Note 13: Subordinated Debentures Issued To Capital Trusts

12 Months Ended

Dec. 31, 2015

Notes

Note 13: Subordinated Debentures Issued To Capital Trusts

Note 13:    Subordinated Debentures Issued to Capital Trusts

In November 2006, Great Southern Capital Trust II (Trust II), a statutory trust formed by the Company for the purpose of issuing the securities, issued a $25.0 million aggregate liquidation amount of floating rate cumulative trust preferred securities.  The Trust II securities bear a floating distribution rate equal to 90-day LIBOR plus 1.60%.  The Trust II securities are redeemable at the Company’s option beginning in February 2012, and if not sooner redeemed, mature on February 1, 2037.  The Trust II securities were sold in a private transaction exempt from registration under the Securities Act of 1933, as amended.  The gross proceeds of the offering were used to purchase Junior Subordinated Debentures from the Company totaling $25.8 million and bearing an interest rate identical to the distribution rate on the Trust II securities.  The initial interest rate on the Trust II debentures was 6.98%.  The interest rate was 1.93% and 1.83% at December 31, 2015 and 2014, respectively. 

In July 2007, Great Southern Capital Trust III (Trust III), a statutory trust formed by the Company for the purpose of issuing the securities, issued a $5.0 million aggregate liquidation amount of floating rate cumulative trust preferred securities.  The Trust III securities bore a floating distribution rate equal to 90-day LIBOR plus 1.40%.  The Trust III securities were redeemable at the Company’s option beginning October 2012, and if not sooner redeemed, matured on October 1, 2037.  The Trust III securities were sold in a private transaction exempt from registration under the Securities Act of 1933, as amended.  The gross proceeds of the offering were used to purchase Junior Subordinated Debentures from the Company totaling $5.2 million and bearing an interest rate identical to the distribution rate on the Trust III securities.  The initial interest rate on the Trust III debentures was 6.76%.  The interest rate was 1.64% at December 31, 2014. 

In July 2015, the Company was the successful bidder in an auction of the $5.0 million aggregate liquidation amount of floating rate cumulative trust preferred securities issued in 2007 by Great Southern Capital Trust III.  The Company purchased the trust preferred securities at a discount, which resulted in a pre-tax gain of approximately $1.1 million.  Subsequent to the purchase, which resulted in the Company’s ownership of all of the outstanding common and preferred securities of Great Southern Capital Trust III, such securities were canceled and the principal amount of the Company’s related debentures, which had equaled the aggregate liquidation amount of the outstanding common and preferred securities of Great Southern Capital Trust III, was reduced to zero.

At December 31, 2015 and 2014, subordinated debentures issued to capital trusts are summarized as follows:

	2015	2014
(In Thousands)
Subordinated debentures	$25,774	$30,929