State Street Corporation (NYSE: STT):
Third-Quarter 2012 GAAP Results
- Earnings per common share (EPS)
of $1.36, increased from $0.98 in the second quarter of 2012 and
from $1.10 in the third quarter of 2011. The third quarter of 2012
includes a net after-tax benefit of $0.35 per share, the majority
of which pertains to claims associated with the 2008 Lehman
Brothers bankruptcy.
- Net income available to common
shareholders of $654 million increased from $480 million in the
second quarter of 2012 and from $543 million in the third quarter
of 2011.
- Revenue of $2.36 billion
decreased 3% from $2.42 billion and $2.43 billion in the second
quarter of 2012 and third quarter of 2011, respectively.
- Net interest revenue of $619
million decreased 8% from $672 million in the second quarter of
2012 and increased 7% from $578 million in the third quarter of
2011.
- Expenses decreased 20% to $1.42
billion from $1.77 billion in the second quarter of 2012 and 21%
from $1.80 billion in the third quarter of 2011.
- Return on average common
shareholders' equity (ROE) of 13.3% increased from 10.0% in the
second quarter of 2012 and 11.2% in the third quarter of 2011.
- GAAP results include a net pre-tax
benefit of $277 million (net after-tax benefit of $166 million, or
$0.35 per share) composed of:
- a $362 million benefit related to
claims associated with the 2008 Lehman Brothers bankruptcy;
partially offset by
- a $60 million provision for previously
disclosed litigation arising out of our asset management and
securities lending businesses; and
- a special $25 million contribution to
fund the Company's charitable grant-making activities.
Third-Quarter 2012 Operating-basis (Non-GAAP)
Results(1)
- EPS of $0.99 decreased 2% from
$1.01 in the second quarter of 2012 and increased 3% from $0.96 in
the third quarter of 2011.
- Net income available to common
shareholders of $473 million decreased 4% from $494 million in
the second quarter of 2012 and 1% from $476 million in the third
quarter of 2011.
- Revenue of $2.35 billion
declined 3% from $2.43 billion and $2.41 billion in the second
quarter of 2012 and third quarter of 2011, respectively.
- Net interest revenue on a fully
taxable-equivalent basis, and excluding conduit-related discount
accretion of $40 million, was $611 million, a decrease of 3% from
$629 million in the second quarter of 2012, and an increase of 8%
percent from $564 million in the third quarter of 2011. Average
excess deposits of $16 billion for the third quarter of 2012
increased $1 billion from $15 billion for both the second quarter
of 2012 and the third quarter of 2011.
- Expenses of $1.66 billion
decreased 4% from $1.73 billion in the second quarter of 2012 and
3% from $1.71 billion in the third quarter of 2011.
- ROE of 9.6% decreased from 10.3%
in the second quarter of 2012 and from 9.8% in the third quarter of
2011.
Third-Quarter 2012 Operating-basis (Non-GAAP)
Highlights(1)
- New Business: Awarded $211
billion in asset servicing mandates and $78 billion of net new
assets to be managed by State Street Global Advisors (SSgA).
- Operating Leverage: Achieved
positive operating leverage of 50 basis points and 20 basis points
compared to the second quarter of 2012 and the third quarter of
2011, respectively.
- Business Operations and Information
Technology Transformation program: On track to achieve
incremental annual pre-tax operating-basis expense savings(1) in
the range of $90 million to $100 million in 2012. The estimated
cumulative expense savings through the end of 2012 are expected to
be approximately $180 million(2).
- Capital(3):
Estimated pro forma tier 1 common ratio under the recent U.S. Basel
III Notices of Proposed Rulemaking (NPRs) was 11.3% as of
September 30, 2012.
- Dividend and share purchases:
State Street declared a quarterly common stock dividend of $0.24
per share and purchased $480 million of its common stock at an
average price of $42.11.
- Goldman Sachs Administration
Services (GSAS): Completed the acquisition on October 15, 2012,
establishing State Street as the market leader in this fast-growing
market in hedge fund administration(4).
