-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Pgs4/lmOjwIoF1pzuS9XjRHRhV9fJpI3E0MqAJUisjhzecJnGP6LrOHqA8GT+AEw AbYHGhjSpFdsdf62v4BIBA== 0000916131-94-000015.txt : 19940330 0000916131-94-000015.hdr.sgml : 19940330 ACCESSION NUMBER: 0000916131-94-000015 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 28 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRENTON BANKS INC CENTRAL INDEX KEY: 0000014060 STANDARD INDUSTRIAL CLASSIFICATION: 6022 IRS NUMBER: 420658989 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 000-06216 FILM NUMBER: 94518440 BUSINESS ADDRESS: STREET 1: 400 LOCUST ST STREET 2: STE 300 CAPITAL SQ CITY: DES MOINES STATE: IA ZIP: 50309 BUSINESS PHONE: 5152375100 10-K 1 BRENTON BANKS, INC. SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended Commission file number 0-6216 December 31, 1993 BRENTON BANKS, INC. Incorporated in Iowa I.R.S. Employer Identification No. 42-0658989 SUITE 300, CAPITAL SQUARE, 400 LOCUST, DES MOINES, IOWA 50309 Registrant's telephone number, including area code: 515-237-5100 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered None None Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, $5 PAR VALUE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [ X ] The aggregate market value of the voting stock held by non-affiliates of the registrant as of March 14, 1994, was $85,120,000. Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the most recent practicable date, March 14, 1994. 5,254,351 shares Common Stock, $5 par value DOCUMENTS INCORPORATED BY REFERENCE The Annual Report to Shareholders for the 1993 calendar year is incorporated by reference into Part I and Part II hereof to the extent indicated in such Parts. The definitive proxy statement of Brenton Banks, Inc. which will be filed not later than 120 days after the close of the Company's fiscal year ending December 31, 1993, is incorporated by reference into Part III hereof to the extent indicated in such Part. 32 Total Pages 1 TABLE OF CONTENTS PART I Page Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . 4 (A) General Description . . . . . . . . . . . . . . . . 4 (B) Recent Developments . . . . . . . . . . . . . . . . 4 (C) Affiliated Banks . . . . . . . . . . . . . . . . . 5 (D) Bank-Related Subsidiaries and Affiliates . . . . . 6 (E) Executive Officers of the Registrant . . . . . . . 7 (F) Employees . . . . . . . . . . . . . . . . . . . . . 8 (G) Supervision and Regulation . . . . . . . . . . . . 8 (H) Governmental Monetary Policy and Economic Conditions . . . . . . . . . . . . . . . . . . . . 10 (I) Competition . . . . . . . . . . . . . . . . . . . . 10 (J) Statistical Disclosure . . . . . . . . . . . . . . 12 Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . 25 Item 8. Financial Statements and Supplementary Data . . . . . . 26 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . 26 2 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 . . . . . . . . . . . . . . . . . . 26 Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 3 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, 1993, the Parent Company had direct control of its 13 affiliated banks and 1 savings bank (hereinafter the "affiliated banks"), all of which are located in Iowa, 5 of which are national banks organized under the laws of the United States, 8 of which are state banks incorporated under the laws of the State of Iowa, and 1 of which is a federal savings bank organized under the laws of the United States. On December 31, 1993, the affiliated banks were operating 42 banking locations in Iowa. All of the affiliated banks are members of the Federal Deposit Insurance Corporation and all of the affiliated national banks are members of the Federal Reserve System. Brenton Banks, Inc. and its subsidiaries (the "Company") engages in retail and commercial banking and related financial services. In connection with this banking industry segment, the Company renders the usual products and services of retail and commercial banking such as deposits, commercial loans, personal loans, and trust services. The principal service rendered by the Company consists of making loans. The principal markets for these loans are businesses and individuals. These loans are made at the offices of the affiliated banks and subsidiaries, and some are sold on the secondary market. The Company also engages in activities that are closely related to banking, including mortgage banking and investment brokerage. The Parent Company furnishes specialized services to its affiliated banks and subsidiaries including supervision, administration and review of loan portfolios; administration of investment portfolios, insurance programs and employee benefit plans; performance of examinations and audits; preparation of tax returns; and assistance with respect to accounting and operating systems and procedures, personnel, marketing, trust, investment brokerage services and banking facilities and equipment. Charges for the services are based on the nature and extent of the services provided. (B) Recent Developments. Management Changes. Robert L. DeMeulenaere was elected President and Director of Brenton Banks, Inc. at the January 19, 1994 Board of Director's meeting. He succeeds J.C. Brenton as President. J.C. Brenton continues as Director of Brenton Banks, Inc. Robert L. DeMeulenaere joined the organization in 1964 at the Davenport bank. In 1972, he moved to the Cedar Rapids bank as Executive Vice President and in 1982 became President. In 1985, he moved to Des Moines as Senior Vice President-Metro Bank Division, and also became President of Brenton Mortgages, Inc. in 1988. He returned to Cedar Rapids in 1990 as CEO of the Cedar Rapids bank as a result of a major acquisition. In 1994, he returned to Des Moines to assume his new responsibilities as President of Brenton Banks, Inc. Accounting Standards. Effective December 31, 1993, the Company adopted the Statement of Financial Accounting Standards No. 115. Under this new accounting standard, the method of classifying investment securities is based on the Company's intended holding period. Accordingly, securities which the Company may sell at its discretion prior to maturity are recorded at their fair value. Additionally, the aggregate unrealized net gains or losses, including the effect of income tax and minority interest, are recorded as a component of common stockholders' equity. At December 31, 1993, aggregate unrealized gains totaled $3,036,270. Weather-Related Concerns. Parts of Iowa experienced record flooding during the summer of 1993, but the state's economy did not falter and most Iowans rebounded quickly. The flood had a varied impact in both metropolitan and agricultural areas of the state. Only a few of the businesses served by Brenton 4 were affected by the flood. In some areas, crop production was reduced 25 to 35 percent from flooding, as well as excessive rainfall and fewer days of sunshine; other areas were less severely impacted. Due to the strength of Brenton's borrowers, multi-peril crop insurance, disaster assistance, and government guarantees, Brenton anticipates that the flood will have very little impact on its loan portfolio quality. Growth and Acquisitions. As part of management's strategic growth plans, Brenton Banks, Inc. investigates acquisition opportunities which strengthen the Company's presence in current or selected new market areas. During 1994, the Company intends to continue to expand both its traditional and non-traditional services. Brenton intends to expand its mortgage banking business in 1994, by expanding mortgage origination and centralizing secondary market operations. Also in early 1994, Brenton purchased an insurance agency in the Tama/Toledo, Iowa area. The intention is to expand the Tama/Toledo location to include a loan production office. The Company also intends to open a loan production and investment brokerage office in Newton, Iowa, as well as a retail Brokerage location in downtown Des Moines. On October 1, 1992, Brenton Banks, Inc. merged with Ames Financial Corporation and acquired its wholly-owned subsidiary, Ames Savings Bank, FSB, of Ames, Iowa whose name has since been changed to Brenton Savings Bank, FSB. The institution continues to operate as a federal savings bank, requiring Brenton Banks, Inc. to also register as a savings and loan holding company. As a savings and loan holding company, Brenton Banks, Inc. is required to file certain reports with and be regulated by the Office of Thrift Supervision. See Supervision and Regulation. Late in 1993, Brenton Savings Bank received approval to open a new banking office in Ankeny, Iowa. In addition, the Brenton Savings Bank, FSB has applied to open a banking office in Iowa City, Iowa. Both Ankeny and Iowa City are rapidly expanding markets not presently served by Brenton. Other. The information appearing on pages 2 through 8 of the Company's Annual Report to Stockholders for the year ended December 31, 1993 (the "Annual Report") filed as Exhibit 13, is incorporated by reference. (C) Affiliated Banks. The 14 affiliated banks had 42 banking locations at December 31, 1993, located in 12 of Iowa's 99 counties. These banks serve both agricultural and metropolitan areas. The location and certain other information about the affiliated banks are given below: Brenton Bank, N.A., Des Moines is located in the Des Moines, Iowa, metropolitan area. Des Moines is the largest city in Iowa and the population of the metropolitan area is approximately 393,000. In addition to their main banking office, Brenton Bank, N.A., Des Moines has eight offices. All of these offices are located in the Des Moines metropolitan area. Brenton Bank and Trust Company, Adel, is located in Adel, Iowa. The bank has offices in Dexter, Redfield and Van Meter, Iowa. Brenton State Bank, Dallas Center, is located in Dallas Center, Iowa and has offices in Granger, Woodward and Waukee, Iowa. These two affiliated banks service customers in parts of Polk, Dallas, Madison, Adair, Guthrie, and Boone counties. Warren County Brenton Bank and Trust is located in Indianola, Iowa, and services customers in parts of Polk, Warren, Madison, Marion, Lucas and Clarke counties. Brenton National Bank of Perry is located in Perry, Iowa and services parts of Dallas, Boone, Guthrie and Greene counties. Brenton State Bank of Jefferson is located in Jefferson, Iowa. This affiliated bank services customers in Greene County. 5 Brenton Bank of Palo Alto County is located in Emmetsburg, Iowa and has offices in Mallard and Ayrshire, Iowa. This affiliated bank services Palo Alto County. Brenton Bank and Trust Company, Clarion, is located in Clarion, Iowa, and has offices in Eagle Grove and Rowan, Iowa. This affiliated bank services customers in parts of Wright, Humboldt and Webster counties. Brenton First National Bank, Davenport, is located in Davenport, Iowa and services customers in the Quad-Cities metropolitan area with a population of approximately 351,000. The bank has four offices in Davenport. Brenton National Bank-Poweshiek County is located in Grinnell, Iowa and services parts of Poweshiek and Jasper counties. Brenton Bank and Trust Company, Marshalltown, Iowa is located in Marshalltown, Iowa and has one office in Marshalltown and one office in Albion, Iowa. The bank services customers in Marshall County. Brenton Bank and Trust Company of Cedar Rapids is located in Cedar Rapids, Iowa and services customers in Linn County, population of approximately 169,000. The bank has three offices in Cedar Rapids and one office in Marion, Iowa. Brenton Bank, N.A. Knoxville is located in Knoxville, Iowa. The bank services customers of Marion County south of the Des Moines river. Brenton Savings Bank, FSB is located in Ames, Iowa and has one office in Ames and one office in Story City. The savings bank serves customers in Story County. At December 31, 1993, four of the affiliated banks owned and operated insurance agencies handling group, fire, crop, homeowner's, automobile and liability insurance. One of the affiliated banks operates insurance agency activities through a corporate subsidiary and three of the affiliated banks conduct the activities directly. In addition, two of the affiliated banks own and operate real estate agencies. One of the affiliated banks operates real estate agency activities through a corporate subsidiary, while the other bank conducts the activities directly. The total commissions from the insurance and real estate agencies are not substantial in relation to total other receipts of any of the affiliated banks owning these agencies. (D) Bank-Related Subsidiaries and Affiliates. Brenton Brokerage Services, Inc., a wholly owned subsidiary of Brenton Bank, N.A., Des Moines, was formed in 1992 and provides a full array of retail investment brokerage services to customers. The company is not involved with the direct issuance, floatation, underwriting or public sale of securities. At December 31, 1993, this subsidiary had 25 licensed brokers serving all Brenton banks. Brenton Bank Services Corporation, a bank services company owned by the affiliated banks, provides centralized accounting, operations and financial reporting services; and coordinates centralized proof services and the computer processing services for the Company. Brenton Mortgages, Inc., a wholly-owned subsidiary of the Parent Company, engages in the mortgage servicing business. This subsidiary services numerous mortgage loans sold to institutional investors and the mortgage loan portfolios of the affiliated banks. Brenton Insurance Services, Inc., a wholly-owned subsidiary of the Parent Company, provides insurance risk management services for the Company. Brenton Properties, Inc., a wholly-owned subsidiary of the Parent Company, owned an office building in Cedar Rapids, Iowa, part of which was leased to Brenton Bank and Trust Company of Cedar 6 Rapids for its main banking facility. Brenton Properties, Inc. was dissolved in 1993, when the building was sold to Brenton Bank and Trust Company of Cedar Rapids. (E) Executive Officers of the Registrant. The term of office for the executive officers of the Parent Company is from the date of election until the next Annual Organizational Meeting of the Board of Directors. The names and ages of the executive officers of the Parent Company as of March 14, 1994, the Parent Company offices held by these executive officers on that date, the period during which the executive officers have served as such and the other positions held with the Company by these officers during the past five years are set forth below and on the following page:
Parent Company Position Name and Address Age Position Commenced Other Positions ________________ ___ ________ _________ _______________ C. Robert Brenton 63 Chairman of the Board 1990 President of the Parent Company - prior to Des Moines, Iowa May 1990 William H. Brenton 69 Chairman of the 1990 Chairman of the Board of the Parent Company - Des Moines, Iowa Executive Committee prior to May 1990 and Vice Chairman of the Board Robert L. DeMeulenaere 54 President 1994 President/Treasurer, Brenton Mortgages, Inc. Des Moines, Iowa - August 1989 to present; CEO, Brenton Bank and Trust Company of Cedar Rapids - August 1990 to January 1994; Senior Vice President of the Parent Company - August 1990 to January 1994; Senior Vice President-Metro Bank Division of the Parent Company - February 1986 to January 1990. Phillip L. Risley 51 Executive Vice 1992 President and CEO, Brenton Bank, N.A., Des Moines, Iowa President Des Moines - February 1990 to present; Vice President - Operations of the Parent Company - May 1984 to January 1992; Chairman of the Board, Brenton Bank Services Corporation - May 1992 to present; Executive Vice President/Treasurer, Brenton Information Systems, Inc. - April 1990 to May 1992; President, Brenton Information Systems, Inc. - prior to April 1990; President, Brenton Bank, N.A., Des Moines - April 1988 to February 1990 Roger D. Winterhof 48 Senior Vice President - 1984 Des Moines, Iowa Community Bank Division Norman D. Schuneman 51 Senior Vice President - 1990 Executive Vice President, Brenton Bank, N.A., Des Moines, Iowa Lending Des Moines - July 1985 to present; Vice President - Loans of the Parent Company - January 1988 to January 1990 Saulene M. Richer 47 Senior Vice President - 1990 President, Brenton Information Systems, Inc. - Des Moines, Iowa Marketing/Technology April 1990 to May 1992 John R. Amatangelo 44 Senior Vice President - 1991 President, Brenton Bank Services Corporation Des Moines, Iowa Operations - May 1992 to present Steven T. Schuler 42 Chief Financial Officer 1990 Executive Vice President, Brenton Bank Des Moines, Iowa and Vice President/ 1983 Services Corporation - May 1992 to present Treasurer/Secretary 1986
7
Parent Company Position Name and Address Age Position Commenced Other Positions ________________ ___ ________ _________ _______________ Gary D. Ernst 50 Vice President - Trust 1990 Des Moines, Iowa Steven F. Schneider 40 Vice President- 1990 President, Brenton Brokerage Services, Inc. - Des Moines, Iowa Brokerage Services April 1993 to present
All of the foregoing individuals have been employed by the Company for the past five years, except for Steven F. Schneider, who was an Investment Representative of A.G. Edwards & Sons, Inc., Des Moines, Iowa, prior to February 1990; John R. Amatangelo, who was Senior Vice President and Director of Operations of Ameritrust Indiana Corporation, Indianapolis, Indiana, from May 1989 to August 1991, Senior Vice President and General Manager, Banking Office Support and ATM Administration of MCorp, Dallas, Taxes from September 1988 to May 1989, and Executive Vice President of MBank Brownsville, N.A., Brownsville, Texas, prior to September 1988; Saulene M. Richer, who was the Opportunity Development Director of I.B.M Corporation, Chicago, Illinois from February 1989 to March 1990, and Branch Manager of I.B.M. Corporation, Des Moines, Iowa, prior to February 1989; and Gary D. Ernst, who was Senior Vice President/Senior Trust Officer of First National Bank, Iowa City, Iowa, from November 1989 to June 1990, President of Massachusetts Fidelity Trust Company, Cedar Rapids, Iowa from May 1988 to November 1989, and Senior Vice President/Senior Trust Officer of Peoples Bank and Trust Company, Cedar Rapids, Iowa, prior to May 1988. (F) Employees. On December 31, 1993, the Parent Company had 47 full-time employees and 4 part-time employees. On December 31, 1993, the Company had 661 full- time employees and 187 part-time employees. None of the employees of the Company are represented by unions. The relationship between management and employees of the Company is considered good. (G) Supervision and Regulation. The Company (Brenton Banks, Inc. and its subsidiaries) is restricted by various regulatory bodies as to the types of activities and businesses in which it may engage. References to the provisions of certain statutes and regulations are only brief summaries thereof and are qualified in their entirety by reference to those statutes and regulations. The Parent Company cannot predict what other legislation may be enacted or what regulations may be adopted, or, if enacted or adopted, the effect thereof. The Parent Company, as a bank holding company, is subject to regulation under the Bank Holding Company Act of 1956 (the "Act") and is registered with the Board of Governors of the Federal Reserve System. Under the Act, the Parent Company is prohibited, with certain exceptions, from acquiring direct or indirect ownership or control of more than 5% of the voting shares of any company which is not a bank and from engaging in any business other than that of banking, managing and controlling banks or furnishing services to its affiliated banks, except that the Parent Company may engage in and may own shares of companies engaged in certain businesses found by the Board of Governors to be so closely related to banking "as to be a proper incident thereto." The Act does not place territorial restrictions on the activities of bank-related subsidiaries of bank holding companies. The Parent Company is required by the Act to file periodic reports of its operations with the Board of Governors and is subject to examination by the Board of Governors. Under the Act and the regulations of the Board of Governors, bank holding companies and their subsidiaries are prohibited from engaging in certain tie-in arrangements in connection with any extension of credit or provision of any property or services. As a savings and loan holding company, Brenton Banks, Inc. is subject to federal regulation and examination by the Office of Thrift Supervision (the "OTS"). The OTS has enforcement authority over the Company. This authority permits the OTS to restrict or prohibit activities that are determined to be a serious risk to the subsidiary savings institution. Generally, the activities for a bank holding company are more limited than the authorized activities for a savings and loan holding company. The Parent Company, its affiliated banks and its bank-related subsidiaries are affiliates within the meaning of the Federal Reserve Act and OTS regulations. As affiliates, they are subject to certain restrictions on loans by an affiliated bank to the Parent Company, other affiliated banks or such other 8 subsidiaries, on investments by an affiliated bank in their stock or securities and on an affiliated bank taking such stock and securities as collateral for loans to any borrower. The Company is also subject to certain restrictions with respect to direct issuance, flotation, underwriting, public sale or distribution of certain securities. The five affiliated banks which are national banks are subject to the supervision of and are regularly examined by the Comptroller of the Currency. All other affiliated state banks are subject to the supervision of and are regularly examined by the Iowa Superintendent of Banking and, because of their membership in the Federal Deposit Insurance Corporation (the "FDIC"), are subject to examination by the FDIC. All banks are required to maintain certain minimum capital ratios established by their primary regulators. The provisions of the FDIC Improvement Act (the "FDICA") restrict the activities that insured state chartered banks may engage in to those activities that are permissible for national banks, except where the FDIC determines that the activity poses no significant risk to the deposit insurance fund and the bank remains adequately capitalized. Furthermore, the FDICIA grants the FDIC the power to take prompt regulatory action against certain undercapitalized and seriously undercapitalized institutions in order to preserve the deposit insurance fund. The affiliated savings bank is subject to the supervision of and is regularly examined by the OTS and FDIC. In addition to the fees charged to by the FDIC, the savings bank is assessed fees by the OTS based upon the savings bank's total assets. As a savings institution, the savings bank is a member of the Federal Home Loan Bank of Des Moines, must maintain certain minimum capital ratios established by the OTS and is required to meet a qualified thrift lender test (the "QTL") to avoid certain restrictions upon its operations. On December 31, 1993, Brenton Savings Bank, FSB, complied with the current minimum capital guidelines and met the QTL test, which it has always met since the test was implemented. The Company operates within a regulatory structure that continuously evolves. In the last several years, significant changes have occurred that affect the Company. The material provisions of these changes follow. The FDIC Improvement Act of 1991 (the "FDICIA") was primarily designed to recapitalize the FDIC's Bank Insurance Fund (the "BIF") and Savings Association Insurance Fund (the "SAIF"). To accomplish this purpose the FDIC was: (1) granted additional borrowing authority; (2) granted the power to levy emergency special assessments on all insured depository institutions; (3) granted the right to change the BIF and SAIF rates on deposits on a semiannual basis; and (4) directed to draft regulations that would provide for "Risk-Based Assessment System" by January 1994. The FDICIA also imposed additional regulatory standards upon depository institutions and granted additional authority to the FDIC. The FDICIA generally requires that all institutions be examined by the FDIC annually. Under the provisions of the FDICIA, all regulatory authorities are required to examine their regulatory accounting standards and, to the extent possible, are required to conform to Generally Accepted Accounting Principles. Finally, the FDICIA granted to the FDIC, under certain circumstances, the authority to seek regulatory orders against banks where necessary and when the banks' primary bank regulatory agency has refused to act. Certain provisions of the FDICIA were implemented during 1993; therefore, the full extent of the provisions of the new law and its effect upon the Company are not currently known but are not expected to have a significant impact upon the Company. The Company's affiliated banks are assessed fees based on the banks' deposits by the FDIC, to insure the funds of customers on deposit with the banks. The deposits acquired from the Resolution Trust Corporation and the deposits of the savings bank are insured by SAIF, while deposits of the Company's subsidiary banks are insured by the BIF. The FDIC has implemented the "Risk-Based Assessment System" which is a system designed to assess higher FDIC insurance premiums to those institutions that are more likely to result in a loss to the deposit insurance fund. Currently, both BIF and SAIF insured institutions are assessed premiums from $.23 to $.31 per $100 of deposits. All Brenton banks currently pay an FDIC insurance premium rate of $.23 per $100 of deposits, the lowest rate under the "Risk-Based Assessment System". The FDIC has authority to increase the base BIF and SAIF rates under certain circumstances that are set forth in the law. 9 According to Iowa's regional interstate banking law, Iowa-based banks and bank holding companies can acquire banks and bank holding companies located in certain other states. Additionally, certain non-Iowa based banks and bank holding companies can acquire Iowa banks and bank holding companies, provided that the total deposits of all banks and savings and loan associations (hereinafter "thrifts") controlled by out of state bank holding companies does not exceed thirty-five percent of the total deposits of all banks and thrifts in the state. The law allows regional interstate banking between Iowa and Illinois, Minnesota, Missouri, Nebraska, South Dakota and Wisconsin. Bank holding companies and banks may acquire thrifts in any state, regardless of whether the acquiror can operate a bank in that state. Such thrifts must conform their activities to those that are permissible for banks or bank holding companies and their subsidiaries. In the first quarter of 1990, an Iowa law was enacted suspending the application of Iowa Banking Law prohibitions against branch banking with respect to the acquisition of troubled thrifts. This law was extended during the second quarter of 1993. The suspension of these prohibitions allows Iowa-based banks and bank holding companies to acquire thrifts in contravention of existing branch banking restrictions until July 1, 1994. 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 Brenton National Bank, Des Moines and Brenton Bank and Trust, Urbandale to form Brenton Bank, N.A., Des Moines. Generally, thrifts can operate offices in any county in Iowa and may, under certain circumstances, acquire thrifts in other states with the approval of the OTS. (H) Governmental Monetary Policy and Economic Conditions. The earnings of the Company are affected by the policies of regulatory authorities, including the Federal Reserve System. Federal Reserve System monetary policies have had a significant effect on the operating results of commercial banks in the past and are expected to continue to do so in the future. Because of changing conditions in the economy and in the money markets, as a result of actions by monetary and fiscal authorities, interest rates, credit availability and deposit levels may change due to circumstances beyond the control of the Company. Future policies of the Federal Reserve System and other authorities cannot be predicted, nor can their effect on future earnings be predicted. (I) Competition. The banking business in Iowa is highly competitive and the affiliated banks compete not only with banks and thrifts, but with sales, finance and personal loan companies; credit unions; and other financial institutions which are active in the areas in which the affiliated banks operate. In addition, the affiliated banks compete for customer funds with other investment alternatives available through investment brokers, insurance companies, finance companies and other institutions. The multi-bank holding companies which own banks in Iowa are in direct competition with one another. The Company is one of the largest multi-bank holding companies operating in Iowa based on deposit size. The largest multi-bank holding company, which is domiciled in Minnesota, has 41 banking locations in various parts of Iowa. The total deposits of this company's affiliated banks located in Iowa are approximately 208 percent greater than the total deposits of the Company. Another multi-bank holding company, domiciled in Wisconsin, has 42 locations in Iowa, and another multi- bank holding company domiciled in Missouri, has 36 locations in Iowa. 10 Brenton Banks, Inc. is the second largest multi-bank holding company domiciled in Iowa. The largest Iowa-based bank holding company has 63 banking locations in the state and deposits approximately 27 percent greater than the deposits of the Company. The third largest Iowa-based multi-bank holding company has 24 locations in Iowa and deposits approximately 45 percent less than those of the Company. Certain of the subsidiary banks of these multi-bank holding companies may compete with certain of the Parent Company's affiliated banks and any other affiliated financial institutions which may be acquired by the Parent Company. These multi-bank holding companies, other smaller bank holding companies, chain banking systems and others may compete with the Parent Company for the acquisition of additional banks. The Company has also expanded into the related investment brokerage business in the last several years, placing brokers in many Brenton bank locations. The Brenton brokers in small communities compete with brokers from regional and national investment brokerage firms. 11 Item 1(I) Business - Statistical Disclosure The following statistical disclosures relative to the consolidated operations of the Company have been prepared in accordance with Guide 3 of the Guides for the Preparation and Filing of Reports and Registration Statements under the Securities Exchange Act of 1934. Average balances were primarily calculated on a daily basis. I. Distribution of Assets, Liabilities, and Stockholders' Equity; Interest Rates and Interest Differential The following summarizes the average consolidated statement of condition by major type of account, the interest earned and interest paid and the average yields and average rates paid for each of the three years ending December 31, 1993:
1993 1992 1991 ______________________________ ______________________________ ______________________________ Interest Average Interest Average Interest Average Average Income or Yields or Average Income or Yields or Average Income or Yields or Balance Expense Rates Balance Expense Rates Balance Interest Rates __________ _________ _________ __________ _________ _________ __________ _________ _________ (Dollars in thousands) Assets: Interest-earning assets Loans (1,2) $ 802,088 $ 70,310 8.77% $ 736,646 $ 71,077 9.65% $ 727,870 $ 76,563 10.52% Investment securities held to maturity: Taxable investments: United States Treasury securities 24,598 1,290 5.24 81,606 5,282 6.47 75,413 5,985 7.94 Securities of United States government agencies 58,522 3,410 5.83 102,196 7,128 6.98 101,661 9,385 9.23 Mortgage-backed and related securities 204,130 10,857 5.32 170,480 11,931 7.00 136,559 11,838 8.67 Other investments 12,743 1,071 8.41 30,019 2,098 6.99 28,833 1,909 6.62 Tax-exempt investments: Obligations of states and political subdivisions(2) 164,520 11,471 6.97 139,296 10,665 7.66 106,658 9,441 8.85 Investment securities available for sale 53,174 2,809 5.28 6,512 459 7.05 -- -- -- Loans held for sale 6,165 520 8.43 2,553 238 9.33 -- -- -- Federal funds sold and securities purchased under agreements to resell 23,725 486 2.05 27,082 654 2.41 35,154 2,028 5.77 Interest-bearing deposits with banks 762 22 2.88 6,240 307 4.92 18,335 1,302 7.10 _________ _______ ____ _________ _______ ____ _________ _______ ____ Total interest-earning assets(2) 1,350,427 $102,246 7.57% 1,302,630 $109,839 8.43% 1,230,483 $118,451 9.62% Allowance for loan losses (9,615) (8,894) (8,819) Cash and due from banks 46,025 41,715 35,656 Bank premises and equipment 23,045 21,400 18,876 Other assets 26,543 30,422 32,243 _________ _________ _________ Total assets $1,436,425 $1,387,273 $1,308,439 (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 35 percent federal income tax rate for 1993, and a 34 percent rate for 1992 and 1991, 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.
12 Item 1(I) Business - Statistical Disclosure, Continued I. Distribution of Assets, Liabilities, and Stockholders' Equity; Interest Rates and Interest Differential, Continued
1993 1992 1991 ______________________________ ______________________________ ______________________________ Interest Average Interest Average Interest Average Average Income or Yields or Average Income or Yields or Average Income or Yields or Balance Expense Rates Balance Expense Rates Balance Expense Rates _________ __________ _________ __________ _________ _________ __________ _________ _________ (Dollars in thousands) Liabilities and stockholders' equity: Interest-bearing liabilities: Interest-bearing deposits: Demand $ 217,754 $ 4,552 2.09% $ 209,642 $ 5,277 2.52% $ 175,595 $ 7,531 4.29% Savings 299,640 7,697 2.57 260,568 9,385 3.60 235,894 11,521 4.88 Time 622,789 29,940 4.81 646,261 37,781 5.85 654,776 46,903 7.16 Federal funds purchased and securities sold under agreements to repurchase 42,715 1,027 2.41 33,240 924 2.78 20,340 963 4.74 Other short-term borrowings 33 1 3.62 2,170 121 5.57 5,361 466 8.70 Long-term borrowings 14,077 1,210 8.60 14,067 1,285 9.14 13,619 1,303 9.57 _________ ______ ____ _________ ______ ____ _________ ______ ____ Total interest-bearing liabilities 1,197,008 $44,427 3.71% 1,165,948 $54,773 4.70% 1,105,585 $68,687 6.21% Noninterest-bearing deposits 119,322 112,054 102,795 Accrued expenses and other liabilities 12,805 13,735 14,739 _________ _________ _________ Total liabilities 1,329,135 1,291,737 1,223,119 Minority interest 4,150 3,845 3,589 Common stockholders' equity 103,140 91,691 81,731 _________ _________ _________ Total liabilities and stockholders' equity $1,436,425 $1,387,273 $1,308,439 Net interest spread (1) 3.86% 3.73% 3.41% Net interest income/margin (1) $57,819 4.28% $55,066 4.23% $49,764 4.04% (1) Interest income and yields are stated on a tax equivalent basis using a 35 percent federal income tax rate for 1993 and a 34 percent rate for 1992 and 1991, 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.
13 Item 1(I) 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, 1993:
1993 vs. 1992 1992 vs. 1991 __________________________ __________________________ Variance Variance due to due to _______________ _______________ Variance Volume Rate Variance Volume Rate ________ ______ ____ ________ ______ ____ (In thousands) (In thousands) Interest Income: Loans (1,2) $ (767) 6,030 (6,797) (5,486) 913 (6,399) Investment securities held to maturity: Taxable investments: United States Treasury securities (3,992) (3,139) (853) (703) 464 (1,167) Securities of United States government agencies (3,718) (2,684) (1,034) (2,257) 49 (2,306) Mortgage-backed and related securities (1,074) 2,100 (3,174) 93 2,621 (2,528) Other investments (1,027) (1,388) 361 189 80 109 Tax-exempt investments: Obligations of states and political subdivisions (2) 806 1,816 (1,010) 1,224 2,618 (1,394) Investment securities available for sale 2,350 2,493 (143) 459 459 -- Loans held for sale 282 307 (25) 238 238 -- Federal funds sold and securities purchased under agreements to resell (168) (76) (92) (1,374) (389) (985) Interest-bearing deposits with banks (285) (194) (91) (995) (679) (316) ______ _____ ______ ______ _____ ______ (7,593) 5,265 (12,858) (8,612) 6,374 (14,986) _____ _____ ______ ______ _____ ______ Interest expense: Interest-bearing deposits: Demand (725) 198 (923) (2,254) 1,268 (3,522) Savings (1,688) 1,269 (2,957) (2,136) 1,115 (3,251) Time (7,841) (1,331) (6,510) (9,122) (603) (8,519) Federal funds purchased and securities sold under agreements to repurchase 103 239 (136) (39) 458 (497) Other short-term borrowings (120) (82) (38) (345) (215) (130) Long-term borrowings (75) 1 (76) (18) 42 (60) ______ _____ ______ ______ _____ ______ (10,346) 294 (10,640) (13,914) 2,065 (15,979) ______ _____ ______ ______ _____ ______ Net interest income (expense) $ 2,753 4,971 (2,218) $ 5,302 4,309 993 ______ _____ ______ ______ _____ ______ Note: The change in interest due to both rate and volume has been allocated to change due to volume and change due to rate in proportion to the relationship of the absolute dollar amounts of the change in each. (1) Nonaccrual loans have been included in the analysis of volume and rate variances. (2) Computed on tax equivalent basis using a 35 percent federal income tax rate for 1993 and a 34 percent rate for 1992 and 1991, and adjusted to reflect the effect of the nondeductible interest expense of owning tax-exempt investments.
14 Item 1(I) 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, 1993. As the schedule shows, the Company is liability sensitive within the six-month and 1-year time frames. 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, they typically are not synchronized with overall market rate movements.
