Terms

Series

Series K Non-Cumulative Perpetual Preferred Stock

Liquidation Preference

$25.00

Coupon Rate

5.5%

Rate Type

Fixed

Annual Dividend

$1.38

Payment Frequency

Quarterly

Cumulative

No

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

October 15, 2023

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

23,000,000

Prospectus Summary

U.S. Bancorp is offering 23,000,000 depositary shares, each representing a 1/1,000th interest in a share of its Series K Non-Cumulative Perpetual Preferred Stock, with a liquidation preference of $25 per depositary share and a fixed coupon of 5.50% per annum ($1.375 annually, or $0.34375 per quarter). The first optional redemption date is October 15, 2023 at par ($25 per depositary share). Critically, the dividends are non-cumulative: if the board does not declare a dividend for any quarter, that payment is permanently lost and there is no obligation to make it up in future periods. As a holding company obligation, these depositary shares sit below all of U.S. Bancorp's debt (including senior and subordinated notes) and are structurally subordinated to obligations of its principal banking subsidiary, U.S. Bank National Association. The preferred ranks senior to U.S. Bancorp's common stock and any other junior securities, and pari passu with other series of preferred stock. A regulatory capital call provision allows U.S. Bancorp to redeem the entire series (but not partially) before October 15, 2023 if the preferred loses its Tier 1 capital qualification under Federal Reserve guidelines — a meaningful risk in the event of regulatory reform. At the $25 offering price, the effective yield is 5.50% annually, paid quarterly on January 15, April 15, July 15, and October 15, commencing October 15, 2018. As dividends from a domestic C-corporation, they are expected to qualify for the reduced 15%/20% qualified dividend income (QDI) rate for individual holders and the dividends-received deduction (DRD) for eligible corporate holders. Dividend stopper mechanics prohibit U.S. Bancorp from paying dividends on or repurchasing common stock or junior securities during any period in which full Series K dividends for the current quarter have not been declared and set aside.

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 K Preferred Stock, it is blocked from paying dividends on or repurchasing common stock or any other junior securities; parity stock repurchases are also restricted 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)