State Street Corporation to Redeem $500M of Preferred Stock in the Third Quarter of 2024

Rhea-AI Summary

State Street (NYSE:STT) has announced plans to redeem $500 million of its non-cumulative perpetual preferred stock, Series H, on September 16, 2024. This redemption covers all 5,000 outstanding shares, represented by 500,000 depositary shares. The redemption price is set at $100,000 per share (or $1,000 per depositary share), plus any declared but unpaid dividends up to the redemption date.

Additionally, a cash dividend of $2,036.16 per share ($20.361600 per depositary share) has been declared for the period from June 18, 2024, to the redemption date. This dividend will be paid separately to shareholders of record as of September 3, 2024. After the redemption, no Series H Preferred Stock shares will remain outstanding.

Positive

• Redemption of $500 million in preferred stock, potentially improving the company's capital structure
• Declaration of a substantial cash dividend for Series H Preferred Stock holders

Negative

• Reduction in the company's capital base by $500 million

Insights

Financial Analyst

State Street's decision to redeem $500 million of preferred stock is a strategic financial move that could impact its capital structure and future earnings. This redemption of Series H Preferred Stock, yielding 5.625%, suggests the company may be aiming to optimize its capital costs.

The redemption price of $100,000 per share (or $1,000 per depositary share) plus declared but unpaid dividends indicates a fair treatment of preferred shareholders. However, the loss of this dividend stream could slightly impact income-focused investors.

Importantly, this move might signal State Street's confidence in its financial position and future cash flows. It could potentially lead to improved earnings per share for common stockholders by reducing preferred dividend payments. Investors should monitor how State Street plans to utilize the freed-up capital post-redemption.

Market Research Analyst

State Street's preferred stock redemption aligns with the broader trend of financial institutions optimizing their capital structures in response to evolving market conditions. With interest rates at elevated levels, this move could be interpreted as State Street's strategy to potentially refinance at more favorable terms in the future.

The market's reaction to this news will be important to watch. It may be seen as a positive signal of financial strength, potentially boosting investor confidence. However, it's essential to consider the broader economic context, including Federal Reserve policies and banking sector health.

Investors should also assess how this redemption fits into State Street's overall capital management strategy and its implications for future dividend policies and share buybacks. This move could enhance financial flexibility, potentially allowing for more shareholder-friendly actions in the future.

BOSTON--(BUSINESS WIRE)-- State Street Corporation (NYSE:STT) today announced that it will redeem $500 million, or all, of its 5,000 outstanding shares, of non-cumulative perpetual preferred stock, Series H (“Series H Preferred Stock”) (represented by 500,000 depositary shares, each representing a 1/100th interest in a share of Series H Preferred Stock) on September 16, 2024 (the “Redemption Date”), for cash at a redemption price of $100,000 per share (equivalent to $1,000 per depositary share) plus all dividends that have been declared but not paid up to but not including the Redemption Date (the “Series H Redemption Price”).

As previously announced, (i) a cash dividend of $2,036.16 per share of Series H Preferred Stock (or approximately $20.361600 per depositary share) (the “Series H Dividend”) has been declared for the period from June 18, 2024 up to but not including the Redemption Date. The Series H Dividend will be paid to the holders of record of the Series H Preferred Stock as of September 3, 2024 in the customary manner on the Redemption Date. Accordingly, the Series H Dividend will not be included in the Series H Redemption Price. From and after the Redemption Date, no shares of Series H Preferred Stock will be deemed outstanding and the only remaining rights of the holders of the Series H Preferred Stock will be to receive payment of the Series H Redemption Price.

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 $44.3 trillion in assets under custody and/or administration and $4.4 trillion* in assets under management as of June 30, 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 June 30, 2024 includes approximately $69 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 press release contains forward-looking statements that are not historical in nature. Such forward-looking statements are subject to risks and uncertainties, including competitive factors, government regulation and general economic conditions and other risks and uncertainties described in State Street’s periodic reports on file with the U.S. Securities and Exchange Commission including the most recent Annual Report on Form 10-K of State Street, as filed with the U.S. Securities and Exchange Commission. In some cases, you can identify these statements by forward-looking words, such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “looking ahead,” “may,” “plan,” “possible,” “potential,” “project,” “should,” “will,” and similar words or expressions, the negative or plural of such words or expressions and other comparable terminology. Actual results may differ materially from anticipated results. State Street does not undertake to update its forward-looking statements or any of the information contained in this press release, including to reflect future events or circumstances.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240809079261/en/

Investors:

Elizabeth Lynn

+1 617 664 3477

Media:

Carolyn Cichon

+1 617 664 8672

Source: State Street Corporation

FAQ

When will State Street (STT) redeem its Series H Preferred Stock?

State Street (STT) will redeem its Series H Preferred Stock on September 16, 2024, which is the announced Redemption Date.

What is the redemption price for State Street's (STT) Series H Preferred Stock?

The redemption price is $100,000 per share of Series H Preferred Stock, equivalent to $1,000 per depositary share, plus any declared but unpaid dividends up to the Redemption Date.

How much dividend has State Street (STT) declared for Series H Preferred Stock holders?

State Street has declared a cash dividend of $2,036.16 per share of Series H Preferred Stock, or approximately $20.361600 per depositary share.

What is the total value of Series H Preferred Stock that State Street (STT) is redeeming?

State Street is redeeming $500 million worth of Series H Preferred Stock, which represents all 5,000 outstanding shares.