(1) Operating basis is a non-GAAP
presentation. For an explanation of operating-basis information,
refer to the addendum included with this news release. (2)
Estimated pre-tax, run-rate operating-basis expense savings relate
only to the Business Operations and Information Technology
Transformation program and are based on projected incremental
improvement in 2012 from total 2010 operating-basis expenses of
$6.18 billion; actual expenses of the Company may increase or
decrease due to other factors. (3) Unless otherwise specified, all
capital ratios referenced in this news release refer to State
Street Corporation and not State Street Bank and Trust Company.
Refer to the addendum included with this news release for a further
discussion of these ratios and for reconciliations applicable to
the tier 1 common ratio. Also, see "Capital" below. (4) Based on
HFMWeek Assets under Administration Survey, May 31, 2012, which
cited $505.5 billion and $200.6 billion of assets serviced for
State Street and Goldman Sachs, respectively.
Chairman's Perspective
Joseph L. Hooley, State Street's chairman, president and chief
executive officer, said, “Our third-quarter results reflect
continued resilience across both asset servicing and asset
management, partially offset by weakness in trading services. In a
difficult environment, we were able to achieve positive operating
leverage by controlling expenses and by continuing to implement our
Business Operations and Information Technology Transformation
program.”
Hooley continued, "Although equity markets have improved,
clients remain conservative in their investment allocations which
adversely affects our revenue. We continue to see demand for our
solutions as evidenced by $211 billion of new asset servicing wins,
net new assets of $78 billion to be managed by State Street Global
Advisors and a strong pipeline."
"We look forward to integrating the recently closed acquisition
of the Goldman Sachs Administration Services business and
introducing these clients to our broad range of products and
services. While acquisitions are consistent with our long-term
growth strategy, one of our highest priorities in the current
environment is returning capital to our shareholders. During the
third quarter, we purchased $480 million of common stock, leaving
$840 million remaining under our $1.8 billion common stock
authorization, which we plan to complete in March of 2013."
“We remain confident in the long-term growth prospects of our
business and continue to execute against our priorities of
leveraging the power of our core franchise, managing our expenses
carefully, delivering value to our clients through innovation and
returning capital to our shareholders,” Hooley concluded.
Non-GAAP Financial Measures
In addition to presenting State Street's financial results in
conformity with U.S. generally accepted accounting principles
(GAAP), management also presents results on a non-GAAP, or
“operating” basis, in order to highlight comparable financial
trends and other characteristics with respect to State Street's
business operations from period to period. Descriptions of our
non-GAAP, or operating-basis financial measures, together with
reconciliations of operating-basis information to GAAP-basis
information, are provided in the addendum included with this news
release.
The table below provides a summary of selected financial
information and key ratios for the indicated periods, presented on
an operating (non-GAAP) basis where noted. Amounts are presented in
millions of dollars, except for per-share amounts or where
otherwise noted.
Financial Highlights(1) (Dollars in millions)
Q3 2012 Q2 2012
% Increase(Decrease)
Q3 2011
% Increase(Decrease)
Total revenue(1)
$ 2,348 $ 2,426 (3.2 )% $ 2,413 (2.7
)% Total expenses(1)
$ 1,664 $ 1,728 (3.7 )% $ 1,713
(2.9 )% Net income available to common shareholders(1)
$
473 $ 494 (4.3 )% $ 476 (0.6 )% Earnings per common share(1)
$ 0.99 $ 1.01 (2.0 )% $ 0.96 3.1 % Return on average
common equity(1)
9.6 % 10.3 % (70) bps 9.8 % (20) bps
Total assets at period end
$ 204,522 $ 200,777
1.9 % $ 208,795 (2.0 )% Quarterly average total assets
$
195,805 $ 189,095 3.5 % $ 180,994 8.2 % Net interest margin
1.44 % 1.54 % (10) bps 1.44 % 0 bps
Net unrealized gain (loss) on investment
portfolio, after-taxat period end
$ 577 $ (54 ) $ (259 )
(1)
Presented on an operating basis, a non-GAAP presentation. Refer to
the addendum included with this news release for explanations of
our non-GAAP financial measures and for reconciliations of our
operating-basis financial information.
