US Bancorp Prices $1 Billion Of 7.20% Preferred Stock, With Dividend Resetting In January 2032
The Series P depositary shares priced at $1,000.00 each, with net proceeds of $990,000,000 before expenses and no exchange listing.
US Bancorp priced a $1 billion offering of depositary shares tied to its 7.20% Series P Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, according to a final term sheet dated Wednesday. The 1,000,000 depositary shares sold at $1,000.00 each.
What the term sheet says
Each depositary share represents a 1/25th interest in one share of preferred stock. That share carries a liquidation preference of $25,000, equal to $1,000 per depositary share.
The underwriting discount is $10.00 per depositary share. Net proceeds to US Bancorp, before expenses, come to $990,000,000.
The term sheet lists three joint book-running managers: U.S. Bancorp Investments, Barclays Capital and Morgan Stanley. The co-managers are Academy Securities, Blaylock Van, Penserra Securities and R. Seelaus & Co.
The securities are perpetual. The expected ratings are Baa2 (Stable) from Moody's, BBB (Stable) from S&P, BBB (Stable) from Fitch and AL (Stable) from DBRS. The depositary shares will not be listed on any securities exchange.
How the dividend works
The dividend is non-cumulative, so undeclared dividends do not build up. It is 7.20% a year from October 30, 2026 until the first reset date of January 15, 2032.
From that date, each reset period pays the five-year treasury rate, as set on the most recent determination date, plus a spread of 2.269%. The determination date falls three business days before a reset period begins. Resets recur on each fifth anniversary after that.
Dividends are payable on the 15th of January, April, July and October. The first payment is January 15, 2027, on a 30/360 day count.
Redemption and settlement
US Bancorp may redeem the preferred stock, in whole or in part, on any dividend payment date on or after January 15, 2032. The price is $25,000 per share, or $1,000 per depositary share, plus any declared and unpaid dividends.
It may also redeem in whole, but not in part, within 90 days after a "regulatory capital treatment event," as the preliminary prospectus supplement describes it. Holders cannot require US Bancorp to redeem or repurchase the shares.
Settlement is set for October 30, 2026, on a T+7 basis, meaning the seventh business day after the trade date. Because secondary trades generally settle in one business day, buyers who want to trade before then must arrange alternative settlement, the term sheet says.
The first dividend is due January 15, 2027, and the earliest optional redemption date is January 15, 2032.
Sources
- Form FWP — US BANCORP DE (USB) — SEC EDGAR
- U.S. Bancorp: Solid Results, But Risks May Lurk Beneath The Surface (NYSE:USB) | Seeking Alpha — seekingalpha.com
- U.S. Bancorp’s Dividend Is Doing Its Job. Can the Stock Do Its Part? — Yahoo Finance
- U.S. Bancorp stock outperforms competitors despite losses on the day — MarketWatch
