Revised 3/1/23
This is a Gateway Post for Trust Preferred issues. If you are looking for information on Trust Certificates, this is a link to my Gateway Post on that subject: Trust Certificates: New Gateway Post
Realized Gains: +$4,517.81
The largest gain was in SIVBO, a grantor trust that owned a junior bond issued by SVB Financial:
%20$561.43.jpg){kind=small}
The next largest gain was in JWF at $880.1.
All of those securities have been called at their $25 par values. SIVBO was called in 2017; JWF in 2013; and ABW.PRA in 2012.
Trust Preferred securities are in essence junior bonds issued mostly by banks and utilities, and their payments are taxable as interest. They also have maturity dates. Unfortunately, most of the maturity dates are too long term for me, since I will not purchase a long bond with a maturity beyond 2040. For those with maturities shorter than 30 years, I will give them more slack than I would an equity preferred that has no maturity date which renders that type of preferred a disfavored asset to me subject to my drop of the hat trading rules. For me, given my age, I view a maturity date past 2040 to be the same as no maturity.
A Trust Preferred security will trade like a stock on a stock exchange, rather than as a bond in the bond market, and would consequently be classified by the generic name "exchange traded bonds" by me and others. The place where they trade and their par value, frequently $25, makes them more friendly to individual investors to buy and to sell. The par value is another issue that always needs to be checked.
Generally, these securities have liberal rights reserved to the issuer to defer interest payments, five years is a frequent maximum deferral period, but the deferred interest is cumulative and bears interest at the coupon rate for the security. Each Trust Preferred needs to be checked on these type of issues. In this form of ownership, as an example, a bank will form another entity, a Delaware trust, and cause that new entity to issue preferred stock in the trust to the public, with the proceeds used to buy a junior bond from the bank. The preferred stock represents a beneficial interest in the junior bonds contained in the trust. So, it is a preferred stock issued by a trust but that "preferred stock" represents an beneficial interest in a bond owned by the trust. To find a list of trust preferred stocks, I would recommend that individual investors join QuantumOnline and just look in the Trust Preferred section under "Income Tables" Trust Preferred Securities Table - QuantumOnline.com This free site matches the prospectus with the symbol, and then provides a link to pertinent prospectus filed with the SEC along with some other useful information.
Most of my posts on this topic involve bank Trust Preferred issues since they have been the most volatile over the past year or so, presenting both enhanced opportunity and risks. I am however, monitoring a few non-bank Trust Preferred issues. I also own in Trust Certificate form a junior bond issue of the insurance broker Aon. Those include DKK, KTN and KVW and I personally view the underlying Aon bond in those TCs to be a Trust Preferred. Trust Certificates like DKK, KTN and KVW are classified by me in a separate category and can be found in a different section. Trust Certificate Links in One Post There are also a few Trust Preferred issues from electric utilities trading in the TC form of ownership. There are also some Trust Preferred stocks as the underlying security in synthetic floaters, and I own a few of those too, the ones issued by Goldman Sachs would be an example.