Assets Under
Custody and Administration and Assets Under Management (Dollars
in billions)
Q3 2012 Q2 2012
% Increase(Decrease)
Q3 2011
% Increase(Decrease)
Assets under custody and administration(1) (2)
$
23,441 $ 22,423 4.5 % $ 21,510 9.0 % Assets under
management(2)
$ 2,065 $ 1,908 8.2 % $ 1,855 11.3 %
Market Indices S&P 500® daily average
1,401 1,350
3.8 % 1,225 14.4 % MSCI EAFE® daily average
1,468 1,427 2.9
% 1,531 (4.1 )% S&P 500® average of month end
1,409
1,357 3.8 % 1,214 16.1 % MSCI EAFE® average of month end
1,474 1,424 3.5 % 1,526 (3.4 )% (1)
Includes assets under custody of $17.287 trillion, $16.387
trillion, and $15.714 trillion, as of period-end Q3 2012, Q2 2012
and Q3 2011, respectively. (2) At period end.
The following table provides the components of operating-basis
(non-GAAP) revenue(1) for the periods noted:
(Dollars in millions)
Q3 2012 Q2 2012
% Increase(Decrease)
Q3 2011
% Increase(Decrease)
Servicing fees
$ 1,100 $ 1,086 1.3 % $ 1,106 (0.5 )%
Investment management fees
251 246 2.0 229 9.6 Trading
services revenue: Foreign exchange trading
115 129 (10.9 )
204 (43.6 ) Brokerage and other fees
117 126
(7.1 ) 130 (10.0 ) Total trading services revenue
232
255 (9.0 ) 334 (30.5 ) Securities finance revenue
91 143
(36.4 ) 85 7.1 Processing fees and other revenue
45 48 (6.3
) 90 (50.0 ) Net interest revenue, fully taxable-equivalent
basis(1) (2)
611 629 (2.9 ) 564 8.3 Gains (Losses) related
to investment securities, net(1)
18 19 (5.3 )
5 260.0
Total Operating-Basis
Revenue(1) $ 2,348 $ 2,426
(3.2 )% $ 2,413 (2.7 )%
(1)
Refer to the addendum included with this news release for
explanations of our non-GAAP financial measures and for
reconciliations of our operating-basis financial information.
(2)
Net interest revenue for the third and second quarters of 2012 and
third quarter of 2011, presented in the table, included $32
million, $31 million and $32 million, respectively, of
tax-equivalent adjustments, and excluded $40 million, $74 million
and $46 million, respectively, of conduit-related discount
accretion. GAAP-basis net interest revenue for these periods was
$619 million, $672 million and $578 million, respectively. The
Company continues to expect to record aggregate pre-tax
conduit-related accretion of approximately $850 million in interest
revenue from October 1, 2012 through the remaining terms of the
former conduit securities. This expectation is based on numerous
assumptions, including holding the securities to maturity,
anticipated pre-payment speeds, credit quality and sales.
Servicing fees increased 1.3% to $1.1 billion in the
third quarter of 2012 from the second quarter of 2012, reflecting
strength in global equity markets and net new business. Compared to
the third quarter of 2011, servicing fees decreased 0.5%, primarily
due to the impact of a weaker Euro and business mix partially
offset by market impact.
Investment management fees were $251 million, up 2.0% in
the third quarter of 2012 from the second quarter of 2012,
primarily due to stronger global equity markets. Compared to third
quarter of 2011, management fees were up 9.6%, primarily due to
stronger equity markets and net new business.
Trading services revenue, which includes foreign-exchange
trading revenue and brokerage and other fees, was $232 million,
down 9.0% from the second quarter of 2012 due to weakness in
foreign-exchange and transition management. Trading services
revenue decreased 30.5% from the third quarter of 2011, primarily
due to weakness in foreign-exchange trading. Foreign-exchange
trading revenue decreased 10.9% from the second quarter of 2012
and 43.6% from the third quarter of 2011, primarily due to lower
volatility, partially offset by increased volumes. Brokerage and
other fees decreased 7.1% to $117 million from the second
quarter of 2012 due to weakness in transition management. Compared
to the third quarter of 2011, brokerage and other fees decreased
10.0% due to weaker revenue from electronic foreign-exchange
trading.
