to $1,731,743 due to the accelerated
write-off of certain leasehold improvements.
Furniture and equipment expense increased $293,978, or 26.6 percent, to
$1,400,630 due to depreciation on technology upgrades and increased software
maintenance expense.
Other operating expense increased by 21.5 percent to $3,213,511. The primary
reason for the increase was the previously mentioned payment of $254,619 to the
State of Iowa's sinking fund for Brenton's proportionate share of uninsured
public funds. All Iowa banks with public fund deposits were assessed a portion
of the losses at Hartford-Carlisle Savings Bank. Other increases in this
category included higher intangible amortization due to the third quarter
1999 acquisition of two bank offices and increased consulting fees. The
first three months of 1999 also included a recovery on the disposition of
other real estate owned.
The Company's net noninterest margin, which measures operating efficiency, was
(1.78) percent, compared to (1.68) percent one year ago. Another ratio that the
Company utilizes to measure productivity is the efficiency ratio. This ratio
is computed by dividing 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). For the three months ended March 31, 2000, the
Company's efficiency ratio was 66.28 percent compared to 65.67 percent one year
ago.
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 25.0 percent for the first three months of 2000
compared to 25.1 percent for 1999.
<PAGE>
Part 1 -- Item 2
Page 5 of 8
Capital Resources
Common stockholders' equity totaled $133,260,962 as of March 31, 2000, a 1.0
percent increase from December 31, 1999. Excluding the change in accumulated
other comprehensive income (loss), realized common stockholders' equity
increased 2.1 percent compared to year-end 1999 and totaled $140,410,834. The
Company continues to monitor its capital position to balance the goals of
maximizing return on average equity, while maintaining adequate capital levels
for business risk and regulatory purposes. The Company's risk-based core
capital ratio at March 31, 2000, was 9.55 percent and the total risk-based
capital ratio was 10.58 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
7.05 percent at March 31, 2000, exceeding the regulatory minimum requirement
for well-capitalized institutions of 5.0 percent.
Since the inception in 1994 of a stock repurchase plan, the Company has
repurchased 3,644,983 shares (adjusted for the 2-for-1 stock split in February
1998 and 10 percent common stock dividends) at a total cost of $37,948,804. At
this time, the Board of Directors has decided not to extend this plan for 2000.
In May 1999, the Board of Directors declared a 10 percent common stock dividend
for holders of record as of June 1, 1999, payable June 18, 1999. 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
appropriate per-share data has been restated to reflect the 10 percent common
stock dividend.
The Company paid a dividend of $.087 per common share in the first quarter of
2000, which represents an increase of 1.2 percent over $.086 per share for the
first quarter of 1999. Dividends totaled $1,774,224 for the three months ended
March 31, 2000, and the dividend payout ratio was 39.6 percent of diluted
earnings per common share. The Board of Directors declared a second quarter
dividend of $.087 per share, which was paid on April 28, 2000, to shareholders
of record as of April 20, 2000.
The debt-to-equity ratio of Brenton Banks, Inc. (the "Parent Company") was 6.8
percent at March 31, 2000, compared to 4.9 percent at December 31, 1999. Long-
term borrowings of the Parent Company at March 31, 2000, consisted entirely of
capital notes totaling $6,494,000. In addition, the Parent Company has a $5
million line of credit with a regional bank on which $3 million was outstanding
as of the end of March 2000.
Brenton Banks, Inc. common stock closed on March 31, 2000, at $8.38 per share,
compared to $11.82 a year earlier. The closing price at March 31, 2000, was
127.9 percent of the book value per share of $6.55. This closing stock price
represented a price-to-trailing-12-months-diluted-earnings multiple of 10.5
times.
<PAGE>
Part 1 -- Item 2
Page 6 of 8
Brenton Banks, Inc. continues to pursue acquisition and expansion opportunities
that fit the Company's strategic business and financial plans. There are
currently no pending acquisitions that would require Brenton Banks, Inc. to
secure capital from public or private markets.
Market Risk Management
Market risk is the risk of earnings volatility that results from adverse
changes in interest rates and market prices. The Company's market risk is
comprised primarily of interest rate risk arising from its core banking
activities of lending and deposit taking. Interest rate risk is the risk that
changes in market interest rates may adversely affect the Company's net
interest income. Management continually develops and applies strategies to
mitigate this risk. Management does not believe that the Company's primary
market risk exposures and how those exposures have been managed to-date in 2000
changed significantly when compared to 1999.
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 that net interest income and net
interest margin fluctuate in a narrow range during periods of changing interest
rates. The Company currently believes that net interest income would fall by
less than five 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.
