Cover - blue background with picture of "Tiger Bank" with the words:
Brenton Bank
One Bank,
Unlimited Opportunities
BRENTON BANKS, INC.
1995 Annual Report
After 114 years of growth and success, we have become one. Brenton Bank is
now one bank instead of many. We share one vision instead of many. We are
better positioned than ever before to build on our long heritage of service,
strength and leadership. And a world of opportunities await.
Brenton Banks, Inc. is Iowa's largest, home-based bank holding company, with
$1.6 billion in assets and 45 offices serving metropolitan markets and
regional economic centers across the state. The Company offers a complete
range of financial products and services -- including retail, agricultural
and commercial banking; trust and investment management services; investment,
insurance and real estate brokerage; mortgage banking; cash management and
international banking services, as well as our own proprietary mutual funds.
The Company's stock trades on the NASDAQ national market system under the
symbol BRBK or BrentB.
CONTENTS
Financial Highlights 1
Message To Our Shareholders 2
A Closer Look 8
Management's Discussion and Analysis 12
Consolidated Average Balances and Rates 18
Selected Financial Data 19
Consolidated Financial Statements and Notes 20
Management's Report 35
Independent Auditor's Report 35
Stock Information 36
Corporate Structure 37
Board Of Directors 38
Brenton Banks and Locations 39
On the cover: Derek Johnson and Kristi Sickels, students at Marshalltown's
J.C. Hoglan Elementary School, learn the benefits of saving from Brenton
Bank's Diane Gilliland. Hoglan School's "Tiger Bank", which began in 1994
as a result of a business partnership between Brenton Bank and Hoglan School,
underscores our commitment to serving local communities and helping children
build futures of unlimited opportunity.
ONE BANK, UNLIMITED OPPORTUNITIES Nineteen Ninety Five Annual Report
FINANCIAL HIGHLIGHTS
Brenton Banks, Inc. and Subsidiaries
1995 1994 1993
Operating Results
Net interest income $ 53,332,143 55,450,526 54,228,718
Provision for loan losses 1,864,801 1,987,909 1,251,588
Total noninterest income 17,846,740 16,592,988 17,863,271
Total noninterest expense 55,051,267 56,656,922 50,414,942
Income before income taxes
and minority interest 14,262,815 13,398,683 20,425,459
Net income 10,407,354 10,107,387 14,249,970
Per Common and Common
Equivalent Share***
Net income $ 1.34 1.27 1.80
Cash dividends .45 .44 .40
Book value, including
unrealized gains (losses)* 15.62 14.03 14.27
Book value, excluding
unrealized gains (losses)** 15.44 14.68 13.88
Closing bid price 21.25 18.25 17.50
At December 31
Assets $1,582,779,320 1,581,326,849 1,480,596,046
Loans 910,193,212 970,214,498 875,881,387
Nonperforming loans 5,619,000 5,022,000 4,013,000
Deposits 1,361,942,715 1,340,283,110 1,294,363,694
Common stockholders'
equity* 119,533,631 110,430,345 112,417,665
Ratios
Return on average common
stockholders' equity (ROE) 9.04% 9.03 13.82
Return on average assets
(including minority
interest)(ROA) .71 .70 1.04
Net interest margin 3.89 4.12 4.28
Net noninterest margin (2.38) (2.61) (2.31)
Primary capital to assets** 8.40 8.18 8.31
Tier 1 leverage capital
ratio** 7.45 7.23 7.36
Nonperforming loans as a
percent of loans .62 .52 .46
Net charge-offs as a
percent of average loans .18 .10 .05
Allowance for loan losses
as a percent of non-
performing loans 197.01 217.30 244.65
<FN>
* including unrealized gains (losses) on assets available for sale.
** excluding unrealized gains (losses) on assets available for sale.
*** restated for the May 1994, 3-for-2 stock split.
Message To Our Shareholders
Analysts may argue the point. But from our perspective, the most important
number in this entire document may be the smallest number of all.
One.
Because in 1995, the 13 community banks of Brenton Banks, Inc. became one.
Together with our Ames savings bank, we adopted a single, unified vision of
the future. We became one team of financial professionals, dedicated to
providing the highest quality products and services for our neighbors and
colleagues across the state of Iowa. We planned, invested and accomplished
much, as we positioned your Company for significant growth and success in
the months and years ahead. Along the way, we produced positive financial
results.
Net income for 1995 rose 3.0 percent to $10.407 million, compared to
$10.107 million in 1994. Earnings per common share were $1.34, up 5.5
percent from $1.27 for the prior year. The increase in earnings per share
was partially due to the Company's repurchase of 258,000 shares under our
common stock repurchase plan. During the year, stockholders' equity grew
8.2 percent to $119.534 million, compared to $110.430 million on December 31,
1994. Book value per common and common equivalent share, increased to $15.62,
up 11.3 percent from $14.03 for the previous year.
Overall asset quality remained strong, with nonperforming loans of just .62
percent of total loans. On December 31, 1995, the reserve for loan losses
stood at a solid 197.01 percent of nonperforming loans and 1.22 percent of
total loans. For the year, net interest income declined 3.8 percent to
$53.332 million, compared to $55.451 million for 1994. The net interest
margin fell to 3.89 percent for 1995, compared to 4.12 percent for the
prior year. The lower margin resulted from interest-bearing liability rates
rising faster than rates for interest-earning assets.
To better control future interest rate risk and improve earnings performance,
management began to revise the loan portfolio's composition in 1995, selling
portfolio real estate loans and developing more commercial and direct
consumer loan business. Our "Strategy for Success" calls for significant
lending growth in 1996, thanks to the increased lending capacity created by
the merger, as well our growing ability to serve more customers in each of
our communities.
Graph showing Net Income Per Common Share (1991-1995):
91 92 93 94 95
$1.50 1.67 1.80 1.27 1.34
Graph showing Dividends Per Common Share (1991-1995):
91 92 93 94 95
$0.32 0.35 0.40 0.44 0.45
Graph showing Total Assets (in millions) (1991-1995):
91 92 93 94 95
$1,361 1,431 1,481 1,581 1,583
Picture of banker with a customer and the words:
We planned, invested and accomplished much, as we positioned
your company for significant growth and success in the months
and year ahead.
Caption to picture reads:
Don Van Houweling, President, Van Wall Equipment, Inc. in Perry visits with
Marc Meyer, President - Brenton Agricultural Banking and Brenton Bank -
Perry. Brenton was founded as an ag banking company in 1881, and our long
experience in serving the needs of both production agriculture and
agribusiness has enabled us to develop quality products and services that
add value for our customers.
Picture of Bank President and community leader. Caption to picture reads:
Working in partnership with other community leaders, Craig Agan, Marketing
Director of Knoxville's National Sprint Car Hall of Fame and Mike Cruzen,
President, Brenton Bank - Knoxville, have helped create a winning image of
the city for racing fans across America.
Serving more customers more profitably is at the very heart of our
strategic plan, which recognizes not only the growing global competition
in today's financial services industry, but also the unique opportunities
Brenton enjoys as Iowa's largest home-based banking company. For more than
114 years, no other company has been more committed to serving the needs of
Iowa farmers, businesses, families and communities. In 1995, our unmatched
experience translated into a number of initiatives designed to ensure our
ongoing leadership well into the 21st century.
The Company merged its 13 commercial banks into a single bank with a unified
mission and clear set of objectives. We elected a new, "One Bank" board of
directors representing the diverse needs and experience of clients across
Iowa. By consolidating certain operations, streamlining management and
combining assets, Brenton became better positioned to serve and to prosper.
Cost savings in many areas have already been realized and efficient new
processes and technologies are now in place.
As part of the merger process, the Company established a line of business
management structure designed to help customers profit from our expertise in
a wide range of financial areas -- including commercial and agricultural
banking, retail banking, trust and investment management services, private
banking, mortgage banking, investment, insurance and real estate brokerage.
Rather than a company of banking generalists, we have become a statewide
resource of financial services specialists, enabling us to bring additional
value to every customer relationship. As part of this effort, we are making
- -- and will continue to make -- significant investments in educating and
motivating our people to forge new partnerships, create new efficiencies and
deliver higher quality products and services.
By developing alternative delivery systems and consolidating backroom and
support operations, your Company began to realize additional economies of
scale in 1995, while freeing local bankers to focus on their customers and
become even more involved in their communities. Two additional grocery
store branches were opened in Iowa City and Cedar Rapids. Brenton Direct,
a new telephone banking center, was developed and staffed to provide higher
levels of service and
Words centered in the middle of the page:
Rather than a company of banking generalists, we have become a statewide
resource of financial services specialists, enabling us to bring additional
value to every customer relationship.
expanded hours of operation, including evenings and weekends. We expanded
and enhanced the diversified commercial services area, which provides cash
management and other valuable banking services for commercial customers.
Several of these initiatives produced immediate returns, with 1995
noninterest income growing by 5.4 percent to $17.850 million, excluding
securities gains and losses. Brokerage commissions rose 5.7 percent, due to a
strong market and higher volume. Service charges on deposits grew 2.3
percent. Insurance commissions and fees jumped 10.6 percent, as a result of
both higher sales of credit-related insurance and increased insurance agency
sales. Fiduciary revenues were up 12.2 percent, thanks to increased volumes
in personal trusts, investment management fees and employee benefit plans.
Noninterest expenses for the year fell 2.8 percent to $55.051 million,
compared to $56.657 million for 1994. a one time $2.6 million restructuring
charge related to the implementation of the Company's strategic plan was
taken in 1994. Results for 1995 included savings in salaries and employee
benefits, lower FDIC premium assessments on deposits and a reduction in
data processing costs. These savings were partially offset by increased
occupancy expenses related to new bank facilities in Ames, Ankeny and
Davenport and new branch openings in Iowa City and Cedar Rapids, as well
as $1.8 million in consulting and professional fees tied to the merger and
restructuring.
To say that we literally reinvented our business in 1995 would be an
understatement. And in 1996 and beyond, shareholders, customers and
employees alike, will benefit from the efficiencies, opportunities and
advantages created through our merger and restructuring. More than a
simple consolidation for economy's sake, the new Brenton organization
represents a rededication to the spirit and philosophies that have served
us so well through the years. Building shareholder value. Serving
customers and communities well. Being a leader in local economic
development. And setting our sights on a future even stronger than our past.
If you're searching for a banking organization that can serve your long-term
objectives of service, value, growth, experience and true partnership, look
no further than Brenton.
We are the one.
/s/
C. Robert Brenton
Chairman of the Board
/s/
Robert L. DeMeulenaere
President
Picture of banker and community leader looking at blueprints in an office.
Caption to picture reads:
John Hand, President, Brenton Bank - Emmetsburg and Dave Nixon, Campaign
Chairman for the Wellness Center Project, review blueprints for the city's
new library and wellness center complex. The facility, which will be located
in a single building on the Iowa Lakes Community College campus, will serve
local residents and help attract new economic development to the area.
Brenton Bank participated in the planning and fundraising efforts and
purchased $620,000 in municipal bonds that helped finance the project.
Words on blue background following picture reads:
More than a simple consolidation for economy's sake, the new Brenton
organization represents a rededication to the spirit and philosophies that
have served us so well through the years.
A CLOSER LOOK: Implementing Our Strategy For Success
It's a classic case of high tech, high touch.
On the one hand, customers want access to banking products and services
outside of regular banking hours. For certain activities or to seek
information, they'd rather call on the phone than visit a branch. And who can
blame them? On the other hand, personal bankers have long been chained to
their desks by paperwork and regulatory details. Without question, their time
could be better spent getting to know and understand the needs of our
customers -- and serving them well.
In 1995, Brenton made significant investments in technology and process
improvements designed to provide better service for customers, greater
efficiency for our enterprise and additional opportunities for our local
bankers to become more involved in their communities.
Brenton's new 28,000 sq. ft. Operations & Technology Center consolidates
technical and customer support services for all 45 offices in a single
location. The facility, which also houses the Company's data processing
partner, handles collections, loan and deposit support, statementing,
lockbox services and more. It is also home to Brenton Direct, a new
telephone banking center, which is on the leading edge of our "Strategy
for Success."
Much more than an automated information line, Brenton Direct is a resource
of personalized information and service. It is staffed by experienced
banking professionals who are available to serve customer needs during and
after normal banking hours, including evenings and weekends. In addition to
helping existing customers, Brenton Direct is positioned to help the Company
attract new customers in new communities, enabling us to serve our entire
Iowa market. The facility, which began operation in April, 1995, is already
handling an average of 30,000 calls per month.
Working in partnership with local community boards of directors, Brenton
will continue its long heritage of providing leadership in local economic
development. Brenton bankers have always lived and worked in the communities
we serve, and we have always stood ready to contribute time, effort and
financial resources to worthwhile local groups, projects and activities. We
will continue to share, participate and invest in our communities. Indeed,
our commitment is even stronger than it has been in the past.