3 Months Over 3 Over 6 Total Over 1 or through 6 through 12 within through 5 Over Less Months Months 1 Year Years 5 Years Total ---- ------ ------ ------ ----- ------- ----- (In thousands) Interest-earning assets: Loans (1) $ 191,031 25,744 49,878 266,653 400,540 207,083 874,276 Investment securities: Available for sale: Taxable investments 61,395 32,570 39,841 133,806 128,896 4,935 267,637 Tax-exempt investments 11,351 13,454 6,138 30,943 76,394 37,246 144,583 Held to maturity: Taxable investments 20,129 2,096 4,503 26,728 1,612 2,105 30,445 Tax-exempt investments 700 3,483 12,335 16,518 14,157 5,264 35,939 Loans held for sale 4,349 -- -- 4,349 -- -- 4,349 Federal funds sold and securities purchased under agreements to resell 41,875 -- -- 41,875 -- -- 41,875 Interest-bearing deposits with banks -- -- -- -- -- -- -- _______ _______ _______ _______ _______ _______ _________ Total interest-earning assets $ 330,830 77,347 112,695 520,872 621,599 256,633 1,399,104 _______ _______ _______ _______ _______ _______ _________ Interest-bearing liabilities: Interest-bearing deposits: Demand and savings deposits (2) $ 539,621 -- -- 539,621 -- -- 539,621 Time deposits 119,258 126,591 121,749 367,598 260,013 -- 627,611 Federal funds purchased and securities sold under agreements to repurchase 37,664 -- -- 37,664 -- -- 37,664 Other short-term borrowings -- -- -- -- -- -- -- Long-term borrowings -- -- 1,000 1,000 13,053 6,002 20,055 _______ _______ _______ _______ _______ _______ _________ Total interest-bearing liabilities $ 696,543 126,591 122,749 945,883 273,066 6,002 1,224,951 _______ _______ _______ _______ _______ _______ _________ Interest sensitivity GAP $(365,713) (49,244) (10,054) (425,011) 348,533 250,631 174,153 _______ _______ _______ _______ _______ _______ _________ Interest sensitivity GAP ratio .47:1 .61:1 .92:1 .55:1 2.28:1 42.76:1 1.14:1 _______ _______ _______ _______ _______ _______ _________ Cumulative interest sensitivity GAP $(365,713) (414,957) (425,011) (425,011) (76,478) 174,153 174,153 _______ _______ _______ _______ _______ _______ _________ Cumulative interest sensitivity GAP ratio .47:1 .50:1 .55:1 .55:1 .94:1 1.14:1 1.14:1 _______ _______ _______ _______ _______ _______ _________ (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.
15 Item 1(I) Business - Statistical Disclosure, Continued II. Investment Portfolio The carrying value of investment securities at December 31 for each of the past three years follows:
Amortized Cost at December 31, ______________________________ 1993 1992 1991 ____ ____ ____ (In thousands) Investment securities available for sale: Taxable investments: United States Treasury securities $ 63,777 28,878 -- Securities of United States government agencies 59,181 -- -- Mortgage-backed and related securities 138,744 1,166 -- Other investments 5,925 -- -- Tax-exempt investments: Obligations of states and political subdivisions 144,583 -- -- _______ _______ _______ 412,210 30,044 -- _______ _______ _______ Investment securities held to maturity: Taxable investments: United States Treasury securities -- 55,586 59,297 Securities of United States government agencies -- 67,324 52,478 Mortgage-backed and related securities 24,882 225,659 200,339 Other investments 5,563 11,769 23,271 Tax-exempt investments: Obligations of states and political subdivisions 35,939 150,639 118,952 _______ _______ _______ 66,384 510,977 454,337 _______ _______ _______ Total investment securities $478,594 541,021 454,337 _______ _______ _______
16 Item 1(I) Business - Statistical Disclosure, Continued II. Investment Portfolio The following table shows the maturity distribution and weighted average yields of investment securities at December 31, 1993: (caption> Investments by Maturity and Yields at December 31, 1993 ____________________________________________________________________________ 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) Investment securities available for sale: Taxable investments: United States Treasury securities $ 23,935 4.77% $ 38,777 4.49% $ 1,065 4.29% $ -- --% Securities of United States government agencies 10,039 7.32 35,060 4.50 13,311 5.01 771 4.50 Mortgage-backed and related securities 52,012 5.23 79,918 5.10 5,350 6.83 1,464 5.94 Other investments 1,506 4.89 4,419 4.77 -- -- -- -- Tax-exempt investments: Obligations of states and political subdivisions 33,762 6.75 65,327 6.30 21,195 9.66 24,299 9.05 _______ ____ _______ ____ ______ ____ ______ ____ 121,254 5.73 223,501 5.24 40,921 7.64 26,534 8.74 _______ ____ _______ ____ ______ ____ ______ ____ Investment securities held to maturity: Taxable investments: Mortgage-backed and related securities 9,789 3.96 13,864 4.00 1,229 4.21 -- -- Other investments -- -- 787 4.78 152 6.21 4,624 7.20 Tax-exempt investments: Obligations of states and political subdivisions 12,476 5.05 17,463 6.14 3,886 8.47 2,114 8.19 _______ ____ _______ ____ ______ ____ ______ ____ 22,265 4.57 32,114 5.18 5,267 7.41 6,738 7.51 _______ ____ _______ ____ ______ ____ ______ Total investment securities $143,519 5.55% $255,615 5.24% $46,188 7.61% $33,272 8.49% _______ ____ _______ ____ ______ ____ ______ ____
NOTE: The weighted average yields are calculated on the basis of the cost and effective yields for each scheduled maturity group. The weighted average yields for tax-exempt obligations have been adjusted to a fully taxable basis, assuming a 35 percent federal income tax rate for 1993 and a 34 percent rate for 1992 and 1991, and are adjusted to reflect the effect of the nondeductible interest expense of owning tax-exempt investments. As of December 31, 1993, 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. 17 Item 1(I) 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:
December 31 ____________________________________________________ 1993 1992 1991 1990 1989 ____ ____ ____ ____ ____ (In thousands) 1. Real estate loans: a. Commercial construction and land development $ 24,189 25,180 16,155 16,319 12,309 b. Secured by 1-4 family residential property 349,810 324,124 321,721 315,934 182,227 c. Other 129,574 101,418 96,805 88,572 88,237 2. Loans to financial institutions (primarily bankers' acceptances) -- 393 4,785 9,969 4,875 3. Loans to farmers 66,574 62,471 60,898 55,856 52,699 4. Commercial and industrial loans 90,521 75,062 93,180 67,575 63,677 5. Loans to individuals for personal expenditures, net of unearned income 214,401 163,876 151,529 151,261 134,240 6. All other loans 812 930 6,837 1,832 1,294 _______ _______ _______ _______ _______ $875,881 753,454 751,910 707,318 539,558 _______ _______ _______ _______ _______
18 Item 1(I) Business - Statistical Disclosure, Continued III. Loan Portfolio, Continued The following table shows the maturity distribution of loans as of December 31, 1993 (excluding real estate loans secured by 1-4 family residential property and loans to individuals for personal expenditures):
Loans by Maturity at December 31, 1993 ________________________________________ After One Year Within through After Five One Year Five Years Years Total ________ __________ _____ _____ (In thousands) 1. Real estate loans: a. Commercial construction and land development $ 20,439 3,087 663 24,189 b. Other 34,849 56,101 38,624 129,574 2. Loans to financial institutions -- -- -- -- 3. Loans to farmers 47,607 16,225 2,742 66,574 4. Commercial and industrial loans 55,403 29,197 5,921 90,521 5. All other loans 771 41 -- 812 _______ _______ ______ _______ $159,069 104,651 47,950 311,670 _______ _______ ______ _______
The above loans due after one year which have predetermined and floating interest rates follow: Predetermined interest rates $ 94,874 ______ Floating interest rates $ 57,727 ______ 19 Item 1(I) 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.
1993 1992 1991 1990 1989 ____ ____ ____ ____ ____ (In thousands) Nonaccrual $1,605 1,884 2,931 2,391 3,289 Restructured 323 448 1,019 1,063 1,359 Past due 90 days or more 2,085 2,261 1,672 2,006 2,070 _____ _____ _____ _____ _____ Nonperforming loans $4,013 4,593 5,622 5,460 6,718 _____ _____ _____ _____ _____
Interest income recorded during 1993 on nonaccrual and restructured loans amounted to $191,000. The amount of interest income which would have been recorded during 1993 if nonaccrual and restructured loans had been current, in accordance with the original terms, was $359,000. The amounts scheduled above include the entire balance of any particular loan. Much of the scheduled amount is adequately collateralized, and thus does not represent the amount of anticipated charge-offs in the future. The loans scheduled are representative of the entire customer base of the Company and, therefore, are not concentrated in a specific industry or geographic area other than the loans to farmers in Iowa. Overdrafts are loans for which interest does not normally accrue. Since overdrafts are generally low volume, they were not included in the above schedule, unless there was serious doubt concerning collection. The accrual of interest income is stopped when the ultimate collection of a loan becomes doubtful. A loan is placed on nonaccrual status when it becomes 90 days past due, unless it is both well secured and in the process of collection. Once determined uncollectible, previously accrued interest is charged to the allowance for loan losses. In addition to the loans scheduled above, management has identified other loans which, due to a change in economic circumstances or a deterioration in the financial position of the borrower, present serious concern as to the ability of the borrower to comply with present repayment terms. Additionally, management considers the identification of loans classified for regulatory or internal purposes as loss, doubtful, substandard or special mention. This serious concern may eventually result in certain of these loans being classified in one of the above scheduled categories. At December 31, 1993, these loans amounted to approximately $2 million. As of December 31, 1993, 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 $948,000 and $1,935,000 at December 31, 1993 and 1992, respectively. 20 Item 1(I) 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:
Year Ended December 31 _______________________________________________ 1993 1992 1991 1990 1989 ____ ____ ____ ____ ____ (In thousands) Total loans at the end of the year $875,881 753,454 751,910 707,318 539,558 Average loans outstanding 802,088 736,646 727,870 659,283 512,822 _______ _______ _______ _______ _______ Allowance for loan losses - beginning of the year $ 9,006 8,548 8,871 8,431 7,999 _______ _______ _______ _______ _______ Amount of charge-offs during year: Real estate loans 109 276 110 203 126 Loans to financial institutions -- -- -- -- -- Loans to farmers 68 45 48 90 55 Commercial and industrial loans 54 252 769 455 468 Loans to individuals for personal expenditures 1,230 1,304 1,404 1,011 563 All other loans 70 67 5 8 105 _______ _______ _______ _______ _______ Total charge-offs 1,531 1,944 2,336 1,767 1,317 _______ _______ _______ _______ _______ Amount of recoveries during year: Real estate loans 101 32 60 38 121 Loans to financial institutions -- -- -- -- -- Loans to farmers 81 179 135 130 258 Commercial and industrial loans 248 125 303 505 376 Loans to individuals for personal expenditures 641 635 716 280 158 All other loans 20 20 -- -- 3 _______ _______ _______ _______ _______ Total recoveries 1,091 991 1,214 953 916 _______ _______ _______ _______ _______ Net loans charged off during year 440 953 1,122 814 401 _______ _______ _______ _______ _______ Additions to allowance charged to operating expense 1,252 1,411 799 869 760 _______ _______ _______ _______ _______ Allowance of acquisitions -- -- -- 385 73 _______ _______ _______ _______ _______ Allowance for loan losses - end of the year $ 9,818 9,006 8,548 8,871 8,431 _______ _______ _______ _______ _______ Ratio of allowance to loans outstanding at end of year 1.12% 1.20 1.14 1.25 1.56 ____ ____ ____ ____ ____ Ratio of net charge-offs to average loans outstanding .05% .13 .15 .12 .08 ___ ___ ___ ___ ___
NOTE: The provision for loan losses charged to operating expenses is based on management's evaluation of the loan portfolio, past loan loss experience and other factors that deserve current recognition in estimating loan losses. The allowance for loan losses is maintained at a level necessary to support management's evaluation of potential losses in the loan portfolio, after considering various factors including prevailing and anticipated economic conditions. 21 Item 1(I) 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:
Year Ended December 31 __________________________________________________________________________________________ 1993 1992 1991 1990 1989 _________________ _________________ _________________ _________________ __________________ 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) Real estate loans $2,400 57.5% $2,200 59.8% $2,002 57.8% $1,967 59.5% $1,373 52.4% Loans to financial institutions -- -- -- .1 -- .6 -- 1.4 -- .9 Loans to farmers 1,400 7.6 1,200 8.3 1,500 8.1 1,900 7.9 2,300 9.8 Commercial and industrial loans 2,700 10.3 2,700 10.0 2,600 12.4 3,000 9.6 3,300 11.8 Loans to individuals for personal expenditures 3,318 24.5 2,906 21.3 2,446 20.2 2,004 21.4 1,458 24.9 All other loans -- .1 -- .5 -- .9 -- .2 -- .2 _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ $9,818 100.0% $9,006 100.0% $8,548 100.0% $8,871 100.0% $8,431 100.0% _____ _____ _____ _____ _____ _____ _____ _____ _____ _____
22 Item 1(I) Business - Statistical Disclosure, Continued V. Deposits A classification of the Company's average deposits and average rates paid for the years indicated follows:
Year Ended December 31 1993 1992 1991 Amount Rate Amount Rate Amount Rate (Dollars in thousands) Noninterest-bearing deposits $ 119,322 --% $ 112,054 --% $ 102,795 --% Interest-bearing deposits: Demand 217,754 2.09 209,642 2.52 175,595 4.29 Savings 299,640 2.57 260,568 3.60 235,894 4.88 Time 622,789 4.81 646,261 5.85 654,776 7.16 _________ ____ _________ ____ _________ ____ $1,259,505 $1,228,525 $1,169,060 _________ _________ _________
The following sets forth the maturity distribution of all time deposits of $100,000 or more as of December 31, 1993: Large Time Deposits by Maturity at Maturity Remaining December 31, 1993 (In thousands) Less than 3 months $29,155 Over 3 through 6 months 12,652 Over 6 through 12 months 7,927 Over 12 months 12,993 ______ $62,727 ______ VI. Return on Equity and Assets Various operating and equity ratios for the years indicated are presented below:
Year Ended December 31, ________________________ 1993 1992 1991 ____ ____ ____ Return on average total assets: Net income before deduction of minority interest 1.04% .98% .93% Return on average equity 13.82 14.13 14.27 Common dividend payout ratio 22.22 21.00 21.56 Average equity to average assets 7.18 6.61 6.25 Equity to assets ratio 7.59 6.81 6.37 Tier 1 leverage capital ratio 7.55 6.71 6.21 Primary capital ratio 8.50 7.67 7.23 ____ ____ ____
23 Item 1(I) Business - Statistical Disclosure, Continued VII. Short-Term Borrowings Information relative to federal funds purchased and securities sold under agreements to repurchase follows:
1993 1992 1991 ____ ____ ____ (Dollars in thousands) Amount outstanding at December 31 $37,981 34,882 23,590 Weighted average interest rate at December 31 2.31% 2.34 3.84 Maximum amount outstanding at any quarter-end $66,740 49,125 25,541 Average amount outstanding during the year $42,715 33,240 20,340 Weighted average interest rate during the year 2.41% 2.78 4.74 ____ ____ ____
Information relative to other short-term borrowings, which consist primarily of notes payable by the Parent Company, Federal Reserve Bank borrowings and U.S. Treasury - tax depository note options, follows:
1993 1992 1991 ____ ____ ____ (Dollars in thousands) Amount outstanding at December 31 $ -- 120 4,174 Weighted average interest rate at December 31 --% 3.15 6.44 Maximum amount outstanding at any quarter-end $ -- 2,840 6,659 Average amount outstanding during the year $ 33 2,170 5,361 Weighted average interest rate during the year 3.62% 5.57 8.70 ____ ____ ____
24 Item 2. Properties. At December 31, 1993, the affiliated banks had 42 banking locations with approximately 281,000 square feet, all located in Iowa. Of these banking locations, 32 were owned by the Company - approximately 223,000 square feet; 3 were owned buildings on leased land - approximately 30,000 square feet and 7 were operated under lease contracts with unaffiliated parties - approximately 28,000 square feet. The Company has recently redesigned most of its banking facilities to enhance the overall appearance and stimulate marketing and selling of products. The Company leases certain real estate and equipment under long- term and short-term leases. The Company owns certain real estate which is leased to unrelated persons. Item 3. Legal Proceedings. The Company (Brenton Banks, Inc. and its subsidiaries) is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company's financial position or results of operations. Item 4. Submission of Matters to a Vote of Security Holders. There were no matters submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders, through the solicitation of proxies or otherwise. PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters. The information appearing on pages 30 and 37 of the Corporation's Annual Report, filed as Exhibit 13 hereto, is incorporated herein by reference. There were approximately 1,563 holders of record of the Parent Company's $5 common stock as of March 14, 1994. The closing bid price of the Parent Company's common stock was $26.75 on March 14, 1994. The Parent Company increased dividends to common shareholders in 1993 to $.60 per share, a 14.3 percent increase over $.525 for 1992. Dividend declarations are evaluated and determined by the Board of Directors on a quarterly basis. In January 1994, the Board of Directors declared a dividend of $.165 per common share. There are no restrictions on the Parent Company's present or future ability to pay dividends. Item 6. Selected Financial Data. The information appearing on page 19 of the Company's Annual Report, filed as Exhibit 13 hereto, is incorporated herein by reference. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. The information appearing on pages 10 through 17 of the Company's Annual Report, filed as Exhibit 13 hereto, is incorporated herein by reference. 25 Item 8. Financial Statements and Supplementary Data. The information appearing on pages 20 through 36 of the Company's Annual Report, filed as Exhibit 13 hereto, is incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. Within the twenty-four months prior to the date of the most recent financial statements, there has been no change of accountants of the Company. PART III Item 10. Directors and Executive Officers of the Registrant. The definitive proxy statement of Brenton Banks, Inc., which will be filed not later than 120 days following the close of the Company's fiscal year ending December 31, 1993, is incorporated herein by reference. See also Item 1(E) of this Form 10-K captioned "Executive Officers of the Registrant." Item 11. Executive Compensation. The definitive proxy statement of Brenton Banks, Inc., which will be filed not later than 120 days following the close of the Company's fiscal year ended December 31, 1993, 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, 1993, is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions. The definitive proxy statement of Brenton Banks, Inc., which will be filed not later than 120 days following the close of the Company's fiscal year ending December 31, 1993, is incorporated herein by reference. PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. The following exhibits and financial statement schedules are filed as part of this report: (a) 1. Financial Statements: See the financial statements on pages 20 through 36 of the Company's Annual Report, filed as Exhibit 13 hereto, which are incorporated by reference herein. 2. Financial Statement Schedules: See Exhibits 11 and 12, for computation of earnings per share and ratios. 26 3. Exhibits (not covered by independent auditors' report). Exhibit 3 The Articles of Incorporation, as amended, and Bylaws, as amended, of Brenton Banks, Inc. Exhibit 10 Summary of the Bank Bonus Plans under which some of the executive officers of the Parent Company and certain other personnel of the subsidiaries are eligible to receive a bonus each year. Exhibit 10(i) Summary of the Executive Bonus Plan under which some of the executive officers of the Parent Company are eligible to receive a bonus each year. Exhibit 10(ii) Summary of the Trust Division Bonus Plan under which one of the executive officers of the Parent Company is eligible to receive a bonus each year. Exhibit 10(iii) Summary of the Brokerage Bonus Plan under which one of the executive officers of the Parent Company is eligible to receive a bonus each year. Exhibit 10(iv) Summary of the Employee Bonus Plan under which employees of the Company are eligible to receive a bonus each year. Exhibit 10(v) Employment Agreement, dated July 6, 1989, between William H. Brenton and Brenton Banks, Inc. This Employment Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc., for the year ended December 31, 1989. Exhibit 10(vi) Non-Qualified Stock Option Plan, Administrative Rules and Agreement under which officers of the Company are eligible to receive options to purchase an aggregate of 200,000 shares of the Company's $5 par value common stock. This Non-Qualified Stock Option Plan, Administrative Rules and Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc., for the year ended December 31, 1992. 27 Exhibit 10(vii) Long-Term Stock Compensation Plan, Agreements and related documents, effective for 1993, under which certain of the Company's senior officers and bank presidents are eligible to receive shares of Brenton Banks, Inc. stock based upon their service to the Company and Company performance. Exhibit 10(viii) Long-Term Stock Compensation Plan, Agreements and related documents, effective for 1992, under which certain of the Company's senior officers and bank presidents are eligible to receive shares of Brenton Banks, Inc. stock based upon their service to the Company and Company performance. This Long-Term Stock Compensation Plan, Agreements and related documents, effective for 1992, are incorporated by reference from Form 10-K of Brenton Banks, Inc., for the year ended December 31, 1992. Exhibit 10(ix) Merger Agreement between Brenton Banks, Inc. and Ames Financial Corporation, dated June 17, 1992. This Merger Agreement is incorporated by reference from Form S-4 of Brenton Banks, Inc. filed on August 13, 1992. Exhibit 10(x) Standard Agreement for Advances, Pledge and Security Agreement between Brenton banks and the Federal Home Loan Bank of Des Moines. Exhibit 10(xi) Short-term note with American National Bank & Trust Company of Chicago as of April 30, 1993, setting forth the terms of the Parent Company's $2,000,000 short-term debt agreement. Exhibit 10(xii) Data Processing Agreement dated December 1, 1991 by and between Systematics, Inc. and Brenton Information Systems, Inc. This Data Processing Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc., for the year ended December 31, 1991. Exhibit 10(xiii) Item Processing Agreement dated December 1, 1991 between Brenton Bank Services, Inc. and the Federal Home Loan Bank of Des Moines. This Item Processing Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc., for the year ended December 31, 1992. Exhibit 10(xiv) Restated Trust Agreement for Brenton Banks, Inc. Retirement Plan, effective January 1, 1986. This Restated Trust Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc., for the year ended December 31, 1991. 28 Exhibit 10(xv) Amendment to the Restated Trust Agreement for Brenton Banks, Inc. Retirement Plan, effective May 31, 1989. The Amendment is incorporated by reference from Form 10-K of Brenton Banks, Inc. for the year ended December 31, 1989. Exhibit 10(xvi) Indenture Agreement with respect to Capital Notes dated April 12, 1993. Exhibit 10(xvii) Indenture Agreement with respect to Capital Notes dated April 14, 1992. This Indenture Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc., for the year ended December 31, 1992. Exhibit 10(xviii) Indenture Agreement with respect to Capital Notes dated August 5, 1991. This Indenture Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc. for the year ended December 31, 1991. Exhibit 10(xix) Indenture Agreement with respect to Capital Notes dated March 27, 1991. This Indenture Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc. for the year ended December 31, 1991. Exhibit 10(xx) Indenture Agreement with respect to Capital Notes dated April 5, 1985. This Indenture Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc. for the year ended December 31, 1991. Exhibit 11 Statement of computation of earnings per share. Exhibit 12 Statement of computation of ratios. Exhibit 13 The Annual Report to Shareholders of Brenton Banks, Inc., for the 1993 calendar year. Exhibit 22 Subsidiaries. Exhibit 24 Consent of KPMG Peat Marwick to the incorporation of their report dated January 31, 1994, relating to certain consolidated statements of condition of Brenton Banks, Inc. into the Registration Statement on Form S-8 of Brenton Banks, Inc. 29 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 and Vice President/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 1993. 30 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BRENTON BANKS, INC. By /s/ C. Robert Brenton Chairman of the Board of Directors C. ROBERT BRENTON Date: March 16, 1994 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /s/ William H. Brenton Chairman of the Executive Committee, Vice Chairman of the Board of Directors and Director WILLIAM H. BRENTON Principal Executive Officer Date: March 16, 1994 By /s/ C. Robert Brenton Chairman of the Board and Director C. ROBERT BRENTON Principal Executive Officer Date: March 16, 1994 31 By /s/ Junius C. Brenton President (1990-1993) and Director JUNIUS C. BRENTON Principal Executive Officer Date: March 16, 1994 By /s/ Robert L. DeMeulenaere President and Director ROBERT L. DEMEULENAERE Date: March 16, 1994 By /s/ Steven T. Schuler Vice President/Treasurer/Secretary STEVEN T. SCHULER Chief Financial Officer Date: March 16, 1994 By /s/ Thea H. Oberlander Corporate Controller THEA H. OBERLANDER Date: March 16, 1994 BOARD OF DIRECTORS By /s/ R. Dean Duben R. DEAN DUBEN Date: March 16, 1994 By /s/ Thomas R. Smith THOMAS R. SMITH Date: March 16, 1994 32 EXHIBIT INDEX Exhibits Page Exhibit 3 The Articles of Incorporation, as amended, and Bylaws, as amended, of Brenton Banks, Inc. . . . . . . . . 37 Exhibit 10 Summary of the Bank Bonus Plans under which some of the executive officers of the Parent Company and certain other personnel of the subsidiaries are eligible to receive a bonus each year. . . . . . . . . 95 Exhibit 10(i) Summary of the Executive Bonus Plan under which some of the executive officers of the Parent Company are eligible to receive a bonus each year. . . . . . . . . 97 Exhibit 10(ii) Summary of the Trust Division Bonus Plan under which one of the executive officers of the Parent Company is eligible to receive a bonus each year. . . . . . 99 Exhibit 10(iii) Summary of the Brokerage Bonus Plan under which one of the executive officers of the Parent Company is eligible to receive a bonus each year. . . . . . . . . . 101 Exhibit 10(iv) Summary of the Employee Bonus Plan under which employees of the Company are eligible to receive a bonus each year. . . . . . . . . . . . . . . . . . . . . 103 Exhibit 10(v) Employment Agreement, dated July 6, 1989, between William H. Brenton and Brenton Banks, Inc. This Employment Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc., for the year ended December 31, 1989. . . . . . . . . . . . . . . . 105 Exhibit 10(vi) Non-Qualified Stock Option Plan, Administrative Rules and Agreement under which officers of the Company are eligible to receive options to purchase an aggregate of 200,000 shares of the Company's $5 par value common stock. This Non-Qualified Stock Option Plan, Administrative Rules and Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc., for the year ended December 31, 1992. . . . . 106 33 Exhibit 10(vii) Long-Term Stock Compensation Plan, Agreements and related documents, effective for 1993, under which certain of the Company's senior officers and bank presidents are eligible to receive shares of Brenton Banks, Inc. stock based upon their service to the Company and Company performance. . . . . . . . . . . 107 Exhibit 10(viii) Long-Term Stock Compensation Plan, Agreements and related documents, effective for 1992, under which certain of the Company's senior officers and bank presidents are eligible to receive shares of Brenton Banks, Inc. stock based upon their service to the Company and Company performance. This Long-Term Stock Compensation Plan, Agreements and related documents, effective for 1992, are incorporated by reference from Form 10-K of Brenton Banks, Inc., for the year ended December 31, 1992. . . . . . . . . . . . 121 Exhibit 10(ix) Merger Agreement between Brenton Banks, Inc. and Ames Financial Corporation, dated June 17, 1992. This Merger Agreement is incorporated by reference from Form S-4 of Brenton Banks, Inc. filed on August 13, 1992. . . . . . . . . . . . . . . . . . . . . . 122 Exhibit 10(x) Standard Agreement for Advances, Pledge and Security Agreement between Brenton banks and the Federal Home Loan bank of Des Moines. . . . . . . . . . . . . . . . . . 123 Exhibit 10(xi) Short-term note with American National Bank & Trust Company of Chicago as of April 30, 1993, setting forth the terms of the Parent Company's $2,000,000 short-term debt agreement. . . . . . . . . . . . . . . . . . . . . . . 128 Exhibit 10(xii) Data Processing Agreement dated December 1, 1991 by and between Systematics, Inc. and Brenton Information Systems, Inc. This Data Processing Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc., for the year ended December 31, 1991. . . . . 130 Exhibit 10(xiii) Item Processing Agreement dated December 1, 1991 between Brenton Bank Services, Inc. and the Federal Home Loan Bank of Des Moines. This Item Processing Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc., for the year ended December 31, 1992. . . . . . . . . . . . . . . . . . . . . 131 Exhibit 10(xiv) Restated Trust Agreement for Brenton Banks, Inc. Retirement Plan, effective January 1, 1986. This Restated Trust Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc., for the year ended December 31, 1991. . . . . . . . . . . . 132 34 Exhibit 10(xv) Amendment to the Restated Trust Agreement for Brenton Banks, Inc. Retirement Plan, effective May 31, 1989. The Amendment is incorporated by reference from Form 10-K of Brenton Banks, Inc. for the year ended December 31, 1989. . . . . . . . . . . . 133 Exhibit 10(xvi) Indenture Agreement with respect to Capital Notes dated April 12, 1993. . . . . . . . . . . . . . . . . . . . 134 Exhibit 10(xvii) Indenture Agreement with respect to Capital Notes dated April 14, 1992. This Indenture Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc., for the year ended December 31, 1992. . . . . 149 Exhibit 10(xviii) Indenture Agreement with respect to Capital Notes dated August 5, 1991. This Indenture Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc. for the year ended December 31, 1991. . . . . . 150 Exhibit 10(xix) Indenture Agreement with respect to Capital Notes dated March 27, 1991. This Indenture Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc. for the year ended December 31, 1991. . . . . . 151 Exhibit 10(xx) Indenture Agreement with respect to Capital Notes dated April 5, 1985. This Indenture Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc. for the year ended December 31, 1991. . . . . . 152 Exhibit 11 Statement of computation of earnings per share. . . . . . . 153 Exhibit 12 Statement of computation of ratios. . . . . . . . . . . . . 155 Exhibit 13 The Annual Report to Shareholders of Brenton Banks, Inc., for the 1993 calendar year. . . . . . . . . . . . . . 158 Exhibit 22 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . 201 35 Exhibit 24 Consent of KPMG Peat Marwick to the incorporation of their report dated January 31, 1994, relating to certain consolidated statements of condition of Brenton Banks, Inc. into the Registration Statement on Form S-8 of Brenton Banks, Inc. . . . . . . . . . . . . 204 36 EX-3.(I) 2 Exhibit 3 The Articles of Incorporation, as amended, and Bylaws, as amended, of Brenton Banks, Inc. 37 RESTATED ARTICLES OF INCORPORATION OF BRENTON BANKS, INC. To the Secretary of State of the State of Iowa: Pursuant to the provisions of Section 61 of the Iowa Business Corporation Act, the undersigned corporation adopts the following restated articles of incorporation. ARTICLE I Name and Place of Business Section 1. The name of this corporation shall be Brenton Banks, Inc. Its name prior to the adoption of these Restated Articles of Incorporation was the same. Section 2. The principal place of business of this corporation shall be in the City of Des Moines, County of Polk, State of Iowa. Section 3. The corporation may establish branch offices and agencies in Iowa or in other states as the Board of Directors may deem necessary or expedient. Section 4. The address of the registered office of the corporation in the State of Iowa is: 2840 Ingersoll Avenue in the City of Des Moines, County of Polk, and the name of its registered agent at such address is Wm. H. Brenton. ARTICLE II Objects and Purposes Section 1. The general nature of the business to be conducted by this corporation shall be: (a) To acquire by purchase, subscription, contract or otherwise, and to hold, own, sell, assign, transfer, exchange, mortgage, pledge, or otherwise negotiate, or dispose of, and generally to deal in and with all forms of securities, 38 including but not limited to, shares, stocks, bonds, debentures, notes, scrip, mortgages, warrants, contracts, choses in action, obligations, evidences of indebtedness, certificates of deposit, voting trust certificates, and certificates of interest issued or created, or to be issued or created, by corporations, associations, companies, partnerships, firms, trustees, syndicates, individuals, governments, states, municipalities, and other political and governmental divisions and subdivisions, or by any combinations, organizations, or entities whatsoever, irrespective of their form or the name by which they may be described, and all trust, participation, and other certificates of, and receipts evidencing interests in, any such securities; and to make payment therefore in cash or by the issuance of its stock, bonds, notes, debentures, other obligations or securities, or by any other lawful means of payment whatsoever; to receive, collect, and dispose of interest, dividends, and income upon, of, and from any and all such securities or evidences of interest therein; to exercise any and all rights, powers, and privileges of individual ownership or interest therein, including the right to vote thereon, and to consent and otherwise act with respect thereto; to do any and all acts and things for the preservation, protection, improvement, and enhancement in value of any and all such securities, or evidences of interest therein; to acquire and become interested in any such securities, or evidences of interest therein, as aforesaid, by original subscription, underwriting, participation in syndicates, or otherwise, and irrespective of whether or not such securities or evidences of interest therein be fully paid or subject to further payments; to make payments thereon as called for, or in advance of call, otherwise, and to underwrite or subscribe for the same, conditionally or otherwise, and with a view to investment, for resale, or for any other lawful purpose. (b) To undertake or aid any enterprise and carry out any transactions whatsoever that may be lawfully undertaken and carried out by capitalists; and to carry on a general financial business and general financial operations of all kinds, so far as the same are not prohibited by the laws of the State of Iowa against the exercise of banking powers by 39 corporations, and to operate and maintain an investment service, as well as to act in the capacity of manager for, and/or consultant to, any persons, firms, corporations, or associations and to give advice to such persons, firms, corporations, or associations concerning their business activities, their investments, the conditions of the various stock and mercantile markets, and in general to aid and assist them in any manner that may be desired. (c) To acquire, own, maintain, and operate a statistical, informatory, and advisory service to banks, bankers, trust companies, financial institutions generally, investment companies, and investors generally; to enter into contracts with banks and bankers, trust companies, investment companies, financial institutions of all kinds, and investors generally, for the purpose of supplying and furnishing financial statistics, information, reports, and opinions concerning the value of corporate securities and the capital and earnings of corporations whose securities are dealt in over-the-counter and in the public exchange and markets. (d) To make investigations as to the business, affairs, and property of corporations, partnerships, and various forms of business enterprises; to make appraisals and valuations of all kinds; and to give financial advice relative to the methods of procuring additional capital for business extension, advice relative to the conversion of securities of one or more corporations into those of another, and generally to instruct and to aid corporations, partnerships, and individuals on matters pertaining to new capital structure. (e) To operate, manage, supervise, direct and control all or any part of the business and property of any corporation, association, partnership, combination, organization, entity, or individual, domestic or foreign, through stock organization, by contract, or otherwise, and for that purpose to appoint and remunerate any directors, accountants, or other experts or agents, and to receive for such service fixed or contingent compensation, or compensation in the form of commissions, management fees, shares in gross or net receipts or profits, or in any other manner or upon any other 40 terms whatsoever, or so to act without direct compensation; and to promote, participate, or assist in any way in the business of any such corporation, association, partnership, combination, organization, entity, or individual. Section 2. in furtherance and not in limitation of the general powers conferred by the laws of the State of Iowa, and the purposes and objects hereinbefore stated, it is expressly provided that the corporation also shall have the following powers: (a) To purchase or otherwise acquire, own, hold, use, improve, manage, mortgage, charge, pledge, sell, convey, lease, exchange, transfer, dispose of and deal with in any manner whatsoever, any and all kinds of real and personal property including stock, securities, and other choses in action issued or created by this or any other corporation or by any association, firm, entity, individual or governmental authority. To allow or cause the legal estate and interest in any businesses or property acquired, established, or carried on by the corporation, to remain, or to be vested or registered in the name of, or to be carried on by, any individual or by any foreign or other corporation formed or to be formed, either upon trust for, or as agents or nominees of, this corporation, or upon any other terms or conditions which the board of directors may consider for the benefit of this corporation; to manage the affairs or take over and carry on the business of any such corporation either by acquiring the whole or part of the shares of stock or bonds, debentures, or other securities thereof, or otherwise; to exercise all or any of the powers of any such corporation or of holders of shares of stock, debentures, or securities thereof; and to receive and distribute as profits the dividends and interest on such shares, stock, debentures, or securities. All conveyances of real property by the corporation shall be executed by the chairman, president or any vice-president and counter-signed by the secretary or any assistant secretary with an impression of the corporate seal affixed; and all releases of mortgages, liens, judgments or other claims required by law to be made of record may be executed by the chairman, president, any vice-president, secretary or any assistant secretary. (b) To cause to be formed, to promote, and to aid in the formation of any corporation to association, domestic or foreign, and to cause or participate in the merger, consolidation, reorganization, liquidation or dissolution of any corporation or 41 association, domestic or foreign, in which, or in the business of welfare of which, the corporation shall have, directly or indirectly, any interest. (c) To do everything necessary, proper, convenient, or incidental to the accomplishment of the purposes and objects of the corporation or which is calculated, directly or indirectly, to promote the welfare or interests of the corporation or enhance the value or render profitable any if its property or rights. (d) In general, to carry on any business not contrary to the laws of the State of Iowa, and to do any and all of the acts and things hereinbefore or hereinafter set forth to the same extent as natural persons could do as principal, factor, agent, contractor, trustee or otherwise, either alone or in company with any person or persons, entity, syndicate, partnership, association or corporation. Section 3. The foregoing clauses are to be construed both as purposes and powers; and it is hereby expressly provided that the enumeration herein of specific purposes, objects and powers shall not be held to limit or restrict in any manner the general powers of the corporation. It is the intention that the purposes, objects and powers specified in each of the paragraphs of this Article II shall, except as otherwise expressly provided, in no wise be limited or restricted by the references to or inferences from the terms of any other clause or paragraph of this Article or of any other Article in these Restated Articles of Incorporation. ARTICLE III Capital Stock Section 1. The aggregate number of shares which the corporation is authorized to issue is Two Million (2,000,000), consisting of one class of common shares. Such shares have a par value of Five Dollars ($5.00) per share. Section 2. No holder of the shares of stock of the corporation shall have any pre-emptive or preferential right of subscription to 42 any class of stock of the corporation, whether now or hereafter authorized, or to any obligations convertible into stock of the corporation, issued or sold, and all such additional shares of stock or any obligations convertible into stock of the corporation may be issued and disposed of by the Board of Directors to such person or persons and upon such term and for such consideration as the Board of Directors in its absolute discretion may deem advisable; provided, however, that no stock shall be issued until the corporation shall have received its full par value in cash or property, as provided by the laws of the State of Iowa; and when issued, all shares shall be fully paid and forever nonassessable. Section 3. At all meetings of stockholders, each stockholder shall be entitled to one vote for each share of common capital stock held by him, which may be cast by the stockholder in person or by proxy, and which vote shall not be cumulative. Section 4. Upon the vote of a majority of the directors of this corporation, and of a majority of the votes then appertaining to the total number of shares of the common stock shares then issued and outstanding, this corporation may from time to time, by amendment to these Articles, increase the authorized capital stock of this corporation, or create one or more other classes of stock with such designations, preferences, voting powers, restrictions, or qualifications as may be determined by such vote, which may be the same or different from the designations, preferences, voting powers, restrictions or qualifications of the classes of stock of this corporation then authorized or issued, except that no new class of stock shall hereafter be created which is entitled to dividends or shares in distribution of assets in priority to or concurrent with, any preferential shares theretofore authorized and issued, unless the holders of not less than two-thirds (2/3) of any preferential shares outstanding and the holders of two-thirds (2/3) of the votes appertaining to each class of common stock shares shall consent thereto in writing, or by vote in person or by proxy, at a meeting duly called for that purpose. ARTICLE IV Commencement and Duration The corporate period of this corporation shall begin on the date the Secretary of State issues a Certificate of Incorporation, and this corporation shall have perpetual duration. 