State Street Corporation today announced second-quarter 2010
earnings per common share of $0.87, an increase of 10% compared to
$0.79 in the second quarter of 2009 before the conduit-related
extraordinary loss. Revenue in the second quarter of 2010 was
$2.304 billion, up 9% from $2.122 billion in the second quarter of
2009. Expenses of $1.944 billion in the second quarter increased
from $1.364 billion in the second quarter of 2009 due primarily to
a securities lending charge described below. Return on
shareholders’ equity was 11.0%, down from 13.0%, before the
extraordinary loss, in the second quarter of 2009.
Compared to the first quarter of 2010, second quarter 2010
earnings per share were down 12% from $0.99 per share and revenue
was up slightly from $2.296 billion. Expenses in the first quarter
of 2010 were $1.579 billion. For the first quarter of 2010, return
on shareholders’ equity was 13.4%.
State Street’s second-quarter 2010 GAAP-basis results included:
a pre-tax charge of $414 million, or $251 million after-tax,
separately announced on July 7, 2010, related to certain common and
collective trust funds managed by State Street Global Advisors that
engage in securities lending, and the agency lending program.
GAAP-basis results for the period also included merger and
integration costs of $41 million, primarily associated with the
acquisitions of Intesa Sanpaolo’s securities services business and
Mourant International Finance Administration (“Mourant”); a tax of
$21 million on bonus payments to employees in the United Kingdom; a
one-time tax benefit of $180 million related to the restructuring
of former non-U.S. conduit assets; and discount accretion of $172
million which resulted from the May 2009 consolidation of the
asset-backed commercial paper conduits onto State Street’s balance
sheet.
State Street’s second-quarter 2009 GAAP-basis results included
an after-tax extraordinary loss of $3.684 billion related to the
effect of the conduit consolidation. GAAP-basis results for that
period also included a prepayment of preferred stock discount of
$106 million related to our redemption of the U.S. Treasury’s TARP
CPP investment; discount accretion of $112 million resulting from
the conduit consolidation; and merger and integration costs of $12
million associated with the 2007 acquisition of Investors Financial
Services Corp.
First-quarter 2010 GAAP-basis results included discount
accretion of $212 million and merger and integration costs of $13
million.
In addition to presenting State Street’s financial results in
conformity with U.S. generally accepted accounting principles
(GAAP), management also presents results on an “operating basis” in
order to highlight comparable financial trends and other
characteristics with respect to State Street’s ongoing business
operations from period to period. Operating-basis results for the
second quarter of 2010 and 2009 and for the first quarter of 2010
therefore exclude the items identified in the three paragraphs
above. Reconciliations of GAAP-basis results to operating-basis
results are provided in the addendum at the end of this news
release. Also see “Additional Information.” Operating-basis net
interest revenue for all periods is presented on a fully
taxable-equivalent basis and excludes discount accretion related to
former conduit assets.
Operating-basis earnings per share in the second quarter of 2010
were $0.93 compared to $0.89 in the second quarter of 2009 and
$0.75 in the first quarter of 2010. Operating-basis revenue in the
second quarter of 2010 was $2.163 billion, up 6% from $2.041
billion in the second quarter of 2009. On an operating basis,
return on equity of 11.8% in the second quarter of 2010 compared
with 14.7% in the second quarter of 2009 and 10.0% in the first
quarter of 2010.
Joseph L. Hooley, State Street's president and chief executive
officer, said, "I am pleased with the clear signs that our business
in the second quarter strengthened compared with the first quarter
and overall confirmed our full-year outlook for 2010. The 10%
increase in total fee revenue demonstrates momentum in our
servicing fees as well as the strength in our trading businesses,
including foreign exchange, electronic trading and transition
management. In the quarter, we added $1.11 trillion in assets to be
serviced, including $686 billion from Intesa Sanpaolo’s Securities
Services business and Mourant. Our capital levels remain strong and
are well in excess of the regulatory “well capitalized”
requirements. On an operating basis, we achieved 850 basis points
of positive operating leverage compared to the first quarter of
2010 and continued to manage expenses very carefully.”
Hooley continued, “We’re progressing as planned through this
transition year, taking advantage of opportunities in the markets
through the Intesa acquisition in mid-May and the Mourant
acquisition in early April, both of which are contributing to our
results this year. With the strength of our fee revenue in the
second quarter, including the contribution from these two
acquisitions, we continue to expect that our operating-basis
earnings per share, which exclude discount accretion, will be
slightly higher than the operating-basis $3.32 per share reported
last year.”
Hooley concluded, “We are well positioned to take advantage of
global growth opportunities and, as the economy normalizes, we are
committed to our long-term financial goals for operating-basis
revenue, earnings per share and return on equity.”
The table below provides a summary of selected financial
information and key ratios for the indicated periods, presented on
an operating basis where noted. Unless otherwise specified, all
capital ratios referenced in this news release refer to State
Street Corporation and not State Street Bank and Trust Company. See
“Additional Information” for a further description of these ratios
and the addendum at the end of this news release for
reconciliations applicable to the tier 1 common and TCE ratios.
Q2 2010
Q1 2010
Increase/(decrease) Q2
2009 Increase/(decrease)
(dollars in millions)
For the quarters ended: Total revenue(1) $ 2,163 $ 2,116 $
47 2.2% $ 2,041 $ 122 6.0% Total expenses(1) 1,468 1,566 (98)
(6.3)% 1,352 116 8.6% Earnings per common share(1) $ 0.93 $ 0.75 $
0.18 24.0% $ 0.89 $ 0.04 4.5% Return on common equity(1) 11.8%
10.0% 180 bps 14.7% (290) bps As of period end: Total assets
162,075 153,971 8,104 5.3% 153,421 8,654 5.6% Unrealized loss on
investment portfolio, after-tax (994) (1,435) 441 30.7% (4,747)
3,753 79.1% AUCM (dollars in billions) Assets under custody and
administration(2) $19,032 $19,041 (9) ---% $ 16,394 $ 2,638 16.1%
Assets under management 1,782 1,929 (147) (7.6)% 1,557 225 14.5%
Tier 1 capital ratio 15.1% 18.0% (290) bps 14.5% 60 bps Tier 1
leverage ratio 7.7% 9.0% (130) bps 7.3% 40 bps Tier 1 common ratio
13.2% 15.9% (270) bps 12.6% 60 bps TCE ratio 6.3% 7.5% (120) bps
5.0% 130 bps TCE/RWA ratio 11.9% 14.1% (220) bps 8.5% 340 bps
(1) Presented on an operating basis. Operating-basis results for
the second quarter of 2009 presented in this news release have been
adjusted to reflect the 2010 basis of presentation and therefore
exclude discount accretion from the May 2009 consolidation of the
former asset-backed commercial paper conduits. Consequently, these
operating-basis results may differ from previously disclosed
operating-basis results for the same period.
(2) Includes assets under custody of $13,999 billion, $14,058
billion, and $12,337 billion, respectively, as of period end Q2
2010, Q1 2010, and Q2 2009.
Total assets were $162 billion at June 30, 2010, compared with
$154 billion at March 31, 2010 and $153 billion at June 30, 2009.
