JP Morgan Chase 2010 Annual Report Download - page 267

JPMorgan Chase & Co./2010 Annual Report
267
Note 23 – Preferred stock
At December 31, 2010 and 2009, JPMorgan Chase was author-
ized to issue 200 million shares of preferred stock, in one or more
series, with a par value of $1 per share.
In the event of a liquidation or dissolution of the Firm, JPMorgan
Chase’s preferred stock then outstanding takes precedence over
the Firm’s common stock for the payment of dividends and the
distribution of assets.
Generally, dividends on shares of each outstanding series of
preferred stock are payable quarterly, except for the Fixed-to-
Floating Rate Non-Cumulative Perpetual Preferred Stock, Series I
(“Series I”), which is payable semiannually as discussed below.
On April 23, 2008, the Firm issued 600,000 shares of Series I
preferred stock, for total proceeds of $6.0 billion. Dividends on
Series I shares are payable semiannually at a fixed annual divi-
dend rate of 7.90% through April 2018, and then become pay-
able quarterly at an annual dividend rate of three-month LIBOR
plus 3.47%.
On July 15, 2008, each series of Bear Stearns preferred stock
then issued and outstanding was exchanged into a series of
JPMorgan Chase preferred stock with substantially identical terms
(6.15% Cumulative Preferred Stock, Series E (“Series E”); 5.72%
Cumulative Preferred Stock, Series F (“Series F”); and 5.49%
Cumulative Preferred Stock, Series G (“Series G”)). As a result of
the exchange, these series ranked equally with other series of the
Firm’s preferred stock. On August 20, 2010, the Firm redeemed
all of the outstanding shares of its Series E, Series F and Series G
preferred stock at their stated redemption value.
On August 21, 2008, the Firm issued 180,000 shares of 8.625%
Non-Cumulative Preferred Stock, Series J (“Series J”), for total
proceeds of $1.8 billion.
On October 28, 2008, pursuant to the U.S. Treasury’s Capital
Purchase Program, the Firm issued to the U.S. Treasury, for total
proceeds of $25.0 billion, (i) 2.5 million shares of the Firm’s Fixed
Rate Cumulative Perpetual Preferred Stock, Series K, par value $1
per share and liquidation preference $10,000 per share (the
“Series K Preferred Stock”); and (ii) a warrant to purchase up to
88,401,697 shares of the Firm’s common stock at an exercise
price of $42.42 per share (the “Warrant”), subject to certain
antidilution and other adjustments. The Series K Preferred Stock
was nonvoting, qualified as Tier 1 capital and ranked equally with
other series of the Firm’s preferred stock in terms of dividend
payments and upon liquidation of the Firm. On June 17, 2009,
the Firm redeemed all outstanding shares of the Series K Pre-
ferred Stock and repaid the full $25.0 billion principal amount
together with accrued but unpaid dividends. See Note 24 on
page 268 for further discussion regarding the Warrant.
The following is a summary of JPMorgan Chase’s preferred stock outstanding as of December 31, 2010 and 2009.
Share value and
redemption Shares(b) Carrying value (in millions) Earliest
Contractual
rate in effect at
December 31,
December 31, price per share
(a)
2010 2009 2010 2009 redemption date 2010
Cumulative Preferred Stock,
Series E $ 200 — 818,113 $ — $ 164 — NA
Cumulative Preferred Stock,
Series F 200 — 428,825 — 86 — NA
Cumulative Preferred Stock,
Series G 200 — 511,169 — 102 — NA
Fixed
-
to
-
Floating Rate
Non-Cumulative Perpetual
Preferred Stock, Series I 10,000 600,000 600,000 6,000 6,000 4/30/2018 7.90
%
Non
-
Cumulative Perpetual
Preferred Stock, Series J 10,000 180,000 180,000 1,800 1,800 9/1/2013 8.63
Total preferred stock
780,000
2,538,107
$
7,800
$ 8,152
(a) The redemption price includes the amount shown in the table plus any accrued but unpaid dividends.
(b) Represented by depositary shares.