Strong growth in direct consumer lending is forecast for 1996, as our
company-wide retail banking strategy becomes fully implemented. The plan
calls for local bank presidents to lead our efforts
Words centered in the middle of the page:
We are committed to getting closer to our customers and communities -- to
listening, serving, and satisfying all of their financial needs.
to proactively reach out to current and prospective customers through
personal calling, targeted direct mail and telephone follow-up. We are
committed to getting closer to our customers and communities -- to
listening, serving and satisfying all of their financial needs. The
development of new support processes and personnel frees front line bankers
to become fully involved in this effort.
Led by commercial loan growth and higher cash management revenues, the
commercial side of our business experienced substantial growth in 1995,
particularly in the metropolitan markets of Des Moines, Davenport,
Cedar Rapids and Ames. We expect this growth to continue in 1996, as we
provide more training, support and incentives for our commercial officers.
Brenton offers a full line of commercial banking products and services, from
lending and cash management to international services. In partnership with
our Trust Division, we also work to provide a strong package of employee
benefit and corporate trust products and services.
By establishing a separate line of business for agricultural banking, the
Company continued to build on its 114-year heritage of service to Iowa farmers
and agribusinesses. Our roots are in agricultural banking. We know the
business of farming. And our experienced ag banking officers work to develop
long-term, mutually profitable partnerships with our farm customers. On
November 11, 1995, the Brenton Center for Agricultural Instruction and
Technology Transfer was dedicated at Iowa State University in Ames. The center,
which was supported in part through a gift from the Brenton family, is a
resource of information, instruction and outreach services for students,
farmers and agri-businesses across Iowa and around the world.
Increased volumes in employee benefit plans, personal trusts and investment
management fees produced 12.2 percent growth in fiduciary revenues during 1995.
Working in partnership with personal bankers and commercial officers, Trust is
projecting even stronger growth in the year ahead. With our proven record of
customer service and investment performance, Brenton is well positioned to
serve the expanding 401(k) market. Assets in Brenton's four proprietary mutual
funds totaled more than $103 million at year-end 1995.
While total mortgage volume was down in 1995, primarily due to a slowdown
in refinancing, we project substantial growth in 1996, as rates continue to
trend lower. We also
Words centered in the middle of the page:
On November 11, 1995, the Brenton Center for Agricultural Instruction and
Technology Transfer was dedicated at Iowa State University in Ames.
expect to profit from last year's restructuring of our mortgage operations.
We consolidated processing from 14 bank locations to two regional processing
centers. The recent conversion to new servicing software and the purchase of
laptop computers has positioned our originators to get away from their desks
and go out in the field to develop new business. We introduced an
alternative documentation system that enables us to approve loans in four
days or less, subject to appraisals. In addition, we are now retaining the
servicing rights to most residential loans that we originate. As a result,
we not only realize the full economic value of the servicing process, we
also maintain valuable customer contact over the full life of the loan.
Our full-service investment broker-dealer continues to grow, with revenues
increasing by 5.7 percent in 1995. The operation provides a full range of
investment products to serve client needs -- including stocks, unit
investment trusts, individual bonds, mutual funds, insurance and annuities.
Brenton investment executives focus on planning and tailoring total
financial solutions. The objective is to create long-term, mutually
rewarding relationships with current and prospective customers.
Brenton Insurance, our independent agency, produced double-digit growth
for the third consecutive year. Working out of free-standing offices as well
as in-bank locations, the operation markets personal and commercial lines of
property and casualty coverages, life and health insurance and selected group
plans. The growth of our insurance business reflects your Company's objective
to serve the total financial needs of our customers. Significant additional
insurance revenue is budgeted for 1996.
At Brenton, our greatest strength has always been our people. That is
why, each year, we celebrate their success and recognize their
accomplishments. At our One Bank Celebration on November 18, we honored the
following individuals and banks for their outstanding efforts and
contributions to the overall success of our enterprise: Deb Hall of Cedar
Rapids, Outstanding Teller; Myrna Bayer of Marshalltown, Outstanding Customer
Service Person; Joyce Larson of Brokerage, Outstanding Sales Person; Allen
Shafer of Cedar Rapids, Outstanding Lender; LaRae Bouchard of Operations and
Technology, Outstanding Administrative/Financial/Support Person; and John
Maier of Brenton Mortgage, Outstanding Administrative/Financial/Support
Person. The Brenton Award of Progress was presented to our Clarion bank.
Marshalltown was named our Outstanding Bank for 1995.
Words centered in the middle of the page:
The objective is to create long-term, mutually rewarding relationships
with current and prospective customers.
Bankers meeting customer at customer's hardware store. Caption to
picture reads:
Jerry Logan, President, Logan Contractors Supply, Inc., meets with Woody
Brenton, President - Commercial Banking and Doug Schulte, Assistant
Vice-President, Brenton Trust Division. From commercial lending and cash
management programs to employee benefits and insurance services, Brenton
provides a complete package of sophisticated financial products and services
for business customers across Iowa.
Management's Discussion and Analysis
For 1995, Brenton Banks, Inc. and subsidiaries (the "Company") reported net
income of $10,407,354 compared to 1994 earnings of $10,107,387.
Capital Resources Common stockholders'equity totaled $119,533,631 as of
December 31, 1995, an 8.2 percent increase from the prior year. This
increase was primarily due to current year earnings and the equity
adjustment required by Statement of Financial Accounting Standard (SFAS)
No. 115. Under this accounting standard, which was adopted December 31,
1993, the method of classifying investment securities is based on the
Company's intended holding period. Accordingly, securities that the
Company may sell at its discretion prior to maturity are recorded at their
fair value. The aggregate unrealized net gains or losses (including the
income tax and minority interest effect) are recorded as a component of
stockholders' equity. At December 31, 1995, aggregate unrealized gains from
assets available for sale totaled $1,358,402, while at December 31, 1994,
aggregate unrealized losses totaled $5,117,046. This resulted in a net
increase of $6,475,448 in common stockholders' equity in 1995. The Board
of Directors increased 1995 dividends to common stockholders 2.3 percent over
1994 to $.45 per share, a dividend payout ratio of 33.6 percent of earnings
per share. Dividends for 1995 totaled $3,498,220. As part of the
Company's ongoing stock repurchase plan, the Board of Directors authorized
additional stock repurchases of $5,000,000 of the Company's common stock in
1995. For the year ended December 31, 1995, the Company repurchased 258,133
shares at a total cost of $4,830,111. The Board has extended this plan for
1996. The Company's risk-based core capital ratio was 11.60 percent at
December 31, 1995, and the total risk-based capital ratio was 12.69 percent.
These ratios exceeded the minimum regulatory requirements of 4.00 percent
and 8.00 percent, respectively. The Company's tier 1 leverage ratio, which
measures capital excluding intangible assets, was 7.45 percent at
December 31, 1995, exceeding the regulatory minimum requirement range of 3.00
to 5.00 percent. Each of these capital calculations excludes unrealized gains
or losses on assets available for sale. The debt-to-equity ratio of Brenton
Banks, Inc. (the "Parent Company") was 10.4 percent at December 31, 1995,
compared to 11.5 percent at the end of 1994. This decrease was primarily due
to higher equity created by the SFAS 115 adjustment and current year
earnings. The Parent Company's $2 million line of credit with a regional bank
was unused throughout 1995. Long-term borrowings of the Parent Company at
December 31, 1995 consisted entirely of $12,435,000 of capital notes.
Brenton Banks, Inc. common stock closed 1995 at a bid price of $21.25 per
share, representing 136 percent of the book value per share of $15.62. The
year-end stock price represented a price-to-1995-earnings multiple of 15.9
times. Brenton Banks, Inc. continues to pursue acquisition and expansion
opportunities that strengthen the Company's presence in current and new
markets. There are currently no pending acquisitions that would require
Brenton Banks, Inc. to secure capital from public or private markets.
Asset-Liability Management The Company has a fully integrated asset-
liability management system to assist in managing the balance sheet. This
system performs simulations of the effects of various
Graph showing Primary Capital Ratio (1991-1995):
1991 1992 1993 1994 1995
7.23% 7.67 8.31 8.18 8.40
Graph showing Tier 1 Leverage Capital Ratio (1991-1995)
1991 1992 1993 1994 1995
6.21% 6.71 7.36 7.23 7.45
Graph showing Net Interest Margin (1991-1995):
1991 1992 1993 1994 1995
4.04% 4.23 4.28 4.12 3.89
interest rate scenarios on net interest income and is used to project the
results of alternative investment decisions. Management performs analysis of
the simulations to manage interest rate risk, the net interest margin and
levels of net interest income. The asset-liability simulations indicate
that net interest income will be maximized in a stable interest rate
environment. The Company currently believes that net interest income would
fall by less than 5 percent if interest rates immediately increased or
decreased by 300 basis points, which is within the Company policy limit.
Many steps have been taken over the past year to restructure the Company's
balance sheet in a way that will lessen the impact of interest rate
fluctuations on net interest income. The Company has increased its variable
rate consumer loans by $33.4 million since December 31, 1994. The Company
has also reduced its reliance on residential real estate loans with longer
repricing periods. This was done by securitizing approximately $56 million
of these loans during 1995. As of December 31, 1995, $26 million of these
loan pools had been sold at a loss of approximately $400,000, and $30 million
were held in the Company's available for sale investment portfolio. In
addition to normal balance sheet instruments, the Company has utilized
Federal Home Loan Bank borrowings and interest rate swaps to reduce interest
rate risk.
Liquidity The Company actively monitors and manages its liquidity position
with the objective of maintaining sufficient cash flows to fund operations
and meet customer commitments. Federal funds sold, loans held for sale and
investments available for sale are readily marketable assets. Maturities
of all investment securities are managed to meet the Company's normal
liquidity needs. Investment securities available for sale may be sold prior
to maturity to meet liquidity needs, to respond to market changes or to
adjust the Company's interest rate risk position. Federal funds sold and
assets available for sale comprised 28.0 percent of the Company's total
assets at December 31, 1995. Net cash provided from operations of the
Company is another major source of liquidity and totaled $14,991,191 in 1995,
$16,279,907 in 1994 and $20,429,680 in 1993. These strong cash flows from
operations are expected to continue in the foreseeable future. The Company
has historically maintained a stable deposit base and a relatively low level
of large deposits which results in low dependence on volatile liabilities.
At December 31, 1995, the Company had borrowings of $28,150,000 from the
Federal Home Loan Bank of Des Moines as a means of providing long-term,
fixed-rate funding for certain fixed-rate assets and managing interest rate
risk. The combination of high levels of potentially liquid assets, strong
cash flows from operations and low dependence on volatile liabilities
provided strong liquidity for the Company at December 31, 1995. The Parent
Company, whose primary funding sources are management fees and dividends from
its subsidiaries, had sufficient cash flow and liquidity at December 31,
1995. Dividends of approximately $15 million were available to be paid to the
Parent Company by subsidiary banks without reducing capital ratios below
regulatory minimums. At the end of 1995, the Parent Company had $7.5 million
of short-term investments, as well as additional borrowing capacity.
Results of Operations - 1995 Compared to 1994 Net Income For the year
ended December 31, 1995, Brenton recorded net income of $10,407,354.
Earnings per common share were $1.34 compared to $1.27 for 1994. The
Company's total assets were consistent with 1994 levels of $1.6 billion on
December 31, 1995. Return on average assets (ROA) was .71 percent in 1995,
compared to .70 percent in 1994. The return on average equity (ROE) was
9.04 percent, compared to 9.03 percent one year earlier.
Net Interest Income Net interest income declined $2,118,383 or 3.8 percent
to $53,332,143 for 1995. Although average earning assets increased 1.3 percent
from 1994, average interest-bearing liabilities increased 2.7 percent. In
addition, the average rate earned on earning assets rose 55 basis points,
while the average rate paid on interest-bearing liabilities increased 83 basis
points. The net interest spread, which is the difference between the rate
earned on assets and the rate paid on liabilities, fell to 3.41 percent from
3.69 percent last year. Net interest margin, which is tax equivalent net
interest income as a percent of average earning
assets, declined 23 basis points in 1995 and averaged 3.89 percent,
compared to 4.12 percent in 1994. The Company does not expect further net
interest margin compression. With the focus on commercial and consumer loan
growth, the goal is for improvement in net interest income and net interest
margin.
Loan Quality Brenton's loan quality remained strong in 1995. The
Company's nonperforming loans were a low 0.62 percent of loans or $5,619,000
at December 31, 1995, up from $5,022,000 or 0.52 percent one year ago.
Nonperforming loans include loans on nonaccrual status, loans that have
been renegotiated to below market interest rates or terms, and loans past
due 90 days or more. The increase in nonperforming loans from one year ago
was due to an increase in commercial and consumer loans that were 90 days
or more past due. Nonaccrual and renegotiated loans are below the levels
of one year ago. The allowance for loan losses, which totaled $11.1
million, represented 197.01 percent of nonperforming loans at the end of
1995, compared to 217.3 percent one year ago. The provision for loan
losses totaled $1,864,801 for the year ended December 31, 1995, compared
to $1,987,909 for 1994. The Company's net charge-offs to average loans were
0.18 percent for 1995 compared to 0.10 percent for 1994. Loan losses for 1995
were concentrated in the consumer loan portfolio. Quality control and risk
management are carefully balanced with goals for loan growth. The Company has
a formal structure for reviewing and approving new loans, with all loans
greater than $1,000,000 being approved by the senior loan approval committee.
