UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to _____________ Commission file number 0-6216 BRENTON BANKS, INC. (Exact name of registrant as specified in its charter) Incorporated in Iowa No. 42-0658989 (State or other jurisdiction of (I.R.S. Employer Identification) incorporation or organization) Suite 200, Capital Square, 400 Locust, Des Moines, Iowa 50309 (Address of principle executive offices) (zip code) 515-237-5100 (Registrant's telephone number, including area code) Not applicable (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date, November 7, 2000. 20,372,833 shares of Common Stock, $2.50 par value PART 1 - Item 1. Financial Statements Assets: Cash and due from banks $ 87,148,044 85,064,053 Interest-bearing deposits with banks 2,881,681 2,361,784 Federal funds sold 16,500,000 --- Investment securities: Available for sale 508,003,179 556,191,355 Held to maturity (approximate market value of $21,475,000 and $25,351,000 at September 30, 2000, and December 31, 1999, respectively) 21,218,397 25,201,876 Total investment securities 529,221,576 581,393,231 Loans held for sale 21,920,570 26,201,221 Loans 1,218,510,634 1,195,986,791 Allowance for loan losses (15,533,180) (14,413,104) Loans, net 1,202,977,454 1,181,573,687 Premises and equipment 41,259,601 37,978,240 Accrued interest receivable 17,465,697 15,856,895 Other assets 54,147,767 55,025,590 Total assets $1,973,522,390 1,985,454,701 Liabilities and Stockholders' Equity: Deposits: Noninterest-bearing $ 215,521,953 189,333,019 Interest-bearing: Demand 96,948,162 145,131,184 Savings 654,477,094 640,963,380 Time 584,756,098 554,655,720 Total deposits 1,551,703,307 1,530,083,303 Federal funds purchased and securities sold under agreements to repurchase 166,603,641 166,806,442 Other short-term borrowings 55,640,000 110,423,584 Accrued expenses and other liabilities 18,124,886 13,896,056 Long-term borrowings 33,381,000 27,704,000 Total liabilities 1,825,452,834 1,848,913,385 Minority interest in consolidated subsidiaries 4,977,737 4,607,865 Redeemable preferred stock, $1 par; 500,000 shares authorized; issuable in series, none issued --- --- Common stockholders' equity: Common stock, $2.50 par; 50,000,000 shares authorized; 20,372,833 and 20,354,454 shares issued and outstanding at September 30, 2000, and December 31, 1999, respectively 50,932,082 50,886,135 Capital surplus 42,372 --- Retained earnings 95,680,551 86,682,119 Accumulated other comprehensive income (loss)--unrealized gains (losses) on securities available for sale, net (3,563,186) (5,634,803) Total common stockholders' equity 143,091,819 131,933,451 Total liabilities and stockholders' equity $1,973,522,390 1,985,454,701 See accompanying notes to consolidated financial statements.

Brenton Banks, Inc. and Subsidiaries Consolidated Statements of Condition (Unaudited) ~~June~~September 30, December 31, 2000 1999 _________ ____________

PART 1 - Item 1. Financial Statements Interest Income Interest and fees on loans $ 78,164,932 69,190,499 27,371,001 24,071,189 Interest and dividends on investments: Available for sale--taxable 18,117,996 19,113,212 5,950,172 6,210,273 Available for sale--tax-exempt 5,423,095 5,300,349 1,773,779 1,761,522 Held to maturity--taxable 49,465 85,198 15,077 24,459 Held to maturity--tax-exempt 853,555 1,319,313 264,217 381,498 Total interest and dividends on investments 24,444,111 25,818,072 8,003,245 8,377,752 Interest on federal funds sold 232,141 67,971 55,258 6,768 Other interest income 134,058 131,016 51,114 55,031 Total interest income 102,975,242 95,207,558 35,480,618 32,510,740 Interest Expense Interest on deposits 44,072,292 37,700,119 15,389,798 12,327,601 Interest on federal funds purchased and securities sold under agreements to repurchase 6,139,833 5,009,541 2,499,699 2,268,757 Interest on other short-term borrowings 3,173,206 4,711,678 893,141 1,900,244 Interest on long-term borrowings 1,452,702 1,604,914 548,514 415,203 Total interest expense 54,838,033 49,026,252 19,331,152 16,911,805 Net interest income 48,137,209 46,181,306 16,149,466 15,598,935 Provision for loan losses 3,150,000 3,150,000 1,050,000 1,050,000 Net interest income after provision for loan losses 44,987,209 43,031,306 15,099,466 14,548,935 Noninterest Income Service charges on deposit accounts 7,391,684 6,884,262 2,452,704 2,429,966 Mortgage banking income 2,465,004 3,547,758 891,948 558,353 Investment brokerage commissions 3,239,494 3,233,899 802,030 1,025,740 Fiduciary income 2,988,447 