8-KShareholder MattersCorporate ChangesOther Events+1

JPMORGAN CHASE & CO 8-K Report, Rights Modification (Oct 20, 2017)

Filed October 20, 2017For Securities:JPMJPM-PCJPM-PDJPM-PKJPM-PLJPM-PMJPM-PJAMJBVYLD

Summary

JPMorgan Chase & Co. (JPM) filed an 8-K report on October 20, 2017, to announce the issuance and sale of its Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series CC. This issuance involved 125,750 shares of preferred stock, represented by 1,257,500 depositary shares. The Series CC Preferred Stock has a liquidation preference of $10,000 per share. The filing details the establishment of these securities through a Certificate of Designations, outlining their rights, preferences, and limitations. This action signifies a capital raise and an expansion of the company's equity structure, which investors should note for its potential impact on future dividend payouts and capital ratios. The terms of the Series CC Preferred Stock include a crucial dividend covenant: if dividends are not declared on this series, JPMorgan Chase's ability to pay dividends, make distributions, or redeem/purchase/acquire its common stock or any parity or junior preferred stock will be restricted. This highlights a priority given to the Series CC Preferred Stock holders in the event of financial constraints. Investors should review the Certificate of Designations for a comprehensive understanding of these terms and their implications for existing common and preferred shareholders.

Key Highlights

  • 1JPMorgan Chase & Co. issued 125,750 shares of Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series CC.
  • 2These shares are represented by 1,257,500 depositary shares, each representing one-tenth of a preferred share.
  • 3The Series CC Preferred Stock carries a liquidation preference of $10,000 per share.
  • 4The company filed a Certificate of Designations with Delaware on October 19, 2017, to establish the terms and rights of the Series CC Preferred Stock.
  • 5A key provision restricts dividend payments on common stock and junior/parity preferred stock if dividends on Series CC Preferred Stock are not declared.
  • 6The issuance was completed on October 20, 2017, under a Registration Statement on Form S-3 and an Underwriting Agreement dated October 13, 2017.

Frequently Asked Questions

The primary purpose of this 8-K filing is to announce the completion of the issuance and sale of JPMorgan Chase & Co.'s Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series CC, detailing the terms and establishment of these new securities.

The Series CC Preferred Stock is fixed-to-floating rate and non-cumulative. A significant restriction is that if JPMorgan Chase fails to declare dividends on this series for a completed dividend period, it will be restricted from paying dividends or making distributions on its common stock or any preferred stock that ranks on parity with or junior to the Series CC Preferred Stock.

The Series CC Preferred Stock has a liquidation preference of $10,000 per share.

The issuance of new preferred stock can impact existing shareholders in several ways. It increases the number of shares outstanding, potentially diluting earnings per share. Furthermore, the dividend restrictions mean that common stockholders' ability to receive dividends is subordinate to the Series CC Preferred Stock's dividend rights, especially if the company faces financial difficulties.