What is the main purpose of this 8-K filing for Bank of America?

The main purpose of this 8-K filing is to report the creation and issuance of a new series of preferred stock, the 6.000% Non-Cumulative Preferred Stock, Series EE, and related Depositary Shares. It details the terms, preferences, and implications of this new stock issuance.

What are the implications of the Series EE Preferred Stock for common shareholders?

If Bank of America fails to declare and pay full dividends on the Series EE Preferred Stock, it will be restricted from declaring or paying dividends on, or repurchasing, its common stock or any preferred stock that ranks equally or junior to the Series EE Preferred Stock. This means common shareholder returns could be impacted if the company faces dividend payment issues on this new preferred series.

Is the dividend on the Series EE Preferred Stock cumulative?

No, the Series EE Preferred Stock is explicitly stated as 'Non-Cumulative'. This means that if Bank of America misses a dividend payment, that payment is forfeited and not carried forward to be paid at a later date.

What is the value of each Depositary Share?

Each Depositary Share represents a 1/1,000th interest in a share of Series EE Preferred Stock, which has a liquidation preference of $25,000 per share. Therefore, the liquidation preference attributable to one Depositary Share is $25.

BAC 8-K: Shareholder Matters & Corporate Changes

Summary

Bank of America Corporation (BAC) filed an 8-K on April 25, 2016, primarily to report on the issuance and terms of its new 6.000% Non-Cumulative Preferred Stock, Series EE. This filing details the creation of 36,000,000 Depositary Shares, each representing a 1/1,000th interest in a share of Series EE Preferred Stock, which were closed on April 25, 2016. The introduction of this new preferred stock series imposes certain restrictions on BAC's ability to pay dividends on or repurchase its common stock or other junior/parity preferred stock if it fails to make full dividend payments on the Series EE Preferred Stock. This issuance represents a move by Bank of America to strengthen its capital structure and potentially attract a specific type of investor seeking stable, fixed dividend income. Investors should note that the non-cumulative nature of the dividends means that missed payments are not carried forward, but the restrictions on common stock dividends in case of missed preferred dividends are a significant point of attention. The filing also includes exhibits related to the underwriting, deposit agreements, and legal opinions concerning this new series of preferred stock.

Key Highlights

1Bank of America issued 36,000,000 Depositary Shares representing interests in its new 6.000% Non-Cumulative Preferred Stock, Series EE.
2The issuance was finalized on April 25, 2016, with the filing of a Certificate of Designations with the Delaware Secretary of State.
3Failure to declare and pay full dividends on the Series EE Preferred Stock will trigger restrictions on BAC's ability to pay dividends on or repurchase common stock and parity/junior preferred stock.
4The Series EE Preferred Stock has a liquidation preference of $25,000 per share.
5The preferred stock is non-cumulative, meaning missed dividend payments are not accrued.
6The filing references prior prospectuses and registration statements related to the offering of these Depositary Shares.
7Key exhibits include the Underwriting Agreement, Certificate of Designations, Deposit Agreement, and legal opinions.

BANK OF AMERICA CORP /DE/ 8-K Report, Rights Modification (Apr 25, 2016)

Summary

Key Highlights

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