8-KShareholder MattersCorporate ChangesOther Events+1

BANK OF AMERICA CORP /DE/ 8-K Report, Rights Modification (Jun 17, 2014)

Filed June 17, 2014For Securities:BACBAC-PBBAC-PKBAC-PLBAC-PMBAC-PNBAC-PSBML-PJBAC-PEBAC-PPBAC-PQBACRPBML-PGBML-PHBML-PLBAC-POMER-PK

Summary

This 8-K filing from Bank of America Corporation on June 17, 2014, details the issuance and sale of its Series V Preferred Stock. Specifically, the company filed a Certificate of Designations to establish the terms of its Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series V. This new series of preferred stock carries a liquidation preference of $25,000 per share. The filing also announces the closing of an offering of 1,500,000 Depositary Shares, each representing a 1/25th interest in a share of the Series V Preferred Stock. Importantly, the terms of the Series V Preferred Stock include restrictions on the company's ability to pay dividends or repurchase common stock or other parity/junior preferred stock if it fails to pay full dividends on the Series V Preferred Stock. This structure aims to protect preferred shareholders' dividend rights.

Key Highlights

  • 1Bank of America filed a Certificate of Designations establishing the Series V Preferred Stock.
  • 2The Series V Preferred Stock has a liquidation preference of $25,000 per share.
  • 3The company closed the sale of 1,500,000 Depositary Shares, each representing a 1/25th interest in a Series V Preferred Stock share.
  • 4Dividends on the Series V Preferred Stock are fixed-to-floating and non-cumulative.
  • 5Restrictions are imposed on common stock and junior/parity preferred stock dividends and repurchases if Series V Preferred dividends are not paid in full.
  • 6The filing includes various exhibits related to the underwriting, Certificate of Designations, Deposit Agreement, and legal opinions for the Series V Preferred Stock and Depositary Shares.

Frequently Asked Questions

The primary purpose of this 8-K filing is to formally announce the establishment and issuance of Bank of America's Series V Preferred Stock and the related Depositary Shares. It details the key terms and preferences of this new class of preferred stock.

The Series V Preferred Stock is a fixed-to-floating rate, non-cumulative preferred stock with a liquidation preference of $25,000 per share. A significant feature is the inclusion of dividend payment restrictions on common stock and other junior/parity preferred stock if the full dividends on the Series V Preferred Stock are not paid.

Depositary Shares are fractional interests in a share of preferred stock. In this case, each Depositary Share represents a 1/25th interest in a share of the Series V Preferred Stock. This structure often makes the preferred stock more accessible to a broader range of investors.

The dividend restrictions mean that if Bank of America fails to pay the full dividends on the Series V Preferred Stock, it will be prohibited from paying dividends on or repurchasing its common stock or any preferred stock that ranks equally or junior to the Series V Preferred Stock. This prioritizes payments to Series V Preferred shareholders.