State Street Corporation today announced 2007 fourth-quarter
earnings per share of $0.57 on net income of $223 million, compared
to earnings per share of $0.91 on net income of $309 million in the
fourth quarter of 2006. Revenue in the fourth quarter is $2.479
billion compared to $1.622 billion in the fourth quarter of 2006.
Return on shareholders� equity is 7.7% in the fourth quarter of
2007 compared to 16.9% in the fourth quarter of 2006. Average
shares outstanding for the fourth quarter of 2007 are 392 million
shares. For the full year 2007, earnings of $3.45 per share on net
income of $1.261 billion compares with $3.26 per share on income
from continuing operations of $1.096 billion in 2006. Return on
shareholders� equity in 2007 is 13.4% compared with return on
shareholders� equity from continuing operations of 16.2% in 2006.
Average shares for the full year 2007 are 365 million shares.
Results presented on an �operating basis� for the fourth quarter of
2007 exclude a previously announced after-tax charge of $279
million ($467 million on a pre-tax operating basis) associated with
the underperformance of certain active fixed-income strategies at
State Street Global Advisors (SSgA) and $57 million, or $38 million
of after-tax merger and integration costs related to the July 2,
2007, acquisition of Investors Financial Services Corp. (�Investors
Financial�). Results presented on an �operating basis� for the
fourth quarter of 2006 exclude an $18 million adjustment to reduce
income-tax expense. Revenue for both quarters is presented on a
fully taxable-equivalent basis. Full-year 2007 results presented on
an �operating basis� exclude the $279 million after tax-charge
associated with State Street Global Advisors and $198 million, or
$129 million of after-tax merger and integration costs relating to
the acquisition of Investors Financial. Full-year 2006 results
presented on an �operating basis� exclude a $65 million adjustment
to increase income-tax expense. Revenue for both years is presented
on a fully tax-equivalent basis. Management presents results on an
operating basis in order to provide financial information that is
comparable from period to period, and to present comparable
financial trends with respect to our ongoing business operations.
Management believes such presentation facilitates an investor�s
understanding and analysis of our underlying performance and trends
in addition to financial information prepared in accordance with
GAAP. The following financial information is presented on an
operating basis. Earnings per share in the fourth quarter are $1.38
per share on net income of $540 million, up 60% from $0.86 per
share in the fourth quarter of 2006. Revenue of $2.496 billion in
the fourth quarter of 2007 is up 52.8% from $1.634 billion in the
fourth quarter a year ago. Expenses of $1.649 billion in the fourth
quarter of 2007 are up 40.0% from $1.178 billion in the year-ago
quarter. For the fourth quarter of 2007, return on shareholders�
equity is 18.7%, compared to 15.9% for the fourth quarter of 2006.
The following financial information is presented on an operating
basis. Earnings for the full-year 2007 is $4.57 per share on net
income of $1.669 billion, up 32% from $3.46 per share on income
from continuing operations of $1.161 billion in 2006. Revenue in
2007 is up 32.1% to a record level of $8.394 billion from $6.356
billion in 2006. Expenses in 2007 of $5.768 billion increased 27.0%
from $4.540 billion in 2006. Return on shareholders equity in 2007
is 17.7%, up from 17.1% in 2006. Commenting on the performance,
Ronald E. Logue, State Street's chairman and chief executive
officer, said, "Nearly every revenue item on our income statement
increased in double digits this year, compared to 2006, resulting
in 32% growth in earnings per share on an operating basis. While
investment servicing and investment management fees were both
strong, revenue from trading services and securities finance
benefited from continuing market volatility, particularly in the
fixed-income markets in the second half of 2007. The consolidation
of Investors Financial continues on schedule, and the impact on our
bottom line in 2007 was dilution of $.06 per share, a significant
improvement from our original model of $0.14 per share dilutive.
Our strategy of more actively managing the balance sheet and the
growth of our non-US business contributed to an annual increase of
55% in fully taxable-equivalent net interest revenue. Net interest
margin equaled 1.71% for 2007. Additionally, our non-U.S. revenue
now represents approximately 41% of total revenue, up from 39% in
2006.� Logue added, �As we explained on our call earlier this
month, we expect that by establishing the fourth-quarter reserve to
address the legal exposure and other costs associated with the
underperformance of certain active fixed-income strategies at State
Street Global Advisors, we can address customer concerns and help
to put the issue behind us, particularly given the current momentum
in our business. Management fee revenue at SSgA grew 21% in 2007
compared to 2006, and SSgA continues to be a strong contributor to
State Street�s results. Total assets under management as of
December 31, 2007, grew 13% from the level at the end of 2006, and
specifically SSgA�s fixed income assets increased 21% in the same
period.� Logue concluded, �During 2008 we will build on the
progress we made in 2007, particularly outside the U.S. We continue
to target positive operating leverage on an annual basis. For 2008,
due to the acquisition of Investors Financial on July 2, 2007, our
goal for growth in revenue is 14% to 17%, up from our long-term
goal of 8% to 12%. We expect earnings per share growth of 10% to
15% and return on equity of 14% to 17%, both on an operating basis.