Documentation and loan quality reviews are performed routinely by internal
loan review personnel, as well as by regulatory examiners. The allowance
for loan losses represents the reserve available to absorb potential loan
losses within the loan portfolio. The allowance is based on management's
judgment after considering various factors such as the current and
anticipated economic environment, historical loan loss experience, and most
importantly, the evaluation of individual loans by lending officers
and internal loan review personnel. Using a standard evaluation process,
individual loan officers evaluate loan characteristics, the borrower's
financial condition and collateral values. From these assessments, the
Reserve Adequacy Committee reviews the loan portfolio quality, quantifies
the results and reviews the calculations of the required allowance for
loan losses. In addition, the Reserve Adequacy Committee approves
charge-offs and subsequent collection and action plans for problem credits.
Management believes the allowance for loan losses at December 31, 1995, was
sufficient to absorb all potential loan losses within the portfolio,
recognizing that the adequacy of the reserve is subject to future economic
events and uncertainties. Beginning January 1, 1995, the Financial
Accounting Standards Board mandated a standard that fundamentally
changed certain accounting procedures for impaired loans, including the
determination of the allowance for loan losses and financial disclosures.
This new Standard has not had a material effect on the financial statements
of the Company.
Net Noninterest Margin To measure operating efficiency, the Company uses
the net noninterest margin, which is the difference between noninterest
income and noninterest expense as a percent of
Graph showing Return on Average Assets (1991-1995):
1991 1992 1993 1994 1995
0.93% 0.98 1.04 0.70 0.71
Graph showing Return on Average Equity (1991-1995):
1991 1992 1993 1994 1995
14.27% 14.13 13.82 9.03 9.04
average assets. For 1995, the net noninterest margin was (2.38) percent
compared to (2.61) percent in 1994. Although this is a positive trend, the
Company is aggressively working on further reductions by developing fee-based
services and reducing the growth of operating expenses.
Noninterest Income Generating noninterest income is a key component to
the Company's earnings performance, particularly when lower net interest
margins cause reductions in net interest income. For 1995, total noninterest
income (excluding securities transactions) increased 5.4 percent to
$17,849,743 from $16,932,612 one year ago. The increases were seen in
substantially all noninterest income categories. Service charges on
deposit accounts rose 2.3 percent in 1995, compared to one year earlier.
This increase occurred in the fourth quarter of 1995, when the Company
implemented standardized service charges and initiatives to reduce the amount
of waived charges and fees. Insurance commissions and fees increased 10.6
percent to $2,339,817 in 1995. This was due to higher sales of credit-related
insurance and higher sales from insurance agency operations. Secondary market
real estate loan income also rose and posted a 22.9 percent increase from one
year earlier. Secondary market income for 1995 totaled $1,153,066.
Fiduciary income rose 12.2 percent to $2,425,105 in 1995 compared to
$2,160,492 in 1994. This increase was due to a growing customer base in the
areas of personal trusts, investment management, employee benefit plans and
the Brenton Family of Mutal Funds. Higher revenues were the result of this
growth and favorable market conditions. Securities transactions created an
additional increase in noninterest income. Securities losses for 1995 totaled
$3,003 compared to 1994 losses of $339,624. Offsetting the overall increase
in noninterest income was a 20.6 percent decline in other operating income.
The major cause for the decline was $232,454 of net losses on the sale of
loans in 1995 compared to 1994 gains of $167,519.
Noninterest Expense Total noninterest expense decreased 2.8 percent in
1995 to $55,051,267 from $56,656,922 one year ago. Included in 1994
expense was a one-time restructuring charge of $2,645,000. The restructuring
charge was taken to cover costs related to the Company's strategic plan that
included consolidating the Company's 13 commercial banks, reducing Brenton's
overall personnel levels and closing selected banking branches. A summary
of the estimated costs expensed in 1994 and the actual costs incurred in
1995 follows:
1994 Estimated Costs 1995 Actual Costs
Salaries and wages $1,089,000 $ 565,263
Employee benefits 289,000 83,409
Occupancy expenses 192,000 --
Data processing expense 527,500 389,432
Abandonment losses 267,000 164,945
Legal, regulatory and other 280,500 409,085
$2,645,000 $1,612,134
The difference between the estimated costs recorded in 1994 and the actual
costs incurred was reversed, thereby reducing or charging the above expense
categories in 1995. The major restructuring charge reversals occurred in
salaries and wages and employee benefit categories. The actual costs were
well below original estimates due to employee attrition, which assisted in
meeting necessary salary reductions without incurring severance. In addition,
occupancy costs and abandonment losses were lower than original estimates.
This was due to a planned branch closing that did not occur in 1995, but is
expected to occur in 1996. Another branch which was expected to be abandoned
was sold with the Company incurring no loss. Salary expense declined
approximately $710,000 from one year ago after eliminating the effects of the
restructuring charge, due to overall staff reductions. The number of
full-time equivalent employees decreased by 13.6 percent when comparing year-
end 1995 personnel levels to year-end 1994. The decrease in salaries was
offset by increases in incentives, insurance sales commissions and executive
compensation plan expenses. The reductions in salaries and wages led to a
proportionate decline in employee benefits. The increases in occupancy and
furniture and equipment expense were due primarily to rents and depreciation
for new and renovated banking offices in Ames, Ankeny, Cedar Rapids,
Davenport and Iowa City. The Company invested approximately $7 million in
these new facilities. Data processing expenses were unchanged from last
year after eliminating the impact of the restructuring charge. Advertising
expenses were also unchanged from one year ago. In September 1995, the FDIC
refunded assessments retroactively to May 1995 and lowered deposit insurance
premiums for all well capitalized banks. This was a result of the full
funding of reserves required by the FDIC to insure the deposits of the
banking industry. This reduced 1995 expenses by $1,124,169, in comparison to
1994. The Company continues to pay the lowest rates available under the
FDIC's risk-based premium system. At the present time, Congress is
considering proposed legislation to recapitalize the Savings Association
Insurance Fund (SAIF). This proposed legislation would assess a one-time
premium, currently estimated between $1.2 million and $1.5 million, on all
SAIF deposits and would be expensed when and if legislation is passed. The
Company has approximately $225 million of SAIF deposits. Other operating
expenses rose $2.5 million or 22.6 percent after eliminating the impact of
the restructuring charge. A large part of this increase relates to payments
made to EDS, a management consulting firm that was hired to reengineer the
retail and commercial banking processes and assist in developing a formalized
program for enhancing noninterest income. In addition, the Company has
contracted with other consultants to perform sales training and develop
management reporting systems. In 1995, the Company also recorded
approximately $1 million for estimated costs related to branch closings
anticipated in 1996.
Income Taxes The Company's income tax strategies include reducing income
taxes by purchasing securities and originating loans that produce tax-exempt
income. The goal is to maintain the maximum level of tax-exempt assets in
order to benefit the Company on both a tax equivalent yield basis and in
income tax savings. The effective rate of income tax expense as a percent of
income before income tax and minority interest was 22.5 percent for 1995
compared to 20.2 percent for 1994. In 1994, the Company established
out-of-state investment subsidiaries to manage the investment portfolios of
each Brenton bank. These subsidiaries provided an opportunity to lower the
amount of state franchise taxes paid by the Company. Effective July 1, 1995,
the state of Iowa enacted legislation that eliminated the tax benefits derived
from these subsidiaries. The Company dissolved these subsidiaries on
June 30, 1995.
Effect of New Accounting Standards Two new Statements of Financial
Accounting Standards (SFAS) were issued in 1995, but will not be effective
until 1996: SFAS No. 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of," and SFAS No. 123
"Accounting for Stock-Based Compensation." The adoption of both SFAS 121
and SFAS 123 is not expected to have a material effect on the Company's
future financial statements.
Results of Operations - 1994 Compared to 1993 Net income For the year
ended December 31, 1994, Brenton recorded net income of $10,107,387, which
included an after-tax restructuring charge of $1,658,415 related to the
Company's strategic plan. Earnings per common share before the restructuring
charge were $1.48 compared to $1.80 for 1993. The restructuring charge
totaled $.21 per share, reducing final 1994 earnings per share to $1.27.
The Company's total assets grew 6.8 percent to $1.6 billion at December 31,
1994. The Company's ROA, excluding the one-time charge, was .81 percent in
1994, compared to 1.04 percent in 1993. The ROE, excluding the restructuring
charge, was 10.51 percent, compared to 13.82 percent one year earlier. The
restructuring charge reduced ROA to .70 percent and reduced ROE to 9.03
percent.
Net Interest Income Net interest income rose 2.3 percent to $55,450,526
for 1994. This growth was prompted by an increase in average earning assets,
primarily from a 16.7 percent increase in average loans in 1994. During
1994, the Company's net interest margin declined 16 basis points from one
year earlier and averaged 4.12 percent.
Loan Quality Nonperforming loans of $5,022,000 at the end of 1994
represented 0.52 percent of loans, up 25.1 percent from one year earlier.
Provision expense for loan losses increased $736,321 in 1994. This
provision increased the allowance for loan losses to $10,913,043 at
December 31, 1994, representing 217.30 percent of nonperforming loans.
Net loans charged off for 1994 represented a low 0.10 percent of average
loans.
Noninterest Income For 1994, total noninterest income (excluding
securities transactions) declined 2.0 percent to $16,932,612 from
$17,268,103 one year prior. Service charges received on deposit accounts
declined about $422,000 from 1993. Higher interest rates caused a 56.1
percent decline in secondary market real estate loan fees, which totaled
$938,332 in 1994. Securities transactions caused an additional decline in
noninterest income. In response to the rising interest rate environment,
securities were sold from the investment portfolio at a net loss of $339,624.
Offsetting the overall decline in noninterest income was a 22.2 percent
growth in insurance commissions, which resulted primarily from the
acquisition of an insurance agency in Tama/Toledo, Iowa.
Noninterest Expense Total noninterest expense rose 12.4 percent in 1994 to
$56,656,922 from $50,414,942 one year ago. Included in 1994 expense was a
one-time, pre-tax restructuring charge of $2,645,000. Without the
restructuring charge, noninterest expense increased 7.1 percent from the
prior year. The following comparisons exclude the restructuring charge.
Salaries and benefits rose $1,063,409 from 1993 to 1994. The majority of this
increase was related to expansion of mortgage services, cash management and
investment brokerage, as well as the opening of new branches. The increase in
salaries created a proportionate rise in employee benefits expense.
Occupancy and furniture and equipment expenses increased in 1994 by $959,493.
This was primarily due to rents associated with new offices for banking,
brokerage and real estate brokerage activities, and depreciation expense for
remodeled facilities and new technology. Data processing expenses were
unchanged from 1993. FDIC deposit insurance rose 5.7 percent in 1994, due to
increasing deposit levels. During 1994, Brenton initiated several promotional
campaigns offering brokerage services, no-fee checking accounts and home
equity loans. These campaigns, along with local community events, added
16.5 percent to advertising and promotion expenses. Other operating
expenses rose 11.5 percent. This increase was a result of many new activities
including costs for new banking offices, acquisition of real estate and
insurance agencies, expanded cash management services and the introduction of
the Brenton Family of Mutual Funds. Growth and expansion activities in 1994
added an additional $1.75 million of recurring noninterest expense.
Income Taxes The Company's income tax strategies include reducing income
taxes by purchasing assets that produce tax-exempt income. The effective rate
of income tax expense as a percent of income before income tax and minority
interest was 20.2 percent for 1994 compared to 27.0 percent for 1993.
This decline in effective rate was due to lower overall Company earnings and
reduced state franchise taxes. In 1994, the Company established out-of-state
investment subsidiaries to provide an opportunity to lower the amount of state
franchise taxes paid by the Company.
