FORM 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 12 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 of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 200, Capital Square, 400 Locust, Des Moines, Iowa 50309
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 515-237-5100
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $2.50 par value
(Title of class)
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X . No .
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ ].
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 6, 2000, was $108,342,752.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the most recent practicable date, March 6, 2000.
20,357,371 shares Common Stock, $2.50 par value
DOCUMENTS INCORPORATED BY REFERENCE
The Appendix to the Proxy Statement for the 1999 calendar year is incorporated
by reference into Part I, Part II and Part IV hereof to the extent indicated in
such Parts.
The definitive proxy statement of Brenton Banks, Inc., which will be filed not
later than 120 days after the close of the Company's fiscal year ending
December 31, 1999, is incorporated by reference into Part III hereof to the
extent indicated in such Part.
1 of 284 Total Pages
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TABLE OF CONTENTS
PART I
Page
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(A) General Description . . . . . . . . . . . . . . . . . . . . 5
(B) Recent Developments . . . . . . . . . . . . . . . . . . . . 6
(C) Affiliated Banks . . . . . . . . . . . . . . . . . . . . . 7
(D) Bank-Related Subsidiaries and Affiliates . . . . . . . . . 8
(E) Executive Officers and Policymakers of the
Registrant . . . . . . . . . . . . . . . . . . . . . . . . 8
(F) Employees . . . . . . . . . . . . . . . . . . . . . . . . . 9
(G) Supervision and Regulation . . . . . . . . . . . . . . . . 9
(H) Governmental Monetary Policy and Economic
Conditions . . . . . . . . . . . . . . . . . . . . . . . . 11
(I) Competition . . . . . . . . . . . . . . . . . . . . . . . . 11
(J) Statistical Disclosure . . . . . . . . . . . . . . . . . . 12
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 25
Item 4. Submission of Matters to a Vote of Security
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters . . . . . . . . . . . . . . . . . . 25
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . 25
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . 26
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 26
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . 26
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . . . . . . . . . 26
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PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . . . 26
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . 26
Item 12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . . . . . . . . 26
Item 13. Certain Relationships and Related Transactions . . . . . . . . . 26
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . 27
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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PART I
Item 1. Business.
(A) General Description.
Brenton Banks, Inc. (the "Parent Company") is a bank holding company
registered under the Bank Holding Company Act of 1956 and a savings and loan
holding company under the Savings and Loan Holding Company Act. Brenton Banks,
Inc. was organized as an Iowa corporation under the name Brenton Companies in
1948. Subsequently, the Parent Company changed its corporate name to its
current name, Brenton Banks, Inc. On December 31, 1999, the Parent Company had
direct control of its commercial and savings bank (hereinafter the "affiliated
banks"), both located in Iowa. The commercial bank is a state bank
incorporated under the laws of the State of Iowa and the savings bank is a
federal savings bank organized under the laws of the United States. Both of the
affiliated banks are members of the Federal Deposit Insurance Corporation.
Brenton Banks, Inc. and its subsidiaries (the "Company") engage in retail,
commercial, business and agricultural banking and related financial services
from 44 locations throughout Iowa. In connection with this banking industry
segment, the Company provides the usual products and services of banking such
as deposits, commercial loans, business loans, agri-business loans, personal
loans, cash management services, international banking services, investment
management and trust services.
The principal services provided by the Company are accepting deposits and
making loans. The significant loan categories are commercial, business,
commercial real estate, agri-business and personal. Commercial and business
loans are made to business enterprises principally to finance inventory,
operations or other assets at terms generally up to five years. The principal
risk involves the customers' management skills and general economic conditions.
Commercial real estate mortgage loans are routinely made for terms up to 20
years for real property used in a borrower's business. Repayment primarily
depends upon the financial performance and the cash flow of the business
enterprise. Declines in commercial real estate values could ultimately affect
the collectibility of these types of loans. Agri-business loans are made to
farmers for financing crop inputs, equipment, livestock and real property used
in farming activities. Agri-business loans are also made to businesses related
to or that support the production and sale of agricultural products. Weather
conditions and government policies have major influences on agricultural
financial performance and ultimately the borrower's ability to repay loans.
Personal loans are made to individuals primarily on a secured basis to finance
such items as residential mortgages, home improvements, personal property,
education and vehicles. Unsecured personal loans are made on a limited basis.
The individual's credit worthiness and economic conditions affecting the job
market are the primary risks associated with personal loans. Personal loans
generally do not exceed five years. For all loan types, the primary criteria
used in determining whether to make a loan is the borrower's ability to repay,
which is based upon a cash flow analysis, and willingness to pay supported by a
historical review of credit performance.
The principal markets for these loans are businesses and individuals in
Iowa. Iowa has two primary regional market segments. One market consists of
selected metropolitan areas across the state, which includes service and
manufacturing industries. The other market involves rural areas, which are
predominately agricultural in nature. These loans are made by the affiliated
banks, and some are sold on the secondary market. The Company also engages in
activities that are closely related to banking, including mortgage banking,
investment, insurance and real estate brokerage.
The segment information appearing on page 31 of the Company's Appendix to
the Proxy Statement, filed as Exhibit 13 hereto, is incorporated herein by
reference.
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(B) Recent Developments.
Stock Split. In January 1998, the Board of Directors declared a 2-for-1
stock split for stockholders of record as of February 10, 1998, payable
February 20, 1998. As a result, the par value of the Company's common stock
was reduced from $5.00 to $2.50 per share and authorized shares were increased
to 50 million.
Common Stock Dividends. On May 24, 1999, the Board of Directors declared
a ten percent common stock dividend to stockholders of record on June 1, 1999.
On May 21, 1998, the Board of Directors declared a ten percent common stock
dividend to stockholders of record on June 1, 1998. Fractional shares resulting
from both stock dividends were paid in cash.
Common Stock Repurchase Plan. As part of the Company's ongoing capital
management and stock repurchase plan, in 1999, the Board of Directors
authorized additional stock repurchases of $4,000,000 of the Company's common
stock. For the years ended December 31, 1999, 1998 and 1997, the Company
repurchased 300,624, 563,915 and 886,494 shares (restated for the 2-for-1 stock
split and 10 percent common stock dividends), respectively, at total costs of
$4,004,426, $10,000,900 and $10,014,087. At this time, the Board has decided
not to extend this plan for 2000.
Growth and Acquisitions. As part of management's strategic growth plans,
Brenton Banks, Inc. investigates growth and expansion opportunities, which
would strengthen the Company's presence in current or selected new market
areas. The Company also continues expansion of its traditional and non-
traditional products and services. On September 24, 1999, the Company
completed the acquisition of two U.S. Bank offices in Pella and Knoxville, with
deposits totaling approximately $53 million. In November 1999, a new full-
service office was opened in Coralville, a suburb of Iowa City. In the third
quarter of 2000, the Company, which currently has four full-service offices in
the Quad Cities, plans to expand into Moline, Illinois. 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.
During the fourth quarter of 1999, an underperforming grocery store
facility in Cedar Rapids was closed. During the first quarter of 2000, another
of the Company's grocery store facilities in Iowa City was closed due to the
closing of the grocery store at the election of the chain store management.
Year 2000. The information appearing on pages 9 and 10 of the Company's
Appendix to the Proxy Statement, filed as Exhibit 13 hereto, is incorporated
herein by reference.
Sales Culture. In the past four years, the Company has intensified its
company-wide commitment to making Brenton a proactive sales organization. The
Company has also emphasized promoting partnering across business units to
better serve our clients' total financial needs. The objective is to provide
tools to Brenton bankers to enable them to take a proactive role in
understanding their clients' needs and goals and then to develop custom-
tailored financial strategies and solutions. The desired results are to
strengthen existing and new relationships with clients across Iowa and to
provide them with lifetime financial solutions.
In late 1998, the Company began a strategic growth initiative called
"Quantum Leap." The objective is to grow the Company's client base at a rate
significantly above Iowa's population and economic growth rates. The
initiative is designed to further evolve the Company's growing sales culture
by increasing the sales staff over the next three years, by creating
opportunities for additional sales from the existing sales staff and by
strengthening partnerships with the sales support staff. The net after-tax
cost of the initiative in 1999 was $1,035,000.
Gramm-Leach-Bliley Act of 1999. The Gramm-Leach-Bliley Act of 1999 (the
"Act") that has been passed by Congress and was signed into law by the
President on November 12, 1999 represents sweeping reform of federal
regulation of financial services. This Act relaxes the previous limitations
upon
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banks affiliating with insurance and securities firms and generally allows
banks and bank holding companies to engage is a broader range of financial
services. Among other provisions, this Act:
Repeals the restrictions on banks affiliating with securities firms
contained in the Glass-Steagall Act.
Permits a qualifying bank holding company to become a "financial holding
company." A financial holding company may engage in certain listed
financial activities (including insurance underwriting and agency
activities, security underwriting and brokerage activities, merchant
banking, and insurance company portfolio investment activities) as well as
"complementary" financial activities. These complementary activities are
to be defined by regulation promulgated by the federal regulators, but are
generally broader than those activities currently permitted under the Bank
Holding Company Act.
Provides a system of functional regulation under which certain securities
activities of banks will come under the supervision by the Securities and
Exchange Commission, eliminating an exemption banks previously enjoyed.
Reaffirms the traditional authority of states to regulate insurance
companies and insurance agencies, but prohibits discrimination against bank
affiliates that conduct those activities.
Eliminates the unitary thrift holding company formation in the future.
Provides consumers new protections against the transfer and use of certain
financial information by financial institutions including banks and there
affiliates and requires banks to disclose there financial privacy policies
to customers.
Makes certain changes to the FHLB structure, provides for ATM fee
disclosures and modifies the Community Reinvestment Act to provide for the
disclosure of certain agreements between banks and community groups.
Congress authorized the Federal Reserve Board, the Securities and
Exchange Commission, and other relevant federal agencies to adopt rules to
implement the provision of the Act. These regulations have not been adopted
and therefore the Company cannot predict their effect upon the Company.
A bank holding company that elects to become a financial holding company,
must have each of its banks meet certain regulatory standards for being "well
capitalized", "well-managed", and "satisfactory" in its Community Reinvestment
Act compliance. A bank holding company that fails to maintain these standards
may be required to cease engaging in certain activities or restrict its
futures activities. Any bank holding company that does not elect to become a
financial holding company will remain subject to the current restrictions
under the Bank Holding Company Act.
It is anticipated that the Act will alter the competitive landscape in
which the Company operates. Companies that are presently engaged primarily in
insurance activities or securities activities will be permitted to acquire
banks and bank holding companies.
(C) Affiliated Banks.
The two affiliated banks have 41 banking locations, located in 11 of
Iowa's 99 counties. These banks serve both metropolitan and agricultural
areas. The location and certain other information about the affiliated banks
are given below.
The main office of Brenton Bank is located in Des Moines, Iowa. Des Moines
is the largest city in Iowa. In addition to its main banking location, Brenton
Bank has 36 offices located throughout Iowa and provides services to clients in
numerous counties across the state.
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Brenton Savings Bank, FSB is located in Ames, Iowa, and has four offices
in Ames and Story City. The savings bank primarily serves clients in Story
County, however, the facility to be opened in Moline, Illinois, will be an
office of Brenton Savings Bank, FSB.
(D) Bank-Related Subsidiaries and Affiliates.
Brenton Investments, Inc., a wholly-owned subsidiary of Brenton Bank,
provides a full array of retail investment brokerage products and services to
clients. The company is not involved with the direct issuance, flotation or
underwriting of securities. At December 31, 1999, this subsidiary had 29
licensed brokers serving all Brenton banking locations.
Brenton Mortgages, Inc., a wholly-owned subsidiary of Brenton Savings
Bank, FSB, engages in the mortgage banking business. This subsidiary
originates and services mortgage loans sold to institutional investors and the
mortgage loan portfolios of the affiliated banks.
Brenton Realty Services, Ltd. and Brenton Insurance, Inc. are wholly-owned
subsidiaries of Brenton Bank. Brenton Realty Services, Ltd. operates two real
estate brokerage agencies. Brenton Insurance, Inc. provides individual and
group life, annuity, health, fire, crop, homeowner's, automobile and liability
insurance products to Brenton clients.
Brenton Insurance Services, Inc., a wholly-owned subsidiary of the Parent
Company, is currently inactive.
(E) Executive Officers and Policymakers of the Registrant.
The term of office for the executive officers and policymakers of the
Company is from the date of election until the next Annual Organizational
Meeting of the Board of Directors. The names and ages of the executive
officers and policymakers of the Company as of March 6, 2000, the primary
offices held by these executive officers and policymakers on that date, the
period during which the officers have served as such and the other positions
held with the Company by these officers during the past five years are set
forth below and on the following page:
<TABLE>
<CAPTION>
Company Position
Name and Address Age Position or Subsidiary Commenced Other Positions
________________ ___ ______________________ _________ _______________
<S> <C> <C> <C> <C>
Robert L. DeMeulenaere 60 President and Chief 1994 President, Brenton Bank - January 1994 to
Des Moines, Iowa Executive Officer November 1997
Brenton Banks, Inc.
Chairman and Chief 1997
Executive Officer
Brenton Bank
Larry A. Mindrup 58 President 1997 CEO, Brenton Savings Bank, FSB; Ames - April
Des Moines, Iowa Chief Banking Officer 1995 1994 to March 1996; President, Brenton Bank,
Brenton Bank N.A., Des Moines - May 1995 to September
1995; President, Brenton Savings Bank, FSB,
Ames - April 1994 to April 1995
Phillip L. Risley 57 Executive Vice President/ 1997 Executive Vice President of the Parent
Des Moines, Iowa Chief Administrative 1995 Company - January 1992 to December 1995;
Officer/ President and CEO, Brenton Bank, N.A.,
Brenton Bank Des Moines - February 1990 to May 1995;
Chairman of the Board, Brenton Bank
Services Corporation - May 1992 to
September 1995
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</TABLE>
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<TABLE>
<CAPTION>
Company Position
Name and Address Age Position or Subsidiary Commenced Other Positions
________________ ___ ______________________ _________ _______________
<S> <C> <C> <C> <C>
Steven T. Schuler 48 Chief Financial Officer/ 1990 Executive Vice President, Brenton Bank
Des Moines, Iowa Treasurer/Secretary 1986 Services Corporation - May 1992 to
Brenton Banks, Inc. and September 1995
Brenton Bank
Woodward G. Brenton 49 Chief Commercial 1995 President and CEO, Brenton First National
Des Moines, Iowa Banking Officer Bank - January 1992 to October 1995
Brenton Bank
Charles N. Funk 45 Regional President 1997 Chief Investment/ALCO Officer - October 1995
Des Moines, Iowa President, Des Moines 1997 to September 1997; Vice President -
Brenton Bank Investments, Brenton Banks, Inc. - December
1991 to October 1995
Douglas F. Lenehan 51 Chief Sales and 1999 Vice President - Cash Management, Brenton
Des Moines, Iowa Marketing Officer Bank, Des Moines - June 1993 to May 1997
President, Diversified 1997
Commercial Services
Brenton Bank
Elizabeth M. Piper/Bach 47 Chief Financial Services 1997
Des Moines, Iowa Officer
Brenton Bank
President 1995
Brenton Investments,
Inc.
Norman D. Schuneman 57 Chief Credit Officer 1995 Senior Vice President - Lending of the
Des Moines, Iowa Brenton Bank Parent Company - January 1990 to
December 1995; Executive Vice President,
Brenton Bank, N.A., Des Moines - July
1985 to October 1995
<FN>
All of the foregoing individuals have been employed by the Company for the past five
years, except for Elizabeth M. Piper/Bach, who was Vice President and Director of
Investment Management Consulting and Training for John G. Kinnard & Co. from 1993 to
1995 and Vice President and Director of the Investment Management Group of Dain Bosworth
in Minneapolis, Minnesota, prior to 1993.
</TABLE>
(F) Employees.
On December 31, 1999, the Company had 669 full-time employees and 134
part-time employees. The number of full-time equivalent employees at year-end
was 739. On December 31, 1999, the Parent Company had five employees. None of
the employees of the Company are represented by unions. The relationship
between management and employees of the Company is considered good.
(G) Supervision and Regulation.
The Company is restricted by various regulatory bodies as to the types of
activities and businesses in which it may engage. References to the provisions
of certain statutes and regulations are only brief summaries thereof and are
qualified in their entirety by reference to those statutes and regulations.
The Company cannot predict what other legislation may be enacted or what
regulations may be adopted, or, if enacted or adopted, the effect thereof.
The Parent Company, as a bank holding company, is subject to regulation
under the Bank Holding Company Act of 1956 (the "Act") and is registered with
the Board of Governors of the Federal Reserve System. Under the Act, the
Parent Company is prohibited, with certain exceptions, from acquiring direct or
indirect ownership or control of more than five percent of the voting shares of
any company that is not a bank and from engaging in any business other than
that of banking, managing and controlling banks or furnishing
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services to its affiliated banks. However, the Parent Company may engage in
and may own shares of companies engaged in certain businesses found by the
Board of Governors to be so closely related to banking "as to be a proper
incident thereto." The Act does not place territorial restrictions on the
activities of bank-related subsidiaries of bank holding companies. The Parent
Company is required by the Act to file periodic reports of its operations with
the Board of Governors and is subject to examination by the Board of Governors.
Under the Act and the regulations of the Board of Governors, bank holding
companies and their subsidiaries are prohibited from engaging in certain tie-in
arrangements in connection with any extension of credit or provision of any
property or services. The Bank Holding Company Act has recently been amended
pursuant to the Gramm-Leach-Bliley Act of 1999. See "Recent Developments."
As a savings and loan holding company, Brenton Banks, Inc. is subject to
federal regulation and examination by the Office of Thrift Supervision (the
"OTS"). The OTS has enforcement authority over the Company that permits the
OTS to restrict or prohibit activities that are determined to be a serious risk
to the subsidiary savings institution. Generally, the activities for a bank
holding company are more limited than the authorized activities for a savings
and loan holding company.
The Parent Company, its affiliated banks and its bank-related subsidiaries
are affiliates within the meaning of the Federal Reserve Act and OTS
regulations. As affiliates, they are subject to certain restrictions on loans
by an affiliated bank to the Parent Company, other affiliated banks or bank-
related subsidiaries, on investments by an affiliated bank in their stock or
securities and on an affiliated bank taking such stock and securities as
collateral for loans to any borrower. The Company is also subject to certain
restrictions with respect to direct issuance, flotation, underwriting, public
sale or distribution of certain securities.
Brenton Bank is a state-chartered bank subject to the supervision of and
regular examination by the Iowa Superintendent of Banking and, because of its
membership in the Federal Deposit Insurance Corporation ("FDIC"), is subject to
examination by the FDIC. Brenton Bank is required to maintain certain minimum
capital ratios established by its primary regulator. The provisions of the
FDIC Act restrict the activities that insured state-chartered banks may engage
in to those activities that are permissible for national banks, except where
the FDIC determines that the activity poses no significant risk to the deposit
insurance fund and the bank remains adequately capitalized. Furthermore, the
FDIC Act grants the FDIC the power to take prompt regulatory action against
certain undercapitalized and seriously undercapitalized institutions in order
to preserve the deposit insurance fund.
The affiliated savings bank is subject to the supervision of and regular
examination by the OTS and FDIC. In addition to the fees charged by the FDIC,
the savings bank is assessed fees by the OTS based upon the savings bank's
total assets. The savings bank is required to maintain certain minimum capital
ratios established by the OTS and must meet a qualified thrift lender test (the
"QTL") to avoid certain restrictions upon its operations. On December 31,
1999, Brenton Savings Bank, FSB complied with the current minimum capital
guidelines and met the QTL test, which it has always met since the test was
implemented.
During 1994, the "Riegle-Neal Interstate Banking and Branching Efficiency
Act of 1994" (the "Interstate Banking Act") was enacted. This law amended
certain provisions of the federal banking laws (including the Bank Holding
Company Act) to permit the acquisition of banks by banks or bank holding
companies domiciled outside of the home state of the acquired bank. The
Interstate Banking Act seeks to provide a uniform interstate banking law for
all 50 states. The provisions of the law allow states to impose certain "non-
discriminatory" conditions upon interstate mergers, including limits on the
concentration of deposits. According to Iowa's banking law, Iowa-based banks
and bank holding companies can acquire banks and bank holding companies located
in other states. Iowa law prohibits a bank holding company or bank controlled
by a bank holding company from acquiring additional Iowa-based banks or bank
holding companies if the total deposits in Iowa of such bank holding company
and its affiliates would exceed 10 percent of the total deposits of all banks
and thrifts in the state.
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Generally, banks in Iowa are prohibited from operating offices in counties
other than the county in which the bank's principal office is located and
contiguous counties. However, certain banks located in the same or different
municipalities or urban complexes may consolidate or merge and retain their
existing banking locations by converting to a United Community Bank. The
resulting bank would adopt one principal place of business, and would retain
the remaining banking locations of the merged or consolidated banks as offices.
The Company relied upon the United Community Bank law when it merged its 13
commercial banks into one state-chartered bank in 1995. Generally, thrifts can
operate offices in any county in Iowa and may, under certain circumstances,
acquire or branch into thrifts in other states with the approval of the OTS.
(H) Governmental Monetary Policy and Economic Conditions.
The earnings of the Company are affected by the policies of regulatory
authorities, including the Federal Reserve System. Federal Reserve System
monetary policies have had a significant effect on the operating results of
commercial banks in the past and are expected to continue to do so in the
future. Because of changing conditions in the economy and in the money markets,
as a result of actions by monetary and fiscal authorities, interest rates,
credit availability and deposit levels may change due to circumstances beyond
the control of the Company. Future policies of the Federal Reserve System and
other authorities cannot be predicted, nor can their effect on future earnings.
(I) Competition.
The banking business in Iowa is highly competitive and the affiliated
banks compete not only with banks and thrifts, but with sales, finance and
personal loan companies; credit unions; Internet banks; and other financial
services companies that are active in the areas in which the affiliated banks
operate. In addition, the affiliated banks compete for customer funds with
other investment alternatives available through investment banking companies,
insurance companies, finance companies and other institutions.
The multi-bank holding companies, which own banks in Iowa, are in direct
competition with one another. Brenton Banks, Inc. is the largest multi-bank
holding company domiciled in Iowa. As of June 30, 1999, Brenton Banks, Inc.'s
affiliated banks held approximately 3.5 percent of total Iowa bank and thrift
deposits. There were seven other multi-bank holding companies that operated
banks in Iowa, but are domiciled in other states. During 1999, two of these
holding companies merged. The Iowa deposits of three of these holding
companies are of similar size or greater when compared to Brenton Banks, Inc.
The Iowa deposits of all six of the other multi-bank holding companies have
declined from the same date a year earlier. The Company considers the
ownership/name changes of these out-of-state holding companies during the past
two years to be a competitive advantage to the Company.
Certain of the subsidiary banks of these multi-bank holding companies may
compete with certain of the Parent Company's affiliated banks and any other
affiliated financial institutions, which may be acquired by the Parent Company.
These multi-bank holding companies, other smaller bank holding companies, chain
banking systems and others may compete with the Parent Company for the
acquisition of additional banks.
The Company has expanded the mortgage banking business in the past few
years by increasing the number of mortgage loan originators and by expanding
the number of locations where mortgage banking services are offered. The
volume of loan closings in 1999 was $431 million compared to $513 million in
1998. The volume of loan closings declined in 1999 as a result of higher
mortgage rates in the market place.
The Company has also expanded the investment brokerage business in the
last several years, placing brokers in many Brenton Bank locations as well as
individual brokerage offices. The Brenton brokers compete with brokers from
regional and national investment brokerage firms as well as Internet trading
services.
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Item 1(J) Business - Statistical Disclosure
The following statistical disclosures relative to the consolidated
operations of the Company have been prepared in accordance with Guide 3 of the
Guides for the Preparation and Filing of Reports and Registration Statements
under the Securities Exchange Act of 1934. Average balances were primarily
calculated on a daily basis.
I. Distribution of Assets, Liabilities and Stockholders' Equity;
Interest Rates and Interest Differential
The following summarizes the average consolidated statement of
condition by major type of account, the interest earned and interest paid and
the average yields earned and average rates paid for each of the three years
ending December 31:
<TABLE>
<CAPTION>
1999
(dollars in thousands) ___________________________________________
Interest Average
Average Income or Yields or
Balance Expense Rates
_______ _________ _________
<S> <C> <C> <C>
Assets:
Interest-earning assets:
Interest-bearing deposits with banks $ 3,526 $ 173 4.90%
Federal funds sold and securities purchased
under agreements to resell 7,118 349 4.91
Trading account securities - - -
Investment securities available for sale:
Taxable investments:
United States Treasury securities 45,191 2,151 4.76
Securities of United States government
Agencies 156,054 9,112 5.84
Mortgage-backed and related securities 197,088 11,966 6.07
Other investments 32,407 1,897 5.85
Tax-exempt investments:
Obligations of states and political
subdivisions (2) 155,558 10,056 6.46
Investment securities held to maturity:
Taxable investments:
Securities of United States government
Agencies - - -
Mortgage-backed and related securities 1,128 75 6.62
Other investments 386 27 7.01
Tax-exempt investments:
Obligations of states and political
subdivisions (2) 33,982 2,390 7.03
Loans held for sale 56,218 3,977 7.07
Loans (1,2) 1,098,732 90,782 8.26
_________________________________________________________________________________________
Total interest-earning assets (2) 1,787,388 $ 132,955 7.44%
Allowance for loan losses (14,519) _________________________
Cash and due from banks 72,186
Premises and equipment 36,010
Other assets 62,761
_________________________________________________________________________________________
Total assets $1,943,826
_________________________________________________________________________________________
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Interest-bearing deposits:
Demand $ 109,535 $ 3,481 3.18%
Savings 641,308 19,289 3.01
Time 546,868 28,561 5.22
Federal funds purchased and securities
sold under agreements to repurchase 150,387 6,631 4.41
Other short-term borrowings 117,377 6,403 5.46
Long-term borrowings 31,330 2,015 6.43
________________________________________________________________________________________
Total interest-bearing liabilities 1,596,805 $ 66,380 4.16%
Noninterest-bearing deposits 192,211 ________________________
Accrued expenses and other liabilities 15,940
_________________________________________________________________________________________
Total liabilities 1,804,956
Minority interest 4,734
Common stockholders' equity 134,136
_________________________________________________________________________________________
Total liabilities and stockholders' equity $1,943,826
_________________________________________________________________________________________
Net interest spread (2) 3.28%
_________________________________________________________________________________________
Net interest income/margin (2) $ 66,575 3.73%
_________________________________________________________________________________________
<FN>
(1) The average outstanding balance is net of unearned income and includes nonaccrual
loans.
(2) Interest income and yields are stated on a tax-equivalent basis using a federal
income tax rate of 35 percent and are adjusted to reflect the effect of the
nondeductible interest expense of owning tax-exempt investments. The standard
federal income tax rate is used for consistency of presentation.
is used for consistency of presentation.
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
1998 1997
___________________________________________ ___________________________________
Interest Average Interest Average
Average Income or Yields or Average Income or Yields or
Balance Expense Rates Balance Expense Rates
_______ _________ _________ _______ _________ _________
<S> <C> <C> <C> <C> <C> <C>
$ 3,706 $ 176 4.74% $ 2,460 $ 118 4.80%
31,048 1,659 5.35 31,472 1,742 5.54
- - - 12 1 4.26
40,898 2,319 5.67 45,459 2,748 6.05
97,770 5,955 6.09 71,958 4,555 6.33
236,280 14,545 6.16 217,817 13,835 6.35
15,643 952 6.09 12,998 832 6.40
125,237 8,382 6.69 99,868 7,035 7.04
1,402 89 6.33 7,925 485 6.11
1,869 140 7.48 2,594 191 7.36
727 48 6.68 2,181 136 6.25
53,130 3,623 6.82 56,204 3,777 6.72
37,841 2,690 7.11 10,284 811 7.89
999,232 87,339 8.74 970,115 85,540 8.82
________________________________________________________________________________________
1,644,783 $127,917 7.78% 1,531,347 $121,806 7.95%
(13,738) __________________________ (12,171)
65,874 58,681
31,883 29,841
51,318 41,771
________________________________________________________________________________________
$1,780,120 $1,649,469
________________________________________________________________________________________
$ 90,589 $ 2,800 3.09% $ 81,430 $ 2,332 2.86%
585,598 17,429 2.98 551,509 15,903 2.88
556,056 30,543 5.49 567,258 31,075 5.48
116,388 5,092 4.38 78,234 3,413 4.36
65,205 3,757 5.76 53,223 3,183 5.98
47,605 3,017 6.34 32,056 2,199 6.86
________________________________________________________________________________________
1,461,441 $ 62,638 4.29% 1,363,710 $ 58,105 4.26%
164,403 __________________________ 139,480
17,020 17,097
________________________________________________________________________________________
1,642,864 1,520,287
4,834 4,691
132,422 124,491
________________________________________________________________________________________
1,780,120 1,649,469
________________________________________________________________________________________
3.49% 3.69%
________________________________________________________________________________________
$ 65,279 3.97% $ 53,701 4.16%
________________________________________________________________________________________
</TABLE>
13
<PAGE>
Item 1(J) Business - Statistical Disclosure, Continued
I. Distribution of Assets, Liabilities and Stockholders' Equity;
Interest Rates and Interest Differential, Continued
The following shows the changes in interest earned and interest paid
due to changes in volume and changes in rate for each of the two years ended
December 31:
<TABLE>
<CAPTION>
1999 vs. 1998 1998 vs. 1997
__________________________ __________________________
Variance Variance
due to due to
_______________ _______________
Variance Volume Rate Variance Volume Rate
________ ______ ____ ________ ______ ____
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest Income:
Interest-bearing deposits with banks $ (3) (9) 6 $ 58 59 (1)
Federal funds sold and securities
purchased under agreements to resell (1,310) (1,184) (126) (83) (23) (60)
Trading account securities - - - (1) 1 (2)
Investment securities available for sale:
Taxable investments:
United States Treasury securities (168) 228 (396) (429) (265) (164)
Securities of United States government
Agencies 3,157 3,413 (256) 1,400 1,578 (178)
Mortgage-backed and related securities (2,579) (2,382) (197) 710 1,147 (437)
Other investments 945 983 (38) 120 163 (43)
Tax-exempt investments:
Obligations of states and political
subdivisions (2) 1,674 1,969 (295) 1,347 1,713 (366)
Investment securities held to maturity:
Taxable investments:
Securities of United States government
Agencies (89) (44) (45) (396) (412) 16
Mortgage-backed and related securities (65) (50) (15) (51) (54) 3
Other investments (21) (24) 3 (88) (96) 8
Tax-exempt investments:
Obligations of states and political
subdivisions (2) (1,233) (1,344) 111 (154) (208) 54
Loans held for sale 1,287 1,351 (64) 1,879 1,950 (71)
Loans (1,2) 3,443 8,390 (4,947) 1,799 2,550 (751)
______ ______ ______ _____ _____ ______
5,038 11,297 (6,259) 6,111 8,103 (1,992)
Interest Expense:
Interest-bearing deposits:
Demand 681 600 81 468 274 194
Savings 1,860 1,673 187 1,526 1,003 523
Time (1,982) (499) (1,483) (532) (616) 84
Federal funds purchased and securities
sold under agreements to repurchase 1,539 1,499 40 1,679 1,670 9
Other short-term borrowings 2,646 2,856 (210) 574 695 (121)
Long-term borrowings (1,002) (1,046) 44 818 996 (178)
______ ______ ______ _____ _____ ______
3,742 5,083 (1,341) 4,533 4,022 511
______ ______ ______ _____ _____ ______
Net interest income $ 1,296 6,214 (4,918) $ 1,578 4,081 (2,503)
<FN>
Note: The change in interest due to both rate and volume has been allocated to change due to volume and rate
in proportion to the relationship of the absolute dollar amounts of the change in each.
(1) Nonaccrual loans have been included in the analysis of volume and rate variances.
(2) Computed on a tax-equivalent basis using a federal income tax rate of 35 percent and adjusted to reflect
the effect of the nondeductible interest expense of owning tax-exempt investments.
</TABLE>
14
<PAGE>
Item 1(J) Business - Statistical Disclosure, Continued
I. Distribution of Assets, Liabilities and Stockholders' Equity;
Interest Rates and Interest Differential, Continued
Interest Rate Sensitivity Analysis
The following schedule shows the matching of interest sensitive
assets to interest sensitive liabilities by various maturity or repricing
periods as of December 31, 1999. As the schedule shows, the Company is
liability sensitive within the one-year time frame. Included in the three
months or less sensitivity category are all interest-bearing demand and savings
accounts. Although these deposits are contractually subject to immediate
repricing, management believes a large portion of these accounts are not
synchronized with overall market rate movements.
<TABLE>
<CAPTION>
3 Months Over 3 Over 6 Total Over 1
or through 6 through 12 within through 5 Over
Less Months Months 1 Year Years 5 Years Total
---- ------ ------ ------ ----- ------- -----
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Interest-bearing deposits with banks $ 2,362 - - 2,362 - - 2,362
Investment securities:
Available for sale:
Taxable investments (3) 32,651 17,427 41,593 91,671 272,265 36,802 400,738
Tax-exempt investments 5,792 14,445 11,713 31,950 61,601 61,902 155,453
Held to maturity:
Taxable investments - 130 8 138 163 696 997
Tax-exempt investments 648 3,059 3,185 6,892 9,975 7,338 24,205
_________ _______ _______ _________ _______ _______ _________
Total investment securities 39,091 35,061 56,499 130,651 344,004 106,738 581,393
Loans held for sale 26,201 - - 26,201 - - 26,201
Loans (1)(3) 402,252 17,785 44,150 464,187 535,294 189,247 1,188,728
_________ _______ _______ _________ _______ _______ _________
Total interest-earning assets $ 469,906 52,846 100,649 623,401 879,298 295,985 1,798,684
Interest-bearing liabilities:
Interest-bearing deposits:
Demand and savings deposits (2) $ 786,094 - - 786,094 - - 786,094
Time deposits 125,387 88,303 150,639 364,329 189,524 803 554,656
Federal funds purchased and securities
sold under agreements to repurchase 166,806 - - 166,806 - - 166,806
Other short-term borrowings 71,924 20,500 18,000 110,424 - - 110,424
Long-term borrowings - - 793 793 23,978 2,933 27,704
_________ _______ _______ _________ _______ _______ _________
Total interest-bearing liabilities $1,150,211 108,803 169,432 1,428,446 213,502 3,736 1,645,684
_________ _______ _______ _________ _______ _______ _________
Interest sensitivity GAP $ (680,305) (55,957) (68,783) (805,045) 665,796 292,249 153,000
_________ _______ _______ _________ _______ _______ _________
Interest sensitivity GAP ratio .41:1 .49:1 .59:1 .44:1 4.12:1 79.23:1 1.09:1
_________ _______ _______ _________ _______ _______ _________
Cumulative interest sensitivity GAP $ (680,305) (736,262) (805,045) (805,045) (139,249) 153,000 153,000
_________ _______ _______ _________ _______ _______ _________
Cumulative interest sensitivity GAP ratio .41:1 .42:1 .44:1 .44:1 .92:1 1.09:1 1.09:1
<FN>
(1) Nonaccrual loans have been excluded from the interest rate sensitivity analysis.
(2) Interest-bearing demand and savings deposits are included in the 3 months or less sensitivity category.
(3) Assumed repayments on mortgage-related loans and investments are based upon projected prepayment speeds which are
determined by considering Wall Street estimates.
</TABLE>
15
<PAGE>
Item 1(J) Business - Statistical Disclosure, Continued
II. Investment Portfolio
The carrying value of investment securities at December 31 for each
of the past three years follows:
<TABLE>
<CAPTION>
1999 1998 1997
____ ____ ____
(in thousands)
<S> <C> <C> <C>
Investment securities available for sale
(fair value):
Taxable investments:
United States Treasury securities $ 32,412 43,292 38,790
Securities of United States government
agencies 152,214 140,417 86,660
Mortgage-backed and related securities 184,245 233,055 230,933
Other investments 31,867 26,984 20,957
Tax-exempt investments:
Obligations of states and political
Subdivisions 155,453 161,436 109,314
_______ _______ _______
556,191 605,184 486,654
Investment securities held to maturity
(amortized cost):
Taxable investments:
Securities of United States government
agencies - - 5,025
Mortgage-backed and related securities 662 1,529 2,363
Other investments 335 450 1,518
Tax-exempt investments:
Obligations of states and political
Subdivisions 24,205 41,048 60,173
_______ _______ _______
25,202 43,027 69,079
_______ _______ _______
Total investment securities $581,393 648,211 555,733
</TABLE>
16
<PAGE>
Item 1(J) Business - Statistical Disclosure, Continued
II. Investment Portfolio
The following table shows the maturity distribution and weighted
average yields of investment securities at December 31, 1999:
<TABLE>
<CAPTION>
After One After Five
Within but through but through After
One Year Five Years Ten Years Ten Years
_______________ _______________ _______________ _______________
Amount Yield Amount Yield Amount Yield Amount Yield
______ _____ ______ _____ ______ _____ ______ _____
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment securities
available for sale:
Taxable investments:
United States Treasury
Securities $ 19,972 4.34% $ 12,440 5.41% $ - -% $ - -%
Securities of United
States government
agencies 5,001 5.89 128,968 5.62 18,245 6.21 - -
Mortgage-backed and
related securities 50,681 6.11 111,992 6.29 21,572 6.80 - -
Other investments 10,473 6.25 21,394 5.67 - - - -
Tax-exempt investments:
Obligations of states and
political subdivisions 31,950 6.38 61,601 6.25 46,161 6.71 15,741 7.41
_______ ____ _______ ____ ______ ____ ______ ____
118,077 5.89 336,395 5.95 85,978 6.63 15,741 7.41
_______ ____ _______ ____ ______ ____ ______ ____
Investment securities held
to maturity:
Taxable investments:
Mortgage-backed and
related securities 98 6.36 333 6.36 231 6.36 - -
Other investments 138 6.43 163 7.39 15 8.25 19 7.38
Tax-exempt investments:
Obligations of states and
political subdivisions 6,892 6.62 9,975 7.09 6,293 8.15 1,045 8.38
_______ ____ _______ ____ ______ ____ ______ ____
7,128 6.62 10,471 7.08 6,539 8.09 1,064 8.36
_______ ____ _______ ____ ______ ____ ______ ____
Total investment securities $125,205 5.93% $346,866 5.99% $92,517 6.73% $16,805 7.47%
<FN>
NOTE: The weighted average yields are calculated on the basis of the cost and effective yields for each
scheduled maturity group. The maturities of mortgage-backed securities have been included in the
period of anticipated payment considering estimated prepayment rates. The "weighted average yields
for tax-exempt obligations have been adjusted to a fully-taxable basis, assuming a 35 percent federal
income tax rate and are adjusted to reflect the effect of the nondeductible interest expense of owning
tax-exempt investments.
As of December 31, 1999, the Company did not have securities from a single issuer, other than the
United States Government or its agencies, which exceeded 10 percent of consolidated common stockholders'
equity.
Maturities of all investment securities are managed to meet the Company's normal liquidity needs.
Investment securities available for sale may be sold prior to maturity to meet liquidity needs, to
respond to market changes or to adjust the Company's asset/liability position.
</TABLE>
17
<PAGE>
Item 1(J) Business - Statistical Disclosure, Continued
III. Loan Portfolio
The following table shows the amount of loans outstanding by type as
of December 31 for each of the past five years:
<TABLE>
<CAPTION>
December 31
____________________________________________________
1999 1998 1997 1996 1995
____ ____ ____ ____ ____
(in thousands)
<S> <C> <C> <C> <C> <C>
1. Real estate loans:
a. Commercial construction and land development $ 86,725 54,941 30,007 42,693 38,123
b. Secured by 1-4 family residential property,
including home equity loans 356,548 302,731 342,134 338,010 319,430
c. Other 163,202 151,995 161,989 150,395 163,739
2. Loans to financial institutions - - - - -
3. Loans to farmers 75,624 84,554 79,036 69,660 68,543
4. Commercial and industrial loans 193,690 179,414 160,428 132,395 119,368
5. Loans to individuals for personal expenditures 306,689 251,636 217,405 207,197 199,489
6. All other loans 13,509 8,284 2,190 1,594 1,501
$1,195,987 1,033,555 993,189 941,944 910,193
</TABLE>
18
<PAGE>
Item 1(J) Business - Statistical Disclosure, Continued
III. Loan Portfolio, Continued
The following table shows the maturity distribution of loans as of
December 31, 1999 (excluding real estate loans secured by 1-4 family
residential property and loans to individuals for personal expenditures):
<TABLE>
<CAPTION>
After One
Year
Within through After Five
One Year Five Years Years Total
________ __________ _____ _____
(in thousands)
<S> <C> <C> <C> <C>
1. Real estate loans:
a. Commercial construction and land development $ 85,517 264 944 86,725
b. Other 16,821 81,456 64,925 163,202
2. Loans to financial institutions - - - -
3. Loans to farmers 53,554 20,155 1,915 75,624
4. Commercial and industrial loans 134,137 43,959 15,594 193,690
5. All other loans 4,967 5,268 3,274 13,509
$294,996 151,102 86,652 532,750
The above loans due after one year which have
predetermined and floating interest rates follow:
Predetermined interest rates $ 92,776
Floating interest rates $144,978
</TABLE>
19
<PAGE>
Item 1(J) Business - Statistical Disclosure, Continued
III. Loan Portfolio, Continued
The following schedule shows the dollar amount of loans at
December 31 for each of the past five years which were either accounted for
on a nonaccrual basis, had been restructured to below market terms to
provide a reduction or deferral of interest or principal, or were 90 days or
more past due as to interest or principal. Each particular loan has been
included in only the most appropriate category.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
____ ____ ____ ____ ____
(in thousands)
<S> <C> <C> <C> <C> <C>
Nonaccrual $ 7,259 8,099 3,227 2,663 2,639
Restructured 399 289 513 568 178
Past due 90 days or more 1,794 2,901 2,972 2,936 2,802
Nonperforming loans $ 9,452 11,289 6,712 6,167 5,619
</TABLE>
Interest income recorded during 1999 on nonaccrual and restructured
loans amounted to $212,000. The amount of interest income which would have
been recorded during 1999, if nonaccrual and restructured loans had been
current in accordance with the original terms, was $973,000.
The amounts scheduled above include the entire balance of any
particular loan. Much of the scheduled amount is adequately
collateralized, and thus does not represent future anticipated charge-offs.
The loans scheduled above from 1997 through 1999 contain one sizable loan
of $2.9 million, which represents a concentration. A partial charge-off of
$500,000 was taken on this loan in 1999, to reduce the loan balance to
estimated collateral value. Resolution is expected in the year 2000."
The other loans scheduled above are not concentrated in a specific industry
or geographic area, other than the fact they are all located within the
state of Iowa. Overdrafts are loans for which interest does not normally
accrue. Since overdrafts are generally low volume, they were not included
in the above schedule, unless there was serious doubt concerning
collection.
The accrual of interest income is stopped when the ultimate collection
of a loan becomes doubtful. A loan is placed on nonaccrual status when it
becomes 90 days past due, unless it is both well secured and in the process
of collection. Once determined uncollectible, interest credited to income
in the current year is reversed and interest accrued in prior years is
charged to the allowance for loan losses.
In addition to the loans scheduled above, management has identified
other loans which, due to a change in economic circumstances or a
deterioration in the financial position of the borrower, present some
concern as to the ability of the borrower to comply with present repayment
terms. Additionally, management considers the identification of loans
classified for regulatory or internal purposes as loss, doubtful,
substandard or special mention. This concern may eventually result in
certain of these loans being classified in one of the above-scheduled
categories. At December 31, 1999, these loans amounted to less than $1
million.
As of December 31, 1999, management is unaware of any other material
interest-earning assets which have been placed on a nonaccrual basis, have
been restructured, or are 90 days or more past due. The amount of other
real estate owned, which has been received in lieu of loan repayment,
amounted to $1,186,000 and $389,000 at December 31, 1999, and 1998,
respectively.
20
<PAGE>
Item 1(J) Business - Statistical Disclosure, Continued
IV. Summary of Loan Loss Experience
The following is an analysis of the allowance for loan losses for
years ended December 31 for each of the past five years:
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
____ ____ ____ ____ ____
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Total loans at the end of the year $1,195,987 1,033,555 993,189 941,944 910,193
_________ _________ _______ _______ _______
Average loans outstanding $1,098,732 999,232 970,115 919,578 945,724
_________ _________ _______ _______ _______
Allowance for loan losses - beginning of the year $ 14,172 12,732 11,328 11,070 10,913
_________ _________ _______ _______ _______
Amount of charge-offs during year:
Real estate loans 1,561 478 299 479 41
Loans to financial institutions - - - - -
Loans to farmers 988 261 196 365 36
Commercial and industrial loans 518 592 890 594 340
Loans to individuals for personal expenditures 3,270 2,997 2,844 2,623 2,960
All other loans 67 79 - - -
_________ _________ _______ _______ _______
Total charge-offs 6,404 4,407 4,229 4,061 3,377
_________ _________ _______ _______ _______
Amount of recoveries during year:
Real estate loans 265 133 217 68 66
Loans to financial institutions - - - - -
Loans to farmers 269 37 109 138 50
Commercial and industrial loans 488 268 184 95 400
Loans to individuals for personal expenditures 1,347 1,198 1,223 1,118 1,153
All other loans 26 11 - - -
_________ _________ _______ _______ _______
Total recoveries 2,395 1,647 1,733 1,419 1,669
_________ _________ _______ _______ _______
Net loans charged-off during year 4,009 2,760 2,496 2,642 1,708
_________ _________ _______ _______ _______
Additions to allowance charged to operating expense 4,250 4,200 3,900 2,900 1,865
_________ _________ _______ _______ _______
Allowance for loan losses - end of the year $ 14,413 14,172 12,732 11,328 11,070
_________ _________ _______ _______ _______
Ratio of allowance to loans outstanding at
end of year 1.21 1.37 1.28 1.20 1.22
_________ _________ _______ _______ _______
Ratio of net charge-offs to average loans
Outstanding .36 .28 .26 .29 .18
_________ _________ _______ _______ _______
<FN>
NOTE: The provision for loan losses charged to operating expenses is based upon management's evaluation of
the loan portfolio, past loan loss experience and the level of the allowance for loan losses necessary
to support management's evaluation of probable losses in the loan portfolio. Management's evaluation of
the allowance for loan losses is based upon several factors including economic conditions, historical loss
and collection experience, risk characteristics of the loan portfolio, underlying collateral values,
industry risk and credit concentrations.
</TABLE>
21
<PAGE>
Item 1(J) Business - Statistical Disclosure, Continued
IV. Summary of Loan Loss Experience, Continued
In the following summary, the Company has allocated the allowance for
loan losses according to the amount deemed to be reasonably necessary to
provide for losses within each category of loans. The amount of the allowance
applicable to each category and the percentage of loans in each category to
total loans follows:
<TABLE>
<CAPTION>
December 31
___________________________________________________________________________________________________________________________
1999 1998 1997 1996 1995
Allowance Percent Allowance Percent Allowance Percent Allowance Percent Allowance Percent
for of Loans for of Loans for of Loans for of Loans for of Loans
Loan to Total Loan to Total Loan to Total Loan to Total Loan to Total
Losses Loans Losses Loans Losses Loans Losses Loans Losses Loans
______ _____ ______ _____ ______ _____ ______ _____ _____ _____
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Real estate loans $ 2,800 50.7% $ 3,000 49.3% $ 2,400 53.8% $ 2,200 56.4% $ 2,400 57.3%
Loans to financial institutions - - - - - - - - - -
Loans to farmers 1,900 6.3 1,600 8.2 1,200 8.0 1,000 7.4 1,300 7.5
Commercial and industrial loans 4,200 16.2 4,100 17.4 3,800 16.1 3,200 14.0 2,900 13.1
Loans to individuals for personal
Expenditures 5,513 25.7 5,472 24.3 5,332 21.9 4,928 22.0 4,470 21.9
All other loans - 1.1 - .8 - .2 - .2 - .2
______________ ______________ ______________ _____________ ______________
$14,413 100.0% $14,172 100.0% $12,732 100.0% $11,328 100.0% $11,070 100.0%
______________ ______________ ______________ _____________ ______________
</TABLE>
22
<PAGE>
Item 1(J) Business - Statistical Disclosure, Continued
V. Deposits
A classification of the Company's average deposits and
average rates paid for the three years ended December 31 follow:
<TABLE>
<CAPTION>
1999 1998 1997
____________ ____________ ____________
Amount Rate Amount Rate Amount Rate
______ ____ ______ ____ ______ ____
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing
deposits $ 192,211 -% $ 164,403 -% $ 139,480 -%
Interest-bearing
deposits:
Demand 109,535 3.18 90,589 3.09 81,430 2.86
Savings 641,308 3.01 585,598 2.98 551,509 2.88
Time 546,868 5.22 556,056 5.49 567,258 5.48
______________ ______________ ______________
$1,489,922 $1,396,646 $1,339,677
______________ ______________ ______________
</TABLE>
The following sets forth the maturity distribution of all time deposits
of $100,000 or more as of December 31, 1999:
Maturity Remaining Amount
(in thousands)
Less than 3 months $ 17,886
Over 3 through 6 months 14,190
Over 6 through 12 months 31,150
Over 12 months 15,892
_______
$ 79,118
VI. Return on Equity and Assets
Various operating and equity ratios for the three years ended December 31
are presented below:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Return on average total assets:
(Net income before deduction of
minority interest) .89% 1.18% 1.14%
Return on average equity:
(Including unrealized gains (losses)
on securities available for sale) 12.35 15.37 14.47
Return on average equity:
(Excluding unrealized gains (losses)
on securities available for sale) 12.31 15.77 14.68
Common dividend payout ratio 43.25 33.02 27.11
Average equity to average assets 6.90 7.4 7.55
Equity to assets ratio 6.91 6.81 7.36
Tier 1 leverage capital ratio 6.80 7.17 7.63
</TABLE>
23
<PAGE>
Item 1(J) Business - Statistical Disclosure, Continued
VII. Short-Term Borrowings
Information relative to federal funds purchased and
securities sold under agreements to repurchase follows:
<TABLE>
<CAPTION>
1999 1998 1997
____ ____ ____
(dollars in thousands)
<S> <C> <C> <C>
Amount outstanding at December 31 $166,806 155,847 92,633
Weighted average interest rate at
December 31 4.58% 4.24 4.48
Maximum amount outstanding at any
month-end $211,978 155,847 92,633
Average amount outstanding during
the year $150,387 116,388 78,234
Weighted average interest rate during
the year 4.41% 4.38 4.36
</TABLE>
Information relative to other short-term borrowings,
which consist primarily of Federal Home Loan Bank advances,
follows:
<TABLE>
<CAPTION>
1999 1998 1997
____ ____ ____
(dollars in thousands)
<S> <C> <C> <C>
Amount outstanding at December 31 $110,424 87,050 73,700
Weighted average interest rate at
December 31 5.04% 5.38 6.02
Maximum amount outstanding at any
month-end $157,352 87,050 73,700
Average amount outstanding during
the year $117,377 65,205 53,223
Weighted average interest rate during
the year 5.46% 5.76 5.98
</TABLE>
24
<PAGE>
Item 2. Properties.
The affiliated banks and subsidiaries have 44 service
locations with approximately 344,000 square feet, all located in
Iowa. Of these locations, 30 were owned by the Company --
approximately 267,000 square feet; three were owned buildings on
leased land -- approximately 30,000 square feet and 11 were
operated under lease contracts with unaffiliated parties --
approximately 47,000 square feet.
