Terms

Series

Series C Non-Cumulative Perpetual Preferred Stock

Liquidation Preference

$25.00

Rate Type

Fixed

Payment Frequency

Quarterly

Cumulative

No

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

October 1, 2019

First Call Price

$25.00

Redemption Notice Period

30 days

Capital Stack Ranking

Junior To: All Indebtedness And Other Non-Equity Claims, Any Senior Series Of Preferred Stock Issued With Requisite Holder Consent; Pari Passu With: Any Other Series Of Preferred Stock Ranking Equally (Parity Stock); Senior To: Common Stock, Any Other Junior Stock

Regulatory (Basel III) Call

Yes

Tax Classification

Qualified Dividend

Qualifies for QDI

Yes

Qualifies for DRD

Yes

Depositary Share Fraction

0.001

Prospectus Summary

Northern Trust Corporation is offering depositary shares, each representing a 1/1,000th interest in a share of its Series C Non-Cumulative Perpetual Preferred Stock, with a liquidation preference of $25,000 per underlying share ($25 per depositary share). The fixed dividend rate was not set at the time of the preliminary prospectus filing; dividends are payable quarterly in arrears on January 1, April 1, July 1, and October 1, commencing January 1, 2015. Critically, the Series C is non-cumulative: if the board does not declare a dividend for any period, that dividend is permanently lost and Northern Trust has no obligation to make it up in future periods. The Series C Preferred Stock ranks senior to Northern Trust's common stock and all other junior stock, and pari passu with any future parity preferred, but is junior to all indebtedness and non-equity claims. As a holding company obligation, it is structurally subordinated to creditors of Northern Trust Bank, N.A. (the principal operating subsidiary), whose ability to upstream dividends is subject to bank regulatory constraints. A regulatory capital treatment event call provision allows Northern Trust to redeem all shares within 90 days if a change in law or regulation creates more than an insubstantial risk that the Series C will no longer qualify as Additional Tier 1 capital under Federal Reserve rules — a meaningful risk for income investors who may be called out at par if Basel III-related rules are amended. Because the coupon rate was not finalized in this preliminary prospectus, the effective yield at par cannot be stated; investors should refer to the final prospectus. Dividends qualify as 'qualified dividend income' for non-corporate U.S. holders (taxed at preferential long-term capital gains rates, subject to holding period requirements) and qualify for the 70% dividends-received deduction for U.S. corporate holders. The record date falls on the 15th of the calendar month preceding each payment month. The dividend stopper mechanic provides that, if a full Series C dividend for the current period has not been declared and paid, Northern Trust is blocked from paying dividends on or repurchasing common stock or any junior stock — offering some protection to preferred holders, though the non-cumulative structure means missed dividends are not recoverable.

Summarized from the SEC prospectus filing.

Distribution History

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If Northern Trust has not paid full dividends on the Series C Preferred Stock for the current dividend period, it is blocked from paying dividends on or repurchasing common stock or any other junior stock, and from repurchasing parity stock (subject to limited exceptions).

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 68 (Strong)