Regions Financial (RF) has announced a new issuance of fixed rate reset perpetual preferred stock. The issue will have an optional redemption period starting 9/15/2029.
The banker has a number of preferred issues already outstanding, including 2 fixed to floating issues–one of which becomes redeemable starting 9/15/2024. As we have come to expect the fixed to floating issue RF-B will be redeemed with the proceeds of this new issue.
Use of proceeds statement–
We expect to receive net proceeds from this offering, after deducting underwriting discounts and estimated offering expenses payable by us, of approximately $ (or approximately $ if the underwriters exercise in full their option to purchase additional depositary shares). We intend to use the net proceeds to redeem all outstanding shares of the Series B Preferred Stock and to use any remaining proceeds for general corporate purposes.
The preliminary prospectus can be read here.
Thanks to J for posting this and to EarlyBird for posting ‘yield talk’ in the 7.125% area.
the issue is now trading RF/PRF, its permaneny symbol $25.08. Schwab and I would imagine all brokers.
Priced at 6.95% coupon.
Resets at 5-yr UST + 2.771%.
https://www.sec.gov/Archives/edgar/data/1281761/000128176124000045/regionsfinancialcorporatio.htm
At first blush that seems low but I guess upon further review of what current issues are trading at it seems quite reasonable. If I can get in below or at par I would probably buy 200 shares. Nothing serious but a small bite like I normally do.
Fc set the price you want to pay for it. Especially since it’s a regional bank , not one of the TBTF I think the market is over bought right now. Feels topped out.
To Tim & also you banking experts; What is your unbiased opinion of this bank? I’ve certainly heard of them for sure but do not claim to have done any DD, so just would like to hear from those that have done a deep dive on their financial strength if possible.
I’m no expert Chuck but I’m in DEEP on regions. They have higher net wort ratios then many banks. There is significant CRE exposure
The B series was 500 mm so you’d think this deal would be at least this much. I’m not seeing it, i hate that!!!
If you Prefer,
Net proceeds to Issuer: $490,141,000
“We may redeem the Preferred Stock at our option….” What does that mean, come 2029 RF MAY redeem at their option?
It means if it’s in RF’s shareholder’s best interests (not necessarily yours) they are allowed to call them on or after 9/15/24. They don’t have to call (aka “redeem”) them but can. Also note an optional call is always done with advanced notice – in this case (and most) on not less than 30 days notice
Everyone, FYI – it’s redeemable only on a div pay date. *
* except for the case of a change in regulations that poses a risk of RF-B not allowed to be Tier 1 Capital. In this case it could be redeemed on any date.
from the prospectus, p. S-23:
Optional Redemption
We may redeem the Preferred Stock at our option, through a resolution duly adopted by our board of directors (or a duly authorized committee of our board of directors), in whole or in part, from time to time, on any dividend payment date on or after September 15, 2024, at a price equal to $1,000 per share (equivalent to $25 per depositary share), plus (except as otherwise provided) the per share amount of any declared and unpaid dividends on the Preferred Stock prior to the date fixed for redemption (the “redemption date”) (but with no amount in respect of any dividends that have not been declared prior to the redemption date).
Man we aren’t going to get any overtime on B’s?!!
I wasn’t counting on it when I loaded up on them closer to their low, but it would have been nice if they had let them float for a bit.
Expect coupon 7.125.- 7.25 area..
Jerry:
Seeing that potential 7%+ yield for the new RF issue….Always nice to reminisce about those crazy days of ZIRP.
RF has a perpetual outstanding (RF-E) that they issued back in April 2021 at 4.45% – and it actually eventually traded up to $26.45 for a 4.2% yield. This is only a $20B bank. Current price of RF-E is $18.50.
My goodness. I pray as an income investor that we never go back to those days.
160B in assets
https://companiesmarketcap.com/regions-financial/total-assets/#:~:text=Total%20assets%20on%20the%20balance,total%20assets%20are%20%24154.90%20B.