Excluding $15 billion of excess deposits held at the Federal
Reserve and other central banks at June 30, 2010, $19 billion at
March 31, 2010, and $20 billion at June 30, 2009, the normalized
balance sheet was $147 billion at June 30, 2010, compared to a
normalized balance sheet of $135 billion at March 31, 2010 and $133
billion at June 30, 2009. State Street’s regulatory capital ratios
continue to be strong as of June 30, 2010, with the Company’s tier
1 capital ratio at 15.1% and its leverage ratio at 7.7%. In
addition, at that date, the Company’s tier 1 common ratio was
13.2%, its TCE to risk-weighted assets ratio was 11.9%, and its TCE
ratio was 6.3%. The change in ratios reflects the impact of the
acquisitions completed in the second quarter, partially offset by
internal generation of capital during the period.
At June 30, 2010, the after-tax, unrealized mark-to-market
losses in the investment portfolio were $994 million, down 31% from
$1.44 billion at March 31, 2010, and down about 79% from $4.75
billion as of June 30, 2009.
In the second quarter of 2010, discount accretion related to the
former conduit assets of $172 million, or $0.21 per share,
contributed to State Street’s capital strength, and the Company
expects a total of about $750 million of accretion in 2010,
slightly reduced from our earlier expectation due primarily to
lower prepayment speeds. As of June 30, 2010, the Company expects
about $3.9 billion in total on a pre-tax basis to accrete into
interest revenue over the remaining lives of the assets. These
expectations are based on anticipated pre-payment speeds, credit
quality, sales-to-date, and assuming the Company holds the
securities to maturity.
The following tables provide the components of operating-basis
revenue and operating-basis expenses for the noted periods:
Operating-Basis Revenue
(dollars in millions)
Q2 2010 Q1 2010
%
Increase/(decrease)
Q2 2009
%
Increase/(decrease)
Servicing fees $ 957 $ 880 8.8 % $ 795 20.4 % Investment management
fees 217 226 (4.0 ) 193 12.4 Trading services revenue 326 242 34.7
310 5.2 Securities finance revenue 109 72 51.4 201 (45.8 )
Processing fees and other revenue 87 120 (27.5 ) 17 411.8 Net
interest revenue, fully-taxable equivalent basis(1) 517 481 7.5 499
3.6
Gains (losses) related to
investment securities, net
(50 ) 95 (152.6 ) 26 (292.3 )
Total
Operating-Basis Revenue $ 2,163
$ 2,116 2.2 % $ 2,041
6.0 %
(1) Operating-basis information for the second quarter of 2010,
the first quarter of 2010, and the second quarter of 2009 included
$31 million, $32 million, and $31 million, respectively, of
tax-equivalent adjustments, and excluded $172 million, $212
million, and $112 million, respectively, of discount accretion.
GAAP-basis net interest revenue for those periods was $658 million,
$661 million and $580 million, respectively.
Operating-Basis
Expenses
(dollars in millions)
Q2 2010 Q1 2010
%
Increase/(decrease)
Q2 2009
%
Increase/(decrease)
Salaries and employee benefits $ 828 $ 883 (6.2 )% $ 696 19.0 %
Information systems and communications
174
167
4.2
167
4.2
Transaction processing services 164 153 7.2 146 12.3 Occupancy 116
118 (1.7 ) 121 (4.1 ) Other 186 245 (24.1 )
222 (16.2 )
Total Operating-Basis Expenses $
1,468 $ 1,566 (6.3 )%
$ 1,352 8.6 %
SECOND-QUARTER 2010 RESULTS VS.
YEAR-AGO SECOND QUARTER
Servicing fees were up 20% to $957 million from $795 million in
last year’s second quarter. The increase was attributable primarily
to new business, increases in daily average equity valuations, and
the impact of the two acquisitions. Total assets under custody and
administration were $19.03 trillion at June 30, 2010, up 16%,
compared with $16.39 trillion at June 30, 2009. Daily average
values for the S&P 500 Index were up 27% and the MSCI® EAFE
IndexES increased approximately 18% from the second quarter of
2009.
Investment management fees, generated by State Street Global
Advisors, were $217 million, up 12% from $193 million in the
year-ago quarter. The increase in management fees was attributable
primarily to increases in average month-end equity valuations and
net new business. Average month-end equity valuations were up about
22% as measured by the S & P 500 and were up 12% as measured by
the MSCI EAFE indexES. Total assets under management at June 30,
2010, were $1.78 trillion, up 14% compared to $1.56 trillion at
June 30, 2009.
Trading services revenue, which includes foreign exchange
trading revenue and brokerage and other fees, was $326 million for
the second quarter of 2010, an increase of 5% from $310 million in
the second quarter a year ago. Foreign exchange revenue decreased
3% primarily due to lower volatility, partially offset by higher
volumes. Brokerage and other fees increased 18% due primarily to
strength in electronic trading and transition management.
Securities finance revenue was $109 million in the quarter, down
46% from $201 million in the year-ago second quarter due primarily
to compressed spreads, despite a slight increase in volumes.
Processing fees and other revenue was $87 million compared to $17
million in the second quarter of 2009 due primarily to higher net
revenue from structured products, tax-advantaged investments, and
other fees in the second quarter of 2010.
Net interest revenue on a fully-taxable equivalent basis, which
includes discount accretion, was $689 million. On an operating
basis, which excludes discount accretion, net interest revenue was
$517 million, an increase of 4% from $499 million in the year-ago
second quarter due primarily to the impact of deposits from the
Intesa acquisition as well as a modest decrease in funding costs.
Net interest margin, including the discount accretion, was 221
basis points in the second quarter of 2010 compared to 193 basis
points in the second quarter of 2009. Operating-basis net interest
margin was 166 basis points in the second quarter of 2010.
In the quarter, we recorded $3 million of net gains from sales
of available-for-sale securities, offset by $(53) million of
other-than-temporary impairment, resulting in $(50) million of net
losses related to investment securities. In addition, we recorded a
$10 million provision for loan losses related to commercial real
estate exposures.
Operating-basis expenses of $1.468 billion in the second quarter
of 2010 increased 9% compared to $1.352 billion in the year-ago
quarter primarily due to increases in salaries and benefits
expenses, offset partially by a lower level of other expenses.
Salaries and benefits expenses increased 19% to $828 million,
because in the second quarter of 2009, we did not accrue
discretionary cash incentive compensation in order to support our
TCE improvement plan. In addition, the Intesa and Mourant
acquisitions in the second quarter of 2010 contributed to salaries
and benefits expenses. Transaction processing services increased
12% to $164 million due to higher volumes in the investment
servicing business including the impact of the two acquisitions.
Other expenses decreased 16% to $186 million due to lower
securities processing costs and an $11 million recovery associated
with Lehman Brothers.
The effective tax rate on second-quarter 2010 GAAP-basis
earnings was (23.4) %, compared to 32.6% in the second quarter of
2009. The reduction of the rate is primarily attributable to a
one-time benefit from the restructuring of former non-US conduit
assets. The effective tax rate on operating-basis earnings for the
second quarter of 2010 was 29.1%, down from 31.5% on the same basis
for the second quarter of 2009 due to a change in the geographic
mix of earnings. The effective tax rate on operating-basis earnings
for the full year 2010 is expected to be between 28% and 29%.