The Company has entered into agreements for construction of a
new operations and sales support facility in Clive, Iowa. The
estimated total cost of the land and building is $12.5 million.
Groundbreaking occurred in October 1999, construction has begun and
completion is expected in the fourth quarter of 2000. The new
building will replace space that the Company currently leases, and
will include room for future growth.
The Company leases certain real estate and equipment under
long-term and short-term leases. The Company owns certain real
estate that is leased to unrelated persons.
Item 3. Legal Proceedings.
The Company (Brenton Banks, Inc. and its subsidiaries) is
involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the
ultimate disposition of these matters will not have a material
adverse effect on the Company's financial position or results of
operations.
Item 4. Submission of Matters to a Vote of Security Holders.
There were no matters submitted to a vote of security holders,
through the solicitation of proxies or otherwise, during the fourth
quarter of the fiscal year covered by this report.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.
The information appearing on pages 26 and 34 of the
Corporation's Appendix to the Proxy Statement, filed as Exhibit 13
hereto, is incorporated herein by reference.
There were approximately 2,271 holders of record of the Parent
Company's $2.50 common stock as of March 6, 2000. The closing
price of the Parent Company's common stock was $8.94 on March 6,
2000.
The Parent Company increased dividends to common shareholders
in 1999 to $.346 per share, a 9.2 percent increase over $.317 for
1998. Dividend declarations are evaluated and determined by the
Board of Directors on a quarterly basis. In January 2000, the
Board of Directors declared a dividend of $.087 per common share.
There are currently no restrictions on the Parent Company's present
or future ability to pay dividends.
Item 6. Selected Financial Data.
The information appearing on page 12 of the Company's Appendix
to the Proxy Statement, filed as Exhibit 13 hereto, is incorporated
herein by reference.
25
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The information appearing on pages 3 through 10 of the
Company's Appendix to the Proxy Statement, filed as Exhibit 13
hereto, is incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosure About Market
Risk.
The information appearing on page 8 of the Company's Appendix
to the Proxy Statement, filed as Exhibit 13 hereto, is incorporated
herein by reference.
Item 8. Financial Statements and Supplementary Data.
The information appearing on pages 13 through 33 of the
Company's Appendix to the Proxy Statement, filed as Exhibit 13
hereto, is incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
Within the twenty-four months prior to the date of the most
recent financial statements, there has been no change in or
disagreements with accountants of the Company.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The definitive proxy statement of Brenton Banks, Inc., which
will be filed not later than 120 days following the close of the
Company's fiscal year ending December 31, 1999, is incorporated
herein by reference. See also Item 1(E) of this Form 10-K
captioned "Executive Officers and Policymakers of the Registrant."
Item 11. Executive Compensation.
The definitive proxy statement of Brenton Banks, Inc., which
will be filed not later than 120 days following the close of the
Company's fiscal year ended December 31, 1999, is incorporated
herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The definitive proxy statement of Brenton Banks, Inc., which
will be filed not later than 120 days following the close of the
Company's fiscal year ending December 31, 1999, is incorporated
herein by reference
Item 13. Certain Relationships and Related Transactions.
All loans made by the Parent Company's affiliated banks to
directors, nominees, executive officers and associates of such
persons were made in the ordinary course of business, on
substantially the same terms, including interest rates and
collateral, as those prevailing at the time of comparable
transactions with unaffiliated persons, and did not involve more
than the normal risk of collectibility or present other unfavorable
features. There were no other reportable transactions.
26
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.
The following exhibits and financial statement schedules are
filed as part of this report:
(a) 1. Financial Statements: See the financial statements on
pages 13 through 33 of the Company's Appendix to the Proxy
Statement, filed as Exhibit 13 hereto, which are
incorporated herein by reference.
2. Financial Statement Schedules: See Exhibits 11 and 12, for
computation of earnings per share and ratios.
3. Exhibits (not covered by independent auditors' report).
Exhibit 3
The Articles of Incorporation, as amended, and Bylaws, as
amended, of Brenton Banks, Inc. These Articles of
Incorporation, as amended, and Bylaws are incorporated by
reference from Form 10-K of Brenton Banks, Inc. for the
year ended December 31, 1997.
Exhibit 10.1
Summary of the Company's Bonus Plans under which some of
the executive officers of the Company and certain other
personnel of the subsidiaries are eligible to receive a
bonus each year.
Exhibit 10.2
1996 Stock Option Plan, Administrative Rules and Agreement
under which officers of the Company are eligible to
receive options to purchase an aggregate of 1,607,100
shares (restated for the 2-for-1 stock split effective
February 1998 and the 10 percent common stock dividends
effective in 1999, 1998, 1997 and 1996) of the Company's
$2.50 par value common stock. This 1996 Stock Option
Plan, Administrative Rules and Agreement are incorporated
by reference from Form 10-Q of Brenton Banks, Inc. for the
quarter ended September 30, 1996.
Exhibit 10.3
Form of the 1999 Stock Option Agreement, under which
certain officers of the Company are eligible to receive
options pursuant to the 1996 Stock Option Plan.
Exhibit 10.4
Directors' Incentive Plan. This Directors' Incentive Plan
is incorporated by reference from Form 10-Q of Brenton
Banks, Inc. for the quarter ended September 30, 1995.
Exhibit 10.5
Employment Agreement, dated July 6, 1989, between William
H. Brenton and Brenton Banks, Inc.
27
<PAGE>
Exhibit 10.6
Non-Qualified Stock Option Plan, Administrative Rules and
Agreement under which officers of the Company were
eligible to receive options to purchase an aggregate of
878,460 shares (restated for the 2-for-1 stock split
effective February 1998 and the 10 percent common stock
dividends effective in 1999, 1998, 1997 and 1996) of the
Company's $2.50 par value common stock. This Non-
Qualified Stock Option Plan, Administrative Rules and
Agreement are incorporated by reference from Form 10-K of
Brenton Banks, Inc. for the year ended December 31, 1997.
Exhibit 10.7
Long-Term Stock Compensation Plan, Agreements and related
documents, effective for 1994, under which certain of the
Company's senior officers and bank presidents were
eligible to receive shares of Brenton Banks, Inc. stock
based upon their service to the Company and Company
performance.
Exhibit 10.8
Long-Term Stock Compensation Plan, Agreements and related
documents, effective for 1995, under which certain of the
Company's senior officers and bank presidents were
eligible to receive shares of Brenton Banks, Inc. stock
based upon their service to the Company and Company
performance. This Long-Term Stock Compensation Plan,
Agreements and related documents are incorporated by
reference from Form 10-K of Brenton Banks, Inc. for the
year ended December 31, 1995.
Exhibit 10.9
Standard Agreement for Advances, Pledge and Security
Agreement between Brenton Bank and the Federal Home Loan
Bank of Des Moines. This Standard Agreement for Advances,
Pledge and Security Agreement is incorporated by reference
from Form 10-K of Brenton Banks, Inc. for the year ended
December 31, 1998.
Exhibit 10.10
Short-term note with American National Bank & Trust
Company of Chicago as of April 30, 1999, setting forth the
terms of the Parent Company's $5,000,000 short-term debt
agreement.
Exhibit 10.11
Data Processing Agreement dated December 1, 1991, by and
between ALLTEL Information Services, Inc., (formerly
Systematics, Inc.) and Brenton Bank (formerly Brenton
Information Systems, Inc.). This Data Processing
Agreement is incorporated by reference from Form 10-K of
Brenton Banks, Inc. for the year ended December 31, 1996.
28
<PAGE>
Exhibit 10.12
Correspondent Services Agreement dated November 13, 1996,
between Brenton Bank and the Federal Home Loan Bank of Des
Moines. This Correspondent Services Agreement is
incorporated by reference from Form 10-K of Brenton Banks,
Inc. for the year ended December 31, 1996.
Exhibit 10.13
Adoption Agreement #003 -- Nonstandardized Code Section
401(k) Profit Sharing Plan, effective January 1, 1999.
Exhibit 10.14
Indenture Agreement with respect to Capital Notes dated
April 12, 1993. This Indenture Agreement is incorporated
by reference from Form 10-K of Brenton Banks, Inc. for the
year ended December 31, 1998.
Exhibit 10.15
Indenture Agreement with respect to Capital Notes dated
April 14, 1992. This Indenture Agreement is incorporated
by reference from Form 10-K of Brenton Banks, Inc. for the
year ended December 31, 1997.
Exhibit 10.16
Indenture Agreement with respect to Capital Notes dated
March 27, 1991. This Indenture Agreement is incorporated
by reference from Form 10-K of Brenton Banks, Inc. for the
year ended December 31, 1996.
Exhibit 10.17
Indenture Agreement with respect to Capital Notes dated
August 5, 1991. This Indenture Agreement is incorporated
by reference from Form 10-K of Brenton Banks, Inc. for the
year ended December 31, 1996.
Exhibit 10.18
Indenture Agreement with respect to Capital Notes dated
April 8, 1994.
Exhibit 10.19
Indenture Agreement with respect to Capital Notes dated
April 10, 1995. This Indenture Agreement is incorporated
by reference from Form 10-K of Brenton Banks, Inc. for the
year ended December 31, 1995.
Exhibit 10.20
Indenture Agreement with respect to Capital Notes dated
April 10, 1996. This Indenture Agreement is incorporated
by reference from Form 10-K of Brenton Banks, Inc. for the
year ended December 31, 1996.
29
<PAGE>
Exhibit 10.21
Indenture Agreement with respect to Capital Notes dated
April 23, 1997. This Indenture Agreement is incorporated
by reference from Form 10-K of Brenton Banks, Inc. for the
year ended December 31, 1997.
Exhibit 10.22
Indenture Agreement with respect to Capital Notes dated
April 16, 1998. This Indenture Agreement is incorporated
by reference from Form 10-K of Brenton Banks, Inc. for the
year ended December 31, 1998.
Exhibit 10.23
Indenture Agreement with respect to Capital Notes dated
April 19, 1999.
Exhibit 10.24
Split-Dollar Insurance Agreement between the Company,
William H. Brenton Crummy Trust and William H. Brenton
Crummy Trust II, dated November 23, 1994.
Exhibit 10.25
Split-Dollar Insurance Agreement between the Company and
Brenton Life Insurance Trust for the benefit of C. Robert
Brenton, dated August 12, 1994.
Exhibit 10.26
Split-Dollar Insurance Agreement between the Company and
Brenton Life Insurance Trust for the benefit of Junius C.
Brenton, dated January 12, 1997. This Split-Dollar
Insurance Agreement is incorporated by reference from Form
10-K of Brenton Banks, Inc. for the year ended December
31, 1996.
Exhibit 10.27
Agreement between Robert L. DeMeulenaere and the Company
regarding the change in control arrangement, dated
December 31, 1994.
Exhibit 10.28
Twelfth Amendment to Data Processing Agreement dated July
1, 1995, by and between ALLTEL Information Services, Inc.
(formerly Systematics, Inc. and Systematics Financial
Services, Inc.) and Brenton Bank (formerly Brenton Bank
Services Corporation). This Twelfth Amendment to Data
Processing Agreement is incorporated by reference from
Form 10-Q of Brenton Banks, Inc. for the quarter ended
September 30, 1995.
30
<PAGE>
Exhibit 10.29
Thirteenth Amendment to Data Processing Agreement dated
December 1, 1995, by and between ALLTEL Information
Services, Inc. (formerly Systematics Financial Services,
Inc.) and Brenton Bank (formerly Brenton Bank Services
Corporation). This Thirteenth Amendment to Data Processing
Agreement is incorporated by reference from Form 10-K of
Brenton Banks, Inc. for the year ended December 31, 1995.
Exhibit 10.30
Fourteenth Amendment to Data Processing Agreement dated
January 1, 1998, by and between ALLTEL Information
Services, Inc. (formerly Systematics Financial Services,
Inc.) and Brenton Bank (formerly Brenton Bank Services
Corporation). This Fourteenth Amendment to Data
Processing Agreement is incorporated by reference from
Form 10-K of Brenton Banks, Inc. for the year ended
December 31, 1998.
Exhibit 10.31
Fifteenth Amendment to Data Processing Agreement dated
January 1, 1998, by and between ALLTEL Information
Services, Inc. (formerly Systematics Financial Services,
Inc.) and Brenton Bank (formerly Brenton Bank Services
Corporation). This Fifteenth Amendment to Data Processing
Agreement is incorporated by reference from Form 10-K of
Brenton Banks, Inc. for the year ended December 31, 1998.
Exhibit 10.32
Purchase Agreement dated December 31, 1998, by and between
West Lakes Development Company and Brenton Bank. This
Purchase Agreement is incorporated by reference from Form
10-K of Brenton Banks, Inc. for the year ended
December 31, 1998.
Exhibit 10.33
Purchase Agreement dated December 31, 1998, by and between
West End Diner, Inc. and Brenton Bank. This Purchase
Agreement is incorporated by reference from Form 10-K of
Brenton Banks, Inc. for the year ended December 31, 1998.
Exhibit 10.34
Agreement between The Weitz Company, Inc. and Brenton Bank
dated June 15, 1999. This Agreement is incorporated by
reference from Form 10-Q of Brenton Banks, Inc. for the
quarter ended September 30, 1999.
Exhibit 10.35
Agreement between Savage-Ver Ploeg & Associates, Inc. and
Brenton Bank dated March 19, 1999. This Agreement is
incorporated from Form 10-Q of Brenton Banks, Inc. for the
quarter ended September 30, 1999.
Exhibit 11
Statement of computation of earnings per share.
31
<PAGE>
Exhibit 12
Statement of computation of ratios.
Exhibit 13
The Appendix to the Proxy Statement for Brenton Banks,
Inc. for the 1999 calendar year.
Exhibit 21
Subsidiaries.
Exhibit 23
Consent of KPMG LLP to the incorporation of their report
dated January 28, 2000, relating to certain consolidated
financial statements of Brenton Banks, Inc. into the
Registration Statement on Form S-8 of Brenton Banks, Inc.
Exhibit 27
Financial Data Schedule (filed only with Electronic
Transmission).
The Parent Company will furnish to any shareholder upon request a copy of
any exhibit upon payment of a fee of $.50 per page. Requests for copies of
exhibits should be directed to Steven T. Schuler, Chief Financial
Officer/Treasurer/Secretary, at Brenton Banks, Inc., P.O. Box 961, Des Moines,
Iowa 50304-0961.
(b) Reports on Form 8-K: No reports on Form 8-K were required to
be filed during the last quarter of 1999.
32
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
BRENTON BANKS, INC.
By /s/ Robert L. DeMeulenaere
President and Director
ROBERT L. DEMEULENAERE
Date: March 9, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By /s/ Robert L. DeMeulenaere
President and Director
ROBERT L. DEMEULENAERE
Principal Executive Officer
Date: March 9, 2000
By /s/ Steven T. Schuler
Chief Financial Officer/Treasurer/Secretary
STEVEN T. SCHULER
Chief Financial Officer
Chief Accounting Officer
Date: March 9, 2000
33
<PAGE>
BOARD OF DIRECTORS
By: /s/ C. Robert Brenton
C. ROBERT BRENTON
Chairman of the Board
Date: March 9, 2000
By /s/ William H. Brenton
WILLIAM H. BRENTON
Date: March 9, 2000
By /s/ Junius C. Brenton
JUNIUS C. BRENTON
Date: March 9, 2000
By: /s/ Robert C. Carr
ROBERT C. CARR
Date: March 9, 2000
By /s/ Gary M. Christensen
GARY M. CHRISTENSEN
Date: March 9, 2000
By /s/ Robert J. Currey
ROBERT J. CURREY
Date: March 9, 2000
34
<PAGE>
EXHIBIT INDEX
Exhibits Page
Exhibit 3
The Articles of Incorporation, as amended, and Bylaws,
as amended, of Brenton Banks, Inc. These Articles of
Incorporation, as amended, and Bylaws are incorporated
by reference from Form 10-K of Brenton Banks, Inc. for
the year ended December 31, 1997. ........................ 41
Exhibit 10.1
Summary of the Company's Bonus Plans under which some
of the executive officers of the Company and certain
other personnel of the subsidiaries are eligible to
receive a bonus each year. ............................... 42
Exhibit 10.2
1996 Stock Option Plan, Administrative Rules and
Agreement under which officers of the Company are
eligible to receive options to purchase an aggregate
of 1,607,100 shares (restated for the 2-for-1 stock
split effective February 1998 and the 10 percent
common stock dividends effective in 1999, 1998, 1997
and 1996) of the Company's $2.50 par value common
stock. This 1996 Stock Option Plan, Administrative
Rules and Agreement are incorporated by reference from
Form 10-Q of Brenton Banks, Inc. for the quarter ended
September 30, 1996. ...................................... 44
Exhibit 10.3
Form of the 1999 Stock Option Agreement, under which
certain officers of the Company are eligible to receive
options pursuant to the 1996 Stock Option Plan. ........... 45
Exhibit 10.4
Directors' Incentive Plan. This Directors' Incentive
Plan is incorporated by reference from Form 10-Q of
Brenton Banks, Inc. for the quarter ended September 30,
1995. .................................................... 49
Exhibit 10.5
Employment Agreement, dated July 6, 1989, between
William H. Brenton and Brenton Banks, Inc. ............... 50
Exhibit 10.6
Non-Qualified Stock Option Plan, Administrative
Rules and Agreement under which officers of the
Company were eligible to receive options to purchase
an aggregate of 878,460 shares (restated for the
2-for-1 stock split effective February 1998 and the
10 percent common stock dividends effective in 1999,
1998, 1997 and 1996) of the Company's $2.50 par value
common stock. This Non-Qualified Stock Option Plan,
Administrative Rules and Agreement are incorporated
by reference from Form 10-K of Brenton Banks, Inc.
for the year ended December 31, 1997. .................... 57
35
<PAGE>
Exhibit 10.7
Long-Term Stock Compensation Plan, Agreements and
related documents, effective for 1994, under which
certain of the Company's senior officers and bank
presidents were eligible to receive shares of
Brenton Banks, Inc. stock based upon their service
to the Company and Company performance. .................. 58
Exhibit 10.8
Long-Term Stock Compensation Plan, Agreements and
related documents, effective for 1995, under which
certain of the Company's senior officers and bank
presidents were eligible to receive shares of Brenton
Banks, Inc. stock based upon their service to the
Company and Company performance. This Long-Term
Stock Compensation Plan, Agreements and related
Documents are incorporated by reference from Form
10-K of Brenton Banks, Inc. for the year ended
December 31, 1995. ....................................... 72
Exhibit 10.9
Standard Agreement for Advances, Pledge and
Security Agreement between Brenton Bank and the
Federal Home Loan Bank of Des Moines. This Standard
Agreement for Advances, Pledge and Security Agreement
is incorporated by reference from Form 10-K of Brenton
Banks, Inc. for the year ended December 31, 1998. ........ 73
Exhibit 10.10
Short-term note with American National Bank & Trust
Company of Chicago as of April 30, 1999, setting
forth the terms of the Parent Company's $5,000,000
short-term debt agreement. ............................... 74
Exhibit 10.11
Data Processing Agreement dated December 1, 1991,
by and between ALLTEL Information Services, Inc.,
(formerly Systematics, Inc.) and Brenton Bank
(formerly Brenton Information Systems, Inc.).
This Data Processing Agreement is incorporated
by reference from Form 10-K of Brenton Banks,
Inc. for the year ended December 31, 1996. ............... 78
Exhibit 10.12
Correspondent Services Agreement dated November
13, 1996, between Brenton Bank and the Federal
Home Loan Bank of Des Moines. This Correspondent
Services Agreement is incorporated by reference from
Form 10-K of Brenton Banks, Inc. for the year ended
December 31, 1996. ....................................... 79
Exhibit 10.13
Adoption Agreement #003 -- Nonstandardized Code
Section 401(k) Profit Sharing Plan, effective
January 1, 1999. ......................................... 80
36
<PAGE>
Exhibit 10.14
Indenture Agreement with respect to Capital Notes
dated April 12, 1993. This Indenture Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc. for the year ended December 31, 1998. ........ 129
Exhibit 10.15
Indenture Agreement with respect to Capital Notes
dated April 14, 1992. This Indenture Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc. for the year ended December 31, 1997. ........ 130
Exhibit 10.16
Indenture Agreement with respect to Capital Notes
dated March 27, 1991. This Indenture Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc. for the year ended December 31, 1996. ........ 131
Exhibit 10.17
Indenture Agreement with respect to Capital Notes
dated August 5, 1991. This Indenture Agreement
is incorporated by reference from Form 10-K of Brenton
Banks, Inc. for the year ended December 31, 1996. ........ 132
Exhibit 10.18
Indenture Agreement with respect to Capital Notes
dated April 8, 1994. ..................................... 133
Exhibit 10.19
Indenture Agreement with respect to Capital Notes
dated April 10, 1995. This Indenture Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc. for the year ended December 31, 1995. ........ 148
Exhibit 10.20
Indenture Agreement with respect to Capital Notes
dated April 10, 1996. This Indenture Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc. for the year ended December 31, 1996. ........ 149
Exhibit 10.21
Indenture Agreement with respect to Capital Notes
dated April 23, 1997. This Indenture Agreement is
incorporated by reference from Form 10-K of Brenton
Banks, Inc. for the year ended December 31, 1997. ........ 150
Exhibit 10.22
Indenture Agreement with respect to Capital Notes
dated April 16, 1998. This Indenture Agreement
is incorporated by reference from Form 10-K of Brenton
Banks, Inc. for the year ended December 31, 1998. ........ 151
37
<PAGE>
Exhibit 10.23
Indenture Agreement with respect to Capital Notes
dated April 19, 1999. .................................... 152
Exhibit 10.24
Split-Dollar Insurance Agreement between the Company,
William H. Brenton Crummy Trust and William H. Brenton
Crummy Trust II, dated November 23, 1994. ................ 171
Exhibit 10.25
Split-Dollar Insurance Agreement between the Company
and Brenton Life Insurance Trust for the benefit of
C. Robert Brenton, dated August 12, 1994. ................ 213
Exhibit 10.26
Split-Dollar Insurance Agreement between the Company
and Brenton Life Insurance Trust for the benefit of
Junius C. Brenton, dated January 12, 1997. This
Split-Dollar Insurance Agreement is incorporated by
reference from Form 10-K of Brenton Banks, Inc. for
the year ended December 31, 1996. ........................ 223
Exhibit 10.27
Agreement between Robert L. DeMeulenaere and the
Company regarding the change in control arrangement,
dated December 31, 1994. ................................. 224
Exhibit 10.28
Twelfth Amendment to Data Processing Agreement
dated July 1, 1995, by and between ALLTEL Information
Services, Inc. (formerly Systematics, Inc. and
Systematics Financial Services, Inc.) and Brenton
Bank (formerly Brenton Bank Services Corporation).
This Twelfth Amendment to Data Processing Agreement
is incorporated by reference from Form 10-Q of Brenton
Banks, Inc. for the quarter ended September 30, 1995. .... 228
Exhibit 10.29
Thirteenth Amendment to Data Processing Agreement
dated December 1, 1995, by and between ALLTEL
Information Services, Inc. (formerly Systematics
Financial Services, Inc.) and Brenton Bank
(formerly Brenton Bank Services Corporation).
This Thirteenth Amendment to Data Processing
Agreement is incorporated by reference from Form
10-K of Brenton Banks, Inc. for the year ended
December 31, 1995. ....................................... 229
Exhibit 10.30
Fourteenth Amendment to Data Processing Agreement
dated January 1, 1998, by and between ALLTEL
Information Services, Inc. (formerly Systematics
Financial Services, Inc.) and Brenton Bank
(formerly Brenton Bank Services Corporation).
This Fourteenth Amendment to Data Processing
Agreement is incorporated by reference from Form
10-K of Brenton Banks, Inc. for the year ended
December 31, 1998. ....................................... 230
38
<PAGE>
Exhibit 10.31
Fifteenth Amendment to Data Processing Agreement
dated January 1, 1998, by and between ALLTEL
Information Services, Inc. (formerly Systematics
Financial Services, Inc.) and Brenton Bank
(formerly Brenton Bank Services Corporation).
This Fifteenth Amendment to Data Processing
Agreement is incorporated by reference from Form
10-K of Brenton Banks, Inc. for the year ended
December 31, 1998. ....................................... 231
Exhibit 10.32
Purchase Agreement dated December 31, 1998, by
and between West Lakes Development Company and
Brenton Bank. This Purchase Agreement is
incorporated by reference from Form 10-K of
Brenton Banks, Inc. for the year ended
December 31, 1998. ....................................... 232
Exhibit 10.33
Purchase Agreement dated December 31, 1998,
by and between West End Diner, Inc. and
Brenton Bank. This Purchase Agreement is
Incorporated by reference from Form 10-K of
Brenton Banks, Inc. for the year ended
December 31, 1998. ....................................... 233
Exhibit 10.34
Agreement between The Weitz Company, Inc.
and Brenton Bank dated June 15, 1999. This
Agreement is incorporated by reference from Form
10-Q of Brenton Banks, Inc. for the quarter
ended September 30, 1999. ................................ 234
Exhibit 10.35
Agreement between Savage-Ver Ploeg & Associates,
Inc. and Brenton Bank dated March 19, 1999. This
Agreement is incorporated from Form 10-Q of Brenton
Banks, Inc. for the quarter ended September 30,
1999. .................................................... 235
Exhibit 11
Statement of computation of earnings per share. .......... 236
Exhibit 12
Statement of computation of ratios. ...................... 238
Exhibit 13
The Appendix to the Proxy Statement for Brenton
Banks, Inc. for the 1999 calendar year. .................. 242
Exhibit 21
Subsidiaries. ............................................ 280
Exhibit 23
Consent of KPMG LLP to the incorporation of their
report dated January 28, 2000, relating to certain
consolidated financial statements of Brenton Banks,
Inc. into the Registration Statement on Form S-8
of Brenton Banks, Inc. ................................... 282
39
<PAGE>
Exhibit 27
Financial Data Schedule (filed only with Electronic
Transmission). ........................................... 284
40
<PAGE>
Exhibit 3
The Articles of Incorporation, as amended, and Bylaws, as amended, of
Brenton Banks, Inc. These Articles of Incorporation, as amended, and
Bylaws are incorporated by reference from Form 10-K of Brenton Banks,
Inc. for the year ended December 31, 1997.
41
<PAGE>
Exhibit 10.1
Summary of the Company's Bonus Plans under which some of the
executive officers of the Company and certain other personnel of the
subsidiaries are eligible to receive a bonus each year.
42
<PAGE>
1999 BRENTON BANKS, INC. BONUS PLANS
For 1999, the Company (Brenton Banks, Inc. and Subsidiaries) has bonus plans
that cover executive officers, line of business managers, senior managers,
market managers, and other key personnel. The following chart summarizes the
main features of these bonus plans:
Bonus potential (as percent of base pay):
Chief Executive Officer 60.00%
Other Executive Officers 45.00% to 50.00%
Line of business managers 40.00%
Market managers 30.00% to 40.00%
Senior managers and other key personnel 10.00% to 37.50%
Bonus threshold for executive officers:
Bonus achievement is tied to a consolidated earnings threshold of
$19,500,000 whereby no bonus will be paid if this earnings threshold is
not achieved. For executive officers 50% to 100% of bonus is tied to
consolidated net income. The same tiered earnings bonus matrix applies
to all employees who have a portion of their bonus tied to consolidated
net income. The tiered bonus matrix, for that portion of the bonus tied
to net income, provides for no bonus unless net income exceeds
$19,500,000 and provides for 100% of bonus to be earned when net income
exceeds $22,500,000.
Bonus criteria:
Bonus amounts are paid for achievement of certain pre-established
financial and personal goals, the most significant of which are as
follows:
Consolidated net income
Subsidiary or line of business controllable net income
Sales goals
Growth in loans
Growth in core deposits
Fee income generation
Noninterest income
Noninterest expense
Customer portfolio profitability
Key personal objectives
Bonus achievements:
Bonus amounts are earned ratably based on actual results compared to a
tiered bonus achievement matrix.
43
<PAGE>
Exhibit 10.2
1996 Stock Option Plan, Administrative Rules and Agreement under
which officers of the Company are eligible to receive options to
purchase an aggregate of 1,607,100 shares (restated for the 2-for-1
stock split effective February 1998 and the 10 percent common stock
dividends effective in 1999, 1998, 1997 and 1996) of the Company's
$2.50 par value common stock. This 1996 Stock Option Plan,
Administrative Rules and Agreement are incorporated by reference from
Form 10-Q of Brenton Banks, Inc. for the quarter ended September 30,
1996.
44
<PAGE>
Exhibit 10.3
Form of the 1999 Stock Option Agreement, under which certain officers
of the Company are eligible to receive options pursuant to the 1996
Stock Option Plan.
45
<PAGE>
Brenton Banks, Inc.
Stock Option Agreement
Pursuant to the 1996 Stock Option Plan
Name: [NAME]
"Participant"
This agreement certifies your receipt of an option grant under the
Brenton Banks, Inc. 1996 Stock Option Plan. All aspects of this
grant shall be governed by the terms and conditions of this
agreement, in addition to those in the Plan document which has been
given to you along with this agreement. The terms and conditions
which apply to your option are contained in these documents.
This document shall constitute an agreement between you and Brenton
Banks, Inc. only if a copy signed by you is received by Brenton
Banks Inc.'s Compensation Committee within ninety days of the date
of this agreement. By signing this agreement, you acknowledge
receipt of the Plan document and acceptance and agreement with all
terms and conditions of the option grant and the Plan document.
The Company and Participant acknowledge that the purpose of the
grant of the option is designed to align the interests of the
Company's stockholders and Participant through the Participant's
ownership of the stock acquired through the exercise of the
options.
The Participant represents and warrants that they are bona fide
residents of the State of Iowa.
ACCEPTED and AGREED: Brenton Banks, Inc.
_______________________________
Robert L. DeMeulenaere,
President
_____________________ _______ _______________________ ______
Participant Date Chairman--Compensation Date
Committee of the Board
46
<PAGE>
Stock Option Agreement
Terms and Conditions
Number of Shares: <Options> Option Price: [PRICE-PER-SHARE]
Date of Grant: [DATE] Expiration Date: [EXPIRATION]
Vesting: The Option becomes vested and may be exercised upon the
earlier of 9 1/2 years after grant or upon and to the extent that
the achievement of the Cumulative Net Income Goals as specified
below:
The Cumulative Net Income Goals of the Company are as set forth in
Table 1 below. The Cumulative Net Income of the Company
(hereinafter the "CNI") through each of the dates listed in Table 1
below shall mean the sum of the Company's Annual Net Income as
reported in the Company's Audited Financial Statements for each of
the years beginning January 1, 1996 through such dates. To the
extent that the Company fails to obtain the minimum CNI designated
for any performance period, no options shall become vested. To the
extent that CNI meets or exceeds the minimum CNI designated for any
performance period the amount of options vested shall be
proportionately equal to the amount that CNI exceeds the minimum to
the maximum set forth on Table 1. To the extent that the CNI
exceeds the maximum designated for any performance period, no
additional options in excess of the maximum shall vest. The amount
of shares vested throughout the term of the Option shall not exceed
the total number of Option shares granted. Once Option shares are
vested, such shares shall remain vested in subsequent years
notwithstanding the failure to meet subsequent performance
criteria. Notwithstanding the foregoing, no fractional shares shall
be required to be issued by the Company. Options shall become
vested upon certification by the Company's accountants of the
Company's Annual Net Income and the certification of CNI by the
Compensation Committee.
<TABLE>
<CAPTION>
TABLE 1:
% Total Vested Cumulative Net Income (000) Starting 1/1/96 Through
12/31/98 12/31/99 12/31/00 12/31/01
<S> <C> <C> <C> <C>
100% -- -- -- $118,376,000
75% -- -- -- 113,640,960
67% -- -- $93,900,000 110,681,560
50% -- -- 89,486,000 107,130,280
33% -- $70,900,000 88,073,000 102,987,120
25% -- 67,737,000 85,071,000 --
0% $50,000,000 64,574,000 -- --
45,940,000 -- -- --
-- -- -- --
</TABLE>
47
<PAGE>
Treatment Upon Termination: In the case of the Participant's
termination of employment from the Company, any of its subsidiaries
or joint ventures, the Options granted herein shall terminate as
provided in Table 2, below. For purposes of this Agreement,
"Termination for Cause" shall mean termination of employment for
theft or misappropriation of company's funds/assets, or the
Participant's conviction of a felony. Disability shall mean a
Participant who is disabled as defined under the Company's
Disability Plan, if any, or under the Social Security Rules.
<TABLE>
<CAPTION>
TABLE 2:
Treatment of Post-Termination
Reason for Termination Unvested Options Exercise Period
<S> <C> <C>
Termination for cause All forfeited None
Voluntary quit or All forfeited 90 days
involuntary for any
reason other than for
cause
Death or disability Prorata vesting over five Remainder of
years based on actual option period
service since date of
grant
Retirement at or after Prorated vesting based on Remainder of
age 65 or, with Committee actual service since date option period
consent, retirement prior of grant through nine
to age 65 years and six (6) months
Retirement prior to age All forfeited Ninety days
65 without Committee
consent
</TABLE>
Change in Control: Upon a Change in Control of the Company,
unvested options become vested depending on when the Change in
Control occurs. Upon a Change in Control Options granted
hereunder, to the extent not previously vested, shall become vested
to the extent set forth in Table 3. The amount vested upon a
Change in Control shall be determined by multiplying the percentage
set forth across from the year in which the Change in Control
occurs by the total number of unvested Options shares granted
herein.
TABLE 3:
In 1996 -- 0% vesting In 1998 -- 75% vesting
In 1997 -- 50% vesting In 1999 or thereafter -- 100% vesting
Committee Discretion: The Participant and Company acknowledge that
a material acquisition or divestiture of a business activity or
business unit (by merger, stock swap or other similar transactions)
by the Company may be a material change in the operations of the
Company that may justify an amendment to the performance vesting
schedule set forth in Table 1. The Participant and Company agree
that in such an event the Compensation Committee shall have the
right to make an appropriate adjustment to Table 1, as determined
in the good faith judgment of the Compensation Committee, provided
that any adjustment shall only be made prospectively and shall be
made within 120 days of the consummation of the transaction which
justifies the amendment.
Change in Duties or Position of Participant: So long as the holder
of an Option shall continue to be a Participant of the Company or
one or more of its subsidiaries his Option shall not be affected by
any change of duties or position.
48
<PAGE>
Exhibit 10.4
Directors' Incentive Plan. This Directors' Incentive Plan is
incorporated by reference from Form 10-Q of Brenton Banks, Inc. for
the quarter ended September 30, 1995.
49
<PAGE>
Exhibit 10.5
Employment Agreement, dated July 6, 1989, between William H.
Brenton and Brenton Banks, Inc.
50
<PAGE>
Employment Agreement
This Agreement is made this sixth day of July, 1989 by and
between Brenton Banks, Inc., an Iowa corporation (Company) and
William H. Brenton(Employee).
Witnesseth:
Whereas, Employee is currently a key employee of the Company
holding the office of Chairman of the Company and serving on
significant committees of the Company and on boards of directors
and significant committees of subsidiaries of the Company, and
Whereas, the retention of Employee's services for and on
behalf of the Company is of material importance to the
preservation and enhancement of the Company's business, and
Whereas, Employee has agreed to remain in the employ of the
Company in return for the Company's promises stated in this
Agreement.
Now, Therefore, in consideration of the mutual covenants set
forth in this Agreement the Company and Employee agree as follows:
1. Term of Employment. Company hereby employs Employee on
the terms and conditions set forth in this Agreement and Employee
hereby accepts such employment and agrees to render services to
the Company on the terms and conditions set forth in this
Agreement. The term of employment shall continue until December
31, 1994 unless sooner terminated as provided in subsequent
paragraphs of this Agreement. During the term of employment
Employee shall perform such executive services for the Company as
may be consistent with his title and from time to time assigned to
him by the Board of Directors of the Company. The services of
Employee shall be performed principally in Des Moines, Iowa.
2. Duties and Offices. Until the annual stockholders meeting
in May 1990, Employee shall hold his present office of Chairman of
the Company and, subject to the rights of the stockholders, shall
be a member of and Chairman of the Board of Directors of Company.
Unless otherwise agreed between Employee and the Company,
Employee while Chairman shall serve on such committees and
subsidiary boards of directors and hold such subsidiary offices as
has been customary for the Chairman of the Company and receive
customary compensation for all such service. From the annual
stockholders meeting in May 1990 until December 31, 1994 Employee
shall hold the office of Vice Chairman of the Company. Unless
otherwise agreed between Employee and the Company, Employee while
Vice Chairman shall, if Employee so desires, serve on subsidiary
boards of directors and on committees on which he now serves or on
which Employee desires to serve or on which the Chairman or the
President then serves and, subject to the rights of the
stockholders, shall be a member of the Board of Directors of the
Company and receive customary compensation for all such service.
While Vice Chairman and a member of the Board of Directors he
shall serve as Chairman of the Executive Committee of the Board of
Directors. While Vice Chairman, Employee may perform consulting
services for outside companies and individuals provided each
engagement is disclosed to the Company and presents no conflict of
interest with the Company. The Company recognizes that the duties
of Vice Chairman will not require as much time commitment as the
duties of Chairman.
51
<PAGE>
3. Compensation. Employee's base salary through December 31,
1994 shall be not less than the greater of (a) Employee's base
salary for 1989 or (b) the higher of the base salaries in effect
from time to time for C. Robert Brenton or J. C. Brenton.
Employee's base salary shall be increased commensurate with
general increases in the base salaries of other senior executives.
The base salary may be increased from time to time by the Board
of Directors. In addition to base salary, Employee shall be
entitled to participate in bonus, stock option, pension, profit
sharing and other programs available to other senior executives
and shall be entitled to other benefits, expense reimbursement and
allowances now or in the future available to other senior
executives, all on a basis not less favorable than the best
available to C. Robert Brenton or J. C. Brenton.
4. Retirement. Employee shall retire on December 31, 1994.
Employee may retire earlier if Employee so desires. Upon
retirement, the Company shall pay Employee $50,000 as a lump sum
retirement benefit. In addition, upon retirement, the Company
shall pay Employee as an additional lump sum retirement benefit
the amount, if any, by which $160,000 multiplied by Employee's
years (or fractional years) of service from January 1, 1990,
through the date of retirement exceeds the amount of base salary
and bonuses paid to Employee for such period. After retirement,
the Company shall make an office (with reasonable secretarial
help) available for use by Employee during his lifetime; however,
this obligation shall cease at such time as there is a change in
control of the Company as defined in Section 280G of the Internal
Revenue Code. After retirement Employee may serve as a member of
the boards of directors of subsidiary banks as Employee desires
and, subject to the rights of the stockholders, shall, if Employee
desires, be a member of the Board of Directors of the Company and
shall receive customary compensation for all such service.
5. Supplemental Retirement Income. Commencing with
Employee's retirement, the Company shall pay to Employee $50,000
per year in equal monthly installments, subject to adjustment as
provided below. If Employee dies, such payments shall continue to
Employee's spouse. Such payments shall continue from the date of
commencement until December 31, 2004, or, if earlier, the date on
which both Employee and his spouse are deceased. The amount of
such payments shall be adjusted as of the commencement date of the
payments and as of each fifth anniversary of the commencement date
to reflect increases in the Consumers Price Index (or other
appropriate index) which have occurred since the date of this
Agreement, but in no event shall the amount of increase due to
such adjustment exceed one-half of the amount of such payments
prior to the adjustment. (For example, if payments commence on
January 1, 1995, and if the Consumer Price Index in December 1994
is 110% of the Consumer Price Index on the date of this Agreement
and in December 1999 is 120% of the Consumer Price Index on the
date of this Agreement, then the amount of such payments would be
$55,000 per year for 1995 through 1999 and $60,000 per year for
2000 through 2004).
6. Death Before Retirement. If Employee dies before
retirement and is survived by his spouse, the payments set forth
in paragraph 5 shall be made to his spouse commencing upon
Employee's death but not beyond his spouse's death, and his spouse
shall receive the benefits provided in paragraphs 13 and 15, and
shall receive the benefits provided in paragraph 4 as though
Employee had retired upon his date of death.
7. Disability. In the event Employee becomes permanently
disabled prior to retirement, Employee shall retire upon the date
of determination of permanent disability and shall receive the
benefits provided in paragraphs 4, 5, 12, 13 and 15.
52
<PAGE>
Employee shall be deemed permanently disabled if Employee has been
absent from his duties for three consecutive months and a licensed
physician chosen by the Company determines that Employee has a
physical or mental condition which renders him incapable of
performing his usual and customary employment with the Company.
In the event of temporary disability while employed, Employee
shall receive disability benefits pursuant to disability plans
applicable to other senior executives.
8. Termination for Just Cause by Company. The Board of
Directors of the Company shall have the right to terminate
Employee's employment for just cause. Upon termination for just
cause, Employee shall be deemed to have retired upon the date of
termination and shall receive the benefits provided in paragraphs
4, 5, 12, 13 and 15. Termination for just cause by the Company
shall mean and be limited to termination for (a) personal
dishonesty, breach of fiduciary duty involving personal profit,
conviction of a felony involving moral turpitude, or (b) the
willful and continued failure by Employee to substantially perform
his duties hereunder (other than any such failure resulting from
Employee's incapacity due to physical or mental illness) after
demand for substantial performance is delivered by the Company
that specifically identifies the manner in which the Company
believes Employee has not substantially performed his duties and
that gives Employee a reasonable time to conform his performance
of duties to those required under this Agreement. For purposes of
this paragraph, no act or failure to act on Employee's part shall
be considered "willful" unless done or omitted to be done by him
not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company. After
termination pursuant to this paragraph, Employee shall be entitled
to compete with the Company without limitation, except that
Employee shall make no use of confidential information learned
during his employment with the Company.
9. Termination For Just Cause by Employee. Employee shall
have the right to terminate his employment for just cause.
Commencing upon the effective date of termination for just cause
by the Employee, the Company shall pay Employee in equal monthly
installments until December 31, 1994, the amounts to which
Employee would have been entitled under paragraph 3 if he had
remained employed by the Company under this Agreement, including
participation, or amounts equivalent to participation, in the
Company's qualified pension plan. Commencing January 1, 1995, the
Company shall pay to Employee or his spouse the benefits under
paragraph 4, 5, 12, 13 and 15 as though Employee had retired on
December 31, 1994. If Employee dies prior to December 31, 1994,
he shall be deemed to have died before retirement and the
provisions of paragraph 6 shall apply. Termination for just cause
by Employee shall mean and be limited to termination within three
months following (a) the assignment to Employee of any duties
inconsistent with Employee's positions, duties, responsibilities
or status within the Company in effect on the date of this
Agreement or as provided in paragraph 2, (b) a material change in
Employee's responsibilities, titles or offices as in effect on the
date of this Agreement or as provided in paragraph 2, (c) the
requirement that Employee perform his services principally at a
location other than Des Moines, Iowa, or (d) a material default by
the Company in the performance of its obligations under this
Agreement. After termination pursuant to this paragraph, Employee
shall be entitled to compete with the Company without limitations,
except that Employee shall make no use of confidential information
learned during his employment with the Company.
10. Termination Without Just Cause. The Company shall have
the right to terminate Employee's employment without just cause by
giving Employee six months advance notice of such termination, or
in lieu of such notice, by paying Employee an amount equal to six
months base salary then in effect. In addition, commencing upon
53
<PAGE>
the effective date of termination, the Company shall pay Employee
in equal monthly installments until December 31, 1994, the amounts
to which Employee would have been entitled under paragraph 3 if he
had remained employed by the Company under this Agreement
including participation, or amounts equivalent to participation,
in the Company's qualified pension plan. Commencing January 1,
1995, the Company shall pay to Employee or his spouse the benefits
under paragraphs 4, 5, 12, 13 and 15 as though Employee had
retired on December 31, 1994. If Employee dies prior to December
31, 1994, he shall be deemed to have died before retirement and
the provisions of paragraph 6 shall apply. After termination
pursuant to this paragraph, Employee shall be entitled to compete
with the Company without limitation, except that Employee shall
make no use of confidential information during his employment with
the Company.
11. Unfunded Agreement. Supplemental retirement benefits to
be provided under this Agreement are unfunded obligations of the
Company. Company shall not be required to segregate any monies
from its general funds, to create any trust, to make any special
deposits or to purchase any policies of insurance with respect to
its obligations under this Agreement.
12. Life Insurance. Until Employee reaches age 70, the
Company shall continue in force the present life insurance policy
on the life of Employee. After Employee reaches age 70, the
Company shall until December 31, 2004, or Employee's death,
contribute $7,500 per year towards life insurance premiums under a
policy on Employee's life to be selected by Employee.
13. Medical Insurance. Until the completion of payment of
the supplemental retirement income pursuant to paragraph 5, the
Company shall pay for Employee's and Employee's spouse medical
insurance under a policy which, when combined with Medicare
benefits, provides coverage not less favorable than now in effect,
subject to requirements of the insuror based upon age.
14. Limitation. In the event of termination for just cause
by Employee pursuant to paragraph 9 or termination without just
cause by the Company pursuant to paragraph 10, if such termination
is contingent upon a change in control as provided in section 28OG
of the Internal Revenue Code, and if the payments provided in
paragraph 15, the second sentence of paragraph 9 or the second
sentence in paragraph 10 would constitute an "excess parachute
payment" as defined in section 28OG of the Internal Revenue Code,
then in lieu of such payments the Company shall pay the Employee
within 30 days after such termination an amount equal to 2.9 times
the average aggregate annual compensation paid to Employee by the
Company and includible in his gross income for federal income tax
purposes during the five calendar years preceding the taxable year
in which change in control occurs. The determination whether
termination is contingent upon a change in control and whether
such payments would constitute an "excess parachute payment" shall
be made jointly by an independent certified public accountant
selected by Employee and the independent certified public
accountants responsible for preparing the Company's federal income
tax return for the year in which such lump sum payment is made.
15. Additional Benefits. If the Company
(a) prior to January 1, 1995, or
54
<PAGE>
(b) after December 31, 1994 and prior to January 1, 2000,
incident to or in anticipation of an acquisition of control of the
Company as defined in 12 CFR 225.41,
provides or agrees to provide post employment, severance payments
or retirement benefits to C. Robert Brenton or J. C. Brenton other
than payments pursuant to a qualified plan which are more
favorable than those provided under this Agreement, then Employee,
at his option, or his spouse, at her option if Employee is
deceased, may elect to receive payments and benefits pursuant to
the arrangement between the Company and C. Robert Brenton or J. C.
Brenton, including retroactive adjustment in payments and benefits
received by Employee or his spouse prior to the time the Company
made such arrangement. If such arrangement between the Company
and C. Robert Brenton or J. C. Brenton is made on or before
December 31, 1994, the Employee or his spouse may elect to receive
payments and benefits fully commensurate with such arrangement.
If such arrangement between the Company and C. Robert Brenton or
J. C. Brenton is made after December 31, 1994, then Employee or
his spouse may elect to receive payments and benefits partially
adjusted to be commensurate with such arrangement; if such
arrangement is made during 1995 then the payments and benefits
shall be 100% adjusted; during 1996, 80% adjusted; during 1997,
60% adjusted; during 1998, 40% adjusted, during 1999, 20%
adjusted. If any determination under this paragraph requires
determination of actuarial equivalency, such determination shall
be made jointly by an independent certified public accountant
selected by Employee or his spouse if Employee is then deceased
and the independent certified public accountant responsible for
preparing the Company's federal income tax return. As used in
this paragraph, "the Company" shall include any entity providing
payments or benefits in connection with any such employment,
severance or retirement.
For Example: If, incident to the acquisition of control, the
Company during 1997 agrees with C. Robert Brenton to pay him a
lump sum retirement benefit of $100,000 and the amount received by
Employee upon his retirement on December 31, 1994, under paragraph
4 was $75,000, then the Company in 1997 would pay Employee 60% of
$25,000, or $15,000 (subject to decrease by the estimators to
reflect inflation from 1994 to 1997 and subject to increase by the
estimators to reflect the time value of money from 1994 to 1997).
If the Company during 1997 agreed with C. Robert Brenton to pay
him supplemental retirement income of $60,000 per year until age
85, then the Company would (a) continue payments to Employee under
paragraph 5 of this Agreement until Employee reaches age 85, (b)
beginning in 1997 increase such payments from $50,000 to $56,000
(60% of the difference between $60,000 and $50,000), and (c) pay
Employee in 1997 $18,000 (subject to adjustment for inflation and
the time value of money) which is $6,000 for each of the three
years from Employee's retirement date of December 31, 1994 to the
beginning of 1997.
16. General Provisions. Benefits under this Agreement shall
not be subject in any manner to alienation sale, transfer,
assignment, pledge, or encumbrance of any kind unless approved by
the Board of Directors of the Company. Any attempt to alienate,
sell, transfer, assign, pledge, or otherwise encumber any benefit,
whether presently or hereafter payable, shall be void unless so
approved. Except as required by law, no benefit shall in any
manner be subject to garnishment, attachment, execution, or other
legal process, or be liable for or subject to the debts or
liability of Employee or his spouse.
In the event of litigation regarding this Agreement, the
Company shall reimburse Employee or his spouse for all reasonable
attorney fees and expenses incident to such
55
<PAGE>
litigation, if Employee or his spouse is the prevailing party.
Employee shall not be required to mitigate the amount of any
payment under this Agreement, by seeking other employment or
otherwise. This agreement may not be amended or otherwise
modified without the consent of Employee or, after his death, his
spouse. No waiver of any provision of this Agreement shall be
effective unless in writing signed by the party sought to be
charged with such waiver; the waiver of a provision upon one
occasion shall not constitute the waiver of the same provision on
a different occasion. This Agreement shall be binding upon the
successors and assigns of the Company; a successor of the Company
shall include any entity which succeeds to substantially all the
assets of the Company, whether by merger, purchase or otherwise.
This Agreement or the termination of employment pursuant to
this Agreement shall have no adverse effect upon Employee's
participation or rights under pension, profit sharing, stock,
option or other plan of the Company.
17. Notices. Notices under this Agreement shall be effective
if hand delivered to Employee or to the Chairman (other than
Employee) or Secretary of the Company, or if sent certified mail,
return receipt requested to Employee at his then current place of
residence or to the Chairman (other than Employee) or Secretary at
the principal offices of the Company.
In Witness Whereof, the parties have executed this Agreement
effective the day and year first above written.
/s/ William H. Brenton
William H. Brenton, Employee
Brenton Banks, Inc.
By /s/ C. Robert Brenton
C. Robert Brenton, President
Approval of Board of Directors
The undersigned, constituting all of the members of the Board
of Directors of Brenton Banks, Inc., hereby approve the foregoing
Employment Agreement.
/s/ C. Robert Brenton
C. Robert Brenton
/s/ J. C. Brenton
J. C. Brenton
/s/ R. Dean Duben
R. Dean Duben
/s/ Thomas R. Smith
Thomas R. Smith
/s/ William H. Brenton
William H. Brenton
(signing but abstaining)
/s/ Steven T. Schuler
Steven T. Schuler
ATTEST
56
<PAGE>
Exhibit 10.6
Non-Qualified Stock Option Plan, Administrative Rules and Agreement
under which officers of the Company were eligible to receive options
to purchase an aggregate of 878,460 shares (restated for the 2-for-1
stock split effective February 1998 and the 10 percent common stock
dividends effective in 1999, 1998, 1997 and 1996) of the Company's
$2.50 par value common stock. This Non-Qualified Stock Option Plan,
Administrative Rules and Agreement are incorporated by reference from
Form 10-K of Brenton Banks, Inc. for the year ended December 31,
1997.