Our 2008 target is to achieve near the lower end of these ranges.�
In reporting its financial results for the fourth quarter of 2007,
State Street has prepared information in four categories:
�Baseline� results are results on an operating basis excluding the
�Investors Financial� results described below and are presented on
a fully taxable-equivalent basis. �Investors Financial� results are
the revenue and expenses, including financing costs and
amortization of intangibles, attributable to the Investors
Financial business acquired on July 2, 2007, but excluding merger
and integration costs, all presented on a fully taxable-equivalent
basis. Per-share amounts reflect the effect of the acquisition on
outstanding shares. �Operating-basis� results are �reported�
results excluding the charge recorded in the fourth quarter of 2007
and merger and integration costs. They are presented on a fully
taxable-equivalent basis. �Reported� results are in accordance with
U.S. generally accepted accounting principles (GAAP). Management
believes that providing separate Investors Financial results and
baseline financial information further assists investors and
analysts in understanding the effect of that acquisition. $ in
millions except per share data For the three months ended December
31, 2007 � � Baseline (a) � Investors Financial (b) � � Operating
(c) � Reported Fee Revenue $ 1,709 $ 201 � � 1,910 � 1,910 All
other revenue � 546 � 40 � � 586 � 569 Total revenue � 2,255 � 241
� � 2,496 � 2,479 Total expenses � 1,482 � 167 � � 1,649 � 2,173
Income taxes � 279 � 28 � � 307 � 83 Net income $ 494 $ 46 � $ 540
$ 223 Diluted EPS $ 1.39 $ (.01 ) $ 1.38 $ .57 (a) represents State
Street results on an �operating basis,� further adjusted to exclude
the � Investors Financial� results described in the adjoining
column, all presented on a fully taxable equivalent basis. (b)
represents revenue and expenses, including financing costs and
amortization of intangibles, attributable to the Investors
Financial business acquired on July 2, 2007, but excluding merger
and integration costs. Presented on a fully taxable-equivalent
basis. Per-share amounts reflect the impact on outstanding shares
from the issuance of approximately 61 million shares for the
acquisition. (c) excludes the charge recorded in the fourth quarter
of 2007 and merger and integration costs, and presented on a fully
taxable-equivalent basis. FOURTH-QUARTER RESULTS VS. YEAR-AGO
QUARTER Total revenue on a fully taxable-equivalent basis is $2.496
billion in the fourth quarter of 2007 is up from $1.634 billion, or
52.8%, from the fourth quarter of 2006. Expenses on an operating
basis are $1.649 billion, up 40.0% compared with $1.178 billion in
the fourth quarter of 2006. As a result, on an operating basis,
State Street generated about 1280 basis points of positive
operating leverage. Servicing fees are $967 million, up $269
million or 39%, from $698 million in the year-ago quarter. The
increase is attributable to business from customers added from the
Investors Financial acquisition, business from new and existing
clients and higher average equity valuations. Total assets under
custody at quarter end are $15.30 trillion, a record level, up 29%,
compared with $11.85 trillion at the end of the year-ago quarter.
Daily average values for the S&P 500 Index are up 8%, for the
MSCI� EAFE IndexSM are up 16%, and for the NASDAQ are up 13% during
the fourth quarter of 2007 from the year-ago quarter. Management
fees, generated by State Street Global Advisors, are $297 million,
up $44 million, or 17%, compared to $253 million in the year-ago
quarter. The increase in management fees reflects new business from
existing and new clients and an increase in average month-end
equity valuations, offset partially by lower performance fees.
Total assets under management at quarter end are $1.98 trillion, up
13%, compared to $1.75 trillion at the end of the year-ago quarter.
Average month-end values compared to the fourth quarter of 2006,
are up 7% for the S&P 500 Index and up 13% for the NASDAQ;
average month-end values for the MSCI� EAFE IndexSM are up 15%. The
total return of the Lehman US Aggregate bond index for the fourth
quarter is 3.00%. Trading services revenue, which includes foreign
exchange trading revenue and brokerage and other fee revenue, is up
73%, from $203 million to $352 million. The increase is driven by
improved volumes and higher volatility in foreign exchange, as well
as an increase in brokerage and other revenue principally due to
the acquisition of Currenex in March, 2007. Securities finance
revenue is $256 million in the quarter, compared to $90 million in
the year-ago quarter, an increase of 184%. The increase primarily
reflects improved spreads and increased demand for securities on
loan as a result of turmoil in the fixed-income markets. Processing
and other revenue is down 38%, or $23 million to $38 million
primarily due to increased costs of funding for our asset-backed
commercial paper. Fully taxable-equivalent net interest revenue is
$573 million, up 75% from $328 million in last year�s fourth
quarter. The increase is due to reinvestment of assets at higher
rates and lower-cost funding, the impact of the Investors Financial
acquisition, and favorable spreads and increased volumes of non-US
deposits. The increase in expenses on an operating basis to $1.649
billion in the fourth quarter of 2007 from $1.178 billion in the
fourth quarter of 2006 is primarily due to the inclusion of
Investors Financial�s operating expenses for the second half of
2007. Baseline expenses increased 26%. Salaries and employee
benefits expense on an operating basis increased $240 million to
$934 million, attributable to additions to headcount from the
Investors Financial acquisition. Transaction processing expense
increased 52% to $184 million principally due to the acquisition.
