<PAGE> 1
As filed with the Securities and Exchange Commission on January 16, 2001
Registration No. 333-52534
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
<TABLE>
<S> <C>
GLACIER BANCORP, INC. GLACIER CAPITAL TRUST I
(Exact names of registrant and co-registrant (Exact names of registrant and co-registrant
as specified in their charters) as specified in their charters)
</TABLE>
<TABLE>
<S> <C> <C>
DELAWARE 6035 81-0519541
(State or jurisdiction of incorporation or (Primary Standard Industrial Classification (I.R.S. Employer Identification No.)
organization) Code Number)
DELAWARE
(State or jurisdiction of incorporation or (Primary Standard Industrial Classification APPLIED FOR
organization) Code Number) (I.R.S. Employer Identification No.)
</TABLE>
49 COMMONS LOOP, KALISPELL, MONTANA 59901 (406) 756-4234
(Address, including zip code, and telephone number, including area code, of
registrant's and co-registrant's principal executive offices)
MICHAEL J. BLODNICK
President and Chief Executive Officer
49 Commons Loop, Kalispell, Montana 59901
(406) 756-4234
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------
Copies of Communications to:
CARMEN L. SMITH, ESQ. LAWRENCE T. MARTINEZ, ESQ.
Graham & Dunn PC Dorsey & Whitney LLP
1420 Fifth Avenue, 33rd Floor 507 Davidson Building
Seattle, Washington 98101 Great Falls, Montana 59401
----------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, 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, other
than securities offered pursuant to dividend or 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, 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, check
the following box.[ ]
----------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
<PAGE> 2
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.
SUBJECT TO COMPLETION, DATED JANUARY 16, 2001
1,400,000 PREFERRED SECURITIES
GLACIER CAPITAL TRUST I
% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
FULLY, IRREVOCABLY AND UNCONDITIONALLY GUARANTEED BY
GLACIER BANCORP, INC. LOGO
GLACIER BANCORP, INC. WORDS LOGO
-------------------------
The preferred securities represent undivided beneficial interests in the
assets of Glacier Capital Trust I. The trust will invest the proceeds of this
offering of preferred securities in the % junior subordinated debentures of
Glacier Bancorp, Inc.
For each of the preferred securities that you own, you will receive
cumulative cash distributions at an annual rate of % on March 31, June 30,
September 30 and December 31 of each year, beginning March 31, 2001, from
payments on the subordinated debentures. We may defer payments of distributions
at any time for up to 20 consecutive quarters. The preferred securities are
effectively subordinated to all our senior and subordinated indebtedness and
that of our subsidiaries. The subordinated debentures mature, and the preferred
securities must be redeemed, by February 1, 2031. The trust may redeem the
preferred securities, at a redemption price of $25 per preferred security, plus
accrued and unpaid distributions, at any time on or after February 1, 2006, or
earlier under certain circumstances.
Application has been made to have the preferred securities quoted on the
Nasdaq National Market under the symbol "GBCIP."
These securities are not savings accounts, deposits or obligations of any
bank and are not insured by the Federal Deposit Corporation or any other
governmental agency.
INVESTING IN THE PREFERRED SECURITIES INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 10.
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<TABLE>
<CAPTION>
PER PREFERRED SECURITY TOTAL
---------------------- -----------
<S> <C> <C>
Public offering price............................... $25.00 $35,000,000
Proceeds to the trust............................... $25.00 $35,000,000
</TABLE>
This is a firm commitment underwriting. We will pay underwriting
commissions of $ per preferred security, or a total of $ , for
arranging the investment in our subordinated debentures.
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.
-------------------------
D.A. DAVIDSON & CO LOGO
The date of this prospectus is , 2001.
<PAGE> 3
[On top left /center] - Map of Montana, Idaho and Utah with cities identified
by stars and name in which Glacier's bank branches are located.
[On top right] - Glacier logo in blue and green.
GLACIER BANCORP, INC.
Upon consummation of the pending acquisition of WesterFed Financial Corporation
and certain branches of Wells Fargo & Company, Glacier Bancorp will initially
serve 29 communities through 63 banking offices. The communities to be served
and the number of banking offices are listed below.
<TABLE>
<CAPTION>
WESTERFED WELLS FARGO
FINANCIAL CORPORATION(1) GLACIER BANCORP, INC. BRANCHES(1)
------------------------------ --------------------------------------------------- ----------------------
<S> <C> <C> <C>
GLACIER BANK: FIRST SECURITY BANK: MOUNTAIN WEST BANK:
WESTERN SECURITY BANK: Kalispell (3) Missoula (4) Boise (3)
Billings (6) Billings (2) Hailey
Missoula (5) Butte (2) MOUNTAIN WEST BANK: Park City
Helena (4) Helena Boise Brigham City
Great Falls (3) Bigfork Coeur d' Alene Ketchum
Kalispell Libby Hayden
Bozeman Polson Post Falls
Butte Columbia Falls
Anaconda Out Bank BIG SKY WESTERN BANK:
Conrad Bozeman (2)
Hamilton GLACIER BANK OF WHITEFISH: Big Sky
Havre Whitefish
Laurel VALLEY BANK OF HELENA:
Lewiston GLACIER BANK OF EUREKA: Helena (3)
Eureka
</TABLE>
(1) Assuming consummation of the acquisitions described in the prospectus.
<PAGE> 4
SUMMARY
This section briefly summarizes some of the information in, or incorporated
by reference into, this prospectus. Because this is a summary, it does not
contain all of the information that may be important to you. You should read the
more detailed information set forth in this prospectus, our financial statements
and the other information that is incorporated by reference into this
prospectus.
GLACIER BANCORP, INC.
Glacier Bancorp, Inc. is a regional multi-bank holding company that
currently provides commercial banking services in 19 communities through 29
banking offices in Montana and Idaho. We offer a wide range of banking products
and services, including transaction and savings deposits, commercial, consumer,
and real estate loans, mortgage origination services, and retail brokerage
services. At September 30, 2000, we had total assets of $1 billion and
stockholders' equity of $92 million, making us the largest publicly-traded
banking organization headquartered in the region we serve.
We are headquartered in Kalispell, Montana and conduct our operations
principally through seven banking subsidiaries. These subsidiaries include
Glacier Bank (Kalispell), Glacier Bank of Whitefish, Glacier Bank of Eureka,
First Security Bank of Missoula, Valley Bank of Helena, Big Sky Western Bank,
and Mountain West Bank of Coeur d'Alene, Idaho. Our banks serve individuals,
small to medium-sized businesses, community organizations, and public entities.
We pursue a community banking philosophy, emphasizing personalized service
combined with the full resources of a larger banking organization.
In recent years, we have experienced significant growth. For instance, our
total assets increased from $676 million at December 31, 1996 to $974 million at
December 31, 1999, and our net income increased from $8.5 million in 1996 to
$12.4 million in 1999. We have achieved these results by acquiring community
banks in our market area and by generating internal growth at our banks. Since
1996 we have acquired First Security Bank of Missoula, Valley Bank of Helena,
Big Sky Western Bank, and Mountain West Bank of Coeur d'Alene, Idaho. In
September 2000, we entered into agreements to acquire WesterFed Financial
Corporation and seven branch banking offices of Wells Fargo & Company located in
Idaho and Utah. Upon completion of these transactions, our total assets will
increase to more than $2 billion, and we will significantly expand our market
presence in Montana and Idaho and commence operations in Utah. These pending
acquisitions are described in greater detail under the heading "Pending
Transactions."
Our strategy is to continue to seek opportunities to expand our customer
base and our banking operations in Montana, Idaho and Utah and into eastern
Washington. We will pursue this strategy by emphasizing the following
initiatives:
- maintaining our community banking approach by preserving the independent
identity of our banking subsidiaries and allowing most lending decisions
to be made at the local level;
- offering a full array of professional banking products and services, with
a particular emphasis on consumer and commercial lending;
- delivering high levels of personalized customer service;
- attracting and retaining skilled banking officers who are well known and
highly respected in their communities; and
- pursuing selective acquisitions of community banks in our target market
area.
Following the completion of our pending transactions, we will focus on
integrating the acquired banking operations into those of our existing banking
subsidiaries. We will also seek to expand our community banking approach,
particularly our commercial lending services, into the acquired banking offices.
1
<PAGE> 5
Our common stock is quoted on the Nasdaq National Market under the symbol
GBCI. Our executive offices are located at 49 Commons Loop, Kalispell, Montana
59901, and our telephone number is (406) 756-4234.
PENDING TRANSACTIONS
WESTERFED MERGER
On September 20, 2000, we entered into a merger agreement to acquire
WesterFed Financial Corporation of Missoula, Montana. WesterFed is the holding
company for Montana's largest savings bank, Western Security Bank, which
operates 27 offices in 13 Montana communities. Western Security Bank offers a
variety of banking products and services, with a particular emphasis on deposit
services, real estate lending, and consumer lending. At September 30, 2000,
WesterFed had total assets of $933 million and stockholders' equity of $92
million.
Upon consummation of the merger with WesterFed, we will be the largest
banking organization domiciled in the state of Montana, with 56 banking offices
and over $1.3 billion in deposits within the state. The merger will strengthen
our position in key markets throughout Montana, while providing us significant
opportunities for operating efficiencies and revenue enhancements. Moreover, we
believe WesterFed's staff will add further talent and depth to our organization.
Western Security Bank will initially operate as one of our separate
subsidiaries.
The merger is expected to close as soon as the end of February of 2001.
Under the terms of the merger agreement, we will pay WesterFed shareholders
total consideration of approximately $93 million, assuming a Glacier stock price
of $12.25 per share. We anticipate that the consideration will include the
payment of approximately $38 million in cash and the exchange of approximately
4.5 million shares of our common stock, subject to certain adjustments provided
for by formula in the merger agreement. Consummation of the merger is subject to
a number of conditions, including the approval of banking regulators, WesterFed
shareholders, and our shareholders.
WELLS FARGO BRANCH ACQUISITION
On September 14, 2000, we entered into agreements to acquire from Wells
Fargo & Company seven bank branches located in Idaho and Utah. Wells Fargo
recently purchased First Security Corporation, and the branches that we have
agreed to acquire are First Security and Wells Fargo branches that federal
regulators have required to be divested in connection with that acquisition. In
total, as of August 31, 2000, the branches had approximately $187 million in
deposits and $52 million in loans, including:
- three branches in and around Boise, Idaho with total deposits of
approximately $100 million and total loans of approximately $19 million;
- two branches in Ketchum and Hailey, Idaho, with total deposits of
approximately $38 million and total loans of approximately $13 million;
and
- two branches in Brigham City and Park City, Utah, with total deposits of
approximately $49 million and total loans of approximately $20 million.
Upon completing the branch acquisitions, we will substantially expand our
presence in Idaho by adding approximately $138 million in deposits, establishing
a network of strategically-located banking offices in the Boise area, and
entering the markets of Ketchum and Hailey. We will also extend our banking
operations into two growing markets in northern Utah. Following the acquisition,
the acquired branches will operate as branches of Mountain West Bank, our Idaho
banking subsidiary.
We recently received approval from the FDIC and the Utah and Idaho state
banking regulators to acquire the branches, and we expect to close the
transaction in March of 2001. The purchase price will depend on the total
deposits, cash-equivalent assets and loans at the branches immediately prior to
closing. We anticipate that the total purchase price will be approximately $21
million.
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<PAGE> 6
The closing of the offering of the preferred securities is not contingent
on the closing of either the WesterFed merger or the Wells Fargo branch
acquisitions.
GLACIER CAPITAL TRUST I
The trust is a business trust recently organized under Delaware law by us
and the trustees of the trust. We formed the trust as a financing subsidiary.
Upon issuance of the preferred securities offered by this prospectus, the
purchasers in this offering will own all of the issued and outstanding preferred
securities of the trust. In exchange for our capital contribution to the trust,
we will own all of the common securities of the trust. The trust exists
exclusively for the following purposes:
- issuing the preferred securities to the public for cash;
- issuing the common securities to us;
- investing the proceeds from the sale of the preferred and common
securities in an equivalent amount of % junior subordinated
debentures due February 1, 2031 issued by us; and
- engaging in activities that are incidental to those listed above.
The trust's address is 49 Commons Loop, Kalispell, Montana 59901, and its
telephone number is (406) 756-4234.
3
<PAGE> 7
THE OFFERING
The issuer................. Glacier Capital Trust I
Securities being offered... 1,400,000 preferred securities, which represent
preferred undivided beneficial interests in the
assets of the trust. Those assets will consist
solely of the subordinated debentures and payments
received on the subordinated debentures.
The trust will sell the preferred securities to the
public for cash. The trust will use that cash to
buy the subordinated debentures from us.
Offering price............. $25 per preferred security.
When we will pay
distributions to you....... Your purchase of the preferred securities entitles
you to receive cumulative cash distributions at a
% annual rate. Distributions will accumulate
from the date the trust issues the preferred
securities and will be paid quarterly on March 31,
June 30, September 30 and December 31 of each year,
beginning March 31, 2001. The record date for
distributions on the preferred securities will be
the business day prior to the distribution date. We
may defer the payment of cash distributions, as
described below.
When we must redeem the
preferred securities..... The subordinated debentures will mature and the
preferred securities must be redeemed by February
1, 2031. We have the option, however, to shorten
the maturity date to a date not earlier than
February 1, 2006. We will not shorten the maturity
date unless we have received the prior approval of
the Board of Governors of the Federal Reserve
System, if required.
Redemption of the preferred
securities before
February 1, 2031 is
possible................. The trust must redeem the preferred securities when
the subordinated debentures are paid at maturity or
upon any earlier redemption of the subordinated
debentures. We may redeem all or part of the
subordinated debentures at any time on or after
February 1, 2006. In addition, we may redeem, at
any time, all of the subordinated debentures if:
- the interest we pay on the subordinated
debentures is no longer deductible by us for
federal tax purposes, the trust becomes subject
to federal income tax, or the trust will become
subject to certain other taxes or governmental
charges;
- existing laws or regulations change in a manner
requiring the trust to register as an investment
company; or
- the capital adequacy guidelines of the Federal
Reserve change so that the preferred securities
are not eligible to be counted as Tier 1 capital.
Redemption of the subordinated debentures prior to
maturity will be subject to the prior approval of
the Federal Reserve, if approval is then required.
If the preferred securities are redeemed by the
trust, you will receive the liquidation amount of
$25 per preferred security, plus any accrued and
unpaid distributions to the date of redemption.
4
<PAGE> 8
We have the option to
extend the interest payment
period................... The trust will rely solely on payments made by us
under the subordinated debentures to pay
distributions on the preferred securities. As long
as we are not in default under the indenture
relating to the subordinated debentures, we may, at
one or more times, defer interest payments on the
subordinated debentures for up to 20 consecutive
quarters, but not beyond February 1, 2031. If we
defer interest payments on the subordinated
debentures:
- the trust will also defer distributions on the
preferred securities;
- the distributions you are entitled to will
accumulate; and
- these accumulated distributions will earn
interest at an annual rate of %, compounded
quarterly, until paid.
At the end of any deferral period, we will pay to
the trust all accrued and unpaid interest under the
subordinated debentures. The trust will then pay
all accumulated and unpaid distributions to you.
You will still be taxed if
distributions on the
preferred securities are
deferred................. If a deferral of payment occurs, you must recognize
the deferred amounts as income for United States
federal income tax purposes in advance of receiving
these amounts, even if you are a cash basis
taxpayer.
Our guarantee of payment... We guarantee the trust will use its assets to pay
the distributions on the preferred securities and
the liquidation amount upon liquidation of the
trust. However, the guarantee does not apply when
the trust does not have sufficient funds to make
the payments. If we do not make payments on the
subordinated debentures, the trust will not have
sufficient funds to make payments on the preferred
securities. In this event, your remedy is to
institute a legal proceeding directly against us
for enforcement of payments under the subordinated
debentures.
We may distribute the
subordinated debentures
directly to you.......... We may, at any time, dissolve the trust and
distribute the subordinated debentures to you,
subject to the prior approval of the Federal
Reserve, if approval is then required. If we
distribute the subordinated debentures, we will use
our reasonable efforts to list them on a national
securities exchange, Nasdaq National Market or
comparable automated quotation system.
How the securities will
rank in right of payment... Our obligations under the preferred securities,
subordinated debentures and guarantee are unsecured
and will rank as follows with regard to right of
payment:
- the preferred securities will rank equally with
the common securities of the trust. The trust
will pay distributions on the preferred
securities and the common securities pro rata.
However, if we default with respect to the
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;
5
<PAGE> 9
- our obligations under the subordinated debentures
and the guarantee are unsecured and generally
will rank junior in priority to our existing and
future senior and other subordinated
indebtedness; and
- because we are a holding company, the
subordinated debentures and the guarantee will
effectively be subordinated to all existing and
future liabilities of our subsidiaries with
respect to the assets of each subsidiary.
Voting rights of the
preferred securities....... Except in limited circumstances, holders of the
preferred securities will have no voting rights.
Nasdaq National Market
symbol................... We have applied to have the preferred securities
approved for quotation on the Nasdaq National
Market under the symbol "GBCIP."
You will not receive
certificates............. 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
the preferred securities, and your beneficial
ownership interests will be recorded through the
DTC book-entry system.
Use of proceeds............ The trust will invest the proceeds from the sale of
the preferred securities in the subordinated
debentures. We estimate the net proceeds to us from
the sale of the subordinated debentures to the
trust, after deducting underwriting expenses and
commissions, will be approximately $33.4 million.
The net proceeds will enhance our capital position
in anticipation of our merger with WesterFed and
our acquisition of Wells Fargo branches in Idaho
and Utah. We currently expect to use the net
proceeds for general corporate purposes, including
financing the WesterFed and Wells Fargo
transactions. See "Use of Proceeds."
Risk factors............... See "Risk Factors" for a discussion of factors that
you should carefully consider before you decide to
purchase the preferred securities.
6
<PAGE> 10
SUMMARY CONSOLIDATED FINANCIAL DATA
The summary consolidated financial data set forth below for, and as of the
end of, each of the years in the five-year period ended December 31, 1999, are
derived from our historical financial statements. Our consolidated financial
statements, as of December 31, 1999 and 1998 and for each of the years in the
three year period ended December 31, 1999, have been audited by KPMG LLP,
independent certified public accountants. The summary consolidated data set
forth below for the nine-month periods ended September 30, 2000 and 1999, are
derived from unaudited consolidated financial statements. In our opinion, all
adjustments, consisting of normal recurring adjustments, have been included that
are necessary for a fair presentation of results as of and for the nine-month
periods indicated. This information should be read in conjunction with such
consolidated financial statements and related notes and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
consolidated financial statements and the notes incorporated by reference into
this prospectus from (1) our Current Report on Form 8-K filed on December 14,
2000, which restates our audited financial statements for the years ended
December 31, 1999, 1998 and 1997 to reflect a pooling of interests transaction
consummated on February 4, 2000; and (2) our Quarterly Report on Form 10-Q for
the quarter ended September 30, 2000, as amended. Results for past periods are
not necessarily indicative of results that may be expected for future periods,
and results for the nine-month period ended September 30, 2000 are not
necessarily indicative of results that may be expected for the entire year
ending December 31, 2000.
SUMMARY CONSOLIDATED FINANCIAL DATA
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
AS OF AND FOR THE
NINE MONTHS ENDED AS OF AND FOR THE
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
--------------------- ----------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Interest income............................. $ 57,939 $ 46,723 $ 64,719 $ 58,828 $ 55,612 $ 50,481 $ 44,407
Interest expense............................ 27,360 19,703 27,635 25,470 24,925 22,639 19,285
---------- -------- -------- -------- -------- -------- --------
Net interest income....................... 30,579 27,020 37,084 33,358 30,687 27,842 25,122
Provision for loan losses................... 1,483 1,246 1,723 1,735 1,052 1,017 652
---------- -------- -------- -------- -------- -------- --------
Net interest income after provision for
loan losses............................. 29,096 25,774 35,361 31,623 29,635 26,825 24,470
Non-interest income......................... 10,097 9,752 12,809 13,596 11,057 10,421 9,068
Non-interest expense........................ 23,095 21,145 29,096 27,170 23,709 23,027 18,954
---------- -------- -------- -------- -------- -------- --------
Earnings before income taxes.............. 16,098 14,381 19,074 18,049 16,983 14,219 14,584
Income taxes................................ 5,825 5,058 6,722 6,674 6,246 5,740 5,523
---------- -------- -------- -------- -------- -------- --------
Net earnings.............................. $ 10,273 $ 9,323 $ 12,352 $ 11,375 $ 10,737 $ 8,479 $ 9,061
========== ======== ======== ======== ======== ======== ========
SUMMARY OF FINANCIAL CONDITION:
Total assets................................ $1,026,041 $918,140 $974,001 $786,802 $748,526 $675,580 $599,193
Investment securities....................... 203,849 205,060 209,312 119,087 128,638 126,689 112,877
Loans receivable, net....................... 723,026 619,614 652,208 571,188 526,234 478,868 421,812
Total deposits.............................. 716,987 576,784 644,106 546,503 487,539 433,434 378,316
Total borrowed funds........................ 206,593 245,482 235,264 144,593 177,620 169,987 151,104
Stockholders' equity........................ 91,838 85,260 85,056 84,146 73,537 61,620 55,763
PER SHARE DATA(1):
Average common shares
outstanding -- basic...................... 11,439 11,341 11,393 11,147 10,782 10,532 10,589
Basic earnings per common share............. $ 0.90 $ 0.82 $ 1.08 $ 1.02 $ 1.00 $ 0.81 $ 0.86
Diluted earnings per common share........... 0.89 0.81 1.06 1.00 0.98 0.80 0.85
Dividends declared per share................ 0.44 0.40 0.54 0.42 0.36 0.29 0.19
Period end book value per share............. 8.03 8.21 7.44 7.44 6.69 5.86 5.47
</TABLE>
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<TABLE>
<CAPTION>
AS OF AND FOR THE
NINE MONTHS ENDED AS OF AND FOR THE
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
--------------------- ----------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL RATIOS:
Return on:
Average assets(2)......................... 1.37% 1.37% 1.41% 1.47% 1.50% 1.32% 1.64%
Average stockholders' equity(2)........... 15.82 14.41 14.60 14.43 15.89 14.45 17.66
Equity as a percentage of total assets...... 8.95 9.29 8.73 10.69 9.82 9.12 9.31
Dividend payout ratio....................... 48.89 48.78 50.00 41.07 36.36 35.80 22.09
Efficiency ratio(3)......................... 56.78 57.50 58.32 57.87 56.80 60.18 55.44
Net loans to total assets................... 70.47 67.49 66.96 72.60 70.30 70.88 70.40
Net interest margin on average earning
assets (tax equivalent)(2)................ 4.46 4.67 4.72 4.79 4.72 4.76 4.96
Nonperforming assets to total assets(4)..... 0.18 0.28 0.23 0.39 0.27 0.28 0.21
Allowance for loan losses to total loans.... 1.07 1.05 1.02 0.98 0.88 0.85 0.89
Allowance for loan losses to nonperforming
assets.................................... 418 278 295 185 230 215 299
RATIO OF EARNINGS TO FIXED CHARGES(5):
Including interest on deposits.............. 1.59x 1.73x 1.69x 1.71x 1.68x 1.63x 1.76x
Excluding interest on deposits.............. 2.45 2.80 2.71 3.03 2.80 2.60 2.88
</TABLE>
-------------------------
(1) Revised for stock splits and dividends.
(2) The ratios for the nine months ended September 30, 2000 and 1999 have been
annualized and are not necessarily indicative of results for the entire
year.
(3) Efficiency ratio is the ratio of non-interest expense to the sum of net
interest income and non-interest income.