Often, the TC form of ownership presents an opportunity for an investor comfortable with that form of ownership. One such opportunity is that a bank Trust Preferred in a TC may present a better maturity and yield at the investor's cost of purchase at the time of an order than Trust Preferred securities from the same issuer. An example was my recent purchase of MJH at $7.51 with a $25 par value, a TC containing a Trust Preferred issue of Bank of America, and KTV. The later one is a TC with the underlying bond issued originally by First Union that I compare with Wells Fargo Trust Preferred since Wells acquired Wachovia which acquired First Union. I realize that the entire chain of events with an issue like that can be daunting and will cause it to be disfavored to one without so much baggage so to speak.Some of my posts relating to Trust Preferred issues are as follows:
General Discussions:Regular Preferred and Trust PreferredBary on Bank Preferred StocksTrust Preferred and Trust Certificate Distinguished/Posts on Tax Issues relating to Equity and Trust Preferred Stock and Deferral of Cumulative Preferred DividendsResponse to Query on Trust Preferred: Junior Debt Is Subordinated to More Senior Debt
Stocks, Bonds & Politics: Trust Preferred Securities & Financial Reform (Dodd-Frank law)
AMERISERV Bought 50 ASRVP @ 25 Sold 50 of the TP ARSVP at 25.8 PROSPECTUS: www.sec.gov
AON (Trust Certificates containing TPs) Sold Dkk Ex Interest Today TRUST CERTIFICATE AON BOND KTN TRUST CERTIFICATE AON BOND KTN ORDER FILLED at $13.1 Managing Risk in an IRA: KTN and KVW Links To Prospectuses for the AON TCs in One Place Bought 50 DKK in Roth TC KVW Pricing KTN add at less than $14 Added 50 of the TC DKK at $23.34 Sold 100 KVW at 24.75 Bought 50 DKK at 24.78 Sold 50 of 150 DKK DKK-Called by Owner of Call Warrant at $25 par value plus accrued interest FINRA INFO ON UNDERLYING BOND: FINRA DKK Prospectus: www.sec.gov KTN Prospectus: www.sec.gov KVW Prospectus: 424B5 KVF Prospectus: 424B5 Underlying Bond Prospectus: www.sec.gov KVW and DKK Called by Owner of Call Warrant (KTN does not have call warrant attached to it and I still own it as of 8/2011)
Associated Bank Added 50 ABWPRA at $19.42 Bought 50 of the TP ABWPRA Added 50 of ABWPRA Sold 100 of the 150 ABWPRA at 22.2 SOLD ABWPRA AT 25.15 PROSPECTUS: www.sec.gov
Dillards: Buy 50 of DDT at $5.82 sold ainv and ddt Bought 50 DDT at 18.42 Sold 50 DDT at 22 PROSPECTUS: www.sec.gov
DPL Bought 100 MJT at 22.57 Sold 100 MJT at $24.43 Bought 100 MJV at $24.8 BOUGHT 50 MJT at 25.6 Call Warrant Exercised on MJT and MJV at $25 par value plus accrued interest UNDERLYING BOND PROSPECTUS: www.sec.gov MJV PROSPECTUS: www.sec.gov MJT PROSPECTUS: www.sec.gov LINK TO FINRA INFORMATION ON UNDERLYING BOND: FINRA
Everest RE: Bought 50 REPRB AT 20.78 Bought 50 REPRB at 20.19 Sold 50 REPRB at 21.9 Sold REPRB at 24.36 Bought: 50 REPRB @ 23.80 Added 50 REPRB at 22.03 Sold 100 REPRA at 24.11 PROSPECTUS: Final Prospectus Supplement
Florida Progress (now part of PGN) Bought 50 Shares of FPCPRA Bought 50 FPCPRA at $24.95 Sold 50 FPCPRA @ 25.47 in Roth IRA Bought 50 FPCPRA at 25.59 BOUGHT 100 FPCPRA at $25.35 Sold 100 FPCPRA at $25.9 Sold 50 FPCPRA at $26-Roth PROSPECTUS: www.sec.gov
Hawaii Electric Bought 50 HEPRU @ 25.05 IRA Sold 50 HEPRU at 25.4
KEY Bank KEYPRA Bought 50 of the TP KEYPRB Sold KEYPRB PROSPECTUS: www.sec.gov KEYPRA and KEYPRB Called by KEY as of 9/1/11
MORGAN STANLEY (MWR) Bought 50 MWR in regular IRA at 22.25 Added 50 MWR at 22 Sold 50 of 100 MWR at 22.91 Sold: 50 MWR @ 22.98 PROSPECTUS: www.sec.gov
National Penn Bought 50 NPBCO at 23.09 Sold 50 NPBCO at 25.2 Bought 50 of the TP NPBCO at $24.93 Bought 100 NPBCO at 24.91 Sold 100 NPBCO at $25.87 Sold 50 NPBCO at $26.17 Prospectus: www.sec.gov
