What is the purpose of the Series Q Preferred Stock?

The Series Q Preferred Stock is a new class of preferred stock established by Truist Financial Corporation with specific terms, including a fixed dividend rate of 5.100% and a reset mechanism. Its issuance, through depositary shares, is a way for the company to raise capital.

What does it mean that the preferred stock is 'Non-Cumulative'?

Non-cumulative means that if the company misses a dividend payment on this preferred stock, that missed dividend is not carried forward to be paid at a later date. Dividends must be declared by the Board of Directors to be paid.

What is the significance of the depositary shares?

Depositary shares are a convenient way for investors to hold fractional interests in preferred stock, especially when the par value and liquidation preference of the underlying stock are very high ($25,000 per share). They simplify trading and ownership for smaller investors.

How does this transaction affect existing shareholders?

The issuance of preferred stock generally aims to strengthen the company's capital base, which can be beneficial for common shareholders by improving financial stability. However, preferred stock dividends and liquidation preferences take priority over common stock, meaning common shareholders' claims are subordinate.

TRUIST FINANCIAL CORP 8-K: Corporate Changes

Summary

Truist Financial Corporation (TFC) filed an 8-K on June 18, 2020, detailing amendments to its Articles of Incorporation to establish the terms of its 5.100% Series Q Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock. This filing is linked to a subsequent event where the company closed the sale of 1,000,000 depositary shares representing ownership in this newly defined preferred stock. These depositary shares, each representing 1/25th of a share of the preferred stock, were registered under the Securities Act of 1933. The transaction involved an underwriting agreement with RBC Capital Markets, Goldman Sachs, and SunTrust Robinson Humphrey, as well as a deposit agreement with Computershare Inc. and Computershare Trust Company, N.A. This move by TFC aims to bolster its capital structure by issuing new preferred equity.

Key Highlights

1Truist Financial Corporation (TFC) amended its Articles of Incorporation to define the terms of its 5.100% Series Q Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock.
2The company completed the sale of 1,000,000 depositary shares related to this preferred stock on June 19, 2020.
3Each depositary share represents a 1/25th ownership interest in a share of the Series Q Preferred Stock.
4The preferred stock has a liquidation preference of $25,000 per share.
5The sale of depositary shares was conducted under a registration statement filed earlier with the SEC.
6Key agreements filed include the Underwriting Agreement, Articles of Amendment, and Deposit Agreement.

TRUIST FINANCIAL CORP 8-K Report, Bylaw Amendment (Jun 19, 2020)

Summary

Key Highlights

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