Note 19.

Trust-Preferred Capital Notes

On December 12, 2003, MFC Capital Trust II, a wholly owned subsidiary of the Company, was formed for the purpose of issuing redeemable Capital Securities. On December 19, 2003, $5 million of trust-preferred securities were issued through a pooled underwriting totaling approximately $344 million. The securities have a LIBOR-indexed floating rate of interest.

During 2012, the interest rates ranged from 3.16 percent to 3.40 percent. For the year ended December 31, 2012, the weighted-average interest rate was 3.10 percent. The securities have a mandatory redemption date of January 23, 2034, and are subject to varying call provisions beginning January 23, 2009. The principal asset of the trust is $5.2 million of the Company's junior subordinated debt securities with like maturities and like interest rates to the Capital Securities. See Note 24 for information regarding an interest rate swap entered into by the Company during 2010 to manage the interest rate risk associated with these trust preferred securities. The interest rate swap effectively fixes the yield on the trust preferred securities at approximately 5.43 percent.

The trust-preferred securities may be included in Tier 1 capital for regulatory capital adequacy determination purposes up to 25 percent of Tier 1 capital after its inclusion. The portion of the trust-preferred securities not considered as Tier 1 capital may be included in Tier 2 capital. On December 31, 2012, all of the Company's trust-preferred securities are included in Tier I capital.

The obligations of the Company with respect to the issuance of the Capital Securities constitute a full and unconditional guarantee by the Company of the trusts' obligations with respect to the Capital Securities.

Subject to certain exceptions and limitations, the Company may elect from time to time to defer interest payments on the junior subordinated debt securities, which would result in a deferral of distribution payments on the related Capital Securities.