<PAGE>
As filed with the Securities and Exchange Commission on April 28, 1999.
Registration Nos. 333-76623 and 333-76623-01
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
--------------
GBCI CAPITAL TRUST II
GOLD BANC CORPORATION, INC.
(Exact names of Registrants as specified in their charters)
--------------
Delaware Applied For
Kansas 48-1008593
(States or other jurisdictions of (I.R.S. Employer
incorporation or organization) Identification Nos.)
11301 Nall Avenue
Leawood, Kansas 66211
(913) 451-8050
(Address, including zip code, and telephone number, including area code, of
Registrants' principal executive office)
--------------
MICHAEL W. GULLION
Chief Executive Officer
Gold Banc Corporation, Inc.
11301 Nall Avenue
Leawood, Kansas 66211
(913) 451-8050
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
STEVEN F. CARMAN, ESQ. STEVEN KAPLAN, ESQ.
Blackwell Sanders Peper Martin LLP Arnold & Porter
Two Pershing Square Thurman Arnold Building
2300 Main Street, Suite 1000 555 Twelfth Street, N.W.
Kansas City, Missouri 64108 Washington, D.C. 20004-1202
(816) 983-8153 (202) 942-5998
Fax: (816) 983-9153 Fax: (202) 942-5999
--------------
Approximate date of commencement of proposed sale to the public: As soon as
possible after the Registration Statement becomes effective.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed Proposed
Title of each class of Amount maximum maximum Amount of
securities to be to be offering price aggregate registration
registered registered per unit* offering price* fee
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<S> <C> <C> <C> <C>
% Preferred
Securities of GBCI
Capital Trust II...... 1,610,000 $25.00 $40,250,000 $11,190
- --------------------------------------------------------------------------------
% Junior
Subordinated Debentures
of Gold Banc
Corporation, Inc. (1).
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Guarantee of Gold Banc
Corporation, Inc. With
Respect to the
preferred securities
(2)...................
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</TABLE>
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* Estimated solely for the purpose of calculating the registration fee,
exclusive of accrued interest and dividends, if any.
(1) The junior subordinated debentures will be purchased by GBCI Capital Trust
II with the proceeds of the sale of the preferred securities. Such
debentures may later be distributed for no additional consideration to the
holders of the preferred securities upon dissolution of the Trust and
distribution of its assets.
(2) This Registration Statement is deemed to cover the guarantee. Pursuant to
Rule 457(n) under the Securities Act of 1933, no separate registration fee
is required for the guarantee.
The prospectus contained in this Registration Statement will be used for the
offering of the following securities: (1) % preferred securities of GBCI
Capital Trust II; (2) % junior subordinated debentures of Gold Banc
Corporation, Inc.; and (3) a guarantee of Gold Banc Corporation, Inc. of
certain obligations under the preferred securities.
--------------
The Registrants hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION--DATED April 28, 1999
$35,000,000
GBCI Capital Trust II
Gold Banc Corporation, Inc.
[LOGO]
----------
% preferred securities
Guaranteed as described in this prospectus by Gold Banc Corporation, Inc.
Consider carefully the "risk factors" beginning on page 11 in this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
Neither the preferred securities nor the junior subordinated debentures are
deposit accounts of any bank, and neither are insured to any extent by the
Federal Deposit Insurance Corporation or any other governmental agency.
The underwriters are offering the preferred securities subject to prior sale,
when, as and if delivered to and accepted by the underwriters. The underwriters
have the right to reject orders in whole or in part. The underwriters expect
that the Trust will deliver the preferred securities on or about , 1999.
Gold Banc Corporation, Inc.--
. We are a multi-bank holding company that offers, through our subsidiaries,
a full range of community banking and related financial services to
customers in Kansas, Oklahoma and Missouri.
. We will purchase all of the common securities of the Trust.
. We have guaranteed the Trust's obligations under the preferred securities,
but only to the extent of funds held by the Trust.
The Trust--
. GBCI Capital Trust II is a Delaware business trust.
. We created the Trust for the limited purposes of issuing the common and
preferred securities, investing in the junior subordinated debentures, and
engaging in incidental activities.
The preferred securities--
. The preferred securities represent beneficial interests in the assets of
the Trust, which will include the junior subordinated debentures and
payments on the junior subordinated debentures.
. Holders of the preferred securities are entitled to cumulative
distributions at the annual rate of %.
. We have applied to have the preferred securities approved for quotation
under the proposed Nasdaq National Market symbol "GLDBO."
. The public offering price is $25 per preferred security.
. The Trust may redeem the preferred securities for cash or in exchange for
the junior subordinated debentures.
. If we defer interest payments on the junior subordinated debentures, the
Trust will defer distributions on the preferred securities.
The junior subordinated debentures--
. We will sell $ of our % junior subordinated debentures to the
Trust.
. The junior subordinated debentures are scheduled to mature on
, 2029, but we may shorten this date.
. We may defer interest payments on the junior subordinated debentures from
time to time.
<TABLE>
<CAPTION>
Price To Underwriting Proceeds
Public Discount To Trust
----------- ------------ --------
<S> <C> <C> <C>
Per Preferred Security........................ $ 25.00
Total......................................... $35,000,000
</TABLE>
In the table above, the price to the public includes accrued distributions,
if any, from , 1999. We, along with the Trust, have agreed to
indemnify the underwriters against certain liabilities, including certain
liabilities under the Securities Act of 1933. See "Underwriting." Because all
of the proceeds from the sale of the preferred securities will be used to
purchase the junior subordinated debentures, we have agreed to pay the
underwriters, as compensation, $ per preferred security or $ in
the aggregate ($ if the over-allotment option is exercised in full). See
"Underwriting." We have also agreed to pay the expenses of this offering,
estimated to be $210,000. We have also granted the underwriters a 30-day option
to purchase up to a maximum of 210,000 additional preferred securities to cover
over-allotments, if any. If the over-allotment option is exercised in full, the
total price to public will be $40,250,000, the total underwriting commission
will be $ and the total proceeds to the Trust will be $ . See
"Underwriting."
Advest, Inc. U.S. Bancorp Piper Jaffray
Prospectus dated , 1999
<PAGE>
MAP
JOHNSON COUNTY, TULSA, PITTSBURG, ST. JOSEPH,
KANSAS OKLAHOMA KANSAS MISSOURI
(SHAWNEE AND Growing city of University-based Regional business
LEAWOOD) Suburb 760,000 people. economy and hub serving
of Kansas City Diversified regional trade northwest
and a county that economy, strong center for Missouri. Solid
has one of the in technology and southeast Kansas. economy with core
country's aviation. Firm strength in
fastest-growing Southeastern manufacturing manufacturing.
business sectors. Tulsa hosts base and small Metropolitan area
Population of thousands of business population of
417,000 and ranks small businesses. community. County 97,000.
in the top 1% of population of
counties in the 36,000 plus 6,400
nation in per students.
capita income
(based on 1996
Census Bureau
statistics).
Certain persons participating in this offering may engage in transactions
that stabilize, maintain, or otherwise affect the price of the preferred
securities being offered, including over-allotting shares of the preferred
securities and bidding for and purchasing such shares at a level above that
which otherwise might prevail in the open market. For a description of these
activities, see "Underwriting." Such stabilizing transactions, if commenced,
may be discontinued at any time. In connection with this offering, certain
underwriters (and selling group members) may engage in passive market making
transactions in the common shares on the Nasdaq National Market in accordance
with Rule 103 of Regulation M. See "Underwriting."
<PAGE>
PROSPECTUS SUMMARY
This summary does not contain all of the information that may be important
to you. You should carefully read this prospectus, and all other information
that is incorporated by reference into this prospectus, in its entirety before
you decide to invest in the preferred securities.
Gold Banc Corporation, Inc.
Overview
We provide a full-range of community banking and related financial services
at 28 locations in Kansas, Oklahoma and Missouri. As a multi-bank holding
company, we own nine commercial banks, one federal savings bank, an investment
advisory company, a trust company, a computer services business and an
insurance agency. Since December 1978, we have grown internally and through
acquisitions from a one bank holding company with $2.9 million in total assets
to a bank holding company with ten banks and four non-bank subsidiaries, with
$1.1 billion in total assets at December 31, 1998. A significant amount of our
growth occurred in 1998, during which we acquired 6 banks operating in 13
locations with $514.7 million in total assets. Our growth has been based on a
community banking strategy, which we believe our customers value because it
combines a focus on local communities with the breadth in product and service
offerings of a larger bank.
Community Banking Strategy
Our strategy is to build responsive community banking offices with local
decision making authority. To implement this strategy, each of our subsidiary
banks maintains its own distinct local identity, complete with local decision
makers who are empowered, with certain limitations, to make credit decisions.
We view each subsidiary bank president as the head of a financial services
center, where a primary focus is serving small to medium-sized businesses and
their owner-operators. These customers value one-stop shopping which we offer
through our bank subsidiaries. More than 80 percent of our loans in Johnson
County, Kansas and Tulsa, Oklahoma (our two largest markets) are provided to
local businesses. Each subsidiary bank maintains a local board of directors
that helps support the vital role our subsidiary banks play in identifying and
fulfilling the different needs of locally owned businesses in their respective
communities.
One of our goals is to create a more efficient organization within the
framework of our community banking philosophy. While each of our subsidiary
banks operates separately, we are centralizing certain management and
administrative functions, including data processing, human resources and
regulatory administration in order to take advantage of economies of scale.
Following our acquisition of CompuNet Engineering, Inc. in the first quarter of
1999, CompuNet will administer our consolidated back office operations,
including the operation of the data and call centers for all of our subsidiary
banks. We also provide direction for our subsidiary banks in areas of budget,
asset/liability and investment portfolio management and credit review. We feel
centralizing these functions, which involve little contact with our customers,
will allow us to run our business more efficiently, help lower operating
expenses and enable our bank employees to focus on customer service and
community involvement.
Geographic Growth into Metropolitan Areas
While we continue to operate in select county seat towns, our market
strategy increasingly focuses on larger growing Midwestern suburbs and cities
and on serving the thousands of small-to-medium-sized businesses and their
owner operators located in these communities that are responsible for driving
much of this growth. Reflective of our increasing focus on vibrant metropolitan
markets, as of December 31, 1998,
1
<PAGE>
approximately 66 percent of our assets were deployed in four markets which
support a large base of small-to-medium sized businesses:
. Johnson County, Kansas;
. Tulsa, Oklahoma;
. Pittsburg, Kansas; and
. St. Joseph, Missouri.
We believe that a recent wave of acquisitions of local banks in these
communities by larger, more regional competitors and the conversion of these
bank franchises to branch locations of much larger entities has resulted in the
elimination of local decision making and caused a number of customers of these
locations to become dissatisfied. This has created an opportunity for us to
attract and retain loan customers whose businesses require flexibility and
responsiveness in lending decisions and a more personalized banking
relationship.
Growth into Non-Bank Services
In addition to our growth in assets, deposits and geographic locations, we
have also expanded our product and service offerings. We provide more than
traditional deposit accounts and loans. Since the beginning of 1998, we have
added three non-bank businesses to further our objective of becoming a complete
financial services provider for small-to-medium sized businesses, their owner
operators and other customers. We now offer:
. Investment management and retail brokerage services through Midwest
Capital Management, Inc.;
. Business and personal insurance through Gold Banc Financial Services,
Inc.; and
. Trust services and employee benefit accounts, including 401(k) plans,
through The Trust Company.
In addition, through our acquisition of CompuNet, we now offer certain
technology services to financial institutions and other businesses. CompuNet
designs, implements, integrates and administers local and wide area computer
networks and also provides such technology services as Y2K compliance support,
Internet solutions and video conferencing.
Growth into New Technology
We continue to employ new technologies to serve and retain customers.
Through the use of two-way videoconferencing, our bank customers have the
opportunity to visit one-on-one with our non-bank professionals while in the
familiar convenience of their own local bank. During the second quarter of 1999
we expect to premier our Internet banking system which, in addition to our
Interactive Voice Response telephone system, allows our bank customers
convenient 24-hour remote access to their account information. We believe these
services are important to certain of our banking customers, including small-
business owners, and provide an opportunity to strengthen and develop
relationships with these customers.
Growth through Acquisitions
In addition to internal growth, we will continue to look for opportunities
to grow through acquisitions of community banks or non-bank providers of
financial services located in metropolitan areas and county seat towns in our
targeted market area. We believe that there will continue to be owners of small
community banks that will be interested in selling their banks to an
organization such as ours that has strong capital, a broad array of products
and services, management talent, and a committment to retaining the local
identities of its subsidiaries. Other reasons that banks may continue to be
willing to sell are a lack of liquidity in the stock of the company and
increasing costs associated with upgrading technology and maintaining
compliance with bank regulations. We will continue to look to acquire banks
with strong existing management teams so that our strategies can be implemented
with the existing management structures, boards of directors and bank charters
that are in place at these banks.
2
<PAGE>
Our principal executive office is located at 11301 Nall Avenue, Leawood,
Kansas 66211, and our telephone number is (913) 451-8050.
GBCI Capital Trust II
GBCI Capital Trust II is a Delaware statutory business trust that we created
for the limited purposes of:
. issuing the preferred securities and the common securities;
. investing the proceeds it receives from issuing the preferred securities
and the common securities in an equivalent amount of junior subordinated
debentures issued by us; and
. engaging in activities related to the activities described above.
The Trust will issue all of the preferred securities to the purchasers in
this offering. We will purchase all of the common securities. The common
securities will represent an aggregate liquidation amount equal to at least 3%
of the total capital of the Trust.
The junior subordinated debentures will be the only assets of the Trust, and
payments under the junior subordinated debentures will be the only revenue of
the Trust.
The Trust will be governed by the trust agreement among us, as depositor,
Bankers Trust (Delaware), as Delaware trustee, and Bankers Trust Company, as
property trustee.
The principal executive office of the Trust is c/o Gold Banc Corporation,
Inc. at 11301 Nall Avenue, Leawood, Kansas 66211, and its telephone number is
(913) 451-8050.
The Offering
The Issuer................ GBCI Capital Trust II, a Delaware statutory
business trust.
The Securities being 1,400,000 preferred securities having a
Offered................... liquidation amount of $25 per preferred
security. The preferred securities represent
preferred undivided beneficial interests in the
assets of the Trust, which will consist solely
of junior subordinated debentures. We will
guarantee payments on the preferred securities
to the extent of funds in the Trust. We have
granted the underwriters an option, exercisable
within 30 days after the date of the offering,
to purchase up to an additional 210,000
preferred securities at the initial offering
price, solely to cover over-allotments, if any.
The Offering Price........ $25 per preferred security.
The Payment of The Trust will pay distributions to you on each
Distributions............. preferred security at an annual rate of
%. The distributions will be cumulative,
will accumulate from , 1999, and will be
payable in arrears at the end of each calendar
quarter, commencing , 1999.
Junior Subordinated The Trust will invest the proceeds from the
Debentures................ issuance of the preferred securities and the
common securities in an equivalent amount of
our % junior subordinated debentures.
3
<PAGE>
Maturity..................
The junior subordinated debentures are
scheduled to mature on , 2029
unless we shorten the maturity date. We will
not shorten the maturity date unless we have
first received any required regulatory
approvals. The Trust must redeem the preferred
securities when the junior subordinated
debentures are paid on the maturity date, or
following any earlier redemption of the junior
subordinated debentures.
We have the Option to
Extend the Interest
Payment Period...........
At any time we are not in default under the
junior subordinated debentures, we may defer
payments of interest on the junior subordinated
debentures for up to 20 consecutive quarters,
but not beyond their stated maturity date. The
Trust would defer quarterly distributions on
the preferred securities while we are deferring
payment on the junior subordinated debentures.
Deferred quarterly distributions will
accumulate additional distributions at an
annual rate of % compounded quarterly.
During any period that we are deferring
interest payments, we may not declare or pay
any cash distributions on our capital stock or
debt securities that are of equal or lower rank
than the junior subordinated debentures. After
the end of any period in which we are deferring
interest payments, if we have paid all deferred
and current interest under the junior
subordinated debentures, we may defer interest
payments again. If we defer interest payments,
you will be required to include deferred
interest income in your gross income for United
States federal income tax purposes before you
have received deferred interest payments.
Redemption of the
Preferred Securities is
Possible................. The Trust may redeem the preferred securities
in whole or in part if we repay the junior
subordinated debentures. Subject to any
regulatory approval that may then be required,
we may redeem the junior subordinated
debentures prior to their scheduled maturity
(1) on or after , 2004, in whole at
any time or in part from time to time, or (2)
at any time, in whole, but not in part, within
90 days after:
. certain tax events occur or become likely to
occur;
. the Trust is or becomes likely to be deemed to
be an investment company; or
. there is a change in the regulatory capital
treatment of the preferred securities.
Upon any redemption of the junior subordinated
debentures we will use the cash proceeds of the
redemption to pay you a liquidation amount for
the preferred securities. The liquidation
amount you will receive will be $25 per
preferred security plus any accrued and unpaid
distributions to the date of redemption.
. The preferred securities will rank equally
How the Securities will with the common securities. The Trust will
Rank in Right of pay distributions on the preferred securities
Payment............. and the common securities pro rata. However,
if we
4
<PAGE>
default by failing to pay interest payments on
the junior subordinated debentures then no
distributions on the common securities will be
paid until all accumulated and unpaid
distributions on the preferred securities have
been paid.
. Our obligations under the junior subordinated
debentures are unsecured and generally will
rank junior in priority to our senior and
other subordinated indebtedness. In late
1997, we created GBCI Capital Trust and
issued junior subordinated debentures to that
trust. The junior subordinated debentures we
will issue to the Trust will rank equally
with those junior subordinated debentures. If
we create any other trusts similar to the
Trust, then the junior subordinated
debentures will rank equally with any other
junior subordinated debentures we issue to
such trusts.
. Our obligations under the guarantee are
unsecured and will rank junior to our senior
and other subordinated indebtedness. The
guarantee we issue in this transaction will
rank equally with that guarantee relating to
the preferred securities issued by GBCI
Capital Trust in late 1997. If we issue any
other guarantees in the future relating to
preferred securities issued by the other
trusts, then the guarantee issued in this
transaction will rank equally with the other
guarantees.
. Because we are a holding company, the junior
subordinated debentures and the guarantee
will effectively be subordinated to all
existing and future liabilities of our
subsidiaries.
The Junior Subordinated
Debentures May Be
Distributed to You.......
Under certain circumstances and after we obtain
any necessary regulatory approvals, we may
dissolve the Trust. If we dissolve the Trust,
after satisfaction of any of the Trust's
liabilities to creditors, the Trust will
distribute your pro rata share of the junior
subordinated debentures to you in liquidation
of the Trust.
Our Guarantee of We will fully and unconditionally guarantee the
Payments.................. preferred securities based on:
. our obligations to make payments on the junior
subordinated debentures;
. our obligations under a guarantee executed for
the benefit of the holders of the preferred
securities; and
. our obligations under the trust agreement.
If we do not make payments on the junior
subordinated debentures, the Trust will not
have sufficient funds to make payments on the
preferred securities. The guarantee does not
cover payments when the Trust does not have
sufficient funds.
Limited Voting Rights..... You will have no voting rights except in
limited circumstances.
The Use of Proceeds....... The Trust will invest all of the proceeds from
the sale of the preferred and the common
securities in our junior subordinated
debentures. We
5
<PAGE>
intend to use the net proceeds from our sale of
the junior subordinated debentures to finance
growth, including future acquisitions if and
when suitable opportunities arise, repay
approximately $11.0 million of corporate
indebtedness and for general corporate
purposes. In addition, we are likely to
contribute a portion of the proceeds to one or
more of the subsidiary banks to support
internal growth opportunities. Initially, we
may invest the net proceeds not used to pay
down corporate indebtedness in short to medium
term investment securities.
Nasdaq National Market The proposed Nasdaq National Market symbol is
Symbol.................... "GLDBO."
Book-entry................ The preferred securities will be represented by
a global security that will be deposited with
and registered in the name of The Depository
Trust Company, New York, New York, or its
nominee. This means that you will not receive a
certificate for your preferred securities.
ERISA Considerations...... You must carefully consider the information set
forth under "Certain ERISA Considerations."
Risk Factors
Before purchasing the preferred securities offered by this prospectus you
should carefully consider the "Risk Factors" beginning on page 11.
6
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following is our selected consolidated financial information. This
information has been restated to include acquisitions accounted for as poolings
of interests and per share information has been restated to reflect a two-for-
one stock split of our common stock in 1998. You should read this selected
consolidated financial information in conjunction with our consolidated
financial statements and notes that appear in our Annual Report on Form 10-K
for 1998 that is incorporated by reference into this prospectus. See "Where You
Can Find More Information."
