Fifth Third Bancorp on Sept. 17 closed the sale of 10 million depositary shares, each representing a 0.001 ownership interest in a share of series K noncumulative perpetual preferred stock.
The liquidation preference per depositary share is $25. Net proceeds from the offering after estimated expenses and underwriting discounts to be paid by the company totaled about $241.9 million. Fifth Third Bancorp intends to use the proceeds for general corporate purposes, which may include repurchases of its common stock, according to a pricing term sheet dated Sept. 12.
Beginning on the original issuance date, dividends on the series K preferred stock will accrue on a noncumulative basis at an annual rate of 4.95%. Dividends on the liquidation preference of $25,000 per preferred share will be paid when, as and if declared by the company's board, quarterly in arrears on March 31, June 30, Sept. 30 and Dec. 31 of each year, beginning Dec. 31, 2019.
The company may redeem the series K preferred stock at its option, in whole or in part, on any dividend payment date on or after Sept. 30, 2024. It may also redeem the shares, in whole but not in part, following a regulatory capital event. In each case, the shares will be redeemed at a price equal to 100% of the liquidation preference, plus declared but unpaid dividends, without accumulation of undeclared dividends to the redemption date.
Upon any redemption of the series K preferred stock, the depositary will redeem a proportionate number of depositary shares. Neither the holders of the preferred shares nor the holders of depositary shares will have the right to require the redemption or repurchase of the series K preferred stock.
Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, Wells Fargo Securities LLC and UBS Securities LLC acted as joint book-running managers for the offering. Fifth Third Securities Inc. served as co-manager.
