8-KShareholder MattersCorporate ChangesOther Events+1

BANK OF AMERICA CORP /DE/ 8-K Report, Rights Modification (Jan 30, 2008)

Filed January 30, 2008For Securities:BACBAC-PBBAC-PKBAC-PLBAC-PMBAC-PNBAC-PSBML-PJBAC-PEBAC-PPBAC-PQBACRPBML-PGBML-PHBML-PLBAC-POMER-PK

Summary

Bank of America Corporation (BAC) filed an 8-K on January 30, 2008, primarily to report on the issuance and terms of its new Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series K. This filing details the creation of 6,000,000 Depositary Shares, each representing a 1/25th interest in a share of the Series K Preferred Stock, through a public offering underwritten by various institutions. The Series K Preferred Stock has a liquidation preference of $25,000 per share and its issuance imposes restrictions on Bank of America's ability to declare or pay dividends on, or repurchase its Junior Stock and Parity Stock if full dividends on the Series K Preferred Stock are not met. This action signifies a move by Bank of America to strengthen its capital structure amidst a challenging economic environment, likely in response to the ongoing subprime mortgage crisis and its impact on financial institutions. Investors should note that the terms of this preferred stock, particularly the non-cumulative dividend feature and the potential restrictions on common stock distributions, are crucial considerations for understanding the future financial flexibility and shareholder returns of Bank of America.

Key Highlights

  • 1Bank of America issued 6,000,000 Depositary Shares, each representing a 1/25th interest in its Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series K.
  • 2The Series K Preferred Stock has a liquidation preference of $25,000 per share.
  • 3The issuance of Series K Preferred Stock imposes restrictions on dividends and repurchases of Junior Stock and Parity Stock if dividends on the Series K Preferred Stock are not fully paid.
  • 4The filing includes the Certificate of Designations for the Series K Preferred Stock, outlining its rights and preferences.
  • 5An Underwriting Agreement dated January 24, 2008, details the terms of the public offering of these Depositary Shares.
  • 6This preferred stock issuance is noted as being made on a delayed basis under a registration statement filed previously.

Frequently Asked Questions

This 8-K filing is primarily to report the establishment and issuance of Bank of America's Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series K, and its associated Depositary Shares. It details the terms, preferences, and the restrictions that come with this new class of preferred stock.

The issuance of Series K Preferred Stock introduces restrictions. If Bank of America fails to declare and pay full dividends on the Series K Preferred Stock, its ability to declare dividends or repurchase its Junior Stock (including common stock) and Parity Stock will be limited. This could impact the timing and amount of distributions to common shareholders.

This means the preferred stock initially pays a fixed rate of dividend, which will later convert to a floating rate dividend. 'Non-Cumulative' signifies that if a dividend payment is missed in a particular period, it is not carried forward to be paid in the future; the company is not obligated to make up for missed payments.

The Series K Preferred Stock has a liquidation preference of $25,000 per share. This means that in the event of the company's liquidation, dissolution, or winding-up, holders of this preferred stock are entitled to receive $25,000 per share before any distribution is made to holders of Junior Stock.