SECOND-QUARTER 2010 RESULTS VS.
FIRST QUARTER 2010
The following information is presented on an operating basis.
Earnings per common share in the second quarter of 2010 were $0.93,
up 24% from $0.75 in the first quarter of 2010. Total revenue in
the second quarter of $2.163 billion was up 2.2% compared with
first-quarter revenue of $2.116 billion. Total expenses for the
second quarter of 2010 were $1.468 billion, down 6.3% compared with
$1.566 billion in the first quarter. As a result, we achieved 850
basis points of positive operating leverage comparing the results
of the second quarter of 2010 with those of the first quarter of
2010. Return on common shareholders’ equity of 11.8% compared with
10.0% in the first quarter of 2010.
Servicing fees were $957 million, up 9% from $880 million in the
first quarter due primarily to the impact of the two acquisitions
and new business. Management fees were $217 million, down 4% from
$226 million, including lower equity market valuations. Trading
services revenue was $326 million, up 35% compared to $242 million
due to higher volatility and volumes in foreign exchange as well as
stronger fees from transition management and electronic trading in
brokerage and other fees. Securities finance revenue was $109
million, up 51% from $72 million in the prior quarter primarily due
to higher spreads and volumes associated with the traditional
second-quarter seasonality. Processing fees and other revenue
decreased from $120 million to $87 million due primarily to the
impact of a gain from an early buyout of a legacy leasing
transaction in the first quarter of 2010. Fully taxable-equivalent
net interest revenue in the second quarter of 2010 totaled $689
million, including discount accretion. On an operating basis, net
interest revenue in the second quarter of 2010 was $517 million, up
from $481 million in the first quarter of 2010 due to favorable
yields in our investment portfolio as well as the impact of the
Intesa acquisition.
Compared to the first quarter of 2010, salaries and employee
benefits expense decreased 6% to $828 million from $883 million
primarily due to lower incentive compensation costs as a result of
the charge recorded in the quarter related to our securities
lending program, partially offset by the impact of the acquisitions
of Intesa and Mourant. Transaction processing expenses increased 7%
to $164 million due to higher volumes in the investment servicing
business including the impact of the two acquisitions. Other
expenses drove overall lower operating-basis expenses, declining
24% to $186 million due to lower securities processing costs and an
$11 million recovery associated with Lehman Brothers.
ADDITIONAL INFORMATION
All per share amounts represent fully diluted earnings per
common share. Return on common shareholders’ equity is determined
by dividing annualized net income available to common shareholders
by average common shareholders’ equity for the period.
Operating-basis return on common equity utilizes annualized
operating-basis net income in the calculation. Positive operating
leverage is defined as the excess rate of growth of total revenue
over the rate of growth of total expenses, each determined on an
operating basis.
This news release includes financial information presented on a
GAAP basis as well as on an operating basis. Management measures
and compares certain financial information on an operating basis,
as it believes that this presentation supports meaningful
comparisons from period to period and the analysis of comparable
financial trends with respect to State Street’s normal ongoing
business operations. Management believes that operating-basis
financial information, which reports revenue from non-taxable
sources on a fully taxable-equivalent basis and excludes the impact
of revenue and expenses outside of the normal course of business,
facilitates an investor’s understanding and analysis of State
Street’s underlying financial performance and trends in addition to
financial information prepared in accordance with GAAP. Non-GAAP
financial measures should be considered in addition to, not as a
substitute for or superior to, financial measures determined in
accordance with GAAP. A full reconciliation of operating-basis
results to GAAP results is included in the addendum at the end of
this news release.
Management believes that the use of other non-GAAP financial
measures in the calculation of capital ratios is useful to
understanding State Street’s capital position and of interest to
investors. Below is a description of, and other information with
respect to, the capital ratios referenced in this news release.
The tier 1 capital and tier 1 leverage ratios are capital ratios
used regularly by bank regulatory authorities to evaluate the
Company’s capital adequacy. The tier 1 common ratio was used by the
Federal Reserve in connection with its 2009 Supervisory Capital
Assessment Program. The TCE and TCE/risk-weighted assets ratios are
other capital ratios management believes provide additional context
for understanding and assessing the Company’s capital adequacy.
- The tier 1 risk-based
capital, or tier 1 capital, and tier 1 leverage ratios, as
applicable, are each calculated in accordance with applicable bank
regulatory requirements.
- The tier 1 risk-based common,
or tier 1 common, ratio is calculated by dividing (a) tier 1
capital less non-common elements including qualifying perpetual
preferred stock, qualifying minority interest in subsidiaries and
qualifying trust preferred securities, by (b) risk-weighted assets,
which assets are calculated in accordance with applicable bank
regulatory requirements. The tier 1 common ratio is not required by
GAAP or on a recurring basis by bank regulations. Management is
currently monitoring this ratio, along with the other capital
ratios described in this news release, in evaluating State Street’s
capital levels and believes that, at this time, the ratio may be of
interest to investors. Reconciliations with respect to unaudited
tier 1 common capital as of June 30, 2010, March 31, 2010, and June
30, 2009 are provided in the addendum at the end of this news
release.
- The ratio of tangible common
equity to adjusted tangible assets, or TCE ratio, is calculated
by dividing consolidated total common shareholders’ equity by
consolidated total assets, after reducing both amounts by goodwill
and other intangible assets net of related deferred taxes. Total
assets reflected in the TCE ratio also exclude cash balances on
deposit at the Federal Reserve Bank and other central banks in
excess of required reserves. The TCE ratio is not required by GAAP
or by bank regulations, but is a metric used by management to
evaluate the adequacy of State Street’s capital levels. Since there
is no authoritative requirement to calculate the TCE ratio, our TCE
ratio is not necessarily comparable to similar capital measures
disclosed or used by other companies in the financial services
industry. Tangible common equity and adjusted tangible assets are
non-GAAP financial measures and should be considered in addition
to, nor as a substitute for or superior to, financial measures
determined in accordance with GAAP. Reconciliations with respect to
the calculation of the unaudited TCE ratio as of June 30, 2010,
March 31, 2010, and June 30, 2009 are provided in the addendum at
the end of this news release.
- The ratio of tangible common
equity to risk-weighted assets, or TCE/RWA ratio, is calculated
by dividing consolidated total common shareholders’ equity (reduced
by goodwill and other intangible assets net of related deferred
taxes) by total risk-weighted assets (determined in accordance with
applicable bank regulatory requirements). The TCE/RWA ratio is not
required by GAAP or by bank regulations, but is a metric used by
management to evaluate the adequacy of State Street’s capital
levels. Since there is no authoritative requirement to calculate
the TCE/RWA ratio, our TCE/RWA ratio is not necessarily comparable
to similar capital measures disclosed or used by other companies in
the financial services industry. Tangible common equity is a
non-GAAP financial measure and should be considered in addition to,
not as a substitute for or superior to, financial measures
determined in accordance with GAAP. Reconciliations with respect to
the calculation of the unaudited TCE/RWA ratio as of June 30, 2010,
March 31, 2010, and June 30, 2009 are included in the addendum at
the end of this news release.
