Subordinated Debentures

12 Months Ended

Dec. 31, 2022

The Company’s subordinated debentures are reflected in the table below. The amounts include fair value adjustments from acquisitions.


	December 31, 2022				Rate Structure	Maturity Date
(Dollars in thousands)	Balance		Rate 1
Subordinated debentures owed to trust subsidiaries
First Company Statutory Trust 2001	$	3,584	7.715	%	3 month LIBOR plus 3.30%	07/31/2031
First Company Statutory Trust 2003	2,632		7.974	%	3 month LIBOR plus 3.25%	03/26/2033
Glacier Capital Trust II	46,393		6.829	%	3 month LIBOR plus 2.75%	04/07/2034
Citizens (ID) Statutory Trust I	5,155		7.388	%	3 month LIBOR plus 2.65%	06/17/2034
Glacier Capital Trust III	36,083		5.369	%	3 month LIBOR plus 1.29%	04/07/2036
Glacier Capital Trust IV	30,928		6.339	%	3 month LIBOR plus 1.57%	09/15/2036
Bank of the San Juans Bancorporation Trust I	2,076		6.581	%	3 month LIBOR plus 1.82%	03/01/2037
FNB (UT) Statutory Trust I	4,124		7.824	%	3 month LIBOR plus 3.10%	06/26/2033
FNB (UT) Statutory Trust II	1,807		6.489	%	3 month LIBOR plus 1.72%	12/15/2036
Total subordinated debentures owed to trust subsidiaries	$	132,782

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1 This is the paid rate on the subordinated debentures which excludes the impact from the interest rate cap derivatives. For additional information relating to interest rate cap derivatives, see Note 11.

Subordinated Debentures Owed to Trust Subsidiaries

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 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.

Provisions of the Dodd-Frank Act require that if a depository institution holding company exceeds $15 billion due to an acquisition, then trust preferred securities are to be excluded from Tier 1 capital beginning in the period in which the transaction occurred. During 2020, the Company’s acquisition of SBAZ on February 29, 2020, resulted in total consolidated assets exceeding $15 billion; accordingly the trust preferred securities were included in Tier 2 capital instead of Tier 1 beginning in 2020.

Subordinated Debentures

The Company acquired subordinated debentures with the FSB acquisition that qualified as Tier 2 capital under the applicable capital adequacy rules and regulations promulgated by the FRB. The Tier 2 subordinated debentures were not deposits and were not insured by the FDIC or any other government agency. Such obligations were subordinated to the claims of general creditors, were unsecured and were ineligible as collateral. The principal amount was due at maturity and interest distributions were payable quarterly. The Tier 2 subordinated debentures should not be prepaid prior to the fifth anniversary of the closing date, which was September 30, 2020, except in the event the obligation no longer qualifies as Tier 2 capital (“Tier 2 capital event”) or the interest payable is no longer deductible (“tax event”). Any prepayment made in connection with a Tier 2 capital event or a tax event will be subject to obtaining the prior approval of the FRB. The Company prepaid this obligation in 2021.

For additional information on regulatory capital, see Note 12.