Graph showing Nonperforming Loans (in thousands) (1991-1995):
1991 1992 1993 1994 1995
$5,622 4,593 4,013 5,022 5,619
Graph showing Net Noninterest Margin (1991-1995);
1991 1992 1993 1994 1995
2.26% 2.31 2.31 2.61 2.38
Consolidated Average Balances and Rates
Brenton Banks, Inc. and Subsidiaries
Average Balances
(In thousands) 1995 1994 1993 1992 1991
Assets:
Cash and due from banks $ 57,138 46,301 46,025 41,715 35,656
Interest-bearing deposits with
banks 1,076 124 762 6,240 18,335
Federal funds sold and
securities purchased under
agreements to resell 39,763 37,666 23,725 27,082 35,154
Trading account securities -- 116 -- -- --
Investment securities:
Available for sale-taxable 244,786 245,913 53,174 6,512 --
Available for sale-tax-exempt 100,859 132,040 -- -- --
Held to maturity-taxable 65,959 35,794 299,993 384,301 342,466
Held to maturity-tax-exempt 50,235 44,584 164,520 139,296 106,658
Loans held for sale 5,908 2,575 6,165 2,553 --
Loans 945,724 936,370 802,088 736,646 727,870
Allowance for loan losses (11,166) (10,502) (9,615) (8,894) (8,819)
Bank premises and equipment 31,436 24,545 23,045 21,400 18,876
Other 29,508 25,663 26,543 30,422 32,243
$1,561,226 1,521,189 1,436,425 1,387,273 1,308,439
Liabilities and Stockholders'
Equity:
Deposits:
Noninterest-bearing $ 128,770 127,464 119,322 112,054 102,795
Interest-bearing:
Demand 355,819 250,520 217,754 209,642 175,595
Savings 231,633 294,715 299,640 260,568 235,894
Time 626,497 625,981 622,789 646,261 654,776
Total deposits 1,342,719 1,298,680 1,259,505 1,228,525 1,169,060
Federal funds purchased and
securities sold under
agreements to repurchase 40,237 61,656 42,715 33,240 20,340
Other short-term borrowings 6,536 4,860 33 2,170 5,361
Accrued expenses and other
liabilities 14,896 13,254 12,805 13,735 14,739
Long-term borrowings 37,264 26,500 14,077 14,067 13,619
Total liabilities 1,441,652 1,404,950 1,329,135 1,291,737 1,223,119
Minority interest 4,391 4,290 4,150 3,845 3,589
Common stockholders' equity 115,183 111,949 103,140 91,691 81,731
$1,561,226 1,521,189 1,436,425 1,387,273 1,308,439
Summary of Average Interest
Rates
Average rates earned:
Interest-bearing deposits with
banks 6.20% 6.65 2.88 4.92 7.10
Trading account securities -- 6.36 -- -- --
Federal funds sold and
securities purchased under
agreements to resell 5.69 4.53 2.05 2.41 5.77
Investment securities:
Available for sale-taxable 5.96 5.30 5.28 6.63 --
Available for sale-tax exempt
(tax equivalent basis) 6.71 6.37 -- -- --
Held to maturity-taxable 6.17 5.20 5.54 6.88 8.50
Held to maturity-tax-exempt
(tax equivalent basis) 8.05 7.70 6.97 7.66 8.85
Loans held for sale 6.71 7.50 8.43 9.33 --
Loans 8.69 8.14 8.77 9.65 10.52
Average rates paid:
Deposits 4.37% 3.55 3.70 4.70 6.19
Federal funds purchased and
securities sold under
agreements to repurchase 4.08 3.38 2.41 2.78 4.74
Other short-term borrowings 5.67 5.42 3.63 5.57 8.70
Long-term borrowings 7.03 6.86 8.60 9.14 9.57
Average yield on
interest-earning assets 7.86% 7.31 7.57 8.43 9.62
Average rate paid on
interest-bearing liabilities 4.45 3.62 3.71 4.70 6.21
Net interest spread 3.41 3.69 3.86 3.73 3.41
Net interest margin 3.89 4.12 4.28 4.23 4.04
Selected Financial Data
Brenton Banks, Inc. and Subsidiaries
Year-end Balances
(In thousands)
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
Total assets $1,582,779 1,581,327 1,480,596 1,431,140 1,360,942 1,274,301 961,370 921,207 908,933 956,505
Interest-earning
assets 1,461,218 1,475,473 1,400,709 1,323,252 1,267,402 1,181,172 883,721 845,571 836,029 865,364
Interest-bearing
liabilities 1,300,508 1,315,378 1,224,951 1,181,013 1,141,008 1,052,597 769,717 733,133 728,597 771,416
Demand deposits 143,220 136,548 127,132 137,212 115,479 125,626 113,349 118,392 116,830 123,883
Long-term
borrowings 38,178 28,939 20,055 13,284 13,634 12,675 14,701 16,215 17,509 18,759
Preferred stock -- -- -- -- -- -- -- -- 2,000 3,000
Common
stockholders'
equity** 119,534 110,430 112,418 97,430 86,712 77,258 63,522 56,401 49,618 44,976
Results of
operations
(In thousands)
Interest income $ 111,040 101,223 98,656 106,560 115,561 106,826 85,722 76,745 74,774 84,321
Interest expense 57,708 45,772 44,427 54,773 68,687 64,431 49,102 43,180 43,149 52,920
Net interest
income 53,332 55,451 54,229 51,787 46,874 42,395 36,620 33,565 31,625 31,401
Provision for
loan losses 1,865 1,988 1,252 1,411 799 869 760 1,214 2,132 11,605
Net interest
income after
provision for
loan losses 51,467 53,463 52,977 50,376 46,075 41,526 35,860 32,351 29,493 19,796
Noninterest
income 17,847 16,593 17,863 14,684 12,715 11,554 10,113 10,367 9,064 16,483
Noninterest
expense 55,051 56,657 50,415 46,591 42,284 37,820 32,781 32,066 32,952 32,558
Income before
income taxes
and minority
interest 14,263 13,399 20,425 18,469 16,506 15,260 13,192 10,652 5,605 3,721
Income taxes 3,205 2,701 5,508 4,884 4,308 4,388 4,016 2,527 408 116
Minority interest 651 591 667 632 539 533 472 422 290 84
Net income 10,407 10,107 14,250 12,953 11,659 10,339 8,704 7,703 4,907 3,521
Preferred stock
dividend
requirement -- -- -- -- -- -- -- 81 265 360
Net income
available to
common
stockholders $ 10,407 10,107 14,250 12,953 11,659 10,339 8,704 7,622 4,642 3,161
Average common
shares
outstanding* 7,753 7,952 7,919 7,783 7,758 7,745 7,196 7,196 7,196 7,196
Per common and
common
equivalent
share*
Net income $ 1.34 1.27 1.80 1.67 1.50 1.33 1.21 1.06 .65 .44
Cash dividends .450 .440 .400 .350 .323 .273 .22 .117 .000 000
Common
stockholders'
equity** 15.62 14.03 14.27 12.47 11.16 9.97 8.83 7.84 6.89 6.25
Selected
operating
ratios
Return on
average assets
(including
minority
interest) .71% .70 1.04 .98 .93 .95 1.00 .90 .57 .38
Return on
average common
stockholders'
equity 9.04 9.03 13.82 14.13 14.27 14.39 14.50 14.34 9.78 7.35
Common dividend
payout 33.58 34.65 22.22 21.00 21.56 20.50 18.23 11.01 .00 .00
Allowance for
loan losses
as a percent
of loans 1.22 1.12 1.12 1.20 1.14 1.25 1.55 1.60 1.75 2.09
Net charge-offs
to average
loans
outstanding .18 .10 .05 .13 .15 .12 .08 .18 .75 2.61
<FN>
*Restated for 3-for-2 stock split effective in 1994 and 2-for-1 stock split effective in 1990.
**Including unrealized gains (losses) on assets available for sale.
Consolidated Statements of Condition
Brenton Banks, Inc. and Subsidiaries
December 31 1995 1994
Assets:
Cash and due from banks (note 2) $ 71,159,078 58,387,727
Interest-bearing deposits with banks 265,072 64,255
Federal funds sold and securities purchased
under agreements to resell 37,600,000 59,396,428
Investment securities:
Available for sale (note 3) 396,370,443 349,208,773
Held to maturity (market value of
$109,131,000 and $92,284,000 at
December 31, 1995 and 1994, respectively)
(note 3) 108,082,213 94,484,134
Investment securities 504,452,656 443,692,907
Loans held for sale 8,707,309 2,104,492
Loans (note 4) 910,193,212 970,214,498
Allowance for loan losses (note 5) (11,069,869) (10,913,043)
Loans, net 899,123,343 959,301,455
Bank premises and equipment (notes 6 and 10) 32,849,842 27,103,630
Accrued interest receivable 14,494,261 13,064,921
Other assets (note 8) 14,127,759 18,211,034
$1,582,779,320 1,581,326,849
Liabilities and Stockholders' Equity:
Deposits (note 7):
Noninterest-bearing $ 143,220,373 136,547,995
Interest-bearing:
Demand 399,308,392 315,369,233
Savings 215,488,846 255,046,184
Time 603,925,104 633,319,698
Total deposits 1,361,942,715 1,340,283,110
Federal funds purchased and securities sold
under agreements to repurchase 41,107,411 70,703,736
Other short-term borrowings (note 9) 2,500,000 12,000,000
Accrued expenses and other liabilities 15,083,453 14,749,917
Long-term borrowings (note 10) 38,177,803 28,939,413
Total liabilities 1,458,811,382 1,466,676,176
Minority interest in consolidated subsidiaries 4,434,307 4,220,328
Redeemable preferred stock, $1 par;
500,000 shares authorized; issuable in series,
none issued -- --
Common stockholders' equity (notes 12, 13
and 15):
Common stock, $5 par; 25,000,000 shares
authorized; 7,653,252 and 7,871,546 shares
issued at December 31, 1995 and 1994,
respectively 38,266,260 39,357,730
Capital surplus 2,020,518 5,210,344
Retained earnings 77,888,451 70,979,317
Unrealized gains (losses) on assets
available for sale 1,358,402 (5,117,046)
Total common stockholders' equity 119,533,631 110,430,345
$1,582,779,320 1,581,326,849
<FN>
Commitments and contingencies (notes 16 and 17).
See accompanying notes to consolidated financial statements.
Consolidated Statements of Operations
Brenton Banks, Inc. and Subsidiaries
Years Ended December 31 1995 1994 1993
Interest Income:
Interest and fees on loans (note 4) $ 82,525,850 76,456,964 70,816,746
Interest and dividends on
investments:
Available for sale-taxable 14,577,652 13,032,050 3,143,004
Available for sale-tax-exempt 4,446,824 5,530,626 --
Held to maturity-taxable 4,069,617 1,862,628 16,293,759
Held to maturity-tax-exempt 3,090,185 2,619,333 7,894,225
Interest on federal funds sold
and securities purchased under
agreements to resell 2,263,734 1,705,717 485,912
Other interest income 66,705 15,636 21,934
Total interest income 111,040,567 101,222,954 98,655,580
Interest Expense:
Interest on deposits (note 7) 53,075,352 41,609,766 42,188,138
Interest on federal funds purchased
and securities sold under
agreements to repurchase 1,641,516 2,082,077 1,027,324
Interest on other short-term
borrowings (note 9) 370,642 263,658 1,200
Interest on long-term borrowings
(note 10) 2,620,914 1,816,927 1,210,200
Total interest expense 57,708,424 45,772,428 44,426,862
Net interest income 53,332,143 55,450,526 54,228,718
Provision for loan losses (note 5) 1,864,801 1,987,909 1,251,588
Net interest income after
provision for loan losses 51,467,342 53,462,617 52,977,130
Noninterest Income:
Service charges on deposit accounts 5,547,796 5,424,547 5,846,770
Insurance commissions and fees 2,339,817 2,115,085 1,730,387
Other service charges, collection
and exchange charges, commissions
and fees 3,862,474 3,558,900 4,120,732
Investment brokerage commissions 3,044,107 2,879,401 3,010,004
Fiduciary income 2,425,105 2,160,492 1,912,442
Net gains (losses) from securities
available for sale (note 3) (3,003) (339,624) 595,168
Other operating income 630,444 794,187 647,768
Total noninterest income 17,846,740 16,592,988 17,863,271
Noninterest Expense:
Salaries and wages 22,815,220 24,595,274 22,952,044
Employee benefits (note 14) 4,158,580 4,960,665 4,162,486
Occupancy expense of premises,
net (notes 6 and 16) 4,912,417 4,702,208 3,988,525
Furniture and equipment expense
(notes 6 and 16) 3,747,021 3,060,557 2,622,747
Data processing expense (note 17) 2,379,920 3,083,819 2,526,280
FDIC deposit insurance assessment 1,783,213 2,907,382 2,749,969
Advertising and promotion 1,741,390 1,772,852 1,521,712
Other operating expense 13,513,506 11,574,165 9,891,179
Total noninterest expense 55,051,267 56,656,922 50,414,942
Income before income taxes
and minority interest 14,262,815 13,398,683 20,425,459
Income taxes (note 8) 3,204,687 2,700,640 5,507,849
Income before minority interest 11,058,128 10,698,043 14,917,610
Minority interest 650,774 590,656 667,640
Net income $ 10,407,354 10,107,387 14,249,970
Per common and common equivalent
share (note 12):
Net income $ 1.34 1.27 1.80
Cash dividends .45 .44 .40
<FN>
See accompanying notes to consolidated financial statements.