<TABLE>
<CAPTION>
At or for the Years Ended December 31,
--------------------------------------------------
1998 1997 1996 1995 1994
---------- -------- -------- -------- --------
(In thousands, except per share data and
ratios)
<S> <C> <C> <C> <C> <C>
Selected Results of
Operations
Interest income........... $ 75,196 $ 55,531 $ 44,652 $ 37,356 $ 32,173
Interest expense.......... 39,588 27,975 24,282 20,123 17,788
Net interest income....... 35,608 27,556 20,370 17,233 14,385
Provision for loan losses. 2,781 2,130 1,262 1,812 581
Non-interest income....... 8,778 4,753 4,179 3,322 917
Non-interest expense...... 28,079 17,478 16,047 14,118 10,156
Net income (1)............ 9,122 8,295 4,906 3,105 3,132
Per Share Data
Net income (basic and
diluted) (1)............. 0.55 0.54 0.45 0.30 0.29
Book value................ 4.88 4.19 3.47 2.69 2.23
Cash dividend (2)......... 0.075 0.045 -- -- --
Selected Balance Sheet Data
Total assets.............. $1,111,356 $824,464 $632,561 $532,044 $453,065
Loans, net of unearned
income................... 723,364 545,531 408,258 321,866 271,148
Allowance for loan losses. 10,752 7,736 5,322 4,486 3,678
Investment securities..... 229,520 164,534 148,637 140,984 138,967
Goodwill.................. 13,328 3,205 3,257 3,409 --
Deposits.................. 926,687 697,163 549,507 466,327 391,514
Long-term debt............ 78,708 35,174 7,074 14,973 14,631
Stockholders' equity...... 83,811 66,566 53,120 28,875 24,479
Performance Ratios
Return on average assets
(1)...................... 0.93% 1.13% 0.85% 0.65% 0.74%
Return on average equity
(1)...................... 11.59% 13.07% 13.63% 10.93% 13.47%
Efficiency ratio.......... 67.50% 58.34% 69.80% 75.08% --
Net interest margin....... 4.11% 4.14% 3.95% 3.99% 3.83%
Net interest spread....... 3.67% 3.58% 3.52% 3.56% 3.45%
Dividend payout (2)....... 10.56% 7.03% -- -- --
Asset Quality Ratios
Allowance for loan losses
to non-performing loans.. 290.59% 673.28% 752.76% 227.02% 361.65%
Net charge-offs to average
loans.................... 0.21% 0.10% 0.12% 0.34% 0.05%
Allowance for loan losses
to total loans........... 1.46% 1.40% 1.29% 1.37% 1.34%
Capital Ratios
Tier 1 risk-based capital
ratio (3)................ 12.03% 14.11% 13.59% 6.93% 7.67%
Total risk-based capital
ratio (3)................ 13.42% 15.41% 14.85% 8.19% 8.94%
Leverage ratio............ 8.80% 11.00% 8.14% 5.27% 5.14%
Ratio of Earnings to Fixed
Charges (4)
Including interest on
deposits................. 1.34x 1.45x 1.30x 1.23x 1.33x
Excluding interest on
deposits................. 3.90x 8.06x 4.72x 3.48x 4.15x
</TABLE>
- --------
(1) 1998 and 1997 net earnings and earnings per share of $9,122 and $8,295 and
$0.55 and $0.54, respectively, include pro forma adjustments for income
taxes related to the earnings of Citizens Bancorporation, Inc., a
Subchapter S corporation we acquired in 1998. Actual earnings and earnings
per share unadjusted for income taxes on Citizens' earnings for 1998 and
1997, were $11,919 and $9,874 and $0.71 and $0.64, respectively.
Additionally, the return on average assets and return on average equity
ratios are shown on a pro forma basis to reflect an adjustment for income
taxes on Citizens' earnings for 1998 and 1997. Returns on average assets
for 1998 and 1997 on an actual basis were 1.22% and 1.35%, respectively.
Returns on average equity for 1998 and 1997 on an actual basis were 15.14%
and 15.56%, respectively.
(2) Prior to the second quarter of 1997, we had not paid cash dividends on
shares of our common stock. The dividends paid and dividend payout ratio do
not reflect a restatement of dividends paid prior to 1998 by entities we
acquired in pooling of interests transactions in 1998.
(3) Tier 1 risk-based and Total risk-based capital ratios for the years ended
1996, 1995 and 1994 are not restated to reflect subsidiaries we acquired in
pooling of interests transactions in 1998.
(4) The consolidated ratio of earnings to fixed charges has been computed by
dividing income before income taxes and fixed charges by fixed charges.
Fixed charges represent all interest expense. Ratios are presented both
excluding and including interest on deposits.
7
<PAGE>
RECENT DEVELOPMENTS
Selected Financial and Other Data
The following tables set forth historical financial and other data for us at
the dates and for the periods indicated. Financial data as of March 31, 1999,
and for the three months ended March 31, 1999 and 1998, are unaudited. In the
opinion of our management, all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation have been included. The data for
the three months ended March 31, 1999, are not necessarily indicative of what
our results of operations will be for the year ending December 31, 1999, or for
any other period.
Consolidated Condensed Statement of Condition
<TABLE>
<CAPTION>
As of As of
March 31, 1999 December 31, 1998
-------------- -----------------
(unaudited) (audited)
(dollars in thousands)
<S> <C> <C>
Cash and due from banks....................... $ 31,230 $ 36,305
Interest-bearing deposits and fed funds....... 69,482 62,798
Loans, net of allowance for loan losses....... 737,033 723,364
Investment securities......................... 241,105 229,520
Premises and equipment........................ 28,193 26,183
Goodwill...................................... 17,061 13,328
Other assets.................................. 23,493 19,858
---------- ----------
Total assets.............................. $1,147,597 $1,111,356
========== ==========
Deposits...................................... $ 950,025 $ 926,687
Short-term borrowings......................... 22,520 14,212
Other borrowings and long-term debt........... 50,244 49,958
Other liabilities............................. 9,505 7,938
Guaranteed preferred beneficial interest in
subordinated debt............................ 28,750 28,750
Total stockholders' equity.................... 86,553 83,811
---------- ----------
Total liabilities and stockholders'
equity................................... $1,147,597 $1,111,356
========== ==========
</TABLE>
8
<PAGE>
Selected Consolidated Operating Data
<TABLE>
<CAPTION>
For the Three
Months Ended
March 31,
---------------
1999 1998
------- -------
(unaudited)
(dollars in
thousands,
except per
share data)
<S> <C> <C>
Interest income................................................ $20,646 $16,795
Interest expense............................................... 10,960 8,834
------- -------
Net interest income........................................ 9,686 7,961
Provision for loan losses...................................... 496 810
------- -------
Net interest income after provision for loan losses............ 9,190 7,151
Non-interest income:
Service charges.............................................. 908 655
Gain on sale of mortgage loans............................... 156 225
Gain on sale of securities................................... 167 1
Investment trading fees & commissions........................ 976 691
Other........................................................ 1,104 338
------- -------
Total non-interest income.................................. 3,311 1,910
Non-interest expense:
Salaries and employee benefits............................... 3,865 2,975
Occupancy expense............................................ 1,287 768
Federal deposit insurance premiums........................... 17 21
Other........................................................ 2,601 1,788
------- -------
Total non-interest expense................................. 7,770 5,552
Income before income taxes..................................... 4,731 3,509
Income tax expense (1)......................................... 1,649 1,176
------- -------
Net income................................................. $ 3,082 $ 2,333
======= =======
Basic and diluted earnings per share (2)....................... $ 0.18 $ 0.14
======= =======
</TABLE>
- --------
(1) 1998 amounts include pro forma adjustments for taxes related to Subchapter
S corporate earnings of Citizens Bank of Tulsa.
(2) 1998 data restated for the 2 for 1 stock split in May 1998.
Selected Ratios(1)
<TABLE>
<CAPTION>
At or for
the Three
Months
Ended March
31,
------------
1999 1998
----- -----
<S> <C> <C>
Net interest margin............................................... 3.83% 3.98%
Net interest spread............................................... 3.37% 3.43%
Return on average assets (2)...................................... 1.09% 1.07%
Return on average equity (2)...................................... 14.48% 12.66%
Leverage ratio.................................................... 8.62% 10.58%
Non-performing loans to total loans............................... 0.29% 0.28%
Non-performing assets to total assets............................. 0.42% 0.27%
Allowance for loan losses to total loans.......................... 1.49% 1.42%
</TABLE>
- --------
(1) Ratios are annualized where appropriate. Such ratios and results are not
necessarily indicative of results that may be expected for the full year.
(2) 1998 amounts include pro forma adjustments for taxes related to Subchapter
S corporate earnings of Citizens Bank of Tulsa.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RECENT DEVELOPMENTS
Results of Operations
Net income for the three months ended March 31, 1999 was $3.1 million, or
$0.18 per share, compared to $2.3 million, or $0.14 per share, for the three
months ended March 31, 1998. This 32% increase in net income was primarily the
result of the acquisition of six banks with thirteen branch locations, as well
as internal growth.
For the three months ended March 31, 1999, return on average assets was
1.09% and return on an average equity was 14.48%, which are both increased from
the ratios for the first quarter of 1998 of 1.07% and 12.66%, respectively. On
a cash earnings basis (excluding the amortization of goodwill) the return on
average assets and return on average equity for the three months ended March
31, 1999 were 1.16% and 15.36%, respectively, versus 1.11% and 13.12%,
respectively, for the three months ended March 31, 1998.
For the three-month period ended March 31, 1999, net interest income
increased $1.7 million compared to the same period in 1998. The change was due
to a significant increase in the amount of interest-earning assets and
interest-bearing liabilities. The net interest margin for the three months
ended March 31, 1999 was 3.83% as compared to 3.98% for the same period in
1998. Other income increased $1.4 million primarily from increased service
charges on deposit accounts of $253,000 and increased investment trading fees
and commissions of $285,000, as well as through the addition of two banks we
acquired in the third quarter of 1998 accounted for under the purchase method
of accounting. Non-interest expense increased $2.2 million, also primarily due
to our growth through acquisitions. Significant increases included: salaries
and benefits of $890,000 and occupancy of $519,000.
Financial Condition
Total assets at March 31, 1999 were $1.1 billion, an increase of $36
million, or 3.3%, from total assets at December 31, 1998. Investment securities
increased $11 million and net loans increased $14 million resulting mostly from
internal growth. Other assets increased $11 million primarily due to the
acquisition of CompuNet Engineering in March 1999.
Deposits increased $23 million, from $927 million at December 31, 1998, to
$950 million at March 31, 1999. The increase was almost entirely the result of
internal growth. Short-term borrowings increased $8.3 million primarily due to
increased borrowings at the holding company level for the acquisition of
CompuNet Engineering, L.L.C. and general operating expenses. Other liabilities
increased almost $1.6 million, primarily as a result of the acquisition of
CompuNet Engineering in March 1999. Shareholders' equity increased $2.7 million
as a result of earnings less dividends.
10
<PAGE>
RISK FACTORS
You should carefully consider the following risk factors before purchasing
the preferred securities offered by this prospectus. This prospectus contains
forward-looking statements that involve risk and uncertainties. You can
identify these forward-looking statements because they may include terms such
as "believes," "anticipates," "intends," "expects," or similar expressions, and
may include discussions of future strategy. We caution you not to rely unduly
on any forward-looking statements in this prospectus. Our actual results could
differ materially from the forward-looking statements. The risk factors
described below could cause or contribute to these differences and apply to all
forward-looking statements wherever they appear in this prospectus. However,
there could be other factors not listed below that may affect the Trust and us.
We may not update these risk factors or publicly announce revisions to forward-
looking statements contained in this prospectus.
Risk Factors Relating to the Preferred Securities
We will depend primarily on any dividends we may receive from our subsidiaries
in making payments under the junior subordinated debentures, which could affect
the payments made to you under the preferred securities.
The Trust will depend solely on our payments on the junior subordinated
debentures from us to pay amounts due to you on the preferred securities. We
are a separate legal entity from our subsidiaries and do not have significant
operations of our own. We will depend primarily on any dividends we receive
from our subsidiaries, which may be limited by regulations, and our cash and
liquid investments, to pay interest to the Trust on the junior subordinated
debentures.
Our obligations under the guarantee and the junior subordinated debentures are
subordinate to most of our other creditors.
Our obligations under the guarantee and the junior subordinated debentures
are unsecured and:
. are subordinate in right of payment to all of our existing and future
senior debt, subordinated debt and additional senior obligations, which
totaled $64.2 million at December 31, 1998; and
. rank equally with our obligations associated with the outstanding
preferred securities of GBCI Capital Trust and any future issuances of
preferred securities.
Because we are a holding company, the creditors of our subsidiaries also
will have priority over us and you in any distribution of the subsidiaries'
assets in a liquidation, reorganization or otherwise, except to the extent that
we are recognized as a creditor of our subsidiaries. Therefore, the junior
subordinated debentures will be effectively subordinated to all existing and
future liabilities of our subsidiaries, and you should look only to our assets
for payments on the junior subordinated debentures.
We may defer interest payments under the junior subordinated debentures, which
could have adverse consequences for you.
So long as we are not in default under the junior subordinated debentures,
we may defer the payment of interest on the junior subordinated debentures at
any time or from time to time for up to 20 consecutive quarters. Any deferral,
however, cannot extend beyond the stated maturity date of the junior
subordinated debentures.
During any period in which we are deferring interest payments, the Trust
will defer quarterly distributions on the preferred securities, which will
accumulate with additional distributions at the annual rate of % compounded
quarterly from the relevant distribution payment date. During a deferral period
you will continue to accrue income (in the form of original issue discount) for
federal income tax purposes on the preferred
11
<PAGE>
securities, but you will not receive distributions attributable to that income.
In addition, during a deferral period, your tax basis in the preferred
securities will increase by the amount of accrued but unpaid distributions. If
you sell the preferred securities during a deferral period, your increased tax
basis will decrease the amount of any capital gain or increase the amount of
any capital loss that you may have otherwise realized on the sale. A capital
loss, except in certain limited circumstances, cannot be applied to offset
ordinary income. As a result, deferral of distributions could result in
ordinary income, a related tax liability for the holder, and a capital loss
that may only be used to offset a capital gain.
The guarantee covers payments only if the Trust has cash available.
If we do not make payments on the junior subordinated debentures, the Trust
will not have sufficient funds to pay distributions or the $25 per preferred
security liquidation amount. Because the guarantee does not cover payments when
the Trust does not have sufficient funds, you will not be able to rely on the
guarantee for payment of these amounts. Instead, you or the property trustee
may enforce the rights of the Trust under the junior subordinated debentures
directly against us.
In certain circumstances the Trust may return your principal to you, which
would require you to reinvest your principal sooner than expected.
Under the following circumstances we may return your principal before the
stated maturity of the junior subordinated debentures:
. We may redeem all of the junior subordinated debentures in whole, but not
in part, prior to maturity within 90 days after certain occurrences at
any time during the life of the Trust. If we redeem the junior
subordinated debentures due to the occurrence of one of these events, the
Trust will redeem the preferred securities. You would receive the
redemption price.
. We may also at any time shorten the maturity of the junior subordinated
debentures to a date not earlier than , 2004. We may be
required to obtain regulatory approval before shortening the maturity of
the junior subordinated debentures.
. You should be aware that Congress in the future may enact legislation
that would adversely affect our ability to deduct the interest we pay on
the junior subordinated debentures or that otherwise results in
unfavorable tax consequences for us or the Trust. This legislation may
cause us to redeem the junior subordinated debentures and cause the Trust
to redeem the preferred securities.
If we redeem the junior subordinated debentures we would redeem the
preferred securities, and you may be required to reinvest your principal at a
time when you may not be able to earn a return that is as high as you were
earning on the preferred securities.
You will have only limited voting rights, and we can amend the trust agreement
without your consent.
You will have limited voting rights as a holder of the preferred securities.
Your voting rights will relate only to the modification of the preferred
securities and the exercise of the Trust's rights as holder of the junior
subordinated debentures. You will not usually be able to appoint, remove or
replace the property trustee or the Delaware trustee because these rights
generally reside with us as the holder of the common securities. However, if an
event of default under the trust agreement occurs and is continuing, the
holders of at least a majority in aggregate liquidation amount of the preferred
securities may remove the trustees. Even if it would adversely affect your
rights, we, together with the property trustee and the trust administrators may
amend the trust agreement without your consent to ensure that the Trust will be
classified as a grantor trust for United States federal income tax purposes.
We can distribute the junior subordinated debentures to you, which may have
adverse tax consequences for you and which may affect the market price of the
preferred securities.
The Trust may be dissolved at any time before maturity of the junior
subordinated debentures on , 2029. As a result, and subject to the
terms of the trust agreement, the trustees may distribute the junior
subordinated debentures to the holders of the preferred securities.
12
<PAGE>
We cannot predict the market price for the junior subordinated debentures
that may be distributed. Accordingly, the junior subordinated debentures that
you receive upon a distribution, or the preferred securities you hold pending
such a distribution, may trade at a price that is less than you paid to
purchase the preferred securities. Because you may receive junior subordinated
debentures, you must also make an investment decision with regard to the junior
subordinated debentures. You should carefully review all of the information
regarding the junior subordinated debentures contained in this prospectus.
Under current United States federal income tax laws, a distribution of the
junior subordinated debentures to you upon the dissolution of the Trust would
not be a taxable event to you. Nevertheless, if the Trust is classified for
United States federal income tax purposes as an association taxable as a
corporation at the time it is dissolved, the distribution of the junior
subordinated debentures would be a taxable event to you. In addition, if there
is a change in law, a distribution of junior subordinated debentures upon the
dissolution of the Trust could be a taxable event to you.
The holders of the preferred securities and the junior subordinated debentures
are not protected by covenants in the indenture and the trust agreement.
Neither the indenture, which sets forth the terms of the junior subordinated
debentures, nor the trust agreement, which sets forth the terms of the
preferred securities and the common securities, protects holders of junior
subordinated debentures or the preferred securities, respectively, in the event
we experience significant adverse changes in our financial condition or results
of operations. In addition, neither the indenture nor the trust agreement
limits our ability or the ability of any subsidiary to incur additional
indebtedness. Therefore, the provisions of these governing instruments should
not be considered a significant factor in evaluating whether we will be able to
comply with our obligations under the junior subordinated debentures or the
guarantee.
The market price for the preferred securities may decline after you invest.
The market price for the preferred securities may decline during any period
that we are deferring interest payments on the junior subordinated debentures.
If this were the case, the preferred securities would not trade at a price that
accurately reflects the value of accrued but unpaid interest on the underlying
junior subordinated debentures.
There is no current public market for the preferred securities. We plan to
list the preferred securities on the Nasdaq National Market. There is no
guarantee that an active or liquid public trading market will develop for the
preferred securities or whether continued listing of the preferred securities
will be applicable on the Nasdaq National Market. Although the underwriters
have informed the Trust and us that they intend to make a market in the
preferred securities, they are not obligated to do so and any such market
making activity may be terminated at any time without notice. Even if an active
public market does develop, there is no guarantee that the market price for the
preferred securities will equal or exceed the price you pay for the preferred
securities.
The preferred securities are not insured.
Neither the Federal Deposit Insurance Corporation nor any other governmental
agency has insured the preferred securities.
Risk Factors Relating to the Company and Its Industry
It may be difficult for us to maintain our rapid growth.
We have completed several acquisitions in the past few years that have
significantly enhanced our rate of growth. We cannot be certain that we will
continue to sustain this rate of growth or grow at all. Competition for
suitable acquisition candidates is intense. We are targeting acquisition
candidates, particularly in the metropolitan and suburban areas, that a variety
of larger financial institutions are also interested in acquiring.
13
<PAGE>
We have reviewed potential acquisition candidates and held preliminary
discussions with several of these candidates. We cannot assure you that any of
these discussions will be successful. As a result, we may not be successful in
identifying acquisition candidates or be able to acquire banks and businesses
on terms we feel are favorable.
The rural market areas we now serve afford limited, if any, opportunities
for growth. We believe future growth in our earnings will depend, in addition
to acquisitions, on our growth in the metropolitan and suburban market areas
where we have branches. The financial institutions in these metropolitan and
suburban areas also compete intensely for assets and deposits. This competition
may adversely affect our ability to grow our asset and deposit base profitably.
We may experience difficulties in managing our growth.
As part of our general strategy, we may continue to acquire banks and
businesses that we believe provide a strategic fit with our business. To the
extent that we do grow, we cannot assure you that we will be able to adequately
and profitably manage such growth. Acquiring other banks and businesses will
involve risks commonly associated with acquisitions, including:
. potential exposure to liabilities of banks and businesses we acquire;
. difficulty and expense of integrating the operations and personnel of
banks and businesses we acquire;
. potential disruption to our business;
. potential diversion of our management's time and attention;
. impairment of relationships with and the possible loss of key employees
and customers of the banks and businesses we acquire; and
. incurrence of amortization expense if we account for an acquisition as a
purchase and dilution to our stockholders if we use our common stock as
consideration for the acquisition.
The loss of certain key personnel could adversely affect our operations.
Our success depends in large part on the retention of a limited number of
key persons, including:
. Michael W. Gullion, our Chairman and Chief Executive Officer;
. Malcolm M. Aslin, our President and Chief Operating Officer;
. Keith E. Bouchey, our Executive Vice President, Chief Financial Officer
and Corporate Secretary; and
. Joseph F. Smith, our Executive Vice President and Chief Technology
Officer.
We will likely undergo a difficult transition period if we lose the services
of any or all of these individuals. In recognition of this risk, we own and are
the beneficiary of an insurance policy on the life of Mr. Gullion providing
death benefits of $1.5 million and have entered into employment agreements with
Messrs. Gullion, Aslin, Bouchey and Smith.
