01—Abstract
Summary
Summary of the 8-K filed May 9, 2024. Cited figures are marked; the original filing is the authoritative source.
Wells Fargo & Company (NYSE: WFC) announced in an 8-K filed May 9, 2024, that it will fully redeem its 5.90%a Fixed-to-Floating Rate Non-Cumulative Perpetual Class A Preferred Stock, Series S, and the related depositary shares.
The redemption date is June 15, 2024, which falls on a non-business day, so payment shifts to June 17, 2024. The company is redeeming all 80,000 outstanding preferred shares and 2,000,000 depositary shares, each representing a 1/25th interest in a preferred share. After the redemption, no Series S preferred or depositary shares will remain outstanding.
The redemption price is $25,000b per preferred share and $1,000 per depositary share, which implies an aggregate redemption amount of roughly $2.0 billion. The price is stated at the liquidation value and excludes declared but unpaid dividends. Holders will receive the regular quarterly dividend separately on the same June 17 payment date, to shareholders of record at the close of business on May 31, 2024.
The company states that all regulatory requirements for the redemption have been satisfied, and Equiniti Trust Company, LLC is acting as redemption agent. For investors, this is a routine capital management action rather than a signal of operational stress.
Retiring a higher-coupon preferred series reduces Wells Fargo's outstanding preferred equity and its fixed dividend obligations, and the filing does not disclose the funding source or any replacement issuance. Holders of the depositary shares should expect cash at the redemption price, with the dividend paid separately, and should account for the reinvestment decision that follows.
02—Key points
Key Highlights
- Wells Fargo will fully redeem all 80,000 outstanding shares of its 5.90% Fixed-to-Floating Rate Non-Cumulative Perpetual Class A Preferred Stock, Series S, on June 15, 2024, which shifts to June 17, 2024 because of a non-business day.
- The redemption also retires all 2,000,000 Series S depositary shares, each representing a 1/25th interest in a preferred share, leaving no Series S preferred or depositary shares outstanding afterward.
- The redemption price is $25,000 per preferred share and $1,000 per depositary share, implying roughly $2.0 billion in aggregate redemption payments.
- Redemption prices exclude declared but unpaid dividends; the regular quarterly dividend will be paid separately on June 17, 2024, to holders of record as of May 31, 2024.
- The company states that all regulatory requirements for the redemption have been satisfied, and Equiniti Trust Company, LLC is the redemption agent.
- The filing is a routine capital management event under Item 8.01 (Other Events) and does not disclose a financial restatement, impairment, or change in operations.
- Wells Fargo reports approximately $1.9 trillion in assets and four reportable segments: Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth & Investment Management.
03—Questions
Frequently Asked Questions
When will holders receive their redemption payment?
The redemption date is June 15, 2024, but because it falls on a non-business day, payment will be made on June 17, 2024. The redemption agent, Equiniti Trust Company, LLC, will send payment to holders on the redemption date.
How much cash is involved in the redemption?
The redemption price is $25,000 per preferred share and $1,000 per depositary share. Applying these prices to 80,000 preferred shares and 2,000,000 depositary shares gives an aggregate of approximately $2.0 billion, excluding declared but unpaid dividends.
Will holders still receive the June dividend?
Yes. The redemption prices do not include declared and unpaid dividends. The regular quarterly dividend will be paid separately on June 17, 2024, to holders of record at the close of business on May 31, 2024.
Does this redemption signal financial trouble at Wells Fargo?
The filing does not indicate financial distress. It describes a routine redemption of a preferred series at its stated redemption price after regulatory requirements were satisfied. Retiring preferred stock reduces fixed dividend obligations and preferred equity, but the filing does not disclose the funding source or any replacement issuance.
Will any Series S preferred stock or depositary shares remain outstanding?
No. After the redemption, no shares of the Series S Preferred Stock or the Series S Depositary Shares will remain outstanding.
04—Continue