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 the
one-week LIBOR rate, the better the prospects for net interest income
improvement.
<PAGE>
Part 1 -- Item 2
Page 7 of 8
To improve net interest income and lessen interest rate risk, management
continues its strategy of de-emphasizing fixed-rate portfolio residential real
estate loans with long repricing periods. When appropriate for interest rate
management purposes, the Company securitizes residential real estate loans.
The Company also continues to focus on reducing interest rate risk by
emphasizing growth in variable-rate consumer and commercial loans. Other
actions include the use of fixed-rate Federal Home Loan Bank (FHLB) advances as
alternatives to certificates of deposit, active management of the available for
sale investment securities portfolio to provide for cash flows that will
facilitate interest rate risk management and, in selected cases, the use of
interest rate swaps and interest rate floor contracts.
Liquidity
The Company actively monitors and manages its liquidity position with the
objective of maintaining sufficient cash flows to fund operations, meet client
commitments, take advantage of market opportunities and provide a margin
against unforeseeable liquidity needs. 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. Readily marketable assets,
as defined above, comprised 29.9 percent of the Company's total assets at March
31, 2000.
Net cash provided from Company operations is another primary source of
liquidity. For the three months ended March 31, 2000 and 1999, net cash
provided by operating activities was $20,036,441 and $39,937,714, respectively.
The Company's trend of strong cash flows from operations is expected to
continue into 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. As of March 31, 2000, the Company had advances of $81,490,000
from the FHLB of Des Moines, of which $38,740,000 represents a variable-rate,
line of credit used to fund mortgage lending operations. The remaining balance
was used as a means of providing both long- and short-term, fixed-rate funding
for certain assets and managing interest rate risk. The Company had additional
borrowing capacity available from the FHLB of approximately $100 million at
March 31, 2000.
The combination of high levels of potentially liquid assets, strong cash flows,
low dependence on volatile liabilities and additional borrowing capacity
provided sufficient liquidity for the Company at March 31, 2000.
<PAGE>
Part 1 -- Item 2
Page 8 of 8
The Company has entered into agreements for the construction of an operations
and sales support facility with an estimated total cost of $10.3 million,
exclusive of land. Groundbreaking occurred in October 1999, construction is
underway and completion is expected in the fourth quarter of 2000. The
building will replace currently leased space and will also allow for additional
growth.
Recently Issued Accounting Standards
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities", which is scheduled to be
effective for the Company for the year beginning January 1, 2001. This
statement requires recognition of all derivative instruments as either assets
or liabilities in the statement of financial position measured at fair value.
This statement requires that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met. Special accounting for qualifying hedges allows gains and losses from
derivatives to offset related results on the hedged item in the income
statement, and requires a company to formally document, designate and assess
the effectiveness of transactions for which hedge accounting is applied. The
impact the adoption of SFAS No. 133 will have on the Company's financial
statements has not been determined. The Company expects to adopt SFAS No. 133
when required.
Looking Ahead
The outlook for 2000 is positive and the Company expects earnings improvement
over 1999 results. Brenton continues to enhance our sales and partnership
culture in an effort to improve revenues and gain market share as the largest
Iowa-based bank holding company. By delivering a broad range of financial
products and services tailored to the needs of our clients, we continue to
create value for both clients and shareholders. The goal is to deliver the
entire bank to every client at every opportunity, enabling Brenton to
strengthen client relationships and generate additional sales.
During the first quarter of 2000, Brenton's new on-line Anytime Banking service
was launched and has been well received. Brenton Investment Direct clients
will soon have access to their account information and on-line transaction
convenience at www.brentoninvestments.com
At this time, it appears the Company's planned expansion into Moline, Illinois,
will take place in the first half of 2001. It will mark the first time Brenton
has crossed into another state with a full-service banking office. Regulatory
approval for this location has been obtained.
<PAGE>
Part 1 -- Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The information appearing on page 6 of Item 2 under the heading "Market
Risk Management" is incorporated herein by reference.
PART 2 -- Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K -- There were no reports on Form 8-K filed for the
three months ended March 31, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BRENTON BANKS, INC.
- -----------------------------------
(Registrant)
May 5, 2000 /s/ Robert L. DeMeulenaere
- -----------------------------------------------------------------
Dated Robert L. DeMeulenaere
President and Chief Executive
Officer
May 5, 2000 /s/ Steven T. Schuler
- ----------------------------------------------------------------
Dated Steven T. Schuler
Chief Financial Officer/
Treasurer/Secretary and
Chief Accounting Officer
AMENDATORY AGREEMENT
Effective January 1, 2000
Brenton Banks, Inc., an Iowa Corporation, as Employer sponsor ("Employer"), of
the Brenton Banks, Inc. Employees' Retirement Plan makes this Amendatory
Agreement.