Consolidated Statements of Cash Flows
Brenton Banks, Inc. and Subsidiaries
Years Ended December 31 1995 1994 1993
Operating Activities:
Net income $ 10,407,354 10,107,387 14,249,970
Adjustments to reconcile net
income to net cash provided
by operating activities:
Provision for loan losses 1,864,801 1,987,909 1,251,588
Depreciation and amortization 4,097,022 3,387,034 3,100,977
Deferred income taxes (25,181) (1,257,325) (531,013)
Net (gains) losses from
securities held for sale 3,003 339,624 (595,168)
(Increase) decrease in accrued
interest receivable and
other assets (1,678,132) (1,477,154) 2,456,544
Increase in accrued expenses,
other liabilities and
minority interest 322,324 3,192,432 496,782
Net cash provided by operating
activities 14,991,191 16,279,907 20,429,680
Investing Activities:
Investment securities available
for sale:
Purchases (242,871,379) (122,339,026) (166,637,785)
Maturities 278,575,538 154,659,319 34,834,992
Sales 5,577,835 21,484,178 98,446,394
Investment securities held to
maturity:
Purchases (121,543,300) (59,384,073) (132,198,518)
Maturities 59,896,255 26,687,613 233,316,414
Net (increase) decrease in
loans held for sale (6,602,817) 2,244,930 147,839
Net (increase) decrease in
loans 28,502,974 (95,225,841) (122,867,264)
Purchases of bank premises
and equipment (9,372,711) (6,893,877) (3,487,797)
Net cash used by investing
activities (7,837,605) (78,766,777) (58,445,725)
Financing Activities:
Net increase in noninterest-
bearing, interest-bearing
demand and savings deposits 51,054,199 40,210,540 19,464,320
Net increase (decrease)
in time deposits (29,394,594) 5,708,876 4,959,049
Net increase (decrease)
in federal funds purchased
and securities sold under
agreements to repurchase (29,596,325) 33,039,408 2,782,728
Net increase (decrease) in
other short-term borrowings (9,500,000) 12,000,000 (119,784)
Proceeds of long-term
borrowings 12,429,000 22,176,030 9,337,000
Repayment of long-term
borrowings (3,190,610) (13,291,530) (2,565,942)
Dividends on common stock (3,498,220) (3,471,901) (3,138,307)
Proceeds from issuance
of common stock under the
employee stock purchase plan -- -- 361,194
Proceeds from issuance
of common stock under the
stock option plan 187,213 385,767 461,185
Proceeds from issuance
of common stock under the
long-term stock compensation
plan 361,602 -- --
Payment for shares acquired
under common stock repurchase
plan (4,830,111) (850,950) --
Payment for fractional shares
in 3-for-2 stock split -- (4,307) --
Net cash provided (used) by
financing activities (15,977,846) 95,901,933 31,541,443
Net increase (decrease) in
cash and cash equivalents (8,824,260) 33,415,063 (6,474,602)
Cash and cash equivalents at
the beginning of the year 117,848,410 84,433,347 90,907,949
Cash and cash equivalents at
the end of the year $ 109,024,150 117,848,410 84,433,347
<FN>
See accompanying notes to consolidated financial statements.
Consolidated Statements of Changes in Common Stockholders' Equity
Brenton Banks, Inc. and Subsidiaries
Common Capital Retained Unrealized
Stock Surplus Earnings Gains (Losses) Total
Balance, December 31, 1992 $26,039,350 5,002,053 66,405,950 (17,190) 97,430,163
Net income -- -- 14,249,970 -- 14,249,970
Net change in unrealized
gains (losses) -- -- -- 3,053,460 3,053,460
Dividends on common stock
$40 per share* -- -- (3,138,307) -- (3,138,307)
Issuance of shares of common
stock under the stock option
plan (note 15) 161,000 300,185 -- -- 461,185
Issuance of shares of common
stock under the employee stock
purchase plan (note 15) 65,405 295,789 -- -- 361,194
Balance, December 31, 1993 26,265,755 5,598,027 77,517,613 3,036,270 112,417,665
Net income -- -- 10,107,387 -- 10,107,387
Net change in unrealized
gains (losses) -- -- -- (8,153,316) (8,153,316)
Dividends on common stock
$.44 per share* -- -- (3,471,901) -- (3,471,901)
3-for-2 stock split in the
form of a stock dividend
(note 12) 13,169,475 -- (13,169,475) -- --
Fractional shares
resulting from stock split -- -- (4,307) -- (4,307)
Issuance of shares of common
stock under the stock
option plan (note 15) 146,500 239,267 -- -- 385,767
Shares reacquired under
stock repurchase
plan (note 12) (224,000) (626,950) -- -- (850,950)
Balance, December 31, 1994 39,357,730 5,210,344 70,979,317 (5,117,046) 110,430,345
Net income -- -- 10,407,354 -- 10,407,354
Net change in unrealized
gains (losses) -- -- -- 6,475,448 6,475,448
Dividends on common stock
$.45 per share -- -- (3,498,220) -- (3,498,220)
Issuance of shares of
common stock under the
stock option plan
(note 15) 98,750 88,463 -- -- 187,213
Issuance of shares of
common stock under the
stock compensation
plan (note 15) 100,445 261,157 -- -- 361,602
Shares reacquired under
stock repurchase plan
(note 12) (1,290,665) (3,539,446) -- -- (4,830,111)
Balance, December 31, 1995 $38,266,260 2,020,518 77,888,451 1,358,402 119,533,631
<FN>
*Reflects the 3-for-2 stock split in the form of a stock dividend in May 1994.
See accompanying notes to consolidated financial statements.
Notes to Consolidated Financial Statements
Brenton Banks, Inc. and Subsidiaries
December 31, 1995, 1994 and 1993
(1) Summary of Significant Accounting Policies and Related Matters
Nature of Operations Brenton Banks, Inc. and subsidiaries (the Company)
engage in retail, commercial, and agricultural banking and related financial
services from 45 locations throughout the state of Iowa. The Company provides
the usual products and services of banking such as deposits, commercial
loans, agribusiness loans, personal loans, and trust services. The Company
also engages in activities that are closely related to banking, including
mortgage banking and investment brokerage.
The accounting and reporting policies of the Company conform with
generally accepted accounting principles and general practices within the
banking industry. The following describe the more significant accounting
policies:
The Principles of Consolidation The consolidated financial statements
include the accounts of Brenton Banks, Inc. (the Parent Company) and its
subsidiaries. All material intercompany accounts and transactions have been
eliminated in the consolidated financial statements. Certain
reclassifications were made in the financial statements to agree with the
current year presentation.
The excess cost over underlying net assets of consolidated subsidiaries
and other intangible assets are being amortized over 10 to 40 years and
are included in other assets in the consolidated statements of condition.
Intangible assets totaled $5,282,000 and $5,499,000 at December 31, 1995,
and 1994, respectively.
Investment Securities Investment securities are classified based on the
Company's intended holding period. Securities which may be sold prior to
maturity, to meet liquidity needs, to respond to market changes or to adjust
the Company's asset-liability position, are classified as available for sale.
Securities which the Company intends to hold to maturity are classified as
held to maturity.
Investment securities available for sale are recorded at fair value.
The aggregate unrealized gains or losses, net of the income tax and minority
interest effect, are recorded as a component of common stockholders' equity.
Securities held to maturity are recorded at cost, adjusted for amortization
of premiums and accretion of discounts. The timing of the amortization and
accretion for mortgage-backed securities are adjusted for actual and
projected prepayments.
Net gains or losses on the sales of securities are shown in the
statements of operations. Gains or losses are computed using the specific
security identification method.
Loans Loans are carried primarily at the unpaid principal balance.
Interest income on loans is accrued and recorded as income based on
contractual interest rates and daily outstanding principal balances, except
on discounted loans where unearned income is recorded as income over the life
of the loans based on the interest method.
The accrual of interest income is stopped when the ultimate collection
of a loan becomes doubtful. A loan is placed on non-accrual status
when it becomes 90 days past due, if it is neither well secured or in the
process of collection. Once determined uncollectible, previously accrued
interest is charged to the allowance for loan losses.
Loans held for sale include real estate mortgage loans originated
with the intent to sell. These loans are carried at the lower of aggregate
cost or fair value.
Allowance for Loan Losses The allowance for loan losses is maintained at a
level necessary to support management's evaluation of potential losses in the
loan portfolio, after considering various factors including prevailing and
anticipated economic conditions. Loan losses or recoveries are charged or
credited directly to the allowance account.
Bank Premises and Equipment Bank premises and equipment are stated at cost
less accumulated depreciation. Depreciation is provided predominantly by the
straight-line method over estimated useful lives of 8 to 40 years for
buildings and leasehold improvements, and 3 to 25 years for furniture and
equipment.
Other Real Estate Owned Included in other assets is property acquired through
foreclosure, acceptance of deed in lieu of foreclosure or other transfers in
settlement of outstanding loans and related contract sales of such property
until the contract is transferred to earning assets based upon sufficient
equity in the asset. Amounts totaled $869,000 and $502,000 at December 31,
1995, and 1994, respectively. Such property is carried at the lower of cost
or estimated fair value. Periodic appraisals are obtained to support
carrying values. Net expense of ownership and declines in carrying values
are charged to operating expenses.
Employee Retirement Plan All employees of the Company are eligible, after
meeting certain requirements, for inclusion in the defined contribution
retirement plan. The plan is a combination profit sharing and 401(k) plan.
Retirement plan costs are expensed as the Company contributes to the plan.
The Company does not provide any material post-retirement benefits.
Income Taxes The Company files a consolidated federal income tax return.
Federal income taxes are allocated to the Parent Company and each subsidiary
on the basis of its taxable income or loss included in the consolidated
return.
When income and expense are recognized in different periods for
financial and income tax reporting purposes, deferred taxes are provided for
such temporary differences unless limited.
Statements of Cash Flows In the statements of cash flows, cash and cash
equivalents include cash and due from banks, interest-bearing deposits with
banks, federal funds sold and securities purchased under agreements to resell
and trading account securities.
Income Per Common and Common Equivalent Share Income per common and common
equivalent share computations are based on the weighted average number of
common and common stock equivalent shares outstanding. In May 1994, the
Company declared a 3-for-2 stock split in the form of a stock dividend. The
average number of shares, after considering stock plans and the stock split,
was 7,752,866 for 1995, 7,951,866 for 1994 and 7,918,560 for 1993.
Fair Value of Financial Instruments Fair value estimates are made at a
specific point in time, based on relevant market information and information
about the financial instrument. These estimates do not reflect any premium or
discount that could result from offering the Company's entire holdings of a
particular financial instrument for sale at one time. Unless included in
assets available for sale, it is the Company's general practice and intent to
hold its financial instruments to maturity and not to engage in trading or
sales activities.
Fair value estimates are based on judgments regarding future expected
loss experience, current economic conditions, risk characteristics of various
financial instruments and other factors. These estimates are subjective in
nature and involve uncertainties and matters of significant judgment and
therefore cannot be determined with precision. Changes in assumptions could
significantly affect the estimates.
Estimated fair values have been determined by the Company using the
best available data, and an estimation method suitable for each category of
financial instruments.
Interest Rate Swaps Amounts paid or received, related to outstanding swap
contracts that are used in the asset/liability management process, are
recognized into earnings, as an adjustment to interest income over the
estimated life of the related assets. Gains or losses associated with the
termination of interest rate swap agreements for identified positions are
deferred and amortized over the remaining lives of the related assets as an
adjustment to yield.
Use of Estimates in the Preparation of Financial Statements The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. A significant estimate that is
particularly sensitive to change relates to the allowance for loan losses.
Effect of New Financial Accounting Standards Effective January 1, 1995, the
Company adopted Statement of Financial Accounting Standards (SFAS) 114,
"Accounting by Creditors for Impairment of a Loan," and its amendment
SFAS 118 "Income Recognition and Disclosures." Under the Company's credit
policies, all nonaccrual and restructured loans are considered to meet the
definition of impaired loans under SFAS 114 and 118. Loan impairment is
measured based on the present value of expected future cash flows discounted
at the loan's effective interest rate, except where more practical, at the
observable market price of the loan or the fair value of the collateral if
the loan is collateral dependent. The adoption of SFAS 114 and 118 did not
have a material effect on the financial position or results of operations
of the Company.
Effective October 1, 1995, the Company adopted SFAS 122, "Accounting
for Mortgage Servicing Rights, an Amendment of FASB Statement No. 65." The
adoption of SFAS 122 did not have a material effect on the financial position
or results of operations of the Company.
Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of," was issued in March 1995 and requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset is not
recoverable. Adoption of SFAS 121 is required for fiscal years beginning
after December 15, 1995. The adoption of SFAS 121 is not expected to have a
material effect on the Company's future financial statements.
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," was issued in October 1995 and requires that the
impact of the fair value of employee stock-based compensation plans on net
income and earnings per share be disclosed on a pro forma basis in a footnote
to the consolidated financial statements for awards granted after December
15, 1994, if the accounting for such awards continues to be in accordance
with the Accounting Principles Board Opinion No. 25, "Accounting for Stock
issued to Employees". Alternatively, SFAS 123 permits that the fair value of
employee stock-based compensation plans be recorded as a component of
compensation expense in the statement of income as of the date of grant of
awards related to such plans. Adoption of SFAS 123 is required for fiscal
years beginning after December 15, 1995. The adoption of SFAS 123 is not
expected to have a material effect on the Company's future financial
statements.