57
<PAGE>
Exhibit 10.7
Long-Term Stock Compensation Plan, Agreements and related documents,
effective for 1994, under which certain of the Company's senior
officers and bank presidents were eligible to receive shares of
Brenton Banks, Inc. stock based upon their service to the Company and
Company performance.
58
<PAGE>
BRENTON BANKS, INC.
Long-Term Stock Compensation Plan
Grant Agreement
This Grant Agreement made on the date set forth below, by and
between Brenton Banks, Inc., an Iowa Corporation (the "Company")
and Phillip L. Risley, an employee of the Company or a Subsidiary
thereof (the "Grantee").
The Company desires to carry out the purpose of its Long-Term
Stock Compensation Plan by awarding Restricted Stock Grants and
Incentive Stock Grants to the Grantee pursuant to the terms set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants set
forth in this Agreement and for good and valuable consideration,
the Company and the Employee have agreed, and do by this Agreement
agree, as follows:
1. Terms. Those terms defined in the Brenton Banks, Inc., Long-
Term Stock Compensation Plan or in the Administrative Rules
adopted thereunder shall have the same meaning when used in this
Agreement.
2. Restricted Stock Grant. The Company by this Agreement
irrevocably awards the Grantee the rights to acquire 2,033 shares
of the Company's Stock pursuant to the terms of a Restricted Stock
Grant, set forth in the provisions of the Plan (a copy of which is
attached hereto as Exhibit A), the Administrative Rules adopted
pursuant to the Plan (a copy of which are attached hereto as
Exhibit B), and the Resolution of the Company's Board of Directors
(a copy of which is attached hereto as Exhibit C).
3. Incentive Stock Grant. The Company by this Agreement
irrevocably awards the Grantee the rights to acquire 3775 shares
of the Company's Stock pursuant to the terms of a Incentive Stock
Grant, set forth in the provisions of the Plan (a copy of which is
attached hereto as Exhibit A), the Administrative Rules adopted
pursuant to the Plan (a copy of which are attached hereto as
Exhibit B), the Resolution of the Company's Board of Directors (a
copy of which is attached hereto as Exhibit C) and the Performance
Criteria adopted by the Board (a copy of which is attached hereto
as Exhibit D).
4. Terms. All of the terms, conditions and provisions contained
in the Plan, Administrative Rules, Resolutions of the Board and
Performance Criteria set forth in Exhibits A, B, C, and D shall be
incorporated herein by this reference, and shall govern the
provisions of awards set forth in this Agreement.
5. Stock Legend. The Grantee hereby consents to the imposition
of an appropriate legend upon the Stock issued pursuant to the
Grants. The legend shall be in the form prescribed by the
Company's legal counsel if said counsel deems it necessary.
6. Notices. Any notices provided for under this Agreement shall
be in writing and shall be delivered in person to the party to be
notified or sent by certified mail. Notices sent to the Company
shall be addressed to Brenton Banks, Inc., 300 Capital Square, Des
Moines, Iowa, 50309. Notices sent to the Grantee shall be sent to
the Grantee's address as it appears in the Company's regular
records.
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7. Entire Agreement. This Agreement constitutes the entire
agreement between the Company and the Grantee. No waiver,
modification or amendment of any of the terms of this Agreement
shall be effective unless set forth in a written agreement signed
by the Company and the Grantee.
In Witness Whereof, the parties have executed this Agreement
on the 8th day of February, 1994.
BRENTON BANKS, INC.
By_____________________________________
Its____________________________________
COMPANY
_______________________________________
Phillip L. Risley
GRANTEE
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BRENTON BANKS, INC.
Long-Term Stock Compensation Plan
1. Purpose. The Long-Term Stock Compensation Plan (the "Plan")
is intended to advance the interests of Brenton Banks, Inc. (the
"Company"), it shareholders, and its subsidiaries by providing
financial incentives to key management personnel and by
encouraging and enabling selected officers and other key employees
upon whose judgment, initiative and effort the Company is largely
dependent for the successful conduct of its business, to acquire
and retain a proprietary interest in the Company by ownership of
its stock.
2. Definitions.
2.1 "Board" means the Board of Directors of the Company.
2.2 "Stock" means the Company's $5.00 par value Common
Stock or, in the event that the Company issues a different class
of stock with the same or higher dividend and liquidation rights
as the Company's $5.00 Common Stock but with lesser voting rights,
such stock.
2.3 "Date of Grant" means the date on which the Board
authorizes a grant under the Plan.
2.4 "Grant" means the right to acquire Common Stock and/or
cash awarded under the Plan (including both Incentive Stock Grants
and Restricted Stock Grants).
2.5 "Incentive Stock Grant" means a Grant of Stock pursuant
to the provisions of Section 6.2.
2.6 "Restricted Stock Grant" means a Grant of Stock
pursuant to the provisions of Section 6.1.
2.7 "Grantee" means a person to whom a Grant has been
awarded under the Plan.
2.8 "Disability" or "Disabled" shall be as defined under
the Company's disability plan, if any, or under the Social
Security Rules.
2.9 "Subsidiary" or "Subsidiaries" means a subsidiary
corporation or corporations of the Company as defined in Section
425 of the Internal Revenue Code.
2.10 "Successor" means the legal representative of the
estate of a deceased Grantee or the person or persons who acquire
the right to exercise a Grant by bequest or inheritance or
otherwise by reason of the death or disability of any Grantee.
2.11 "Administrative Rules" means Rules adopted by a
majority vote of the Board to interpret the provisions of the Plan
or to impose other terms, conditions and restrictions on the
Grant, issuance and transfer of Grants and Stock issued pursuant
to the award of Grants. Administrative Rules shall, upon adoption,
become part of this Plan as if originally stated herein. The
Rules adopted by the Board shall be passed by resolution and kept
at the Company's main office.
2.12 "Change in Control" shall mean a change in the
ownership of 50% or more of the Company's par Value $5.00 Common
Stock as certified by the Secretary of the Company.
2.13 "Performance Criteria" shall mean the criteria
established by the Board pursuant to Section 6.2.3 of the Plan.
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2.14 "Qualified Contingent Vesting Event" shall mean an
event described in Sections 6.2.4.2, 6.2.4.3, and 6.2.4.4.
3. Administration of Plan. The Plan shall be administered by
the Board. Grants to members of the Board may be granted only by
a majority of the disinterested members of the Board. The Board
shall have full and final authority in its discretion, subject to
the provisions of the Plan, to determine the individuals to whom
and the time or times at which Grants shall be made and the number
of shares of Stock covered by each Grant; to determine the
Performance Criteria with respect to Incentive Stock Grants; to
construe and interpret the Plan; to determine the terms and
provisions of the respective Grant agreements and to make all
other determinations and take all other actions deemed necessary
or advisable for the proper administration of the Plan. All such
actions and determinations shall be conclusively binding for all
purposes and upon all persons.
4. Stock Subject to Grant. The aggregate number of shares of
the Company's Stock which may be issued upon the exercise of
Grants made under the Plan shall not exceed 240,000, subject to
adjustment under the provisions of Section 11. The shares of
Stock to be granted may be authorized but unissued shares, shares
issued and reacquired by the Company or shares bought on the
market for the purposes of the Plan. In the event any Grant
shall, for any reason, terminate or expire or be surrendered to
the Company, the shares subject to such Grant shall again be
available to be awarded under the Plan.
5. Participants. Grants may be awarded under the Plan to
officers, directors and key employees of the Company or of any
of its Subsidiaries.
6. Terms and Conditions of Grants. Any Grant under the Plan
shall be evidenced by an agreement executed by the Company and
the applicable Grantee and shall contain such terms and be in
such form as the Board may from time to time approve, subject
to the following limitations and conditions:
6.1 Restricted Stock Grants.
6.1.1 Authorized Shares. The aggregate number of
shares that may be awarded to employees under the Plan pursuant to
Restricted Stock Grants shall not exceed 84,000 shares of Stock.
In the event any Restricted Stock Grant shall, for any reason, be
forfeited, terminated, expire or be surrendered to the Company,
the shares subject to such Restricted Stock Grant shall again be
available to be awarded as a Restricted Stock Grant under the
Plan.
6.1.2 Restricted Stock Grants. Restricted Stock may
be awarded by the Board to participants of the Company chosen by
the Board in its sole discretion. The amount of each award shall
be subject to the terms and conditions set forth in an agreement
between the Company and the Grantee containing the terms and
conditions of the award, which shall be consistent with the
provisions set forth in this Plan and the Administrative Rules
adopted by the Board. All Restricted Stock Grants that do not vest
pursuant to the provisions of Section 6.1.3 shall be forfeited.
6.1.3 Vesting of Restricted Stock Grants. Restricted
Stock Grants shall vest with the Grantee following the Grantee's
completion of three (3) successive calendar years of employment
with the Company or any Subsidiary, with said years being
specified by the Board. The Restricted Stock Grants awarded to
Grantees shall be considered vested or forfeited on the January
1st following completion of the third successive calendar year of
employment with the Company or any Subsidiary.
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6.1.4 Notwithstanding the foregoing:
6.1.5 Termination of Employment. Upon termination of
a Grantee's employment with the Company or with any of its
Subsidiaries for reasons other than death, disability, retirement
after age 65 or retirement before age 65 with Board approval, the
Grantee's and the Company's rights, duties and obligations under
the Restricted Stock Grant shall be terminated and the Restricted
Stock Grants shall be forfeited.
6.1.6 Death or Disability of Grantee. If a Grantee
to whom a Restricted Stock Grant shall have been awarded, shall
die or become disabled while the Grantee is employed by the
Company or one or more of its Subsidiaries, such Restricted Stock
Grant shall thereupon be 100% vested.
6.1.7 Retirement of Grantee. In the event that a
Grantee to whom a Restricted Stock Grant shall have been awarded
shall retire upon or after the age of 65, any Restricted Stock
Grant held by such retired Grantee shall thereupon be 100% vested.
In the event Grantee retires prior to age 65, with the approval
of the Board in its sole discretion, the Restricted Stock Grant
will become (i) one-third (1/3) vested if the retirement occurs
after the completion of the first calendar year specified by the
Board but prior to the completion of the second calendar year
specified by the Board and (ii) 100% vested if the retirement
occurs after the completion of the second calendar year specified
by the Board. If the Grantee retires prior to the age of 65
without the approval of the Board, the provisions of Section
6.1.4.1 shall control.
6.1.8 Change in Control of the Company. In the event
of a Change in Control of the Company, the outstanding Restricted
Stock Grants shall thereupon be 100% vested, and, to the extent
permitted by law, the Grantees shall be permitted to participate
in the sale or merger resulting in the Change in Control.
6.1.9 Incentive Stock Grants.
6.1.10 Authorized Shares. The aggregate number of
shares that may be awarded to employees under the Plan pursuant to
Incentive Stock Grants shall not exceed 156,000 shares of Stock.
In the event any Incentive Stock Grant shall, for any reason, be
forfeited, terminate or expire or be surrendered to the Company,
the shares subject to such Incentive Stock Grant shall again be
available to be awarded as a Incentive Stock Grant under the Plan.
6.1.11 Incentive Stock Grants. Incentive Stock Grants
may be awarded by the Board to participants of the Company chosen
by the Board in its sole discretion. The amount of each award
shall be subject to the terms and conditions set forth in an
agreement between the Company and the Grantee containing the terms
and conditions of the award, which shall be consistent with the
provisions set forth in this Plan and the Administrative Rules
adopted by the Board. All Incentive Stock Grants that do not
vest pursuant to the provisions of Section 6.2.3 shall be
forfeited.
6.1.12 Vesting of Incentive Stock Grants. Incentive
Stock Grants shall vest with the Grantee following: (a) the
Grantee's completion of three (3) successive calendar years of
employment, with said years specified by the Board; and (b) the
Company achieving the Performance Criteria specified by the Board
on the Grant Date. The number of shares vested pursuant to any
Grant, if any, shall be determined pursuant to the Performance
Criteria set by the Board. The Stock awarded pursuant to
Incentive Stock Grant shall be considered vested or forfeited on
the January 1st following completion of the third successive
calendar year specified by the Board.
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6.1.13 Performance Criteria. The Performance Criteria
shall be set by the Board. The Performance Criteria shall be the
same for each Grantee receiving a Grant on a particular Grant
Date, provided that the Performance Criteria set with respect to a
particular Grant Date may be different from Performance Criteria
set for prior or subsequent Grant Dates. The Board shall
determine the Performance Criteria prior to or during the first
year of the performance period specified by the Board.
6.1.14 Performance in Excess of 100% of Incentive
Stock Grant. The Board may establish Performance Criteria in
amounts that exceed 100% of the Performance Stock Granted to the
Grantees. In the event that the Performance Criteria set by the
Board exceed 100% of the Stock to be awarded by a Grant, any and
all amounts in excess of 100% shall be paid in cash to the Grantee
based upon the Fair Market Value of the Stock on the date
Incentive Stock Grant Vests. For the purposes hereof, "Fair
Market Value" shall be as determined by the Board and such
determination shall be binding upon the Company and upon the
Grantee. The Board may make such determination: (i) in the case of
Stock not then listed and traded upon a recognized securities
exchange, upon the basis of the mean between the closing bid and
asked quotations for such stock on the date the Incentive Stock
Grants vest (as reported by the Wall Street Journal "NASDAQ Bid
and Asked Quotations" National Market Listings or as reported by
NASDAQ if not reported in the Wall Street Journal) or in the event
that there shall be no bid or asked quotations on such date, then
upon the basis of the bid and asked quotations nearest preceding
such date, or (ii) in the case the Stock shall then be listed and
traded upon a recognized securities exchange, upon the basis of
the mean between the highest and lowest selling prices at which
shares of Stock were traded on such recognized securities exchange
on the date the Incentive Stock Grants vest, as reported in the
Wall Street Journal or, if the Stock was not traded on said date,
the date nearest preceding such date, and (iii) upon any other
factors which the Board shall deem appropriate.
6.1.15 Notwithstanding the foregoing:
6.1.16 Termination of Employment. Upon termination of
a Grantee's employment with the Company or with any of its
Subsidiaries for reasons other than death, disability, retirement
after age 65 or retirement before age 65 with Board approval, the
Grantee's and the Company's rights, duties and obligations under
the Incentive Stock Grant shall be terminated and the Incentive
Stock Grant shall be forfeited.
6.1.17 Death or Disability of Grantee. If a Grantee
to whom an Incentive Stock Grant shall have been awarded shall die
or become disabled while he shall be employed by the Company or
one or more of its Subsidiaries, such Incentive Stock Grant shall
thereupon be vested in accordance with the provisions of Section
6.2.5 and said death or disability shall be deemed to be a
Qualified Contingent Vesting Event.
6.1.18 Retirement of Grantee. In the event that a
Grantee to whom an Incentive Stock Grant shall have been awarded
shall retire upon or after the age of 65, such Incentive Stock
Grant held by such retired Grantee shall thereupon be vested in
accordance with the provisions of Section 6.2.5 and said
retirement shall be deemed to be a Qualified Contingent Vesting
Event. In the event Grantee retires prior to age 65, the Incentive
Stock Grant may become vested in accordance with the provisions of
Section 6.2.5 upon the approval of the Board in its sole
discretion; and upon such approval by the Board said retirement
shall be deemed to be a Qualified Contingent Vesting Event. If
the Grantee retires prior to the age of 65 without the approval of
the Board, the provisions of Section 6.2.4.1 shall control.
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6.1.19 Change in Control of the Company. In the event
of a Change in Control of the Company, such Incentive Stock Grants
shall thereupon be vested in accordance with the provisions of
Section 6.2.5, and said Change in Control shall be deemed to be a
Qualified Contingent Vesting Event. Furthermore, to the extent
permitted by law, the Grantees shall be permitted to participate
in the sale or merger resulting in the Change in Control.
6.1.20 Contingent Vesting Rules. Pursuant to the
provisions of Sections 6.2.4.2, 6.2.4.3, and 6.2.4.4 the Incentive
Stock Grants shall vest upon the occurrence of a Qualified
Contingent Vesting Event, in accordance with the terms set forth
below.
6.1.21 If a Qualified Contingent Vesting Event occurs
prior to the completion of the first year of the performance
period specified by the Board, all of the Incentive Stock Grants
shall be forfeited and none of the Incentive Stock Grants shall
thereafter become vested in the Grantee.
6.1.22 If a Qualified Contingent Vesting Event occurs
after the completion of the first year of the performance period
specified by the Board but prior to the completion of the second
year of the performance period specified by the Board, the Grantee
shall be entitled to receive one-third (1/3) of the Incentive
Stock Grant that would vest if the Performance Criteria was
applied to the financial results of the Company for the first
fiscal year of the performance period. All other Incentive Stock
Grants not vested pursuant to the provisions of the preceding
sentence shall be forfeited.
6.1.23 If a Qualified Contingent Vesting Event occurs
after the completion of the second year of the performance period
specified by the Board, but prior to the completion of the third
year of the performance period specified by the Board, the Grantee
shall be entitled to receive 100% of the Incentive Stock Grant
that would vest if the Performance Criteria was applied to the
financial results of the Company for the first and second fiscal
years of the performance period. All other Incentive Stock Grants
not vested pursuant to the provisions of the preceding sentence
shall be forfeited.
7. Delivery of Stock. Stock and any cash payments (if
applicable) to be delivered to a Grantee pursuant to the vesting
of a Grant, shall be delivered to the Grantee within 90 days of
the date the Grant vests. In the event that a Grantee is unable
to accept the Stock due to death, disability or otherwise, the
Stock and any cash payments (if applicable) shall be delivered to
the Grantee's Successor.
8. Fractional Shares. No factional shares of Stock shall be
issued to any participant pursuant to the terms of the Plan. The
vesting of any Grant shall be rounded to the nearest whole share.
In the event that 50% or more of a share shall vest pursuant to
the terms of the Plan, the Participant shall be vested with the
next whole share; to the extent that less than 50% of a share
shall vest, the participant shall rounded down to the next whole
share and the percentage of the share shall be disregarded.
9. Shareholder Rights. Neither a Grantee nor his Successor
shall have any of the rights of a shareholder (including but not
limited to voting or dividend rights) of the Company until the
Grants have vested and the stock certificates evidencing the
shares awarded by the Grants are properly delivered to such
Grantee or his Successor; provided, however, that the Grantee
shall be entitled to receive a cash payment (in the form of a
bonus or death benefit) from the Company equal to the amount of
any dividends which would have been payable on the Stock if the
Stock had been issued to the Grantee on the date the Grant vested.
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10. No Alteration of Employment Terms. The Grant to an eligible
person does not alter in any way the Company's or the relevant
Subsidiary's existing rights to terminate such person's employment
at any time for any reason, nor does it confer upon such person
any rights or privileges except as specifically provided for in
the Plan.
11. Adjustments. In the event that the outstanding shares of
Stock of the Company are hereafter increased or decreased or
changed into or exchanged for a different number or kind of shares
or other securities of the Company or of another corporation, by
reason of a recapitalization, reclassification, stock split-up,
combination of shares, or dividend or other distribution payable
in capital stock, appropriate adjustment shall be made by the
Board in the number and kind of shares as to which Grants may be
made under the Plan. In addition, there shall be appropriate
adjustments made in the number and kind of shares of Stock as to
which outstanding Grants shall be issued, to the end that the
proportionate interest of the holder of the Grant shall, to the
extent practicable, be maintained as before the occurrence of such
event. Such adjustment in outstanding Grants shall be made
through a change in the total number or kind of shares awarded in
the Grant.
12. Restrictions on Issuing Shares. The issuance of Stock
pursuant to the vesting of a Grant shall be subject to the
condition that, if at any time the Company shall determine in its
discretion that the satisfaction of withholding tax or other
withholding liabilities, or that the listing, registration, or
qualification of any shares otherwise deliverable upon such
exercise upon any securities exchange or under any state or
federal law, or that the consent or approval of any regulatory
body, is necessary or desirable as a condition of, or in
connection with, the delivery of the Stock pursuant thereto, then
in any such event, such delivery shall be deferred until such time
as such withholding, listing, registration, qualification, consent
or approval shall have been effected or obtained free of any
conditions not acceptable to the Company.
13. Suspension and/or Termination of Plan. The Board may at any
time suspend or terminate the Plan. Unless previously terminated
by the Board, no further Grants shall be awarded under the Plan
after December 31, 1995. No Grants may be awarded during any
suspension or termination of the Plan. No suspension or
termination of the Plan shall, without a Grantee's consent, alter
or impair any of the rights or obligations under any Grant
theretofore awarded to such Grantee under the Plan.
14. Nontransferability of Grants. No Grant awarded under the
Plan shall be transferable otherwise than by bequest or by laws of
descent and distribution, and during the lifetime of the Grant
only the Grantee or Grantee's Successor may receive stock or cash
from the Grant.
15. Effectiveness of the Plan. The Plan shall become effective
only after the Board shall, by the affirmative vote of a majority
of its members, have approved the Plan.
16. Time of Awarding Grants. Nothing contained in the Plan nor
in any resolution adopted or to be adopted by the Board of
Directors or the stockholders of the Company nor any action taken
by the Board shall constitute a Grant. A Grant shall take place
only when a written Agreement is duly executed by the Company and
the Grantee to whom such Grant shall be awarded.
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ADMINISTRATIVE RULES
FOR BRENTON BANKS, INC.
LONG-TERM STOCK COMPENSATION PLAN
1. Definitions. Those terms defined in the Plan shall have the
same meaning when used in these Rules.
2. Withholding Taxes. Prior to issuing any Stock pursuant to
the terms of a Grant, a Grantee shall be required to make adequate
provisions for the withholding of any and all applicable State,
Federal and local taxes (hereinafter "Withholding Taxes"). The
manner in which Withholding Taxes shall be remitted to the
appropriate taxing authorities shall be by a cash payment to the
Company from the Grantee in an amount equal to the amount of
Withholding Taxes that must be remitted to the respective taxing
authorities unless the Grantee elects to pay the withholding taxes
pursuant to an alternative method described in either Section 2.1
or 2.2 hereof. After the Grantee determines whether the
alternative method will apply, the Board, in its sole discretion,
shall determine which alternative method is applied to the
particular Grantee.
2.1 Loan. The Grantee may obtain a loan from the Company
or one of the Company's subsidiaries in an amount equal to the
amount of Withholding Taxes that must be remitted to the
respective taxing authorities. Any loan to a Grantee must be made
with interest payable at prime and the loan being due and payable
on December 31 of the year in which the withholding taxes are due
and payable. All loans made to a Grantee must comply with all
federal and applicable state banking laws. Nothing contained in
this paragraph shall require any subsidiary of the Company to make
a loan to a Grantee.
2.2 Exchange of Stock. The Grantee may exchange the right
to receive a portion of the Stock issuable pursuant to a Grant for
an amount of cash equal in value to the amount of Withholding
Taxes that must be remitted to the respective taxing authorities
based upon the Fair Market Value of the Stock at the time of
withholding.
3. Performance Criteria. The performance criteria established
by the Board shall have the following meanings and shall be
interpreted in accordance with the following rules.
3.1 "Average Annual Earnings Per Share Growth (EPS)" shall
be determined by dividing the sum of the "Annual Percentage Growth
Rates in EPS" for each of the years contained in the performance
period by the total number of years in the performance period.
3.2 "Annual Percentage Growth Rates in EPS" shall mean
annual percentage growth in the Company's Earnings Per Share (for
consolidated financial reporting purposes) after the effect of
adjusting earnings for the financial statement expense of Grants
under the Plan pursuant to Generally Accepted Accounting
Principles.
3.3 "Earnings Per Share" shall be the primary earnings per
share of the Company for consolidated financial reporting
purposes.
The following example shall illustrate the definitions set
forth above:
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During the years 1991, 1992, 1993 and 1994 the Company's
Earnings Per Share are $1.80, $2.10, $2.31 and $2.60 respectively.
After adjustment for the financial statement expense of Grants
under the Plan, the Company's earnings per share are $1.80, $1.90,
$2.20 and $2.40 for 1991, 1992, 1993 and 1994 respectively. The
Annual Percentage Growth Rate in EPS for 1992 is computed by
subtracting the 1991 adjusted earning per share ($1.80) from the
adjusted 1992 earning per share ($1.90) and dividing that number
by the 1991 adjusted earning per share ($1.80). Therefore, the
Annual Percentage Growth Rate in EPS for 1992 is 5.55%. The
Annual Percentage Growth Rate in EPS for 1993 and 1994 (computed
in the same manner) is 15.78% and 9.09% respectively. The Average
Annual Earning Per Share Growth for the years 1992, 1993 and 1994
is 10.13% ((5.55 + 15.78 + 9.09)/3).
4. Restricted Stock Grants - Vesting and Forfeiture Rules. The
following examples are intended to act as an illustration of the
Board's intentions with respect to Restrictive Stock Grant awards
pursuant to the Plan. All of the examples set forth below are
based upon the following facts:
Employee X is granted a restricted stock Grant in 1992. The
terms of the Grant entitle the employee to receive 100 shares of
Stock if the X is employed with the Company or any Subsidiary on
January 1, 1995.
4.1 Death or Disability. On June 15, 1992, Employee X
becomes disabled or dies. Employee X becomes fully vested in the
100 shares of Stock.
4.2 Termination. On November 15, 1994, Employee X is
terminated by the Company. Because Employee X is not employed by
the Company on January 1, 1995 and has not been continuously
employed by Company the for three consecutive years, none of the
Restricted Stock Grants shall vest.
5. Incentive Stock Grants - Vesting and Forfeiture Rules. The
following examples are intended to act as an illustration of the
Board's intentions with respect to Incentive Stock Grants awarded
pursuant to the Plan. All of the examples set forth below are
based upon the following facts:
Employee X is granted an Incentive Stock Grant in 1992. The
terms of the Grant entitle the employee to receive up to 100
shares of Stock if (1) X is employed with the Company or any
Subsidiary on January 1, 1995; and (2) the Company meets or
exceeds certain Performance Criteria. The Performance Criteria
adopted by the Board specify that if the Average Earnings Per
Share Growth of the Company's Stock is below 7.50% - none of the
Incentive Stock Grants will vest; if the Average Earnings Per
Share Growth of the Company's Stock is from 7.50% to 8.74% - 50%
of the Incentive Stock Grants will vest; if the Average Earnings
Per Share Growth of the Company's Stock is from 8.75% to 9.99% -
75% of the Incentive Stock Grants will vest; if the Average
Earnings Per Share Growth of the Company's Stock is from 10.00% to
11.99% - 100% of the Incentive Stock Grants will vest. The
Company's Earnings Per Share Growth for the years 1992, 1993 and
1994 are 10.00%, 9.25% and 7.25% respectively.
5.1 Achievement of Company performance goals. Employee X
continues to work for the Company through January 1, 1995. The
Average Earnings Per Share is 8.83% ((10% + 9.25% + 7.25%)/3).
Therefore, in January of 1995, Employee X will have 75% of the
Stock granted pursuant to the Incentive Stock Grant vested. The
number of shares that will be delivered to Employee X is
determined by multiplying the percentage of vested Incentive Stock
Grants by the total number of shares Granted in the Incentive
Stock Grant (75% X 100 shares = 75 shares).
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5.2 Qualified Contingent Vesting Event - Year Two of the
Performance Period. Employee X continues to be employed by the
Company through June 1, 1993, at which time a Qualified Contingent
Vesting Event occurs. On June 1, 1993, the Company would apply
the performance criteria to the financial results of the Company
for the first fiscal year - 1992. The Average Earning Per Share
as of December 31, 1992 would be 10% (10%/1). A 10% Average
Earnings Per Share will result in 100% of the Incentive Stock
Grant vesting. However, pursuant to Section 6.2.5.2. of the Plan,
only one-third (1/3) of the Incentive Stock Grants will vest if
the Qualified Contingent Vesting Event occurs during the second
year of performance period. Therefore, the number of shares that
will be delivered to Employee X is determined by multiplying the
percentage of vested Incentive Stock Grants pursuant to
measurement via Performance Criteria by the total number of shares
Granted in the Incentive Stock Grant and by one-third (100% X 100
shares X 1/3 = 33 shares).
5.3 Qualified Contingent Vesting Event - Year Three of the
Performance Period. Employee X continues to be employed by the
Company through June 1, 1994, at which time a Qualified Contingent
Vesting Event occurs. On June 1, 1994, the Company would apply
the performance criteria to the financial results of the Company
for the first and second fiscal years - 1992 and 1993. The
Average Earning Per Share would be 9.625% ((10% + 9.25%)/2). A
9.625% Average Earnings Per Share will result in 75% of the
Incentive Stock Grant vesting. Pursuant to Section 6.2.5.3. of
the Plan, 100% of the Incentive Stock Grants will vest if the
Qualified Contingent Vesting Event occurs during the third year of
the performance period. Therefore, the number of shares that will
be delivered to Employee X is determined by multiplying the
percentage of vested Incentive Stock Grants pursuant to
measurement via Performance Criteria by the total number of shares
Granted in the Incentive Stock Grant (75% X 100 shares = 75
shares).
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RESOLUTIONS ADOPTED
BY THE
BRENTON BANKS, INC.
BOARD OF DIRECTORS
At a regular meeting of the Board of Directors of the Company
the following resolutions were unanimously adopted by the Board of
Directors.
Resolved, that pursuant to the provisions of the Company's
Long-Term Stock Compensation Plan, the Board approves the awarding
of Grants to the employees of the Company upon the terms and
conditions set forth below.
1. That Restricted Stock Grants are to be awarded to those
employees listed on Exhibit A attached hereto, in the amounts set
forth in the column titled "Restricted Shares". The Restricted
Stock Grants shall be subject to the terms and conditions set
forth in the Plan. The Board further specifies that the three
successive calendar years of employment, the completion of which
the Restricted Stock Grants are conditioned upon, are 1994, 1995
and 1996. All Grants shall vest or be forfeited, pursuant to the
provisions of the Plan, on or before January 1, 1997.
2. That Incentive Stock Grants are to be awarded to those
employees listed on Exhibit A attached hereto, in the amounts set
forth in the column titled "Performance Shares". The Incentive
Stock Grants shall be subject to the terms and conditions set
forth in the Plan, Administrative Rules and those set forth below.
a. The Board hereby specifies that the three
successive calendar years of employment (the "Performance
Period"), the completion of which the Incentive Stock Grants are
conditioned upon, are 1994, 1995 and 1996. All Incentive Stock
Grants shall vest or be forfeited, pursuant to the provisions of
the Plan, on or before March 15, 1997.
b. The Board further specifies that the Performance
Criteria that the Company must achieve prior to the vesting of any
of the Incentive Stock Grants shall be as set forth on Exhibit B
attached hereto.
To the extent that a Grant fails to vest, the shares shall be
deemed to be forfeited pursuant to the terms of the Plan.
Those terms defined in the Company's Long Term Stock
Compensation Plan or Rules adopted thereunder by the Board shall
have the same meaning when used in this Resolution.
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EXHIBIT B
Average Annual Earnings
Per Share Growth over the Tiered Achievement
Three Year Performance Period Scale
Less than 7.5% . . . . . . . . . . . . . 0% vested
7.50% to 8.74% . . . . . . . . . . .. . 50% vested
8.75% to 9.99% . . . . . . . . . .. . . 75% vested
10.00% to 11.99% . . . . . . . .. . . . 100% vested
12.00% to 13.99% . . . . . . . . . . . 115% vested
14.00% to 15.99% . . . . . . . . . . . 130% vested
Greater than 16.00% . . . .. . . . . . 150% vested
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Exhibit 10.8
Long-Term Stock Compensation Plan, Agreements and related
documents, effective for 1995, under which certain of the
Company's senior officers and bank presidents were eligible
to receive shares of Brenton Banks, Inc. stock based upon
their service to the Company and Company performance.
This Long-Term Stock Compensation Plan, Agreements and
related documents are incorporated by reference from Form
10-K of Brenton Banks, Inc. for the year ended December 31,
1995.
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Exhibit 10.9
Standard Agreement for Advances, Pledge and Security Agreement
between Brenton Bank and the Federal Home Loan Bank of Des Moines.
This Standard Agreement for Advances, Pledge and Security Agreement
is incorporated by reference from Form 10-K of Brenton Banks, Inc.
for the year ended December 31, 1998.
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Exhibit 10.10
Short-term note with American National Bank & Trust Company of
Chicago as of April 30, 1999, setting forth the terms of
the Parent Company's $5,000,000 short-term debt agreement.
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American National Bank
And Trust Company of Chicago
PROMISSORY NOTE (UNSECURED)
$5,000,000.00
Chicago, Illinois
April 30, 1999
Due April 30, 2000
FOR VALUE RECEIVED, the undersigned (jointly and severally if
more than one) ("Borrower"), promises to pay to the order of
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO ("Bank"), at
its principal place of business in Chicago, Illinois or such other
place as Bank may designate from time to time hereafter, the
principal sum of FIVE MILLION AND 00/100 DOLLARS, or such lesser
principal sum as may then be owed by Borrower to Bank hereunder.
Borrower's obligations and liabilities to Bank under this
Note ("Borrower's Liabilities") shall be due and payable on April
30, 2000.
This Note restates and replaces a Promissory Note (Unsecured)
in the principal amount of $5,000,000.00, dated April 30, 1998
executed by Borrower in favor of Bank (the "Prior Note") and is
not a repayment or novation of the Prior Note.
The unpaid principal balance of Borrower's Liabilities due
hereunder shall bear interest from the date of disbursement until
paid, computed at a daily rate equal to the daily rate equivalent
of 1.00% per annum (computed on the basis of a 360-day year and
actual days elapsed) minus the rate of interest announced or
published publicly from time to time by Bank as its prime or base
rate of interest (the "Base Rate"); provided, however, that in the
event that any of Borrower's Liabilities are not paid when due,
the unpaid amount of Borrower's Liabilities shall bear interest
after the due date until paid at a rate equal to the stun of the
rate that would otherwise be in effect plus 3%.
The rate of interest to be charged by Bank to Borrower shall
fluctuate hereafter from time to time concurrently with, and in an
amount equal to, each increase or decrease in the Base Rate,
whichever is applicable.
Accrued interest shall be payable by Borrower to Bank on the
same day of each month, and at maturity, commencing with the last
day of May, 1999 or as billed by Bank to Borrower, at Bank's
principal place of business, or at such other place as Bank may
designate from time to time hereafter. After maturity, accrued
interest on all of Borrower's Liabilities shall be payable on
demand.
Borrower warrants and represents to Bank that Borrower shall
use the proceeds represented by this Note solely for proper
business purposes and consistently with all applicable laws and
statutes.
Any deposits or other sums at any time credited by or payable
or due from Bank to Borrower, or any monies, cash, cash
equivalents, securities, instruments, documents or other assets of
Borrower in the possession or control of Bank or its bailee for
any purpose, may be reduced to cash and applied by Bank to or
setoff by Bank against Borrower's Liabilities.
The occurrence of any one of the following events shall
constitute a default by the Borrower ("Event of Default") under
this Note: (a) if Borrower fails to pay any of Borrower's
Liabilities when due and payable or declared due and payable
(whether by scheduled maturity, required payment, acceleration,
demand or otherwise); (b) if Borrower or any guarantor of any of
Borrower's Liabilities fails or neglects to perform, keep or
observe any term, provision, condition, covenant, warranty or
representation contained in this Note; (c) occurrence of a default
or an event of default under any agreement, instrument or document
heretofore, now or at any time hereafter delivered by or on behalf
of Borrower to Bank; (d) occurrence of a default or an event of
default under any agreement, instrument or document heretofore,
now or at any time hereafter delivered to Bank by any guarantor of
Borrower's Liabilities or by any person or entity which has
granted to Bank a security interest or lien in and to some or all
such person's or entity's real or personal property to secure the
payment of Borrower's Liabilities; (e) if any of Borrower's assets
are attached, seized, subjected to a writ, or are levied upon or
become subject to any lien or come within the possession of any
receiver, trustee, custodian or assignee for the benefit of
creditors; (f) if a notice of lien, levy or assessment is filed of
record or given to Borrower with respect to all or any of
Borrower's assets by any federal, state or local department or
agency; (g) if Borrower or any guarantor of Borrower's Liabilities
becomes insolvent or generally fails to pay or admits in writing
its inability to pay debts as they become due, if a petition under
Title 11 of the United States Code or any similar law or
regulation is filed by or against Borrower or any such guarantor,
if Borrower or any such guarantor shall make an assignment for the
benefit of creditors, if any case or proceeding is filed by or
against Borrower or any such guarantor
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for its dissolution or liquidation, or if Borrower or any such
guarantor is enjoined, restrained or in any way prevented by court
order from conducting all or any material part of its business
affairs; (h) the death or incompetency of Borrower or any
guarantor of Borrower's Liabilities, or the appointment of a
conservator for all or any portion of Borrower's assets; (i) the
revocation, termination or cancellation of any guaranty of
Borrower's Liabilities without written consent of Bank; (j) if a
contribution failure occurs with respect to any pension plan
maintained by Borrower or any corporation, trade or business that
is, along with Borrower, a member of a controlled group of
corporations or a controlled group of trades or businesses (as
described in Sections 414(b) and (c) of the Internal Revenue Code
of 1986 or Section 4001 of the Employee Retirement Income Security
Act of 1974, as amended, "ERISA") sufficient to give rise to a
lien under Section 302(f) of ERISA; (k) if Borrower or any
guarantor of Borrower's Liabilities is in default in the payment
of any obligations, indebtedness or other liabilities to any third
party and such default is declared and is not cured within the
time, if any, specified therefor in any agreement governing the
same; (l) if any material statement, report or certificate made or
delivered by Borrower, any of Borrower's partners, officers,
employees or agents or any guarantor of Borrower's Liabilities is
not true and correct; or (m) if Bank is reasonably insecure.
Upon the occurrence of an Event of Default, at Bank's option,
without notice by Bank to or demand by Bank of Borrower, all of
Borrower's Liabilities shall be immediately due and payable.
All of Bank's rights and remedies under this Note are
cumulative and non-exclusive. The acceptance by Bank of any
partial payment made hereunder after the time when any of
Borrower's Liabilities become due and payable will not establish a
custom or waive any rights of Bank to enforce prompt payment
hereof. Bank's failure to require strict performance by Borrower
of any provision of this Note shall not waive, affect or diminish
any right of Bank thereafter to demand strict compliance and
performance therewith. Any waiver of an Event of Default hereunder
shall not suspend, waive or affect any other Event of Default
hereunder. Borrower and every endorser waive presentment, demand
and protest and notice of presentment, protest, default, non-
payment, maturity, release, compromise, settlement, extension or
renewal of this Note, and hereby ratify and confirm whatever Bank
may do in this regard. Borrower further waives any and all notice
or demand to which Borrower might be entitled with respect to this
Note by virtue of any applicable statute or law (to the extent
permitted by law).
Borrower agrees to pay, immediately upon demand by Bank, any
and all costs, fees and expenses (including reasonable attorneys'
fees, costs and expenses) incurred by Bank (i) in enforcing any of
Bank's rights hereunder, and (ii) in representing Bank in any
litigation, contest, suit or dispute, or to commence, defend or
intervene or to take any action with respect to any litigation,
contest, suit or dispute (whether instituted by Bank, Borrower or
any other person) in any way relating to this Note or Borrower's
Liabilities, and to the extent not paid the same shall become part
of Borrower's Liabilities.
This Note shall be deemed to have been submitted by Borrower
to Bank and to have been made at Bank's principal place of
business. This Note shall be governed and controlled by the
internal laws of the State of Illinois and not the law of
conflicts.
Advances under this Note may be made by Bank upon oral or
written request of any person authorized to make such requests on
behalf of Borrower ("Authorized Person"). Borrower agrees that
Bank may act on requests which Bank in good faith believes to be
made by an Authorized Person, regardless of whether such requests
are in fact made by an Authorized Person. Any such advance shall
be conclusively presumed to have been made by Bank to or for the
benefit of Borrower. Borrower does hereby irrevocably confirm,
ratify and approve all such advances by Bank and agrees to
indemnify Bank against any and all losses and expenses (including
reasonable attorneys' fees) and shall hold Bank harmless with
respect thereto.
TO INDUCE BANK TO ACCEPT THIS NOTE, BORROWER IRREVOCABLY
AGREES THAT, SUBJECT TO BANK'S SOLE AND ABSOLUTE ELECTION, ALL
ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT, ARISING OUT
OF OR FROM OR RELATED TO THIS NOTE SHALL BE LITIGATED IN COURTS
HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS.
BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY
LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID CITY AND STATE.
BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE
THE VENUE OF ANY LITIGATION BROUGHT AGAINST BORROWER BY BANK IN
ACCORDANCE WITH THIS PARAGRAPH.
BORROWER IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT, COUNTERCLAIM OR PROCEEDING (I) TO ENFORCE OR DEFEND
ANY RIGHTS UNDER OR IN CONNECTION WITH THIS NOTE OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH, OR (II) ARISING FROM
ANY DISPUTE OR CONTROVERSY IN CONNECTION WITH OR RELATED TO THIS
NOTE OR ANY SUCH AMENDMENT, INSTRUMENT, DOCUMENT OR
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AGREEMENT, AND AGREES THAT ANY SUCH ACTION, SUIT, COUNTERCLAIM OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
400 Locust BRENTON BANKS, INC.
Des Moines, Iowa 50304 an Iowa corporation
By: /s/ Steven T. Schuler
FEIN: 42-0658989 Steven T. Schuler,
CFO/Treasurer/Secretary
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Exhibit 10.11
Data Processing Agreement dated December 1, 1991, by and between
ALLTEL Information Services, Inc., (formerly Systematics, Inc.) and
Brenton Bank (formerly Brenton Information Systems, Inc.). This Data
Processing Agreement is incorporated by reference from Form 10-K of
Brenton Banks, Inc. for the year ended December 31, 1996.
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Exhibit 10.12
Correspondent Services Agreement dated November 13, 1996, between
Brenton Bank and the Federal Home Loan Bank of Des Moines. This
Correspondent Services Agreement is incorporated by reference from
Form 10-K of Brenton Banks, Inc. for the year ended December 31,
1996.
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Exhibit 10.13
Adoption Agreement #003 - Nonstandardized Code Section 401(k) Profit
Sharing Plan, effective January 1, 1999.
80
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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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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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[ ] (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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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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<PAGE>
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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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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[ 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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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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[ ] (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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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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[ ] (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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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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[ ] (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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[ ] (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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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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[ ] (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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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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[ ] (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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[ ] (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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[ ] (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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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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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.
113
<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.
114
<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.
115
<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.]
116
<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.]
117
<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.]
118
<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.]
119
<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.]
120
<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.]
121
<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.]
122
<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.]
123
<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.
124
<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.
125
<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"
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<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.
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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"
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Exhibit 10.14
Indenture Agreement with respect to Capital Notes dated April 12,
1993. This Indenture Agreement is incorporated by reference from
Form 10-K of Brenton Banks, Inc. for the year ended December 31,
1998.
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Exhibit 10.15
Indenture Agreement with respect to Capital Notes dated
April 14, 1992. This Indenture Agreement is incorporated
by reference from Form 10-K of Brenton Banks, Inc. for
the year ended December 31, 1997.
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Exhibit 10.16
Indenture Agreement with respect to Capital Notes dated March 27,
1991. This Indenture Agreement is incorporated by reference from Form
10-K of Brenton Banks, Inc. for the year ended December 31, 1996.
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Exhibit 10.17
Indenture Agreement with respect to Capital Notes dated August 5,
1991. This Indenture Agreement is incorporated by reference from Form
10-K of Brenton Banks, Inc. for the year ended December 31, 1996.
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Exhibit 10.18
Indenture Agreement with respect to Capital Notes dated April 8,
1994.
<PAGE>
I N D E N T U R E A G R E E M E N T
W I T H R E S P E C T
T O C A P I T A L N O T E S
D A T E D A P R I L 8 , 1 9 9 4
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INDENTURE AGREEMENT
THIS INDENTURE AGREEMENT is made as of the 8th day of April,
1994, between BRENTON BANKS, INC., a corporation organized and
existing under the laws of Iowa with its principal place of
business in the City of Des Moines, Iowa, hereinafter called the
"Company," and BANKERS TRUST COMPANY, a state banking corporation
organized under the laws of the State of Iowa, with its principal
place of business in the City of Des Moines, Iowa, hereinafter
called the "Trustee."
W I T N E S S E T H:
WHEREAS, Company is duly authorized by its Articles of
Incorporation and By-Laws to borrow money for its corporate
purposes; and,
WHEREAS, Company was heretofore duly authorized by a
unanimous affirmative vote of its directors at a meeting duly
called and held for such purpose to borrow the sum of $5,000,000
for use in connection with its ordinary operations and to issue
its Capital Notes in the total sum of $5,000,000, with the same to
be secured by an appropriate Indenture Agreement with Bankers
Trust Company, Des Moines, Iowa, as Trustee for the Capital Note
holders.
NOW, THEREFORE, in consideration of One Dollar ($1.00) in
hand paid to Trustee, and in consideration of the purchase and
acceptance of Capital Notes of Company by various purchasers,
Company hereby covenants and declares that its Capital Notes in
the maximum principal sum of $5,000,000, and hereinafter more
fully described, shall be issued by it upon and subject to the
following terms, conditions, and covenants, and Trustee by its
execution hereof agrees to act as Trustee for all such Capital
Note holders under and pursuant to the terms of this Agreement.
ARTICLE I
Capital Notes
1.01 Company shall issue its Capital Notes, in the maximum
total principal sum of $5,000,000 with the same being in the
series, maturing on the dates, and bearing interest at the rates
enumerated on Exhibit A attached hereto, which said Capital Notes
shall constitute those issued under and pursuant to this
Indenture. Such Capital Notes shall be issued in denominations of
multiples of $1,000.
1.02 The Capital Notes to be issued under and pursuant to
the terms hereof shall be in the form attached hereto as Exhibit
B.
1.03 All Capital Notes issued pursuant to this Indenture
shall be issued directly to the registered owners as to principal
and interest, and shall be transferable by the registered owner in
person or by duly authorized attorney at the office of the Company
upon surrender and cancellation of the original Capital Note, at
which time a new registered Capital Note(s) shall be executed and
delivered by Company in lieu thereof with the same registered in
the name of the transferee or transferees. Each Capital Note
issued in consummation of an assignment and transfer of an
original issue, or any subsequent Capital Notes issued and
outstanding under the terms hereof, shall be appropriately
recorded by both Company and by Trustee.
1.04 All Capital Notes issued under and pursuant to this
Indenture shall be certified by Trustee and shall not be valid for
any purpose until so certified. Whenever a Capital Note is
surrendered for transfer
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or assignment and a new Capital Note issued in lieu thereof, the
same shall be certified at that time by Trustee prior to its
delivery to the registered owner or owners.
1.05 All Capital Notes issued under the terms hereof shall
have equal priority as to principal. Upon the happening of an
"event of default," all interest due and unpaid on that date on
all Capital Notes issued and outstanding shall have priority over
any principal amounts of such Capital Notes, and shall be paid
ratably either in money or property among the Capital Note holders
to whom the said unpaid interest is due and owing, and no payment
of principal shall be made until all said unpaid interest has been
paid and discharged in full. Following payment of the interest,
the principal sums due and unpaid on all Capital Notes issued and
outstanding as of that date shall then be paid. For the purpose of
principal payment, whether by virtue of distribution of money or
property, priority with respect thereto shall be equal between all
such outstanding Capital Notes.
1.06 Any Capital Note issued under the terms hereof which
has been lost, destroyed, or stolen shall be replaced by Company
with an identical new Capital Note, certified by Trustee, upon
proof of loss, destruction, or theft satisfactory to Company and
Trustee and the giving of a bond to secure Company and Trustee
from loss, if and to the extent required by Company and Trustee.
1.07 Any Capital Note surrendered to Company by the holder
thereof on payment or redemption shall be promptly cancelled by
Company and after cancellation delivered to Trustee for
recordation and return to Company. A Capital Note surrendered
upon an assignment or transfer shall also be so cancelled by
Company and delivered to Trustee for recordation and return to
Company.
1.08 All Capital Notes issued pursuant to the terms hereof
shall bear interest, payable semi-annually on June 1 and December
1 of each year prior to maturity, call for redemption or
redemption pursuant to Section 1.11 hereof. No payment of
principal shall be made until all unpaid interest has been paid
and discharged in full. Following payment of the interest, the
principal sums due and unpaid on all Capital Notes issued and
outstanding as of that date shall be paid. For the purpose of
principal payments, whether by virtue of distribution of money or
property, priority with respect thereto shall be equal in all
respects between all such outstanding Capital Notes.
1.09 Capital Notes issued and outstanding under the terms
hereof shall be paid on maturity to the extent that payment is not
prohibited by the terms hereof, and after payment of all interest
due and payable on any such outstanding Capital Notes at that
time.
1.10 Any Capital Note issued pursuant to this Indenture may
be redeemed in whole or in part by Company, on any interest
payment date after eight (8) years from the date of issuance of
such Capital Note, in advance of maturity at any time thirty (30)
days after notice by Company of its election to do so by paying
all interest due thereon together with the principal amount
thereof.
1.11 Upon the death of an individual registered holder or
of an individual bearing a certain designated relationship to the
registered holder, a Capital Note will be redeemed by the Company
at the option of certain designated person(s) exercised as
provided herein at face plus all interest accrued on the Capital
Note to the date of redemption. An option shall arise upon the
death of an individual who is (i) sole registered holder, (ii) a
joint tenant registered holder, (iii) a tenant in common
registered holder, (iv) a life tenant registered holder, (v) the
sole grantor of a revocable trust which is a registered holder,
(vi) a participant in an IRA or other retirement plan solely for
the benefit of one participant which is a registered holder, or
(vii) the ward of a conservatorship or custodianship which is a
registered holder. No option to require redemption of a Capital
Note shall arise except as specifically set forth above.
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Upon the death of an individual who is the sole
registered holder of a Capital Note, such option shall be
exercisable by the deceased holder's personal representative(s).
Upon the death of a registered holder who holds a Capital Note in
joint tenancy, such option shall be exercisable by the surviving
joint tenant(s). Upon the death of a registered holder who holds
a Capital Note in tenancy in common, such option shall be
exercisable jointly by the personal representative(s) of the
deceased holder and by the remaining tenant(s) in common. Upon
the death of a registered holder who has a life estate in a
Capital Note, such option shall be exercisable by the
remainderman(men). Upon the death of an individual who is the
sole grantor of a revocable trust which is a registered holder,
such option shall be exercisable by the trustee(s) of the trust.
Upon the death of the participant in an IRA or other retirement
plan solely for the benefit of one participant which is a
registered holder, such option shall be exercisable by the
beneficiary(ies) of such IRA or retirement plan. Upon the death
of a ward of a conservatorship or custodianship which is a
registered holder, such option shall be exercisable by the
personal representative(s) of such ward's estate. In the event
more than one person is entitled to exercise the option, such
option shall be exercisable only with the concurrence of all
persons entitled to exercise the option.
The option shall be exercisable for a period of 9
months following the date of death of the individual whose death
gives rise to the option. The option shall be exercised by the
person(s) entitled to exercise the option giving written notice to
the Company of the exercise of the option at the Company's
principal executive offices. Prior to the redemption of the
Capital Note, the person(s) entitled to exercise the option shall
furnish the Company with such documentation or evidence as the
Company shall require to establish such person's(s') entitlement
to exercise the redemption option. The Company shall be under no
duty to notify the person(s) entitled to exercise the option of
the existence of this redemption option or of any facts which come
to the attention of the Company which would give any person the
right to exercise the option.
