State Street Corporation to Redeem $500 Million of Preferred Stock in the First Quarter of 2021
January 14 2021 - 04:31PM
Business Wire
State Street Corporation (NYSE:STT) today announced that it will
redeem $500 million, or 5,000 of its 7,500 outstanding shares, of
its non-cumulative perpetual preferred stock, Series F (“Series F
Preferred Stock”) (represented by depositary shares, each
representing a 1/100th interest in a share of Series F preferred
stock) on March 15, 2021, for cash at a redemption price of
$100,000 per share (equivalent to $1,000 per depositary share) plus
all declared and unpaid dividends (the “Redemption Price”). As
separately announced, a cash dividend of $953.38 per share of
Series F Preferred Stock (or approximately $9.5338 per depositary
share) has been declared for the period from December 15, 2020 up
to but not including March 15, 2021 (the “March Dividend”). The
March Dividend will be paid separately to the holders of record of
the Series F Preferred Stock as of March 1, 2021 in the customary
manner. Accordingly, there will not be any declared and unpaid
dividends included in the Redemption Price.
Separately, as previously announced, in December 2020 the
Federal Reserve lifted the moratorium on common share repurchases
in place since the third quarter of last year for several large
financial institutions, including State Street. As a result, we
expect to resume common share repurchases this quarter. Like other
large financial institutions, we are authorized by the Federal
Reserve to make common share repurchases in Q1 2021 in an amount
such that a) common equity distributions, inclusive of dividends
paid in the quarter (capped at current levels), do not exceed
average 2020 quarterly net income, plus b) a number of shares equal
to the share issuances in the quarter related to expensed employee
compensation. State Street expects to announce details of a first
quarter 2021 common share repurchase program along with its fourth
quarter and full year 2020 results on January 19, 2021. The common
share repurchase program is subject to approval by our Board of
Directors.
“We are pleased to continue to optimize our capital structure
through the redemption of approximately $500 million of preferred
stock and the planned resumption of our common share repurchase
program,” said Ron O’Hanley, President and Chief Executive Officer.
“Our strong balance sheet performance under stress and elevated
capital levels will enable us to begin the return of capital and to
further optimize our capital mix, benefitting our
shareholders.”
About State Street Corporation State Street Corporation
(NYSE:STT) is one of the world's leading providers of financial
services to institutional investors including investment servicing,
investment management and investment research and trading. With
$36.6 trillion in assets under custody and/or administration and
$3.1 trillion* in assets under management as of September 30, 2020,
State Street operates globally in more than 100 geographic markets
and employs approximately 39,000 worldwide. For more information,
visit State Street's website at www.statestreet.com.
* Assets under management as of September 30, 2020 includes
approximately $81 billion of assets with respect to SPDR® products
for which State Street Global Advisors Funds Distributors, LLC
(SSGA FD) acts solely as the marketing agent. SSGA FD and State
Street Global Advisors are affiliated.
Forward Looking Statements This News Release contains
forward-looking statements within the meaning of United States
securities laws, including statements about our goals and
expectations regarding our plans for capital actions (including the
resumption of common share repurchases, the redemption of preferred
stock and the payment of dividends), business, financial and
capital condition, strategies, governmental and regulatory
initiatives and developments, and the business environment.
Forward-looking statements are often, but not always, identified by
such forward-looking terminology as “will,” “outlook,” “guidance,”
“expect,” “priority,” “objective,” “intend,” “plan,” “forecast,”
“believe,” “anticipate,” “estimate,” “seek,” “may,” “trend,”
“target,” “strategy” and “goal,” or similar statements or
variations of such terms. 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 time subsequent to the time this
News Release is first issued.
