CASH 2017 Annual Report

128 The Company issued all of the 10,310 authorized shares of trust preferred securities of First Midwest Financial Capital Trust I holding solely securities. Distributions are paid semi-annually. Cumulative cash distributions are calculated at a variable rate of London Interbank Offered Rate (“LIBOR”) plus 3.75% (5.22% at September 30, 2017, and 4.99% at September 30, 2016), not to exceed 12.5%. The Company may, at one or more times, defer interest payments on the capital securities for up to 10 consecutive semi-annual periods, but not beyond July 25, 2031. At the end of any deferral period, all accumulated and unpaid distributions are required to be paid. The capital securities are required to be redeemed on July 25, 2031; however, the Company has a semi-annual option to shorten the maturity date. The redemption price is $1,000 per capital security plus any accrued and unpaid distributions to the date of redemption. Holders of the capital securities have no voting rights, are unsecured and rank junior in priority of payment to all of the Company’s indebtedness and senior to the Company’s common stock. Although the securities issued by the Trust are not included as a component of stockholders’ equity, the securities are treated as capital for regulatory purposes, subject to certain limitations. The Company completed the public offering of $75.0 million of 5.75% fixed-to-floating rate subordinated debentures during fiscal year 2016. These notes are due August 15, 2026. The subordinated debentures were sold at par, resulting in net proceeds of approximately $73.9 million. At September 30, 2017, the Company had $73.3 million in subordinated debentures, net of issuance costs of $1.7million. Accumulated interest expense on the subordinated debentureswas $4.3million as of September 30, 2017. As of September 30, 2017, the Company had three capital leases, two equipment leases and one property lease. At September 30, 2017, the portion of the liability expected to be expensed and amortized beyond 12 months is $1.9 million. The majority of the $1.9 million is related to the Urbandale, Iowa retail branch location . NOTE 10. EMPLOYEE STOCK OWNERSHIPAND PROFIT SHARING PLANS The Company maintains an Employee Stock Ownership Plan (“ESOP”) for eligible employees who have 1000 hours of employment with the Bank, have worked at least one year at the Bank and who have attained age 21. ESOP expense of $1,668,000, $1,150,000 and $994,000 was recorded for the years ended September 30, 2017, 2016 and 2015, respectively. Contributions of $1,606,102, $1,174,682 and $992,038 were made to the ESOP during the years ended September 30, 2017, 2016 and 2015, respectively. Contributions to the ESOP and shares released from suspense are allocated among ESOP participants on the basis of compensation in the year of allocation. Benefits generally become 100% vested after seven years of credited service. Prior to the completion of seven years of credited service, a participant who terminates employment for reasons other than death or disability receives a reduced benefit based on the ESOP’s vesting schedule. Forfeitures are reallocated among remaining participating employees in the same proportion as contributions. Benefits are payable in the form of stock upon termination of employment. The Company’s contributions to the ESOP are not fixed, so benefits payable under the ESOP cannot be estimated. For the years ended September 30, 2017, 2016 and 2015, 20,486 shares, 19,381 shares and 23,750 shares, from the suspense account, with a fair value of $78.40, $60.61 and $41.77 per share, respectively, were released. For the years ended September 30, 2017, 2016 and 2015, allocated shares and total ESOP shares reflect 14,126 shares, 15,502 shares and 10,294 shares, respectively, withdrawn from the ESOP by participants who were no longer with the Company or by participants diversifying their holdings. At September 30, 2017, 2016 and 2015, there were 1,479, 2,710 and 2,974 shares purchased, respectively, for dividend reinvestment. Year-end ESOP shares are as follows: At September 30, 2017 2016 2015 (Dollars in Thousands) Allocated shares 256,219 262,872 256,283 Unearned shares — — — Total ESOP shares 256,219 262,872 256,283 Fair value of unearned shares $ — $ — $ —