(4) Nonperforming assets consist of (i) non-accrual loans, (ii) loans delinquent
more than 90 days and (iii) other real estate owned (OREO).
(5) For purposes of calculating ratio of earnings to fixed charges, earnings
consist of income before taxes plus interest. Fixed charges consist of
interest expenses.
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SUMMARY COMBINED PRO FORMA FINANCIAL DATA
The summary combined pro forma financial data consists of an unaudited pro
forma combined statement of financial condition as of September 30, 2000, and
unaudited pro forma combined statements of operations for the nine-month period
ended September 30, 2000, and for the year ended December 31, 1999. The pro
forma statement of financial condition has been prepared assuming the merger
with WesterFed and the acquisition of the Wells Fargo branches each occurred on
September 30, 2000. The pro forma combined statements of operations have been
prepared assuming that the merger with WesterFed and the acquisition of the
Wells Fargo branches each occurred on the first day of the period. The summary
combined pro forma financial data set forth below is derived from and should be
read in conjunction with the "Unaudited Combined Condensed Pro Forma Financial
Statements" and the related notes beginning on page F-1 of this prospectus.
<TABLE>
<CAPTION>
AS OF AND FOR THE NINE MONTHS ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 2000 DECEMBER 31, 1999
---------------------------------------- -------------------------------------
GLACIER AFTER GLACIER AFTER
WESTERFED WESTERFED
GLACIER AND AND GLACIER AND AND
WESTERFED IDAHO/UTAH WESTERFED IDAHO/UTAH
GLACIER COMBINED ACQUISITIONS GLACIER COMBINED ACQUISITIONS
---------- ----------- ------------- ------- ----------- -------------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Interest income............................ $ 57,939 $ 110,933 $ 121,193 $64,719 $134,695 $148,374
Interest expense........................... 27,360 60,135 66,737 27,635 69,072 77,874
---------- ---------- ---------- ------- -------- --------
Net interest income...................... 30,579 50,798 54,456 37,084 65,623 70,500
Provision for loan losses.................. 1,483 2,833 2,922 1,723 3,393 3,512
---------- ---------- ---------- ------- -------- --------
Net interest income after provision for
loan losses.............................. 29,096 47,965 51,534 35,361 62,230 66,988
Non-interest income........................ 10,097 17,581 18,948 12,809 20,947 22,770
Non-interest expense....................... 23,095 42,806 46,332 29,096 57,519 62,219
---------- ---------- ---------- ------- -------- --------
Earnings before income tax............... 16,098 22,740 24,150 19,074 25,658 27,539
Income taxes............................... 5,825 8,449 9,011 6,722 9,247 9,982
---------- ---------- ---------- ------- -------- --------
Net earnings............................. $ 10,273 $ 14,291 $ 15,139 $12,352 $ 16,411 $ 17,557
========== ========== ========== ======= ======== ========
SUMMARY OF FINANCIAL CONDITION:
Cash and cash equivalents.................. $ 37,955 $ 54,582 $ 78,738
Investment securities...................... 203,849 396,514 502,004
Loans receivable, net...................... 723,026 1,332,464 1,383,661
Goodwill and other intangibles............. 6,628 40,911 61,676
Other assets............................... 54,583 112,998 118,655
---------- ---------- ----------
Total assets........................... $1,026,041 $1,937,469 $2,144,734
========== ========== ==========
Total deposits............................. $ 716,987 $1,323,545 $1,510,387
Total borrowed funds....................... 206,593 416,628 416,628
Other liabilities.......................... 10,623 34,437 34,860
---------- ---------- ----------
Total liabilities...................... 934,203 1,774,610 1,961,875
---------- ---------- ----------
Trust preferred securities................. -- 15,000 35,000
---------- ---------- ----------
Stockholders' equity....................... 91,838 147,859 147,859
---------- ---------- ----------
Total liabilities and stockholders'
equity............................... $1,026,041 $1,937,469 $2,144,734
========== ========== ==========
PER SHARE DATA(1):
Average common shares
outstanding -- basic..................... 11,439 15,794 15,794 11,393 16,126 16,126
Basic earnings per common share............ $ 0.90 $ 0.90 $ 0.96 $ 1.08 $ 1.02 $ 1.09
Diluted earnings per common share.......... 0.89 0.89 0.94 1.06 0.99 1.06
Book value per common share................ 8.03 9.26 9.26
Tangible book value per common share(2).... 7.45 6.70 5.40
REGULATORY CAPITAL RATIOS:
Leverage ratio............................. 8.61% 6.59% 5.91%
Tier 1 capital............................. 12.11 9.61 8.98
Tier 2 (risk based) capital................ 13.17 10.68 10.02
RATIO OF EARNINGS TO FIXED CHARGES(3):
Including interest on deposits............. 1.59x 1.38x 1.36x 1.69x 1.37x 1.35x
Excluding interest on deposits............. 2.45 1.96 1.96 2.71 1.96 1.95
</TABLE>
-------------------------
(1) Revised for stock splits and dividends.
(2) Tangible book value is total stockholders' equity less goodwill and other
intangibles.
(3) For purposes of calculating ratio of earnings to fixed charges, earnings
consist of income before taxes plus interest. Fixed charges consist of
interest expenses.
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<PAGE> 13
RISK FACTORS
An investment in the preferred securities involves a number of risks. We
urge you to read all of the information contained in this prospectus. In
addition, we urge you to consider carefully the following factors in evaluating
an investment in the trust before you purchase the preferred securities offered
by this prospectus.
Because the trust will rely on the payments it receives on the subordinated
debentures to fund all payments on the preferred securities, and because the
trust may distribute the subordinated debentures in exchange for the preferred
securities, purchasers of the preferred securities are making an investment
decision that relates to the subordinated debentures being issued by Glacier
Bancorp, Inc., as well as the preferred securities. Purchasers should carefully
review the information in this prospectus about the preferred securities, the
subordinated debentures and the guarantee.
RISKS RELATED TO GLACIER BANCORP, INC.
WE MAY EXPERIENCE DIFFICULTIES IN EFFECTIVELY INTEGRATING ACQUIRED BANKING
OPERATIONS AND MANAGING OUR GROWTH.
As part of our strategy, and in addition to completing our pending
transactions, we may continue to expand into additional communities or attempt
to strengthen our position in our current markets by acquiring banking
institutions and/or making branch acquisitions. To the extent that we undertake
growth initiatives, we may not be able to adequately and profitably manage such
growth, and we may experience the effects of higher operating expenses relative
to operating income from the new operations, which may have an adverse effect on
our levels of reported net income, return on average equity and return on
average assets. Acquiring other banks involves risks commonly associated with
acquisitions, including:
- potential exposure to unknown or contingent liabilities of banks and
businesses we acquire;
- challenge of attracting and retaining the management talent needed to
maintain adequate depth of management throughout our organization as we
continue to grow in the future;
- ability to maintain adequate sources of funding at attractive pricing;
- challenge of implementing appropriate policies, procedures and operating
systems necessary to support a larger organization while preserving our
historically low net overhead ratios;
- potential diversion of our management's time and attention;
- the possible loss of key employees and customers of the banks and
businesses we acquire; and
- incurrence of goodwill when we account for an acquisition as a purchase.
Failure to address these issues successfully could adversely affect our
results of operations and financial condition.
CHANGES IN ECONOMIC CONDITIONS MAY CAUSE US TO HAVE LOWER EARNINGS.
The inability of borrowers to repay loans can erode our earnings.
Substantially all of our loans are to businesses and individuals in western
Montana and Idaho, and any decline in the economy of this market area could
impact us adversely. 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 OUR BUSINESS, AND OUR ALLOWANCE FOR LOAN LOSSES
MAY NOT BE ADEQUATE TO COVER ACTUAL LOAN LOSSES.
Credit losses are inherent in the lending business and could have a
material adverse effect on our operating results and our ability to make
payments on the subordinated debentures. We make various
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<PAGE> 14
assumptions and judgments 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 losses, thereby having an adverse effect on our operating results, and
may cause us to increase the allowance in the future. In addition, although our
level of delinquencies has been historically low, due to the significant
increase in loans originated over the last few years, we cannot assure you that
we will not experience an increase in delinquencies and losses as these loans
continue to age, particularly if the economic conditions in our market areas
decline. The actual amount of future provisions for loan losses cannot now be
determined and may exceed the amounts of past provisions.
WE RELY HEAVILY ON OUR MANAGEMENT AND THE UNEXPECTED LOSS OF KEY OFFICERS MAY
ADVERSELY AFFECT OUR OPERATIONS.
We are highly dependent on the continued services of a small number of our
executive officers and key employees. Our corporate executive management team is
lead primarily by two individuals, Michael J. Blodnick and James H. Strosahl,
our chief executive officer and chief financial officer, respectively. In
addition, the decentralized nature of our organization means that the president
of each of our major subsidiary banks is a key employee. The loss of the
services of any of these individuals and the failure to recruit and retain key
personnel could adversely affect our operations.
CHANGES IN INTEREST RATES COULD HAVE AN ADVERSE EFFECT ON OUR PROFITABILITY.
Our ability to make a profit, like that of most financial institutions,
substantially depends upon our net interest income, which is the difference
between the interest income we earn on our interest-earning assets, such as
loans, and the interest expense we pay on our interest-bearing liabilities, such
as deposits. Certain assets and liabilities, however, may react in different
degrees to changes in market interest rates. Further, interest rates on some
types of assets and liabilities may fluctuate prior to changes in broader market
interest rates, while rates on other types may lag behind.
Factors such as inflation, recession, unemployment, money supply,
international disorders, instability in domestic and foreign financial markets,
and other factors beyond our control may affect interest rates. Changes in
market interest rates will also affect the level of voluntary prepayments on our
loans and payments on our mortgage-backed securities resulting in the receipt of
proceeds that may be reinvested at a lower rate than the loan or mortgage-backed
security being prepaid. Although we pursue an asset-liability management
strategy designed to control our risk from changes in market interest rates,
changes in interest rates could still have an adverse effect on our
profitability.
COMMERCIAL LOANS AND COMMERCIAL REAL ESTATE LOANS REPRESENT A SIGNIFICANT
PORTION OF OUR LOAN PORTFOLIO, AND REPAYMENT OF THESE LOANS MAY BE DEPENDENT ON
FACTORS OUTSIDE OF OUR CONTROL OR THE CONTROL OF OUR BORROWERS.
As of September 30, 2000, commercial loans and commercial real estate loans
totaled $326 million, or 45%, of our total loan portfolio. Commercial lending
and commercial real estate lending typically involve higher principal amounts
and the repayment of the loans generally is dependent, in large part, on
sufficient income from the borrowers and cash flow from the collateral securing
the loans to cover operating expenses and debt service. Economic events or
governmental regulations outside of the control of the borrower or lender could
negatively impact the future cash flow of the borrowers and the value of the
collateral securing the loans.
IF WE DO NOT ADJUST TO RAPID CHANGES AND CONSOLIDATION IN THE FINANCIAL SERVICES
INDUSTRY, OUR FINANCIAL PERFORMANCE MAY SUFFER.
Our ability to compete successfully in our market will depend in part on
our ability to expand our scope of available financial services as needed to
meet the requirements and demands of our customers. In addition to the challenge
of attracting and retaining customers for traditional banking services, our
competitors now include securities dealers, brokers, mortgage bankers,
investment advisors and finance and
11
<PAGE> 15
insurance companies who seek to offer one-stop financial services to their
customers that may include services that banks have not been able or allowed to
offer to their customers in the past. The increasingly competitive environment
is a result primarily of changes in regulation, changes in technology and
product delivery systems and the accelerating pace of consolidation among
financial service providers.
CHANGES IN THE REGULATORY STRUCTURE OR THE STATUTES OR REGULATIONS APPLICABLE TO
US COULD HAVE A MATERIAL IMPACT ON OUR OPERATIONS.
We are subject to extensive regulation, supervision and examination by the
Federal Reserve Board, state banking authorities, and the Federal Deposit
Insurance Corporation. Regulatory authorities have extensive discretion in
carrying out their supervisory and enforcement responsibilities, and regulations
have been implemented which have increased capital requirements, increased
insurance premiums and resulted in increased administrative and professional
expenses. Any change in the existing regulatory structure or the applicable
statutes or regulations could have a material impact on our operations.
Additional legislation and regulations may be enacted or adopted in the future
which could significantly affect our powers, authority and operations, which in
turn could have a material adverse effect on our operations.
WE CONTINUALLY ENCOUNTER TECHNOLOGICAL CHANGE, AND WE MAY HAVE FEWER RESOURCES
THAN OUR COMPETITORS TO CONTINUE TO INVEST IN TECHNOLOGICAL IMPROVEMENTS.
The financial services industry is undergoing rapid technological changes,
with frequent introductions of new technology-driven products and services. In
addition to better serving customers, the effective use of technology increases
efficiency and enables financial institutions to reduce costs. Our future
success will depend, in part, upon our ability to address the needs of our
customers by using technology to provide products and services that will satisfy
customer demands for convenience, as well as to create additional efficiencies
in our operations. Many of our competitors have substantially greater resources
to invest in technological improvements. We cannot assure you that we will be
able to effectively implement new technology-driven products and services or be
successful in marketing these products and services to our customers.
RISKS RELATED TO OUR PENDING TRANSACTIONS
WE MAY EXPERIENCE GREATER THAN EXPECTED DIFFICULTIES IN OPERATING WESTERFED'S
BUSINESSES.
As described under "Summary -- Pending Transactions -- WesterFed Merger,"
we have entered into an agreement to merge with WesterFed. Our proposed merger
with WesterFed, assuming that the transaction had occurred at September 30,
2000, will cause our assets to increase from approximately $1 billion to almost
$2 billion, our deposits to increase from approximately $720 million to $1.3
billion, our loans to increase from approximately $720 million to $1.3 billion
and our number of banking offices to initially increase from 29 to 56. As part
of the WesterFed integration, we may divest of or close certain of the acquired
branch offices. Due in part to the large size of the WesterFed merger relative
to our other acquisitions, we may experience greater than expected difficulties
in operating WesterFed. Any such operating difficulties could have an adverse
effect on our ability to realize the expected benefits of the merger.
There are many things that could go wrong and adversely affect the business
and profitability of the combined company. We cannot predict the full range of
post-merger problems that may occur. Some possible difficulties include:
- our failure to effectively integrate the businesses and operations of
WesterFed;
- the challenge to retain key personnel of WesterFed through the
integration process;
- the challenge of retaining customers during the integration process;
12
<PAGE> 16
- increased competition from competitors for WesterFed's customers; and
- risks associated with unanticipated events or liabilities.
WE WILL ACQUIRE ADDITIONAL BRANCHES IN ANOTHER TRANSACTION, AND IT MAY BE
DIFFICULT TO INTEGRATE THEM CONCURRENTLY WITH THE WESTERFED OPERATIONS.
As described under "Summary -- Pending Transactions -- Wells Fargo Branch
Acquisition," we have entered into agreements to purchase a total of seven
branches of Wells Fargo & Company subsidiary banks located in Idaho and Utah.
Two of the Wells Fargo branches we are acquiring are located in Utah, a market
where we have no previous experience. Also, our initial base of approximately
$50 million in Utah deposits will not create a large base for us to compete with
financial institutions already in the Utah market area. The addition of the five
Wells Fargo branches in Idaho will double our presence in that state, and we may
have difficulties meeting the needs of our new customers while adequately
serving our existing customer base in Idaho.
The successful integration of the branches into our business will present
challenges, particularly in light of the fact that we will also be integrating
the business of WesterFed, as described immediately above, at approximately the
same time. We may experience greater than expected difficulties in integrating
and operating the new branches, and any such difficulties will be compounded by
our simultaneous integration of the business conducted by WesterFed, following
completion of the merger. The level of deposits and loans may decline following
our acquisition. In addition, management resources could be strained, and there
can be no assurance that we will be able to effectively integrate the operations
of the new branches.
THE PROPOSED TRANSACTIONS WILL USE SIGNIFICANT CASH RESOURCES AND MAY AFFECT OUR
ABILITY TO MEET FINANCIAL OBLIGATIONS, INCLUDING OUR PAYMENTS UNDER THE
SUBORDINATED DEBENTURES.
We will issue a substantial number of shares of our stock and use
significant cash resources to effect the proposed transactions. This will reduce
our cash liquidity and will possibly limit our ability to meet other financial
obligations, including our payments under the subordinated debentures.
THE PROPOSED TRANSACTIONS MAY NOT BE CONSUMMATED, WHICH WOULD ADVERSELY AFFECT
OUR FUTURE OPERATING INCOME.
Both of the proposed transactions are subject to various conditions,
including approval by the banking regulatory agencies. In addition, the
WesterFed merger must be approved by the shareholders of WesterFed and Glacier,
and either party may terminate the merger if closing has not occurred by June
30, 2001. In the event that either or both of the proposed transactions are not
consummated, we would be obligated to repay the $35 million owing pursuant to
the subordinated debentures from our operating income without the benefit of
increased cash flows expected as a result of the proposed transactions. The
closing of the offering of the preferred securities is not contingent on the
closing of either the WesterFed merger or the Wells Fargo branch acquisitions.
RISKS RELATED TO AN INVESTMENT IN THE PREFERRED SECURITIES
IF WE DO NOT MAKE INTEREST PAYMENTS UNDER THE SUBORDINATED DEBENTURES, THE TRUST
WILL BE UNABLE TO PAY DISTRIBUTIONS AND LIQUIDATION AMOUNTS. THE GUARANTEE WILL
NOT APPLY BECAUSE THE GUARANTEE COVERS PAYMENTS ONLY IF THE TRUST HAS FUNDS
AVAILABLE.
The trust will depend solely on our payments on the subordinated debentures
to pay amounts due to you on the preferred securities. If we default on our
obligation to pay the principal or interest on the subordinated debentures, the
trust will not have sufficient funds to pay distributions or the liquidation
amount on the preferred securities. In that case, you will not be able to rely
on the guarantee for payment of these amounts because the guarantee only applies
if the trust has sufficient funds to make distributions
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<PAGE> 17
on or to pay the liquidation amount of the preferred securities. Instead, you or
the property trustee will have to institute a direct action against us to
enforce the property trustee's rights under the indenture relating to the
subordinated debentures.
TO THE EXTENT WE MUST RELY ON DIVIDENDS FROM OUR SUBSIDIARIES TO MAKE INTEREST
PAYMENTS ON THE SUBORDINATED DEBENTURES TO THE TRUST, OUR AVAILABLE CASH FLOW
MAY BE RESTRICTED.
We are a holding company, and substantially all of our assets are held by
our subsidiaries. Our ability to make payments on the subordinated debentures
when due will depend primarily on available cash in the form of dividends from
our subsidiaries. The ability of each banking subsidiary to pay dividends is
subject to its profitability, financial condition, capital expenditures and
other cash flow requirements. Dividend payments or extensions of credit from our
banking subsidiaries are also subject to regulatory limitations, generally based
on capital levels and current and retained earnings, imposed by the various
regulatory agencies with authority over such subsidiaries. Based on applicable
regulatory limitations, our banking subsidiaries had the capacity to pay a total
of approximately $20 million as dividends to us as of September 30, 2000,
subject to each bank remaining well-capitalized under applicable regulatory
guidelines. We may also be precluded from making interest payments on the
subordinated debentures by banking regulators in order to address any perceived
deficiencies in liquidity or regulatory capital levels at the holding company
level. Such regulatory action would require us to obtain consent from our
regulators prior to paying dividends on our capital stock or interest on the
subordinated debentures. In the event our regulators withheld their consent to
our payment of interest on the subordinated debentures, we would exercise our
right to defer interest payments on the subordinated debentures, and the trust
would not have funds available to make distributions on the preferred securities
during such period. The commencement of a deferral period would likely cause the
market price of the preferred securities to decline. We cannot assure you that
our subsidiaries will be able to pay dividends in the future or that our
regulators will not attempt to preclude us from making interest payments on the
subordinated debentures.
THE SUBORDINATED DEBENTURES AND THE GUARANTEE RANK LOWER THAN OUR OTHER
INDEBTEDNESS, AND OUR HOLDING COMPANY STRUCTURE EFFECTIVELY SUBORDINATES ANY
CLAIMS AGAINST US TO THOSE OF OUR SUBSIDIARIES' CREDITORS.
Our obligations under the subordinated debentures and the guarantee are
unsecured and will rank junior in priority of payment to our existing and future
senior and subordinated indebtedness. As of September 30, 2000, our senior and
subordinated indebtedness totaled $207 million. The issuance of the subordinated
debentures and the preferred securities does not limit our ability, or the
ability of our subsidiaries, to incur additional indebtedness, guarantees or
other liabilities.
Because we are a holding company, the creditors of our subsidiaries also
will have priority over you in any distribution of our subsidiaries' assets in
liquidation, reorganization or otherwise. Accordingly, the subordinated
debentures and the guarantee 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 preferred securities and the subordinated debentures.
WE HAVE THE OPTION OF DEFERRING INTEREST PAYMENTS ON THE SUBORDINATED DEBENTURES
FOR SUBSTANTIAL PERIODS.
We may, at one or more times, defer interest payments on the subordinated
debentures for up to 20 consecutive quarters. If we defer interest payments on
the subordinated debentures, the trust will defer distributions on the preferred
securities during any deferral period. During a deferral period, you will be
required to recognize as income for federal income tax purposes the amount
approximately equal to the interest that accrues on your proportionate share of
the subordinated debentures held by the trust in the tax year in which that
interest accrues, even though you will not receive these amounts until a later
date.
You will also not receive the cash related to any accrued and unpaid
interest from the trust if you sell the preferred securities before the end of
any deferral period. During a deferral period, accrued but unpaid distributions
will increase your tax basis in the preferred securities. If you sell the
preferred securities during a deferral period, your increased tax basis will
decrease the amount of any capital gain or increase
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<PAGE> 18
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, and a related tax liability for the holder, and a capital loss
that may only be used to offset a capital gain.
We do not currently intend to exercise our right to defer interest payments
on the subordinated debentures. However, if we exercise our right in the future,
the market price of the preferred securities would likely be adversely affected.
The preferred securities may trade at a price that does not fully reflect the
value of accrued but unpaid interest on the subordinated debentures. If you sell
the preferred securities during an interest deferral period, you may not receive
the same return on investment as someone who continues to hold the preferred
securities. Due to our right to defer interest payments, the market price of the
preferred securities may be more volatile than the market prices of other
securities without the deferral feature.
WE HAVE MADE ONLY LIMITED COVENANTS IN THE INDENTURE AND THE TRUST AGREEMENT.
The indenture governing the subordinated debentures and the trust agreement
governing the trust do not require us to maintain any financial ratios or
specified levels of net worth, revenues, income, cash flow or liquidity, and,
therefore do not protect holders of the subordinated debentures or the preferred
securities 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, you should not consider the provisions
of these governing instruments as a significant factor in evaluating whether we
will be able to comply with our obligations under the subordinated debentures or
the guarantee.
WE MAY REDEEM THE SUBORDINATED DEBENTURES BEFORE FEBRUARY 1, 2031.
Under the following circumstances, we may redeem the subordinated
debentures before their stated maturity:
- We may redeem the subordinated debentures, in whole or in part, at any
time on or after February 1, 2006.
- We may redeem the subordinated debentures in whole, but not in part,
within 180 days after certain occurrences at any time during the life of
the trust. These occurrences may include adverse tax, Investment Company
Act or bank regulatory developments.
You should assume that we will exercise our redemption option if we are
able to obtain capital at a lower cost than we pay on the subordinated
debentures or if it is otherwise in our interest to redeem the subordinated
debentures. If the subordinated debentures are redeemed, the trust must redeem
preferred securities having an aggregate liquidation amount equal to the
aggregate principal amount of subordinated debentures redeemed, 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.