We also place great value on the experience of the presidents of our
subsidiaries and the branches of our subsidiaries and on their relationships
with the communities they serve. The loss of these key persons could negatively
impact the affected banking locations. There is no assurance we will be able to
retain our current key personnel or attract additional qualified key persons as
needed.
Changes in the local economic conditions could adversely affect our loan
portfolio.
Our success depends to a certain extent upon the general economic conditions
of the local markets that we serve. Unlike larger banks that are more
geographically diversified, we provide banking and financial services to
customers in those markets in Kansas, Oklahoma and Missouri, including a number
of rural markets, where our subsidiary banks operate. Our commercial, real
estate and construction loans, and the ability of the
14
<PAGE>
borrowers to repay these loans and the value of the collateral securing these
loans, are impacted by the local economic conditions. In the rural markets we
serve the predominant economic sector is agriculture. Changes in the
agricultural economy may have an impact on our results of operations and
financial condition. We cannot assure you that favorable economic conditions
will exist in such markets.
Our allowance for loan losses may not be adequate to cover actual loan losses.
As a lender, we are exposed to the risk that our customers will be unable to
repay their loans according to their terms and that any collateral securing the
payment of their loans may not be sufficient to assure repayment. Credit losses
are inherent in the lending business and could have a material adverse effect
on our operating results. Our credit risk with respect to our real estate and
construction loan portfolio relates principally to the general creditworthiness
of individuals and the value of real estate serving as security for the
repayment of loans. Our credit risk with respect to our commercial and consumer
installment loan portfolio relates principally to the general creditworthiness
of businesses and individuals within our local markets.
We make various assumptions and judgements about the collectability of our
loan portfolio and provide an allowance for potential losses based on a number
of factors. If our assumptions are wrong, our allowance for loan losses may not
be sufficient to cover our loan losses. We may have to increase the allowance
in the future. Material additions to our allowance for loan losses would
decrease our net income.
We may be unable to manage interest rate risks that could reduce our net
interest income.
Like other financial institutions, our results of operations are impacted
principally by net interest income which is the difference between interest
earned on loans and investments and interest expense paid on deposits and other
borrowings. We cannot predict or control changes in interest rates. Regional
and local economic conditions and the policies of regulatory authorities,
including monetary policies of the Federal Reserve, affect interest income and
interest expense. While we continually take measures intended to manage the
risks from changes in market interest rates, changes in interest rates can
still have a material adverse effect on our profitability.
We cannot predict how changes in technology will impact our business.
The financial services market, including banking services, is increasingly
affected by advances in technology, including developments in:
. telecommunications;
. data processing;
. automation;
. Internet-based banking;
. telebanking; and
. debit cards and so-called "smart cards."
Our ability to compete successfully in the future will depend on whether we
can anticipate and respond to technological changes. To develop these and other
new technologies we will likely have to make additional capital investments.
Although we continually invest in new technology, we cannot assure you that we
will have sufficient resources or access to the necessary proprietary
technology to remain competitive in the future.
The banking business is highly competitive.
We operate in a competitive environment. In the metropolitan and suburban
areas in which we compete, other commercial banks, savings and loan
associations, credit unions, finance companies, mutual funds, insurance
companies, and brokerage and investment banking firms and other financial
intermediaries offer
15
<PAGE>
similar services. We also face competition in our rural markets. Many of these
competitors have substantially greater resources and lending limits and may
offer certain services our subsidiary banks and businesses do not currently
provide. In addition, some of the nonbank competitors are not subject to the
same extensive regulations that govern our subsidiary banks and businesses. Our
profitability depends upon the ability of our subsidiaries to compete in our
primary market areas.
Our operations may be adversely affected if we, or certain persons with whom we
do business, fail to adequately address the Year 2000 issue.
Certain of our older computer programs identify years with two digits
instead of four. If not remedied, this is likely to cause problems because
these programs may recognize the year 2000 as the year 1900. As with other
financial institutions, we engage in a significant amount of business and
reporting activity that depends on accurate date information, such as
calculation of interest and other calculations pertaining to loans, deposits,
assets and investments. As a result, Year 2000 problems could result in a
system failure or miscalculations that disrupt our operations. We continue to
address these issues as they relate to our subsidiaries and corporate systems
and are in the implementation phase of our preparations for the year change
from 1999 to 2000.
The process of remediating, the costs of remediating or failing to remediate
Year 2000 issues may be more burdensome than we anticipate. In addition, it is
possible that Year 2000 issues could have a material adverse affect on:
. our service providers and their ability to provide us services, including
Bankline MidAmerica, Inc. which provides a data processing system that
most of our subsidiary banks have converted to or are scheduled to
convert to before December 31, 1999, and
. our customers, their businesses, and their ability to repay loans.
The cumulative effect of such problems, if they occur, could adversely
effect our operations. For a more detailed discussion of our Year 2000
initiatives see the disclosure under "Year 2000 Initiatives" in our annual
report on Form 10-K for the year ended December 31, 1998, which has been
incorporated by reference into this prospectus.
We are subject to extensive regulation.
The banking industry is heavily regulated under both federal and state law.
These regulations are primarily intended to protect depositors and the Federal
Deposit Insurance Corporation, not our creditors or stockholders. Our nonbank
subsidiaries are also subject to the supervision of the Federal Reserve Board,
in addition to other regulatory and self-regulatory agencies including the
Securities and Exchange Commission, the National Association of Securities
Dealers, and state securities and insurance regulators. Regulations affecting
banks and financial services businesses are undergoing continuous change, and
the ultimate effect of such changes cannot be predicted. Regulations and laws
may be modified at any time, and new legislation may be enacted that affects
us, our subsidiary banks or our nonbank subsidiaries. We cannot assure you that
such modifications or new laws will not adversely affect us.
Our subsidiary banks may be forced to pay for any losses the Federal Deposit
Insurance Corporation incurs if it provides assistance to any of our other
subsidiary banks.
Federal law contains a "cross guarantee" provision that could require any of
our insured subsidiary banks to pay for losses incurred by the Federal Deposit
Insurance Corporation if it provides assistance to another of our insured
subsidiary banks or in the event a subsidiary bank fails. If another of our
subsidiary banks is assessed for any assistance the Federal Deposit Insurance
Corporation may provide, such assessment could materially effect that
subsidiary bank's financial condition as well as ours.
16
<PAGE>
USE OF PROCEEDS
All the proceeds to the Trust from the sale of the preferred securities will
be invested by the Trust in the junior subordinated debentures. The net
proceeds we receive from the sale of the junior subordinated debentures, which
we estimate to be approximately $35,000,000 ($40,250,000 if the over-allotment
option is exercised in full), will be used:
. for financing growth, which may include one or more branch acquisitions,
acquisitions of other financial institutions, or acquisitions of other
financial services companies;
. to repay approximately $11.0 million of corporate indebtedness under an
outstanding line of credit subject to an interest rate equal to 1.75%
plus LIBOR; and
. for general corporate purposes.
In addition, we are likely to contribute a portion of the proceeds to one or
more of the banks to support internal growth opportunities. Pending any such
use, we will invest the net proceeds in short to medium-term investments. The
precise amounts and timing of the application of proceeds will depend upon our
and our subsidiaries' funding requirements and the availability of other funds.
Under the risk-based capital adequacy guidelines established by the Federal
Reserve, capital we receive from the proceeds of the sale of the Trust's
preferred securities, plus the proceeds from the prior sale of preferred
securities by GBCI Capital Trust, cannot constitute more than 25% of our total
Tier 1 capital. Amounts in excess of this 25% capital limitation will
constitute Tier 2, or supplemental capital and therefore will be included in
total risk-based capital. None of the proceeds from the issuance of the
preferred securities of the Trust will initially be included in our Tier 1
capital due to this limitation. However, the full amount will be included in
our total risk-based capital.
17
<PAGE>
CAPITALIZATION
The following table sets forth (1) our consolidated capitalization at
December 31, 1998, (2) our consolidated capitalization giving effect to the
issuance of the preferred securities, and (3) actual and pro forma capital
ratios. The table assumes application of the net proceeds from the
corresponding sale of the junior subordinated debentures to the Trust as if the
sale of the preferred securities had been consummated on December 31, 1998, and
as if the underwriters' over-allotment was not exercised.
<TABLE>
<CAPTION>
At December 31, 1998
------------------------------
As Adjusted For the
Sale of
Actual Preferred Securities
-------- --------------------
(Unaudited)
(Dollars in thousands)
<S> <C> <C>
Guaranteed preferred beneficial interests in our
subordinated debt(1)........................... $ 28,750 $ 63,750
Stockholders' Equity
Preferred stock no par value, 25,000,000
shares authorized, none issued............... -- --
Common stock no par value, 25,000,000 shares
authorized; 17,181,618 shares issued and
outstanding.................................. 17,182 17,182
Retained earnings............................. 37,235 37,235
Additional paid in capital.................... 29,200 29,200
Accumulated other comprehensive income........ 391 391
Unearned compensation......................... (197) (197)
-------- --------
Total stockholders' equity.................. 83,811 83,811
-------- --------
Total capitalization........................ $112,561 $147,561
======== ========
Company Capital Ratios(2):
Equity to total assets........................ 7.54% 7.31%
Tier 1 risk-based capital ratio(3)(4)......... 12.03% 11.90%
Total risk-based capital ratio(3)(4).......... 13.42% 18.42%
Leverage ratio................................ 8.80% 8.80%
</TABLE>
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(1) Includes: (a) the Trust's preferred securities representing beneficial
interests in an aggregate principal amount of $35,000,000 of our %
junior subordinated debentures (not including the $5,250,000 aggregate
principal amount of junior subordinated debentures to be purchased in the
event the underwriters exercise their over-allotment option) that will
mature on , 2029; and (b) GBCI Capital Trust's preferred
securities representing beneficial interests in an aggregated principal
amount of $28,750,000 of our 8.75% junior subordinated debentures that will
mature on December 31, 2027.
(2) The capital ratios, as adjusted, are computed including the total estimated
proceeds from the sale of the preferred securities in a manner consistent
with Federal Reserve guidelines.
(3) Federal Reserve guidelines for calculation of Tier 1 capital limit the
amount of cumulative preferred stock which can be included in Tier 1
capital to 25% of total Tier 1 capital. None of the preferred securities
will initially be included in Tier 1 capital due to this limitation.
However, the full amount will be included in total risk based capital.
(4) Assumes net proceeds of the offering of the preferred securities are
invested in assets with a 20% risk weighting under the risk-based capital
rules of the Federal Reserve.
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GBCI CAPITAL TRUST II
The Trust is a statutory business trust created under Delaware law pursuant
to the filing of a Certificate of Trust with the Delaware Secretary of State on
April 16, 1999. The Trust will be governed by the trust agreement among us, as
depositor, Bankers Trust (Delaware), as Delaware trustee, and Bankers Trust
Company, as property trustee. We will select two individuals to act as
administrators with respect to the Trust. While we hold the common securities,
we intend to select two individuals who are our employees or officers or
affiliated with us to serve as the administrators. See "Description of
Preferred Securities--Miscellaneous." The Trust exists for the exclusive
purposes of:
. issuing and selling the preferred and the common securities;
. using the proceeds from the sale of the preferred securities and the
common securities to acquire the junior subordinated debentures; and
. engaging in only those other activities necessary, convenient or
incidental thereto (such as registering the transfer of the preferred
securities and the common securities).
Accordingly, the junior subordinated debentures will be the sole assets of the
Trust, and payments under the junior subordinated debentures will be the sole
source of revenue of the Trust.
We will own all of the common securities. The common securities will rank
equally, and payments on them will be made pro rata, with the preferred
securities, except that upon the occurrence and during the continuation of an
event of default under the junior subordinated debentures arising as a result
of our failure to pay any amounts in respect of the junior subordinated
debentures when due, our rights as the holder of the common securities to
payment in respect of distributions and payments upon liquidation, redemption
or otherwise will be subordinated to the rights of the holders of the preferred
securities. See "Description of Preferred Securities--Subordination of Common
Securities." We will acquire common securities in an aggregate liquidation
amount equal to 3% of the total capital of the Trust. The Trust has a term of
30 years, but may terminate earlier as provided in the trust agreement.
The address of the Delaware trustee is Bankers Trust (Delaware), 1101 Centre
Road, Suite 200, Trust Department, Wilmington, Delaware 19805, and the
telephone number is (302) 636-3301.
The address of the property trustee, the guarantee trustee and the debenture
trustee is Bankers Trust Company, Four Albany Street, 4th Floor, New York, New
York 10006, and the telephone number is (212) 250-2500.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as our
subsidiary and, accordingly, the accounts of the Trust will be included in our
consolidated financial statements. The preferred securities will be included in
the consolidated balance sheets and appropriate disclosures about the preferred
securities, the guarantee and the junior subordinated debentures will be
included in the notes to our consolidated financial statements. For financial
reporting purposes, we will record distributions on the preferred securities in
our consolidated statements of earnings.
DESCRIPTION OF PREFERRED SECURITIES
The Trust will issue the preferred securities and the common securities
under the trust agreement for the Trust. The preferred securities will
represent preferred undivided beneficial interests in the assets of the Trust
and you will be entitled a preference in certain circumstances with respect to
distributions and amounts payable on redemption or liquidation over the common
securities, as well as other benefits as described in the trust agreement.
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This summary of certain provisions of the preferred securities and the trust
agreement is not complete. You should read the form of the trust agreement,
which is filed as an exhibit to the registration statement of which this
prospectus is a part. Wherever particular defined terms of the trust agreement
are referred to in this prospectus, such defined terms are incorporated herein
by reference. A copy of the form of the trust agreement is also available upon
request from the trustees.
General
The preferred securities will be limited to $35,000,000 aggregate
liquidation amount (as defined in the trust agreement) outstanding (which
amount may be increased by up to $5,250,000 aggregate liquidation amount of
preferred securities for exercise of the underwriters' over-allotment option).
See "Underwriting." The preferred securities will rank equally, and payments
will be made pro rata, with the common securities except as described under "--
Subordination of Common Securities." The junior subordinated debentures will be
registered in the name of the Trust and held by the property trustee in trust
for your benefit and the benefit of the holders of the common securities. The
guarantee we will execute for the benefit of the holders of the preferred
securities will be a guarantee on a subordinated basis with respect to the
preferred securities but will not guarantee payment of distributions or amounts
payable on redemption or liquidation of the preferred securities when the Trust
does not have funds on hand available to make such payments. See "Description
of Guarantee."
Distributions
You will receive distributions on each preferred security at the annual rate
of % of the stated liquidation amount of $ , payable quarterly in
arrears on March 31, June 30, September 30 and December 31 of each year, to
record holders at the close of business on the 15th day of March, June,
September and December (whether or not a business day) next preceding the
relevant distribution date. Each date on which distributions will be paid is
referred to as a distribution date in this prospectus. Distributions on the
preferred securities will be cumulative. Distributions will accumulate from
, 1999. The first distribution date for the preferred securities will
be , 1999. The amount of distributions payable for any period less
than a full distribution period will be computed on the basis of a 360-day year
of twelve 30-day months and the actual days elapsed in a partial month in such
period. Distributions payable for each full distribution period will be
computed by dividing the annual rate by four. If any date on which
distributions are payable is not a business day, then payment will be made on
the next succeeding day that is a business day (without any additional
distributions or other payment because of the delay), except that, if such
business day falls in the next calendar year, the payment will be made on the
immediately preceding business day.
So long as no debenture event of default has occurred and is continuing, we
have the right to defer the payment of interest on the junior subordinated
debentures at any time or from time to time for an "extension period" not
exceeding 20 consecutive quarterly periods with respect to each extension
period, provided that no extension period may extend beyond the maturity date
of the junior subordinated debentures. As a consequence of any such deferral,
quarterly distributions on the preferred securities will be deferred during the
extension period. Distributions to which you are entitled will accumulate
additional distributions thereon at the annual rate of %, compounded
quarterly from the relevant payment date, computed on the basis of a 360-day
year of twelve 30-day months and the actual days elapsed in a partial month in
such period. Additional distributions payable for each full distribution period
will be computed by dividing the annual rate by four.
During any extension period, we may not (1) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of our capital stock or (2) make any payment of principal
of or interest or premium, if any, on or repay, repurchase or redeem any of our
debt securities that rank equally in all respects with or junior in interest to
the junior subordinated debentures, including our obligations associated with
the outstanding preferred securities of GBCI Capital Trust.
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These prohibitions, however, do not apply to:
. repurchases, redemptions or other acquisitions of our capital stock, in
connection with any employment contract, benefit plan or other similar
arrangement, a dividend reinvestment or stockholder stock purchase plan
or the issuance of our capital stock (or securities convertible into or
exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable extension period;
. a reclassification, exchange, or conversion of any class or series of our
capital stock (or any capital stock of our subsidiaries) for any class or
series of our capital stock or of any class or series of our indebtedness
for any class or series of our capital stock;
. the purchase of fractional interests in shares of our capital stock
pursuant to the conversion or exchange provisions of such capital stock
or the security being converted or exchanged;
. any declaration of a dividend in connection with any stockholders' rights
plan, or the issuance of rights, stock or other property under any
stockholders' rights plan, or the redemption or repurchase of rights
pursuant thereto; or
. any dividend in the form of stock, warrants, options or other rights
where the dividend stock or the stock issuable upon exercise of such
warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks equally with or junior to such stock.
Before the end of an extension period, we may further defer the payment of
interest. No extension period may exceed 20 consecutive quarterly periods or
extend beyond the maturity date of the junior subordinated debentures. Upon the
termination of an extension period and the payment of all amounts then due, we
may elect to begin a new extension period. No interest shall be due during an
extension period, except at the end of the extension period. We must give the
trustees notice of our election of an extension period at least one business
day prior to the earlier of (1) the date the distributions on the preferred
securities would have been payable but for the election to begin the extension
period and (2) the date the property trustee is required to give you notice of
the record date or the date the distributions are payable, but in any event not
less than one business day prior to the record date. The property trustee will
give you notice of our election to begin a new extension period. Subject to the
foregoing, there is no limitation on the number of times that we may elect to
begin an extension period. See "Description of Junior Subordinated Debentures--
Option To Extend Interest Payment Period" and "Certain Federal Income Tax
Consequences--Interest Income and Original Issue Discount."
We currently do not intend to exercise our right to defer payments of
interest by extending the interest payment period on the junior subordinated
debentures.
The revenue of the Trust available for distribution to you will be limited
to payments under the junior subordinated debentures in which the Trust will
invest the proceeds from the issuance and sale of the preferred securities. See
"Description of Junior Subordinated Debentures." If we do not make payments on
the junior subordinated debentures, the Trust may not have funds available to
pay distributions or other amounts payable on the preferred securities. The
payment of distributions and other amounts payable on the preferred securities
(if and to the extent the Trust has funds legally available for and cash
sufficient to make such payments) is guaranteed by us on a limited basis as set
forth herein under "Description of Guarantee."
Redemption
If we repay or redeem the junior subordinated debentures, we must give the
property trustee not less than 30 nor more than 60 days notice in order that it
can redeem a proportionate amount of the preferred and common securities. The
redemption price for each preferred security shall equal $25 plus accumulated
but unpaid distributions on the redemption date and the related amount of the
premium, if any, paid by us upon the concurrent redemption of such junior
subordinated debentures. See "Description of Junior Subordinated Debentures--
Redemption." If less than all the junior subordinated debentures are to be
repaid or redeemed on a redemption date, then the proceeds from the repayment
or redemption shall be allocated to the redemption pro rata of the preferred
securities and the common securities.
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We may redeem the junior subordinated debentures (1) on or after ,
2004 in whole at any time or in part from time to time, or (2) in whole, but
not in part, at any time within 90 days following the occurrence and during the
continuation of a Tax Event, Investment Company Event or Capital Treatment
Event (each as defined below), in each case subject to possible regulatory
approval. See "--Liquidation Distribution Upon Dissolution." A redemption of
the junior subordinated debentures would cause a mandatory redemption of a
proportionate amount of the preferred securities and common securities at the
redemption price.
"Tax Event" means the receipt by the Trust of an opinion of our counsel
experienced in such matters to the effect that, as a result of any amendment
to, or change (including an announced prospective change) in, the laws (or any
regulations thereunder) of the United States or an political subdivision or
taxing authority thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance
of the preferred securities, there is more than an insubstantial risk that:
. the Trust is, or will be within 90 days of the delivery of such opinion,
subject to United States federal income tax with respect to income
received or accrued on the junior subordinated debentures;
. interest payable by us on the junior subordinated debentures is not, or
within 90 days of the delivery of such opinion will not be, deductible by
us, in whole or in part, for United States federal income tax purposes;
or
. the Trust is, or will be within 90 days of the delivery of such opinion,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges.
See "Certain Federal Income Tax Consequences--Pending Tax Litigation Affecting
the Preferred Securities" for discussion of pending United States Tax Court
litigation that, if decided adversely to the taxpayer, could give rise to a Tax
Event, that may permit us to redeem the junior subordinated debentures prior to
, 2004.