WITNESSETH
WHEREAS, it is necessary to make an amendment to the Plan in order to change
the Method of Payment of Accrued Benefit; and
WHEREAS, the Employer has the authority to make amendments to the Plan.
NOW THEREFORE, in consideration of the above premises, the Employer amends the
Plan as follows:
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. A Participant or Beneficiary may
elect distribution under one, or any combination, of the following methods: (1)
by payment in a lump sum; (b) by payment in monthly, quarterly, semi-annual, or
annual installments over a fixed reasonable period of time, not exceeding the
life expectancy of the Participant, or the joint life and last survivor
expectancy of the Participant and his Beneficiary.
The amendment made to the Plan under this Amendatory Agreement shall be
effective for the Plan Year and Limitation Year beginning January 1, 2000. In
all other respects, the Plan shall remain unchanged and in full force and
effect.
IN WITNESS WHEREOF, The Employer has executed this Amendatory Agreement in Des
Moines, Iowa, on this 4th day of February, 2000.
BRENTON BANKS, INC.
By: /s/ Steven T. Schuler
CFO/Treasurer/Secretary
<PAGE>
BRENTON BANKS, INC. EMPLOYEES' RETIREMENT PLAN
JANUARY 1, 1999 AMENDMENT
<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))
[ ] (a) A discretionary Trustee. See Section 10.03[A] of the Plan.
[ X ] (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.
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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, Brenton Banks, Inc. Executive Savings 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.
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<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 12/31.
[ ] (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 _____.
Restated Plan. The restated Effective Date is January 1, 1999.
This Plan is a substitution and amendment of an existing retirement plan(s)
originally established December 22, 1986. [Note: See the Effective Date
Addendum.]
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1.27 HOUR OF SERVICE. The crediting method for Hours of Service is: (Choose
(a) or (b))
[ x ] (a) The actual method.
[ ] (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 and
ALLTEL Information Services, Inc., US Bank, N.A., 106 E. Main, Knoxville, Iowa,
and US Bank, N.A., 712 Washington Street, Pella, Iowa. 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))
[ X ] (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.
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<PAGE>
[ ] (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.
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).
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<PAGE>
Plan Entry Date. "Plan Entry Date" means the Effective Date and: (Choose (d),
(e) or (f))
[ ] (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.
[ X ] (f) (Specify entry dates) For (k) portion of plan - first day of the
month following 30th calendar day of employment; For non-401(k) portion of plan
- - the first day of the Plan Year and the first day of the seventh month of the
Plan Year.
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) __________________.
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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.]
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].
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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.
[ ] (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%.]
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[ ] (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).
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.
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[ ] (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: ____________________.
[ ] (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.
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[ 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: 3%.
The subsequent tiers of eligible contributions are: 1%.
[ ] (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.
[ x ] (ii) May not exceed 20% 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) _____.
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(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) as of the first day of any calendar
quarter.
(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) as of the first day of any calendar
quarter.
[ ] (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) _____%.
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.
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[ 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: March 31,
June 30, September 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: March 31, June 30, September 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.
[ ] (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).
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<PAGE>
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.
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.
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<PAGE>
[ 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 percentage
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: _____________________.
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).
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<PAGE>
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.
[ ] (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,
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<PAGE>
[ ] (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.
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.
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<PAGE>
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.
[ 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.
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<PAGE>
[ ] (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).
[ x ] (b) The total Excess Amount.
[ ] (c) None of the Excess Amount.
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<PAGE>
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.]
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.
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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))
[ X ] (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.
[ ] (2) The mandatory contributions have accumulated for at
least _____ Plan Years since the Plan Year for which contributed.
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<PAGE>
[ ] (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.]
[ x ] (b) Graduated Vesting Schedules.
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Top Heavy Schedule
(Mandatory)
Years of Nonforfeitable
Service Percentage
_______ ______________
Less than 1 0%
1 0%
2 25%
3 50%
4 75%
5 or more 100%
Non Top Heavy Schedule
(Optional)
Years of Nonforfeitable
Service Percentage
_______ ______________
Less than 1 0%
1 0%
2 25%
3 50%
4 75%
5 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))
[ X ] (g) Subject to the vesting election under Options (a), (b) or (c).
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<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.
