Note 10. Subordinated Debentures

Trust preferred securities were issued by the Company’s trust subsidiaries, the common stock of which is wholly-owned by the Company, in conjunction with the Company issuing subordinated debentures to the trust subsidiaries. The terms of the subordinated debentures are the same as the terms of the trust preferred securities. The Company guaranteed the payment of distributions and payments for redemption or liquidation of the trust preferred securities to the extent of funds held by the trust subsidiaries. The obligations of the Company under the subordinated debentures together with the guarantee and other back-up obligations, in the aggregate, constitute a full and unconditional guarantee by the Company of the obligations of all trusts under the trust preferred securities.

The trust preferred securities are subject to mandatory redemption upon repayment of the subordinated debentures at their stated maturity date or the earlier redemption in an amount equal to their liquidation amount plus accumulated and unpaid distributions to the date of redemption. Interest distributions are payable quarterly. The Company may defer the payment of interest at any time from time to time for a period not exceeding 20 consecutive quarters provided that the deferral period does not extend past the stated maturity. During any such deferral period, distributions on the trust preferred securities will also be deferred and the Company’s ability to pay dividends on its common shares will be restricted.

Subject to prior approval by the FRB, the trust preferred securities may be redeemed at par prior to maturity at the Company’s option on or after the redemption date. All of the Company’s trust preferred securities have reached the redemption date and could be redeemed at the Company’s option. The trust preferred securities may also be redeemed at any time in whole (but not in part) for the Trusts in the event of unfavorable changes in laws or regulations that result in 1) subsidiary trusts becoming subject to federal income tax on income received on the subordinated debentures, 2) interest payable by the Company on the subordinated debentures becoming non-deductible for federal tax purposes, 3) the requirement for the trusts to register under the Investment Company Act of 1940, as amended, or 4) loss of the ability to treat the trust preferred securities as Tier 1 capital under the FRB capital adequacy guidelines.

For regulatory purposes, the FRB has allowed bank holding companies to include trust preferred securities in Tier 1 capital up to a certain limit. Provisions of the Dodd-Frank Act require the FRB to exclude trust preferred securities from Tier 1 capital, but a grandfather provision permits bank holding companies with consolidated assets of less than $15 billion to continue counting existing trust preferred securities as Tier 1 capital until they mature. All of the Company’s trust preferred securities qualified as Tier 1 instruments at December 31, 2013.

Note 10. Subordinated Debentures (continued)

The terms of the subordinated debentures, arranged by maturity date, are reflected in the table below. The amounts include fair value adjustments from acquisitions.



	December 31, 2013				Variable Rate Structure	Maturity Date
(Dollars in thousands)	Balance		Rate		Variable Rate Structure	Maturity Date
First Company Statutory Trust 2001	$	3,018	3.537	%	3 mo LIBOR plus 3.30	07/31/2031
First Company Statutory Trust 2003	2,227		3.496	%	3 mo LIBOR plus 3.25	03/26/2033
Glacier Capital Trust II	46,393		2.994	%	3 mo LIBOR plus 2.75	04/07/2034
Citizens (ID) Statutory Trust I	5,155		2.894	%	3 mo LIBOR plus 2.65	06/17/2034
Glacier Capital Trust III	36,083		1.533	%	3 mo LIBOR plus 1.29	04/07/2036
Glacier Capital Trust IV	30,928		1.813	%	3 mo LIBOR plus 1.57	09/15/2036
Bank of the San Juans Bancorporation Trust I	1,758		2.058	%	3 mo LIBOR plus 1.82	03/01/2037
	$	125,562