WE CAN DISTRIBUTE THE SUBORDINATED DEBENTURES TO YOU, WHICH MAY HAVE ADVERSE TAX
CONSEQUENCES FOR YOU AND WHICH MAY ADVERSELY AFFECT THE MARKET PRICE OF THE
PREFERRED SECURITIES.
The trust may be dissolved at any time before maturity of the subordinated
debentures on February 1, 2031. As a result, and subject to the terms of the
trust agreement, the trustees may distribute the subordinated debentures to you.
We cannot predict the market prices for the subordinated debentures that
may be distributed in exchange for preferred securities upon liquidation of the
trust. The preferred securities, or the subordinated debentures that you may
receive if the trust is liquidated, may trade at a discount to the price that
you paid to purchase the preferred securities. Because you may receive
subordinated debentures, your investment decision with regard to the preferred
securities will also be an investment decision with regard
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<PAGE> 19
to the subordinated debentures. You should carefully review all of the
information contained in this prospectus regarding the subordinated debentures.
Under current United States federal income tax laws, a distribution of the
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
income tax purposes as an association taxable as a corporation at the time it is
dissolved, the distribution of the subordinated debentures would be a taxable
event to you. In addition, if there is a change in law, a distribution of
subordinated debentures upon the dissolution of the trust could be a taxable
event to you.
YOU ARE SUBJECT TO REPAYMENT RISK BECAUSE POSSIBLE TAX LAW CHANGES COULD RESULT
IN REDEMPTION OF THE PREFERRED SECURITIES.
Future legislation may be enacted that could adversely affect our ability
to deduct our interest payments on the subordinated debentures for federal
income tax purposes, making redemption of the subordinated debentures likely and
resulting in a redemption of the preferred securities. Although it is impossible
to predict future legislative proposals, if a future proposal were to become
effective in a form applicable to already issued and outstanding securities, we
could be precluded from deducting interest on the subordinated debentures.
Enactment of this type of proposal might in turn give rise to a tax event as
described under "Description of the Preferred Securities -- Redemption or
Exchange -- Redemption upon a Tax Event, Investment Company Event or Capital
Treatment Event."
TRADING CHARACTERISTICS OF THE PREFERRED SECURITIES MAY CREATE ADVERSE TAX
CONSEQUENCES FOR YOU.
The preferred securities may trade at a price that does not reflect the
value of accrued but unpaid interest on the underlying subordinated debentures.
If you dispose of your preferred securities between record dates for payments on
the preferred securities, you may have adverse tax consequences. Under these
circumstances, you will be required to include accrued but unpaid interest on
the subordinated debentures allocable to the preferred securities through the
date of disposition in your income as ordinary income if you use the accrual
method of accounting or if this interest represents original issue discount.
If interest on the subordinated debentures is included in income under the
original issue discount provisions, you would add this amount to your adjusted
tax basis in your share of the underlying subordinated debentures deemed
disposed. If your selling price is less than your adjusted tax basis, which will
include all accrued but unpaid original issue discount interest included in your
income, you could recognize a capital loss which, subject to limited exceptions,
cannot be applied to offset ordinary income for federal income tax purposes. See
"Federal Income Tax Consequences" for more information on possible adverse tax
consequences to you.
THERE IS NO CURRENT PUBLIC MARKET FOR THE PREFERRED SECURITIES, AND THEIR MARKET
PRICE MAY BE SUBJECT TO SIGNIFICANT FLUCTUATIONS.
There is currently no public market for the preferred securities and the
initial public offering price of the preferred securities equals their
liquidation amount. We have applied to have the preferred securities designated
for inclusion in the Nasdaq National Market, and trading is expected to commence
on or prior to the delivery of the preferred securities. However, there is no
guarantee that an active or liquid trading market will develop for the preferred
securities or that quotation of the preferred securities will continue in the
Nasdaq National Market. If an active trading market does not develop, the market
price and liquidity of the preferred securities will be adversely affected. Even
if an active public market does develop, future trading prices of the preferred
securities may be subject to significant fluctuations in response to prevailing
interest rates, our future operating results and financial condition, the market
for similar securities and general economic and market conditions. Consequently,
there is no guarantee that the market price of the preferred securities
following this offering will equal or exceed the initial public offering price.
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The market price for the preferred securities, or the subordinated
debentures that you may receive in a distribution, is also likely to decline
during any period that we are deferring interest payments on the subordinated
debentures.
YOUR DIRECT ENFORCEMENT RIGHTS MAY BE LIMITED IF THERE IS AN EVENT OF DEFAULT
UNDER THE INDENTURE.
You may be limited in your ability to directly enforce your rights against
us if an event of default under the indenture occurs. If an event of default
under the indenture occurs and is continuing, this event will also be an event
of default under the trust agreement. In general, you must rely on the
enforcement by the property trustee of its rights as holder of the subordinated
debentures against us. The holders of 25% in liquidation amount of the preferred
securities will have the right, by notice to us and the debenture trustee, to
declare the principal and all accrued interest on the debentures to be
immediately due and payable. Upon any event of default arising from our failure
to pay interest or principal on the debentures, any record holder may, to the
extent permitted by applicable law, take action directly against us to enforce
payment to such holder of principal and interest or the debentures. In addition,
if an event of default occurs under the guarantee, you may proceed directly
against us. You will not be able to exercise directly any other remedies
available to the holders of the subordinated debentures unless the property
trustee fails to do so.
AS A HOLDER OF PREFERRED SECURITIES, YOU HAVE LIMITED VOTING RIGHTS.
Holders of preferred securities have limited voting rights. Your voting
rights pertain primarily to amendments to the trust agreement. In general, only
we can replace or remove any of the trustees. 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 replace
the property trustee and the Delaware trustee.
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<PAGE> 21
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in or incorporated by reference into this
prospectus constitute forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. We intend for such forward-looking statements to be covered by the safe
harbor provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995, and we are including this statement
for purposes of invoking these safe harbor provisions. You can identify these
statements from our use of the words "estimate," "project," "believe," "intend,"
"anticipate," "expect," "target" and similar expressions. These forward-looking
statements may include, among other things:
- statements relating to projected growth; anticipated improvements in
earnings, earnings per share, and other financial performance measures;
and management's long term performance goals;
- statements relating to the anticipated effects on results of operations
or financial condition from expected developments or events;
- statements relating to our business and growth strategies, including our
pending and any potential acquisitions; and
- any other statements which are not historical facts.
Such forward-looking statements involve known and unknown risks,
uncertainties and other important factors that could cause our actual results,
performance or achievements, or industry results, to differ materially from our
expectations of future results, performance or achievements expressed or implied
by such forward-looking statements. In addition, our past results of operations
do not necessarily indicate our future results. We discuss these and other
uncertainties in the "Risk Factors" section of this prospectus.
We undertake no obligation to publicly update or otherwise revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. You should assume that the information appearing in this
prospectus is accurate as of the date on the front cover of this prospectus
only.
USE OF PROCEEDS
The trust will invest all of the proceeds from the sale of its preferred
and common securities in the subordinated debentures. We anticipate that the net
proceeds from the sale of the subordinated debentures will be approximately
$33.4 million after deduction of offering expenses and underwriting commissions.
The net proceeds will enhance our capital position in anticipation of our
merger with WesterFed and our acquisition of the Wells Fargo branches. We
currently expect to use the net proceeds to finance, in part, the pending
transactions and for general corporate purposes. Initially, we will use the net
proceeds to pay down certain of our short-term Federal Home Loan Bank (FHLB)
borrowings. Such borrowings bear interest at rates ranging from 6% to 7% per
annum and have varying remaining maturities, generally of less than 30 days.
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<PAGE> 22
CAPITALIZATION
The following table sets forth (1) our capitalization at September 30,
2000, on a historical basis, (2) our pro forma consolidated capitalization after
giving effect to this offering and the application of the estimated net proceeds
as if the offering had occurred on September 30, 2000, and (3) our pro forma
consolidated capitalization after giving effect to this offering, our
acquisition of the Wells Fargo branches and our merger with WesterFed, as if
such transactions had occurred on September 30, 2000. This data should be read
in conjunction with the consolidated financial statements and notes thereto
incorporated by reference into this prospectus and the "Unaudited Combined
Condensed Pro Forma Financial Statements" and related notes beginning on page
F-1 of this prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 2000
-------------------------------------------
PRO FORMA, AS
ACTUAL AS ADJUSTED(1) ADJUSTED(2)
-------- -------------- -------------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C>
Debt:
FHLB advances(3).................................... $177,909 $142,909 $378,989
Other............................................... 28,684 28,684 37,639
-------- -------- --------
Total debt(3).................................... $206,593 $171,593 $416,628
-------- -------- --------
Company obligated mandatorily redeemable preferred
securities of subsidiary trust holding solely
subordinated debentures............................. -- 35,000 35,000
-------- -------- --------
Stockholders' Equity:
Common stock........................................ 114 114 159
Paid in capital..................................... 101,756 101,756 157,732
Retained earnings................................... (6,057) (6,057) (6,057)
Accumulated other comprehensive loss................ (3,975) (3,975) (3,975)
-------- -------- --------
Total stockholders' equity....................... 91,838 91,838 147,859
-------- -------- --------
Total capitalization(4).......................... $298,431 $298,431 $599,487
-------- -------- --------
Capital Ratios(5):
Leverage ratio(6)(7)................................ 8.61% 11.99% 5.91%
Tier 1 capital ratio(7)............................. 12.11 16.86 8.98
Tier 2 (risk-based) capital ratio................... 13.17 17.92 10.02
</TABLE>
-------------------------
(1) Adjusted to reflect the issuance of the preferred securities and the
proceeds therefrom in this offering.
(2) Adjusted to reflect the issuance of the preferred securities and the
proceeds therefrom in this offering, our merger with WesterFed and our
acquisition of the Wells Fargo branches. See Note (E) to "Unaudited Combined
Condensed Pro Forma Financial Statements" beginning on page F-1 of this
prospectus.
(3) The proceeds of this offering will initially by used to pay down certain of
our short-term FHLB borrowings. See "Use of Proceeds" for a description of
the FHLB borrowings.
(4) Total capitalization does not include deposits of approximately $717, $1,324
and $1,510, respectively, as of September 30, 2000.
(5) The capital ratios, as adjusted, are computed including the total estimated
net proceeds from the sale of the preferred securities, in a manner
consistent with Federal Reserve regulations.
(6) The leverage ratio is Tier 1 capital divided by average quarterly assets,
after deducting intangible assets and net deferred tax assets in excess of
regulatory maximum limits.
(7) The preferred securities have been structured to qualify as Tier 1 capital.
However, in calculating the amount of Tier 1 qualifying capital, the
preferred securities, together with any outstanding cumulative preferred
stock of Glacier that may be outstanding in the future, may only be included
up to the amount constituting 25% of Tier 1 core capital elements (including
the preferred securities).
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<PAGE> 23
ACCOUNTING AND REGULATORY TREATMENT
The trust will be treated, for financial reporting purposes, as our
subsidiary and, accordingly, the accounts of the trust will be included in our
consolidated financial statements. The preferred securities will be presented as
a separate line item in our consolidated balance sheet under the caption
"Company obligated mandatorily redeemable preferred securities of subsidiary
trust holding solely subordinated debentures," and appropriate disclosures about
the preferred securities, the guarantee and the subordinated debentures will be
included in the notes to our consolidated financial statements. For financial
reporting purposes, we will record distributions payable on the preferred
securities in our consolidated statements of operations.
Our future reports filed under the Securities Exchange Act of 1934, as
amended, will include a footnote to the consolidated financial statements
stating that:
- the trust is wholly-owned;
- the sole assets of the trust are the subordinated debentures and
specifying the subordinated debentures' principal amount, interest rate
and maturity date; and
- our obligations described in this prospectus, in the aggregate,
constitute a full, irrevocable and unconditional guarantee on a
subordinated basis by us of the obligations of the trust under the
preferred securities.
We have not included separate financial statements of the trust in this
prospectus. We do not consider that separate financial statements would be
material to holders of preferred securities because we will own all of the
trust's voting securities, the trust has no independent operations and we
guarantee the payments on the preferred securities to the extent described in
this prospectus.
MARKET FOR THE PREFERRED SECURITIES
We have applied to have the preferred securities designated for quotation
on the Nasdaq National Market under the symbol "GBCIP." We are not sure,
however, whether an active and liquid trading market will develop, or if
developed, will continue. The public offering price and distribution rate have
been determined by negotiations among our representatives and the underwriters,
and the public offering price of the preferred securities may not be indicative
of the market price following the offering. See "Underwriting."
DESCRIPTION OF THE TRUST
The trust is a statutory business trust formed pursuant to the Delaware
Business Trust Act under a trust agreement executed by us, as sponsor for the
trust, and the trustees, and a certificate of trust filed with the Delaware
Secretary of State. The trust agreement will be amended and restated in its
entirety in the form filed as an exhibit to the registration statement of which
this prospectus is a part, as of the date the preferred securities are initially
issued. The trust agreement will be qualified under the Trust Indenture Act of
1939.
The holders of the preferred securities issued pursuant to the offering
described in this prospectus will own all of the issued and outstanding
preferred securities of the trust that have certain prior rights over the other
securities of the trust. We will not initially own any of the preferred
securities. We will acquire common securities in an amount equal to at least 3%
of the total capital of the trust and will initially own, directly or
indirectly, all of the issued and outstanding common securities. The common
securities, together with the preferred securities, are called the trust
securities.
The trust exists exclusively for the purposes of:
- issuing the preferred securities to the public for cash;
- issuing its common securities to us;
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<PAGE> 24
- investing the proceeds from the sale of the trust securities in an
equivalent amount of subordinated debentures; and
- engaging in other activities that are incidental to those listed above.
The rights of the holders of the trust securities are as set forth in the
trust agreement, the Delaware Business Trust Act and the Trust Indenture Act.
The trust agreement does not permit the trust to borrow money or make any
investment other than in the subordinated debentures. Other than with respect to
the trust securities, we have agreed to pay for all debts and obligations and
all costs and expenses of the trust, including the fees and expenses of the
trustees and any income taxes, duties and other governmental charges, and all
costs and expenses related to these charges, to which the trust may become
subject, except for United States withholding taxes that are properly withheld.
The number of trustees of the trust will, pursuant to the Trust Agreement,
initially be five. Three of the trustees, will be persons who are employees or
officers of or who are affiliated with us. These are administrative trustees and
initially include Michael J. Blodnick, James H. Strosahl, and Thomas E.
Anderson. The fourth trustee, the Delaware trustee, will be an entity that
maintains its principal place of business in the State of Delaware. Initially,
Wilmington Trust Company, a Delaware banking corporation, will act as Delaware
trustee. The fifth trustee, called the property trustee, also will initially be
Wilmington Trust Company. The property trustee is the institutional trustee
under the trust agreement and acts as the indenture trustee called for under the
applicable provisions of the Trust Indenture Act. Also for purposes of
compliance with the Trust Indenture Act, Wilmington Trust Company will act as
guarantee trustee and indenture trustee under the guarantee agreement and the
indenture. See "Description of the Subordinated Debentures" and "Description of
the Guarantee." We, as holder of all of the common securities, will have the
right to appoint or remove any trustee unless an event of default under the
indenture has occurred and is continuing, in which case only the holders of the
preferred securities may remove the Delaware trustee or the property trustee.
The trust has a term of approximately 35 years but may terminate earlier as
provided in the trust agreement.
The property trustee will hold the subordinated debentures for the benefit
of the holders of the trust securities and will have the power to exercise all
rights, powers and privileges under the indenture as the holder of the
subordinated debentures. In addition, the property trustee will maintain
exclusive control of a segregated non-interest bearing "payment account"
established with Wilmington Trust Company to hold all payments made on the
subordinated debentures for the benefit of the holders of the trust securities.
The property trustee will make payments of distributions and payments on
liquidation, redemption and otherwise to the holders of the trust securities out
of funds from the payment account. The guarantee trustee will hold the guarantee
for the benefit of the holders of the preferred securities.
DESCRIPTION OF THE PREFERRED SECURITIES
The preferred securities will be issued pursuant to the trust agreement,
which will be qualified as an indenture under the Trust Indenture Act.
Wilmington Trust Company will act as property trustee for the preferred
securities under the trust agreement for purposes of complying with the
provisions of the Trust Indenture Act. The terms of the preferred securities
will include those stated in the trust agreement and those made part of the
trust agreement by the Trust Indenture Act. A form of the trust agreement has
been filed as an exhibit to the registration statement of which this prospectus
forms a part.
GENERAL
The trust agreement authorizes the administrative trustees, on behalf of
the trust, to issue the trust securities, which consist of the preferred
securities to be sold to the public and the common securities to be sold to us.
We will own all of the common securities issued by the trust. The preferred
securities will represent preferred undivided beneficial interests in the assets
of the trust, and the holders of the preferred securities will be entitled to a
preference over the common securities upon an event of default with respect
21
<PAGE> 25
to distributions and amounts payable on redemption or liquidation. The trust is
not permitted to issue any securities other than the trust securities or to
incur any other indebtedness.
The preferred securities will rank equally, and payments on the preferred
securities will be made proportionally, with the common securities, except as
described under "-- Subordination of Common Securities" below.
The property trustee will hold legal title to the subordinated debentures
in trust for the benefit of the holders of the trust securities. We will
guarantee the payment of distributions out of money held by the trust, and
payments upon redemption of the preferred securities or liquidation of the
trust, to the extent described under "Description of the Guarantee." The
guarantee agreement does not cover the payment of any distribution or the
liquidation amount when the trust does not have sufficient funds available to
make these payments.
DISTRIBUTIONS
Source of Distributions. The funds of the trust available for distribution
to holders of the preferred securities will be limited to payments made under
the subordinated debentures, which the trust will purchase with the proceeds
from the sale of the trust securities. Distributions will be paid through the
property trustee, which will hold the amounts received from our interest
payments on the subordinated debentures in the property account for the benefit
of the holders of the trust securities. If we do not make interest payments on
the subordinated debentures, the property trustee will not have funds available
to pay distributions on the preferred securities.
Payment of Distributions. Distributions on the preferred securities will be
payable at the annual rate of % of the $25 stated liquidation amount,
payable quarterly on March 31, June 30, September 30 and December 31 of each
year, to the holders of the preferred securities on the relevant record dates.
The record date will be the business day immediately preceding the relevant
distribution date. The first distribution date for the preferred securities will
be March 31, 2001.
Distributions will accumulate from the date of issuance, will be cumulative
and will be computed on the basis of a 360-day year of twelve 30-day months. If
the distribution date is not a business day, payment of the distributions will
be made on the next day that is a business day, without any additional interest
or other payment for the delay. However, if the next business day is in the next
calendar year, payment of the distribution will be made on the business day
immediately preceding the scheduled distribution date. "Business day" means any
day other than a Saturday, a Sunday, a day on which banking institutions in the
state of Montana or Wilmington, Delaware are authorized or required by law,
executive order or regulation to remain closed or a day on which the corporate
trust office of the property trustee or the indenture trustee is closed for
business.
Extension Period. As long as no event of default under the indenture has
occurred and is continuing, we have the right to defer the payment of interest
on the subordinated debentures at any time for a period not exceeding 20
consecutive quarters. However, no extension period may extend beyond February 1,
2031 or end on a date other than an interest payment date, which dates are the
same as the distribution dates. If we defer the payment of interest, quarterly
distributions on the preferred securities will also be deferred during any such
extension period. Any deferred distributions under the preferred securities will
accumulate additional amounts at the annual rate of %, compounded quarterly
from the relevant distribution date. The term "distributions" as used in this
prospectus includes those accumulated amounts.
During an extension period, we may not:
- 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 (other than stock dividends, noncash dividends in connection with
the implementation of a shareholder rights plan, or the issuance of stock
under any plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, purchase of common stock in connection with
employee benefit plans or in connection with the reclassification of any
class of our capital stock into another class of capital stock) or allow
any of our subsidiaries
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<PAGE> 26
to do the same with respect to their capital stock (other than the
payment of dividends or distributions to us);
- make any payment of principal, interest or premium on or repay,
repurchase or redeem any debt securities that rank equally with or junior
in interest to the subordinated debentures or allow any of our
subsidiaries to do the same;
- make any guarantee payments with respect to any other guarantee by us of
any other debt securities of any of our subsidiaries if such other
guarantee ranks equally with or junior to the subordinated debentures
(other than payments under the guarantee); or
- redeem, purchase or acquire less than all of the subordinated debentures
or any of the preferred securities.
AFTER THE TERMINATION OF ANY EXTENSION PERIOD AND THE PAYMENT OF ALL
AMOUNTS DUE, WE MAY ELECT TO BEGIN A NEW EXTENSION PERIOD, SUBJECT TO THE ABOVE
REQUIREMENTS.
We do not currently intend to exercise our right to defer distributions on
the preferred securities by extending the interest payment period on the
subordinated debentures.
REDEMPTION OR EXCHANGE
General. Subject to the prior approval of the Federal Reserve, if then
required, we will have the right to redeem the subordinated debentures:
- in whole at any time, or in part from time to time, on or after February
1, 2006;
- at any time, in whole, within 180 days following the occurrence of a Tax
Event, an Investment Company Event or a Capital Treatment Event, as
defined below; or
- at any time, to the extent of any preferred securities we repurchase plus
a proportionate amount of the common securities sold.
Mandatory Redemption. Upon our repayment or redemption, in whole or in
part, of any subordinated debentures, whether on February 1, 2031 or earlier,
the property trustee will apply the proceeds to redeem the same amount of the
trust securities, upon not less than 30 days' nor more than 60 days' notice, at
the redemption price. The redemption price will equal 100% of the aggregate
liquidation amount of the trust securities, plus accumulated but unpaid
distributions and Additional Payments (as defined below) to the date of
redemption. If less than all of the subordinated debentures are to be repaid or
redeemed on a date of redemption, the proceeds from such repayment or redemption
will be allocated to redemption of the preferred securities and the common
securities proportionately.
Additional Payments mean the additional amounts as may be necessary to be
paid by us in order that the amount of distributions then due and payable by the
trust on the outstanding trust securities will not be reduced as a result of any
additional taxes, duties, assessments and other governmental charges to which
the trust has become subject.
Distribution of Subordinated Debentures in Exchange for Preferred
Securities. Upon prior approval of the Federal Reserve, if required, we will
have the right at any time to dissolve, wind-up or terminate the trust and,
after satisfaction of the liabilities of creditors of the trust as provided by
applicable law, including, without limitation, amounts due and owing the
trustees of the trust, to cause the subordinated debentures to be distributed
directly to the holders of trust securities in liquidation of the trust. See
"-- Liquidation Distribution Upon Termination."
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<PAGE> 27
After the liquidation date fixed for any distribution of subordinated
debentures in exchange for preferred securities:
- those preferred securities will no longer be deemed to be outstanding;
and
- any certificates representing preferred securities will be deemed to
represent subordinated debentures with a principal amount equal to the
liquidation amount of those preferred securities and bearing accrued and
unpaid interest in an amount equal to the accumulated and unpaid
distributions on the preferred securities until the certificates are
surrendered to the administrative trustees in exchange for certificates
representing the subordinated debentures.
We cannot assure you that the market prices for the preferred securities or
the subordinated debentures that may be distributed if a dissolution and
liquidation of the trust were to occur will be as much as the price you pay for
the preferred securities. The preferred securities that you may purchase, or the
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.
