01—Abstract
Summary
Summary of the 8-K filed July 30, 2024. Cited figures are marked; the original filing is the authoritative source.
Citigroup Inc. (NYSE: C) filed this Form 8-K on July 30, 2024 to disclose the establishment of a new series of preferred stock, the 7.000%a Fixed Rate Reset Noncumulative Preferred Stock, Series DD.
On July 29, 2024, the company filed a Certificate of Designations with the Delaware Secretary of State, which amended its Restated Certificate of Incorporation and took effect immediately upon filing. The filing is primarily a capital-structure and securities-registration event rather than an earnings or operational update, so it contains no new financial results, guidance, or changes to business operations. The new Series DD preferred is being issued as Depositary Shares, each representing a 1/25th interest in one share of the preferred, under an underwriting agreement dated July 23, 2024, and a deposit agreement dated July 30, 2024, with Computershare serving as depositary, registrar and transfer agent.
Exhibits also include a legal opinion from Skadden, Arps, Slate, Meagher & Flom LLP and the registrant's list of securities registered under Section 12(b), which covers Citigroup common stock (ticker C) and multiple trust preferred securities and Medium-Term Senior Notes issued by Citigroup Global Markets Holdings Inc. (CGMHI), all listed on the New York Stock Exchange. For investors, the key takeaway is that Citigroup has added a new fixed-to-floating reset preferred issue carrying a 7.000%b initial coupon.
Preferred stock of this type is typically a Tier 1 capital instrument for bank holding companies, so the issuance supports regulatory capital, and noncumulative terms mean unpaid dividends do not accumulate. Investors should review the Certificate of Designations and prospectus supplement for the reset mechanics, redemption terms and dividend priority, which are not detailed in this filing's text.
02—Key points
Key Highlights
- Citigroup filed a Certificate of Designations on July 29, 2024, creating the 7.000% Fixed Rate Reset Noncumulative Preferred Stock, Series DD, effective immediately upon filing.
- Each Depositary Share represents a 1/25th interest in one share of Series DD preferred, which lowers the minimum investment for retail investors.
- The offering was governed by an underwriting agreement dated July 23, 2024, and a deposit agreement dated July 30, 2024, with Computershare as depositary, registrar and transfer agent.
- The 7.000% coupon is a fixed rate that resets, so the dividend rate may change on a future reset date according to the terms in the Certificate of Designations.
- Noncumulative dividend terms mean that any dividend not declared for a period is not paid later, which is a key risk consideration for holders.
- The filing is a capital-structure event that supports Citigroup's Tier 1 regulatory capital, and includes no new earnings, financial results or guidance.
- Citigroup's listed securities on the NYSE were updated in Exhibit 99.1 and include common stock (C) plus several trust preferred and CGMHI Medium-Term Note series.
03—Questions
Frequently Asked Questions
What new security did Citigroup issue or register in this filing?
Citigroup established a new series of preferred stock called the 7.000% Fixed Rate Reset Noncumulative Preferred Stock, Series DD, through a Certificate of Designations filed on July 29, 2024. The shares are offered as Depositary Shares, with each representing a 1/25th interest in one share of the preferred.
What does 'Fixed Rate Reset Noncumulative' mean for investors?
'Fixed Rate Reset' means the dividend starts at a fixed 7.000% rate and then resets to a new rate on a set date, typically based on a benchmark rate plus a spread. 'Noncumulative' means that if the board does not declare a dividend for a period, the missed dividend is not paid later. The exact reset formula and dates are in the Certificate of Designations and offering documents, not in this filing summary.
Does this filing include Citigroup's financial results or guidance?
No. This 8-K covers only the preferred stock designation, related agreements and securities registration. It contains no quarterly earnings, revenue, net income, or forward-looking guidance.
Why would a bank issue preferred stock like this?
Banks issue noncumulative preferred stock to strengthen regulatory capital, particularly Tier 1 capital, without diluting common shareholders. It also gives the bank a source of funding that typically ranks ahead of common stock in dividend and liquidation priority.
Which securities are listed on the NYSE according to this filing?
Exhibit 99.1 lists Citigroup common stock (ticker C), 7.625% Trust Preferred Securities of Citigroup Capital III (C/36Y), 7.875% Fixed/Floating Rate Trust Preferred Securities of Citigroup Capital XIII (C N), and several CGMHI Medium-Term Senior Notes, Series N, with various maturities from 2026 to 2036 under tickers such as C/36A, C/36, C/35, C/28, C/26, C/28A, C/28B and C/29A.
04—Continue