NOTE 11. SUBORDINATED DEBT AND JUNIOR SUBORDINATED DEBT

WesBanco had $26.0 million of subordinated debt outstanding at December 31, 2016 that was issued by the former YCB, acquired by WesBanco in 2016. These notes have a fixed rate of 6.25%, mature on December 15, 2025, and are callable on December 15, 2020. The interest rate will become a variable rate equal to 3-month LIBOR plus 4.59% on the call date. The subordinated debt is considered Tier 2 regulatory capital for WesBanco and WesBanco Bank.

The Trusts, consisting of WesBanco Capital Trust II, WesBanco Capital Statutory Trust III, WesBanco Capital Trusts IV, V and VI, Oak Hill Capital Trusts 2, 3 and 4, Community Bank Shares Statutory Trusts I and II, and First Federal Statutory Trusts II and III are all wholly-owned trust subsidiaries of WesBanco formed for the purpose of issuing Trust Preferred Securities (“Trust Preferred Securities”) into a pool of other financial services entity trust preferred securities, and lending the proceeds to WesBanco. The Trust Preferred Securities were issued and sold in private placement offerings. The proceeds from the sale of the securities and the issuance of common stock by the Trusts were invested in Junior Subordinated Deferrable Interest Debentures (“Junior Subordinated Debt”) issued by WesBanco, the former Oak Hill Financial, Inc., acquired by WesBanco in 2007, and the former YCB, acquired by WesBanco in 2016, which are the sole assets of the Trusts. The Trusts pay dividends on the Trust Preferred Securities at the same rate as the distributions paid by WesBanco on the Junior Subordinated Debt held by the Trusts. The Trusts provide WesBanco with the option to defer payment of interest on the Junior Subordinated Debt for an aggregate of 20 consecutive quarterly periods. Should any of these options be utilized, WesBanco may not declare or pay dividends on its common stock during any such period. Undertakings made by WesBanco with respect to the Trust Preferred Securities for the Trusts constitute a full and unconditional guarantee by WesBanco of the obligations of these Trust Preferred Securities. WesBanco organized Trusts II and III in June 2003, Trusts IV and V in June 2004 and Trust VI in March 2005. The Oak Hill Trusts 2 and 3 were organized in 2004 and Trust 4 was organized in 2005. The Community Bank Trust I was organized in 2004, and Trust II was organized in 2006. The First Federal Trust II was organized in 2007, and Trust III was organized in 2008.

The Junior Subordinated Debt is presented as a separate category of long-term debt on the Consolidated Balance Sheets. For regulatory purposes, the Federal Reserve Board has allowed bank holding companies to include trust preferred securities in Tier 1 capital up to a certain limit. Provisions in the Dodd-Frank Act require the Federal Reserve Board to generally exclude trust preferred securities from Tier 1 capital, but a grandfather provision will permit bank holding companies with consolidated assets of less than $15 billion, such as WesBanco, to continue counting existing trust preferred securities as Tier 1 capital until they mature. All of the Trust Preferred Securities qualified under the current rules as Tier 1 instruments at December 31, 2016, but no such securities issued in the future will count as Tier 1 capital. The Trust Preferred Securities provide the issuer with a unique capital instrument that has a tax deductible interest feature not normally associated with the equity of a corporation.

The following table shows WesBanco’s trust subsidiaries with outstanding Trust Preferred Securities as of December 31, 2016:

(in thousands)

Trust
Preferred
Securities

Common
Securities

Junior
Subordinated
Debt

Stated
Maturity
Date

Optional
Redemption
Date

WesBanco Capital Trust II (1)

13,000

410

13,410

6/30/2033

6/30/2008

WesBanco Capital Statutory Trust III (2)

17,000

526

17,526

6/26/2033

6/26/2008

WesBanco Capital Trust IV (3)

20,000

619

20,619

6/17/2034

6/17/2009

WesBanco Capital Trust V (3)

20,000

619

20,619

6/17/2034

6/17/2009

WesBanco Capital Trust VI (4)

15,000

464

15,464

3/17/2035

3/17/2010

Oak Hill Capital Trust 2 (5)

5,000

155

5,155

10/18/2034

10/18/2009

Oak Hill Capital Trust 3 (6)

8,000

248

8,248

10/18/2034

10/18/2009

Oak Hill Capital Trust 4 (7)

5,000

155

5,155

6/30/2035

6/30/2015

Community Bank Shares Statutory Trust I (3)

5,905

217

6,122

6/17/2034

6/17/2014

Community Bank Shares Statutory Trust II (8)

7,901

310

8,211

6/15/2036

6/15/2016

First Federal Statutory Trust II (9)

8,145

310

8,455

3/22/2037

3/15/2017

First Federal Statutory Trust III (10)

8,335

240

8,575

6/24/2038

6/24/2018

Total

133,286

4,273

137,559

(1)	Variable rate based on the three-month LIBOR plus 3.15% with a current rate of 4.15% through March 30, 2017, adjustable quarterly.

(2)	Variable rate based on the three-month LIBOR plus 3.10% with a current rate of 4.10% through March 26, 2017, adjustable quarterly.

(3)	Variable rate based on the three-month LIBOR plus 2.65% with a current rate of 3.64% through March 17, 2017, adjustable quarterly.

(4)	Variable rate based on the three-month LIBOR plus 1.77% with a current rate of 2.76% through March 17, 2017, adjustable quarterly.

(5)	Variable rate based on the three-month LIBOR plus 2.40% with a current rate of 3.28% through January 18, 2017, adjustable quarterly.

(6)	Variable rate based on the three-month LIBOR plus 2.30% with a current rate of 3.18% through January 18, 2017, adjustable quarterly.

(7)	Variable rate based on the three-month LIBOR plus 1.60% with a current rate of 2.60% through March 30, 2017, adjustable quarterly.

(8)	Variable rate based on the three-month LIBOR plus 1.70% with a current rate of 2.66% through March 15, 2017, adjustable quarterly.

(9)	Fixed rate of 6.69% through March 15, 2017, then variable rate based on the three-month LIBOR plus 1.60%.

(10)	Fixed rate of 8.00% through maturity, callable June 24, 2018 and thereafter at par.