2,784,211 966,880 845,827 Insurance commissions and fees 803,820 1,108,276 245,651 387,542 Other service charges, collection and exchange charges, commissions and fees 3,736,266 3,644,329 1,238,512 1,182,941 Net realized gains from securities available for sale 126,654 220,356 98,450 13,437 Other operating income 1,281,215 1,363,148 391,878 300,857 Total noninterest income 22,032,584 22,786,239 7,088,053 6,744,663 Noninterest Expense Compensation 20,965,778 23,097,142 6,661,505 7,966,710 Employee benefits 3,978,953 4,341,695 1,204,414 1,265,519 Occupancy expense of premises, net 4,902,663 4,495,346 1,569,102 1,552,958 Furniture and equipment expense 4,304,615 3,700,443 1,439,085 1,433,312 Data processing expense 2,223,163 2,109,148 712,156 725,855 Marketing 756,615 1,314,190 192,744 378,401 Supplies 870,519 1,080,164 249,650 333,135 Other operating expense 9,296,548 8,812,367 3,205,472 2,921,721 Total noninterest expense 47,298,854 48,950,495 15,234,128 16,577,611 Income before income taxes and minority interest 19,720,939 16,867,050 6,953,391 4,715,987 Income taxes 4,830,298 4,081,089 1,705,613 1,061,835 Income before minority interest 14,890,641 12,785,961 5,247,778 3,654,152 Minority interest 578,304 476,699 208,691 152,358 Net income $ 14,312,337 12,309,262 5,039,087 3,501,794 Per common share: Net income--basic $ 0.71 0.60 0.25 0.17 Net income--diluted 0.70 0.59 0.25 0.17 Cash dividends 0.261 0.259 0.087 0.087 See accompanying notes to consolidated financial statements.

Brenton Banks, Inc. and Subsidiaries Consolidated Statements of Operations (Unaudited) ~~Six~~Nine Months Ended Three Months Ended ~~June~~September 30, ~~June~~September 30, 2000 1999 2000 1999 ____ ____ ____ ____

PART 1 - Item 1. Financial Statements Operating Activities: Net income $ 14,312,337 12,309,262 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 3,150,000 3,150,000 Depreciation and amortization 5,325,298 3,993,549 Net realized gains from securities available for sale (126,654) (220,356) Investment securities amortization and accretion 951,243 1,930,831 Net decrease in loans held for sale 4,280,651 54,364,451 Net increase in accrued interest receivable and other assets (2,700,055) (5,329,716) Net increase (decrease) in accrued expenses, other liabilities and minority interest 4,527,612 (1,173,217) Net cash provided by operating activities 29,720,432 69,024,804 Investing Activities: Investment securities available for sale: Purchases (66,123,556) (102,637,521) Maturities 87,586,313 94,110,559 Sales 29,403,408 37,892,131 Investment securities held to maturity: Purchases --- (954,576) Maturities 3,941,112 11,339,282 Net increase in loans (62,029,367) (127,777,195) Acquisition of deposits and loans, net --- 48,835,363 Sale of loans 37,475,600 --- Sale of deposits (3,790,380) --- Purchases of premises and equipment (8,051,909) (8,574,653) Proceeds from sales of premises and equipment 104,612 --- Net cash provided (used) by investing activities 18,515,833 (47,766,610) Financing Activities: Net increase (decrease) in noninterest-bearing, interest-bearing demand and savings deposits (6,354,961) 15,356,968 Net increase (decrease) in time deposits 31,757,555 (66,152,033) Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase (202,801) 8,549,444 Net increase (decrease) in other short-term borrowings (57,283,584) 15,423,584 Proceeds of long-term borrowings 9,223,000 9,772,000 Repayment of long-term borrowings (1,046,000) (2,035,000) Dividends on common stock (5,313,905) (5,336,751) Proceeds from issuance of common stock under the employee stock purchase plan 28,440 243,573 Proceeds from issuance of common stock under the stock option plan 59,879 4,296 Payment for shares reacquired under common stock repurchase plan --- (3,133,823) Payment for fractional shares resulting from common stock dividend --- (14,003) Net cash used by financing activities (29,132,377) (27,321,745) Net increase (decrease) in cash and cash equivalents 19,103,888 (6,063,551) Cash and cash equivalents at the beginning of the year 87,425,837 84,627,337 Cash and cash equivalents at the end of the period $ 106,529,725 78,563,786

Brenton Banks, Inc. and Subsidiaries Consolidated Statements of Cash Flow (Unaudited) For the ~~six~~nine months ended ~~June~~September 30, 2000 1999 _____________ _______________

Interest paid during the period $ 51,345,043 49,358,680 Income taxes paid during the period 3,905,077 3,599,296 See accompanying notes to consolidated financial statements.

