U.S. Bancorp (NYSE: USB) announced today that, after June 30,
2023, 3-month CME Term SOFR, as administered by CME Group Benchmark
Administration, Ltd. (or any successor administrator) plus the
relevant tenor spread adjustment (“3-month Term SOFR”) will be the
replacement reference rate for certain outstanding floating rate or
fixed-to-floating rate debt securities, preferred stock represented
by depositary shares, income trust securities, and preferred stock
issued by U.S. Bank National Association, U.S. Bancorp, USB Capital
IX and USB Realty Corp. (collectively, “U.S. Bancorp”) that use
3-month U.S. dollar LIBOR (“USD LIBOR”) as the reference rate and
are governed by U.S. law (such instruments collectively, the
“Legacy LIBOR Instruments”).
In March 2021, the UK Financial Conduct Authority announced that
after June 30, 2023, 1-month, 3-month, 6-month and 12-month USD
LIBOR settings either will cease publication or no longer be
representative.
In connection with the cessation of representative USD LIBOR, in
the United States, the Adjustable Interest Rate (LIBOR) Act (the
“LIBOR Act”) was passed and subsequently implemented by regulations
issued by the Board of Governors of the Federal Reserve System (the
“LIBOR Rule”) to aid transition efforts with respect to certain
U.S. law-governed legacy contracts through a statutory replacement
of USD LIBOR with a SOFR-based replacement rate. The LIBOR Rule
also establishes relevant tenor spread adjustments applicable to
the SOFR-based replacement rates and sets forth technical,
administrative, or operational change, alterations, or
modifications that are necessary or appropriate to the
implementation, administration, and calculation of the replacement
reference rate (the “LIBOR Act Conforming Changes”).
Certain Legacy LIBOR Instruments lack a clearly defined or
practicable benchmark replacement rate, while others contain
hardwired contractual fallback provisions that specify the
transition to a specific successor reference rate and spread
adjustment and, in either case, also may contemplate conforming
changes that are necessary or appropriate to the implementation,
administration, and calculation of the replacement reference rate.
Each Legacy LIBOR Instrument referenced herein will transition to
3-month Term SOFR plus the relevant tenor spread adjustment on the
first applicable date after June 30, 2023 either (i) pursuant to
the LIBOR Act and LIBOR Rule by operation of law, (ii) pursuant to
the discretion of a determining person to select the benchmark
replacement under the LIBOR Act or LIBOR Rule, or (iii) pursuant to
the contractual terms of the Legacy LIBOR Instrument for any Legacy
LIBOR Instruments that have hardwired fallback provisions.
For the following types of Legacy LIBOR Instruments that lack a
clearly defined or practicable benchmark replacement rate and
currently use 3-month USD LIBOR as the reference rate or will use
3-month USD LIBOR as the reference rate during a floating rate
period, in accordance with the LIBOR Act and LIBOR Rule, by
operation of law, 3-month Term SOFR will be the reference rate for
calculations of the amount of interest or dividends payable with
respect to interest or dividend periods with determination dates
occurring after June 30, 2023:
- Floating rate debt securities issued by U.S. Bank National
Association
- Floating rate and fixed-to-floating rate preferred stock
(represented by depositary shares) issued by U.S. Bancorp
- Fixed-to-floating rate income trust securities issued by USB
Capital IX
- Fixed-to-floating rate preferred stock issued by USB Realty
Corp.
Annex A provides a list of USD LIBOR-linked instruments
that will transition to 3-month Term SOFR by operation of law
following June 30, 2023, pursuant to the LIBOR Act and LIBOR
Rule.
For Legacy LIBOR Instruments that lack a clearly defined or
practicable benchmark replacement rate and provide a determining
person with authority to select the benchmark replacement rate,
3-month Term SOFR will be the applicable reference rate for
calculations of the amount of interest or dividends payable with
respect to interest or dividend periods with determination dates
occurring after June 30, 2023. Annex B provides details on
such USD LIBOR-linked instruments that will transition to 3-month
Term SOFR following June 30, 2023.
For Legacy LIBOR Instruments for which hardwired contractual
fallback provisions specify the transition to a successor reference
rate and spread adjustment following the cessation of the
publication of 3-month USD LIBOR on a representative basis, 3-month
Term SOFR will be the applicable reference rate for calculations of
the amount of interest or dividends payable with respect to
interest or dividend periods with determination dates occurring
after June 30, 2023. Annex C provides details on such USD
LIBOR-linked instruments that will transition, pursuant to the
terms of such instruments, to 3-month Term SOFR following June 30,
2023.
In each case, and as explained above, the 3-month Term SOFR
replacement rate, and therefore the calculation of the amount of
interest or dividends payable on securities or instruments for
interest or dividend periods with determination dates that occur
after June 30, 2023, also will include the tenor spread adjustment
of 0.26161%, provided in the LIBOR Act and LIBOR Rule for
securities or instruments that reference 3-month LIBOR or
consistent with the terms of the hardwired fallback provisions, as
appropriate. In addition, the LIBOR Act Conforming Changes will
apply to and will become an integral part of the Legacy LIBOR
Instruments transitioning under the LIBOR Act and LIBOR Rule, as
well as those instruments transitioning pursuant to hardwired
contractual fallback provisions.
