01—Abstract
Summary
Summary of the 8-K filed March 21, 2024. Cited figures are marked; the original filing is the authoritative source.
On March 21, 2024, JPMorgan Chase & Co. (NYSE: JPM) announced it will redeem four series of its fixed-to-floating rate non-cumulative perpetual preferred stock, all represented by depositary shares.
Series U (100,000 shares, represented by 1,000,000 depositary shares) will be redeemed on April 30, 2024, and Series Q (150,000 shares / 1,500,000 depositary shares), Series R (150,000 shares / 1,500,000 depositary shares) and Series S (200,000 shares / 2,000,000 depositary shares) will be redeemed on May 1, 2024. Redemptions are being made under the optional redemption provisions of each series at a price of $10,000a per share ($1,000 per depositary share), plus the applicable dividend for the final period. For investors, this is a routine capital-management action rather than a signal of financial stress.
Redeeming preferred stock at the first available call date is typical when a bank can refinance more cheaply or when it wants to optimize its capital structure. The filing does not state the reason for the redemptions, and it does not indicate whether the firm plans to replace this capital with new preferred or common issuance. The redemptions total roughly $4.5 billionb in liquidation value (based on $1,000 per depositary share across 6,000,000 depositary shares), a small fraction of JPMorgan's $327.9 billion in stockholders' equity as of December 31, 2023.
Holders of the affected preferred shares will receive the redemption price along with final dividends, with record dates of April 1, 2024 for all four series. After these redemptions, holders of these series will no longer receive dividend payments, and the preferred stock will no longer be outstanding. Investors who hold these depositary shares should watch for redemption payments through Computershare and should note the final dividend dates.
02—Key points
Key Highlights
- JPMorgan Chase will redeem all outstanding preferred stock in Series U (April 30, 2024) and Series Q, R, and S (May 1, 2024), under optional redemption provisions.
- Redemption price is $10,000 per share, equal to $1,000 per depositary share (each representing one-tenth of a preferred share), plus final dividends.
- Total depositary shares being redeemed are 6,000,000 across the four series: Series U 1,000,000; Series Q 1,500,000; Series R 1,500,000; Series S 2,000,000.
- Implied aggregate redemption value is approximately $6.0 billion at $1,000 per depositary share; the stated liquidation figures are for the depositary share count, so this figure is a computed estimate.
- Final dividend payment dates are April 30, 2024 for Series U and May 1, 2024 for Series Q, R, and S, with record dates of April 1, 2024 for all series.
- The redemptions are a routine capital-structure action; the filing gives no stated reason and does not indicate replacement issuance.
- Redemption payments are processed through Computershare as Depositary, with book-entry shares surrendered per DTC procedures.
03—Questions
Frequently Asked Questions
Why is JPMorgan Chase redeeming these preferred shares?
The filing says the redemptions are made under the optional redemption provisions of each series, but it does not state a specific business reason. Issuers commonly call preferred stock at the first available date when it is cheaper to refinance or when they want to adjust their capital mix.
How much will investors receive for each depositary share?
Each depositary share represents one-tenth of a preferred share, and the redemption price is $1,000 per depositary share ($10,000 per full preferred share), plus the final dividend payable on the redemption date.
When do I need to act as an investor holding these shares?
Holders of book-entry shares should follow DTC procedures for surrender, and holders of physical depositary receipts must present and surrender them to Computershare on or before the redemption date. The record date for final dividends is April 1, 2024.
Does this redemption affect JPMorgan's financial health?
The redemptions are small relative to the firm's $327.9 billion in stockholders' equity as of December 31, 2023. The filing does not indicate any financial stress, and the action is best viewed as routine capital management.
Will JPMorgan issue new preferred stock to replace these shares?
The filing does not say whether JPMorgan plans to issue replacement preferred stock or other capital instruments. Investors should check later filings or investor communications for any new issuance.
04—Continue