43 ARTICLE V Directors and Officers Section 1. The affairs of this corporation shall be conducted by a Board of Directors consisting of not less than seven nor more than twenty- five members, who shall be elected by the stockholders at their annual meeting each year. A director is not required to be a stockholder in this corporation. Section 2. The Board of Directors may fill all vacancies occurring between annual elections in its membership by election of persons to hold office for the remainder of the term. Section 3. The Board of Directors may, by resolution or resolutions passed by a majority of the whole Board, designate one or more committees, each committee to consist of two or more of the directors of the corporation, which, to the extent provided in said resolution or resolutions or in the Bylaws of the corporation, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the corporation, any may have power to authorize and seal of the corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be stated in the Bylaws of the corporation or as may be determined from time to time by resolution adopted by the Board of Directors. Section 4. Any resolution in writing signed by all the members of the Board of Directors (or any Committee thereof) shall be and constitute action by such Board (or committee) with the same force and effect as if the same had been duly passed by the same vote at a duly called meeting of such bodies. Section 5. The officers of this corporation shall be a Chairman, President, one or more Vice Presidents, a Secretary, one or more Assistant Secretaries, and a Treasurer, and such other officers as shall be authorized by the Board of Directors, or provided for in the Bylaws. An officer may hold more than one office if the Board so decides. The officers shall be elected by the Board of Directors at the annual meeting to be held immediately following the annual meeting of stockholders or at a special meeting called for such purpose and shall hold office at the discretion of the Board. 44 Section 6. An officer is not required to be a director or a stockholder in this corporation. Section 7. The duties of the officers shall be those usually performed by such officers in similar corporations, unless otherwise provided by resolution of the Board of Directors, or in the Bylaws, or by the stockholders at any annual or special meeting. ARTICLE VI Stockholders' Liability Section 1. Private property of the stockholders shall be exempt from corporate debts and liabilities. Section 2. This Article shall not be changed except by unanimous consent of all stockholders. ARTICLE VII Indemnification of Directors and Officers The corporation shall indemnify (1) every director or officer, or former director or former officer, his heirs, executors and administrators, and (2) at the discretion of the Board of Directors of the corporation, any person, or the heirs, executors and administrators of such person, who shall have served at its request as a director or officer of any other corporation of which it is a stockholder or creditor, and from which he is not entitled to be indemnified, against reasonable expenses actually incurred by him in connection with the defense of any action, suit or proceeding to which he may be made a party by reason of his being, or having been, a director or officer of the corporation or of such other corporation, except in relation to matters as to which he shall be finally adjudged in such action, suit or proceeding, to be liable for gross negligence or misconduct in the performance of his duties; in the event of a settlement, indemnification 45 shall be provided only in connection with such matters covered by the settlement as to which the corporation is advised by independent counsel, selected by or in the manner designated by the Board of Directors, that the person to be indemnified did not commit such a breach of duty. The foregoing right of indemnification shall not be exclusive of other rights to which he may be entitled. ARTICLE VIII Bylaws The Board of Directors, at its first meeting, shall adopt Bylaws for the corporation and may alter such Bylaws at any regular or special meeting. ARTICLE IX Amendments Amendment to these Articles, excepting Article III and Article VI, may be made at any annual meeting of the stockholders, or at any special meeting called for that purpose, by a vote of the majority of the shares of the capital stock outstanding. ARTICLE X These Restated Articles of Incorporation set forth the provisions of the Articles of Incorporation as heretofore and hereby amended; have been duly adopted as required by law; and supersedes the original Articles of Incorporation and all amendments thereto. ARTICLE XI The number of shares of the corporation outstanding at the time of such adoption was 140,383; and the number of shares entitled to vote thereon was 140,383. 46 ARTICLE XII The designation and number of outstanding shares of each class entitled to vote thereon as a class were as follows: None. ARTICLE XIII The number of shares voted for such amendment was 136,288; and the number of shares voted against such amendment was none. ARTICLE XIV The number of shares of each class entitled to vote thereon as a class voted for and against such amendment, respectively, was: None. ARTICLE XV The manner, if not set forth in such amendment, in which any exchange, reclassification, or cancellation of issued shares provided for in the amendment shall be effected, is as follows: These Restated Articles of Incorporation reclassify the common stock from 400,000 shares of common stock of Twenty-Five Dollars ($25.00) par value to 2,000,000 shares of common stock of Five Dollar ($5.00) par value. ARTICLE XVI The manner in which such amendment effects a change in the stated capital, and the amount of stated capital as changed by such amendment, are as follows: No change. Dated: May 5, 1972 BRENTON BANKS, Inc. By: /s/ C. Robert Brenton, President By: /s/ Betty L. Steel, Secretary 47 STATE OF IOWA : : ss. COUNTY OF POLK : On this 5th day of May, 1972, before me, a Notary Public in and for the State of Iowa, personally appeared C. Robert Brenton and Betty L. Steel, to be personally known, who being by me duly sworn did say that they are the President and Secretary, respectively, of said corporation, that the seal affixed to said instrument is the seal of said corporation, and that said Restated Articles of Incorporation were signed and sealed on behalf of the said corporation by authority of its Board of Directors and the said C. Robert Brenton and Betty L. Steele acknowledged the execution of said instrument to be the voluntary act and deed of said corporation by it and by them voluntarily executed. /s/ Notary Public in and for the State of Iowa Seal. 48 ARTICLES OF AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION OF BRENTON BANKS, INC. TO THE SECRETARY OF STATE OF THE STATE OF IOWA: Pursuant to the provisions of Section 58 of the Iowa Business Corporation Act, Section 496A.58 of the Iowa Code, the undersigned corporation adopts the following Articles of Amendment to its Restated Articles of Incorporation: 1. The name of the corporation is Brenton Banks, Inc. The effective date of its incorporation was August 31, 1948. 2. The following amendment to the Restated Articles of Incorporation was adopted by the shareholders of the corporation on May 9, 1979, in the manner prescribed by the Iowa Business Corporation Act: Article III, Section 1 is amended to read as follows: ARTICLE III Capital Stock Section 1. Authorized Common Shares. The aggregate number of shares of common stock which the corporation is authorized to issue is Five Million (5,000,000), consisting of one class. Such shares shall have a par value of Five Dollars ($5.00) per share. Article III is amended by renumbering the existing Sections 2, 3, and 4 thereof as Sections 3, 4, and 5, respectively, and by adding the following section as Section 2: 49 Section 2. Authorized Preferred Shares. The aggregate number of shares of preferred stock which the corporation is authorized to issue is Five Hundred Thousand (500,000) consisting of one class. Such shares shall have a par value of One Dollar ($l.00) per share. The preferred shares shall be senior to the common shares, and the common shares shall be subject to the rights and preferences of the preferred shares as hereinafter set forth. The preferred shares may be issued from time to time in one or more series in any manner permitted by law, as determined from time to time by the Board of Directors and stated in the resolution or resolutions providing for the issuance of such shares adopted by the Board of Directors pursuant to authority hereby vested in it, each series to be appropriately designated, prior to the issuance of any shares thereof, by some distinguishing letter, number, or title. All shares of each series of preferred shares shall be alike in every particular (except as to the dates from which dividends shall commence to accrue) and all preferred shares shall be of equal rank and have the same powers, preferences, and rights, and shall be subject to the same qualifications, limitations, and restrictions, without distinction between the shares of different series thereof, except only in regard to the following particulars, which may be different in different series: (a) the annual rate or rates of dividends payable on shares of such series and the dates from which such dividends shall commence to accrue; (b) the amount or amounts payable upon redemption thereof and the manner in which the same may be redeemed; (c) the amount or amounts payable to holders thereof upon any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation; (d) the provisions of the sinking fund, if any, with respect thereto; (e) the terms and rates of conversion or exchange thereof if convertible or exchangeable; and (f) the provision as to voting rights, if any. The shares of any series of preferred share having voting power shall not have more than one vote per share, and if the stated dividends and amounts payable on liquidation are not paid in full, the shares of all series of the preferred 50 shares shall share ratably in the payment of dividends including accumulations, if any, in accordance with the sums which would be payable on such shares if all dividends were declared and paid in full, and in any distribution of assets other than by way of dividends in accordance with the sums which would be payable on such distribution if all sums payable were discharged in full. The designation of each particular series of preferred shares and its terms in respect of the foregoing particulars shall be fixed and determined by the Board of Directors in any manner permitted by law and stated in the resolution or resolutions providing for the issuance of such shares adopted by the Board of Directors pursuant to authority hereby vested in it, before any shares of such series are issued, and shall be set forth in full or summarized on the certificates for such series. The Board of Directors may from time to time increase the number of shares of any series of preferred shares already created by providing that any unissued preferred shares shall constitute part of such series, or may decrease (but not below the number of shares thereof then outstanding) the number of shares of any series of preferred shares already created by providing that any unissued shares previously assigned to such series shall no longer constitute part thereof. The Board of Directors is hereby empowered to classify or reclassify any unissued preferred shares by fixing or altering the terms thereof in respect of the above mentioned particulars and by assigning the same to an existing or newly created series from time to time before the issuance of such shares. The holders of preferred shares of each series shall be entitled to receive, out of any funds legally available for the purpose, when and as declared by the Board of Directors, cash dividends thereon at such rate per annum as shall be fixed by resolution of the Board of Directors for such series, and no more, payable quarterly on the days fixed by the Board of Directors for the first series. Such dividends shall be cumulative, shall be deemed to accrue from day to day regardless of whether or not earned or declared, and shall commence to accrue on each preferred share from such date or dates as may be fixed by the Board of Directors prior to the issue thereof. The Corporation in making any dividend payment upon the preferred shares shall make dividend payments ratably upon all outstanding preferred shares in proportion to the amount of the dividends accrued thereon to the date of such dividend payment. In no event, so long as any preferred shares shall remain outstanding, shall any dividend whatsoever (other than a dividend payable in shares ranking junior to the preferred shares as to dividends and assets) be declared or 51 paid upon, nor shall any distribution be made or ordered in respect of, the common shares or any other class of shares ranking junior to the preferred shares as to dividends or assets, nor shall any moneys other than the net proceeds received from the sale of shares ranking junior to the preferred shares as to dividends and assets be set aside for or applied to the purchase or redemption (through a sinking fund or otherwise) of common shares or of any other class of shares ranking junior to the preferred shares as to dividends or assets, unless all dividends on the preferred shares of all series for past dividend periods shall have been paid and the full dividend on all outstanding preferred shares of all series for the then current dividend period shall have been paid or declared and set apart for payment; and the Corporation shall have set aside all amounts, if any, theretofore required to be set aside as and for sinking funds, if any, for the preferred shares of all series for the then current year, and all defaults, if any, in complying with any such sinking fund requirements in respect of previous years shall have been made good. The Corporation, at the option of the Board of Directors may at any time redeem the whole, or from time to time may redeem any part, of any series of preferred shares, by paying therefor in cash the amount which shall have been determined by the Board of Directors, in the resolution or resolutions authorizing such series, to be payable upon the redemption of such shares at such time. Redemption may be made of the whole or any part of the outstanding shares of any one or more series, in the discretion of the Board of Directors; if the redemption be a part of a series, the shares to be redeemed may be selected by lot, or all of the shares of such series may be redeemed pro rata, in such manner as may be prescribed by resolution of the Board of Directors. Subject to the foregoing provisions and to any qualifications, limitations, or restrictions applicable to any particular series of preferred shares which may be stated in the resolution or resolutions providing for the issuance of such series, the Board of Directors shall have authority to prescribe from time to time the manner in which any series of preferred shares shall be redeemed. Upon any liquidation, dissolution, or winding up of the Corporation, whether voluntary or involuntary, the preferred shares of each series shall be entitled, before any distribution shall be made to the common shares or to any other class or shares junior to the preferred shares as to dividends or assets, to be paid the full preferential amount or amounts fixed by the Board of Directors for such series as herein authorized; but the preferred shares shall not be entitled 52 to any further payment and any remaining net assets shall be distributed ratably to all outstanding common shares. If upon such liquidation, dissolution, or winding up of the Corporation, whether voluntary or involuntary, the net assets of the Corporation shall be insufficient to permit the payment to all outstanding preferred shares of all series of the full preferential amounts to which they are respectively entitled, then the entire net assets of the Corporation shall be distributed ratably to all outstanding preferred shares in proportion to the full preferential amount to which each such share is entitled. Neither a consolidation nor a merger of the Corporation with or into any other corporation or corporations nor the sale of all or substantially all of the assets of the Corporation shall be deemed to be a liquidation, dissolution, or winding up within the meaning of this clause. Article III is further amended by amending Article III, Section 4 (as redesignated; previously Article III, Section 3) to read as follows: Section 4. Subject to any voting restrictions or limitations placed upon preferred shares by the Board of Directors pursuant to such power granted to the Board in Article III, Section 2, at all meetings of stockholders each stockholder shall be entitled to one vote for each share of capital stock held by him, which vote may be cast by the stockholder in person or by proxy, and which vote shall not be cumulative. Article V, Section I is amended to read as follows: ARTICLE V Directors and Officers Section 1. The affairs of this corporation shall be conducted by a Board of Directors. The number of members of the Board of Directors shall be set forth in the Bylaws of the corporation. A director is not required to be a stockholder in this corporation. 3. The number of shares of the corporation outstanding at the time of such adoption was 1,107,898; and the number of shares entitled to vote thereon was 1,107,898. 4. The number of shares voted for the amendment set forth in paragraph 2 was 976,718, and the number of shares voted against such amendment was 5,700. 53 5. Such amendment does not provide for an exchange, reclassification or cancellation of issued shares. 6. Such amendment does not effect a change in the amount of stated capital. Dated this 14th day of May, 1979. BRENTON BANKS, INC. By /s/ C. Robert Brenton, President By /s/ Betty L. Steele, Secretary STATE OF IOWA : : ss COUNTY OF POLK : On this 14th day of May, 1979, before me, the undersigned, a Notary Public in and for said County and State, personally appeared C. Robert Brenton and Betty L. Steele, to me personally known, who being by me duly sworn did say that they are the President and Secretary of said corporation, respectively, of said corporation, that the seal affixed to said instrument is the seal of said corporation, and that said instrument was signed and sealed on behalf of said corporation by authority of its Board of Directors and the said C. Robert Brenton and Betty L. Steele acknowledged the execution of said instrument to be the voluntary act and deed of said corporation by it and by them voluntarily executed. /s/ Claire Cole Notary Public in and for the County and State Seal. 54 STATEMENT OF DIVISION OF PREFERRED STOCK INTO SERIES OF BRENTON BANKS, INC. STATE OF IOWA ) ) SS: COUNTY OF POLK ) TO THE SECRETARY OF STATE OF THE STATE OF IOWA: Pursuant to Section 15(2) of the Iowa Business Corporation Act, Chapter 496A of the Iowa Code (1979), Brenton Banks, Inc. does hereby submit for filing with the Iowa Secretary of State the following Statement: 1. The name of the corporation is Brenton Banks, Inc. 2. Attached hereto is a true and correct copy of a resolution adopted by the Board of Directors of said corporation establishing and designating the series, and fixing and determining the relative rights and preferences of a portion of the preferred stock of such corporation. 3. Such resolution was adopted by the Board of Directors of Brenton Banks, Inc. on October 18, 1979. 4. Such resolution was duly adopted by the Board of Directors of Brenton Banks, Inc. Dated this day 18th day of October, 1979. BRENTON BANKS, INC. By /s/ C. Robert Brenton, President By /s/ Betty L. Steele, Secretary Corporate Seal 55 On this 18th day of October, 1979, before me, the undersigned, a Notary Public in and for said County and State, personally appeared C. Robert Brenton and Betty L. Steele, to me personally known, who being by me duly sworn did say that they are the President and Secretary, respectively, of said corporation, that the seal affixed to said instrument is the seal of said corporation, and that said instrument was signed and sealed on behalf of said corporation by authority of its Board of Directors and the said C. Robert Brenton and Betty L. Steele acknowledged the execution of said instrument to be the voluntary act and deed of said corporation by it and by them voluntarily executed. /s/ Sandra S. Holan Notary Public in and for said County and State Seal. 56 CERTIFICATE OF RESOLUTION ESTABLISHING AND DESIGNATING THE SERIES A $9.50 CUMULATIVE PREFERRED STOCK OF BRENTON BANKS, INC. BRENTON BANKS, INC., a corporation organized and existing under the laws of the State of Iowa (the "Company"), DOES HEREBY CERTIFY: That, pursuant to authority conferred upon the Board of Directors by the Restated Articles of Incorporation, as amended, of the Company (the "Restated Articles of Incorporation"), and pursuant to the provisions of I.C.A. Section 496A.15, said Board of Directors at a meeting thereof duly called, convened and held on October 18, 1979, duly adopted a resolution providing for the issuance of 60,000 shares of Series A $9.50 Cumulative Preferred Stock, par value $1.00 per share, which resolution is as follows: Be It Resolved that, pursuant to the authority vested in the Board of Directors (the "Board") of Brenton Banks, Inc., (the "Company") by the Restated Articles of Incorporation, as amended, of the Company, there is hereby established and authorized to be issued a series of the Company's Preferred Stock, $1.00 par value, consisting of 60,000 shares, which shall have the following voting powers, designation, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions: 1. Designation. The designation of said series of Preferred Stock shall be "Series A $9.50 Cumulative Preferred Stock" (the "Series A Preferred Stock"). 2. Dividends. The holders of the Series A Preferred Stock shall be entitled to cumulative cash dividends at the rate of $9.50 per share per annum (and no more) computed on the basis of a 360-day year of twelve 30-day months, when and as declared by the Board, out of any funds of the Company at the time legally available for the payment of cash dividends on shares of the Series A Preferred Stock, payable quarterly on the fifteenth day of each of the months of January, April, July and October Exhibit A 57 of each calendar year commencing January 15, 1980 (each such day being hereinafter called a "dividend payment date"); provided, however, that dividends in arrears may be paid at any time. Such dividends on each share of Series A Preferred Stock shall accrue daily, and shall be cumulative, from the date on which such share of Series A Preferred Stock shall have been originally issued and shall so accrue and be accumulative whether or not the Company shall have had net profits or assets legally available for such dividends in any quarterly dividend payment period. Arrears of dividends shall not bear interest. 3. Optional Redemptions. (a) In addition to the requirements of the Redemption Fund set forth in paragraph 4 and to the rights of redemption set forth hereinafter, the Company may at any time and from time to time call for redemption and redeem all or any portion of the then outstanding shares of the Series A Preferred Stock (in units of 1000 shares or an integral multiple of 100 in excess thereof) at the then applicable redemption price per share set forth below, plus a sum of money equivalent to all accrued and unpaid cumulative dividends (whether or not declared or earned thereon to and including the date of redemption. Date of Redemption Applicable On or After and Prior to Redemption October 15, October 15, Price Per Share 1979 1980 $119.00 1980 1981 $119.00 1981 1982 $119.00 1982 1983 $105.00 1983 1984 $104.00 1984 1985 $103.00 1985 1886 $102.00 1986 1987 $101.00 1987 and thereafter $100.00 (b) In addition to the requirements of the Redemption Fund set forth in paragraph 4 and to the right of redemption pursuant to paragraph 3(a), on each Redemption Fund payment date specified in paragraph 4(a) (the "Redemption Fund Payment Date") the Company shall have the option (which shall not be cumulative) to redeem that number of shares of the Series A Preferred Stock equal to the number of such shares then required to be redeemed pursuant to paragraph 4, or any part thereof, at a price per share equal to $100, plus a sum of money equivalent to all accrued and unpaid cumulative dividends (whether or not declared or earned) thereof to and including the date of redemption. 58 (c) In the event that the Company shall have requested the holders of the Series A Preferred Stock in writing to consent to a Prohibited Corporate Action, and the holder or holders of less than the greater of that percentage of the outstanding Series A Preferred Stock as would be required under either applicable law or the provisions of paragraph 6(a) to approve such Prohibited Corporate Action shall, within 30 days from the date of such request, have consented in writing to such Prohibited Corporate Action, then the Company may, within 120 days after such 30 day period (upon the notice and otherwise in the manner specified in paragraph 5), redeem all but not less than all of the shares of Series A Preferred Stock then outstanding. The request of the Company for such consent shall contain a reasonably detailed description of such transaction being proposed and the terms and provisions with respect thereto. In the event the Company shall have failed to obtain the requisite consent as described above, redemption of Series A Preferred Stock pursuant to the provisions of this paragraph 3(c) shall be made concurrently with the completion of such Prohibited Corporate Action and shall be made at a redemption price of $100 per share, plus, in each case, all accrued and unpaid cumulative dividends thereon (whether or not declared or earned) to the date fixed for redemption. 4. Redemption Fund for Series A Preferred Stock (a) On or before October 15, 1984, and on or before October 15 of each year thereafter, to and including October 15, 1989, the Company shall, so long as any shares of Series A Preferred Stock remain outstanding, set apart out of its funds lawfully available for the purpose (or to the extent the same are available therefor), as and for a Redemption Fund for the retirement of the Series A Preferred Stock (the "Redemption Fund"), that sum in cash which shall be sufficient to redeem, at a price per share equal to $100 plus all accrued and unpaid cumulative dividends thereon to the date fixed for such retirement the lesser of (i) 10,000 shares of Series A Preferred Stock; or (ii) the aggregate outstanding shares of Series A Preferred Stock. (b) The amounts so set apart for the Redemption Fund shall be applied by the Company, on October 15 in each of the years 1984 through 1989, inclusive to the redemption (in the manner and upon the notice specified in paragraph 5) of the maximum number of shares of Series A Preferred Stock redeemable from such amounts so set apart at said price. (c) The obligation of the Company to set apart such sum or sums specified in paragraph 4(a) shall be cumulative so that, if the full amount required to be set apart as 59 aforesaid in each such year for the Redemption Fund shall not be so set apart, the deficiency shall be made good and shares of the Series A Preferred Stock shall be called for redemption and redeemed accordingly, at any time thereafter as soon a funds shall become lawfully available therefore, whether or not on a Redemption Fund Payment Date specified in paragraph 4(a). Optional redemptions pursuant to paragraph 3 or repurchases, directly or indirectly, by the Company of shares of the Series A Preferred Stock shall not affect the Company's obligations to make the Redemption Fund payments required by this paragraph 4; provided, however, that in the event of any redemption or repurchase of Series A Preferred Stock other than pursuant to the provisions of paragraphs 3(a), 3(b) or 4 which does not result in the redemption or repurchase of all of the outstanding shares of Series A Preferred Stock (a "Special Redemption"), then the redemptions required to be made pursuant to the provisions of this paragraph 4 shall, after the occurrence of such Special Redemption be reduced in the same proportions that the number of share of Series A Preferred Stock outstanding immediately preceding such Special Redemption has been reduced by such to the end that the remaining redemptions required to be made pursuant to this paragraph 4 on each of the shares of Series A Preferred Stock shall be the same as if shares of Series A Preferred Stock had not been redeemed or repurchased pursuant to a Special Redemption. 5. Manner and Effect of Redemptions (a) Notice of any proposed redemption of shares of Series A Preferred Stock shall be given by the Company by mailing, registered or certified mail, postage prepaid, such notice not less than thirty nor more than sixty days prior to the date fixed for such redemption to the holders of record of shares of Series A Preferred Stock to be redeemed or purchased, at their respective addresses appearing on the books of the Company. Said notice shall specify the shares called for redemption, the redemption price and the place at which and the date on which the shares called for redemption will, upon presentation and surrender of the certificates of stock evidencing such shares, be redeemed and the redemption price therefor paid. (b) If less than all of the shares of the Series A Preferred Stock are to be redeemed pursuant to the provisions of this Resolution, selection of shares to be redeemed shall be pro-rata in accordance with the number of shares of Series A Preferred Stock held by each holder thereof. 60 (c) If the giving of notice of redemption shall have been completed as above provided and the deposit of funds shall have been made pursuant to subparagraph (d) below, the holders of shares of Series A Preferred Stock shall be entitled to receive the redemption price (including accrued dividends with respect to the shares called for redemption) on the date and at the place stated in such notice upon surrender of certificates for such shares, duly endorsed or accompanied by duly executed stock transfer powers. (d) On or prior to the date fixed for any redemption of shares of Series A Preferred Stock, the Company shall deposit as a trust fund with Brenton National Bank of Des Moines or any bank or trust company in good standing, organized under the laws of the United States of America or the State of Illinois and doing business in Chicago, Illinois with a capital and surplus of at least fifty million dollars, selected by the Board, a sum sufficient to redeem on the date fixed for redemption such shares called for redemption, with irrevocable instructions to said bank or trust company to pay said sum to the holders of the shares to be redeemed upon their surrender of their certificates pursuant to subparagraph (c) of this paragraph 5. From and after the date fixed for redemption, the shares so called for redemption shall be deemed to be redeemed and dividends on such stock shall cease to accrue. The holders of such shares shall cease to be shareholders with respect to such shares and shall have no rights with respect thereto, from and after the date fixed for redemption, except the right to receive from said bank or trust company payment of the redemption price, without interest thereon, upon the surrender of the certificates of certificates evidencing such shares. (e) All shares of series A Preferred Stock which shall have been redeemed, purchased or otherwise acquired by the Company may become additional authorized but unissued shares of Preferred Stock, but such shares shall not be reissued as shares of Series A Preferred Stock. 6. Certain Restrictions on Corporate Action So long as any shares of Series A Preferred Stock shall be outstanding, and in addition to any other approvals or consents required by law, without the prior written consent of the holders of not less than 66-2/3% of all shares of Series A Preferred Stock at the time outstanding: (a) Prohibited Corporate Actions. The Company shall not be a party to any Prohibited Corporate Action. 61 (b) Dividends on or Redemption of Junior Stock. The Company shall not declare or pay any dividend or make any other distribution on any shares of Junior Stock or purchase, redeem or otherwise acquire for any consideration other than in exchange for or out of the net cash proceeds of the contemporaneous issue or sale of other shares of Junior stock), or set aside as a sinking fund or other fund for the redemption or repurchase of any shares of Junior Stock or any warrants, rights or options to purchase shares of Junior Stock (all such declarations, dividends, purchase payments or other distributions or allocations being herein called "Restricted Stock Payments"), unless at the time of making payment or declaration of the proposed Restricted Stock Payment (i) all dividend and Redemption Fund payments applicable to the Series A Preferred Stock have been currently satisfied, and (ii) after giving effect to the proposed Restricted Stock Payment the aggregate amount of Restricted Stock payments made during the period from and after January 1, 1979 to and including the date of the making of the proposed Restricted Stock Payment, would not exceed the sum of (x) $2,000,000 plus (y) Consolidated Net Income for such period, on a cumulative basis for said entire period. (c) Agreements Restricting Dividends on or Redemption of the Series A Preferred Stock. The Company shall not (i) enter into any agreement, indenture or other instrument containing express provisions restricting or limiting the obligation or right of the Company to make payment of dividends on shares of the Series A Preferred Stock or payments into the Redemption Fund described in paragraph 4 or the redemption of the Series A Preferred Stock therefrom nor (ii) will it permit any subsidiary to enter into any agreement, indenture or other instruments (other than with regulatory authorities having jurisdiction over such subsidiary) containing express provisions restricting or limiting the right of such Subsidiary to make, payments of dividends on the stock of such Subsidiary owned by the Company if such provisions are, at the time of entering into such agreement indenture or other instrument, more restrictive with respect to the payment of such dividends than the applicable provisions of any Federal or state statute rule or regulation to which such Subsidiary may at such time be subject. (d) Issuance of Parity Stock. The Company shall not create, authorize or issue any shares of any Parity Stock unless at the time of issuance thereof and after giving effect thereto and to the application of the proceeds thereof. Net Income Available for Fixed Charges of the Company for any period of 12 consecutive calendar months out of the 15 calendar months immediately proceeding the issuance of such Parity Stock shall have been at least equal to 200% of Pro Forma Fixed Charges for such period. 62 (e) Redemptions of Preferred Stock. If and so long as any Redemption Fund payment or any quarterly dividend on the Series A Preferred Stock be in arrears, the Company shall not redeem, purchase or otherwise acquire, by way of sinking fund payments or purchase fund payments or otherwise, any other series of Preferred Stock unless funds shall simultaneously be set apart for the redemption Fund and for the sinking fund or analogous funds for the redemption of shares of all other series of Preferred Stock, ratably in accordance with the sums which would so be set apart if all Redemption Fund payments in arrears and all sinking or analogous fund payments in arrears for all other series of Preferred Stock were set aside in full, and the funds so set apart shall forthwith be applied to the redemption of the maximum number of shares of each series of Preferred Stock redeemable from the amounts so set apart at the respective prices applicable thereto. Whenever there shall be deposited or set aside the whole or any part of the funds required to be deposited or set aside by the Company as a sinking fund or purchase fund or other similar fund for the periodic retirement of shares of any other series of the Company's Preferred Stock, there shall also be deposited or set aside at the same time the full amount or the same proportionate part, as the case may be, of the funds, if any, then due to be deposited or set aside for the Redemption Fund for the periodic retirement of shares of Series A Preferred Stock then outstanding. (f) Issuance of Prior Stock. The Company shall not create, authorize or issue any shares of any Prior Stock. So long as any shares of Series A Preferred Stock shall be outstanding and in addition to any other approvals or consents required by law, without the prior written consent of the holders of 100% of all shares of Series A Preferred Stock at the time outstanding; (g) Certain Amendments. The company shall not amend, alter or repeal any of the provisions of its Restated Article of Incorporation or of this Resolution in any manner which adversely affects the rights, preferences or powers, or the qualification, limitations or restrictions of the Series A Preferred Stock or the holders thereof. 