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State Street Repays $2 Billion in TARP Funds

BOSTON--(BUSINESS WIRE)--Jun. 17, 2009-- 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.


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.

Source: State Street Corporation

State Street Corporation
Edward J. Resch, +1 617-664-1110
Kelley MacDonald, +1 617-664-3477
Carolyn Cichon, +1 617-664-8672

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding State Street Corporation's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.