8-KShareholder MattersCorporate ChangesOther Events+1

PNC FINANCIAL SERVICES GROUP, INC. 8-K Report, Rights Modification (Feb 7, 2023)

Filed February 7, 2023For Securities:PNC

Summary

PNC Financial Services Group, Inc. (PNC) has filed an 8-K report detailing the establishment and offering of its new 6.250% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series W. This new series of preferred stock, represented by depositary shares, ranks senior to the company's common stock and equally with other outstanding parity preferred stock. The issuance is a move to bolster capital and potentially offers investors a fixed income stream, initially at a 6.250% annual rate, which will reset every seven years based on the seven-year U.S. Treasury rate plus a spread of 2.808%. The Series W Preferred Stock is perpetual, meaning it has no maturity date and can be redeemed at PNC's option under specific conditions. The report also outlines restrictions on dividends and distributions to common stock and junior/parity preferred stock if dividends on the Series W Preferred Stock are not declared, highlighting the priority of this new preferred security. Investors should note the non-cumulative nature of the dividends, meaning missed dividends are not paid later.

Key Highlights

  • 1Establishment of 6.250% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series W.
  • 2Issuance of 1,500,000 Depositary Shares, each representing a 1/100th interest in a Series W Preferred Stock share.
  • 3Series W Preferred Stock ranks senior to common stock and equally with other parity preferred stock.
  • 4Initial fixed dividend rate of 6.250% per annum, resetting every seven years based on U.S. Treasury rates plus a 2.808% spread.
  • 5Non-cumulative dividends: missed dividends are not paid out later.
  • 6Perpetual stock with no maturity date; redeemable at PNC's option after the first reset date or upon a Regulatory Capital Treatment Event.
  • 7Restrictions on common stock and junior/parity preferred stock distributions if Series W dividends are not paid.

Frequently Asked Questions

The primary purpose of this filing is to announce the establishment and public offering of a new series of preferred stock, the 6.250% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series W. This action is a significant corporate event for PNC, detailing the terms and conditions of this new security for investors and regulators.

The Series W Preferred Stock offers a fixed dividend of 6.250% annually until March 15, 2030, after which the rate resets every seven years based on the seven-year U.S. Treasury rate plus a 2.808% spread. It ranks senior to common stock, and dividends are non-cumulative, meaning missed payments are not recouped. The stock is perpetual and redeemable at PNC's option under certain conditions.

The Series W Preferred Stock ranks equally with other existing series of preferred stock (Series B, O, R, S, T, U, and V) and senior to the common stock in terms of dividends and liquidation preferences. The terms also introduce restrictions on payments to common stock and parity securities if dividends on the Series W Preferred Stock are not declared, reinforcing its priority within the capital structure.

The dividends are paid 'when, as and if' declared by PNC's Board of Directors or a duly authorized committee. Crucially, the dividends are non-cumulative. This means that if a dividend is not declared for a particular period, it is lost and will not be paid at a later date. This contrasts with cumulative preferred stock, where missed dividends must be paid before any dividends can be paid to common stockholders.