8-KShareholder MattersCorporate ChangesOther Events+1

BANK OF AMERICA CORP /DE/ 8-K Report, Rights Modification (Apr 22, 2022)

Filed April 22, 2022For 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 April 22, 2022, to report the issuance and sale of 80,000 shares of its Series TT Preferred Stock. This preferred stock, with a liquidation preference of $25,000 per share, is offered through 2,000,000 Depositary Shares, each representing a 1/25th interest in a share of the Series TT Preferred Stock. The terms of this new preferred stock, including its dividend rights and liquidation preference, have been formally established through a Certificate of Designations filed with Delaware. An important investor consideration is that the terms of the Series TT Preferred Stock include restrictions on the company's ability to pay dividends or repurchase common stock if it fails to meet its obligations on this new preferred stock. This filing indicates a capital raise activity by Bank of America through the issuance of preferred equity, which could impact its capital structure and financial flexibility.

Key Highlights

  • 1Bank of America issued 80,000 shares of Series TT Preferred Stock on April 22, 2022.
  • 2The Series TT Preferred Stock has a fixed-rate reset feature and a liquidation preference of $25,000 per share.
  • 3The company sold 2,000,000 Depositary Shares, each representing a 1/25th interest in a share of the Series TT Preferred Stock.
  • 4A Certificate of Designations was filed to define the terms, preferences, and rights of the Series TT Preferred Stock.
  • 5The issuance of Series TT Preferred Stock includes covenants that restrict common stock dividends and repurchases if preferred dividends are not paid.
  • 6This filing signifies a capital raising event for Bank of America through the issuance of preferred equity.

Frequently Asked Questions

The Series TT Preferred Stock is a new class of preferred stock issued by Bank of America. The filing indicates this issuance is a capital raising activity, meaning the company is selling these shares to obtain funds. The specific use of proceeds is not detailed in this 8-K, but it contributes to the company's overall capital structure.

The Series TT Preferred Stock has a liquidation preference of $25,000 per share. It is described as 6.125% Fixed-Rate Reset Non-Cumulative Preferred Stock. Importantly, its terms include restrictions on the company's ability to declare or pay dividends on common stock, or repurchase equity, if the full dividends on the Series TT Preferred Stock are not paid.

The Series TT Preferred Stock is being offered indirectly through Depositary Shares. Bank of America sold 2,000,000 Depositary Shares, with each Depositary Share representing a 1/25th interest in one share of the Series TT Preferred Stock.

While this filing doesn't indicate an immediate change to common stock dividends, the restrictive covenants associated with the Series TT Preferred Stock mean that if Bank of America fails to pay the required dividends on this preferred stock, it will be restricted from paying dividends or repurchasing its common stock. Investors should monitor BAC's ability to service its preferred dividend obligations.