1.12 In the event any Capital Note is not presented for
surrender and cancellation on maturity or when called for
redemption by Company, Company shall deposit a sum equal to the
amount due thereon, with Trustee in trust for payment thereof, and
no interest shall be due and payable to the holder of such Capital
Note from and after its maturity or redemption date. Such payment
by Company to Trustee shall be made within thirty (30) days after
the due date. Thereafter, Trustee shall pay over said sum to the
owner upon delivery and surrender of the pertinent Capital Note(s)
for redemption and cancellation.
1.13 Nothing contained in this Indenture or in any of the
Capital Notes shall be construed to cause the Capital Notes issued
hereunder to become immediately due and payable in the event of
any consolidation or merger of the Company with or into any other
corporation or corporations (whether or not affiliated with the
Company), or successive consolidations or mergers in which the
Company or its successor or successors shall be a party or
parties, or any sale or conveyance of the property of the Company
as an entirety or substantially as an entirety, to any other
corporation (whether or not affiliated with the Company) or the
purchase of stock and subsequent liquidation of the assets into
the purchasing entity (hereinafter "purchase and liquidation")
authorized to acquire and operate the same if the following are
delivered to the Trustee: (1) an opinion by a certified public
accountant appointed by the successor corporation or entity
opining that the net worth of the successor corporation or entity
following the acquisition, merger, consolidation, sale of assets,
or purchase and liquidation determined on a pro forma basis using
the successor corporation's or entity's and the Company's most
recent year-end financial statements preceding the date of the
acquisition, merger, consolidation, sale of assets, or purchase
and liquidation is in excess of the net worth of the Company as
reflected on the Company's most recent year-end financial
statements preceding the date of the acquisition, merger,
consolidation, sale of assets, or purchase and liquidation; (2) an
Assumption Agreement in which the successor corporation or entity
expressly assumes the due and punctual performance and observance
of all of the covenants and conditions of this Indenture to be
performed by the Company; and (3) an opinion of counsel appointed
by the successor corporation or entity that the Assumption
Agreement is a valid and binding obligation of such
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successor corporation or entity enforceable in accordance with its
terms and the Capital Notes are valid and binding obligations of
the successor corporation or entity.
In case of any such consolidation, merger, sale,
conveyance, or purchase and liquidation and upon the assumption by
the successor corporation, such successor corporation shall
succeed to and be substituted for the Company, with the same
effect as if it had been named herein as the Company.
1.14 Any notices which Company is required to give under
the terms of this Indenture, or which are deemed necessary or
proper by Company, shall be given by first class mail with postage
prepaid addressed to each Capital Note holder at the address shown
for him on the books and records of Company, and notices so given
shall be deemed given upon the date of the mailing thereof.
ARTICLE II
Covenants of Company
2.01 Company covenants and agrees to pay all principal and
interest as the same becomes due and payable upon any Capital
Notes issued and outstanding under the terms of this Indenture;
provided, however, that principal shall only be paid by it upon
surrender of the appropriate Capital Notes for cancellation, or if
not surrendered, by payment to Trustee as provided in this
Indenture.
2.02 Subject to the provisions of Section 1.13 hereof,
Company covenants to continue the operation of its business, all
as required and permitted by its Articles of Incorporation and By-
Laws, and to at all times maintain sufficient assets and property
to continue such general operations so long as any of its Capital
Notes remain issued and outstanding under the terms hereof.
2.03 Company covenants to meet all requirements relative to
issuance of said Capital Notes, payment of principal and interest
thereon from the sources specified, and all other conditions
relating thereto as provided in Article I hereof.
2.04 Company further covenants to furnish Trustee true
copies of all quarterly and annual reports normally prepared by
Company.
2.05 On an annual basis Company covenants to furnish
trustee with a certificate indicating whether there has been an
"event of default", as defined in Article III hereof, on the
Capital Notes. Said statement shall be certified by an officer of
the Company that it is true and accurate according to the
Company's best knowledge and belief. The Company shall deliver
the certificate to the Trustee within ninety (90) days of the
Company's fiscal year end.
2.06. The Company further covenants to furnish Trustee a
quarterly statement listing the current capital noteholders. Said
statement shall be certified by an officer of the Company to be
true and accurate according to the Company's best knowledge and
belief.
ARTICLE III
Defaults: Rights, Remedies, and Duties of
Trustee and Capital Note Holders
3.01 An "event of default" shall constitute any one of the
following:
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a. Failure of Company to pay interest or principal
or any part thereof, within thirty (30) days after due;
b. Failure of Company to fully perform any other
covenant or obligation made and to be kept or performed by Company
by virtue of this Indenture which is not remedied within sixty
(60) days after notice of such failure from Trustee or from the
holders of twenty-five percent (25%) of the principal amount of
all Capital Notes issued and outstanding under the terms hereof at
that time.
c. Adjudication of Company as a bankrupt or
insolvent in any state or federal court, or appointment by any
court of a receiver to take over and conduct the business,
affairs, and property of Company, or commencement of liquidation
of Company, either voluntary or involuntary, pursuant to any
bankruptcy, insolvency or receivership.
3.02 Subject to the provisions of Section 4.01(e), upon the
happening of an "event of default," Trustee shall declare all
principal and interest on all Capital Notes of Company then issued
and outstanding under the terms hereof due and payable at once by
written notice to Company, and thereafter, Trustee may sue at law
or in equity or proceed in any other manner authorized by law to
enforce payment of all sums due on any such outstanding Capital
Notes and to establish and enforce all rights and priorities of
every kind and nature of the holders of all such Capital Notes and
of such Trustee.
3.03 Subject to the provisions of Section 4.01(e), upon the
occurrence of an "event of default" as defined in this Indenture,
Trustee, within thirty (30) days after knowledge thereof, shall
give written notice thereof to all registered owners of Capital
Notes outstanding under the terms of this Indenture at that time,
said notice to be by ordinary first class mail addressed to each
owner at the address shown on Trustee's records. Failure to give
notices under the terms hereof, however, shall not make Trustee
liable for any claim resulting therefrom.
3.04 In any action or proceeding in which rights of Capital
Note holders in and to the assets and property of Company are or
may be affected, or to enforce payment of interest or principal
due under this Indenture or any of the Capital Notes issued
pursuant to the same, or to otherwise enforce performance by
Company of any obligations made or to be performed by it under the
terms hereof or of Capital Notes issued pursuant to this
Indenture, Trustee shall act for and on behalf of all Capital Note
Holders, and shall file and make proof of debts, claims,
petitions, pleadings, and all other instruments, and may take all
action and steps deemed necessary or proper to enforce, protect,
and preserve all rights and properties of the holders of
outstanding Capital Notes.
3.05 Trustee may employ counsel as in its discretion deemed
proper in the case of any "event of default" of Company, or any
other actions as in this Indenture described or provided for with
respect to Trustee either in its own right or for and on behalf of
Capital Note holders, and Company shall pay all fees and expenses
of such counsel and of Trustee in any such acts, actions, or
proceedings taken by Trustee under terms hereof.
3.06 All moneys collected or received by Trustee by virtue
of any act, action, or proceeding taken under the terms hereof or
received by Trustee for and on behalf of Capital Note holders
shall be disbursed as follows:
a. In payment of all costs, expenses, charges, and
fees of Trustee, including counsel and attorney's fees;
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b. In payment of all principal and interest due and
unpaid on the Capital Notes issued and outstanding at that time.
If there are insufficient funds to fully pay all such principal
and interest, the funds available shall be applied and paid first
ratably to the payment of unpaid interest and then ratably to the
payment of principal;
c. The remainder, if any, to Company.
3.07 In case of an "event of default" by Company by virtue
of which the Trustee may elect to institute an action or
proceeding on behalf of the Capital Note holders against Company,
if Trustee does not institute an action within thirty (30) days
after its elective right to so do has accrued, the holders of
Capital Notes totaling twenty-five percent (25%) of the principal
amount of all such Capital Notes then issued and outstanding by
written demand given to Trustee may require Trustee to institute
any action or proceeding which they direct Trustee to initiate,
provided however, that Trustee, before bringing any such action,
may, as is hereinafter more fully spelled out, require adequate
security from such Capital Note holders to protect it against any
loss by virtue of expenses, charges, and fees incident to any
action so required. In the event that two or more groups of
holders of Capital Notes each of which holds Capital Notes
totaling twenty-five percent (25%) of the principal amount of all
such Capital Notes then issued and outstanding direct the trustee
to proceed in a conflicting manner(s), the trustee may interplead
the funds into or may seek a declaratory determination of the
conflict(s) from the District Court for Polk County, Iowa.
3.08 No holder of any Capital Note issued hereunder shall
have the right to institute any suit, action, or proceeding in
equity or at law for the execution of any trust or power hereof or
for the endorsement or any remedy under this Indenture or any
Capital Note issued hereunder unless:
a. Such holder shall have previously given the
Trustee written notice of some existing "event of default" and of
the continuance thereof;
b. The holders of twenty-five percent (25%) in
principal amount of the Capital Notes at the time outstanding
shall have requested the Trustee to exercise such power or right
of action after the right to do so has accrued hereunder and have
afforded the Trustee a reasonable opportunity to proceed upon such
request;
c. Such holders shall have offered to Trustee
indemnity satisfactory to it against the costs, expenses, and
liabilities to be incurred thereby; and
d. The Trustee shall have failed or refused to
comply with such request within a period of sixty (60) days.
Compliance with the foregoing conditions shall at the option of
the Trustee be a condition precedent to the exercise of the powers
and trusts of this Indenture and to any action or proceeding for
the enforcement of any remedy hereunder, and no holder of any
Capital Note shall have any right to enforce any right on account
of this Indenture or his Capital Note, except in the manner herein
provided, and in any event all proceedings hereunder at law or in
equity shall be instituted and maintained for the ratable benefit
of all holders of outstanding Capital Notes in the manner and with
the interest priority provided for in Section 1.05 and Section
3.06, and any other applicable provisions hereof.
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ARTICLE IV
Trustee, Its Rights and Duties,
and Successor Trustees
4.01 The Trustee, for itself and its successors, hereby
accepts the trust created by this Indenture and assumes the duties
imposed, but upon the following terms and conditions:
a. Trustee shall be entitled to reasonable
compensation for all services from time to time rendered by it
under and by virtue of the terms of this Indenture including an
acceptance fee, together with all expenses from time to time
incurred by it, including fees paid for counsel and for legal
services. The parties hereto shall agree upon Trustee's fees for
ordinary services from time to time hereunder. In the event the
parties do not agree, or in the event of extraordinary services by
virtue of events of default or liquidation of Company, or any
other matter which may require extraordinary services from
Trustee, Trustee's compensation may be fixed by an appropriate
court. Company covenants to pay all compensation to which Trustee
may be entitled, including expenses and fees from time to time,
promptly upon demand.
b. Trustee shall not be responsible for the
correctness of any recitals in this Indenture of any Capital Notes
issued under and pursuant to the same (except certificates and
authentications by Trustee).
c. Trustee may employ and consult with counsel
whenever deemed necessary, and the opinion of such counsel shall
be full and complete authorization and protection to and for
Trustee in respect of any action taken or suffered by it in good
faith and in accordance with the opinion of such counsel.
d. Trustee may rely upon the correctness of any
certificate or statement, of the President or a Vice President of
Company furnished from time to time under the terms hereof and
shall not be liable in any way for any act done or any omission to
act in reliance on any such certificate or statement.
e. Trustee hereunder shall have no responsibility
for determining when or whether an "Event of Default" has occurred
except for those events of default which would come to its
knowledge and attention in the ordinary course of business under
this form of Trust Indenture.
4.02 Trustee shall not be liable for any act of commission
or omission on its part in connection with the discharge and
performance of its duties and obligations under this Indenture and
any Capital Notes issued pursuant hereto, except to the extent
that any such act or omission shall constitute willful misconduct
or negligence, and reliance upon certificates and statements of
Company, the President or a Vice President thereof, opinions of
counsel (whether counsel for Company or not), and good faith
errors in judgment by a responsible officer or officers of Trustee
shall not be held to be negligent in any case.
4.03 Trustee shall keep at all times a current list of the
names and addresses of registered Capital Note holders, issued and
outstanding under the terms of this Indenture. Company shall
promptly notify Trustee of all changes in names or addresses of
Capital Note holders known to it.
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4.04 Trustee may resign whenever it may elect to so do,
sixty (60) days after a written notice of its intention to so do
has been served on Company and on all Capital Note owners shown by
the records of Trustee (notices in all cases to be by ordinary,
first class mail with the date of service thereof), and in the
event Trustee shall resign, or in the event Trustee shall be
dissolved and cease to do business as a bank or trust company,
Company shall designate by an appropriate written instrument a
successor Trustee which shall be a state or national bank or trust
company with its principal office in the state of Iowa. Any
successor trustee appointed by Company under the terms hereof
shall have all rights, powers, and duties of the original Trustee
as herein provided, and whenever in this Indenture the word
"Trustee" appears or the Trustee is referred to, it shall mean and
includes any and all successor Trustees who may be appointed
hereunder.
4.05 Trustee shall not be in any manner precluded from
buying, selling, owning, or dealing in Capital Notes issued
pursuant to this agreement, either in its own right or as agent
for others, as fully and completely as any other individual, firm,
or corporation could do.
4.06 Trustee or Company may (and on written request of
owners of twenty-five percent (25%) in principal amount of
outstanding Capital Notes shall) call a meeting of all Capital
Note owners for any appropriate purpose. Such meeting shall be
called by giving a written notice of the time and place thereof by
ordinary, first class mail to all Capital Note owners whose names
and addresses are first shown in the records of Trustee, mailed
not less than five (5) days prior to the date fixed for such
meeting. The Company shall pay for the costs of calling and
holding said meeting.
4.07 In any case in which Trustee is required or may deem
it proper or advisable to give a notice to Company, a Capital Note
holder or any other person, firm, or agency, such notice shall be
given by ordinary, first class mail, addressed to the last known
post office address of any such person, firm, or agency, and the
time of service thereof shall be the time of mailing thereof.
ARTICLE V
5.01 The Company and Trustee may make arrangements varying,
amending or changing this Indenture as Company and Trustee shall
from time to time deem proper without the approval of the
noteholders, provided only that no such amendment shall adversely
affect any rights or interests of owners of Capital Notes then
issued and outstanding under and pursuant to this Indenture.
5.02 Upon the execution of any Supplemental Indenture
pursuant to the provisions of this Article V, this Indenture shall
be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights,
obligations, duties, and immunities under this Indenture of the
Trustee, the Company, and the holders of Capital Notes shall
thereafter be determined, exercised and enforced hereunder subject
in all respects to such modifications and amendments, and all the
terms and conditions of any such Supplemental Indenture shall be
and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.
IN WITNESS WHEREOF, Brenton Banks, Inc. has caused this
Indenture to be executed in its name and on its behalf by its
President, duly attested by its Secretary, with its corporate seal
hereto attached, and Bankers Trust Company, Des Moines, Iowa, to
evidence its acceptance of the trusts hereby created, has caused
this instrument to be signed in its name and on its behalf by a
duly authorized officer, all on or as of this 8th day of April,
1994.
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BRENTON BANKS, INC. BANKERS TRUST COMPANY
By____________________________ By___________________________
Robert L. DeMeulenaere, Bryan Hall, Trust Officer
President
ATTEST:
By_______________________________
Steven T. Schuler,
Chief Financial Officer and
Treasurer/Secretary
STATE OF IOWA )
) ss.
COUNTY OF POLK )
On this ___ day of ___________________, 1994, before me, a
Notary Public in and for Polk County, Iowa, personally appeared
Robert L. DeMeulenaere, President, and Steven T. Schuler, Chief
Financial Officer and Treasurer/Secretary, of Brenton Banks, Inc.,
the corporation which executed the above and foregoing instrument,
who being to me known as the identical persons who signed the
foregoing instrument, and by me duly sworn, each for himself, did
say that they are respectively the President and the Chief
Financial Officer/Secretary/Treasurer of said corporation, and
that said instrument was by them signed and sealed on behalf of
the said corporation by authority of its Board of Directors, and
each of them acknowledged the execution of said instrument to be
the voluntary act and deed of said corporation, by it and each of
them voluntarily executed.
IN WITNESS WHEREOF, I have hereunto signed my name and
affixed my Notarial Seal the day and year last above written.
___________________________
______________, Notary Public in
and for Polk County
STATE OF IOWA )
) ss.
COUNTY OF POLK )
On this ____ day of _____________________, 1994, before me, a
Notary Public in and for Polk County, Iowa, personally appeared
Bryan Hall, of Bankers Trust Company, the corporation which
executed the above and foregoing instrument, who being to me known
as the identical person who signed the foregoing
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instrument, and by me duly sworn, did say that he is the Trust
Officer of said corporation, and that said instrument was by him
signed and sealed on behalf of the said corporation by authority
of its Board of Directors, and he acknowledged the execution of
said instrument to be the voluntary act and deed of said
corporation, by it and by him voluntarily executed.
IN WITNESS WHEREOF, I have hereunto signed my name and
affixed my Notarial Seal the day and year last above written.
_____________________
______________, Notary Public in
and for Polk County
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5.00% Capital Notes
Series SS-22 through SS-33
Due 1998 through 2009
5.25% Capital Notes
Series TT-22 through TT-33
Due 1998 through 2009
5.50% Capital Notes
Series UU-22 through UU-33
Due 1998 through 2009
5.75% Capital Notes
Series VV-22 through VV-33
Due 1998 through 2009
6.00% Capital Notes
Series G-22 through G-33
Due 1998 through 2009
6.25% Capital Notes
Series Q-22 through Q-33
Due 1998 through 2009
6.50% Capital Notes
Series J-22 through J-33
Due 1998 through 2009
6.75% Capital Notes
Series K-22 through K-33
Due 1998 through 2009
7.00% Capital Notes
Series M-22 through M-33
Due 1998 through 2009
7.25% Capital Notes
Series N-22 through N-33
Due 1998 through 2009
7.50% Capital Notes
Series R-22 through R-33
Due 1998 through 2009
7.75% Capital Notes
Series T-22 through T-33
Due 1998 through 2009
8.00% Capital Notes
Series U-22 through U-33
Due 1998 through 2009
8.25% Capital Notes
Series V-22 through V-33
Due 1998 through 2009
8.50% Capital Notes
Series W-22 through W-33
Due 1998 through 2009
8.75% Capital Notes
Series X-22 through X-33
Due 1998 through 2009
9.00% Capital Notes
Series Y-22 through Y-33
Due 1998 through 2009
9.25% Capital Notes
Series B-22 through B-33
Due 1998 through 2009
9.50% Capital Notes
Series A-22 through A-33
Due 1998 through 2009
9.75% Capital Notes
Series C-22 through C-33
Due 1998 through 2009
10.00% Capital Notes
Series D-22 through D-33
Due 1998 through 2009
10.25% Capital Notes
Series E-22 through E-33
Due 1998 through 2009
10.50% Capital Notes
Series F-22 through F-33
Due 1998 through 2009
10.75% Capital Notes
Series H-22 through H-33
Due 1998 through 2009
11.00% Capital Notes
Series I-22 through I-33
Due 1998 through 2009
11.25% Capital Notes
Series L-22 through L-33
Due 1998 through 2009
11.50% Capital Notes
Series O-22 through O-33
Due 1998 through 2009
11.75% Capital Notes
Series S-22 through S-33
Due 1998 through 2009
12.00% Capital Notes
Series Z-22 through Z-33
Due 1998 through 2009
12.25% Capital Notes
Series P-22 through P-33
Due 1998 through 2009
12.50% Capital Notes
Series SS-22 through SS-33
Due 1998 through 2009
12.75% Capital Notes
Series AA-22 through AA-33
Due 1998 through 2009
13.00% Capital Notes
Series BB-22 through BB-33
Due 1998 through 2009
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<PAGE>
O
No. _______________
BRENTON BANKS, INC.
DES MOINES, IOWA
$__________________
REGISTERED CAPITAL NOTE (SERIES _______________________ CALLABLE)
Brenton Banks, Inc., a corporation organized and existing
under the laws of the State of Iowa, hereinafter referred to as
the Corporation, for value received hereby promises to pay to the
registered holder hereof, upon presentation of this Capital Note,
the sum of $___________________ on the 1st day of
June,______________, at the main office of the Corporation in the
City of Des Moines, Iowa. The Corporation further agrees to pay
interest on the principal amount from the __________ day of
____________________, until paid, at the rate of _______% per
annum, payable semi-annually on the first day of June and December
of each year.
The Corporation shall, upon request of the registered holder
hereof, mail a check representing the interest hereon, or the
principal when due, to the registered holder at his address
appearing on the books of registration.
The Capital Note is subject to being called on any interest
payment date occurring more than eight (8) years after the date of
issuance hereof, at the option of the Corporation on not less than
thirty (30) days' prior written notice given by the Corporation by
ordinary mail to the holder of the Capital Note at such holder's
address appearing on the books of registration, at 100% of the
principal amount of this Capital Note, together with interest
accrued and unpaid on this Capital Note, to the date fixed for
such call.
Upon the death of an individual registered holder or of an
individual bearing a certain designated relationship to the
registered holder, a Capital Note will be redeemed by the Company
at the option of certain designated person(s) exercised as
provided herein at face plus all interest accrued on the Capital
Note to the date of redemption. An option shall arise upon the
death of an individual who is (i) sole registered holder, (ii) a
joint tenant registered holder, (iii) a tenant in common
registered holder, (iv) a life tenant registered holder, (v) the
sole grantor of a revocable trust which is a registered holder,
(vi) a participant in an IRA or other retirement plan solely for
the benefit of one participant which is a registered holder, or
(vii) the ward of a conservatorship or custodianship which is a
registered holder. No option to require redemption of a Capital
Note shall arise except as specifically set forth above.
Upon the death of an individual who is the sole registered
holder of a Capital Note, such option shall be exercisable by the
deceased holder's personal representative(s). Upon the death of a
registered holder who holds a Capital Note in joint tenancy, such
option shall be exercisable by the surviving joint tenant(s). Upon
the death of a registered holder who holds a Capital Note in
tenancy in common, such option shall be exercisable jointly by the
personal representative(s) of the deceased holder and by the
remaining tenant(s) in common. Upon the death of a registered
holder who has a life estate in a Capital Note, such option shall
be exercisable by the remainderman(men). Upon the death of an
individual who is the sole grantor of a revocable trust which is a
registered holder, such option shall be exercisable by the
trustee(s) of the trust. Upon the death of the participant in an
IRA or other retirement plan solely for the benefit of one
participant which is a registered holder, such option shall be
exercisable by the beneficiary(ies) of such IRA or retirement
plan. Upon the death of a ward of a conservatorship or
custodianship which is a registered holder, such option shall be
exercisable by the personal representative(s) of such ward's
estate. In the event more than one person is entitled to exercise
the option, such option shall be exercisable only with the
concurrence of all persons entitled to exercise the option.
The option shall be exercisable for a period of 9 months
following the date of death of the individual whose death gives
rise to the option. The option shall be exercised by the person(s)
entitled to exercise the option giving written notice to the
Company of the exercise of the option at the Company's principal
executive offices. Prior to the redemption of the Capital Note,
the person(s) entitled to exercise the option shall furnish the
Company with such documentation or evidence as the Company shall
require to establish such person's(s') entitlement to exercise the
redemption option. The Company shall be under no duty to notify
the person(s) entitled to exercise the option of the existence of
this redemption option or of any facts which come to the attention
of the Company which would give any person the right to exercise
the option.
This Capital Note is one of an authorized issue of fully
registered Capital Notes of Brenton Banks, Inc., issued in
multiples of $1,000 and limited to the aggregate principal amount
of $5,000,000 at any one time outstanding, all issued pursuant to
an Indenture dated April 8, 1994,executed and delivered by the
Corporation to the Trustee, to which Indenture reference is hereby
made for a description of rights, duties and obligations
thereunder of the Corporation, the Trustee and the Owners of the
Capital Notes.
In the event of default in the payment of principal of, or
interest on, this Capital Note, the total principal amount of this
Capital Note, and all interest hereof, shall become due and
payable and the Corporation shall immediately pay the same.
Books for the registry hereof are maintained at the office of
the Corporation or at the agency of the Corporation established
for that purpose in the city of Des Moines, Iowa. This Capital
Note is transferable by the registered holder hereof in person, or
by his duly authorized attorney, at the office or agency of the
Corporation for such purpose in the city of Des Moines, Iowa, upon
surrender for cancellation of this Capital Note at said office or
agency. Thereupon, a new Capital Note for a like principal amount,
or new Capital Notes in such authorized denominations and
registered in such name or names, as shall have been requested,
shall be issued and delivered.
No transfer hereof shall be valid unless made on the
Corporation's books, at the office of the Corporation or the
agency established for that purpose, in accordance with the
provisions of the foregoing paragraph. The Corporation and its
agents may deem and treat the person in whose name this Capital
Note is registered as the absolute owner of the Capital Note for
the purpose of receiving payment hereof and interest due hereon,
but the Corporation may, at any time, require the presentation
hereof as a condition precedent to such payment.
No recourse shall be had for the payment of the principal of,
or interest upon, this Capital Note, against any shareholder,
officer, or director of the Corporation, by reason of any matter
prior to the delivery of this Note, or otherwise, all such
liability, by the acceptance hereof, and as a part of the
consideration of this issue hereof, being expressly waived.
In the event any Capital Note is not presented for payment when
due or when called by the Corporation, the Corporation shall
deposit a sum equal to the amount due thereon with Trustee in
trust for payment thereof and neither the Corporation nor Trustee
shall thereafter be liable for any interest thereon.
This Capital Note and any subsequent Capital Note issued on
transfer and surrender hereunder shall not be valid for any
purpose until duly certified by the Trustee under the Indenture
supporting the name.
This Capital Note is not a deposit and is not insured by the
Federal Deposit Insurance Corporation.
IN WITNESS WHEREOF, the Corporation has caused this Capital
Note to be executed by its Chairman, Vice Chairman, President, or
Treasurer, and attested to by another authorized officer, and its
corporate seal affixed hereto, at Des Moines, Iowa, on the day and
year appearing below.
Corporate Seal:
Date: ________________________________
BRENTON BANKS, INC.
By: __________________________________
(Chairman, Vice Chairman, President or Treasurer)
ATTEST:
______________________________________
(Secretary, Asst. Secretary Treasurer, Asst. Treasurer, Controller
or Asst. Controller)
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<PAGE>
REGISTRATION
(No writing on this registered Capital Note except by an officer
or agent of the Corporation)
Date of In Whose Registry
Registration Name Registered Address Officer
______________ ________________ _______________ ________________
______________ ________________ _______________ ________________
______________ ________________ _______________ ________________
______________ ________________ _______________ ________________
TRUSTEE'S CERTIFICATE
The foregoing Capital Note is hereby certified by the undersigned Bank as
Trustee as one of the series of Capital Notes of Brenton Banks, Inc.,
described in the Indenture referred to therein, made between the Corporation
and this Bank as Trustee.
Dated as of this _______ day of ____________________, ______.
_______________________________
(Trustee)
By_____________________________
Its____________________________
(Title)
ASSIGNMENT
For value received I hereby assign to
__________________________________ the within registered Capital
Note and hereby irrevocably appoint
_________________________________________________ attorney to
transfer the registered Capital Note on the books of the within
named Corporation with full power of substitution in the premises.
Dated:_________________________
Signatures guaranteed by the ____________________________________
Signature (in whose name registered)
_______________________________
(Bank)
_______________________________ ____________________________________
Signature Signature (in whose name registered)
_______________________________
Date Office & Title
The transfer of any notes represented by this certificate to any
person who is not then a bona fide resident of the State of Iowa
purchasing such notes for the purpose of investment and not for
resale is restricted pursuant to the terms of a subscription form
executed by the original holder of such notes.
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<PAGE>
Exhibit 10.19
Indenture Agreement with respect to Capital Notes dated April 10,
1995. This Indenture Agreement is incorporated by reference from Form
10-K of Brenton Banks, Inc., for the year ended December 31, 1995.
148
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Exhibit 10.20
Indenture Agreement with respect to Capital Notes dated April 10,
1996. This Indenture Agreement is incorporated by reference from
Form 10-K of Brenton Banks, Inc. for the year ended December 31,
1996.
149
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Exhibit 10.21
Indenture Agreement with respect to Capital Notes dated April 23,
1997. This Indenture Agreement is incorporated by reference from Form
10-K of Brenton Banks, Inc. for the year ended December 31, 1997.
150
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Exhibit 10.22
Indenture Agreement with respect to Capital Notes dated April 16,
1998. This Indenture Agreement is incorporated by reference from Form
10-K of Brenton Banks, Inc. for the year ended December 31, 1998.
151
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Indenture Agreement with respect to Capital Notes dated April 19,
1999.
152
<PAGE>
I N D E N T U R E A G R E E M E N T
W I T H R E S P E C T
T O C A P I T A L N O T E S
D A T E D A P R I L 19, 1 9 9 9
153
<PAGE>
INDENTURE AGREEMENT
THIS INDENTURE AGREEMENT is made as of the 19th day of April,
1999, between BRENTON BANKS, INC., a corporation organized and
existing under the laws of Iowa with its principal place of
business in the City of Des Moines, Iowa, hereinafter called the
"Company," and BANKERS TRUST COMPANY, a state banking corporation
organized under the laws of the State of Iowa, with its principal
place of business in the City of Des Moines, Iowa, hereinafter
called the "Trustee."
W I T N E S S E T H:
WHEREAS, Company is duly authorized by its Articles of
Incorporation and By-Laws to borrow money for its corporate
purposes; and,
WHEREAS, Company was heretofore duly authorized by a unanimous
affirmative vote of its directors at a meeting duly called and held
for such purpose to borrow the sum of $5,000,000 for use in
connection with its ordinary operations and to issue its Capital
Notes in the total sum of $5,000,000, with the same to be secured
by an appropriate Indenture Agreement with Bankers Trust Company,
Des Moines, Iowa, as Trustee for the Capital Note holders.
NOW, THEREFORE, in consideration of One Dollar ($1.00) in hand
paid to Trustee, and in consideration of the purchase and accep-
tance of Capital Notes of Company by various purchasers, Company
hereby covenants and declares that its Capital Notes in the maximum
principal sum of $5,000,000, and hereinafter more fully described,
shall be issued by it upon and subject to the following terms,
conditions, and covenants, and Trustee by its execution hereof
agrees to act as Trustee for all such Capital Note holders under
and pursuant to the terms of this Agreement.
ARTICLE I
Capital Notes
1.01 Company shall issue its Capital Notes, in the maximum
total principal sum of $5,000,000 with the same being in the
series, maturing on the dates, and bearing interest at the rates
enumerated on Exhibit A attached hereto, which said Capital Notes
shall constitute those issued under and pursuant to this Indenture.
Such Capital Notes shall be issued in denominations of multiples of
$1,000.
1.02 The Capital Notes to be issued under and pursuant to the
terms hereof shall be in the form attached hereto as Exhibit B.
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<PAGE>
1.03 All Capital Notes issued pursuant to this Indenture
shall be issued directly to the registered owners as to principal
and interest, and shall be transferable by the registered owner in
person or by duly authorized attorney at the office of the Company
upon surrender and cancellation of the original Capital Note, at
which time a new registered Capital Note(s) shall be executed and
delivered by Company in lieu thereof with the same registered in
the name of the transferee or transferees. Each Capital Note
issued in consummation of an assignment and transfer of an original
issue, or any subsequent Capital Notes issued and outstanding under
the terms hereof, shall be appropriately recorded by both Company
and by Trustee.
1.04 All Capital Notes issued under and pursuant to this
Indenture shall be certified by Trustee and shall not be valid for
any purpose until so certified. Whenever a Capital Note is surren-
dered for transfer or assignment and a new Capital Note issued in
lieu thereof, the same shall be certified at that time by Trustee
prior to its delivery to the registered owner or owners.
1.05 All Capital Notes issued under the terms hereof shall
have equal priority as to principal. Upon the happening of an
"event of default," all interest due and unpaid on that date on all
Capital Notes issued and outstanding shall have priority over any
principal amounts of such Capital Notes, and shall be paid ratably
either in money or property among the Capital Note holders to whom
the said unpaid interest is due and owing, and no payment of
principal shall be made until all said unpaid interest has been
paid and discharged in full. Following payment of the interest,
the principal sums due and unpaid on all Capital Notes issued and
outstanding as of that date shall then be paid. For the purpose of
principal payment, whether by virtue of distribution of money or
property, priority with respect thereto shall be equal between all
such outstanding Capital Notes.
1.06 Any Capital Note issued under the terms hereof which has
been lost, destroyed, or stolen shall be replaced by Company with
an identical new Capital Note, certified by Trustee, upon proof of
loss, destruction, or theft satisfactory to Company and Trustee and
the giving of a bond to secure Company and Trustee from loss, if
and to the extent required by Company and Trustee.
1.07 Any Capital Note surrendered to Company by the holder
thereof on payment or redemption shall be promptly cancelled by
Company and after cancellation delivered to Trustee for recordation
and return to Company. A Capital Note surrendered upon an
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<PAGE>
assignment or transfer shall also be so cancelled by Company and
delivered to Trustee for recordation and return to Company.
1.08 All Capital Notes issued pursuant to the terms hereof
shall bear interest, payable semi-annually on June 1 and December 1
of each year prior to maturity, call for redemption or redemption
pursuant to Section 1.11 hereof. No payment of principal shall be
made until all unpaid interest has been paid and discharged in
full. Following payment of the interest, the principal sums due
and unpaid on all Capital Notes issued and outstanding as of that
date shall be paid. For the purpose of principal payments, whether
by virtue of distribution of money or property, priority with
respect thereto shall be equal in all respects between all such
outstanding Capital Notes.
1.09 Capital Notes issued and outstanding under the terms
hereof shall be paid on maturity to the extent that payment is not
prohibited by the terms hereof, and after payment of all interest
due and payable on any such outstanding Capital Notes at that time.
1.10 Any Capital Note issued pursuant to this Indenture may
be redeemed in advance of maturity in whole or in part by Company,
on any interest payment date occurring on or after the midpoint
between the date of issuance and the stated maturity date of such
Capital Note, at any time after thirty (30) days notice by Company
of its election to do so by paying all interest due thereon
together with the principal amount thereof.
1.11 Upon the death of an individual registered holder or of
an individual bearing a certain designated relationship to the
registered holder, a Capital Note will be redeemed by the Company
at the option of certain designated person(s) exercised as provided
herein at face plus all interest accrued on the Capital Note to the
date of redemption. An option shall arise upon the death of an
individual who is (i) sole registered holder, (ii) a joint tenant
registered holder, (iii) a tenant in common registered holder,
(iv) a life tenant registered holder, (v) the sole grantor of a
revocable trust which is a registered holder, (vi) a participant in
an IRA or other retirement plan solely for the benefit of one
participant which is a registered holder, or (vii) the ward of a
conservatorship or custodianship which is a registered holder. No
option to require redemption of a Capital Note shall arise except
as specifically set forth above.
Upon the death of an individual who is the sole registered
holder of a Capital Note, such option shall be exercisable by the
deceased holder's personal representative(s). Upon the death of a
registered holder who holds a Capital Note in joint tenancy, such
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<PAGE>
option shall be exercisable by the surviving joint tenant(s). Upon
the death of a registered holder who holds a Capital Note in
tenancy in common, such option shall be exercisable jointly by the
personal representative(s) of the deceased holder and by the
remaining tenant(s) in common. Upon the death of a registered
holder who has a life estate in a Capital Note, such option shall
be exercisable by the remainderman(men). Upon the death of an
individual who is the sole grantor of a revocable trust which is a
registered holder, such option shall be exercisable by the
trustee(s) of the trust. Upon the death of the participant in an
IRA or other retirement plan solely for the benefit of one
participant which is a registered holder, such option shall be
exercisable by the beneficiary(ies) of such IRA or retirement plan.
Upon the death of a ward of a conservatorship or custodianship
which is a registered holder, such option shall be exercisable by
the personal representative(s) of such ward's estate. In the event
more than one person is entitled to exercise the option, such
option shall be exercisable only with the concurrence of all
persons entitled to exercise the option.
The option shall be exercisable for a period of 9 months
following the date of death of the individual whose death gives
rise to the option. The option shall be exercised by the person(s)
entitled to exercise the option giving written notice to the
Company of the exercise of the option at the Company's principal
executive offices. Prior to the redemption of the Capital Note,
the person(s) entitled to exercise the option shall furnish the
Company with such documentation or evidence as the Company shall
require to establish such person's(s') entitlement to exercise the
redemption option. The Company shall be under no duty to notify
the person(s) entitled to exercise the option of the existence of
this redemption option or of any facts which come to the attention
of the Company which would give any person the right to exercise
the option.
1.12 In the event any Capital Note is not presented for sur-
render and cancellation on maturity or when called for redemption
by Company, Company shall deposit a sum equal to the amount due
thereon, with Trustee in trust for payment thereof, and no interest
shall be due and payable to the holder of such Capital Note from
and after its maturity or redemption date. Such payment by Company
to Trustee shall be made within thirty (30) days after the due
date. Thereafter, Trustee shall pay over said sum to the owner
upon delivery and surrender of the pertinent Capital Note(s) for
redemption and cancellation.
1.13 Nothing contained in this Indenture or in any of the
Capital Notes shall be construed to cause the Capital Notes issued
157
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hereunder to become immediately due and payable in the event of any
consolidation or merger of the Company with or into any other
corporation or corporations (whether or not affiliated with the
Company), or successive consolidations or mergers in which the
Company or its successor or successors shall be a party or parties,
or any sale or conveyance of the property of the Company as an
entirety or substantially as an entirety, to any other corporation
(whether or not affiliated with the Company) or the purchase of
stock and subsequent liquidation of the assets into the purchasing
entity (hereinafter "purchase and liquidation") authorized to
acquire and operate the same if the following are delivered to the
Trustee: (1) an opinion by a certified public accountant appointed
by the successor corporation or entity opining that the net worth
of the successor corporation or entity following the acquisition,
merger, consolidation, sale of assets, or purchase and liquidation
determined on a pro forma basis using the successor corporation's
or entity's and the Company's most recent year-end financial
statements preceding the date of the acquisition, merger,
consolidation, sale of assets, or purchase and liquidation is in
excess of the net worth of the Company as reflected on the
Company's most recent year-end financial statements preceding the
date of the acquisition, merger, consolidation, sale of assets, or
purchase and liquidation; (2) an Assumption Agreement in which the
successor corporation or entity expressly assumes the due and
punctual performance and observance of all of the covenants and
conditions of this Indenture to be performed by the Company; and
(3) an opinion of counsel appointed by the successor corporation or
entity that the Assumption Agreement is a valid and binding
obligation of such successor corporation or entity enforceable in
accordance with its terms and the Capital Notes are valid and
binding obligations of the successor corporation or entity.
In case of any such consolidation, merger, sale, conveyance,
or purchase and liquidation and upon the assumption by the
successor corporation, such successor corporation shall succeed to
and be substituted for the Company, with the same effect as if it
had been named herein as the Company.
1.14 Any notices which Company is required to give under the
terms of this Indenture, or which are deemed necessary or proper by
Company, shall be given by first class mail with postage prepaid
addressed to each Capital Note holder at the address shown for him
on the books and records of Company, and notices so given shall be
deemed given upon the date of the mailing thereof.
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ARTICLE II
Covenants of Company
2.01 Company covenants and agrees to pay all principal and
interest as the same becomes due and payable upon any Capital Notes
issued and outstanding under the terms of this Indenture; provided,
however, that principal shall only be paid by it upon surrender of
the appropriate Capital Notes for cancellation, or if not
surrendered, by payment to Trustee as provided in this Indenture.
2.02 Subject to the provisions of Section 1.13 hereof,
Company covenants to continue the operation of its business, all as
required and permitted by its Articles of Incorporation and By-
Laws, and to at all times maintain sufficient assets and property
to continue such general operations so long as any of its Capital
Notes remain issued and outstanding under the terms hereof.
2.03 Company covenants to meet all requirements relative to
issuance of said Capital Notes, payment of principal and interest
thereon from the sources specified, and all other conditions
relating thereto as provided in Article I hereof.
2.04 Company further covenants to furnish Trustee true copies
of all quarterly and annual reports normally prepared by Company.
2.05 On an annual basis Company covenants to furnish trustee
with a certificate indicating whether there has been an "event of
default", as defined in Article III hereof, on the Capital Notes.
Said statement shall be certified by an officer of the Company that
it is true and accurate according to the Company's best knowledge
and belief. The Company shall deliver the certificate to the
Trustee within ninety (90) days of the Company's fiscal year end.
2.06 The Company further covenants to furnish Trustee a
quarterly statement listing the current capital noteholders. Said
statement shall be certified by an officer of the Company to be
true and accurate according to the Company's best knowledge and
belief.
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ARTICLE III
Defaults: Rights, Remedies, and Duties of
Trustee and Capital Note Holders
3.01 An "event of default" shall constitute any one of the
following:
a. Failure of Company to pay interest or principal or any part
thereof, within thirty (30) days after due;
b. Failure of Company to fully perform any other covenant or
obligation made and to be kept or performed by Company by virtue of
this Indenture which is not remedied within sixty (60) days after
notice of such failure from Trustee or from the holders of twenty-
five percent (25%) of the principal amount of all Capital Notes
issued and outstanding under the terms hereof at that time.
c. Adjudication of Company as a bankrupt or insolvent in any
state or federal court, or appointment by any court of a receiver
to take over and conduct the business, affairs, and property of
Company, or commencement of liquidation of Company, either
voluntary or involuntary, pursuant to any bankruptcy, insolvency or
receivership.
3.02 Subject to the provisions of Section 4.01(e), upon the
happening of an "event of default," Trustee shall declare all prin-
cipal and interest on all Capital Notes of Company then issued and
outstanding under the terms hereof due and payable at once by
written notice to Company, and thereafter, Trustee may sue at law
or in equity or proceed in any other manner authorized by law to
enforce payment of all sums due on any such outstanding Capital
Notes and to establish and enforce all rights and priorities of
every kind and nature of the holders of all such Capital Notes and
of such Trustee.
3.03 Subject to the provisions of Section 4.01(e), upon the
occurrence of an "event of default" as defined in this Indenture,
Trustee, within thirty (30) days after knowledge thereof, shall
give written notice thereof to all registered owners of Capital
Notes outstanding under the terms of this Indenture at that time,
said notice to be by ordinary first class mail addressed to each
owner at the address shown on Trustee's records. Failure to give
notices
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under the terms hereof, however, shall not make Trustee liable for
any claim resulting therefrom.
3.04 In any action or proceeding in which rights of Capital
Note holders in and to the assets and property of Company are or
may be affected, or to enforce payment of interest or principal due
under this Indenture or any of the Capital Notes issued pursuant to
the same, or to otherwise enforce performance by Company of any
obligations made or to be performed by it under the terms hereof or
of Capital Notes issued pursuant to this Indenture, Trustee shall
act for and on behalf of all Capital Note Holders, and shall file
and make proof of debts, claims, petitions, pleadings, and all
other instruments, and may take all action and steps deemed
necessary or proper to enforce, protect, and preserve all rights
and properties of the holders of outstanding Capital Notes.
3.05 Trustee may employ counsel as in its discretion deemed
proper in the case of any "event of default" of Company, or any
other actions as in this Indenture described or provided for with
respect to Trustee either in its own right or for and on behalf of
Capital Note holders, and Company shall pay all fees and expenses
of such counsel and of Trustee in any such acts, actions, or
proceedings taken by Trustee under terms hereof.
3.06 All moneys collected or received by Trustee by virtue of
any act, action, or proceeding taken under the terms hereof or
received by Trustee for and on behalf of Capital Note holders shall
be disbursed as follows:
a. In payment of all costs, expenses, charges, and fees of
Trustee, including counsel and attorney's fees;
b. In payment of all principal and interest due and unpaid on the
Capital Notes issued and outstanding at that time. If there are
insufficient funds to fully pay all such principal and interest,
the funds available shall be applied and paid first ratably to the
payment of unpaid interest and then ratably to the payment of
principal;
c. The remainder, if any, to Company.
3.07 In case of an "event of default" by Company by virtue of
which the Trustee may elect to institute an action or proceeding on
behalf of the Capital Note holders against Company, if Trustee does
not institute an action within thirty (30) days after its elective
right to so do has accrued, the holders of Capital Notes totaling
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<PAGE>
twenty-five percent (25%) of the principal amount of all such
Capital Notes then issued and outstanding by written demand given
to Trustee may require Trustee to institute any action or
proceeding which they direct Trustee to initiate, provided however,
that Trustee, before bringing any such action, may, as is
hereinafter more fully spelled out, require adequate security from
such Capital Note holders to protect it against any loss by virtue
of expenses, charges, and fees incident to any action so required.
In the event that two or more groups of holders of Capital Notes
each of which holds Capital Notes totaling twenty-five percent
(25%) of the principal amount of all such Capital Notes then issued
and outstanding direct the trustee to proceed in a conflicting
manner(s), the trustee may interplead the funds into or may seek a
declaratory determination of the conflict(s) from the District
Court for Polk County, Iowa.
3.08 No holder of any Capital Note issued hereunder shall
have the right to institute any suit, action, or proceeding in
equity or at law for the execution of any trust or power hereof or
for the endorsement or any remedy under this Indenture or any
Capital Note issued hereunder unless:
a. Such holder shall have previously given the Trustee written
notice of some existing "event of default" and of the continuance
thereof;
b. The holders of twenty-five percent (25%) in principal amount of
the Capital Notes at the time outstanding shall have requested the
Trustee to exercise such power or right of action after the right
to do so has accrued hereunder and have afforded the Trustee a
reasonable opportunity to proceed upon such request;
c. Such holders shall have offered to Trustee indemnity
satisfactory to it against the costs, expenses, and liabilities to
be incurred thereby; and
d. The Trustee shall have failed or refused to comply with such
request within a period of sixty (60) days. Compliance with the
foregoing conditions shall at the option of the Trustee be a
condition precedent to the exercise of the powers and trusts of
this Indenture and to any action or proceeding for the enforcement
of any remedy hereunder, and no holder of any Capital Note shall
have any right to enforce any right on account of this Indenture or
his Capital Note, except in the manner herein provided, and in any
event
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<PAGE>
all proceedings hereunder at law or in equity shall be instituted
and maintained for the ratable benefit of all holders of
outstanding Capital Notes in the manner and with the interest
priority provided for in Section 1.05 and Section 3.06, and any
other applicable provisions hereof.
ARTICLE IV
Trustee, Its Rights and Duties,
and Successor Trustees
4.01 The Trustee, for itself and its successors, hereby
accepts the trust created by this Indenture and assumes the duties
imposed, but upon the following terms and conditions:
a. Trustee shall be entitled to reasonable compensation for all
services from time to time rendered by it under and by virtue of
the terms of this Indenture including an acceptance fee, together
with all expenses from time to time incurred by it, including fees
paid for counsel and for legal services. The parties hereto shall
agree upon Trustee's fees for ordinary services from time to time
hereunder. In the event the parties do not agree, or in the event
of extraordinary services by virtue of events of default or
liquidation of Company, or any other matter which may require
extraordinary services from Trustee, Trustee's compensation may be
fixed by an appropriate court. Company covenants to pay all
compensation to which Trustee may be entitled, including expenses
and fees from time to time, promptly upon demand.
b. Trustee shall not be responsible for the correctness of any
recitals in this Indenture of any Capital Notes issued under and
pursuant to the same (except certificates and authentications by
Trustee).
c. Trustee may employ and consult with counsel whenever deemed
necessary, and the opinion of such counsel shall be full and
complete authorization and protection to and for Trustee in respect
of any action taken or suffered by it in good faith and in
accordance with the opinion of such counsel.
d. Trustee may rely upon the correctness of any certificate or
statement, of the President or a Vice President of Company
furnished from time to time
163
<PAGE>
under the terms hereof and shall not be liable in any way for any
act done or any omission to act in reliance on any such certificate
or statement.
e. Trustee hereunder shall have no responsibility for determining
when or whether an "Event of Default" has occurred except for those
events of default which would come to its knowledge and attention
in the ordinary course of business under this form of Trust
Indenture.
4.02 Trustee shall not be liable for any act of commission or
omission on its part in connection with the discharge and perfor-
mance of its duties and obligations under this Indenture and any
Capital Notes issued pursuant hereto, except to the extent that any
such act or omission shall constitute willful misconduct or negli-
gence, and reliance upon certificates and statements of Company,
the President or a Vice President thereof, opinions of counsel
(whether counsel for Company or not), and good faith errors in
judgment by a responsible officer or officers of Trustee shall not
be held to be negligent in any case.
4.03 Trustee shall keep at all times a current list of the
names and addresses of registered Capital Note holders, issued and
outstanding under the terms of this Indenture. Company shall
promptly notify Trustee of all changes in names or addresses of
Capital Note holders known to it.
4.04 Trustee may resign whenever it may elect to so do, sixty
(60) days after a written notice of its intention to so do has been
served on Company and on all Capital Note owners shown by the
records of Trustee (notices in all cases to be by ordinary, first
class mail with the date of service thereof), and in the event
Trustee shall resign, or in the event Trustee shall be dissolved
and cease to do business as a bank or trust company, Company shall
designate by an appropriate written instrument a successor Trustee
which shall be a state or national bank or trust company with its
principal office in the state of Iowa. Any successor trustee
appointed by Company under the terms hereof shall have all rights,
powers, and duties of the original Trustee as herein provided, and
whenever in this Indenture the word "Trustee" appears or the
Trustee is referred to, it shall mean and includes any and all
successor Trustees who may be appointed hereunder.
4.05 Trustee shall not be in any manner precluded from
buying, selling, owning, or dealing in Capital Notes issued
pursuant to this agreement, either in its own right or as agent for
others,
164
<PAGE>
as fully and completely as any other individual, firm, or
corporation could do.
4.06 Trustee or Company may (and on written request of owners
of twenty-five percent (25%) in principal amount of outstanding
Capital Notes shall) call a meeting of all Capital Note owners for
any appropriate purpose. Such meeting shall be called by giving a
written notice of the time and place thereof by ordinary, first
class mail to all Capital Note owners whose names and addresses are
first shown in the records of Trustee, mailed not less than five
(5) days prior to the date fixed for such meeting. The Company
shall pay for the costs of calling and holding said meeting.
4.07 In any case in which Trustee is required or may deem it
proper or advisable to give a notice to Company, a Capital Note
holder or any other person, firm, or agency, such notice shall be
given by ordinary, first class mail, addressed to the last known
post office address of any such person, firm, or agency, and the
time of service thereof shall be the time of mailing thereof.
ARTICLE V
5.01 The Company and Trustee may make arrangements varying,
amending or changing this Indenture as Company and Trustee shall
from time to time deem proper without the approval of the
noteholders, provided only that no such amendment shall adversely
affect any rights or interests of owners of Capital Notes then
issued and outstanding under and pursuant to this Indenture.
5.02 Upon the execution of any Supplemental Indenture
pursuant to the provisions of this Article V, this Indenture shall
be and be deemed to be modified and amended in accordance therewith
and the respective rights, limitations of rights, obligations,
duties, and immunities under this Indenture of the Trustee, the
Company, and the holders of Capital Notes shall thereafter be
determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms
and conditions of any such Supplemental Indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for
any and all purposes.
IN WITNESS WHEREOF, Brenton Banks, Inc. has caused this Indenture
to be executed in its name and on its behalf by its President, duly
attested by its Secretary, with its corporate seal hereto attached,
and Bankers Trust Company, Des Moines, Iowa, to evidence its
acceptance of the trusts hereby created, has caused this instrument
to be signed in its name and on its behalf by a duly authorized
officer, all on or as of this 19th day of April, 1999.
