State Street Corporation Announces Issuance of Preferred Stock

Rhea-AI Summary

State Street (NYSE: STT) has announced the issuance of $750 million of depositary shares, each representing a 1/100th ownership interest in its 6.450% Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, Series K. The shares have a liquidation preference of $100,000 per share.

The issuance involved a diverse syndicate of underwriters, including minority and women-owned investment banks. Dividends will be paid quarterly starting June 15, 2025, with a fixed rate of 6.450% until September 15, 2030. After that, the rate will reset every five years based on the U.S. Treasury rate plus a 2.135% spread.

The company maintains redemption rights after September 15, 2030, subject to regulatory approval, or in case of a regulatory capital treatment event.

Positive

• Successful raising of $750 million in capital through preferred stock issuance
• Attractive 6.450% fixed dividend rate for initial period
• Flexible redemption options providing financial management flexibility

Negative

• Non-cumulative dividend structure poses risk to investors if payments are suspended
• Potential dividend rate uncertainty after September 2030 due to Treasury rate-based resets

Insights

Financial Analyst

State Street's $750 million preferred stock issuance represents a strategic capital management move with several notable features. The 6.450% fixed rate until 2030 is relatively attractive in the current rate environment, providing investors with stable returns while allowing State Street to lock in capital costs before potential market shifts.

The structure of this Series K Preferred Stock is particularly sophisticated. After September 2030, the rate reset mechanism tied to five-year Treasury rates plus 2.135% spread provides built-in protection against interest rate risk while maintaining predictability for both the institution and investors. This hybrid structure balances fixed-rate stability in the near term with floating-rate flexibility in the longer term.

Several key aspects warrant attention:

• The non-cumulative nature of dividends provides State Street with financial flexibility during stressed periods
• The redemption option after September 2030 gives the bank strategic optionality for capital management
• The regulatory capital treatment event clause offers protection against potential regulatory changes

The timing of this issuance suggests proactive capital planning, potentially positioning State Street ahead of anticipated regulatory requirements or strategic initiatives. The inclusion of minority and women-owned investment banks in the syndicate not only broadens the investor base but also aligns with evolving ESG considerations in capital markets.

BOSTON--(BUSINESS WIRE)-- State Street Corporation (“State Street”) (NYSE: STT) announced today that it has issued $750 million of depositary shares, each representing a 1/100^th ownership interest in a share of its 6.450% Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, Series K (the “Series K Preferred Stock”), with a liquidation preference of $100,000 per share.

Consistent with recent securities issuances, State Street accessed a broad investor base through a diverse syndicate of underwriters with Blaylock Van, LLC, a minority-owned investment bank, and Siebert Williams Shank & Co., LLC, a minority and women-owned investment bank, each acting as co-managers on the transaction. The underwriting syndicate also included BofA Securities, Inc. and Morgan Stanley & Co. LLC, each acting as joint book-running managers.

Dividends on the Series K Preferred Stock will be payable on the liquidation preference amount, on a non-cumulative basis, quarterly in arrears on the 15^th day of March, June, September and December of each year, commencing on June 15, 2025. Dividends will accrue (i) from the date of issuance to, but excluding, September 15, 2030 at a fixed rate of 6.450% per annum and (ii) from and including September 15, 2030, for each five-year reset period, at a rate per annum equal to the five-year U.S. Treasury rate as of the most recent reset dividend determination date, plus a spread of 2.135%. Dividend payments on the Series K Preferred Stock will only be payable when, as and if declared by State Street’s board of directors, or any duly authorized committee of its board of directors. State Street may redeem the Series K Preferred Stock (i) in whole or in part on any dividend payment date on or after September 15, 2030, subject to regulatory approval, and (ii) in whole but not in part within 90 days following the occurrence of a regulatory capital treatment event.

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 $46.6 trillion in assets under custody and/or administration and $4.7 trillion* in assets under management as of December 31, 2024, State Street operates globally in more than 100 geographic markets and employs approximately 53,000 worldwide. For more information, visit State Street's website at www.statestreet.com.

*Assets under management as of December 31, 2024 includes approximately $82 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250206745497/en/

Media:

Carolyn Cichon

+1 617 664 8672



Investor:

Elizabeth Lynn

+1 617 664 3477

Source: State Street Corporation

FAQ

What is the dividend rate for State Street's (STT) new Series K Preferred Stock?

The Series K Preferred Stock pays a fixed rate of 6.450% until September 15, 2030, after which it will reset every five years based on the U.S. Treasury rate plus a 2.135% spread.

How much capital did State Street (STT) raise through its Series K Preferred Stock issuance?

State Street raised $750 million through the issuance of Series K Preferred Stock depositary shares.

When will State Street (STT) begin paying dividends on the Series K Preferred Stock?

Dividends will begin paying quarterly on June 15, 2025, and continue on March 15, June 15, September 15, and December 15 of each year.

When can State Street (STT) redeem the Series K Preferred Stock?

State Street can redeem the Series K Preferred Stock after September 15, 2030, subject to regulatory approval, or earlier in whole if there's a regulatory capital treatment event.