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<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 30 days following
a participant's separation from service. [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.
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<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))
[ ] (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.
[ x ] (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.
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<PAGE>
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).]
[ x ] (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.
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<PAGE>
[ ] (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.]
[ ] (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.
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<PAGE>
[ ] (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.]
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))
[ x ] (a) 0% 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.
[ ] (c) (Specify) ___________________________________.
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))
[ x ] (1) Apply Section 9.11 without modification.
[ ] (2) Use the segregated account approach described in Section
14.12.
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<PAGE>
[ ] (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 salary reduction contributions: (Choose (i) or
(ii))
[ x ] (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(a).
[ x ] (b) For matching contributions, the Advisory Committee will: (Choose
(1), (2), (3) or (4))
[ X ] (1) Apply Section 9.11 without modification.
[ ] (2) Use the weighted average method described in Section 14.12,
based on a __________ weighting period.
[ ] (3) Treat as part of the relevant Account at the beginning of
the valuation period ___% 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).
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<PAGE>
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))
[ x ] (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) every day the New York Stock Exchange is open.
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<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 _____.
[ x ] (j) (Specify) The vesting schedule will be effective for all
participants who complete one hour of service after the effective date of
January, 1998.
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.
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<PAGE>
ADDENDUM 6.02(e)
Effective January 1, 1999
Brenton Banks, Inc. Employees' Retirement Plan
A participant eligible to elect distribution under Section 6.03 may elect to
receive the portion of the distributable amount that is vested in Employer
securities as an in-kind transfer as directed by the participant. The Employer
securities will be distributed in-kind in full shares at the bid price on the
date of distribution. Any fractional shares of the Employer securities
remaining will be distributed in cash.
<PAGE>
APPENDIX B TO GENERAL INSTRUCTIONS
CHECKLIST OF EMPLOYER ADMINISTRATIVE ELECTIONS
The Prototype Plan permits the adopting employer (or the Advisory Committee) to
make certain administrative elections not reflected in the adoption agreement.
This form lists those administrative elections and provides a means of
recording your decision.
1. Section 1.09 - Definition of highly compensated employee. The plan
permits the employer to make a calendar year election for purposes of
identifying highly compensated employees.
[ x ] The plan will use the calendar year election.
[ ] The plan will not use the calendar year election.
2. Section 1.12(B) - Nondiscrimination definition of compensation. When
testing discrimination under the plan, the plan permits the employer to elect
to "gross up" an employees compensation by the amount of his elective
contributions for the year.
[ x ] The plan will "gross up" compensation for elective contributions.
[ ] The plan will exclude elective contributions.
[Note: This election solely is for purposes of testing discrimination. The
election does not affect the employer's election under Option (a) or (b) of
Adoption Agreement Section 1.12. The elections under Adoption Agreement
Section 1.12 apply to the definition of compensation for purposes of making
allocations of employer contributions and participant forfeitures.]
3. Section 4.03. Rollover contributions.
[ x ] The plan accepts rollover contributions.
[ ] The plan does not accept rollover contributions.
4. Section 7.04. If your plan has a discretionary trustee, Section 7.04
authorizes the employer to enter into a written agreement with the trustee
permitting the employer to direct investments. Legal counsel should assist you
in this arrangement.
5. Section 8.10. If the trustee agrees, the plan authorizes participant
direction of investment. The adopting employer, the Advisory Committee and the
trustee should agree to the conditions and limitations of participant direction
of investment. Legal counsel should assist you with this election.
[ x ] The plan will permit participant direction of investment.
[ ] The plan will not permit participant direction of investment.
6. Section 9.04. The plan authorizes the Advisory committee to adopt a
written loan policy to permit participant loans.
[ x ] The plan will permit participant loans.
[ ] The plan will not permit participant loans.
7. Section 11.01. The plan may invest in life insurance on behalf of a
participant's account, subject to participant consent.
[ ] The plan will invest in life insurance contracts.
[ x ] The plan will not invest in life insurance contracts.
<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 19th day of
October, 1999.
Name and EIN of Employer: BRENTON BANKS, INC. 42-0658989
Signed: /s/ Phillip L. Risley
Name(s) of Trustee: Brenton Bank
Signed: /s/ Mary Chiodo
Name of Custodian: N/A
Signed: N/A
[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: 002.
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 50306-0478 (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, 1999.
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 22 day of October, 1999.
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: Oct. 19, 1999
[Date] Signed: /s/ Phillip L. Risley
Name(s) of Trustee: Brenton Bank
Accepted:
[Date] Signed:
[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, 1999.