165
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BRENTON BANKS, INC. BANKERS TRUST COMPANY
By /s/ Robert L. DeMeulenaere By /s/ Bryan Hall
Robert L. DeMeulenaere Bryan Hall, Trust Officer
President
ATTEST:
By /s/ Steven T. Schuler
Steven T. Schuler,
Chief Financial Officer and
Treasurer/Secretary
STATE OF IOWA )
) ss.
COUNTY OF POLK )
On this 19th day of April, 1999, before me, a Notary Public in
and for Polk County, Iowa, personally appeared Robert L.
DeMeulenaere, President, and Steven T. Schuler, Chief Financial
Officer and Treasurer/Secretary, of Brenton Banks, Inc., the
corporation which executed the above and foregoing instrument, who
being to me known as the identical persons who signed the foregoing
instrument, and by me duly sworn, each for himself, did say that
they are respectively the President and the Chief Financial
Officer/Secretary/Treasurer of said corporation, and that said
instrument was by them signed and sealed on behalf of the said
corporation by authority of its Board of Directors, and each of
them acknowledged the execution of said instrument to be the
voluntary act and deed of said corporation, by it and each of them
voluntarily executed.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed
my Notarial Seal the day and year last above written.
/s/ Pamela J. Slippy
, Notary Public in
and for Polk County
Seal
166
<PAGE>
STATE OF IOWA )
) ss.
COUNTY OF POLK )
On this 21 day of April, 1999, before me, a Notary Public in and for Polk
County, Iowa, personally appeared Bryan Hall, of Bankers Trust Company, the
corporation which executed the above and foregoing instrument, who being to me
known as the identical person who signed the foregoing instrument, and by me
duly sworn, did say that he is the Trust Officer of said corporation, and that
said instrument was by him signed and sealed on behalf of the said corporation
by authority of its Board of Directors, and he acknowledged the execution of
said instrument to be the voluntary act and deed of said corporation, by it
and by him voluntarily executed.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed my
Notarial Seal the day and year last above written.
/s/ Pamela J. Slippy
, Notary Public in
and for Polk County
Seal
167
<PAGE>
Exhibit A
5.00% Capital Notes
Series RR-27 through RR-38
Due 2003 through 2014
5.25% Capital Notes
Series TT-27 through TT-38
Due 2003 through 2014
5.50% Capital Notes
Series UU-27 through UU-38
Due 2003 through 2014
5.75% Capital Notes
Series VV-27 through VV-38
Due 2003 through 2014
6.00% Capital Notes
Series G-27 through G-38
Due 2003 through 2014
6.25% Capital Notes
Series Q-27 through Q-38
Due 2003 through 2014
6.50% Capital Notes
Series J-27 through J-38
Due 2003 through 2014
6.75% Capital Notes
Series K-27 through K-38
Due 2003 through 2014
7.00% Capital Notes
Series M-27 through M-38
Due 2003 through 2014
7.25% Capital Notes
Series N-27 through N-38
Due 2003 through 2014
7.50% Capital Notes
Series R-27 through R-38
Due 2003 through 2014
7.75% Capital Notes
Series T-27 through T-38
Due 2003 through 2014
8.00% Capital Notes
Series U-27 through U-38
Due 2003 through 2014
8.25% Capital Notes
Series V-27 through V-38
Due 2003 through 2014
8.50% Capital Notes
Series W-27 through W-38
Due 2003 through 2014
8.75% Capital Notes
Series X-27 through X-38
Due 2003 through 2014
9.00% Capital Notes
Series Y-27 through Y-38
Due 2003 through 2014
9.25% Capital Notes
Series B-27 through B-38
Due 2003 through 2014
9.50% Capital Notes
Series A-27 through A-38
Due 2003 through 2014
9.75% Capital Notes
Series C-27 through C-38
Due 2003 through 2014
10.00% Capital Notes
Series D-27 through D-38
Due 2003 through 2014
10.25% Capital Notes
Series E-27 through E-38
Due 2003 through 2014
10.50% Capital Notes
Series F-27 through F-38
Due 2003 through 2014
10.75% Capital Notes
Series H-27 through H-38
Due 2003 through 2014
11.00% Capital Notes
Series I-27 through I-38
Due 2003 through 2014
11.25% Capital Notes
Series L-27 through L-38
Due 2003 through 2014
11.50% Capital Notes
Series O-27 through O-38
Due 2003 through 2014
11.75% Capital Notes
Series S-27 through S-38
Due 2003 through 2014
12.00% Capital Notes
Series Z-27 through Z-38
Due 2003 through 2014
12.25% Capital Notes
Series P-27 through P-38
Due 2003 through 2014
12.50% Capital Notes
Series SS-27 through SS-38
Due 2003 through 2014
12.75% Capital Notes
Series AA-27 through AA-38
Due 2003 through 2014
13.00% Capital Notes
Series BB-27 through BB-38
Due 2003 through 2014
168
<PAGE>
T No. _______________
BRENTON BANKS, INC.
DES MOINES, IOWA
$__________________
REGISTERED CAPITAL NOTE (SERIES _______________________ CALLABLE)
Brenton Banks, Inc., a corporation organized and existing under the laws
of the State of Iowa, hereinafter referred to as the Corporation, for value
received hereby promises to pay to the registered holder hereof, upon
presentation of this Capital Note, the sum of $___________________ on the 1st
day of June, ______________, at the main office of the Corporation in the City
of Des Moines, Iowa. The Corporation further agrees to pay interest on the
principal amount from the __________ day of ____________________, until paid,
at the rate of _______% per annum, payable semi-annually on the first day of
June and December of each year.
The Corporation shall, upon request of the registered holder hereof, mail a
check representing the interest hereon, or the principal when due, to the
registered holder at his address appearing on the books of registration.
The Capital Note is subject to being called on any interest payment date
occurring on or after the date that is the midpoint between the original
issuance date and the stated maturity date, at the option of the Corporation
on not less than thirty (30) days' prior written notice given by the
Corporation by ordinary mail to the holder of the Capital Note at such
holder's address appearing on the books of registration, at 100% of the
principal amount of this Capital Note, together with interest accrued and
unpaid on this Capital Note, to the date fixed for such call.
Upon the death of an individual registered holder or of an individual
bearing a certain designated relationship to the registered holder, a Capital
Note will be redeemed by the Company at the option of certain designated
person(s) exercised as provided herein at face plus all interest accrued on
the Capital Note to the date of redemption. An option shall arise upon the
death of an individual who is (i) sole registered holder, (ii) a joint tenant
registered holder, (iii) a tenant in common registered holder, (iv) a life
tenant registered holder, (v) the sole grantor of a revocable trust which is a
registered holder, (vi) a participant in an IRA or other retirement plan
solely for the benefit of one participant which is a registered holder, or
(vii) the ward of a conservatorship or custodianship which is a registered
holder. No option to require redemption of a Capital Note shall arise except
as specifically set forth above.
Upon the death of an individual who is the sole registered holder of a
Capital Note, such option shall be exercisable by the deceased holder's
personal representative(s). Upon the death of a registered holder who holds a
Capital Note in joint tenancy, such option shall be exercisable by the
surviving joint tenant(s). Upon the death of a registered holder who holds a
Capital Note in tenancy in common, such option shall be exercisable jointly by
the personal representative(s) of the deceased holder and by the remaining
tenant(s) in common. Upon the death of a registered holder who has a life
estate in a Capital Note, such option shall be exercisable by the
remainderman(men). Upon the death of an individual who is the sole grantor of
a revocable trust which is a registered holder, such option shall be
exercisable by the trustee(s) of the trust. Upon the death of the participant
in an IRA or other retirement plan solely for the benefit of one participant
which is a registered holder, such option shall be exercisable by the
beneficiary(ies) of such IRA or retirement plan. Upon the death of a ward of a
conservatorship or custodianship which is a registered holder, such option
shall be exercisable by the personal representative(s) of such ward's estate.
In the event more than one person is entitled to exercise the option, such
option shall be exercisable only with the concurrence of all persons entitled
to exercise the option.
The option shall be exercisable for a period of 9 months following the date
of death of the individual whose death gives rise to the option. The option
shall be exercised by the person(s) entitled to exercise the option giving
written notice to the Company of the exercise of the option at the Company's
principal executive offices. Prior to the redemption of the Capital Note, the
person(s) entitled to exercise the option shall furnish the Company with such
documentation or evidence as the Company shall require to establish such
person's(s') entitlement to exercise the redemption option. The Company shall
be under no duty to notify the person(s) entitled to exercise the option of
the existence of this redemption option or of any facts which come to the
attention of the Company which would give any person the right to exercise the
option.
This Capital Note is one of an authorized issue of fully registered Capital
Notes of Brenton Banks, Inc., issued in multiples of $1,000 and limited to the
aggregate principal amount of $5,000,000 at any one time outstanding, all
issued pursuant to an Indenture dated April 19, 1999, executed and delivered
by the Corporation to the Trustee, to which Indenture reference is hereby made
for a description of rights, duties and obligations thereunder of the
Corporation, the Trustee and the Owners of the Capital Notes.
In the event of default in the payment of principal of, or interest on,
this Capital Note, the total principal amount of this Capital Note, and all
interest hereof, shall become due and payable and the Corporation shall
immediately pay the same.
Books for the registry hereof are maintained at the office of the
Corporation or at the agency of the Corporation established for that purpose
in the city of Des Moines, Iowa. This Capital Note is transferable by the
registered holder hereof in person, or by his duly authorized attorney, at the
office or agency of the Corporation for such purpose in the city of Des
Moines, Iowa, upon surrender for cancellation of this Capital Note at said
office or agency. Thereupon, a new Capital Note for a like principal amount,
or new Capital Notes in such authorized denominations and registered in such
name or names, as shall have been requested, shall be issued and delivered.
No transfer hereof shall be valid unless made on the Corporation's books,
at the office of the Corporation or the agency established for that purpose,
in accordance with the provisions of the foregoing paragraph. The Corporation
and its agents may deem and treat the person in whose name this Capital Note
is registered as the absolute owner of the Capital Note for the purpose of
receiving payment hereof and interest due hereon, but the Corporation may, at
any time, require the presentation hereof as a condition precedent to such
payment.
No recourse shall be had for the payment of the principal of, or interest
upon, this Capital Note, against any shareholder, officer, or director of the
Corporation, by reason of any matter prior to the delivery of this Note, or
otherwise, all such liability, by the acceptance hereof, and as a part of the
consideration of this issue hereof, being expressly waived.
In the event any Capital Note is not presented for payment when due or when
called by the Corporation, the Corporation shall deposit a sum equal to the
amount due thereon with Trustee in trust for payment thereof and neither the
Corporation nor Trustee shall thereafter be liable for any interest thereon.
This Capital Note and any subsequent Capital Note issued on transfer and
surrender hereunder shall not be valid for any purpose until duly certified by
the Trustee under the Indenture supporting the name.
This Capital Note is not a deposit and is not insured by the Federal
Deposit Insurance Corporation.
IN WITNESS WHEREOF, the Corporation has caused this Capital Note to be
executed by its Chairman, President or Treasurer, and attested to by another
authorized individual, and its corporate seal affixed hereto, at Des Moines,
Iowa, on the day and year appearing below.
Brenton Banks, Inc.
Corporate Seal
Iowa
Date: ________________________________
BRENTON BANKS, INC.
By: __________________________________
(Chairman, President or Treasurer)
ATTEST:
______________________________________
(Secretary, Asst. Secretary Treasurer,
or other authorized individual)
169
<PAGE>
REGISTRATION
(No writing on this registered Capital Note except by an officer or agent of
the Corporation)
Date of In Whose Registry
Registration Name Registered Address Officer/Agent
______________ ________________ _______________ ________________
______________ ________________ _______________ ________________
______________ ________________ _______________ ________________
______________ ________________ _______________ ________________
TRUSTEE'S CERTIFICATE
The foregoing Capital Note is hereby certified by the undersigned Bank as
Trustee as one of the series of Capital Notes of Brenton Banks, Inc.,
described in the Indenture referred to therein, made between the Corporation
and this Bank as Trustee.
Dated as of this _______ day of ____________________, ______.
_______________________________
(Trustee)
By_____________________________
Its____________________________
(Title)
ASSIGNMENT
For value received I hereby assign to ___________________________ the within
registered Capital Note and hereby irrevocably appoint
_________________________________________________ attorney to transfer the
registered Capital Note on the books of the within named Corporation with full
power of substitution in the premises.
Dated:____________________
Signatures guaranteed by the ____________________________________
Signature (in whose name registered)
__________________________
(Bank)
__________________________ ____________________________________
Signature Signature (in whose name registered)
__________________________
Date Office & Title
The transfer of any notes represented by this certificate to any person who is
not then a bona fide resident of the State of Iowa purchasing such notes for
the purpose of investment and not for resale is restricted pursuant to the
terms of a subscription form executed by the original holder of such notes.
170
<PAGE>
Exhibit 10.24
Split-Dollar Insurance Agreement between the Company, William H.
Brenton Crummy Trust and William H. Brenton Crummy Trust II, dated
November 23, 1994.
171
<PAGE>
Split Dollar Insurance Agreement
Collateral Assignment
AGREEMENT, made and entered into this 23rd day of November,
1994, by and between Brenton Banks, Inc., Des Moines, Iowa
("Company"), and the William H. Brenton Crummey Trust and the
William H. Brenton Crummey Trust II, irrevocable trusts, for the
benefit of William H. Brenton and William H. Brenton ("Owner"),
Des Moines, Iowa.
WHEREAS, William H. Brenton is a valued Employee of the
Company, and Company wishes to provide additional inducement for
William H. Brenton's continued involvement with the Company, and
as additional compensation, Company wishes to assist William H.
Brenton with respect to a personal life insurance program by
entering into this Split Dollar Insurance Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions contained herein, the parties hereto agree as follows:
1. Policy. The life insurance policy (the "Policy") with
which this Agreement deals is identified in Exhibit "A" attached
hereto and by this reference incorporated herein. In the event
that this Agreement deals with multiple life insurance policies,
each policy shall be identified in a separate Exhibit "A" attached
hereto, and all references herein to the Policy shall include all
policies with respect to which a separate Exhibit "A" is attached
hereto.
2. Ownership. The Owner shall at all times be the owner of
the Policy, and shall have the sole right to exercise all
ownership rights granted to the owner by the terms of the Policy.
It is the express intention of the parties hereto to reserve to
the Owner all rights in the Policy granted by the terms of the
Policy, including, but not limited to, the right to borrow against
the Policy, the right to assign the Owner's interest in the
Policy, the right to change the beneficiary of the Policy, the
right to exercise settlement options, and the right to surrender
or cancel the Policy (in whole or in part). The Company shall not
have nor exercise any right in and to the Policy which could in
any way endanger, defeat or impair any of the rights of the Owner
in the Policy. The only rights in and to the Policy granted to
the Company shall be its security interest in the cash value of
the Policy and its right to receive a portion of the death benefit
of the Policy, all as provided herein.
3. Premiums. Premiums on the Policy shall be paid by the
parties hereto as set forth in Exhibit "B" attached hereto and by
this reference incorporate herein.
4. Interest of Company in the Policy. The Company's
interest in the Policy shall be limited to the following rights in
the cash value and to a portion of the death benefit of the Policy
as set forth below:
a. In the event the Policy is totally surrendered or
canceled by the Owner, the Company shall receive from the
surrender proceeds of the Policy: (i) the aggregate amount of
cumulative premiums paid by the Company, plus (ii) an amount, not
less than zero, which is calculated by taking 5.2 percent per
annum of the total amount of cumulative premiums paid by the
Company to date less $300,000.00 ("Amount Due Company").
b. Upon the death of William H. Brenton, or, if the
Policy is a survivorship life insurance product, upon the death of
the survivor of William H. Brenton and William H. Brenton's
spouse, while the Policy remains in force, the Company shall
receive from the death benefit proceeds of the Policy the Amount
Due Company.
172
<PAGE>
c. In the event of the termination of this Agreement,
the Company shall be repaid by the Owner the Amount Due Company.
d. In the event the Owner obtains a policy loan with
respect to the Policy or in the event the Policy is partially
surrendered and such loan or partial surrender causes the net cash
surrender value of the Policy to be a sum less than the Amount Due
Company, the Owner will repay to the Company a portion of any
Policy loan proceeds or partial surrender proceeds to the Company
so as to cause the net cash surrender value of the Policy
following the policy loan or partial surrender to be equal to or
exceed the Amount Due Company.
As used in this Agreement, the term "net cash surrender value"
shall mean the cash surrender value of the Policy, less the amount
of any then existing loans or withdrawals against the Policy
obtained by the Owner. As used in this Agreement, the term "the
aggregate amount of cumulative premiums paid by the Company" shall
mean the aggregate amount of premiums paid by the Company net of
any repayment to the Company of such amount.
5. Collateral Assignment. Contemporaneously herewith the
Owner has assigned the Policy as collateral security to secure
payment of the amounts payable to Company identified herein under
a form of Collateral Assignment which has been filed with the
insurance company issuing the Policy. In the event of a total or
partial surrender of the Policy, termination of this Agreement or
upon the death of William H. Brenton, or, if the Policy is a
survivorship life insurance product, upon the death of the
survivor of William H. Brenton and William H. Brenton's spouse,
the amounts payable to the Company identified herein shall be paid
to the Company in accordance with the terms of such Collateral
Assignment.
6. Death of William H. Brenton. Upon the death of William
H. Brenton, or, if the Policy is a survivorship life insurance
product, upon the death of the survivor of William H. Brenton and
William H. Brenton's spouse, the balance of the death benefit
under the Policy in excess of the amount payable to the Company
under the provisions hereof, if any, shall be paid directly to the
beneficiary or beneficiaries designated by the Owner in the manner
and in the amounts provided by the beneficiary designation of the
Policy filed with the insurance company issuing the Policy.
7. Termination. This Agreement may be terminated at any
time upon the mutual agreement of the parties hereto.
8. Assignment by Owner. In the event the Owner shall
transfer all interest in the Policy to a transferee, then all of
the Owner's interest in the Policy and in this Agreement shall be
vested in the transferee, who shall become a substituted party
hereto and who shall become bound by the provisions hereof, and
the Owner shall have no further interest in the Policy or in this
Agreement.
9. Assignment by Company. The Company shall not assign any
of its rights in the Policy or in this Agreement to anyone other
than the Owner (or the Owner's transferee, if the Owner has
transferred its rights in the Policy) without the prior written
consent of the Owner (or the Owner's transferee, if the Owner has
transferred its rights in the Policy). Any attempted assignment
or transfer by the Company in violation of this paragraph shall be
null and void and of no force and effect.
10. Insurer Liability. The insurance company which issues
the Policy shall not be deemed to be bound by the provisions of
this Agreement nor to have notice of the terms of this Agreement.
Any and all liability of the insurance company issuing the Policy
shall be determined solely by reference to the terms of the
Policy, any applicable riders to the Policy, the beneficiary
designation with respect to the Policy, the Collateral Assignment
with respect to the Policy and any other documents filed with the
insurance company and accepted and acknowledged by the insurance
company.
173
<PAGE>
11. Split Dollar Plan. This Agreement is intended to
qualify the ownership of the Policy as a collateral assignment
method split dollar life insurance employee benefit plan as
described in Revenue Ruling 64-328, and shall be administered so
as to qualify as such a plan.
12. Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof
and cannot be amended, altered, modified, except by a written
instrument signed by each of the parties hereto.
13. Notices. Any notice, consent or demand required or
permitted to be given under the provisions of this Agreement by
one party to another shall be in writing, shall be signed by the
party giving the notice, and shall be given either by delivery to
the other party personally, or by mailing, by United States
certified mail, postage prepaid, to the other party, addressed to
the other party's last known mailing address as shown on the
records of the Company. In the event such notice is given by
mailing, the date of mailing shall be deemed the date of the
giving of such notice, consent or demand.
14. Binding on Successors and Assigns. This Agreement shall
bind and inure to the benefit of the parties and their respective
heirs, successors and assigns.
15. Governing Law. This Agreement shall be deemed made in
the state of Iowa Business Corporation Act, the this Agreement and
the rights of the parties hereunder shall be governed by and
construed in accordance with the laws of the state of Iowa
Business Corporation Act.
16. Severability. In the event a particular provision of
this Agreement is held to be invalid under applicable law, effect
shall nevertheless be given to all valid provisions hereof to
further the objectives of this Agreement.
17. Interpretation. Where appropriate in this Agreement,
words used in the singular shall include the plural, and words
used in the masculine or neuter shall include the feminine.
18. Named Fiduciary and Plan Administrator. For the
purposes of the Employee Retirement Security Act of 1974 (ERISA),
the Company shall be the "Named Fiduciary" and Plan Administrator
of the split dollar insurance plan for which this Agreement is
hereby designated the written plan instrument. The Company, as
Named Fiduciary, shall have authority to control and manage the
operation and administration of this Agreement, and it shall be
responsible for establishing and carrying out a funding policy and
method consistent with the objectives of this Agreement. Any
decision by the Company denying a claim for benefits under this
Agreement shall be stated in writing, set forth specific reasons
for the denial, and be delivered or mailed to the claimant. All
claim procedures under this split dollar insurance plan shall be
performed in compliance with the requirements of ERISA.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the year and date first above written.
Brenton Banks, Inc.
Company
By /s/ Steven T. Schuler
Its CFO/Treasurer/Sec.
174
<PAGE>
Brenton Bank, N. A., Trustee of the
William H. Brenton Crummy Trust
Owner
By /s/ Gary Ernst
Its Vice Pres. Sr. Trust Officer
Brenton Bank, N.A. Trustee of the
William H. Brenton Crummy Trust II
Owner
By /s/ Gary Ernst
Its Vice Pres. Sr. Trust Officer
William H. Brenton
Owner
/s/ William H. Brenton
175
<PAGE>
EXHIBIT "A"
Policy Number: 117215X
Issued by: EMC Insurance Companies
Providing for initial death benefit proceeds of $ 300,000
This policy is a life insurance policy on the life of William
H. Brenton. The policy also provides a death benefit on the life
of Natalie G. Brenton in the amount of $150,000.
176
<PAGE>
EXHIBIT "A"
Policy Number: 119921
Issued by: EMC Insurance Companies
Providing for initial death benefit proceeds of $ 400,000
This policy is a life insurance policy on the life of William
H. Brenton.
177
<PAGE>
EXHIBIT "A"
Policy Number: 137577
Issued by: EMC Insurance Companies
Providing for initial death benefit proceeds of $ 400,000
This policy is a life insurance policy on the life of William
H. Brenton.
178
<PAGE>
EXHIBIT "A"
Policy Number: 121476
Issued by: EMC Insurance Companies
Providing for initial death benefit proceeds of $ 450,000
This policy is a life insurance policy on the life of William
H. Brenton. The policy also provides a death benefit on the life
of Natalie G. Brenton in the amount of $350,000.
179
<PAGE>
EXHIBIT "A"
Policy Number: 146078
Issued by: EMC Insurance Companies
Providing for initial death benefit proceeds of $ 500,000
This policy is a life insurance policy on the life of William
H. Brenton.
180
<PAGE>
EXHIBIT "A"
Policy Number: 7890362
Issued by: Penn Mutual Life Insurance Company
Providing for initial death benefit proceeds of $ 500,000
This policy is a survivorship life insurance policy on the
lives of William H. Brenton and Natalie G. Brenton, William H.
Brenton's wife, which pays a death benefit only upon the death of
the survivor of William H. Brenton and Natalie G. Brenton.
181
<PAGE>
EXHIBIT "A"
Policy Number: 4239293
Issued by: Principal Mutual Life Insurance Company
Providing for initial death benefit proceeds of $ 500,000
This policy is a life insurance policy on the life of William
H. Brenton.
182
<PAGE>
EXHIBIT "A"
Policy Number: 4239294
Issued by: Principal Mutual Life Insurance Company
Providing for initial death benefit proceeds of $ 500,000
This policy is a life insurance policy on the life of Natalie
G. Brenton.
183
<PAGE>
EXHIBIT "A"
Policy Number: 44243450
Issued by: Equitable Variable Life Insurance Company
Providing for initial death benefit proceeds of $ 750,000
This policy is a life insurance policy on the life of William
H. Brenton.
184
<PAGE>
EXHIBIT "B"
Premiums
The Company shall pay the following premiums due on each
Policy.
<TABLE>
<CAPTION>
Policy Number Premiums Paid
<S> <C>
EMC Insurance Companies
117215X $ 3,700
119921 7,758
137577 9,120
121476 11,390
146078 20,300
Penn Mutual Life Insurance Company
7890362 6,532
Principal Mutual Life Insurance Company
4239293 6,300
4239294 5,100
Equitable Variable Life Insurance Company
44243450 43,800
________
Total premiums paid $114,000
________
________
</TABLE>
185
<PAGE>
Collateral Assignment
THIS ASSIGNMENT is made and entered into this ________ day of
December, 1994, by the undersigned as owner (the "Owner") of a
certain life insurance policy number 117215X (the "Policy") issued
by EMC Insurance Companies (the "Insurer") upon the life of
William H. Brenton, and Brenton Bank, Inc. (the "Assignee").
WHEREAS, William H. Brenton ("Employee") is a valued Employee
of the Assignee, and
WHEREAS, Owner has entered into a Split Dollar Agreement with
the
Assignee (the "Agreement"), and
WHEREAS, in consideration of the Assignee agreeing to make
certain
premium payments, the Owner agrees to grant the Assignee a
security interest in the Policy as collateral security for the
repayment of the cumulative premiums paid by the Assignee.
NOW, THEREFORE, the undersigned Owner hereby assigns,
transfers and sets over to the Assignee the following specific
rights in the Policy subject to the following terms and
conditions:
1. This Assignment is made, and the Policy is to be held,
as collateral security for all liabilities of the Owner to the
Assignee, either now existing or that may hereafter arise,
pursuant to the terms of the Agreement.
2. The Assignee's interest in the Policy shall be strictly
limited to:
a. The right to be repaid from the surrender proceeds
of the Policy: (i) the aggregate amount of cumulative premiums
paid by the Company, plus (ii) an amount, not less than zero,
which is calculated by taking 5.2 percent per annum of the total
amount of cumulative premiums paid by the Company to date less
$300,000.00 ("Amount Due Company") in the event the Policy is
totally surrendered or canceled by the Owner.
b. The right to be repaid from the death benefit
proceeds of the Policy the Amount Due Company upon the death of
the Employee, or, if the Policy is a survivorship life insurance
product, upon the death of the survivor of the Employee and the
Employee's spouse, while the Policy remains in force.
c. The right to be repaid the Amount Due Company in the
event
of the termination of the Agreement.
d. The right to be repaid a portion of any Policy loan
proceeds or partial surrender proceeds paid to the Assignee so as
to cause the net cash surrender value of the Policy to be equal to
or exceed the Amount Due Company in the event the Owner obtains a
Policy loan or in the event the Policy is partially surrendered
and such loan or partial surrender causes the net cash surrender
value of the Policy to be a sum less than the Amount Due Company.
As used in this Assignment, the term "net cash surrender value"
shall mean the cash surrender value of the Policy, less the amount
of any then existing loans or withdrawals against the Policy
obtained by the Owner. As used in this Assignment, the term "the
aggregate amount of cumulative premiums paid by the Assignee"
shall mean the aggregate amount of premiums paid by the Assignee
net of any repayment to the Assignee of such amount.
186
<PAGE>
3. The Owner shall retain all incidents of ownership in the
Policy, including, but not limited to, the sole and exclusive
rights to: borrow against the Policy; make withdrawals from the
Policy; assign Owner interest in the Policy; change the
beneficiary of the Policy; exercise settlement options; and,
surrender or cancel the Policy (in whole or in part). All of
these incidents of ownership shall be exercisable by the Owner
unilaterally and without the consent of any other person.
4. The Assignee shall, upon request, if the Policy is in
the possession of the Assignee, forward the Policy to the Insurer,
without unreasonable delay, for change of beneficiary, any
election of optional mode of settlement, or the exercise of any
other right reserved by the Owner.
5. The Insurer is hereby authorized to recognize the
Assignee's claims, including the validity or the amount of any
liabilities of the Owner to the Assignee under the Agreement, the
existence of any default therein, the giving of any notice
required therein or herein, or the application to be made by the
Assignee of any amounts to be paid to the Assignee. Upon the
Insurer giving prior written notice to Owner of the proposed
payment of amounts to the Assignee, the receipt of the Assignee
for any sums received by it shall be a full discharge and release
therefore to the Insurer.
6. The Insurer shall be fully protected in recognizing a
request made by the Owner for surrender or cancellation of the
Policy, in whole or in part, or in recognizing a request made by
the Owner for any loans against the Policy permitted by the terms
of the Policy. In the event this request is made, upon prior
written notice thereof to the Assignee the Insurer may pay the
proceeds of any surrender, cancellation, or loan to the sole order
of the Owner, or as the Owner shall direct.
7. Upon the full payment of the liabilities of the Owner to
the Assignee pursuant to the Agreement, the Assignee shall execute
an appropriate release of this Collateral Assignment.
8. It is the express intention of the Owner to assign a
limited interest in the Policy to the Assignee as security for
certain premium payments made by the Assignee, without giving the
Assignee any incidents of ownership in the Policy within the
meaning of section 2042 of the Internal Revenue Code (and
regulations thereunder), or any similar provision of subsequent
law. All provisions of this Collateral Assignment (and of the
Agreement) shall be construed and exercised so as to effect this
intention.
IN WITNESS WHEREOF, the Owner and Assignee have executed this
Assignment and the Insurer has acknowledged its acceptance of this
Assignment effective the day and year first above written.
William H. Brenton
Owner
___________________________________________
Brenton Banks, Inc.
Assignee
By ________________________________________
Its _______________________________________
187
<PAGE>
ACCEPTED:
EMC Insurance Companies
Insurer
By_________________________________________
Its________________________________________
188
<PAGE>
Collateral Assignment
THIS ASSIGNMENT is made and entered into this ________ day of
December, 1994, by the undersigned as owner (the "Owner") of a
certain life insurance policy number 119921 (the "Policy") issued
by EMC Insurance Companies (the "Insurer") upon the life of
William H. Brenton, and Brenton Bank, Inc. (the "Assignee").
WHEREAS, William H. Brenton ("Employee") is a valued Employee
of the Assignee, and
WHEREAS, Owner has entered into a Split Dollar Agreement with
the Assignee (the "Agreement"), and
WHEREAS, in consideration of the Assignee agreeing to make
certain premium payments, the Owner agrees to grant the Assignee a
security interest in the Policy as collateral security for the
repayment of the cumulative premiums paid by the Assignee.
NOW, THEREFORE, the undersigned Owner hereby assigns,
transfers and sets over to the Assignee the following specific
rights in the Policy subject to the following terms and
conditions:
1. This Assignment is made, and the Policy is to be held,
as collateral security for all liabilities of the Owner to the
Assignee, either now existing or that may hereafter arise,
pursuant to the terms of the Agreement.
2. The Assignee's interest in the Policy shall be strictly
limited to:
a. The right to be repaid from the surrender proceeds
of the Policy: (i) the aggregate amount of cumulative premiums
paid by the Company, plus (ii) an amount, not less than zero,
which is calculated by taking 5.2 percent per annum of the total
amount of cumulative premiums paid by the Company to date less
$300,000.00 ("Amount Due Company") in the event the Policy is
totally surrendered or canceled by the Owner.
b. The right to be repaid from the death benefit
proceeds of the Policy the Amount Due Company upon the death of
the Employee, or, if the Policy is a survivorship life insurance
product, upon the death of the survivor of the Employee and the
Employee's spouse, while the Policy remains in force.
c. The right to be repaid the Amount Due Company in the
event of the termination of the Agreement.
d. The right to be repaid a portion of any Policy loan
proceeds or partial surrender proceeds paid to the Assignee so as
to cause the net cash surrender value of the Policy to be equal to
or exceed the Amount Due Company in the event the Owner obtains a
Policy loan or in the event the Policy is partially surrendered
and such loan or partial surrender causes the net cash surrender
value of the Policy to be a sum less than the Amount Due Company.
As used in this Assignment, the term "net cash surrender value"
shall mean the cash surrender value of the Policy, less the amount
of any then existing loans or withdrawals against the Policy
obtained by the Owner. As used in this Assignment, the term "the
aggregate amount of cumulative premiums paid by the Assignee"
shall mean the aggregate amount of premiums paid by the Assignee
net of any repayment to the Assignee of such amount.
189
<PAGE>
3. The Owner shall retain all incidents of ownership in the
Policy, including, but not limited to, the sole and exclusive
rights to: borrow against the Policy; make withdrawals from the
Policy; assign Owner interest in the Policy; change the
beneficiary of the Policy; exercise settlement options; and,
surrender or cancel the Policy (in whole or in part). All of
these incidents of ownership shall be exercisable by the Owner
unilaterally and without the consent of any other person.
4. The Assignee shall, upon request, if the Policy is in
the possession of the Assignee, forward the Policy to the Insurer,
without unreasonable delay, for change of beneficiary, any
election of optional mode of settlement, or the exercise of any
other right reserved by the Owner.
5. The Insurer is hereby authorized to recognize the
Assignee's claims, including the validity or the amount of any
liabilities of the Owner to the Assignee under the Agreement, the
existence of any default therein, the giving of any notice
required therein or herein, or the application to be made by the
Assignee of any amounts to be paid to the Assignee. Upon the
Insurer giving prior written notice to Owner of the proposed
payment of amounts to the Assignee, the receipt of the Assignee
for any sums received by it shall be a full discharge and release
therefore to the Insurer.
6. The Insurer shall be fully protected in recognizing a
request made by the Owner for surrender or cancellation of the
Policy, in whole or in part, or in recognizing a request made by
the Owner for any loans against the Policy permitted by the terms
of the Policy. In the event this request is made, upon prior
written notice thereof to the Assignee the Insurer may pay the
proceeds of any surrender, cancellation, or loan to the sole order
of the Owner, or as the Owner shall direct.
7. Upon the full payment of the liabilities of the Owner to
the Assignee pursuant to the Agreement, the Assignee shall execute
an appropriate release of this Collateral Assignment.
8. It is the express intention of the Owner to assign a
limited interest in the Policy to the Assignee as security for
certain premium payments made by the Assignee, without giving the
Assignee any incidents of ownership in the Policy within the
meaning of section 2042 of the Internal Revenue Code (and
regulations thereunder), or any similar provision of subsequent
law. All provisions of this Collateral Assignment (and of the
Agreement) shall be construed and exercised so as to effect this
intention.
IN WITNESS WHEREOF, the Owner and Assignee have executed this
Assignment and the Insurer has acknowledged its acceptance of this
Assignment effective the day and year first above written.
Brenton Bank, N.A. Trustee of the
William H. Brenton Crummy Trust
Owner
By_________________________________________
Its________________________________________
Brenton Banks, Inc.
Assignee
By ________________________________________
Its _______________________________________
190
<PAGE>
ACCEPTED:
EMC Insurance Companies
Insurer
By________________________________________
Its_______________________________________
191
<PAGE>
Collateral Assignment
THIS ASSIGNMENT is made and entered into this ________ day of
December, 1994, by the undersigned as owner (the "Owner") of a
certain life insurance policy number 137577 (the "Policy") issued
by EMC Insurance Companies (the "Insurer") upon the life of
William H. Brenton, and Brenton Bank, Inc. (the "Assignee").
WHEREAS, William H. Brenton ("Employee") is a valued Employee
of the Assignee, and
WHEREAS, Owner has entered into a Split Dollar Agreement with
the Assignee (the "Agreement"), and
WHEREAS, in consideration of the Assignee agreeing to make
certain premium payments, the Owner agrees to grant the Assignee a
security interest in the Policy as collateral security for the
repayment of the cumulative premiums paid by the Assignee.
NOW, THEREFORE, the undersigned Owner hereby assigns,
transfers and sets over to the Assignee the following specific
rights in the Policy subject to the following terms and
conditions:
1. This Assignment is made, and the Policy is to be held,
as collateral security for all liabilities of the Owner to the
Assignee, either now existing or that may hereafter arise,
pursuant to the terms of the Agreement.
2. The Assignee's interest in the Policy shall be strictly
limited to:
a. The right to be repaid from the surrender proceeds
of the Policy: (i) the aggregate amount of cumulative premiums
paid by the Company, plus (ii) an amount, not less than zero,
which is calculated by taking 5.2 percent per annum of the total
amount of cumulative premiums paid by the Company to date less
$300,000.00 ("Amount Due Company") in the event the Policy is
totally surrendered or canceled by the Owner.
b. The right to be repaid from the death benefit
proceeds of the Policy the Amount Due Company upon the death of
the Employee, or, if the Policy is a survivorship life insurance
product, upon the death of the survivor of the Employee and the
Employee's spouse, while the Policy remains in force.
c. The right to be repaid the Amount Due Company in the
event of the termination of the Agreement.
d. The right to be repaid a portion of any Policy loan
proceeds or partial surrender proceeds paid to the Assignee so as
to cause the net cash surrender value of the Policy to be equal to
or exceed the Amount Due Company in the event the Owner obtains a
Policy loan or in the event the Policy is partially surrendered
and such loan or partial surrender causes the net cash surrender
value of the Policy to be a sum less than the Amount Due Company.
As used in this Assignment, the term "net cash surrender value"
shall mean the cash surrender value of the Policy, less the amount
of any then existing loans or withdrawals against the Policy
obtained by the Owner. As used in this Assignment, the term "the
aggregate amount of cumulative premiums paid by the Assignee"
shall mean the aggregate amount of premiums paid by the Assignee
net of any repayment to the Assignee of such amount.
192
<PAGE>
3. The Owner shall retain all incidents of ownership in the
Policy, including, but not limited to, the sole and exclusive
rights to: borrow against the Policy; make withdrawals from the
Policy; assign Owner interest in the Policy; change the
beneficiary of the Policy; exercise settlement options; and,
surrender or cancel the Policy (in whole or in part). All of
these incidents of ownership shall be exercisable by the Owner
unilaterally and without the consent of any other person.
4. The Assignee shall, upon request, if the Policy is in
the possession of the Assignee, forward the Policy to the Insurer,
without unreasonable delay, for change of beneficiary, any
election of optional mode of settlement, or the exercise of any
other right reserved by the Owner.
5. The Insurer is hereby authorized to recognize the
Assignee's claims, including the validity or the amount of any
liabilities of the Owner to the Assignee under the Agreement, the
existence of any default therein, the giving of any notice
required therein or herein, or the application to be made by the
Assignee of any amounts to be paid to the Assignee. Upon the
Insurer giving prior written notice to Owner of the proposed
payment of amounts to the Assignee, the receipt of the Assignee
for any sums received by it shall be a full discharge and release
therefore to the Insurer.
6. The Insurer shall be fully protected in recognizing a
request made by the Owner for surrender or cancellation of the
Policy, in whole or in part, or in recognizing a request made by
the Owner for any loans against the Policy permitted by the terms
of the Policy. In the event this request is made, upon prior
written notice thereof to the Assignee the Insurer may pay the
proceeds of any surrender, cancellation, or loan to the sole order
of the Owner, or as the Owner shall direct.
7. Upon the full payment of the liabilities of the Owner to
the Assignee pursuant to the Agreement, the Assignee shall execute
an appropriate release of this Collateral Assignment.
8. It is the express intention of the Owner to assign a
limited interest in the Policy to the Assignee as security for
certain premium payments made by the Assignee, without giving the
Assignee any incidents of ownership in the Policy within the
meaning of section 2042 of the Internal Revenue Code (and
regulations thereunder), or any similar provision of subsequent
law. All provisions of this Collateral Assignment (and of the
Agreement) shall be construed and exercised so as to effect this
intention.
IN WITNESS WHEREOF, the Owner and Assignee have executed this
Assignment and the Insurer has acknowledged its acceptance of this
Assignment effective the day and year first above written.
Brenton Bank, N.A. Trustee of the
William H. Brenton Crummy Trust
Owner
By_________________________________________
Its________________________________________
Brenton Banks, Inc.
Assignee
By ________________________________________
Its _______________________________________
193
<PAGE>
ACCEPTED:
EMC Insurance Companies
Insurer
By________________________________________
Its_______________________________________
194
<PAGE>
Collateral Assignment
THIS ASSIGNMENT is made and entered into this ________ day of
December, 1994, by the undersigned as owner (the "Owner") of a
certain life insurance policy number 121476 (the "Policy") issued
by EMC Insurance Companies (the "Insurer") upon the life of
William H. Brenton, and Brenton Bank, Inc. (the "Assignee").
WHEREAS, William H. Brenton ("Employee") is a valued Employee
of the Assignee, and
WHEREAS, Owner has entered into a Split Dollar Agreement with
the Assignee (the "Agreement"), and
WHEREAS, in consideration of the Assignee agreeing to make
certain premium payments, the Owner agrees to grant the Assignee a
security interest in the Policy as collateral security for the
repayment of the cumulative premiums paid by the Assignee.
NOW, THEREFORE, the undersigned Owner hereby assigns,
transfers and sets over to the Assignee the following specific
rights in the Policy subject to the following terms and
conditions:
1. This Assignment is made, and the Policy is to be held,
as collateral security for all liabilities of the Owner to the
Assignee, either now existing or that may hereafter arise,
pursuant to the terms of the Agreement.
2. The Assignee's interest in the Policy shall be strictly
limited to:
a. The right to be repaid from the surrender proceeds
of the Policy: (i) the aggregate amount of cumulative premiums
paid by the Company, plus (ii) an amount, not less than zero,
which is calculated by taking 5.2 percent per annum of the total
amount of cumulative premiums paid by the Company to date less
$300,000.00 ("Amount Due Company") in the event the Policy is
totally surrendered or canceled by the Owner.
b. The right to be repaid from the death benefit
proceeds of the Policy the Amount Due Company upon the death of
the Employee, or, if the Policy is a survivorship life insurance
product, upon the death of the survivor of the Employee and the
Employee's spouse, while the Policy remains in force.
c. The right to be repaid the Amount Due Company in the
event of the termination of the Agreement.
d. The right to be repaid a portion of any Policy loan
proceeds or partial surrender proceeds paid to the Assignee so as
to cause the net cash surrender value of the Policy to be equal to
or exceed the Amount Due Company in the event the Owner obtains a
Policy loan or in the event the Policy is partially surrendered
and such loan or partial surrender causes the net cash surrender
value of the Policy to be a sum less than the Amount Due Company.
As used in this Assignment, the term "net cash surrender value"
shall mean the cash surrender value of the Policy, less the amount
of any then existing loans or withdrawals against the Policy
obtained by the Owner. As used in this Assignment, the term "the
aggregate amount of cumulative premiums paid by the Assignee"
shall mean the aggregate amount of premiums paid by the Assignee
net of any repayment to the Assignee of such amount.
195
<PAGE>
3. The Owner shall retain all incidents of ownership in the
Policy, including, but not limited to, the sole and exclusive
rights to: borrow against the Policy; make withdrawals from the
Policy; assign Owner interest in the Policy; change the
beneficiary of the Policy; exercise settlement options; and,
surrender or cancel the Policy (in whole or in part). All of
these incidents of ownership shall be exercisable by the Owner
unilaterally and without the consent of any other person.
4. The Assignee shall, upon request, if the Policy is in
the possession of the Assignee, forward the Policy to the Insurer,
without unreasonable delay, for change of beneficiary, any
election of optional mode of settlement, or the exercise of any
other right reserved by the Owner.
5. The Insurer is hereby authorized to recognize the
Assignee's claims, including the validity or the amount of any
liabilities of the Owner to the Assignee under the Agreement, the
existence of any default therein, the giving of any notice
required therein or herein, or the application to be made by the
Assignee of any amounts to be paid to the Assignee. Upon the
Insurer giving prior written notice to Owner of the proposed
payment of amounts to the Assignee, the receipt of the Assignee
for any sums received by it shall be a full discharge and release
therefore to the Insurer.
6. The Insurer shall be fully protected in recognizing a
request made by the Owner for surrender or cancellation of the
Policy, in whole or in part, or in recognizing a request made by
the Owner for any loans against the Policy permitted by the terms
of the Policy. In the event this request is made, upon prior
written notice thereof to the Assignee the Insurer may pay the
proceeds of any surrender, cancellation, or loan to the sole order
of the Owner, or as the Owner shall direct.
7. Upon the full payment of the liabilities of the Owner to
the Assignee pursuant to the Agreement, the Assignee shall execute
an appropriate release of this Collateral Assignment.
8. It is the express intention of the Owner to assign a
limited interest in the Policy to the Assignee as security for
certain premium payments made by the Assignee, without giving the
Assignee any incidents of ownership in the Policy within the
meaning of section 2042 of the Internal Revenue Code (and
regulations thereunder), or any similar provision of subsequent
law. All provisions of this Collateral Assignment (and of the
Agreement) shall be construed and exercised so as to effect this
intention.
IN WITNESS WHEREOF, the Owner and Assignee have executed this
Assignment and the Insurer has acknowledged its acceptance of this
Assignment effective the day and year first above written.
William H. Brenton
Owner
___________________________________________
Brenton Banks, Inc.
Assignee
By ________________________________________
Its _______________________________________
196
<PAGE>
ACCEPTED:
EMC Insurance Companies
Insurer
By_________________________________________
Its________________________________________
197
<PAGE>
Collateral Assignment
THIS ASSIGNMENT is made and entered into this ________ day of
December, 1994, by the undersigned as owner (the "Owner") of a
certain life insurance policy number 146078 (the "Policy") issued
by EMC Insurance Companies (the "Insurer") upon the life of
William H. Brenton, and Brenton Bank, Inc. (the "Assignee").
WHEREAS, William H. Brenton ("Employee") is a valued Employee
of the Assignee, and
WHEREAS, Owner has entered into a Split Dollar Agreement with
the Assignee (the "Agreement"), and
WHEREAS, in consideration of the Assignee agreeing to make
certain premium payments, the Owner agrees to grant the Assignee a
security interest in the Policy as collateral security for the
repayment of the cumulative premiums paid by the Assignee.
NOW, THEREFORE, the undersigned Owner hereby assigns,
transfers and sets over to the Assignee the following specific
rights in the Policy subject to the following terms and
conditions:
1. This Assignment is made, and the Policy is to be held,
as collateral security for all liabilities of the Owner to the
Assignee, either now existing or that may hereafter arise,
pursuant to the terms of the Agreement.
2. The Assignee's interest in the Policy shall be strictly
limited to:
a. The right to be repaid from the surrender proceeds
of the Policy: (i) the aggregate amount of cumulative premiums
paid by the Company, plus (ii) an amount, not less than zero,
which is calculated by taking 5.2 percent per annum of the total
amount of cumulative premiums paid by the Company to date less
$300,000.00 ("Amount Due Company") in the event the Policy is
totally surrendered or canceled by the Owner.
b. The right to be repaid from the death benefit
proceeds of the Policy the Amount Due Company upon the death of
the Employee, or, if the Policy is a survivorship life insurance
product, upon the death of the survivor of the Employee and the
Employee's spouse, while the Policy remains in force.
c. The right to be repaid the Amount Due Company in the
event of the termination of the Agreement.
d. The right to be repaid a portion of any Policy loan
proceeds or partial surrender proceeds paid to the Assignee so as
to cause the net cash surrender value of the Policy to be equal to
or exceed the Amount Due Company in the event the Owner obtains a
Policy loan or in the event the Policy is partially surrendered
and such loan or partial surrender causes the net cash surrender
value of the Policy to be a sum less than the Amount Due Company.
As used in this Assignment, the term "net cash surrender value"
shall mean the cash surrender value of the Policy, less the amount
of any then existing loans or withdrawals against the Policy
obtained by the Owner. As used in this Assignment, the term "the
aggregate amount of cumulative premiums paid by the Assignee"
shall mean the aggregate amount of premiums paid by the Assignee
net of any repayment to the Assignee of such amount.
198
<PAGE>
3. The Owner shall retain all incidents of ownership in the
Policy, including, but not limited to, the sole and exclusive
rights to: borrow against the Policy; make withdrawals from the
Policy; assign Owner interest in the Policy; change the
beneficiary of the Policy; exercise settlement options; and,
surrender or cancel the Policy (in whole or in part). All of
these incidents of ownership shall be exercisable by the Owner
unilaterally and without the consent of any other person.
4. The Assignee shall, upon request, if the Policy is in
the possession of the Assignee, forward the Policy to the Insurer,
without unreasonable delay, for change of beneficiary, any
election of optional mode of settlement, or the exercise of any
other right reserved by the Owner.
5. The Insurer is hereby authorized to recognize the
Assignee's claims, including the validity or the amount of any
liabilities of the Owner to the Assignee under the Agreement, the
existence of any default therein, the giving of any notice
required therein or herein, or the application to be made by the
Assignee of any amounts to be paid to the Assignee. Upon the
Insurer giving prior written notice to Owner of the proposed
payment of amounts to the Assignee, the receipt of the Assignee
for any sums received by it shall be a full discharge and release
therefore to the Insurer.
6. The Insurer shall be fully protected in recognizing a
request made by the Owner for surrender or cancellation of the
Policy, in whole or in part, or in recognizing a request made by
the Owner for any loans against the Policy permitted by the terms
of the Policy. In the event this request is made, upon prior
written notice thereof to the Assignee the Insurer may pay the
proceeds of any surrender, cancellation, or loan to the sole order
of the Owner, or as the Owner shall direct.
7. Upon the full payment of the liabilities of the Owner to
the Assignee pursuant to the Agreement, the Assignee shall execute
an appropriate release of this Collateral Assignment.
8. It is the express intention of the Owner to assign a
limited interest in the Policy to the Assignee as security for
certain premium payments made by the Assignee, without giving the
Assignee any incidents of ownership in the Policy within the
meaning of section 2042 of the Internal Revenue Code (and
regulations thereunder), or any similar provision of subsequent
law. All provisions of this Collateral Assignment (and of the
Agreement) shall be construed and exercised so as to effect this
intention.
IN WITNESS WHEREOF, the Owner and Assignee have executed this
Assignment and the Insurer has acknowledged its acceptance of this
Assignment effective the day and year first above written.
Brenton Bank, N.A. Trustee of the
William H. Brenton Crummy Trust
Owner
By_________________________________________
Its________________________________________
Brenton Banks, Inc.
Assignee
By ________________________________________
Its _______________________________________
199
<PAGE>
ACCEPTED:
EMC Insurance Companies
Insurer
By_________________________________________
Its________________________________________
200
<PAGE>
Collateral Assignment
THIS ASSIGNMENT is made and entered into this ________ day of
December, 1994, by the undersigned as owner (the "Owner") of a
certain life insurance policy number 4239293 (the "Policy") issued
by Principal Mutual Life Insurance Company (the "Insurer") upon
the life of William H. Brenton, and Brenton Bank, Inc. (the
"Assignee").
WHEREAS, William H. Brenton ("Employee") is a valued Employee
of the Assignee, and
WHEREAS, Owner has entered into a Split Dollar Agreement with
the Assignee (the "Agreement"), and
WHEREAS, in consideration of the Assignee agreeing to make
certain premium payments, the Owner agrees to grant the Assignee a
security interest in the Policy as collateral security for the
repayment of the cumulative premiums paid by the Assignee.
NOW, THEREFORE, the undersigned Owner hereby assigns,
transfers and sets over to the Assignee the following specific
rights in the Policy subject to the following terms and
conditions:
1. This Assignment is made, and the Policy is to be held,
as collateral security for all liabilities of the Owner to the
Assignee, either now existing or that may hereafter arise,
pursuant to the terms of the Agreement.
