- JPMorgan Chase (JPM - Get Report) on July 12 redeemed $9 billion in trust preferred shares, including nearly $4.2 billion with coupons higher than 6.5%. All the shares were redeemed for face value.
- Bank of America (BAC - Get Report) on July 25 redeemed $3.9 billion in trust preferred shares, all of which had coupons of 6.00% or higher, with $2.3 billion paying over 7.50%. The company paid premium redemption prices for $1.8 billion of the redeemed trust preferreds. When Bank of America announced its second-quarter results on July 18, the company said that the retirement of trust preferred securities and debt, combined with "additional liability management actions announced for the third quarter of 2012, are expected to benefit quarterly net interest income by approximately $300 million, of which $60 million was recognized in the second quarter of 2012."
- Many regional banks are also following the trend, as the regulators have given them no choice, including BB&T (BBT) of Winston-Salem, N.C., which in July redeemed $3.1 billion in trust preferreds at face value, of which $350 million paid a fixed rate of 8.10%, while $575 million paid a fixed rate of 9.60%.
Banks Find New Way to Squeeze Investors: Street Whispers
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts
More than 30 investing pros with skin in the game give you actionable insight and investment ideas.