What is the significance of the Series H Preferred Stock issuance?

The issuance of Series H Preferred Stock is a capital-raising event for U.S. Bancorp. It allows the company to obtain funds by selling new preferred shares, likely to strengthen its capital position or for general corporate purposes. The depositary shares structure makes these preferred securities more accessible to a broader range of investors.

Why is U.S. Bancorp redeeming its Series D Preferred Stock?

The redemption of the Series D Preferred Stock, especially in conjunction with the issuance of the Series H Preferred Stock, suggests a strategic move to replace older, potentially higher-cost, or less flexible capital with new preferred equity. The company may be taking advantage of favorable market conditions to refinance its debt-like instruments.

What is a Replacement Capital Covenant (RCC) and how does it affect investors?

A Replacement Capital Covenant (RCC) is an agreement that restricts a company from redeeming or repurchasing certain existing debt or preferred stock unless it can raise 'replacement capital' from issuing new, qualified securities. For investors in the Series D Preferred Stock (and potentially other covered securities), this covenant provides a degree of protection against premature redemption for a specified period, as it ensures that redemption proceeds would need to be replaced with new capital, thus maintaining the overall capital structure.

What are Depositary Shares?

Depositary Shares are equity instruments representing ownership of a fraction of a share of a company's preferred stock. In this case, each Depositary Share represents 1/1,000th of a share of U.S. Bancorp's Series H Preferred Stock. They are often used for preferred stocks with a high per-share liquidation preference, making them more affordable and marketable to individual investors.

US BANCORP \DE\ 8-K: Corporate Changes

Summary

U.S. Bancorp filed a Form 8-K on May 2, 2013, reporting on significant corporate actions related to its preferred stock. The company announced the closing of the sale of 20,000,000 Depositary Shares, each representing a 1/1,000th interest in its Series H Non-Cumulative Perpetual Preferred Stock. This issuance was made under a registration statement filed earlier and involved a syndicate of underwriters. In conjunction with this new issuance, U.S. Bancorp also announced the redemption of all 20,000 outstanding shares of its 7.875% Series D Non-Cumulative Perpetual Preferred Stock. The redemption price was set at $25,000 per share, plus accrued dividends. Furthermore, the company entered into a Replacement Capital Covenant (RCC) that imposes restrictions on the redemption or repurchase of preferred stock, generally requiring such actions to be funded by the proceeds of qualified securities issuances. These actions indicate strategic capital management and a shift in the company's preferred stock structure.

Key Highlights

1U.S. Bancorp successfully closed the sale of 20,000,000 Depositary Shares representing Series H Non-Cumulative Perpetual Preferred Stock.
2The issuance of Series H Preferred Stock was conducted through a registered offering with multiple underwriters.
3The company is redeeming all 20,000 outstanding shares of its 7.875% Series D Non-Cumulative Perpetual Preferred Stock.
4The redemption of Series D Preferred Stock will occur on June 3, 2013, at $25,000 per share plus accrued dividends.
5A Replacement Capital Covenant (RCC) was entered into, restricting future redemptions/repurchases of preferred stock unless funded by qualified securities.
6The Certificate of Designations for the Series H Preferred Stock was filed, formally establishing its terms.
7These events signal active capital management and refinancing of existing preferred stock obligations.

US BANCORP \DE\ 8-K Report, Bylaw Amendment (May 2, 2013)

Summary

Key Highlights

Frequently Asked Questions