What is the purpose of designating a new series of preferred stock (Series AA)?

While not explicitly stated, designating new preferred stock often serves to strengthen a company's capital base, meet regulatory capital requirements, or provide flexibility for future strategic initiatives or acquisitions.

What does it mean that the Series AA Preferred Stock is "non-cumulative"?

Non-cumulative means that if the company does not declare or pay a dividend on the Series AA Preferred Stock in any dividend period, then that missed dividend is not accumulated and will not be paid at a future date. Dividends on non-cumulative preferred stock are only paid if declared by the board of directors.

Why did Wells Fargo eliminate the designations for Series J and Series K Preferred Stock?

The elimination of these certificates suggests that Wells Fargo is simplifying its capital structure, potentially retiring or consolidating these series, or streamlining its corporate documentation related to its preferred stock.

What are the Depositary Shares and what is their relation to the Series AA Preferred Stock?

The Depositary Shares represent fractional interests in the Series AA Preferred Stock. In this case, each Depositary Share represents a 1/1,000th interest in a share of the Series AA Preferred Stock. This is a common way for companies to make preferred stock more accessible to a wider range of investors.

WELLS FARGO & COMPANY/MN 8-K: Corporate Changes

Summary

Wells Fargo & Company (WFC) filed an 8-K on October 27, 2020, reporting significant corporate actions related to its preferred stock. The company filed a Certificate of Designation for a new series of preferred stock, the "Non-Cumulative Perpetual Class A Preferred Stock, Series AA," authorizing 46,800 shares with a liquidation preference of $25,000 per share. This action signals a strategic move to bolster its capital structure or meet regulatory requirements. Additionally, Wells Fargo filed Certificates of Elimination for its Series J and Series K Preferred Stock, effectively removing their specific designations from its Restated Certificate of Incorporation. This suggests a simplification or restructuring of its preferred stock offerings.

Key Highlights

1Wells Fargo designated 46,800 shares of "Non-Cumulative Perpetual Class A Preferred Stock, Series AA" with a $25,000 per share liquidation preference.
2The Series AA Preferred Stock is non-cumulative and perpetual.
3Certificates of Elimination were filed for the Series J (8.00% Non-Cumulative Perpetual Class A Preferred Stock) and Series K (Fixed-to-Floating Rate Non-Cumulative Perpetual Class A Preferred Stock), removing their previous designations.
4The company sold 46,800,000 Depositary Shares on October 28, 2020, representing interests in the Series AA Preferred Stock.
5Exhibits filed include the Underwriting Agreement for the depositary shares, the Certificate of Designation for Series AA, the Deposit Agreement, and legal opinions.

WELLS FARGO & COMPANY/MN 8-K Report, Bylaw Amendment (Oct 28, 2020)

Summary

Key Highlights

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