7. Preference on Liquidation, Dissolution or Winding Up. In the event of any complete or partial liquidation, dissolution or winding up of the affairs of the Company or any distribution of its assets to its shareholders, whether voluntary or involuntary, the holders of Series A Preferred Stock shall be entitled to be paid in full out of any legally available assets of the Company, before any distribution or payment shall be 63 made to the holders of any Junior Stock, (i) is such liquidation, dissolution or winding up shall be voluntary, a sum in cash equal to (x) $105 per share if the Voluntary Liquidation Date shall be prior to October 15, 1982; or (y) if the Voluntary Liquidation Date shall be on or after October 15, 1982, the redemption price that would have been payable had the Company, instead, at its option redeemed the same pursuant to paragraph 3(a) on such Voluntary Liquidation Date, or (ii) if such liquidation, dissolution or winding up shall be involuntary, a sum in cash equal to $100 per share, plus in each case, full accrued, unpaid, cumulative dividends, if any, thereon (whether or not earned or declared) to the date of payment. As used in this paragraph 7, the term "Voluntary Liquidation Date" shall mean the date of commencement of the proceedings for any voluntary complete or partial liquidation, dissolution or winding up of the affairs of the Company or any voluntary distribution of its assets to its shareholders (which commencement date shall be deemed to be the earliest date on which the resolution shall be adopted by the Board or requisite holders of any series or class of capital stock proposing the voluntary liquidation concerned). A Prohibited Corporate Action shall not be regarded as a liquidation, dissolution or winding up of the affairs of the Company within the meaning of this paragraph 7. 8. Conversion Rights Shares of the Series A Preferred Stock shall not be convertible into shares of any other class of capital stock of the Company. 9. Stated Capital for the Series A Preferred Stock. The Series A Preferred Stock shall have a stated capital per share equal to its par value. 10. Voting Power. (a) The holders of the Series A Preferred Stock shall not be entitled to vote and shall not be entitled to notice of any shareholders' meeting except as otherwise provided by law or by the provision of paragraph 6. (b) If at any time either (i) dividends on the Series A Preferred Stock shall be in arrears (regardless of the cause of such arrearage) in respect of any four or more 64 quarter-annual dividend payments (or the equivalent), in whole or in part, or (ii) the Company shall be in default (regardless of the cause of such default) in any annual (or the equivalent) redemption or sinking fund payment, in whole or in part, on the Series A Preferred Stock, then the holders of not less than 51% of all outstanding shares of Series A Preferred Stock, shall have the right by written instrument filed with the Secretary of the Company to appoint two observers who shall be entitled so long as any such event shall continue (w) to receive the same notice in respect of all meetings (both regular and special) of the Board and each committee thereof as are required to be furnished to members of the Board or such committee by law or by the Restated Article of Incorporation or By-laws of the Company, (x) to attend all meetings of the Board and each committee thereof and to receive minutes of all meetings of the Board, (y) to receive all information and reports which are furnished to members of the Board and each committee thereof and (z) to participate in all discussions conducted at meetings of the Board and each committee thereof; but such observers shall not constitute members of the Board or any committee thereof and shall not be entitled to vote on any matters presented to the Board or any committee thereof. 11. Definitions. As used herein the following terms shall have the following meanings: "Capitalized Lease" shall mean any lease the obligation for Rentals with respect to which is required to be capitalized on a balance sheet of the lessee in accordance with generally accepted accounting principles. "Common Stock" shall include any class of capital stock of the Company now or hereafter authorized, the right of which to share in distributions either of earnings or assets of such corporation is without limit as to any amount or percentage. "Consolidated Net Income" for any period shall mean the gross revenues of the Company and its Subsidiaries for such period less all expenses and other proper charges (including taxes on income), determined on a consolidated basis in accordance with generally accepted accounting principles consistently applied and after eliminating earnings or losses attributable to outstanding Minority Interests, but excluding in any event: (i) any excess of gains over losses (but not any excess of losses over gains) on the sale or other disposition of investments (other than investments 65 held in the ordinary course of the banking business) or fixed or capital assets and any taxes on such excluded gains; (ii) the proceeds of any life insurance policy; (iii) net earnings and losses of any Subsidiary of the Company accrued prior to the date it became a Subsidiary of the Company; (iv) net earnings and losses of any corporation (other than a Subsidiary of the Company), substantially all the assets of which have been acquired in any manner, realized by such other corporation prior to the date of such acquisition; (v) net earnings and losses of any corporation (other than a Subsidiary of the Company) with which the Company or a Subsidiary of the Company shall have consolidated or which shall have merged into or with the Company or a Subsidiary of the Company prior to the date of such consolidation or merger; (vi) net earnings of any business entity (other than a Subsidiary of the Company) in which the Company or any Subsidiary of the Company has an ownership interest unless such net earnings shall have actually been received by the Company or such Subsidiary in the form of cash distributions; (vii) any portion of the net earnings of any Subsidiary of the Company which for any reason is unavailable for payment of dividends to the company or any other Subsidiary of the Company; (viii) earnings resulting from any reappraisal, revaluation or write-up of assets (other than in the ordinary course of business of a financial institution); (ix) any deferred or other credit representing any excess of the equity in any Subsidiary of the Company at the date of acquisition thereof over the amount invested in such Subsidiary of the Company; (x) any gain arising from the acquisition of any securities of the Company or any Subsidiary of the Company; and 66 (xi) any reversal of any contingency reserve, except to the extent that provision for such contingency reserve shall have been made from income arising during such period. "Fixed Charges" for any period shall mean on a consolidated basis the sum of (i) all interest and all amortization of debt discount and expense in respect of all indebtedness of the Company and its Subsidiaries (including imputed interest on Capitalized Leases) other than indebtedness of Subsidiaries of the Company consisting of deposits included within the definitions contained in 12 C.F.R. 217.1 and (ii) 33-1/3% of all Rentals in respect of all leases other than Capitalized Leases payable during such period by the Company and its Subsidiaries. "Junior Stock" shall mean and include the Common Stock of the Company and all other shares of stock of any other class of the Company at any time created and issued ranking junior the Series A Preferred Stock with respect to the right to receive dividends and the right tot he distribution of assets upon liquidation, dissolution or winding up of the Company. "Minority Interests" shall mean any shares of stock of any class of a Subsidiary of the Company (other than directors' qualifying shares as required by law) that are not owned by the Company and/or one or more of its Subsidiaries, Minority Interests shall be valued by valuing Minority Interests constituting preferred stock at the voluntary or involuntary liquidating value of such preferred stock, whichever is great, and by valuing Minority Interests constituting common stock at the book value of capital and surplus applicable thereto adjusted, if necessary, to reflect any changes from the book value of such common stock required by the foregoing method of valuing Minority Interests in preferred stock. "Net Income Available for Fixed Charges" for any period shall mean the sum of (i) Consolidated Net Income during such period plus (to the extent deducted in determining Consolidated Net Income), (ii) all provisions for any federal, state or other income taxes made by the Company and its Subsidiaries during such period and (iii) Fixed Charges during such period. "Parity Stock" shall mean stock of any other class of the Company ranking on a parity with the Series A Preferred Stock (including, without limitation, shares of Series A Preferred Stock which have been redeemed, purchased 67 or otherwise acquired by the Company) with respect to the payment of dividends or the distribution of assets or any securities of any kind convertible into shares of such Parity Stock. "Preferred Stock" shall mean the preferred stock of the Company authorized to be issued pursuant to Section 2 of Article III of the Restated Articles of Incorporation of the Company. "Prior Stock" shall mean stock of any other class of the Company ranking prior to the Series A Preferred Stock with resect to the payment of dividends or the distribution of assets or any securities of any kind convertible into shares of such Prior Stock. "Pro Forma Fixed Charges" for any period shall mean, as of the date of any determination thereof, the sum of (i) the maximum aggregate amount of Fixed Charges which would have become payable by the Company and its subsidiaries in such period plus (ii) the total dividend requirements on all series and classes of Preferred stock of the Company, determined, in each case on a pro forma basis giving effect as of the beginning of such period to the issuance and sale of the Parity Stock then proposed to be issued and the application of the proceeds thereof. "Prohibited Corporate Action" shall mean any merger, consolidation or sale of all or substantially all of the assets of the Company. "Rentals" shall mean and include all fixed rents (including as such all payments which the lessee is obligated to make to the lessor on termination of the lease or surrender of the property) payable by the Company or any of its Subsidiaries, as lessee or sub-lessee under a lease of real or personal property, but shall be exclusive of any amounts required to be paid by the Company or such Subsidiary (whether or not designated as rents or additional rents) on account of maintenance, repairs, insurance, taxes and similar charges. Fixed rents under any so-called "percentage leases" shall be computed solely on the basis of the minimum rents, if any, required to be paid by the lessee regardless of sales volume or gross revenues. "Subsidiary" shall mean, as to any particular parent corporation, any corporation of which more than 50 percent (by number of votes) or the Voting Stock shall be owned, by such parent corporation and/or one or more corporations which are themselves subsidiaries of such parent corporation. 68 "Voting Stock" shall mean securities of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the corporate directors (or persons performing similar functions). IN WITNESS WHEREOF, said BRENTON BANKS, INC., has caused its corporate seal to be hereunto affixed and this certificate to be signed by C. Robert Brenton, its President and attested by Betty L. Steele, it Secretary, this 18th day of October 1979. BRENTON BANKS, INC. By: /s/ C. Robert Brenton Its President [Seal] Attest: By /s/ Betty L. Steele Secretary 69 This page intentionally left blank. 70 ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF BRENTON BANKS, INC. TO THE SECRETARY OF STATE OF THE STATE OF IOWA: Pursuant to the provisions of Section 58 of the Iowa Business Corporation Act, the undersigned adopts the following Articles of Amendment to its Articles of Incorporation: I The name of the corporation is Brenton Banks, Inc. The effective date of its Articles of Incorporation was the 31st day of August, 1948. II The following amendment to the Articles of Incorporation was adopted by the shareholders of the corporation on May 4, 1988, in the manner prescribed by the Iowa Business Corporation Act. ARTICLE VII DIRECTORS' NONLIABILITY AND INDEMNIFICATION 1. Nonliability. A director of this corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or knowing violation of the law, (iii) for any transaction from which the director derived an improper personal benefit, or (iv) under Section 496A.44 of the Iowa Business Corporation Act. No amendment to or repeal of this Article shall apply to or have any effect on the liability or alleged liability of any director of the corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal. If Iowa law is hereafter changed to permit further elimination or 71 limitation of the liability of directors for monetary damages to the corporation of its shareholders, then the liability of a director of this corporation shall be eliminated or limited to the full extent then permitted. The directors of this corporation have agreed to serve as directors in reliance upon the provisions of this Article. 2. Indemnification. The corporation shall indemnify a director of this corporation, and each director of this corporation who is serving or who has served, at the request of this corporation, as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust, other enterprise or employee benefit plan to the fullest extent possible against expenses, including attorneys' fees, judgments, penalties, fines, settlements and reasonable expenses, actually incurred by such director or person relating to his conduct as a director of this corporation or as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust, other enterprise or employee benefit plan, except that the mandatory indemnification required by this sentence shall not apply (i) to a breach of a director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or knowing violation of the law, (iii) for a transaction from which a director derived an improper personal benefit, (iv) under Section 496A.44 of the Iowa Business Corporation Act, or (v) against judgments, penalties, fines and settlements arising from any proceeding by or in the right of the corporation, or against expenses in any such case where such director shall be adjudged liable to the corporation. III The number of shares of the corporation outstanding at the time of such adoption was 2,398,645, and the number of shares entitled to vote thereon was 2,398,645. 72 IV The designation and number of outstanding shares of each class entitled to vote thereon as a class were as follows: None. V The number of shares voted for such amendment was 2,124,600, and the number of shares voted against such amendment was 13,103. VI The number of shares of each class entitled to vote thereon as a class voted for and against such amendment, respectively, was: None. VII The manner, if not set forth in such amendment, in which any exchange, reclassification, or cancellation of issued shares provided for in the amendment shall be effected, is as follows: No change. VIII The manner in which such amendment effects a change in the amount of stated capital, and the amount of stated capital as changed by such amendment, are as follows: No change. Dated: May 5, 1988. BRENTON BANKS, INC. By: /s/ C. Robert Brenton, President By: /s/ Steven T. Schuler, Secretary Corporate Seal 73 STATE OF IOWA : : SS. COUNTY OF POLK : On this 5th day of May, 1988, before me a Notary Public in and for the State of Iowa, personally appeared C. Robert Brenton, to me personally known, who being by me duly sworn did say that he is President of said corporation, that the seal affixed to said instrument is the seal of said corporation, and that said Articles of Amendment were signed and sealed on behalf of said corporation by authority of its Board of Directors and the said C. Robert Brenton acknowledged the execution of said instrument to be the voluntary act and deed of said corporation by it voluntarily executed. /s/ Janice L. Thoman Notary Public in and for the State of Iowa Seal. 74 STATEMENT OF CANCELLATION OF REDEEMABLE SHARES OF BRENTON BANKS, INC. TO THE SECRETARY OF STATE OF THE STATE OF IOWA: Pursuant to the provisions of Section 64 of the Iowa Business Corporation Act, Chapter 496A, Code of Iowa, the undersigned corporation submits the following statement of cancellation by redemption of redeemable shares of the corporation. 1. The name of the corporation is Brenton Banks, Inc. 2. The effective date of incorporation was August 31, 1948. 3. Sixty thousand (60,000) shares of $9.50 Cumulative Preferred Series A stock were canceled through redemption. 4. The aggregate number of issued shares after giving effect to such cancellation is 2,398,645 common shares. 5. The original name of the corporation was Brenton Companies. 6. The amount of the stated capital of the corporation after giving effect to such cancellation is $12,226,725. Dated June 30, 1988. BRENTON BANKS, INC. By: /s/ C. Robert Brenton, President By: /s/ Steven T. Schuler, Secretary 75 STATE OF IOWA ) ) ss. COUNTY OF POLK ) On this 5th day of July, 1988, before me, the undersigned a Notary Public in and for said County and State, personally appeared C. Robert Brenton and Steven T. Schuler, to me personally known, who, being by me duly sworn, did say that they are the President and Secretary, respectively, of said corporation executing the within and foregoing instrument, that the seal affixed hereto is the seal of said corporation; that said instrument was signed and sealed on behalf of said corporation by authority of its Board of Directors; and that the said President and Secretary, as such officers, acknowledged the execution of said instrument to be the voluntary act and deed of said corporation, by it and by them voluntarily executed. /s/ Janice L. Thoman Notary Public in and for said County and State Seal. 76 This page intentionally left blank. 77 ARTICLES OF AMENDMENT OF BRENTON BANKS, INC. TO THE SECRETARY OF STATE OF THE STATE OF IOWA: Pursuant to Section 1002 or 1006 of the Iowa Business Corporation Act, the undersigned corporation adopts the following amendment to the corporation's Restated Articles of Incorporation. 1. The name of the corporation is Brenton Banks, Inc. 2. The following amendment was adopted by the shareholders of the corporation: RESOLVED, that Article III, Section 1 of the Restated Articles of Incorporation, is amended to read as follows: Section 1. Authorized Common Shares. The aggregate number of shares of common stock which the corporation is authorized to issue is Twenty Five Million (25,000,000), consisting of one class. Such shares shall have a par value of Five Dollars ($5.00) per share. 3. The date of adoption of the amendment was May 9, 1990. 4. The amendment was approved by the shareholders. The designation, number of outstanding shares, number of votes entitled to be cast by each voting group entitled to vote separately on the amendment, and the number of votes of each voting group indisputably represented at the meeting is as follows: VOTES ENTITLED DESIGNATION SHARES TO BE CAST ON VOTES REPRESENTED OF GROUP OUTSTANDING AMENDMENT AT MEETING Common 4,797,290 4,797,290 4,196,958 4A. The total number of votes cast for and against the amendment by each Voting group entitled to vote separately on the amendment is as follows: 78 VOTING VOTES VOTES GROUP FOR AGAINST Common 4,151,304 34,706 4B. The total number of undisputed votes cast for the amendment by each voting group was: VOTING VOTES GROUP FOR Common 4,151,304 The number of votes cast for the amendment by each voting group was sufficient for approval by that voting group. BRENTON BANKS, INC. By /s/ Junius C. Brenton, President 79 ARTICLES OF MERGER MERGING AMES FINANCIAL CORPORATION WITH AND INTO BRENTON BANKS, INC. Pursuant to the provisions of Section 1105 of the Iowa Business Corporation Act, the undersigned corporation adopts the following Articles of Merger: 1. The Plan and Agreement of Merger (the "Plan") is attached hereto and by this reference is incorporated herein. 2. (a) The designation, number of outstanding shares and number of votes entitled to be cast by each voting group entitled to vote separately on the Plan as to each corporation is as follows: Number of Number of Name of Designation Outstanding Votes Entitled Corporation of Shares Shares to be Cast Ames Financial Corporation Common 273,624 273,624 The Plan was adopted by action of the Board of Directors of Brenton Banks, Inc. without a vote of the shareholders pursuant to the provisions of Section 1103(7) of the Iowa Business Corporation Act. (b) The total number undisputed votes cast for the Plan by the common stockholders of Ames Financial Corporation was 243,385, which number was sufficient for approval of the Plan by that voting group. The Plan was adopted by action of the Board of Directors of Brenton Banks, Inc. without a vote of the shareholders pursuant to the provisions of Section 1103(7) of the Iowa Business Corporation Act. 3. The merger shall take effect at 12:01 a.m. on October 1, 1992. Dated this 29th day of September, 1992. Attest: BRENTON BANKS, INC. /s/ Steven T. Schuler, Secretary /s/ J. C. Brenton, President Corporate Seal 80 STATE OF IOWA ) ) ss. COUNTY OF POLK ) On this 29th day of September, 1992, before me, the undersigned, a Notary Public in and for the State of Iowa, personally appeared J. C. Brenton, to me personally known, who, being by me duly sworn, did say that he is the President of Brenton Banks, Inc., executing the within and foregoing instrument, that no seal has been procured by the said corporation; that said instrument was signed on behalf of said corporation by authority of is Board of Directors; and that the said J. C. Brenton, as such officer, acknowledged the execution of said instrument to be the voluntary act and deed of said corporation, by it and by him voluntarily executed. /s/ Shirley Kirchner Notary Public in and for the State of lowa Seal. 81 PLAN AND AGREEMENT OF MERGER OF AMES FINANCIAL CORPORATION WITH AND INTO BRENTON BANKS, INC. THIS PlAN AND AGREEMENT OF MERGER ("Agreement") dated as of September 29, 1992, by and between BRENTON BANKS, Inc. ("Brenton") and AMES FINANCIAL CORPORATION ("Ames Financial"). WITNESSETH WHEREAS, Brenton is a corporation duly organized and existing under the laws of the State or lowa, with authorized capitalization at December 31, 1991 consisting of 25,000,000 shares of $5.00 par value common stock, of which 4,813,890 shares were duly authorized, fully paid, validly issued, nonassessable and outstanding and 500,000 shares of $1.00 par value preferred stock, of which no shares were outstanding; and WHEREAS, Ames Financial is a corporation duly organized and existing under the laws of the State of Delaware, with authorized capitalization at December 31, 1991 consisting of 5,000,000 shares of Ames Financial common stock, $.01 par value, of which 273,624 shares are duly authorized, validly issued. fully paid, nonassessable and currently outstanding and 1,000,000 shares of Ames Financial serial preferred stock, $.01 par value, of which no shares are outstanding; and WHEREAS, Brenton and Ames Financial are parties to that certain Merger Agreement (the "Merger Agreement") dated as of June 17, 1992 providing for the merger (the "Merger") of Ames Financial with and into Brenton in the manner and with the effect set forth in this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein and in the Merger Agreement, it is agreed that, in accordance with the applicable statutes of the States of Delaware and lowa, the parties hereto agree as follows: ARTICLE I The Merger Section 1. The Merger. On the Effective Date (as hereinafter defined) Ames Financial shall be merged with and into Brenton in accordance with the terms and provisions of this Agreement, the separate existence of Ames Financial shall cease and the merger shall in all respects have the effect provided for in Section 259 of the General Corporation Law of the State of Delaware and Section 1106 of the lowa Business Corporation Act. The Merger shall be pursuant to the provisions of and with the effect provided in, the Merger Agreement and the Merger shall become effective on the date (the "Effective Date") upon which the Articles of Merger are filed with the lowa Secretary of State or at such later time and/or date as may be provided in the Articles of Merger. 82 Section 2. Name. The name of the surviving corporation in the Merger ("Surviving Corporation") shall be 'BRENTON BANKS, INC. Section 3. Articles of Incorporation. The Articles of Incorporation of Brenton in effect immediately prior to the Effective Date shall be and remain the Articles of Incorporation of the Surviving Corporation until amended as provided by law and the terms thereof. Section 4. By-Laws. The By-Laws or Brenton in effect immediately prior to the Effective Date shall be and remain the By-Laws of the Surviving Corporation until amended as provided by law and the terms thereof. Section 5. Officers and Directors. From and after the Effective Date of the Merger, the directors and officers of the Surviving Corporation shall be those persons who are the directors and officers of Brenton at the Effective Date of the Merger, and they shall continue to hold office from and after the Effective Date of the Merger as provided in the Articles of Incorporation and Bylaws of the Surviving Corporation. ARTICLE II Conversion of Shares Section 1. Brenton Shares. The shares of capital stock of Brenton issued and outstanding as of the Effective Date of the Merger shall continue to be issued and outstanding shares of the Surviving Corporation. Section 2. Conversion of Ames Financial Shares. As of the Effective Date, by virtue of the Merger and without any action on the part of the holder of any common stock of Ames Financial ("Ames Financial Share" or "Ames Financial Shares"): a. Each outstanding Ames Financial Share (other than any shares as to which appraisal rights have been perfected) shall be converted into the right to receive 1.358 shares of the $5.00 par value common stock of Brenton ("Brenton Common Stock" or "Brenton Shares"). b. From and after the Effective Date, the holders of certificates formerly representing Ames Financial Shares shall cease to have any rights with respect thereto other than any appraisal rights perfected pursuant to Section 262 of the General Corporation Law of the State of Delaware. Section 3. Fractional Shares. No fractional shares of Brenton Common Stock shall be issued to any holder of Ames Financial Shares. In lieu thereof, each such holder who would be entitled to a fraction of a share of Brenton Common Stock shall receive, at the time of surrender of the certificate or certificates representing such holder's Ames Financial Shares, an amount in cash equal to the market value per share of the common stock of Brenton, calculated by taking the Average Bid Price for the last five trading dates preceding the Effective Date on which actual trades occurred multiplied by the fraction of a share of Brenton Common Stock to which such holder otherwise would be entitled. No such holder shall be entitled to dividends, voting rights, interest on the value of, or any other rights in respect of a fractional share. Section 4. Surrender of Ames Financial Shares. The following shall apply to the surrender of Ames Financial Shares. 83 a. Prior to the Effective Date, Brenton shall appoint Harris Bank and Trust Company, Chicago, Illinois or its successor, or any other bank or trust company (having capital of at least $50 million) mutually acceptable to Ames Financial and Brenton, as exchange agent (the "Exchange Agent") for the purpose of exchanging some or all of the certificates representing the Brenton Shares. At the Effective Date, Brenton shall issue and deliver to the holders of Ames Financial Shares who have surrendered to Brenton for cancellation their certificates for Ames Financial Shares such cash and such certificates representing the Brenton Shares as shall be required by this Agreement to be delivered to the holders of such Ames Financial Shares. After the Effective Date Brenton shall Issue and deliver to the Exchange Agent such cash and such certificates representing the Brenton Shares as shall be required by this Agreement to be delivered to holders of Ames Financial Shares who have not surrendered to Brenton for cancellation their certificates for Ames Financial Shares as or the Effective Date. At or as soon as practicable after the Effective Date each holder of Ames Financial Shares converted pursuant to Section 2(a) of this Article II, upon surrender to Brenton or to the Exchange Agent, as the case may be, of one or more certificates for such Ames Financial Shares for cancellation, will be entitled to receive a certificate representing the number of Brenton Shares determined in accordance with Section 2(a) of this Article II and a payment in cash with respect to tractional shares, if any, determined in accordance with Section 3 of this Article II. Each certificate representing the Brenton Shares: (1) shall be dated as to the Effective Date; (2) may bear the Rule 144 Restrictive Legend (as that term is defined in section 8.4 of the Merger Agreement) and (3) may bear the Rule 145 Restrictive Legend (as that term is defined in Section 8.5 of the Merger Agreement). b. No dividends or other distributions of any kind which are declared payable to stockholders of record of the Brenton Shares after the Effective Date will be paid to persons entitled to receive such certificates for Brenton Shares until such persons surrender their certificates representing Ames Financial Shares. Upon surrender of such certificates representing Ames Financial Shares, the holder thereto shall be paid, without interest any dividends or other distributions with respect to the Brenton Shares as to which the record date and payment date occurred on or after the Effective Date and on or before the date of surrender. c. If any certificate for Brenton Shares is to be issued in a name other than that in which the certificate for Ames Financial Shares surrendered in exchange therefor is registered, it shall be a condition of such exchange that: (1) the person requesting such exchange shall pay to the Exchange Agent any transfer costs, taxes or other expenses required by reason of the issuance of certificates for such Brenton Shares in a name other than the registered holder of the certificate surrendered, or such persons shall establish that such costs, taxes and expenses have been paid or are not applicable and (2) the person requesting such exchange shall establish, to the satisfaction of Brenton and its counsel, that the requirements of Section 9.14 of the Merger Agreement, if applicable, have been complied with. d. All dividends or distributions, and any cash to be paid pursuant to Section 3 of this Article II in lieu of fractional shares, if held by the Exchange Agent for payment or delivery to the holders of unsurrendered certificates representing Ames Financial Shares and unclaimed at the end of one year from the Effective Date, shall together with any interest earned thereon) at such time be paid or redelivered by the Exchange Agent to Brenton, and after such time any holder of a certificate representing Ames Financial Shares who has not surrendered such certificate to the Exchange Agent shall, subject to applicable law, look as a general creditor only to Brenton for payment or delivery of such dividends or distributions or cash, as the case may be. Section 5. No Further Transfers of Ames Financial Shares. As of the Effective date the stock transfer books of Ames Financial shall be closed and no transfer of Ames Financial shares theretofore outstanding shall thereafter be made. 84 Section 6. Adjustments. If, between the date of this Agreement and the Effective Date, the outstanding Brenton Common Stock shall have been changed into a different number of shares or a different class by reason of any reclassification, recapitalization, split up, combination, exchange of shares or readjustment, or a stock dividend thereon shall be declared with a record date within such period, the number of Brenton Shares to be issued and delivered in the Merger in exchange for each outstanding Ames Financial shall be correspondingly adjusted. Section 7. Treatment of Stock Options. Each person holding one or more options to purchase Ames Financial Shares pursuant to the Ames Financial Stock Option and Incentive Plan (the "Ames Option Plan") shall, subject to any adjustments under Section 16(b) of the Securities Exchange Act of 1934, exercise his or her option to acquire Ames Financial Shares prior to the Effective Date. If Ames Financial is not in receipt of funds from any such person in payment of the options exercised prior to the Effective Date, then such person shall be deemed to have allowed the options held by him or her under the Ames Option Plan to lapse and such options shall thereafter be null, void and of no further force or effect. ARTICLE III Miscellaneous Section 1. Governing Law. This Agreement, the Merger Agreement, the Merger and the Surviving Corporation shall be governed by the laws of the State of lowa. Section 2. Conditions. The obligations of the parties to effect the Merger shall be subject to all of the terms and conditions contained in the Merger Agreement. Section 3. Termination. At any time prior to the filing of the Articles of Merger with the lowa Secretary of State, this Agreement may be terminated by the mutual consent of the Boards of Directors of Ames Financial and Brenton or may be terminated as provided in the Merger Agreement. This Agreement shall terminate automatically upon the termination of the Merger Agreement. Section 4. Amendment. This Agreement and the Merger Agreement may be amended by the Boards of Directors of Brenton and Ames Financial at any time prior to the Effective Date without the approval of the shareholders of Ames Financial with respect to any of their terms except the terms relating to: (1) the amount or kind of consideration to be delivered to the Ames Financial shareholders in the Merger; (2) the Articles of Incorporation of Brenton or (3) the terms or conditions of this Agreement or the Merger Agreement if such amendment would adversely affect the shareholders of Ames Financial. Section 5. Shareholder Approval. This Agreement, the Merger Agreement and the Merger shall be subject to approval by the affirmative vote of a majority of the outstanding shares of Ames Financial common stock at a meeting of stockholders duly called and held. The consummation of the Merger shall be subject to the satisfaction, unless duly waived, of the conditions set forth in Sections 9 and 10 of the Merger Agreement. Section 6. Notices. Any notice or other communication required or permitted under this agreement shall be effective only if it is in writing and delivered personally, or by Federal Express, or by facsimile or sent by first class United States mail, postage prepaid, registered or, certified mail, address as follows: 85 If to Brenton, to: Mr. J. C. Brenton, President Brenton Banks, Inc. Suite 300, Capital Square 400 Locust Street Des Moines. Iowa 50304-0961 Facsimile No. (515) 237-5221 with copy to: W. Kendall Brown, Esq. Brown, Winick, Graves, Donnelly, Baskerville & Schoenebaum Suite 1100, Two Ruan Center 601 Locust Street Des Moines, Iowa 50309 Facsimile No. (515) 283-0231 If to Ames Financial, to: Mr. Keith E. Dickson, Chairman Ames Financial Corporation 424 Main Street Ames, Iowa 50010 Facsimile No. (515) 232-3318 with copy to: Donald L. Smith, Esq. Smith, Nutty, Sharp, Benson & Jahn 618 Douglas Avenue Ames, Iowa 50010 Facsimile No. (515) 232-0137 or to such other address or facsimile number as either party may designate by notice to the other, and shall be deemed to have been given upon receipt. Section 7. Further Assurances. From time to time as and when required by the Surviving Corporation and to the extent permitted by law, the officers and directors of Ames Financial last in office shall execute and deliver such assignments, deeds and other instruments and shall take or cause to be taken such further or other action as shall be necessary in order to vest or perfect in or to confirm of record or otherwise to the Surviving Corporation title to, and possession of, all of the assets, rights, franchises and interests of Ames Financial in and of every type of property (real, personal and mixed) and chooses in action, and otherwise to carry out the purposes of this Agreement; and the proper officers and directors of the Surviving Corporation are fully authorized to take any and all such action in the name of Ames Financial or otherwise. 86 IN WITNESS WHEREOF, Brenton and Ames Financial, pursuant to the approval and authority duly given by resolutions adopted by their respective Boards of Directors, have each caused this Plan and Agreement of Merger to be executed by its respective President or Chairman (and, if applicable, its corporate seal to be affixed hereto) and to be attested to by its Secretary. ATTEST BRENTON BANKS, INC. /s/ Steven T. Schuler, Secretary /s/ J. C. Brenton, President Corporate Seal ATTEST AMES FINANCIAL CORPORATION /s/ Karen Jacobson, Secretary /s/ Keith E. Dickson, Chairman Corporate Seal 87 CERTIFICATE OF SECRETARY OF AMES FINANCIAL CORPORATION I, Karen Jacobson, Secretary of Ames Financial Corporation, a corporation organized and existing under the laws of the State of Delaware ("Ames Financial"), hereby certify, as such secretary (and under the seal of such corporation) that the Plan and Agreement of Merger dated June 17, 1992 between Ames Financial and Brenton Banks, Inc. to which this certificate is attached was duly submitted to the shareholders of Ames Financial at a special meeting of said shareholders called and held after at least twenty (20) days' notices by mail as provided in Section 251 of the General Corporation Law of the State of Delaware on the 16th day of September, 1992, for the purpose or considering and taking action upon the proposed Plan and Agreement of Merger; that 273,624 shares of common stock, with a par value of $.01, of Ames Financial were on said date issued and outstanding; that the proposed Plan and Agreement of Merger was approved by the affirmative vote of the holders of a majority of the total number of shares of the outstanding common stock of Ames Financial entitled to vote thereon, and that thereby the Plan and Agreement of Merger was at such meeting duly adopted as the act of the shareholders of Ames Financial and the duly adopted agreement of such corporation. WITNESS my hand (and the seal of Ames Financial) on this 30th day of September, 1992. /s/ Karen Jacobson, Secretary Ames Financial Corporation Corporate Seal CERTIFICATE OF SECRETARY OF BRENTON BANKS, INC. I, Steven T. Schuler, Secretary of Brenton Banks, Inc. a corporation organized and existing under the laws of the State of lowa ("Brenton"), hereby certify, as such secretary (and under the seal of such corporation) that the Plan and Agreement of Merger dated June 17, 1992 between Ames Financial and Brenton Banks, Inc. to which this certificate is attached was duly adopted pursuant to subsection (d) of Section 251 of the General Corporation Law of the State of Delaware and that the conditions specified in the first sentence of said subsection (d) of Section 251 of the General Corporation Law of the State of Delaware have been satisfied. WITNESS my hand (and the seal of Brenton) on this 30th day of September, 1992. /s/ Steven T. Schuler, Secretary Brenton Banks, Inc. Corporate Seal 88 BRENTON BANKS, INC. BY-LAWS ARTICLE I. MEETINGS OF STOCKHOLDERS 1. All meetings of stockholders shall be held in Des Moines, Iowa. 2. Annual meetings of stockholders shall be held on the first Wednesday following the first Monday in May of each year. 3. Any stockholder proposal for action at the annual meeting, including nominations for the Board of Directors, must be submitted in writing to the Secretary of the Corporation at least five (5) days prior to the date of the annual meeting to be considered and voted upon at the meeting. Any such stockholder proposal or nomination for the Board of Directors must be accompanied by a written statement describing the purpose of the proposal or the qualifications of the nominee. Such a statement shall not exceed five hundred (500) words. 4. Special meetings of stockholders may be called by the Chairman, the Vice Chairman, the President, or by a majority of the Directors or by stockholders representing two-thirds of the outstanding stock of the corporation. 