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 22 day of October, 1999.
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: Oct. 19, 1999
[Date] Signed: /s/ Phillip L. Risley
Name(s) of Trustee: Brenton Bank
Accepted:
[Date] Signed:
[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, 1999.
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 21 day of October, 1999.
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: Oct. 19, 1999
[Date] Signed: /s/ Phillip L. Risley
Name(s) of Trustee: Brenton Bank
Accepted:
[Date] Signed:
[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, 1999.
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 21 day of October, 1999.
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: Oct. 19, 1999
[Date] Signed: /s/ Phillip L. Risley
Name(s) of Trustee: Brenton Bank
Accepted:
[Date] Signed:
[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, 1999.
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 21st day of October, 1999.
Name of Participating Employer: Brenton Realty Services, Ltd.
Signed: /s/ James L. Lowrance
James L. Lowrance
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: Oct. 19, 1999
[Date] Signed: /s/ Phillip L. Risley
Name(s) of Trustee: Brenton Bank
Accepted:
[Date] Signed:
[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, 1999.
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 10/19/99 day of ___________, 1999.
Name of Participating Employer: Brenton Mortgages, Inc.
Signed: /s/ , President
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: Oct. 19, 1999
[Date] Signed: /s/ Phillip L. Risley
Name(s) of Trustee: Brenton Bank
Accepted:
[Date] Signed:
[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, 1999.
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 19 day of October, 1999.
Name of Participating Employer: Brenton Insurance, Inc.
Signed: /s/ Elizabeth Piper/Bach
Elizabeth Piper/Bach
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: 10-19-99
[Date] Signed: /s/ Elizabeth Piper/Bach
/s/ Phillip L. Risley
Name(s) of Trustee: Brenton Bank
Accepted:
[Date] Signed:
[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, 1999.
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 19 day of October, 1999.
Name of Participating Employer: Brenton Investments, Inc.
Signed: /s/ Elizabeth Piper/Bach
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: 10-19-1999
[Date] Signed: /s/ Phillip L. Risley
Name(s) of Trustee: Brenton Bank
Accepted:
[Date] Signed:
[Note: Each Participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for important
Master Plan information.]
<PAGE>
APPENDIX B TO GENERAL INSTRUCTIONS
CHECKLIST OF EMPLOYER ADMINISTRATIVE ELECTIONS
The Prototype Plan permits the adopting employer (or the Advisory Committee) to
make certain administrative elections not reflected in the adoption agreement.
This form lists those administrative elections and provides a means of
recording your decision.
1. Section 1.09 - Definition of highly compensated employee. The plan permits
the employer to make a calendar year election for purposes of identifying
highly compensated employees.
[ x ] The plan will use the calendar year election.
[ ] The plan will not use the calendar year election.
2. Section 1.12(B) - Nondiscrimination definition of compensation. When
testing discrimination under the plan, the plan permits the employer to elect
to "gross up" an employees compensation by the amount of his elective
contributions for the year.
[ x ] The plan will "gross up" compensation for elective contributions.
[ ] The plan will exclude elective contributions.
[Note: This election solely is for purposes of testing discrimination. The
election does not affect the employer's election under Option (a) or (b) of
Adoption Agreement Section 1.12. The elections under Adoption Agreement
Section 1.12 apply to the definition of compensation for purposes of making
allocations of employer contributions and participant forfeitures.]
3. Section 4.03. Rollover contributions.
[ x ] The plan accepts rollover contributions.
[ ] The plan does not accept rollover contributions.
4. Section 7.04. If you plan has a discretionary trustee, Section 7.04
authorizes the employer to enter into a written agreement with the trustee
permitting the employer to direct investments. Legal counsel should assist you
in this arrangement.
5. Section 8.10. If the trustee agrees, the plan authorizes participant
direction of investment. The adopting employer, the Advisory Committee and the
trustee should agree to the conditions and limitations of participant direction
of investment. Legal counsel should assist you with this election.
[ x ] The plan will permit participant direction of investment.
[ ] The plan will not permit participant direction of investment.
6. Section 9.04. The plan authorizes the Advisory Committee to adopt a
written loan policy to permit participant loans.
[ x ] The plan will permit participant loans.
[ ] The plan will not permit participant loans.
7. Section 11.01. The plan may invest in life insurance on behalf of a
participant's account, subject to participant consent.
[ ] The plan will invest in life insurance contracts.
[ x ] The plan will not invest in life insurance contracts.
<PAGE>
LOAN POLICY
The Committee of the retirement plan ("Plan") sponsored by BRENTON BANKS, INC.