PART 1 - Item 1. Financial Statements Common Stock Beginning of year balance $ 50,886,135 46,880,953 Ten percent common stock dividend --- 4,655,915 Issuance of shares of common stock under the stock option plan 38,655 33,280 Issuance of shares of common stock under the employee stock purchase plan 7,292 33,647 Shares reacquired under the common stock repurchase plan --- (522,110) End of period balance 50,932,082 51,081,685 Capital Surplus Beginning of year balance --- --- Issuance of shares of common stock under the stock option plan 21,224 (28,984) Issuance of shares of common stock under the employee stock purchase plan 21,148 209,926 Shares reacquired under the common stock repurchase plan --- (180,942) End of period balance 42,372 --- Retained Earnings Beginning of year balance 86,682,119 85,010,569 Net income 14,312,337 12,309,262 Dividends on common stock (5,313,905) (5,336,751) Ten percent common stock dividend --- (4,655,915) Fractional shares resulting from common stock dividend --- (14,003) Shares reacquired under the common stock repurchase plan --- (2,430,771) End of period balance 95,680,551 84,882,391 Total Stockholders' Equity before Accumulated Other Comprehensive Income (Loss) 146,655,005 135,964,076 Accumulated Other Comprehensive Income (Loss) Beginning of year balance (5,634,803) 3,318,797 Change in unrealized holding gains (losses) on securities, net 2,071,617 (7,401,896) End of period balance (3,563,186) (4,083,099) Total Stockholders' Equity $ 143,091,819 131,880,977 See accompanying notes to consolidated financial statements.

Brenton Banks, Inc. and Subsidiaries Consolidated Statements of Changes in Common Stockholders' Equity (Unaudited) For the ~~six~~nine months ended ~~June~~September 30, 2000 1999 _____________ _______________

PART 1 - Item 1. Financial Statements Net Income $14,312,337 12,309,262 5,039,087 3,501,794 Other comprehensive income (loss), net of tax: Unrealized gains (losses) on securities available for sale: Unrealized holding gains (losses) arising during the period (net of deferred tax of $(1,745,944) and $(1,279,639), respectively, for the three and nine months ended September 30, 2000, and $899,779 and $4,414,964, respectively, for the three and nine months ended September 30, 1999) 2,151,029 (7,264,835) 2,935,024 (1,480,588) Less: reclassification adjustment for net realized gains included in net income (net of tax expenses of $36,665 and $47,242, respectively, for the three and nine months ended September 30, 2000, and $5,079 and $83,295, respectively, for the three and nine months ended September 30, 1999) (79,412) (137,061) (61,785) (8,358) __________ __________ _________ _________ Other comprehensive income (loss), net of tax 2,071,617 (7,401,896) 2,873,239 (1,488,946) __________ __________ _________ _________ Comprehensive income $16,383,954 4,907,366 7,912,326 2,012,848 ========== ========== ========= ========= See accompanying notes to consolidated financial statements.