(2) Cash and Due From Banks
The subsidiary banks are required by federal banking regulations to maintain
certain cash and due from banks reserves. This reserve requirement amounted
to $25,022,000 at December 31, 1995.
(3) Investment Securities
The amortized cost and estimated fair value of investment securities follow.
The estimated fair value of investment securities has been determined using
available quoted market prices for similar securities.
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
December 31, 1995 (In thousands)
Investment securities available for sale:
Taxable investments:
U.S. Treasury securities $ 27,621 161 (7) 27,775
Securities of U.S. government agencies 72,705 214 (97) 72,822
Mortgage-backed and related securities 190,953 927 (852) 191,028
Other investments 9,089 -- (18) 9,071
Tax-exempt investments:
Obligations of states and
political subdivisions 94,014 1,893 (233) 95,674
$394,382 3,195 (1,207) 396,370
Investment securities held to maturity:
Taxable investments:
Securities of U.S. government agencies $ 48,595 375 (44) 48,926
Mortgage-backed and related securities 3,653 32 (2) 3,683
Other investments 6,145 25 (4) 6,166
Tax-exempt investments:
Obligations of states and political
subdivisions 49,689 794 (127) 50,356
$108,082 1,226 (177) 109,131
December 31, 1994
Investment securities available for sale:
Taxable investments:
U.S. Treasury securities $ 51,198 -- (557) 50,641
Securities of U.S. government agencies 66,848 100 (911) 66,037
Mortgage-backed and related securities 108,491 156 (4,526) 104,121
Other investments 10,890 -- (78) 10,812
Tax-exempt investments:
Obligations of states and political
subdivisions 119,986 664 (3,052) 117,598
$357,413 920 (9,124) 349,209
Investment securities held to maturity:
Taxable investments:
Securities of U.S. government agencies $ 9,444 -- (127) 9,317
Mortgage-backed and related securities 35,282 5 (995) 34,292
Other investments 3,087 -- (35) 3,052
Tax-exempt investments:
Obligations of states and political
subdivisions 46,671 130 (1,178) 45,623
$94,484 135 (2,335) 92,284
Gross gains of $19,000 and gross losses of $22,000 were recorded on sales of
investment securities held for sale in 1995, gross gains of $68,000 and gross
losses of $408,000 were recorded in 1994, and gross gains of $944,000 and
gross losses of $349,000 were recorded in 1993.
Other investments at December 31, 1995, and 1994, consisted primarily
of corporate bonds. U.S. government agencies originate or guarantee primarily
all of the mortgage-backed and related securities. The amortized cost of
obligations of states and political subdivisions included industrial
development revenue bonds of $7,269,000 and $9,549,000 at December 31,
1995, and 1994, respectively.
Under provisions of the Financial Accounting Standards Board Special
Report entitled "A Guide to Implementation of Statement 115 on Accounting for
Certain Investments in Debt and Equity Securities," the Company transferred
securities with amortized costs of $48,049,000 in December 1995 from held to
maturity to available for sale. Unrealized gains related to such securities
transferred were $315,000.
The scheduled maturities of investment securities at December 31, 1995
follow. Actual maturities may differ from scheduled maturities because
issuers may have the right to call obligations without penalties. The
maturities of mortgage-backed securities have been included in the period of
anticipated payment considering historical prepayment rates.
Estimated
Amortized Fair
(In thousands) Cost Value
Investment securities available for sale:
Due in one year or less $108,311 108,259
Due after one year through five years 208,035 208,751
Due after five years through ten years 36,408 37,063
Due after ten years 41,628 42,297
$394,382 396,370
Investment securities held to maturity:
Due in one year or less $ 34,851 34,857
Due after one year through five years 39,304 39,441
Due after five years through ten years 25,960 26,441
Due after ten years 7,967 8,392
$108,082 109,131
<FN>
Investment securities carried at $163,418,000 and $153,405,000 at December
31, 1995 and 1994, respectively, were pledged to secure public and other
funds on deposit and for other purposes.
(4) Loans
A summary of loans follows:
(In thousands) December 31, 1995 1994
Real estate loans:
Commercial construction
and land development $ 38,123 26,549
Secured by 1-4 family
residential property 319,430 389,713
Other 163,739 143,960
Loans to farmers 68,543 71,853
Commercial and industrial loans 119,368 115,280
Loans to individuals for personal
expenditures, net of unearned
income of $313 and $751
at December 31, 1995 and
1994, respectively 199,489 221,627
All other loans 1,501 1,232
$910,193 970,214
The Company originates commercial, real estate, agribusiness and personal
loans with customers throughout Iowa. The portfolio has unavoidable
geographic risk as a result.
At December 31, 1995, and 1994, the Company had nonaccrual loans of
$2,639,000 and $3,784,000, respectively, and restructured loans of $178,000
and $298,000, respectively. The average balance of nonaccrual and
restructured loans for the year ended December 31, 1995 was $3,353,000, and
the allowance for loan losses related to these impaired loans was $425,000.
Interest income recorded during 1995, 1994 and 1993 on nonaccrual and
restructured loans was $136,000, $321,000 and $191,000 respectively.
Interest income which would have been recorded if these loans had been
current in accordance with original terms was $418,000 in 1995, $537,000
in 1994 and $359,000 in 1993.
Loan customers of the Company include certain executive officers,
directors and principal shareholders, and their related interests and
associates. All loans to this group were made in the ordinary course of
business at prevailing terms and conditions. The aggregate indebtedness of
all executive officers, directors and principal shareholders of Brenton
Banks, Inc. and its significant subsidiaries, and indebtedness of related
interests and associates of this group (except where the indebtedness of
such persons was less than $60,000) included in loans follows:
(In thousands) Amount
Balance at December 31, 1994 $5,334
Additional loans 2,154
Loan payments (589)
Balance at December 31, 1995 $6,899
(5) Allowance for Loan Losses
A summary of activity in the allowance for loan losses follows:
(In thousands) 1995 1994 1993
Balance at beginning of year $10,913 9,818 9,006
Provision 1,865 1,988 1,252
Recoveries 1,669 1,549 1,091
Loans charged off (3,377) (2,442) (1,531)
Balance at end of year $11,070 10,913 9,818
(6) Bank Premises and Equipment
A summary of bank premises and equipment follows:
(In thousands) December 31, 1995 1994
Land $ 3,614 3,204
Buildings and leasehold improvements 32,045 24,791
Furniture and equipment 21,756 18,137
Construction in progress 33 2,472
57,448 48,604
Less accumulated depreciation 24,598 21,500
$32,850 27,104
Depreciation expense included in operating expenses amounted to $3,626,000,
$2,938,000 and $2,621,000 in 1995, 1994 and 1993,respectively.
(7) Deposits
Time deposits included deposits in denominations of $100,000 or more of
$64,014,000 and $73,349,000 at December 31, 1995, and 1994, respectively.
A summary of interest expense by deposit classification follows:
(In thousands) 1995 1994 1993
Demand $11,842 5,418 4,552
Savings 6,638 6,878 7,697
Time deposits of $100,000
or more 4,193 3,110 2,091
Other time deposits 30,402 26,204 27,848
$53,075 41,610 42,188
The Company made cash interest payments of $55,229,000, $46,850,000 and
$44,141,000 on deposits and borrowings in 1995, 1994 and 1993, respectively.
(8) Income Taxes
The current and deferred income tax provisions included in the consolidated
statements of operations follow:
1995 (In thousands) Current Deferred Total
Federal $2,728 (76) 2,652
State 502 51 553
$3,230 (25) 3,205
1994
Federal $3,037 (1,099) 1,938
State 921 (158) 763
$3,958 (1,257) 2,701
1993
Federal $4,855 (523) 4,332
State 1,184 (8) 1,176
$6,039 (531) 5,508
Since the income tax returns are filed after the issuance of the financial
statements, amounts reported are subject to revision based on actual amounts
used in the income tax returns. The Company made cash income tax payments of
$2,500,000, $2,671,000 and $4,514,000 to the IRS, and $737,000, $1,226,000
and $1,301,000 to the state of Iowa in 1995, 1994 and 1993, respectively.
Cash income tax payments for a year include estimated payments for current
year income taxes and final payments for prior year income taxes. State
income tax expense relates to state franchise taxes payable individually by
the subsidiary banks.
The reasons for the difference between the amount computed by applying the
statutory federal income tax rate of 34 percent in 1995 and 1994 and 35
percent in 1993, and income tax expense follow:
(In thousands) 1995 1994 1993
At statutory rate $ 4,849 4,556 7,149
Increase (reduction):
Tax-exempt interest (2,566) (2,768) (2,766)
State taxes, net of federal
benefit 365 503 764
Nondeductible interest expense
to own tax-exempts 431 363 361
Other, net 126 47 --
$ 3,205 2,701 5,508
Accumulated deferred income tax debits are included in other assets in the
consolidated statements of condition. There was no valuation allowance at
December 31, 1995, or 1994. A summary of the temporary differences resulting
in deferred income taxes and the related tax effect of each follows:
(In thousands) 1995 1994
Provision for loan losses $3,985 3,750
Unrealized (gains) losses on
assets available for sale (694) 3,191
Restructuring charge -- 970
Depreciation (452) (541)
Stock compensation plan 372 418
Real estate mortgage loan
points deferred (479) (357)
Alternative minimum tax credit
carry-forward 442 --
Other, net 272 (125)
$3,446 7,306
(9) Other Short-Term Borrowings
The Company had short-term borrowings with the Federal Home Loan Bank of Des
Moines (FHLB) totaling $2,500,000 and $12,000,000 at December 31, 1995, and
1994, respectively. The average rate on these borrowings at December 31,
1995, was 4.68 percent. These borrowings were secured by residential mortgage
loans equal to 150 percent of the borrowings and FHLB stock.
The Parent Company has arranged an unsecured, available line of credit of
$2,000,000 which was unused at December 31, 1995. It is at the prime
interest rate and is subject to annual review and renewal.
(10) Long-Term Borrowings
Long-term borrowings consisted of the following:
(In thousands) December 31, 1995 1994
Capital notes, 6.00% to 10.00%
Total Parent Company $12,435 12,644
Borrowings from FHLB, average rate
of 6.42% at December 31, 1995 25,650 16,150
Mortgage debt, average rate of
7.47% at December 31, 1995 93 100
Other -- 45
$38,178 28,939
Mortgage debt was secured by real property with a carrying value of $115,000
at December 31, 1995. Borrowings from the FHLB were secured by residential
mortgage loans equal to 150 percent of the borrowings and FHLB stock.
The mortgage debt and borrowings from the FHLB were direct obligations of
the individual subsidiaries.
Scheduled maturities of long-term borrowings at December 31, 1995, follow:
Parent
(In thousands) Company Consolidated
1996 $ 910 918
1997 1,603 17,762
1998 1,177 10,687
1999 1,736 1,786
2000 1,213 1,216
Thereafter 5,796 5,809
$12,435 38,178
(11) Fair Value of Financial Instruments
The estimated fair values of the Company's financial instruments were as
follows:
December 31, 1995 December 31, 1994
Recorded Fair Recorded Fair
(In thousands) Amount Value Amount Value
Financial assets:
Cash and due from banks $ 71,159 71,159 58,388 58,388
Interest-bearing deposits with banks 265 265 64 64
Federal funds sold and securities
purchased under agreements to resell 37,600 37,600 59,396 59,396
Investment securities 504,452 505,501 443,693 441,493
Loans held for sale 8,707 8,707 2,104 2,104
Loans, net 899,123 910,338 959,301 950,861
Financial liabilities:
Deposits $1,361,943 1,367,680 1,340,283 1,341,969
Federal funds purchased, securities
sold under agreements to repurchase
and other short-term borrowings 43,607 43,607 82,704 82,704
Long-term borrowings 38,178 40,610 28,939 28,061
Off-balance-sheet assets (liabilities):
Commitments to extend credit $ -- -- -- --
Letters of credit -- (63) -- (42)
Interest rate swaps -- (224) -- 51
The recorded amount of cash and due from banks and interest-bearing deposits
with banks approximates fair value.
The recorded amount of federal funds sold and securities purchased under
agreements to resell approximates fair value as a result of the short-term
nature of the instruments.
The estimated fair value of investment securities has been determined
using available quoted market prices for similar securities.
The estimated fair value of loans is net of an adjustment for credit
risk. For loans with floating interest rates, it is presumed that estimated
fair values generally approximate the recorded book balances. Real estate
loans secured by 1-4 family residential property were valued using trading
prices for similar pools of mortgage-backed securities. Other fixed-rate
loans were valued using a present-value discounted cash flow with a discount
rate approximating the market for similar assets.
