State Street Corp said on Monday that it planned to sell stock and bonds to position itself to repay a taxpayer infusion, and took a $3.7 billion after-tax charge as it moved asset-backed commercial paper conduits onto its balance sheet.
The large Boston-based custodial bank and asset manager said it planned to notify the U.S. Treasury Department of its plans to buy back $2 billion of preferred stock and warrants it sold under the Troubled Asset Relief Program. It plans to use proceeds from the sale of stock and the sale of debt not backed by the Federal Deposit Insurance Corp for this purpose.
State Street's charge relates to the moving of $22.7 billion of assets from the conduits, a type of special purpose vehicle that holds receivables. It expects to eventually recognize the vast majority of the charge as interest revenue over time, including $475 million before taxes in 2009.
The company now expects 2009 operating profit of $4.25 to $4.50 per share, taking into account the stock and bond offerings and the consolidation of the conduits, with operating revenue down 12 percent.
Analysts on average expected profit of $3.80 per share on revenue of $8.25 billion, according to Reuters Estimates.
Shares of State Street fell 5 percent to $36.60 in premarket trading.
(Reporting by Jonathan Stempel; Editing by Lisa Von Ahn)