Brenton Banks, Inc. and Subsidiaries Consolidated Statements of Comprehensive Income (~~Loss) (~~Unaudited) ~~Six~~Nine Months Ended Three Months Ended ~~June~~September 30, ~~June~~September 30, 2000 1999 2000 1999 _________ ________ ____ ____

PART 1 -- ITEM 1. FINANCIAL STATEMENTS BRENTON BANKS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) 1. Adjustments and Reclassifications The accompanying financial statements for the interim periods were prepared without audit. In the opinion of management, all adjustments that were necessary for a fair presentation of financial position and results of operations have been made. These adjustments were of a normal recurring nature. 2. Additional Footnote Information In reviewing these financial statements, reference should be made to the notes to consolidated financial statements contained in the Appendix to the Proxy Statement for the year ended December 31, 1999. 3. Statements of Cash Flows In the statements of cash flows, cash and cash equivalents include cash and due from banks, interest-bearing deposits with banks and federal funds sold. 4. Changes in Accounting Policies There have been no changes in accounting policy in the nine months ended September 30, 2000. 5. Income Taxes Federal income tax expense for the nine months ended September 30, 2000, and 1999, was computed using the consolidated effective federal income tax rates. For the first nine months of 2000 and 1999, the Company also recognized income tax expense pertaining to state franchise taxes payable individually by the subsidiary banks. 6. Common Stock Transactions On May 20, 1999, the Board of Directors declared a ten- percent common stock dividend for stockholders of record on June 1, 1999. The stock dividend certificates were distributed on June 18, 1999. Fractional shares resulting from this stock dividend were paid in cash. All appropriate per-share data has been restated to reflect the ten-percent common stock dividend. Part 1 -- Item 1 Page 2 of 2 7. Income Per Share Basic net income per common share amounts are computed by dividing net income by the weighted average number of common shares outstanding during the period. The weighted average number of common shares outstanding for the three and nine months ended September 30, 2000, were 20,365,795 and 20,360,174, respectively, and 20,462,200 and 20,530,231, respectively, for the three and nine months ended September 30, 1999. Diluted net income per common share amounts are computed by dividing net income by the weighted average number of common shares and all dilutive potential common shares outstanding during the period. The weighted average number of common shares and all dilutive potential common shares outstanding for the three and nine months ended September 30, 2000, were 20,516,800 and 20,511,179, respectively, and 20,788,333 and 20,856,364, respectively, for the three and nine months ended September 30, 1999. 8. Segment Information The Company has one reportable operating segment: banking. The banking segment generates revenues through personal, business, commercial and agricultural lending, providing deposit account services and trust services, and management of the investment securities portfolio. The Company evaluates the banking segment's performance on the basis of profit. Included in "all other" in the table below are mortgage banking, investment brokerage, insurance sales and real estate brokerage. All operations are concentrated in the state of Iowa. The following table presents a summary of the Company's operating segments for the nine months ended September 30, 2000, and 1999 (in thousands): 2000 ____________________________ Net interest income $ 47,470 726 (59) --- 48,137 Noninterest income from Nonaffiliates 14,868 7,081 84 --- 22,033 Noninterest income from Affiliates 79 --- 9,091 (9,170) --- Income before income taxes and minority interest 20,556 507 7,745 (9,087) 19,721 1999 ____________________________ Net interest income $ 45,300 1,257 (376) --- 46,181 Noninterest income from Nonaffiliates 14,180 8,537 69 --- 22,786 Noninterest income from Affiliates 129 --- 12,634 (12,763) --- Income before income taxes and minority interest 17,404 596 11,497 (12,630) 16,867

Part 1 -- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Introduction The following presentation describes Brenton Banks, Inc. and Subsidiaries ("Brenton" or the "Company") results of operations for the three and nine month periods ended September 30, 2000, and 1999, capital resources, market risk management, asset/liability management, liquidity management and the impact of recently issued accounting standards. This discussion should be read in conjunction with the Consolidated Financial Statements of the Company and the notes thereto, which are included elsewhere in this report. Brenton recently announced it has agreed to be acquired by Wells Fargo & Company, subject to shareholder approval. Approval has been received from the Federal Reserve Board and the Department of Justice. The acquisition is expected to close in December of 2000. Additional details can be found under the heading "Capital Resources" on page 6. Forward-Looking Information Forward-looking information relating to the financial results or strategies of the Company is referenced throughout Management's Discussion and Analysis. The following paragraphs identify forward-looking statements and the risks that need to be considered when reading those statements. Forward-looking