Terms

Series

8.250% Fixed-to-Floating Rate Normal Automatic Preferred Enhanced Capital Securities (Normal APEX) / Non-Cumulative Perpetual Preferred Stock, Series A

Liquidation Preference

$1,000.00

Coupon Rate

8.25%

Rate Type

Fixed To Floating

Annual Dividend

$82.50

Payment Frequency

Semi Annual

Cumulative

Yes

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

March 15, 2011

First Call Price

$1,000.00

Redemption Notice Period

30 days

Capital Stack Ranking

Junior To: All Senior And Subordinated Debt Of State Street Corporation, All Liabilities To Creditors Of State Street Corporation; Pari Passu With: Other Series Of Parity Preferred Stock Of State Street Corporation; Senior To: Common Stock, Other Junior Stock Of State Street Corporation

Regulatory (Basel III) Call

Yes

Tax Classification

Qualified Dividend

Qualifies for QDI

Yes

Qualifies for DRD

Yes

Depositary Share Fraction

0.01

Shares Offered

500,000

Prospectus Summary

State Street Capital Trust III is offering 500,000 Normal APEX (8.250% Fixed-to-Floating Rate Normal Automatic Preferred Enhanced Capital Securities) at $1,000 liquidation amount per security, representing a 1/100th beneficial interest in one share of State Street Corporation's Non-Cumulative Perpetual Preferred Stock, Series A ($100,000 liquidation preference per share). Through the expected stock purchase date of March 15, 2011, distributions accrue at a fixed 8.250% per annum paid semi-annually on March 15 and September 15; thereafter, the rate resets quarterly to three-month LIBOR plus 4.990%, paid quarterly. Critically, distributions are cumulative through the stock purchase date — meaning missed payments accrue — but become non-cumulative thereafter, so any skipped dividend after that date is permanently lost to holders. The Normal APEX are a holding company instrument of State Street Corporation, sitting structurally below all obligations of operating subsidiary State Street Bank and Trust Company. The Preferred Stock ranks senior to common stock and junior-ranking stock, but is subordinated to all creditor claims on State Street Corporation's assets. The underlying Junior Subordinated Debentures are contractually subordinated to all of State Street's senior and subordinated debt. Redemption of the Preferred Stock requires prior Federal Reserve approval and, absent Fed permission, may only occur if replaced with non-restricted Tier 1 capital (e.g., common stock or another non-cumulative perpetual preferred). A 'capital treatment event' — loss of Tier 1 qualifying status for the Junior Subordinated Debentures — can trigger early redemption of those debentures prior to the stock purchase date, unwinding the structure. At the $1,000 issue price, the initial fixed-period yield is 8.25% per annum ($82.50 annually), paid semi-annually on March 15 and September 15 commencing September 15, 2008. After the stock purchase date, distributions shift to quarterly payments at LIBOR + 4.990%. Dividends on the underlying Preferred Stock of a domestic C-corporation typically qualify for the preferential 15%/20% qualified dividend income (QDI) rate for individual holders and the dividends-received deduction (DRD) for corporate holders, though this is not explicitly confirmed in the prospectus. After the stock purchase date, if State Street does not declare a dividend on the Preferred Stock, the Trust will not make a distribution on Normal APEX for that period and holders have no recourse to recover the missed payment — the non-cumulative feature is the key income risk post-2011.

Summarized from the SEC prospectus filing.

Distribution History

Floating Rate Terms

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If State Street skips or partially pays a dividend on the Preferred Stock, it is prohibited from paying dividends on common stock and other junior-ranking stock until full dividends resume; after the stock purchase date, Normal APEX holders have no right to recover skipped distributions.

Other Preferreds from State Street Corp

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 56 (Average)