8-KLeadership ChangesShareholder MattersCorporate Changes+2

BANK OF AMERICA CORP /DE/ 8-K Report, Rights Modification (Sep 5, 2014)

Filed September 5, 2014For 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 September 5, 2014, detailing significant corporate actions. The primary event involves the issuance of 80,000 shares of Series X Preferred Stock, designed to be fixed-to-floating rate and non-cumulative. This issuance imposes restrictions on the company's ability to pay dividends or repurchase common stock and junior preferred stock if full dividends on the Series X Preferred Stock are not met. Additionally, the report announces a change in executive leadership: David C. Darnell has been appointed as Vice Chairman, Global Wealth & Investment Management, stepping down from his role as Co-Chief Operating Officer. The filing also confirms the closing of the sale of 2,000,000 Depositary Shares, each representing a 1/25th interest in a share of the Series X Preferred Stock, with the terms governed by a previously filed prospectus and a recent prospectus supplement.

Key Highlights

  • 1Bank of America issued 80,000 shares of Series X Preferred Stock, a new class of fixed-to-floating rate, non-cumulative preferred stock.
  • 2The Series X Preferred Stock carries a liquidation preference of $25,000 per share.
  • 3Dividends on common stock and junior preferred stock are restricted if the company fails to pay full dividends on the Series X Preferred Stock.
  • 4David C. Darnell has been appointed as Vice Chairman, Global Wealth & Investment Management.
  • 5Mr. Darnell will no longer serve as Co-Chief Operating Officer.
  • 6The company closed the sale of 2,000,000 Depositary Shares, each representing a fraction of a Series X Preferred Share.
  • 7The filing includes the Certificate of Designations for the Series X Preferred Stock, outlining its rights and preferences.

Frequently Asked Questions

The Series X Preferred Stock is a new class of preferred stock issued by Bank of America. It is fixed-to-floating rate and non-cumulative, meaning that any missed dividend payments are not accumulated and must be paid in full before any dividends can be paid on common stock or junior preferred stock. It has a liquidation preference of $25,000 per share.

The primary implication for common stockholders is that the company's ability to declare or pay dividends on common stock, or to repurchase common stock, is now subject to restrictions. These restrictions are triggered if Bank of America fails to declare and pay full dividends on its Series X Preferred Stock. This could potentially limit future dividend payouts or share buybacks for common shareholders.

David C. Darnell has been appointed as Vice Chairman, Global Wealth & Investment Management. This is a new executive position within the company's wealth management division. He previously served as Co-Chief Operating Officer since September 2011.

The Depositary Shares represent fractional interests (specifically, a 1/25th interest) in the Series X Preferred Stock. The sale of these Depositary Shares on September 5, 2014, was the mechanism through which the company raised capital by offering the underlying Series X Preferred Stock to the public.