Securities finance revenue was $91 million, a decline of
36.4% from the second quarter of 2012, due primarily to
second-quarter seasonality. Compared to the third quarter of 2011,
securities finance revenue increased 7.1% due to higher spreads,
offset partially by lower volumes.
Processing fees and other revenue declined 50.0% from the
third quarter of 2011, primarily due to gains related to real
estate and certain leases recorded in the third quarter of 2011 and
amortization expenses related to tax-advantaged investments in
renewable energy in the third quarter of 2012.
Fully taxable-equivalent net interest revenue was $611
million, a decrease of 2.9% from $629 million in the second quarter
of 2012, primarily due to lower yields on earning assets. Compared
to the third quarter of 2011, fully taxable-equivalent net interest
revenue was up 8.3% from $564 million, largely driven by higher
earning assets and lower funding costs, partially offset by lower
asset yields.
Net interest margin, including excess deposits held at
the Federal Reserve and other central banks, was 144 basis points
in the third quarter of 2012 compared to 154 basis points in the
second quarter of 2012 and 144 basis points in the third quarter of
2011.
Net gains from sales of available-for-sale securities of
$24 million were recorded in the third quarter of 2012, and
separately, $6 million of net losses from other-than-temporary
impairment were recorded, resulting in $18 million of net gains
related to investment securities.
The following table provides the components of operating-basis
(non-GAAP)(1) expenses for the periods noted:
(Dollars in millions)
Q3 2012 Q2 2012
% Increase(Decrease)
Q3 2011
% Increase(Decrease)
Compensation and employee benefits
$ 916 $ 942 (2.8
)% $ 965 (5.1 )% Information systems and communications
211
208 1.4 191 10.5 Transaction processing services
170 172
(1.2 ) 180 (5.6 ) Occupancy
115 115 — 119 (3.4 ) Other
252 291 (13.4 ) 258 (2.3 )
Total
Operating-Basis Expenses(1) $ 1,664
$ 1,728 (3.7 )% $ 1,713 (2.9 )%
(1) Refer to the addendum included with this news release for
explanations of our non-GAAP financial measures and for
reconciliations of our operating-basis financial information.
Compensation and employee benefits decreased 2.8% from
the second quarter of 2012 to $916 million and decreased 5.1% from
third quarter of 2011. The decrease from both periods is primarily
due to lower compensation and employee benefit costs associated
with the continued implementation of the Business Operations and
Information Technology Transformation program.
Information systems and communications were $211 million
in the third quarter of 2012, up 10.5% from the third quarter of
2011, primarily due to costs related to activities transitioned in
connection with the Business Operations and Information Technology
Transformation program.
Transaction processing services declined 5.6% to $170
million in the third quarter of 2012 from the third quarter of
2011, primarily due to lower volumes in the investment servicing
business.
Other expenses decreased 13.4% to $252 million in the
third quarter of 2012 from the second quarter of 2012, primarily
due to lower securities processing costs and professional fees.
Income Taxes
The effective tax rate on third-quarter 2012 GAAP
earnings increased to 28.3% from 24.9% in the second quarter of
2012 due to the benefits associated with the 2008 Lehman Brothers
bankruptcy. The effective tax rate on operating-basis earnings for
the third quarter of 2012 was 24.5%, largely in line with 24.7% in
the second quarter of 2012 and down from 27.0% in the third quarter
of 2011, primarily due to the impact of an increase in
tax-advantaged investments in renewable energy in 2012. The
effective tax rate on operating-basis earnings for full-year 2012
is expected to be approximately 25.5%.