Also primarily as a result of the acquisition, information systems
and communications expense increased 24% to $148 million, and
occupancy expenses of $107 million in 2007 quarter compare to $94
million in the 2006 quarter. On an operating basis, other expenses
increased 84%, or $126 million, to $276 million, primarily due to
acquisition costs, fees, such as for professional services and
recruiting, and securities processing costs. The effective tax rate
was 27.1% in the fourth quarter of 2007 compared with 30.4% in the
fourth quarter of 2006. We expect the rate for 2008 to be 34.5%.
FOURTH-QUARTER RESULTS VS. THIRD QUARTER On an operating basis,
fourth-quarter earnings are $1.38 per share as compared to
third-quarter earnings of $1.15 per share, which excluded $91
million, or $0.24 per share of after-tax merger and integration
costs. On an operating basis in both periods, earnings per share
would have increased 20%. Total revenue on a fully tax-equivalent
basis in the 2007 fourth quarter of $2.496 billion is up 10.6%, or
$239 million compared to $2.257 billion in the third quarter. On an
operating basis, expenses in the fourth quarter of 2007 are $1.649
billion up 6.5%, or $101 million, from third quarter expenses of
$1.548 billion. Servicing fee revenue is up 3% due to business from
new and existing customers and higher average equity valuations.
Management fees are down 1% due to lower performance fees, offset
partially by new business wins and higher equity valuations.
Trading services revenue is up 10% to $352 million primarily due to
higher volatility and increased volumes and higher volatility in
FX. Securities finance revenue improved 55% to $256 million due to
improved spreads. Processing fees and other revenue declined 38% to
$38 million due to lower results from the structured products
business and lower earnings from joint-venture equity investments.
Fully taxable-equivalent net interest revenue increased 19% to $573
million due to reinvestment of assets at higher rates and a higher
level of lower-cost funding and the impact of the Investors
Financial acquisition. Salaries and employee benefits expense is up
2% on an operating basis due to higher headcount added to service
new business. Occupancy expense was down 2% due to lower operating
costs. On an operating basis, other expense increased 30%, or $63
million, to $276 million primarily due to acquisition costs, fees,
such as for professional services and recruiting, and securities
processing costs. FULL YEAR 2007 VS. 2006 Total revenue on a fully
taxable-equivalent basis increased 32.1% from $6.356 billion to
$8.394 billion. Servicing fees increased 24%, from $2.723 billion
to $3.388 billion. Management fees increased 21%, from $943 million
to $1.141 billion. Trading services revenue increased 34%, from
$862 million to $1.152 billion and securities finance revenue
increased 76%, from $386 million to $681 million. Processing fees
and other revenue decreased 13%, to $237 million from $272 million.
Fully taxable-equivalent net interest revenue increased 55%, from
$1.155 billion to $1.788 billion. On an operating basis, expenses
increased 27.0%, from $4.540 billion to $5.768 billion, excluding
merger and integration costs and the impact of the charge.
Operating expenses included an increase of 28% to $3.397 billion in
salaries and employee benefits expense. Transaction processing
expense increased 25% to $619 million and information systems and
communications increased 9% to $546 million. Occupancy expense
increased 9% to $408 million. Other expenses increased 54% to $798
million. ADDITIONAL INFORMATION All per share amounts represent
diluted earnings per share based on average shares outstanding for
the respective period reported. State Street expects to complete
the previously announced $1 billion accelerated share repurchase by
January 18, 2008. INVESTOR CONFERENCE CALL State Street will
webcast an investor conference call today, Tuesday, January 15,
2008, at 9:30 a.m. EST, available at
www.statestreet.com/stockholder. The conference call will also be
available via telephone, at +1 719/457-2679 (confirmation code
4616472). Recorded replays of the conference call will be available
on the web site, and by telephone at +1 402/220-4230, beginning at
2:00 PM today. The telephone replay will be available for
approximately two weeks following the conference call. This press
release and additional financial information is available on State
Street�s website, at www.statestreet.com/stockholder, under
�Financial Reports.� State Street Corporation (NYSE: STT) is the
world's leading specialist in providing institutional investors
with investment servicing, investment management and investment
research and trading services. With $15.30 trillion in assets under
custody and $1.98 trillion in assets under management at December
31, 2007, State Street operates in 26 countries and more than 100
geographic markets worldwide and employs 27,110 worldwide. For more
information, visit State Street�s web site at www.statestreet.com
or call 877/639-7788 [NEWS STT] toll-free in the United States and
Canada, or +1 678/999-4577 outside those countries. FORWARD-LOOKING
STATEMENTS This news announcement contains forward-looking