INVESTOR CONFERENCE
CALL
State Street will webcast an investor conference call today,
Tuesday, July 20, 2010, at 9:30 a.m. EDT, available at
www.statestreet.com/stockholder. The conference call will also be
available via telephone, at +1 706/679-5594 or +1 888/391-4233
(Conference ID #62660494). Recorded replays of the conference call
will be available on the web site, and by telephone at +1
706/645-9291 or +1 800/642-1687 (Conference ID#62660494), beginning
approximately two hours after the call’s completion. The telephone
replay will be available for approximately two weeks following the
conference call. This news release, presentation materials referred
to on the conference call, and additional financial information are
available on State Street’s website, at
www.statestreet.com/stockholder under “Investor Information--Latest
News, Annual Reports and Financial Trends—Financial Trends,” and
“Investor Events and Presentations.”
State Street Corporation (NYSE: STT) is the world's leading
provider of financial services to institutional investors including
investment servicing, investment management and investment research
and trading. With $19.03 trillion in assets under custody and
administration and $1.78 trillion in assets under management at
June 30, 2010, State Street operates in 25 countries and more than
100 geographic markets and employs 28,925 worldwide. For more
information, visit State Street’s web site at www.statestreet.com
or call +1 877/639-7788 [NEWS STT] toll-free in the United States
and Canada, or +1 678/999-4577 outside those countries.
FORWARD-LOOKING
STATEMENTS
This news release contains forward-looking statements as defined
by United States securities laws, including statements about our
goals and expectations regarding our business, financial condition,
results of operations and strategies, the financial and market
outlook, governmental and regulatory initiatives and developments,
and the business environment. Forward-looking statements are often,
but not always, identified by such forward-looking terminology as
“plan,” “expect,” “look,” “believe,” “anticipate,” “estimate,”
“seek,” “may,” “will,” “trend,” “target” and “goal,” or similar
statements or variations of such terms. 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 our expectations or beliefs as of any date
subsequent to the date of this news release.
Important factors that may affect future results and outcomes
include, but are not limited to:
- changes in law or regulation
that may adversely affect our, our clients’ or our counterparties’
business activities and the products or services that we sell,
including additional or increased taxes or assessments thereon, the
requirement that additional capital be maintained and changes that
expose us to risks related to compliance;
- financial market disruptions and
the economic recession, whether in the U.S. or internationally, and
monetary and other governmental actions, including regulation,
taxes and fees, designed to address or otherwise be responsive to
such disruptions and recession, including actions taken in the U.S.
and internationally to address the financial and economic
disruptions that began in 2007;
- increases in the volatility of,
or declines in the levels of, our net interest revenue, changes in
the composition of the assets on our consolidated balance sheet and
the possibility that we may be required to change the manner in
which we fund those assets;
- the financial strength and
continuing viability of the counterparties with which we or our
clients do business and to which we have investment, credit or
financial exposure;
- the liquidity of the U.S. and
international securities markets, particularly the markets for
fixed-income securities, and the liquidity requirements of our
clients;
- the credit quality, credit
agency ratings, and fair values 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 in our
consolidated statement of income;
- the maintenance of credit agency
ratings for our debt and depository obligations as well as the
level of credibility of credit agency ratings;
- the performance and demand for
the products and services we offer, including the level and timing
of redemptions and withdrawals from our collateral pools and other
collective investment products;
- the risks that acquired
businesses will not be integrated successfully, or that the
integration will take longer than anticipated, that expected
synergies will not be achieved or unexpected disynergies will be
experienced, that client and deposit retention goals will not be
met, that other regulatory or operational challenges will be
experienced and that disruptions from the transaction will harm
relationships with clients, employees or regulators;
- the ability to complete
acquisitions, divestitures and joint ventures, including the
ability to obtain regulatory approvals, the ability to arrange
financing as required, and the ability to satisfy other closing
conditions;
- the possibility of our clients
incurring substantial losses in investment pools where we act as
agent, and the possibility of further general reductions in the
valuation of assets;
- our ability to attract deposits
and other low-cost, short-term funding;
- potential changes to the
competitive environment, including changes due to the effects of
consolidation and perceptions of State Street as a suitable service
provider or counterparty;
- the level and volatility of
interest rates and the performance and volatility of securities,
credit, currency and other markets in the U.S. and
internationally;
- our ability to measure the fair
value of the investment securities on our consolidated balance
sheet;
- the results of litigation,
government investigations and similar disputes or proceedings;
- adverse publicity or other
reputational harm;
- our ability to grow revenue,
attract and/or retain and compensate highly skilled people, control
expenses and attract the capital necessary to achieve our business
goals and comply with regulatory requirements;
- our ability to control operating
risks, information technology systems risks and outsourcing risks,
and our ability to protect our intellectual property rights, the
possibility of errors in the quantitative models we use to manage
our business and the possibility that our controls will fail or be
circumvented;
- the potential for new products
and services to impose additional costs on us and expose us to
increased operational risk;
- changes in accounting standards
and practices; and
- changes 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 our 2009 Annual Report on Form 10-K,
and our subsequent SEC filings. We encourage investors to read
these filings, particularly the sections on Risk Factors, for
additional information with respect to any forward-looking
statements and prior to making any investment decision. The
forward-looking statements contained in this news release speak
only as of the date hereof, July 20, 2010, and we do not undertake
efforts to revise those forward-looking statements to reflect
events after this date.
STATE STREET CORPORATION Earnings Release
Addendum CONSOLIDATED
FINANCIAL HIGHLIGHTS June 30, 2010 Quarters Ended
% Change Q2 2010 Q2 2010 (Dollars in millions, except
per share amounts
June 30, March 31, June 30, vs. vs. or
where otherwise noted)
2010 2010 2009
Q1 2010 Q2 2009 Revenue: Fee revenue
$ 1,696 $ 1,540 $ 1,516 10
%
12
%
Net interest revenue
658 661 580 - 13 Net gains from sales
of available-for-sale securities
3 192 90 Losses from
other-than-temporary impairment
(53 ) (97 ) (64 )
Total Revenue
2,304 2,296 2,122 - 9 Provision for Loan
Losses
10 15 14 Total Expenses: Expenses from operations
1,468 1,566 1,352 (6 ) 9 Securities lending charge and U.K.