Capital
Capital ratios(1):
September 30,2012
June 30,2012
bps Increase(Decrease)
September 30,2011
bps Increase(Decrease)
Total capital ratio
21.3 % 21.5 % (20 ) bps 19.5 %
180 bps Tier 1 capital ratio
19.8 % 19.9 % (10 ) bps
17.9 % 190 bps Tier 1 leverage ratio
7.6 % 7.7 % (10
) bps 7.8 % (20 ) bps Tier 1 common ratio
17.8 % 17.9
% (10 ) bps 16.0 % 180 bps Estimated pro forma tier 1 common ratio
under Basel III NPRs, including impact of SSFA(2)
11.3
% 11.0 % 30 bps N/A N/A TCE ratio
7.6 % 7.2 %
40 bps 7.0 % 60 bps (1) Unless otherwise
specified, all capital ratios referenced in the table above and
elsewhere in this news release refer to State Street Corporation
and not State Street Bank and Trust Company. Refer to the addendum
included with this news release for a further description of these
ratios, and for reconciliations applicable to the tier 1 common and
tangible common equity, or TCE, ratios presented in this table. All
ratios are presented at period end. Total capital, tier 1 capital
and tier 1 leverage ratios as of September 30, 2012 presented in
the table above were down modestly from June 30, 2012, primarily
due to slightly higher total risk-weighted assets (slightly higher
average assets for the leverage ratio) partially offset by higher
capital levels. (2) Basel III capital ratios reflect the impact
estimated by State Street of the Notices of proposed rulemaking
(NPRs) issued by federal banking regulators in June 2012 regarding
capital, primarily the application of the Simplified Supervisory
Formula Approach (SSFA). The Capital rules in the NPR are not
final. This estimate is subject to change based on regulatory
clarifications, further analysis, the results of industry comment
on the NPRs and other factors. Refer to the addendum included with
this news release for information concerning the specified capital
ratios and for reconciliations of the Basel III tier 1 common ratio
to the tier 1 common ratio calculated under currently applicable
regulatory guidelines. N/A Not applicable.
The estimated pro forma Basel III tier 1 common ratio as
of September 30, 2012 was 11.3%. As noted above, this includes
the estimated impact of the NPRs on the investment portfolio. This
estimate would be 11.9% as of September 30, 2012, if adjusted
on a pro forma basis (i) to hypothetically give effect as of that
date to all of the projected run-off and reinvestment through
January 1, 2015 of our investment portfolio assets affected by the
SSFA, and (ii) assuming the acquisition of GSAS occurred on
September 30, 2012. Refer to the addendum included with this
news release for a reconciliation of this ratio.
Common Stock Dividend and Share Repurchase Program
The Company purchased approximately 11.4 million shares of its
common stock at a total cost of $480 million in the third quarter
of 2012 and declared a quarterly common stock dividend of $0.24 per
share. The Company has $840 million remaining under its $1.8
billion stock purchase program authorization, effective through
March 2013.
Preferred Stock Dividends
In the third quarter, the Company issued fixed-rate perpetual
preferred stock and redeemed its floating-rate preferred stock to
take advantage of the low interest-rate environment. As a result,
for the third quarter of 2012, the Company recorded preferred stock
dividends composed of approximately $7 million on its floating-rate
Series A perpetual preferred stock, which was redeemed on October
4, 2012, and approximately $8 million on the new Series C
fixed-rate perpetual preferred stock, issued on August 21, 2012.
The dividend on the new Series C perpetual preferred stock covers
the first dividend period which runs from the date of issuance
through December 15, 2012. As a result, the Company will not accrue
a Series C perpetual preferred stock dividend in the fourth quarter
of 2012.
Additional Information
All per share amounts represent fully diluted earnings per
common share. Return on average common shareholders' equity is
determined by dividing annualized net income available to common
equity by average common shareholders' equity for the period.
Operating-basis return on average common equity utilizes annualized
operating-basis net income available to common equity in the
calculation. Operating leverage is defined as the rate of growth of
total revenue less the rate of growth of total expenses, each as
determined on an operating basis.
Investor Conference Call
State Street will webcast an investor conference call today,
Tuesday, October 16, 2012, at 9:30 a.m. EDT, available at
www.statestreet.com/stockholder. The conference call will also be
available via telephone, at +1 888/391-4233 in the U.S. or at +1
706/679-5594 outside of the U.S. The Conference ID is #32878361.