statements as defined by United States securities laws, including
statements about the financial outlook and business environment,
exposure to claims and the adequacy of our reserve. These
statements are not guarantees of future performance, are inherently
uncertain, are based on current assumptions that are difficult to
predict and involve a number of risks and uncertainties. Therefore,
actual outcomes and results may differ materially from what is
expressed in those statements, and those statements should not be
relied upon as representing State Street's expectations or beliefs
as of any date subsequent to the date of this release. Important
factors that may affect future results and outcomes include: State
Street's ability to integrate and convert acquisitions into its
business, including the acquisition of Investors Financial Services
Corp.; the level and volatility of interest rates, particularly in
the U.S. and Europe; the performance and volatility of securities,
currency and other markets in the U.S. and internationally; and
economic conditions and monetary and other governmental actions
designed to address those conditions; the liquidity of the US and
European securities markets, particularly the markets for
fixed-income securities, including asset-backed commercial paper;
and the liquidity requirements of our customers; the credit quality
and credit agency ratings of the securities in our investment
securities portfolio, a deterioration or downgrade of which could
lead to other-than-temporary impairment of the respective
securities and the recognition of an impairment loss; State
Street's ability to attract non-interest bearing deposits and other
low-cost funds; the results of litigation and similar disputes and
the effect that any such results may have on SSgA�s reputation and
its ability to attract and retain customers; the possibility that
the ultimate costs of the legal exposure associated with SSgA�s
actively managed fixed-income strategies may exceed or be below the
level of the reserve, in view of the uncertainties of the timing
and outcome of litigation, and the amounts involved; the
possibility of further developments of the nature giving rise to
the legal exposure associated with SSgA�s actively managed
fixed-income and other investment strategies; the performance and
demand for the investment products we offer; the competitive
environment in which State Street operates; the enactment of
legislation and changes in regulation and enforcement that impact
State Street and its customers, as well as the effects of legal and
regulatory proceedings, including litigation; State Street's
ability to continue to grow revenue, control expenses and attract
the capital necessary to achieve its business goals and comply with
regulatory requirements; State Street's ability to control systemic
and operating risks; trends in the globalization of investment
activity and the growth on a worldwide basis in financial assets;
trends in governmental and corporate pension plans and savings
rates; changes in accounting standards and practices, including
changes in the interpretation of existing standards, that impact
State Street's consolidated financial statements; and changes in
tax legislation and in the interpretation of existing tax laws by
U.S. and non-U.S. tax authorities that impact the amount of taxes
due. Other important factors that could cause actual results to
differ materially from those indicated by any forward-looking
statements are set forth in State Street's 2006 Annual Report on
Form 10-K and its subsequent SEC filings. State Street encourages
investors to read its 10-K, particularly the section on Risk
Factors, and its subsequent SEC filings for additional information
with respect to any forward-looking statements and prior to making
any investment decision. The forward-looking statements contained
in this press release speak only as of the date hereof, January 15,
2008, and State Street will not undertake efforts to revise those
forward-looking statements to reflect events after this date. STATE
STREET CORPORATION Earnings Press Release Addendum � � Financial
Highlights December 31, 2007 � � Quarters Ended � % Change � Q4
2007 Q4 2007 (Dollars in millions, except per share amounts
December 31, September 30, December 31, vs. vs. or where otherwise
noted) � 2007 (1) � 2007 (1) � 2006 � Q3 2007 � Q4 2006 � � Total
Revenue $ 2,479 $ 2,240 $ 1,622 11 % 53 % Total Expenses (2) (3)
2,173 1,689 1,178 29 84 Net Income 223 358 309 (38) (28) � Diluted
Earnings Per Share (4) $ .57 $ .91 $ .91 (37) (37) � Cash Dividends
Declared Per Share $ .23 $ .22 $ .21 Closing Price Per Share of
Common Stock (at quarter end) 81.20 68.16 67.44 � Return on Equity
7.7 % 12.6 % 16.9 % � At Quarter End: Assets Under Custody (AUC)
(in trillions) $ 15.30 $ 15.15 $ 11.85 Assets Under Management
(AUM) (in trillions) 1.98 2.00 1.75 � Financial Trends: Years Ended
� % Change � 2007 December 31, December 31, vs. (Dollars in
millions, except per share amounts) � 2007 (5) � 2006 � 2006 � �
Total Revenue $ 8,336 $ 6,311 32 % Total Expenses (2) (3) 6,433
4,540 42 Income Tax Expense 642 675 (5) Income from Continuing
Operations 1,261 1,096 15 Income from Discontinued Operations - 10