Deposit liabilities with no stated maturities have an estimated fair
value equal to the recorded balance. Deposits with stated maturities have
been valued using a present-value discounted cash flow with a discount rate
approximating the current market for similar deposits. The fair-value
estimate does not include the benefit that results from the low-cost funding
provided by the deposit liabilities compared to the cost of borrowing funds
in the market. The Company believes the value of these depositor
relationships to be significant.
The recorded amount of the federal funds purchased, securities sold under
agreements to repurchase and short-term borrowings approximates fair value
as a result of the short-term nature of these instruments.
The estimated fair value of long-term borrowings was determined using
a present-value discounted cash flow with a discount rate approximating the
current market for similar borrowings.
The fair value of commitments to extend credit and standby letters of
credit are estimated using the fees currently charged to enter into similar
agreements.
The fair value of interest rate swaps (used for hedging purposes) is
the estimated amount that the Company would receive or pay to terminate the
swap agreements at the reporting date.
(12) Common Stock Transactions
In May 1994, the Company declared a 3-for-2 stock split in the form of a 100
percent stock dividend. This transaction resulted in the issuance of
2,633,895 shares of common stock and the transfer of $13,169,475 from
retained earnings to common stock. Net income and cash dividends per share
information in the financial statements have been retroactively restated to
reflect this transaction.
As part of the Company's ongoing stock repurchase plan, in 1995 the
Board of Directors authorized additional stock repurchases of $5,000,000 of
the Company's common stock. For the years end December 31, 1995, and 1994,
the Company repurchased 258,133 and 44,800 shares, respectively, at a total
cost of $4,830,111 and $850,950.
(13) Dividend Restrictions
The Parent Company derives a substantial portion of its cash flow, including
that available for dividend payments to stockholders, from the subsidiary
banks in the form of dividends received. State and savings banks are subject
to certain statutory and regulatory restrictions that affect dividend
payments.
Based on minimum regulatory capital guidelines as published by those
regulators, the maximum dividends which could be paid by the subsidiary banks
to the Parent Company at December 31, 1995, were approximately $15 million.
(14) Employee Retirement Plan
The Company provides a defined contribution retirement plan for the benefit
of employees. The plan is a combination profit sharing and 401(k) plan. All
employees 21 years of age or older and employed by the Company for at least
one year are eligible for the plan. The Company contributes 4 1\2 percent of
eligible compensation of all participants to the profit sharing portion of
the plan, and matches employee contributions to the 401(k) portion of the
plan up to a maximum of 3 percent of each employee's eligible compensation.
Retirement plan costs charged to operating expenses in 1995, 1994 and 1993
amounted to $1,263,000, $1,367,000 and $1,211,000, respectively. The Company
offers no material post-retirement benefits.
(15) Stock Plans
A total of 349,551 shares were granted over the past four years to key
management personnel under the Company's long-term stock compensation plan.
Under provisions of the plan, no grants will be made after 1995. Each grant
of shares covers a three-year performance period, 35 percent of which vests
upon completion of employment for the performance period and 65 percent of
which vests based on a tiered achievement scale tied to financial performance
goals established by the Board of Directors. The total stock compensation
expense associated with this plan was $425,000, $(102,000) and $683,000
for 1995, 1994 and 1993, respectively and changes in the outstanding grant
shares during 1995 were as follows (restated for the May 1994, 3-for-2
stock split in the form of a stock dividend):
Performance 1992 to 1993 to 1994 to 1995 to
Period 1994 1995 1996 1997
December 31, 1992 91,493 -- -- --
Granted - 1993 -- 78,644 -- --
December 31, 1993 91,493 78,644 -- --
Granted - 1994 -- -- 90,293 --
Forfeited - 1994 -- (1,989) -- --
December 31, 1994 91,493 76,655 90,293 --
Granted - 1995 -- -- -- 89,121
Forfeited - 1995 -- (8,378) (13,385) (6,625)
Expired - 1995 (59,471) -- -- --
Vested - 1995 (32,022) -- -- --
Outstanding grant
shares at
December 31, 1995 -- 68,277 76,908 82,496
For the performance period 1993 to 1995, 23,897 shares vested and 44,380
shares expired on January 1, 1996.
The Company's nonqualified stock option plan permits the Board of
Directors to grant options to purchase up to 300,000 shares of the Company's
$5 par value common stock. The options may be granted to officers of the
Company. The price at which options may be exercised cannot be less than the
fair market value of the shares at the date the options are granted. The
options are subject to certain vesting requirements and maximum exercise
periods, as established by the Board of Directors.
Changes in options outstanding and exercisable during 1995, 1994 and
1993 were as follows (restated for the May 1994, 3-for-2 stock split in
the form of a stock dividend):
Exercisable Outstanding Option Price
Options Options Per Share
December 31, 1992 208,200 232,800 $4.42-9.46
Vested - 1993 10,200 -- 6.42-9.46
Exercised - 1993 (48,300) (48,300) 4.42
December 31, 1993 170,100 184,500 4.42-9.46
Granted - 1994 -- 8,400 19.65
Vested - 1994 7,200 -- 8.79-9.46
Exercised - 1994 (36,850) (36,850) 4.42-8.79
December 31, 1994 140,450 156,050 4.42-19.65
Vested - 1995 3,000 -- 8.79-9.46
Exercised - 1995 (19,750) (19,750) 4.42
Forfeited - 1995 -- (12,600) 8.79-19.65
December 31, 1995
(12,600 shares
available for grant) 123,700 123,700 $4.42-9.46
The Company's Employee Stock Purchase Plan allows employees to purchase the
Company's common stock at 85 percent of the current market price on four
defined purchase dates during the year. During 1995, 21,032 shares of common
stock were purchased by employees under this plan.
(16) Lease Commitments
Rental expense included in the consolidated statements of operations amounted
to $1,937,000, $1,799,000 and $1,373,000 in 1995, 1994 and 1993,
respectively. Future minimum rental commitments for all noncancelable leases
with terms of one year or more total approximately $1,200,000 per year
through 2000, $500,000 per year through 2005, $200,000 per year through 2010,
and $40,000 per year through 2015, with a total commitment of $9,700,000.
(17) Commitments and Contingencies
In the normal course of business, the Company is party to financial
instruments necessary to meet the financing needs of customers, which are not
reflected on the consolidated statements of condition. These financial
instruments include commitments to extend credit, standby letters of credit
and interest rate swaps. The Company's risk exposure in the event of
nonperformance by the other parties to these financial instruments is
represented by the contractual amount of these instruments. The Company uses
the same credit policies in making commitments as it does in making loans.
Commitments to extend credit are legally binding agreements to lend
to customers. Commitments generally have fixed expiration dates and may
require payment of a fee. Based upon management's credit assessment of the
customer, collateral may be obtained. The type and amount of collateral
varies, but may include real estate under construction, property, equipment
and other business assets. In many cases, commitments expire without being
drawn upon, so the total amount of commitments does not necessarily represent
future liquidity requirements. At December 31, 1995, the Company had
outstanding commitments to extend credit of $166 million.
Standby letters of credit are conditional commitments issued by the
Company guaranteeing the financial performance of a customer to a third
party. The credit risk involved in issuing letters of credit is essentially
the same as that involved in extending loans. At December 31, 1995, there
were $20,513,000 of standby letters of credit outstanding. The Company does
not anticipate losses as a result of issuing commitments to extend credit or
standby letters of credit.
The Company has entered into two interest rate swap agreements with a
notional value of $10,960,000 at December 31, 1995, involving the exchange of
a fixed for a floating rate interest payment stream. The interest rate swap
agreements subject the Company to market risk associated with changes in
interest rates, as well as the risk of default by the counterparty to the
agreement. The credit worthiness of the counterparties was evaluated by the
Company's loan committee prior to entering into the agreements. The
agreements run through 1998.
Brenton Savings Bank, FSB converted from a mutual savings and loan
association to a federal stock savings bank in 1990, at which time a $4
million liquidation account was established. Each eligible savings account
holder, who had maintained a deposit account since the conversion, would be
entitled to a distribution if the savings bank were completely liquidated.
This distribution to savers would have priority over distribution to the
Parent Company. The Company does not anticipate such a liquidation.
During 1995, the Company amended the data processing agreement with ALLTEL
Financial Information Services, Inc. (ALLTEL), formerly Systematics,
Inc., whereby ALLTEL manages and operates the Company's data processing
facility. The contract involves fixed payments of $2,250,000 in 1996 and
$2,400,000 in 1997 through 2001 and $1,200,000 in 2002. These fixed payments
will be adjusted for inflation and volume fluctuations.
Congress is considering proposed legislation to recapitalize the Savings
Association Insurance Fund (SAIF). This proposed legislation would assess
a one-time premium on all SAIF deposits and would be expensed when and
if legislation is passed. The Company has approximately $225 million of SAIF
deposits.
The Company is involved with various claims and legal actions arising
in the ordinary course of business. In the opinion of management, the
ultimate disposition of these matters will not have a material adverse effect
on the Company's financial statements.
(18) Restructuring Charge
During the fourth quarter of 1994, the Company finalized plans for a
strategic restructuring program. This plan resulted in a special charge of
$2.6 million ($1.7 million after tax or $.21 per share), in 1994. A summary
of the estimated costs expensed in 1994 and the actual costs incurred in 1995
follows:
1994 Estimated 1995 Actual
Costs Costs
Salaries and wages $1,089,000 $ 565,263
Employee benefits 289,000 83,409
Occupancy expense 192,000 --
Data processing expense 527,500 389,432
Abandonment losses 267,000 164,945
Legal, regulatory and other 280,500 409,085
$2,645,000 $1,612,134
The difference between the estimated costs recorded in 1994 and the actual
costs incurred was credited or charged to the above expense categories in the
fourth quarter of 1995.
(19) Brenton Banks, Inc. (Parent Company) Condensed Financial Information
Statements of Condition
December 31 (In thousands) 1995 1994
Assets
Cash and deposits $ 128 34
Short-term investments 7,500 8,500
Advances to bank subsidiaries 165 720
Investments in:
Bank subsidiaries 119,325 109,012
Bank-related subsidiaries 43 332
Excess cost over net assets 1,900 1,974
Premises and equipment 1,375 1,020
Other assets 3,138 3,235
$133,574 124,827
Liabilities and Stockholders'
Equity
Accrued expenses payable
and other liabilities $ 1,605 1,753
Long-term borrowings 12,435 12,644
Common stockholders' equity 119,534 110,430
$133,574 124,827
Statements of Operations
Years Ended December 31
(In thousands) 1995 1994 1993
Income
Dividends from subsidiaries $ 8,997 11,691 8,150
Interest income 442 317 84
Management fees 1,634 1,222 1,580
Other operating income 2,644 2,128 1,881
13,717 15,358 11,695
Expense
Salaries and benefits 4,021 3,466 3,976
Interest on long-term borrowings 1,046 1,044 1,108
Other operating expense 2,006 2,263 1,998
7,073 6,773 7,082
Income before income taxes and
equity in undistributed earnings
of subsidiaries 6,644 8,585 4,613
Income taxes (759) (1,083) (1,175)
Income before equity in undistributed
earnings of subsidiaries 7,403 9,668 5,788
Equity in undistributed earnings of
subsidiaries 3,004 439 8,462
Net income $10,407 10,107 14,250
(19) Brenton Banks, Inc. (Parent Company) Condensed Financial Information
Statements of Cash Flows
Years Ended December 31
(In thousands) 1995 1994 1993
Operating Activities
Net income $10,407 10,107 14,250
Adjustments to reconcile net
income to net cash provided
by operating activities:
Equity in undistributed earnings
of subsidiaries (3,004) (439) (8,462)
Depreciation and amortization 230 230 188
(Increase) decrease in other assets 49 (370) (1,154)
Increase (decrease) in accrued
expenses payable and other
liabilities (148) (373) 641
Net cash provided by operating
activities 7,534 9,155 5,463
Investing Activities
(Increase) decrease in short-term
investments 1,000 (5,000) (3,500)
Redemption (purchase) of subsidiary
equity, net 156 (200) 886
Advances to subsidiaries (97) (270) (400)
Purchase of premises and equipment,
net (512) (648) (119)
Net cash provided (used) by
investing activities 547 (6,118) (3,133)
Financing Activities
Net proceeds (repayment) of
long-term borrowings (209) 622 (74)
Proceeds from issuance of common
stock under the long-term
stock compensation plan 362 -- --
Proceeds from issuance of common
stock under the stock option plan 188 386 822
Payment for shares acquired under
common stock repurchase plan (4,830) (851) --
Payment for fractional shares
in 3-for-2 stock split -- (4) --
Dividends on common stock (3,498) (3,472) (3,138)
Net cash provided (used) by
financing activities (7,987) (3,319) (2,390)
Net increase (decrease) in cash
and interest-bearing deposits 94 (282) (60)
Cash and interest-bearing deposits
at the beginning of the year 34 316 376
Cash and interest-bearing deposits
at the end of the year $ 128 34 316
(20) Unaudited Quarterly Financial Information
The following is a summary of unaudited quarterly financial information.