EMPLOYEES' RETIREMENT PLAN adopts the following loan policy pursuant to the
terms of the Plan. As a participant or beneficiary under the Plan, you may
receive a loan only as permitted by this loan policy.
1. Loan Application. Any Plan participant may apply for a loan from the
Plan. For purposes of this loan policy, the term "participant" means any
participant who is an employee of the employer with respect to the Plan. A
participant must apply for each loan in writing with an application which
specifies the amount of the loan desired, the requested duration for the loan
and the source of security for the loan. [The Committee will not approve any
loan if a participant is not creditworthy. In order to be creditworthy, the
participant must have established in his or her community, a reputation which
would entitle him or her to a similar loan from a commercial or business
lender. In applying for the loan from the Plan, each participant must give
fully authority to investigate his or her creditworthiness.]
2. Limitation on Loan Amount/Purpose of Loan. The Committee will not approve
any loan to a participant in an amount which exceeds 50% of his or her
nonforfeitable accrued benefit (account balances), as reflected by the books
and records of the Plan. The maximum aggregate dollar amount of loans
outstanding to any participant may not exceed $50,000, reduced by the excess
of the participant's highest outstanding participant loan balance during the
12-month period ending on the date of the loan over the participant's current
outstanding participant loan balance on the date of the loan. A participant
may not request a loan for less than $1,000.
A participant loan may be for the purpose of one or any combination of the
following reasons: (1) the purchase, construction or improvement of a resident
(2) tuition and other educational expenses; (3) medical and dental expenses.
The advisory committee reserves the right to request documentation supporting
the above purposes.
3. Evidence and Terms of Loan. The Committee will document every loan in the
form of a promissory note signed by the participant for the face amount of the
loan, together with a commercially reasonable rate of interest. The Committee
must reevaluate interest rates for loans made more than one month since the
last loan made by the Plan.
A loan will provide a fixed rate of interest equal to the current prime
interest rate as published from time to time in the Money section of USA Today,
plus one percent (1%). The Committee will determine whether the interest rate
is commercially reasonable at the time it approves the loan. The loan must
provide for monthly payments under a level amortization schedule with payments
deducted via a monthly debit to the participant's bank account with the first
payment deducted no later than 30 days after the date of the note.
[The Committee will suspend payments for a period not exceeding one year which
occurs during an approved leave of absence.] The Committee will fix the term
for repayments of any loan. However, in no instance may the term of repayment
be greater than five years. The committee may fix the term for repayment of a
home loan for a period not to exceed five years. A "home loan" is a loan used
to acquire a dwelling unit which, within a reasonable time, the participant
will use as a principal residence.
Participants should note the law treats the amount of any loan not repaid five
years after the date of the loan as a taxable distribution on the last day of
the five year period or, if sooner, at the time the loan is in default. If a
participant extends a non-home loan having a five year or less repayment term
beyond five years, the balance of the loan at the time of the extension is a
taxable distribution to the participant.
4. Security for Loan. A participant must secure each loan with an irrevocable
pledge and assignment of 50% of the nonforfeitable amount of the borrowing
participant's accrued benefit under the Plan.
<PAGE>
5. Form of Pledge. The pledge and assignment of a participant's account
balances will be in the form prescribed by the Committee.
6. Military Service. If a participant separates from service (or takes a
leave of absence) from the Employer because of service in the military and does
not receive a distribution of his/her account balances, the Plan suspends loan
repayments until the participant's completion of military service or until the
participant's fifth anniversary of commencement of military service, if
earlier. The Employer will provide the participant with a written explanation
of the effect of the participant's military service upon his/her Plan loan.
7. Default/Risk of Loss. The Committee will treat a Plan loan in default if:
(a) any scheduled payment remains unpaid beyond the last day of the calendar
quarter following the calendar quarter in which the participant missed the
scheduled payment; or 90 days.
(b) there is the making or furnishing of any representation or statement to
the Plan by or on behalf of the participant which proves to have been false in
any material respect when made or furnished;
(c) loss, theft, damage, destruction, sale or encumbrance to or of any of the
collateral, or the making of any levy seizure or attachment thereof or thereon;
(d) death, dissolution, insolvency, business failure, appointment of receiver
of any part of the property of, assignment for the benefit of creditors by, or
the commencement of any proceeding under any bankruptcy or insolvency laws of,
by or against the participant.
(E) termination of employment occurs for any reason, and the principal balance
is not paid within 90 days after employment has ended.