5. Written or printed notice stating the place, day, and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten nor more than sixty days before the date of the meeting, either personally or by mail or at the direction of the Chairman, the Vice Chairman, the President, the secretary, or the officer or person calling the meeting to each shareholder of record entitled to vote at such meeting, but such notice may be waived in writing by any stockholder. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the shareholder at his/her address as it appears on the stock transfer books of the Corporation, with postage thereon prepaid. 6. At any meeting of stockholders, holders of a majority of the outstanding shares shall constitute a quorum for the transaction of business. 7. The Chairman, or in his absence the Vice Chairman, at any meeting of the stockholders, shall have the power and authority to prescribe appropriate rules and procedures for the maintenance of order and the conduct of the meeting; including, but not limited to, requirements for identification of speakers, limitation on the time allotted to questions, comments and debate, variance from the agenda, and procedures for dealing with disruptive individuals. ARTICLE II. DIRECTORS 1. The Board of Directors of the Corporation shall consist of not less than five, nor more than eleven members, who shall be elected by the stockholders at their annual meeting. The Board of Directors shall, from time to time, designate the number of directors of the Corporation within such range. Directors shall hold office for a term of one year, or until their successors are elected and qualified, but may be removed at any time by a majority vote of the stockholders. 89 2. Stockholder nominations for the Board of Directors shall be made in accordance with Article I, Section 3, of these ByLaws. 3. The Board of Directors shall have the general management and control of the business and affairs of the Corporation, and may exercise all the powers possessed by the Corporation. 4. The Board of Directors shall meet immediately after adjournment of the annual meeting of stockholders, and at such other times and places as the Board may determine and as called by the Chairman, the Vice Chairman or the President. 5. At all meetings of the Board it shall be necessary for a majority of all the Directors to be present to constitute a quorum for the transaction of business, but a lesser number may adjourn the meeting to a future time and convenient place. 6. The Board of Directors may, by resolution or resolutions passed by a majority of the whole Board, designate one or more committees, each committee to consist of two or more of the Directors of the Corporation, which to the extent provided in said resolution or resolutions, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation, and may have power to authorize the seal of the Corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. The committee or committees shall keep regular minutes of their proceedings and report the same to the Board when required. 7. The Board of Directors may appoint an Executive Committee. The Vice Chairman shall be a member of and chairman of the Executive Committee. The Board of Directors shall, from time to time, designate the number of Executive Committee members of the Corporation. The Executive Committee shall not have authority to alter or amend the by-Laws, but shall exercise all other powers of the Board of Directors between the meeting of said Board, except the power to fill vacancies in their own membership, which vacancy shall be filled by the Board of Directors. The Executive Committee shall meet at stated times or on notice to all by the Committee Chair. It shall fix its own rules of procedure. A majority shall constitute a quorum, but an affirmative vote of a majority of the whole committee shall be necessary in every case. The Executive Committee shall keep regular minutes of proceedings. 8. Any resolution in writing signed by all the members of the Board of Directors (or any Committee thereof) shall be and constitute action by such Board (or Committee) with the same force and effect as if the same had been duly passed by the same vote at a duly called meeting of such bodies. ARTICLE III. OFFICERS 1. The officers of the corporation shall be a Chairman, a Vice Chairman, a President, one or more Vice Presidents, a Secretary, one or more Assistant Secretaries, and a Treasurer, and such other officers as shall be authorized by the Board of Directors. Officers shall be elected by the Board of Directors and shall hold office at the pleasure of the Board. One person may hold one or more offices, if the Board so determines. 2. The Chairman shall exercise the general supervision and direction of the affairs of the Company. He shall preside as Chairman of all meetings of the stockholders, 90 of the Board of Directors, and, in the absence of the Vice Chairman, of the Executive Committee, or he may direct another officer to preside in his place. He may, with the Secretary, sign all certificates of stock and execute all contracts and instruments which the Board of Directors shall lawfully authorize and direct. 3. The Vice Chairman shall, in the absence of the Chairman, have all powers and duties of the Chairman. As Committee Chair, he shall preside at all meetings of the Executive Committee, or he may direct another officer to preside in his place. He shall have such other powers and duties as may be prescribed from time to time by the Board of Directors or the Chairman, including those prescribed in any employment agreement. 4. The President shall work with all business affairs incident to the activities and direction of the Company. He may, with the secretary, sign all certificates of stock and execute all contracts and instruments which the Board of Directors shall lawfully authorize and direct. 5. The Board of Directors may elect an Executive Vice President, who shall have the powers and duties incident to that office and shall have such other powers and duties as may be prescribed from time to time by the Chairman, the Vice Chairman or the President. He shall, in the incapacity of the Chairman, the Vice Chairman and of the President, perform such duties of the Chairman, the Vice Chairman and of the President as the Board of Directors or the Executive Committee shall prescribe. He may, with the Secretary, execute contracts and instruments which the Board of Directors shall lawfully authorize and direct. 6. Each Vice President shall have the powers and duties incident to that office and shall have such other powers and duties as may be prescribed from time to time by the Chairman, the Vice Chairman or the President. In the event of the inactivity of the Chairman, of the Vice Chairman and of the President, a Vice President designated by the Board of Directors or the Executive Committee shall perform such duties of the Chairman, of the Vice Chairman and of the President as the Board of Directors or the Executive Committee shall prescribe. Any Vice President may execute contracts in the name of the company. 7. The Secretary shall be ex-officio secretary of the Board of Directors and the Executive Committee. He shall keep the minutes of all meetings of the stockholders, the Board of Directors and the Executive Committee, and, when required, of all other standing committees; and attend to serving and giving all notices of the company. He shall have charge of the corporate seal, the stock certificate books and such other books, records, and papers as the Board of Directors and Executive Committee may direct; keep a stock book containing the names alphabetically arranged of all persons who are stockholders of the company, showing their place of residence, the number of shares of stock held by them respectively and the time when they respectively became owners thereof. 8. Each Assistant Secretary shall have the powers and duties incident to that office and shall have such other powers and duties as may be prescribed by the Secretary. In the event of the incapacity of the Secretary, an Assistant Secretary designated by the Board of Directors and/ or the Executive Committee shall perform such duties of the Secretary as the Board of Directors and/or the Executive Committee shall prescribe. 9. The Treasurer shall keep or cause to be kept full and accurate accounts of all receipts and disbursements in books belonging to the company, and shall have the 91 care and custody of all funds and securities of the company and deposit such funds in the name of the company in such bank or banks as the Board of Directors and/or the Executive Committee or the Chairman or the Vice Chairman or the President may designate. The Treasurer is authorized to sign all checks, drafts, notes, bills of exchange, orders for the payment of money, and any negotiable instruments of the company, but no such instrument shall be signed in blank. He shall disburse the funds of the company as may be ordered by the Board of Directors, the Executive Committee, the Chairman, the Vice Chairman or the President. The Treasurer shall at all reasonable times exhibit the books and accounts to any directors, and he shall give such bonds for the faithful performance of his duties as the Board of Directors, the Executive Committee, the Chairman, the Vice Chairman or the President may determine, and he shall perform such other duties as may be incident to his office. ARTICLE IV. SEAL The corporate seal of the company shall be circular in shape, and shall be engraved with the name of the company and the state of incorporation around the margin, and the words "CORPORATE SEAL" across the center. ARTICLE V. CAPITAL STOCK 1. Certificates of stock shall be in a form adopted by the Board of Directors and shall be signed by the Chairman, the Vice Chairman or President and the Secretary or Assistant Secretary and be attested by the corporate seal. All certificates shall be numbered consecutively; and the name of the stockholder, his place of residence, the number of shares, and the dates of acquisition and transfer shall be entered by the Secretary upon the records of the company, and such record shall constitute the sole and exclusive evidence of who, as stockholders, shall have the right to receive dividends and to vote at stockholders' meetings. 2. Title to a certificate and to the shares represented thereby can be transferred only, (a) by delivery of the certificate endorsed either in blank or to a specified person by the person appearing by the certificate to be the owner of the shares represented thereby, or b) by delivery of the certificate and a separate document containing a written assignment of the certificate or a power of attorney to sell, assign, or transfer the same or the shares represented thereby, signed by the person appearing by the certificate to be the owner of the shares represented thereby. Such assignment or power of attorney may be either in blank or to a specified person. ARTICLE VI. EXECUTION OF INSTRUMENTS, LOANS 1. Execution of Instruments. Any checks, drafts, bills of exchange, acceptances, bonds, notes or other obligations or evidences of indebtedness of the company, and also all deeds, mortgages, indentures, bills of sale, conveyances, endorsements, assignments, transfers, stock powers, or other instruments of transfer, contracts, agreements, dividend and other orders, powers of attorney, proxies, waivers, consents, returns, reports, certificates, demands, notices of documents and other instruments of writing of any nature may be signed, executed, verified, acknowledged and delivered by such officers, agents, or employees of the company, or any of them, and in such manner, as shall be provided in the Articles of Incorporation or as from time to time may be determined by the Board of Directors. 2. Loans. When so authorized by the Board of Directors any officer or agent of the company may effect loans and advances at any time for the company secured by 92 mortgage or pledge of the company's property or otherwise, and may do every act and thing necessary or proper in connection therewith. Such authority may be general or confined to specific instances. ARTICLE VII. DIVIDENDS The Board of Directors, in its discretion from time to time may declare dividends upon the capital stock from the surplus and net profits of the company, subject to all the provisions of the Articles of Incorporation. ARTICLE VIII. FISCAL YEAR The fiscal year of this corporation shall begin on the first day of January and terminate on the last day of December of each year, except that the first year shall begin on August 31, 1948. ARTICLE IX. OTHER OFFICERS AND THEIR DUTIES The Board of Directors, upon exercising any power to appoint additional officers, may prescribe their duties and compensation and determine as to the securities for the faithful performance of their duties to be given by them, which prescription as to duties and securities may be made in the form of By-Laws or by resolution of the Board, as it shall determine. ARTICLE X. INDEMNIFICATION OF DIRECTORS AND OFFICERS This corporation shall indemnify an officer of this corporation and each officer of this corporation who is serving or who has served, at the request of this corporation, as a director, officer, partner, trustee, employee, or agent of another corporation, partnership, joint venture, trust, other enterprise or employee benefit plan, to the fullest extent possible against expenses, including attorneys' fees, judgments, penalties, fines, settlements, and reasonable expenses, actually incurred by such officer or person relating to his conduct as an officer of this corporation or as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust, other enterprise or employee benefit plan, except that the mandatory indemnification required by this sentence shall not apply (i) to a breach of an officer's duty of loyalty to the corporation or its stockholders, (ii) for acts of omissions not in good faith or which involve intentional misconduct or knowing violation of the law, (iii) for a transaction from which the officer derived an improper personal benefit, (iv) under Section 496A.44 of the Iowa Business Corporation Act, or (v) against judgments, penalties, fines, and settlements arising from any proceeding by or in the right of the corporation, or against expenses in any such case where such officer shall be adjudged liable to the corporation. ARTICLE XI. OTHER INTERESTS-OF-OFFICERS OR DIRECTORS 1. No Director shall vote on a question in which he is interested, except the election of a President or other officer or employee, but in the absence of fraud, no contract or other transaction of the corporation shall be affected or invalidated in any way by the fact that any of the officers or Directors of the corporation are in any way interested in or connected with any other party to said contract or transaction or are themselves parties to said contract or transaction, provided that such interest shall be fully disclosed or otherwise known to the Board of Directors at the meeting of said Board at which such contract or transaction is authorized or confirmed, and provided further that at the meeting of the Board of Directors authorizing or 93 confirming such contract or transaction there shall be present a quorum of Directors not so interested or connected and such contract or transaction shall be approved by a majority of such quorum, which majority shall consist of Directors not so interested or connected. The mere ownership of stock in another corporation by a Director shall not disqualify him to vote in respect of any transaction between this corporation and such other corporation. 2. Inasmuch as the officers and Directors of this corporation may be men of large and diversified business interest, and connected with other corporations with which, from time to time, this corporation may have business dealings, no contract or other transaction between this corporation and any other corporation shall be affected by the fact that any of the officers or directors of this corporation are interested in or are directors or officers of such other corporation, if such contract or transaction be made, authorized or confirmed by the Board of Directors in the manner provided in the preceding paragraph, or by any committee of this corporation having the requisite authority, by vote of a majority of the members of such committee not so interested; and any officer or director individually may be a party to or may be interested in any contract or transaction of this corporation, provided that such contract or transaction shall be approved or ratified by the Board of Directors or by any committee of this corporation having the requisite authority, in the manner herein set forth. ARTICLE XII. AMENDMENTS The Board of Directors may alter these By-Laws of the corporation at any regular or special meeting. AS AMENDED July 6, 1989. Resolved that the foregoing are adopted as the amended and substituted By-laws of the corporation as of the above date. /s/ C. Robert Brenton /s/ J.C. Brenton /s/ R. Dean Duben /s/ Thomas R. Smith /s/ William H. Brenton CONSTITUTING ALL OF THE MEMBERS OF THE BOARD OF DIRECTORS 94 EX-10.21 3 Exhibit 10 Summary of the Bank Bonus Plans under which some of the executive officers of the Parent Company and certain other personnel of the subsidiaries are eligible to receive a bonus each year. 95 1993 BANK BONUS PLANS Bank Bonus Plans are in place for all subsidiary banks. The plans vary somewhat from bank to bank. However, the following general structure exists in all plans: A. Applies to bank presidents and certain other bank personnel. B. Bank presidents and other bank personnel can earn up to a maximum of 32.5% of their salary. C. Based on meeting certain pre-established financial and personal goals, the most significant of which are as follows: 1. Net income; 2. Net interest margin; 3. Net noninterest margin; 4. Noninterest income; 5. Asset growth; 6. Asset quality; and 7. Key personal objectives tied to bank financial or mission measurement goals. D. Bonus amounts are earned ratably based on tiered achievement scales negotiated between the bank's management and senior management of the holding company. 96 EX-10.1EX.BONUSPLAN 4 Exhibit 10(i) Summary of the Executive Bonus Plan under which some of the executive officers of the Parent Company are eligible to receive a bonus each year. 97 BRENTON BANKS, INC. (PARENT COMPANY) EXECUTIVE BONUS PLAN The Executive Bonus Plans for 1993 cover certain executive officers. The specific provisions of each plan differs somewhat by executive; however, the following general structure exists for all plans: A. Executives can earn up to a maximum of 32.5% of their salary. B. The bonus is based on meeting certain pre-established financial or mission goals, the most significant of which are as follows: 1. Net income of the Company or Division; 2. Asset growth; 3. Net noninterest margin; and 4. Key personal financial objectives tied to the area of responsibility. C. Bonus amounts are earned ratably based on tiered achievement scales. 98 EX-10.2TR.BONUS 5 Exhibit 10(ii) Summary of the Trust Division Bonus Plan under which one of the executive officers of the Parent Company is eligible to receive a bonus each year. 99 1993 TRUST DIVISION BONUS PLAN The following is a summary of the Trust Division Bonus Plan for 1993: A. The bonus plan covers the Vice President-Trust. B. The Vice President-Trust may earn up to a maximum of 32.5% of base compensation. C. The bonus amount is earned ratably based on a tiered achievement scale relating to net pre-tax earnings of the Trust Division. D. The tiered achievement scale is negotiated between the Vice President-Trust and the Chairman of the Board. 100 EX-10.3BR.BONUS 6 Exhibit 10(iii) Summary of the Brokerage Bonus Plan under which one of the executive officers of the Parent Company is eligible to receive a bonus each year. 101 1993 BROKERAGE BONUS PLAN The following is a summary of the Brokerage Bonus Plan for 1993: A. The bonus plan covers the Vice President-Brokerage Services. B. The Vice President-Brokerage Services may earn up to a maximum of 32.5% of base compensation. C. The bonus amount is earned ratably based on a tiered achievement scale relating to net pre-tax earnings of the brokerage operation. D. The tiered achievement scale is negotiated between the Vice President-Brokerage Services and the Chairman of the Board. 102 EX-10.4EMBONUS 7 Exhibit 10(iv) Summary of the Employee Bonus Plan under which employees of the Company are eligible to receive a bonus each year. 103 1993 EMPLOYEE BONUS PLANS The Employee Bonus Plans are in place for all employees of the Company who are not covered by any other bonus plans. The plans vary somewhat from subsidiary to subsidiary. The main provisions of these bonus plans follow: A. Employees are eligible for the plans if they have been employed at lease 6 months and are on the payroll at year-end. B. Employees can earn a maximum of 7% of their base salary. C. The plans are based on achieving certain Company goals relating to net income and the employee's individual performance. Bonuses are earned ratably based on tiered achievement scales. 104 EX-10.5EMP.AGR 8 Exhibit 10(v) Employment Agreement, dated July 6, 1989, between William H. Brenton and Brenton Banks, Inc. This Employment Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc., for the year ended December 31, 1989. 105 EX-10.6STOCKPLAN 9 Exhibit 10(vi) Non-Qualified Stock Option Plan, Administrative Rules and Agreement under which officers of the Company are eligible to receive options to purchase an aggregate of 200,000 shares of the Company's $5 par value common stock. This Non-Qualified Stock Option Plan, Administrative Rules and Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc., for the year ended December 31, 1992. 106 EX-10.7STOCKCOMP. 10 Exhibit 10(vii) Long-Term Stock Compensation Plan, Agreements and related documents, effective for 1993, under which certain of the Company's senior officers and bank presidents are eligible to receive shares of Brenton Banks, Inc. stock based upon their service to the Company and Company performance. 107 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. 108 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 109 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. 110 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. 111 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. 112 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. 113 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. 114 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. 115 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: 116 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). 117 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). 118 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. 119 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 120 EX-10.8STOCKCOMP 11 Exhibit 10(viii) Long-Term Stock Compensation Plan, Agreements and related documents, effective for 1992, under which certain of the Company's senior officers and bank presidents are eligible to receive shares of Brenton Banks, Inc. stock based upon their service to the Company and Company performance. This Long-Term Stock Compensation Plan, Agreements and related documents, effective for 1992, are incorporated by reference from Form 10-K of Brenton Banks, Inc., for the year ended December 31, 1992. 121 EX-10.9MERGERAGR 12 Exhibit 10 (ix) Merger Agreement between Brenton Banks, Inc. and Ames Financial Corporation, dated June 17, 1992. This Merger Agreement is incorporated by reference from Form S-4 of Brenton Banks, Inc. filed on August 13, 1992. 122 EX-10.10FHLBAGR 13 Exhibit (10x) Standard Agreement for Advances, Pledge and Security Agreement between Brenton banks and the Federal Home Loan Bank of Des Moines. 123 FEDERAL HOME LOAN BANK OF DES MOINES DES MOINES, IOWA AGREEMENT FOR ADVANCES, PLEDGE AND SECURITY AGREEMENT BLANKET PLEDGE This Agreement for Advances, Pledge and Security Agreement ("Agreement"), effective the _____ day of ______________, 19___, is entered between ______________________________________ ("Member"), with principal offices at ______________________________________________ and the Federal Home Loan Bank of Des Moines, ("Bank"), with principal offices at 907 Walnut, Des Moines, Iowa 50309. WHEREAS, The Bank in accordance with the Federal Home Loan Bank Act, regulations and directives of the Federal Housing Finance Board, and policies promulgated by its own Board, makes available advances to its members. The available advances are set forth by the Bank in a statement of "Credit Policy," as may be amended from time to time. WHEREAS, The Member may, from time to time, apply for an advance or advances which may be available to it. NOW THEREFORE, For valuable consideration and with respect to each and every such advance, the Parties agree as follows: SECTION 1. CONFIRMATION OF ADVANCE. To be bound by the terms and conditions set forth herein, in the confirmation of advance issued with respect to each advance, and in the Bank's Credit Policy as may be amended from time to time. A confirmation of advance shall mean a writing or machine readable electronic transmission in such form or forms as may be determined by the Bank from time to time. SECTION 2. PAYMENT TO THE BANK. To repay each and any advance together with interest thereon according to the confirmation of each such advance communicated to the Member by the Bank, together with any unpaid costs and expenses in connection therewith. Such payment shall be made at the office of the Bank in Des Moines, Iowa, or at such other place as the Bank, or its successors or assigns, may from time to time appoint in writing. The default rate on past due principal and interest may, at the option of the Bank, be at a rate 1% per annum higher than the then current rate being charged by the Bank for advances. SECTION 3. ASSIGNMENT TO BANK OF SECURITY INTEREST IN BANK STOCK. The Member hereby assigns, transfers and pledges to the Bank, its successors or assigns, all stock of the Federal Home Loan Bank of Des Moines owned by the Member as collateral security for payment of any and all indebtedness, whether in the nature of an advance or otherwise, of the Member to the Bank, its successors and assigns. SECTION 4. ASSIGNMENT OF SECURITY INTEREST IN OTHER COLLATERAL. As additional collateral security for any and all such advances, Member assigns, transfers, and pledges to the Bank, its successors or assigns, each and every note or other instrument evidencing a debt and any mortgage, deed of trust, title, or document of title securing it; all securities (including, but not limited to mortgage-backed securities issued or guaranteed by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, obligations of or guaranteed by the United States or an agency thereof, share certificates or other participation interests in any securities trust, mortgage loan participation certificates); all contract for deeds; all chattel paper; any chose in action; all general intangibles; all deposit accounts; certificates of deposit; and proceeds from any of the above (hereinafter " Collateral"). With respect to such Collateral, Member undertakes and agrees as follows: A. That such security interest shall extend to after acquired Collateral of a similar nature; 124 B. That the Member shall be at liberty to use, commingle, and dispose of all or part of the Collateral, and to collect, compromise, and dispose of the proceeds of the Collateral without being required to account for the proceeds or replace the Collateral subject only to its obligation to maintain the Collateral as herein provided; C. To keep and maintain such Collateral free and clear of pledges, liens, and encumbrances to others at the required collateral maintenance level. The "required collateral maintenance level" means the amount of collateral the member is required to maintain free and clear of pledge, liens, and encumbrance to others as set forth from time to time in the Credit Policy; D. To assemble and deliver Collateral to the Bank or its authorized agents immediately upon demand of the Bank; and as specified by the Bank in its Credit Policy from time to time, and to pay for the safekeeping collateral as established by the Bank; E. To make, execute, and deliver to the Bank such assignments, endorsements, listings, powers, financing statements or other instruments as the Bank may reasonably request respecting such Collateral. SECTION 5. DUTY TO USE REASONABLE CARE. In the event Member delivers security to Bank or its Agent pursuant to paragraph 4 above, the duty of the Bank with respect to said security shall be solely to use reasonable care in the custody and preservation of the security in its possession. SECTION 6. ADDITIONAL SECURITY. Member shall assign additional or substituted Collateral for such advances at any time the Bank shall deem it necessary for the Bank's protection. SECTION 7. EVENTS OF DEFAULT. The Bank may consider the Member in default hereunder upon the occurrence of any of he following events or conditions: A. Failure of the Member to pay any interest, or repay any principal, of any advances as herein required; or B. Breach or failure to perform by the Member of any covenant, promise, condition, obligation or liability contained or referred to herein, or any other agreement to which the Member and the Bank are parties; or C. Proof being made that any representations, statements or warranty made or furnished in any manner to the Bank by or on behalf of the Member in connection with all or part of any advance was false in any material respect when made or furnished; or D. Loss, theft, damage, destruction, sale or encumbrance to or of any of the Collateral except as herein permitted, or the making of any levy, seizure or attachment thereof or therein; or E. Any tax levy, attachment, garnishment, levy of execution or other process issued against the Member or the Collateral; or F. Any suspension of payment by the Member to any creditor or any events which result in acceleration to the maturity of any indebtedness of the Member to others under any Indenture, agreement or undertaking; or G. Application for, or appointment of, a receiver of any part of the property of the Member, or in case of adjudication of insolvency, or assignment, for benefit of creditors, or general transfer of assets by the Member, or if management of the Member is taken over by any supervisory authority, or in case of any other form of liquidation, merger, sale of assets or voluntary dissolution, or upon termination of the membership of the Member in the Federal Home Loan Bank of Des Moines, or in the case of advances made under the provisions of 12 U.S.C. paragraph 1431(g)(4), if at any time thereafter the creditor liabilities of the Member, excepting its liabilities to the Bank, are increased in any manner to an amount exceeding 5% of its net assets; or H. Determination by the Bank that a material adverse change has occurred in the financial condition of the Member from that disclosed at the time of the making of any advance, or from the condition of the Member as theretofore most recently disclosed to the Bank in any manner, or I. If the Bank reasonably and in good faith deems itself insecure even though the Member is not otherwise in default. 125 SECTION 8. BANK REMEDIES IN THE EVENT OF DEFAULT. At any time after any default as herein before provided, the Bank may, at its option, declare the entire amount of any and all advances to be immediately due and payable. The Bank shall have all of the remedies of a secured party under the Uniform Commercial Code of the State of Iowa. In addition thereto, the Bank may take immediate possession of any of the Collateral or any part thereof wherever the same may be found. The Member agrees to pay all the costs and expenses of the Bank in the collection of the secured indebtedness and enforcement of the Bank's rights hereunder including, without limitation, reasonable attorney's fees. The Bank may sell the Collateral or any part thereof in such manner and for such price as the Bank deems appropriate without any liability for any loss due to decrease in the market value of the Collateral during the period held. The Bank shall have the right to purchase all or part of the Collateral at public or private sale. If any notification of intended disposition of any of the Collateral is required by law, such notification shall be deemed reasonable and properly given if mailed, postage prepaid, at least five days before any such disposition to the address of the Member appearing on the records of the Bank. The proceeds of any sale shall be applied in the following order: First, to pay all costs and expenses of every kind for the care, collection, safekeeping, sale, foreclosure, delivery or otherwise respecting the Collateral (including expenses incurred in the protection of the Bank's title to or lien upon or right in any of the Collateral, expenses for legal services of any kind in connection therewith or in making any such sale or sales, insurance, commission for sales and guaranty); then to interest on all indebtedness of the Member to the Bank; then to the principal amount of any such indebtedness whether or not such indebtedness is due or accrued. The Bank, at its discretion, may apply any surplus to indebtedness of Member to third parties claiming a secondary security interest in the Collateral. Any remaining surplus shall be paid to the Member. SECTION 9. APPOINTMENT OF BANK AS ATTORNEY-IN-FACT. In the event of default, and without limiting any other rights the Bank might have as a secured party under the Uniform Commercial Code of Iowa, or the laws of any jurisdiction under which Bank might be exercising rights hereunder, and under this Agreement, Member does hereby make, constitute and appoint Bank its true and lawful attorney-in-fact to deal with the Collateral and, in its name and stead to release, collect, compromise, settle and release or record any mortgage of deed or trust which is a part of such Collateral as fully as the Member could do if acting for itself. The powers herein granted are coupled with an interest, and are irrevocable, and full power of substitution is granted to the Bank in the premises. SECTION 10. AUDIT AND VERIFICATION OF COLLATERAL. In extension and not in limitation of all requirements of law respecting examination of the Member by or on behalf of the Bank, the Member agrees that all Collateral pledged hereunder shall always be subject to audit and verification by or on behalf of the Bank in its corporate capacity. SECTION 11. RESOLUTION TO BE FURNISHED BY MEMBER. Member agrees to furnish to the Bank from time to time a certified copy of resolution of its Board of Directors or other governing body authorizing such of the Member's officers, as the Member shall select, to apply for advances from the Bank. Unless the Bank shall be otherwise notified in writing, the Bank may honor applications made by such officers other than in writing; but, in such event the Member shall confirm such application for advance in writing on forms furnished by the Bank. But the Member shall forever be estopped to deny its obligation to repay such advance whether or not an application in writing is ever received by the Bank so long only as the advance is made in good faith by the Bank on the request of an officer or employee so authorized by the Member. SECTION 12. APPLICABILITY OF BANK ACT. In addition to the terms and conditions herein specifically set forth, all advances are subject to the rights, powers, privileges and duties conferred upon the Federal Housing Finance Board, the Federal Home Loan Banks, and on member institutions by the Act of Congress entitled, "Federal Home Loan Bank Act, as amended." SECTION 13. JURISDICTION. In any action or proceeding brought by the Bank or the Member in order to enforce any right or remedy under this Agreement, Member will submit to the jurisdiction of the United States District Court for the Southern District of Iowa, or if such action or proceeding may not be brought in Federal Court, the jurisdiction of the Iowa District Court in Polk County. If any action or proceeding is brought by the Member seeking to obtain relief against the Bank arising out of this Agreement and such relief is not granted by a court of competent jurisdiction, the Member will pay all attorney's fees and court costs incurred by the Bank in connection therewith. 126 SECTION 14. CHOICE OF LAW. This Agreement shall be construed and enforced according to the law of the State of Iowa, except that the rate of interest on advances hereunder shall be governed by the provisions of 12 U.S.C. paragraph 1430 (as amended). SECTION 15. AGREEMENT CONSTITUTES ENTIRE AGREEMENT. This Agreement embodies the entire Agreement and understanding between the parties hereto relating to the subject matter hereof and supersedes all prior agreements between such parties that relate to the subject matter except that: The Credit Policy as duly adopted by the Bank's Board of Directors from time to time shall be incorporated herein, unless agreed to in writing by both parties. Advances made by the Bank to Member prior to the execution of this Agreement shall continue to be governed exclusively by the terms of the prior agreements pursuant to which such advances were made, except that (i) any default thereunder shall constitute default hereunder, (ii) Collateral furnished as security hereunder shall also secure such prior advances and (iii) the rights and obligations with respect to such Collateral shall be governed by the terms of this Agreement. SECTION 16. SECTION HEADINGS. Section headings are not to be considered part of this Agreement. Section headings are solely for convenience of reference, and shall not effect the meaning or interpretation of this Agreement or any of its provisions. SECTION 17. SEVERABILITY OF SECTIONS. If any section or portion thereof is deemed void in any legal proceeding, the remainder of the Agreement shall remain in full force and effect. SECTION 18. The person signing this document on behalf of the Member represents that its execution was authorized by appropriate action of the directors of the Member which was completed on the _____ day of __________, 19___, and that such action is duly reflected in the records of the Member. ______________________________________ FEDERAL HOME LOAN BANK OF DES MOINES (Full Corporate Name of Member) By: ______________________________ By: ____________________________ Title: ______________________________ Title: ____________________________ Date: ______________________________ Date: ____________________________ By: ______________________________ By: ____________________________ Title: ______________________________ Title: ____________________________ Date: ______________________________ Date: ____________________________ Revised 5/91 127 EX-10.11STNOTE 14 Exhibit 10(xi) Short-term note with American National Bank & Trust Company of Chicago as of April 30, 1993, setting forth the terms of the Parent Company's $2,000,000 short-term debt agreement. 