bonus tax
435 - - Merger and integration costs
41 13
12 215 242 Income tax expense (benefit) (1)
(82 ) 207
242 Net Income Before Extraordinary Loss
432 495 502 (13 )
(14 ) Extraordinary Loss, Net of Tax
- - (3,684 ) Net Income
(Loss)
432 495 (3,182 ) (13 ) (114 ) Net Income
Before Extraordinary Loss Available to Common Shareholders
432 495 370 (13 ) 17 Net Income (Loss) Available to Common
Shareholders
432 495 (3,314 ) (13 ) (113 ) Diluted
Earnings Per Common Share Before Extraordinary Loss
$
.87 $ .99 $ .79 (12 ) 10 Diluted Earnings (Loss) Per Common
Share
.87 .99 (7.12 ) (12 ) (112 ) Average Diluted
Common Shares Outstanding (in thousands)
498,886 498,056
465,814 Cash Dividends Declared Per Common Share
$
.01 $ .01 $ .01 Closing Price Per Share of Common Stock (at
quarter end)
33.82 45.14 47.20 Ratios: Return on
common equity before extraordinary loss
11.0
%
13.4 % 13.0
%
Net interest margin, fully taxable-equivalent basis
2.21
2.34 1.93 Tier 1 risk-based capital
15.1 18.0 14.5 Total
risk-based capital
16.4 19.5 15.9 Tier 1 leverage
7.7
9.0 7.3 Tier 1 common to risk-weighted assets (2)
13.2 15.9
12.6 Tangible common equity to tangible assets (2)
6.3 7.5
5.0 Tangible common equity to risk-weighted assets (2)
11.9
14.1 8.5 At Quarter End: Assets Under Custody and
Administration (3) (in trillions)
$ 19.03 $ 19.04 $
16.39 Assets Under Management (in trillions)
1.78 1.93 1.56
Six Months Ended % Change 2010
June
30, June 30, vs. (Dollars in millions, except per share
amounts)
2010 2009 2009 Revenue:
Fee revenue
$ 3,236 $ 2,938 10
%
Net interest revenue
1,319 1,144 15 Net gains from sales of
available-for-sale securities
195 119 Losses from
other-than-temporary impairment
(150 ) (77 ) Total
Revenue
4,600 4,124 12 Provision for Loan Losses
25
98 Total Expenses: Expenses from operations
3,034 2,639 15
Securities lending charge and U.K. bonus tax
435 - Merger
and integration costs
54 29 86 Income tax expense(1)
125 380 Net Income Before Extraordinary Loss
927 978
(5 ) Extraordinary Loss, Net of Tax
- (3,684 ) Net Income
(Loss)
927 (2,706 ) (134 ) Net Income Before
Extraordinary Loss Available to Common Shareholders
927 815
14 Net Income (Loss) Available to Common Shareholders
927
(2,869 ) (132 ) Diluted Earnings Per Common Share Before
Extraordinary Loss
$ 1.86 $ 1.81 3 Diluted Earnings
(Loss) Per Common Share
1.86 (6.37 ) (129 ) Average
Diluted Common Shares Outstanding (in thousands):
498,295
450,483 Cash Dividends Declared Per Common Share
$
.02 $ .02 Return on Common Equity Before
Extraordinary Loss
12.2
%
14.4
%
Net interest margin, fully taxable-equivalent basis
2.27
1.96 (1) Quarter ended June 30, 2010 reflects a one-time tax
benefit of $180 million associated with the restructuring of former
non-U.S. conduit assets. (2) Refer to accompanying reconciliation
for additional information. (3) Includes assets under custody of
$14.00 trillion, $14.06 trillion, and $12.34 trillion,
respectively.
STATE STREET CORPORATION Earnings
Release Addendum
SELECTED CONSOLIDATED FINANCIAL
INFORMATION Quarters and Six Months Ended June 30, 2010 and
June 30, 2009 Quarters Ended Six Months Ended
June
30, June 30,
June 30, June 30, (Dollars in millions,
except per share amounts)
2010 2009 % Change
2010
2009 % Change
Fee Revenue: Servicing fees
$ 957 $ 795 20 %
$ 1,837 $ 1,561 18 %
Management fees
217 193 12
443 374 18 Trading
services
326 310 5
568 555 2 Securities finance
109 201 (46 )
181 382 (53 ) Processing fees and other
87 17 412
207
66 214 Total fee revenue
1,696 1,516 12
3,236 2,938 10
Net Interest Revenue: Interest
revenue
846 773 9
1,724 1,511 14 Interest expense
188 193 (3 )
405
367 10 Net interest revenue (1)
658 580
13
1,319 1,144 15
Gains (Losses) related to
investment securities, net: Net gains from sales of
available-for-sale securities
3 90
195 119 Losses
from other-than-temporary impairment
(240 ) (167 )
(480 ) (180 ) Losses not related to credit
187 103
330
103 Gains (Losses) related to investment securities,
net
(50 ) 26
45 42 Total revenue
2,304 2,122 8.6
4,600 4,124 11.5 Provision for
loan losses
10 14
25 98
Expenses:
Salaries and employee benefits
849 696 22
1,732 1,427
21 Information systems and communications
174 167 4
341 328 4 Transaction processing services
164 146 12
317 277 14 Occupancy
116 121 (4 )
234 242 (3 )
Securities lending charge
414 - 414 -
Merger and integration costs
41 12 242
54 29 86 Other
186 222 (16 )
431
365 18 Total expenses
1,944
1,364 42.5
3,523
2,668 32.0 Income before income tax expense and
extraordinary loss
350 744 (53 )
1,052 1,358 (23 )
Income tax expense (benefit)
(82 ) 242
125 380 Income before
extraordinary loss
432 502 (14 )
927 978 (5 )
Extraordinary loss, net of tax
- (3,684
)
- (3,684 )
Net income (loss)
$ 432 $ (3,182 ) (114 )
$ 927
$ (2,706 ) (134 )
Adjustments to net income
(loss): Prepayment of preferred stock discount
$
- $ (106 )
$ - $ (106 ) Dividend on preferred
stock
- (21 )
- (46 ) Accretion of preferred stock
discount
- (5 )
-
(11 )
- (132 )
-
(163 )
Net income before extraordinary loss
available to common shareholders $ 432
$ 370 17
$ 927 $ 815 14
Net income (loss) available to common shareholders
$ 432 $ (3,314 ) (113 )
$ 927
$ (2,869 ) (132 )
Earnings Per Common Share Before
Extraordinary Loss: Basic(2)
$ .86 $ .80 8
$ 1.85 $ 1.82 2 Diluted
.87 .79 10
1.86
1.81 3
Earnings (Loss) Per Common Share: Basic (3)
$ .86 $ (7.16 ) (112 )
$ 1.85 $ (6.40 )
(129 ) Diluted
.87 (7.12 ) (112 )
1.86 (6.37 ) (129 )
Average Common Shares Outstanding (in thousands):
Basic
495,606 462,399
495,099 447,370 Diluted
498,886 465,814
498,295 450,483 Selected consolidated
financial information presented above was prepared in accordance
with accounting principles generally accepted in the United States.
(1) Net interest revenue on a fully taxable-equivalent basis
was $689 million and $611 million for the quarters ended June 30,
2010 and 2009, respectively, and $1.38 billion and $1.21 billion
for the six months ended June 30, 2010 and 2009, respectively.
These amounts include taxable-equivalent adjustments of $31 million
for the quarters ended June 30, 2010 and 2009 and $63 million for
the six months ended June 30, 2010 and 2009. (2) Basic earnings per
common share before extraordinary loss on distributed earnings were
$.01 for each of the quarters ended June 30, 2010 and 2009 and $.02
and $.25 for the six months ended June 30, 2010 and 2009,
respectively. Basic earnings per common share before extraordinary
loss on undistributed earnings were $.85 and $.79 for the quarters
ended June 30, 2010 and 2009, respectively, and $1.83 and $1.57 for
the six months ended June 30, 2010 and 2009, respectively. (3)
Basic earnings per common share on distributed earnings were $.01
for each of the quarters ended June 30, 2010 and 2009 and $.02 and
$.25 for the six months ended June 30, 2010 and 2009, respectively.