2. The Assignee's interest in the Policy shall be strictly
limited to:
a. The right to be repaid from the surrender proceeds
of the Policy: (i) the aggregate amount of cumulative premiums
paid by the Company, plus (ii) an amount, not less than zero,
which is calculated by taking 5.2 percent per annum of the total
amount of cumulative premiums paid by the Company to date less
$300,000.00 ("Amount Due Company") in the event the Policy is
totally surrendered or canceled by the Owner.
b. The right to be repaid from the death benefit
proceeds of the Policy the Amount Due Company upon the death of
the Employee, or, if the Policy is a survivorship life insurance
product, upon the death of the survivor of the Employee and the
Employee's spouse, while the Policy remains in force.
c. The right to be repaid the Amount Due Company in the
event of the termination of the Agreement.
d. The right to be repaid a portion of any Policy loan
proceeds or partial surrender proceeds paid to the Assignee so as
to cause the net cash surrender value of the Policy to be equal to
or exceed the Amount Due Company in the event the Owner obtains a
Policy loan or in the event the Policy is partially surrendered
and such loan or partial surrender causes the net cash surrender
value of the Policy to be a sum less than the Amount Due Company.
As used in this Assignment, the term "net cash surrender value"
shall mean the cash surrender value of the Policy, less the amount
of any then existing loans or withdrawals against the Policy
obtained by the Owner. As used in this Assignment, the term "the
aggregate amount of cumulative premiums paid by the Assignee"
shall mean the aggregate amount of premiums paid by the Assignee
net of any repayment to the Assignee of such amount.
201
<PAGE>
3. The Owner shall retain all incidents of ownership in the
Policy, including, but not limited to, the sole and exclusive
rights to: borrow against the Policy; make withdrawals from the
Policy; assign Owner interest in the Policy; change the
beneficiary of the Policy; exercise settlement options; and,
surrender or cancel the Policy (in whole or in part). All of
these incidents of ownership shall be exercisable by the Owner
unilaterally and without the consent of any other person.
4. The Assignee shall, upon request, if the Policy is in
the possession of the Assignee, forward the Policy to the Insurer,
without unreasonable delay, for change of beneficiary, any
election of optional mode of settlement, or the exercise of any
other right reserved by the Owner.
5. The Insurer is hereby authorized to recognize the
Assignee's claims, including the validity or the amount of any
liabilities of the Owner to the Assignee under the Agreement, the
existence of any default therein, the giving of any notice
required therein or herein, or the application to be made by the
Assignee of any amounts to be paid to the Assignee. Upon the
Insurer giving prior written notice to Owner of the proposed
payment of amounts to the Assignee, the receipt of the Assignee
for any sums received by it shall be a full discharge and release
therefore to the Insurer.
6. The Insurer shall be fully protected in recognizing a
request made by the Owner for surrender or cancellation of the
Policy, in whole or in part, or in recognizing a request made by
the Owner for any loans against the Policy permitted by the terms
of the Policy. In the event this request is made, upon prior
written notice thereof to the Assignee the Insurer may pay the
proceeds of any surrender, cancellation, or loan to the sole order
of the Owner, or as the Owner shall direct.
7. Upon the full payment of the liabilities of the Owner to
the Assignee pursuant to the Agreement, the Assignee shall execute
an appropriate release of this Collateral Assignment.
8. It is the express intention of the Owner to assign a
limited interest in the Policy to the Assignee as security for
certain premium payments made by the Assignee, without giving the
Assignee any incidents of ownership in the Policy within the
meaning of section 2042 of the Internal Revenue Code (and
regulations thereunder), or any similar provision of subsequent
law. All provisions of this Collateral Assignment (and of the
Agreement) shall be construed and exercised so as to effect this
intention.
IN WITNESS WHEREOF, the Owner and Assignee have executed this
Assignment and the Insurer has acknowledged its acceptance of this
Assignment effective the day and year first above written.
Brenton Bank, N.A. Trustee of the
William H. Brenton Crummy Trust
Owner
By_________________________________________
Its________________________________________
Brenton Banks, Inc.
Assignee
By ________________________________________
Its _______________________________________
202
<PAGE>
ACCEPTED:
Principal Mutual Life Insurance Company
Insurer
By_________________________________________
Its________________________________________
203
<PAGE>
Collateral Assignment
THIS ASSIGNMENT is made and entered into this ________ day of
December, 1994, by the undersigned as owner (the "Owner") of a
certain life insurance policy number 4239294 (the "Policy") issued
by Principal Mutual Life Insurance Company (the "Insurer") upon
the life of Natalie G. Brenton, wife of William H. Brenton, and
Brenton Bank, Inc. (the "Assignee").
WHEREAS, William H. Brenton ("Employee") is a valued Employee
of the Assignee, and
WHEREAS, Owner has entered into a Split Dollar Agreement with
the Assignee (the "Agreement"), and
WHEREAS, in consideration of the Assignee agreeing to make
certain premium payments, the Owner agrees to grant the Assignee a
security interest in the Policy as collateral security for the
repayment of the cumulative premiums paid by the Assignee.
NOW, THEREFORE, the undersigned Owner hereby assigns,
transfers and sets over to the Assignee the following specific
rights in the Policy subject to the following terms and
conditions:
1. This Assignment is made, and the Policy is to be held,
as collateral security for all liabilities of the Owner to the
Assignee, either now existing or that may hereafter arise,
pursuant to the terms of the Agreement.
2. The Assignee's interest in the Policy shall be strictly
limited to:
a. The right to be repaid from the surrender proceeds
of the Policy: (i) the aggregate amount of cumulative premiums
paid by the Company, plus (ii) an amount, not less than zero,
which is calculated by taking 5.2 percent per annum of the total
amount of cumulative premiums paid by the Company to date less
$300,000.00 ("Amount Due Company") in the event the Policy is
totally surrendered or canceled by the Owner.
b. The right to be repaid from the death benefit
proceeds of the Policy the Amount Due Company upon the death of
the Employee, or, if the Policy is a survivorship life insurance
product, upon the death of the survivor of the Employee and the
Employee's spouse, while the Policy remains in force.
c. The right to be repaid the Amount Due Company in the
event of the termination of the Agreement.
d. The right to be repaid a portion of any Policy loan
proceeds or partial surrender proceeds paid to the Assignee so as
to cause the net cash surrender value of the Policy to be equal to
or exceed the Amount Due Company in the event the Owner obtains a
Policy loan or in the event the Policy is partially surrendered
and such loan or partial surrender causes the net cash surrender
value of the Policy to be a sum less than the Amount Due Company.
As used in this Assignment, the term "net cash surrender value"
shall mean the cash surrender value of the Policy, less the amount
of any then existing loans or withdrawals against the Policy
obtained by the Owner. As used in this Assignment, the term "the
aggregate amount of cumulative premiums paid by the Assignee"
shall mean the aggregate amount of premiums paid by the Assignee
net of any repayment to the Assignee of such amount.
204
<PAGE>
3. The Owner shall retain all incidents of ownership in the
Policy, including, but not limited to, the sole and exclusive
rights to: borrow against the Policy; make withdrawals from the
Policy; assign Owner interest in the Policy; change the
beneficiary of the Policy; exercise settlement options; and,
surrender or cancel the Policy (in whole or in part). All of
these incidents of ownership shall be exercisable by the Owner
unilaterally and without the consent of any other person.
4. The Assignee shall, upon request, if the Policy is in
the possession of the Assignee, forward the Policy to the Insurer,
without unreasonable delay, for change of beneficiary, any
election of optional mode of settlement, or the exercise of any
other right reserved by the Owner.
5. The Insurer is hereby authorized to recognize the
Assignee's claims, including the validity or the amount of any
liabilities of the Owner to the Assignee under the Agreement, the
existence of any default therein, the giving of any notice
required therein or herein, or the application to be made by the
Assignee of any amounts to be paid to the Assignee. Upon the
Insurer giving prior written notice to Owner of the proposed
payment of amounts to the Assignee, the receipt of the Assignee
for any sums received by it shall be a full discharge and release
therefore to the Insurer.
6. The Insurer shall be fully protected in recognizing a
request made by the Owner for surrender or cancellation of the
Policy, in whole or in part, or in recognizing a request made by
the Owner for any loans against the Policy permitted by the terms
of the Policy. In the event this request is made, upon prior
written notice thereof to the Assignee the Insurer may pay the
proceeds of any surrender, cancellation, or loan to the sole order
of the Owner, or as the Owner shall direct.
7. Upon the full payment of the liabilities of the Owner to
the Assignee pursuant to the Agreement, the Assignee shall execute
an appropriate release of this Collateral Assignment.
8. It is the express intention of the Owner to assign a
limited interest in the Policy to the Assignee as security for
certain premium payments made by the Assignee, without giving the
Assignee any incidents of ownership in the Policy within the
meaning of section 2042 of the Internal Revenue Code (and
regulations thereunder), or any similar provision of subsequent
law. All provisions of this Collateral Assignment (and of the
Agreement) shall be construed and exercised so as to effect this
intention.
IN WITNESS WHEREOF, the Owner and Assignee have executed this
Assignment and the Insurer has acknowledged its acceptance of this
Assignment effective the day and year first above written.
Brenton Bank, N.A. Trustee of the
William H. Brenton Crummy Trust
Owner
By_________________________________________
Its________________________________________
Brenton Banks, Inc.
Assignee
By ________________________________________
Its _______________________________________
205
<PAGE>
ACCEPTED:
Principal Mutual Life Insurance Company
Insurer
By_________________________________________
Its________________________________________
206
<PAGE>
Collateral Assignment
THIS ASSIGNMENT is made and entered into this ________ day of
December, 1994, by the undersigned as owner (the "Owner") of a
certain life insurance policy number 44243450 (the "Policy")
issued by Equitable Variable Life Insurance Company (the
"Insurer") upon the life of William H. Brenton, and Brenton Bank,
Inc. (the "Assignee").
WHEREAS, William H. Brenton ("Employee") is a valued Employee
of the Assignee, and
WHEREAS, Owner has entered into a Split Dollar Agreement with
the Assignee (the "Agreement"), and
WHEREAS, in consideration of the Assignee agreeing to make
certain premium payments, the Owner agrees to grant the Assignee a
security interest in the Policy as collateral security for the
repayment of the cumulative premiums paid by the Assignee.
NOW, THEREFORE, the undersigned Owner hereby assigns,
transfers and sets over to the Assignee the following specific
rights in the Policy subject to the following terms and
conditions:
1. This Assignment is made, and the Policy is to be held,
as collateral security for all liabilities of the Owner to the
Assignee, either now existing or that may hereafter arise,
pursuant to the terms of the Agreement.
2. The Assignee's interest in the Policy shall be strictly
limited to:
a. The right to be repaid from the surrender proceeds
of the Policy: (i) the aggregate amount of cumulative premiums
paid by the Company, plus (ii) an amount, not less than zero,
which is calculated by taking 5.2 percent per annum of the total
amount of cumulative premiums paid by the Company to date less
$300,000.00 ("Amount Due Company") in the event the Policy is
totally surrendered or canceled by the Owner.
b. The right to be repaid from the death benefit
proceeds of the Policy the Amount Due Company upon the death of
the Employee, or, if the Policy is a survivorship life insurance
product, upon the death of the survivor of the Employee and the
Employee's spouse, while the Policy remains in force.
c. The right to be repaid the Amount Due Company in the
event of the termination of the Agreement.
d. The right to be repaid a portion of any Policy loan
proceeds or partial surrender proceeds paid to the Assignee so as
to cause the net cash surrender value of the Policy to be equal to
or exceed the Amount Due Company in the event the Owner obtains a
Policy loan or in the event the Policy is partially surrendered
and such loan or partial surrender causes the net cash surrender
value of the Policy to be a sum less than the Amount Due Company.
As used in this Assignment, the term "net cash surrender value"
shall mean the cash surrender value of the Policy, less the amount
of any then existing loans or withdrawals against the Policy
obtained by the Owner. As used in this Assignment, the term "the
aggregate amount of cumulative premiums paid by the Assignee"
shall mean the aggregate amount of premiums paid by the Assignee
net of any repayment to the Assignee of such amount.
207
<PAGE>
3. The Owner shall retain all incidents of ownership in the
Policy, including, but not limited to, the sole and exclusive
rights to: borrow against the Policy; make withdrawals from the
Policy; assign Owner interest in the Policy; change the
beneficiary of the Policy; exercise settlement options; and,
surrender or cancel the Policy (in whole or in part). All of
these incidents of ownership shall be exercisable by the Owner
unilaterally and without the consent of any other person.
4. The Assignee shall, upon request, if the Policy is in
the possession of the Assignee, forward the Policy to the Insurer,
without unreasonable delay, for change of beneficiary, any
election of optional mode of settlement, or the exercise of any
other right reserved by the Owner.
5. The Insurer is hereby authorized to recognize the
Assignee's claims, including the validity or the amount of any
liabilities of the Owner to the Assignee under the Agreement, the
existence of any default therein, the giving of any notice
required therein or herein, or the application to be made by the
Assignee of any amounts to be paid to the Assignee. Upon the
Insurer giving prior written notice to Owner of the proposed
payment of amounts to the Assignee, the receipt of the Assignee
for any sums received by it shall be a full discharge and release
therefore to the Insurer.
6. The Insurer shall be fully protected in recognizing a
request made by the Owner for surrender or cancellation of the
Policy, in whole or in part, or in recognizing a request made by
the Owner for any loans against the Policy permitted by the terms
of the Policy. In the event this request is made, upon prior
written notice thereof to the Assignee the Insurer may pay the
proceeds of any surrender, cancellation, or loan to the sole order
of the Owner, or as the Owner shall direct.
7. Upon the full payment of the liabilities of the Owner to
the Assignee pursuant to the Agreement, the Assignee shall execute
an appropriate release of this Collateral Assignment.
8. It is the express intention of the Owner to assign a
limited interest in the Policy to the Assignee as security for
certain premium payments made by the Assignee, without giving the
Assignee any incidents of ownership in the Policy within the
meaning of section 2042 of the Internal Revenue Code (and
regulations thereunder), or any similar provision of subsequent
law. All provisions of this Collateral Assignment (and of the
Agreement) shall be construed and exercised so as to effect this
intention.
IN WITNESS WHEREOF, the Owner and Assignee have executed this
Assignment and the Insurer has acknowledged its acceptance of this
Assignment effective the day and year first above written.
Brenton Bank, N.A. Trustee of the
William H. Brenton Crummy Trust
Owner
By_________________________________________
Its________________________________________
Brenton Banks, Inc.
Assignee
By ________________________________________
Its _______________________________________
208
<PAGE>
ACCEPTED:
Equitable Variable Life Insurance Company
Insurer
By_________________________________________
Its________________________________________
209
<PAGE>
Collateral Assignment
THIS ASSIGNMENT is made and entered into this ________ day of
________________________, ________, by the undersigned as owner
(the "Owner") of a certain life insurance policy number 7890362
(the "Policy") issued by Penn Mutual Life Insurance Company (the
"Insurer") upon the lives of William H. Brenton and Natalie G.
Brenton, and Brenton Bank, Inc. (the "Assignee").
WHEREAS, William H. Brenton ("Employee") is a valued Employee
of the Assignee, and
WHEREAS, Owner has entered into a Split Dollar Agreement with
the Assignee (the "Agreement"), and
WHEREAS, in consideration of the Assignee agreeing to make
certain premium payments, the Owner agrees to grant the Assignee a
security interest in the Policy as collateral security for the
repayment of the cumulative premiums paid by the Assignee.
NOW, THEREFORE, the undersigned Owner hereby assigns,
transfers and sets over to the Assignee the following specific
rights in the Policy subject to the following terms and
conditions:
1. This Assignment is made, and the Policy is to be held,
as collateral security for all liabilities of the Owner to the
Assignee, either now existing or that may hereafter arise,
pursuant to the terms of the Agreement.
2. The Assignee's interest in the Policy shall be strictly
limited to:
a. The right to be repaid from the surrender proceeds
of the Policy: (i) the aggregate amount of cumulative premiums
paid by the Company, plus (ii) an amount, not less than zero,
which is calculated by taking 5.2 percent per annum of the total
amount of cumulative premiums paid by the Company to date less
$300,000.00 ("Amount Due Company") in the event the Policy is
totally surrendered or canceled by the Owner.
b. The right to be repaid from the death benefit
proceeds of the Policy the Amount Due Company upon the death of
the Employee, or, if the Policy is a survivorship life insurance
product, upon the death of the survivor of the Employee and the
Employee's spouse, while the Policy remains in force.
c. The right to be repaid the Amount Due Company in the
event of the termination of the Agreement.
d. The right to be repaid a portion of any Policy loan
proceeds or partial surrender proceeds paid to the Assignee so as
to cause the net cash surrender value of the Policy to be equal to
or exceed the Amount Due Company in the event the Owner obtains a
Policy loan or in the event the Policy is partially surrendered
and such loan or partial surrender causes the net cash surrender
value of the Policy to be a sum less than the Amount Due Company.
As used in this Assignment, the term "net cash surrender value"
shall mean the cash surrender value of the Policy, less the amount
of any then existing loans or withdrawals against the Policy
obtained by the Owner. As used in this Assignment, the term "the
aggregate amount of cumulative premiums paid by the Assignee"
shall mean the aggregate amount of premiums paid by the Assignee
net of any repayment to the Assignee of such amount.
210
<PAGE>
3. The Owner shall retain all incidents of ownership in the
Policy, including, but not limited to, the sole and exclusive
rights to: borrow against the Policy; make withdrawals from the
Policy; assign Owner interest in the Policy; change the
beneficiary of the Policy; exercise settlement options; and,
surrender or cancel the Policy (in whole or in part). All of
these incidents of ownership shall be exercisable by the Owner
unilaterally and without the consent of any other person.
4. The Assignee shall, upon request, if the Policy is in
the possession of the Assignee, forward the Policy to the Insurer,
without unreasonable delay, for change of beneficiary, any
election of optional mode of settlement, or the exercise of any
other right reserved by the Owner.
5. The Insurer is hereby authorized to recognize the
Assignee's claims, including the validity or the amount of any
liabilities of the Owner to the Assignee under the Agreement, the
existence of any default therein, the giving of any notice
required therein or herein, or the application to be made by the
Assignee of any amounts to be paid to the Assignee. Upon the
Insurer giving prior written notice to Owner of the proposed
payment of amounts to the Assignee, the receipt of the Assignee
for any sums received by it shall be a full discharge and release
therefore to the Insurer.
6. The Insurer shall be fully protected in recognizing a
request made by the Owner for surrender or cancellation of the
Policy, in whole or in part, or in recognizing a request made by
the Owner for any loans against the Policy permitted by the terms
of the Policy. In the event this request is made, upon prior
written notice thereof to the Assignee the Insurer may pay the
proceeds of any surrender, cancellation, or loan to the sole order
of the Owner, or as the Owner shall direct.
7. Upon the full payment of the liabilities of the Owner to
the Assignee pursuant to the Agreement, the Assignee shall execute
an appropriate release of this Collateral Assignment.
8. It is the express intention of the Owner to assign a
limited interest in the Policy to the Assignee as security for
certain premium payments made by the Assignee, without giving the
Assignee any incidents of ownership in the Policy within the
meaning of section 2042 of the Internal Revenue Code (and
regulations thereunder), or any similar provision of subsequent
law. All provisions of this Collateral Assignment (and of the
Agreement) shall be construed and exercised so as to effect this
intention.
IN WITNESS WHEREOF, the Owner and Assignee have executed this
Assignment and the Insurer has acknowledged its acceptance of this
Assignment effective the day and year first above written.
Brenton Bank, N.A. Trustee of the
William H. Brenton Crummy Trust
Owner
By_________________________________________
Its________________________________________
Brenton Banks, Inc.
Assignee
By ________________________________________
Its _______________________________________
211
<PAGE>
ACCEPTED:
Penn Mutual Life Insurance Company
Insurer
By_________________________________________
Its________________________________________
212
<PAGE>
Exhibit 10.25
Split-Dollar Insurance Agreement between the Company and Brenton Life
Insurance Trust for the benefit of C. Robert Brenton, dated August
12, 1994.
213
<PAGE>
Split Dollar Insurance Agreement
Collateral Assignment
AGREEMENT, made and entered into this 12th day of August,
1994, by and between Brenton Banks, Inc., Des Moines, Iowa
("Company"), and Brenton Life Insurance Trust, an irrevocable
trust, ("Owner") for the benefit of C. Robert Brenton, Des Moines,
Iowa.
WHEREAS, C. Robert Brenton is a valued Employee of the
Company, and Company wishes to provide additional inducement for
C. Robert Brenton's continued involvement with the Company, and as
additional compensation, Company wishes to assist C. Robert
Brenton with respect to a personal life insurance program by
entering into this Split Dollar Insurance Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions contained herein, the parties hereto agree as follows:
1. Policy. The life insurance policy (the "Policy") with
which this Agreement deals is identified in Exhibit "A" attached
hereto and by this reference incorporated herein. In the event
that this Agreement deals with multiple life insurance policies,
each policy shall be identified in a separate Exhibit "A" attached
hereto, and all references herein to the Policy shall include all
policies with respect to which a separate Exhibit "A" is attached
hereto.
2. Ownership. The Owner shall at all times be the owner of
the Policy, and shall have the sole right to exercise all
ownership rights granted to the owner by the terms of the Policy.
It is the express intention of the parties hereto to reserve to
the Owner all rights in the Policy granted by the terms of the
Policy, including, but not limited to, the right to borrow against
the Policy, the right to assign the Owner's interest in the
Policy, the right to change the beneficiary of the Policy, the
right to exercise settlement options, and the right to surrender
or cancel the Policy (in whole or in part). The Company shall not
have nor exercise any right in and to the Policy which could in
any way endanger, defeat or impair any of the rights of the Owner
in the Policy. The only rights in and to the Policy granted to
the Company shall be its security interest in the cash value of
the Policy and its right to receive a portion of the death benefit
of the Policy, all as provided herein.
3. Premiums. Premiums on the Policy shall be paid by the
parties hereto as set forth in Exhibit "B" attached hereto and by
this reference incorporate herein.
4. Interest of Company in the Policy. The Company's
interest in the Policy shall be limited to the following rights in
the cash value and to a portion of the death benefit of the Policy
as set forth below:
a. In the event the Policy is totally surrendered or
canceled by the Owner, the Company shall receive from the
surrender proceeds of the Policy: (i) the aggregate amount of
cumulative premiums paid by the Company, plus (ii) an amount, not
less than zero, which is calculated by taking 5.2 percent per
annum of the total amount of cumulative premiums paid by the
Company to date less $300,000.00 ("Amount Due Company").
b. Upon the death of C. Robert Brenton, or, if the
Policy is a survivorship life insurance product, upon the death of
the survivor of C. Robert Brenton and C. Robert Brenton's spouse,
while the Policy remains in force, the Company shall receive from
the death benefit proceeds of the Policy the Amount Due Company.
214
<PAGE>
c. In the event of the termination of this Agreement,
the Company shall be repaid by the Owner the Amount Due Company.
d. In the event the Owner obtains a policy loan with
respect to the Policy or in the event the Policy is partially
surrendered and such loan or partial surrender causes the net cash
surrender value of the Policy to be a sum less than the Amount Due
Company, the Owner will repay to the Company a portion of any
Policy loan proceeds or partial surrender proceeds to the Company
so as to cause the net cash surrender value of the Policy following
the policy loan or partial surrender to be equal to or exceed the
Amount Due Company.
As used in this Agreement, the term "net cash surrender value"
shall mean the cash surrender value of the Policy, less the amount
of any then existing loans or withdrawals against the Policy
obtained by the Owner. As used in this Agreement, the term "the
aggregate amount of cumulative premiums paid by the Company" shall
mean the aggregate amount of premiums paid by the Company net of
any repayment to the Company of such amount.
5. Collateral Assignment. Contemporaneously herewith the
Owner has assigned the Policy as collateral security to secure
payment of the amounts payable to Company identified herein under
a form of Collateral Assignment which has been filed with the
insurance company issuing the Policy. In the event of a total or
partial surrender of the Policy, termination of this Agreement or
upon the death of C. Robert Brenton, or, if the Policy is a
survivorship life insurance product, upon the death of the
survivor of C. Robert Brenton and C. Robert Brenton's spouse, the
amounts payable to the Company identified herein shall be paid to
the Company in accordance with the terms of such Collateral
Assignment.
6. Death of C. Robert Brenton. Upon the death of C. Robert
Brenton, or, if the Policy is a survivorship life insurance
product, upon the death of the survivor of C. Robert Brenton and
C. Robert Brenton's spouse, the balance of the death benefit under
the Policy in excess of the amount payable to the Company under
the provisions hereof, if any, shall be paid directly to the
beneficiary or beneficiaries designated by the Owner in the manner
and in the amounts provided by the beneficiary designation of the
Policy filed with the insurance company issuing the Policy.
7. Termination. This Agreement may be terminated at any
time upon the mutual agreement of the parties hereto.
8. Assignment by Owner. In the event the Owner shall
transfer all interest in the Policy to a transferee, then all of
the Owner's interest in the Policy and in this Agreement shall be
vested in the transferee, who shall become a substituted party
hereto and who shall become bound by the provisions hereof, and
the Owner shall have no further interest in the Policy or in this
Agreement.
9. Assignment by Company. The Company shall not assign any
of its rights in the Policy or in this Agreement to anyone other
than the Owner (or the Owner's transferee, if the Owner has
transferred its rights in the Policy) without the prior written
consent of the Owner (or the Owner's transferee, if the Owner has
transferred its rights in the Policy). Any attempted assignment
or transfer by the Company in violation of this paragraph shall be
null and void and of no force and effect.
10. Insurer Liability. The insurance company which issues
the Policy shall not be deemed to be bound by the provisions of
this Agreement nor to have notice of the terms of this Agreement.
Any and all liability of the insurance company issuing the Policy
shall be determined solely by reference to the terms of the
Policy, any applicable riders to the Policy, the beneficiary
designation with respect to the Policy, the Collateral Assignment
with respect to the Policy and any other documents filed with the
insurance company and accepted and acknowledged by the insurance
company.
215
<PAGE>
11. Split Dollar Plan. This Agreement is intended to qualify the
ownership of the Policy as a collateral assignment method split dollar life
insurance employee benefit plan as described in Revenue Ruling 64-328, and
shall be administered so as to qualify as such a plan.
12. Entire Agreement. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter hereof and cannot be
amended, altered, modified, except by a written instrument signed by each of
the parties hereto.
13. Notices. Any notice, consent or demand required or permitted to be
given under the provisions of this Agreement by one party to another shall be
in writing, shall be signed by the party giving the notice, and shall be given
either by delivery to the other party personally, or by mailing, by United
States certified mail, postage prepaid, to the other party, addressed to the
other party's last known mailing address as shown on the records of the
Company. In the event such notice is given by mailing, the date of mailing
shall be deemed the date of the giving of such notice, consent or demand.
14. Binding on Successors and Assigns. This Agreement shall bind and
inure to the benefit of the parties and their respective heirs, successors and
assigns.
15. Governing Law. This Agreement shall be deemed made in the state of
Iowa Business Corporation Act, the this Agreement and the rights of the
parties hereunder shall be governed by and construed in accordance with the
laws of the state of Iowa Business Corporation Act.
16. Severability. In the event a particular provision of this Agreement
is held to be invalid under applicable law, effect shall nevertheless be given
to all valid provisions hereof to further the objectives of this Agreement.
17. Interpretation. Where appropriate in this Agreement, words used in
the singular shall include the plural, and words used in the masculine or
neuter shall include the feminine.
18. Named Fiduciary and Plan Administrator. For the purposes of the
Employee Retirement Security Act of 1974 (ERISA), the Company shall be the
"Named Fiduciary" and Plan Administrator of the split dollar insurance plan
for which this Agreement is hereby designated the written plan instrument.
The Company, as Named Fiduciary, shall have authority to control and manage
the operation and administration of this Agreement, and it shall be
responsible for establishing and carrying out a funding policy and method
consistent with the objectives of this Agreement. Any decision by the Company
denying a claim for benefits under this Agreement shall be stated in writing,
set forth specific reasons for the denial, and be delivered or mailed to the
claimant. All claim procedures under this split dollar insurance plan shall
be performed in compliance with the requirements of ERISA.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
year and date first above written.
Brenton Banks, Inc.
Company
By /s/ Steven T. Schuler
Its CFO/Treasurer/Sec.
216
<PAGE>
Brenton Bank, N. A., Trustee of the
Brenton Life Insurance Trust
Owner
By /s/ Gary Ernst
Its Vice Pres. Sr. Trust Officer
217
<PAGE>
EXHIBIT "A"
Policy Number: 44209399
Issued by: Equitable Variable Life Insurance Company
Providing for initial death benefit proceeds of $3,500,000.
This policy is a survivorship life insurance policy on the
lives of C. Robert Brenton and Babette C. Brenton, C. Robert
Brenton's wife, which pays a death benefit only upon the death of
the survivor of C. Robert Brenton and Babette C. Brenton.
218
<PAGE>
EXHIBIT "B"
Premiums
The Company shall pay all of the premiums due on the Policy.
219
<PAGE>
Collateral Assignment
THIS ASSIGNMENT is made and entered into this ________ day of
________________________, ________, by the undersigned as owner
(the "Owner") of a certain life insurance policy number 44209399
(the "Policy") issued by Equitable Variable Life Insurance Company
(the "Insurer") upon the lives of C. Robert Brenton and Babette C.
Brenton, and Brenton Bank, Inc. (the "Assignee").
WHEREAS, C. Robert Brenton ("Employee") is a valued Employee
of the Assignee, and
WHEREAS, Owner has entered into a Split Dollar Agreement with
the Assignee (the "Agreement"), and
WHEREAS, in consideration of the Assignee agreeing to make
certain premium payments, the Owner agrees to grant the Assignee a
security interest in the Policy as collateral security for the
repayment of the cumulative premiums paid by the Assignee.
NOW, THEREFORE, the undersigned Owner hereby assigns,
transfers and sets over to the Assignee the following specific
rights in the Policy subject to the following terms and
conditions:
1. This Assignment is made, and the Policy is to be held,
as collateral security for all liabilities of the Owner to the
Assignee, either now existing or that may hereafter arise,
pursuant to the terms of the Agreement.
2. The Assignee's interest in the Policy shall be strictly
limited to:
a. The right to be repaid from the surrender proceeds
of the Policy: (i) the aggregate amount of cumulative premiums
paid by the Company, plus (ii) an amount, not less than zero,
which is calculated by taking 5.2 percent per annum of the total
amount of cumulative premiums paid by the Company to date less
$300,000.00 ("Amount Due Company") in the event the Policy is
totally surrendered or canceled by the Owner.
b. The right to be repaid from the death benefit
proceeds of the Policy the Amount Due Company upon the death of
the Employee, or, if the Policy is a survivorship life insurance
product, upon the death of the survivor of the Employee and the
Employee's spouse, while the Policy remains in force.
c. The right to be repaid the Amount Due Company in the
event of the termination of the Agreement.
d. The right to be repaid a portion of any Policy loan
proceeds or partial surrender proceeds paid to the Assignee so as
to cause the net cash surrender value of the Policy to be equal to
or exceed the Amount Due Company in the event the Owner obtains a
Policy loan or in the event the Policy is partially surrendered
and such loan or partial surrender causes the net cash surrender
value of the Policy to be a sum less than the Amount Due Company.
As used in this Assignment, the term "net cash surrender value"
shall mean the cash surrender value of the Policy, less the amount
of any then existing loans or withdrawals against the Policy
obtained by the Owner. As used in this Assignment, the term "the
aggregate amount of cumulative premiums paid by the Assignee"
shall mean the aggregate amount of premiums paid by the Assignee
net of any repayment to the Assignee of such amount.
220
<PAGE>
3. The Owner shall retain all incidents of ownership in the
Policy, including, but not limited to, the sole and exclusive
rights to: borrow against the Policy; make withdrawals from the
Policy; assign Owner interest in the Policy; change the
beneficiary of the Policy; exercise settlement options; and,
surrender or cancel the Policy (in whole or in part). All of
these incidents of ownership shall be exercisable by the Owner
unilaterally and without the consent of any other person.
4. The Assignee shall, upon request, if the Policy is in
the possession of the Assignee, forward the Policy to the Insurer,
without unreasonable delay, for change of beneficiary, any
election of optional mode of settlement, or the exercise of any
other right reserved by the Owner.
5. The Insurer is hereby authorized to recognize the
Assignee's claims, including the validity or the amount of any
liabilities of the Owner to the Assignee under the Agreement, the
existence of any default therein, the giving of any notice
required therein or herein, or the application to be made by the
Assignee of any amounts to be paid to the Assignee. Upon the
Insurer giving prior written notice to Owner of the proposed
payment of amounts to the Assignee, the receipt of the Assignee
for any sums received by it shall be a full discharge and release
therefore to the Insurer.
6. The Insurer shall be fully protected in recognizing a
request made by the Owner for surrender or cancellation of the
Policy, in whole or in part, or in recognizing a request made by
the Owner for any loans against the Policy permitted by the terms
of the Policy. In the event this request is made, upon prior
written notice thereof to the Assignee the Insurer may pay the
proceeds of any surrender, cancellation, or loan to the sole order
of the Owner, or as the Owner shall direct.
7. Upon the full payment of the liabilities of the Owner to
the Assignee pursuant to the Agreement, the Assignee shall execute
an appropriate release of this Collateral Assignment.
8. It is the express intention of the Owner to assign a
limited interest in the Policy to the Assignee as security for
certain premium payments made by the Assignee, without giving the
Assignee any incidents of ownership in the Policy within the
meaning of section 2042 of the Internal Revenue Code (and
regulations thereunder), or any similar provision of subsequent
law. All provisions of this Collateral Assignment (and of the
Agreement) shall be construed and exercised so as to effect this
intention.
IN WITNESS WHEREOF, the Owner and Assignee have executed this
Assignment and the Insurer has acknowledged its acceptance of this
Assignment effective the day and year first above written.
Brenton Bank, N.A. Trustee of the
Brenton Life Insurance Trust
Owner
By ________________________________________
Its _______________________________________
Brenton Banks, Inc.
Assignee
By ________________________________________
Its _______________________________________
221
<PAGE>
ACCEPTED:
Equitable Variable Life Insurance Company
Insurer
By ________________________________________
Its _______________________________________
222
<PAGE>
Exhibit 10.26
Split-Dollar Insurance Agreement between the Company and Brenton Life
Insurance Trust for the benefit of Junius C. Brenton, dated January
12, 1997. This Split-Dollar Insurance Agreement is incorporated by
reference from Form 10-K of Brenton Banks, Inc. for the year ended
December 31, 1996.
223
<PAGE>
Exhibit 10.27
Agreement between Robert L. DeMeulenaere and the Company regarding
the change in control arrangement, dated December 31, 1994.
224
<PAGE>
AGREEMENT
This Agreement ("Agreement") effective this 31st day of December,
1994, by and between Brenton Banks, Inc., an Iowa bank holding
company with its principal place of business in Des Moines, Iowa
("Employer") and Robert L. DeMeulenaere ("Employee").
Whereas, Employer desires to provide certain employment security
to Employee, a key employee of Employer, to induce Employee to
continue his employment with Employer and enhance his ability to
perform effectively without undue distraction should Employer
become a target of an attempted acquisition, takeover or merger;
and
Whereas, in an effort to induce Employee to remain in the employ
of Employer and in consideration of his continuing employment,
Employer desires to enter into this Agreement for the payment of
certain benefits in the event that Employee employment is
terminated or subject to a significant change as provided herein,
following a change of control of Employer.
Now, therefore, in consideration of the promises herein contained,
and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Term. Except as otherwise provided, this Agreement shall
remain in full force and effect until the earlier of the death or
disability of Employee, or the expiration of the Employee's rights
to receive any benefits payable pursuant to this Agreement.
2. Entitlement to Benefits. Employee shall be entitled to
benefits if the Employee is employed by Employer when a Change in
Control of Employer occurs and, within three years thereafter,
there is a Termination of Existing Employment of Employee.
3. Change of Control. For purposes of this Agreement, a Change
of Control of Employer shall mean any transaction or series of
transactions, the result of which is: (a) a direct or indirect
acquisition of all or substantially all of the assets of the
Employer; (b) a change in ownership whereby the stockholders of
Employer immediately prior to such transaction(s) own less than a
majority of the combined voting power of all issued and
outstanding securities of Employer or its successor following the
transaction(s); or (c) a person and their affiliates own a greater
number of shares of the Company than the Brenton Family.
Transactions resulting in a Change of Control shall include but
not be limited to direct acquisitions of assets or securities or
indirect acquisitions by merger, consolidation, or other legal
reorganization of Employer. The "Brenton Family" for purposes of
this section, shall include all descendants of Harold Brenton and
their spouses and affiliates including but not limited to any
shares owned by trusts, corporations or persons which the
descendants of Harold Brenton have control over or are for the
benefit of said descendants or their spouses.
225
<PAGE>
4. Termination of Existing Employment. For purposes of this
Agreement, a Termination of Existing Employment shall occur if
there is a substantial reduction in duties in Employee's
employment or such employment is terminated by Employer,
Employer's subsidiary, a successor to Employer or such successor's
subsidiary.
5. Calculation of Benefits. Upon a Termination of Existing
Employment within one year of a Change in Control, Employee shall
be entitled to receive Benefits in the amount of Five Hundred
Thousand Dollars ($500,000); upon a Termination of Existing
Employment more than one year but prior to three years following a
Change in Control, the Benefits to be received by the Employee
shall be reduced by $10,417 for each full month the Employee
remains employed by the Company beyond the 12th month following
the change in control. No benefits shall accrue to the Employee
if there is a Termination of Existing Employment more than three
years following a Change in Control. For example, if the Employee
is terminated during the 17th month following the change in
control, the Employee will receive $458,332 ($500,000 - ((16-12) x
$10417)). The benefits payable hereunder shall be paid to the
Employee within 10 days following the event causing the payment to
become due.
6. Ratable Decrease in Benefits with Age. The Benefits
calculated under Paragraph 5 above shall remain unchanged for any
Change of Control that occurs before Employee reaches age 61. In
the event that a Change of Control occurs after Employee turns 61,
the Benefits calculated thereunder shall be reduced by 20% during
the year Employee is age 61, reduced by 40% during the year
Employee is age 62, reduced by 60% during the year Employee is age
63, reduced by 80% during the year Employee is age 64, and
Employee shall no longer be entitled to receive benefits if a
Change in Control occurs after Employee turns age 65. For
example, a Change of Control and Termination of Existing
Employment occurs when Employee is age 62 and the Benefits
calculated in accordance with Paragraph 5 above are $500,000, the
Benefits are decreased by 40% to $300,000. In the preceding
example, if the Termination of Existing Employment occurred during
the twenty-fifth month following the Change of Control and the
Employee is age 64, the Benefits in the amount of $374,996
calculated in accordance with Paragraph 5 would be decreased by
80% to $74,999.20.
7. Limitation on Benefits. Notwithstanding the foregoing, in the
event that the amount of Benefits payable to Employee exceeds 2.9
times the Employee's "base amount" allocated to the payment
hereunder as determined under I.R.C. Section 280G(b)(3)(B), the
Benefits payable to Employee shall be limited to 2.9 times the
Employee's "base amount" allocated to the payment hereunder as
determined under I.R.C. Section 280G(b)(3)(B).
8. No Reduction in Salary. If, following a Change in Control,
the Employee remains employed by Employer or its successor, the
Employer or its successor may not, for a period of three years
following the Change of Control, reduce the Employee's salary
below the salary level paid immediately prior to the Change in
Control.
226
<PAGE>
9. No Contract of Employment. The rights and obligations created
hereunder shall have no effect on Employee's status as an employee
at will of Employer. Employee acknowledges that this Agreement
creates no right to be employed by Employer and shall be construed
solely as creating additional financial security in the event of a
Change of Control of Employer.
10. Binding Agreement. This Agreement shall be binding on
Employer, its successors and assigns.
11. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the
State of Iowa.
12. Waiver. Following a Change of Control, no successor to
Employer shall request or require Employee to release, modify,
waive or discharge his rights hereunder. Failure of Employee to
enforce his rights hereunder at the time of any breach or non-
compliance with any condition or provision of this Agreement by
Employer, its successors or assigns, shall not be deemed to be a
waiver of such provision and shall have no effect on the
enforcement of the same or any other condition herein contained.
13. Severability. In the event that any provision of this
Agreement is deemed to be invalid or unenforceable, such invalid
or unenforceable provision shall be deemed to be modified in such
a manner as to make it valid and enforceable and shall have no
affect on the validity or enforceability of any other provision of
this Agreement.
14. Prior Agreements. This Agreement shall supersede all prior
agreements between the parties relating to Change of Control of
Employer, and all such prior agreements, whether oral or written,
are hereby canceled, terminated, and revoked.
Wherefore, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
Brenton Banks, Inc., Employee
By__________________________ _________________________
C. Robert Brenton, Robert L. DeMeulenaere
Chairman ofthe Board
227
<PAGE>
Exhibit 10.28
Twelfth Amendment to Data Processing Agreement dated July 1, 1995, by
and between ALLTEL Information Services, Inc. (formerly Systematics,
Inc. and Systematics Financial Services, Inc.) and Brenton Bank
(formerly Brenton Bank Services Corporation). This Twelfth Amendment
to Data Processing Agreement is incorporated by reference from Form
10-Q of Brenton Banks, Inc. for the quarter ended September 30, 1995.
228
<PAGE>
Exhibit 10.29
Thirteenth Amendment to Data Processing Agreement dated
December 1, 1995, by and between ALLTEL Information
Services, Inc. (formerly Systematics Financial Services,
Inc.) and Brenton Bank (formerly Brenton Bank Services
Corporation). This Thirteenth Amendment to Data
Processing Agreement is incorporated by reference from
Form 10-K of Brenton Banks, Inc. for the year ended
December 31, 1995.
229
<PAGE>
Exhibit 10.30
Fourteenth Amendment to Data Processing Agreement dated January 1,
1998, by and between ALLTEL Information Services, Inc. (formerly
Systematics Financial Services, Inc.) and Brenton Bank (formerly
Brenton Bank Services Corporation). This Fourteenth Amendment to
Data Processing Agreement is incorporated by reference from Form 10-K
of Brenton Banks, Inc. for the year ended December 31, 1998.
230
<PAGE>
Exhibit 10.31
Fifteenth Amendment to Data Processing Agreement dated January 1,
1998, by and between ALLTEL Information Services, Inc. (formerly
Systematics Financial Services, Inc.) and Brenton Bank (formerly
Brenton Bank Services Corporation). This Fifteenth Amendment to Data
Processing Agreement is incorporated by reference from Form 10-K of
Brenton Banks, Inc. for the year ended December 31, 1998.
231
<PAGE>
Exhibit 10.32
Purchase Agreement dated December 31, 1998, by and between West Lakes
Development Company and Brenton Bank. This Purchase Agreement is
incorporated by reference from Form 10-K of Brenton Banks, Inc. for
the year ended December 31, 1998.
232
<PAGE>
Exhibit 10.33
Purchase Agreement dated December 31, 1998, by and between West End
Diner, Inc. and Brenton Bank. This Purchase Agreement is
incorporated by reference from Form 10-K of Brenton Banks, Inc. for
the year ended December 31, 1998.
233
<PAGE>
Exhibit 10.34
Agreement between The Weitz Company, Inc. and Brenton Bank dated June
15, 1999. This Agreement is incorporated by reference from Form 10-Q
of Brenton Banks, Inc. for the quarter ended September 30, 1999.
234
<PAGE>
Exhibit 10.35
Agreement between Savage-Ver Ploeg & Associates, Inc. and Brenton
Bank dated March 19, 1999. This Agreement is incorporated from Form
10-Q of Brenton Banks, Inc. for the quarter ended September 30, 1999.
235
<PAGE>
Exhibit 11
Statement of computation of earnings per share.
236
<PAGE>
<TABLE>
<CAPTION>
Statements re: Computation of Earnings Per Share
Brenton Banks, Inc.
December 31, 1999 1998 1997
<S> <C> <C> <C>
Basic EPS Computation
Numerator:
Net income $ 16,560,117 $ 20,350,921 $ 18,010,107
Denominator:
Average common shares
Outstanding 20,498,366 20,853,194 21,180,706
Basic EPS $ 0.81 $ 0.98 $ 0.85
Diluted EPS Computation
Numerator:
Net income $ 16,560,117 $ 20,350,921 $ 18,010,107
Denominator:
Average common shares
Outstanding 20,498,366 20,853,194 21,180,706
Average stock options 302,913 428,511 343,534
Average long-term stock
compensation plan --- --- 169,586
20,801,279 21,281,705 21,693,826
Diluted EPS $ 0.80 $ 0.96 $ 0.83
<FN>
Note: Amounts are restated for the 2-for-1 stock split effective
February 1998 and the 10 percent common stock dividends
effective in 1999 and 1998.
</TABLE>
237
<PAGE>
Exhibit 12
Statement of computation of ratios.
238
<TABLE>
<CAPTION>
Statements re: Computation of Ratios
Item 1(l) Business - Statistical Disclosure VI. Return on Equity and Assets
Brenton Banks, Inc.
(Dollars in thousands)
December 31, 1999 1998 1997
<S> <C> <C> <C>
Return on average total assets:
Net income (before deduction
of minority interest) $ 17,204 21,071 18,753
* divided by *
Average assets $ 1,943,826 1,780,120 1,649,469
Ratio 0.89% 1.18% 1.14%
Return on average common
stockholders' equity:
Net income $ 16,560 20,351 18,010
* divided by *
Average common stockholders'
equity $ 134,136 132,422 124,491
Ratio 12.35% 15.37% 14.47%
Return on average common
stockholders' equity excluding
unrealized gains (losses) on
assets available for sale:
Net income $ 16,560 20,351 18,010
* divided by *
Average common stockholders'
equity excluding unrealized
gains (losses) on assets
available for sale 134,569 129,055 122,685
Ratio 12.31% 15.77% 14.68%
Common dividend payout ratio:
Cash dividends per share $ 0.346 0.317 0.225
* divided by *
Net income per share-diluted $ 0.80 0.96 0.83
Ratio 43.25% 33.02% 27.11%
</TABLE>
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<TABLE>
<CAPTION>
Statements re: Computation of Ratios
Item 1(l) Business - Statistical Disclosure VI. Return on Equity and Assets
Brenton Banks, Inc.
(Dollars in thousands)
December 31, 1999 1998 1997
<S> <C> <C> <C>
Average equity to average
assets:
Average equity $ 134,136 132,422 124,491
* divided by *
Average assets $ 1,943,826 1,780,120 1,649,469
Ratio 6.90% 7.44% 7.55%
Equity to assets ratio:
Common stockholders' equity
excluding unrealized gains
(losses) on assets available
for sale $ 137,568 131,891 126,159
* divided by *
Total assets excluding
unrealized gains (losses) on
assets available for sale $ 1,991,090 1,936,238 1,715,264
Ratio 6.91% 6.81% 7.36%
Tier 1 leverage capital ratio:
Common stockholders' equity
excluding unrealized gains
(losses) on assets available
for sale $ 137,568 131,891 126,159
Minority interest 4,608 4,913 4,859
Less: intangibles (6,984) (1,970) (2,087)
Less: minimum MSR's to be
Deducted 0 (388) ---
Tier 1 capital $ 135,192 134,446 128,931
* divided by *
Quarterly average total
assets excluding unrealized
gains (losses) on assets
available for sale 1,994,057 1,878,074 1,692,176
Less: intangibles (6,984) (1,970) (2,087)
Less: minimum MRS's to be
Deducted 0 (388) ---
Tier 1 assets $ 1,987,073 1,875,716 1,690,089
Ratio 6.80% 7.17% 7.63%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Statements re: Computation of Ratios
Item 1(l) Business - Statistical Disclosure VI. Return on Equity and Assets
Brenton Banks, Inc.
(Dollars in thousands)
December 31, 1999 1998 1997
<S> <C> <C> <C>
Net Noninterest Margin:
Noninterest income $ 29,794 33,358 27,506
Less: Securities gains
(losses) 216 665 494
Less: Noninterest expense 65,374 61,392 57,699
Net noninterest income $ (35,796) (28,699) (30,687)
* divided by *
Year-to-date average assets $ 1,943,826 1,780,120 1,649,469
Ratio -1.84% -1.61% -1.86%
Efficiency Ratio:
Noninterest expense $ 65,374 61,392 57,699
* divided by *
Noninterest income 29,794 33,358 27,506
Less: Securities gains
(losses) 216 665 494
Less: Loan gains (losses) 7 81 78
T.E. net interest income 66,575 65,279 63,701
Subtotal 96,146 97,891 90,635
Ratio 67.99% 62.71% 63.66%
</TABLE>
241
<PAGE>
Exhibit 13
The Appendix to the Proxy Statement for Brenton Banks,
Inc. for the 1999 calendar year.
242
<PAGE>
BRENTON BANKS, INC.
APPENDIX TO THE PROXY STATEMENT
FISCAL YEAR 1999
243
<PAGE>
TABLE OF CONTENTS
PAGE
General Information 1
Financial Highlights 2
Management's Discussion and Analysis 3
Consolidated Average Balances and Rates 11
Selected Financial Data 12
Consolidated Statements of Condition 13
Consolidated Statements of Operations 14
Consolidated Statements of Cash Flows 15
Consolidated Statements of Changes in
Common Stockholders' Equity 16
Consolidated Statements of Comprehensive
Income 17
Notes to Consolidated Financial Statements 18
Management's Report 33
Independent Auditors' Report 33
Stock Information 34
Corporate Structure 35
244
<PAGE>
BRENTON BANKS, INC.
GENERAL INFORMATION
Brenton Banks, Inc. (the "Company") is a bank holding company registered
under the Bank Holding Company Act of 1956 and a savings and loan holding
company under the Savings and Loan Holding Company Act. Brenton Banks, Inc.
was organized as an Iowa corporation under the name of Brenton Companies in
1948. Subsequently, the Company's name was changed to its current name,
Brenton Banks, Inc.
Brenton Banks, Inc. is the largest, Iowa-based bank holding company, with
44 service locations in metropolitan markets and regional economic centers
across the state. The Company offers a complete range of financial products
and services - including retail, agricultural, commercial and business
banking; trust and investment management services; investment, insurance and
real estate brokerage; mortgage banking; cash management and international
banking services; as well as proprietary mutual funds. The Company's stock
trades on the NASDAQ stock market under the symbol BRBK.
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<PAGE>
<TABLE>
<CAPTION>
BRENTON BANKS, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
1999 1998 1997
<S> <C> <C> <C>
Operating Results
Net interest income $ 62,599,137 61,387,326 60,133,764
Provision for loan losses 4,250,000 4,200,000 3,900,000
Total noninterest income 29,793,656 33,357,827 27,505,789
Total noninterest expense 65,374,270 61,391,528 57,698,564
Income before income
taxes and minority
interest 22,768,523 29,153,625 26,040,989
Net income 16,560,117 20,350,921 18,010,107
Per Common Share*
Net income-basic $ .81 .98 .85
Net income-diluted .80 .96 .83
Cash dividends .346 .317 .225
Book value, including
unrealized gains
(losses)** 6.48 6.55 6.17
Book value, excluding
unrealized gains
(losses)*** 6.76 6.39 6.02
Closing price 10.13 15.23 16.53
At December 31
Assets $1,985,454,701 1,939,556,765 1,718,483,797
Loans 1,195,986,791 1,033,554,556 993,189,110
Nonperforming loans 9,452,000 11,289,000 6,712,000
Deposits 1,530,083,303 1,496,675,131 1,364,270,491
Realized common
stockholders' equity*** 137,568,254 131,891,522 126,159,453
Total common stockholders'
equity** 131,933,451 135,210,319 129,379,299
Market capitalization of
common stock 206,088,847 314,102,382 346,646,292
Ratios
Return on average total
common stockholders'
equity (ROE)** 12.35% 15.37 14.47
Return on average realized
common stockholders'
equity (ROE)*** 12.31 15.77 14.68
Return on average assets
(including minority
interest) (ROA) .89 1.18 1.14
Net interest margin 3.73 3.97 4.16
Net noninterest margin (1.84) (1.61) (1.86)
Efficiency ratio 67.99 62.71 63.66
Loan to deposit ratio 78.16 69.06 72.80
Allowance for loan losses
to total loans 1.21 1.37 1.28
Equity to assets*** 6.91 6.81 7.36
Risk-based capital ratio 10.18 11.37 11.95
Tier 1 leverage capital
ratio*** 6.80 7.17 7.63
Nonperforming loans as a
percent of loans .79 1.09 .68
Net charge-offs as a percent
of average loans .36 .28 .26
Allowance for loan losses as
a percent of nonperforming
loans 152.49 125.54 189.69
<FN>
* Restated for the 2-for-1 stock split effective February 1998
and the 10 percent common stock dividends effective in
1999 and 1998.
