NOTE 15. JUNIOR SUBORDINATED DEBENTURES

As of December 31, 2013, the Company had two wholly-owned trusts (“Trusts”) formed in 2003 and 2005 to issue trust preferred securities and related common securities. The Company has not consolidated the accounts of the Trusts in its consolidated financial statements.

The following table presents information about the Trusts as of December 31, 2013


(Dollars in thousands)
Trust Name	Issue Date	Issued Amount		Rate (1)			Effective Rate (2)			Maturity Date	Redemption Date
Bank of Commerce Holdings Trust	March 18,2003	$	5,155		Floating	(3)		3.54	%	April 7, 2033		(5	)
Bank of Commerce Holdings Trust II	July 29, 2005		10,310		Floating	(4)		1.83	%	September 15, 2035		(6	)

Total		$	15,465

(1)	Contractual interest rate of junior subordinated debentures.

(2)	Effective rate as of December 31, 2013.

(3)	Rate based on three month London Interbank Offered Rate (LIBOR) plus 3.30% adjusted quarterly. The rate increase is capped at 2.75% annually and the lifetime cap is 12.5%.

(4)	Rate based on three month LIBOR plus 1.58% adjusted quarterly.

(5)	Redeemable on quarterly payment dates.

(6)	Redeemable at the Company’s option on any March 15, June 15, September 15, or December 15.

The $15.5 million of trust preferred securities issued to the Trusts as of December 31, 2013 and 2012, are reflected as junior subordinated debentures in the Consolidated Balance Sheets. The common stock issued by the Trusts is recorded in other assets in the Consolidated Balance Sheets, and totaled $465 thousand at December 31, 2013 and 2012.

All of the debentures issued to the Trusts, less the common stock of the Trusts, qualified as Tier 1 capital as of December 31, 2013, under guidance issued by the Federal Reserve Board.

Effective March 31, 2011, the Federal Reserve Board implemented new limits on the inclusion of restricted core capital elements in Tier 1 capital of bank holding companies. The new provisions allow for the aggregate amount of trust preferred securities and certain other restricted core capital elements to be limited to one-third of the sum of unrestricted core capital elements, net of goodwill less any associated deferred tax liability associated with the goodwill.

At December 31, 2013, the Company’s restricted core capital elements were 15% of total core capital, net of goodwill and any associated deferred tax liability.