Redemption Upon a Tax Event, Investment Company Event or Capital Treatment
Event. If a Tax Event, an Investment Company Event or a Capital Treatment Event
occurs, we will have the right to redeem the subordinated debentures in whole
and thereby cause a mandatory redemption of the trust securities subject to our
having received the prior approval of the Federal Reserve, if then required, in
whole at the redemption price. If one of these events occurs and we do not elect
to redeem the subordinated debentures, or to dissolve the trust and cause the
subordinated debentures to be distributed to holders of the trust securities,
the preferred securities will remain outstanding and Additional Payments may be
payable on the subordinated debentures. See "Description of Subordinated
Debentures -- Redemption or Exchange".
"Tax Event" means the receipt by the trust and us of an opinion of counsel
experienced in such matters stating that:
- interest payable by us on the subordinated debentures is not, or within
90 days after the date of the opinion will not be, deductible by us, in
whole or in part, for federal income tax purposes;
- the trust is, or will be within 90 days after the date of the opinion,
subject to federal income tax with respect to income received or accrued
on the subordinated debentures; or
- the trust is, or will be within 90 days after the date of opinion,
subject to more than an immaterial amount of other taxes, duties,
assessments or other governmental charges as a result of any amendment to
any tax laws or regulations.
"Investment Company Event" means the receipt by the trust and us of an
opinion of counsel experienced in such matters to the effect that the trust is
or will be considered an "investment company" that is required to be registered
under the Investment Company Act of 1940 as a result of a change in law or
regulation or a change in interpretation or application of laws or regulations.
"Capital Treatment Event" means the receipt by the trust and us of an
opinion of counsel experienced in such matters to the effect that there is more
than an insubstantial risk of impairment of our ability to treat the preferred
securities as Tier 1 capital for purposes of the current capital adequacy
guidelines of the Federal Reserve as a result of any amendment to any laws or
any regulations.
For all of the events described above, we or the trust must request and
receive an opinion with regard to the event within a reasonable period of time
after we become aware of the possible occurrence of an event of such kind.
Redemption of Subordinated Debentures in Exchange for Preferred Securities
We Repurchase. Upon prior approval of the Federal Reserve, if required, we will
also have the right at any time, and from time to time, to redeem subordinated
debentures in exchange for any preferred securities we may have repurchased in
the market. If we elect to surrender any preferred securities beneficially owned
by us in exchange for redemption of a like amount of subordinated debentures, we
will also surrender a
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<PAGE> 28
proportionate amount of common securities in exchange for subordinated
debentures. Preferred securities owned by other holders will not be called for
redemption at any time when we elect to exchange trust securities we own to
redeem subordinated debentures.
The common securities we surrender will be in the same proportion to the
preferred securities we surrender as are the common securities then remaining
outstanding to the preferred securities then remaining outstanding. In exchange
for the trust securities surrendered by us, the trustee will distribute to us
subordinated debentures with a principal amount equal to the liquidation amount
of the trust securities, plus any accumulated but unpaid distributions, if any,
then held by the trustee allocable to those trust securities. After the date of
redemption involving an exchange by us, the trust securities we surrender and
the subordinated debentures distributed to us in exchange will no longer be
deemed outstanding.
REDEMPTION PROCEDURES
Preferred securities will be redeemed at the redemption price with the
applicable proceeds from our contemporaneous redemption of the 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 available for the payment of the redemption price. See
"-- Subordination of Common Securities" below.
Notice of any redemption will be mailed at least 30 days, but not more than
60 days, before the date of redemption to each holder of trust securities to be
redeemed at its registered address. Unless we default in payment of the
redemption price on the subordinated debentures, interest will cease to
accumulate on the subordinated debentures called for redemption on and after the
date of redemption.
If the trust gives notice of redemption of its trust securities, the
property trustee, to the extent funds are available, will irrevocably deposit
with the depositary for the trust securities funds sufficient to pay the
aggregate redemption price and will give the depositary for the trust securities
irrevocable instructions and authority to pay the redemption price to the
holders upon surrender of their certificates evidencing the trust securities.
See "Book-Entry Issuance." If the preferred securities are no longer in
book-entry form, the property trustee, to the extent funds are available, will
deposit with the designated paying agent for such preferred securities funds
sufficient to pay the aggregate redemption price and will give the paying agent
irrevocable instructions and authority to pay the redemption price to the
holders upon surrender of their certificates evidencing the preferred
securities. Notwithstanding the foregoing, distributions payable on or prior to
the date of redemption for any trust securities called for redemption will be
payable to the holders of the trust securities on the relevant record dates for
the related distribution dates.
If notice of redemption has been given and we have deposited funds as
required on the date of the deposit, all rights of the holders of the trust
securities called for redemption will cease, except the right to receive the
redemption price, but without interest on such redemption price after the date
of redemption. The trust securities will also cease to be outstanding on the
date of the deposit. If any date fixed for redemption of trust securities is not
a business day, payment of the redemption price payable on that date will be
made on the next day that is a business day without any additional interest or
other payment in respect of the delay. However, if the next business day is in
the next succeeding calendar year, payment of the interest will be made on the
immediately preceding business day.
If payment of the redemption price in respect of trust securities called
for redemption is improperly withheld or refused and not paid by the trust, or
by us pursuant to the guarantee, distributions on the trust securities will
continue to accumulate at the applicable rate from the date of redemption
originally established by the trust for the trust securities to the date the
redemption price is actually paid. In this case, the actual payment date will be
considered the date fixed for redemption for purposes of calculating the
redemption price. See "Description of the Guarantee." Payment of the redemption
price on the preferred securities and any distribution of subordinated
debentures to holders of preferred securities will be made to the applicable
recordholders as they appear on the register for the preferred securities on the
relevant record date. In the case of redemption, the record date will be the
fifteenth business day immediately preceding the date of redemption. In the case
of a distribution of subordinated debentures,
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<PAGE> 29
the record date will be a date within 45 days of the liquidation of the trust,
as determined by the property trustee.
If less than all of the trust securities are to be redeemed, the aggregate
liquidation amount of the trust securities to be redeemed will be allocated
proportionately to those trust securities based upon the relative liquidation
amounts. The particular preferred securities to be redeemed will be selected by
the property trustee from the outstanding preferred securities not previously
called for redemption by a method the property trustee deems fair and
appropriate. This method may provide for the redemption of portions equal to $25
or an integral multiple of $25 of the liquidation amount of the preferred
securities. The property trustee will promptly notify the 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 to be redeemed.
Subject to applicable law, and if we are not exercising our right to defer
interest payments on the subordinated debentures, we may, at any time, purchase
outstanding preferred securities.
SUBORDINATION OF COMMON SECURITIES
Payment of distributions on, and the redemption price of, the preferred
securities and common securities will be made based on the liquidation amount of
these securities. However, if an event of default under the indenture has
occurred and is continuing, no distributions on or redemption of the common
securities may be made. Further, no payments may be made on the common
securities unless payment in full in cash of all accumulated and unpaid
distributions (including additional interest on interest in arrears paid on the
subordinated debentures, if any) on all of the outstanding preferred securities
for all distribution periods terminating on or before that time, or in the case
of payment of the redemption price, payment of the full amount of the redemption
price for all of the outstanding preferred securities then called for
redemption, has been made or provided. All funds available to the property
trustee will first be applied to the payment in full in cash of all
distributions (including additional payments, if any are required) on, or the
redemption price of, the preferred securities then due and payable.
In the case of the occurrence and continuance of any event of default under
the trust agreement resulting from an event of default under the indenture, we,
as holder of the common securities, will be deemed to have waived any right to
act with respect to that event of default under the trust agreement until the
effect of the event of default has been cured, waived or otherwise eliminated
with respect to the preferred securities. Until the event of default under the
trust agreement has been so cured, waived or otherwise eliminated, the property
trustee will act solely on behalf of the holders of the preferred securities and
not on our behalf, and only the holders of the preferred securities will have
the right to direct the property trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
We will have the right at any time to dissolve, wind-up or terminate the
trust and cause the subordinated debentures to be distributed to the holders of
the preferred securities. This right is subject, however, to us receiving
approval of the Federal Reserve, if required. In addition, the trust will
automatically dissolve upon expiration of its term or will dissolve earlier on
the first to occur of:
- our bankruptcy, dissolution or liquidation;
- the distribution of a like amount of the subordinated debentures to the
holders of its trust securities, if we have given written direction to
the property trustee to terminate the trust;
- redemption of all of the preferred securities as described under
"-- Redemption or Exchange -- Mandatory Redemption"; or
- the entry of a court order for the dissolution of the trust.
With the exception of a redemption as described under "-- Redemption or
Exchange -- Mandatory Redemption," if an early dissolution of the trust occurs,
the trust will be liquidated by the trustees as
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expeditiously as they determine to be possible. After satisfaction of
liabilities to creditors of the trust as provided by applicable law, the
trustees will distribute, to the holders of trust securities, subordinated
debentures:
- in an aggregate stated principal amount equal to the aggregate stated
liquidation amount of the trust securities;
- with an interest rate identical to the distribution rate on the trust
securities; and
- with accrued and unpaid interest equal to accumulated and unpaid
distributions on the trust securities.
However, if the property trustee determines that the distribution is not
practical, the holders of trust securities will be entitled to receive, in lieu
of subordinated debentures, a proportionate amount of the liquidation
distribution. The liquidation distribution will be the amount equal to the
aggregate of the liquidation amount, plus accumulated and unpaid distributions
to the date of payment. If the liquidation distribution can be paid only in part
because the trust has insufficient assets available to pay in full the aggregate
liquidation distribution, the amounts payable directly by the trust on the trust
securities will be paid to us, as the holder of the common securities, and the
holders of the preferred securities on a proportional basis based on liquidation
amounts. However, if an event of default under the indenture has occurred and is
continuing, the preferred securities will have a priority over the common
securities. See "-- Subordination of Common Securities" above.
Under current United States federal income tax law and interpretations and
assuming that the trust is treated as a grantor trust, as is expected, a
distribution of the subordinated debentures should not be a taxable event to
holders of the preferred securities. Should there be a change in law, a change
in legal interpretation, a Tax Event or another circumstance, however, the
distribution could be a taxable event to holders of the preferred securities.
See "Federal Income Tax Consequences -- Receipt of Subordinated Debentures or
Cash Upon Liquidation of the Trust." If we do not elect to redeem the
subordinated debentures prior to maturity or to liquidate the trust and
distribute the subordinated debentures to holders of the preferred securities,
the preferred securities will remain outstanding until the repayment of the
subordinated debentures.
If we elect to dissolve the trust and thus cause the subordinated
debentures to be distributed to holders of the preferred securities in
liquidation of the trust, we will continue to have the right to shorten the
maturity of the subordinated debentures. See "Description of Subordinated
Debentures -- General."
LIQUIDATION VALUE
The amount of the liquidation distribution payable on the preferred
securities in the event of any liquidation of the trust is $25 per preferred
security, plus accumulated and unpaid distributions to the date of payment,
which may be in the form of a distribution of subordinated debentures having a
liquidation value and accrued interest of an equal amount. See "-- Liquidation
Distribution Upon Termination."
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:
- the occurrence of an event of default under the indenture (See
"Description of the Subordinated Debentures -- Debenture Events of
Default");
- a default by the trust in the payment of any distribution when it becomes
due and payable, and continuation of the default for a period of 30 days;
- a default by the trust in the payment of any redemption price of any of
the trust securities when it becomes due and payable;
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- a default in the performance, or breach, in any material respect, of any
covenant or warranty of the trustees in the trust agreement, other than
those defaults covered in the preceding two points, and continuation of
the default or breach for a period of 60 days after there has been given,
by registered or certified mail, to the defaulting trustee(s) by the
holders of at least 25% in aggregate liquidation amount of the
outstanding preferred securities, a written notice specifying the default
or breach and requiring it to be remedied and stating that the notice is
a "Notice of Default" under the trust agreement; or
- the occurrence of events of bankruptcy or insolvency with respect to the
property trustee and our failure to appoint a successor property trustee
within 60 days.
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 the holders of the preferred securities, the
administrative trustees and to us, unless the event of default has been cured or
waived. We and the administrative trustees are required to file annually with
the property trustee a certificate as to whether or not we and the
administrative trustees are in compliance with all the conditions and covenants
applicable to the administrative trustees and us under the trust agreement.
If an event of default under the indenture has occurred and is continuing,
the preferred securities will have preference over the common securities upon
dissolution of the trust. See "-- Subordination of Common Securities" and
"-- Liquidation Distribution Upon Dissolution" above. The existence of an event
of default under the trust agreement does not entitle the holders of preferred
securities to accelerate the maturity thereof, unless the event of default is
caused by the occurrence of an event of default under the indenture and both the
indenture trustee and holders of at least 25% in principal amount of the
subordinated debentures fail to accelerate the maturity thereof.
REMOVAL OF THE TRUSTEES
Unless an event of default under the indenture has occurred and is
continuing, we may remove any trustee at any time. If an event of default under
the indenture has occurred and is continuing, only the holders of a majority in
liquidation amount of the outstanding preferred securities may remove the
property trustee or the Delaware trustee. The holders of the preferred
securities have no right to vote to appoint, remove or replace the
administrative trustees. These rights are vested exclusively with us as the
holder of the common securities. No resignation or removal of a trustee and no
appointment of a successor trustee will be effective until the successor trustee
accepts the appointment in accordance with the trust agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an event of default under the trust agreement has occurred and is
continuing, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the trust property may
at the time be located, we will have the power to appoint at any time or times,
and upon written request of the property trustee, we will appoint, one or more
persons or entities either (1) to act as a co-trustee, jointly with the property
trustee, of all or any part of the trust property, or (2) to act as separate
trustee of any trust property. In either case, these trustees will have the
powers that may be provided in the instrument of appointment and will have
vested in them any property, title, right or power deemed necessary or
desirable, subject to the provisions of the trust agreement. In case an event of
default under the indenture has occurred and is continuing, the property trustee
alone will have power to make the appointment.
MERGER OR CONSOLIDATION OF TRUSTEES
Generally, any person or successor to any of the trustees may be a
successor trustee to any of the trustees, including a successor resulting from a
merger or consolidation. However, any successor trustee must meet all of the
qualifications and eligibility standards to act as a trustee.
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MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other person or entity,
except as described below. The trust may, at our request, with the consent of
the administrative trustees and without the consent of the holders of the
preferred securities, the property trustee or the Delaware trustee, undertake a
transaction described in the preceding sentence if the following conditions are
met:
- the successor entity either (1) expressly assumes all of 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 (referred to as "successor
securities") so long as the successor securities rank the same in
priority as the preferred securities with respect to distributions and
payments upon liquidation, redemption and otherwise;
- we appoint a trustee of the successor entity possessing substantially the
same powers and duties as the property trustee in its capacity as the
holder of the subordinated debentures;
- the successor securities are listed or will be listed on the Nasdaq
National Market or other automated quotation system or on any securities
exchange on which the preferred securities are then listed or quoted;
- the 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
successor securities) in any material respect;
- the successor entity has a purpose substantially identical to that of the
trust;
- prior to the merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, we have received an opinion from
independent counsel that (1) any transaction of this kind does not
adversely affect the rights, preferences and privileges of the holders of
the preferred securities (including any successor securities) in any
material respect, and (2) following the transaction, neither the trust
nor the successor entity will be required to register as an "investment
company" under the Investment Company Act; and
- we own all of the common securities of the successor entity and guarantee
the obligations of the 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 every holder of the preferred securities, enter into any of the foregoing
transactions of this kind if such transaction would cause the trust or the
successor entity not to be classified as a grantor trust for United States
federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT
Except as described below and under "Description of the
Guarantee -- Amendments and Assignment" and as otherwise required by the Trust
Indenture Act and the trust agreement, the holders of the preferred securities
will have no voting rights.
The trust agreement may be amended from time to time by us and the
trustees, without the consent of the holders of the preferred securities, in the
following circumstances:
- with respect to acceptance of appointment by a successor trustee;
- 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, as long as the amendment is not inconsistent with
the other provisions of the trust agreement and does not have a material
adverse effect on the interests of any holder of trust securities; or
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- to modify, eliminate or add to any provisions of the trust agreement if
necessary to ensure that the trust will be classified for federal income
tax purposes as a grantor trust at all times that any trust securities
are outstanding or to ensure that the trust will not be required to
register as an "investment company" under the Investment Company Act.
With the consent of the holders of a majority of the aggregate liquidation
amount of the outstanding trust securities, we and the trustees may amend the
trust agreement if the trustees receive an opinion of counsel to the effect that
the amendment or the exercise of any power granted to the trustees in accordance
with the amendment will not affect the trust's status as a grantor trust for
federal income tax purposes or the trust's exemption from status as an
"investment company" under the Investment Company Act. Without the consent of
each holder of trust securities, however, the trust agreement may not be amended
to (1) change the amount or timing of any distribution on the trust securities
or otherwise adversely affect the amount of any distribution required to be made
in respect of the trust securities as of a specified date, or (2) restrict the
right of a holder of trust securities to institute suit for the enforcement of
the payment on or after that date.
As long as the property trustee holds any subordinated debentures, the
trustees will not:
- direct the time, method and place of conducting any proceeding for any
remedy available to the indenture trustee or executing any trust or power
conferred on the property trustee with respect to the subordinated
debentures;
- waive any past default that is waivable under the indenture;
- exercise any right to rescind or annul a declaration that the principal
of all the subordinated debentures will be due and payable; or
- consent to any amendment or termination of the indenture or the
subordinated debentures, where the consent is required, without obtaining
the prior approval of the holders of a majority in aggregate liquidation
amount of all outstanding trust securities. Where a consent under the
indenture requires the consent of each holder of the affected
subordinated debentures, however, no consent will be given by the
property trustee without the prior consent of each holder of the trust
securities.
The trustees may not revoke any action previously authorized or approved by
a vote of the holders of the trust securities except by subsequent vote of the
holders of the trust securities. The property trustee will notify each holder of
trust securities of any notice of default with respect to the subordinated
debentures. In addition to obtaining the foregoing approvals of the holders of
the trust securities, prior to taking any of the foregoing actions, the trustees
must obtain an opinion of counsel experienced in these matters to the effect
that the trust will continue to be classified as a grantor trust and not as an
association taxable as a corporation for federal income tax purposes on account
of such action.
Any required approval of holders of trust securities may be given at a
meeting of holders of the trust securities convened for the purpose or pursuant
to written consent. The property trustee will cause a notice of any meeting at
which holders of the trust securities are entitled to vote to be given to each
holder of record of trust securities.
No vote or consent of the holders of preferred securities will be required
for the trust to redeem and cancel its preferred securities in accordance with
the trust agreement.
Notwithstanding the fact that holders of preferred securities 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 affiliate of ours
or any trustee, will, for purposes of the vote or consent, be treated as if they
were not outstanding.
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GLOBAL PREFERRED SECURITIES
The preferred securities will be represented by one or more global
preferred securities registered in the name of The Depository Trust Company, New
York, New York ("DTC") or its nominee. A global preferred security is a security
representing interests of more than one beneficial holder. Beneficial interests
in the global preferred securities will be shown on, and transfers will be
effected only through, records maintained by participants. Participants are
brokers, dealers, or others with accounts with DTC. Except as described below,
preferred securities in definitive form will not be issued in exchange for the
global preferred securities. See "Book-Entry Issuance."
No global preferred security may be exchanged for preferred securities
registered in the names of persons other than DTC or its nominee unless:
- DTC notifies the indenture trustee that it is unwilling or unable to
continue as a depositary for the global preferred security, and we are
unable to locate a qualified successor depositary;
- we execute and deliver to the indenture trustee a written order stating
that we elect to terminate the book-entry system through DTC; or
- there shall have occurred and be continuing an event of default under the
indenture.
Any global preferred security that is exchangeable pursuant to the
preceding sentence will be exchangeable for definitive certificates registered
in such names as DTC shall direct. It is expected that the instructions will be
based upon directions received by DTC with respect to ownership of beneficial
interests in the global preferred security. If preferred securities are issued
in definitive form, the preferred securities will be in denominations of $25 and
integral multiples of $25 and may be transferred or exchanged at the offices
described below.
Unless and until it is exchanged in whole or in part for the individual
preferred securities represented thereby, a global preferred security may not be
transferred except as a whole by DTC to a nominee of DTC, by a nominee of DTC to
DTC or another nominee of DTC or by DTC or any nominee to a successor depositary
or any nominee of the successor.
Payments on global preferred securities will be made to DTC, as the
depositary for the global preferred securities. If the preferred securities are
issued in definitive form, distributions will be payable, the transfer of the
preferred securities will be registerable, and preferred securities will be
exchangeable, for preferred securities of other denominations of a like
aggregate liquidation amount, at the corporate office of the property trustee,
or at the offices of any paying agent or transfer agent appointed by the
administrative trustees. However, payment of any distribution may be made at the
option of the administrative trustees by check mailed to the address of record
of the persons entitled to the distribution or by wire transfer. In addition, if
the preferred securities are issued in definitive form, the record dates for
payment of distributions will be the 15th day of the month in which the relevant
distribution date occurs. For a description of the terms of DTC arrangements
relating to payments, transfers, voting rights, redemptions and other notices
and other matters, see "Book-Entry Issuance."
Upon the issuance of one or more global preferred securities, and the
deposit of the global preferred security with or on behalf of DTC or its
nominee, DTC or its nominee will credit, on its book-entry registration and
transfer system, the respective aggregate liquidation amounts of the individual
preferred securities represented by the global preferred security to the
accounts of persons that have accounts with DTC. These accounts will be
designated by the dealers, underwriters or agents with respect to the preferred
securities. Ownership of beneficial interests in a global preferred security
will be limited to persons or entities with an account with DTC or who may hold
interests through any person or entity with an account that may hold interests
through participants. With respect to interests of any person or entity with an
account with DTC, ownership of beneficial interests in a global preferred
security will be shown on, and the transfer of that ownership will be effected
only through, records maintained by the applicable depositary or its nominee.
With respect to persons or entities who hold interest in a global preferred
security through a participant, the interest and any transfer of the interest
will be shown on the
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participant's records. The laws of some states require that certain purchasers
of securities take physical delivery of these securities in definitive form.
These laws may impair the ability to transfer beneficial interests in a global
preferred security.
So long as DTC or another depositary, or its nominee, is the registered
owner of the global preferred security, the depositary or the nominee, as the
case may be, will be considered the sole owner or holder of the preferred
securities represented by the global preferred security for all purposes under
the trust agreement. Except as described in this prospectus, owners of
beneficial interests in a global preferred security will not be entitled to have
any of the individual preferred securities represented by the global preferred
security registered in their names, will not receive or be entitled to receive
physical delivery of any the preferred securities in definitive form and will
not be considered the owners or holders of the preferred securities under the
trust agreement.
None of us, the property trustee, any paying agent or the securities
registrar for the preferred securities will have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests of the global preferred security representing the
preferred securities or for maintaining, supervising or reviewing any records
relating to the beneficial ownership interests.
We expect that DTC or its nominee, upon receipt of any payment of the
liquidation amount or distributions in respect of a global preferred security,
immediately will credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the aggregate
liquidation amount of the global preferred security as shown on the records of
DTC or its nominee. We also expect that payments by participants to owners of
beneficial interests in the global preferred security held through the
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name." The payments will be the responsibility of
the participants. See "Book-Entry Issuance."
PAYMENT AND PAYING AGENCY
Payments in respect of the preferred securities shall be made to DTC, which
credits the relevant accounts of participants on the applicable distribution
dates, or, if any of the preferred securities are not held by DTC, the payments
shall be made by check mailed to the address of the holder as listed on the
register of holders of the preferred securities. The paying agent for the
preferred securities will initially be the property trustee and any co-paying
agent chosen by the property trustee and acceptable to us and the administrative
trustees. The paying agent for the preferred securities may resign as paying
agent upon 30 days' written notice to the administrative trustees, the property
trustee and us. If the property trustee no longer is the paying agent for the
preferred securities, the administrative trustees will appoint a successor to
act as paying agent. The successor must be a bank or trust company acceptable to
us and the property trustee.
