| Capital & Balance Sheet
As of September 30, 2011, total capital was $245.7 billion, consisting of $70.1 billion in total shareholders’ equity (common shareholders’ equity of $67.0 billion and preferred stock of $3.1 billion) and $175.7 billion in unsecured long-term borrowings.
Book value per common share was $131.09 and Tangible book value per common share was $120.41, decreasing 0.3% and 1.0%, respectively, compared with the end of 2Q11. Book value and tangible book value per common share are based on common shares outstanding, including restricted stock units granted to employees with no future service requirements, of 511.0 million at period end.
According to the regulatory capital guidelines currently applicable to bank holding companies (Basel 1), the company’s Tier 1 capital ratio was 13.8% as of September 30, 2011, down from 14.7% as of June 30, 2011. Tier 1 common ratio was 12.1% on September 30, 2011 compared with 12.9% on June 30 2011.
Annualized return on average common shareholders’ equity (ROE) was 3.7% for the first nine months of 2011. Excluding the preferred dividend of $1.64 billion related to the redemption of Goldman’s Series G Preferred Stock in 1Q11, annualized ROE was 6.0% for the first nine months of 2011.
Total assets were $949.0 billion on September 30, 2011 compared with $937.0 billion on June 30, 2011. Level 3 assets were approximately $47.0 billion as of September 30, 2011, unchanged from June 30, 2011, and represented 4.9% of total assets.
As of September 30, 2011, global core excess (GCE) liquidity was $164.0 billion, and averaged $164.0 billion for 3Q11, unchanged compared with 2Q11.
On September 12, 2010, the Basel Committee on Banking Supervision released new capital requirements (Basel III), to be phased in between January 1, 2013, and January 1, 2019. The minimum floor for common equity will increase from 2.0% to a maximum of 4.5% by January 1, 2015, and the tier-1 capital minimum requirement will increase from 4.0% to 6.0% by January 1, 2015. A capital buffer will be added to both capital measurements and will commence on January 1, 2016, at 0.625%, and increased to 2.5% by January 1, 2019, for a final standard of 7.0% minimum common equity ratio and 8.5% minimum tier-1 capital ratio.
Share Repurchase
In keeping with the company’s long-standing policy of repurchasing shares to offset increases in share count over time resulting from employee share-based compensation, Goldman repurchased 18.1 million shares of its common stock at an average cost of $119.66 per share or a total cost of $2.16 billion during 3Q11. The remaining share authorization under the company’s existing repurchase program is 72.7 million shares.
On July 18, 2011, the board of directors of Goldman approved the repurchase of an additional 75.0 million shares of common stock pursuant to the company’s existing share repurchase program. The remaining share authorization under the Goldman’s existing repurchase program, including the newly authorized amount, is 90.8 million shares.
Divestures
On September 1, 2011, Goldman completed the sale of Litton Loan Servicing to Ocwen Financial Corporation. Earlier, in June 2011, Goldman had announced the sale of its mortgage-servicing subsidiary, Litton Loan Servicing, to Ocwen for about $263.7 million. Some of the assets of Litton were retained by Goldman, which was not reflected in the sale price.
As per the terms of the deal, Ocwen entered a new $2.47 billion loan for servicing advances and paid $337.4 million to retire a part of its debt, which Litton owes to Goldman. Further, Ocwen received $575 million of senior secured loan from Barclays plc (BCS) in order to finance the deal.
Additionally, the transaction provided Ocwen with $41.2 billion of servicing portfolio in the form of unpaid principal balance, primarily related to non-prime residential mortgage loans. Moreover, it provided the company with the servicing platforms based in Houston and Dallas in Texas.
Dividends
On October 18, 2011, Goldman declared a dividend of $0.35 per share payable on December 29, 2011 to common shareholders of record as of December 1, 2011.
On October 14, 2011, the company declared dividends on the following series of its non-cumulative preferred stock (represented by depositary shares, each representing a 1/1,000th interest in a share of preferred stock):
• $239.58 per share of Floating Rate Non-Cumulative Preferred Stock, Series A;
• $387.50 per share of 6.20% Non-Cumulative Preferred Stock, Series B;
• $255.56 per share of Floating Rate Non-Cumulative Preferred Stock, Series C; and
• $255.56 per share of Floating Rate Non-Cumulative Preferred Stock, Series D.
The dividends on all the series of preferred stock will be paid on November 10, 2011 to preferred shareholders of record as of October 26, 2011.
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