Terms

Series

Series A Non-Cumulative Perpetual Preferred Stock

Liquidation Preference

$100,000.00

Coupon Rate

7.189%

Rate Type

Fixed To Floating

Annual Dividend

$71.89

Payment Frequency

Quarterly

Cumulative

No

Perpetual

Yes

Convertible

No

Capital Stack Ranking

Junior To: All Debt Obligations Of U.S. Bancorp Including Junior Subordinated Notes, Depositors And Creditors Of Bank Subsidiaries; Pari Passu With: Other Series Of Preferred Stock Ranking On Parity As To Dividends; Senior To: Common Stock, Any Junior Preferred Stock

Tax Classification

Qualified Dividend

Qualifies for QDI

Yes

Qualifies for DRD

Yes

Depositary Share Fraction

0.01

Shares Offered

1,250,000

Prospectus Summary

U.S. Bancorp, the Minneapolis-based multi-state financial holding company and parent of U.S. Bank National Association, is offering up to 1,250,000 Depositary Shares (each representing 1/100th of a share) of its Series A Non-Cumulative Perpetual Preferred Stock, with a liquidation preference of $100,000 per underlying share ($1,000 per depositary share), in exchange for outstanding Normal ITS issued by USB Capital IX. The preferred pays a fixed rate of 7.189% per annum until the later of April 15, 2011 and the Stock Purchase Date, after which it reverts to terms identical to the preferred issued under the Normal ITS structure. These dividends are non-cumulative: if U.S. Bancorp's board does not declare a dividend in any period, that payment is permanently lost to holders with no obligation to make it up later. The Series A Preferred ranks senior to U.S. Bancorp's common stock and any junior preferred, and on parity with other series of preferred stock. As a holding company obligation, it is structurally subordinated to all liabilities of U.S. Bancorp's bank subsidiaries (including U.S. Bank National Association), meaning creditors and depositors of the bank must be satisfied before preferred holders receive anything in a liquidation scenario. The preferred is designed to qualify as unrestricted Tier 1 capital under Federal Reserve guidelines — an improvement over the hybrid Normal ITS it replaces, which counted only as restricted Tier 1 capital. No explicit regulatory capital redemption call provision is described in the available text. At the $1,000 liquidation preference per depositary share, the 7.189% initial rate yields approximately $71.89 annually per depositary share. Dividends on U.S. Bancorp preferred stock are generally expected to qualify as qualified dividend income (QDI) eligible for the 15%/20% preferential tax rate for individual holders, and for the dividends-received deduction (DRD) for eligible corporate holders, though investors should verify in the full tax section. Specific quarterly payment dates are not detailed in the available text. If dividends on the Series A Preferred or any parity preferred are not paid for the equivalent of six dividend periods (consecutive or not), holders gain the right to elect two additional directors to the board — the primary enforcement mechanism given the non-cumulative structure.

Summarized from the SEC prospectus filing.

Distribution History

Floating Rate Terms

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If dividends on the Series A Preferred or any parity preferred stock are not declared or paid for six dividend periods (whether or not consecutive), holders gain voting rights to elect two additional directors; no explicit stopper on common dividends described in the provided text.

Other Preferreds from U.S. Bancorp

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 69 (Strong)