REGIONS Bought 50 RFPRZ at 22.88 Sold RFPRZ at 23.46 Bought 50 RFPRZ at 24.49 Sold RFPRZ @ 25.98 PROSPECTUS: Final Prospectus Supplement
Sterling Bancshares (SBIBN) Bought 50 TP SBIBN at 23.2 Bought 50 SBIBN at 23 Sold 50 SBIBN at 24 Sold 50 SBIBN at $24.95 Prospectus: www.sec.gov
Sterling Bank (STL) Bought 50 of the TP STLPRA at $8.99 Added 50 STLPRA at 8.69 Sold 50 STLPRA at $9.4Bought 100 STLPRA at 8.87 Sold 100 of the TP STLPRA at 10.25 Bought 100 STLPRA at 10.05 Bought 50 STLPRA @ 10.21 Bought 200 STLPRA @ 10.14 Sold 100 STLPRA at 10.47 Added 40 STLPRA at 10.14 in Regular IRA Added 100 of the TP STLPRA at $9.87 SOLD 250 STLPRA at 10.2 Sold 200 STLPRA at $10.5-ROTH IRA PROSPECTUS: www.sec.gov
Susquehanna Trust Preferred Securities & Financial Reform/Bought 30 SUSPRA in Roth IRA Bought 50 SUSPRA at $25.25 ROTH IRA PROSPECTUS: Final Prospectus Supplement
SVB FINANCIAL Added 50 SIVBO AT $19.20 IN ROTH Added 50 SIVBO at $19.15 Bought 50 SIVBO at $19.49 Sold 50 of the 150 SIVBO at 24.65 Sold Remaining SIVBO at $25 Bought 50 SIVBO at 24.5 in Roth IRA Sold 50 SIVBO at $25 ROTH IRA PROSPECTUS:www.sec.gov
US Bank Bought 50 USBPRF at 22.54 Sold 50 USBPRF at 23.94 PROSPECTUS: e424b5
Wells Fargo TPs (via acquisition of Wachovia who acquired First Union): Rounded KTV to 100 Shares at under $18 Buy 50 KTV at $20.5 Added 50 KTV at 25.85 in Regular IRA Redemption KTV at 26.11 plus accrued interest PROSPECTUS: www.sec.gov Underlying Security in KTV Redeemed by Wells Fargo 4/2011-Causes Automatic Redemption of TP
Wells Fargo Buy of JWF at $9.15 SOLD 50 of the TP JWF at 25.06 PROSPECTUS: Definitive Prospectus Supplement
XEROX: Added 50 KTX at 25 Bought 50 KTX at 25.14 Roth IRA PROSPECTUS: www.sec.gov (TC CONTAINING A TP)
ZIONS Bank bought 50 zbprb in roth at $19.9 Sold 50 ZBPRB at 24.38 Bought 50 ZBPRB at 25.05 Sold 50 ZBPRB at 25.68 PROSPECTUS: www.sec.gov
The above link to JWF is an issue from Wells Fargo. During the last meltdown in these issues, I was able to pick that one up at $9.15 with a par value of $25 and I sold the slightly higher cost shares to lock in a profit, thereby reducing my risk for that security.I will buy these securities but I am not much of a fan. I eliminate most of them due to their maturity dates. I do not care for the liberal deferral rights. But most of all, I become nervous about the ones issued by some of the banks since I believe, rightly or wrongly, that any TP issued by a bank seized by the FDIC would likely be rendered worthless. As the prospects of many banks improved, over the past few weeks, I have been more willing to buy them.I will add other references to this Gateway Post as I find them or for new ones.
Added: For the most part, I try to be an opportunistic buyer of these securities, hoping to catch them during a meltdown. It is, therefore, best to know about them in advance so that an opportunity can be recognized and seized before it passes. I suspect that the recent purchases of JWF and MJH may be held to maturity. The current yield on the MJH purchase is almost 24% per year until maturity in 2026. My mistake was not buying at least a 100 shares notwithstanding my negative opinions about Ken Lewis and pre-existing holdings in other debt and preferred issues from BAC. Several opportunities over the past nine months have presented themselves to buy Trust Preferred securities at heavily discounted prices to par value. I have preferred buying senior bonds from non-financial companies during those meltdowns and limited my exposure to TPs from banks. A few of those buys, such as PJS, were made at a similar discount to par value and were senior bonds.