statements include such words as believe, expect, anticipate, target, goal, objective or other words with similar meaning. The Company is under no obligation to update such forward-looking information statements. The risks involved in the operations and strategies of the Company include competition from other financial institutions and other financial service providers, changes in interest rates, changes in economic or market conditions and changes in regulations from federal and state regulators. These risks, which are not all inclusive, cannot be estimated. Results of Operations The nine months ended September 30, 2000, compared to the nine months ended September 30, 1999. Net Income For the nine months ended September 30, 2000, Brenton recorded net income of $14,312,337, which rose 16.3 percent from net income of $12,309,262 for the first nine months of 1999. Improvements were achieved in net interest income, service charges on deposit accounts, fiduciary income and a reduction in operating expenses. Offsetting these improvements was a decline in mortgage banking revenues. Year-to-date diluted earnings per common share were $.70, compared to $.59 for the first nine months of 1999. Part 1 -- Item 2 Page 2 of 10 The Company's annualized return on average equity (ROE) was 14.14 percent for the nine months ended September 30, 2000, compared to 12.21 percent for the same period last year. The annualized return on average assets (ROA) was 1.02 percent, compared to .89 percent for the first nine months of 1999. Net Interest Income During the first nine months of 2000, net interest income grew 4.2 percent to $48,137,209, compared to $46,181,306 for the same period a year ago due to favorable rate variances. The yield on interest-earning assets increased 51 basis points while the rate paid on interest-bearing liabilities increased 43 basis points. This combination improved net interest margin 12 basis points to 3.81 percent for the nine months ended September 30, 2000, from 3.69 percent for the same period last year. Loan Quality At September 30, 2000, total loans had grown 5.0 percent to $1.2 billion from the same date a year earlier. The growth was led by a $45.2 million (10 percent) increase in average commercial/business/agricultural loans, a $40.6 million (16 percent) increase in average direct consumer loans and a $33.3 million (16 percent) increase in average indirect loans. Loan quality continued to improve as nonperforming loans declined to $7,742,000, or .64 percent of total loans, at September 30, 2000, compared to $9,452,000, or .79 percent of total loans, at the end of the prior year and $11,694,000, or 1.01 percent of total loans, at September 30, 1999. Nonperforming loans include loans on nonaccrual status, loans that have been renegotiated to below market interest rates or terms and loans past due 90 days or more. The allowance for loan losses, which totaled $15.5 million, represented 200.64 percent of nonperforming loans and 1.27 percent of total loans at September 30, 2000. At September 30, 1999, the same ratios were 124.88 percent and 1.26 percent, respectively. The provision for loan losses totaled $3,150,000 for the nine months ended September 30, 2000, and 1999. Annualized year-to-date net charge-offs were .23 percent of average loans for the first nine months of 2000, compared with .34 percent for the same period last year and .36 percent for all of 1999. The Company has a formal structure for reviewing and approving loans. Loan quality control and risk management is carefully balanced with goals for loan growth. Management believes the allowance for loan losses at September 30, 2000, is sufficient to absorb probable loan losses within the portfolio. Part 1 -- Item 2 Page 3 of 10 Noninterest Income Noninterest income for the nine months ended September 30, 2000, was $21,905,930 (excluding securities gains and losses), a 2.9 percent decline from $22,565,883 one year ago. Reductions in mortgage banking revenues and insurance commissions and fees exceeded growth in traditional fee income. Mortgage banking revenues declined 30.5 percent to total $2,465,004 for the first nine months of 2000, compared to 3,547,758 for 1999. Rising mortgage interest rates in the early part of 2000 led to a 38 percent decline in mortgage loan origination volume. Residential real estate loan closings for the nine months ended September 30, 2000, totaled $220 million compared to $354 million for the same period last year. Portfolio real estate loans totaling $37.5 million were sold in the first quarter of 2000, resulting in capitalized servicing income of $337,000. Insurance commissions and fees declined 27.5 percent as both credit-related and insurance agency commissions fell due to lower volumes of sales. Service charges on deposits rose $507,422, or 7.4 percent, compared to the first nine months of 1999. This growth was the result of increased account analysis charges on commercial and business deposit accounts and an increase in the client base due to the acquisition of deposit accounts in Pella and Knoxville in late 1999. Fiduciary income grew 7.3 percent to $2,988,447 because of increased trust assets and a recovery of a $75,000 previously uncollected fee. Investment securities gains totaled $126,654 compared to gains of $220,356 for the same period in 1999. Noninterest Expense Noninterest expense totaled $47,298,854 for the nine months ended September 30, 2000, a 3.4 percent decline from the first nine months