REGISTRAR AND TRANSFER AGENT
The property trustee will act as the registrar and the 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 upon payment of any
tax or other governmental charges that may be imposed in connection with any
transfer or exchange. The trust and its registrar and transfer agent will not be
required to register or cause to be registered the transfer of preferred
securities after they have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The property trustee, until the occurrence and continuance of an event of
default under the trust agreement, undertakes to perform only the duties set
forth in the trust agreement. After an event of default under the trust
agreement, the property trustee must exercise the same degree of care and skill
as a prudent person exercises or uses in the conduct of its own affairs. The
property trustee is under no obligation to exercise any of the powers vested in
it by the trust agreement at the request of any holder of
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preferred securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred. If no event of default
under the trust agreement has occurred and is continuing and the property
trustee is required to decide between alternative causes of action, construe
ambiguous provisions in the trust agreement or is unsure of the application of
any provision of the trust agreement, and the matter is not one on which holders
of preferred securities are entitled to vote upon, the property trustee will
take the action directed in writing by us. If the property trustee is not so
directed, it will take the action it deems advisable and in the best interests
of the holders of the trust securities and will have no liability except for its
own bad faith, negligence or willful misconduct.
MISCELLANEOUS
The administrative trustees are authorized and directed to conduct the
affairs of and to operate the trust in such a way that:
- the trust will not be deemed to be an "investment company" required to be
registered under the Investment Company Act;
- the trust will not be classified as an association taxable as a
corporation for federal income tax purposes; and
- the subordinated debentures will be treated as our indebtedness for
federal income tax purposes.
In this regard, we and the administrative trustees are authorized to take
any action not inconsistent with applicable law, the certificate of trust or the
trust agreement, that we and the administrative trustees determine to be
necessary or desirable for these purposes.
Holders of the preferred securities have no preemptive or similar rights.
The trust agreement and the preferred securities will be governed by Delaware
law.
DESCRIPTION OF THE SUBORDINATED DEBENTURES
Concurrently with the issuance of the preferred securities, the trust will
invest the proceeds from the sale of the trust securities in the subordinated
debentures issued by us. The subordinated debentures will be issued as unsecured
debt under the indenture between us and Wilmington Trust Company, as trustee
(the "indenture trustee"). The indenture will be qualified under the Trust
Indenture Act.
The following discussion is subject to, and is qualified in its entirety by
reference to, the indenture and to the Trust Indenture Act. We urge prospective
investors to read the form of the indenture, which is filed as an exhibit to the
registration statement of which this prospectus forms a part.
GENERAL
The subordinated debentures will be limited in aggregate principal amount
to $35 million. This amount represents the sum of the aggregate stated
liquidation amounts of the trust securities. The subordinated debentures will
bear interest at the annual rate of % of the principal amount. The interest
will be payable quarterly on March 31, June 30, September 30 and December 31 of
each year, beginning March 31, 2001, to the person in whose name each
subordinated debenture is registered at the close of business on the business
day immediately preceding the day interest is due. It is anticipated that, until
the liquidation, if any, of the trust, the subordinated debentures will be held
in the name of the property trustee in trust for the benefit of the holders of
the trust securities.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. If any date on which interest is
payable on the subordinated debentures is not a business day, payment of
interest will be made on the next day that is a business day without any
additional interest or other payment in respect of the delay. However, if the
next business day is in the next calendar year, payment of the interest will be
made on the immediately preceding business day. Accrued interest that is not
paid on the applicable interest payment date will bear additional interest on
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the amount due at the annual rate of %, compounded quarterly. The term
"interest," includes quarterly interest payments, interest on quarterly interest
payments not paid on the applicable interest payment date and additional
interest, as applicable.
The subordinated debentures will mature on February 1, 2031, the stated
maturity date. We may shorten this date once at any time to any date not earlier
than February 1, 2006, subject to the prior approval of the Federal Reserve, if
required.
We will give notice to the indenture trustee and the holders of the
subordinated debentures, no more than 180 days, and no less than 90 days, prior
to the effectiveness of any change in the stated maturity date. We will not have
the right to redeem the subordinated debentures from the trust until after
February 1, 2006, except if a Tax Event, an Investment Company Event or a
Capital Treatment Event has occurred.
The subordinated debentures will be unsecured and will rank junior to all
of our senior and subordinated indebtedness. Because we are a holding company,
our right to participate in any distribution of assets of any of our
subsidiaries, upon any subsidiary's liquidation or reorganization or otherwise,
and thus the ability of holders of the subordinated debentures to benefit
indirectly from any distribution by a subsidiary, is subject to the prior claim
of creditors of the subsidiary, except to the extent that we may be recognized
as a creditor of the subsidiary. The subordinated debentures will, therefore, be
effectively subordinated to all existing and future liabilities of our
subsidiaries, and holders of subordinated debentures should look only to our
assets for payment. The indenture does not limit our ability to incur or issue
secured or unsecured senior and junior debt. See "-- Subordination" below.
The indenture does not contain provisions that afford holders of the
subordinated debentures protection in the event of a highly leveraged
transaction or other similar transaction involving us, nor does it require us to
maintain or achieve any financial performance levels or to obtain or maintain
any credit rating on the subordinated debentures.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
As long as no event of default under the indenture has occurred and is
continuing, we have the right under the indenture to defer the payment of
interest on the subordinated debentures at any time for a period not exceeding
20 consecutive quarters. However, no extension period may extend beyond the
stated maturity of the subordinated debentures or end on a date other than a
date interest is normally due. 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. During an extension period,
interest will continue to accrue and holders of subordinated debentures, or the
holders of preferred securities if they are then outstanding, will be required
to accrue and recognize as income for federal income tax purposes the accrued
but unpaid interest amounts in the year in which such amounts accrued. See
"Federal Income Tax Consequences -- Interest Payment Period and Original Issue
Discount."
During an extension period, we may not:
- 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 (other than stock dividends, noncash dividends in connection with
the implementation of a shareholder rights plan, or the issuance of stock
under any plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, purchase of common stock in connection with
employee benefit plans or in connection with the reclassification of any
class of capital stock into another class of capital stock) or allow any
of our subsidiaries to do the same with respect to their capital stock
(other than payment of dividends or distributions to us);
- make or allow any of our subsidiaries to make any payment of principal,
interest or premium on, or repay, repurchase or redeem any debt
securities issued by us that rank equally with or junior to the
subordinated debentures;
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- make or allow any of our subsidiaries to make any guarantee payments with
respect to any other guarantee by us of any other debt securities of any
of our subsidiaries if the guarantee ranks equally with or junior to the
subordinated debentures (other than payments under the guarantee); or
- redeem, purchase or acquire less than all of the subordinated debentures
or any of the preferred securities.
Prior to the termination of any extension period, so long as no event of
default under the indenture is continuing, we may further defer the payment of
interest subject to the above stated requirements. Upon the termination of any
extension period and the payment of all amounts then due, we may elect to begin
a new extension period at any time. We do not currently intend to exercise our
right to defer payments of interest on the subordinated debentures.
We must give the property trustee, the administrative trustees and the
indenture trustee notice of our election of an extension period at least two
business days prior to the earlier of (1) the next date on which distributions
on the trust securities would have been payable except for the election to begin
an extension period, or (2) the date we are required to give notice of the
record date, or the date the distributions are payable, to the Nasdaq National
Market, or other applicable self-regulatory organization, or to holders of the
preferred securities, but in any event at least one business day prior to the
record date.
Other than as described above, there is no limitation on the number of
times that we may elect to begin an extension period.
ADDITIONAL SUMS TO BE PAID AS A RESULT OF ADDITIONAL TAXES
If the trust is required to pay any additional taxes, duties, assessments
or other governmental charges of whatever nature (other than withholding taxes),
we will pay as additional amounts on the subordinated debentures any amounts
which may be required so that the net amounts received and retained by the trust
after paying any additional taxes, duties, assessments or other governmental
charges will not be less than the amounts the trust would have received had the
additional taxes, duties, assessments or other governmental charges not been
imposed.
REDEMPTION OR EXCHANGE
Subject to prior approval of the Federal Reserve, if required, we may
redeem the subordinated debentures prior to maturity:
- on or after February 1, 2006, in whole at any time or in part from time
to time;
- in whole at any time within 180 days following the occurrence of a Tax
Event, an Investment Company Event or a Capital Treatment Event; or
- at any time, to the extent of any preferred securities we repurchase,
plus a proportionate amount of the common securities we hold.
In each case, we will pay a redemption price equal to the accrued and
unpaid interest on the subordinated debentures so redeemed to the date fixed for
redemption, plus 100% of the principal amount of the redeemed subordinated
debentures.
Notice of any redemption will be mailed at least 30 days, but not more than
60 days, before the redemption date to each holder of subordinated debentures to
be redeemed at its registered address. Redemption of less than all outstanding
subordinated debentures must be effected proportionately, by lot or in any other
manner deemed to be fair by the indenture trustee. Unless we default in payment
of the redemption price for the subordinated debentures, on and after the
redemption date, interest will no longer accrue on the subordinated debentures
or the portions of the subordinated debentures called for redemption.
The subordinated debentures will not be subject to any sinking fund.
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DISTRIBUTION UPON LIQUIDATION
As described under "Description of the Preferred Securities -- Liquidation
Distribution Upon Termination," under certain circumstances and with the Federal
Reserve's approval, the subordinated debentures may be distributed to the
holders of the preferred securities in liquidation of the trust after
satisfaction of liabilities to creditors of the trust. If this occurs, we will
use our reasonable efforts to list the subordinated debentures on the Nasdaq
National Market or national stock exchange or other national quotation system on
which the preferred securities are then listed, if any. There can be no
assurance as to the market price of any subordinated debentures that may be
distributed to the holders of preferred securities.
RESTRICTIONS ON PAYMENTS
We are restricted from making certain payments (as described below) if we
have chosen to defer payment of interest on the subordinated debentures, an
event of default has occurred and is continuing under the indenture or we are in
default with respect to our obligations under the guarantee.
If either of these events shall have occurred, we will not:
- 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 (other than stock dividends, noncash dividends in
connection with the implementation of a shareholder rights plan, or the
issuance of stock under any plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, purchase of common stock
in connection with employee benefit plans or in connection with the
reclassification of any class of our capital stock into another class of
capital stock) or allow any of our subsidiaries to do the same with
respect to their capital stock (other than payment of dividends or
distributions to us);
- make or allow any of our subsidiaries to make any payment of principal,
interest or premium on, or repay or repurchase or redeem any of our debt
securities that rank equally with or junior to the subordinated
debentures;
- make or allow any of our subsidiaries to make any guarantee payments with
respect to any guarantee by us of the debt securities of any of our
subsidiaries if the guarantee ranks equally with or junior to the
subordinated debentures (other than payments under the guarantee); or
- redeem, purchase or acquire less than all of the subordinated debentures
or any of the preferred securities.
SUBORDINATION
The subordinated debentures are subordinated and junior in right of payment
to all of our senior and subordinated debt (as defined below). Upon any payment
or distribution of assets to creditors upon any liquidation, dissolution,
winding up, reorganization, assignment for the benefit of creditors, marshaling
of assets or any bankruptcy, insolvency, debt restructuring or similar
proceedings in connection with any insolvency or bankruptcy proceedings of
Glacier Bancorp, Inc., the holders of our senior and subordinated debt will
first be entitled to receive payment in full of principal and interest before
the holders of subordinated debentures will be entitled to receive or retain any
payment in respect of the subordinated debentures.
If the maturity of any subordinated debentures is accelerated, the holders
of all of our senior and subordinated debt outstanding at the time of the
acceleration will also be entitled to first receive payment in full of all
amounts due to such holders, including any amounts due upon acceleration, before
the holders of the subordinated debentures will be entitled to receive or retain
any payment in respect of the principal of or interest on the subordinated
debentures.
No payments of principal or interest on the subordinated debentures may be
made if there has occurred and is continuing a default in any payment with
respect to any of our senior or subordinated debt
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or an event of default with respect to any of our senior or subordinated debt
resulting in the acceleration of the maturity of the senior or subordinated
debt.
The term "debt" means, with respect to any entity, whether recourse is to
all or a portion of the assets of the entity and whether or not contingent:
- every obligation of the entity for money borrowed;
- every obligation of the entity evidenced by bonds, subordinated
debentures, notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets or
businesses;
- every reimbursement obligation of the entity with respect to letters of
credit, bankers' acceptances or similar facilities issued for the account
of the entity;
- every obligation of the entity issued or assumed as the deferred purchase
price of property or services, excluding trade accounts payable or
accrued liabilities arising in the ordinary course of business;
- every capital lease obligation of the entity; and
- every obligation of the type referred to in the first five points of
another entity and all dividends of another entity the payment of which,
in either case, the first entity has guaranteed or is responsible or
liable, directly or indirectly, as obligor or otherwise.
The term "senior debt" means the principal of and premium and interest,
including interest accruing on or after the filing of any petition in bankruptcy
or for reorganization relating to us, on debt, whether incurred on or prior to
the date of the indenture or incurred after the date. Senior debt also includes
all indebtedness, whether incurred on or prior to the date of the indenture or
thereafter incurred, for claims in respect of derivative products such as
interest and foreign exchange rate contracts, commodity contracts and similar
arrangements. However, senior debt will not be deemed to include:
- any debt where it is provided in the instrument creating the debt that
the obligations are not superior in right of payment to the subordinated
debentures or to other debt which is equal with, or subordinated to, the
subordinated debentures;
- any of our debt that, when incurred and without regard to any election
under the federal bankruptcy laws, was without recourse to us;
- any debt of ours to any of our subsidiaries;
- any debt of ours to any of our employees;
- any debt that by its terms is subordinated to trade accounts payable or
accrued liabilities arising in the ordinary course of business to the
extent that payments made to the holders of the debt by the holders of
the subordinated debentures as a result of the subordination provisions
of the indenture would be greater than they otherwise would have been as
a result of any obligation of the holders to pay amounts over to the
obligees on the trade accounts payable or accrued liabilities arising in
the ordinary course of business as a result of subordination provisions
to which the debt is subject; and
- debt which constitutes subordinated debt.
The term "subordinated debt" means the principal of, premium and interest
on debt, including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to us, whether incurred on or prior to
the date of the indenture or thereafter incurred, which is by its terms
expressly provided to be junior and subordinate to other debt of ours, other
than the subordinated debentures. However, subordinated debt will not be deemed
to include:
- any of our debt which, when incurred and without regard to any election
under the federal bankruptcy laws, was without recourse to us;
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- any debt of ours to any of our subsidiaries;
- any debt of ours to any of our employees;
- any debt which by its terms is subordinated to trade accounts payable or
accrued liabilities arising in the ordinary course of business to the
extent that payments made to the holders of the debt by the holders of
the subordinated debentures as a result of the subordination provisions
of the indenture would be greater than they otherwise would have been as
a result of any obligation of the holders to pay amounts over to the
obligees on the trade accounts payable or accrued liabilities arising in
the ordinary course of business as a result of subordination provisions
to which the debt is subject;
- debt which constitutes senior debt; and
- any debt of ours under debt securities (and guarantees in respect of
these debt securities) initially issued to any trust, or a trustee of a
trust, partnership or other entity affiliated with us that is, directly
or indirectly, our financing vehicle in connection with the issuance by
that entity of preferred securities or other securities which are
intended to qualify for "Tier 1" capital treatment.
We are a bank holding company and almost all of our operating assets are
owned by our subsidiary banks. We rely primarily on dividends from our bank
subsidiaries to meet our obligations for payment of principal and interest on
our outstanding debt obligations and corporate expenses. We are a legal entity
separate and distinct from our subsidiaries. There are regulatory limitations on
the payment of dividends directly or indirectly to us from our bank
subsidiaries. In addition, our bank subsidiaries are subject to certain
restrictions imposed by federal law on any extensions of credit to, and certain
other transactions with, us and their other affiliates. Accordingly, the
subordinated debentures will be effectively subordinated to all existing and
future liabilities of our bank subsidiaries.
Also, as a bank holding company, our right to participate in any
distribution of assets of any bank subsidiary upon such subsidiary's liquidation
or reorganization or otherwise (and thus the ability of holders of the preferred
securities to benefit indirectly from such distribution), is subject to the
prior claims of creditors of that subsidiary (including depositors), except to
the extent we may be recognized as a creditor of that subsidiary. At September
30, 2000, our subsidiaries had total liabilities, including deposits, of
approximately $900 million. Accordingly, the subordinated debentures will be
effectively subordinated to all existing and future liabilities of our
subsidiaries (including deposit liabilities) and all liabilities of any of our
future subsidiaries. The indenture does not limit the incurrence or issuance of
other secured or unsecured debt of us or any subsidiary, including senior
indebtedness.
PAYMENT AND PAYING AGENTS
Generally, payment of principal of and interest on the subordinated
debentures will be made at the office of the indenture trustee in Wilmington,
Delaware. However, we have the option to make payment of any interest by (1)
check mailed to the address of the person entitled to payment at the address
listed in the register of holders of the subordinated debentures, or (2)
transfer to an account maintained by the person entitled thereto as specified in
the register of holders of the subordinated debentures, provided that proper
transfer instructions have been received by the applicable record date. Payment
of any interest on subordinated debentures will be made to the person in whose
name the subordinated debenture is registered at the close of business on the
regular record date for the interest payment, except in the case of defaulted
interest.
Any moneys deposited with the indenture trustee or any paying agent for the
subordinated debentures, or then held by us in trust, for the payment of the
principal of or interest on the subordinated debentures and remaining unclaimed
for two years after the principal or interest has become due and payable, will
be repaid to us on May 31 of each year. If we hold any of this money in trust,
then it will be discharged from the trust to us and the holders of the
subordinated debentures will thereafter look, as a general unsecured creditor,
only to us for payment.
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REGISTRAR AND TRANSFER AGENT
The indenture trustee will act as the registrar and the transfer agent for
the subordinated debentures. Subordinated debentures may be presented for
registration of transfer, with the form of transfer endorsed thereon, or a
satisfactory written instrument of transfer, duly executed, at the office of the
registrar. Provided that we maintain a transfer agent in Wilmington, Delaware,
we may rescind the designation of any transfer agent or approve a change in the
location through which any transfer agent acts. We may at any time designate
additional transfer agents with respect to the subordinated debentures.
If we redeem any of the subordinated debentures, neither we nor the
indenture trustee will be required to (1) issue, register the transfer of or
exchange subordinated debentures during a period beginning at the opening of
business 15 days before the day of selection for redemption of subordinated
debentures and ending at the close of business on the day of mailing of the
relevant notice of redemption, or (2) transfer or exchange any subordinated
debentures so selected for redemption, except, in the case of any subordinated
debentures being redeemed in part, any portion not to be redeemed.
MODIFICATION OF INDENTURE
We and the indenture trustee may, from time to time without the consent of
the holders of the subordinated debentures, amend or waive our rights under or
supplement the indenture for purposes which do not materially adversely affect
the rights of the holders of the subordinated debentures. Other changes may be
made by us and the indenture trustee with the consent of the holders of a
majority in principal amount of the outstanding subordinated debentures.
However, without the consent of the holder of each outstanding subordinated
debenture affected by the proposed modification, no modification may:
- extend the maturity date of the subordinated debentures;
- reduce the principal amount or the rate or extend the time of payment of
interest; or
- reduce the percentage of principal amount of subordinated debentures
required to amend the indenture.
As long as any of the preferred securities remain outstanding, no
modification of the indenture may be made that requires the consent of the
holders of the subordinated debentures, and no waiver of any event of default
under the indenture may be effective, without the prior consent of the holders
of a majority of the aggregate liquidation amount of the preferred securities
or, if such modification or waiver requires the consent of each holder of the
outstanding subordinated debentures, such modification or waiver may not occur
without the prior consent of each holder of the outstanding preferred
securities.
SUBORDINATED DEBENTURE EVENTS OF DEFAULT
The indenture provides that any one or more of the following events with
respect to the subordinated debentures that has occurred and is continuing
constitutes an event of default under the indenture:
- our failure to pay any interest on the subordinated debentures for 30
days after the due date, except where we have properly deferred the
interest payment;
- our failure to pay any principal on the subordinated debentures when due,
whether at maturity, upon redemption or otherwise;
- our failure to observe or perform in any material respect other covenants
contained in the indenture for 90 days after written notice to us from
the indenture trustee or the holders of at least 25% in aggregate
outstanding principal amount of the subordinated debentures; or
- our bankruptcy, insolvency or reorganization or the dissolution of the
trust.
The holders of a majority of the aggregate outstanding principal amount of
the subordinated debentures have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the indenture trustee.
The indenture trustee, or the holders of at least 25% in
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aggregate outstanding principal amount of the subordinated debentures, may
declare the principal due and payable immediately upon an event of default under
the indenture. For as long as any preferred securities remain outstanding, upon
an event of default under the indenture and the failure by the indenture trustee
or the holder of 25% in aggregate principal amount of subordinated debentures to
declare the principal on the subordinated debentures immediately due and
payable, the holders of 25% in aggregate liquidation amount of the preferred
securities may make such declaration.
The holders of a majority of the outstanding principal amount of the
subordinated debentures may annul the declaration and waive the default if that
default has been cured and any other defaults have been cured or properly waived
and a sum sufficient to pay all matured installments of interest and principal
due otherwise than by acceleration, has been deposited with the indenture
trustee. If the subordinated debentures are held by trust or the property
trustee, the holders of a majority in liquidation amount of the preferred
securities must consent to the waiver.
If an event of default under the indenture has occurred and is continuing,
the property trustee, as holder of the subordinated debentures, will have the
right to declare the principal of and the interest on the subordinated
debentures, and any other amounts payable under the indenture, to be immediately
due and payable and to enforce its other rights as a creditor with respect to
the subordinated debentures.
We are required to file annually with the indenture trustee a certificate
as to whether or not we are in compliance with all of the conditions and
covenants applicable to us under the indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF THE PREFERRED SECURITIES
If an event of default under the indenture has occurred and is continuing
and the event is attributable to the failure by us to pay interest on or
principal of the subordinated debentures on the date on which the payment is due
and payable, a holder of preferred securities may institute a direct action
against us to compel us to make the payment. We may not amend the indenture to
remove the foregoing right to bring a direct action without the prior written
consent of all of the holders of the preferred securities. If the right to bring
a direct action is removed, the trust may become subject to the reporting
obligations under the Securities Exchange Act of 1934.
The holders of the preferred securities will not be able to exercise
directly any remedies, other than those set forth in the preceding paragraph,
available to the holders of the subordinated debentures unless there has been an
event of default under the trust agreement. See "Description of the Preferred
Securities -- Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
We may not consolidate with or merge into any other entity or convey or
transfer our properties and assets substantially as an entirety to any entity,
and no entity may be consolidated with or merged into us or sell, convey,
transfer or otherwise dispose of its properties and assets substantially as an
entirety to us, unless:
- if we consolidate with or merge into another person or convey or transfer
our properties and assets substantially as an entirety to any person, the
successor person is organized under the laws of the United States or any
State or the District of Columbia, and the successor person expressly
assumes by supplemental indenture our obligations under the subordinated
debentures;
- immediately after the transaction, no event of default under the
indenture, and no event which, after notice or lapse of time, or both,
would become an event of default under the indenture, has occurred and is
continuing; and
- other conditions as prescribed in the indenture are met.