(In thousands, except per common and common equivalent share data)
1995
Three months ended March 31 June 30 Sept. 30 Dec. 31*
Interest income $26,611 27,852 28,442 28,135
Interest expense 13,597 14,807 14,670 14,634
Net interest income 13,014 13,045 13,772 13,501
Provision for loan losses 460 459 486 460
Net interest income after
provision for loan losses 12,554 12,586 13,286 13,041
Noninterest income 4,271 4,499 4,379 4,697
Noninterest expense 13,681 13,736 13,402 14,232
Income before income taxes
and minority interest 3,144 3,349 4,263 3,506
Income taxes 573 661 1,143 828
Minority interest 121 124 122 283
Net income $ 2,450 2,564 2,998 2,395
Per common and common
equivalent share:
Net income $ .31 .33 .39 .31
1994
Three months ended March 31 June 30 Sept. 30 Dec. 31*
Interest income $23,857 24,867 25,682 26,817
Interest expense 10,427 10,815 11,610 12,920
Net interest income 13,430 14,052 14,072 13,897
Provision for loan losses 404 426 440 718
Net interest income after
provision for loan losses 13,026 13,626 13,632 13,179
Noninterest income 4,406 4,185 3,958 4,043
Noninterest expense 13,515 13,502 13,677 15,963
Income before income taxes
and minority interest 3,917 4,309 3,913 1,259
Income taxes 888 1,055 958 (201)
Minority interest 136 147 146 162
Net income $ 2,893 3,107 2,809 1,298
Per common and common
equivalent share:
Net income $ .37 .39 .35 .16
<FN>
*See footnote 18 regarding the restructure charge.
Management's Report
The management of Brenton Banks, Inc. is responsible for the content of the
consolidated financial statements and other information included in this
annual report. Management believes that the consolidated financial statements
have been prepared in conformity with generally accepted accounting
principles appropriate to reflect, in all material respects, the substance of
events and transactions that should be included. In preparing the
consolidated financial statements, management has made judgments and
estimates of the expected effects of events and transactions that are
accounted for or disclosed.
Management of the Company believes in the importance of maintaining a
strong internal accounting control system, which is designed to provide
reasonable assurance that assets are safeguarded and transactions are
appropriately authorized. The Company maintains a staff of qualified internal
auditors who perform periodic reviews of the internal accounting control
system. Management believes that the internal accounting control system
provides reasonable assurance that errors or irregularities that could be
material to the consolidated financial statements are prevented or
detected and corrected on a timely basis.
The Board of Directors has established an Audit Committee to assist in
assuring the maintenance of a strong internal accounting control system.
The Audit Committee meets periodically with management, the internal auditors
and the independent auditors to discuss the internal accounting control
system and the related internal and external audit efforts. The internal
auditors and the independent auditors have free access to the Audit Committee
without management present. There were no matters considered to be reportable
conditions under Statement of Auditing Standards No. 60 by the independent
auditors.
The consolidated financial statements of Brenton Banks, Inc. and
subsidiaries are examined by independent auditors. Their role is to render an
opinion on the fairness of the consolidated financial statements based upon
audit procedures they consider necessary in the circumstances.
Brenton Banks, Inc.
/s/
Robert L. DeMeulenaere
President
/s/
Steven T. Schuler
Chief Financial Officer/Treasurer/Secretary
Independent Auditor's Report
The Board of Directors and Shareholders of Brenton Banks, Inc.:
We have audited the accompanying consolidated statements of condition of
Brenton Banks, Inc. and subsidiaries as of December 31, 1995, and 1994,
and the related consolidated statements of operations, changes in
common stockholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1995. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Brenton Banks, Inc. and subsidiaries at December 31, 1995, and 1994, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with generally
accepted accounting principles.
/s/
KPMG Peat Marwick LLP
Des Moines, Iowa
February 9, 1996
Stock Information
Brenton Banks, Inc. common stock is traded on the NASDAQ National Market and
quotations are furnished by the NASDAQ System. There were 1,605 common
stockholders of record on December 31, 1995.
Market and Dividend Information
1995 High Low Dividends
1st quarter $18 3\4 17 3\4 .11
2nd quarter 19 17 3\4 .11
3rd quarter 20 1\2 17 7\8 .11
4th quarter 22 3\4 19 1\4 .12
1994 High Low Dividends
1st quarter $18 3\8 17 1\2 .11
2nd quarter 20 17 5\8 .11
3rd quarter 20 1\2 19 .11
4th quarter 19 1\2 17 1\2 .11
The above table sets forth the high and low sales prices and cash dividends
per share for the Company's common stock, after the effect of the May 1994,
3-for-2 stock split in the form of a stock dividend.
The market quotations, reported by NASDAQ, represent prices between dealers
and do not include retail markup, markdown or commissions.
NASDAQ Symbol: BRBK
Wall Street Journal and
Other Newspapers: BrentB
Market Makers
The Chicago Corporation
Herzog, Heine, Geduld, Inc.
Howe, Barnes Investments, Inc.
Keefe, Bruyette & Woods, Inc.
Principal Financial Securities
S.J. Wolfe & Co.
Stifel, Nicolaus & Co., Inc.
Form 10-K
Copies of Brenton Banks, Inc. Annual Report to the Securities and Exchange
Commission Form 10-K will be mailed when available without charge to
shareholders upon written request to Steven T. Schuler, Chief Financial
Officer/Treasurer/Secretary, at the corporate headquarters.
Stockholder Information
Corporate Headquarters
Suite 300, Capital Square
400 Locust Street
Des Moines, Iowa 50309
Telephone 515/237-5100
Annual Shareholders' Meeting
May 8, 1996, 5:00 p.m.
Des Moines Convention Center
501 Grand Avenue
Des Moines, Iowa 50309
Transfer Agent/Registrar/
Dividend Disbursing Agent
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, Illinois 60690
Legal Counsel
Brown, Winick, Graves, Gross,
Baskerville, Schoenebaum
and Walker, P.L.C.
Suite 1100, Two Ruan Center
601 Locust Street
Des Moines, Iowa 50309
Independent Auditors
KPMG Peat Marwick LLP
2500 Ruan Center
666 Grand Avenue
Des Moines, Iowa 50309
Design: Designgroup, Inc.
Photography: Scott Sinklier
Corporate Structure
BRENTON BANKS, INC.
BOARD OF DIRECTORS
C. Robert Brenton
Chairman of the Board
Brenton Banks, Inc.
William H. Brenton
Past Chairman (21 Years)
Past Chairman, Executive
Committee (5 Years)
Past President (5 Years)
Brenton Banks, Inc.
J.C. Brenton
Past President
Brenton Banks, Inc.
Gary M. Christensen
President & CEO
Pella Corporation
Robert L. DeMeulenaere
President
Brenton Banks, Inc.
R. Dean Duben
Vice Chairman of the Board
Brenton Bank, Davenport
Hubert G. Ferguson
Financial Services Consultant,
New Brighton, Minnesota
BRENTON BANKS, INC.
EXECUTIVE OFFICERS
C. Robert Brenton
Chairman of the Board
Robert L. DeMeulenaere
President
Steven T. Schuler
Chief Financial Officer/Treasurer/Secretary
BRENTON BANK
SENIOR OFFICERS AND
LINE OF BUSINESS MANAGERS
C. Robert Brenton
Chairman of the Board
Robert L. DeMeulenaere
President
Larry A. Mindrup
Chief Banking Officer
President, Des Moines
Woodward G. Brenton
Chief Commercial Banking Officer
President, Davenport
Charles N. Funk
Chief Investment/ALCO Officer
Ronald D. Larson
Regional President Eastern Iowa Division
President, Cedar Rapids
Marc J. Meyer
Regional President Agricultural Division
President, Perry
Phillip L. Risley
Chief Administrative Officer
Cashier
Steven T. Schuler
Chief Financial Officer/Treasurer/Secretary
Norman D. Schuneman
Chief Credit Officer
John H. Anderson
Chief Operating Officer, Davenport
Michael A. Cruzen
President, Knoxville
Thomas J. Friedman
President, Ankeny
Kevin Z. Geis
President, Brenton Savings Bank, FSB
Ames
Robert L. German
President, Dallas Center
John M. Hand
President, Emmetsburg
Michael D. Hunter
President, Jefferson
V. Blaine Lenz
President, Eagle Grove
James L. Lowrance
President, Marshalltown
Clay A. Miller
President, Clarion
Daryl K. Petty
President, Adel
Clark H. Raney
President, Indianola
Roger D. Winterhof
President, Grinnell
John R. Amatangelo
President, Operations and
Technology Division
Kenneth R. Brenton
President, Brenton Mortgages
Gary D. Ernst
President, Trust Division
Marsha A. Findlay
Senior Vice President, Des Moines
Senior Retail Banking Officer
Douglas F. Lenehan
President, Diversified Commercial Services Division
Loras J. Neuroth
President, Brenton Insurance
Elizabeth M. Piper/Bach
President, Brokerage
Catherine Reed
Senior Marketing Officer
Board Of Directors - One Bank
Pictures (three pictures showing Bank Directors):
Robert L. DeMeulenaere, President
Brenton Banks, Inc., Des Moines
John Kibbie, Farmer and State Senator
Emmetsburg
James L. Daubendiek, President
Jefferson Telephone Co., Jefferson
Ron Swanson, Farmer
Clarion
Dr. Beverly Nelson, Executive Vice President
Valley Community College and State
Representative, Marshalltown
Richard J. Oggero, Chairman
Weitz Co., Inc., Des Moines
Paul Buchanan, Co-owner
Weise Corp., Perry
James E. Van Werden, Attorney
Adel
Gayle Nelson Vogel, Attorney
Knoxville
C. Robert Brenton, Chairman
Brenton Banks, Inc., Des Moines
William H. Brenton, Director
Brenton Banks, Inc., Des Moines
Arlen Schrum, CPA
Schull & Co., Indianola
Bruce G. Kelly, Chief Executive Officer
Employers Mutual Co., Des Moines
Douglas Pyle, CPA Partner
D. D. Pyle Co., Ames
Not Pictured:
James Altorfer, President
Altorfer Machinery, Cedar Rapids
Charles A. Ruhl, Jr., Executive Vice President
Ruhl & Ruhl Realtors, Davenport
Front of the back cover - blue background with picture depicting State of Iowa
and the locations of bank offices within Iowa.
Brenton Bank Locations - Iowa
Adel Dexter
Albion Eagle Grove
Ames, 424 Main Street Emmetsburg
Ames, North Grand Mall Granger
Ankeny Grinnell
Ayrshire Indianola
Cedar Rapids, 150 First Avenue, NE Iowa City
Cedar Rapids, 31010 Williams Blvd., SW Jefferson
Cedar Rapids, 1800 51st Street, NE Johnston
Cedar Rapids, 2300 Edgewood Road, SW Knoxville
Clarion Mallard
Clive, 10101 University Marion
Clive, 13631 University Marshalltown, 102 South Center
Dallas Center Marshalltown, 1724 South Center
Davenport, 1606 Brady Perry
Davenport, Village Shopping Center Redfield
Davenport, West Third and Division Rowan
Davenport, 53rd and Utica Ridge Story City
Des Moines, 400 Locust Street Urbandale
Des Moines, 29th & Ingersoll Van Meter
Des Moines, 2805 Beaver Waukee
Des Moines, S.W. 9th and McKinley Woodward
Des Moines, 4303 Fleur
Back cover - black background with the words:
Brenton Banks, Inc.
Suite 300, Capital Square
400 Locust Street
Des Moines, Iowwa 50309
Telephone 515/237-5100
Appendix to Annual Report
Referencing Graphic and Image Material
All graphic and image material has been described in text of the annual
report. Set forth below is a listing of such material.
1. Cover - first unnumbered page of the Annual Report.
2. Bar graphs, second page of the Annual Report, showing Net Income Per
Common Share from 1991-1995; Dividends Per Common Share from 1991-1995;
and Total Assets (in millions) from 1991-1995.
3. Photograph on page 3 of the Annual Report.
4. Photograph on page 4 of the Annual Report.
5. Text, centered on page, on page 5 of the Annual Report.
6. Photograph on page 7 of the Annual Report.
7. Text, centered on page, on page 8 of the Annual Report.
8. Text, centered on page, on page 9 of the Annual Report.
9. Text, centered on page, on page 10 of the Annual Report.
10. Photograph on page 11 of the Annual Report.
11. Bar graph showing Primary Capital Ratio and Tier 1 Leverage Capital
Ratio expressed as percentages from 1991-1995, on page 12 of the Annual
Report, and Net Interest Margin for 1991-1995.
12. Bar graph showing the Return on Average Assets and Return on Average
Equity from 1991-1995, both expressed in terms of a percentage, on page 14
of the Annual Report.
13. Bar graph showing the Nonperforming Loans (in thousands) and Net
Noninterest Margin from 1991-1995, on page 17 of the Annual Report.
14. Three photographs on page 38 of the Annual Report.
15. Map on page 39 of the Annual Report.