10-K: U.S. Bancorp Details Capital Stock and Debt Securities in SEC Filing

U.S. Bancorp outlines the details of its common and preferred stock, as well as its medium-term notes, in a recent SEC filing.

Summary

• U.S. Bancorp has registered its common stock, several series of preferred stock, and medium-term notes with the SEC.
• The company's authorized capital stock consists of 4 billion shares of common stock and 50 million shares of preferred stock.
• As of December 31, 2023, there were approximately 1.56 billion shares of common stock and 243,510 shares of preferred stock issued and outstanding.
• The preferred stock is divided into multiple series, each with specific designations, dividend rights, and liquidation preferences.
• Holders of common stock are entitled to one vote per share and to dividends as declared by the board of directors.
• The company has also registered its 0.850% Medium-Term Notes, Series X (Senior), due June 7, 2024, with an outstanding aggregate principal amount of $1.175 billion as of December 31, 2020.
• The notes pay interest annually on June 7 and will mature on June 7, 2024.
• The company may issue additional debt securities with the same terms as the notes, ranking equally with them.

Sentiment

Score: 5

Explanation: The document is neutral in tone, providing factual information about the company's capital structure. It does not express any positive or negative sentiment.

Positives

• The document provides a detailed overview of the company's capital structure.
• The company has a diverse range of capital instruments, including common stock, multiple series of preferred stock, and medium-term notes.
• The document outlines the rights and preferences of each class of stock, providing clarity for investors.

Negatives

• The document is primarily descriptive and does not provide any analysis of the company's financial performance.
• The document does not provide any information about the company's future plans or strategies.

