8-KShareholder MattersCorporate ChangesOther Events+1

BANK OF AMERICA CORP /DE/ 8-K Report, Rights Modification (Jan 29, 2016)

Filed January 29, 2016For 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 29, 2016, to report on the issuance and terms of its 6.200% Non-Cumulative Preferred Stock, Series CC. The company issued 44,000,000 Depositary Shares, each representing a 1/1,000th interest in a share of the Series CC Preferred Stock, including the full exercise of an over-allotment option. This filing is significant as it details the rights and preferences associated with the Series CC Preferred Stock. Notably, the ability of Bank of America to pay dividends on or repurchase common stock or parity junior preferred stock is restricted if it fails to declare and pay full dividends on the Series CC Preferred Stock. Investors in this new preferred stock offering should note the non-cumulative nature of the dividends and the liquidation preference of $25,000 per share of Series CC Preferred Stock.

Key Highlights

  • 1Bank of America issued 44,000,000 Depositary Shares representing interests in Series CC Preferred Stock on January 29, 2016.
  • 2The Series CC Preferred Stock carries a fixed dividend rate of 6.200% and is non-cumulative.
  • 3A key feature is a restriction on common stock and junior preferred stock dividends/repurchases if Series CC Preferred dividends are not paid in full.
  • 4Each Depositary Share represents a 1/1,000th interest in a share of Series CC Preferred Stock.
  • 5The Series CC Preferred Stock has a liquidation preference of $25,000 per share.
  • 6The issuance included the full exercise of the underwriters' over-allotment option.
  • 7The filing includes various agreements and opinions related to the issuance and sale of the Depositary Shares.

Frequently Asked Questions

The primary purpose of this 8-K filing is to report the terms and conditions of Bank of America's newly issued 6.200% Non-Cumulative Preferred Stock, Series CC, and the related Depositary Shares. It details the rights, preferences, and restrictions associated with this preferred stock.

Non-cumulative means that if Bank of America fails to declare and pay the full dividend on the Series CC Preferred Stock in any given period, the missed dividend is lost forever and does not accrue or become payable later. This is a critical distinction for preferred stock investors.

The restriction means that if Bank of America doesn't pay the full preferred dividends on Series CC Preferred Stock, it cannot pay dividends on its common stock or repurchase common stock or parity junior preferred stock. This prioritizes the payment of preferred dividends over common stock distributions in such situations.

While the 8-K filing details the issuance of 44,000,000 Depositary Shares and the terms of the preferred stock, it does not explicitly state the total capital raised. Investors would need to refer to the Prospectus Supplement dated January 21, 2016, or other financial statements to determine the offering price and total proceeds.