General Discussions:Regular Preferred and Trust PreferredBary on Bank Preferred StocksTrust Preferred and Trust Certificate Distinguished/Posts on Tax Issues relating to Equity and Trust Preferred Stock and Deferral of Cumulative Preferred DividendsResponse to Query on Trust Preferred: Junior Debt Is Subordinated to More Senior Debt
Stocks, Bonds & Politics: Trust Preferred Securities & Financial Reform (Dodd-Frank law)
AMERISERV Bought 50 ASRVP @ 25 Sold 50 of the TP ARSVP at 25.8 PROSPECTUS: www.sec.gov
AON (Trust Certificates containing TPs) Sold Dkk Ex Interest Today TRUST CERTIFICATE AON BOND KTN TRUST CERTIFICATE AON BOND KTN ORDER FILLED at $13.1 Managing Risk in an IRA: KTN and KVW Links To Prospectuses for the AON TCs in One Place Bought 50 DKK in Roth TC KVW Pricing KTN add at less than $14 Added 50 of the TC DKK at $23.34 Sold 100 KVW at 24.75 Bought 50 DKK at 24.78 Sold 50 of 150 DKK DKK-Called by Owner of Call Warrant at $25 par value plus accrued interest FINRA INFO ON UNDERLYING BOND: FINRA DKK Prospectus: www.sec.gov KTN Prospectus: www.sec.gov KVW Prospectus: 424B5 KVF Prospectus: 424B5 Underlying Bond Prospectus: www.sec.gov KVW and DKK Called by Owner of Call Warrant (KTN does not have call warrant attached to it and I still own it as of 8/2011)
Associated Bank Added 50 ABWPRA at $19.42 Bought 50 of the TP ABWPRA Added 50 of ABWPRA Sold 100 of the 150 ABWPRA at 22.2 SOLD ABWPRA AT 25.15 PROSPECTUS: www.sec.gov
Bank of America: Buy of 50 MJH at $7.51 Sold 50 MJH at 23.6 sold 100 fbfprn (Fleet Boston acquired by BAC) at $17.38; Bought 50 of the TC CPP at $24.2 (underlying security originally issued by Countrywide Capital III) Sold TP CPP at 24.9 Bought 50 of CPP at $21.4 Sold 50 CPP at $24 Bought Back 50 CPP at $21.35 Sold 50 CPP at $24.93; Bought 50 BACPRW at 22.62 in the ROTH Sold BACPRW at 23.55 Bought 50 KRBPRE at 24.62 in Roth IRA (Originally issued by MBNA now part of BAC) Bought 50 KRBPRD @ 25.14 Sold 50 KRBPRD at $24.7 Bought 50 KRBPRD at 23.6 Bought 50 KRBPRE @25.07 Added 50 of the TP KRBPRE at 25.19 SOLD 50 KRBPRE @ 25.96 Sold 100 KRBPRE at $25.13-ROTH IRA Bought Back 50 KRBPRE at $25.06-ROTH IRA Bank Of America Calls for Redemption All of its TPs That I Own Redemption Proceeds Received BAC Trust Preferred Securities KRBPRE Prospectus: sec.gov KRBPRD Prospectus; CPP Prospectus; BACPRW Prospectus: MJH Prospectus; FBFPRN Prospectus ; SEE RATINGS OF BAC TPS: Bank of America; FINRA Information on underlying bond in CPP
Dillards: Buy 50 of DDT at $5.82 sold ainv and ddt Bought 50 DDT at 18.42 Sold 50 DDT at 22 PROSPECTUS: www.sec.gov
DPL Bought 100 MJT at 22.57 Sold 100 MJT at $24.43 Bought 100 MJV at $24.8 BOUGHT 50 MJT at 25.6 Call Warrant Exercised on MJT and MJV at $25 par value plus accrued interest UNDERLYING BOND PROSPECTUS: www.sec.gov MJV PROSPECTUS: www.sec.gov MJT PROSPECTUS: www.sec.gov LINK TO FINRA INFORMATION ON UNDERLYING BOND: FINRA
Everest RE: Bought 50 REPRB AT 20.78 Bought 50 REPRB at 20.19 Sold 50 REPRB at 21.9 Sold REPRB at 24.36 Bought: 50 REPRB @ 23.80 Added 50 REPRB at 22.03 Sold 100 REPRA at 24.11 PROSPECTUS: Final Prospectus Supplement
Florida Progress (now part of PGN) Bought 50 Shares of FPCPRA Bought 50 FPCPRA at $24.95 Sold 50 FPCPRA @ 25.47 in Roth IRA Bought 50 FPCPRA at 25.59 BOUGHT 100 FPCPRA at $25.35 Sold 100 FPCPRA at $25.9 Sold 50 FPCPRA at $26-Roth PROSPECTUS: www.sec.gov
Hawaii Electric Bought 50 HEPRU @ 25.05 IRA Sold 50 HEPRU at 25.4
KEY Bank KEYPRA Bought 50 of the TP KEYPRB Sold KEYPRB PROSPECTUS: www.sec.gov KEYPRA and KEYPRB Called by KEY as of 9/1/11
MORGAN STANLEY (MWR) Bought 50 MWR in regular IRA at 22.25 Added 50 MWR at 22 Sold 50 of 100 MWR at 22.91 Sold: 50 MWR @ 22.98 PROSPECTUS: www.sec.gov
