8-KShareholder MattersCorporate ChangesOther Events+1

JPMORGAN CHASE & CO 8-K Report, Rights Modification (Feb 12, 2015)

Filed February 12, 2015For Securities:JPMJPM-PCJPM-PDJPM-PKJPM-PLJPM-PMJPM-PJAMJBVYLD

Summary

JPMorgan Chase & Co. (JPM) filed an 8-K on February 12, 2015, to report on the issuance and sale of its 6.125% Non-Cumulative Preferred Stock, Series Y. This filing details the establishment of the rights and preferences of this new preferred stock series through a Certificate of Designations, which was filed with the Delaware Secretary of State on February 11, 2015. The Series Y Preferred Stock has a liquidation preference of $10,000 per share and is represented by Depositary Shares, with each Depositary Share representing 1/400th of a share of Series Y Preferred Stock. This issuance effectively adds a new layer of capital to JPM's balance sheet. The terms of the Series Y Preferred Stock include provisions that can restrict the payment of dividends or distributions on common stock and junior or parity preferred stock if dividends on the Series Y Preferred Stock are not declared for the most recent dividend period. Investors should note the non-cumulative nature of the dividends, meaning missed dividend payments are not made up in the future. This filing primarily serves as a disclosure of the terms and completion of this preferred stock offering.

Key Highlights

  • 1JPMorgan Chase & Co. completed the issuance and sale of 143,000 shares of its 6.125% Non-Cumulative Preferred Stock, Series Y.
  • 2The Series Y Preferred Stock has a liquidation preference of $10,000 per share.
  • 3The issuance is represented by 57,200,000 Depositary Shares, with each Depositary Share representing 1/400th of a Series Y Preferred Stock share.
  • 4The Certificate of Designations, establishing the stock's rights and preferences, was filed on February 11, 2015.
  • 5Dividends on the Series Y Preferred Stock are non-cumulative.
  • 6Restrictions on distributions to common stock and junior/parity preferred stock can be imposed if Series Y dividends are not declared.
  • 7The offering was conducted under a registration statement and involved underwriting agreements with J.P. Morgan Securities LLC.

Frequently Asked Questions

The primary purpose of this 8-K filing is to report the completion of JPMorgan Chase & Co.'s issuance and sale of its 6.125% Non-Cumulative Preferred Stock, Series Y, and to formally establish the terms and rights associated with this new class of preferred stock.

The Series Y Preferred Stock carries a dividend rate of 6.125% and has a liquidation preference of $10,000 per share. Importantly, the dividends are non-cumulative, meaning any missed dividend payments are not carried forward. The stock is issued in the form of Depositary Shares, where 400 Depositary Shares represent one share of Series Y Preferred Stock.

The terms of the Series Y Preferred Stock include a provision that restricts JPMorgan Chase & Co.'s ability to pay dividends on its common stock or any preferred stock ranking junior to or on parity with the Series Y Preferred Stock, if the company fails to declare dividends on the Series Y Preferred Stock for the most recent dividend period. This means common stockholders' dividend payments could be impacted if the company prioritizes its preferred stock dividend obligations.

Depositary Shares are used to represent ownership in a class of preferred stock. In this case, 57,200,000 Depositary Shares were issued, each representing a fraction (1/400th) of a share of Series Y Preferred Stock. This structure is often used to make preferred stock more accessible to a wider range of investors and to facilitate trading.