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SATISFACTION AND DISCHARGE
The indenture will cease to be of further effect, and we will be deemed to
have satisfied and discharged our obligations under the indenture, when all
subordinated debentures not previously delivered to the indenture trustee for
cancellation:
- have become due and payable; and
- will become due and payable at their stated maturity within one year or
are to be called for redemption within one year, and we deposit or cause
to be deposited with the indenture trustee funds, in trust, for the
purpose and in an amount sufficient to pay and discharge the entire
indebtedness on the subordinated debentures not previously delivered to
the indenture trustee for cancellation, for the principal and interest
due to the date of the deposit or to the stated maturity or redemption
date, as the case may be.
We may still be required to provide officers' certificates, opinions of
counsel and pay fees and expenses due after these events occur.
GOVERNING LAW
The indenture and the subordinated debentures will be governed by and
construed in accordance with Delaware law.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
The indenture trustee is subject to all the duties and responsibilities
specified with respect to an indenture trustee under the Trust Indenture Act.
Subject to these provisions, the indenture trustee is under no obligation to
exercise any of the powers vested in it by the indenture at the request of any
holder of subordinated debentures, unless offered reasonable indemnity by the
holder against the costs, expenses and liabilities which might be incurred. The
indenture 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
indenture trustee reasonably believes that repayment or adequate indemnity is
not reasonably assured to it.
MISCELLANEOUS
We have agreed, pursuant to the indenture, for so long as preferred
securities remain outstanding:
- to maintain directly or indirectly 100% ownership of the common
securities of the trust, except that certain successors that are
permitted pursuant to the indenture may succeed to our ownership of the
common securities;
- not to voluntarily terminate, wind up or liquidate the trust without
prior approval of the Federal Reserve, if then required;
- to use our reasonable efforts to cause the trust (1) to remain a business
trust (and to avoid involuntary termination, winding up or liquidation),
except in connection with a distribution of subordinated debentures, the
redemption of all of the trust securities of the trust or mergers,
consolidations or amalgamations, each as permitted by the trust
agreement; and (2) to otherwise continue not to be treated as an
association taxable as a corporation or partnership for federal income
tax purposes; and
- to use our reasonable efforts to cause each holder of trust securities to
be treated as owning an individual beneficial interest in the
subordinated debentures.
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BOOK-ENTRY ISSUANCE
GENERAL
DTC will act as securities depositary for the preferred securities and may
act as securities depositary for all of the subordinated debentures in the event
of the distribution of the subordinated debentures to the holders of preferred
securities. Except as described, the preferred securities will be issued only as
registered securities in the name of Cede & Co. (DTC's nominee). One or more
global preferred securities will be issued for the preferred securities and will
be deposited with DTC.
DTC is a limited purpose trust company organized under New York banking
law, a "banking organization" within the meaning of the New York banking law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to Section 17A of the Securities Exchange Act of 1934. DTC
holds securities that its participants deposit with DTC. DTC also facilitates
the settlement among participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct participants in DTC include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. DTC is owned by a number of its direct
participants and by the New York Stock Exchange, Inc., the American Stock
Exchange LLC and the National Association of Securities Dealers, Inc. Access to
the DTC system is also available to indirect participants, such as securities
brokers and dealers, banks and trust companies that clear through or maintain
custodial relationships with direct participants, either directly or indirectly.
The rules applicable to DTC and its participants are on file with the SEC.
Purchases of preferred securities within the DTC system must be made by or
through direct participants, which receive a credit for the preferred securities
on DTC's records. The ownership interest of each actual purchaser of each
preferred security ("beneficial owner") is, in turn, recorded on the direct and
indirect participant's records. Beneficial owners will not receive written
confirmation from DTC of their purchases, but beneficial owners are expected to
receive written confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the direct or indirect participants
in DTC through which the beneficial owners purchased preferred securities.
Transfers of ownership interests in the preferred securities are to be
accomplished by entries made on the books of participants acting on behalf of
beneficial owners. Beneficial owners will not receive certificates representing
their ownership interest in preferred securities, except if use of the
book-entry system for the preferred securities is discontinued.
DTC will have no knowledge of the actual beneficial owners of the preferred
securities: DTC's records reflect only the identity of the direct participants
to whose accounts the preferred securities are credited, which may or may not be
the beneficial owners. The participants remain responsible for keeping account
of their holdings on behalf of their customers.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that we believe to be accurate, but we and the
trust assume no responsibility for the accuracy thereof. Neither we nor the
trust have any responsibility for the performance by DTC or its participants of
their respective obligations as described in this prospectus or under the rules
and procedures governing their respective operations.
NOTICES AND VOTING
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants, and by direct and
indirect participants to beneficial owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
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Redemption notices will be sent to Cede & Co., as the registered holder of
the preferred securities. If less than all of the preferred securities are being
redeemed, the amount to be redeemed will be determined in accordance with the
trust agreement.
Although voting with respect to the preferred securities is limited to the
holders of record of the preferred securities, in those instances in which a
vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to preferred securities. Under its usual procedures, DTC will mail an
omnibus proxy to the property trustee as soon as possible after the record date.
The omnibus proxy assigns Cede & Co.'s consenting or voting rights to those
direct participants to whose accounts the preferred securities are credited on
the record date.
DISTRIBUTION OF FUNDS
The property trustee will make distribution payments on the preferred
securities to DTC. DTC's practice is to credit direct participants' accounts on
the relevant payment date in accordance with their respective holdings shown on
DTC's records unless DTC has reason to believe that it will not receive payments
on the payment date. Payments by participants to beneficial owners will be
governed by standing instructions and customary practices and will be the
responsibility of the participant and not of DTC, the property trustee, the
trust or us, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of distributions to DTC is the responsibility
of the property trustee, disbursement of the payments to direct participants is
the responsibility of DTC, and disbursements of the payments to the beneficial
owners is the responsibility of direct and indirect participants.
SUCCESSOR DEPOSITORIES AND TERMINATION OF BOOK-ENTRY SYSTEM
DTC may discontinue providing its services with respect to any of the
preferred securities at any time by giving reasonable notice to the property
trustee and us. If no successor securities depositary is obtained, definitive
preferred securities representing the preferred securities are required to be
printed and delivered. We also have the option to discontinue use of the system
of book-entry transfers through DTC (or a successor depositary). After an event
of default under the indenture, the holders of a majority in liquidation amount
of preferred securities may determine to discontinue the system of book-entry
transfers through DTC. In these events, definitive certificates for the
preferred securities will be printed and delivered.
DESCRIPTION OF THE GUARANTEE
The preferred securities guarantee agreement will be executed and delivered
by us concurrently with the issuance of the preferred securities for the benefit
of the holders of the preferred securities. The guarantee agreement will be
qualified as an indenture under the Trust Indenture Act. Wilmington Trust
Company, the guarantee trustee, will act as trustee for purposes of complying
with the provisions of the Trust Indenture Act, and will also hold the guarantee
for the benefit of the holders of the preferred securities. Prospective
investors are urged to read the form of the guarantee agreement, which has been
filed as an exhibit to the registration statement of which this prospectus forms
a part.
GENERAL
We agree to pay in full on a subordinated basis, to the extent described in
the guarantee agreement, the guarantee payments (as defined below) to the
holders of the preferred securities, as and when due, regardless of any defense
or counterclaim that the trust may have or assert other than the defense of
payment.
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The following payments with respect to the preferred securities are called
the "guarantee payments" and, to the extent not paid or made by the trust and to
the extent that the trust has funds available for those distributions, will be
subject to the guarantee:
- any accumulated and unpaid distributions required to be paid on the
preferred securities;
- with respect to any preferred securities called for redemption, the
redemption price; and
- upon a voluntary or involuntary dissolution, winding up or liquidation of
the trust (other than in connection with the distribution of subordinated
debentures to the holders of preferred securities or a redemption of all
of the preferred securities), the lesser of:
(1) the aggregate of the liquidation amount and all accumulated and
unpaid distributions on the preferred securities; and
(2) the amount of assets of the trust remaining available for
distribution to holders of preferred securities in liquidation of the
trust.
We may satisfy our obligations to make a guarantee payment by making a
direct payment of the required amounts to the holders of the preferred
securities or by causing the trust to pay the amounts to the holders.
The guarantee agreement is a guarantee, on a subordinated basis, of the
guarantee payments, but the guarantee only applies to the extent the trust has
funds available for those distributions. If we do not make interest payments on
the subordinated debentures purchased by the trust, the trust will not have
funds available to make the distributions and will not pay distributions on the
preferred securities.
STATUS OF THE GUARANTEE
The guarantee constitutes our unsecured obligation that ranks junior in
right of payment to all of our senior and subordinated debt in the same manner
as the subordinated debentures and senior to our capital stock. We expect from
time to time that we and our subsidiaries will incur additional indebtedness.
None of the indenture, the trust agreement or the guarantee limit the amounts of
the obligations that we or any of our subsidiaries may incur.
The guarantee constitutes a guarantee of payment and not of collection. If
we fail to make guarantee payments when required, holders of preferred
securities may institute a legal proceeding directly against us to enforce their
rights under the guarantee without first instituting a legal proceeding against
any other person or entity.
The guarantee will not be discharged except by payment of the guarantee
payments in full to the extent not paid by the trust or upon distribution of the
subordinated debentures to the holders of the preferred securities. Because we
are a holding company, our right to participate in any distribution of assets of
any subsidiary upon the subsidiary's liquidation or reorganization or otherwise
is subject to the prior claims of creditors of that subsidiary, except to the
extent we may be recognized as a creditor of that subsidiary. Our obligations
under the guarantee, therefore, will be effectively subordinated to all existing
and future liabilities of our subsidiaries, and claimants should look only to
our assets for payments under the guarantee.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of the preferred securities, in which case no vote will be
required, the guarantee may be amended only with the prior approval of the
holders of a majority of the aggregate liquidation amount of the outstanding
preferred securities. See "Description of the Preferred Securities -- Voting
Rights; Amendment of Trust Agreement."
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EVENTS OF DEFAULT; REMEDIES
An event of default under the guarantee will occur upon our failure to make
any required guarantee payments or to perform any other obligations under the
guarantee. The holders of a majority in aggregate liquidation amount of the
preferred securities will 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 and may direct the exercise of any power conferred upon
the guarantee trustee under the guarantee.
Any holder of preferred securities may institute and prosecute a legal
proceeding directly against us to enforce its 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 to provide to the guarantee trustee annually a certificate
as to whether or not we are in compliance with all of the conditions and
covenants applicable to us under the guarantee.
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;
- full payment of the amounts payable upon liquidation of the trust; or
- distribution of the subordinated debentures to the holders of the
preferred securities.
If at any time any holder of the preferred securities must restore payment
of any sums paid under the preferred securities or the guarantee, the guarantee
will continue to be effective or will be reinstated with respect to such
amounts.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee, other than during the occurrence and continuance of
our default in performance of the guarantee, undertakes to perform only those
duties as are specifically set forth in the guarantee. When an event of default
has occurred and is continuing, the guarantee trustee 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 those provisions, the guarantee
trustee is under no obligation to exercise any of the powers vested in it by the
guarantee at the request of any holder of any preferred securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby.
EXPENSE AGREEMENT
We will, pursuant to the Agreement as to Expenses and Liabilities entered
into by us and the trust under the trust agreement, irrevocably and
unconditionally guarantee to each person or entity to whom the trust becomes
indebted or liable, the full payment of any costs, expenses or liabilities of
the trust, other than obligations of the trust to pay to the holders of the
preferred securities or other similar interests in the trust of the amounts due
to the holders pursuant to the terms of the preferred securities or other
similar interests, as the case may be. Third-party creditors of the trust may
proceed directly against us under the expense agreement, regardless of whether
they had notice of the expense agreement.
GOVERNING LAW
The guarantee will be governed by Delaware law.
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RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
We irrevocably guarantee, as and to the extent described in this
prospectus, payments of distributions and other amounts due on the preferred
securities, to the extent the trust has funds available for the payment of these
amounts. We and the trust believe that, taken together, our obligations under
the subordinated debentures, the indenture, the trust agreement, the expense
agreement and the guarantee agreement provide, in the aggregate, a full,
irrevocable and unconditional guarantee, on a subordinated basis, of payment of
distributions and other amounts due on the preferred securities. No single
document standing alone or operating in conjunction with fewer than all of the
other documents constitutes a guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the obligations of the trust under the preferred
securities.
If and to the extent that we do not make payments on the subordinated
debentures, the trust will not pay distributions or other amounts due on the
preferred securities. The guarantee does not cover payment of distributions when
the trust does not have sufficient funds to pay the distributions. In this
event, the remedy of a holder of preferred securities is to institute a legal
proceeding directly against us for enforcement of payment of the distributions
to the holder. Our obligations under the guarantee are subordinated and junior
in right of payment to all of our other indebtedness.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
subordinated debentures, these payments will be sufficient to cover
distributions and other payments due on the preferred securities, primarily
because:
- the aggregate principal amount of the subordinated debentures will be
equal to the sum of the aggregate stated liquidation amount of the trust
securities;
- the interest rate and interest and other payment dates on the
subordinated debentures will match the distribution rate and distribution
and other payment dates for the preferred securities;
- we will pay for any and all costs, expenses and liabilities of the trust,
except the obligations of the trust to pay to holders of the preferred
securities the amounts due to the holders pursuant to the terms of the
preferred securities; and
- the trust will not engage in any activity that is not consistent with the
limited purposes of the trust.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any preferred security may institute a legal proceeding
directly against us to enforce its rights under the guarantee without first
instituting a legal proceeding against the guarantee trustee, the trust or any
other person or entity. A default or event of default under any of our senior or
subordinated debt would not constitute a default or event of default under the
trust agreement. In the event, however, of payment defaults under, or
acceleration of, our senior or subordinated debt, the subordination provisions
of the indenture provide that no payments may be made in respect of the
subordinated debentures until the obligations have been paid in full or any
payment default has been cured or waived. Failure to make required payments on
the subordinated debentures would constitute an event of default under the trust
agreement.
LIMITED PURPOSE OF THE TRUST
The preferred securities evidence preferred undivided beneficial interests
in the assets of the trust. The trust exists for the exclusive purposes of
issuing the trust securities, investing the proceeds thereof in subordinated
debentures and engaging in only those other activities necessary, advisable or
incidental
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<PAGE> 50
thereto. A principal difference between the rights of a holder of a preferred
security and the rights of a holder of a subordinated debenture is that a holder
of a subordinated debenture is entitled to receive from us the principal amount
of and interest accrued on subordinated debentures held, while a holder of
preferred securities is entitled to receive distributions from the trust (or
from us under the guarantee) if and to the extent the trust has funds available
for the payment of the distribution.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary dissolution of the trust involving the
liquidation of the subordinated debentures, the holders of the preferred
securities will be entitled to receive, out of assets held by the trust, the
liquidation distribution in cash. See "Description of the Preferred
Securities -- Liquidation Distribution Upon Dissolution."
Upon our voluntary or involuntary liquidation or bankruptcy, the property
trustee, as holder of the subordinated debentures, would be a subordinated
creditor of ours. Therefore, the property trustee would be subordinated in right
of payment to all of our senior and subordinated debt, but is entitled to
receive payment in full of principal and interest before any of our stockholders
receive payments or distributions. Since we are the guarantor under the
guarantee and have agreed to pay for all costs, expenses and liabilities of the
trust other than the obligations of the trust to pay to holders of the preferred
securities the amounts due to the holders pursuant to the terms of the preferred
securities, the positions of a holder of the preferred securities and a holder
of the subordinated debentures relative to our other creditors and to our
stockholders in the event of liquidation or bankruptcy are expected to be
substantially the same.
FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following summary of the material federal income tax considerations
that may be relevant to the purchasers of preferred securities represents the
opinion of Graham & Dunn PC, counsel to us and the trust insofar as it relates
to matters of law and legal conclusions. The conclusions expressed herein are
based upon current provisions of the Internal Revenue Code of 1986, regulations
thereunder and current administrative rulings and court decisions, all of which
are subject to change at any time, with possible retroactive effect. Subsequent
changes may cause tax consequences to vary substantially from the consequences
described below. Furthermore, the authorities on which the following summary is
based are subject to various interpretations, and it is therefore possible that
the federal income tax treatment of the purchase, ownership and disposition of
preferred securities may differ from the treatment described below. No attempt
has been made in the following discussion to comment on all federal income tax
matters affecting purchasers of preferred securities.
Moreover, the discussion generally focuses on holders of preferred
securities who are individual citizens or residents of the United States and who
acquire preferred securities on their original issue at their offering price and
hold preferred securities as capital assets. The discussion has only limited
application to corporations, estates, trusts or nonresident aliens and does not
address all the tax consequences that may be relevant to holders who may be
subject to special tax treatment, such as, for example, banks, thrifts, real
estate investment trusts, regulated investment companies, insurance companies,
dealers in securities or currencies, tax-exempt investors or persons that will
hold the preferred securities as a position in a "straddle," as part of a
"synthetic security" or "hedge," as part of a "conversion transaction" or other
integrated investment, or as other than a capital asset. The following summary
also does not address the tax consequences to persons that have a functional
currency other than the U.S. dollar or the tax consequences to shareholders,
partners or beneficiaries of a holder of preferred securities. Further, it does
not include any description of any alternative minimum tax consequences or the
tax laws of any state or local government or of any foreign government that may
be applicable to the preferred securities. Accordingly, each prospective
investor should consult, and should rely exclusively on,
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<PAGE> 51
the investor's own tax advisors in analyzing the federal, state, local and
foreign tax consequences of the purchase, ownership or disposition of preferred
securities.
CLASSIFICATION OF THE SUBORDINATED DEBENTURES
In the opinion of Graham & Dunn PC, tax counsel for us and the trust, the
subordinated debentures will be classified for federal income tax purposes as
our indebtedness under current law, and, by acceptance of a preferred security,
each holder covenants to treat the subordinated debentures as indebtedness and
the preferred securities as evidence of an indirect beneficial ownership
interest in the subordinated debentures. No assurance can be given, however,
that this position will not be challenged by the Internal Revenue Service or, if
challenged, that it will be sustained. The remainder of this discussion assumes
that the subordinated debentures will be classified for federal income tax
purposes as our indebtedness.
CLASSIFICATION OF THE TRUST
With respect to the preferred securities, Graham & Dunn PC, tax counsel for
us and the trust, has rendered its opinion that, under then current law and
assuming full compliance with the terms of the trust agreement and indenture,
the trust will be classified for federal income tax purposes as a grantor trust
and not as an association taxable as a corporation. Accordingly, for federal
income tax purposes, each holder of preferred securities generally will be
treated as owning an undivided beneficial interest in the subordinated
debentures and, except as described below with respect to any Original Issue
Discount ("OID"), each holder will be required to include in its gross income
any interest with respect to the subordinated debentures at the time such
interest is accrued or is received, in accordance with the holder's method of
accounting.
INTEREST PAYMENT PERIOD AND ORIGINAL ISSUE DISCOUNT
United States persons (including cash basis taxpayers) that hold debt
instruments issued with OID must generally include such OID in income as it
accrues on a constant yield method, even if there is not a corresponding receipt
of cash attributable to such income. A debt instrument such as the subordinated
debentures will generally be treated as issued with OID if the stated interest
on the instrument does not constitute "qualified stated interest." Qualified
stated interest is generally any one of a series of stated interest payments on
an instrument that are unconditionally payable at least annually at a single
fixed rate. In determining whether stated interest on an instrument is
unconditionally payable and thus constitutes qualified stated interest, remote
contingencies as to the timely payment of stated interest are ignored. In the
case of the subordinated debentures, we have concluded that the likelihood of
exercising our option to defer payments of interest is remote. This is in part
because we have a history of declaring dividends on our common stock and we
would be unable to continue making these dividends if we deferred our payments
under the subordinated debentures.
If the possibility that we will exercise our option to defer any payment of
interest were determined not to be "remote" or if we actually exercised our
option to defer the payment of interest, the subordinated debentures would be
treated as issued with OID at the time of issuance or at the time of such
exercise, as the case may be, and all stated interest would thereafter be
treated as OID as long as the subordinated debentures remained outstanding. In
such event, all of a United States person's taxable interest income in respect
of the subordinated debentures would constitute OID that would have to be
included in income on a constant yield method before the receipt of the cash
attributable to such income, regardless of such person's method of tax
accounting, and actual distributions of stated interest would not be reported as
taxable income. Consequently, a holder of preferred securities would be required
to include such OID in gross income even though we would not make any actual
cash payments during an Extension Period.
Because income on the preferred securities will constitute interest,
corporate holders of preferred securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the preferred securities.
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MARKET DISCOUNT AND ACQUISITION PREMIUM
Holders of preferred securities other than a holder who purchased the
preferred securities upon original issuance may be considered to have acquired
their undivided interests in the subordinated debentures with "market discount"
or "acquisition premium" as these phrases are defined for federal income tax
purposes. Such holders are advised to consult their tax advisors as to the
income tax consequences of the acquisition, ownership and disposition of the
preferred securities.
RECEIPT OF SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST
Under the circumstances described under "Description of the Preferred
Securities -- Redemption or Exchange" and "-- Liquidation Distribution Upon
Dissolution," the subordinated debentures may be distributed to holders of
preferred securities upon a liquidation of the trust. Under current federal
income tax law, such a distribution would be treated as a nontaxable event to
the holder and would result in the holder having an aggregate tax basis in the
subordinated debentures received in the liquidation equal to the holder's
aggregate tax basis in the preferred securities immediately before the
distribution. A holder's holding period in subordinated debentures received in
liquidation of the trust would include the period for which the holder held the
preferred securities.
If, however, a Tax Event occurs which results in the trust being treated as
an association taxable as a corporation, the distribution would likely
constitute a taxable event to holders of the preferred securities. Under certain
circumstances described herein, the subordinated debentures may be redeemed for
cash and the proceeds of the redemption distributed to holders in redemption of
their preferred securities. Under current law, such a redemption should, to the
extent that it constitutes a complete redemption, constitute a taxable
disposition of the redeemed preferred securities, and a holder for federal
income tax purposes should recognize gain or loss as if the holder sold the
preferred securities for cash.
DISPOSITION OF PREFERRED SECURITIES
A holder that sells preferred securities will recognize gain or loss equal
to the difference between the amount realized on the sale of the preferred
securities and the holder's adjusted tax basis in the preferred securities. A
holder's adjusted tax basis in the preferred securities generally will be its
initial purchase price increased by OID, if any, previously includible in the
holder's gross income to the date of disposition and decreased by payments other
than qualified stated interest received on the preferred securities to the date
of disposition. A gain or loss of this kind will generally be a capital gain or
loss and will be a long-term capital gain or loss if the preferred securities
have been held for more than one year at the time of sale.
The preferred securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
subordinated debentures. A holder that disposes of its preferred securities
between record dates for payments of distributions thereon will be required to
include accrued but unpaid interest on the subordinated debentures through the
date of disposition in income as ordinary income and to add the amount to its
adjusted tax basis in its proportionate share of the underlying subordinated
debentures deemed disposed of. To the extent the selling price is less than the
holder's adjusted tax basis, a holder will recognize a capital loss. The
adjusted basis would include, in the form of OID, all accrued but unpaid
interest. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for federal income tax purposes.
BACKUP WITHHOLDING AND INFORMATION REPORTING
The amount of qualified stated interest, or, if applicable, OID, accrued on
the preferred securities held of record by individual citizens or residents of
the United States, or certain trusts, estates and partnerships, will be reported
to the Internal Revenue Service on Forms 1099-INT, or, where applicable, Forms
1099-OID, which forms should be mailed to the holders by January 31 following
each calendar year. Payments made on, and proceeds from the sale of, the
preferred securities may be subject to a "backup" withholding tax (currently at
31%) unless the holder complies with certain identification and other
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requirements. Any amounts withheld under the backup withholding rules will be
allowed as a credit against the holder's federal income tax liability, provided
the required information is provided to the Internal Revenue Service.
