8-K: Bank of Hawaii Corporation Issues Depositary Shares Representing New Series B Preferred Stock

Bank of Hawaii Corporation has finalized a deposit agreement and issued 6,600,000 depositary shares, each representing a 1/40th ownership interest in a share of its new 8.000% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series B.

Summary

• Bank of Hawaii Corporation has entered into a deposit agreement with Computershare Inc. and Computershare Trust Company, N.A. to facilitate the issuance of depositary shares.
• The depositary shares represent a 1/40th ownership interest in the company's newly created 8.000% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series B.
• A total of 6,600,000 depositary shares were issued and sold in a public offering.
• The Series B Preferred Stock has a liquidation preference of $1,000 per share, equivalent to $25.00 per depositary share.
• The company filed a Certificate of Designations with the Secretary of State of Delaware on June 20, 2024, establishing the terms of the Series B Preferred Stock.
• Holders of the depositary shares are entitled to proportional rights and preferences of the Series B Preferred Stock, including dividend, voting, redemption, and liquidation rights.
• The deposit agreement outlines the terms for the deposit of the Series B Preferred Stock and the issuance of the depositary receipts.

Sentiment

Score: 7

Explanation: The document is a standard financial announcement detailing a capital raise through the issuance of preferred stock. The terms are typical for this type of offering, and the sentiment is neutral to positive as it provides the company with additional capital.

Positives

• The depositary shares provide investors with a way to participate in the company's new Series B Preferred Stock.
• The Series B Preferred Stock offers a fixed dividend rate of 8.000% per annum.
• The deposit agreement provides a framework for the management and transfer of the depositary shares.
• The depositary shares are expected to be listed on the New York Stock Exchange.

Negatives

• The dividends on the Series B Preferred Stock are non-cumulative, meaning that if a dividend is not declared, it is not accrued for future payment.
• The company's ability to pay dividends on the Series B Preferred Stock is subject to certain restrictions.
• The Series B Preferred Stock is not redeemable prior to August 1, 2029, except in the event of a Regulatory Capital Treatment Event.

Risks

• The company's ability to pay dividends on the Series B Preferred Stock is subject to its financial performance and regulatory requirements.
• The market value of the depositary shares may fluctuate based on market conditions and investor sentiment.
• Changes in regulations could impact the company's ability to treat the Series B Preferred Stock as Tier 1 capital.
• The non-cumulative nature of the dividends means that investors may not receive dividends in every period.

Future Outlook

The company intends to list the depositary shares on the New York Stock Exchange and will use the net proceeds from the sale of the shares as specified in the prospectus.

Industry Context

The issuance of preferred stock is a common method for financial institutions to raise capital and manage their capital structure. The fixed-rate, non-cumulative nature of the Series B Preferred Stock is typical for this type of offering.

Comparison to Industry Standards

• The 8.000% dividend rate is within the range of rates offered by other financial institutions for similar preferred stock offerings.
• The non-cumulative dividend feature is standard for preferred stock issued by banks and financial institutions.
• The liquidation preference of $1,000 per share is a common feature for preferred stock.
• The redemption provisions are similar to those of other preferred stock offerings, with a typical call date after a certain period and a special redemption option in the event of a regulatory capital treatment event.
• Comparable companies that have issued similar preferred stock include regional and national banks such as KeyCorp, Regions Financial, and Fifth Third Bancorp.

Stakeholder Impact

• Shareholders will see a change in the capital structure of the company with the addition of the new Series B Preferred Stock.
• Investors in the depositary shares will receive a fixed dividend rate, subject to the company's financial performance.
• The company will have additional capital to support its operations and growth.

Next Steps

• The company will list the depositary shares on the New York Stock Exchange.
• The company will use the net proceeds from the sale of the shares as specified in the prospectus.
• The company will make dividend payments on the Series B Preferred Stock, if declared, on the specified payment dates.

Key Dates

Keywords

depositary shares, preferred stock, Series B Preferred Stock, Bank of Hawaii Corporation, deposit agreement, fixed rate, non-cumulative, public offering, Computershare, liquidation preference