8-KCorporate ChangesExhibits & Filings

WELLS FARGO & COMPANY/MN 8-K Report, Bylaw Amendment (Nov 20, 2012)

Filed November 20, 2012For Securities:WFCWFC-PDWFC-PCWFC-PYWFC-PAWFC-PLWFCNPWFC-PZ

Summary

Wells Fargo & Company/MN (WFC) filed an 8-K on November 19, 2012, to report on the creation and subsequent sale of a new series of preferred stock. Specifically, the company filed a Certificate of Designation on November 19, 2012, establishing "Non-Cumulative Perpetual Class A Preferred Stock, Series O." This series has a substantial liquidation preference of $25,000 per share and an authorization of 27,600 shares. The following day, November 20, 2012, Wells Fargo announced the sale of 26,000,000 Depositary Shares. Each Depositary Share represents a 1/1,000th interest in a share of the Series O Preferred Stock. This action indicates the company's strategic use of preferred equity to potentially strengthen its capital position or fund operations. Investors should note the non-cumulative nature of the dividends, meaning dividend payments are not carried forward if not declared in a given period.

Key Highlights

  • 1Wells Fargo established a new series of preferred stock, "Non-Cumulative Perpetual Class A Preferred Stock, Series O," effective November 19, 2012.
  • 2The Series O Preferred Stock has a liquidation preference of $25,000 per share.
  • 3The company filed a Certificate of Designation with the Delaware Secretary of State to authorize this new series.
  • 4On November 20, 2012, Wells Fargo sold 26,000,000 Depositary Shares, each representing a 1/1,000th interest in the Series O Preferred Stock.
  • 5The filing includes several exhibits detailing the underwriting agreement, certificate of designation, deposit agreement, and related legal opinions.
  • 6The dividends on the Series O Preferred Stock are non-cumulative.

Frequently Asked Questions

The establishment and sale of the Series O Preferred Stock indicate Wells Fargo's strategic use of preferred equity. This can be a way to raise capital, potentially bolster regulatory capital ratios, or fund specific business initiatives without diluting common equity.

Non-cumulative means that if Wells Fargo does not declare and pay a dividend on the Series O Preferred Stock in any given dividend period, those unpaid dividends are lost and do not accrue. They will not be paid in the future, unlike cumulative preferred stock where missed dividends must be paid before common stockholders receive any dividends.

The Series O Preferred Stock is the underlying security. Wells Fargo created Depositary Shares, where each Depositary Share represents a fraction (1/1,000th) of a share of the Series O Preferred Stock. This structure is common for preferred stock to make it more accessible and tradable in smaller denominations for investors.

The Series O Preferred Stock has a liquidation preference of $25,000 per share. This means that in the event of liquidation, dissolution, or winding up of Wells Fargo, holders of this preferred stock are entitled to receive $25,000 per share before any distribution is made to common stockholders.