If a Tax Event described in the first or third circumstances above has
occurred and is continuing and the Trust holds all of the junior subordinated
debentures, we will pay on the junior subordinated debentures any additional
amounts as may be necessary in order that the amount of distributions then due
and payable by the Trust on the outstanding preferred securities and common
securities of the Trust will not be reduced as a result of any additional
taxes, duties and other governmental charges to which the Trust has become
subject as a result of a Tax Event.
"Investment Company Event" means the receipt by the Trust of an opinion of
our counsel experienced in such matters to the effect that, as a result of the
occurrence of a change in law or regulation or a written change (including any
announced prospective change) in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority, there is more than an insubstantial risk that the Trust is or will
be considered an "investment company" that is required to be registered under
the Investment Company Act, which change or prospective change becomes
effective or would become effective, as the case may be, on or after the date
of the issuance of the preferred securities.
"Capital Treatment Event" means the reasonable determination by us that, as
a result of the occurrence of any amendment to, or change (including any
announced prospective change) in, the laws (or any rules or regulations
thereunder) of the United States or any political subdivision thereof or
therein, or as a result of any official or administrative pronouncement or
action or judicial decision interpreting or applying such laws or regulations,
which amendment or change is effective or such pronouncement, action or
decision, is announced on or after the date of issuance of the preferred
securities, there is more than an insubstantial risk that we will not be
entitled to treat an amount equal to the liquidation amount of the preferred
securities as Tier 1 Capital (or the then equivalent thereof), except as
otherwise restricted by the Federal Reserve, for purposes of the risk-based
capital adequacy guidelines of the Federal Reserve, as then in effect and
applicable to us. The Federal Reserve has determined that the proceeds of
certain qualifying securities like the preferred securities will
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qualify as Tier I capital for us only up to an amount not to exceed, when taken
together with all of our cumulative preferred stock, if any, 25% of our Tier 1
capital.
Redemption Procedures
Preferred securities redeemed on each redemption date shall be redeemed at a
price equal to $25 plus accumulated but unpaid distributions, with the
applicable proceeds from the contemporaneous redemption of the junior
subordinated debentures. Redemptions of the preferred securities will be made
and the redemption price will be payable on each redemption date only to the
extent that the Trust has funds on hand available for the payment of such
redemption price. See also "--Subordination of Common Securities."
If the Trust gives you notice of redemption of the preferred securities,
then, by 12:00 noon, Eastern time, on the redemption date, to the extent funds
are available, in the case of preferred securities held in book-entry form, the
property trustee will deposit irrevocably with The Depository Trust Company
funds sufficient to pay the applicable redemption price and will give DTC
irrevocable instructions and authority to pay the redemption price to you. With
respect to preferred securities not held in book-entry form, the property
trustee, to the extent funds are available, will irrevocably deposit with the
paying agent for the preferred securities funds sufficient to pay the
applicable redemption price and will give the paying agent irrevocable
instructions and authority to pay the redemption price to you once you
surrender your certificates evidencing the preferred securities.
Notwithstanding the foregoing, distributions payable on or prior to the
redemption date for any preferred securities called for redemption will be
payable to you on the relevant record dates for the related distribution dates.
If notice of redemption is given and funds are deposited as required, then
upon the date of such deposit all of your rights with respect to your preferred
securities so called for redemption will cease, except your right to receive
the redemption price and any distributions payable in respect of the preferred
securities on or prior to the redemption date, but without interest, and
preferred securities that are redeemed will cease to be outstanding. If any
date fixed for redemption of preferred securities is not a business day, then
payment of the redemption price payable on such date will be made on the next
succeeding day which is a business day (without any interest or other payment
in respect of any such delay), except that, if such business day falls in the
next calendar year, such payment will be made on the immediately preceding
business day. In the event that payment of the redemption price for the
preferred securities called for redemption is improperly withheld or refused
and not paid either by the Trust or by us pursuant to the guarantee as
described under "Description of Guarantee," distributions on such preferred
securities will continue to accumulate at the then applicable rate, from the
redemption date originally established by the Trust for such preferred
securities to the date such redemption price is actually paid, in which case
the actual payment date will be the date fixed for redemption for purposes of
calculating the redemption price.
Subject to applicable law (including, without limitation, United States
federal securities laws), we or our affiliates may at any time and from time to
time purchase outstanding preferred securities by tender, in the open market or
by private agreement, and may resell such securities.
If less than all the preferred securities and common securities are to be
redeemed on a redemption date, then the aggregate liquidation amount of such
preferred securities and common securities to be redeemed shall be allocated
pro rata to the preferred securities and the common securities based upon the
relative liquidation amounts of such classes. The particular preferred
securities to be redeemed shall be selected on a pro rata basis not more than
60 days prior to the redemption date by the property trustee from the
outstanding preferred securities not previously called for redemption, or in
accordance with DTC's customary procedures if the preferred securities are then
held in the form of a global preferred security in accordance with DTC's
customary practices. The property trustee shall promptly notify the securities
registrar for the preferred securities in writing of the preferred securities
selected for redemption and, in the case of any preferred securities selected
for partial redemption, the liquidation amount of the preferred securities to
be redeemed. For
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all purposes of the trust agreement, unless the context otherwise requires, all
provisions relating to the redemption of preferred securities shall relate, in
the case of any preferred securities redeemed or to be redeemed only in part,
to the portion of the aggregate liquidation amount of preferred securities
which has been or is to be redeemed.
Notice of any redemption will be mailed to you at your address as it appears
on the securities register for the Trust at least 30 days but not more than 60
days before the redemption date if your preferred securities will be redeemed.
Unless we default in payment of the redemption price on the junior subordinated
debentures, on and after the redemption date interest will cease to accrue on
the junior subordinated debentures or portions thereof called for redemption.
Unless payment of the redemption price in respect of the preferred securities
is withheld or refused and not paid either by the Trust or us pursuant to the
guarantee, distributions will cease to accumulate on the preferred securities
or portions thereof called for redemption.
Subordination of Common Securities
Payment of distributions on, the redemption price of, and the liquidation
distribution in respect of, the preferred securities and common securities, as
applicable, shall be made pro rata based on the liquidation amount of such
preferred securities and common securities. However, if on any distribution
date or redemption date a debenture event of default has occurred and is
continuing as a result of any failure by us to pay any amounts in respect of
the junior subordinated debentures when due, no payment of any distribution on,
or redemption price of, or liquidation distribution in respect of, any of the
common securities, and no other payment on account of the redemption,
liquidation or other acquisition of such common securities, shall be made
unless payment in full in cash of all accumulated and unpaid distributions on
all the outstanding preferred securities for all distribution periods
terminating on or prior thereto, or in the case of payment of the redemption
price, the full amount of such redemption price on all the outstanding
preferred securities then called for redemption, shall have been made or
provided for, and all funds immediately available to the property trustee shall
first be applied to the payment in full in cash of all distributions on, or
redemption price of, the preferred securities then due and payable.
In the case of any event of default with respect to the preferred securities
(as described below under "--Events of Default; Notice") resulting from an
event of default with respect to junior subordinated debentures (as described
below under "Description of Junior Subordinated Debentures--Debenture Events of
Default"), the holders of the common securities shall have no right to act with
respect to any such event of default under the trust agreement until the
effects of all such events of default with respect to such preferred securities
have been cured, waived or otherwise eliminated. See "-- Events of Default;
Notice" and "Description of Junior Subordinated Debentures--Debenture Events of
Default." Until all such event of default under the trust agreement with
respect to the preferred securities have been so cured, waived or otherwise
eliminated, the property trustee will act solely on your behalf and not on
behalf of the holders of the common securities, and only you will have the
right to direct the property trustee to act on your behalf.
Liquidation Distribution Upon Dissolution
The amount payable on the preferred securities in the event of any
liquidation of the Trust is $25 per preferred security plus accumulated and
unpaid distributions, subject to certain exceptions which may be in the form of
a distribution of such amount in junior subordinated debentures.
The holders of all the outstanding common securities have the right at any
time to dissolve the Trust and, after satisfaction of liabilities to creditors
of the Trust as provided by applicable law, cause the junior subordinated
debentures to be distributed you and the holders of the common securities in
liquidation of the Trust.
The Federal Reserve's risk-based capital guidelines currently provide that
redemptions of permanent equity or other capital instruments before stated
maturity could have a significant impact on a bank holding
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company's overall capital structure and that any organization considering such
a redemption should consult with the Federal Reserve before redeeming any
equity or capital instrument prior to maturity if such redemption could have a
material effect on the level or composition of the organization's capital base
(this consultation may not be necessary if the equity or capital instrument is
redeemed with the proceeds of, or replaced by, a like amount of a similar or
higher quality capital instrument and the Federal Reserve considers the
organization's capital position to be fully adequate after the redemption).
In the event we, while a holder of common securities, dissolve the Trust
prior to the maturity date of the preferred securities and the dissolution of
the Trust is deemed to constitute the redemption of capital instruments by the
Federal Reserve under its risk-based capital guidelines or policies, our
dissolution of the Trust may be subject to the prior approval of the Federal
Reserve. Moreover, any changes in applicable law or changes in the Federal
Reserve's risk-based capital guidelines or policies could impose a requirement
on us to obtain the prior approval of the Federal Reserve to dissolve the
Trust.
Pursuant to the trust agreement, the Trust will automatically dissolve upon
expiration of its term or, if earlier, will dissolve on the first to occur of:
. certain events of bankruptcy, dissolution or liquidation of us or another
holder of the common securities;
. the distribution of a proportionate amount of the junior subordinated
debentures to you and the holders of the common securities, if the
holders of common securities have given written direction to the property
trustee to dissolve the Trust (which direction, subject to the foregoing
restrictions, is optional and wholly within the discretion of the holders
of common securities);
. the redemption of all the preferred securities in connection with the
redemption of all the preferred securities and common securities as
described under "--Redemption;" and
. the entry of an order for the dissolution of the Trust by a court of
competent jurisdiction.
If dissolution of the Trust occurs as described in any of the first three
circumstances described above, the Trust will be liquidated by the property
trustee as expeditiously as the property trustee determines to be possible by
distributing, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, to you and the holders of the common securities a
proportionate amount of the junior subordinated debentures, unless such
distribution is not practical.
If distribution of the junior subordinated debentures is not practical, you
and the holders of preferred securities and common securities will be entitled
to receive out of the assets of the Trust available for distribution to
holders, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, an amount equal to, in the case of your
distribution, the aggregate of the liquidation amount plus accumulated and
unpaid distributions thereon to the date of payment. If such liquidation
distribution can be paid only in part because the Trust has insufficient assets
available to pay in full the aggregate liquidation distribution, then the
amounts payable directly by the Trust on its preferred securities shall be paid
on a pro rata basis.
The holders of the common securities will be entitled to receive
distributions upon any such liquidation pro rata with you, except that if an
event of default under the junior subordinated debentures has occurred and is
continuing as a result of our failure to pay any amounts in respect of the
junior subordinated debentures when due, the preferred securities shall have a
priority over the common securities. See "--Subordination of Common
Securities."
After the liquidation date is fixed for any distribution of junior
subordinated debentures:
. the preferred securities will no longer be deemed to be outstanding;
. DTC or its nominee, as the registered holder of preferred securities,
will receive a registered global certificate or certificate representing
the junior subordinated debentures to be delivered upon such distribution
with respect to preferred securities held by DTC or its nominee; and
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. any certificates representing the preferred securities not held by DTC or
its nominee will be deemed to represent the junior subordinated
debentures having a principal amount equal to the stated liquidation
amount of the preferred securities and bearing accrued and unpaid
interest in an amount equal to the accumulated and unpaid distributions
on the preferred securities until such certificates are presented to the
security registrar for the preferred securities and common securities for
transfer or reissuance.
If we do not redeem the junior subordinated debentures prior to maturity,
the Trust is not liquidated, and the junior subordinated debentures are not
distributed to you, then the preferred securities will remain outstanding until
the repayment of the junior subordinated debentures and the distribution of the
liquidation distribution to you.
There can be no assurance as to the market prices for the preferred
securities or the junior subordinated debentures that may be distributed in
exchange for preferred securities if a dissolution and liquidation of the Trust
were to occur. Accordingly, the preferred securities that you may purchase, or
the junior subordinated debentures that you may receive on dissolution and
liquidation of the Trust, may trade at a discount to the price that you paid to
purchase the preferred securities offered hereby.
Events of Default; Notice
Any one of the following events constitutes an event of default under the
trust agreement with respect to the preferred securities (whatever the reason
for such event of default and whether it is voluntary or involuntary or
effected by operation of law or pursuant to a judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
. the occurrence of a event of default with respect to the junior
subordinated debentures (see "Description of Junior Subordinated
Debentures--Debenture Events of Default");
. default by the Trust in the payment of any distribution when it becomes
due and payable, and continuation of such default for a period of 30
days;
. default by the Trust in the payment of any redemption price of any
preferred security and common security when it becomes due and payable;
. default in the performance, or breach, in any material respect, of any
covenant or warranty of the trustees in the trust agreement (other than a
covenant or warranty a default in the performance of which or the breach
of which is dealt with in either clause two or three above), and
continuation of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, to the trustees
and us by the holders of at least 25% in aggregate liquidation amount of
the outstanding preferred securities, a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" under the trust agreement; or
. the occurrence of certain events of bankruptcy or insolvency with respect
to the property trustee if a successor property trustee has not been
appointed within 90 days thereof.
Within five business days after the occurrence of any event of default
actually known to the property trustee, the property trustee will transmit
notice of the event of default to you and the holders of the common securities
and the preferred securities and the administrators, unless the event of
default has been cured or waived. We, as depositor, and the administrators are
required to file annually with the property trustee a certificate as to whether
or not we are in compliance with all the conditions and covenants applicable to
us under the trust agreement.
If an event of default with respect to the junior subordinated debentures
has occurred and is continuing as a result of any failure by us to pay any
amounts in respect of the junior subordinated debentures when due, the
preferred securities will have a preference over the common securities with
respect to payments of any amounts as described above. See "--Subordination of
Common Securities," "--Liquidation Distribution Upon Dissolution" and
"Description of Junior Subordinated Debentures--Debenture Events of Default."
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Removal of Trustees; Appointment of Successors
The holders of at least a majority in aggregate liquidation amount of the
outstanding preferred securities may remove any trustee for cause or, if an
event of default with respect to the junior subordinated debentures has
occurred and is continuing, with or without cause. If a trustee is removed by
the holders of the outstanding preferred securities, the successor may be
appointed by the holders of at least 25% in aggregate liquidation amount of
preferred securities. If a trustee resigns, such trustee will appoint its
successor. If a trustee fails to appoint a successor, the holders of at least
25% in aggregate liquidation amount of the outstanding preferred securities may
appoint a successor. If a successor has not been appointed by the holders, any
holder of preferred securities or common securities or the other trustee may
petition a court in the State of Delaware to appoint a successor. Any Delaware
trustee must meet the applicable requirements of Delaware law. Any property
trustee must be a national or state-chartered bank, and at the time of
appointment have securities rated in one of the three highest rating categories
by a nationally recognized statistical rating organization and have capital and
surplus of at least $50,000,000. No resignation or removal of a trustee and no
appointment of a successor trustee shall be effective until the acceptance of
appointment by the successor trustee in accordance with the provisions of the
trust agreement.
Merger or Consolidation of Trustees
Any entity into which the property trustee or the Delaware trustee may be
merged or converted or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which such trustee is
a party, or any entity succeeding to all or substantially all the corporate
trust business of such trustee, will be the successor of such trustee under the
trust agreement, provided such entity is otherwise qualified and eligible.
Mergers, Consolidations, Amalgamations or Replacements of the Trust
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, convey, transfer or lease its properties and assets substantially
as an entirety to, any entity, except described below or as otherwise set forth
in the trust agreement. The Trust may, at the request of the holders of the
common securities and with the consent of the holders of at least a majority
aggregate liquidation amount of the outstanding preferred securities, merge
with or into, consolidate, amalgamate, or be replaced by or convey, transfer or
lease its properties and assets substantially as an entirety to a trust
organized as such under the laws of any state, so long as:
. such successor entity (1) expressly assumes all the obligations of the
Trust with respect to the preferred securities or (2) substitutes for the
preferred securities other securities having substantially the same terms
as the preferred securities so long as the substitute preferred
securities have the same priority as the preferred securities with
respect to distributions and payments upon liquidation, redemption and
otherwise;
. a trustee of such successor entity, possessing the same powers and duties
as the property trustee, is appointed to hold the junior subordinated
debentures,
. such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not cause the preferred securities (including any
substitute preferred securities) to be downgraded by any nationally
recognized statistical rating organization, if then rated;
. such merger, consolidation, amalgamation, replacement, conveyance
transfer or lease does not adversely affect the rights, preferences and
privileges of the holders of the preferred securities (including any
substitute preferred securities) in any material respect;
. such successor entity has a purpose substantially identical to that of
the Trust;
. prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Trust has received an opinion from
independent counsel experienced in such matters to the effect that (1)
such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely
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affect your rights, preference and privileges as a holder of preferred
securities (including any substitute preferred securities) in any material
respect, and (2) following such merger, consolidation, amalgamation,
replacement, conveyance transfer or lease, neither the Trust nor such
successor entity will be required to register as an investment company
under the Investment Company Act; and
. we or any permitted successor or assignee own all the common securities
of such successor entity and guarantee the obligations of such successor
entity under the successor securities at least to the extent provided by
the guarantee.
Notwithstanding the foregoing, the Trust may not, except with the consent of
holders of 100% in aggregate liquidation amount of the preferred securities,
consolidate, amalgamate, merge with or into, or be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to,
any other entity or permit any other entity to consolidate, amalgamate, merge
with or into or replace it if such consolidation, amalgamation, merger,
replacement, conveyance, transfer or lease would cause the Trust or the
successor entity to be taxable as a corporation for United States federal
income tax purposes.
Voting Rights; Amendment of Trust Agreement
Except as provided above and under "--Removal of Trustees; Appointment of
Successors" and "Description of Guarantee--Amendments and Assignment" and as
otherwise required by law and the trust agreement, you will have no voting
rights.
The trust agreement may be amended from time to time by the holders of a
majority of the common securities and the property trustee, without your
consent, to:
. cure any ambiguity, correct or supplement any provisions in the trust
agreement that may be inconsistent with any other provision, or to make
any other provisions with respect to matters or questions arising under
the trust agreement, provided that any such amendment does not adversely
affect in any material respect your interests; or
. modify, eliminate or add to any provisions of the trust agreement to such
extent as may be necessary to ensure that the Trust will not be taxable
as a corporation for United States federal income tax purposes at any
time that any preferred or common securities are outstanding or to ensure
that the Trust will not be required to register as an "investment
company" under the Investment Company Act.
Any such amendments of the trust agreement will become effective when notice
of such amendment is given to the holders of preferred securities and common
securities.
The trust agreement may be amended by the holders of a majority of the
common securities and the property trustee with:
. the consent of holders representing not less than a majority in aggregate
liquidation amount of the outstanding preferred securities; and
. receipt by the trustees of an opinion of counsel to the effect that such
amendment or the exercise of any power granted to the trustees in
accordance with such amendment will not affect the Trust's not being
taxable as a corporation for United States federal income tax purposes or
the Trust's exemption from status as an "investment company" under the
Investment Company Act.
However, without the consent of each holder of preferred securities or common
securities affected thereby, the trust agreement may not be amended to:
. change the amount or timing of any distribution on the preferred
securities and common securities or otherwise adversely affect the amount
of any distribution required to be made in respect of the preferred
securities and common securities as of a specified date; or
. restrict your right and the right of a holder of common securities to
institute suit for the enforcement of any such payment on or after such
date.
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So long as any junior subordinated debentures are held by the Trust, the
property trustee will not:
. direct the time, method and place of conducting any proceeding for any
remedy available to the debenture trustee, or execute any trust or power
conferred on the property trustee with respect to the junior subordinated
debentures;
. waive any past default that is waivable under Section 5.13 of the
indenture;
. exercise any right to rescind or annul a declaration that the principal
of all the junior subordinated debentures shall be due and payable; or
. consent to any amendment, modification or termination of the indenture or
the junior subordinated debentures, where such consent shall be required,
without, in each case, obtaining the prior approval of the holders of at
least a majority in aggregate liquidation amount of the outstanding
preferred securities, or, if a consent under the indenture would require
the consent of each holder of junior subordinated debentures affected
thereby, no such consent will be given by the property trustee without
the prior consent of each holder of the preferred securities.
The property trustee may not revoke any action previously authorized or
approved by a vote of the holders of the preferred securities except by
subsequent vote of the holders of the preferred securities. The property
trustee will notify you of any notice of default with respect to the junior
subordinated debentures. In addition to obtaining your approval as described
above, before taking any of the actions listed above, the property trustee will
obtain an opinion of counsel experienced in such matters to the effect that the
Trust will not be taxable as a corporation for United States federal income tax
purposes on account of such action.
Any required approval of holders of preferred securities may be given at a
meeting of holders of preferred securities convened for such purpose or
pursuant to written consent. The property trustee will cause a notice of any
meeting at which you are entitled to vote, or of any matter upon which action
by your written consent is to be taken, to be given to you in the manner set
forth in the trust agreement.