128 PROMISSORY NOTE (UNSECURED) PROMISSORY NOTE (UNSECURED) Grid Note Maximum Chicago, Illinois April 30, 1993 $2.000.000.00 Due April 30, 1994 FOR VALUE RECEIVED the undersigned (jointly and severally if more than one) ("Borrower"), promises to pay to the order of AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO ("Bank") at its principal place of business in Chicago, Illinois or such other place as Bank may designate from time to time hereafter, the principal sum of TWO MILLION AND NO/100 Dollars, or such lesser principal sum as may then be owed by Borrower to Bank hereunder. Borrowers obligations and liabilities to Bank under this Note ("Borrowers Liabilities") shall be due and payable on April 30, 1994. The unpaid principal balance of Borrower's Liabilities due hereunder shall bear interest from the date hereof until paid, computed as follows (DELETE INAPPLICABLE PROVISIONS): (i)XXXXX (ii) at a daily rate equal to the daily rate equivalent of 0.0% per annum (computed on the basis of a 360-day year and actual days elapsed) in excess of the rate of interest announced or published publicly from time to time by Bank as its prime or base rate of interest (the "BASE RATE"); provided, however, that in the event that any of Borrower's Liabilities are not paid when due, the unpaid amount of Borrower's Liabilities shall bear interest after the due date until paid at a rate equal to the sum of (a) the rate in effect prior to the due date and (b) 3%. If the rate of interest to be charged by Bank to Borrower hereunder is that specified in clause (ii) such rate shall fluctuate hereafter from time to time concurrently with, and in an amount equal to, each increase or decrease in the Base Rate, whichever is applicable. Accrued interest shall be payable by Borrower to Bank with each principal installment of Borrower's Liabilities due hereunder, or as billed by Bank to Borrower, at Bank's principal place of business, or at such other place as Bank may designate from time to time hereafter. Borrower warrants and represents to Bank that Borrower shall use the proceeds represented by this Note solely for proper business purposes, and consistently with all applicable laws and statutes. The occurrence of any one of the following events shall constitute a default by the Borrower ("Event of Default") under this Note: (a) if Borrower fails pay any of Borrower's Liabilities when due and payable; (b) if Borrower fails to perform, keep or observe any term, provision, condition, covenant, warranty, or representation contained in this Note which is required to be performed, kept, or observed by Borrower; (c) occurrence of a default or an event of default under any agreement, instrument or document heretofore, now or at any time hereafter delivered by or on behalf of Borrower to Bank; (d) occurrence of a default or an event of default under any agreement, instrument or document heretofore, now or at any time hereafter delivered to Bank by any guarantor or Borrower's Liabilities; (e) if any of Borrower's assets are attached, seized, subjected to a writ of distress warrant, or are levied upon or become subject to any lien or come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors; (f) if Borrower or any guarantor of Borrower's Liabilities becomes insolvent or generally fails to pay, or admits in writing its inability to pay, debts as they become due, if a petition under any section or chapter of the Bankruptcy Reform Act of 1978 or any similar law or regulation is filed by or against Borrower or any such guarantor, if Borrower or any such guarantor shall make an assignment for the benefit of creditors, if any case or proceeding is filed by or against Borrower or any such guarantor for its dissolution or liquidation, or upon the death or incompetency of Borrower or any such guarantor, or the appointment of a conservator for all or any portion of Borrower's assets; or (g) if a contribution failure occurs with respect to any pension plan maintained by Borrower or any corporation, trade or business that is, along with Borrower, a member of a controlled group of corporations or a controlled group of trades or businesses (as described in Sections 414(b) and (c) of the Internal Revenue Code of 1986 or Section 4001 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") sufficient to give rise to a lien under Section 302(f) of ERISA; or (h) if Bank Is reasonably insecure. Upon the occurrence of an Event of Default, at Bank's option, without notice by Bank to or demand by Bank of Borrower, all of Borrower's Liabilities shall be due and payable forthwith. All of Bank's rights and remedies under this Note are cumulative and non-exclusive. The acceptance by Bank of any partial payment made hereunder after the time when any of Borrower's Liabilities become due and payable will not establish a custom, or waive any rights of Bank to enforce prompt payment hereof. Bank's failure to require strict performance by Borrower of any provision of this Note shall not waive, affect or diminish any right of Bank thereafter to demand strict compliance and performance therewith. Any waiver of an Event of Default hereunder shall not suspend, waive or affect any other Event of Default hereunder. Borrower and every endorser waive presentment, demand and protest and notice of presentment, protest, default, non-payment, maturity, release, compromise, settlement, extension or renewal of this Note, and hereby ratify and confirm whatever Bank may do in this regard. Borrower further waives any and all notice or demand to which Borrower might be entitled with respect to this Note by virtue of any applicable statute or law (to the extent permitted by law). Borrower agrees to pay, upon Bank's demand therefor, any and all costs, fees and expenses (including attorneys' fees, costs and expenses) incurred by Bank (i) in enforcing any of Bank's rights hereunder, and (i) in representing Bank in any litigation, contest, suit or dispute, or to commence, defend or intervene or to take any action with respect to any litigation, contest, suit or dispute (whether instituted by Bank, Borrower or any other person) in any way relating to this Note or Borrower's Liabilities, and to the extent not paid the same shall become part of Borrower's Liabilities hereunder. This Note shall be deemed to have been submitted by Borrower to Bank at Bank's principal place of business and shall be deemed to have been made thereat. This Note shall be governed and controlled by the laws of the State of Illinois as to interpretation, enforcement, validity, construction, effect, choice of law and in all other respects. TO INDUCE BANK TO ACCEPT THIS NOTE, BORROWER, IRREVOCABLY, AGREES THAT, SUBJECT TO BANK'S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO THIS NOTE SHALL BE LITIGATED IN COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS. BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID CITY AND STATE. BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST BORROWER BY BANK IN ACCORDANCE WITH THIS PARAGRAPH. BORROWER IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING (I) TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR IN CONNECTION WITH THIS NOTE OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR (II) ARISING FROM ANY DISPUTE OR CONTROVERSY IN CONNECTION WITH OR RELATED TO THIS NOTE OR ANY SUCH AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. C/O Brenton Banks, Inc. 400 Locust, Box 961 Des Moines, Iowa 50304 Address Brenton Banks, Inc. By: /s/ J.C. Brenton (signature) Its: President (title) By: /s/ Steven T. Schuler (signature) Its: CFO & Vice Pres/Treas/Sec. (title) F77-3575 R-6-90 129 EX-10.12SYSTEMATICS 15 Exhibit 10(xii) Data Processing Agreement dated December 1, 1991 by and between Systematics, Inc. and Brenton Information Systems, Inc. This Data Processing Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc., for the year ended December 31, 1991. 130 EX-10.13ITEMPROCESSI 16 Exhibit 10(xiii) Item Processing Agreement dated December 1, 1991 between Brenton Bank Services, Inc. and the Federal Home Loan Bank of Des Moines. This Item Processing Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc., for the year ended December 31, 1992. 131 EX-10.14RETIREMENTPL 17 Exhibit 10(xiv) Restated Trust Agreement for Brenton Banks, Inc. Retirement Plan, effective January 1, 1986. This Restated Trust Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc., for the year ended December 31, 1991. 132 EX-10.15RETIREMENTPL 18 Exhibit 10(xv) Amendment to the Restated Trust Agreement for Brenton Banks, Inc. Retirement Plan, effective May 31, 1989. The Amendment is incorporated by reference from Form 10-K of Brenton Banks, Inc. for the year ended December 31, 1989. 133 EX-10.16INDENTURE199 19 Exhibit (10xvi) Indenture Agreement with respect to Capital Notes dated April 12, 1993. 134 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 1 2 , 1 9 9 3 135 INDENTURE AGREEMENT THIS INDENTURE AGREEMENT is made as of the 12th day of April, 1993, 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 136 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. 137 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 138 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: 139 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; 140 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. 141 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. 142 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 12th day of April, 1993. 143 BRENTON BANKS, INC. BANKERS TRUST COMPANY By____________________________ By___________________________ Junius C. Brenton, President Bryan Hall, Trust Officer ATTEST: By____________________________ Steven T. Schuler, Chief Financial Officer and Vice President/Treasurer/Secretary STATE OF IOWA ) ) ss. COUNTY OF POLK ) On this ___ day of ___________________, 1993, before me, a Notary Public in and for Polk County, Iowa, personally appeared Junius C. Brenton, President, and Steven T. Schuler, Chief Financial Officer and Vice President/Treasurer/Secretary, of Brenton Banks, Inc., the corporation which executed the above and foregoing instrument, who being to me known as the identical persons who signed the foregoing instrument, and by me duly sworn, each for himself, did say that they are respectively the President and the Chief Financial Officer/Vice President/Secretary/Treasurer of said corporation, and that said instrument was by them signed and sealed on behalf of the said corporation by authority of its Board of Directors, and each of them acknowledged the execution of said instrument to be the voluntary act and deed of said corporation, by it and each of them voluntarily executed. IN WITNESS WHEREOF, I have hereunto signed my name and affixed my Notarial Seal the day and year last above written. _____________________________ _____________________, Notary Public in and for Polk County STATE OF IOWA ) ) ss. COUNTY OF POLK ) On this ____ day of _____________________, 1993, 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 144 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 145 5.00% Capital Notes Series SS-21 through SS-32 Due 1997 through 2008 5.25% Capital Notes Series TT-21 through TT-32 Due 1997 through 2008 5.50% Capital Notes Series UU-21 through UU-32 Due 1997 through 2008 5.75% Capital Notes Series VV-21 through VV-32 Due 1997 through 2008 6.00% Capital Notes Series G-21 through G-32 Due 1997 through 2008 6.25% Capital Notes Series Q-21 through Q-32 Due 1997 through 2008 6.50% Capital Notes Series J-21 through J-32 Due 1997 through 2008 6.75% Capital Notes Series K-21 through K-32 Due 1997 through 2008 7.00% Capital Notes Series M-21 through M-32 Due 1997 through 2008 7.25% Capital Notes Series N-21 through N-32 Due 1997 through 2008 7.50% Capital Notes Series R-21 through R-32 Due 1997 through 2008 7.75% Capital Notes Series T-21 through T-32 Due 1997 through 2008 8.00% Capital Notes Series U-21 through U-32 Due 1997 through 2008 8.25% Capital Notes Series V-21 through V-32 Due 1997 through 2008 8.50% Capital Notes Series W-21 through W-32 Due 1997 through 2008 8.75% Capital Notes Series X-21 through X-32 Due 1997 through 2008 9.00% Capital Notes Series Y-21 through Y-32 Due 1997 through 2008 9.25% Capital Notes Series B-21 through B-32 Due 1997 through 2008 9.50% Capital Notes Series A-21 through A-32 Due 1997 through 2008 9.75% Capital Notes Series C-21 through C-32 Due 1997 through 2008 10.00% Capital Notes Series D-21 through D-32 Due 1997 through 2008 10.25% Capital Notes Series E-21 through E-32 Due 1997 through 2008 10.50% Capital Notes Series F-21 through F-32 Due 1997 through 2008 10.75% Capital Notes Series H-21 through H-32 Due 1997 through 2008 11.00% Capital Notes Series I-21 through I-32 Due 1997 through 2008 11.25% Capital Notes Series L-21 through L-32 Due 1997 through 2008 11.50% Capital Notes Series O-21 through O-32 Due 1997 through 2008 11.75% Capital Notes Series S-21 through S-32 Due 1997 through 2008 12.00% Capital Notes Series Z-21 through Z-32 Due 1997 through 2008 12.25% Capital Notes Series P-21 through P-32 Due 1997 through 2008 12.50% Capital Notes Series SS-21 through SS-32 Due 1997 through 2008 12.75% Capital Notes Series AA-21 through AA-32 Due 1997 through 2008 13.00% Capital Notes Series BB-21 through BB-32 Due 1997 through 2008 146 N No. _______________ BRENTON BANKS, INC. DES MOINES, IOWA $__________________ REGISTERED CAPITAL NOTE (SERIES _______________________ CALLABLE) Brenton Banks, Inc., a corporation organized and existing under the laws of the State of Iowa, hereinafter referred to as the Corporation, for value received hereby promises to pay to the registered holder hereof, upon presentation of this Capital Note, the sum of $___________________ on the 1st day of June,______________, at the main office of the Corporation in the City of Des Moines, Iowa. The Corporation further agrees to pay interest on the principal amount from the __________ day of ____________________, until paid, at the rate of _______% per annum, payable semi-annually on the first day of June and December of each year. The Corporation shall, upon request of the registered holder hereof, mail a check representing the interest hereon, or the principal when due, to the registered holder at his address appearing on the books of registration. The Capital Note is subject to being called on any interest payment date occurring more than eight (8) years after the date of issuance hereof, at the option of the Corporation on not less than thirty (30) days' prior written notice given by the Corporation by ordinary mail to the holder of the Capital Note at such holder's address appearing on the books of registration, at 100% of the principal amount of this Capital Note, together with interest accrued and unpaid on this Capital Note, to the date fixed for such call. Upon the death of an individual registered holder or of an individual bearing a certain designated relationship to the registered holder, a Capital Note will be redeemed by the Company at the option of certain designated person(s) exercised as provided herein at face plus all interest accrued on the Capital Note to the date of redemption. An option shall arise upon the death of an individual who is (i) sole registered holder, (ii) a joint tenant registered holder, (iii) a tenant in common registered holder, (iv) a life tenant registered holder, (v) the sole grantor of a revocable trust which is a registered holder, (vi) a participant in an IRA or other retirement plan solely for the benefit of one participant which is a registered holder, or (vii) the ward of a conservatorship or custodianship which is a registered holder. No option to require redemption of a Capital Note shall arise except as specifically set forth above. Upon the death of an individual who is the sole registered holder of a Capital Note, such option shall be exercisable by the deceased holder's personal representative(s). Upon the death of a registered holder who holds a Capital Note in joint tenancy, such option shall be exercisable by the surviving joint tenant(s). Upon the death of a registered holder who holds a Capital Note in tenancy in common, such option shall be exercisable jointly by the personal representative(s) of the deceased holder and by the remaining tenant(s) in common. Upon the death of a registered holder who has a life estate in a Capital Note, such option shall be exercisable by the remainderman(men). Upon the death of an individual who is the sole grantor of a revocable trust which is a registered holder, such option shall be exercisable by the trustee(s) of the trust. Upon the death of the participant in an IRA or other retirement plan solely for the benefit of one participant which is a registered holder, such option shall be exercisable by the beneficiary(ies) of such IRA or retirement plan. Upon the death of a ward of a conservatorship or custodianship which is a registered holder, such option shall be exercisable by the personal representative(s) of such ward's estate. In the event more than one person is entitled to exercise the option, such option shall be exercisable only with the concurrence of all persons entitled to exercise the option. The option shall be exercisable for a period of 9 months following the date of death of the individual whose death gives rise to the option. The option shall be exercised by the person(s) entitled to exercise the option giving written notice to the Company of the exercise of the option at the Company's principal executive offices. Prior to the redemption of the Capital Note, the person(s) entitled to exercise the option shall furnish the Company with such documentation or evidence as the Company shall require to establish such person's(s') entitlement to exercise the redemption option. The Company shall be under no duty to notify the person(s) entitled to exercise the option of the existence of this redemption option or of any facts which come to the attention of the Company which would give any person the right to exercise the option. This Capital Note is one of an authorized issue of fully registered Capital Notes of Brenton Banks, Inc., issued in multiples of 51,000 and limited to the aggregate principal amount of $5,000,000 at any one time outstanding, all issued pursuant to an Indenture dated April 12, 1993, 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) 147 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. 148 EX-10.17INDENTURE199 20 Exhibit 10(xvii) Indenture Agreement with respect to Capital Notes dated April 14, 1992. This Indenture Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc., for the year ended December 31, 1992. 149 EX-10.18INDENTURE199 21 Exhibit 10(xviii) Indenture Agreement with respect to Capital Notes dated August 5, 1991. This Indenture Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc. for the year ended December 31, 1991. 150 EX-10.19INDENTURE199 22 Exhibit 10(xix) Indenture Agreement with respect to Capital Notes dated March 27, 1991. This Indenture Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc. for the year ended December 31, 1991. 151 EX-10.20INDENTURE198 23 Exhibit 10(xx) Indenture Agreement with respect to Capital Notes dated April 5, 1985. This Indenture Agreement is incorporated by reference from Form 10-K of Brenton Banks, Inc. for the year ended December 31, 1991. 152 EX-11 24 Exhibit 11 Statement of computation of earnings per share. 153 Statements re: Computation of Earnings Per Share Brenton Banks, Inc.
December 31, 1993 1992 1991 1990 Net income $14,249,970 $12,953,094 $11,659,427 $10,338,585 Average common shares outstanding 5,232,530 5,186,902 5,171,675 5,162,827 Average shares under long-term stock compensation plan 46,510 1,895 0 0 Average common equivalent shares outstanding 5,279,040 5,188,797 5,171,675 5,162,827 Earnings per share 2.70 2.50 2.25 2.00
154 EX-12 25 Exhibit 12 Statement of computation of ratios. 155 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, 1993 1992 1991 1990 Return on average total assets: Net income (before deduction of minority interest) $ 14,918 13,585 12,198 10,872 * divided by * Average assets $ 1,436,425 1,387,273 1,308,439 1,145,785 Ratio 1.04% 0.98% 0.93% 0.95% Return on average common stockholders' equity: Net income $ 14,250 12,953 11,659 10,339 * divided by * Average common stockholders' equity $ 103,140 91,691 81,731 71,824 Ratio 13.82% 14.13% 14.27% 14.39% Common dividend payout ratio: Cash dividends per share $ 0.600 0.525 0.485 0.410 * divided by * Net income per share $ 2.70 2.50 2.25 2.00 Ratio 22.22% 21.00% 21.56% 20.50% Average equity to average assets: Average equity $ 103,140 91,691 81,731 71,824 * divided by * Average assets $ 1,436,425 1,387,273 1,308,439 1,145,785 Ratio 7.18% 6.61% 6.25% 6.27% Equity to assets ratio: Common stockholders' equity $ 112,418 97,430 86,712 77,258 * divided by * Total assets $ 1,480,596 1,431,140 1,360,942 1,274,301 Ratio 7.59% 6.81% 6.37% 6.06%
156
December 31, 1993 1992 1991 1990 Tier 1 leverage capital ratio: Common stockholders' equity $ 112,418 97,430 86,712 77,258 Minority interest 4,407 3,987 3,716 3,481 Less: intangibles (5,499) (5,834) (6,314) (6,420) Tier 1 capital $ 111,326 95,583 84,114 74,319 * divided by * Total assets $ 1,480,596 1,431,140 1,360,942 1,274,301 Less: intangibles (5,499) (5,834) (6,314) (6,420) Tier 1 assets $ 1,475,097 1,425,306 1,354,628 1,267,881 Ratio 7.55% 6.71% 6.21% 5.86% Primary capital to assets: Common equity $ 112,418 97,430 86,712 77,258 Minority interest 4,407 3,987 3,716 3,481 Allowance for loan losses 9,818 9,006 8,548 8,871 Primary capital $ 126,643 110,423 98,976 89,610 * divided by * Total assets $ 1,480,596 1,431,140 1,360,942 1,274,301 Allowance for loan losses 9,818 9,006 8,548 8,871 Allowable assets $ 1,490,414 1,440,146 1,369,490 1,283,172 Ratio 8.50% 7.67% 7.23% 6.98%
157 EX-13 26 Exhibit 13 The Annual Report to Shareholders of Brenton Banks, Inc., for the 1993 calendar year. 158 Blue background, with the words, "Growth, Change, Service, Excellence" repeated 4 times, fading into the background, to display the depth of the importance of those to the Company. 159 CORPORATE PROFILE Brenton Banks, Inc. is a multi-bank holding company headquartered in Des Moines, Iowa. Assets total $1.5 billion with another $.6 billion under trust agreement and $.2 billion in investment brokerage accounts. Brenton Banks, Inc. operates 13 commercial banks and one savings bank in 42 banking facilities across Iowa, including the major metropolitan areas of Des Moines, Cedar Rapids, Davenport and Ames. The Company's 10 community banks are in highly productive trade areas and county seat communities. In addition to banking, investment brokerage and trust business, Brenton Banks, Inc. operates mortgage, insurance and real estate subsidiaries. The first Brenton Bank was founded in Dallas Center, Iowa in 1881. Brenton Banks, Inc., incorporated in 1948, was Iowa's first bank holding company. The Company's common stock is publicly traded on Nasdaq National Market under the symbol BRBK, and is also listed in various newspapers as BrentB. Contents Financial Highlights 1 Message to Shareholders 2 Management Changes 5 A Closer Look 7 Management's Discussion and Analysis 10 Consolidated Average Balances and Rates 18 Selected Financial Data 19 Consolidated Financial Statements and Notes 20 Management's Report 35 Independent Auditor's Report 36 Stock Information 37 Corporate Structure 38 Brenton Banks and Assets 39 160 FINANCIAL HIGHLIGHTS Brenton Banks, Inc. and Subsidiaries
Operating Results 1993 1992 1991 Net interest income $54,228,718 51,786,369 46,873,888 Provision for loan losses 1,251,588 1,410,730 799,157 Total noninterest income 17,863,271 14,684,040 12,714,549 Total noninterest expense 50,414,942 46,590,756 42,283,746 Income before income taxes and minority interest 20,425,459 18,468,923 16,505,534 Net income 14,249,970 12,953,094 11,659,427 Per Common and Common Equivalent Share 1993 1992 1991 Net income $ 2.70 2.50 2.25 Cash dividends .600 .525 .485 Book value, including unrealized gains (losses)* 21.40 18.71 16.74 Book value, excluding unrealized gains (losses)** 20.82 18.71 16.75 Closing bid price 26.25 26.00 20.75 At December 31 1993 1992 1991 Assets $ 1,480,596,046 1,431,139,829 1,360,941,588 Loans 875,881,387 753,454,137 751,909,813 Nonperforming loans 4,013,000 4,593,000 5,622,000 Deposits 1,294,363,694 1,269,940,325 1,215,088,230 Common stockholders' equity* 112,417,665 97,430,163 86,712,022 Ratios 1993 1992 1991 Return on average common stockholders' equity (ROE) 13.82% 14.13 14.27 Return on average assets (including minority interest) (ROA) 1.04 .98 .93 Net interest margin 4.28 4.23 4.04 Net noninterest margin (2.31) (2.31) (2.26) Primary capital to assets* 8.50 7.67 7.23 Tier 1 leverage capital ratio* 7.55 6.71 6.21 Nonperforming loans as a percent of loans .46 .61 .75 Net charge-offs as a percent of average loans .05 .13 .15 Allowance for loan losses as a percent of nonperforming loans 244.65 196.09 152.05
* including unrealized gains (losses) on assets available for sale ** excluding unrealized gains (losses) on assets available for sale
Net Income (In thousands) 89 90 91 92 93 $8,704 10,339 11,659 12,953 14,250 Return on Average Equity 89 90 91 92 93 14.50% 14.39 14.27 14.13 13.82 Net Interest Margin 89 90 91 92 93 4.38% 4.11 4.04 4.23 4.28 Return on Average Assets 89 90 91 92 93 1.00% .95 .93 .98 1.04
161 MESSAGE TO THE SHAREHOLDERS The year 1993 was excellent for our Company. This is true from both a financial and an operational standpoint. We are proud of our Company's financial gains in 1993. Earnings reached record levels for the sixth consecutive year at $14.25 million, a 10.0 percent increase over 1992. Earnings per common share were $2.70 for 1993, compared with $2.50 for 1992. Our goal is to grow earnings per share by ten percent per year. This year earnings per share grew 8.0 percent, compared to 11.1 percent in 1992 and 12.5 percent in 1991. Our common stock ended the year at a bid price of $26.25, which represents 123 percent of book value and 9.7 times current year's earnings. Dividends paid in 1993 rose 14.3 percent to $.60 per share, a payout of 22.2 percent of earnings per share. The January 1994 dividend was increased to $.165 per common share. We are proud that our loan quality remains excellent. This is reflected by net loans charged off for the year of only 0.05 percent of average loans. Also, nonperforming loans represented a low 0.46 percent of loans at the end of the year. Both the net loans charged off and nonperforming loan experience rank Brenton in the top ten percent among our midwestern peers. Our deposit growth slowed in 1993. Growth in noninterest income through brokerage, insurance, trust and mortgage services is designed to provide diversification and increased earnings, even if deposit growth remains slow. These services are discussed further in A Closer Look. Our plan for the Company is to remain independent and to expand our presence into new geographic markets. This will be accomplished through acquisitions, branch expansion and a wider array of financial services. A number of initiatives are currently underway in this area. The Iowa economy has remained robust, despite the occurrence of unprecedented flooding and its negative impact on agriculture. The average work week, housing permits, sales tax receipts, non-farm employment and bank loans set record levels for Iowa through December 1993, while unemployment dropped to record lows.* Our goal is to provide premier service to consumer, commercial, and agricultural customers through community and metro banking affiliates. We emphasize local authority, supported by the centralized services of the Parent Company and its service providers. This, we feel, is the best combination for Brenton. We function in a setting of strong centralized controls in the areas of credit, investment, and bank regulation. A well developed and extensive financial reporting system, which reports and compares performance, is the communication link between the Parent Company and our subsidiaries. Our Company is bound together by a common and measurable Mission statement. Our strength is in the highly capable and experienced group of professional bankers both at our affiliate and Parent Company levels. We are very confident and proud of the collective leadership within Brenton. We will continue to remain conservative in the way we lend money and the way we borrow money for new corporate endeavors. Our excellent loan quality and low debt-to-equity ratios demonstrate these strengths. Thank you, our shareholders, for your investment in Brenton Banks, Inc. Your continued confidence and support energizes our goal to be Iowa's premier banking organization. We strive to offer the best service to our customers and the greatest value to you, our shareholders. C. Robert Brenton Chairman of the Board William H. Brenton Chairman of the Executive Committee and Vice Chairman of the Board J.C. (Buz) Brenton President * Source Des Moines Register, January 30, 1994 162 (picture of William H. Brenton, J.C. Brenton, and C. Robert Brenton) Pictured (left to right) are William H. Brenton, Chairman of the Executive Committee & Vice Chairman of the Board, J.C. Brenton, President, and C. Robert Brenton, Chairman of the Board. (picture of Robert L. DeMeulenaere) Pictured is Robert L. DeMeulenaere, elected President of Brenton Banks, Inc. at the January 19, 1994 Board of Director's meeting. He succeeds J.C. Brenton as President. Mr. DeMeulenaere joined the organization in 1964 at the Davenport bank. In 1972, he moved to the Cedar Rapids bank as Executive Vice President and in 1982 became President. In 1985, he moved to Des Moines as Senior Vice President-Metro Bank Division and also became President of Brenton Mortgages, Inc. in 1988. He returned to Cedar Rapids in 1990 as CEO of the Cedar Rapids bank as a result of a major acquisition. In 1994, he returned to Des Moines to assume his new responsibilities with Brenton Banks, Inc. as President. 163 (picture of executives - caption on following page) 164 MANAGEMENT CHANGES In June, 1993, J.C. (Buz) Brenton announced his intention to step down from his duties as President of the Company at year-end. He also announced that Robert L. DeMeulenaere, thirty-year employee of the Company and recent President of the Cedar Rapids affiliate, would be elected President in January, 1994. Dear Brenton Associates: I wish to announce to you that at this year-end I will step down as President of our Company. Bob DeMeulenaere will replace me as President. I will remain on the Board of our Company, but otherwise be inactive except to be available for counsel or other help as needed and as my time will permit. There will be a period of time when Bob DeMeulenaere will report to me. He will be elected as President at this year-end and move to the corporate offices. I plan to take office space within Capital Square so as to be accessible but not engaged actively, except to participate on the Board of Directors and in the affairs of the Company, once Bob ceases to report to me. Bill and Bob Brenton's jobs and titles will remain the same. This move from active banking is part of a plan I have held, and shared with my brothers, for three or four years. There is much to try to do in life of a worthwhile nature. I wish to direct my energies more fully toward environmental and humanitarian affairs, if possible. I want you to know that I have and do love my work, my Company, and you, my associates. My relations with my brothers, always have, and continue to be, a strength for me and, I believe, the Company. In Bob DeMeulenaere, we have a leader who is exceptionally well qualified in background, character, and intellect to do the job. He commands the highest respect within the Company and the industry. The future is bright indeed! Yours, J.C. (Buz) Brenton President Brenton Banks, Inc. (picture of the following executives on facing page) Front Row: (l-r) Phillip L. Risley, Executive Vice President; Roger D. Winterhof, Senior Vice President-Community Bank Division; Larry Mindrup, President, Brenton National Bank-Poweshiek County, Grinnell, and Community Bank Area Manager Second Row: (l-r) John R. Amatangelo, Senior Vice President- Operations; Saulene M. Richer, Senior Vice President- Marketing/Technology; Steven T. Schuler, Chief Financial Officer & Vice President/Treasurer/Secretary Third Row: (l-r) Steven F. Schneider, Vice President-Brokerage Services; Charles N. Funk, Vice President-Investments; Gary D. Ernst, Vice President-Trust Fourth Row: (l-r) Norman D. Schuneman, Senior Vice President- Lending; Mary F. Sweeney, Vice President-Human Resources 165 (photo of a male and female customer at a desk, with a Brenton broker behind the desk. There is a sign which reads: Brenton Brokerage. No photo caption) 166 A CLOSER LOOK Over the past several years, significant changes have been made at the Company. The purpose of this section of The Annual Report is to provide to shareholders, prospective shareholders and customers an overview of our Company and its direction. Brenton Bank's, Inc. Mission In 1989, the Company adopted a Mission which we think is unique in that it demands measurement throughout our system. Our Mission is to be the premier banking organization in Iowa in: * Service to customers; * Products that appeal to customers; * Professional appearance of our people and facilities; and * As a place to work. We will make measured progress in these areas on an annual basis. We also strive to be leading community citizens. Our profit objective is to rank in the top quarter of similar sized bank holding companies. In this way, we seek to substantially enhance shareholder value while remaining strong for our customers, employees and communities. Over the past several years, our staff has focused its attention and energy on accomplishing the objectives identified in our Mission. Our Mission, which we continually measure and document, gives us a unity of purpose and focus. We utilize comparisons, surveys and information-sharing to maintain our commitment to strive for improvement and achieve success. This concentration of effort has directly benefitted our customers, employees and shareholders. Growth and Expansion In 1993, average balance sheet growth equalled 3.5 percent, which was below that of recent years. The current low interest rate environment causes deposit funds to move from traditional bank investments to annuities, mutual funds, stock market and insurance products. As interest rates increase and Brenton is able to pay higher rates on deposits and receive higher yields on loans and investments, there will again be an inflow into traditional bank deposit products. We have recognized the need to offer off-balance-sheet products directly to our customers as an alternative investment for those seeking a higher rate of return. For this reason, Brenton greatly expanded its brokerage business in 1993. Last year the number of Brenton brokers grew by one-third and brokerage sales increased 88.1 percent, contributing $.8 million to the Company's pretax net income. Brenton is also strengthening its offerings in the mutual funds area and has a goal of developing its own proprietary funds. Annuity products are now being offered by all of our banks and life insurance products will be offered in 1994. In addition to internal growth, Brenton is pursuing expansion. Our expansion goals are designed to increase market share in our metropolitan markets and to expand into new regional economic centers in Iowa. Late in 1993, Brenton received approval to open a new banking office in Ankeny, Iowa. This office will be affiliated with our Ames subsidiary, Brenton Savings Bank, FSB. In addition, we have applied for a banking office charter in Iowa City, Iowa. Both Ankeny and Iowa City are rapidly expanding markets not presently served by Brenton. In early 1994, Brenton also purchased an insurance agency in the Tama/Toledo, Iowa area. Our intentions are to expand the Tama/Toledo location to include lending services. During 1994, Brenton will open a loan production and investment 167 brokerage office in Newton, Iowa. Brenton Brokerage Services, Inc. will also be opening a retail location in downtown Des Moines. Changes and Enhancements During 1993, our Company undertook and completed a number of new initiatives. We completed the centralization of our operations from individual banks into Brenton Bank Services Corporation, which began in 1992. This has increased the Company's ability to control costs and standardize products and services. Standardization will greatly enhance our ability to market products and services in a concentrated and professional manner. Operational enhancements allow us to take advantage of technology in developing customer information. These are significant steps for Brenton. Excellence Brenton has recently remodeled the majority of its facilities. The improvements were designed to enhance the marketing and selling of products and services. Strategically placed graphic sales displays were included in virtually all banking locations. Cumulatively, the remodeling projects were a major effort to enhance our overall appearance and stimulate sales. During 1993, Brenton completed the centralization of its Human Resource activities under the direction of Vice President-Human Resources, Mary F. Sweeney. The standardization of our benefit programs and policies has strengthened our relationship with our most valuable asset, our business associates. By the end of 1993, all of our banks were offering a new checking account, the Select Account. This deposit product is priced based on the customer's total banking relationship with Brenton. It is very appealing for those customers using more than one Brenton service and therefore, provides the opportunity to turn single- service customers into multiple-service customers. We feel this account will quickly grow to be the backbone of our relationship with the majority of our deposit customers. Leasing and international banking services both expanded in 1993. We consider them integral to our commercial and agricultural product offerings and intend them to be a growing contribution to our noninterest income. Last year we made a major commitment to the area of corporate cash management, with the hiring of Douglas F. Lenehen, Vice President- Cash Management Services, and the addition of computer hardware and specialized software. These services are needed and desired by most Brenton business customers, so we consider this an important addition. In 1993, we decided to expand our mortgage banking operation. Although our banks have been making residential mortgages for years, we have experienced increased activity over the past three years. We have added specialized real estate loan originators in many Brenton locations and sold more than $121 million of loans to the secondary market in 1993. These activities, with the exception of mortgage servicing, have been decentralized. We feel that substantive additional income is possible by expanding mortgage origination and centralizing our secondary market operations. The planning process for this mortgage banking expansion began in 1993, with implementation commencing in 1994. Measured by any standard, credit quality remains a hallmark at Brenton. We are very proud of our lending record. With strong loan administration and control, managed by Senior Vice President- Lending, Norman D. Schuneman, we are confident we will maintain our sound loan portfolio over the years. Asset-Liability management under the guidance of Vice President- Investments, Charles N. Funk, made significant progress during 1993. Asset-Liability management is the management of the relationship between the repricing of loans and investments and their chief funding source, primarily deposits. By the end of 1993, Brenton had installed a standardized mechanism for projecting earnings variances, given various changes of general interest rates in the economy. This information allows us to arrive at better conclusions regarding loan and deposit pricing and maturity decisions. This new system of measuring interest rate risk significantly improves our planning process. This culmination of expansion, new products, improved appearance and more technical analysis provides us the competitive advantages needed to excel in our industry and accomplish our Mission. 168 (photo of a meeting being conducted by a Brenton Trust Officer, showing six of the participants at round tables. No photo caption.) 169 MANAGEMENT'S DISCUSSION AND ANALYSIS For 1993 and the sixth consecutive year, Brenton Banks, Inc. and subsidiaries (the "Company") reported record earnings. Net income for the year was $14,249,970, a 10.0 percent increase over 1992. Earnings per common and common equivalent share rose to $2.70 for 1993, up 8.0 percent from $2.50 in 1992. Capital Resources The Company's record earnings contributed to the 15.4 percent growth in common stockholders' equity, which totaled $112,417,665 at December 31, 1993. Share issuances under the Employee Stock Purchase Plan added $361,194 to the Company's equity while the exercise of previously granted stock options added $461,185. Effective December 31, 1993, the Company adopted the Statement of Financial Accounting Standards No. 115. Under this new accounting standard, the method of classifying investment securities is based on the Company's intended holding period. Accordingly, securities which the Company may sell at its discretion prior to maturity are recorded at their fair value. Additionally, the aggregate unrealized net gains, including the effect of income tax and minority interest, are recorded as a component of common stockholders' equity. At December 31, 1993, aggregate unrealized gains totaled $3,036,270. Because of the Company's strong earnings performance, the Board of Directors increased 1993 dividends to common stockholders 14.3 percent over 1992 to $.60 per share, a dividend payout ratio of 22.2 percent of earnings per share. In January 1994, the Board declared a dividend of $.165 per share, which was up 13.8 percent from the first quarter of 1993 and 3.1 percent from the prior quarter. The Company's risk-based core capital ratio was 12.64 percent at December 31, 1993, and the total risk-based capital ratio was 13.75 percent. These exceeded the minimum regulatory requirements of 4.00 percent and 8.00 percent respectively. The Company's tier 1 leverage ratio, which measures capital excluding intangible assets, was 7.55 percent at December 31, 1993, exceeding the regulatory minimum requirement range of 3.00 to 5.00 percent. Each of these capital calculations includes unrealized gains on assets available for sale. The debt-to-equity ratio of Brenton Banks, Inc. (the "Parent Company") was 10.7 percent at December 31, 1993, compared to 12.4 percent at the end of 1992. The Parent Company's available $2 million line of credit with a regional bank was unused at the end of 1993. Long-term borrowings of the Parent Company consisted entirely of $12,022,000 of capital notes. Brenton Banks, Inc. common stock closed 1993 at a bid price of $26.25 per share, representing 1.23 times the book value per share of $21.40 on the same date. The year-end stock price represented a price-to-1993-earnings multiple of 9.7 times.