Important factors that may affect future results and outcomes
include, but are not limited to:
- the resumption of common share repurchases by State Street and
the payment of undeclared dividends are subject to approval by our
Board of Directors, as well as market conditions, our capital
position, our financial performance, the amount of common stock
issued as part of employee compensation programs, investment
opportunities and the potential for regulatory limitations on
capital actions, including common share repurchases and
dividends;
- the financial strength of the counterparties with which we or
our clients do business and to which we have investment, credit or
financial exposures or to which our clients have such exposures as
a result of our acting as agent, including as an asset manager or
securities lending agent;
- the significant risks and uncertainties for our business,
results of operations and financial condition, as well as our
regulatory capital and liquidity ratios and other regulatory
requirements, caused by the COVID-19 pandemic, which will depend on
several factors, including the scope and duration of the pandemic,
its influence on the economy and financial markets, the
effectiveness of our work from home arrangements and staffing
levels in operational facilities, challenges associated with our
return to office plans such as maintaining a safe office
environment and integrating at-home and in-office staff, the impact
of market participants on which we rely and actions taken by
governmental authorities and other third parties in response to the
pandemic and the impact of lower equity market valuations on our
service and management fee revenue; increases in the volatility of,
or declines in the level of, our NII; changes in the composition or
valuation of the assets recorded in our consolidated statement of
condition (and our ability to measure the fair value of investment
securities); and changes in the manner in which we fund those
assets;
- the volatility of servicing fee, management fee, trading fee
and securities finance revenues due to, among other factors, the
value of equity and fixed-income markets, market interest and FX
rates, the volume of client transaction activity, competitive
pressures in the investment servicing and asset management
industries, and the timing of revenue recognition with respect to
software and processing fees revenues;
- the liquidity of the U.S. and international securities markets,
particularly the markets for fixed-income securities and inter-bank
credits; the liquidity of the assets on our balance sheet and
changes or volatility in the sources of such funding, particularly
the deposits of our clients; and demands upon our liquidity,
including the liquidity demands and requirements of our
clients;
- the level, volatility and uncertainty of interest rates; the
expected discontinuation of Interbank Offered Rates including
London Interbank Offered Rate (LIBOR); the valuation of the U.S.
dollar relative to other currencies in which we record revenue or
accrue expenses; the performance and volatility of securities,
credit, currency and other markets in the U.S. and internationally;
and the impact of monetary and fiscal policy in the U.S. and
internationally on prevailing rates of interest and currency
exchange rates in the markets in which we provide services to our
clients;
- the credit quality, credit-agency ratings and fair values of
the securities in our investment securities portfolio, a
deterioration or downgrade of which could lead to impairment of
such securities and the recognition of a provision for credit
losses in our consolidated statement of income;
- our ability to attract and retain deposits and other low-cost,
short-term funding; our ability to manage the level and pricing of
such deposits and the relative portion of our deposits that are
determined to be operational under regulatory guidelines; our
ability to deploy deposits in a profitable manner consistent with
our liquidity needs, regulatory requirements and risk profile; and
the risks associated with the potential liquidity mismatch between
short-term deposit funding and longer term investments;
- the manner and timing with which the Federal Reserve and other
U.S. and non-U.S. regulators implement or reevaluate the regulatory
framework applicable to our operations (as well as changes to that
framework), including implementation or modification of the
Dodd-Frank Act and related stress testing and resolution planning
requirements and implementation of international standards
applicable to financial institutions, such as those proposed by the
Basel Committee and European legislation (such as Undertakings for
Collective Investments in Transferable Securities (UCITS) V, the
Money Market Fund Regulation and the Markets in Financial
Instruments Directive II/Markets in Financial Instruments
Regulation); among other consequences, these regulatory changes
