Terms

Series

8.625% Non-Cumulative Preferred Stock, Series J

Liquidation Preference

$25.00

Coupon Rate

8.625%

Rate Type

Fixed

Annual Dividend

$2.16

Payment Frequency

Quarterly

Cumulative

No

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

September 1, 2013

First Call Price

$25.00

Redemption Notice Period

30 days

Capital Stack Ranking

Junior To: All Existing And Future Indebtedness Of Jpmorgan Chase & Co., Creditors Of Subsidiaries; Pari Passu With: Series I Preferred Stock, Mirror Preferred Stock; Senior To: Common Stock, Any Capital Stock Expressly Junior To The Preferred Stock

Regulatory (Basel III) Call

No

Tax Classification

Qualified Dividend

Qualifies for QDI

Yes

Qualifies for DRD

Yes

Depositary Share Fraction

0.0025

Shares Offered

64,000,000

Prospectus Summary

JPMorgan Chase & Co. is offering 64,000,000 depositary shares, each representing a 1/400th interest in a share of its perpetual 8.625% Non-Cumulative Preferred Stock, Series J, with a liquidation preference of $25 per depositary share and a $1 par value per underlying preferred share. The fixed coupon of 8.625% per annum translates to approximately $0.539 per depositary share quarterly ($2.156 annually), payable on March 1, June 1, September 1, and December 1, beginning December 1, 2008. Critically, dividends are non-cumulative: if the board does not declare a dividend for any quarter, that payment is permanently lost and holders have no future claim for it. The Series J Preferred ranks senior to JPMorgan Chase common stock and any expressly junior preferred series, and on parity with the Series I and Mirror Preferred Stock. However, it is subordinate to all existing and future debt obligations of JPMorgan Chase & Co. Because JPMorgan Chase is a holding company, holders also face structural subordination — subsidiary creditors have priority over the holding company's equity claims against subsidiary assets. There is no explicit regulatory capital (Tier 1) call provision in this issuance; redemption after September 1, 2013 requires prior Federal Reserve Board approval and compliance with a replacement capital covenant, but cannot be forced by regulatory capital treatment loss. At the $25 liquidation preference, the 8.625% coupon implies an effective yield of 8.625% at par. Dividends are expected to qualify for the reduced 15%/20% qualified dividend income (QDI) rate for individual U.S. holders (subject to holding period requirements and pre-2011 rate rules as noted), and corporate holders are generally eligible for a 70% dividends-received deduction. Record dates are set not more than 30 days before each quarterly payment date. The dividend stopper mechanism prevents JPMorgan Chase from paying dividends on common stock or redeeming junior securities unless full dividends on the Series J have been paid for the most recently completed period, providing some protection to preferred holders.

Summarized from the SEC prospectus filing.

Distribution History

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If JPMorgan Chase has not paid full dividends on the Series J Preferred Stock for the most recently completed dividend period, it cannot pay dividends on common stock or other junior securities (except stock dividends), and cannot redeem or repurchase junior or equally ranking stock.

Other Preferreds from JPMorgan Chase & Co

Div Score Breakdown

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