Recorded replays of the conference call will be available on the
web site, and by telephone at +1 855/859-2056 inside the U.S. or at
+1 404/537-3406 outside the U.S. beginning approximately two hours
after the call's completion. The Conference ID is 32878361. 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 (including those
concerning our investment portfolio), and additional financial
information are available on State Street's website, at
www.statestreet.com/stockholder under “Investor Relations--Investor
News & Events" and under the title “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 $23.441 trillion in assets under custody and
administration and $2.065 trillion in assets under management at
September 30, 2012, State Street operates in 29 countries and
more than 100 geographic markets and employs 29,650 worldwide. For
more information, visit State Street's website 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 relating to
our goals and expectations regarding our business, financial and
capital condition (including without limitation, our capital ratios
under Basel III), results of operations, investment portfolio
performance 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
October 16, 2012.
Important factors that may affect future results and outcomes
include, but are not limited to:
- 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 including, for example, the direct and indirect effects on
counterparties of the current sovereign debt risks in Europe and
other regions;
- financial market disruptions or
economic recession, whether in the U.S., Europe or other regions
internationally;
- increases in the volatility of, or
declines in the level of, our net interest revenue, changes in the
composition of the assets on our consolidated statement of
condition and the possibility that we may be required to change the
manner in which we fund those assets;
- the liquidity of the U.S. and
international securities markets, particularly the markets for
fixed-income securities and inter-bank credits, and the liquidity
requirements of our clients;
- 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;
- 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;
- our ability to attract deposits and
other low-cost, short-term funding, and our ability to deploy
deposits in a profitable manner consistent with our liquidity
requirements and risk profile;
- the manner in which the Federal Reserve
and other regulators implement the Dodd-Frank Act, Basel III,
European directives with respect to banking and financial
instruments and other regulatory initiatives in the U.S. and
internationally, including regulatory developments that result in
changes to our operating model or other changes to the provision of
our services;
- adverse changes in required regulatory
capital ratios, whether arising under the Dodd-Frank Act, Basel II
or Basel III, or due to changes in regulatory positions or
regulations in jurisdictions in which we engage in banking
activities;
- increasing requirements to obtain
necessary approvals of the Federal Reserve and our other regulators
for the use, allocation or distribution of our capital or for other
specific capital actions or programs, including acquisitions,
dividends and equity repurchases, without which our growth plans,
distributions to shareholders, equity purchase programs or other
capital initiatives may be restricted;
- 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, capital
adequacy requirements and changes that expose us to risks related
to compliance;
- the maintenance of credit agency
ratings for our debt and depository obligations as well as the
level of credibility of credit agency ratings;
- delays or difficulties in the execution
of our previously announced business operations and information
technology transformation program, which could lead to changes in
our estimates of the charges, expenses or savings associated with
the planned program, resulting in increased volatility of our
earnings;
- the results of, and costs associated
with, government investigations, litigation, and similar claims,
disputes, or proceedings;
- the possibility that our clients will
incur substantial losses in investment pools where we act as agent,
and the possibility of significant reductions in the valuation of
assets;
- adverse publicity or other reputational
harm;
- dependencies on information technology,
complexities and costs of protecting the security of our systems
and difficulties with protecting our intellectual property
rights;
- 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;
- potential changes to the competitive
environment, including changes due to regulatory and technological
changes, the effects of consolidation, and perceptions of State
Street as a suitable service provider or counterparty;
- potential changes in how clients
compensate us for our services, and the mix of services that
clients choose from us;
- the risks that acquired businesses and
joint ventures will not achieve their anticipated financial and
operational benefits or 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 closing conditions;
- our ability to recognize emerging
clients' needs and to develop products that are responsive to such
trends and profitable to the company; the performance of 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; and the potential for new
products and services to impose additional costs on us and expose
us to increased operational risk;
- our ability to measure the fair value
of the investment securities on our consolidated statement of
condition;
- our ability to control operating risks,
data security breach 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 prove insufficient, fail or be circumvented;
- changes in accounting standards and
practices; and
- changes in tax legislation and in the
interpretation of existing tax laws by U.S. and non-U.S. tax
authorities that affect 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 2011 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, October 16, 2012, and we do not undertake efforts to
revise those forward-looking statements to reflect events after
that date.
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