The federal income tax discussion set forth above is included for general
information only and may not be applicable depending upon the particular
situation of a holder of preferred securities. Holders of preferred securities
should consult their tax advisors with respect to the tax consequences to them
of the purchase, ownership and disposition of the preferred securities,
including the tax consequences under state, local, foreign and other tax laws
and the possible effects of changes in federal or other tax laws.
ERISA CONSIDERATIONS
Employee benefit plans and individual retirement accounts (collectively,
"Plans") that are subject to the Employee Retirement Income Security Act of
1974, and/or Section 4975 of the Internal Revenue Code, generally may purchase
preferred securities, subject to the investing fiduciary's determination that
the investment in preferred securities satisfies applicable fiduciary standards
and other requirements applicable to investments by the Plan.
In any case, we and/or any of our affiliates may be considered a "party in
interest" (within the meaning of ERISA) or a "disqualified person" (within the
meaning of Section 4975 of the Internal Revenue Code) with respect to certain
Plans. These Plans generally include Plans maintained or sponsored by, or
contributed to by, any such persons with respect to which we or any of our
affiliates are a fiduciary or Plans for which we or any of our affiliates
provide services. The acquisition and ownership of preferred securities by a
Plan with respect to which we or any of our affiliates are considered a party in
interest or a disqualified person may constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Internal Revenue Code, unless the
preferred securities are acquired pursuant to and in accordance with an
applicable exemption.
As a result, Plans with respect to which we or any of our affiliates are a
party in interest or a disqualified person should not acquire preferred
securities unless the preferred securities are acquired pursuant to and in
accordance with an applicable exemption. Any other Plans or other entities whose
assets include Plan assets subject to ERISA or Section 4975 of the Internal
Revenue Code proposing to acquire preferred securities should consult with their
own counsel.
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UNDERWRITING
We and the trust intend to offer the preferred securities through a number
of underwriters. We, the trust, and D.A. Davidson & Co., acting as the
representative of the underwriters named below, have entered into an
underwriting agreement with respect to the preferred securities. Subject to the
underwriting agreement, each of the underwriters severally and not jointly has
agreed to purchase the number of preferred securities set forth opposite its
name below.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS PREFERRED SECURITIES
------------ --------------------
<S> <C>
D.A. Davidson & Co..........................................
---------
Total..................................................... 1,400,000
=========
</TABLE>
The underwriting agreement provides that, subject to the terms and
conditions of that agreement, the underwriters will purchase all of the
preferred securities on a firm commitment basis, meaning that the underwriters
will purchase all of the preferred securities if they purchase any of them. In
the event of a default by any underwriter, the underwriting agreement provides
that, in certain circumstances, purchase commitments of nondefaulting
underwriters may be increased or the underwriting agreement may be terminated.
The underwriters have advised us and the trust 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 share. The underwriters may allow and such
dealers may re-allow a concession not in excess of $ per share to other
dealers. After the preferred securities are released for sale to the public, the
underwriters may change the offering price and other selling terms. The
underwriters have agreed with us that up to $2,500,000 of the preferred
securities (approximately 7%) will be reserved for sale to our and our
subsidiaries' executive officers and directors. Any reserved preferred
securities which are not so purchased may be offered by the underwriters to the
general public on the same basis as the other preferred securities offered by
this prospectus.
In view of the fact that the proceeds of the sale of the preferred
securities will ultimately be used to purchase subordinated debentures from us,
the underwriting agreement provides that we will pay as compensation to the
underwriters the following fees:
<TABLE>
<CAPTION>
UNDERWRITING
FEES
------------
<S> <C>
Per Preferred Security...................................... $
--------
Total..................................................... $
========
</TABLE>
In addition to the underwriting fees, we have agreed to reimburse the
underwriters up to a maximum of $75,000 for their expenses, including attorneys'
fees, that they incur in connection with this offering.
In connection with the offering, the underwriters and their 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. These transactions may include
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 purchase preferred securities in the open market following
completion of the initial offering. The underwriters also may engage in
stabilizing transactions in which they bid for, and purchase, 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. Any of these 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. Neither we nor 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 market price of the
preferred securities. The underwriters are not required to engage in any of
these transactions, and may discontinue any of these transactions at any time
without
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notice. We and the trust have agreed to indemnify the underwriters against
liabilities arising from the offering of the preferred securities, including
civil liabilities under the Securities Act of 1933, or to contribute to payments
that the underwriters may be required to make in connection with those
liabilities.
The underwriters have advised us that they do not intend to confirm any
sales of preferred securities to any discretionary accounts. The underwriters
will comply with Rule 2810 under the NASD Conduct Rules when they offer and sell
the preferred securities because the National Association of Securities Dealers,
Inc. may view the preferred securities as interests in a direct participation.
The underwriters and their affiliates may provide investment banking
services for us or our affiliates in the future for which they would expect to
receive customary fees and commissions. D.A. Davidson & Co. has performed
investment banking services for us in the past and is currently providing
financial advisory services to us in connection with our proposed merger with
WesterFed, for which it has received or will receive customary compensation.
We have applied to have the preferred securities quoted on the Nasdaq
National Market under the symbol "GBCIP."
LEGAL MATTERS
Graham & Dunn PC, Seattle, Washington, counsel to us and the trust, will
pass upon certain legal matters, including matters relating to federal income
tax considerations. Richards, Layton & Finger, P.A., Wilmington, Delaware will
pass upon certain matters of Delaware law for us and the trust. Dorsey & Whitney
LLP, Great Falls, Montana and Minneapolis, Minnesota will pass upon certain
legal matters for the underwriters and may rely on the opinion of Richards,
Layton & Finger, P.A., Wilmington, Delaware, as to matters of Delaware law.
EXPERTS
The consolidated financial statements of Glacier as of December 31, 1999
and 1998, and for each of the years in the three-year period ended December 31,
1999, are incorporated by reference herein and in the Registration Statement
filed by Glacier in reliance upon the report of KPMG LLP, independent certified
public accountants, incorporated by reference herein, and upon the authority of
said firm as experts in accounting and auditing. KPMG's report, dated October
19, 2000, contains explanatory paragraphs indicating (1) that KPMG did not audit
either the 1997 or 1998 financial statements of Mountain West Bank acquired by
Glacier Bancorp, Inc. on February 4, 2000 in a pooling of interests; those
statements were audited by other auditors whose report has been furnished to
KPMG, and KPMG's opinion, insofar as it relates to the amounts included for
Mountain West Bank in the 1997 and 1998 consolidated financial statements of
Glacier Bancorp, Inc., is based solely on the report of the other auditors; and
(2) the consolidated financial statements give retroactive effect to the merger
of Glacier Bancorp, Inc. and Mountain West Bank on February 4, 2000, which has
been accounted for as a pooling of interests.
The audited financial statements as of March 31, 1999 and for the years
ended March 31, 1999 and 1998 of Mountain West Bank (a subsidiary of Glacier)
have been audited by PricewaterhouseCoopers LLP, independent accountants, whose
report thereon is incorporated by reference herein from Glacier's Current Report
on Form 8-K dated December 14, 2000. Such financial statements (not separately
presented), to the extent they have been included in the Glacier's financial
statements, have been so included in reliance on the report of such independent
accountants given on the authority of said firm as experts in auditing and
accounting.
The consolidated financial statements of WesterFed as of December 31, 1999
and June 30, 1999 and for the six months ended December 31, 1999 and for each of
the years in the three-year period ended June 30, 1999 are incorporated by
reference herein and in the Registration Statement in reliance on the
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report of KPMG LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
WHERE YOU CAN FIND INFORMATION
This prospectus is a part of a Registration Statement on Form S-3 filed by
us and the trust with the Securities and Exchange Commission under the
Securities Act, with respect to the preferred securities, the subordinated
debentures and the guarantee. This prospectus does not contain all the
information set forth in the registration statement, certain parts of which are
omitted in accordance with the rules and regulations of the SEC. For further
information with respect to us and the securities offered by this prospectus,
reference is made to the registration statement, including the exhibits to the
registration statement. Statements contained in this prospectus concerning the
provisions of such documents are necessarily summaries of such documents, and
each such statement is qualified in its entirety by reference to the copy of the
applicable document filed with the SEC.
We file periodic reports, proxy statements and other information with the
SEC. Our filings are available to the public over the Internet at the SEC's web
site. The address of that site is http://www.sec.gov. You may also inspect and
copy these materials at the public reference facilities of the SEC at 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, as well as at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and 75 Park Place, Room 1400, New
York, New York 10007. Copies of such material can be obtained at prescribed
rates from the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information.
The trust is not currently subject to the information reporting
requirements of the Securities Exchange Act of 1934, and, although the trust
will become subject to such requirements upon the effectiveness of the
Registration Statement, it is not expected that the trust will be required to
file separate reports under the Securities Exchange Act of 1934.
Each holder of the preferred securities will receive a copy of our annual
report at the same time as we furnish the annual report to the holders of our
common stock.
DOCUMENTS INCORPORATED BY REFERENCE
We "incorporate by reference" into this prospectus the information in
documents we file, or WesterFed files, with the SEC, which means that we can
disclose important information to you through those documents. The information
incorporated by reference is an important part of this prospectus. Some
information contained in this prospectus updates the information incorporated by
reference and some information that we file subsequently with the SEC will
automatically update this prospectus. We incorporate by reference the specified
information and documents listed below:
(1) our Annual Report on Form 10-K for the fiscal year ended December
31, 1999, filed in paper copy with the SEC on March 31, 2000, and
electronically as a conforming copy on April 4, 2000;
(2) our Quarterly Report on Form 10-Q for the quarters ended March 31,
June 30 and September 30, 2000, filed with the SEC on May 12, August 14 and
November 7, 2000, respectively;
(3) our amendment, on Form 10-QA, to our Quarterly Report for the
quarter ended September 30, 2000, filed with the SEC on November 14, 2000;
(4) our Current Report or Form 8-K filed on December 14, 2000, which
restates our audited financial statements to reflect a pooling of interests
transaction consummated on February 4, 2000;
(5) our Current Report on Form 8-K filed with the SEC on December 22,
2000;
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(6) the Audited Consolidated Financial Statements and notes thereto
appearing on pages 21 through 55 of WesterFed's Annual Report appearing as
Exhibit 13 to WesterFed's Annual Report on Form 10-K for the six months
ended December 31, 1999, filed with the SEC on March 30, 2000; and
(7) the financial statements contained under Item 1 to WesterFed's
Quarterly Report on Form 10-Q for the quarter ended September 30, 2000,
filed with the SEC on November 6, 2000.
We also incorporate by reference any filings we or WesterFed make with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 after the initial filing of the registration statement that contains this
prospectus and before the time that all of the securities offered in this
prospectus are sold.
You may request a copy of these filings at no cost by contacting us at the
following address:
Glacier Bancorp, Inc.
49 Commons Loop
Kalispell, Montana 59901
Attn: Michael J. Blodnick
(406) 756-4234
54
<PAGE> 58
UNAUDITED COMBINED CONDENSED PRO FORMA FINANCIAL STATEMENTS
On September 14, 2000, we executed a definitive agreements to acquire,
though our Idaho subsidiary Mountain West Bank, from Wells Fargo & Company seven
bank branches located in Idaho and Utah. We will acquire a total of
approximately $187 million in deposits and approximately $52 million in loans.
The total purchase price will depend on the total deposits, cash, assets and
loans at the branches determined immediately prior to closing. We estimate that
the total purchase price will be approximately $21 million. The branch
acquisition is subject to various closing conditions, and is expected to close
in March 2001. See "Summary -- Pending Transactions -- Wells Fargo Branch
Acquisition."
On September 20, 2000, we entered into a merger agreement with WesterFed
Financial Corporation whereby we will acquire WesterFed for approximately $93
million. We anticipate that the consideration will include approximately 4.5
million shares of our common stock, assuming a Glacier stock price of $12.25,
the payment of approximately $38 million in cash for all of the outstanding
shares of WesterFed. The total number of shares and the amount of cash are
subject to certain adjustments provided for by formula in the definitive
agreement. Consummation of the merger is subject to a number of conditions,
including receipt of approval from banking regulators, WesterFed shareholders
and our shareholders. See "Summary -- Pending Transactions -- WesterFed Merger."
The following unaudited combined condensed pro forma financial statements
consist of an unaudited pro forma combined statement of financial condition as
of September 30, 2000, and unaudited pro forma combined statements of operations
for the nine-month period ended September 30, 2000 and the year ended December
31, 1999 and related notes. The pro forma statement of financial condition has
been prepared assuming the merger with WesterFed and the acquisition of the
Wells Fargo branches each occurred on September 30, 2000. The pro forma combined
statements of operations have been prepared assuming that the merger with
WesterFed and the acquisition of the Wells Fargo branches each occurred on the
first day of the period. The unaudited pro forma combined statements of
operations are not necessarily indicative of operating results which would have
been achieved had the WesterFed merger and the Wells Fargo branch acquisition
been consummated as of the beginning of the period presented and should not be
construed as representative of future results. The unaudited combined condensed
pro forma financial statements should be read in conjunction with the historical
financial statements and the related notes thereto for WesterFed and us
incorporated by reference into this prospectus.
F-1
<PAGE> 59
UNAUDITED PRO FORMA COMBINED
CONDENSED STATEMENT OF FINANCIAL CONDITION
AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
GLACIER
GLACIER AND BANCORP, INC.
GLACIER PRO FORMA WESTERFED IDAHO/UTAH AFTER
BANCORP, INC. WESTERFED ADJUSTMENTS(1) COMBINED BRANCHES(1) ACQUISITIONS
------------- --------- -------------- ----------- ----------- -------------
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash on hand and in banks.............. $ 33,700 $ 15,289 $ -- $ 48,989 $ 4,156 $ 53,145
Interest bearing cash deposits......... 4,255 1,338 -- 5,593 20,000(e) 25,593
---------- -------- -------- ---------- -------- ----------
Cash and cash equivalents.......... 37,955 16,627 -- 54,582 24,156 78,738
Investments Investment securities,
held-to-maturity..................... -- 75,980 357(c) 76,337 -- 76,337
Investment securities,
available-for-sale................. 203,849 145,020 (28,692)(b) 320,177 105,490 425,667
---------- -------- -------- ---------- -------- ----------
Total investments................ 203,849 221,000 (28,335) 396,514 105,490 502,004
Loans receivable....................... 730,834 628,176 (12,513)(c) 1,346,497 51,714 1,398,211
Allowance for losses................... (7,808) (6,225) -- (14,033) (517) (14,550)
---------- -------- -------- ---------- -------- ----------
Total loans, net................. 723,026 621,951 (12,513) 1,332,464 51,197 1,383,661
Premises and equipment, net............ 25,005 25,118 2,000(c) 52,123 5,657 57,780
Real estate and other assets owned..... 97 272 -- 369 -- 369
Federal Home Loan Bank of Seattle
stock, at cost....................... 16,146 12,852 -- 28,998 -- 28,998
Federal Reserve stock, at cost......... 1,639 -- -- 1,639 -- 1,639
Accrued interest receivable............ 6,233 7,284 -- 13,517 -- 13,517
Core deposit intangible................ 1,597 2,961 10,914(c) 15,472 4,682(d) 20,154
Goodwill............................... 5,031 14,264 (14,264)(c) 25,439 16,083(d) 41,522
20,408(c)
Deferred income taxes.................. 1,512 -- (1,512) -- -- --
Other assets........................... 3,951 10,680 1,721(c) 16,352 -- 16,352
---------- -------- -------- ---------- -------- ----------
Total assets................... $1,026,041 $933,009 $(21,581) $1,937,469 $207,265 $2,144,734
========== ======== ======== ========== ======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits -- non-interest bearing....... $ 152,022 $ 40,085 $ -- $ 192,107 $ 30,519 $ 222,626
Deposits -- interest bearing........... 564,965 569,028 (2,555)(c) 1,131,438 156,323 1,287,761
Advances from Federal Home Loan Bank of
Seattle.............................. 177,909 203,558 (2,478)(c) 378,989 -- 378,989
Securities sold under agreements to
repurchase........................... 20,699 8,753 -- 29,452 -- 29,452
Other borrowed funds................... 7,985 202 -- 8,187 -- 8,187
Accrued interest payable............... 3,387 8,069 -- 11,456 423 11,879
Current income taxes................... 941 729 -- 1,670 -- 1,670
Deferred income taxes.................. -- 817 1,009(c) 314 -- 314
(1,512)
Other liabilities...................... 5,970 9,777 4,925(c) 20,672 -- 20,672
Minority Interest...................... 325 -- -- 325 -- 325
---------- -------- -------- ---------- -------- ----------
Total liabilities................ 934,203 841,018 (611) 1,774,610 187,265 1,961,875
---------- -------- -------- ---------- -------- ----------
Trust preferred securities............. -- -- 15,000(e) 15,000 20,000(e) 35,000
Common stock, $.01 par value per
share................................ 114 57 (57)(a) 159 -- 159
45(b)
Paid-in capital........................ 101,756 71,017 (71,017)(a) 157,732 -- 157,732
55,976(b)
Common stock acquired by ESOP/RRP...... -- (1,892) 1,892(a) -- -- --
Treasury stock, at cost................ -- (33,537) 33,537(a) -- -- --
Retained earnings -- substantially
restricted........................... (6,057) 57,875 (57,875)(a) (6,057) -- (6,057)
Accumulated other comprehensive loss... (3,975) (1,529) 1,529(a) (3,975) -- (3,975)
---------- -------- -------- ---------- -------- ----------
Total stockholders' equity....... 91,838 91,991 (35,970) 147,859 -- 147,859
---------- -------- -------- ---------- -------- ----------
Total liabilities and
stockholders' equity........... $1,026,041 $933,009 $(21,581) $1,937,469 $207,265 $2,144,734
========== ======== ======== ========== ======== ==========
</TABLE>
-------------------------
(1) See accompanying notes to unaudited combined condensed pro forma financial
statements to which specific references above also refer.
F-2
<PAGE> 60
UNAUDITED COMBINED CONDENSED
PRO FORMA STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
GLACIER
GLACIER AND BANCORP INC.
GLACIER PRO FORMA WESTERFED IDAHO/UTAH PRO FORMA
BANCORP, INC. WESTERFED ADJUSTMENTS(1) COMBINED BRANCHES(1) COMBINED
------------- --------- -------------- ----------- ----------- ------------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Interest income
Loans.............................. $46,338 $39,268 $ 1,341(e) $ 86,947 $ 3,530 $ 90,477
Investments and interest bearing
deposits......................... 11,601 13,862 (1,423)(e) 23,986 6,730 30,716
(54)(e)
------- ------- ------- -------- ------- --------
Total interest income............ 57,939 53,130 (136) 110,933 10,260 121,193
Interest expense
Deposits........................... 16,246 19,527 639(e) 36,412 5,042 41,454
Borrowings......................... 11,114 10,819 620(e) 22,553 22,553
Trust preferred securities......... -- -- 1,170(e) 1,170 1,560(e) 2,730
------- ------- ------- -------- ------- --------
Total interest expense........... 27,360 30,346 2,429 60,135 6,602 66,737
Net interest income................ 30,579 22,784 (2,565) 50,798 3,658 54,456
Provision for loan losses............ 1,483 1,350 -- 2,833 89 2,922
------- ------- ------- -------- ------- --------
Net interest income after provision
for loan losses.................. 29,096 21,434 (2,565) 47,965 3,569 51,534
Non-interest income
Fees and service charges........... 7,255 6,099 -- 13,354 1,367 14,721
Net gains on sale of loans......... 1,512 245 -- 1,757 -- 1,757
Net losses on sale of
investments...................... (5) (1,068) -- (1,073) -- (1,073)
Gain on sale of branch offices..... 1,878 1,878 -- 1,878
Other income....................... 1,335 514 (184)(e) 1,665 -- 1,665
------- ------- ------- -------- ------- --------
Total non-interest income........ 10,097 7,668 (184) 17,581 1,367 18,948
Non-interest expense
Employee compensation and
benefits......................... 12,078 9,046 21,124 1,312 22,436
Occupancy and equipment............ 3,568 2,809 60(e) 6,437 365 6,802
Other expense...................... 6,985 5,809 -- 12,794 895 13,689
Deposit premium amortization....... 149 439 818(e) 1,406 351(e) 1,757
Goodwill amortization.............. 270 500 230(e) 1,000 603(e) 1,603
Minority interest.................. 45 -- -- 45 -- 45
------- ------- ------- -------- ------- --------
Total non-interest expense....... 23,095 18,603 1,108 42,806 3,526 46,332
Earnings before income taxes......... 16,098 10,499 (3,857) 22,740 1,410 24,150
Federal and state income tax
expense............................ 5,825 4,038 (1,414) 8,449 562 9,011
------- ------- ------- -------- ------- --------
Net earnings..................... $10,273 $ 6,461 $(2,443) $ 14,291 $ 848 $ 15,139
======= ======= ======= ======== ======= ========
Average common shares outstanding --
basic.............................. 11,439 3,959 15,794 15,794
Average common shares outstanding --
diluted............................ 11,548 4,075 16,031 16,031
Basic net earnings per share of
common stock....................... $ 0.90 $ 1.63 $ 0.90 $ 0.96
Diluted net earnings per share of
common stock....................... $ 0.89 $ 1.59 $ 0.89 $ 0.94
</TABLE>
-------------------------
(1) See accompanying notes to unaudited combined condensed pro forma financial
statements to which specific references above also refer.
F-3
<PAGE> 61
UNAUDITED COMBINED CONDENSED
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
GLACIER
GLACIER BANCORP, INC.
GLACIER PRO FORMA WESTERFED IDAHO/UTAH AFTER
BANCORP, INC. WESTERFED ADJUSTMENTS(1) COMBINED BRANCHES(1) ACQUISITIONS
------------- --------- -------------- --------- ------------- -------------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Interest income
Loans........................... $51,741 $52,083 $ 1,788(e) $105,612 $ 4,706 $110,318
Investments and interest bearing
deposits...................... 12,978 18,073 (1,897)(e) 29,083 8,973 38,056
(71)(e)
------- ------- ------- -------- ------- --------
Total interest income......... 64,719 70,156 (180) 134,695 13,679 148,374
Interest expense
Deposits........................ 16,494 24,941 852(e) 42,287 6,722 49,009
Borrowings...................... 11,141 13,258 826(e) 25,225 25,225
Trust preferred securities...... -- -- 1,560(e) 1,560 2,080(e) 3,640
------- ------- ------- -------- ------- --------
Total interest expense........ 27,635 38,199 3,238 69,072 8,802 77,874
Net interest income............. 37,084 31,957 (3,418) 65,623 4,877 70,500
Provision for loan losses......... 1,723 1,670 -- 3,393 119 3,512
------- ------- ------- -------- ------- --------
Net interest income after
provision for loan losses..... 35,361 30,287 (3,418) 62,230 4,758 66,988
Non-interest income
Fees and service charges........ 8,497 6,841 -- 15,338 1,823 17,161
Net gains on sale of loans...... 3,108 754 -- 3,862 -- 3,862
Net gains on sale of
investments................... 23 103 -- 126 -- 126
Other income.................... 1,181 686 (246)(e) 1,621 -- 1,621
------- ------- ------- -------- ------- --------
Total non-interest income..... 12,809 8,384 (246) 20,947 1,823 22,770
Non-interest expense
Employee compensation and
benefits...................... 14,557 13,258 -- 27,815 1,749 29,564
Occupancy and equipment......... 4,172 3,808 80(e) 8,060 486 8,546
Other expense................... 10,011 8,507 -- 18,518 1,193 19,711
Deposit premium amortization.... 51 706 1,091(e) 1,848 468(e) 2,316
Goodwill amortization........... 254 666 307(e) 1,227 804(e) 2,031
Minority interest............... 51 -- -- 51 -- 51
------- ------- ------- -------- ------- --------
Total non-interest expense.... 29,096 26,945 1,478 57,519 4,700 62,219
Earnings before income taxes...... 19,074 11,726 (5,142) 25,658 1,881 27,539
Federal and state income tax
expense......................... 6,722 4,411 (1,886) 9,247 735 9,982
------- ------- ------- -------- ------- --------
Net earnings.................... $12,352 $ 7,315 $(3,256) $ 16,411 $ 1,146 $ 17,557
======= ======= ======= ======== ======= ========
Average common shares
outstanding -- basic............ 11,393 4,303 16,126 16,126
Average common shares
outstanding -- diluted.......... 11,597 4,488 16,534 16,534
Basic net earnings per share of
common stock.................... $ 1.08 $ 1.70 $ 1.02 $ 1.09
Diluted net earnings per share of
common stock.................... $ 1.06 $ 1.63 $ 0.99 $ 1.06
</TABLE>
-------------------------
(1) See accompanying notes to unaudited combined condensed pro forma financial
statements to which specific references above also refer.