Net Income 1,261 1,106 � Diluted Earnings Per Share: From
Continuing Operations $ 3.45 $ 3.26 6 From Discontinued Operations
- .03 Net Income 3.45 3.29 � Cash Dividends Declared Per Share .88
.80 10 � Return on Equity from Continuing Operations 13.4 % 16.2 %
Return on Equity 13.4 16.4 � (1) Quarters ended December 31 and
September 30, 2007 include financial results of Investors
Financial, which State Street acquired on July 2, 2007. (2) Total
expenses for the quarters ended December 31 and September 30, 2007
include merger and integration costs of $57 million and $141
million, respectively, or $38 million and $91 million after-tax,
respectively, recorded in connection with the acquisition of
Investors Financial. Total expenses for the year ended December 31,
2007 included merger and integration costs of $198 million, or $129
million after-tax. (3) Total expenses for the quarter and year
ended December 31, 2007 include a net charge of $467 million, or
$279 million after-tax, associated with certain active fixed-income
strategies at State Street Global Advisors. (4) Diluted earnings
per share for the quarters ended December 31 and September 30, 2007
reflect the issuance of 60.8 million shares on July 2, 2007 in
connection with the completion of the acquisition of Investors
Financial. (5) Financial results for the year ended December 31,
2007 include results of Investors Financial for the quarters ended
September 30 and December 31, 2007. STATE STREET CORPORATION
Earnings Press Release Addendum � � � � � � SELECTED FINANCIAL
INFORMATION Quarters and Years Ended December 31, 2007 and December
31, 2006 � Quarters Ended Years Ended December 31, 2007 (1)
December 31, 2006 % Change December 31, 2007 (2) December 31, 2006
% Change (Dollars in millions, except per share amounts) � � � Fee
Revenue: Servicing fees $ 967 $ 698 39 % $ 3,388 $ 2,723 24 %
Management fees 297 253 17 1,141 943 21 Trading services 352 203 73
1,152 862 34 Securities finance 256 90 184 681 386 76 Processing
fees and other � 38 � 61 (38) � 237 � 272 (13) Total fee revenue
1,910 1,305 46 6,599 5,186 27 � Net Interest Revenue: Interest
revenue 1,454 1,226 19 5,212 4,324 21 Interest expense � 898 � 910
(1) � 3,482 � 3,214 8 Net interest revenue (3) 556 316 76 1,730
1,110 56 Provision for loan losses � - � - � - � - Net interest
revenue after provision for loan losses 556 316 76 1,730 1,110 56 �
Gains on sales of available-for-sale investment securities, net �
13 � 1 � 7 � 15 Total revenue 2,479 1,622 52.8 8,336 6,311 32.1 �
Operating Expenses: Salaries and employee benefits 793 694 14 3,256
2,652 23 Information systems and communications 148 119 24 546 501
9 Transaction processing services 184 121 52 619 496 25 Occupancy
107 94 14 408 373 9 Special charge 600 - - 600 - - Merger and
integration costs 57 - - 198 - - Other � 284 � 150 89 � 806 � 518
56 Total operating expenses � 2,173 � 1,178 84.5 � 6,433 � 4,540
41.7 Income from continuing operations before income tax expense
306 444 (31) 1,903 1,771 7 Income tax expense from continuing
operations � 83 � 135 � 642 � 675 Income from continuing operations
223 309 (28) 1,261 1,096 15 � Income from discontinued operations
before income tax expense - - - 16 Income tax expense from
discontinued operations � - � - � - � 6 Income from discontinued
operations � - � - � - � 10 Net income $ 223 $ 309 $ 1,261 $ 1,106
� Earnings Per Share From Continuing Operations: Basic $ .58 $ .93
(38) $ 3.50 $ 3.31 6 Diluted .57 .91 (37) 3.45 3.26 6 � Earnings
Per Share From Discontinued Operations: Basic $ - $ - $ - $ .03
Diluted - - - .03 � Earnings Per Share: Basic $ .58 $ .93 $ 3.50 $
3.34 Diluted .57 .91 3.45 3.29 � Average Shares Outstanding (in
thousands): Basic 385,200 331,421 360,675 331,350 Diluted 392,200
337,429 365,488 335,732 � Consolidated Selected Financial
Information presented above was prepared in accordance with
accounting principles generally accepted in the United States. �
(1) Quarter ended December 31, 2007 includes financial results of
Investors Financial, which State Street acquired on July 2, 2007.
(2) Year ended December 31, 2007 includes results of Investors
Financial for the quarters ended September 30 and December 31,
2007. (3) Net interest revenue on a fully taxable-equivalent basis
was $573 million and $328 million for the quarters ended December
31, 2007 and 2006, respectively, and $1.788 billion and $1.155
billion for the years ended December 31, 2007 and 2006,
respectively. These amounts include taxable-equivalent adjustments
of $17 million and $12 million for the quarters ended December 31,
2007 and 2006, respectively, and $58 million and $45 million for
the year ended December 31, 2007 and 2006. STATE STREET CORPORATION
Earnings Press Release Addendum � � � SELECTED FINANCIAL
INFORMATION Quarters Ended December 31, 2007 and September 30, 2007
� � Quarters Ended (1) December 31, 2007 September 30, 2007 %
Change (Dollars in millions, except per share amounts) � � � � � �
Fee Revenue: Servicing fees $ 967 $ 937 3 % Management fees 297 299
(1) Trading services 352 320 10 Securities finance 256 165 55
Processing fees and other � 38 � 61 (38) Total fee revenue 1,910
1,782 7 � Net Interest Revenue: Interest revenue 1,454 1,383 5
