8-KShareholder MattersCorporate ChangesOther Events+1

BANK OF AMERICA CORP /DE/ 8-K Report, Rights Modification (Jul 24, 2018)

Filed July 24, 2018For 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 (BAC) on July 24, 2018, primarily concerns the issuance and terms of its new 5.875% Non-Cumulative Preferred Stock, Series HH. The company filed a Certificate of Designations to establish the specific rights and preferences of this new preferred stock, which has a liquidation preference of $25,000 per share. This filing is important for investors as it details the terms under which dividends and other distributions on common stock or junior preferred stock may be restricted if the company fails to meet its dividend obligations on the Series HH Preferred Stock. Furthermore, the report discloses the closing of the sale of 34,160,000 Depositary Shares, each representing a 1/1,000th interest in a share of the Series HH Preferred Stock. This offering was conducted in accordance with a prospectus dated June 29, 2018, and a prospectus supplement dated July 17, 2018. The filing also includes various exhibits related to the offering, issuance, and sale of these depositary shares, providing transparency for investors regarding the structure and terms of this new capital raise.

Key Highlights

  • 1Bank of America issued 34,160,000 Depositary Shares representing interests in its new Series HH Preferred Stock.
  • 2The Series HH Preferred Stock carries a fixed dividend rate of 5.875% and is non-cumulative.
  • 3Each share of Series HH Preferred Stock has a liquidation preference of $25,000.
  • 4The company filed a Certificate of Designations to formally establish the terms and preferences of the Series HH Preferred Stock.
  • 5Restrictions on common stock and junior preferred stock dividends, repurchases, or redemptions are in place if Series HH Preferred dividends are not paid.
  • 6The offering of Depositary Shares was completed on July 24, 2018, following prior prospectus filings.
  • 7The filing includes supporting documents such as underwriting agreements and deposit agreements related to the issuance.

Frequently Asked Questions

The Series HH Preferred Stock is a new class of non-cumulative preferred stock issued by Bank of America Corporation with a fixed dividend rate of 5.875%. It has a liquidation preference of $25,000 per share and is offered to investors through depositary shares.

As the Series HH Preferred Stock is non-cumulative, any missed dividend payments are not carried forward to be paid at a later date. If Bank of America fails to declare and pay the full dividend on the Series HH Preferred Stock, there are restrictions on the company's ability to pay dividends on or repurchase its common stock and other junior preferred stock.

Depositary Shares are created by a bank (in this case, likely a subsidiary or a designated agent of Bank of America) which holds the underlying preferred stock and issues its own shares, representing a fraction of the preferred stock. Each Depositary Share in this offering represents a 1/1,000th interest in a share of the Series HH Preferred Stock, making the preferred stock more accessible to a wider range of investors.

The Certificate of Designations is a legal document filed with the state of Delaware that formally defines the rights, preferences, and limitations of the Series HH Preferred Stock. It outlines key details such as the dividend rate, liquidation preference, voting rights, and any dividend payment restrictions that impact other classes of securities.