Basic earnings per common share on undistributed earnings were $.85
and $(7.17) for the quarters ended June 30, 2010 and 2009,
respectively, and $1.83 and $(6.65) for the six months ended June
30, 2010 and 2009, respectively.
STATE STREET
CORPORATION Earnings Release Addendum
SELECTED CONSOLIDATED FINANCIAL INFORMATION
Quarters Ended June 30, 2010 and March 31, 2010
Quarters Ended
June 30, March 31, (Dollars in
millions, except per share amounts)
2010 2010
% Change
Fee Revenue: Servicing fees
$
957 $ 880 9 % Management fees
217 226 (4 ) Trading
services
326 242 35 Securities finance
109 72 51
Processing fees and other
87 120
(28 ) Total fee revenue
1,696 1,540 10
Net
Interest Revenue: Interest revenue
846 878 (4 ) Interest
expense
188 217 (13 ) Net
interest revenue (1)
658 661 -
Gains (Losses)
related to investment securities, net: Net gains from sales of
available-for-sale securities
3 192 Losses from
other-than-temporary impairment
(240 ) (240 ) Losses
not related to credit
187 143
Gains (Losses) related to investment securities, net
(50
) 95 Total revenue
2,304 2,296 0.3
Provision for loan losses
10 15
Expenses:
Salaries and employee benefits
849 883 (4 ) Information
systems and communications
174 167 4 Transaction processing
services
164 153 7 Occupancy
116 118 (2 ) Securities
lending charge
414 - Merger and integration costs
41 13 215 Other
186 245
(24 ) Total expenses
1,944 1,579
23.1 Income before income tax expense
350 702 (50 ) Income
tax expense (benefit)
(82 ) 207
Net income $ 432 $ 495 (13 )
Earnings Per Common Share: Basic (2)
$
.86 $ .99 (13 ) Diluted
.87 .99 (12 )
Average Common Shares Outstanding (in thousands): Basic
495,606 494,588 Diluted
498,886 498,056 Selected
consolidated financial Information presented above was prepared in
accordance with accounting principles generally accepted in the
United States. (1) Net interest revenue on a fully
taxable-equivalent basis was $689 million and $693 million for the
quarters ended June 30, 2010 and March 31, 2010, respectively.
These amounts include taxable-equivalent adjustments of $31 million
and $32 million for the quarters ended June 30, 2010 and March 31,
2010, respectively. (2) Basic earnings per common share on
distributed earnings were $.01 for each of the quarters ended June
30, 2010 and March 31, 2010 and on undistributed earnings were $.85
and $.98 for the quarters ended June 30, 2010 and March 31, 2010,
respectively.
STATE STREET CORPORATION Earnings
Release Addendum SELECTED CONSOLIDATED
OPERATING-BASIS FINANCIAL INFORMATION Quarters and Six
Months Ended June 30, 2010 and June 30, 2009 Quarters
Ended (1) Six Months Ended (1)
June 30, June 30,
June 30, June 30, (Dollars in millions, except per share
amounts)
2010 2009 % Change
2010 2009 %
Change
Fee Revenue: Servicing fees
$
957 $ 795 20 %
$ 1,837 $ 1,561 18 % Management
fees
217 193 12
443 374 18 Trading services
326 310 5
568 555 2 Securities finance
109 201
(46 )
181 382 (53 ) Processing fees and other
87 17 412
207 66
214 Total fee revenue
1,696 1,516 12
3,236
2,938 10
Net Interest Revenue: Interest revenue,
operating basis
705 692 2
1,403 1,438 (2 ) Interest
expense
188 193 (3 )
405 350 16 Net interest revenue, operating
basis
517 499 4
998 1,088 (8 ) Gains (Losses)
related to investment securities, net
(50 )
26
45 42 Total revenue,
operating basis (2)
2,163 2,041 6.0
4,279 4,068 5.2
Provision for loan losses
10 14
25 98
Expenses: Salaries and employee benefits
828 696 19
1,711 1,427 20 Information systems and communications
174 167 4
341 328 4 Transaction processing services
164 146 12
317 277 14 Occupancy
116 121 (4 )
234 242 (3 ) Other
186 222
(16 )
431 365 18 Total expenses,
operating basis (2)
1,468 1,352
8.6
3,034 2,639 15.0 Income before
income tax expense, operating basis
685 675 1
1,220
1,331 (8 ) Income tax expense, operating basis
190 203
322 345 Tax-equivalent adjustment
31
31
63 63
Net income,
operating basis $ 464 $ 441 5
$ 835 $ 923 (10 )
Adjustments to net
income (loss): Dividend on preferred stock
$ - $
(21 )
$ - $ (46 ) Accretion of preferred stock
discount
- (5 )
-
(11 )
- (26 )
-
(57 )
Net income available to common shareholders, operating
basis $ 464 $ 415 12
$
835 $ 866 (4 )
Diluted earnings per
common share, operating basis $ .93 $ .89 4
$ 1.68 $ 1.92 (13 )
Average diluted common
shares outstanding (in thousands) 498,886 465,814
498,295 450,483
Return on common equity, operating
basis 11.8 % 14.7 %
11.0 % 15.3 %
(1) Refer to the accompanying reconciliation of reported results to
operating-basis results. (2) For the quarter ended June 30, 2010,
negative operating leverage in the year-over-year comparison was
260 basis points, based on an increase in total operating-basis
revenue of 6.0% and an increase in total operating-basis expenses
of 8.6%. For the six months ended June 30, 2010, negative operating
leverage in the year-over-year comparison was 980 basis points,
based on an increase in total operating-basis revenue of 5.2% and
an increase in total operating-basis expenses of 15.0%
STATE STREET CORPORATION Earnings Release Addendum
SELECTED CONSOLIDATED OPERATING-BASIS FINANCIAL
INFORMATION Quarters Ended June 30, 2010 and March 31,
2010 Quarters Ended (1)
June 30, March 31,
(Dollars in millions, except per share amounts)
2010
2010 % Change
Fee Revenue: Servicing
fees
$ 957 $ 880 9 % Management fees
217 226
(4 ) Trading services
326 242 35 Securities finance
109 72 51 Processing fees and other
87
120 (28 ) Total fee revenue
1,696 1,540 10
Net Interest Revenue: Interest revenue, operating basis
705 698 1 Interest expense
188
217 (13 ) Net interest revenue, operating basis
517 481 7
Gains (Losses) related to investment securities, net
(50 ) 95 Total revenue, operating basis (2)
2,163 2,116 2.2 Provision for loan losses
10
15
Expenses: Salaries and employee benefits
828 883 (6 ) Information systems and communications
174 167 4 Transaction processing services
164 153 7
Occupancy
116 118 (2 ) Other
186
245 (24 ) Total expenses, operating basis (2)
1,468
1,566 (6.3 ) Income before income tax expense,
operating basis
685 535 28 Income tax expense
190 132
Tax-equivalent adjustment
31 32
Net
income, operating basis $ 464 $ 371 25
Diluted earnings per common share, operating
basis $ .93 $ .75 24
Average diluted
common shares outstanding (in thousands) 498,886 498,056
Return on common equity, operating basis 11.8
% 10.0 % (1) Refer to the accompanying reconciliation
of reported results to operating-basis results. (2) For the quarter
ended June 30, 2010, positive operating leverage in the
quarter-over-quarter comparison was 850 basis points, based on an
increase in total operating-basis revenue of 2.2% and a decrease in
total operating-basis expenses of 6.3%.