of 1999. Compensation, the largest component of noninterest expense, declined $2,131,364, 9.2 percent, to $20,965,778 due to a lower number of employees and decreased variable compensation costs related to lower mortgage loan origination volume. The number of full-time equivalent employees declined 16 percent from a year earlier. Employee benefits expense declined 8.4 percent, or $362,742, as a result of reduced compensation expense. Part 1 -- Item 2 Page 4 of 10 Occupancy expense increased 9.1 percent to $4,902,663 because of the accelerated amortization of certain leasehold improvements, the opening of the Coralville office in the fourth quarter of 1999 and the acquisition of the office in Pella in September of last year. Furniture and equipment expense increased $604,172 to $4,304,615 for the first nine months of 2000 due to depreciation on technology upgrades and increased costs for software maintenance agreements. Marketing and supplies expense declined 42.4 percent and 19.4 percent, respectively, as a result of cost management efforts. Other operating expense for the first nine months of 2000 increased 5.4 percent to $9,061,714 primarily because of $572,000 of merger-related costs in the third quarter of 2000. The Company's net noninterest margin, which measures operating efficiency, was (1.73) percent, compared to (1.83) percent one year ago. Another ratio the Company utilizes to measure productivity is the efficiency ratio. This ratio divides noninterest expense by the sum of tax-equivalent net interest income plus noninterest income (excluding gains and losses on the sale of securities and loans). At September 30, 2000, the Company's efficiency ratio was 64.91 percent, compared with 68.32 percent one year ago. Income Taxes The Company's income tax strategies include reducing income taxes by purchasing securities and originating loans that produce tax-exempt income. The goal is to maintain an optimum level of tax-exempt assets in order to benefit the Company both on a tax-equivalent yield basis and in income tax savings. The effective rate of income tax expense as a percent of income before income tax and minority interest was 24.5 percent for the first nine months of 2000 compared to 24.2 percent for 1999. Results of Operations The three months ended September 30, 2000, compared to the three months ended September 30, 1999. Net Income For the three months ended September 30, 2000, net income totaled $5,039,087, compared to $3,501,794 for the third quarter of 1999, an increase of 43.9 percent. Diluted earnings per common share were $.25 for the third quarter of 2000, compared to $.17 for the third quarter of 1999. Part 1 -- Item 2 Page 5 of 10 Net Interest Income Net interest income for the quarter totaled $16,149,466, an increase of $550,531, or 3.5 percent, over the same period in 1999. Similar to the year-to- date comparison, the improvement was due to favorable rate variances as the yield on interest-earning assets rose more than the rate paid on interest- bearing liabilities. The net interest margin for the third quarter of 2000 was 3.80 percent, compared to 3.68 percent for the third quarter of 1999. Provision for Loan Losses The provision for loan losses for the third quarters of both 2000 and 1999 totaled $1,050,000. Annualized net charge-offs as a percent of average loans were .30 percent for the third quarter of 2000, compared to .26 percent for the same period of 1999. Loan losses for both years were primarily concentrated in the consumer loan portfolio. Noninterest Income Noninterest income (excluding securities gains) increased by $258,377, or 3.8 percent, from the third quarter of 1999 to the third quarter of 2000. Despite a 32 percent decline in residential real estate loan closings, mortgage banking revenues rose $333,595 in the third quarter of 2000 compared to the same period of 1999. The third quarter of 1999 included higher losses on sales of originated loans. Investment brokerage commissions declined 21.8 percent to $802,030 due to the combination of lower transaction volume and having fewer brokers on staff. Insurance commissions and fees declined $141,891 from the prior year as a result of a decline of $122,241 in credit-related insurance commissions. Net gains from securities transactions totaled $98,450 for the third quarter of 2000, versus net gains of $13,437 in the third quarter of 1999. Part 1 -- Item 2 Page 6 of 10 Noninterest Expense Noninterest expense declined by 8.1 percent when comparing the third quarter of 2000 with the third quarter of 1999. The Company's net noninterest margin was (1.67) percent for the third quarter of 2000, compared to (2.00) percent for the third quarter of 1999. Quarter-to-quarter, the largest noninterest expense changes were in the categories of compensation, marketing expense and other expense. Compensation and benefit costs declined a combined 14.8 percent from the third quarter of 1999. The decline was due to reduced staffing levels as the number of full-time equivalent employees declined to 627 from 751 a year earlier. Like the nine-month period, marketing expense declined as a result of cost reduction efforts. Other expense increased 9.7 percent due to the previously mentioned, merger- related expenses of $572,000. Capital Resources As announced on July 7, 2000, Wells Fargo & Company and Brenton signed a definitive agreement for the acquisition of the Company by Wells Fargo & Company. The acquisition, which is subject to the approval