State Street Repays $2 Billion in TARP Funds
June 17 2009 - 6:55PM
Business Wire
State Street Corporation (NYSE:STT), today announced that it has
repaid the full amount of the US Department of the Treasury�s $2
billion investment in the company under the TARP Capital Purchase
Program (CPP). The Company redeemed all of the outstanding shares
of preferred stock issued to the U.S. Treasury for a total
redemption price of $2,000,555,556, which reflects the aggregate
liquidation amount of the preferred stock and the accrued dividends
since the most recent dividend payment date. The effect of the
redemption will be to reduce net income available to common
stockholders by approximately $105 million in the second quarter of
2009. This amount represents the difference between the amortized
cost of the preferred stock and the redemption price. State Street
will also initiate discussions with the US Treasury regarding its
intent to repurchase the warrant issued to the US Treasury in
connection with the preferred investment. That warrant, initially
exercisable for 5,576,208 shares of State Street�s common stock,
now represents an interest to purchase 2,788,104 shares. Due to
State Street�s successful completion of a qualified public offering
of common stock in May 2009 with gross proceeds ($2.3 billion) in
excess of the amount of the US Treasury�s CPP investment, the
number of shares underlying the warrant was reduced by one-half in
accordance with the terms of the warrant.
State Street Corporation (NYSE: STT) is the world's leading
provider of financial services to institutional investors including
investment servicing, investment management and investment research
and trading. With $11.337 trillion in assets under custody and
$1.395 trillion in assets under management at March 31, 2009, State
Street operates in 27 countries and more than 100 geographic
markets and employs 27,500 worldwide.
FORWARD-LOOKING
STATEMENTS
This news announcement contains forward-looking statements as
defined by United States securities laws, including statements
about our goals and expectations regarding our business, financial
condition, results of operations and strategies, the financial and
market outlook, governmental and regulatory initiatives and
developments, and the business environment. These statements are
not guarantees of future performance, are inherently uncertain, are
based on current assumptions that are difficult to predict and
involve a number of risks and uncertainties. Therefore, actual
outcomes and results may differ materially from what is expressed
in those statements, and those statements should not be relied upon
as representing our expectations or beliefs as of any date
subsequent to the date of this release.
Important factors that may affect future results and outcomes
include, but are not limited to:
- global financial market
disruptions and the current worldwide economic recession, and
monetary and other governmental actions designed to address such
disruptions and recession in the U.S. and internationally;
- increases in the potential
volatility of our net interest revenue, changes in the composition
of the assets on our consolidated balance sheet and the possibility
that we may be required to change the manner in which we fund those
assets, all as a result of the May 15, 2009 consolidation for
financial reporting purposes of the asset-backed commercial paper
conduits that we administer;
- the financial strength and
continuing viability of the counterparties with which we or our
clients do business and with which we have investment or financial
exposure;
- the liquidity of the U.S. and
international securities markets, particularly the markets for
fixed income securities, and the liquidity requirements of our
customers;
- the credit quality and credit
agency ratings of the securities in our investment securities
portfolio, a deterioration or downgrade of which could lead to
other-than-temporary impairment of the respective securities and
the recognition of an impairment loss;
- the maintenance of credit agency
ratings for our debt obligations as well as the level of
credibility of credit agency ratings;
- the possibility of our customers
incurring substantial losses in investment pools where we act as
agent, and the possibility of further general reductions in the
valuation of assets;
- our ability to attract deposits
and other low-cost, short-term funding;
- potential changes to the
competitive environment, including changes due to the effects of
consolidation, extensive and changing government regulation and
perceptions of State Street as a suitable service provider or
counterparty;
- the level and volatility of
interest rates and the performance and volatility of securities,
credit, currency and other markets in the U.S. and
internationally;
- our ability to measure the fair
value of the investment securities on our consolidated balance
sheet;
- the results of litigation,
government investigations and similar disputes and, in particular,
the effect of current or potential proceedings concerning State
Street Global Advisors�, or SSgA�s, active fixed-income strategies
and other investment products, and the enactment of legislation and
changes in regulation and enforcement that impact us and our
customers;
- adverse publicity or other
reputational harm;
- our ability to pursue
acquisitions, strategic alliances and divestures, finance future
business acquisitions and obtain regulatory approvals and consents
for acquisitions;
- the performance and demand for
the products and services we offer, including the level and timing
of withdrawals from our collective investment products;
- our ability to continue to grow
revenue, attract highly skilled people, control expenses and
attract the capital necessary to achieve our business goals and
comply with regulatory requirements;
- our ability to control operating
risks, information technology systems risks and outsourcing risks,
the possibility of errors in the quantitative models we use to
manage our business and the possibility that our controls will fail
or be circumvented;
- the potential for new products
and services to impose additional costs on us and expose us to
increased operational risk, and our ability to protect our
intellectual property rights;
- changes in government regulation
or new legislation, which may increase our costs, expose us to risk
related to compliance or impact our customers;
- changes in accounting standards
and practices; and
- changes in tax legislation and
in the interpretation of existing tax laws by U.S. and non-U.S. tax
authorities that impact the amount of taxes due.
Other important factors that could cause actual results to
differ materially from those indicated by any forward-looking
statements are set forth in our 2008 Annual Report on Form 10-K and
our subsequent SEC filings, including our Current Report on Form
8-K filed on May 18, 2009. We encourage investors to read these
filings, particularly the sections on Risk Factors, for additional
information with respect to any forward-looking statements and
prior to making any investment decision. The forward-looking
statements contained in this press release speak only as of the
date hereof, June 17, 2009, and we do not undertake efforts to
revise those forward-looking statements to reflect events after
this date.
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