What is the 'Series U Preferred Stock' and why is JPM issuing it?

The Series U Preferred Stock is a new class of preferred stock issued by JPMorgan Chase & Co. Companies issue preferred stock for various reasons, including to strengthen their capital base, meet regulatory requirements, or fund operations. The specific terms, like its fixed-to-floating rate and non-cumulative dividend feature, are detailed in the filing.

How does this new preferred stock affect common stockholders?

This issuance introduces a new security that has certain rights and preferences over common stock. Specifically, if JPM fails to pay dividends on the Series U Preferred Stock, it faces restrictions on paying dividends or making other distributions to common stockholders. This means common stockholders' ability to receive dividends or other benefits could be impacted in certain scenarios.

What is the significance of the 'non-cumulative' feature?

The 'non-cumulative' feature means that if JPM misses a dividend payment on the Series U Preferred Stock for any dividend period, that missed payment is lost forever. The company is not obligated to make up for these missed payments in the future. This is generally less favorable for preferred stockholders compared to cumulative preferred stock.

What are 'depositary shares' and 'depositary receipts'?

Depositary shares are a way for U.S. companies to trade preferred stock overseas or in a more accessible format. A depositary institution (in this case, Computershare Inc.) holds the actual preferred shares and issues its own receipts (depositary receipts) that represent a fraction of a preferred share. Investors trade these depositary receipts, which represent ownership in the underlying preferred stock.

JPM 8-K: Shareholder Matters & Corporate Changes

Summary

JPMorgan Chase & Co. (JPM) filed an 8-K on March 10, 2014, to report the creation and issuance of its Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series U. This filing details the terms and conditions under which 100,000 shares of this preferred stock were issued, representing 1,000,000 depositary shares. This issuance is significant as it introduces a new class of preferred equity into the company's capital structure, with specific dividend and liquidation preference rights. The primary impact for investors is the introduction of a new security that ranks on par with or junior to this Series U Preferred Stock regarding dividend payments and liquidation preferences. The terms of this preferred stock include restrictions on the company's ability to pay dividends on or redeem common stock or other junior preferred stock if dividends on the Series U Preferred Stock are not declared or paid. This filing is essential for understanding JPM's capital management and the hierarchy of its financial obligations to various security holders.

Key Highlights

1JPMorgan Chase & Co. issued 100,000 shares of Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series U.
2Each share of Series U Preferred Stock represents 10 depositary shares, totaling 1,000,000 depositary shares issued.
3The Series U Preferred Stock has a liquidation preference of $10,000 per share.
4Dividends on the Series U Preferred Stock are non-cumulative.
5The company's ability to pay dividends on, or make distributions or redemptions for, common stock or junior preferred stock is restricted if dividends on Series U Preferred Stock are not paid.
6The Certificate of Designations for Series U Preferred Stock was filed with the Secretary of State of Delaware on March 7, 2014.
7The issuance was made pursuant to an Underwriting Agreement and JPM's effective Registration Statement on Form S-3.

JPMORGAN CHASE & CO 8-K Report, Rights Modification (Mar 10, 2014)

Summary

Key Highlights

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