of Brenton shareholders, is expected to close in December 2000. Approval has been received from the Federal Reserve Board and the Department of Justice. A special meeting of shareholders' has been scheduled for November 30, 2000. Under the terms of the agreement, Wells Fargo & Company will exchange a total of $255,694,000 of its common stock for all of the common stock of Brenton Banks, Inc. outstanding at the time the acquisition closes. The exchange ratio will be determined by fist dividing $255,694,000 by the average New York Stock Exchange-only closing prices of Wells Fargo common stock for the 15 consecutive trading days ending on the day immediately before the special meeting of Brenton shareholders, and then dividing that number by the total number of shares of Brenton common stock outstanding at the time of the merger. Common stockholders' equity totaled $143.1 million as of September 30, 2000, an 8.5 percent increase from December 31, 1999. The Company continues to monitor its capital position to balance the goals of maximizing return on average equity, while maintaining adequate capital levels for business risk and regulatory purposes. The Company's risk-based core capital ratio at September 30, 2000, was 9.88 percent and the total risk-based capital ratio was 10.94 percent. These ratios exceeded the minimum regulatory requirements of 4.00 and 8.00 percent, respectively. The Company's tier 1 leverage capital ratio, which measures capital excluding intangible assets was 7.38 percent at September 30, 2000, exceeding the regulatory minimum requirement for well-capitalized institutions of 5.0 percent. Part 1 -- Item 2 Page 7 of 10 Since the inception in 1994 of a stock repurchase plan, the Company has repurchased 3,644,983 shares (adjusted for stock splits/dividends) at a total cost of $37,948,804. The Board of Directors decided not to extend this plan for 2000. In May 1999, the Board of Directors declared a ten-percent common stock dividend. As a result of this action, each shareholder received one additional share of Brenton Banks, Inc. common stock for every ten shares they owned. Fractional shares were paid in cash. All appropriate per-share data has been restated to reflect the ten-percent common stock dividend. The Company paid dividends of $.261 per common share in the first nine months of 2000, compared to $.259 per common share for the same period of 1999, an increase of .8 percent. Dividends totaled $5,313,905 for the first nine months of 2000 and the dividend payout ratio was 37.3 percent of diluted earnings per common share. In October 2000, the Board of Directors declared a quarterly cash dividend of $.116 per common share, consisting of the regular quarterly amount of $.087 per share plus an additional amount of $.029 per share. The regular dividend was equal to the third quarter dividend. The additional amount of $.029 per share was paid to recognize the difference in dividend payment dates between Brenton and Wells Fargo & Company. Wells Fargo & Company usually pays their quarterly dividend about one month later than Brenton. The debt-to-equity ratio of Brenton Banks, Inc. (the "Parent Company") was 4.9 percent at September 30, 2000. This percentage is unchanged from December 31, 1999. Long-term borrowings of the Parent Company at September 30, 2000, consisted entirely of capital notes totaling $5,631,000. In addition, the Parent Company has a $5 million line of credit with a regional bank on which $1.4 million was outstanding as of the end of September 2000. Brenton Banks, Inc. common stock closed on September 30, 2000, at $12.06 per share, compared to $13.91 a year earlier. The closing price at September 30, 2000, was 171.8 percent of the book value per share of $7.02. This closing stock price represented a price-to-trailing-12-months-diluted-earnings multiple of 13.4 times. Market Risk Management Market risk is the risk of earnings volatility that results from adverse changes in interest rates and market prices. The Company's market risk is comprised primarily of interest rate risk arising from its core banking activities of lending and deposit taking. Interest rate risk is the risk that changes in market interest rates may adversely affect the Company's net interest income. Management continually develops and applies strategies to mitigate this risk. Management does not believe that the Company's primary market risk exposures and how those exposures have been managed to-date in 2000 changed significantly when compared to 1999. Part 1 -- Item 2 Page 8 of 10 Asset/Liability Management The Company has a fully integrated asset/liability management system to assist in managing the balance sheet. The process, which is used to project the results of alternative investment decisions, includes the development of simulations that reflect the effects of various interest rate scenarios on net interest income. Management analyzes the simulations to manage interest rate risk, the net interest margin and levels of net interest income. The goal is to structure the balance sheet so that net interest margin fluctuates in a narrow range during periods of changing interest rates. The Company currently believes that net interest income would fall by less than five percent if interest rates increased or decreased by 300 basis points over a one-year time horizon. This is within the Company's policy limits. The slope of the yield curve is also a major determinant in the net interest income of the