What is the purpose of the Series QQ Preferred Stock?

The Series QQ Preferred Stock was issued as part of a capital-raising effort by Bank of America. It adds a layer of equity to the company's capital structure and pays a fixed dividend.

What are the dividend rights associated with the Series QQ Preferred Stock?

The Series QQ Preferred Stock pays a non-cumulative dividend of 4.250% per annum. Non-cumulative means that if a dividend is not declared in a particular period, it is not carried forward to future periods.

How does the Series QQ Preferred Stock impact common shareholders?

The Series QQ Preferred Stock introduces restrictions on Bank of America's ability to declare or pay dividends on, or repurchase, its common stock or parity preferred stock if it fails to declare and pay full dividends on the Series QQ Preferred Stock. This means preferred shareholders have a priority claim on earnings over common shareholders in such scenarios.

What is the liquidation preference of the Series QQ Preferred Stock?

The Series QQ Preferred Stock has a liquidation preference of $25,000 per share. This means that in the event of liquidation, holders of this preferred stock are entitled to receive $25,000 per share before any distributions are made to common shareholders.

BAC 8-K: Shareholder Matters & Corporate Changes

Summary

Bank of America Corporation (BAC) filed an 8-K report on October 26, 2021, detailing the issuance and terms of its new 4.250% Non-Cumulative Preferred Stock, Series QQ. This filing primarily concerns the establishment of a new class of preferred stock, which was subsequently offered to investors through depositary shares. The issuance of this preferred stock introduces specific covenants that could restrict BAC's ability to pay common stock dividends or repurchase shares if full dividends on the Series QQ Preferred Stock are not paid. This represents a capital raising activity and a modification to the company's capital structure. Investors should note that the 52,000,000 depositary shares, each representing a 1/1,000th interest in a share of Series QQ Preferred Stock, were offered to the market. The key takeaway for investors is the introduction of this new layer of preferred equity, which carries a fixed non-cumulative dividend rate. The accompanying restrictions on common stock distributions are a crucial element to understand for current and potential common shareholders, as it indicates a priority for preferred dividend payments.

Key Highlights

1Bank of America issued 52,000,000 Depositary Shares, each representing a 1/1,000th interest in a share of Series QQ Preferred Stock.
2The Series QQ Preferred Stock is a new class of non-cumulative preferred stock with a fixed dividend rate of 4.250% per annum.
3The Series QQ Preferred Stock has a liquidation preference of $25,000 per share.
4A key term of the Series QQ Preferred Stock is that the company's ability to pay common stock dividends or repurchase shares is restricted if full preferred dividends are not paid.
5This issuance is a capital-raising event aimed at strengthening the company's capital base.
6The filing includes the Certificate of Designations which formally outlines the terms and rights of the Series QQ Preferred Stock.
7The offering was conducted under a prospectus dated August 4, 2021, and supplemented by a prospectus supplement dated October 19, 2021.

BANK OF AMERICA CORP /DE/ 8-K Report, Rights Modification (Oct 26, 2021)

Summary

Key Highlights

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