8-KShareholder MattersCorporate ChangesOther Events+1

JPMORGAN CHASE & CO 8-K Report, Rights Modification (Sep 23, 2014)

Filed September 23, 2014For Securities:JPMJPM-PCJPM-PDJPM-PKJPM-PLJPM-PMJPM-PJAMJBVYLD

Summary

JPMorgan Chase & Co. (JPM) filed an 8-K on September 23, 2014, to report the establishment and issuance of its Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series X. This new series of preferred stock has a liquidation preference of $10,000 per share and was issued in the form of 1,600,000 depositary shares, each representing one-tenth of a share of Series X Preferred Stock. The filing details the rights, preferences, and restrictions associated with this new class of stock, including dividend and liquidation payment provisions. Key for investors is the structure of the Series X Preferred Stock and its potential impact on common stockholders. The terms indicate that any failure by JPM to pay dividends on the Series X Preferred Stock or meet its liquidation preference would impose restrictions on the company's ability to pay dividends or make distributions on its common stock or other junior preferred stock. This filing represents a capital raising activity and the creation of a new class of equity with specific rights and limitations.

Key Highlights

  • 1JPM announced the issuance of 160,000 shares of Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series X.
  • 2The Series X Preferred Stock has a liquidation preference of $10,000 per share.
  • 3The shares were issued as 1,600,000 depositary shares, each representing 1/10th of a Series X Preferred Stock share.
  • 4A Certificate of Designations was filed with the Delaware Secretary of State on September 22, 2014, establishing the terms of the Series X Preferred Stock.
  • 5Dividends on the Series X Preferred Stock are non-cumulative.
  • 6Restrictions are imposed on payments to common stockholders or junior preferred stock if JPM fails to pay dividends or liquidation preferences on the Series X Preferred Stock.
  • 7The issuance was made under JPM's Registration Statement on Form S-3 and an Underwriting Agreement.

Frequently Asked Questions

This 8-K filing announces the establishment and issuance of a new class of preferred stock by JPMorgan Chase & Co., specifically the Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series X. It details the terms, rights, and issuance of these securities.

The Series X Preferred Stock has a liquidation preference of $10,000 per share and pays non-cumulative dividends. A significant feature is that the company's ability to pay dividends or make distributions on its common stock or junior preferred stock is restricted if it fails to pay dividends or liquidation preferences on the Series X Preferred Stock.

While the issuance itself is a capital-raising activity, the terms of the Series X Preferred Stock introduce potential restrictions on distributions to common stockholders if JPM does not meet its obligations to the preferred stockholders. This could limit future dividend payments or other distributions to common shareholders under certain circumstances.

'Fixed-to-Floating Rate' indicates that the dividend rate on this preferred stock will initially be fixed for a period and then will transition to a floating rate thereafter. 'Non-Cumulative' means that if JPM misses a dividend payment, that missed payment is lost and is not accumulated to be paid in the future; however, failure to pay dividends still triggers the restrictions mentioned.