STATE STREET
CORPORATION Earnings Release Addendum
RECONCILIATION OF REPORTED RESULTS TO
OPERATING-BASIS RESULTS Quarter and Six Months Ended June
30, 2010
(Dollars in millions, except per share amounts)
Quarter Ended
June 30, 2010 Six Months Ended June 30, 2010
Reported Operating Reported
Operating Results Adjustments Results
Results Adjustments Results Fee
Revenue: Servicing fees
$ 957 $ 957
$ 1,837 $ 1,837 Management fees
217 217 443 443 Trading services
326 326 568 568 Securities finance
109 109 181 181 Processing fees and
other
87 87
207 207 Total fee revenue
1,696
1,696 3,236 3,236 Net Interest
Revenue: Interest revenue
846 $ (141
)
(1)
705 1,724 $ (321 )
(7)
1,403 Interest expense
188
- 188 405
- 405 Net interest revenue
658
(141 ) 517 1,319 (321 )
998 Gains (Losses) related to investment securities,
net:
(50 ) -
(50 ) 45 -
45 Total revenue 2,304 (141 )
2,163 4,600 (321 ) 4,279
Provision for loan losses
10 - 10 25
- 25 Expenses: Salaries and employee
benefits
849 (21 )
(2)
828 1,732 (21 )
(2)
1,711 Information systems and communications
174
- 174 341 - 341 Transaction
processing services
164 - 164 317
- 317 Occupancy
116 - 116
234 - 234 Securities lending charge
414
(414 )
(3)
- 414 (414 )
(3)
- Merger and integration costs
41 (41 )
(4)
- 54 (54 )
(4)
- Other
186 -
186 431 -
431 Total expenses
1,944
(476 ) 1,468 3,523
(489 ) 3,034 Income before
income tax expense
350 335 685 1,052
168 1,220 Income tax expense
(82 )
272
(5)
190 125 197
(5)
322 Tax-equivalent adjustment
-
31
(6)
31 - 63
(6)
63 Net income $ 432
$ 32 $ 464 $
927 $ (92 ) $ 835
Diluted earnings per common share $ .87
$ .06 $ .93 $ 1.86
$ (.18 ) $ 1.68
Average diluted common shares outstanding (in thousands)
498,886 498,886 498,886 498,295
498,295 498,295 Return on common equity
11.0 % 0.8 % 11.8 %
12.2 % (1.2 ) % 11.0
% (1) Represents tax-equivalent adjustment of $31
million, which is not included in reported results, net of $172 of
discount accretion related to former conduit assets. (2) Represents
a $21 million accrual associated with a tax on bonus payments to
employees in the U.K. (3) Represents a cash contribution and
related costs of $339 million to SSgA lending fund collateral pools
and a $75 million charge to establish a reserve to address
potential inconsistencies in the application of a redemption policy
for agency lending collateral pools. (4) Represents merger and
integration costs. (5) Represents a one-time tax benefit of $180
million associated with the restructuring of former non-U.S.
conduit assets and the net tax effect of non-operating adjustments.
(6) Represents tax-equivalent adjustment, which is not included in
reported results. (7) Represents tax-equivalent adjustment of $63
million, which is not included in reported results, net of $384 of
discount accretion related to former conduit assets.
STATE STREET CORPORATION Earnings Release Addendum
RECONCILIATION OF REPORTED
RESULTS TO OPERATING-BASIS RESULTS Quarter and Six Months
Ended June 30, 2009
(Dollars in millions, except per share amounts)
Quarter Ended June 30,
2009
Six Months Ended June 30,
2009
Reported Operating Reported
Operating Results Adjustments Results
Results Adjustments Results Fee
Revenue: Servicing fees $ 795 $ 795 $ 1,561 $ 1,561 Management
fees 193 193 374 374 Trading services 310 310 555 555 Securities
finance 201 201 382 382 Processing fees and other 17
17 66 66
Total fee revenue 1,516 1,516 2,938 2,938
Net Interest
Revenue: Interest revenue 773 $ (81 )
(1)
692 1,511 $ (73 )
(6)
1,438 Interest expense 193 -
193 367 (17 )
(7)
350 Net interest revenue 580 (81 ) 499 1,144 (56 ) 1,088
Gains (Losses) related to investment securities, net
26 - 26 42
- 42
Total revenue 2,122
(81 ) 2,041 4,124 (56 ) 4,068 Provision for loan losses 14 -
14 98 - 98
Expenses: Salaries and employee benefits
696 - 696 1,427 - 1,427 Information systems and communications 167
- 167 328 - 328 Transaction processing services 146 - 146 277 - 277
Occupancy 121 - 121 242 - 242 Merger and integration costs 12 (12 )
(2)
- 29 (29 )
(2)
- Other 222 - 222
365 - 365 Total
expenses 1,364 (12 ) 1,352
2,668 (29 ) 2,639
Income before income tax expense and extraordinary loss 744 (69 )
675 1,358 (27 ) 1,331 Income tax expense 242 (39 )
(3)
203 380 (35 )
(3)
345 Tax-equivalent adjustment - 31
(1)
31 - 63
(1)
63 Income before extraordinary loss 502 (61 )
441 978 (55 ) 923 Extraordinary loss, net of tax (3,684 )
3,684
(4)
- (3,684 ) 3,684
(4)
-
Net income (loss) $ (3,182 ) $ 3,623 $
441 $ (2,706 ) $ 3,629 $ 923
Adjustments to net income (loss): Prepayment of
preferred stock discount $ (106 ) $ 106
(5)
$ - $ (106 ) $ 106
(5)
$ - Dividend on preferred stock (21 ) - (21 ) (46 ) - (46 )
Accretion of preferred stock discount (5 ) -
(5 ) (11 ) - (11 )
(132 ) 106 (26 ) (163 )
106 (57 )
Net income before
extraordinary loss available to common shareholders $
370 $ 45 $ 415 $ 815 $ 51
$ 866
Net income (loss) available to common
shareholders $ (3,314 ) $ 3,729 $ 415 $
(2,869 ) $ 3,735 $ 866
Diluted
earnings per common share before extraordinary loss $ .79 $ .10
$ .89 $ 1.81 $ .11 $ 1.92
Diluted earnings (loss) per
common share (7.12 ) 8.01 .89 (6.37 ) 8.29 1.92
Average diluted common shares outstanding (in thousands)
465,814 465,814 465,814 450,483 450,483 450,483
Return on
common equity before extraordinary loss 13.0 % 1.7 % 14.7 %
14.4 % 0.9 % 15.3 % (1) Represents tax-equivalent adjustment of $31
million, which is not included in reported results, net of $112
million of discount accretion related to former conduit assets. (2)
Represents merger and integration costs. (3) Represents the net tax
effect of non-operating adjustments. (4) Represents extraordinary
loss related to the May 2009 consolidation of the asset-backed
commercial paper conduits onto State Street's balance sheet.