Annual Dividends per Common Share 89 90 91 92 93 $.33 .41 .485 .525 .60 89 90 91 92 93 Primary Capital Ratio 7.77% 6.98 7.23 7.67 8.50 Tier 1 Leverage Capital Ratio 6.73% 5.86 6.21 6.71 7.55
170 Liquidity The objective of liquidity management is to maintain sufficient cash flows to fund operations and meet customer commitments. Insufficient liquidity can cause higher costs of obtaining funds when needed, while excess liquidity can lead to the loss of income opportunity. Federal funds sold, trading account securities, and assets available for sale are readily marketable. 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. Federal funds sold, trading account securities, and assets available for sale comprised 30.7 percent of the Company's total assets. Net cash provided from Company operations is another major source of liquidity. The net cash provided from operating activities was $20,429,680 in 1993; $17,822,173 in 1992; and $16,067,732 in 1991. This trend of strong cash from operations is expected to continue into the foreseeable future. The Company's stable deposit base and relatively low levels of large deposits resulted in low dependence on volatile liabilities. During 1993, the Company chose to borrow $8 million from the Federal Home Loan Bank of Des Moines as a means of providing long- term fixed-rate funding for certain fixed-rate assets. The combination of a high level of potentially liquid assets, strong cash from operations, and low dependence on volatile liabilities provided excellent liquidity for the Company at December 31, 1993. The Parent Company, whose primary funding sources are management fees and dividends from the banking subsidiaries, had sufficient cash flow and liquidity at December 31, 1993. Dividends totaling $30 million were available to be paid to the Parent Company by subsidiary banks without reducing capital ratios below regulatory minimums. At the end of 1993, the Parent Company had $3.5 million of short-term investments and additional borrowing capacity. Brenton Banks, Inc. continues to pursue its growth mission by seeking acquisition opportunities that strengthen the Company's presence in current and selected new market areas. There are currently no pending acquisitions that would require Brenton Banks, Inc. to secure capital from public or private markets. Asset-Liability Management During the last 18 months, the Company has improved the sophistication of its asset-liability management system. This new system simulates the effect of various interest rate scenarios on net income. This analysis process is also used to project the results of alternative investment decisions. Management performs in-depth analyses of the simulations to manage interest rate risk and the Company's net interest margin. At December 31, 1993, the Company's stable one-year GAP position was negative at .55:1, meaning fewer assets are scheduled to reprice within one year than liabilities. This situation suggests that a decline in interest rates may benefit the Company and that a rise in interest rates may negatively impact net interest income. The negative GAP position is largely the result of treating interest-bearing demand and savings accounts as immediately repriceable based on their contractual terms. The Company can partly neutralize the effect of interest rate changes by controlling the timing of rate changes on these deposit accounts. 171 (photo of a Brenton Real Estate Originator, with a male and female couple in a home construction scene.) 172 Results of Operations - 1993 Compared to 1992 Net Income Brenton recorded its sixth consecutive year of record net income with $14,249,970 in 1993, a 10.0 percent increase over $12,953,094 in 1992. This continued improvement was attributable to an increase in net interest income and fee-and commission-based diversified services. The Company's total assets grew 3.5 percent to $1.5 billion at 1993. Return on average assets (ROA) improved to 1.04 percent in 1993, compared to 0.98 percent for 1992. Due to the Company's increasing equity position, the return on average equity (ROE) was 13.82 percent, compared to 14.13 percent one year earlier. Net Interest Income Net interest income rose 4.7 percent to $54,228,718 for 1993. This increase was partially due to the higher net interest margin of 4.28 percent, compared to 4.23 percent last year. Influenced by the falling interest rate environment, the Company experienced a more rapid decline in rates paid on deposits and other liabilities than in yields earned on assets. Loans, which typically earn higher yields than investment securities, rose 16.2 percent. On a tax equivalent basis for 1993, loans earned an average rate of 8.77 percent while investment securities yielded an average 6.05 percent. The net interest spread, which is the difference between the rate earned on assets and the rate paid on liabilities, rose to 3.86 percent from 3.73 percent last year. During the course of 1993, the Company's net interest margin declined 19 basis points. The goal to continue expansion of net interest income is, therefore, centered on growth in interest- earning assets. The majority of this growth is sought in loans. Loan Quality Brenton's loan quality remains strong compared to its peers and is the foundation of the Company's financial performance. Demonstrating this, the Company's nonperforming loans were a low 0.46 percent of loans or $4,013,000 at December 31, 1993, down 12.6 percent from $4,593,000 one year ago. Nonperforming loans include loans on nonaccrual status, loans that have been renegotiated to below market interest rates or terms, and loans past due 90 days or more. Brenton ranked second among 33 Midwestern peer banks with its 0.61 percent ratio of nonperforming loans to loans at the end of 1992, according to the Stifel, Nicolaus & Co., Inc. December 31, 1992 Midwest Regional Banking Review. By December 31, 1993, this ratio had improved to 0.46 percent.
89 90 91 92 93 Provision for Loan Losses $760 869 799 1,411 1,252 Net Charge-offs (In thousands) $401 814 1,122 953 440 Nonperforming Loans (In thousands) 89 90 91 92 93 $6,718 $5,460 $5,622 $4,593 $4,013
173 The allowance for loan losses represented 244.65 percent of nonperforming loans at the end of 1993, compared to 196.09 percent one year ago. The Company's net charge-offs to average loans, which ranked best among the 33 peer banking organizations for 1992, improved from 0.13 percent for 1992 to 0.05 percent for 1993. This high-quality loan portfolio led to a modest provision expense for loan losses, which represented 0.16 percent of average loans in 1993. Though parts of Iowa experienced record flooding during the summer of 1993, the state's economy did not falter and most Iowans rebounded quickly. The flood had a varied impact in both metropolitan and agricultural areas of the state. Only a few of the businesses served by Brenton were affected by the flood. In some areas, crop production was reduced 25 to 35 percent from flooding, as well as excessive rainfall and fewer days of sunshine; other areas were less severely impacted. Due to the strength of Brenton's borrowers, multi-peril crop insurance, disaster assistance, and government guarantees, Brenton anticipates that the flood will have very little impact on its loan portfolio quality. Quality control and risk management are carefully balanced with goals for loan growth. The Company's rigorous loan evaluation and approval system requires large loans to be approved by a team of top Company officers and all loans to be routinely reviewed by qualified loan examiners. To limit the risk exposure of commercial real estate loans, the Company closely monitors and restricts its loans for commercial multi-tenant buildings and speculative land-development loans. Instead, the Company concentrates on owner-occupied residential and commercial mortgages used to finance facilities built and occupied by the customer. Additionally, Brenton believes that loan quality is enhanced by maintaining full-service banking relationships with borrowing customers. The allowance for loan losses is the amount available to absorb actual loan losses within the portfolio. The allowance is based on management's judgment after considering various factors such as the current and anticipated economic environment, historical loan loss experience, and most importantly, individual loan evaluations at each bank. Through the Company's loan evaluation process, individual banks evaluate loan characteristics, the borrower's financial condition, and collateral value. From these evaluations, the loan portfolio quality is quantified and the bank assesses and computes the required allowance for loan losses. This process is expanded into an adequacy analysis of the allowance on a Company-wide basis. The adequacy of the allowance is subject to future events and uncertainties. Because of the in-depth analysis process, management believes the allowance for loan losses at December 31, 1993 was sufficient to absorb possible loan losses within the present portfolio.
Total Assets (In millions) 89 90 91 92 93 $961 1,274 1,361 1,431 1,481 Net Noninterest Margin 89 90 91 92 93 2.46% 2.29 2.26 2.31 2.31
174
Loan Composition Real Estate 57.5% Consumer 24.5% Commercial 10.3% Loans to Farmers 7.6% Other .1%
Beginning in 1995, the Financial Accounting Standards Board will mandate a standard that will fundamentally change certain accounting procedures for impaired loans, including the determination of the allowance for loan losses and financial disclosures. This new Standard is not expected to have a material effect on the future financial statements of the Company. Net Noninterest Margin To measure operating efficiency, the Company uses the net noninterest margin, which is the difference between noninterest income and noninterest expense as a percent of average assets. For 1993 and 1992, the net noninterest margin was 2.31 percent. To reduce this margin, which is a significant goal, the Company must continue to increase its asset base, develop fee-based services, and use new technology and procedures to enhance operational efficiencies. Noninterest Income Over the last several years, Brenton has expanded its fee-based services, including trust, investment brokerage, secondary market real estate loan origination, insurance, and farm management. These services were the basis of the Company's 21.7 percent growth in noninterest income during 1993 and are expected to continue to grow. Investment brokerage commissions grew 88.1 percent to $3.0 million for the year, compared to $1.6 million for 1992. After considering related expenses, investment brokerage contributed $.8 million to the Company's pre-tax net income, compared to $.3 million last year. The number of full-time brokers grew by one-third in 1993 and management expects that number to continue growing. The brokerage business is a natural extension of the banking business, as it allows Brenton to expand the array of financial services provided to existing customers. Other charges and fees rose 29.8 percent for the year, largely from a 59.6 percent, or nearly $800,000, increase in fees on real estate loans originated for the secondary market. Three years ago, the Company was originating under $20 million of mortgage loans for sale into the secondary market. In 1993, the volume was more than six times that amount, totaling over $121 million. To respond to the increased demand for new real estate loans and refinancings prompted by current low interest rates, Brenton added specialized real estate loan originators in several of its locations. Fiduciary income from trust services rose 8.8 percent to $1.9 million in 1993 through the addition of new employee benefit and personal trusts, and growth of existing trusts. At the end of 1993, the Company's trust department managed $607 million in assets. Securities transactions also influenced the increase in noninterest income. Management realigned a portion of the investment portfolio that is available for sale in response to the interest rate environment, realizing securities gains of $595,168. The main purpose of this realignment was to diversify reinvestment risk and reduce interest rate risk in the investment portfolio. 175 Noninterest Expense Total noninterest expense rose 8.2 percent in 1993 to $50,414,942 from $46,590,756 one year ago. The 9.8 percent increase in salaries and wages, which stems partly from commissions related to increased investment brokerage and secondary market real estate loan origination, comprised more than half of the total noninterest expense increase. This increase in salaries caused a proportionate rise in the related benefits expense. Also in 1993, the Company increased its matching contribution to the employee 401(k) plan by 1 percent of salaries. Brenton has recently redesigned most of its facilities and added technological enhancements to improve the marketing and selling of products and services. These projects are a major effort to enhance Brenton's overall image and stimulate sales. As a result, expenses related to occupancy, furniture, and equipment rose 9.3 percent. During 1993, Brenton initiated several successful promotion campaigns in offering new products that serve Brenton customers. These campaigns, along with various event sponsorships throughout the state, added 16.9 percent to the advertising and promotion expenses. Data processing expense and FDIC deposit insurance assessments were both down slightly from last year. All Brenton banks pay an FDIC insurance premium rate of $.23 per $100 of deposits, the lowest rate under the FDIC's risk-based premium system. Other operating expense rose only 4.7 percent, with expenses related to any given category increasing only modestly. Income Taxes The Company's income tax 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 as a percent of income before income tax and minority interest was 27.0 percent for 1993 compared to 26.4 percent for 1992. In January 1993, the Company adopted a new accounting standard relating income taxes. This standard allows the Company to recognize deferred tax benefits based on the likelihood of realization of those benefits in future years. Also during 1993, the Company's effective federal income tax rate rose because of statutory federal changes. Neither of these items had a material effect on the financial statements of the Company. Results of Operations - 1992 Compared to 1991 Acquisitions On October 1, 1992, Brenton Banks, Inc. merged with Ames Financial Corporation and acquired its wholly-owned subsidiary, Ames Savings Bank, FSB of Ames, Iowa. With its name changed to Brenton Savings Bank, FSB, the institution continues to operate as a federal savings bank. The merger transaction, accounted for as a pooling-of-interests, resulted in the restatement of historical information to reflect combined results of Brenton and Ames Financial Corporation. The merger was accomplished by a stock-for-stock exchange. No bank borrowings were required since the only cash paid was for fractional shares of common stock. Net Income The Company's record earnings of $12,953,094 in 1992 was an 11.1 percent increase over $11,659,427 in 1991. Earnings per share also grew 11.1 percent to $2.50 for 1992 compared to $2.25 for 1991. The Company's ROA improved to .98 percent from .93 percent in 1991. The ROE was 14.13 percent, down slightly from 14.27 percent for 1991, the result of an increase in equity capital. Net Interest Income Net interest income rose 10.5 percent over 1991 to $51,786,369, and was prompted by growth in interest-earning assets and declining interest rates. The net interest margin was 4.23 percent for 1992 compared to 4.04 percent one year earlier. Loan Quality Nonperforming loans of $4,593,000 at the end of 1992 represented 0.61 percent of loans. While remaining low, the provision expense for loan losses rose $611,573 in 1992. This provision increased the allowance for loan losses to $9,006,290 at December 31, 1992, representing 196.09 percent of nonperforming loans and 1.20 percent of loans. Net loans charged off for 1992 represented a low 0.13 percent of average loans. Noninterest Income Noninterest income rose 15.5 percent from 1991 to $14,684,040 for 1992. The Company capitalized on mortgage origination during an interest rate environment that encouraged new home building and refinancing. Mortgage fees on residential mortgage loans sold into the secondary market totaled $1,449,807 for 1992, more than four times that of 1991. Brenton Brokerage Services, Inc. became a licensed broker dealer in April 1992, and experienced excellent growth in personnel and sales volume during the year. Investment brokerage commissions totaled $1,600,324 for 1992, a 76.9 percent increase over 1991. Noninterest Expense Noninterest expense rose 10.2 percent to $46,590,756 in 1992. Brenton implemented several changes to improve operating efficiency and control the growth of noninterest expenses. Initial costs, which significantly impacted this increase, were necessary to fully incorporate these efficiencies. Improvements in Brenton's computer technology designed to improve customer service and streamline operations resulted in a 36.7 percent increase in equipment depreciation over 1991. The transition to centralized backroom operations in 1992 added some expense because of some necessary initial parallel operations. As part of this centralization effort, the proof and item capture functions were out-sourced to the Federal Home Loan Bank of Des Moines in November 1991. While providing overall cost savings, this shifted expenses of $581,154 from salaries and benefits, occupancy expense, and furniture and equipment expense to other operating expenses in 1992. The October 1992 merger with Ames Financial Corporation caused one-time legal, accounting, and regulatory costs of $332,500. A long-term stock incentive plan for the Company's senior officers and bank presidents was approved and implemented during the fourth quarter of 1992. This plan provides financial incentives based on service to the Company and Company performance over the next several years. In addition, it encourages senior managers to pursue maximizing shareholder value by providing them an opportunity to own Brenton stock. This stock compensation expense was $560,000 for 1992. Noninterest expense categories all increased with the exception of electronic data processing fees, which decreased through negotiations of Brenton's contract for data processing services. Federal Deposit Insurance Corporation assessments rose 13.8 percent to $2,750,378. All Brenton banks pay an FDIC insurance premium rate of $.23 per $100 of deposits, the lowest rate under the FDIC's risk-based premium system. Income Taxes The Company's income tax strategy includes reducing taxes by purchasing assets which produce tax-exempt income. The effective rate of income tax as a percent of income before income tax and minority interest was 26.4 percent for 1992, compared to 26.1 percent for 1991. 177 CONSOLIDATED AVERAGE BALANCES AND RATES CONSOLIDATED AVERAGE BALANCES AND RATES Brenton Banks, Inc. and Subsidiaries
Average Balances (In thousands) 1993 1992 1991 1990 1989 Assets Cash and due from banks $ 46,025 41,715 35,656 36,012 34,061 Interest-bearing deposits with banks 762 6,240 18,335 13,562 5,823 Federal funds sold and securities purchased under agreements to resell 23,725 27,082 35,154 40,095 24,889 Investment securities: Available for sale 53,174 6,512 _ _ - Held to maturity-taxable 299,993 384,301 342,466 303,243 285,237 Held to maturity-tax exempt 164,520 139,296 106,658 58,507 29,892 Loans held for sale 6,165 2,553 _ _ - Loans 802,088 736,646 727,870 659,283 512,822 Allowance for loan losses (9,615) (8,894) (8,819) (8,763) (8,226) Bank premises and equipment 23,045 21,400 18,876 17,003 15,027 Other 26,543 30,422 32,243 26,843 21,976 $1,436,425 1,387,273 1,308,439 1,145,785 921,501 Liabilities and Stockholders' Equity: Deposits: Noninterest-bearing $ 119,322 112,054 102,795 102,225 100,985 Interest-bearing: Demand 217,754 209,642 175,595 152,434 121,226 Savings 299,640 260,568 235,894 205,433 191,153 Time 622,789 646,261 654,776 560,679 404,868 Total deposits 1,259,505 1,228,525 1,169,060 1,020,771 818,232 Federal funds purchased and securities sold under agreements to repurchase 42,715 33,240 20,340 18,912 13,459 Other short-term borrowings 33 2,170 5,361 3,027 246 Accrued expenses and other liabilities 12,805 13,735 14,739 14,432 9,966 Long-term borrowings 14,077 14,067 13,619 13,347 16,222 Total liabilities 1,329,135 1,291,737 1,223,119 1,070,489 858,125 Minority interest 4,150 3,845 3,589 3,472 3,350 Common stockholders' equity 103,140 91,691 81,731 71,824 60,026 $1,436,425 1,387,273 1,308,439 1,145,785 921,501 Summary of Average Interest Rates Average rates earned: Interest-bearing deposits with banks 2.88% 4.92 7.10 8.69 9.29 Federal funds sold and securities purchased under agreements to resell 2.05 2.41 5.77 7.84 9.08 Investment securities: Available for sale 5.28 6.63 _ _ _ Held to maturity_taxable 5.54 6.88 8.50 8.93 8.56 Held to maturity_tax-exempt (tax equivalent basis) 6.97 7.66 8.85 9.74 10.54 Loans held for sale 8.43 9.33 _ _ _ Loans 8.77 9.65 10.52 10.85 10.99 Average rates paid: Deposits 3.70% 4.70 6.19 6.71 6.47 Federal funds purchased and securities sold under agreements to repurchase 2.41 2.78 4.74 6.16 6.88 Other short-term borrowings 3.63 5.57 8.70 10.18 9.05 Long-term borrowings 8.60 9.14 9.57 10.16 10.77 Average yield on interest-earning assets 7.57% 8.43 9.62 10.11 10.10 Average rate paid on interest-bearing liabilities 3.71 4.70 6.21 6.76 6.57 Net interest spread 3.86 3.73 3.41 3.35 3.53 Net interest margin 4.28 4.23 4.04 4.11 4.38
178 SELECTED FINANCIAL DATA SELECTED FINANCIAL DATA Brenton Banks, Inc. and Subsidiaries
Year-end balances (In thousands) 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 Total assets $1,480,596 1,431,140 1,360,942 1,274,301 961,370 921,207 908,933 956,505 963,190 991,097 Interest-earning assets 1,400,709 1,323,252 1,267,402 1,181,172 883,721 845,571 836,029 865,364 880,666 900,785 Interest-bearing liabilities 1,224,951 1,181,013 1,141,008 1,052,597 769,717 733,133 728,597 771,416 785,851 804,428 Liabilities Demand deposits 127,132 137,212 115,479 125,626 113,349 118,392 116,830 123,883 117,624 116,831 Long-term borrowings 20,055 13,284 13,634 12,675 14,701 16,215 17,509 18,759 19,707 19,729 Preferred stock _ _ _ _ _ - 2,000 3,000 4,000 5,000 Common stockholders' 112,418 97,430 86,712 77,258 63,522 56,401 49,618 44,976 41,815 47,832 equity Results of operations (In thousands) Interest income $ 98,656 106,560 115,561 106,826 85,722 76,745 74,774 84,321 96,181 102,731 Interest expense 44,427 54,773 68,687 64,431 49,102 43,180 43,149 52,920 63,175 71,968 Net interest income 54,229 51,787 46,874 42,395 36,620 33,565 31,625 31,401 33,006 30,763 Provision for loan losses 1,252 1,411 799 869 760 1,214 2,132 11,605 17,320 7,375 Net interest income after 52,977 50,376 46,075 41,526 35,860 32,351 29,493 19,796 15,686 23,388 provision for loan losses Noninterest income 17,863 14,684 12,715 11,554 10,113 10,367 9,064 16,483 9,306 8,002 Noninterest expense 50,415 46,591 42,284 37,820 32,781 32,066 32,952 32,558 30,427 29,352 Income (loss) before 20,425 18,469 16,506 15,260 13,192 10,652 5,605 3,721 (5,435) 2,038 income taxes and minority interest Income taxes 5,508 4,884 4,308 4,388 4,016 2,527 408 116 (887) (1,804) Minority interest 667 632 539 533 472 422 290 84 39 248 Net income (loss) 14,250 12,953 11,659 10,339 8,704 7,703 4,907 3,521 (4,587) 3,594 Preferred stock dividend _ _ _ _ _ 81 265 360 455 550 requirement Net income (loss) $ 14,250 12,953 11,659 10,339 8,704 7,622 4,642 3,161 (5,042) 3,044 available to common stockholders Average common shares 5,279 5,189 5,172 5,163 4,797 4,797 4,797 4,797 4,797 4,797 outstanding* Per common and common equivalent share* Net income (loss) $ 2.70 2.50 2.25 2.00 1.81 1.59 .97 .66 (1.05) .63 Cash dividends .600 .525 .485 .410 .330 .175 .000 .000 .203 .314 Common stockholders' 21.40 18.71 16.74 14.96 13.24 11.76 10.34 9.38 8.72 9.97 equity Selected operating ratios Return on average assets 1.04% .98 .93 .95 1.00 .90 .57 .38 (.47) .40 (including minority interest) Return on average common 13.82 14.13 14.27 14.39 14.50 14.34 9.78 7.35 (11.03) 6.41 stockholders' equity Common dividend payout 22.22 21.00 21.56 20.50 18.23 11.01 .00 .00 N/M 49.84 Allowance for loan 1.12 1.20 1.14 1.25 1.55 1.60 1.75 2.09 1.95 1.05 losses as a percent of loans Net charge-offs to average .05 .13 .15 .12 .08 .18 .75 2.61 2.54 1.18 loans outstanding *Restated for 2-for-1 stock split effective in 1990. N/M - Not meaningful, Company incurred a net loss.
179 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES CONSOLIDATED STATEMENTS OF CONDITION Brenton Banks, Inc. and Subsidiaries December 31
Assets 1993 1992 Cash and due from banks (note 3) $ 42,548,497 66,410,098 Interest-bearing deposits with banks _ 2,372,851 Federal funds sold and securities purchased under agreements to resell 41,875,000 22,125,000 Trading account securities 9,850 _ Investment securities: Available for sale (note 4) 412,209,721 29,825,757 Held to maturity (market value of $66,892,000 and $517,151,000 at December 31, 1993 and 1992, respectively) (note 4) 66,384,042 510,976,506 Investment securities 478,593,763 540,802,263 Loans held for sale 4,349,422 4,497,261 Loans (note 5) 875,881,387 753,454,137 Allowance for loan losses (note 6) (9,817,864) (9,006,290) Loans, net 866,063,523 744,447,847 Bank premises and equipment (notes 7 and 11) 23,147,521 22,280,589 Accrued interest receivable 12,815,884 13,454,136 Other assets (note 9) 11,192,586 14,749,784 $1,480,596,046 1,431,139,829 Liabilities and Stockholders' Equity Deposits (note 8): Noninterest-bearing $ 127,131,654 137,212,165 Interest-bearing: Demand 232,005,404 213,825,352 Savings 307,615,814 296,251,035 Time 627,610,822 622,651,773 Total deposits 1,294,363,694 1,269,940,325 Federal funds purchased and securities sold under agreements to repurchase 37,664,328 34,881,600 Other short-term borrowings (note 10) _ 119,784 Accrued expenses and other liabilities 11,688,256 11,496,858 Long-term borrowings (note 11) 20,054,913 13,283,855 Total liabilities 1,363,771,191 1,329,722,422 Minority interest in consolidated subsidiaries 4,407,190 3,987,244 Redeemable preferred stock, $1 par; 500,000 shares authorized; issuable in series, none issued _ _ Common stockholders' equity (notes 12, 13 and 15): Common stock, $5 par; 25,000,000 shares authorized; 5,253,151 and 5,207,870 shares issued at December 31, 1993 and 1992, respectively 26,265,755 26,039,350 Capital surplus 5,598,027 5,002,053 Retained earnings 77,517,613 66,405,950 Unrealized gains (losses) on assets available for sale 3,036,270 (17,190) Total common stockholders' equity 112,417,665 97,430,163 $1,480,596,046 1,431,139,829
Commitments and contingencies (notes 16 and 17). See accompanying notes to consolidated financial statements. 180 CONSOLIDATED STATEMENTS OF OPERATIONS Brenton Banks, Inc. and Subsidiaries Years Ended December 31
Interest Income 1993 1992 1991 Interest and fees on loans (note 5) $70,816,746 71,364,279 76,545,213 Interest and dividends on investments: Taxable 19,436,763 26,804,831 29,116,364 Tax-exempt 7,894,225 7,429,582 6,569,424 Interest on interest-bearing deposits with banks 21,934 307,248 1,302,070 Interest on federal funds sold and securities purchased under agreements to resell 485,912 653,886 2,028,373 Total interest income 98,655,580 106,559,826 115,561,444 Interest Expense Interest on deposits (note 8) 42,188,138 52,443,250 65,954,608 Interest on federal funds purchased and securities sold under agreements to repurchase 1,027,324 923,853 963,419 Interest on other short-term borrowings (note 10) 1,200 120,912 466,157 Interest on long-term borrowings (note 11) 1,210,200 1,285,442 1,303,372 Total interest expense 44,426,862 54,773,457 68,687,556 Net interest income 54,228,718 51,786,369 46,873,888 Provision for loan losses (note 6) 1,251,588 1,410,730 799,157 Net interest income after provision for loan losses 52,977,130 50,375,639 46,074,731 Noninterest Income Service charges on deposit accounts 5,846,770 5,735,963 5,784,257 Insurance commissions and fees 1,730,387 1,695,699 1,467,639 Other service charges, collection and exchange charges, commissions and fees 4,120,732 3,175,552 2,146,847 Investment brokerage commissions 3,010,004 1,600,324 904,704 Fiduciary income 1,912,442 1,758,203 1,629,495 Net gains (losses) from securities available for sale (note 4) 595,168 79,474 (21,587) Other operating income 647,768 638,825 803,194 Total noninterest income 17,863,271 14,684,040 12,714,549 Noninterest Expense Salaries and wages 22,952,044 20,894,947 18,570,522 Employee benefits (note 14) 4,162,486 3,609,995 3,270,760 Occupancy expense of premises, net (notes 7 and 16) 3,988,525 3,710,772 3,596,108 Furniture and equipment expense (notes 7 and 16) 2,622,747 2,339,605 1,920,159 Data processing expense (note 17) 2,526,280 2,532,410 2,808,215 FDIC deposit insurance assessment 2,749,969 2,750,378 2,416,652 Advertising and promotion 1,521,712 1,301,545 1,221,589 Other operating expense 9,891,179 9,451,104 8,479,741 Total noninterest expense 50,414,942 46,590,756 42,283,746 Income before income taxes and minority interest 20,425,459 18,468,923 16,505,534 Income taxes (note 9) 5,507,849 4,884,145 4,307,625 Income before minority interest 14,917,610 13,584,778 12,197,909 Minority interest 667,640 631,684 538,482 Net income $14,249,970 12,953,094 11,659,427 Per common and common equivalent share (note 12): Net income $ 2.70 2.50 2.25 Cash dividends .600 .525 .485
See accompanying notes to consolidated financial statements. 181 CONSOLIDATED STATEMENTS OF CASH FLOWS Brenton Banks, Inc. and Subsidiaries Years Ended December 31
Operating Activities 1993 1992 1991 Net income $ 14,249,970 12,953,094 11,659,427 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 1,251,588 1,410,730 799,157 Depreciation and amortization 3,100,977 2,780,907 2,257,965 Deferred income taxes (531,013) (88,728) 478,681 Net (gains) losses from securities held for sale (595,168) (79,474) 21,587 Decrease in accrued interest receivable and other assets 2,456,544 3,104,394 2,102,323 Increase (decrease) in accrued expenses, other liabilities and minority interest 496,782 (2,258,750) (1,251,408) Net cash provided from operating activities 20,429,680 17,822,173 16,067,732 Investing Activities Cash used for acquisitions from the RTC _ _ (333,500) Cash and cash equivalents of RTC acquisitions _ _ 16,110,116 Investment securities available for sale: Purchases (166,637,785) _ _ Maturities 34,834,992 _ _ Sales 98,446,394 37,841,160 _ Investment securities held to maturity: Purchases (132,198,518) (407,542,480) (305,134,642) Maturities 233,316,414 283,315,958 250,101,854 Sales _ _ 8,466,321 Net (increase) decrease in loans held for sale 147,839 (4,497,261) _ Net increase in loans (122,867,264) (2,496,838) (45,659,105) Purchases of bank premises and equipment (3,487,797) (4,864,458) (3,611,388) Net cash used by investing activities (58,445,725) (98,243,919) (80,060,344) Financing Activitie Net increase in noninterest-bearing, interest-bearing demand and savings deposits 19,464,320 92,823,328 45,184,386 Net increase (decrease) in time deposits 4,959,049 (37,971,233) 15,045,923 Net increase in federal funds purchased and securities sold under agreements to repurchase 2,782,728 11,291,161 4,458,260 Net decrease in other short-term borrowings (119,784) (4,053,769) (3,375,754) Proceeds of long-term borrowings 9,337,000 2,293,000 2,626,000 Repayment of long-term borrowings (2,565,942) (2,643,637) (1,666,344) Dividends on common stock (3,138,307) (2,577,619) (2,330,688) Proceeds from issuance of common stock under the employee stock purchase plan 361,194 _ _ Proceeds from issuance of common stock under the stock option plan 461,185 341,756 143,694 Net cash provided from financing activities 31,541,443 59,502,987 60,085,477 Net decrease in cash and cash equivalents (6,474,602) (20,918,759) (3,907,135) Cash and cash equivalents at the beginning of the year 90,907,949 111,826,708 115,733,843 Cash and cash equivalents at the end of the period $ 84,433,347 90,907,949 111,826,708
See accompanying notes to consolidated financial statements. 182 CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS' EQUITY Brenton Banks, Inc. and Subsidiaries
Common Stock Capital Surplus Retained Earnings Unrealized Gains(Losses) To Balance, December 31, 1990 $25,825,400 4,730,553 46,701,736 _ 77,257,689 Net income _ _ 11,659,427 _ 11,659,427 Net change in unrealized gains (losses) _ _ _ (18,100) (18,100) Dividends on common stock $.485 per share _ _ (2,330,688) _ (2,330,688) Issuance of 13,400 shares of common stock under the stock option plan (note 15) 67,000 76,694 _ _ 143,694 Balance, December 31, 1991 25,892,400 4,807,247 56,030,475 (18,100) 86,712,022 Net income _ _ 12,953,094 _ 12,953,094 Net change in unrealized gains (losses) _ _ _ 910 910 Dividends on common stock $.525 per share _ _ (2,577,619) _ (2,577,619) Issuance of 22,600 shares of common stock under the stock option plan (note 15) 113,000 188,756 _ _ 301,756 Issuance of common stock under the Ames Financial Corporation stock option plan 33,950 6,050 _ _ 40,000 Balance, December 31, 1992 26,039,350 5,002,053 66,405,950 (17,190) 97,430,163 Net income _ _ 14,249,970 _ 14,249,970 Net change in unrealized gains (losses) _ _ - 3,053,460 3,053,460 Dividends on common stock $.60 per share _ _ (3,138,307) - (3,138,307) Issuance of 32,200 shares of common stock under the stock option plan (note 15) 161,000 300,185 _ _ 461,185 Issuance of 13,081 shares of common stock under the employee stock purchase plan (note 15) 65,405 295,789 _ _ 361,194 Balance, December 31, 1993 $26,265,755 5,598,027 77,517,613 3,036,270 112,417,665
See accompanying notes to consolidated financial statements. 183 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Brenton Banks, Inc. and Subsidiaries December 31, 1993, 1992 and 1991 (1) Summary of Significant Accounting Policies and Related Matters The accounting and reporting policies of Brenton Banks, Inc. and its subsidiaries (the Company) conform with generally accepted accounting principles and general practices within the banking industry. The following describe the more significant accounting policies: The Principles of Consolidation The Company provides banking and related services to domestic markets. The consolidated financial statements include the accounts of Brenton Banks, Inc. (the Parent Company) and its subsidiaries. All material intercompany accounts and transactions have been eliminated in the consolidated financial statements. Certain reclassifications were made in the financial statements to agree with the current year presentation. The excess cost over underlying net assets of consolidated subsidiaries and other intangible assets are being amortized over 10 to 40 years and are included in other assets in the consolidated statements of condition. Intangible assets totaled $5,411,000 and $5,834,000 at December 31, 1993 and 1992, respectively. Investment Securities The Company adopted Statement of Financial Accounting Standards No. 115, effective December 31, 1993. Under this new Standard, the method of classifying investment securities is based on the Company's intended holding period. Securities which may be sold prior to maturity, to meet liquidity needs, to respond to market changes or to adjust the Company's asset- liability position, are classified as available for sale. Securities which the Company intends to hold to maturity are classified as held to maturity. Investment securities available for sale are recorded at fair value. The aggregate unrealized gains or losses, net of the income tax and minority interest effect, are recorded as a component of common stockholders' equity. Securities held to maturity are recorded at cost, adjusted for amortization of premiums and accretion of discounts. The timing of the amortization and accretion for mortgage-backed securities are adjusted for actual and projected prepayments. Prior to the adoption of the new Standard, the Company isolated certain securities which could be sold as part of the Company's asset-liability management strategy. These securities were classified as available for sale and accounted for using the aggregate lower of cost or fair value. Net gains or losses on the sales of securities are shown in the statements of operations. Gains or losses are computed using the specific security identification method. Loans Loans are carried primarily at the unpaid principal balance. Interest income on loans is accrued and recorded as income based on contractual interest rates and daily outstanding principal balances, except on discounted loans where unearned income is recorded as income over the life of the loans based on the interest method. The accrual of interest income is stopped when the ultimate collection of a loan becomes doubtful. A loan is placed on nonaccrual status when it becomes 90 days past due, if it is neither well secured or in the process of collection. Once determined uncollectible, previously accrued interest is charged to the allowance for loan losses. Loans held for sale include real estate mortgage loans originated with the intent to sell. These loans are carried at the lower of aggregate cost or fair value. Allowance for Loan Losses The allowance for loan losses is maintained at a level necessary to support management's evaluation of potential losses in the loan portfolio, after considering various factors including prevailing and anticipated economic conditions. Loan losses or recoveries are charged or credited directly to the allowance account. Bank Premises and Equipment Bank premises and equipment are stated at cost less accumulated depreciation. Depreciation is provided predominantly by the straight-line method over estimated useful lives of 8 to 40 years for buildings and leasehold improvements, and 3 to 25 years for furniture and equipment. 184 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 $948,000 and $1,935,000 at December 31, 1993 and 1992, respectively. Such property is carried at the lower of cost or estimated fair value. Periodic appraisals are obtained to support carrying values. Net expense of ownership and declines in carrying values are charged to operating expenses. Employee Retirement Plan All employees of the Company are eligible, after meeting certain requirements, for inclusion in the defined contribution retirement plan. The plan is a combination profit sharing and 401(k) plan. Retirement plan costs are expensed as the Company contributes to the plan. The Company does not provide any material post-retirement benefits. Income Taxes The Company files a consolidated federal income tax return. Federal income taxes are allocated to the Parent Company and each subsidiary on the basis of its taxable income or loss included in the consolidated return. When income and expense are recognized in different periods for financial and income tax reporting purposes, deferred taxes are provided for such temporary differences unless limited. Statements of Cash Flows In the statements of cash flows, cash and cash equivalents include cash and due from banks, interest- bearing deposits with banks, federal funds sold and securities purchased under agreements to resell and trading account securities. Income Per Common and Common Equivalent Share Income per common and common equivalent share computations are based on the weighted average number of common and common stock equivalent shares outstanding. In October 1992, the Company merged with Ames Financial Corporation. The average number of shares, after considering the stock plans and the merger was 5,279,040 for 1993, 5,188,797 for 1992 and 5,171,675 for 1991. 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 Bank'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. These methods are presented in each applicable footnote. The recorded value of cash and cash equivalents approximates market value. Likewise, the recorded value approximates market value for federal funds purchased and securities sold under agreements to repurchase, because of the structure of those instruments. (2) Acquisitions The Company acquired all outstanding shares of Ames Financial Corporation (Ames) and its wholly owned subsidiary Ames Savings Bank, FSB in exchange for 371,380 shares of common stock on October 1, 1992. The merger was accounted for using the pooling- of-interests method and, accordingly, the consolidated financial statements were restated to include the financial position and results of operations of Ames for all periods presented. (3) Cash and Due From Banks The subsidiary banks are required by federal banking regulations to maintain certain cash and due from banks reserves. This reserve requirement amounted to $4,818,000 at December 31, 1993. 185 (4) Investment Securities The Company adopted Statement of Financial Accounting Standards No. 115, relating to the classification of investment securities, effective December 31, 1993. As a result, $412,210,000 of securities were established as available for sale. The amortized cost and estimated fair value of investment securities follow. The estimated fair value of investment securities has been valued using available quoted market prices for similar securities.