Company. Generally, the steeper the intermediate treasury to the one-week LIBOR rate, the better the prospects for net interest income improvement. To improve net interest income and lessen interest rate risk, management continues its strategy of de-emphasizing fixed-rate portfolio residential real estate loans with long repricing periods. When appropriate for interest rate management purposes, the Company securitizes residential real estate loans. The Company also continues to focus on reducing interest rate risk by emphasizing growth in variable-rate consumer and commercial loans. Other actions include the use of fixed-rate Federal Home Loan Bank (FHLB) advances as alternatives to certificates of deposit, active management of the available for sale investment securities portfolio to provide for cash flows that will facilitate interest rate risk management and, in selected cases, the use of interest rate swaps and interest rate floor contracts. The highly competitive banking environment in Iowa also greatly impacts the Company's net interest margin. The effect of competition on net interest income is difficult to predict. Part 1 -- Item 2 Page 9 of 10 Liquidity The Company actively monitors and manages its liquidity position with the objective of maintaining sufficient cash flows to fund operations, meet customer commitments, take advantage of market opportunities and provide a margin against unforeseeable liquidity needs. Federal funds sold, loans held for sale and investment securities available for sale are readily marketable assets. Maturities of all investment securities are managed to meet the Company's normal liquidity needs. Investment securities available for sale may be sold prior to maturity to meet liquidity needs, to respond to market changes or to adjust the Company's interest rate risk position. Readily marketable assets, as defined above, comprised 27.7 percent of the Company's total assets at September 30, 2000. Net cash provided from company operations is another primary source of liquidity. For the nine months ended September 30, 2000, and 1999, net cash provided by operating activities was $29,720,432 and $69,024,804, respectively. The Company's trend of strong cash flows from operations is expected to continue. The Company has historically maintained a stable deposit base and a relatively low level of large deposits, which result in a low dependence on volatile liabilities. As of September 30, 2000, the Company had advances of $81,990,000 from the FHLB of Des Moines, of which $38,740,000 represents a variable-rate line of credit used to fund mortgage lending operations. The remaining balance was used as a means of providing both long- and short-term, fixed-rate funding for certain assets and managing interest rate risk. The Company had additional borrowing capacity available from the FHLB of approximately $58 million at September 30, 2000. The combination of high levels of potentially liquid assets, strong cash flows from operations, low dependence on volatile liabilities and additional borrowing capacity provided sufficient liquidity for the Company at September 30, 2000. Construction has been substantially completed on an operations and sales support facility with an estimated total cost of $8 million, exclusive of land. Due to the recent announcement of the proposed acquisition of Brenton by Wells Fargo & Company, the project has been put on hold until a determination of its future use has been completed. Part 1 -- Item 2 Page 10 of 10 Recently Issued Accounting Standards In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities", which is scheduled to be effective for the year beginning January 1, 2001. In June 2000, SFAS No. 138 amended SFAS No. 133. This statement, as amended, requires recognition of all derivative instruments as either assets or liabilities in the statement of financial position measured at fair value. This statement requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows gains and losses from derivatives to offset related results on the hedged items in the income statement, and requires a company to formally document, designate and assess the effectiveness of transactions for which hedge accounting is applied. Management does not expect the adoption of SFAS No. 133, as amended by SFAS No. 138, to have a material impact on the Company's financial statements. The Company expects to adopt SFAS No. 133 when required. Part 1 -- Item 3. Quantitative and Qualitative Disclosures About Market Risk. The information appearing on page 7 of Item 2 under the heading "Market Risk Management" is incorporated herein by reference. Part 2 -- Item 6. Exhibits and Reports on Form 8-K (b) Reports on Form 8-K -- A report on Form 8-K was filed on July 13, 2000. The purpose of the filing was to announce that Brenton Banks, Inc. and Wells Fargo & Company had signed a definitive agreement for the acquisition of Brenton by Wells Fargo. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BRENTON BANKS, INC. ----------------------------------- (Registrant) November 8, 2000 /s/ Robert L. DeMeulenaere ----------------------------------------------------------------- Dated Robert L. DeMeulenaere President and Chief Executive Officer November 8, 2000 /s/ Steven T. Schuler ---------------------------------------------------------------- Dated Steven T. Schuler Chief Financial Officer/ Treasurer/Secretary and Chief Accounting Officer

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