** Including unrealized gains (losses) on securities available for
sale.
*** Excluding unrealized gains (losses) on securities available for
sale.
</TABLE>
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Management's Discussion and Analysis
Introduction
The following presentation describes Brenton Banks, Inc. and Subsidiaries'
("Brenton" or the "Company") results of operations for the three-year period
ended December 31, 1999, capital resources, market risk management,
asset/liability management, liquidity, year 2000 results and the impact of
recently issued accounting standards. 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 federal and state regulators. These risks,
which are not all inclusive, cannot be estimated.
Results of Operations - 1999 Compared to 1998
Net Income
For the year ended December 31, 1999, Brenton recorded net income of
$16,560,117, a decline of 18.6 percent from net income of $20,350,921 in 1998.
Lower mortgage banking revenues and investment brokerage commissions, along
with normal expense growth including costs associated with the Company's growth
initiatives contributed to the reduction. Continued compression of the net
interest margin held the growth in net interest income to a modest amount.
Diluted earnings per common share were $.80 compared to $.96 for 1998.
The Company's return on average assets (ROA) was .89 percent in 1999, compared
to 1.18 percent in 1998. The return on average equity (ROE), including
unrealized gains (losses) on securities available for sale, was 12.35 percent,
compared to 15.37 percent one year earlier.
Net Interest Income
Net interest income rose 2.0 percent to $62,599,137 for 1999 as favorable
volume variances were tempered by tighter interest spreads. The growth of net
interest income was limited because of compression of the net interest margin
due to Iowa's highly competitive banking environment. Average earning assets
increased 8.7 percent over 1998 while average interest-bearing liabilities
increased 9.3 percent.
The net interest spread, which is the difference between the yield earned
on assets and the rate paid on liabilities, declined to 3.28 percent from 3.49
percent a year earlier. The average yield on earning assets declined 34 basis
points while the rate on interest-bearing liabilities declined 13 basis points.
Net interest margin, which is tax-equivalent net interest income as a percent
of average earning assets, was 3.73 percent in 1999 compared to 3.97 percent in
1998.
Loan Growth/Loan Quality
At December 31, 1999, total loans had grown 15.7 percent to $1,196.0
million from $1,033.6 million a year earlier. The areas of significant growth
included indirect consumer loans, direct consumer loans which were primarily
home equity loans and commercial construction loans. Loan quality remained
good with nonperforming loans at December 31, 1999, totaling $9,452,000, or .79
percent of loans. This compares to $11,289,000 at December 31, 1998, or 1.09
percent of loans. 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.
Loan quality control and risk management is continually balanced with
goals for loan growth. The Company has a formal structure for reviewing and
approving all loans. Documentation and loan quality reviews are performed
systematically by internal loan review personnel and external third party loan
review professionals, as well as by regulatory personnel.
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<PAGE>
The allowance for loan losses, which totaled $14.4 million, represented
152.49 percent of nonperforming loans at the end of 1999, compared to 125.54
percent one year ago. The provision for loan losses totaled $4,250,000 for
1999 and $4,200,000 in 1998. The Company's net charge-offs as a percent of
average loans were .36 percent for 1999 compared to .28 percent for 1998, both
of which were better than historical industry averages. Loan losses for both
years were primarily concentrated in the indirect and direct consumer loan
portfolio.
The allowance for loan losses represents a reserve available to absorb
probable loan losses within the loan portfolio as of December 31, 1999. The
allowance is based on management's judgment after considering various factors
such as the current and anticipated economic environment, historical loan loss
experience, and most importantly, the evaluation of individual loans by loan
officers, loan administration officers and loan review personnel.
Using the Company's loan grading process, each loan is evaluated based on
its specific characteristics, the borrower's financial condition and collateral
values. All loans are rated on a 1-to-9 rating scale. From these assessments,
the Reserve Adequacy Committee performs quarterly reviews of the loan
portfolio, quantifies the results and reviews the calculations of the allowance
for loan losses.
Management considered the allowance for loan losses at December 31, 1999,
as sufficient to absorb probable loan losses within the portfolio.
Net Noninterest Margin/Efficiency Ratio
To measure operating efficiency, Brenton uses the net noninterest margin,
which is the difference between noninterest income (excluding security gains or
losses) and noninterest expense as a percent of average assets. For 1999, the
net noninterest margin was (1.84) percent compared to (1.61) percent in 1998.
Another ratio 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). For the year ended December 31, 1999, the
Company's efficiency ratio was 67.99 percent, compared to 62.71 percent one
year ago. To enhance operating efficiency throughout the organization, the
Company continues to focus on cost management and the development of strategic
sources and improvements in noninterest income.
Noninterest Income
Noninterest income (excluding securities transactions) for 1999 was
$29,578,016, a 9.5 percent decline from $32,692,377 in 1998. Noninterest
income (excluding securities gains and losses) for 1999 represented 1.52
percent of average assets and 32.1 percent of total operating income. All
categories of noninterest income, except mortgage banking, investment brokerage
commissions and other income reflected strong growth from the prior year.
Service charges on deposit accounts increased 18.9 percent in 1999 to
$9,372,840. This growth related to increased account analysis charges on
commercial and business deposit accounts due to a higher number of clients and
revised fee schedules for deposit products.
Fiduciary revenues climbed 5.4 percent to $3,685,449 in 1999 compared to
$3,497,030 in 1998. This revenue improvement was due to increased trust
assets.
Insurance commissions and fees rose 16.3 percent to $1,608,661 in 1999 due
to a 42.4 percent increase in credit-related insurance commissions.
Other service charges and fees increased 3.4 percent to $4,791,432 in 1999
compared to 1998 as a result of improvements in merchant credit card fees,
ATM/debit card fees, official check commissions and international fees. These
increases were somewhat offset by declines in real estate sales commissions and
purchased receivable fees.
Mortgage banking revenue declined 45.8 percent to total $4,225,351 for
1999 compared to a record level of $7,797,577 in 1998. Rising mortgage
interest rates during 1999 led to higher than anticipated losses on sales of
originated loans. Residential real estate loan closings for 1999 totaled
$430.6 million compared to $513.4 million in 1998.
Investment brokerage commissions totaled $4,160,138 for 1999, a reduction
of 22.0 percent from 1998. The decline was due to lower transaction volume as
a result of broker turnover early in 1999.
Despite higher levels of income from bank-owned life insurance policies in
1999, other operating income declined by $426,357 from one year ago. Several
miscellaneous one-time items were recorded in 1998.
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<PAGE>
Securities transactions also contributed to the decrease in noninterest
income. Securities gains of $215,640 were recorded in 1999 versus gains of
$665,450 in 1998.
The Company will continue to focus on generating fee income by providing a
broad array of financial products and services to existing and new clients.
The Company has become a proactive sales organization by developing a
partnership culture. Referrals are made between lines of business in an effort
to meet all of the financial needs of our clients'. The growth rate of fee
income could be vulnerable to future economic conditions and competition from
other financial institutions and other financial service providers that cannot
be estimated by the Company.
Noninterest Expense
Total noninterest expense increased 6.5 percent in 1999 to $65,374,270
from $61,391,528 one year ago.
Compensation, the largest component of noninterest expense, increased
$1,083,876, or 3.7 percent, over 1998 as a result of normal salary adjustments
and the Company's growth initiatives. Included in compensation is variable
compensation, which declined 12.7 percent as a result of lower sales of
mortgage and investment products and services. The number of full-time
equivalent employees at December 31, 1999, declined 1.5 percent compared to the
end of 1998 as a result of continued focus on staffing levels and improvements
in efficiency in various operating areas. Benefit expense increased 13.4
percent due to increased compensation expense, higher health insurance premiums
and an award of Brenton stock to most employees during the first quarter of
1999.
Occupancy expense rose 4.4 percent, or $256,425, in 1999 as a result of
increases in depreciation expense and real estate taxes, and an 11 percent
decline in rental income from outside tenants.
Furniture and equipment expense grew to $5,295,734, a 27.2 percent
increase from the prior year. The increase was due to depreciation on
technology upgrades and higher costs for software maintenance agreements.
Data processing expense increased $249,692, or 9.5 percent. This increase
was driven by contractual terms based on growth in the number of loan and
deposit accounts.
Marketing expense rose $311,842 to $1,784,474 because of expanded
marketing efforts for various lines of business and costs related to revising
the Company's deposit products.
Supplies expense increased 14.5 percent to $1,404,316 from $1,226,212 last
year. The increase was primarily due to a higher volume of debit cards issued
and a higher volume of new account checks and deposit slips provided as a
result of new accounts opened, including the acquisition of deposit accounts in
Pella and Knoxville from U.S. Bank.
Other operating expenses increased only $118,380, or 1.0 percent, when
comparing 1999 results to 1998. Increases in legal fees, check processing
fees, bank operational losses and Year 2000 related expenses exceeded
reductions in personnel recruitment costs and consulting fees.
In late 1998, the Company began a strategic growth process called "Quantum
Leap." The objective is to attract profitable clients at a rate significantly
above Iowa's population and economic growth rates. The initiative is designed
to further evolve the Company's growing sales culture by substantially
increasing the sales staff over the next three years, by creating opportunities
for additional sales from the existing sales staff and by strengthening
partnerships with the sales support staff. The Company's substantial
investment and commitment to this initiative will provide revenue growth in the
years to come. The net after-tax cost of the initiative in 1999 was
$1,035,000. While the Company's growth initiatives have caused and will
continue to cause some components of expense to increase, the Company continues
to carefully focus on cost management and evaluates all major expense items in
an effort to control the growth rate of noninterest expenses.
Income Taxes
Brenton'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 24.4 percent for 1999 compared to
27.7 percent for 1998.
Results of Operations - 1998 Compared to 1997
Net Income
For the year ended December 31, 1998, Brenton recorded net income of
$20,350,921, an increase of 13.0 percent over 1997, which
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<PAGE>
totaled $18,010,107. Diluted earnings per common share were $.96 compared to
$.83 for 1997. Return on average assets (ROA) was 1.18 percent in 1998,
compared to 1.14 percent in 1997. The return on average equity (ROE) was 15.37
percent, compared to 14.47 percent one year earlier.
Net Interest Income
Net interest income rose 2.1 percent to $61,387,326 for 1998 as favorable
volume variances exceeded unfavorable rate variances. Average earning assets
increased 7.4 percent over 1997 while average interest-bearing liabilities
increased 7.2 percent. The average yield earned on earning assets declined 17
basis points, due to the declining interest rate environment. Meanwhile, the
average rate paid on interest-bearing liabilities increased three basis points
as a result of an aggressive effort to gain new client relationships, which
resulted in the sale of higher-priced transaction deposit products.
The net interest spread declined to 3.49 percent from 3.69 percent a year
earlier. Net interest margin averaged 3.97 percent in 1998 compared to 4.16
percent in 1997.
Loan Growth/Loan Quality
At December 31, 1998, total loans had grown 4.1 percent to $1,033.6
million from $993.2 million a year earlier. Loan quality remained good with
nonperforming loans at December 31, 1998, totaling $11,289,000, or 1.09 percent
of loans. This compared to $6,712,000 at December 31, 1997, or .68 percent of
loans.
The allowance for loan losses, which totaled $14.2 million, represented
125.54 percent of nonperforming loans at the end of 1998, compared to 189.69
percent one year earlier. The provision for loan losses totaled $4,200,000 for
the year ended December 31, 1998, compared to $3,900,000 for 1997. The
increase in the provision was related to the $29.1 million increase in average
loans outstanding during 1998. The Company's net charge-offs as a percent of
average loans was .28 percent for 1998 compared to .26 percent for 1997. Loan
losses for both years were primarily concentrated in the consumer loan
portfolio.
Net Noninterest Margin/Efficiency Ratio
For 1998, the net noninterest margin improved to (1.61) percent compared
to (1.86) percent in 1997. For the year ended December 31, 1998, the Company's
efficiency ratio improved to 62.71 percent, compared to 63.66 percent in 1997.
Noninterest Income
Brenton achieved record levels of noninterest income in 1998. For 1998,
total noninterest income (excluding securities transactions) increased 21.0
percent to $32,692,377 from $27,011,967 one year earlier. Noninterest income
(excluding securities gains and losses) for 1998 represented 1.84 percent of
average assets and 34.8 percent of total operating income. All categories of
noninterest income, except insurance commissions and fees, reflected strong
growth from the prior year.
Service charges on deposit accounts increased 8.2 percent in 1998 to
$7,885,513. This growth related to increased account analysis charges on
commercial and business deposit accounts due to a higher number of clients.
Mortgage banking revenue rose 138.2 percent to $7,797,577 for 1998
compared to $3,274,215 in 1997. This revenue growth was the result of a
significantly higher volume of mortgage loan originations and the favorable
interest rate environment. Residential real estate loan closings for 1998
totaled $513.4 million compared to $179.1 million in 1997. Refinancings
represented 58.7 percent of the closings in 1998 and 41.6 percent in 1997.
Investment brokerage commissions totaled $5,334,309 for 1998, an increase
of 11.0 percent over 1997 due to greater broker productivity and active
financial markets.
Fiduciary revenues climbed 11.5 percent to $3,497,030 in 1998 compared to
$3,136,078 in 1997. This revenue improvement was due to increased assets from
existing trust accounts and new business.
Insurance commissions and fees declined 50.7 percent to $1,382,917 in 1998
due to the third quarter 1997 sale of one of the Company's insurance agencies
and a 44.7 percent decline in credit-related insurance commissions.
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<PAGE>
Other service charges, commissions and fees increased 22.3 percent to
$4,208,330 in 1998 compared to 1997 as a result of increases from real estate
sales commissions, ATM/debit card fees, international fees and commercial line
of credit fees.
Other operating income increased by $329,277 from 1997. The increase was
primarily due to higher levels of income from bank-owned life insurance
policies and miscellaneous one-time items, which exceeded a 1997 gain on the
sale of one of the Company's insurance agencies, as discussed above.
Securities transactions also contributed to the increase in noninterest
income. Securities gains of $665,450 were recorded in 1998 versus gains of
$493,822 in 1997.
Noninterest Expense
Total noninterest expense increased 6.4 percent in 1998 to $61,391,528
from $57,698,564 in 1997.
Compensation expense increased $2,317,134, or 8.6 percent, over 1997.
Standard salaries, which comprised 69.3 percent of total compensation expense,
increased by 11.6 percent compared to 1997 due to an increase in the number of
full-time equivalent employees and normal annual salary increases. Variable
compensation increased 43.3 percent as a result of higher sales of fee-related
products and services. Other compensation decreased $1,917,090 because of the
expiration of a long-term stock compensation plan. The number of full-time
equivalent employees increased 9.8 percent at December 31, 1998, compared to
the end of 1997 as a result of filling a number of open positions. Benefit
expense increased 13.3 percent due to increased compensation, higher health
insurance premiums and increased retirement plan contributions.
Occupancy expense rose 3.5 percent, or $197,959, in 1998 as a result of
increases in depreciation expense, repairs and maintenance and utility costs.
Furniture and equipment expense grew to $4,163,137, a 14.6 percent
increase from 1997. The increase was due to depreciation on technology
upgrades and increased repairs and maintenance expense.
Transferring the personal computer "help desk" function to an internal
operation reduced data processing expense $226,668, or 8.0 percent.
Other operating expenses increased $173,054, or 1.5 percent, when
comparing 1998 results to 1997. Increases in consulting fees, personnel
recruitment expenses, check processing fees and correspondent bank service
charges exceeded reductions in legal fees, bank operational losses,
miscellaneous expense and loss on sale of fixed assets.
Income Taxes
Brenton's income tax strategies included reducing income taxes by
purchasing securities and originating loans that produce tax-exempt income.
The effective rate of income tax expense as a percent of income before income
tax and minority interest was 27.7 percent for 1998 compared to 28.0 percent
for 1997.
Capital Resources
Common stockholders' equity totaled $131,933,451 as of December 31, 1999,
a 2.4 percent decline from the prior year. Excluding the change in accumulated
other comprehensive income (loss), realized stockholders' equity increased 4.3
percent compared to year-end 1998 and totaled $137,568,254.
In May 1999, the Board declared a 10 percent common stock dividend. As a
result of this action, each shareholder received one additional share of common
stock for every 10 shares they owned. Fractional shares were paid in cash. All
per-share data has been restated to reflect the 2-for-1 stock split in 1998 and
the 10 percent common stock dividends in 1999 and 1998. Cash dividends for
1999 totaled $7,112,542, or $.346 per common share, which represents an
increase of 9.2 percent over 1998 dividends of $.317 per share. The dividend
payout ratio for 1999 was 43.25 percent of earnings per share.
As part of Brenton's ongoing stock repurchase plan, 300,624 shares of
common stock (adjusted for the 10 percent common stock dividend) were
repurchased during 1999 at a cost of $4,004,426. Since the inception of the
plan in 1994, the Company has repurchased 3,644,983 shares (adjusted for the 2-
for-1 stock split and 10 percent common stock dividends) at a total cost of
$37,948,804. At this time, the Board has decided not to extend this plan for
2000.
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<PAGE>
The Company continues to monitor its capital position to balance the goals
of maximizing return on average equity, while maintaining adequate capital
levels for regulatory purposes. The Company's risk-based core capital ratio at
December 31, 1999, was 9.20 percent and the total risk-based capital ratio was
10.18 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 6.80 percent at
December 31, 1999, exceeding the regulatory minimum requirement for well-
capitalized institutions of 5.0 percent.
The debt-to-equity ratio of Brenton Banks, Inc. (the "Parent Company") was
4.9 percent at December 31, 1999, compared to 6.7 percent at the end of 1998.
The Parent Company's $5 million line of credit with a regional bank was unused
at the end of the year. Long-term borrowings of the Parent Company at December
31, 1999, consisted entirely of capital notes totaling $6,454,000.
Brenton Banks, Inc. common stock closed on December 31, 1999, at $10.13, a
decline of 33.5 percent from the prior year-end. The closing price at December
31, 1999, was 156.4 percent of the book value per share of $6.48. The year-end
stock price represented a price-to-1999-diluted-earnings multiple of 12.7
times.
Brenton Banks, Inc. continues to pursue acquisition and expansion
opportunities, which fit the strategic direction and enhance the financial
performance of the Company, as well as strengthen the Company's presence in
current and new markets. On September 24, 1999, the Company completed the
acquisition of two U.S. Bank offices in Pella and Knoxville, with deposits
totaling approximately $53 million. 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 were managed in 1999 changed when
compared to 1998.
The Company uses a third-party computer software simulation modeling
program to measure its exposure to potential interest rate changes. For
various assumed hypothetical changes in market interest rates, numerous other
assumptions are made such as prepayment speeds on loans and securities backed
by mortgages, the slope of the Treasury yield curve, the rates and volumes on
the Company's deposit products and the rates and volumes on the Company's loan
production.
The following table sets forth the estimated changes in net interest
income (expressed as a percent of base net interest income) for projected
hypothetical changes in market interest rates. Base net interest income is the
projected net interest income assuming no change in interest rates. As shown
in the table, the Company's net interest income is more sensitive in a
prolonged falling rate scenario than in a rising rate scenario. As market
rates decline, the assumed speed of fixed-rate loan repayments increases,
causing the funds received to be reinvested at lower rates. Current interest
rates on certain liabilities are at a level that does not allow for significant
downward repricing should market interest rates decline significantly. As
market rates increase, fixed-rate loans are less likely to prepay, therefore,
slowing the opportunity to reinvest at the assumed higher rates. In either a
rising or falling interest rate environment, the Company believes it has taken
actions to minimize the actual impact on net interest income. Those actions
include the origination of variable-rate consumer and commercial loans, the use
of fixed-rate Federal Home Loan Bank advances as alternatives to certificates
of deposit and active management of the investment securities portfolio to
provide for cash flows that will facilitate interest rate risk management. In
selected cases, the Company may enter into interest rate swaps, however, the
amount of swaps assumed in the projection of net interest income are not
material. The Company has entered into interest rate floor contracts to
mitigate the effect falling interest rates would have when certain deposit
categories could not be priced proportionately lower. Actual changes in net
interest income may differ from estimated changes set forth in this table due
to various risks and uncertainties concerning how actual repricing
opportunities will differ from assumed repricing opportunities.
<TABLE>
<CAPTION>
Changes in net interest income due to projected
hypothetical changes in market interest rates
_____________________________________________
Assumed changes
in market rates 2000 2001 2002
_______________ _____ _____ _____
<S> <C> <C> <C>
- -300 bps 1.9% -1.6% -6.7%
- -200 bps 1.8% 0.3% -3.7%
- -100 bps 1.3% 2.1% 0.2%
+100 bps -0.8% -0.4% 1.6%
+200 bps -1.5% -2.8% 1.7%
+300 bps -2.5% -5.5% 1.2%
<FN>
(Changes in hypothetical interest rates are assumed to be instantaneous and
sustained parallel shifts in the yield curve.)
</TABLE>
8 252
<PAGE>
Asset/Liability Management
Brenton 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, as previously discussed, that reflect the effects of various
interest rate scenarios on net interest income. Management utilizes the
simulations to manage interest rate risk, the net interest margin and levels of
net interest income.
The goal of asset/liability management 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.
To improve net interest income and lessen interest rate risk, management
continued 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 continues to focus on reducing interest rate risk by emphasizing
growth in variable-rate commercial and consumer loans.
In addition to normal balance sheet instruments, the Company has utilized
Federal Home Loan Bank advances and, in selected cases, interest rate swaps and
interest rate floor contracts to reduce interest rate risk. Other actions
taken to minimize interest rate risk were previously discussed under the
heading "Market Risk Management."
Liquidity Management
Brenton 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 29.3 percent of the Company's total assets at
December 31, 1999.
Net cash provided from operations (exclusive of increases or decreases in
loans held for sale) of the Company is another major source of liquidity and
totaled $20,729,000 in 1999, $24,749,000 in 1998 and $23,303,000 in 1997.
These strong cash flows from operations are expected to continue in the
foreseeable future.
The Company has historically maintained a stable deposit base and a
relatively low level of large deposits, which results in a low dependence on
volatile liabilities. At December 31, 1999, the Company had advances of
$131,674,000 from the Federal Home Loan Bank ("FHLB") of Des Moines, of which
$52,200,000 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-term, fixed-rate funding for certain assets and managing interest
rate risk. The Company had additional borrowing capacity available from the
FHLB of approximately $7 million at December 31, 1999.
The combination of high levels of potentially liquid assets, strong cash
flows from operations, low dependence on volatile liabilities and additional
borrowing capacity provided strong liquidity for the Company at December 31,
1999.
The Company has entered into agreements for the construction of an
operations and sales support facility with an estimated total cost, exclusive
of land, of $10.3 million. Groundbreaking occurred in October 1999,
construction has begun and completion is expected in the fourth quarter of
2000. The building will replace currently leased space and will also allow for
additional growth.
The Parent Company had sufficient cash flow and liquidity at December 31,
1999. The primary funding source for the Parent Company is dividends from its
subsidiaries. Dividends of approximately $28 million were available to be paid
to the Parent Company by subsidiary banks without reducing capital ratios below
regulatory minimums. At the end of 1999 the Parent Company had $3.4 million of
interest-bearing deposits with banks, a $5 million unused line of credit and
additional borrowing capacity.
Year 2000
The "Year 2000" issue was a top priority for Brenton since the
establishment of a Year 2000 Committee and a formal plan in August 1997. The
purpose of the committee and the formal plan was to minimize the risk of
potential disruption related to computers or other equipment with date-
sensitive software. Based on the Company's assessment of operations through
February 2000, we have not
9 253
<PAGE>
experienced any significant year 2000 issues. The Company has surveyed our
larger clients, vendors and significant third parties and believes they have
experienced no significant year 2000 issues, which could adversely affect the
Company. The Company will continue to monitor year 2000 issues.
The incremental expense associated with becoming Year 2000 compliant
totaled approximately $325,000 in 1999 and $530,000 overall, which was not
material to the Company's financial position. There were additional benefits
that resulted from this project, because in addition to becoming Year 2000
compliant, systems were improved.
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 originally was scheduled
to be effective for the Company for the year beginning January 1, 2000. The
effective date has been postponed until 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.
10 254
<PAGE>
<TABLE>
<CAPTION>
BRENTON BANKS, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES AND RATES
Average Balances (in thousands) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Assets:
Cash and due from banks $ 72,186 65,874 58,681 65,439 57,138
Interest-bearing deposits with
banks 3,526 3,706 2,460 1,393 1,076
Federal funds sold and
securities purchased under
agreements to resell 7,118 31,048 31,472 26,188 39,763
Trading account securities - - 12 - -
Investment securities:
Available for sale--taxable 430,740 390,591 348,232 330,002 244,786
Available for sale--tax-exempt 155,558 125,237 99,868 85,471 100,859
Held to maturity--taxable 1,514 3,998 12,700 46,271 65,959
Held to maturity--tax-exempt 33,982 53,130 56,204 51,639 50,235
Loans held for sale 56,218 37,841 10,284 7,983 5,908
Loans 1,098,732 999,232 970,115 919,578 945,724
Allowance for loan losses (14,519) (13,738) (12,171) (11,440) (11,166)
Premises and equipment 36,010 31,883 29,841 31,728 31,436
Other assets 62,761 51,318 41,771 28,642 29,508
$ 1,943,826 1,780,120 1,649,469 1,582,894 1,561,226
Liabilities and Stockholders'
Equity:
Deposits:
Noninterest-bearing $ 192,211 164,403 139,480 131,051 128,770
Interest-bearing:
Demand 109,535 90,589 81,430 376,259 355,819
Savings 641,308 585,598 551,509 241,250 231,633
Time 546,868 556,056 567,258 583,508 626,497
Total deposits 1,489,922 1,396,646 1,339,677 1,332,068 1,342,719
Federal funds purchased and
securities sold under
agreements to repurchase 150,387 116,388 78,234 59,276 40,237
Other short-term borrowings 117,377 65,205 53,223 17,295 6,536
Accrued expenses and other
liabilities 15,940 17,020 17,097 17,520 14,896
Long-term borrowings 31,330 47,605 32,056 33,094 37,264
Total liabilities 1,804,956 1,642,864 1,520,287 1,459,253 1,441,652
Minority interest in
consolidated subsidiaries 4,734 4,834 4,691 4,471 4,391
Common stockholders' equity 134,136 132,422 124,491 119,170 115,183
$ 1,943,826 1,780,120 1,649,469 1,582,894 1,561,226
Summary of Average Interest
Rates:
Average yields earned:
Interest-bearing deposits with
banks 4.90% 4.74 4.80 4.87 6.20
Trading account securities - - 4.26 - -
Federal funds sold and
securities purchased under
agreements to resell 4.91 5.35 5.54 5.41 5.69
Investment securities:
Available for sale--taxable 5.83 6.09 6.31 6.08 5.96
Available for sale--tax-exempt
(tax equivalent basis) 6.46 6.69 7.04 7.13 6.71
Held to maturity--taxable 6.72 6.93 6.39 6.22 6.17
Held to maturity--tax-exempt
(tax equivalent basis) 7.03 6.82 6.72 6.68 8.05
Loans held for sale 7.07 7.11 7.89 8.47 6.71
Loans 8.26 8.74 8.82 8.69 8.69
Average rates paid:
Deposits 3.96% 4.12 4.11 4.12 4.37
Federal funds purchased and
securities sold under
agreements to repurchase 4.41 4.38 4.36 4.17 4.08
Other short-term borrowings 5.46 5.76 5.98 5.87 5.67
Long-term borrowings 6.43 6.34 6.86 7.07 7.03
Average yield on interest-
earning assets 7.44% 7.78 7.95 7.80 7.86
Average rate paid on interest-
bearing liabilities 4.16 4.29 4.26 4.22 4.45
Net interest spread 3.28 3.49 3.69 3.58 3.41
Net interest margin 3.73 3.97 4.16 4.03 3.89
</TABLE>
11 255
<PAGE>
<TABLE>
<CAPTION>
BRENTON BANKS, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
Year-end Balances
(in thousands) 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total assets $ 1,985,455 1,939,557 1,718,484 1,632,095 1,582,779 1,581,327 1,480,596 1,431,140 1,360,942 1,274,301
Interest-earning assets 1,805,943 1,788,081 1,578,923 1,497,600 1,461,218 1,475,473 1,400,709 1,323,252 1,267,402 1,181,172
Interest-bearing
liabilities 1,645,684 1,590,493 1,406,258 1,335,609 1,300,508 1,315,378 1,224,951 1,181,013 1,141,008 1,052,597
Noninterest-bearing
deposits 189,333 190,625 161,007 153,284 143,220 136,548 127,132 137,212 115,479 125,626
Long-term borrowings 27,704 41,546 36,662 34,860 38,178 28,939 20,055 13,284 13,634 12,675
Common stockholders'
equity** 131,933 135,210 129,379 121,954 119,534 110,430 112,418 97,430 86,712 77,258
Results of Operations
(in thousands)
Interest income $ 128,979 124,026 118,239 111,383 111,040 101,223 98,656 106,560 115,561 106,826
Interest expense 66,380 62,639 58,105 55,331 57,708 45,772 44,427 54,773 68,687 64,431
Net interest income 62,599 61,387 60,134 56,052 53,332 55,451 54,229 51,787 46,874 42,395
Provision for loan losses 4,250 4,200 3,900 2,900 1,865 1,988 1,252 1,411 799 869
Net interest income after
provision for loan losses 58,349 57,187 56,234 53,152 51,467 53,463 52,977 50,376 46,075 41,526
Noninterest income 29,794 33,358 27,506 23,327 17,847 16,593 17,863 14,684 12,715 11,554
Noninterest expense 65,374 61,392 57,699 56,090 55,051 56,657 50,415 46,591 42,284 37,820
Income before income
taxes and minority
interest 22,769 29,153 26,041 20,389 14,263 13,399 20,425 18,469 16,506 15,260
Income taxes 5,565 8,082 7,288 5,771 3,205 2,701 5,508 4,884 4,308 4,388
Minority interest 644 720 743 603 651 591 667 632 539 533
Net income $ 16,560 20,351 18,010 14,015 10,407 10,107 14,250 12,953 11,659 10,339
Average common shares
outstanding
(in thousands)* 20,498 20,853 21,181 21,891 22,469 23,105 22,983 22,782 22,716 22,677
Per Common Share*
Net income-basic $ .81 .98 .85 .64 .46 .44 .62 .57 .51 .46
Net income-diluted .80 .96 .83 .63 .46 .43 .61 .56 .51 .45
Cash dividends .346 .317 .225 .171 .154 .150 .137 .120 .110 .093
Common stockholders'
equity*** 6.76 6.39 6.02 5.62 5.27 5.01 4.74 4.26 3.81 3.40
Closing price 10.13 15.23 16.53 10.38 7.26 6.23 5.98 5.92 4.72 3.07
Selected Operating
Ratios
Return on total average
common stockholders'
equity** 12.35% 15.37 14.47 11.76 9.04 9.03 13.82 14.13 14.27 14.39
Return on average realized
common stockholders'
equity*** 12.31 15.77 14.68 11.79 8.91 8.99 13.82 14.12 14.26 14.39
Return on average assets
(including minority
interest) .89 1.18 1.14 .92 .71 .70 1.04 .98 .93 .95
Equity to assets*** 6.91 6.81 7.36 7.41 7.47 7.28 7.40 6.81 6.37 6.06
Common dividend
payout 43.25 33.02 27.11 27.14 33.48 34.88 22.46 21.43 21.57 20.67
Allowance for loan
losses as a percent
of loans 1.21 1.37 1.28 1.20 1.22 1.12 1.12 1.20 1.14 1.25
Net charge-offs as a
percent of average
loans .36 .28 .26 .29 .18 .10 .05 .13 .15 .12
<FN>
* Restated for 2-for-1 stock split effective February 1998, 10 percent
common stock dividends effective in 1999, 1998, 1997 and 1996 and
3-for-2 stock split effective in 1994.
** Including unrealized gains (losses) on securities available for sale.
*** Excluding unrealized gains (losses) on securities available for sale.
</TABLE>
12 256
<PAGE>
<TABLE>
<CAPTION>
BRENTON BANKS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
December 31 1999 1998
<S> <C> <C>
Assets:
Cash and due from banks (note 2) $ 85,064,053 76,460,049
Interest-bearing deposits with banks 2,361,784 2,167,288
Federal funds sold and securities purchased
under agreements to resell - 6,000,000
Investment securities:
Available for sale (note 3) 556,191,355 605,183,788
Held to maturity (market value of
$25,351,000 and $44,011,000
at December 31, 1999, and 1998,
respectively) (note 3) 25,201,876 43,027,501
Investment securities 581,393,231 648,211,289
Loans held for sale 26,201,221 98,147,391
Loans (notes 4, 9 and 10) 1,195,986,791 1,033,554,556
Allowance for loan losses (note 5) (14,413,104) (14,172,264)
Loans, net 1,181,573,687 1,019,382,292
Premises and equipment (note 6) 37,978,240 32,523,113
Accrued interest receivable 15,856,895 16,458,066
Other assets (notes 4 and 8) 55,025,590 40,207,277
1,985,454,701 1,939,556,765
Liabilities and Stockholders' Equity:
Deposits (note 7):
Noninterest-bearing 189,333,019 190,625,140
Interest-bearing:
Demand 145,131,184 131,602,358
Savings 640,963,380 603,367,340
Time 554,655,720 571,080,293
Total deposits 1,530,083,303 1,496,675,131
Federal funds purchased and securities sold
under agreements to repurchase 166,806,442 155,847,300
Other short-term borrowings (note 9) 110,423,584 87,050,000
Accrued expenses and other liabilities 13,896,056 18,315,348
Long-term borrowings (note 10) 27,704,000 41,546,000
Total liabilities 1,848,913,385 1,799,433,779
Minority interest in consolidated
subsidiaries 4,607,865 4,912,667
Redeemable preferred stock, $1 par;
500,000 shares authorized; issuable
in series, none issued - -
Common stockholders' equity (notes 12,
13, 14 and 16):
Common stock, $2.50 par; 50,000,000
shares authorized; 20,354,454 and
18,752,381 shares issued and outstanding
at December 31, 1999, and 1998, respectively 50,886,135 46,880,953
Capital surplus - -
Retained earnings 86,682,119 85,010,569
Accumulated other comprehensive income
(loss)-- unrealized gains (losses) on
securities available for sale (5,634,803) 3,318,797
Total common stockholders' equity 131,933,451 135,210,319
$ 1,985,454,701 1,939,556,765
<FN>
Commitments and contingencies (notes 17 and 18).
See accompanying notes to consolidated financial statements.
</TABLE>
13 257
<PAGE>
<TABLE>
<CAPTION>
BRENTON BANKS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31 1999 1998 1997
<S> <C> <C> <C>
Interest Income:
Interest and fees on loans (note 4) $ 94,493,565 89,739,711 86,020,464
Interest and dividends on investments:
Available for sale--taxable 25,125,818 23,770,870 21,969,148
Available for sale--tax-exempt 7,058,222 5,866,972 4,929,898
Held to maturity--taxable 101,816 277,075 811,729
Held to maturity--tax-exempt 1,677,406 2,536,082 2,647,149
Interest on federal funds sold and
securities purchased under agreements
to resell 349,298 1,659,405 1,742,284
Other interest income 172,918 175,678 118,695
Total interest income 128,979,043 124,025,793 118,239,367
Interest Expense:
Interest on deposits (note 7) 51,330,450 50,772,501 49,310,346
Interest on federal funds purchased
and securities sold under
agreements to repurchase 6,630,927 5,092,162 3,413,432
Interest on other short-term
borrowings (note 9) 6,403,143 3,756,817 3,183,053
Interest on long-term borrowings
(note 10) 2,015,386 3,016,987 2,198,772
Total interest expense 66,379,906 62,638,467 58,105,603
Net interest income 62,599,137 61,387,326 60,133,764
Provision for loan losses (note 5) 4,250,000 4,200,000 3,900,000
Net interest income after provision
for loan losses 58,349,137 57,187,326 56,233,764
Noninterest Income:
Service charges on deposit accounts 9,372,840 7,885,513 7,290,765
Mortgage banking income 4,225,351 7,797,577 3,274,215
Investment brokerage commissions 4,160,138 5,334,309 4,808,048
Fiduciary income 3,685,449 3,497,030 3,136,078
Insurance commissions and fees 1,608,661 1,382,917 2,803,983
Other service charges, collection
and exchange charges, commissions
and fees 4,791,432 4,634,529 3,879,609
Net realized gains from securities
available for sale (note 3) 215,640 665,450 493,822
Other operating income 1,734,145 2,160,502 1,819,269
Total noninterest income 29,793,656 33,357,827 27,505,789
Noninterest Expense:
Compensation 30,225,317 29,141,441 26,824,307
Employee benefits (note 15) 5,525,097 4,873,271 4,303,104
Occupancy expense of premises,
net (notes 6 and 17) 6,063,984 5,807,559 5,609,600
Furniture and equipment expense
(notes 6 and 17) 5,295,734 4,163,137 3,634,336
Data processing expense (note 18) 2,873,419 2,623,727 2,850,395
Marketing 1,784,474 1,472,632 1,361,963
Supplies 1,404,316 1,226,212 1,195,762
Other operating expense 12,201,929 12,083,549 11,919,097
Total noninterest expense 65,374,270 61,391,528 57,698,564
Income before income taxes and
minority interest 22,768,523 29,153,625 26,040,989
Income taxes (note 8) 5,564,805 8,082,355 7,287,628
Income before minority interest 17,203,718 21,071,270 18,753,361
Minority interest 643,601 720,349 743,254
Net income $ 16,560,117 20,350,921 18,010,107
Per common share (notes 1 and 13):
Net income-basic $ .81 .98 .85
Net income-diluted .80 .96 .83
Cash dividends .346 .317 .225
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
14 258
<PAGE>
<TABLE>
<CAPTION>
BRENTON BANKS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31 1999 1998 1997
<S> <C> <C> <C>
Operating Activities:
Net income $ 16,560,117 20,350,921 18,010,107
Adjustments to reconcile net
income to net cash provided
(used) by operating activities:
Provision for loan losses 4,250,000 4,200,000 3,900,000
Depreciation and amortization 5,916,858 4,683,179 4,216,828
Deferred income taxes (242,812) 1,396,220 (685,223)
Net realized gains from securities
available for sale (215,640) (665,450) (493,822)
Investment securities amortization
and accretion 2,386,752 1,043,735 1,346,704
Net (increase) decrease in loans
held for sale 71,946,170 (78,843,980) (13,433,113)
Net increase in accrued interest
receivable and other assets (3,540,983) (7,644,451) (3,501,066)
Net increase (decrease) in accrued
expenses, other liabilities and
minority interest (4,385,521) 1,384,709 509,873
Net cash provided (used) by operating
activities 92,674,941 (54,095,117) 9,870,288
Investing Activities:
Investment securities available for sale:
Purchases (135,073,603) (461,159,506) (303,699,052)
Maturities 129,035,932 252,551,601 161,716,090
Sales 38,067,415 89,996,385 119,401,553
Investment securities held to maturity:
Purchases (975,625) (6,166,526) (26,324,353)
Maturities 18,678,932 32,130,525 29,768,259
Net increase in loans (164,147,009) (43,125,313) (53,741,825)
Acquisition of deposits and loans, net 46,120,354 - -
Purchase of other assets for investment - (5,000,000) (5,000,000)
Purchases of premises and equipment (10,856,360) (7,911,645) (2,526,958)
Proceeds from sales of premises and
equipment 8,274 7,291 225,080
Net cash used by investing activities (79,141,690) (148,677,188) (80,181,206)
Financing Activities:
Net increase in noninterest-bearing,
interest-bearing demand and savings
deposits 33,567,260 119,558,474 25,683,433
Net increase (decrease) in time
deposits (53,909,352) 12,846,166 (14,470,053)
Net increase in federal funds
purchased and securities sold under
agreements to repurchase 10,959,142 63,214,724 25,806,456
Net increase (decrease) in other
short-term borrowings (2,126,416) (9,700,000) 25,550,000
Proceeds of long-term borrowings 14,663,000 29,394,000 17,806,000
Repayment of long-term borrowings (3,005,000) (1,460,000) (2,004,024)
Dividends on common stock (7,112,542) (6,622,340) (4,781,675)
Proceeds from issuance of common
stock under the employee stock
purchase plan 243,573 758,090 551,247
Proceeds from issuance of common
stock under the stock option plan 4,013 290,039 1,286,157
Proceeds from issuance of common stock
under the long-term stock compensation
plan - 970,220 246,915
Payment for shares reacquired under
common stock repurchase plan (4,004,426) (10,000,900) (10,014,087)
Payment for fractional shares
resulting from common stock dividend (14,003) (13,961) (16,399)
Net cash provided (used) by financing
activities (10,734,751) 199,234,512 65,643,970
Net increase (decrease) in cash and
cash equivalents 2,798,500 (3,537,793) (4,666,948)
Cash and cash equivalents at the
beginning of the year 84,627,337 88,165,130 92,832,078
Cash and cash equivalents at the
end of the year $ 87,425,837 84,627,337 88,165,130
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
15 259
<PAGE>
<TABLE>
<CAPTION>
BRENTON BANKS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS' EQUITY
Years Ended December 31 1999 1998 1997
<S> <C> <C> <C>
Common Stock
Beginning of year balance $ 46,880,953 43,335,120 40,428,420
Ten percent common stock
dividend (note 13) 4,655,915 4,315,398 3,966,905
Issuance of shares of common stock
under the stock option plan
(note 16) 33,680 99,825 501,760
Issuance of shares of common stock
under the long-term stock
compensation plan (note 16) - 268,960 82,945
Issuance of shares of common stock
under the employee stock purchase
plan (note 16) 33,647 94,150 93,790
Shares reacquired under the common
stock repurchase plan (note 13) (718,060) (1,232,500) (1,738,700)
End of year balance 50,886,135 46,880,953 43,335,120
Capital Surplus
Beginning of year balance - - -
Ten percent common stock dividend
(note 13) - (78,529) -
Issuance of shares of common stock
under the stock option plan
(note 16) (29,667) 190,214 784,397
Issuance of shares of common stock
under the long-term stock
compensation plan (note 16) - 842,685 163,970
Issuance of shares of common stock
under the employee stock purchase
plan (note 16) 209,926 664,018 457,457
Shares reacquired under the common
stock repurchase plan (note 13) (180,259) (1,618,388) (1,405,824)
End of year balance - - -
Retained Earnings
Beginning of year balance 85,010,569 82,824,333 80,448,768
Net income 16,560,117 20,350,921 18,010,107
Dividends on common stock
($.346, $.317, and $.225 per share,
respectively) (7,112,542) (6,622,340) (4,781,675)
Ten percent common stock dividend
(note 13) (4,655,915) (4,236,869) (3,966,905)
Fractional shares resulting from
common stock dividend (14,003) (13,961) (16,399)
Issuance of shares of common stock
under the long-term stock
compensation plan (note 16) - (141,425) -
Issuance of shares of common stock
under the employee stock purchase
plan (note 16) - (78) -
Shares reacquired under the common
stock repurchase plan (note 13) (3,106,107) (7,150,012) (6,869,563)
End of year balance 86,682,119 85,010,569 82,824,333
Total Stockholders' Equity before
Accumulated Other Comprehensive
Income (Loss) 137,568,254 131,891,522 126,159,453
Accumulated Other Comprehensive
Income (Loss)
Beginning of year balance 3,318,797 3,219,846 1,077,041
Change in unrealized holding
gains (losses) on securities
available for sale (8,953,600) 98,951 2,142,805
End of year balance (5,634,803) 3,318,797 3,219,846
Total Stockholders' Equity $ 131,933,451 135,210,319 129,379,299
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
16 260
<PAGE>
<TABLE>
<CAPTION>
BRENTON BANKS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years Ended December 31 1999 1998 1997
<S> <C> <C> <C>
Net income $ 16,560,117 20,350,921 18,010,107
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 $5,291,295,
$(311,674) and $(1,470,886),
respectively) (8,818,825) 512,861 2,451,444
Less: reclassification adjustment
for net realized gains included
in net income (net of tax expense
of $80,865, $251,540 and $185,183,
respectively) (134,775) (413,910) (308,639)
Other comprehensive income (loss),
net of tax (8,953,600) 98,951 2,142,805
Comprehensive income $ 7,606,517 20,449,872 20,152,912
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
17 261
<PAGE>
BRENTON BANKS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
(1) Summary of Significant Accounting Policies and
Related Matters
______________________________________________________________________________
Nature of Operations Brenton Banks, Inc. and subsidiaries (the Company)
engage in retail, commercial, business, and agricultural banking and related
financial services from 44 locations throughout the state of Iowa. The
Company provides the usual products and services of banking such as deposits,
commercial loans, business loans, agribusiness loans, personal loans and trust
and investment management services. The Company also engages in activities
that are closely related to banking, including mortgage banking, investment,
insurance and real estate brokerage.
The accounting and reporting policies of the Company conform with
generally accepted accounting principles and general practices within the
banking industry. The following describe the more significant accounting
policies:
The Principles of Consolidation The consolidated financial statements include
the accounts of Brenton Banks, Inc. (the Parent Company) and its subsidiaries.
All material intercompany accounts and transactions have been eliminated in
the consolidated financial statements. Certain reclassifications were made in
the financial statements to agree with the current year presentation.
The excess cost over underlying net assets of consolidated subsidiaries
and other intangible assets are generally being amortized over 10 to 15 years
and are included in other assets in the consolidated statements of condition.
Intangible assets totaled $8,125,000 and $3,395,000 at December 31, 1999, and
1998, respectively.
Acquisition On September 24, 1999, the Company completed the acquisition of
two branch offices in Pella and Knoxville, Iowa from U.S. Bank. The two
offices had deposits totaling approximately $53 million. The acquisition was
accounted for by the purchase method. Intangible assets of $5.3 million,
including $4.3 million of goodwill, were created in the transaction. Goodwill
is being amortized to other operating expense on a straight-line basis over 15
years.
Investment Securities Investment securities are classified based on the
Company's intended holding period. Securities, which may be sold prior to
maturity to meet liquidity needs, to respond to market changes or to adjust
the Company's asset-liability position, are classified as available for sale.
Securities that the Company has the ability and intent to hold to maturity
are classified as held to maturity.
Investment securities available for sale are recorded at fair value. The
aggregate unrealized gains or losses, net of the income tax and minority
interest effect, are recorded as a component of other comprehensive income
until realized. Securities held to maturity are recorded at cost, adjusted
for amortization of premiums and accretion of discounts. The timing of the
amortization and accretion of mortgage-backed securities is adjusted for
actual and projected prepayments.
Net realized gains or losses on the sale of securities are shown in the
statements of operations. Gains or losses are computed using the specific
security identification method on the trade date.
Loans Loans are carried primarily at the unpaid principal balance. Interest
income on loans is accrued and recorded as income based on contractual
interest rates and daily outstanding principal balances.
The accrual of interest income is stopped when the ultimate collection of
a loan becomes doubtful. A loan is placed on nonaccrual status when it
becomes 90 days past due, if it is neither well secured or in the process of
collection. Once determined uncollectible, interest credited to income in the
current year is reversed and interest accrued in prior years is charged to the
allowance for loan losses.
Under the Company's credit policies, all nonaccrual and restructured
commercial, business, agricultural, commercial real estate and construction
loans are considered to be impaired loans. In determining when a loan is
impaired, management considers the delinquency status of the borrower, the
borrower's ability to generate cash and the fair market value of the
collateral. Specific allowances are established for any impaired commercial,
business, agricultural, commercial real estate or construction loan where the
recorded investment exceeds the measured value of the loan. On a practical
basis, the measured value of a loan is obtained by using the observable market
price of a loan or the fair value of the collateral, if the loan is collateral
dependent. Otherwise, the measured value of a loan is based upon the present
value of expected future cash flows discounted at the loan's effective
interest rate. Impaired loans are charged-off on the basis of management's
ongoing evaluation, but generally when it is deemed probable that the borrower
cannot generate sufficient funds to comply with contractual terms in the
normal course of business. Cash received on impaired loans is applied to
principal until principal is satisfied or until the borrower demonstrates the
ability to perform according to agreed-upon terms.
Loans held for sale include real estate mortgage loans originated with
the intent to sell. These loans are carried at the lower of aggregate cost or
fair value.
Allowance for Loan Losses The allowance for loan losses is maintained at a
level considered appropriate to support management's evaluation of probable
losses in the loan portfolio as of the balance sheet date. Management's
evaluation is based upon several factors including economic conditions,
historical loss and collection experience, risk characteristics of the
portfolio, underlying collateral values, industry risk and credit
concentrations. Loan losses or recoveries are charged or credited directly to
the allowance account.
Premises and Equipment Premises and equipment are stated at cost less
accumulated depreciation. Depreciation is provided predominantly by the
straight-line method over estimated useful lives of 5 to 40 years for
buildings and leasehold improvements, and 3 to 20 years for furniture and
equipment.
Other Real Estate Owned Included in other assets is property acquired through
foreclosure, acceptance of deed in lieu of foreclosure or other transfers in
settlement of outstanding loans and related contract sales of such property
until the contract is transferred to earning assets based upon sufficient
equity in the asset. Amounts totaled $1,186,000 and $389,000 at December 31,
1999, and 1998, respectively. Such property is carried at the lower of cost
or estimated fair value, less estimated selling costs. Periodic
18 262
<PAGE>
appraisals are obtained to support carrying values. Net expense of ownership
and declines in carrying values are charged to operating expenses.
Employee Retirement Plan All employees of the Company are eligible, after
meeting certain requirements, for inclusion in the defined contribution
retirement plan. The plan is a combination profit sharing and 401(k) plan.
Retirement plan costs are expensed as the Company contributes to the plan.
The Company does not provide any material post-retirement benefits.
Income Taxes The Company files a consolidated federal income tax return.
Federal income taxes are allocated to the Parent Company and each subsidiary
on the basis of its taxable income or loss included in the consolidated
return.
The effects of current or deferred taxes are recognized as a current and
deferred tax liability or asset based on current tax laws. Accordingly, income
tax expense in the consolidated statements of operations includes charges or
credits to properly reflect the current and deferred tax asset or liability.
Statements of Cash Flows In the statements of cash flows, cash and cash
equivalents include cash and due from banks, interest-bearing deposits with
banks and federal funds sold and securities purchased under agreements to
resell.
Income Per Common 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 year. 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
year. In January 1998, the Company declared a 2-for-1 stock split effective
February 10, 1998 and in May 1999, June 1998, and May 1997, the Company
declared 10 percent common stock dividends. The average number of common
shares and dilutive potential common shares have been restated for the stock
split and stock dividends.