Risks

• The document notes that the rights of common stockholders are subject to the rights of preferred stockholders, which could limit the control of common stockholders.
• The company is subject to various regulatory policies and requirements relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums.
• The Federal Reserve Board is authorized to prohibit the payment of dividends if it determines that such payment would be an unsafe or unsound practice.
• The company may not issue any class or series of capital stock having a preference or priority in the payment of dividends or in the distribution of assets on the company's liquidation over the Series A, B, J, K, L, M, N and O Preferred Stock without the affirmative vote or consent of the holders of at least 66-2/3% of all of the shares of the Series A, B, J, K, L, M, N and O Preferred Stock and all other Parity Stock, at the time outstanding, voting as a single class without regard to series.
• The Series A, B, J, K, L, M, N and O Preferred Stock are not subject to any mandatory redemption, sinking fund or other similar provisions.
• The Series A, B, J, K, L, M, N and O Preferred Stock are redeemable at the company's option, in whole or in part, at a redemption price equal to the liquidation preference per share, plus any declared and unpaid dividends, without accumulation of any undeclared dividends.
• The Series B Preferred Stock is subject to a Replacement Capital Covenant, which will limit the company's right to redeem the Series B Preferred Stock.
• The Series J, K, L, M, N and O Preferred Stock are redeemable at the company's option, in whole or in part, at any time on or after April 15, 2027, October 15, 2023, January 15, 2026, April 15, 2026, January 15, 2027 and April 15, 2027, respectively, at a redemption price equal to $25,000 per share, plus any declared and unpaid dividends, without accumulation of any undeclared dividends.
• The Series J, K, L, M, N and O Preferred Stock are also redeemable at the company's option, in whole, but not less than all, within 90 days following the occurrence of a Regulatory Capital Treatment Event.
• The company may not be able to pay dividends on the preferred stock if it does not have sufficient funds legally available for dividends.
• The company may not be able to redeem the preferred stock if it does not have sufficient funds or if it is prohibited by regulatory requirements.
• The company may not be able to issue additional preferred stock or other securities that rank senior to the preferred stock without the consent of the holders of at least two-thirds of all of the shares of the preferred stock and all other Parity Stock, at the time outstanding, voting as a single class without regard to series.
• The company may not be able to amend the provisions of the company's Certificate of Incorporation or the Certificate of Designations of the preferred stock or any other series of Preferred Stock so as to materially and adversely affect the powers, preferences, privileges or rights of the preferred stock, taken as a whole, without the affirmative vote or consent of the holders of at least two-thirds of all of the shares of the preferred stock at the time outstanding, voting separately as a class.
• The company may not be able to pay principal, premium, if any, and interest payments in respect of the notes in euro if the euro is unavailable due to the imposition of exchange controls or other circumstances beyond the company's control.
• The company may be required to pay additional amounts to holders of the notes who are U.S. Aliens to cover any withholding taxes imposed by a Relevant Jurisdiction.
• The company may redeem the notes for tax reasons if it becomes obliged to pay additional amounts as a result of any change in, or amendment to, the laws or regulations of a Relevant Jurisdiction affecting taxation.
• The indenture prohibits the company from issuing, selling or otherwise disposing of shares of or securities convertible into, or options, warrants or rights to subscribe for or purchase shares of, voting stock of a principal subsidiary bank; the merger or consolidation of a principal subsidiary bank with or into any other corporation; or the sale or other disposition of all or substantially all of the assets of a principal subsidiary bank, if, after giving effect to the transaction, the company would own, directly or indirectly, 80% or less of the shares of voting stock of the principal subsidiary bank or of the successor bank or the bank which acquires the assets.
• The indenture also prohibits the company from creating, assuming, incurring or causing to exist any pledge, encumbrance or lien, as security for indebtedness for money borrowed on any shares of or securities convertible into voting stock of a principal subsidiary bank that the company owns directly or indirectly; or options, warrants or rights to subscribe for or purchase shares of, voting stock of a principal subsidiary bank that the company owns directly or indirectly, without providing that the senior debt securities of all series, including the notes, will be equally secured if, after treating the pledge, encumbrance or lien as a transfer to the secured party, and after giving effect to the issuance of the maximum number of shares of voting stock issuable after conversion or exercise of the convertible securities, options, warrants or rights, the company would own, directly or indirectly 80% or less of the shares of voting stock of the principal subsidiary bank.
• The indenture does not contain covenants specifically designed to protect holders from a highly leveraged transaction in which the company is involved.
• The only events that constitute events of default under the indenture with respect to the notes are: the company's failure to pay any interest on any note when due, which failure continues for 30 days; the company's failure to pay any principal of or premium on any note when due; the company's failure to make any sinking fund payment, when due, for any note, if applicable; the company's failure to perform any other covenant in the indenture (other than a covenant included in the indenture solely for the benefit of a series of senior debt securities other than the notes), which failure continues for 60 days after written notice; default in the payment of indebtedness for money borrowed under any indenture or instrument under which the company has or a principal subsidiary bank has outstanding indebtedness in an amount in excess of $5,000,000 which has become due and has not been paid, or whose maturity has been accelerated and the default has not been cured or acceleration annulled within 60 days after written notice; and some events of bankruptcy, insolvency or reorganization which involve the company or a principal subsidiary bank.
• The notes are subject to the risk of early redemption for tax reasons.

Future Outlook

The company may issue additional debt securities with the same terms as the notes, ranking equally with them.

Industry Context

This document is a standard SEC filing detailing the capital structure of a large financial institution. It is common for such institutions to have a complex mix of common stock, preferred stock, and debt securities.

Comparison to Industry Standards

• The capital structure of U.S. Bancorp is similar to that of other large financial institutions, which typically have a mix of common stock, preferred stock, and debt securities.
• The use of depositary shares representing fractional interests in preferred stock is a common practice among large banks.
• The terms and conditions of the medium-term notes are also typical for such instruments issued by large financial institutions.
• The specific interest rates and maturity dates of the preferred stock and medium-term notes are specific to U.S. Bancorp and reflect the company's funding needs and market conditions at the time of issuance.

Stakeholder Impact

• Shareholders: The document provides information about the rights and preferences of different classes of stock, which is relevant to shareholders.
• Creditors: The document provides information about the terms and conditions of the company's medium-term notes, which is relevant to creditors.

Key Dates

Keywords

U.S. Bancorp, common stock, preferred stock, medium-term notes, capital stock, depositary shares, securities, dividends, liquidation preference, redemption, voting rights, LIBOR, SOFR, indenture, senior notes, par value, interest payments, maturity date, exchange act, NYSE