December 31, 1993 (In thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Investment securities available for sale: Taxable investments: U.S. Treasury securities $ 63,418 418 (59) 63,777 Securities of U.S. government agencies 58,645 566 (30) 59,181 Mortgage-backed and related securities 137,951 1,354 (561) 138,744 Other investments 5,930 21 (26) 5,925 Tax-exempt investments: Obligations of states and political subdivisions 141,325 3,419 (161) 144,583 $407,269 5,778 (837) 412,210 Investment securities held to maturity: Taxable investments: Mortgage-backed and related securities $ 24,882 227 (3) 25,106 Other investments 5,563 _ (6) 5,557 Tax-exempt investments: Obligations of states and political subdivisions 35,939 473 (183) 36,229 $ 66,384 700 (192) 66,892 December 31, 1992 Investment securities available for sale: Taxable investments: U.S. Treasury investments $ 28,660 218 _ 28,878 Mortgage-backed and related securities 1,166 _ _ 1,166 $ 29,826 218 _ 30,044 Investment securities held to maturity: Taxable investments: U.S. Treasury securities $ 55,586 885 _ 56,471 Securities of U.S. government agencies 67,324 1,170 (96) 68,398 Mortgage-backed and related securities 225,659 2,545 (614) 227,590 Other investments 11,769 98 (17) 11,850 Tax-exempt investments: Obligations of states and political subdivisions 150,639 2,532 (329) 152,842 $510,977 7,230 (1,056) 517,151
186 Gross gains of $944,000 and gross losses of $349,000 were recorded on sales of investment securities held for sale in 1993, gross gains of $424,000 and gross losses of $345,000 were recorded in 1992, and no gains and losses of $22,000 were recorded in 1991. Other investments at December 31, 1993 and 1992 consisted primarily of corporate bonds. U.S. Government agencies originate or guarantee primarily all of the mortgage-backed and related securities. The amortized cost of obligations of states and political subdivisions included industrial development revenue bonds of $10,316,000 and $7,850,000 at December 31, 1993 and 1992, respectively. The scheduled maturities of investment securities at December 31, 1993 follow. Actual maturities may differ from scheduled maturities because issuers may have the right to call obligations without penalties. The maturities of mortgage-backed securities have been included in the period of anticipated payment considering historical prepayment rates.
(In thousands) Amortized Cost Estimated Fair Value Investment securities available for sale: Due in one year or less $120,613 121,255 Due after one year through five years 221,943 223,501 Due after five years through ten years 39,118 40,920 Due after ten years 25,595 26,534 $407,269 412,210 Investment securities held to maturity: Due in one year or less $ 22,265 22,258 Due after one year through five years 32,114 32,367 Due after five years through ten years 5,267 5,477 Due after ten years 6,738 6,790 $ 66,384 66,892
Investment securities carried at $95,641,000 and $92,598,000 at December 31, 1993 and 1992, respectively, were pledged to secure public and other funds on deposit and for other purposes. (5) Loans A summary of loans follows:
(In thousands) December 31, 1993 1992 Real estate loans: Commercial construction and land development $ 24,189 25,180 Secured by 1-4 family residential property 349,810 324,124 Other 129,574 101,418 Loans to financial institutions (primarily bankers' acceptances) _ 393 Loans to farmers 66,574 62,471 Commercial and industrial loans 90,521 75,062 Loans to individuals for personal expenditures, net of unearned income of $741 and $1,373 at December 31, 1993 and 1992, respectively 214,401 163,876 All other loans 812 930 $875,881 753,454
The Company originates commercial, real estate, agribusiness and personal loans with customers throughout Iowa. The portfolio has unavoidable geographic risk as a result. At December 31, 1993 and 1992, the Company had nonaccrual loans of $1,605,000 and $1,884,000, respectively, and restructured loans of $323,000 and $448,000, respectively. Interest income recorded during 1993 and 1992 on nonaccrual and restructured loans was $191,000 and $151,000, respectively. Interest income which would have been recorded if these loans had been current in accordance with original terms was $359,000 in 1993 and $432,000 in 1992. The estimated fair value of loans, net of an adjustment for credit risk was $886 million at December 31, 1993 and $752 million at December 31, 1992. 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. 187 Loan customers of the Company include certain executive officers, directors and principal shareholders, and their related interests and associates. All loans to this group were made in the ordinary course of business at prevailing terms and conditions. The aggregate indebtedness of all executive officers, directors and principal shareholders of Brenton Banks, Inc. and its significant subsidiaries, and indebtedness of related interests and associates of this group (except where the indebtedness of such persons was less than $60,000) included in loans follows:
(In thousands) Amount Balance at December 31, 1992 $ 5,486 Additional loans 2,817 Loan payments (1,103) Balance at December 31, 1993 $ 7,200
(6) Allowance for Loan Losses A summary of activity in the allowance for loan losses follows:
(In thousands) 1993 1992 1991 Balance at beginning of year $ 9,006 8,548 8,871 Provision 1,252 1,411 799 Recoveries 1,091 991 1,214 Loans charged off (1,531) (1,944) (2,336) Balance at end of year $9,818 9,006 8,548
(7) Bank Premises and Equipment A summary of bank premises and equipment follows:
(In thousands) December 31, 1993 1992 Land $ 2,971 2,949 Buildings and leasehold improvements 22,956 1,609 Furniture and equipment 15,538 13,512 Construction in progress 471 442 41,936 38,512 Less accumulated depreciation 18,788 16,231 $23,148 22,281
Depreciation expense included in operating expenses amounted to $2,621,000, $2,301,000 and $1,824,000 in 1993, 1992 and 1991, respectively. (8) Deposits Time deposits included deposits in denominations of $100,000 or more of $62,727,000 and $42,999,000 at December 31, 1993 and 1992, respectively. 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 estimated fair value of deposits was $1.304 billion at December 31, 1993, and $1.280 billion at December 31, 1992. 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. A summary of interest expense by deposit classification follows:
(In thousands) 1993 1992 1991 Demand $ 4,552 5,277 7,531 Savings 7,697 9,385 11,521 Time deposits of $100,000 or more 2,091 2,169 2,763 Other time deposits 27,848 35,612 44,140 $42,188 52,443 65,955
The Company made cash interest payments of $44,141,000, $56,647,000 and $69,473,000 on deposits and borrowings in 1993, 1992 and 1991, respectively. (9) Income taxes The current and deferred income tax provisions included in the consolidated statements of operations follow:
1993 (In thousands) Current Deferred Total Federal $4,855 (523) 4,332 State 1,184 (8) 1,176 $6,039 (531) 5,508 1992 Federal $3,965 (91) 3,874 State 1,008 2 1,010 $4,973 (89) 4,884 1991 Federal $3,062 390 3,452 State 767 89 856 $3,829 479 4,308
188 Since the income tax returns are filed after the issuance of the financial statements, amounts reported are subject to revision based on actual amounts used in the income tax returns. The Company made cash income tax payments of $4,514,000, $3,486,000 and $2,930,000 to the IRS, and $1,301,000, $713,000 and $1,055,000 to the State of Iowa in 1993, 1992 and 1991, respectively. Cash income tax payments for a year include estimated payments for current year income taxes and final payments for prior year income taxes. State income tax expense relates to state franchise taxes payable individually by the subsidiary banks. The Company adopted the use of Statement of Financial Accounting Standards No. 109, relating to accounting for income taxes, effective January 1, 1993. These rules had an immaterial impact on the financial statements of the Company upon its adoption. Accumulated deferred income tax debits are included in other assets in the consolidated statements of condition. There was no valuation allowance at the date of adoption or at December 31, 1993. A summary of the temporary differences resulting in deferred income taxes and the related tax effect of each follows:
(In thousands) 1993 1992 Provision for loan losses $ 3,384 2,952 Unrealized gains on securities available for sale (1,790) _ Depreciation (563) (450) Stock compensation plan 461 198 Other, net (94) (43) $1,398 2,657
The reasons for the difference between the amount computed by applying the statutory federal income tax rate of 35 percent in 1993 and 34 percent in 1992 and 1991, and income tax expense follow:
(In thousands) 1993 1992 1991 At statutory rate $ 7,149 6,279 5,612 Increase (reduction): Tax-exempt interest (2,766) (2,541) (2,247) State taxes, net of federal benefit 764 667 565 Nondeductible interest expense to own tax-exempts 361 377 340 Other, net - 102 38 $ 5,508 4,884 4,308
(10) Other Short-term Borrowings The Company had no short-term borrowings at December 31, 1993. At December 31, 1992, $120,000 was borrowed from the U.S. Treasury, under a tax depository note option with an average rate of 3.15%. The estimated fair value of that borrowing approximated the recorded balance. The Parent Company has arranged an unsecured, available line of credit of $2,000,000 which was unused at December 31, 1993. It is at the prime interest rate and is subject to annual review and renewal. (11) Long-term Borrowings Long-term borrowings consisted of the following:
(In thousands) December 31, 1993 1992 Capital notes, 6.25% to 11.50% $ 12,022 11,907 Contracts payable, 10.00% _ 179 Other, 8.75% _ 10 Total Parent Company 12,022 12,096 Borrowings from FHLB, average rate of 4.84% at December 31, 1993 8,000 _ Mortgage debt, average rate of 9.40% at December 31, 1993 33 1,188 $ 20,055 13,284
Mortgage debt was secured by real property with a carrying value of $41,000 at December 31, 1993. Borrowings from the Federal Home Loan Bank of Des Moines (FHLB) were secured by residential mortgage loans equal to 170 percent of the borrowing and FHLB stock. The estimated fair value of long-term borrowings of $21 million and $14 million at December 31, 1993 and 1992, respectively, was valued using a present value discounted cash flow with a discount rate approximating the current market for similar borrowings. The mortgage debt and borrowings from the FHLB were direct obligations of the individual subsidiaries. Scheduled maturities of long-term borrowings at December 31, 1993 follow:
(In thousands) Parent Company Consolidated 1994 $ 996 999 1995 53 2,056 1996 1,067 3,570 1997 1,603 3,604 1998 1,177 2,678 Thereafter 7,126 7,148 $ 12,022 20,055
189 (12) Common Stock Transactions The Company acquired all outstanding shares of Ames Financial Corporation and its wholly owned subsidiary Ames Savings Bank, FSB in exchange for 371,380 shares of common stock on October 1, 1992. The merger was accounted for using the pooling-of-interests method. (13) Dividend Restrictions The Parent Company derives a substantial portion of its cash flow, including that available for dividend payments to stockholders, from the subsidiary banks in the form of dividends received. National banks, state banks and savings banks are subject to certain statutory and regulatory restrictions that affect dividend payments. Based on minimum regulatory capital guidelines as published by those regulators, the maximum dividends which could be paid by the subsidiary banks to the Parent Company at December 31, 1993 approximated $30 million. (14) Employee Retirement Plan The Company provides a defined contribution retirement plan for the benefit of employees. The plan is a combination profit sharing and 401(k) plan. All employees 21 years of age or older and employed by the Company for at least one year are eligible for the plan. The Company contributes 4 percent of eligible compensation of all participants to the profit sharing portion of the plan, and matches employee contributions to the 401(k) portion of the plan up to a maximum of 3 percent of each employee's eligible compensation. Retirement plan costs charged to operating expenses in 1993, 1992 and 1991 amounted to $1,211,000, $952,000 and $856,000, respectively. The Company offers no material post- retirement benefits. (15) Stock Plans The Company's long-term stock compensation plan for key management personnel plan provides for 240,000 shares of the Company's common stock to be reserved for grant over a four year period. Each grant of shares covers a three year performance period, 35 percent of which vests upon completion of employment for the performance period and 65 percent of which vests based on a tiered achievement scale tied to financial performance goals established by the Board of Directors. Under the plan, 60,995 shares were granted covering the performance period of 1992 through 1994, and 52,429 were granted for 1993 through 1995. The total stock compensation expense associated with this plan was $683,000 and $560,000 for 1993 and 1992 respectively. The Company's nonqualified stock option plan permits the Board of Directors to grant options to purchase up to 200,000 shares of the Company's $5 par value common stock. The options may be granted to officers of the Company. The price at which options may be exercised cannot be less than the fair market value of the shares at the date the options are granted. The options are subject to certain vesting requirements and maximum exercise periods, as established by the Board of Directors. Changes in options outstanding and exercisable during 1993, 1992 and 1991 were as follows:
Exercisable Options Outstanding Options Option Price per Share December 31, 1990 100,100 191,500 $6.63-14.19 Vested--1991 39,100 _ 6.63-14.19 Exercised--1991 (13,400) (13,400) 6.63 December 31, 1991 125,800 178,100 6.63-14.19 Vested--1992 35,600 _ 6.63-14.19 Exercised--1992 (22,600) (22,600) 6.63 Forfeited--1992 _ (300) 6.63 December 31, 1992 138,800 155,200 6.63-14.19 Vested--1993 6,800 _ 9.63-14.19 Exercised--1993 (32,200) (32,200) 6.63 December 31, 1993 (5,600 shares available for grant) 113,400 123,000 $6.63-14.19
The Company's Employee Stock Purchase Plan allows employees to purchase the Company's common stock at 85 percent of the current market price. During 1993, 13,081 shares of common stock were purchased by employees under this plan. 190 (16) Lease Commitments Rental expense included in the consolidated statements of operations amounted to $1,373,000, $1,345,000 and $1,530,000 in 1993, 1992 and 1991, respectively. Future minimum rental commitments for all noncancelable leases with terms of one year or more total approximately $800,000 per year through 2002, with a total commitment of $7,393,000. (17) Commitments and Contingencies In the normal course of business, the Company is party to financial instruments necessary to meet the financing needs of customers, which are not reflected on the consolidated statements of condition. These financial instruments include commitments to extend credit, standby letters of credit and interest rate swaps. The Company's risk exposure in the event of nonperformance by the other parties to these financial instruments is represented by the contractual amount of these instruments. The Company uses the same credit policies in making commitments as it does in making loans. Commitments to extend credit are legally binding agreements to lend to customers. Commitments generally have fixed expiration dates and may require payment of a fee. Based upon management's credit assessment of the customer, collateral may be obtained. The type and amount of collateral varies, but may include real estate under construction, property, equipment and other business assets. In many cases, commitments expire without being drawn upon, so the total amount of commitments does not necessarily represent future liquidity requirements. At December 31, 1993 the Company had outstanding commitments to extend credit of $116 million. Since commitments are generally priced at market rates of interest at the time of funding, the estimated fair value approximates the outstanding commitment balance. Standby letters of credit are conditional commitments issued by the Company guaranteeing the financial performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans. At December 31, 1993 there were $8,842,000 of standby letters of credit outstanding. The stated amount of standby letters of credit approximates the estimated fair value. The Company does not anticipate losses as a result of issuing commitments to extend credit or standby letters of credit. During 1993, the Company entered into an interest rate swap agreement with a notional value of $1,600,000, involving the exchange of a fixed and floating rate interest stream. The estimated fair value of the swap approximated the book value at the end of 1993. 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. Effective December 1991, the Company entered into a five-year data processing facilities management agreement with Systematics, Inc., whereby Systematics, Inc. manages and operates the Company's data processing facility. The contract involves fixed payments of $2,568,000 in 1994, $2,546,000 in 1995 and $2,315,000 in 1996. These fixed payments will be adjusted for inflation and volume fluctuations. The Company is involved with various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company's financial statements. 191 (18) Brenton Banks, Inc. (Parent Company) Condensed Financial Information Statements of Condition
December 31 (In thousands) 1993 1992 Assets Cash and deposits $ 316 376 Short-term investments 3,500 - Advances to bank subsidiaries 450 50 Investments in: Bank subsidiaries 116,595 105,065 Bank-related subsidiaries 264 1,164 Excess cost over net assets 2,048 2,121 Premises and equipment 528 524 Other assets 2,865 1,711 $126,566 111,011 Liabilities and Stockholders' Equity Accrued expenses payable and other liabilities $ 2,126 1,485 Long-term borrowings 12,022 12,096 Common stockholders' equity 112,418 97,430 $126,566 111,011
Statements of Operations
Years Ended December 31 (In thousands) 1993 1992 1991 Income Dividends from subsidiaries $ 8,150 7,643 6,147 Interest income 84 33 44 Management fees 1,580 1,507 1,797 Other operating income 1,881 1,769 1,958 11,695 10,952 9,946 Expense Salaries and benefits 3,976 3,886 3,205 Interest on short-term borrowings _ 98 452 Interest on long-term borrowings 1,108 1,108 1,074 Other operating expense 1,998 2,298 1,494 7,082 7,390 6,225 Income before income taxes and equity in undistributed earnings of subsidiaries 4,613 3,562 3,721 Income taxes (1,175) (1,259) (898) Income before equity in undistributed earnings of subsidiaries 5,788 4,821 4,619 Equity in undistributed earnings of subsidiaries 8,462 8,132 7,040 Net income $14,250 12,953 11,659
192 (18) Brenton Banks, Inc. (Parent Company) Condensed Financial Information (continued) Statements of Cash Flows
Years Ended December 31 (In thousands) 1993 1992 1991 Operating Activities Net income $ 14,250 12,953 11,659 Adjustments to reconcile net income to net cash provided from operating activities: Equity in undistributed earnings of subsidiaries (8,462) (8,132) (7,040) Depreciation and amortization 188 169 161 Increase in other assets (1,154) (345) (62) Increase (decrease) in accrued expenses payable and other liabilities 641 479 (307) Net cash provided from operating activities 5,463 5,124 4,411 Investing Activities Increase in short-term investments (3,500) _ _ Redemption (purchase) of subsidiary equity, net 886 (26) (328) Principal collected or (advances to) subsidiaries (400) 150 400 Purchase of premises and equipment, net (119) (129) (136) Net cash used by investing activities (3,133) (5) (64) Financing Activities Net decrease in short-term borrowings _ (3,950) (3,400) Net proceeds (repayment) of long-term borrowings (74) 1,097 1,152 Proceeds from issuance of common stock under the stock option plans 822 342 144 Dividends on common stock (3,138) (2,578) (2,331) Net cash provided from (used by) financing activities (2,390) (5,089) (4,435) Net increase (decrease) in cash and interest-bearing deposits (60) 30 (88) Cash and interest-bearing deposits at the beginning of the year 376 346 434 Cash and interest-bearing deposits at the end of the year $ 316 376 346
193 (19) Unaudited Quarterly Financial Information The following is a summary of unaudited quarterly financial information. (In thousands, except per common and common equivalent share data)
1993 Three months ended March 31 June 30 Sept. 30 Dec. 31 Interest income $24,597 24,830 24,688 24,541 Interest expense 11,287 11,067 11,064 11,009 Net interest income 13,310 13,763 13,624 13,532 Provision for loan losses 444 295 290 223 Net interest income after provision for loan losses 12,866 13,468 13,334 13,309 Noninterest income 4,085 4,418 4,509 4,851 Noninterest expense 12,581 12,601 12,493 12,740 Income before income taxes and minority interest 4,370 5,285 5,350 5,420 Income taxes 1,122 1,452 1,465 1,469 Minority interest 139 169 176 183 Net income $ 3,109 3,664 3,709 3,768 Per common and common equivalent share: Net income $ .59 .70 .70 .71 1992 Three months ended March 31 June 30 Sept. 30 Dec. 31 Interest income $27,534 26,881 26,530 25,615 Interest expense 15,102 14,232 13,245 12,194 Net interest income 12,432 12,649 13,285 13,421 Provision for loan losses 328 337 335 411 Net interest income after provision for loan losses 12,104 12,312 12,950 13,010 Noninterest income 3,349 3,513 3,647 4,175 Noninterest expense 11,138 11,187 11,797 12,469 Income before income taxes and minority interest 4,315 4,638 4,800 4,716 Income taxes 1,164 1,157 1,340 1,223 Minority interest 144 158 163 167 Net income $ 3,007 3,323 3,297 3,326 Per common and common equivalent share: Net income $ .58 .64 .64 .64
194 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 judgements and estimates of the expected effects of events and transactions that are accounted for or disclosed. Management of the Company believes in the importance of maintaining a strong internal accounting control system, which is designed to provide reasonable assurance that assets are safeguarded and transactions are appropriately authorized. The Company maintains a staff of qualified internal auditors who perform periodic reviews of the internal accounting control system. Management believes that the internal accounting control system provides reasonable assurance that errors or irregularities that could be material to the consolidated financial statements are prevented or detected and corrected on a timely basis. The Board of Directors has established an Audit Committee to assist in assuring the maintenance of a strong internal accounting control system. The Audit Committee meets periodically with management, the internal auditors and the independent auditors to discuss the internal accounting control system and the related internal and external audit efforts. The internal auditors and the independent auditors have free access to the Audit Committee without management present. There were no matters considered to be reportable conditions under Statement of Auditing Standards No. 60 by the independent auditors. The consolidated financial statements of Brenton Banks, Inc. and subsidiaries are examined by independent auditors. Their role is to render an opinion on the fairness of the consolidated financial statements based upon audit procedures they consider necessary in the circumstances. Brenton Banks, Inc. J. C. (Buz) Brenton President (1990-1993) Robert L. DeMeulenaere President Steven T. Schuler Chief Financial Officer and Vice President/Treasurer/Secretary Thea H. Oberlander Corporate Controller 195 INDEPENDENT AUDITOR'S REPORT The Board of Directors and Shareholders of Brenton Banks, Inc.: We have audited the accompanying consolidated statements of condition of Brenton Banks, Inc. and subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of operations, changes in common stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 1993. 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, 1993 and 1992, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1993 in conformity with generally accepted accounting principles. As discussed in note 1 to the consolidated financial statements, the Company changed its method of accounting for investment securities to adopt the provisions of Statement of Financial Accounting Standards No.115 on December 31, 1993. As discussed in note 9 to the consolidated financial statements, the Company changed its method of accounting for income taxes to adopt the provisions of Statement of Financial Accounting Standards No. 109 on January 1, 1993. KPMG Peat Marwick Des Moines, Iowa January 31, 1994 196 STOCK INFORMATION Brenton Banks, Inc. common stock is traded on the Nasdaq Small-Cap Market and quotations are furnished by the Nasdaq System. In February 1994, the Company began trading on the Nasdaq National Market. There were 1,564 common stockholders of record on December 31, 1993. MARKET AND DIVIDEND INFORMATION
1993 High Low Dividends 1st quarter $31 1/4 26 .145 2nd quarter 30 1/4 26 1/4 .145 3rd quarter 30 25 1/2 .15 4th quarter 29 1/4 26 1/4 .16 1992 1st quarter $24 1/4 20 3/4 .125 2nd quarter 23 1/2 22 .13 3rd quarter 25 1/4 23 .135 4th quarter 27 25 .135
The above table sets forth the high and low sales prices and cash dividends per share for the Company's common stock. The market quotations, reported by Nasdaq, represent prices between dealers and do not include retail markup, markdown or commissions. Nasdaq Symbol: BRBK Wall Street Journal and Other Newspapers: BrentB Market Makers The Chicago Corporation Herzog Heine Geduld, Inc. Howe, Barnes & Johnson, Inc. Keefe, Bruyette & Woods, Inc. Stifel, Nicolaus & Co., Inc. S.J. Wolfe & Co. 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 AND VICE PRESIDENT/TREASURER/SECRETARY, AT THE CORPORATE HEADQUARTERS. STOCKHOLDER INFORMATION Corporate Headquarters Suite 300, Capital Square 400 Locust Street Des Moines, Iowa 50309 Telephone 515/237-5100 Annual Shareholders' Meeting May 20, 1994, 5:00 p.m. Des Moines Convention Center 501 Grand Avenue Des Moines, Iowa 50309 Corporate Structure Transfer Agent/Registrar/ Dividend Disbursing Agent Harris Trust and Savings Bank 311 West Monroe Street Chicago, Illinois 60690 Legal Counsel Brown, Winick, Graves, Donnelly, Baskerville and Schoenebaum Suite 1100, Two Ruan Center 601 Locust Street Des Moines, Iowa 50309 Independent Auditors KPMG Peat Marwick 2500 Ruan Center 666 Grand Avenue Des Moines, Iowa 50309 Annual Report Design Designgroup, Inc. Photography: Bill Nellans 197 CORPORATE STRUCTURE DIRECTORS C. Robert Brenton Chairman of the Board Brenton Banks, Inc. William H. Brenton Chairman of the Executive Committee & Vice Chairman of the Board Brenton Banks, Inc. J.C. Brenton President (1990-1993) Brenton Banks, Inc. Robert L. DeMeulenaere President Brenton Banks, Inc. R. Dean Duben Vice Chairman of the Board Brenton First National Bank, Davenport Thomas R. Smith Tom Smith and Associates, Marshalltown EXECUTIVE OFFICERS C. Robert Brenton Chairman of the Board William H. Brenton Chairman of the Executive Committee & Vice Chairman of the Board Robert L. DeMeulenaere President Phillip L. Risley Executive Vice President Roger D. Winterhof Senior Vice President-Community Bank Division Norman D. Schuneman Senior Vice President-Lending Saulene M. Richer Senior Vice President-Marketing/Technology John R. Amatangelo Senior Vice President-Operations Steven T. Schuler Chief Financial Officer & Vice President/Treasurer/Secretary Gary D. Ernst Vice President-Trust Steven F. Schneider Vice President-Brokerage Services OFFICERS Charles N. Funk Vice President-Investments Charles G. Riepe Vice President-Corporate and International Banking Mary F. Sweeney Vice President-Human Resources Thea H. Oberlander Corporate Controller David K. Horner Vice President-Audit Todd A. Stumberg Vice President-Loan Review V. Beth McGeough Vice President-Marketing Ruth O. Rasmussen Office Manager/Assistant Treasurer Jennifer H. Carney Senior Auditor Louise E. Mickelson Compliance Officer Leah I. Trent Administrative Officer BANK PRESIDENTS & CHIEF EXECUTIVE OFFICERS Woodward G. Brenton President and CEO Brenton First National Bank, Davenport James H. Crane President Brenton Bank of Palo Alto County, Emmetsburg Michael A. Cruzen President Brenton Bank, N.A. Knoxville William L. Homan President and CEO Brenton Savings Bank, FSB, Ames Michael D. Hunter President Brenton State Bank of Jefferson Ronald D. Larson President and CEO Brenton Bank and Trust Company of Cedar Rapids James L. Lowrance President Brenton Bank and Trust Company, Marshalltown Marc J. Meyer President Brenton National Bank of Perry Clay A. Miller President Brenton Bank and Trust Company, Clarion Larry A. Mindrup President Brenton National Bank-Poweshiek County, Grinnell Daryl K. Petty President Brenton Bank and Trust Company, Adel Clark H. Raney President Warren County Brenton Bank and Trust, Indianola Phillip L. Risley President and CEO Brenton Bank, N.A., Des Moines Bruce L. Seymour President Brenton State Bank, Dallas Center 198 BRENTON BANKS AND ASSETS COMMUNITY BANKS 1. Brenton Bank and Trust Company Main Bank: Adel Other Communities: Dexter, Redfield and Van Meter Assets: $85,722 2. Brenton Bank and Trust Company Main Bank: Clarion Other Communities: Eagle Grove and Rowan Assets: $55,764 3. Brenton State Bank Main Bank: Dallas Center Other Communities: Granger, Waukee and Woodward Assets: $69,957 4. Brenton Bank of Palo Alto County Main Bank: Emmetsburg Other Communities: Ayrshire and Mallard Assets: $57,494 5. Brenton National Bank- Poweshiek County Main Bank: Grinnell Assets: $115,976 6. Warren County Brenton Bank and Trust Main Bank: Indianola Assets: $45,082 7. Brenton State Bank of Jefferson Main Bank: Jefferson Assets: $57,282 8. Brenton Bank, N.A. Knoxville Main Bank: Knoxville Assets: $63,304 9. Brenton Bank and Trust Company Main Bank: Marshalltown Other Locations: Meadowlane Other Communities: Albion Assets: $98,315 10. Brenton National Bank of Perry Main Bank: Perry Assets: $82,823 METRO BANKS 11. Brenton Savings Bank, fsb Main Bank: Ames, Main Street Other Metro Location: North Grand Other Community: Story City Assets: $100,112 12. Brenton Bank and Trust Company of Cedar Rapids Main Bank: Cedar Rapids, First Ave. Other Metro Locations: Southwest, Northeast and Marion Assets: $170,570 13. Brenton First National Bank Main Bank: Davenport, Brady Street Other Metro Locations: 53rd and Utica Ridge, Village Shopping Center and West Assets: $150,838 14. Brenton Bank, N.A. Main Bank: Des Moines, Capital Square Other Metro Locations: Country Club, Ingersoll, Johnston, Northwest, South, Urbandale, Wakonda and West Assets: $328,047 (assets in thousands) Map of the United States in the upper left corner, showing the outline of Iowa. Main map in the center is a map of Iowa, with counties where the Company has banking locations enlarged and drawn above the map. The enlarged counties include dots designating Brenton bank locations. See listing of bank locations and assets on the same page. Iowa Community Banks Metro Banks Offices 199 BRENTON BANKS, INC. Suite 300, Capital Square 400 Locust Street Des Moines, Iowa 50309 Telephone 515/237-5100 200 Appendix to Annual Report Referencing Graphic and Image Material All graphic and image material has been described in the text of the annual report. Set forth below is a listing of such mateial with a reference to the description of such material in the text of the Annual Report and 10-K. 1. Cover - first unnumbered page of annual report, page 159 of the 10-K. 2. Bar graphs of net Income, Return on Average Equity, Net interest Margin and Return on Average assets (all in thousands) - page 1 of Annual Report, page 161 of 10-K. 3. 2 Photos on page three of Annual Report, page 163 of 10-K. 4. Photograph on page 4 of Annual Report, page 164 of 10-K. 5. Photograph on page 6 of Annual Report, page 166 of 10-K. 6. Photograph on page 9 of Annual Report, page 169 of 10-K. 7. Bar graphs of Annual Dividends per Commn Share, Primary Capital Ratio and Tier 1 Leverage Capital Ratio on page 10 of Annual Report, page 170 of 10-K. 8. Photograph on page 12 of Annual Report, page 127 of 10-K. 9. Bar graphs of Provision for Loan Loses, Net Charge-offs and Nonperforming loans (all in thousands) on page 13 of Annual Report, page 173 of 10-K. 10. Bar graphs of total assets (in millions) and Net Noninterest Margin on page 14 of Annual Report and page 174 of 10-K. 11. Pie chart of Loan Composition on page 15 of Annual Report, page 175 of 10-K. 12. Map on page 39 of Annual Report, page 199 of 10-K. [MODULE-CONTENT] [/TEXT] [/DOCUMENT] EX-21 27 Exhibit 22 Subsidiaries. 201 Subsidiaries The subsidiaries of Brenton Banks, Inc., their location, the jurisdiction in which they are incorporated or organized, and the names under which subsidiaries do business are: Name Under which Subsidiary Jurisdiction in Does Business and Location which Incorporated or of Subsidiary Organized Banks Brenton Bank and Trust Company Iowa Adel, Iowa Brenton Savings Bank, FSB United States Ames, Iowa Brenton Bank and Trust Company of Cedar Rapids Iowa Cedar Rapids, Iowa Brenton Bank and Trust Company Iowa Clarion, Iowa Brenton State Bank Iowa Dallas Center, Iowa Brenton First National Bank United States Davenport, Iowa Brenton Bank, N.A. United States Des Moines, Iowa Brenton Bank of Palo Alto County Iowa Emmetsburg, Iowa Brenton National Bank - Poweshiek County United States Grinnell, Iowa Warren County Brenton Bank and Trust Iowa Indianola, Iowa Brenton State Bank of Jefferson Iowa Jefferson, Iowa Brenton Bank, N.A. Knoxville United States Knoxville, Iowa 202 Brenton Bank and Trust Company Iowa Marshalltown, Iowa Brenton National Bank of Perry United States Perry, Iowa Non-Bank Subsidiaries Brenton Bank Services Corporation Iowa Des Moines, Iowa Brenton Brokerage Services, Inc. Iowa Des Moines, Iowa Brenton Insurance Services, Inc. Iowa Des Moines, Iowa Brenton Mortgages, Inc. Iowa Des Moines, Iowa Brenton Independent Insurance Services Corp. Iowa Marshalltown, Iowa Brenton Realty Services, Ltd. Iowa Marshalltown, Iowa 203 EX-23 28 Exhibit 24 Consent of KPMG Peat Marwick to the incorporation of their report dated January 31, 1994, relating to certain consolidated statements of condition of Brenton Banks, Inc. into the Registration Statement on Form S-8 of Brenton Banks, Inc. 204 AUDITORS' CONSENT The Board of Directors Brenton Banks, Inc.: We consent to incorporation by reference in the Registration Statement on Form S-8 of Brenton Banks, Inc. of our report dated January 31, 1994, relating to the consolidated statements of condition of Brenton Banks, Inc. and subsidiaries as of December 31, 1993 and 1992 and the related consolidated statements of operations, changes in common stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1993 which report appears in the December 31, 1993 annual report on Form 10-K of Brenton Banks, Inc. ____________________________________ KPMG Peat Marwick Des Moines, Iowa March 25, 1994 205 -----END PRIVACY-ENHANCED MESSAGE-----