National Penn Bought 50 NPBCO at 23.09 Sold 50 NPBCO at 25.2 Bought 50 of the TP NPBCO at $24.93 Bought 100 NPBCO at 24.91 Sold 100 NPBCO at $25.87 Sold 50 NPBCO at $26.17 Prospectus: www.sec.gov
REGIONS Bought 50 RFPRZ at 22.88 Sold RFPRZ at 23.46 Bought 50 RFPRZ at 24.49 Sold RFPRZ @ 25.98 PROSPECTUS: Final Prospectus Supplement
Sterling Bancshares (SBIBN) Bought 50 TP SBIBN at 23.2 Bought 50 SBIBN at 23 Sold 50 SBIBN at 24 Sold 50 SBIBN at $24.95 Prospectus: www.sec.gov
Sterling Bank (STL) Bought 50 of the TP STLPRA at $8.99 Added 50 STLPRA at 8.69 Sold 50 STLPRA at $9.4Bought 100 STLPRA at 8.87 Sold 100 of the TP STLPRA at 10.25 Bought 100 STLPRA at 10.05 Bought 50 STLPRA @ 10.21 Bought 200 STLPRA @ 10.14 Sold 100 STLPRA at 10.47 Added 40 STLPRA at 10.14 in Regular IRA Added 100 of the TP STLPRA at $9.87 SOLD 250 STLPRA at 10.2 Sold 200 STLPRA at $10.5-ROTH IRA PROSPECTUS: www.sec.gov
Susquehanna Trust Preferred Securities & Financial Reform/Bought 30 SUSPRA in Roth IRA Bought 50 SUSPRA at $25.25 ROTH IRA PROSPECTUS: Final Prospectus Supplement
SVB FINANCIAL Added 50 SIVBO AT $19.20 IN ROTH Added 50 SIVBO at $19.15 Bought 50 SIVBO at $19.49 Sold 50 of the 150 SIVBO at 24.65 Sold Remaining SIVBO at $25 Bought 50 SIVBO at 24.5 in Roth IRA Sold 50 SIVBO at $25 ROTH IRA PROSPECTUS:www.sec.gov
US Bank Bought 50 USBPRF at 22.54 Sold 50 USBPRF at 23.94 PROSPECTUS: e424b5
Wells Fargo TPs (via acquisition of Wachovia who acquired First Union): Rounded KTV to 100 Shares at under $18 Buy 50 KTV at $20.5 Added 50 KTV at 25.85 in Regular IRA Redemption KTV at 26.11 plus accrued interest PROSPECTUS: www.sec.gov Underlying Security in KTV Redeemed by Wells Fargo 4/2011-Causes Automatic Redemption of TP
Wells Fargo Buy of JWF at $9.15 SOLD 50 of the TP JWF at 25.06 PROSPECTUS: Definitive Prospectus Supplement
XEROX: Added 50 KTX at 25 Bought 50 KTX at 25.14 Roth IRA PROSPECTUS: www.sec.gov (TC CONTAINING A TP)
ZIONS Bank bought 50 zbprb in roth at $19.9 Sold 50 ZBPRB at 24.38 Bought 50 ZBPRB at 25.05 Sold 50 ZBPRB at 25.68 PROSPECTUS: www.sec.gov
The above link to JWF is an issue from Wells Fargo. During the last meltdown in these issues, I was able to pick that one up at $9.15 with a par value of $25 and I sold the slightly higher cost shares to lock in a profit, thereby reducing my risk for that security.I will buy these securities but I am not much of a fan. I eliminate most of them due to their maturity dates. I do not care for the liberal deferral rights. But most of all, I become nervous about the ones issued by some of the banks since I believe, rightly or wrongly, that any TP issued by a bank seized by the FDIC would likely be rendered worthless. As the prospects of many banks improved, over the past few weeks, I have been more willing to buy them.I will add other references to this Gateway Post as I find them or for new ones.
Added: For the most part, I try to be an opportunistic buyer of these securities, hoping to catch them during a meltdown. It is, therefore, best to know about them in advance so that an opportunity can be recognized and seized before it passes. I suspect that the recent purchases of JWF and MJH may be held to maturity. The current yield on the MJH purchase is almost 24% per year until maturity in 2026. My mistake was not buying at least a 100 shares notwithstanding my negative opinions about Ken Lewis and pre-existing holdings in other debt and preferred issues from BAC. Several opportunities over the past nine months have presented themselves to buy Trust Preferred securities at heavily discounted prices to par value. I have preferred buying senior bonds from non-financial companies during those meltdowns and limited my exposure to TPs from banks. A few of those buys, such as PJS, were made at a similar discount to par value and were senior bonds.