Your vote or consent will not be required to redeem and cancel preferred
securities in accordance with the trust agreement.
Notwithstanding that you are entitled to vote or consent under any of the
circumstances described above, any of the preferred securities that are owned
by us, the trustees or any of our affiliates or any trustees, will, for
purposes of such vote or consent, be treated as if they were not outstanding.
Expenses and Taxes
In the indenture, we have agreed to pay all debts and other obligations
(other than distributions on the preferred securities) and all costs and
expenses of the Trust (including costs and expenses relating to the
organization of the Trust, the fees and expenses of the trustees and the costs
and expenses relating to the operation of the Trust) and to pay any and all
taxes and all costs and expenses with respect thereto (other than United States
withholding taxes) to which the Trust might become subject. These obligations
of ours under the indenture are for the benefit of, and shall be enforceable
by, any creditor of the Trust to whom any of these debts, obligations, costs,
expenses and taxes are owed whether or not such creditor has received notice
thereof. Any such creditor may enforce these obligations directly against us,
and we have irrevocably waived any right or remedy to require that any creditor
take any action against the Trust or any other person before proceeding against
us. We have also agreed in the indenture to execute such additional agreements
as may be necessary or desirable to give full effect to the foregoing.
Book Entry, Delivery and Form
The preferred securities will be issued in the form of one or more fully
registered global securities, which will be deposited with, or on behalf of,
DTC and registered in the name of a DTC nominee. Unless and until it
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is exchangeable in whole or in part for the preferred securities in definitive
form, a global security may not be transferred except as a whole by DTC to a
nominee of DTC or by a nominee of DTC to DTC or to another nominee of DTC or by
DTC or any such nominee to a successor of DTC or to a nominee of such
successor.
Ownership of beneficial interests in a global security will be limited to
participants that have accounts with DTC or its nominee or persons that may
hold interests through such participants. We expect that, upon the issuance of
a global security, DTC will credit, on its book-entry registration and transfer
system, the participants' accounts with their respective principal amounts of
preferred securities represented by such global security. Ownership of
beneficial interests in such global security will be shown on, and the transfer
of such ownership interests will be effected only through, records maintained
by DTC (with respect to your interests of participants) and on the records of
participants (with respect to your interests). You will not receive written
confirmation from DTC of your purchase, but are expected to receive written
confirmations from participants through which you entered into the transaction.
Transfers of ownership interests will be accomplished by entries on the books
of participants acting on your behalf.
So long as DTC, or its nominee, is the registered owner of a global
security, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the preferred securities represented by such global security
for all purposes under the trust agreement. Except as provided below, you are
the owner of beneficial interests in a global security and will not be entitled
to receive physical delivery of the preferred securities in definitive form.
You will not be considered an owner or holder under the trust agreement.
Accordingly, you must rely on the procedures of DTC and, if you are not a
participant, on the procedures of the participant through which you own your
interest, to exercise any rights as a holder of preferred securities under the
trust agreement. We understand that, under DTC's existing practices, in the
event that we request any action you, or if you desire to take any action which
a holder is entitled to take under the trust agreement, DTC would authorize the
participants holding your interests to take such action, and such participants
would authorize you to take such action or would otherwise act upon your
instructions. Redemption notices will also be sent to DTC. If less than all of
the preferred securities are being redeemed, we understand that it is DTC's
existing practice to determine by lot the amount of the interest of each
participant to be redeemed.
Distributions on the preferred securities registered in the name of DTC or
its nominee will be made to DTC or its nominee, as the case may be, as the
registered owner of the global security representing such preferred securities.
Neither the trustees, nor the administrators, any paying agent or any other
agent of ours or the trustees will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the global security for such preferred securities or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests. Disbursements of distributions to participants shall be
the responsibility of DTC. DTC's practice is to credit participants' accounts
on a payable date in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive payment on
the payable date. Payments by participants to you will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such participant and not of DTC, us, the
trustees, the paying agent or any other agent of ours, subject to any statutory
or regulatory requirements as may be in effect from time to time.
DTC may discontinue providing its services as securities depository with
respect to the preferred securities at any time by giving reasonable notice to
us or the trustees. If DTC notifies us that it is unwilling to continue as
such, or if it is unable to continue or ceases to be a clearing agency
registered under the Exchange Act and a successor depository is not appointed
by us within ninety days after receiving such notice or becoming aware that DTC
is no longer so registered, we will issue the preferred securities in
definitive form upon registration of, transfer of, or in exchange for, such
global security. In addition, we may at any time and in our sole discretion
determine not to have the preferred securities represented by one or more
global securities and, in such event, will issue preferred securities in
definitive form in exchange for all of the global securities representing such
preferred securities.
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DTC has advised the Trust and us as follows:
. DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve, a "clearing
corporation" within the meaning of the Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of Section 17A of
the Exchange Act;
. DTC was created to hold securities for its participants and to facilitate
the clearance and settlement of securities transactions between
participants through electronic book entry changes to accounts of its
participants, thereby eliminating the need for physical movement of
certificates;
. participants include securities brokers and dealers (such as the
underwriters), banks, trust companies and clearing corporations and may
include certain other organizations;
. certain of such participants (or their representatives), together with
other entities, own DTC; and
. indirect access to the DTC system is available to others such as banks,
brokers, dealers and trust companies that clear through, or maintain a
custodial relationship with, a participant, either directly or
indirectly.
Same-Day Settlement and Payment
Settlement for the preferred securities will be made by the underwriters in
immediately available funds.
Secondary trading in preferred securities of corporate issuers is generally
settled in clearinghouse or next-day funds. In contrast, the preferred
securities will trade in DTC's Same-Day Funds Settlement System, and secondary
market trading activity in the preferred securities will therefore be required
by DTC to settle in immediately available funds. No assurance can be given as
to the effect, if any, of settlement in immediately available funds on trading
activity in the preferred securities.
Payment and Paying Agency
Payments in respect of the preferred securities will be made to DTC, which
will credit the relevant accounts at DTC on the applicable distribution dates
or, if the preferred securities are not held by DTC, such payments will be
made by check mailed to the address of the holder entitled thereto such
address appears on the securities register for the preferred securities and
common securities. The paying agent will initially be the property trustee and
any co-paying agent chosen by the property trustee and acceptable to the
administrators. The paying agent will be permitted to resign as paying agent
upon 30 days' written notice to the property trustee and the administrators.
If the property trustee is no longer the paying agent, the property trustee is
to appoint a successor (which must be a bank or trust company reasonably
acceptable to the administrators) to act as paying agent.
Registrar and Transfer Agent
The property trustee will act as registrar and transfer agent for the
preferred securities.
Registration of transfers of preferred securities will be effected without
charge by or on behalf of the Trust, but only upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange. The Trust will not be required to register or cause to be registered
the transfer of the preferred securities after the preferred securities have
been called for redemption.
Obligations and Duties of the Property Trustee
The property trustee, other than during the occurrence and continuance of
an event of default undertakes to perform only such duties as are specifically
set forth in the trust agreement and, after such event of default, must
exercise the same degree of care and skill as a prudent person would exercise
or use in the conduct of his or her own affairs. Subject to this provision,
the property trustee is under no obligation to exercise any of the
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powers vested in it by the trust agreement at your request unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby.
For information concerning the relationships between Bankers Trust Company,
the property trustee, and us, see "Description of Junior Subordinated
Debentures--Information Concerning the Debenture Trustee."
Miscellaneous
The administrators and the property trustee are authorized and directed to
conduct the affairs of and to operate the Trust in such a way that (1) the
Trust will not be deemed to be an "investment company" required to be
registered under the Investment Company Act or taxable as a corporation for
United States federal income tax purposes and (2) the junior subordinated
debentures will be treated as our indebtedness for United States federal income
tax purposes. In this connection, the property trustee and the holders of
common securities are authorized to take any action not inconsistent with
applicable law, the certificate of trust of the Trust or the trust agreement
that the property trustee and the holders of common securities determine in
their discretion to be necessary or desirable for such purposes, as long as
such action does not materially adversely affect your interests.
You will not have preemptive or similar rights.
The Trust may not borrow money, issue debt or mortgage or pledge any of its
assets.
Governing Law
The trust agreement will be governed by and construed in accordance with the
laws of the State of Delaware.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The junior subordinated debentures are to be issued under the indenture
between Bankers Trust Company, the debenture trustee, and us. This summary of
certain terms and provisions of the junior subordinated debentures and the
indenture is not complete. You should read the form of the indenture that is
filed as an exhibit to the registration statement of which this prospectus is a
part. Whenever particular defined terms of the indenture (as amended or
supplemented from time to time) are referred to in this prospectus, such
defined terms are incorporated herein by reference. A copy of the form of
indenture is available from the debenture trustee upon request.
General
Concurrently with the issuance of the preferred securities, the Trust will
invest the proceeds, together with the consideration paid by us for the common
securities, in the junior subordinated debentures issued by us. The junior
subordinated debentures will bear interest, accruing from , at
the annual rate of % of the principal amount thereof, payable quarterly
in arrears on March 31, June 30, September 30 and December 31 of each year,
commencing , to the person in whose name each junior
subordinated debenture is registered at the close of business on the 15th day
of March, June, September or December (whether or not a business day) next
preceding such interest payment date. It is anticipated that, until the
liquidation (if any) of the Trust, each junior subordinated debenture will be
registered in the name of the Trust and held by the property trustee in trust
for you and the holders of the common securities.
The amount of interest payable for any period less than a full interest
period will be computed on the basis of a 360-day year of twelve 30-day months
and the actual days elapsed in a partial month in such period. The amount of
interest payable for any full interest period will be computed by dividing the
annual rate by four. If
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any date on which interest is payable to the junior subordinated debentures is
not a business day, then payment of the interest payable on such date will be
made on the next business day (without any interest or other payment in respect
of any such delay), or, if such business day falls in the next calendar year,
such payment will be made on the immediately preceding business day in each
case with the same force and effect as if made on the date such payment was
originally payable.
Accrued interest that is not paid on the applicable interest payment date
will bear additional interest on the amount thereof (to the extent permitted by
law) at the annual rate of %, compounded quarterly and computed on the
basis of a 360-day year of twelve 30-day months and the actual days elapsed in
a partial month in such period. The amount of additional interest payable for
any full interest period will be computed by dividing the annual rate by four.
The term "interest" as used herein includes quarterly interest payments,
interest on quarterly interest payments not paid on the applicable interest
payment date and, if applicable, any additional sums we pay on the junior
subordinated debentures following a Tax Event (as defined under "Description of
Preferred Securities--Redemption") that may be required so that distributions
payable by the Trust will not be reduced by any additional taxes, duties or
other governmental changes resulting from such Tax Event.
The junior subordinated debentures will mature on , 2029,
subject to our right to shorten the maturity date once at any time to any date
not earlier than , 2004, if we have received prior approval of the
Federal Reserve if then required under applicable capital guidelines or
policies of the Federal Reserve. In the event we elect to shorten the maturity
of the junior subordinated debentures, we will give notice to the registered
holders of the junior subordinated debentures, the debenture trustee and the
Trust of such shortening no less than 90 days prior to the effectiveness
thereof. The property trustee must give you and the holders of the common
securities notice of the shortening of the stated maturity at least 30 but not
more than 60 days before such date.
The junior subordinated debentures will be unsecured and will rank junior
and be subordinate in right of payment to all of our senior indebtedness and
equally with our obligations associated with the outstanding preferred
securities of GBCI Capital Trust. The junior subordinated debentures will not
be subject to a sinking fund. The indenture does not limit our ability to incur
or issue other secured or unsecured debt, including senior indebtedness,
whether under the junior subordinated debentures or any existing or other
indenture that we may enter into in the future or otherwise. See "--
Subordination."
Option to Extend Interest Payment Period
So long as no event of default under the junior subordinated debentures has
occurred and is continuing, we have the right at any time during the term of
the junior subordinated debentures to defer the payment of interest at any time
or from time to time for a period not exceeding 20 consecutive quarterly
periods with respect to each extension period, provided that no extension
period may extend beyond the stated maturity of the junior subordinated
debentures. During any extension period we have the right to make partial
payments of interest on any interest payment date. At the end of an extension
period, we must pay all interest then accrued and unpaid (together with
interest thereon at the annual rate of %, compounded quarterly and
computed on the basis of a 360-day year of twelve 30-day months and the actual
days elapsed in a partial month in such period, to the extent permitted by
applicable law). The amount of additional interest payable for any full
interest period will be computed by dividing the annual rate by four. During an
extension period, interest will continue to accrue and holders of junior
subordinated debentures (or holders of preferred securities while outstanding)
will be required to accrue interest income for United States federal income tax
purposes. See "Certain Federal Income Tax Consequences--Interest Income and
Original Issue Discount."
During any extension period, we may not:
. make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any of our debt securities that rank equally
in all respects with or junior in interest to the junior subordinated
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debentures, including our obligations associated with the outstanding
preferred securities of GBCI Capital Trust, or
. declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of our capital
stock, except that we may:
(a) repurchase, redeem or make other acquisitions of shares of our
capital stock in connection with any employment contract benefit
plan or other similar arrangement with or for the benefit of any
one or more employees, officers directors or consultants, in
connection with a dividend reinvestment or stockholder stock
purchase plan or in connection with the issuance of our capital
stock (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction
entered into prior to the applicable extension period;
(b) take any necessary action in connection with any reclassification,
exchange or conversion of any class or series of our capital stock
(or any capital stock of a subsidiary of ours) for any class or
series of our capital stock or of any class or series of our
indebtedness for any class or series of our capital stock;
(c) purchase fractional interests in shares of our capital stock
pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged;
(d) declare a dividend in connection with any stockholders' rights
plan, or issue rights, stock or other property under any
stockholders' rights plan, or redeem or repurchase rights pursuant
thereto; or
(e) declare a dividend in the form of stock warrants, options or other
rights where the dividend stock or the stock issuable upon exercise
of such warrants, options or other rights is the same stock as that
on which the dividend is being paid or ranks equally with or junior
to such stock.
Prior to the termination of any extension period, we may further defer the
payment of interest, provided that no extension period may exceed 20
consecutive quarterly periods or extend beyond the stated maturity of the
junior subordinated debentures. Upon the termination of any extension period
and the payment of all amounts then due, we may elect to begin a new extension
period subject to the above conditions. No interest shall be due and payable
during an extension period, except at its end. We must give the trustees notice
of our election of such extension period at least one business day prior to the
earlier of (1) the date the distribution on the preferred securities would have
been payable but for the election to begin an extension period and (2) the date
the property trustee is required to give you notice of the record date or the
date such distribution is payable, but in any event not less than one business
day prior to such record date. The property trustee will give you notice of our
election to begin a new extension period. There is no limitation on the number
of times that we may elect to begin an extension period.
Redemption
We may redeem the junior subordinated debentures prior to maturity at our
option (1) on or after , 2004, in whole at any time or in part
from time to time, or (2) in whole, but not in part, at any time within 90 days
following the occurrence and during the continuation of a Tax Event, Investment
Company Event or Capital Treatment Event (each as defined under "Description of
Preferred Securities--Redemption"), in each case at a redemption price equal to
the outstanding principal amount of the junior subordinated debentures plus
accrued interest (including any additional interest on any additional sums we
pay following a Tax Event as described below under "--Additional Sums"). The
proceeds of any such redemption will be used by the Trust to redeem the
preferred securities.
The Federal Reserve's risk-based capital guidelines, which are subject to
change, currently provide that redemptions of permanent equity or other capital
instruments before stated maturity could have a significant impact on a bank
holding company's overall capital structure and that any organization
considering such a
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redemption should consult with the Federal Reserve before redeeming any equity
or capital instrument prior to maturity if such redemption could have a
material effect on the level or composition of the organization's capital base.
Consultation may not be necessary if the equity or capital instrument was
redeemed with the proceeds of, or replaced by, a like amount of a similar or
higher quality capital instrument and the Federal Reserve considers the
organization's capital position to be fully adequate after the redemption.
If we redeem the junior subordinated debentures prior to their stated
maturity that would constitute the redemption of capital instruments under the
Federal Reserve's current risk-based capital guidelines and may be subject to
the prior approval of the Federal Reserve. The redemption of the junior
subordinated debentures also could be subject to the additional prior approval
of the Federal Reserve under its current risk-based capital guidelines.
Additional Sums
We have covenanted in the indenture that, if and for so long as the Trust is
the holder of all junior subordinated debentures and the Trust is required to
pay any additional taxes, duties or other governmental charges as a result of a
Tax Event, we will pay as additional sums on the junior subordinated debentures
such amounts as may be required so that the distributions payable by the Trust
will not be reduced as a result of any such additional taxes, duties or other
governmental charges. See "Description of Preferred Securities--Redemption."
Registration, Denomination and Transfer
The junior subordinated debentures will initially be registered in the name
of the Trust. If the junior subordinated debentures are distributed to you, it
is anticipated that the depositary arrangements for the junior subordinated
debentures will be substantially identical to those in effect for the preferred
securities. See "Description of Preferred Securities--Book Entry, Delivery and
Form."
Although DTC has agreed to the procedures described above, it is under no
obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and we do not appoint a successor depositary
within 90 days of receipt of notice from DTC to such effect, we will cause the
junior subordinated debentures to be issued in definitive form.
Payments on junior subordinated debentures represented by a global security
will be made to Cede & Co., the nominee for DTC, as the registered holder of
the junior subordinated debentures, described under "Description of Preferred
Securities--Book Entry, Delivery and Form." If junior subordinated debentures
are issued in certificated form, principal and interest will be payable, the
transfer of the junior subordinated debentures will be registerable, and junior
subordinated debentures will be exchangeable for junior subordinated debentures
of other authorized denominations of a like aggregate principal amount, at the
corporate trust office of the debenture trustee in New York, New York, or at
the offices of any paying agent or transfer agent we appoint, provided that
payment of interest may be made at our option by check mailed to the address of
the persons entitled thereto. However, a holder of $1 million or more in
aggregate principal amount of junior subordinated debentures may receive
payments of interest (other than interest payable at the stated maturity) by
wire transfer of immediately available funds upon written request to the
debenture trustee not later than 15 calendar days prior to the date on which
the interest is payable.
Junior subordinated debentures are issuable only in registered form without
coupons in integral multiples of $25. Junior subordinated debentures will be
exchangeable for other junior subordinated debentures of like tenor, of any
authorized denominations, and of a like aggregate principal amount.
Junior subordinated debentures may be presented for exchange as provided
above, and may be presented for registration of transfer (with the form of
transfer endorsed thereon, or a satisfactory written instrument of
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transfer, duly executed), at the office of the securities registrar appointed
under the indenture or at the office of any transfer agent we designate for
such purpose without service charge and upon payment of any taxes and other
governmental charges as described in the indenture. We will appoint the
debenture trustee as securities registrar under the indenture. We may at any
time designate additional transfer agents with respect to the junior
subordinated debentures.
In the event of any redemption, we will not, nor will the debenture trustee
be required to:
. issue, register the transfer of or exchange junior subordinated
debentures during a period beginning at the opening of business 15 days
before the day of selection for redemption of the junior subordinated
debentures to be redeemed and ending at the close of business on the day
of mailing of the relevant notice of redemption; or
. transfer or exchange any junior subordinated debentures so selected for
redemption, except, in the case of any junior subordinated debentures
being redeemed in part, any portion of the debenture not to be redeemed.
Any monies deposited with the debenture trustee or any paying agent, or then
held by us in trust, for the payment of the principal of (and premium, if any)
or interest on any junior subordinated debenture and remaining unclaimed for
two years after this principal (and premium, if any) or interest has become due
and payable shall, at our request, be repaid to us and the holder of such
junior subordinated debenture shall thereafter look, as a general unsecured
creditor, only to us for payment thereof.
Restrictions on Certain Payments; Certain Covenants of the Company
We have covenanted that at any time (1) there has occurred any event (a) of
which we have actual knowledge that with the giving of notice or the lapse of
time, or both, would constitute an event of default under the junior
subordinated debentures and (b) that we have not taken reasonable steps to
cure, (2) if the junior subordinated debentures are held by the Trust, we are
in default with respect to our payment of any obligations under the guarantee,
or (3) we have given notice of our election of an extension period as provided
in the indenture and have not rescinded such notice, or such extension period,
or any extension thereof, is continuing, then we will not:
. make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any of our debt securities that rank equally
in all respects with, or junior in interest to, the junior subordinated
debentures, including our obligations associated with the outstanding
preferred securities of GBCI Capital Trust; or
. declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of our
capital stock, except that we may:
(a) repurchase, redeem or make other acquisitions of shares of our
capital stock in connection with any employment contract, benefit
plan or other similar arrangement with or for the benefit of any
one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock
purchase plan or in connection with the issuance of our capital
stock (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction
entered into prior to the applicable extension period or other
event referred to below;
(b) take any necessary action in connection with any reclassification,
exchange or conversion of any class or series of our capital stock
(or any capital stock of any subsidiary of ours) for any class or
series of our capital stock or of any class or series of our
indebtedness for any class or series of our capital stock;
(c) purchase fractional interests in shares of our capital stock
pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged;
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(d) declare a dividend in connection with any stockholders' rights
plan, or issue rights, stock or other property under any
stockholders' rights plan, or redeem or repurchase rights pursuant
thereto; or
(e) declare a dividend in the form of stock, warrants, options or other
rights where the dividend stock or the stock issuable upon exercise
of such warrants, options or other rights is the same stock as that
on which the dividend is being paid or ranks equally with or junior
to such stock.