F-4
<PAGE> 62
NOTES TO UNAUDITED COMBINED CONDENSED
PRO FORMA FINANCIAL STATEMENTS
NOTE A: BASIS OF PRESENTATION
The unaudited combined condensed pro forma statement of financial condition
combines the historical consolidated statements of financial condition of
Glacier, WesterFed, and the anticipated effects of the Branch Acquisitions in
Idaho and Utah from Wells Fargo/First Security Bank of Utah ("Branch
Acquisition") as if the WesterFed Merger ("Merger") and Branch Acquisitions had
become effective on September 30, 2000. The unaudited pro forma combined
statements of operations for the nine months ended September 30, 2000, and the
year ended December 31, 1999, combines the historical consolidated statements of
operations of Glacier and WesterFed, and the anticipated effects of the Branch
Acquisitions as if the Merger and Branch Acquisitions had become effective on
January 1, 1999. Certain amounts in the historical financial statements of
WesterFed have been reclassified in the unaudited combined condensed pro forma
financial statements to conform to Glacier's historical financial statements.
The Merger and Branch Acquisition will be accounted for using the purchase
method of accounting. Under this method of accounting, assets and liabilities
acquired are adjusted to their estimated fair value and combined with the
historical book values of the assets and liabilities of Glacier. Additionally,
WesterFed's common stock, additional paid in capital, unrealized gains and
losses on securities-available-for-sale, and retained earnings is eliminated.
Applicable income tax effects of such adjustments are included as a component of
Glacier's net deferred taxes with a corresponding offset to goodwill. The actual
revaluation of the net assets acquired is subject to the completion of studies
and evaluations by management and will be based on the estimated fair value of
the net assets acquired at the effective dates of the Merger and Branch
Acquisition.
Any transactions conducted in the ordinary course of business between
Glacier, WesterFed, and Wells Fargo/First Security of Utah would be immaterial
and, accordingly, have not been eliminated.
Following the Merger and, subject to regulatory approvals, Glacier may
merge certain branches of Western Security Bank, a wholly-owned subsidiary of
WesterFed, with other Glacier subsidiaries, and may close branches that are
considered non-strategic or are located close to other branches of the combined
company. The impact of any such merger, or closings is not expected to be
material. Glacier also expects to achieve certain operating cost savings as a
result of the Merger; however, no pro forma adjustment has been included in the
unaudited pro forma combined financial information for the anticipated cost
savings.
The branches acquired in the Branch Acquisitions will become branches of
Mountain West Bank of Coeur d'Alene, Idaho, a wholly-owned subsidiary of
Glacier.
NOTE B: PURCHASE PRICE OF WESTERFED
It is assumed that each WesterFed share will be exchanged for 1.1 shares of
Glacier stock. The merger consideration to be paid to WesterFed stockholders is
assumed to be $22.52 per share calculated by multiplying the closing price of
Glacier stock, assumed to be $12.25, by 1.1, plus $9.05 per share. The total
number of WesterFed shares outstanding as of September 30, 2000 is 4,113,886.
The actual merger consideration per share is subject to adjustment depending on
the average price of Glacier stock prior to the Effective Date. If the actual
merger consideration is adjusted, the actual results will differ from the pro
forma information presented herein.
F-5
<PAGE> 63
NOTES TO UNAUDITED COMBINED CONDENSED
PRO FORMA FINANCIAL STATEMENTS (CONTINUED)
Total purchase price consideration for accounting purposes is calculated as
follows (in thousands, except per share amounts):
<TABLE>
<S> <C>
Acquisition of 4,113,886 shares of WesterFed common stock
for total consideration of $22.52 per share............... $92,665
Valuation adjustment for stock option shares................ 1,348
Estimated direct acquisition costs.......................... 5,700
-------
Total purchase price...................................... $99,713
=======
</TABLE>
It is assumed that 59% of the acquisition cost of WesterFed is paid through
the issuance of Glacier common stock. The assumed value of these shares is
$12.25. The actual value of these shares will be based on the average closing
price of Glacier common stock for the 20 trading days ending on the 15th trading
day prior to the completion of the Merger. The total number of shares Glacier
common stock estimated to be issued is as follows (dollars in thousands, except
share amounts):
<TABLE>
<S> <C>
Acquisition cost of WesterFed common stock.................. $ 92,665
Percentage to be paid through issuance of stock............. 59%
----------
Acquisition cost to be paid through the issuance of stock... 54,673
Divided by the assumed value per share of shares issued..... $ 12.25
----------
Total Glacier shares to be issued......................... 4,463,102
==========
</TABLE>
The acquisition cost to be paid through the issuance of stock will be
recorded as follows:
<TABLE>
<S> <C>
Acquisition cost to be paid through the issuance of common
stock..................................................... $56,021
Less par value of common stock issued....................... (45)
-------
Additional paid-in capital.................................. $55,976
=======
</TABLE>
The cash consideration is assumed to be funded with the proceeds of trust
preferred securities and with the sale of investment securities which are
classified as available-for-sale and whose carrying value approximates market
value. The total cash consideration is assumed as follows:
<TABLE>
<S> <C>
Acquisition cost of WesterFed common stock.................. $92,665
Percentage to be paid in cash at closing.................... 41%
-------
Acquisition cost to be paid in cash......................... 37,993
Estimated direct acquisition costs.......................... 5,700
-------
Total acquisition costs paid in cash...................... $43,693
=======
</TABLE>
According to the terms of the agreement, the total that can be paid in cash
to stockholders is limited to $41.3 million.
NOTE C: ALLOCATION OF PURCHASE PRICE OF WESTERFED
Certain matters are still pending that will have an effect on the ultimate
allocation of the purchase price. Accordingly, the allocation of the purchase
price has not been finalized and the portion of the purchase price allocated to
fair value adjustments, identifiable intangibles and goodwill is subject to
change.
F-6
<PAGE> 64
NOTES TO UNAUDITED COMBINED CONDENSED
PRO FORMA FINANCIAL STATEMENTS (CONTINUED)
Subject to the foregoing, the purchase price has been allocated as
described below (in thousands):
<TABLE>
<S> <C> <C>
WesterFed's net assets at September 30, 2000................ $ 91,991
Increase (decrease) to WesterFed's net assets as a result of
estimated fair value adjustments:
Investment securities held-to-maturity.................... $ 357
Premises and equipment.................................... 2,000
Loans receivable, net..................................... (12,513)
Deposits.................................................. 2,555
Accrued expenses(1)....................................... (4,925)
Borrowed funds............................................ 2,478
Mortgage servicing rights................................. 1,721
Core deposit intangible................................... 10,914
--------
$ 2,587
Applicable income tax effects(2).......................... (1,009)
--------
Net fair value adjustments.................................. 1,578
Eliminate WesterFed's existing goodwill..................... (14,264)
--------
Estimated fair value of identifiable tangible and intangible
net assets................................................ $ 79,305
Goodwill.................................................... 20,408
--------
Total purchase price consideration..................... $ 99,713
========
</TABLE>
-------------------------
(1) Includes $2,733,000 of estimated severance costs under existing WesterFed
employment agreements.
(2) Estimated marginal tax rate of 39%.
NOTE D: BRANCH PURCHASE
The acquisition of the Idaho and Utah branches is structured as a purchase
of assets and assumption of liabilities. With certain exceptions, all of the
deposits of the branches, real and personal property at each of the branch
locations, vault cash, and loans associated with the deposit accounts will be
acquired. The net difference between the assets acquired and liabilities
assumed, (estimated to be approximately $126.255 million), and acquisition
consideration paid by Mountain West Bank of Coeur d'Alene, will be paid in cash
by the selling banks. Such amounts ($105.490 million) are reflected as
investment securities available for sale. The amounts shown in the Idaho/Utah
Branches column on the unaudited combined condensed pro forma financial
statements were based on information provided by the selling banks and
Management's estimates of operating results.
The acquisition consideration paid is expected to be as follows:
<TABLE>
<S> <C>
Core deposit intangible..................................... $ 4,682
Goodwill.................................................... 16,083
-------
Total acquisition consideration........................... $20,765
=======
</TABLE>
NOTE E: PRO FORMA ADJUSTMENTS
For the unaudited combined condensed pro forma statements of operations,
the pro forma adjustments are based on the allocated purchase price of the net
assets acquired based on the fair value estimates at September 30, 2000
described above.
F-7
<PAGE> 65
NOTES TO UNAUDITED COMBINED CONDENSED
PRO FORMA FINANCIAL STATEMENTS (CONTINUED)
Investment securities will be adjusted to fair value based on current
securities yields and the fair value adjustment will be amortized to interest
income as a yield adjustment using the level yield method over the average
estimated life of the securities, currently estimated to be five years.
Loans receivable will be adjusted to fair value based on current loan
interest rates and the fair value adjustment will be amortized to interest
income as a yield adjustment using the level yield method over the average
estimated life of the underlying loans receivable, currently estimated to be
seven years.
Premises and equipment will be adjusted to fair value based on current
market value evaluations and the new basis will be depreciated on a straight
line basis over the remaining estimated economic life of the related assets,
currently estimated at 25 years.
Mortgage servicing rights will be adjusted to fair value based on current
market evaluations and the fair market value adjustment will be amortized on a
straight line basis over the weighted average maturity of the associated loans,
currently estimated to be seven years.
Interest-bearing time deposits will be adjusted to fair value based on
current time deposit interest rates and the fair value adjustment will be
amortized into interest expense using the interest method over the estimated
duration of the related deposit, currently estimated to be three years.
Borrowed funds will be adjusted to fair value based on the current interest
rates of borrowings and the fair value adjustment will be amortized to interest
expense using the interest method over the contractual duration of the related
borrowings, currently estimated to be three years.
For purposes of calculating pro forma adjustments, straight-line
amortization has been used as any differences between the interest method and
the straight-line method would not be significant.
Core deposit intangible will be amortized over the expected economic life,
which is assumed to be ten years. It is anticipated that the amortization amount
will be larger in the earlier years of the amortization period. Goodwill will be
amortized over a twenty-year period on a straight-line basis.
Securities sold to fund the acquisition's cash consideration are estimated
to be $28.229 million with an assumed interest rate of 6.72%.
In addition to the sale of securities, funding of the transactions will be
obtained from proceeds of $35 million trust preferred securities to be issued by
Glacier with an assumed interest rate of 9.5%. The amortization of origination
costs over a five year call period will result in an effective interest cost of
approximately 10.4%.
Pro forma combined weighted average shares outstanding is based on the
number of shares assumed to be issued to WesterFed stockholders as described
above combined with the actual weighted average shares outstanding for Glacier
for the respective periods. No options to acquire WesterFed common stock are
assumed to be outstanding after the Effective Date of the Merger.
F-8
<PAGE> 66
NOTES TO UNAUDITED COMBINED CONDENSED
PRO FORMA FINANCIAL STATEMENTS (CONTINUED)
The incremental effect on pro forma combined net earnings of the WesterFed
purchase accounting adjustments for the year ended December 31, 1999 and the
nine months ended September 30, 2000 is estimated to be an after-tax increase in
expense as follows, using an estimated marginal tax rate of 39%:
<TABLE>
<CAPTION>
AMORTIZATION QUARTERLY ANNUAL
ADJUSTMENT PERIOD IN AMORTIZATION AMORTIZATION
AMOUNT YEARS AMOUNT AMOUNT
---------- ------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Fair value adjustments:
Investment securities.................... $ 357 5 $ 18 $ 71
Loans receivable......................... (12,513) 7 (447) (1,788)
Premises and equipment................... 2,000 25 20 80
Deposits................................. 2,555 3 213 852
Accrued expenses......................... (4,925) --
Borrowed funds........................... 2,478 3 207 826
Mortgage servicing rights................ 1,721 7 61 246
Core deposit intangible.................. 10,914 10 273 1,091
Goodwill................................. 6,144 20 77 307
-------- ----- -------
Total adjustments..................... $ 8,731 422 1,685
========
Income taxes............................. 134 537
----- -------
Incremental decrease on pro forma combined
net earnings............................. $ 288 $ 1,148
===== =======
</TABLE>
<TABLE>
<CAPTION>
ESTIMATED AMORTIZATION FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------
2001 2002 2003 2004 2005
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Fair value adjustments:
Investment securities.................. $ 71 $ 71 $ 71 $ 71 $ 71
Loans receivable....................... (1,788) (1,788) (1,788) (1,788) (1,788)
Premises and equipment................. 80 80 80 80 80
Deposits............................... 852 852 852
Accrued expenses.......................
Borrowed funds......................... 826 826 826
Mortgage servicing rights.............. 246 246 246 246 246
Core deposit intangible................ 2,046 1,827 1,579 1,327 1,075
Goodwill............................... 307 307 307 307 307
------- ------- ------- ------- -------
Total adjustments................... 2,640 2,421 2,173 243 (9)
Income taxes........................... 910 825 728 (25) (123)
------- ------- ------- ------- -------
Incremental decrease on pro forma
combined net earnings.................. $ 1,730 $ 1,596 $ 1,445 $ 268 $ 114
======= ======= ======= ======= =======
</TABLE>
(F) PRO FORMA INCOME PER SHARE
Pro forma combined weighted average shares outstanding is based on the
number of shares assumed to be issued to WesterFed shareholders as described
above combined with the actual weighted average shares outstanding for Glacier
for the respective periods.
F-9
<PAGE> 67
------------------------------------------------------
------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary............................... 1
Risk Factors.......................... 10
Special Note Regarding Forward-Looking
Statements.......................... 18
Use of Proceeds....................... 18
Capitalization........................ 19
Accounting and Regulatory Treatment... 20
Market for the Preferred Securities... 20
Description of the Trust.............. 20
Description of the Preferred
Securities.......................... 21
Description of the Subordinated
Debentures.......................... 33
Book-Entry Issuance................... 42
Description of the Guarantee.......... 43
Relationship Among the Preferred
Securities, the Subordinated
Debentures and the Guarantee........ 46
Federal Income Tax Consequences....... 47
ERISA Considerations.................. 50
Underwriting.......................... 51
Legal Matters......................... 52
Experts............................... 52
Where You Can Find Information........ 53
Documents Incorporated By Reference... 53
Unaudited Combined Condensed Pro Forma
Financial Statements................ F-1
</TABLE>
YOU SHOULD ONLY RELY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT, AND OUR UNDERWRITERS HAVE NOT,
AUTHORIZED ANY PERSON TO PROVIDE YOU WITH DIFFERENT INFORMATION. IF ANYONE
PROVIDES YOU WITH DIFFERENT OR INCONSISTENT INFORMATION, YOU SHOULD NOT RELY ON
IT.
WE ARE NOT, AND OUR UNDERWRITERS ARE NOT, MAKING AN OFFER TO SELL THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
YOU SHOULD ASSUME THAT THE INFORMATION APPEARING IN THIS PROSPECTUS IS
ACCURATE AS OF THE DATE ON THE FRONT COVER OF THIS PROSPECTUS ONLY.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION
OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT
RELATES.
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
1,400,000 PREFERRED SECURITIES
GLACIER CAPITAL TRUST I
% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
FULLY, IRREVOCABLY AND UNCONDITIONALLY
GUARANTEED BY
GLACIER BANCORP, INC. LOGO
GLACIER BANCORP, INC. WORDS LOGO
-------------------------
PROSPECTUS
-------------------------
D.A. DAVIDSON & CO LOGO
, 2001
------------------------------------------------------
------------------------------------------------------
<PAGE> 68
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Registrant in connection
with the sale of the Preferred Securities offered hereby.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............................. $ 9,240
NASD filing fee................................................................. $ 4,000
Nasdaq National Market listing fee.............................................. $ 1,000
Delaware taxes & fees (associated with formation of the trust).................. $ 350
Trustee fees.................................................................... $ 18,500
Printing and mailing expenses................................................... $ 50,000
Legal fees and expenses......................................................... $165,000
Accounting fees and expenses.................................................... $ 75,000
Blue Sky fees and expenses (including fees of counsel).......................... $ 5,000
Miscellaneous expenses.......................................................... $ 76,910
--------
Total................................................................ $405,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the DGCL provides that a corporation may indemnify
directors and officers as well as other employees and individuals against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement in connection with specified actions, suits or proceedings, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation--a "derivative action"), if they acted in good
faith and in a manner they reasonably believed to be in, or not opposed to, the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful. A
similar standard is applicable in the case of derivative actions, except that
indemnification only extends to expenses (including attorneys' fees) incurred in
connection with the defense or settlement of such actions, and the statute
requires court approval before there can be any indemnification where the person
seeking indemnification has been found liable to the corporation. The statute
provides that it is not exclusive of other indemnification that may be granted
by a corporation's charter, bylaws, disinterested director vote, stockholder
vote, agreement or otherwise.
Article VI of Glacier's Bylaws requires the indemnification of any
person made or threatened to be made party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was a director,
officer or employee of the Registrant or any predecessor of the Registrant, or
is or was serving at the request of the Registrant or any predecessor of the
Registrant as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines, excise taxes and amounts paid in
settlement in connection with such action, suit or proceeding to the fullest
extent authorized under Section 145 of the DGCL; provided however, that the
Registrant will not be liable for any amounts due in connection with a
settlement of any action, suit or proceeding effected without the Registrant's
prior written consent, or any action, suit or proceeding initiated by any person
seeking indemnification pursuant to the Bylaws without the prior written consent
of the Registrant.
Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability for (i) any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) payments of unlawful dividends or unlawful
stock repurchases or redemptions, or (iv) any transaction from which the
director derived an improper personal benefit.
Article 8 of Glacier's Certificate of Incorporation provides that the
personal liability of the Registrant's directors and officers for monetary
damages shall be eliminated to the fullest extent permitted by the DGCL as it
exists or may thereafter be in effect. Any amendment to, modification or repeal
of such Article 8 shall not adversely affect the
II-1
<PAGE> 69
rights provided thereby with respect to any claim, issue or matter in any
proceeding that is based in any respect on any alleged action or failure to act
prior to any such amendment, modification or repeal. Under the Trust Agreement,
Glacier will agree to indemnify each of the Trustees of Glacier Capital Trust I
or any predecessor Trustee for Glacier Capital Trust I, and to hold each Trustee
harmless against any loss, damage, claims, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance or administration of the Trust Agreement, including the costs and
expenses of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties under the Trust
Agreement. Glacier and Glacier Capital Trust I have agreed to indemnify the
Underwriters, and the Underwriters have agreed to indemnify Glacier and Glacier
Capital Trust I against certain civil liabilities, including liabilities under
the Securities Act of 1933, as amended. Reference is made to the Underwriting
Exhibit filed as Exhibit 1.1.
ITEM 16. EXHIBITS
The exhibits are listed on the accompanying "Exhibit Index" on page II-5
hereof.
ITEM 17. UNDERTAKINGS
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, 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 herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(h) 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 that 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
proceeding) is asserted by such director, officer, or 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 Act and will be governed by the
final adjudication of such issue.
(i) The undersigned Registrants hereby undertake that:
(1) For purposes of determining any liability under the
Securities Act of 1933, 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 Registrants pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to
be part of this Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus 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-2
<PAGE> 70
SIGNATURES
Pursuant to the requirements of the 1933 Act, 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 to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Kalispell, State of Montana on January 12, 2001.
GLACIER BANCORP, INC.
By: /s/ MICHAEL J. BLODNICK
---------------------------------
Michael J. Blodnick, President
and Chief Executive Officer
GLACIER CAPITAL TRUST I
By: /s/ MICHAEL J. BLODNICK
---------------------------------
Michael J. Blodnick, President
and Administration Trustee
Pursuant to the requirements of the 1933 Act, this Amendment to the
Registration Statement has been signed by the following persons in the
capacities indicated on January 12, 2001.
SIGNATURE AND TITLE
By: /s/ MICHAEL J. BLODNICK
---------------------------------
Michael J. Blodnick, President
and Chief Executive Officer and
Director
(Principal Executive Officer)
By: /s/ JAMES H. STROSAHL
---------------------------------
James H. Strosahl, Chief
Financial Officer
(Principal Financial and
Accounting Officer)
By: JOHN S. MACMILLAN*
---------------------------------
John S. MacMillan,
Chairman of the Board and
Director
II-3
<PAGE> 71
By: WILLIAM L. BOUCHEE*
---------------------------------
William L. Bouchee, Director
By: FRED J. FLANDERS*
---------------------------------
Fred J. Flanders, Director
By: ALLEN J. FETSCHER*
---------------------------------
Allen J. Fetscher, Director
By: JON W. HIPPLER*
---------------------------------
Jon W. Hippler, Director
By: L. PETER LARSON*
---------------------------------
L. Peter Larson, Director
By: F. CHARLES MERCORD*
---------------------------------
F. Charles Mercord, Director
By: EVERIT A. SLITER*
---------------------------------
Everit A. Sliter, Director
By: HAROLD A. TUTVEDT*
---------------------------------
Harold A. Tutvedt, Director
By: /s/ MICHAEL J. BLODNICK
--------------------------------------
Michael J. Blodnick, Attorney-in-fact*
II-4
<PAGE> 72
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
1.1 Form of Underwriting Agreement
4.1 Form of Indenture*
4.2 Form of Junior Subordinated Debenture (included as an exhibit to
Exhibit 4.1)*
4.3 Certificate of Trust*
4.4 Trust Agreement*
4.5 Form of Amended and Restated Trust Agreement*
4.6 Form of Preferred Securities Certificate (included as an Exhibit
to Exhibit 4.5)*
4.7 Form of Preferred Securities Guarantee Agreement*
4.8 Form of Agreement as to Expenses and Liabilities (included as an
exhibit to Exhibit 4.5)*
5.1 Opinion of Richards, Layton & Finger, P.A. regarding the trust
and as to legality of securities
8.1 Opinion of Graham & Dunn PC as to certain federal income tax
matters
12.1 Statement regarding computation of ratio of earnings to fixed
charges*
23.1 Consent of Graham & Dunn PC (contained in its opinion filed as
Exhibit 8.1)
23.2 Consent of Richards, Layton & Finger, P.A. (contained in its
opinion filed as Exhibit 5.1)
23.3 Consent of KPMG LLP, as Glacier's independent accountants
23.4 Consent of KPMG LLP, as WesterFed's independent accountants
23.5 Consent of PricewaterhouseCoopers LLP, as Mountain West's
independent accountants*
24.1 Powers of Attorney (included as part of signature pages)*
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of Wilmington Trust Company, as trustee
under the Indenture*
25.2 Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of Wilmington Trust Company, as trustee
under the Trust Agreement*
25.3 Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of Wilmington Trust Company, as trustee
under the Guarantee Agreement*
</TABLE>
------------
* Previously filed.
II-5
