What are the key terms of the Series N Preferred Stock?

The Series N Preferred Stock is a Fixed Rate Non-Cumulative Perpetual Preferred Stock. Each depositary share represents a 1/40th ownership interest and has a liquidation preference of $25 per depositary share. It is non-cumulative, meaning missed dividend payments are not made up later, and it's perpetual, with no maturity date. The dividends can transition from fixed to floating rate at a future point.

What is the impact of the Series N Preferred Stock on Capital One's ability to return capital to common shareholders?

A significant covenant associated with the Series N Preferred Stock is that Capital One's ability to pay dividends on, or repurchase, its common stock or any junior preferred stock is restricted if it fails to declare and pay (or set aside for payment) the required dividends on the Series N Preferred Stock for the preceding dividend period. This prioritizes preferred dividend payments.

What is the purpose of these offerings?

These offerings are part of Capital One's capital management strategy. The issuance of preferred stock and subordinated notes helps to strengthen the company's capital base, potentially improving regulatory capital ratios and providing financial flexibility. Subordinated debt also generally serves as a form of long-term funding.

What are the dividend features of the 2.359% Fixed-to-Floating Rate Subordinated Notes?

The 2.359% Fixed-to-Floating Rate Subordinated Notes due 2032 initially pay a fixed rate of 2.359% per annum. As the name suggests, the rate will transition to a floating rate at some point before maturity in 2032, likely based on a benchmark interest rate plus a spread, as detailed in the offering documents.

COF 8-K: Shareholder Matters & Corporate Changes

Summary

Capital One Financial Corporation (COF) filed an 8-K on July 29, 2021, detailing two significant financing transactions. The company successfully issued and sold 17,000,000 depositary shares representing interests in its Series N Fixed Rate Non-Cumulative Perpetual Preferred Stock, raising approximately $411.8 million in net proceeds. This preferred stock issuance introduces restrictions on the company's ability to repurchase common stock or junior preferred stock if preferred dividends are not paid. Additionally, Capital One closed a public offering of $1,000,000,000 aggregate principal amount of its 2.359% Fixed-to-Floating Rate Subordinated Notes due 2032. These offerings were conducted under effective shelf registration statements and involved agreements with major underwriters.

Key Highlights

1Completed the issuance of 17,000,000 depositary shares for Series N Preferred Stock, raising approximately $411.8 million in net proceeds.
2Series N Preferred Stock is fixed-to-floating rate and non-cumulative perpetual, with a liquidation preference of $25 per depositary share.
3Dividend payments on common stock and junior preferred stock are restricted if dividends on Series N Preferred Stock are not declared and paid.
4Closed a public offering of $1,000,000,000 aggregate principal amount of 2.359% Fixed-to-Floating Rate Subordinated Notes due 2032.
5Both offerings were made under Capital One's effective Form S-3 registration statement.
6Details of underwriting agreements, deposit agreements, and legal opinions for both offerings are included as exhibits.

CAPITAL ONE FINANCIAL CORP 8-K Report, Rights Modification (Jul 29, 2021)

Summary

Key Highlights

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