First Security Corp. is redeeming all $39.6 million of its 9.5% convertible subordinated debentures due in 2006.

Holders of the securities have four options: They can convert their debentures into common stock at a discount to the market price, tender them for purchase at a price of $1,064.37 per $1,000, redeem them at a price of $1,031.70 per $1,000 plus a payment for accrued interest of $31.67 per $1,000, or sell them in the open market.

Because the conversion price is so far below the current market price of the common stock, First Security expects virtually all the debenture holders to convert their securities. That will reduce the bank's interest expense, a spokesman said.

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