We have covenanted in the indenture:
. to continue to hold, directly or indirectly, 100% of the common
securities, provided that certain successors that are permitted pursuant
to the indenture may succeed to our ownership of the common securities;
. as holder of the common securities, not to voluntarily terminate, windup
or liquidate the Trust, other than:
(a) in connection with a distribution of junior subordinated debentures
to the holders of the preferred securities in liquidation of the
Trust; or
(b) in connection with certain mergers, consolidations or amalgamations
permitted by the trust agreement; and
. to use reasonable efforts, consistent with the terms and provisions of
the trust agreement, to cause the Trust to continue not to be taxable as
a corporation for United States federal income tax purposes.
Modification of Indenture
From time to time, we as well as the debenture trustee may, without the
consent of any of the holders of the outstanding junior subordinated
debentures, amend, waive or supplement the provisions of the indenture to:
. evidence our succession to another corporation or association and the
assumption by such person of our obligations under the junior
subordinated debentures;
. add further covenants, restrictions or conditions for the protection of
holders of the junior subordinated debentures;
. cure ambiguities or correct the junior subordinated debentures in the
case of defects or inconsistencies in the provisions thereof, so long as
any such cure or correction does not adversely affect the interest of the
holders of the junior subordinated debentures in any material respect;
. change the terms of the junior subordinated debentures to facilitate the
issuance of the junior subordinated debentures in certificated or other
definitive form;
. evidence or provide for the appointment of a successor debenture trustee;
or
. qualify, or maintain the qualification of, the indenture under the Trust
Indenture Act.
The indenture contains provisions permitting the debenture trustee and us,
with the consent of the holders of not less than a majority in principal amount
of the junior subordinated debentures, to modify the indenture in a manner
affecting the rights of the holders of the junior subordinated debentures.
However, none of these modifications may be made, without the consent of the
holder of each outstanding junior subordinated debenture so affected that
would:
. change the stated maturity of, or any installment of interest on, the
junior subordinated debentures, or reduce the principal amount thereof,
the rate of interest thereon or any premium payable upon the redemption
thereof, or change the place of payment where, or the currency in which,
any such amount is payable, or impair the right to institute suit for the
enforcement of any payment on junior subordinated debentures; or
. reduce the percentage of principal amount of junior subordinated
debentures, the holders of which are required to consent to any
modification of, or waiver of rights under, the indenture.
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Furthermore, so long as any of the preferred securities remain outstanding,
no modification may be made that adversely affects you in any material respect,
and no termination of the indenture may occur, and no waiver of any event of
default or compliance with any covenant under the indenture may be effective,
without the prior consent of the holders of at least a majority of the
aggregate liquidation amount of the outstanding preferred securities unless and
until the principal of (and premium, if any, on) the junior subordinated
debentures and all accrued and unpaid interest thereon have been paid in full
and certain other conditions are satisfied.
Debenture Events of Default
The indenture provides that any one or more of the following described
events with respect to the junior subordinated debentures that has occurred and
is continuing constitute an "event of default" with respect to the junior
subordinated debentures:
. failure to pay any interest on the junior subordinated debentures when
due and continuance of this default for a period of 30 days (subject to
the deferral of any due date in the case of an extension period);
. failure to pay any principal of or premium, if any, on the junior
subordinated debentures when due whether at the stated maturity;
. failure to observe or perform certain other covenants contained in the
indenture for 90 days after written notice of such failure to us from the
debenture trustee or the holders of at least 25% in aggregate outstanding
principal amount of the outstanding junior subordinated debentures; or
. the occurrence of the appointment of a receiver or other similar official
in any liquidation, insolvency or similar proceeding with respect to us
or all or substantially all of our property; or a court or other
governmental agency shall enter a decree or order appointing a receiver
or similar official and such decree or order shall remain unstayed and
undischarged for a period of 60 days.
As described in "Description of Preferred Securities--Events of Default;
Notice," the occurrence of an event of default in respect of the junior
subordinated debentures will also constitute an event of default in respect of
the preferred securities and common securities.
The holders of at least a majority in aggregate principal amount of
outstanding junior subordinated debentures have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
debenture trustee. The debenture trustee or the holders of not less than 25% in
aggregate principal amount of outstanding junior subordinated debentures may
declare the principal due and payable immediately upon an event of default,
and, should the debenture trustee or such holders of junior subordinated
debentures fail to make such declaration, the holders of at least 25% in
aggregate liquidation amount of the outstanding preferred securities shall have
such right. The holders of a majority in aggregate principal amount of
outstanding junior subordinated debentures may annul such declaration and waive
the default if all defaults (other than the non-payment of the principal of
junior subordinated debentures which has become due solely by such
acceleration) have been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the debenture trustee. Should the holders of junior
subordinated debentures fail to annul such declaration and waive such default,
the holders of a majority in aggregate liquidation amount of the outstanding
preferred securities shall have such right.
The holders of at least a majority in aggregate principal amount of the
outstanding junior subordinated debentures affected thereby may, on behalf of
the holders of all the junior subordinated debentures, waive any past default,
except a default in the payment of principal (or premium, if any) or interest
(unless this default has been cured and a sum sufficient to pay all matured
installments of interest and principal (and premium on, if any) due otherwise
than by acceleration has been deposited with the debenture trustee) or a
default in respect of a covenant or provision which under the indenture cannot
be modified or amended without the consent of the holder of each outstanding
junior subordinated debenture affected by the default. See "--Modification of
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Indenture." We are required to certify annually to the debenture trustee as to
whether or not we are in compliance with all the conditions and covenants
applicable to us under the indenture.
If an event of default occurs and is continuing, the property trustee will
have the right to declare the principal of and the interest on the junior
subordinated debentures, and any other amounts payable under the indenture, to
be due and payable and to enforce its other rights as a creditor with respect
to the junior subordinated debentures.
Enforcement of Certain Rights by Holders of Preferred Securities
If an event of default has occurred and is continuing and such event is
attributable to our failure to pay any amounts payable in respect of the junior
subordinated debentures on the date such amounts are otherwise payable, you may
institute a legal action against us to enforce the payment to you of an amount
equal to the amount payable in respect of junior subordinated debentures having
a principal amount equal to the aggregate liquidation amount of the preferred
securities you hold. We may not amend the indenture to remove the foregoing
right to bring such legal action without your prior written consent. We will
have the right under the indenture to set-off any payment we make to you in
connection with such a legal action.
You are not able to exercise directly any remedies available to the holders
of the junior subordinated debentures except under the circumstances described
in the preceding paragraph. See "Description of Preferred Securities--Events of
Default; Notice."
Consolidation, Merger, Sale of Assets and Other Transactions
The indenture provides that we may not consolidate with or merge into any
other entity or convey, transfer or lease our properties and assets
substantially as an entirety to any entity, and no entity may consolidate with
or merge into us or convey, transfer or lease its properties and assets
substantially as an entirety to us, unless:
. in the event we consolidate with or merge into another entity or convey
or transfer our properties and assets substantially as an entirety to any
entity, the successor entity is organized under the laws of the United
States or any state or the District of Columbia, and such successor
entity expressly assumes our obligations in respect of the junior
subordinated debentures; provided, however, that nothing in the indenture
shall be deemed to restrict or prohibit, and no supplemental indenture
shall be required in the case of the merger of a bank (as defined below)
with and into a bank or us, the consolidation of banks into a bank or us,
or the sale or other disposition of all or substantially all of the
assets of any bank to another bank or us, if, in any such case in which
we are not the surviving, resulting or acquiring entity, we would own,
directly or indirectly, at least 80% of the voting securities of the bank
(and of any other bank any voting securities of which are owned, directly
or indirectly, by such bank) surviving such merger, resulting from such
consolidation or acquiring such assets;
. immediately after giving effect thereto, no event of default with respect
to the junior subordinated debentures, and no event which, after notice
or lapse of time or both, would constitute an event of default with
respect to the junior subordinated debentures, has occurred and is
continuing; and
. certain other conditions as prescribed in the indenture are satisfied.
For purposes of the first bullet point above, the term "bank" means each of:
. any banking subsidiary of ours the consolidated assets of which
constitute 20% or more of our consolidated assets and our consolidated
subsidiaries;
. any other banking subsidiary designated as a bank pursuant to a board
resolution and set forth in an officers' certificate delivered to the
trustee; and
. any subsidiary of ours that owns, directly or indirectly, any voting
securities, or options, warrants or rights to subscribe for or purchase
voting securities, of any bank under the first and second bullet points
above and in the case of all three bullet points above their respective
successors (whether by
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consolidation, merger, conversion transfer of substantially all their
assets and business or otherwise) so long as any such successor is a
banking subsidiary (in the case of the first and second bullet point or a
subsidiary (in the case of the third bullet point) of ours.
The provisions of the indenture do not afford holders of the junior
subordinated debentures protection in the event we are involved in a highly
leveraged or other transaction that may adversely affect holders of the junior
subordinated debentures.
Satisfaction and Discharge
The indenture will cease to be of further effect and we will deemed to have
satisfied and discharged the indenture when:
. all junior subordinated debentures not previously delivered to the
debenture trustee for cancellation (1) have become due and payable, or
(2) will become due and payable at the stated maturity within one year;
. we deposit or cause to be deposited with the debenture trustee funds, in
trust, for the purpose and in an amount sufficient to pay and discharge
the entire indebtedness on the junior subordinated debentures not
previously delivered to the debenture trustee for cancellation, for the
principal (and premium, if any) and interest to the date of the deposit
or to the stated maturity or redemption date; and
. we have paid all other sums payable by us under the indenture and we have
delivered applicable certificates and opinions that indicate we have
complied with all of our obligations.
Subordination
The junior subordinated debentures will be subordinate and junior in right
of payment, to the extent set forth in the indenture, to all of our senior
indebtedness (as defined below) of and equally with our obligations associated
with the outstanding preferred securities of GBCI Capital Trust. If we default
in the payment of any principal, premium, if any, or interest, if any, or any
other amount payable on any senior indebtedness when the same becomes due and
payable whether at maturity or at a date fixed for redemption or by
declaration of acceleration or otherwise, then unless and until such default
has been cured or waived or has ceased to exist or all senior indebtedness has
been paid, no direct or indirect payment (in cash, property, securities, by
set-off or otherwise) may be made or agreed to be made on the junior
subordinated debentures, or in respect of any redemption repayment,
retirement, purchase or other acquisition of any of the junior subordinated
debentures.
As used herein, "senior indebtedness" means, whether recourse is to all or
a portion of our assets and whether or not contingent:
. every obligation of ours for money borrowed;
. every obligation of ours evidenced by bonds, debentures, notes or other
similar instruments, including obligations incurred in connection with
the acquisition of property, assets or businesses;
. every reimbursement obligation of ours with respect to letters of credit,
bankers' acceptance or similar facilities issued for our account;
. every obligation of ours issued or assumed as the deferred purchase price
of property or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business);
. every capital lease obligation of ours;
. every obligation of ours for claims (as defined in Section 101(4) of the
United States Bankruptcy Code of 1978, as amended) in respect of
derivative products such as interest foreign exchange rate contracts,
commodity contracts and similar arrangements; and
. every obligation of the type referred to above of another person and all
dividends of another person the payment of which, in either case, we have
guaranteed or are responsible or liable, directly or indirectly, as
obligor or otherwise.
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However, senior indebtedness shall not include any of the following:
. any obligations which, by their terms, are expressly stated to rank
equally in right of payment with, or to not be superior in right of
payment to, the junior subordinated debentures;
. any of our senior indebtedness which when incurred and without respect to
any election under Section 1111(b) of the United States Bankruptcy Code
of 1978, as amended, was without recourse to us;
. any indebtedness of ours to any of our subsidiaries;
. indebtedness to executive officers or directors; or
. any indebtedness in respect of debt securities issued to any trust, or a
trustee of such trust, partnership or other entity affiliated with us
that is a financing entity of ours in connection with the issuance by
such financing entity of securities that are similar to the preferred
securities, including the outstanding preferred securities of GBCI
Capital Trust.
As of December 31, 1998, the senior indebtedness was approximately $64.2
million. All senior indebtedness (including any interest thereon accruing after
the commencement of any such proceedings) shall first be paid in full before
any payment or distribution, whether in cash, securities or other property, is
made on account of the junior subordinated debentures in the event of:
. certain events of bankruptcy, dissolution or liquidation of us or another
holder of the common securities;
. any proceeding for our liquidation, dissolution or other winding up,
voluntary or involuntary, whether or not involving insolvency or bankrupt
proceedings;
. any assignment by us for the benefit of creditors; or
. any other marshaling of our assets.
In such event, any payment or distribution on account of the junior
subordinated debentures, whether in cash, securities or other property, that
would otherwise (but for the subordination provisions) be payable or
deliverable in respect of the junior subordinated debentures will be paid as
described above directly to the holders of senior indebtedness in accordance
with the priorities then existing among such holders until all senior
indebtedness (including any interest thereon accruing after the commencement of
any such proceedings) has been paid in full.
In the event of any proceeding described above, after payment in full of all
sums owing with respect to our senior indebtedness, the holders of junior
subordinated debentures, together with the holders of our obligations ranking
on a parity with the junior subordinated debentures, will be entitled to be
paid from our remaining assets the amounts at the time due and owing on the
junior subordinated debentures and such other obligations. This payment will be
made before any payment or other distribution, whether in cash, property or
otherwise, will be made on account of any capital stock or obligations ranking
junior to the junior subordinated debentures and such other obligations. If
payment or distribution on account of the junior subordinated debentures of any
character or security, whether in cash, securities or other property, is
received by any holder of any junior subordinated debentures in contravention
of any of the terms hereof and before all our senior indebtedness has been paid
in full, such payment or distribution or security will be received in trust for
the benefit of, and must be paid over or delivered and transferred to, the
holders of our senior indebtedness at the time outstanding in accordance with
the priorities then existing among such holders for application to the payment
of all senior indebtedness remaining unpaid to the extent necessary to pay all
such senior indebtedness in full.
By reason of such subordination, in the event of our insolvency, holders of
senior indebtedness may receive more, ratably, and holders of the junior
subordinated debentures may receive less, ratably, than our other creditors.
Such subordination will not prevent the occurrence of any event of default in
respect of the junior subordinated debentures.
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The indenture places no limitation on the amount of additional senior
indebtedness that we may incur. We expect from time to time to incur additional
senior indebtedness.
Information Concerning the Debenture Trustee
The debenture trustee, other than during the occurrence and continuance of a
default in the performance of our obligations under the junior subordinated
debentures, is under no obligation to exercise any of the powers vested in it
by the indenture at the request of any holder of junior subordinated
debentures, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities that might be incurred by the exercise of these
powers. The debenture trustee is not required to expend or risk its own funds
or otherwise incur personal financial liability in the performance of its
duties if the debenture trustee reasonably believes that repayment or adequate
indemnity is not reasonably assured to it.
Bankers Trust Company, the debenture trustee, may serve from time to time as
trustee under other indentures or trust agreements with us or our subsidiaries
relating to other issues of our securities. In addition, we as well as certain
of our affiliates may have other banking relationships with Bankers Trust
Company and its affiliates.
Governing Law
The indenture and the junior subordinated debentures will be governed by and
construed in accordance with the laws of the State of New York.
DESCRIPTION OF GUARANTEE
We will execute and deliver the guarantee concurrently with the issuance of
preferred securities by the Trust for your benefit. Bankers Trust Company will
act as guarantee trustee under the guarantee. The guarantee trustee will hold
the guarantee for your benefit. This summary of certain provisions of the
guarantee is not complete. You should read the form of the guarantee, which is
filed as an exhibit to the registration statement of which this prospectus is a
part. A copy of the form of guarantee is available upon request from the
guarantee trustee.
General
We will irrevocably agree to pay in full on a subordinated basis, to the
extent set forth in the guarantee and described herein, the guarantee payments
described below to you, as and when due, regardless of any defense, right of
set-off or counterclaim that the Trust may have or assert other than the
defense of payment. The following payments with respect to the preferred
securities, to the extent not paid by or on behalf of the Trust, will be
subject to the guarantee:
. any accrued and unpaid distributions required to be paid on such
preferred securities, to the extent that the Trust has funds on hand
available therefor at such time;
. the redemption price with respect to any preferred securities called for
redemption, to the extent that the Trust has funds on hand available for
its payment at such time; and
. upon a voluntary or involuntary dissolution, termination, winding up or
liquidation of the Trust (unless the junior subordinated debentures are
distributed to you), the lessor of:
(a) the aggregate of the liquidation amount and all accumulated and
unpaid distributions to the date of payment, to the extent that the
Trust has funds on hand available for their payment; and
(b) the amount of assets of the Trust remaining available for
distribution to you on liquidation of the Trust.
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Our obligation to make a guarantee payment may be satisfied by our direct
payment to you or by causing the Trust to pay these amounts to you.
The guarantee will be an irrevocable guarantee of payment on a subordinated
basis of the Trust's obligations under the preferred securities, but will apply
only to the extent that the Trust has funds sufficient to make such payments,
and is not a guarantee of collection.
If we do not make payments on the junior subordinated debentures held by the
Trust, the Trust will not be able to pay any amounts payable in respect of the
preferred securities and will not have funds legally available for these
payments. The guarantee will rank subordinate and junior in right of payment to
all of our senior indebtedness. See "--Status of the Guarantee." The guarantee
does not limit our ability to incur or issue other secured or unsecured debt,
including senior indebtedness, whether under the indenture or any other
indenture that we may enter into in the future or otherwise.
We have through the guarantee, the trust agreement, the junior subordinated
debentures and the indenture, taken together, fully, irrevocably and
unconditionally guaranteed all the Trust's obligations under the preferred
securities on a subordinated basis. No single document standing alone or
operating in conjunction with fewer than all the other documents constitutes
such guarantee. Only the combined operation of these documents has the effect
of providing a full, irrevocable and unconditional guarantee of the Trust's
obligations in respect of the preferred securities. See "Relationship Among the
Preferred Securities, the Junior Subordinated Debentures and the Guarantee."
Status of the Guarantee
The guarantee will constitute our unsecured obligation and will rank
subordinate and junior in right of payment to all of our senior indebtedness
and equally with the obligations associated with the outstanding preferred
securities of GBCI Capital Trust in the same manner as the junior subordinated
debentures.
The guarantee will constitute a guarantee of payment and not of collection.
This means that the guarantee trustee may institute a legal proceeding directly
against us as the guarantor to enforce its rights under the guarantee without
first instituting a legal proceeding against any other person or entity. The
guarantee will be held by the guarantee trustee for your benefit. The guarantee
will not be discharged except by payment of the guarantee payments in full to
the extent not paid by the Trust or distribution to the holders of the
preferred securities or the junior subordinated debentures.
Amendments and Assignment
Except with respect to any changes which do not materially adversely affect
your rights (in which case no consent will be required), the guarantee may not
be amended without the prior approval of the holders of not less than a
majority of the aggregate liquidation amount of the outstanding preferred
securities. The manner of obtaining any such approval is set forth under
"Description of Preferred Securities--Voting Rights; Amendment of Trust
Agreement." All guarantees and agreements contained in the guarantee shall bind
our successors, assigns, receivers, trustees and representatives and shall
inure to your benefit and the benefit of all of the holders of the preferred
securities then outstanding.
Events of Default
An event of default under the guarantee will occur if we fail to perform any
of our payment or other obligations under the guarantee, or to perform any non-
payment obligation if such non-payment default remains unremedied for 30 days.
The holders of not less than a majority in aggregate liquidation amount of the
outstanding preferred securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the guarantee
trustee in respect of the guarantee or to direct the exercise of any trust or
power conferred upon the guarantee trustee under the guarantee.
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You may institute a legal proceeding directly against us to enforce your
rights under the guarantee without first instituting a legal proceeding
against the Trust, the guarantee trustee or any other person or entity.
We are required, as guarantor, to certify annually to the guarantee trustee
whether or not we are in compliance with all the conditions and covenants
applicable to us under the guarantee.
Information Concerning the Guarantee Trustee
The guarantee trustee, other than during the occurrence and continuance of
a default by us in performance of the guarantee, undertakes to perform only
such duties as are specifically set forth in the guarantee and, after the
occurrence of an event of default with respect to the guarantee, must exercise
the same degree of care and skill as a prudent person would exercise or use in
the conduct of his or her own affairs. Subject to this provision, the
guarantee trustee is under no obligation to exercise any of the powers vested
in it by the guarantee at your request unless it is offered reasonable
indemnity against the costs, expenses and liabilities that it might incur in
the exercise of these powers.
For information concerning our relationship with Bankers Trust Company, as
guarantee trustee, see "Description of Junior Subordinated Debentures--
Information Concerning the Debenture Trustee.
Termination of the Guarantee
The guarantee will terminate and be of no further force and effect upon
full payment of the redemption price of the preferred securities, upon full
payment of the amounts payable with respect to the preferred securities upon
liquidation of the Trust, or upon distribution of junior subordinated
debentures to you and the other holders of the preferred securities in
exchange for all of the preferred securities. The guarantee will continue to
be effective or will be reinstated, as the case may be, if at any time you
must restore payment of any sums paid to you under the preferred securities or
the guarantee.