For the avoidance of doubt, each Legacy LIBOR Instrument will
transition to a replacement rate as described herein, and this
announcement does not automatically transition such securities and
instruments to the replacement rate as of the date hereof. Also,
circumstances could change that could impact the timing and other
information described herein.
This press release applies only to the USD LIBOR securities
listed in the Annexes to this press release and does not relate to
any other securities or other instruments. In advance of the June
30, 2023, further notices relating to 3-month Term SOFR as the
benchmark replacement rate for USD LIBOR for Legacy LIBOR
Instruments held through The Depository Trust Company (“DTC”) will
be made pursuant to the DTC LIBOR Replacement Index Communication
Tool.
Forward-Looking Statements
Certain statements contained in this press release may
constitute “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements made in this press release include, without limitation,
statements concerning the expected transition of the Annex C
USD LIBOR Securities to 3-month Term SOFR for the applicable tenor,
plus the relevant spread adjustment. These statements are not
guarantees of future results or performance and involve certain
risks, uncertainties and assumptions that are difficult to predict
or beyond our control. You should not place undue reliance on any
forward-looking statement and should consider the uncertainties
with respect to such transition and resulting risks that such
transition would not occur and including those discussed in the
section entitled “Risk Factors” in our Annual Report on Form 10-K
for the year ended December 31, 2022, and in any of our subsequent
Securities and Exchange Commission filings. Forward-looking
statements speak only as of the date they are made, and except as
required by the U.S. federal securities laws, we undertake no
obligation to update any forward-looking statement to reflect the
impact of circumstances or events that arise after the date the
forward-looking statement was made.
About U.S. Bancorp:
U.S. Bancorp, with approximately 77,000 employees and $682
billion in assets as of March 31, 2022, is the parent company of
U.S. Bank National Association. The Minneapolis-based company
serves millions of customers locally, nationally and globally
through a diversified mix of businesses: Consumer and Business
Banking; Payment Services; Corporate & Commercial Banking; and
Wealth Management and Investment Services. Union Bank, consisting
primarily of retail banking branches on the West Coast, joined U.S.
Bancorp in 2022. The company has been recognized for its approach
to digital innovation, social responsibility, and customer service,
including being named one of the 2023 World’s Most Ethical
Companies and Fortune’s most admired superregional bank. Learn more
at usbank.com/about.
Annex A
Legacy USD LIBOR instruments
transitioning by operation of law under the LIBOR Act and LIBOR
Rule
U.S. Bank National Association USD
LIBOR Debt
CUSIP
Title of Instrument
90331HLC5
Senior Notes due 2046
90331HLD3
Senior Notes due 2046
90331HLE1
Senior Notes due 2047
90331HLH4
Senior Notes due 2047
90331HLY7
Senior Notes due 2048
90331HMA8
Senior Notes due 2048
90331HMG5
Senior Notes due 2054
90331HMT7
Senior Notes due 2055
90331HMW0
Senior Notes due 2056
90331HNA7
Senior Notes due 2056
90331HND1
Senior Notes due 2057
90331HNN9
Senior Notes due 2058
U.S. Bancorp Preferred Stock
represented by Depositary Shares
CUSIP (Depositary Shares)
Title of Instrument
902973866
Depositary Shares, each representing
1/100th interest in a share of Series A Non-Cumulative Perpetual
Preferred Stock
902973155
Depositary Shares, each representing
1/1,000th interest in a share of Series B Non-Cumulative Perpetual
Preferred Stock
902973AZ9
Depositary Shares, each representing
1/25th interest in a share of Series J Non-Cumulative Perpetual
Preferred Stock
USB Capital IX Income Trust
Securities
CUSIP
Title of Instrument
91731KAA8
Fixed-to-Floating Rate Normal Income Trust
Securities
USB Realty Corp. Preferred
Stock
CUSIP
Title of Instrument
903312AA4
Fixed-to-Floating-Rate Exchangeable
Non-Cumulative Perpetual Series A Preferred Stock exchangeable for
shares of U.S. Bancorp’s Series C Non-Cumulative Perpetual
Preferred Stock(1)
(1) Under certain circumstances, upon the
direction of the Office of the Comptroller of the Currency, each
share of USB Realty Corp.’s Series A Preferred Stock will be
automatically exchanged for one share of U.S. Bancorp’s Series C
Non-Cumulative Perpetual Preferred Stock.
Annex B
Legacy U.S. Bank National Association
USD LIBOR instruments transitioning pursuant to the selection of a
determining person under the LIBOR Act and LIBOR Rule
CUSIP
Title of Instrument
90331HNZ2
Senior Notes due 2058
Annex C
Legacy U.S. Bank National Association
USD LIBOR instruments with hardwired contractual fallbacks to
3-month Term SOFR
CUSIP
Title of Instrument
90331HPH0
Senior Notes due 2059
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version on businesswire.com: https://www.businesswire.com/news/home/20230516005795/en/
Investor contact: George Andersen, Director of Investor
Relations, U.S. Bancorp Investor Relations – 612.303.3620,
george.andersen@usbank.com Media contact: Jeff Shelman, U.S.
Bancorp Public Affairs and Communications – 612.303.9933,
jeffrey.shelman@usbank.com
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