The following information was used in the computation of net income per
common share on both a basic and diluted basis for the years ended December
31, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
(in thousands, except for EPS data) 1999 1998 1997
_____________________________________________________________________________
<S> <C> <C> <C>
Basic EPS Computation
Numerator:
Net income $16,560 20,351 18,010
______ ______ ______
Denominator:
Average common shares
outstanding 20,498 20,853 21,181
______ ______ ______
Basic EPS $ .81 .98 .85
______ ______ ______
______ ______ ______
Diluted EPS Computation
Numerator:
Net income $16,560 20,351 18,010
______ ______ ______
Denominator:
Average common shares
outstanding 20,498 20,853 21,181
Average stock options 303 429 343
Average long-term stock
compensation plan --- --- 170
______ ______ ______
20,801 21,282 21,694
______ ______ ______
Diluted EPS $ .80 .96 .83
______ ______ ______
______ ______ ______
</TABLE>
Fair Value of Financial Instruments Fair value estimates are made at a
specific point in time, based on relevant market information and information
about the financial instrument. These estimates do not reflect any premium or
discount that could result from offering the Company's entire holdings of a
particular financial instrument for sale at one time. Unless included in
assets available for sale, it is the Company's general practice and intent to
hold its financial instruments to maturity and not to engage in trading or
sales activities.
Fair value estimates are based on judgments regarding future expected
loss experience, current economic conditions, risk characteristics of various
financial instruments and other factors. These estimates are subjective in
nature and involve uncertainties and matters of significant judgment and
therefore cannot be determined with precision. Changes in assumptions could
significantly affect the estimates.
Estimated fair values have been determined by the Company using the best
available data and an estimation method suitable for each category of
financial instruments.
Interest Rate Floor An interest rate floor requires the seller to pay the
purchaser, at specified dates, the amount, if any, by which the market
interest rate falls below the agreed-upon floor, applied to a notional
principal amount. Initial cash amounts paid on positions accounted for as
hedges are deferred and amortized over the instrument's contractual life.
Subsequent payments received are recognized into earnings as an adjustment to
interest on deposits.
19 263
<PAGE>
Use of Estimates in the Preparation of Financial Statements The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. A significant estimate that is
particularly sensitive to change relates to the allowance for loan losses.
Changes in Accounting Policies:
Accounting for Mortgage-Backed Securities Retained after the Securitization of
Mortgage Loans Held for Sale by a Mortgage Banking Enterprise Effective
January 1, 1999, the Company adopted SFAS No. 134, "Accounting for Mortgage-
Backed Securities Retained after the Securitization of Mortgage Loans Held for
Sale by a Mortgage Banking Enterprise." This statement requires that after
the securitization of mortgage loans held for sale, an entity engaged in
mortgage banking activities classify the resulting mortgage-backed securities
or other retained interests based on its ability and intent to sell or hold
those investments. The adoption of SFAS no. 134 did not have a material
effect on the Company.
(2) Cash and Due From Banks
______________________________________________________________________________
The subsidiary banks are required by federal banking regulations to maintain
certain cash and due from banks reserves. This reserve requirement amounted
to $27,301,000 at December 31, 1999.
(3) Investment Securities
______________________________________________________________________________
The amortized cost and estimated fair value of investment securities follow.
The estimated fair value of investment securities has been determined using
available quoted market prices for similar securities.
20 264
<PAGE>
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
December 31, 1999 (in thousands) Cost Gains Losses Value
<S> <C> <C> <C> <C>
Investment securities available for sale:
Taxable investments:
U.S. Treasury securities $ 32,730 22 (340) 32,412
Securities of U.S. government agencies 157,098 6 (4,890) 152,214
Mortgage-backed and related securities 186,940 113 (2,808) 184,245
Other investments 32,224 --- (357) 31,867
Tax-exempt investments:
Obligations of states and political
subdivisions 156,564 1,402 (2,513) 155,453
_______ _____ ______ _______
$565,556 1,543 (10,908) 556,191
Investment securities held to maturity:
Taxable investments:
Mortgage-backed and related securities $ 662 3 --- 665
Other investments 335 2 (1) 336
Tax-exempt investments:
Obligations of states and political
subdivisions 24,205 249 (104) 24,350
_______ _____ ______ _______
$ 25,202 254 (105) 25,351
December 31, 1998 (in thousands)
Investment securities available for sale:
Taxable investments:
U.S. Treasury securities $ 43,076 360 (144) 43,292
Securities of U.S. government agencies 139,372 1,293 (248) 140,417
Mortgage-backed and related securities 231,955 1,497 (397) 233,055
Other investments 26,948 61 (25) 26,984
Tax-exempt investments:
Obligations of states and political
subdivisions 158,283 3,344 (191) 161,436
_______ _____ ______ _______
$599,634 6,555 (1,005) 605,184
Investment securities held to maturity:
Taxable investments:
Mortgage-backed and related securities $ 1,529 12 --- 1,541
Other investments 450 11 --- 461
Tax-exempt investments:
Obligations of states and political
subdivisions 41,048 964 (3) 42,009
_______ _____ ______ _______
$ 43,027 987 (3) 44,011
</TABLE>
21 265
<PAGE>
Proceeds from the sale of available for sale securities were $38,067,000,
$89,996,000 and $119,402,000 in 1999, 1998, and 1997, respectively. Gross
gains of $337,000 in 1999, $667,000 in 1998 and $874,000 in 1997 and gross
losses of $121,000 in 1999, $2,000 in 1998 and $380,000 in 1997 were realized
on those sales.
Other investments at December 31, 1999, and 1998, consisted primarily of
corporate bonds and Federal Home Loan Bank stock. U.S. government agencies
originate or guarantee primarily all of the mortgage-backed and related
securities.
The scheduled maturities of investment securities at December 31, 1999
follow. Actual maturities may differ from scheduled maturities because
issuers may have the right to call obligations without penalties. The
maturities of mortgage-backed securities have been included in the period of
anticipated payment considering estimated prepayment rates.
<TABLE>
<CAPTION>
Estimated
Amortized Fair
(in thousands) Cost Value
<S> <C> <C>
Investment securities available
for sale:
Due in one year or less $118,891 118,077
Due after one year through
five years 343,631 336,395
Due after five years through
ten years 87,744 85,978
Due after ten years 15,290 15,741
$565,556 556,191
Investment securities held to
maturity:
Due in one year or less $ 7,128 7,127
Due after one year through
five years 10,471 10,519
Due after five years through
ten years 6,539 6,629
Due after ten years 1,064 1,076
$ 25,202 25,351
</TABLE>
Investment securities carried at $237,586,000 and $265,405,000 at December 31,
1999, and 1998, respectively, were pledged to secure public and other funds on
deposit and for other purposes.
(4) Loans
______________________________________________________________________________
A summary of loans at December 31 follows:
<TABLE>
<CAPTION>
(in thousands) 1999 1998
<S> <C> <C>
Real estate loans:
Commercial construction
and land development $ 86,725 54,941
Secured by 1-4 family
residential property 158,755 127,351
Home equity 197,793 175,380
Commercial and other 163,202 151,995
Loans to farmers 75,624 84,554
Commercial and industrial loans 193,690 179,414
Loans to individuals for personal
expenditures:
Direct 68,025 69,452
Indirect 238,664 182,184
All other loans 13,509 8,284
$1,195,987 1,033,555
</TABLE>
The Company originates commercial, business, real estate, agricultural and
personal loans with clients throughout Iowa. The portfolio has unavoidable
geographic risk as a result.
Total nonperforming loans and assets at December 31 were:
<TABLE>
<CAPTION>
(in thousands) 1999 1998
<S> <C> <C>
Impaired loans:
Nonaccrual $ 7,259 8,099
Restructured 399 289
Total impaired loans 7,658 8,388
Loans past due 90 days
or more 1,794 2,901
Total nonperforming loans 9,452 11,289
Other real estate owned 1,186 389
Total nonperforming assets $10,638 11,678
</TABLE>
The average balances of impaired loans for the years ended December 31, 1999,
and 1998, were $8,610,000 and $5,901,000, respectively. The allowance for
loan losses related to impaired loans at December 31, 1999, and 1998, was
$2,827,000 and $2,506,000, respectively. Impaired loans of $0 and $311,000
were not subject to a related allowance for loan losses at December 31, 1999,
and 1998, respectively, because of the net realizable value of loan
collateral, guarantees and other factors.
The effect of nonaccrual and restructured loans on interest income for each of
the three years ended December 31 was:
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
<S> <C> <C> <C>
Interest income:
As originally contracted $973 827 402
As recognized 212 215 157
Reduction of interest income $761 612 245
</TABLE>
Loan clients of the Company include certain executive officers, directors
and principal shareholders, and their related interests and associates. All
loans to this group were made in the ordinary course of business at prevailing
terms and conditions. The aggregate indebtedness of all executive officers,
directors and principal shareholders of Brenton Banks, Inc. and its
significant subsidiaries, and indebtedness of related interests and associates
of this group (except where the indebtedness of such persons was less than
$60,000) included in loans follows:
<TABLE>
<CAPTION>
(in thousands) Amount
<S> <C>
Balance at December 31, 1998 $ 4,691
Additional loans 20,605
Loan payments (957)
Balance at December 31, 1999 $ 24,339
</TABLE>
Mortgage Servicing Rights The fair market value of capitalized servicing
rights at December 31, 1999 was approximately $8,168,000. To determine the
fair value of the servicing rights, the Company used comparable market prices.
In determining the fair market value and potential impairment, the Company
disaggregated the portfolio by its predominate risk factor, interest rate.
The fair value of the portfolio was determined by calculating the present
value of future cash flows. The Company incorporated assumptions that market
participants would use in estimating future
22 266
<PAGE>
net servicing income which include estimates of the cost of servicing per
loan, the discount rate, float value, an inflation rate, ancillary income per
loan, prepayment speeds and default rates.
Capitalized servicing rights on originated loan servicing, included in other
assets, as of December 31 follows:
<TABLE>
<CAPTION>
(in thousands) 1999 1998
<S> <C> <C>
Balance at beginning of year $ 5,775 2,274
Additions from originations 4,580 4,186
Amortization (1,083) (685)
Sale of servicing (2,012) ---
Impairment --- ---
Balance at end of year $ 7,260 5,775
</TABLE>
(5) Allowance for Loan Losses
______________________________________________________________________________
A summary of activity in the allowance for loan losses follows:
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
<S> <C> <C> <C>
Balance at beginning of year $14,172 12,732 11,328
Provision 4,250 4,200 3,900
Recoveries 2,395 1,647 1,733
Loans charged off (6,404) (4,407) (4,229)
Balance at end of year $14,413 14,172 12,732
</TABLE>
(6) Premises and Equipment
A summary of premises and equipment as of December 31 follows:
<TABLE>
<CAPTION>
(in thousands) 1999 1998
<S> <C> <C>
Land $ 5,428 3,338
Buildings and leasehold
improvements 34,765 33,881
Furniture and equipment 33,991 29,853
Construction in progress 1,578 324
75,762 67,396
Less accumulated depreciation 37,784 34,873
$37,978 32,523
</TABLE>
Depreciation expense included in operating expenses amounted to $5,393,000,
$4,282,000 and $3,783,000 in 1999, 1998 and 1997, respectively.
(7) Deposits
Time deposits include deposits in denominations of $100,000 or more of
$79,118,000 and $97,665,000 at December 31, 1999, and 1998, respectively.
A summary of interest expense by deposit classification follows:
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
<S> <C> <C> <C>
Demand $ 3,481 2,800 2,332
Savings 19,289 17,429 15,903
Time deposits
of $100,000 or more 4,561 4,835 4,833
Other time deposits 24,000 25,708 26,242
$51,331 50,772 49,310
</TABLE>
The Company made cash interest payments of $67,684,000, $61,964,000 and
$57,932,000 on deposits and borrowings in 1999, 1998 and 1997, respectively.
At December 31, 1999, the scheduled maturities of time deposits are as
follows:
(in thousands)
2000 $364,329
2001 92,105
2002 73,316
2003 19,805
2004 and thereafter 5,101
$554,656
(8) Income Taxes
The current and deferred income tax provisions included in the consolidated
statements of operations follow:
<TABLE>
<CAPTION>
1999 (in thousands) Current Deferred Total
<S> <C> <C> <C>
Federal $4,641 (203) 4,438
State 1,167 (40) 1,127
$5,808 (243) 5,565
______________________________________________________________________________
1998
Federal $5,301 1,512 6,813
State 1,385 (116) 1,269
$6,686 1,396 8,082
1997
Federal $6,562 (577) 5,985
State 1,411 (108) 1,303
$7,973 (685) 7,288
</TABLE>
Since the income tax returns are filed after the issuance of the financial
statements, amounts reported are subject to revision based on actual amounts
used in the income tax returns. The Company made cash income tax payments of
$3,500,000, $6,000,000 and $6,100,000 to the IRS, and $990,000, $1,510,000 and
$1,568,000 to the state of Iowa in 1999, 1998 and 1997, respectively. Cash
income tax payments for a year include estimated payments for current year
income taxes and final payments for prior year income taxes. State income tax
expense relates to state franchise taxes payable individually by the
subsidiary banks.
23 267
<PAGE>
The reasons for the difference between the amount computed by applying the
statutory federal income tax rate of 35 percent and income tax expense follow:
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
<S> <C> <C> <C>
At statutory rate $ 7,969 10,204 9,114
Increase (reduction) due to:
Tax-exempt interest (3,268) (3,169) (2,916)
State taxes, net of
federal benefit 733 825 847
Nondeductible interest expense
to own tax-exempts 635 572 536
Income on life insurance
Policies (421) (368) (252)
Other, net (83) 18 (41)
$ 5,565 8,082 7,288
</TABLE>
Accumulated deferred income tax assets are included in other assets in the
consolidated statements of condition. There was no valuation allowance at
December 31, 1999, or 1998. A summary of the temporary differences resulting
in deferred income taxes and the related tax effect on each follow:
<TABLE>
<CAPTION>
(in thousands) 1999 1998
<S> <C> <C>
Allowance for loan losses $ 5,959 5,576
Unrealized gains (losses) on
securities available for sale 3,512 (2,157)
Deposit base intangibles (373) (458)
Premises and equipment (308) (366)
Executive savings plan 690 386
Mortgage servicing rights (3,038) (2,348)
Real estate mortgage,
loan points deferred (166) (257)
Other, net (42) (53)
$ 6,234 323
</TABLE>
(9) Other Short-Term Borrowings
The Company had short-term borrowings with the Federal Home Loan Bank of Des
Moines (FHLB) totaling $110,424,000 and $87,050,000 at December 31, 1999, and
1998, respectively. The average rate on these borrowings at December 31, 1999
was 5.04 percent. These borrowings were secured by FHLB stock and residential
mortgage loans equal to 130 percent of the borrowings.
The Parent Company has arranged an unsecured line of credit of
$5,000,000, which was unused at December 31, 1999. It is at the prime
interest rate and is subject to annual review and renewal.
(10) Long-Term Borrowings
Long-term borrowings consisted of the following at December 31:
<TABLE>
<CAPTION>
(in thousands) 1999 1998
<S> <C> <C>
Capital notes, 5.50% to 10.00%
Total Parent Company $ 6,454 9,046
Borrowings from FHLB, average rate
of 5.80% at December 31, 1999 21,250 32,500
$ 27,704 41,546
</TABLE>
Borrowings from the FHLB were secured by FHLB stock and residential mortgage
loans equal to 130 percent of the borrowings and were direct obligations of
the individual subsidiaries.
Scheduled maturities of long-term borrowings at December 31, 1999 follow:
<TABLE>
<CAPTION>
Parent
(in thousands) Company Consolidated
<S> <C> <C>
2000 $ 793 793
2001 812 8,062
2002 446 446
2003 142 14,142
2004 1,328 1,328
Thereafter 2,933 2,933
$ 6,454 27,704
</TABLE>
24 268
<PAGE>
(11) Fair Value of Financial Instruments
The estimated fair values of the Company's financial instruments were as
follows:
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
_________________ _________________
Recorded Fair Recorded Fair
(in thousands) Amount Value Amount Value
_______________________________________________________________________________________
<S> <C> <C> <C> <C>
Financial assets:
Cash and due from banks $ 85,064 85,064 $ 76,460 76,460
Interest-bearing deposits with
banks 2,362 2,362 2,167 2,167
Federal funds sold and securities
purchased under agreements to
resell --- --- 6,000 6,000
Investment securities 581,393 581,542 648,211 649,195
Loans held for sale 26,201 26,201 98,147 98,147
Loans, net 1,181,574 1,176,790 1,019,382 1,029,536
Financial liabilities:
Deposits $ 1,530,083 1,537,292 $1,496,675 1,504,006
Federal funds purchased, securities
sold under agreements to
repurchase and other short-term
borrowings 277,230 277,230 242,897 242,897
Long-term borrowings 27,704 27,259 41,546 42,912
Off-balance-sheet assets
(liabilities):
Commitments to extend credit $ --- --- $ --- ---
Letters of credit --- (96) --- (100)
Interest rate floors 314 7 98 400
</TABLE>
The recorded amount of cash and due from banks and interest- bearing deposits
with banks approximates fair value.
The recorded amount of federal funds sold and securities purchased under
agreements to resell and trading account securities approximates fair value as
a result of the short-term nature of the instruments.
The estimated fair value of investment securities has been determined
using available quoted market prices for similar securities.
The estimated fair value of loans is net of an adjustment for credit
risk. For loans with floating interest rates, it is presumed that estimated
fair values generally approximate the recorded book balances. Real estate
loans secured by 1-4 family residential property were valued using trading
prices for similar pools of mortgage-backed securities. Other fixed-rate
loans were valued using a present-value discounted cash flow with a discount
rate approximating the market for similar assets.
Deposit liabilities with no stated maturities have an estimated fair
value equal to the recorded balance. Deposits with stated maturities have
been valued using a present-value discounted cash flow with a discount rate
approximating the current market for similar deposits. The fair-value
estimate does not include the benefit that results from the low-cost funding
provided by the deposit liabilities compared to the cost of borrowing funds in
the market. The Company believes the value of these depositor relationships
to be significant.
The recorded amount of the federal funds purchased, securities sold under
agreements to repurchase and short-term borrowings approximates fair value as
a result of the short-term nature of these instruments.
The estimated fair value of long-term borrowings was determined using a
present-value discounted cash flow with a discount rate approximating the
current market for similar borrowings.
The fair value of commitments to extend credit and standby letters of
credit are estimated using the fees currently charged to enter into similar
agreements.
The fair value of interest rate floor contracts is the estimated amount
that the Company would receive or pay to terminate the floor agreements at the
reporting date.
25 269
<PAGE>
(12) Regulatory Capital
The Company is subject to various regulatory capital requirements administered
by both federal and state banking agencies. Failure to comply with minimum
capital requirements could result in actions taken by regulators that could
have a direct material impact on the Company's financial statements. Under
the capital adequacy guidelines established by regulators, the Company must
meet specific capital guidelines that involve the measurement of the Company's
assets, liabilities and certain off-balance sheet items. The Company's capital
amounts and classification are also subject to qualitative judgments by the
regulators as it relates to components, risk weightings and other factors.
Quantitative measures established by regulators to ensure capital
adequacy require the Company to maintain minimum amounts and ratios (set forth
in the following table) of total and tier 1 capital to risk weighted assets
and of tier 1 capital to average assets. To be categorized as well-
capitalized, the Company must maintain minimum total risk-based, tier 1 risk-
based and tier 1 leverage ratios as set forth in the table. The Company's
actual capital amounts and ratios are also presented in the table.
<TABLE>
<CAPTION>
To Be Well-
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
________________________________________________________________________________________
Amount Ratio Amount Ratio Amount Ratio
(dollar amounts in thousands)
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1999:
Total Capital
(to Risk Weighted Assets):
Consolidated $149,630 10.18% $117,592 > 8.0% N/A
_
Brenton Bank 132,639 9.77 108,613 > 8.0 $135,766 > 10.0%
_ _
Tier 1 Capital
(to Risk Weighted Assets):
Consolidated 135,192 9.20 58,796 > 4.0 N/A
_
Brenton Bank 119,316 8.79 54,307 > 4.0 81,460 > 6.0
_ _
Tier 1 Capital
(to Average Assets):
Consolidated 135,192 6.80 59,612 > 3.0 N/A
_
Brenton Bank 119,316 6.59 72,474 > 4.0 90,592 > 5.0
_ _
</TABLE>
(13) Common Stock Transactions
In January 1998, the Company declared a 2-for-1 stock split for holders of
record as of February 10, 1998. As a result, the par value of the Company's
common stock was changed from $5.00 to $2.50 per share, the number of
outstanding shares doubled and authorized shares were increased to 50 million.
In May 1999, the Company declared a 10 percent common stock dividend. This
transaction resulted in the issuance of 1,862,366 shares of common stock and
the transfer of $4,655,915 from retained earnings to common stock. In June
1998, the Company declared a 10 percent common stock dividend. As a result of
this action, 1,726,159 shares of common stock were issued and $4,236,869 was
transferred from retained earnings to common stock. Fractional shares
resulting from both 10 percent common stock dividends were paid in cash. Net
income and cash dividends per share information in the financial statements
have been retroactively restated to reflect these transactions.
As part of the Company's ongoing stock repurchase plan, the Board of
Directors authorized additional common stock repurchases of $4 million in
1999. For the years ended December 31, 1999, 1998 and 1997, the Company
repurchased 300,624, 563,915 and 886,494 shares (restated for the 2-for-1
stock split effective February 1998 and the 10 percent common stock dividends
effective in 1999, 1998 and 1997), respectively, at a total cost of
$4,004,426, $10,000,900 and $10,014,087.
(14) Dividend Restrictions
The Parent Company derives a substantial portion of its cash flow, including
that available for dividend payments to stockholders, from the subsidiary
banks in the form of dividends. State and federal savings banks are subject to
certain statutory and regulatory restrictions that affect dividend payments.
Based on minimum regulatory risk-based capital guidelines as published by
those regulators, the maximum dividends that could be paid by the subsidiary
banks to the Parent Company at December 31, 1999, were approximately $28
million.
(15) Employee Retirement Plan
The Company provides a defined contribution retirement plan for the benefit of
employees. The plan is a combination profit sharing
26 270
<PAGE>
and 401(k) plan. All employees 21 years of age or older and employed by the
Company for at least one year are eligible for the plan. The Company
contributes 4 1/2 percent of eligible compensation of all participants to the
profit sharing portion of the plan, and matches employee contributions to the
401(k) portion of the plan up to a maximum of 3 1/2 percent of each employee's
eligible compensation. Retirement plan costs charged to operating expenses in
1999, 1998 and 1997 amounted to $1,636,000, $1,506,000 and $1,290,000,
respectively. The Company offers no material post-retirement benefits.
(16) Stock Plans
In 1996, the Company adopted the 1996 Stock Option Plan (the "Plan"), which
was approved by a vote of stockholders. During 1999, the Board of Directors
authorized a ten percent expansion of the Plan. The Plan authorizes the
granting of options on up to 1,607,100 shares of the Company's common stock to
key employees of the Company. The price at which options may be exercised
cannot be less than the fair market value of the shares at the date the
options are granted. The options are subject to certain performance vesting
requirements, but if vesting is not achieved from performance vesting, 100
percent vesting occurs nine years and six months following the grant date.
Options expire ten years and one month following the grant date. As of
December 31, 1999, 59 percent of the outstanding options have vested.
For purposes of estimating the fair value of the Company's stock options
at the grant-date, the Company's option pricing model was used with the
following weighted average assumptions for 1999, 1998 and 1997, respectively:
expected dividend yields of 2.20%, 2.06% and 2.05%; risk-free interest rates
of 6.26%, 5.55% and 6.52%; volatility factors of the expected market price of
the Company's common stock of 26.1%, 19.6% and 18.5%; and weighted average
expected life of the options of 6 years. The weighted average fair value of
options granted in 1999, 1998 and 1997, respectively, was $3.40, $4.22 and
$3.40.
The Company applies APB Opinion No. 25 in accounting for its Plan and,
accordingly, no compensation cost has been recognized for its stock options in
the financial statements. Had the Company determined compensation cost based
on the fair value at the grant date for its stock options under SFAS No. 123,
the Company's net income and earnings per share would have been reduced to the
pro forma amounts indicated below:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Net income (in thousands):
As reported $16,560 20,351 18,010
Pro forma 16,207 19,732 17,735
Basic earnings per share:
As reported $.81 .98 .85
Pro forma .79 .95 .83
Diluted earnings per share:
As reported $.80 .96 .83
Pro forma .78 .94 .82
</TABLE>
Pro forma net income reflects only options granted in 1999, 1998, 1997
and 1996. Therefore, the full impact of calculating compensation cost for
stock options under SFAS No. 123 is not reflected in the pro forma net income
amounts presented above because compensation cost is reflected over the
options' expected vesting period.
Changes in options outstanding during 1999, 1998 and 1997 were as follows
(restated for the 2-for-1 stock split effective February 1998 and the 10
percent common stock dividends effective in 1999, 1998 and 1997):
<TABLE>
<CAPTION>
Exercisable Outstanding Option Price
Options Options Per Share
<S> <C> <C> <C>
December 31, 1996 --- 1,253,270 $ 8.32-8.87
Granted - 1997 --- 105,488 10.33-13.84
Forfeited - 1997 --- (43,923) 8.32
December 31, 1997 --- 1,314,835 8.32-13.84
Granted - 1998 --- 148,940 15.00-18.81
Forfeited - 1998 --- (27,758) 8.32-16.66
Vested - 1998 473,866 --- 8.32-18.81
December 31, 1998 473,866 1,436,017 8.32-18.81
Granted - 1999 --- 120,250 10.19-14.43
Exercised - 1999 (46,072) (46,072) 8.32-11.31
Forfeited - 1999 --- (56,684) 8.32-16.66
Expired - 1999 (5,481) (5,481) 10.85-16.66
Vested - 1999 430,192 --- 8.32-18.81
December 31, 1999
(112,998 shares available
for grant) 852,505 1,448,030 $ 8.32-18.81
</TABLE>
A total of 1,023,554 shares were granted to key management personnel
under a long-term stock compensation plan. Under provisions of the plan, no
grants were made after 1995. Each grant of shares covered a three-year
performance period, 35 percent of which vested upon completion of employment
for the performance period and 65 percent of which vested based on a tiered
achievement scale tied to financial performance goals established by the Board
of Directors. The total stock compensation expense associated with this plan
was $0, $0, and $1,731,000 for 1999, 1998 and 1997, respectively. Changes in
outstanding grant shares during 1999, 1998 and 1997 were as follows (restated
for the 2-for-1 stock split effective February 1998 and the 10 percent common
stock dividends effective in 1999, 1998 and 1997):
<TABLE>
<CAPTION>
Performance 1994 to 1995 to
Period 1996 1997
<S> <C> <C>
December 31, 1996 199,850 213,963
Forfeited - 1997 --- (28,692)
Expired - 1997 (129,897) ---
Vested and Issued - 1997 (69,953) ---
December 31, 1997 --- 185,271
Vested and Issued - 1998 --- (185,271)
December 31, 1998 --- ---
Vested and Issued - 1999 --- ---
______________________________________________________________________________
Outstanding grant shares
at December 31, 1999 --- ---
</TABLE>
The Company's 1987 nonqualified stock option plan permitted the Board of
Directors to grant options on up to 878,460 shares of the Company's common
stock to officers of the Company. Under provisions of the plan, no further
grants can be made and no grants
27 271
<PAGE>
were made in 1999 or 1998. The price at which options were exercisable was
not less than the fair market value of the shares at the date the options were
granted. The options were subject to certain vesting requirements and maximum
exercise periods, as established by the Board of Directors.
Changes in options outstanding and exercisable during 1999, 1998 and 1997
were as follows (restated for the 2-for-1 stock split effective February 1998
and the 10 percent common stock dividends effective in 1999, 1998 and 1997):
<TABLE>
<CAPTION>
Exercisable Outstanding Option Price
Options Options Per Share
<S> <C> <C> <C>
December 31, 1996 290,876 290,876 $1.51-3.23
Exercised - 1997 (246,953) (246,953) 1.51-3.23
December 31, 1997 43,923 43,923 2.19
Exercised - 1998 (43,923) (43,923) 2.19
December 31, 1998 --- --- $ ---
Exercised - 1999 --- --- ---
______________________________________________________________________________
December 31, 1999 --- --- $ ---
</TABLE>
The Company's Employee Stock Purchase Plan allows qualifying employees to
purchase the Company's common stock at 85 percent of the current market price
on four defined purchase dates during the year. During 1999, 1998 and 1997,
37,132, 43,985 and 47,045 shares (restated for the 2-for-1 stock split
effective February 1998 and the 10 percent common stock dividends effective in
1999, 1998 and 1997), respectively, of common stock were purchased by
employees under this plan.
(17) Lease Commitments
Rental expense included in the consolidated statements of operations amounted
to $1,861,000, $1,849,000 and $1,963,000 in 1999, 1998 and 1997, respectively.
Future minimum rental commitments for all noncancelable leases with terms of
one year or more total approximately $1,128,000 for 2000, $612,000 per year
through 2004, $502,000 per year through 2009 and $43,000 per year through
2013, with a total commitment of $6,260,000.
(18) Commitments and Contingencies
In the normal course of business, the Company is party to financial
instruments necessary to meet the financial needs of clients, which are not
reflected on the consolidated statements of condition. These financial
instruments include commitments to extend credit, standby letters of credit,
commercial letters of credit, commitments to sell residential real estate
mortgage loans and interest rate swaps. The Company's risk exposure in the
event of nonperformance by the other parties to these financial instruments is
represented by the contractual amount of these instruments. The Company is
also a party to interest rate floor contracts, which are designated as hedges
of certain client deposit accounts with contracted minimum interest rates.
The notional amount for an interest rate floor does not represent the amount
at risk because the notional amount will not be exchanged. The Company uses
the same credit policies in making commitments as it does in making loans. A
summary of commitments outstanding at December 31 follows:
<TABLE>
<CAPTION>
(in thousands) 1999 1998
<S> <C> <C>
_____________________________________________________________________________
Commitments to extend credit $ 377,610 274,945
Standby letters of credit 19,262 19,956
Commercial letters of credit 4,048 1,751
Commitments to sell residential
real estate mortgage loans 19,375 70,690
</TABLE>
Commitments to extend credit are legally binding agreements to lend to
clients. Commitments generally have fixed expiration dates and may require
payment of a fee. Based upon management's credit assessment of the client,
collateral may be obtained. The type and amount of collateral varies, but may
include real estate under construction, property, equipment and other business
assets. In many cases, commitments expire without being drawn upon, so the
total amount of commitments does not necessarily represent future liquidity
requirements.
Standby and commercial letters of credit are conditional commitments
issued by the Company guaranteeing the financial performance of a client to a
third party. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loans. The Company does
not anticipate losses as a result of issuing commitments to extend credit,
standby letters of credit or commercial letters of credit.
The Company enters into forward contracts for future delivery of
residential mortgage loans at specified yields to reduce the interest rate
risk associated with fixed-rate residential mortgages held for sale and
commitments to sell residential mortgages. Credit risk arises from the
possible inability of the other parties to comply with the contract terms. The
majority of the Company's contracts are with government-sponsored agencies
(FNMA, FHLMC).
The Company has entered into interest rate floor agreements to manage
interest-rate risk. The notional value of agreements at December 31, 1999 was
$120,000,000 and they expire in 2002. The interest rate floor agreements
require the counterparty to pay the Company, at specified dates, the amount,
if any, by which the market interest rate falls below the agreed-upon floor,
applied to the notional principal amounts. The credit worthiness of the
counterparty was evaluated by the Company's loan committee prior to entering
into the agreements.
Brenton Savings Bank, FSB converted from a mutual savings and loan
association to a federal stock savings bank in 1990, at which time a $4
million liquidation account was established. Each eligible savings account
holder who had maintained a deposit account since the conversion would be
entitled to a distribution if the savings bank were completely liquidated.
This distribution to savers would have priority over distribution to the
Parent Company. The Company does not anticipate such a liquidation.
28 272
<PAGE>
The Company maintains a data processing agreement with ALLTEL Information
Services, Inc. (ALLTEL), whereby ALLTEL manages and operates the Company's
data processing facility. The contract involves fixed payments of $2,190,000
in 2000, $2,190,000 in 2001 and $1,095,000 in 2002. These fixed payments will
be adjusted for inflation and volume fluctuations.
The Company has entered into agreements totaling approximately $10.3
million for the construction of a new operations and sales support center.
The Company is involved with various claims and legal actions arising in
the ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's financial statements.
(19) Brenton Banks, Inc. (Parent Company) Condensed Financial Information
<TABLE>
<CAPTION>
Statements of Condition
December 31 (in thousands) 1999 1998
<S> <C> <C>
Assets
Interest-bearing deposits with banks $ 3,350 1,088
Investments in:
Bank subsidiaries 129,017 136,687
Excess cost over net assets 1,606 1,679
Premises and equipment 446 503
Other assets 4,318 4,722
________ _______
$ 138,737 144,679
Liabilities and Stockholders' Equity
Accrued expenses payable
and other liabilities $ 350 423
Long-term borrowings 6,454 9,046
Common stockholders' equity 131,933 135,210
_______ _______
$ 138,737 144,679
</TABLE>
<TABLE>
<CAPTION>
Statements of Operations
Years Ended December 31 (in thousands) 1999 1998 1997
<S> <C> <C> <C>
Income
Dividends from subsidiaries $ 16,218 16,869 14,850
Interest income 143 93 213
Other operating income 97 103 119
________ ______ ______
16,458 17,065 15,182
Expense
Compensation and benefits 526 439 2,331
Interest on borrowings 597 735 849
Other operating expense 502 613 584
________ ______ ______
1,625 1,787 3,764
Income before income taxes and
equity in undistributed earnings
of subsidiaries 14,833 15,278 11,418
Income taxes (443) (519) (1,155)
Income before equity in undistributed
earnings of subsidiaries 15,276 15,797 12,573
Equity in undistributed earnings of subsidiaries 1,284 4,554 5,437
________ ______ ______
Net income $ 16,560 20,351 18,010
</TABLE>
29 273
<PAGE>
(19) Brenton Banks, Inc. (Parent Company) Condensed Financial Information
<TABLE>
<CAPTION>
Statements of Cash Flows
Years Ended December 31 (in thousands) 1999 1998 1997
<S> <C> <C> <C>
Operating Activities
Net income $ 16,560 20,351 18,010
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in undistributed earnings of subsidiaries (1,284) (4,554) (5,437)
Depreciation and amortization 158 161 163
Net (increase) decrease in other assets 376 354 (1,962)
Net increase (decrease) in accrued expenses
payable and other liabilities (73) (3,109) 1,056
________ ______ ______
Net cash provided by operating activities 15,737 13,203 11,830
Investing Activities
Purchase of subsidiary equity, net --- (26) ---
Purchase of premises and equipment, net --- --- (8)
________ ______ ______
Net cash used by investing activities --- (26) (8)
Financing Activities
Net repayment of long-term borrowings (2,592) (1,066) (1,136)
Proceeds from issuance of common stock under the
long-term stock compensation plan --- 970 247
Proceeds from issuance of common stock under the
stock option plan 4 290 1,286
Proceeds from issuance of common stock under the
employee stock purchase plan 244 758 551
Payment for shares reacquired under common stock
repurchase plan (4,004) (10,001) (10,014)
Payment for fractional shares from common stock
dividends (14) (14) (16)
Dividends on common stock (7,113) (6,622) (4,782)
________ ______ ______
Net cash used by financing activities (13,475) (15,685) (13,864)
Net increase (decrease) in cash and interest-
bearing deposits 2,262 (2,508) (2,042)
Cash and interest-bearing deposits at the
beginning of the year 1,088 3,596 5,638
Cash and interest-bearing deposits at the end
of the year $ 3,350 1,088 3,596
</TABLE>
30 274
<PAGE>
(20) 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 Company accounts for intercompany sales and transactions as if they
were to third parties and attempts to set fees consistent with those that would
apply in an arm's length transaction with a nonaffiliate. There can be no
assurance the rates charged reflect those that would have been agreed upon
following an arm's length transaction. The following table presents a
summary of the Company's operating segments for the three years ended December
31, 1999:
<TABLE>
<CAPTION>
All Parent Intersegment Reported
Banking Other Company Eliminations Balances
(in thousands)
_________________________________________________________________________________________
1999
_________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Net income income $ 61,418 1,635 (454) --- 62,599
Noninterest income from
nonaffiliates 19,017 10,685 92 --- 29,794
Noninterest income from
affiliates 155 --- 16,223 (16,378) ---
Income before income taxes
and minority interest 23,536 618 14,833 (16,218) 22,769
Income taxes 5,789 219 (443) --- 5,565
Depreciation & amortization 5,438 326 158 (5) 5,917
Capital expenditures 10,316 540 --- --- 10,856
Segment assets 1,923,822 66,064 138,737 (143,168) 1,985,455
</TABLE>
<TABLE>
<CAPTION>
1998
_________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Net income income $ 61,112 917 (642) --- 61,387
Noninterest income from
nonaffiliates 17,649 15,621 103 (15) 33,358
Noninterest income from
affiliates 296 --- 16,869 (17,165) ---
Income before income taxes
and minority interest 26,227 4,517 15,278 (16,869) 29,153
Income taxes 7,030 1,571 (519) --- 8,082
Depreciation & amortization 4,274 254 161 (6) 4,683
Capital expenditures 7,311 601 --- --- 7,912
Segment assets 1,885,617 117,268 144,679 (208,007) 1,939,557
</TABLE>
<TABLE>
<CAPTION>
1997
_________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Net income income $ 60,333 437 (636) --- 60,134
Noninterest income from
nonaffiliates 15,864 11,560 119 (37) 27,506
Noninterest income from
affiliates 286 67 14,850 (15,203) ---
Income before income taxes
and minority interest 26,534 2,939 11,418 (14,850) 26,041
Income taxes 7,420 1,023 (1,155) --- 7,288
Depreciation & amortization 3,803 255 163 (4) 4,217
Capital expenditures 2,407 112 8 --- 2,527
Segment assets 1,701,495 24,933 143,023 (150,967) 1,718,484
__________________________________________________________________________________________
</TABLE>
The following table shows the detail of intersegement eliminations for segment
assets shown in the previous table:
<TABLE>
<CAPTION>
1999 1998 1997
_____________________________________________________
(in thousands)
<S> <C> <C> <C>
Investment in subsidiaries $130,869 138,539 133,860
Other consolidating adjustments 12,299 69,468 17,107
_______ _______ _______
$143,168 208,007 150,967
</TABLE>
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<PAGE>
(21) Unaudited Quarterly Financial Information
The following is a summary of unaudited quarterly financial information
(in thousands, except per common share data):
<TABLE>
<CAPTION>
1999
Three months ended March 31 June 30 Sept. 30 Dec. 31
<S> <C> <C> <C> <C>
Interest income $ 31,271 31,425 32,511 33,772
Interest expense 16,020 16,094 16,912 17,354
_______ ______ ______ ______
Net interest income 15,251 15,331 15,599 16,418
Provision for loan losses 1,050 1,050 1,050 1,100
_______ ______ ______ ______
Net interest income after
provision for loan losses 14,201 14,281 14,549 15,318
Noninterest income 7,795 8,247 6,744 7,008
Noninterest expense 15,661 16,712 16,577 16,424
_______ ______ ______ ______
Income before income taxes
and minority interest 6,335 5,816 4,716 5,902
Income taxes 1,589 1,430 1,062 1,484
Minority interest 168 157 152 167
_______ ______ ______ ______
Net income $ 4,578 4,229 3,502 4,251
Per common share:
Net income-basic $ .22 .21 .17 .21
Net income-diluted .22 .20 .17 .21
</TABLE>
<TABLE>
<CAPTION>
1998
Three months ended March 31 June 30 Sept. 30 Dec. 31
<S> <C> <C> <C> <C>
Interest income $ 30,320 30,693 31,190 31,823
Interest expense 15,056 15,428 15,930 16,225
_______ ______ ______ ______
Net interest income 15,264 15,265 15,260 15,598
Provision for loan losses 1,050 1,050 1,050 1,050
_______ ______ ______ ______
Net interest income after
provision for loan losses 14,214 14,215 14,210 14,548
Noninterest income 7,487 8,106 8,549 9,216
Noninterest expense 14,908 15,154 15,172 16,158
_______ ______ ______ ______
Income before income taxes
and minority interest 6,793 7,167 7,587 7,606
Income taxes 1,907 1,994 2,101 2,080
Minority interest 167 178 190 185
_______ ______ ______ ______
Net income $ 4,719 4,995 5,296 5,341
Per common share:
Net income-basic $ .22 .24 .26 .26
Net income-diluted .22 .23 .25 .26
</TABLE>
32 276
<PAGE>
MANAGEMENT'S REPORT
The management of Brenton Banks, Inc. is responsible for the content of
the consolidated financial statements and other information included in this
annual report. Management believes that the consolidated financial statements
have been prepared in conformity with generally accepted accounting principles
appropriate to reflect, in all material respects, the substance of events and
transactions that should be included. In preparing the consolidated financial
statements, management has made judgments and estimates of the expected effects
of events and transactions that are accounted for or disclosed.
Management of the Company believes in the importance of maintaining a
strong internal accounting control system, which is designed to provide
reasonable assurance that assets are safeguarded and transactions are
appropriately authorized. The Company maintains a staff of qualified internal
auditors who perform periodic reviews of the internal accounting control
system. Management believes that the internal accounting control system
provides reasonable assurance that errors or irregularities that could be
material to the consolidated financial statements are prevented or detected and
corrected on a timely basis.
The Board of Directors has established an Audit Committee to assist in
assuring the maintenance of a strong internal accounting control system. The
Audit Committee meets periodically with management, the internal auditors and
the independent auditors to discuss the internal accounting control system and
the related internal and external audit efforts. The internal auditors and the
independent auditors have free access to the Audit Committee without management
present.
The consolidated financial statements of Brenton Banks, Inc. and
subsidiaries are examined by independent auditors. Their role is to render an
opinion on the fairness of the consolidated financial statements based upon
audit procedures they consider necessary in the circumstances.
Brenton Banks, Inc.
Robert L. DeMeulenaere
President and Chief Executive Officer
Steven T. Schuler
Chief Financial Officer/Treasurer/Secretary
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of Brenton Banks, Inc:
We have audited the accompanying consolidated statements of condition of
Brenton Banks, Inc. and subsidiaries as of December 31, 1999, and 1998, and the
related consolidated statements of operations, cash flows, changes in common
stockholders' equity and comprehensive income for each of the years in the
three-year period ended December 31, 1999. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Brenton
Banks, Inc. and subsidiaries at December 31, 1999, and 1998, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1999, in conformity with generally accepted
accounting principles.
KPMG LLP
Des Moines, Iowa
January 28, 2000
33 277
<PAGE>
STOCK INFORMATION
Brenton Banks, Inc. common stock is traded on the NASDAQ Stock Market and
quotations are furnished by the NASDAQ System. There were 2,095 common
stockholders of record on December 31, 1999.
<TABLE>
<CAPTION>
MARKET AND DIVIDEND INFORMATION
1999 High Low Dividends
<S> <C> <C> <C> <C>
1st quarter $15.91 11.82 .086
2nd quarter 17.25 12.55 .086
3rd quarter 17.00 11.63 .087
4th quarter 15.00 9.00 .087
</TABLE>
<TABLE>
<CAPTION>
1998 High Low Dividends
<S> <C> <C> <C> <C>
1st quarter $18.18 14.87 .070
2nd quarter 19.09 16.74 .079
3rd quarter 22.05 16.59 .082
4th quarter 17.39 14.32 .086
</TABLE>
The above table sets forth the high and low sales prices and cash dividends
per share for the Company's common stock, after the effect of the
February 1998 2-for-1 stock split and June 1999 and June 1998 ten percent
common stock dividends.
The market quotations, reported by NASDAQ, represent prices between dealers
and do not include retail markup, markdown or commissions.
NASDAQ Symbol: BRBK
Wall Street Journal and
Other Newspapers: BrentB
Market Makers
ABN AMRO Incorporated
Herzog, Heine, Geduld, Inc.
Howe, Barnes Investments, Inc.
Keefe, Bruyette & Woods, Inc.
Sandler, O'Neill & Partners, L.P.
Stifel, Nicolaus & Co., Inc.
FORM 10-K
COPIES OF BRENTON BANKS, INC. ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION FORM 10-K WILL BE MAILED WHEN AVAILABLE WITHOUT CHARGE TO
SHAREHOLDERS UPON WRITTEN REQUEST TO STEVEN T. SCHULER, CHIEF FINANCIAL
OFFICER/TREASURER/SECRETARY, AT THE CORPORATE HEADQUARTERS. IT IS ALSO
AVAILABLE ON THE SECURITIES AND EXCHANGE COMMISSION'S INTERNET WEB SITE AT
HTTP://WWW.SEC.GOV/CGI-BIN/SRCH-EDGAR.
STOCKHOLDER INFORMATION
Corporate Headquarters
Suite 200, Capital Square
400 Locust Street
Des Moines, Iowa 50309
Telephone 800/627-3686
Annual Shareholders' Meeting
Wednesday, May 17, 2000, 5:00 p.m.
Polk County Convention Complex
501 Grand Avenue
Des Moines, Iowa 50309
Transfer Agent/Registrar/
Dividend Disbursing Agent
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, Illinois 60606
Legal Counsel
Brown, Winick, Graves, Gross,
Baskerville and Schoenebaum, P.L.C.
Suite 1100, Two Ruan Center
601 Locust Street
Des Moines, Iowa 50309
Independent Auditors
KPMG LLP
2500 Ruan Center
666 Grand Avenue
Des Moines, Iowa 50309
34 278
<PAGE>
CORPORATE STRUCTURE
BRENTON BANKS, INC.
BOARD OF DIRECTORS
C. Robert Brenton
Chairman of the Board
Brenton Banks, Inc.
William H. Brenton
Past Chairman and President
Brenton Banks, Inc.
J.C. Brenton
Past President
Brenton Banks, Inc.
Robert C. Carr
Retired
Gary M. Christensen
President & CEO
Pella Corporation
Robert J. Currey
President
21st Century Telecom Group, Inc.
Robert L. DeMeulenaere
President and Chief Executive Officer
Brenton Banks, Inc.
BRENTON BANKS, INC.
EXECUTIVE OFFICERS
C. Robert Brenton
Chairman of the Board
Robert L. DeMeulenaere
President and Chief Executive Officer
Steven T. Schuler
CFO/Treasurer/Secretary
BRENTON BANK SENIOR SALES
SUPPORT OFFICERS
Robert L. DeMeulenaere
Chairman and Chief Executive Officer
Larry A. Mindrup
President
Phillip L. Risley
Executive Vice President
Steven T. Schuler
CFO/Treasurer/Secretary
Judy S. Bohrofen
Human Resources Director
Woodward G. Brenton
Chief Commercial Banking Officer
Gregory M. Cole
Loan Development Center Director
W. Bradley Cunningham
Investment/ALCO Director
Marsha A. Findlay
Professional Development Director
Douglas R. Gulling
Corporate Controller/Cashier
Monica L. Haun
Operations and Technology Director
Douglas F. Lenehan
Chief Sales Officer
Catherine I. Reed
Marketing Director
Norman D. Schuneman
Chief Credit Officer
BRENTON LINE OF BUSINESS
AND REGIONAL BANK
MANAGERS
Woodward G. Brenton
Mortgage Banking
Douglas F. Lenehan
Diversified Commercial Services
David W. Mackaman
Commercial Banking
Larry A. Mindrup
Retail Banking
Elizabeth M. Piper/Bach
Financial Services
Allen W. Shafer
Business Banking
Thomas J. Vincent
Agricultural Banking
Charles N. Funk
Central Regional Manager
Dennis H. Hanson
East Central Regional Manager
G. Darryl Harmon
Davenport/Moline Regional Manager
Ronald D. Larson
Cedar Rapids/Iowa City Regional
Manager
Marc J. Meyer
Western Regional Manager
35 279
<PAGE>
Exhibit 21
Subsidiaries.
280
<PAGE>
Subsidiaries
The subsidiaries of Brenton Banks, Inc., their location, the jurisdiction in
which they are incorporated or organized, and the names under which
subsidiaries do business are:
Name Under which Subsidiary Jurisdiction in
Does Business and Location which Incorporated or
of Subsidiary Organized
Banks
Brenton Savings Bank, FSB United States
Ames, Iowa
Brenton Bank Iowa
Des Moines, Iowa
Non-Bank Subsidiaries
Brenton Investments, Inc. Iowa
Des Moines, Iowa
Brenton Insurance Services, Inc. Iowa
Des Moines, Iowa
Brenton Mortgages, Inc. Iowa
Des Moines, Iowa
Brenton Insurance Inc. Iowa
Adel, Iowa
Brenton Realty Services, Ltd. Iowa
Marshalltown, Iowa
Brenton Savings Financial Services, Inc. Iowa
Ames, Iowa
281
<PAGE>
Exhibit 23
Consent of KPMG LLP to the incorporation of their report dated January
28, 2000, relating to certain consolidated financial statements of
Brenton Banks, Inc. into the Registration Statement on Form S-8 of
Brenton Banks, Inc.
282
<PAGE>
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Brenton Banks, Inc.:
We consent to incorporation by reference in the registration statement
No. 333-71331 on Form S-8 of Brenton Banks, Inc. of our report dated
January 28, 2000, relating to the consolidated statements of condition
of Brenton Banks, Inc. and subsidiaries as of December 31, 1999 and 1998,
and the related consolidated statements of operations, comprehensive
income, changes in common stockholders' equity and cash flows for each
of the years in the three-year period ended December 31, 1999, which
report appears in the December 31, 1999, annual report on Form 10-K of
Brenton Banks, Inc.
/s/ KPMG LLP
KPMG LLP
Des Moines, Iowa
March 28, 2000
283
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
DECEMBER 31, 1999 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 85,064,053
<INT-BEARING-DEPOSITS> 2,361,784
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 556,191,355
<INVESTMENTS-CARRYING> 25,201,876
<INVESTMENTS-MARKET> 25,351,000
<LOANS> 1,195,986,791
<ALLOWANCE> (14,413,104)
<TOTAL-ASSETS> 1,985,454,701
<DEPOSITS> 1,530,083,303
<SHORT-TERM> 277,230,026
<LIABILITIES-OTHER> 18,503,921
<LONG-TERM> 27,704,000
0
0
<COMMON> 50,886,135
<OTHER-SE> 81,047,316
<TOTAL-LIABILITIES-AND-EQUITY> 1,985,454,701
<INTEREST-LOAN> 94,493,565
<INTEREST-INVEST> 33,963,262
<INTEREST-OTHER> 522,216
<INTEREST-TOTAL> 128,979,043
<INTEREST-DEPOSIT> 51,330,450
<INTEREST-EXPENSE> 66,379,906
<INTEREST-INCOME-NET> 62,599,137
<LOAN-LOSSES> 4,250,000
<SECURITIES-GAINS> 215,640
<EXPENSE-OTHER> 66,017,871
<INCOME-PRETAX> 22,124,922
<INCOME-PRE-EXTRAORDINARY> 22,124,922
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,560,117
<EPS-BASIC> .81
<EPS-DILUTED> .80
<YIELD-ACTUAL> 3.50
<LOANS-NON> 7,259,000
<LOANS-PAST> 1,794,000
<LOANS-TROUBLED> 399,000
<LOANS-PROBLEM> 950,000
<ALLOWANCE-OPEN> 14,172,264
<CHARGE-OFFS> 6,404,068
<RECOVERIES> 2,394,908
<ALLOWANCE-CLOSE> 14,413,104
<ALLOWANCE-DOMESTIC> 14,413,104
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