Interest expense � 898 � 919 (2) Net interest revenue (2) 556 464
20 Provision for loan losses � - � - Net interest revenue after
provision for loan losses 556 464 20 � Gains (Losses) on sales of
available-for-sale investment securities, net � 13 � (6) Total
revenue 2,479 2,240 10.7 Operating Expenses: Salaries and employee
benefits 793 916 (13) Information systems and communications 148
145 2 Transaction processing services 184 165 12 Occupancy 107 109
(2) Special charge 600 - - Merger and integration costs 57 141 (60)
Other � 284 � 213 33 Total operating expenses � 2,173 � 1,689 28.7
Income before income tax expense 306 551 (44) Income tax expense �
83 � 193 Net income $ 223 $ 358 (38) � Earnings Per Share: Basic $
.58 $ .92 (37) Diluted .57 .91 (37) � Average Shares Outstanding
(in thousands): Basic 385,200 386,843 Diluted 392,200 392,150 �
Consolidated Selected Financial Information presented above was
prepared in accordance with accounting principles generally
accepted in the United States. (1) Quarters ended December 31 and
September 30, 2007 include financial results of Investors
Financial, which State Street acquired on July 2, 2007. (2) Net
interest revenue on a fully taxable-equivalent basis was $573
million and $481 million for the quarters ended December 31 and
September 30, 2007, respectively. These amounts include
taxable-equivalent adjustments of $17 million. STATE STREET
CORPORATION Earnings Press Release Addendum � � SELECTED
OPERATING-BASIS FINANCIAL INFORMATION Quarters and Years Ended
December 31, 2007 and December 31, 2006 � Quarters Ended (1) Years
Ended (1) December 31, 2007 December 31, 2006 % Change December 31,
2007 December 31, 2006 % Change (Dollars in millions, except per
share amounts) � � � Fee Revenue: Servicing fees $ 967 $ 698 39 % $
3,388 $ 2,723 24 % Management fees 297 253 17 1,141 943 21 Trading
services 352 203 73 1,152 862 34 Securities finance 256 90 184 681
386 76 Processing fees and other � 38 � 61 (38) � 237 � 272 (13)
Total fee revenue 1,910 1,305 46 6,599 5,186 27 � Net Interest
Revenue: Interest revenue, operating basis 1,471 1,238 19 5,270
4,369 21 Interest expense � 898 � 910 (1) � 3,482 � 3,214 8 Net
interest revenue, operating basis 573 328 75 1,788 1,155 55
Provision for loan losses � - � - � - � - Net interest revenue
after provision for loan losses, operating basis 573 328 75 1,788
1,155 55 � Gains on sales of available-for-sale investment
securities, net � 13 � 1 � 7 � 15 Total revenue, operating basis
2,496 1,634 52.8 8,394 6,356 32.1 � Operating Expenses: Salaries
and employee benefits, operating basis 934 694 35 3,397 2,652 28
Information systems and communications 148 119 24 546 501 9
Transaction processing services 184 121 52 619 496 25 Occupancy 107
94 14 408 373 9 Other, operating basis � 276 � 150 84 � 798 � 518
54 Total operating expenses, operating basis � 1,649 � 1,178 40.0 �
5,768 � 4,540 27.0 Income from continuing operations before income
tax expense, operating basis 847 456 86 2,626 1,816 45 Income taxes
from continuing operations, operating basis 290 153 899 610
Taxable-equivalent adjustment � 17 � 12 � 58 � 45 Net income from
continuing operations, operating basis $ 540 $ 291 86 $ 1,669 $
1,161 44 � � Diluted earnings per share from continuing operations,
operating basis $ 1.38 $ .86 60 $ 4.57 $ 3.46 32 � Average diluted
shares outstanding (in thousands) 392,200 337,429 365,488 335,732 �
Return on equity from continuing operations, operating basis 18.7 %
15.9 % 17.7 % 17.1 % � � (1) Refer to the accompanying
reconciliation of reported results to operating-basis results.
STATE STREET CORPORATION Earnings Press Release Addendum � SELECTED
OPERATING-BASIS FINANCIAL INFORMATION Quarters Ended December 31,
2007 and September 30, 2007 � � Quarters Ended � December 31, 2007
(1) September 30, 2007 % Change (Dollars in millions, except per
share amounts) � � � � � � Fee Revenue: Servicing fees $ 967 $ 937
3 % Management fees 297 299 (1) Trading services 352 320 10
Securities finance 256 165 55 Processing fees and other � 38 � 61
(38) Total fee revenue 1,910 1,782 7 � Net Interest Revenue:
Interest revenue, operating basis 1,471 1,400 5 Interest expense �
898 � 919 (2) Net interest revenue, operating basis 573 481 19
Provision for loan losses � - � - Net interest revenue after
provision for loan losses, operating basis 573 481 19 � Gains
(Losses) on sales of available-for-sale investment securities, net
� 13 � (6) Total revenue, operating basis 2,496 2,257 10.6
Operating Expenses: Salaries and employee benefits, operating basis
934 916 2 Information systems and communications 148 145 2
Transaction processing services 184 165 12 Occupancy 107 109 (2)
Other, operating basis � 276 � 213 30 Total operating expenses,
operating basis � 1,649 � 1,548 6.5 Income from continuing
operations before income tax expense, operating basis 847 709 19
Income taxes from continuing operations 290 243 Taxable-equivalent
adjustment � 17 � 17 Net income from continuing operations,
operating basis $ 540 $ 449 20 � � Diluted earnings per share from
continuing operations, operating basis $ 1.38 $ 1.15 20 � Average
diluted shares outstanding (in thousands) 392,200 392,150 � Return
on equity from continuing operations, operating basis 18.7 % 15.8 %
