What is the purpose of the Series NN Preferred Stock issuance?

The primary purpose of issuing the Series NN Preferred Stock is to raise capital and enhance Bank of America's capital base, likely to meet regulatory requirements or support business growth. The filing details the terms of this new class of preferred stock.

What are the key financial terms of the Series NN Preferred Stock?

The Series NN Preferred Stock pays a fixed non-cumulative dividend of 4.375% per annum. Each share has a liquidation preference of $25,000. The shares are represented by Depositary Shares, with each Depositary Share representing a 1/1,000th interest in a share of the Series NN Preferred Stock.

How does this issuance affect existing BAC shareholders?

The issuance itself dilutes existing common shareholders' equity proportionally. More significantly, the terms of the Series NN Preferred Stock create covenants that restrict BAC's ability to pay dividends on its common stock and other junior preferred stock if it fails to pay full dividends on the Series NN Preferred Stock. This provides a layer of protection for Series NN Preferred stockholders at the expense of common and junior preferred stockholders.

What does 'non-cumulative' mean for this preferred stock?

'Non-cumulative' means that if Bank of America fails to declare and pay the full dividends on the Series NN Preferred Stock in any given period, those missed dividends are not accumulated and do not have to be paid in the future. The company is not obligated to make up for missed dividend payments.

BAC 8-K: Shareholder Matters & Corporate Changes

Summary

Bank of America Corporation (BAC) filed an 8-K on October 29, 2020, to report on the issuance of its Series NN Non-Cumulative Preferred Stock. The company sold 44,000,000 Depositary Shares, each representing a 1/1,000th interest in a share of Series NN Preferred Stock, which has a fixed dividend rate of 4.375%. This preferred stock issuance modifies the rights of existing security holders by introducing restrictions on common stock and junior preferred stock dividends and repurchases if full dividends on the Series NN Preferred Stock are not paid. For investors, this filing indicates a capital-raising activity and a specific addition to BAC's capital structure. The Series NN Preferred Stock carries a liquidation preference of $25,000 per share and its terms are detailed in a newly filed Certificate of Designations. The issuance is structured to comply with regulatory requirements and enhance the company's capital base.

Key Highlights

1Bank of America issued 44,000,000 Depositary Shares representing interests in its 4.375% Non-Cumulative Preferred Stock, Series NN.
2The Series NN Preferred Stock has a fixed dividend rate of 4.375% and a liquidation preference of $25,000 per share.
3A Certificate of Designations was filed, formally establishing the terms, preferences, and rights of the Series NN Preferred Stock.
4The issuance of Series NN Preferred Stock introduces specific restrictions on the declaration or payment of dividends on BAC's common stock and parity or junior preferred stock if Series NN dividends are not paid in full.
5This filing details a capital-raising event aimed at bolstering the company's financial structure.
6The offering was conducted under an existing Form S-3 registration statement, supplemented by a Prospectus Supplement dated October 27, 2020.
7Various exhibits, including an Underwriting Agreement and Legal Opinion, are filed in connection with the issuance.

BANK OF AMERICA CORP /DE/ 8-K Report, Rights Modification (Oct 29, 2020)

Summary

Key Highlights

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