Governing Law
The guarantee will be governed by and construed in accordance with the laws
of the State of New York.
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE JUNIOR
SUBORDINATED DEBENTURES, AND THE GUARANTEE
Full and Unconditional Guarantee
We have irrevocably guaranteed, on a subordinate basis payments of
distributions and other amounts due on the preferred securities (to the extent
that Trust has funds available for such payment) and to the extent set forth
under "Description of Guarantee." Taken together, our obligations under the
junior subordinated debentures, the indenture, the trust agreement and the
guarantee provide, in the aggregate, a full, irrevocable and unconditional
guarantee of payments of distributions and other amounts due on the preferred
securities. No single document standing alone or operating in conjunction with
fewer than all the other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the Trust's obligations in respect
of the preferred securities.
If and to the extent that we do not make payments on the junior
subordinated debentures, the Trust will not have sufficient funds to pay
distributions or other amounts due on the preferred securities. The guarantee
does not cover payment of amounts payable with respect to the preferred
securities when the Trust does not have sufficient funds to pay such amounts.
In such event, your remedy is to institute a legal proceeding directly against
us for enforcement of our payment obligations under the junior subordinated
debentures having a principal amount equal to the liquidation amount of the
preferred securities you hold.
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Our obligations under the junior subordinated debentures and the guarantee
are subordinate and junior in right of payment to all senior indebtedness and
rank equally with our obligations associated with the outstanding preferred
securities of GBCI Capital Trust.
Sufficiency of Payments
As long as we make the payments on the junior subordinated debentures when
they are due, such payments will be sufficient to cover distributions and other
payments distributable on the preferred securities, primarily because:
. the aggregate principal amount of the junior subordinated debentures will
be equal to the sum of the aggregate stated liquidation amount of the
preferred securities and common securities;
. the interest rate and interest and other payment dates on the junior
subordinated debentures will match the distribution rate, distribution
dates and other payment dates for the preferred securities;
. we will pay for any and all costs, expenses and liabilities of the Trust
except the Trust's obligations to you and the holders of the common
securities; and
. the trust agreement further provides that the Trust will not engage in
any activity that is not consistent with the limited purposes of the
Trust.
Notwithstanding anything to the contrary in the indenture, we have the right
to set-off any payment we are otherwise required to make thereunder against and
to the extent we have previously made, or are concurrently on the date of such
payment making, a payment under the guarantee.
Enforcement Rights of Holders of Preferred Securities
You may institute a legal proceeding directly against us to enforce your
rights under the guarantee without first instituting a legal proceeding against
the guarantee trustee, the Trust or any other person or entity. See
"Description of Guarantee."
A default or event of default under any of our senior indebtedness would not
constitute a default or event of default in respect of the preferred
securities. However, in the event of payment defaults under, or acceleration of
our senior indebtedness, the subordination provisions of the indenture provide
that no payments may be made in respect of the junior subordinated debentures
until such senior indebtedness has been paid in full or any payment default on
senior indebtedness has been cured or waived. See "Description of Junior
Subordinated Debentures--Subordination."
Limited Purpose of Trust
The preferred securities represent preferred undivided beneficial interests
in the assets of the Trust, and the Trust exists for the sole purpose of
issuing the preferred securities and common securities and investing the
proceeds from their issuance in the junior subordinated debentures. A principal
difference between your rights as a holder of preferred securities and a holder
of a junior subordinated debenture is that a holder of a junior subordinated
debenture is entitled to receive from us payments on junior subordinated
debentures held, while you are entitled to receive distributions or other
amounts distributable with respect to the preferred securities from the Trust
(or from us under the Guarantee) only if and to the extent the Trust has funds
available for the payment of such distributions.
Rights Upon Dissolution
Upon any voluntary or involuntary dissolution of the Trust, other than any
such dissolution involving the distribution of the junior subordinated
debentures, and after satisfaction of liabilities to creditors of the Trust as
required by applicable law, you will be entitled to receive, out of assets held
by the Trust, the liquidation
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distribution in cash. See "Description of Preferred Securities--Liquidation
Distribution Upon Dissolution." If we are voluntarily or involuntarily
liquidated or declare bankruptcy, the Trust, as registered holder of the junior
subordinated debentures, will be our subordinated creditor, subordinated and
junior in right of payment to all our senior indebtedness as set forth in the
indenture, but entitled to receive payment in full of all amounts payable with
respect to the junior subordinated debentures before any of our stockholders
receive payments or distributions. Since we are the guarantor under the
guarantee and have agreed under the indenture to pay for all costs, expenses
and liabilities of the Trust (other than the Trust's obligations to you and the
holders of the common securities), your position as a holder of the preferred
securities and the position of a holder of such junior subordinated debentures
relative to other creditors and to our stockholders in the event of our
liquidation or bankruptcy are expected to be substantially the same.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General
The preferred securities and payments on the preferred securities generally
are subject to taxation. Therefore, you should consider the tax consequences of
owning and receiving payments on the preferred securities before acquiring
them.
We have engaged Blackwell Sanders Peper Martin LLP, Kansas City, Missouri as
special tax counsel ("Tax Counsel") to review the following discussion. They
have given us their written legal opinion that the discussion correctly
describes the principal aspects of the U.S. federal tax treatment of beneficial
owners ("Owners") of preferred securities.
The following discussion is general and may not apply to your particular
circumstances for any of the following (or other) reasons:
. This summary is based on federal tax laws in effect as of the date of
this prospectus. Changes to any of these laws after this date may affect
the tax consequences described below.
. This summary discusses only preferred securities you acquire at original
issuance at the original offering price and hold as capital assets
(within the meaning of federal tax law). It does not discuss all of the
tax consequences that may be relevant to Owners who are subject to
special rules, such as banks, thrift institutions, real estate investment
trusts, regulated investment companies, insurance companies, brokers and
dealers in securities or currencies, certain securities traders, tax-
exempt organizations and certain other financial institutions. This
discussion also does not discuss tax consequences that may be relevant to
an Owner in light of the Owner's particular circumstances, such as an
Owner holding a preferred security as a position in a straddle, hedging,
conversion or other integrated investment.
. This summary does not address:
(a) The income for tax consequences to stockholders in, or partners of
beneficiaries of, a holder of preferred securities;
(b) the United States alternative minimum tax consequences of
purchasing, owning and disposing of preferred securities; or
(c) any state, local or foreign tax consequences of purchasing, owning
and disposing of preferred securities.
The authorities on which this summary is based are subject to various
interpretations, and the opinions of Tax Counsel are not binding on the
Internal Revenue Service (the "IRS") or the courts, either of which could take
a contrary position. Moreover, no rulings have been or will be sought from the
IRS with respect to the transaction described herein. Accordingly, we cannot
assure you that the IRS will not challenge the opinion expressed herein or that
a court would not sustain such a challenge.
We advise you to consult your own tax advisors regarding the tax
consequences of purchasing, owning and disposing of the preferred securities
because the following discussion may not apply to you.
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U.S. Holders
In General. For purposes of the following discussion, a "U.S. Holder" means:
. a citizen or individual resident of the United States;
. a corporation or partnership created or organized in or under the laws of
the United States or any political subdivision thereof;
. an estate the income of which is includible in its gross income for U.S.
federal income tax purposes without regard to its source; or
. a trust if a court within the United States is able to exercise primary
supervision over its administration and at least one United States person
has the authority to control all substantial decisions of the trust.
Characterization of the Trust. Prior to the time that the preferred
securities are issued, Tax Counsel will give its opinion that (1) under then
current law and based on the representations, facts and assumptions set forth
in this prospectus, (2) assuming full compliance with the terms of the trust
agreement (and other relevant documents), and (3) based on certain assumption
and qualifications referred to in the opinion, the Trust will be characterized
for United States federal income tax purposes as a grantor trust. Accordingly,
for United States federal income tax purposes, if you, as a U.S. Holder,
purchase a preferred security you will be considered the owner of an undivided
interest in the junior subordinated debentures owned by the Trust, and you will
be required to include all income or gain recognized for United States federal
income tax purposes with respect to your share of the junior subordinated
debentures on your income tax return.
Characterization of the Junior Subordinated Debentures. We intend to take
the position that, under current law, the junior subordinated debentures are
our debt for United States federal income tax purposes. We, along with the
Trust and you (by acceptance of a beneficial interest in a preferred security)
agree to treat the junior subordinated debentures as the Company's debt and the
preferred securities as evidence of a beneficial ownership interest in the
Trust. We cannot assure you, however, that such position will not be challenged
by the IRS or, if challenged, that a challenge will not be successful. The
remainder of this discussion assumes that the junior subordinated debentures
will be classified as our debt for United States federal income tax purposes.
Interest Income and Original Issue Discount. Under the terms of the junior
subordinated debentures, we have the ability to defer payments of interest from
time to time by extending the interest payment period for a period not
exceeding 20 consecutive quarterly periods, but not beyond the maturity of the
junior subordinated debentures. Treasury regulations provide that debt
instruments like the junior subordinated debentures will not be considered
issued with original issue discount ("OID") even if their issuer can defer
payments of interest if the likelihood of any deferral is "remote."
We have concluded, and this discussion assumes, that, as of the date of this
prospectus, the likelihood of our deferring payments of interest is "remote"
within the meaning of the applicable Treasury regulations. This conclusion is
based in part on the fact that exercising that option would prevent us from
declaring dividends on our common stock and would prevent us from making any
payments with respect to debt securities that rank equally with or junior to
the junior subordinated debentures. Therefore, the junior subordinated
debentures should not be treated as issued with OID by reason of our deferral
option. Rather, you will be taxed on stated interest on the junior subordinated
debentures when it is paid or accrued in accordance with your method of
accounting for income tax purposes. You should note, however, that no published
rulings or any other published authorities of the IRS have addressed this
issue. Accordingly, it is possible that the IRS could take a position contrary
to the interpretation described herein.
If we exercise our option to defer payments of interest, the junior
subordinated debentures would be treated as redeemed and reissued for OID
purposes. The sum of the remaining interest payments (and any de minimis OID)
on the junior subordinated debentures would thereafter be treated as OID. The
OID would accrue, and be includible in your taxable income, on an economic
accrual basis (regardless of your method of accounting for income tax purposes)
over the remaining term of the junior subordinated debentures (including
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any period of interest deferral), without regard to the timing of payments
under the junior subordinated debentures. Subsequent distributions of interest
on the junior subordinated debentures generally would not be taxable. The
amount of OID that would accrue in any period would generally equal the amount
of interest that accrued on the junior subordinated debentures in that period
at the stated interest rate. Consequently, during any period of interest
deferral, you will include OID in gross income in advance of the receipt of
cash, and if you dispose of a preferred security prior to the record date for
payment of distributions on the junior subordinated debentures following that
period, you will be subject to income tax on OID accrued through the date of
disposition (and not previously included in income), but you will not receive
cash from the Trust with respect to the OID.
If the possibility of our exercising our option to defer payments of
interest is not remote, the junior subordinated debentures would be treated as
initially issued with OID in an amount equal to the aggregate stated interest
(plus any de minimis OID) over the term of the junior subordinated debentures.
You would include that OID in your taxable income, over the term of the junior
subordinated debentures, on an economic accrual basis.
Characterization of Income. Because the income underlying the preferred
securities will not be characterized as dividends for income tax purposes, if
you are a corporate holder of the preferred securities you will not be entitled
to a dividends-received deduction for any income you recognize with respect to
the preferred securities.
Market Discount and Bond Premium. Under certain circumstances, you may be
considered to have acquired your undivided interests in the junior subordinated
debentures with market discount or bond premium (as each phrase is defined for
United States federal income tax purposes).
Receipt of Junior Subordinated Debentures or Cash Upon Liquidation of the
Trust. Under certain circumstances described above (See "Description of the
Preferred Securities--Liquidation Distribution Upon Dissolution"), the Trust
may distribute the junior subordinated debentures to you in exchange for your
preferred securities and in liquidation of the Trust. Except as discussed
below, such a distribution would not be a taxable event for United States
federal income tax purposes, and you would have an aggregate adjusted basis in
the junior subordinated debentures you receive for United States federal income
tax purposes equal to your aggregate adjusted basis in your preferred
securities. For United States federal income tax purposes, your holding period
in the junior subordinated debentures you receive in such a liquidation of the
Trust would include the period during which you held the preferred securities.
If, however, the relevant event is a Tax Event that results in the Trust being
treated as an association taxable as a corporation, the distribution would
likely constitute a taxable event to you for United States federal income tax
purposes.
Under certain circumstances described herein (see "Description of the
Preferred Securities"), we may redeem junior subordinated debentures for cash
and distribute the proceeds of such redemption to you in redemption of your
preferred securities. Such a redemption would be taxable for United States
federal income tax purposes, and you would recognize gain or loss as if you had
sold the preferred securities for cash. See "--Sales of Preferred Securities"
below.
Sales of Preferred Securities. If you sell preferred securities, you will
recognize gain or loss equal to the difference between your adjusted basis in
the preferred securities and the amount realized on the sale of such preferred
securities. Your adjusted basis in the preferred securities generally will be
the initial purchase price, increased by OID previously included (or currently
includible) in your gross income to the date of disposition, and decreased by
payments received on the preferred securities (other than any interest received
with respect to the period prior to the effective date we first exercise our
option to defer payments of interest). Any such gain or loss generally will be
capital gain or loss, and generally will be a long-term capital gain or loss if
you have held the preferred securities for more than one year prior to the date
of disposition.
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If you dispose of your preferred securities between record dates for
payments of distributions thereon, you will be required to include accrued but
unpaid interest (or OID) on the junior subordinated debentures through the date
of disposition in your taxable income for United States federal income tax
purposes (notwithstanding that you may receive a separate payment from the
purchaser with respect to accrued interest). You may deduct that amount from
the sales proceeds received (including the separate payment, if any, with
respect to accrued interest) for the preferred securities (or as to OID only,
to add such amount to your adjusted tax basis in the preferred securities). To
the extent the selling price is less than your adjusted tax basis (which will
include accrued but unpaid OID if any), you will recognize a capital loss.
Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes.
Pending Tax Litigation Affecting the Preferred Securities
Last year, a taxpayer filed a petition in the United States Tax Court
contesting the IRS's disallowance of interest deductions that taxpayer claimed
in respect of securities issued in 1993 and 1994 that are, in some respects,
similar to the preferred securities. (Enron Corp. v. Commissioner, Docket No.
6149-98, filed April 1, 1998). An adverse decision by the Tax Court concerning
the deductibility of such interest may cause a Tax Event. Such a Tax Event
would give us the right to redeem the junior subordinated debentures. See
"Description of Junior Subordinated Debentures--Redemption" and "Description of
PreferredSecurities--Liquidation Distribution Upon Dissolution."
Non-U.S. Holders
The following discussion applies to you if you are not a U.S. Holder as
described above.
Payments to you, as a non-U.S. Holder, on a preferred security will
generally not be subject to withholding of income tax, provided that:
. you did not (directly or indirectly, actually or constructively) own 10%
or more of the total combined voting power of all classes of our stock
entitled to vote;
. you are not a controlled foreign corporation that is related to us
through stock ownership; and
. either (a) you certify to the Trust or its agent under penalties of
perjury, that you are not a U.S. Holder and provide your name and
address, or (b) a securities clearing organization, bank or other
financial institution that holds customers' securities in the ordinary
course of its trade or business, and holds the preferred security in such
capacity, certifies to the Trust or its agent, under penalties of
perjury, that it requires and has received such a statement from you or
another financial institution between it and you in the chain of
ownership, and furnishes the Trust or its agent with a copy thereof.
As discussed above, it is possible that changes in the law affecting the
income tax consequences of the junior subordinated debentures could adversely
affect our ability to deduct interest payable on the junior subordinated
debentures. Such changes could also cause the junior subordinated debentures to
be classified as our equity (rather than our debt) for United States federal
income tax purposes. This might cause the income derived from the junior
subordinated debentures to be characterized as dividends, generally subject to
a 30% income tax (on a withholding basis) when paid to you if you are not a
U.S. Holder, rather than as interest which, as discussed above, generally is
exempt from income tax in the hands of a person who is not a U.S. Holder.
You, as a non-U.S. Holder, will generally not be subject to withholding of
income tax on any gain realized upon the sale or other disposition of a
preferred security.
If you hold the preferred securities in connection with the active conduct
of a United States trade or business, you will be subject to income tax on all
income and gains recognized with respect to your proportionate share of the
junior subordinated debentures.
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Information Reporting
In general, information reporting requirements will apply to payments made
on, and proceeds from the sale of, the preferred securities held by a
noncorporate U.S. Holder within the United States. In addition, payments made
on, and payments of the proceeds from the sale of, the preferred securities to
or through the United States office of a broker are subject to information
reporting unless you certify as to your non-U.S. Holder status or otherwise
establish an exemption from information reporting and backup withholding. See
"--Backup Withholding." Taxable income on the preferred securities for a
calendar year should be reported to U.S. Holders on the appropriate forms by
the following January 31st.
Backup Withholding
Payments made on, and proceeds from the sale of, the preferred securities
may be subject to a "backup" withholding tax of 31% unless you comply with
certain identification or exemption requirements. Any amounts so withheld will
be allowed as a credit against your income tax liability, or refunded, provided
the required information is provided to the IRS.
The preceding discussion is only a summary and does not address the
consequences to a particular person of the purchase, ownership and disposition
of the preferred securities. You are urged to contact your own tax advisor to
determine your particular tax consequences.
CERTAIN ERISA CONSIDERATIONS
We and certain of our affiliates may each be considered a "party in
interest" within the meaning of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") or a "disqualified person" within the meaning of
Section 4975 of the Code with respect to many employee benefit plans that are
subject to ERISA and individual retirement accounts ("IRAs"). The purchase of
the preferred securities by an employee benefit plan or IRA that is subject to
the fiduciary responsibility provisions of ERISA or the prohibited transaction
provisions Section 4975(e)(1) of the Code and with respect to which we, or any
affiliate of ours is a service provider (or otherwise is a party in interest or
a disqualified person), may constitute or result in a prohibited transaction
under ERISA or Section 4975 of the Code, unless the preferred securities are
acquired pursuant to and in accordance with an applicable exemption. Any
pension or other employee benefit plan, fiduciary or IRA holder, proposing to
acquire any preferred securities for such a plan or IRA should consult with
legal counsel.
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UNDERWRITING
Subject to the terms and conditions of the underwriting agreement, dated
, 1999, among us, the Trust and Advest, Inc. and U.S. Bancorp
Piper Jaffray Inc., as representatives of the underwriters, the Trust has
agreed to sell to the underwriters, and the underwriters have severally agreed
to purchase from the Trust, the following respective aggregate liquidation
amounts of preferred securities at the public offering price less the
underwriting discounts and commissions set forth on the cover page of this
prospectus:
<TABLE>
<CAPTION>
Liquidation Amount of
Underwriter Preferred Securities
----------- ---------------------
<S> <C>
Advest, Inc......................................... $
U.S. Bancorp Piper Jaffray Inc......................
-----------
Total........................................... $35,000,000
===========
</TABLE>
The underwriting agreement provides that the obligations of the underwriters
are subject to certain conditions precedent and that the underwriters will
purchase all of the preferred securities offered hereby if any of such
preferred securities are purchased.
The underwriters have advised us that they propose to offer the preferred
securities to the public at the public offering price set forth on the cover
page of this prospectus and to certain dealers at such price less a concession
not in excess of $ per preferred security. The underwriters may allow, and
such dealers may reallow, a concession not in excess of $ per preferred
security to certain other dealers. After the public offering, the offering
price and other selling terms may be changed by the underwriters. In addition,
we have agreed to pay a financial advisory fee to Advest, Inc. of $25,000 in
connection with the offering.
We have granted to the underwriters an option, exercisable not later than 30
days after the date of the underwriting agreement, to purchase up to an
additional $5,250,000 aggregate liquidation amount of the preferred securities
at the public offering price. To the extent that the underwriters exercise such
option, we will be obligated, pursuant to the option, to sell such preferred
securities to the underwriters. The underwriters may exercise such option only
to cover over-allotments made in connection with the sale of the preferred
securities offered in this prospectus. If purchased, the underwriters will
offer these additional preferred securities on the same terms as those on which
the $35,000,000 aggregate liquidation amount of the preferred securities are
being offered.
In connection with this offering, the underwriters and any selling group
members and their respective affiliates may engage in transactions effected in
accordance with Rule 104 of the SEC's Regulation M that are intended to
stabilize, maintain or otherwise affect the market price of the preferred
securities. Such transactions may include over-allotment transactions in which
the underwriters create a short position for their own account by selling more
preferred securities than they are committed to purchase from the Trust. In
such a case, to cover all or part of the short position, the underwriters may
exercise the over-allotment option described above or may purchase preferred
securities in the open market following completion of the initial offering of
the preferred securities. The underwriters also may engage in stabilizing
transactions in which they bid for, and purchase, shares of the preferred
securities at a level above that which might otherwise prevail in the open
market for the purpose of preventing or retarding a decline in the market price
of the preferred securities. The underwriters also may reclaim any selling
concessions allowed to an underwriter or dealer if the underwriters repurchase
shares distributed by that underwriter or dealer. Any of the foregoing
transactions may result in the maintenance of a price for the preferred
securities at a level above that which might otherwise prevail in the open
market. We do not, nor do any of the underwriters, make any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the preferred securities. The
underwriters are not required to engage in any of the foregoing transactions
and, if commenced, such transactions may be discontinued at any time without
notice.
