BNY Mellon Announces $500 Million Series N Perpetual Preferred Stock Offering with 6.15% Initial Dividend

Offering Structure and Capital Raise Details

On July 16, 2026, BNY Mellon filed a prospectus supplement detailing its Series N Noncumulative Perpetual Preferred Stock offering. The issuance is structured to bolster the company’s capital base through perpetual preferred securities. The offering includes 500,000 depositary shares, each representing a fractional interest in an underlying preferred share with a $100,000 liquidation preference. This depositary receipt structure facilitates fractional ownership and streamlined trading via book-entry form.

The gross offering totals $500 million, with each depositary share priced at $1,000. Underwriting discounts amount to $10 per share, resulting in net proceeds of $990 per share, or roughly $495 million in total. The depositary shares are expected to be delivered around July 23, 2026, through The Depository Trust Company and its participants, including Clearstream Banking and Euroclear Bank, following standard institutional settlement practices.

Dividend Terms and Payment Schedule

The dividend framework features an initial fixed rate of 6.150% annually on the $1,000 liquidation value per depositary share from issuance through September 19, 2031. Dividends will be paid quarterly in arrears on March 20, June 20, September 20, and December 20 each year, with the first payment scheduled for December 20, 2026. Dividend payments are subject to declaration by the board or its authorized committee and contingent on legally available funds and regulatory compliance.

Starting September 20, 2031, the dividend rate will reset every five years based on the five-year Treasury rate plus a margin of 1.868%. This floating rate ties future dividends to prevailing market interest rates, providing investors with some protection against interest rate fluctuations beyond the initial fixed period. The prospectus does not specify the company’s internal cost of capital assumptions or rationale for the chosen reset spread.

Redemption Rights and Call Features

BNY Mellon retains the option to redeem the Series N Preferred Stock, in whole or part, on or after September 20, 2031, at $1,000 per depositary share plus any accrued but unpaid dividends. This call right becomes exercisable after the initial five-year fixed dividend period, allowing the company to refinance or retire the securities without premium if market conditions are favorable.

Additionally, the company may redeem the entire series within 90 days following a "Regulatory Capital Treatment Event," as defined in the prospectus supplement. This provision enables BNY Mellon to respond promptly to adverse regulatory capital classification changes that could impact the preferred stock’s status. Redemption under this scenario would also occur at $1,000 per share plus accrued dividends, with proportional redemption of depositary shares to ensure investors receive equivalent value.

Dividend Rights and Noncumulative Feature

The Series N Preferred Stock is noncumulative, meaning unpaid dividends do not accumulate if not declared in any quarter. Dividend payments are discretionary and contingent upon the company’s financial condition and regulatory restrictions. This noncumulative aspect introduces potential income risk for investors relying on steady dividend payments.

Dividend payments are subject to legal and regulatory limitations, including capital adequacy and earnings requirements, particularly under Federal Reserve oversight applicable to BNY Mellon as a bank holding company. The prospectus supplement references further detail on these restrictions, though specific thresholds or trigger events are not elaborated in the excerpt.

Voting Rights and Governance

The Series N Preferred Stock generally carries no voting rights except as specified in the prospectus supplement, consistent with typical preferred stock structures. This ensures common shareholders retain control over corporate governance matters. Certain voting rights may apply under special circumstances such as dividend nonpayment or liquidation events.

Depositary shareholders exercise rights and preferences proportionate to the underlying preferred shares through the depositary mechanism, which simplifies trading but adds an intermediary layer between investors and the actual securities.

Book-Entry Issuance and Trading Details

The depositary shares will be issued exclusively in book-entry form with no physical certificates. The Depository Trust Company will maintain records, with participation from Clearstream Banking and Euroclear Bank, facilitating efficient settlement and ownership transfers. Settlement is anticipated on or about July 23, 2026, in New York.

Neither the Series N Preferred Stock nor the depositary shares will be listed on any exchange or automated quotation system, meaning secondary market trading will occur over-the-counter via broker-dealers and institutional networks. These securities are not bank deposits, are uninsured by the FDIC or any government agency, and are not obligations or guaranteed by any bank.

Underwriting Syndicate and Distribution

The offering is led by a syndicate of five joint book-running managers: Goldman Sachs & Co. LLC, J.P. Morgan, Morgan Stanley, RBC Capital Markets, and UBS Investment Bank. BNY Mellon’s affiliate, BNY Capital Markets, also participates as a joint book-running manager. The underwriting discount totals $10 per depositary share, or $5 million in aggregate, compensating underwriters for marketing and distribution efforts.

BNY Mellon affiliates, including BNY Mellon Capital Markets, LLC, may engage in secondary market transactions of the depositary shares post-offering, acting as principals or agents. Secondary sales will be priced relative to prevailing market conditions and liquidity.

Tax Implications and Investor Eligibility

The prospectus supplement addresses U.S. federal income tax considerations for investors, with detailed treatment provided elsewhere in the full documentation. Generally, dividends are taxed as ordinary income in the year received, with qualified dividend tax rates applicable to eligible U.S. individual taxpayers. ERISA-related guidance is also included for employee benefit plan investors.

Sales of depositary shares to retail investors in the European Economic Area and the United Kingdom are prohibited, as no key information document under EU Regulation No 1286/2014 (PRIIPs Regulation) has been prepared. This restricts the offering to institutional and professional investors in compliance with European regulatory standards.

Risk Factors and Investment Considerations

Investors are directed to the "Risk Factors" section starting on page S-6 of the full prospectus supplement. Risks typical of noncumulative perpetual preferred stock include dividend suspension risk, interest rate volatility, liquidity constraints, and regulatory capital treatment changes. The noncumulative nature means dividends are not guaranteed and depend on the company’s financial health and regulatory approvals.

The Securities and Exchange Commission and state securities regulators have neither approved nor disapproved these securities or verified the adequacy of the prospectus supplement. BNY Mellon and the underwriters accept responsibility for the accuracy of the information as of the filing date, cautioning that company financial conditions may have changed since then.

Regulatory Context and Capital Usage

The redemption feature linked to a "Regulatory Capital Treatment Event" reflects BNY Mellon’s consideration of evolving capital requirements for systemically important banks regulated by the Federal Reserve and OCC. This allows the company to redeem the preferred stock if regulatory treatment becomes unfavorable for capital adequacy purposes.

The filing does not specify the intended use of proceeds, which is detailed in the "Use of Proceeds" section of the prospectus. The capital raised may be allocated for general corporate purposes, business growth, acquisitions, or regulatory capital ratio management, as outlined in the full prospectus incorporated by reference.