impact the levels of regulatory capital, long-term debt and
liquidity we must maintain, acceptable levels of credit exposure to
third parties, margin requirements applicable to derivatives,
restrictions on banking and financial activities and the manner in
which we structure and implement our global operations and
servicing relationships. In addition, our regulatory posture and
related expenses have been and will continue to be affected by
heightened standards and changes in regulatory expectations for
global systemically important financial institutions applicable to,
among other things, risk management, liquidity and capital
planning, cyber-security, resiliency, resolution planning and
compliance programs, as well as changes in governmental enforcement
approaches to perceived failures to comply with regulatory or legal
obligations;
- adverse changes in the regulatory ratios that we are, or will
be, required to meet, whether arising under the Dodd-Frank Act or
implementation of international standards applicable to financial
institutions, such as those proposed by the Basel Committee, or due
to changes in regulatory positions, practices or regulations in
jurisdictions in which we engage in banking activities, including
changes in internal or external data, formulae, models, assumptions
or other advanced systems used in the calculation of our capital or
liquidity ratios that cause changes in those ratios as they are
measured from period to period;
- requirements to obtain the prior approval or non-objection of
the Federal Reserve or other U.S. and non-U.S. regulators for the
use, allocation or distribution of our capital or other specific
capital actions or corporate activities, including, without
limitation, acquisitions, investments in subsidiaries, dividends
and stock repurchases, without which our growth plans,
distributions to shareholders, share repurchase programs or other
capital or corporate initiatives may be restricted;
- geopolitical risks applicable to our operations and activities
in jurisdictions globally, including emerging markets and
economies, that have the potential to disrupt or impose costs,
delays or damages upon our, our clients', our counterparties' and
suppliers' and our infrastructure providers' respective operations,
activities and strategic planning and to compromise financial
markets and stability;
- changes in law or regulation, or the enforcement of law or
regulation, that may adversely affect our business activities or
those of our clients or our counterparties, and the products or
services that we sell, including, without limitation, additional or
increased taxes or assessments thereon, capital adequacy
requirements, margin requirements and changes that expose us to
risks related to our operating model and the adequacy and
resiliency of our controls or compliance programs;
- cyber-security incidents, or failures to protect our systems
and our, our clients' and others' information against
cyber-attacks, that could result in the theft, loss, unauthorized
access to, disclosure, use or alteration of information, system
failures, or loss of access to information; any such incident or
failure could adversely impact our ability to conduct our
businesses, damage our reputation and cause losses, potentially
materially;
- our ability to expand our use of technology to enhance the
efficiency, accuracy and reliability of our operations and our
dependencies on information technology; to replace and consolidate
systems, particularly those relying upon older technology, and to
adequately incorporate cyber-security, resiliency and business
continuity into our operations, information technology
infrastructure and systems management; to implement robust
management processes into our technology development and
maintenance programs; and to control risks related to use of
technology, including cyber-crime and inadvertent data
disclosures;
- our ability to identify and address threats to our information
technology infrastructure and systems (including those of our
third-party service providers); the effectiveness of our and our
third party service providers' efforts to manage the resiliency of
the systems on which we rely; controls regarding the access to, and
integrity of, our and our clients' data; and complexities and costs
of protecting the security of such systems and data;
- our ability to control operational and resiliency risks, data
security breach risks and outsourcing risks; our ability to protect
our intellectual property rights; the possibility of errors in the
quantitative models we use to manage our business; and the
possibility that our controls will prove insufficient, fail or be
circumvented;
- economic or financial market disruptions in the U.S. or
internationally, including those which may result from recessions
or political instability; for example, the United Kingdom's (U.K.)