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In view of the fact that the proceeds from the sale of the preferred
securities will be used to purchase our junior subordinated debentures, the
underwriting agreement provides that we will pay as compensation for the
underwriters' arranging the investment of such proceeds an amount of $ per
preferred security (or $ ($ if the over-allotment option is
exercised in full) in the aggregate).
Because the National Association of Securities Dealers, Inc. is expected to
view the preferred securities as interests in a direct participation program,
this offering is being made in compliance with the applicable provisions of
Rule 2810 of the NASD's Conduct Rules.
The preferred securities are a new issue of securities with no established
trading market. The representatives have advised the Trust and us that they
intend to make a market in the preferred securities. However, the underwriters
are not obligated to do so and such market making may be interrupted or
discontinued at any time without notice at the sole discretion of each of the
underwriters. We have applied to have the preferred securities approved for
quotation on the Nasdaq National Market but a requirement for initial listing,
and for continued listing, is the presence of three, and two, market makers,
respectively, for the preferred securities, and the presence of a third market
maker cannot be assured. Accordingly, no assurance can be given as to the
development or liquidity of any market for the preferred securities.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act.
The representatives and certain of the other underwriters have in the past,
and may in the future, perform various services for us, including investment
banking services, for which they have and may receive customary fees. Advest,
Inc. also served as managing underwriter in our public offerings of common
stock in 1996 and trust preferred securities in 1997, and has advised us in
certain of our acquisitions.
VALIDITY OF SECURITIES
The validity of the guarantee and the junior subordinated debentures and
certain tax matters will be passed upon for us by Blackwell Sanders Peper
Martin LLP, Kansas City, Missouri, our counsel, and certain legal matters will
be passed upon for the underwriters by Arnold & Porter, Washington, D.C.
Certain matters of Delaware law relating to the validity of the preferred
securities, the enforceability of the trust agreement and the creation of the
Trust will be passed upon by Richards, Layton & Finger, as special Delaware
counsel to us and the Trust. Blackwell Sanders Peper Martin LLP and Arnold &
Porter will rely as to certain matters of Delaware law on the opinion of
Richards, Layton & Finger. Arnold & Porter will rely as to certain matters of
Kansas law on the opinion of Blackwell Sanders Peper Martin LLP.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference are incorporated by reference from our Annual Report on Form 10-K for
the fiscal year ended December 31, 1998, have been audited by KPMG LLP,
independent auditors, as stated in their report, which is incorporated here by
reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended, and in accordance with the Exchange Act, we file
reports, proxy statements, information statements and other information with
the SEC. Such reports, proxy statements and other information can be inspected
and copied at the public reference facilities of the SEC at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of the
SEC located at 7 World Trade Center, 13th Floor, Suite 1300, New York, New York
10048 and Citicorp Center, 14th Floor, Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661. You may obtain information on the operation of the
public reference rooms by calling the SEC at 1-800-SEC-0330. Copies of this
material can also be obtained at prescribed rates by writing to the Public
Reference
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Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. This
material also may be accessed electronically by means of the SEC's home page on
the Internet at www.sec.gov.
Our common stock trades on the Nasdaq National Market under the symbol
"GLDB." Documents filed by us with the SEC also can be inspected at the offices
of the National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
We have filed a registration statement on Form S-3 with the SEC under the
Securities Act in connection with the offering. This prospectus does not
contain all of the information set forth in the registration statement, certain
parts of which are omitted in accordance with the rules and regulations of the
SEC. The registration statement, including any amendments, schedules and
exhibits thereto, is available for inspection and copying as set forth above.
Statements contained in this prospectus as to the contents of any contract or
other document referred to in this document include all material terms of such
contract or other documents but are not necessarily complete, and in each
instance reference is made to the copy of any such contract or other document
which may have been filed as an exhibit to the registration statement, each
such statement being qualified in all respects by such reference.
No separate financial statements of the Trust have been included or
incorporated by reference in this document. We do not, nor does the Trust,
consider that such financial statements would be material to holders of the
preferred securities because the Trust is a newly formed special purpose
entity, has no operating history or independent operations and is not engaged
in and does not propose to engage in any activity other than holding as trust
assets the junior subordinated debentures and issuing the preferred securities
and common securities. See "GBCI Capital Trust II," "Description of Preferred
Securities," "Description of Junior Subordinated Debentures" and "Description
of Guarantee." In addition, we do not expect that the Trust will be filing
reports under the Exchange Act with the SEC.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Our Annual Report on Form 10-K for the fiscal year ended December 31, 1998
and our Current Report on Form 8-K dated April 28, 1999 are incorporated into
this prospectus by reference.
In addition, all subsequent documents filed with the SEC by us pursuant
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
prospectus shall be deemed to be incorporated by reference into this prospectus
and to be a part hereof from the date of filing such documents. Any statement
contained in this prospectus or in a document incorporated or deemed to be
incorporated by reference in this prospectus or another such document shall be
deemed to be modified or superseded for purposes of this prospectus to the
extent that a statement contained in this prospectus or another such document
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modified or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
superseded, to constitute a part of this prospectus.
This prospectus incorporates documents by reference which are not presented
here or delivered with this document. These documents (excluding exhibits
unless specifically incorporated in these documents) are available without
charge upon written or oral request to Gold Banc Corporation, Inc., 11301 Nall
Avenue, Leawood, Kansas 66211, attention: Corporate Secretary, telephone: (913)
451-8050.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This prospectus (including information included or incorporated by reference
herein) contains forward-looking statements with respect to our financial
condition, results of operations, plans, objectives, future performance and
business, including statements preceded by, followed by or that include the
words, "believes," "expects," "anticipates" or similar expressions. These
forward-looking statements involve certain risks and uncertainties and may
relate to our future operating results.
53
<PAGE>
Factors that may cause actual results to differ materially from those
contemplated by such forward-looking statements include, among others, the
following possibilities:
. expected cost savings from our acquisitions not being fully realized or
realized within the expected time frame;
. earnings following acquisitions being lower than expected;
. a significant increase in competitive pressure among depository and other
financial institutions;
. costs or difficulties related to the integration of the acquired
businesses being greater than expected;
. changes in the interest rate environment resulting in reduced margins;
. general economic or business conditions, either nationally or in Kansas,
Oklahoma or Missouri, being less favorable than expected, resulting in,
among other things, a deterioration in credit quality or a reduced demand
for credit;
. legislative or regulatory changes adversely affecting the businesses in
which we will be engaged;
. changes in the securities markets; and
. changes in the banking industry including the effects of consolidation
resulting from possible mergers of financial institutions.
54
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
No person has been authorized in connection with the offering made hereby to
give any information or to make any representation not contained in this pro-
spectus and, if given or made, such information or representation must not be
relied upon as having been authorized by us or any underwriter. This prospectus
does not constitute an offer to sell or a solicitation of any offer to buy any
of the securities offered hereby to any person or by anyone in any jurisdiction
in which it is unlawful to make such offer or solicitation. Neither the deliv-
ery of this prospectus nor any sale made hereunder shall, under any circum-
stances, create any implication that the information contained herein is cor-
rect as of any date subsequent to the date hereof.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary........................................................ 1
Selected Consolidated Financial Data...................................... 7
Recent Developments....................................................... 8
Risk Factors.............................................................. 11
Use of Proceeds........................................................... 17
Capitalization............................................................ 18
GBCI Capital Trust II..................................................... 19
Accounting Treatment...................................................... 19
Description of Preferred Securities....................................... 19
Description of Junior Subordinated Debentures............................. 32
Description of Guarantee.................................................. 42
Relationship Among the Preferred Securities, the Junior Subordinated
Debentures and the Guarantee............................................. 44
Certain Federal Income Tax Consequences................................... 46
Certain ERISA Considerations.............................................. 50
Underwriting.............................................................. 51
Validity of Securities.................................................... 52
Experts................................................................... 52
Where You Can Find More Information....................................... 52
Incorporation of Certain Documents by Reference........................... 53
Cautionary Statement Concerning Forward-Looking Information............... 53
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[Gold Banc Corporation, Inc. Logo Appears Here]
$35,000,000
GBCI CAPITAL TRUST II
% preferred securities
(liquidation amount $25 per
preferred security)
guaranteed as described herein by
GOLD BANC CORPORATION, INC.
---------------
PROSPECTUS
---------------
ADVEST, INC.
U.S. BANCORP PIPER JAFFRAY
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following is an itemized statement of estimated expenses to be paid by
the Registrant in connection with the issuance and sale of the securities being
registered.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee............. $ 12,000
NASD Filing Fee................................................. $ 6,000
Nasdaq Fees..................................................... $ 15,000
Accounting fees and expenses.................................... $ 8,000
Printing expenses............................................... $ 50,000
Legal fees and expenses......................................... $110,000
Transfer Agent Fees and Expenses................................ $ 9,000
--------
Total....................................................... $210,000
========
</TABLE>
Item 15. Indemnification of Directors and Officers.
The Gold Banc Corporation, Inc. (the "Company") Restated Articles of
Incorporation, as amended, and the Company Amended and Restated Bylaws require
it to indemnify its directors and officers and advisory directors against
liabilities, fines, penalties, settlements, claims and reasonable expenses
incurred by them in connection with any proceeding to which they may be made a
party by reason of their service in those capacities to the fullest extent
permitted by the Kansas General Corporation Code ("KGCC"). The KGCC permits a
corporation to indemnify its present and former directors and officers if
ordered to do so by a court or after a determination by its independent
counsel, stockholders or a majority of its disinterested directors that the
person to be indemnified acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
corporation.
Pursuant to express authority conferred in the Company's Amended and
Restated Bylaws, the Company maintains a policy of insurance, under which the
insurer will, subject to certain conditions, defend the directors and officers
of the Company against and indemnify them from any liabilities in capacities as
such.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or controlling persons pursuant to the
foregoing provisions, the Company has been informed that in the opinion of the
SEC such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
Item 16. Exhibits
The following exhibits are filed herewith or incorporated herein by
reference pursuant to Rule 411 of the Securities Act of 1933, as amended.
<TABLE>
<CAPTION>
Exhibit
Number
-------
<C> <S> <C>
1 Form of Underwriting Agreement***
3(a)(i) Restated Articles of Incorporation of the Company*
3(a)(ii) Certificate of Amendment to Restated Articles of
Incorporation**
3(b) Amended and Restated Bylaws of the Company*
4(a) Form of Junior Subordinated Indenture***
4(b) Form of Junior Subordinated Debenture (included in Exhibit
4(a))***
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
4(c) Form of Amended and Restated Trust Agreement***
<C> <S> <C>
4(d) Form of Preferred Security (included in Exhibit 4(c))***
4(e) Form of Guarantee Agreement***
5(a) Opinion of Blackwell Sanders Peper Martin LLP***
5(b) Opinion of Richards, Layton & Finger
8 Tax Opinion of Blackwell Sanders Peper Martin LLP***
12 Calculation of Earnings to Fixed Charges
23(a) Consent of KPMG LLP
23(b) Consent of Blackwell Sanders Peper Martin LLP (included in
Exhibits 5(a) and 8)***
23(c) Consent of Richards, Layton & Finger (included in Exhibit
5(b))
24 Powers of Attorney (included in signature pages to
Registration Statement)***
25 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Bankers Trust Company, as trustee
under the Junior Subordinated Indenture, the Amended and
Restated Trust Agreement and the Guarantee agreement
relating to GBCI Capital Trust II***
</TABLE>
- --------
* Previously filed as an Exhibit to the Company's Registration Statement on
Form SB-2 No. 333-12377 and the same is incorporated herein by reference.
** Previously filed as an Exhibit to the Company's Registration Statement on
Form S-4 No. 333-28563 and the same is incorporated herein by reference.
*** Previously filed with the initial filing of this Registration Statement.
Item 17. Undertakings.
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceedings) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(b) The undersigned Registrant hereby undertakes to, for purposes of
determining any liability under the Securities Act, treat the information
omitted from the form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form of prospectus
filed by the Registrant under Rule 424(b)(1), or (4) or 497(h) under the
Securities Act as part of this registration statement as of the time the SEC
declared it effective.
(c) The undersigned Registrant hereby undertakes to, for purposes of
determining any liability under the Securities Act, treat each post-effective
amendment that contains a form of prospectus as a new registration statement
for the securities offered in the registration statement, and that offering of
the securities at that time as the initial bona fide offering of those
securities.
II-2
<PAGE>
(d) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Leawood, State of Kansas, on the 28th day of April, 1999:
Gold Banc Corporation, Inc.
/s/ Michael W. Gullion
By: _________________________________
Michael W. Gullion
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 has been signed by the following persons in the capacities indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Michael W. Gullion Chairman of the Board and April 28, 1999
____________________________________ Chief Executive Officer
Michael W. Gullion (Principal Executive
Officer)
/s/ Malcolm M. Aslin Director, President and April 28, 1999
____________________________________ Chief Operating Officer
Malcolm M. Aslin
/s/ Keith E. Bouchey Director, Executive Vice April 28, 1999
____________________________________ President, Chief Financial
Keith E. Bouchey Officer and Corporate
Secretary (Principal
Financial Officer)
/s/ Brian J. Ruisinger Treasurer and Controller April 28, 1999
____________________________________ (Principal Accounting
Brian J. Ruisinger Officer)
/s/ William Wallman* Director April 28, 1999
____________________________________
William Wallman
/s/ D. Michael Browne* Director April 28, 1999
____________________________________
D. Michael Browne
/s/ William F. Wright* Director April 28, 1999
____________________________________
William F. Wright
/s/ Allen D. Petersen* Director April 28, 1999
____________________________________
Allen D. Petersen
</TABLE>
*By Keith E. Bouchey as attorney-in-fact.
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S> <C>
1 Form of Underwriting Agreement***
3(a)(i) Restated Articles of Incorporation of the Company*
3(a)(ii) Certificate of Amendment to Restated Articles of
Incorporation**
3(b) Amended and Restated Bylaws of the Company*
4(a) Form of Junior Subordinated Indenture***
4(b) Form of Junior Subordinated Debenture (included in Exhibit
4(a))***
4(c) Form of Amended and Restated Trust Agreement***
4(d) Form of Preferred Security (included in Exhibit 4(c))***
4(e) Form of Guarantee Agreement***
5(a) Opinion of Blackwell Sanders Peper Martin LLP***
5(b) Opinion of Richards, Layton & Finger
8 Tax Opinion of Blackwell Sanders Peper Martin LLP***
12 Calculation of Earnings to Fixed Charges
23(a) Consent of KPMG LLP
23(b) Consent of Blackwell Sanders Peper Martin LLP (included in
Exhibits 5(a) and 8)***
23(c) Consent of Richards, Layton & Finger (included in Exhibit 5(b))
24 Powers of Attorney (included in signature pages to Registration
Statement)***
25 Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of Bankers Trust Company, as trustee under the
Junior Subordinated Indenture, the Amended and Restated Trust
Agreement and the Guarantee agreement relating to GBCI Capital
Trust II***
</TABLE>
- --------
*Previously filed as an Exhibit to the Company's Registration Statement on Form
SB-2 No. 333-12377 and the same is incorporated herein by reference.
**Previously filed as an Exhibit to the Company's Registration Statement on
Form S-4 No. 333-28563 and the same is incorporated herein by reference.
***Previously filed with the initial filing of this Registration Statement.
<PAGE>
Exhibit 5(b)
[LETTERHEAD OF RICHARDS, LAYTON & FINGER]
April 28, 1999
GBCI Capital Trust II
c/o Gold Banc Corporation, Inc.
11301 Nall Avenue
Leawood, Kansas 66211
Attn: Office of the Secretary
Re: GBCI Capital Trust II
---------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for GBCI Capital Trust II, a
Delaware business trust (the "Trust"), in connection with the matters set forth
herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust (the "Certificate"), as
filed in the office of the Secretary of State of the State of Delaware (the
"Secretary of State") on April 16, 1999;
(b) The Trust Agreement of the Trust, dated as of April 16, 1999,
between Gold Banc Corporation, Inc., a Kansas corporation (the "Company"), and
the trustee of the Trust named therein;
<PAGE>
GBCI Capital Trust II
April 28, 1999
Page 2
(c) The Registration Statement, as amended, No. 333-76623 (the
"Registration Statement"), on Form S-3, including a prospectus (the
"Prospectus") relating to the __% Preferred Securities of the Trust representing
preferred undivided beneficial interests in the Trust (each, a "Preferred
Security" and collectively, the "Preferred Securities"), as filed by the Company
and the Trust as set forth therein with the Securities and Exchange Commission
on or about April 28, 1999;
(d) A form of Amended and Restated Trust Agreement of the Trust, to
be entered into among the Company, the trustees of the Trust named therein, and
the holders, from time to time, of undivided beneficial interests in the Trust
(the "Trust Agreement"), attached as an exhibit to the Registration Statement;
and
(e) A Certificate of Good Standing for the Trust, dated April 27,
1999, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed above, and we have assumed that there exists no
provision in any document that we have not reviewed that bears upon or is
inconsistent with the opinions stated herein. We have conducted no independent
factual investigation of our own but rather have relied solely upon the
foregoing documents, the statements and information set forth therein and the
additional matters recited or assumed herein, all of which we have assumed to be
true, complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement constitutes the entire agreement among the parties thereto with
respect to the subject matter thereof, including with respect to the creation,
operation and termination of the Trust, and that the Trust Agreement and the
Certificate are in full force and effect and have not been amended, (ii) except
to the extent provided in paragraph 1 below, the due creation or due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation, organization or formation, (iii) the legal
capacity of natural persons who are parties to the documents examined by us,
(iv) that each of the parties to the documents examined by us has the power and
<PAGE>
GBCI Capital Trust II
April 28, 1999
Page 3
authority to execute and deliver, and to perform its obligations under, such
documents, (v) the due authorization, execution and delivery by all parties
thereto of all documents examined by us, (vi) the receipt by each Person to whom
a Preferred Security is to be issued by the Trust (collectively, the "Preferred
Security Holders") of a Preferred Security Certificate for such Preferred
Security and the payment for the Preferred Security acquired by it, in
accordance with the Trust Agreement and the Prospectus, and (vii) that the
Preferred Securities are issued and sold to the Preferred Security Holders in
accordance with the Trust Agreement and the Prospectus. We have not participated
in the preparation of the Registration Statement and assume no responsibility
for its contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such questions
and law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act, 12 Del.
C. (S) 3801, et seq.
2. The Preferred Securities will represent valid and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the
Trust, will be entitled to the same limitation of personal liability extended
to stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Trust Agreement.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In addition, we
hereby consent to the use of our name under the heading "Validity of Securities"
in the Prospectus. In giving the foregoing consents, we do not thereby admit
that we come within the category of Persons whose
<PAGE>
GBCI Capital Trust II
April 28, 1999
Page 4
consent is required under Section 7 of the Securities Act of 1933, as amended,
or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ Richards, Layton & Finger, P.A.
EAM/CDR
<PAGE>
EXHIBIT 12
GOLD BANC CORPORATION, INC.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
At or for the Year Ended December 31,
-----------------------------------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
(Dollars in thousands, except per share amounts)
Earnings -
Income before income taxes.................. 13,526 12,701 7,240 4,625 4,565
Adjustments:
Fixed charges (as calculated below
including interest on deposits).......... 39,588 27,975 24,282 20,123 17,788
Earnings as adjusted, including interest
on deposits.............................. 53,114 40,676 31,522 24,748 22,353
Deduct: Interest on deposits............... 34,931 26,175 22,336 18,620 12,250
Earnings as adjusted, excluding
interest on deposits..................... 18,183 14,501 9,186 6,128 10,103
Fixed charges -
Interest on deposits........................ 34,931 26,175 22,336 18,260 16,340
Interest on borrowed funds.................. 2,142 1,791 1,946 1,863 1,448
Interest on guaranteed preferred
beneficial interest in subordinated
debt..................................... 2,515 9 -- -- --
Total fixed charges, including
interest on deposits..................... 39,588 27,975 24,282 20,123 17,788
Deduct: Interest on deposits............... 34,931 26,175 22,336 18,260 16,340
Total fixed charges, excluding
interest on deposits..................... 4,657 1,800 1,946 1,863 1,448
Ratio of earnings to fixed charges:
Including interest on deposits.............. 1.34x 1.45x 1.30x 1.23x 1.33x
Excluding interest on deposits.............. 3.90x 8.06x 4.72x 3.48x 4.15x
</TABLE>
<PAGE>
Exhibit 23(a)
ACCOUNTANTS' CONSENT
The Board of Directors
Gold Banc Corporation, Inc.
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in Amendment No. 1 to the
Registration Statement filed on Form S-3.
/s/ KPMG LLP
Kansas City, Missouri
April 28, 1999