(5) Represents prepayment of the
preferred stock discount in connection with redemption of the U.S.
Treasury's preferred stock investment under the TARP Capital
Purchase Program.
(6) Represents $63 million
tax-equivalent adjustment, which is not included in reported
results, net of $24 million of revenue related to the AMLF and $112
of discount accretion related to former conduit assets.
(7) Represents interest expense
related to the AMLF.
STATE STREET CORPORATION Earnings Release
Addendum RECONCILIATION OF REPORTED RESULTS TO
OPERATING-BASIS RESULTS Quarter Ended March 31, 2010
(Dollars in millions, except per share amounts) Quarter
Ended March 31, 2010 Reported Operating Results
Adjustments Results
Fee Revenue: Servicing fees $ 880 $ 880
Management fees 226 226 Trading services 242 242 Securities finance
72 72 Processing fees and other 120 120 Total fee
revenue 1,540 1,540
Net Interest Revenue: Interest
revenue 878 $ (180 )
(1)
698 Interest expense 217 - 217 Net
interest revenue 661 (180 ) 481 Gains related to investment
securities, net 95 - 95
Total
revenue 2,296 (180 ) 2,116 Provision for loan losses 15
- 15
Expenses: Salaries and employee benefits 883 -
883 Information systems and communications 167 - 167 Transaction
processing services 153 - 153 Occupancy 118 - 118 Merger and
integration costs 13 (13 )
(2)
- Other 245 - 245 Total expenses
1,579 (13 ) 1,566 Income before income tax expense
702 (167 ) 535 Income tax expense 207 (75 )
(3)
132 Tax-equivalent adjustment - 32
(4)
32
Net income $ 495 $ (124 ) $ 371
Net
income available to common shareholders $ 495 $ (124 ) $
371
Diluted earnings per common share $ .99 $ (.24 )
$ .75
Average diluted common shares outstanding (in
thousands) 498,056 498,056 498,056
Return on common
equity 13.4 % (3.4 ) % 10.0 % (1) Represents tax-equivalent
adjustment of $32 million, which is not included in reported
results, net of $212 million of discount accretion related to
former conduit assets. (2) Represents merger and integration costs.
(3) Represents the net tax effect of non-operating adjustments. (4)
Represents tax-equivalent adjustment, which is not included in
reported results.
STATE STREET CORPORATION
Earnings Release Addendum TANGIBLE COMMON
EQUITY AND TIER 1 COMMON RATIOS As of Period End
The table set forth below presents
the calculations of State Street's ratios of tangible common equity
to total tangibleassets and to total risk-weighted assets, and its
ratios of tier 1 common capital to total risk-weighted assets.
For the periods ended
June 30, March 31, June 30,
(Dollars in millions)
2010 2010 2009
Consolidated
Total Assets $ 162,075 $ 153,971 $ 153,421 Less:
Goodwill
5,380 4,515 4,547 Other intangible assets
2,731 1,768 1,790 AMLF investment securities
- - 300
Excess reserves held at central banks
14,768
19,235 20,449 Adjusted assets
139,196 128,453 126,335 Plus: Deferred tax liability
807 515 532 Total
tangible assets
A $ 140,003 $ 128,968
$ 126,867
Consolidated Total Common
Shareholders' Equity $ 16,059 $ 15,410 $ 12,103
Less: Goodwill
5,380 4,515 4,547 Intangible assets
2,731 1,768 1,790
Adjusted equity
7,948 9,127 5,766 Plus deferred tax
liability
807 515 532
Total tangible common equity
B $ 8,755
$ 9,642 $ 6,298 Tangible common equity
ratio
B/A 6.3 % 7.5 % 5.0 % Ratio of
tangible common equity to total risk-weighted assets
B/D
11.9 % 14.1 % 8.5 %
Tier 1 capital
$ 11,127 $ 12,335 $ 10,740 Less:
Trust preferred securities
1,450 1,450
1,450 Tier 1 common capital
C $
9,677 10,885 $ 9,290
Total risk-weighted assets D 73,550 68,338
73,918 Ratio of tier 1 common capital to total risk-weighted
assets
C/D 13.2 % 15.9 % 12.6 %
STATE STREET CORPORATION Earnings Release Addendum
CONSOLIDATED STATEMENT OF
CONDITION
June 30, December
31, June 30, (Dollars in millions, except per share amounts)
2010 2009 2009
Assets Cash and
due from banks
$ 5,312 $ 2,641 $ 4,044
Interest-bearing deposits with banks
20,298 26,632 26,346
Securities purchased under resale agreements
2,750 2,387
5,277 Trading account assets
203 148 127 Investment
securities available for sale
79,936 72,699 58,308
Investment securities held to maturity purchased under money market
liquidity facility - - 300 Investment securities held to maturity
18,166 20,877 22,093 Loans and leases (net of allowance of
$102, $79 and $108)
11,687 10,729 12,554 Premises and
equipment
1,839 1,953 2,114 Accrued income receivable
1,727 1,497 1,549 Goodwill
5,380 4,550 4,547 Other
intangible assets
2,731 1,810 1,790 Other assets
12,046 12,023 14,372
Total assets
$ 162,075 $ 157,946 $
153,421
Liabilities Deposits:
Noninterest-bearing
$ 11,704 $ 11,969 $ 14,539
Interest-bearing -- U.S.
10,226 5,956 6,323 Interest-bearing
-- Non-U.S.
73,813 72,137
64,715 Total deposits
95,743 90,062 85,577
Securities sold under repurchase agreements
9,058 10,542
12,899 Federal funds purchased
5,447 4,532 4,032 Short-term
borrowings under money market liquidity facility - - 300 Other
short-term borrowings
15,749 20,200 19,935 Accrued taxes and
other liabilities
11,473 9,281 9,595 Long-term debt
8,546 8,838 8,980 Total
liabilities
146,016 143,455 141,318
Shareholders'
Equity Preferred stock, no par: authorized 3,500,000; none
issued
- - - Common stock, $1 par: authorized 750,000,000
shares; 501,860,956, 495,365,571 and 494,434,216 shares issued
502 495 494 Surplus
9,266 9,180 9,202 Retained
earnings
8,015 7,071 6,255 Accumulated other comprehensive
loss
(1,707 ) (2,238 ) (3,828 ) Treasury stock (at
cost 433,556, 431,832 and 462,514 shares)
(17
) (17 ) (20 ) Total shareholders' equity
16,059 14,491 12,103
Total liabilities and shareholders' equity
$
162,075 $ 157,946 $ 153,421
State Street (NYSE:STT)
Historical Stock Chart
From May 2024 to Jun 2024
State Street (NYSE:STT)
Historical Stock Chart
From Jun 2023 to Jun 2024