� (1) Refer to the accompanying reconciliation of reported results
to operating-basis results. STATE STREET CORPORATION Earnings Press
Release Addendum � RECONCILIATION OF REPORTED RESULTS TO
OPERATING-BASIS RESULTS Quarter and Year Ended December 31, 2007 �
� (Dollars in millions, except per share amounts) Quarter Ended
December 31, 2007 � Year Ended December 31, 2007 � � � Reported
Operating Reported Operating Results Adjust-ments Results Results
Adjust-ments Results � Fee Revenue: Servicing fees $ 967 $ 967 $
3,388 $ 3,388 Management fees 297 297 1,141 1,141 Trading services
352 352 1,152 1,152 Securities finance 256 256 681 681 Processing
fees and other � 38 � 38 � 237 � 237 Total fee revenue 1,910 1,910
6,599 6,599 � Net Interest Revenue: Interest revenue 1,454 $ 17 (1)
1,471 5,212 $ 58 (1) 5,270 Interest expense � 898 � - � 898 � 3,482
� - � 3,482 Net interest revenue 556 17 573 1,730 58 1,788
Provision for loan losses � - � - � - � - � - � - Net interest
revenue after provision for loan losses 556 17 573 1,730 58 1,788 �
Gains on sales of available-for-sale investment securities, net 13
� - � 13 � 7 � - � 7 Total revenue 2,479 17 2,496 8,336 58 8,394 �
Operating Expenses: Salaries and employee benefits 793 141 (2) 934
3,256 141 (2) 3,397 Infor-mation systems and commun-ications 148 -
148 546 - 546 Trans-action processing services 184 - 184 619 - 619
Occupancy 107 - 107 408 - 408 Special charge 600 (600) (2) - 600
(600) (2) - Merger and integr-ation costs 57 (57) (3) - 198 (198)
(3) - Other � 284 � (8) (2) � 276 � 806 � (8) (2) 798 Total
operating expenses � 2,173 � (524) � 1,649 � 6,433 � (665) � 5,768
Income from continuing operations before income taxes 306 541 847
1,903 723 2,626 Income taxes from continuing operations 83 207 290
642 257 899 Taxable-equivalent adjustment � - � 17 (1) � 17 � - �
58 (1) 58 Net income from continuing operations $ 223 $ 317 $ 540 $
1,261 $ 408 $ 1,669 � Diluted earnings per share from continuing
operations $ .57 $ .81 $ 1.38 $ 3.45 $ 1.12 $ 4.57 � Average
diluted shares outstanding (in thousands) 392,200 392,200 392,200
365,488 365,488 365,488 � Return on equity from continuing
operations 7.7 % 11.0 % 18.7 % 13.4 % 4.3 % 17.7 % � � Reported
results reflect State Street's Consolidated Statement of Income
prepared in accordance with accounting principles generally
accepted in the United States. (1) Represents taxable-equivalent
adjustment, which is not included in reported results. (2)
Represents a net charge associated with certain active fixed-income
strategies at State Street Global Advisors. (3) Represents merger
and integration costs recorded in connection with the acquisition
of Investors Financial, which are direct and incremental costs
associated with the acquisition and do not include ongoing expenses
of the combined organization. STATE STREET CORPORATION Earnings
Press Release Addendum � RECONCILIATION OF REPORTED RESULTS TO
OPERATING-BASIS RESULTS Quarter and Year Ended December 31, 2006 �
� (Dollars in millions, except per share amounts) Quarter Ended
December 31, 2006 � � Year Ended December 31, 2006 � � � � Reported
Results Oper-ating Results Reported Results Adjust-ments Oper-ating
Results Adjust-ments � � � Fee Revenue: Servicing fees $ 698 $ 698
$ 2,723 $ 2,723 Management fees 253 253 943 943 Trading services
203 203 862 862 Securities finance 90 90 386 386 Processing fees
and other � 61 � 61 � 272 � 272 Total fee revenue 1,305 1,305 5,186
5,186 � Net Interest Revenue: Interest revenue 1,226 $ 12 (1) 1,238
4,324 $ 45 (1) 4,369 Interest expense � 910 � - � 910 � 3,214 � - �
3,214 Net interest revenue 316 12 328 1,110 45 1,155 Provision for
loan losses � - � - � - � - � - � - Net interest revenue after
provision for loan losses 316 12 328 1,110 45 1,155 � Gains on
sales of available-for-sale inves-tment secur-ities, net 1 � - � 1
� 15 � - � 15 Total revenue 1,622 12 1,634 6,311 45 6,356 �
Operating Expenses: Salaries and employee benefits 694 - 694 2,652
- 2,652 Infor-mation systems and communi-cations 119 - 119 501 -
501 Trans-action proc-essing services 121 - 121 496 - 496 Occupancy
94 - 94 373 - 373 Other � 150 � - � 150 � 518 � - � 518 Total
operating expenses � 1,178 � - � 1,178 � 4,540 � - � 4,540 Income
from cont-inuing oper-ations before income taxes 444 12 456 1,771
45 1,816 Income taxes from cont-inuing oper-ations 135 18 (2) 153
675 (65) (2) 610 Taxable-equiv-alent adjus-tment � - � 12 (1) � 12
� - � 45 (1) 45 Net income from cont-inuing oper-ations $ 309 $
(18) $ 291 $ 1,096 $ 65 $ 1,161 � Diluted earn-ings per share from
cont-inuing oper-ations $ .91 $ (.05) $ .86 $ 3.26 $ .20 $ 3.46 �
Average dil-uted shares outst-anding (in thou-sands) 337,429
337,429 337,429 335,732 335,732 335,732 � Return on equity from
cont-inuing oper-ations 16.9 % (1.0) % 15.9 % 16.2 % .9 % 17.1 % �
� Reported results reflect State Street's Consolidated Statement of
Income prepared in accordance with accounting principles generally
accepted in the United States. (1) Represents taxable-equivalent
adjustment, which is not included in reported results. (2)
Represents tax-related adjustments primarily related to the impact
of TIPRA and issues associated with leveraged lease transactions.
