Terms

Series

Series H Non-Cumulative Perpetual Preferred Stock

Liquidation Preference

$25.00

Coupon Rate

5.15%

Rate Type

Fixed

Annual Dividend

$1.29

Payment Frequency

Quarterly

Cumulative

No

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

July 15, 2018

First Call Price

$25.00

Capital Stack Ranking

Junior To: All Debt Obligations Of U.S. Bancorp; Pari Passu With: Parity Stock; Senior To: Common Stock, Junior Stock

Regulatory (Basel III) Call

Yes

Tax Classification

Qualified Dividend

Qualifies for QDI

Yes

Qualifies for DRD

Yes

Depositary Share Fraction

0.001

Shares Offered

20,000,000

Prospectus Summary

U.S. Bancorp (USB) is offering 20,000,000 depositary shares, each representing a 1/1,000th interest in a share of its Series H Non-Cumulative Perpetual Preferred Stock, with a liquidation preference of $25 per depositary share. The fixed dividend rate is 5.15% per annum ($1.2875 annually, or ~$0.3219 per quarter), paid on the 15th of January, April, July, and October, commencing July 15, 2013. This is non-cumulative preferred stock: if the board does not declare a dividend for any quarter, that payment is permanently forfeited and investors have no claim to recover it in future periods. The Series H Preferred Stock sits above USB's common stock and other junior securities in the capital stack, but is junior to all of USB's debt obligations. As a holding company issue, it is structurally subordinated to all liabilities of USB's operating subsidiary, U.S. Bank National Association. The preferred is callable at $25 per depositary share on or after July 15, 2018. Importantly, it may be redeemed in whole (but not in part) before that date if a 'regulatory capital treatment event' occurs — meaning a change in law or regulation causes the stock to lose its Tier 1 capital qualification — a provision that shifts regulatory risk to investors. At the $25 per depositary share offering price, the effective yield is 5.15%. Dividends from U.S. Bancorp, a U.S. corporation, are generally expected to qualify as qualified dividend income (QDI) for individual investors taxed at the 15%/20% preferential rate, and to qualify for the dividends-received deduction (DRD) for eligible corporate holders, though investors should verify their specific tax situation. If USB fails to pay the full current-period Series H dividend, it is blocked from paying dividends on common stock and repurchasing junior or parity securities, creating a meaningful structural incentive to maintain preferred distributions — though the non-cumulative structure means any skipped payments are gone permanently.

Summarized from the SEC prospectus filing.

Distribution History

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If U.S. Bancorp has not paid the full current-period dividend on the Series H Preferred Stock, it is blocked from paying dividends on, or repurchasing, its common stock and other junior securities, and from repurchasing parity preferred stock except on a pro-rata basis.

Other Preferreds from U.S. Bancorp

Div Score Breakdown

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