Terms

Series

Common Equivalent Junior Preferred Stock, Series S

Rate Type

Variable

Payment Frequency

Quarterly

Cumulative

No

Perpetual

No

Convertible

Yes

Callable

No

Capital Stack Ranking

Junior To: All Existing And Future Issued Preferred Stock Senior To Common Equivalent Stock, All Indebtedness And Other Non-Equity Claims On The Issuer; Pari Passu With: Common Stock With Respect To Ordinary Dividends Tracking Common Stock Dividend, Common Stock With Respect To Liquidation Participation Amount; Senior To: Common Stock, Any Equity Securities Ranking Junior To Common Equivalent Stock (With Respect To Additional Dividends And Liquidation Preference Amount)

Regulatory (Basel III) Call

No

Tax Classification

Qualified Dividend

Qualifies for QDI

Yes

Qualifies for DRD

No

Depositary Share Fraction

0.001

Prospectus Summary

Bank of America Corporation is offering $18.8 billion of Common Equivalent Securities, each consisting of one depositary share representing a 1/1,000th interest in a share of the Common Equivalent Junior Preferred Stock, Series S, plus a Contingent Warrant. The securities are not redeemable and are designed to automatically convert into common stock at 1,000 shares per preferred share (one share per depositary share) upon stockholder approval of a common stock authorization increase. The liquidation preference equals the public offering price per security times 1,000, but is subject to reduction on partial conversion. Dividends are explicitly non-cumulative — if the board does not declare a dividend for any period, holders have no right to that missed payment and it is permanently lost. The Common Equivalent Stock sits in the middle-lower tier of Bank of America's capital stack: it ranks senior to common stock with respect to Additional Dividends and the liquidation preference amount, but junior to all existing and future senior preferred stock (including TARP preferred stock being redeemed) and junior to all of the issuer's indebtedness and other non-equity claims. As a holding company security, it is also structurally subordinated to all liabilities of Bank of America's banking subsidiaries — the issuer's ability to pay dividends depends on upstream dividend flows from subsidiaries subject to regulatory restrictions. There is no regulatory capital (Tier 1) redemption call provision; the stock is explicitly non-redeemable. If the issuer defers or defaults on its junior subordinated notes, dividends on the Common Equivalent Stock are prohibited. There is no fixed coupon at issuance. Ordinary dividends mirror whatever is declared on common stock on an as-converted basis. If stockholder approval of the common stock amendment fails within 105 days or is rejected, contingent Additional Dividends become payable at an initial rate of 10% per annum of the liquidation preference, stepping up 2% each quarter to a maximum of 16% per annum, payable quarterly, non-cumulative. Tax treatment is uncertain: distributions may qualify for the 15%/20% QDI rate for individuals or the dividends-received deduction for corporations only if the issuer has sufficient current or accumulated earnings and profits — which is not assured. If earnings and profits are insufficient, distributions are treated as return of capital or capital gain, with no preferential rate benefit. The dividend stopper blocks common stock dividends unless full Additional Dividends on the Common Equivalent Stock have been paid, but the Common Equivalent Stock itself is blocked by any unpaid senior preferred dividends.

Summarized from the SEC prospectus filing.

Distribution History

Conversion Terms

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If Additional Dividends on the Common Equivalent Stock have not been paid in full, the issuer is blocked from paying dividends or making distributions on common stock or redeeming/acquiring parity securities. Conversely, the Common Equivalent Stock itself is blocked from receiving dividends until all senior preferred dividends have been paid in full.

Other Preferreds from Bank of America Corp

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 64 (Strong)