exit from the European Union or actual or potential changes in
trade policy, such as tariffs or bilateral and multilateral trade
agreements;
- our ability to create cost efficiencies through changes in our
operational processes and to further digitize our processes and
interfaces with our clients, any failure of which, in whole or in
part, may among other things, reduce our competitive position,
diminish the cost-effectiveness of our systems and processes or
provide an insufficient return on our associated investment;
- our ability to promote a strong culture of risk management,
operating controls, compliance oversight, ethical behavior and
governance that meets our expectations and those of our clients and
our regulators, and the financial, regulatory, reputational and
other consequences of our failure to meet such expectations;
- the impact on our compliance and controls enhancement programs
associated with the appointment of a monitor under the deferred
prosecution agreement with the DOJ and compliance consultant
appointed under a settlement with the SEC, including the potential
for such monitor and compliance consultant to require changes to
our programs or to identify other issues that require substantial
expenditures, changes in our operations, payments to clients or
reporting to U.S. authorities;
- the results of our review of our billing practices, including
additional findings or amounts we may be required to reimburse
clients, as well as potential consequences of such review,
including damage to our client relationships or our reputation,
adverse actions or penalties imposed by governmental authorities
and costs associated with remediation of identified
deficiencies;
- the results of, and costs associated with, governmental or
regulatory inquiries and investigations, litigation and similar
claims, disputes, or civil or criminal proceedings;
- changes or potential changes in the amount of compensation we
receive from clients for our services, and the mix of services
provided by us that clients choose;
- the large institutional clients on which we focus are often
able to exert considerable market influence and have diverse
investment activities, and this, combined with strong competitive
market forces, subjects us to significant pressure to reduce the
fees we charge, to potentially significant changes in our AUC/A or
our AUM in the event of the acquisition or loss of a client, in
whole or in part, and to potentially significant changes in our
revenue in the event a client re-balances or changes its investment
approach, re-directs assets to lower- or higher-fee asset classes
or changes the mix of products or services that it receives from
us;
- the potential for losses arising from our investments in
sponsored investment funds;
- the possibility that our clients will incur substantial losses
in investment pools for which we act as agent; the possibility of
significant reductions in the liquidity or valuation of assets
underlying those pools and the potential that clients will seek to
hold us liable for such losses; and the possibility that our
clients or regulators will assert claims that our fees, with
respect to such investment products, are not appropriate;
- our ability to anticipate and manage the level and timing of
redemptions and withdrawals from our collateral pools and other
collective investment products; the credit agency ratings of our
debt and depositary obligations and investor and client perceptions
of our financial strength; adverse publicity, whether specific to
us or regarding other industry participants or industry-wide
factors, or other reputational harm; changes or potential changes
to the competitive environment, due to, among other things,
regulatory and technological changes, the effects of industry
consolidation and perceptions of us, as a suitable service provider
or counterparty; our ability to complete acquisitions, joint
ventures and divestitures, including, without limitation, our
ability to obtain regulatory approvals, the ability to arrange
financing as required and the ability to satisfy closing
conditions;
- the risks that our acquired businesses, including, without
limitation, CRD, and joint ventures will not achieve their
anticipated financial, operational and product innovation benefits
or will not be integrated successfully, or that the integration
will take longer than anticipated; that expected synergies will not
be achieved or unexpected negative synergies or liabilities will be
experienced; that client and deposit retention goals will not be
met; that other regulatory or operational challenges will be
experienced; and that disruptions from the transaction will harm
our relationships with our clients, our employees or
regulators;
- our ability to integrate CRD's front office software solutions
with our middle and back office capabilities to develop our
front-to-middle-to-back office State Street Alpha that is
competitive, generates revenues in line with our expectations and
meets our clients' requirements; the dependency of State Street
Alpha on enhancements to our data management and the risks to our
servicing model associated with increased exposure to client
data;
- our ability to recognize evolving needs of our clients and to
develop products that are responsive to such trends and profitable
to us; the performance of and demand for the products and services
we offer; and the potential for new products and services to impose
additional costs on us and expose us to increased operational
risk;
- our ability to grow revenue, manage expenses, attract and
retain highly skilled people and raise the capital necessary to
achieve our business goals and comply with regulatory requirements
and expectations;
- changes in accounting standards and practices;
- and the impact of the U.S. tax legislation enacted in 2017, and
changes in tax legislation and in the interpretation of existing
tax laws by U.S. and non-U.S. tax authorities that affect 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 2019 Annual Report on Form 10-K and
our subsequent SEC filings. 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 presentation should not by relied on
as representing our expectations or beliefs as of any time
subsequent to the time this presentation is first issued, and we do
not undertake efforts to revise those forward-looking statements to
reflect events after that time.
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Ilene Fiszel Bieler +1 617-664-3477
Carolyn Cichon +1 617-664-8672
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