The participant will have the opportunity to repay the loan, resume current
status of the loan by paying any missed payment plus interest or, if
distribution is available under the Plan, request distribution of the note. If
the loan remains in default, the Committee will offset the participant's vested
account balances by the outstanding balance of the loan. The Committee will
treat the note as repaid to the extent of any permissible offset. Pending
final disposition of the note, the participant remains obligated for any unpaid
principal and accrued interest.
The Committee intends this loan program not to place other participants at risk
with respect to their interest in the Plan. In this regard, the Committee will
administer any participant loan as a participant directed investment of that
portion of the participant's vested account balance equal to the outstanding
principal balance of the loan. Any loan fees relating to a participant's plan
loan will be deducted from the participant's account balance. The Plan will
credit that portion of the participant's account balances with the interest
earned on the note and with principal payments received by the participant.
The Plan also will charge that portion of the participant's account balances
with expenses directly related to the organization, maintenance and collection
of the note.
Dated this 28th day of July, 1999
/s/ Phillip L. Risley /s/ Betsy Piper/Bach
/s/ Charles N. Funk /s/ Judy Bohrofen
/s/ Steven T. Schuler
"Plan Committee"
<PAGE>
LOAN POLICY
The Committee of the retirement plan ("Plan") sponsored by BRENTON BANKS, INC.
EMPLOYEES' RETIREMENT PLAN adopts the following loan policy pursuant to the
terms of the Plan. As a participant or beneficiary under the Plan, you may
receive a loan only as permitted by this loan policy.
1. Loan Application. Any Plan participant may apply for a loan from the Plan.
For purposes of this loan policy, the term "participant" means any participant
who is an employee of the employer with respect to the Plan. A participant
must apply for each loan in writing with an application which specifies the
amount of the loan desired, the requested duration for the loan and the source
of security for the loan. [The Committee will not approve any loan if a
participant is not creditworthy. In order to be creditworthy, the participant
must have established in his or her community, a reputation which would entitle
him or her to a similar loan from a commercial or business lender. In applying
for the loan from the Plan, each participant must give full authority to
investigate his or her creditworthiness.]
2. Limitation on Loan Amount/Purpose of Loan. The Committee will not approve
any loan to a participant in an amount which exceeds 50% of his or her
nonforfeitable accrued benefit (account balances), as reflected by the books
and records of the Plan. The maximum aggregate dollar amount of loans
outstanding to any participant may not exceed $50,000, reduced by the excess of
the participant's highest outstanding participant loan balance during the 12-
month period ending on the date of the loan over the participant's current
outstanding participant loan balance on the date of the loan. A participant
may not request a loan for less than $1,000.
A participant loan may be for the purpose of one or any combination of the
following reasons: (1) the purchase, construction or improvement of a
residence (2) tuition and other educational expenses; (3) medical and dental
expenses. The advisory committee reserves the right to request documentation
supporting the above purposes.
3. Evidence and terms of Loan. The Committee will document every loan in the
form of a promissory note signed by the participant for the face amount of the
loan, together with a commercially reasonable rate of interest. The Committee
must reevaluate interest rates for loans made more than one month since the
last loan made by the Plan.
A loan will provide a fixed rate of interest equal to the current prime
interest rate as published from time to time in the Money section of USA Today,
plus one percent (1%). The Committee will determine whether the interest rate
is commercially reasonable at the time it approves the loan. The loan must
provide for monthly payments under a level amortization schedule with payments
deducted via a monthly debit to the participant's bank account with the first
payment deducted no later than 30 days after the date of the note.
[The Committee will suspend payments for a period not exceeding one year which
occurs during an approved leave of absence.] The Committee will fix the term
for repayments of any loan. However, in no instance may the term of repayment
be greater than five years. The Committee may fix the term for repayment of a
home loan for a period not to exceed five years. A "home loan" is a loan used
to acquire a dwelling unit which, within a reasonable time, the participant
will use as a principal residence.
Participants should note the law treats the amount of any loan not repaid give
years after the date of the loan as a taxable distribution on the last day of
the five year period or, if sooner, at the time the loan is in default. If a
participant extends a non-home loan having a five year or less repayment term
beyond five years, the balance of the loan at the time of the extension is a
taxable distribution to the participant.
4. Security for Loans. A participant must secure each loan with an
irrevocable pledge and assignment of 50% of the nonforfeitable amount of the
borrowing participant's accrued benefit under the Plan.
<PAGE>
5. Form of Pledge. The pledge and assignment of a participant's account
balances will be in the form prescribed by the Committee.