STATE STREET CORPORATION Earnings Press Release Addendum � �
RECONCILIATION OF REPORTED RESULTS TO OPERATING-BASIS RESULTS
Quarter Ended September 30, 2007 � � � � � � � � � � � (Dollars in
millions, except per share amounts) Quarter Ended September 30,
2007 � � � Reported Operating Results Adjustments � Results � Fee
Revenue: Servicing fees $ 937 $ 937 Management fees 299 299 Trading
services 320 320 Securities finance 165 165 Processing fees and
other � 61 � 61 Total fee revenue 1,782 1,782 � Net Interest
Revenue: Interest revenue 1,383 $ 17 (1) 1,400 Interest expense �
919 � - � 919 Net interest revenue 464 17 481 Provision for loan
losses � - � - � - Net interest revenue after provision for loan
losses 464 17 481 � Gains on sales of available-for-sale investment
securities, net � � (6) � - � (6) Total revenue 2,240 17 2,257 �
Operating Expenses: Salaries and employee benefits 916 - 916
Information systems and communications 145 - 145 Transaction
processing services 165 - 165 Occupancy 109 - 109 Merger and
integration costs 141 (141) (2) - Other � 213 � - � 213 Total
operating expenses � 1,689 � (141) � 1,548 Income from continuing
operations before income taxes 551 158 709 Income taxes from
continuing operations 193 50 243 Taxable-equivalent adjustment � -
� 17 (1) � 17 Net income from continuing operations $ 358 $ 91 $
449 � Diluted earnings per share from continuing operations $ .91 $
.24 $ 1.15 � Average diluted shares outstanding (in thousands)
392,150 392,150 392,150 � Return on equity from continuing
operations 12.6 % 3.2 % 15.8 % � � Reported results reflect State
Street's Consolidated Statement of Income prepared in accordance
with accounting principles generally accepted in the United States.
(1) Represents taxable-equivalent adjustment, which is not included
in reported results. (2) Represents merger and integration costs
recorded in connection with the acquisition of Investors Financial,
which are direct and incremental costs associated with the
acquisition and do not include ongoing expenses of the combined
organization. STATE STREET CORPORATION Press Release Addendum � � �
� CONSOLIDATED STATEMENT OF CONDITION � � � � � � � � � � December
31, September 30, December 31, (Dollars in millions, except per
share amounts) 2007 � 2007 � 2006 � Assets Cash and due from banks
$ 4,733 $ 4,610 $ 2,368 Interest-bearing deposits with banks 5,579
6,559 5,236 Securities purchased under resale agreements 19,133
16,151 14,678 Federal funds sold 4,540 2,575 0 Trading account
assets 589 1,305 785 Investment securities available for sale
70,326 72,789 60,445 Investment securities held to maturity 4,233
4,294 4,547 Loans and leases (net of allowance of $18) 15,784
11,292 8,928 Premises and equipment 1,894 1,824 1,560 Accrued
income receivable 2,096 1,883 1,617 Goodwill 4,567 4,601 1,384
Other intangible assets 1,990 1,994 434 Other assets � 7,079 �
10,011 � 5,371 Total assets $ 142,543 $ 139,888 $ 107,353
Liabilities Deposits: Noninterest-bearing $ 15,039 $ 13,779 $
10,194 Interest-bearing -- U.S. 14,790 15,838 1,272
Interest-bearing -- Non-U.S. � 65,960 � 63,384 � 54,180 Total
deposits 95,789 93,001 65,646 � Securities sold under repurchase
agreements 14,646 14,008 19,147 Federal funds purchased 425 320
2,147 Other short-term borrowings 5,557 4,802 2,835 Accrued taxes
and other expenses 4,392 3,953 3,143 Other liabilities 6,799 8,938
4,567 Long-term debt � 3,636 � 3,616 � 2,616 Total liabilities
131,244 128,638 100,101 � Shareholders' Equity Preferred stock, no
par: authorized 3,500,000; issued none Common stock, $1 par:
authorized 750,000,000 shares; issued 398,366,000, 398,370,000 and
337,126,000 shares 398 398 337 Surplus 4,630 4,616 399 Retained
earnings 7,745 7,610 7,030 Accumulated other comprehensive loss
(575) (369) (224) Treasury stock (at cost 12,082,000, 13,576,000
and 4,688,000 shares) � (899) � (1,005) � (290) Total shareholders'
equity � 11,299 � 11,250 � 7,252 Total liabilities and
shareholders' equity $ 142,543 $ 139,888 $ 107,353
State Street (NYSE:STT)
Historical Stock Chart
From Jul 2024 to Aug 2024
State Street (NYSE:STT)
Historical Stock Chart
From Aug 2023 to Aug 2024