6. Military Service. If a participant separates from service (or takes a
leave of absence) from the Employer because of service in the military and does
not receive a distribution of his/her account balances, the Plan suspends loan
repayments until the participant's completion of military service or until the
participant's fifth anniversary of commencement of military service, if
earlier. The Employer will provide the participant with a written explanation
of the effect of the participant's military service upon his/her Plan loan.
7. Default\Risk of Loss. The Committee will treat a Plan loan in default if:
(a) any scheduled payment remains unpaid beyond the last day of the calendar
quarter following the calendar quarter in which the participant missed the
scheduled payment; or 90 days.
(b) there is the making or furnishings of any representation or statement to
the Plan by or on behalf of the participant which proves to have been false in
any material respect when made or furnished;
(c) loss, theft, damage, destruction, sale or encumbrance to or of any of the
collateral, or the making of any levy seizure or attachment thereof or thereon;
(d) death, dissolution, insolvency, business failure, appointment of receiver
of any part of the property of, assignment for the benefit of creditors by, or
the commencement of any proceeding under any bankruptcy or insolvency laws of,
by or against the participant.
(E) termination of employment occurs for any reason, and the principal balance
is not paid within 90 days after employment has ended.
The participant will have the opportunity to repay the loan, resume current
status of the loan by paying any missed payment plus interest or, if
distribution is available under the Plan, request distribution of the note. If
the loan remains in default, the Committee will offset the participant's vested
account balances by the outstanding balance of the loan. The Committee will
treat the note as repaid to the extent of any permissible offset. Pending
final disposition of the note, the participant remains obligated for any unpaid
principal and accrued interest.
The Committee intends this loan program not to place other participants at risk
with respect to their interests in the Plan. In this regard, the Committee
will administer any participant loan as a participant directed investment of
that portion of the participant's vested account balance equal to the
outstanding principal balance of the loan. Any loan fees relating to a
participant's plan loan will be deducted from the participant's account
balance. The Plan will credit that portion of the participant's account
balances with the interest earned on the note and with principal payments
received by the participant. The Plan also will charge that portion of the
participant's account balances with expenses directly related to the
organization, maintenance and collection of the note.
Dated this 28th day of July, 1999.
/s/ Phillip L. Risley /s/ Betsy Piper/Bach
/s/ Charles N. Funk /s/ Judy Bohrofen
/s/ Steven T. Schuler
"Plan Committee"
Exhibit 11
Statements re: Computation of Earnings per Share
Brenton Banks, Inc.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
____ ____
</CAPTION>
<S> <C> <C>
Basic EPS Computation
Numerator:
Net income $ 4,588,364 4,578,230
========== ==========
Denominator:
Average common shares
outstanding 20,356,377 20,614,026
========== ==========
Basic EPS $ 0.23 $ 0.22
========== ==========
Diluted EPS Computation
Numerator:
Net income $ 4,588,364 4,578,230
========== ==========
Denominator:
Average common shares
outstanding 20,356,377 20,614,026
Average stock options 104,253 343,796
__________ __________
20,460,630 20,957,822
========== ==========
Diluted EPS $ 0.22 $ 0.22
========== ==========
<FN>
Note: 1999 amounts are restated for the 10 percent
common stock dividend effective in June 1999.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MARCH 31, 2000 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 78,844,325
<INT-BEARING-DEPOSITS> 2,626,954
<FED-FUNDS-SOLD> 22,300,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 541,783,285
<INVESTMENTS-CARRYING> 24,554,469
<INVESTMENTS-MARKET> 24,659,000
<LOANS> 1,156,025,736
<ALLOWANCE> 14,997,668
<TOTAL-ASSETS> 1,938,481,022
<DEPOSITS> 1,560,056,107
<SHORT-TERM> 196,728,747
<LIABILITIES-OTHER> 21,691,206
<LONG-TERM> 26,744,000
0
0
<COMMON> 50,893,427
<OTHER-SE> 82,367,535
<TOTAL-LIABILITIES-AND-EQUITY> 1,938,481,022
<INTEREST-LOAN> 25,129,467
<INTEREST-INVEST> 8,219,135
<INTEREST-OTHER> 107,605
<INTEREST-TOTAL> 33,456,207
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<LOAN-LOSSES> 1,050,000
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<EXPENSE-OTHER> 16,375,687
<INCOME-PRETAX> 6,363,281
<INCOME-PRE-EXTRAORDINARY> 6,363,281
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<EPS-BASIC> .23
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<YIELD-ACTUAL> 3.57
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<ALLOWANCE-DOMESTIC> 14,997,668
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</TABLE>
