Fourth-Quarter Operating-Basis(1)
EPS of $1.15 on Revenue of $2.53 Billion; Full-Year
Operating-Basis EPS of $4.54 on Revenue of $10.05 Billion
Core Asset Servicing and Asset Management
Fee Revenue Growth for Full-Year 2013, up 10% from Full-Year
2012
Continued Focus on Expense Control Results
in 171 Basis Points of Positive Operating Leverage(2)
for Full-Year 2013 Compared to Full-Year 2012
In announcing today's financial results, Joseph L. Hooley, State
Street's chairman, president and chief executive officer, said,
"Our fourth quarter and full-year results reflect the strength of
the core business and our continued focus on our key priorities to
deliver value for our clients and shareholders. 2013 was a very
good year for State Street despite both the ongoing headwinds
created by the low rate environment and the increasing regulatory
cost and complexity. Importantly, for the full year, we grew our
core asset servicing and asset management fees by almost 10%
compared to 2012."
Hooley added, "Our results for 2013 also demonstrated our
commitment to controlling expenses which enabled us to achieve 171
basis points of positive operating leverage for full-year 2013
compared to full-year 2012. Our Business Operations and IT
Transformation program continues to deliver expected improved
efficiencies and enhanced client solutions."
Hooley concluded, "We purchased approximately 8.0 million shares
of our common stock during the fourth quarter, and 24.7 million
shares since April 1, 2013, under our current $2.1 billion common
stock purchase program effective through March 2014. We recently
submitted our 2014 capital plan to the Federal Reserve, and the
return of capital through dividends and common stock repurchases
remains a key priority."
Fourth-Quarter 2013 GAAP Results
- Earnings per common share (EPS)
of $1.22 increased from $1.17 in the third quarter of 2013 and from
$1.00 in the fourth quarter of 2012. EPS for the fourth quarter of
2013 reflected the impact of an out-of-period income tax benefit of
$71 million, or $0.16 per share, associated with the completion of
a multi-year data enhancement process related to our deferred
income tax accounts. EPS for the fourth quarter of 2013 also
reflected the impact of pre-tax provisions of $45 million, or $0.06
per share, associated with previously disclosed litigation and
non-U.S. regulatory matters.Net income available to common
shareholders of $545 million increased from $531 million in the
third quarter of 2013 and from $468 million in the fourth quarter
of 2012.
- Revenue of $2.46 billion
increased from $2.43 billion in the third quarter of 2013 and from
$2.45 billion in the fourth quarter of 2012.
- Net interest revenue of $585
million increased from $546 million in the third quarter of 2013
and decreased from $622 million in the fourth quarter of 2012.
- Expenses of $1.85 billion
increased from $1.72 billion in the third quarter of 2013 and
decreased from $1.86 billion in the fourth quarter of 2012.
- Return on average common
shareholders' equity (ROE) of 10.9% increased from 10.8% in the
third quarter of 2013 and from 9.3% in the fourth quarter of
2012.
Full-Year 2013 GAAP Results
- EPS of $4.62 increased 10.0%
from $4.20 in 2012. Revenue increased 2.4% to $9.88 billion
from $9.65 billion in 2012. Expenses increased 4.4% to $7.19
billion from $6.89 billion in 2012. ROE increased to 10.5%
in 2013 from 10.3% in 2012.
Fourth-Quarter 2013 Operating-Basis (Non-GAAP)
Results(1)
- EPS of $1.15 decreased from
$1.19 in the third quarter of 2013 and increased 3.6% from $1.11 in
the fourth quarter of 2012.
- Net income available to common
shareholders of $514 million decreased from $537 million in the
third quarter of 2013 and from $521 million in the fourth quarter
of 2012.
- Revenue of $2.53 billion
increased from $2.47 billion in the third quarter of 2013 and from
$2.46 billion in the fourth quarter of 2012.
- Net interest revenue of $596
million increased from $553 million in the third quarter of 2013
and decreased from $600 million in the fourth quarter of 2012.
Operating-basis net interest revenue excluded discount accretion on
former conduit assets of $31 million, $28 million and $52 million
for the respective quarters and is presented on a fully
taxable-equivalent basis.
- Expenses of $1.76 billion
increased from $1.69 billion in the third quarter of 2013 and from
$1.71 billion in the fourth quarter of 2012.
- ROE of 10.3% decreased from
11.0% in the third quarter of 2013 and was flat with the fourth
quarter of 2012.
Full-Year 2013 Operating-Basis (Non-GAAP)
Results(1)
- EPS of $4.54 increased 14.9%
from $3.95 in 2012. Revenue increased 3.3% to $10.05 billion
from $9.73 billion in 2012. Expenses increased 1.5% to $7.01
billion from $6.91 billion in 2012. ROE increased to 10.3%
in 2013 from 9.7% in 2012.
Fourth-Quarter 2013 and Full-Year 2013
Highlights(1)
- Achieved positive operating
leverage(1)(2) of 171 basis points for full-year 2013
compared to full-year 2012. The fourth quarter of 2013 compared to
the third quarter of 2013 reflected negative operating leverage of
194 basis points, partially driven by a decrease in trading
services revenue. The fourth quarter of 2013 compared to the fourth
quarter of 2012 reflected negative operating leverage of 4 basis
points.
- New Business(3) New asset
servicing mandates during the fourth quarter of 2013 totaled $392
billion and net new assets to be managed were $5 billion.
- Business Operations and Information
Technology Transformation program(4) Achieved
incremental pre-tax expense savings of approximately $220 million
in 2013, resulting in total pre-tax expense savings of
approximately $420 million since the program's inception in 2010
through the end of 2013.
- Capital(5) Tier 1 common
ratio as of December 31, 2013, calculated using currently
applicable regulatory requirements, was 15.5%. Provisions of the
Basel III final rule become effective under a transition timetable
which began on January 1, 2014. The timing of the provisions of the
final rule related to the calculation of risk-weighted assets will
depend on State Street's completion of a required qualification
period. Estimated pro forma Basel III tier 1 common ratio as of
December 31, 2013 was 10.1% (standardized approach) and 11.8%
(advanced approach), each calculated in conformity with the July
2013 final rule. Under the final rule, the lower of the Basel III
tier 1 common ratios calculated by us under the standardized and
advanced approaches will apply in the assessment of our capital
adequacy for regulatory purposes.
- Return of capital to
shareholders Purchased approximately $560 million of our common
stock at an average price of $69.98 per share during the fourth
quarter of 2013. During full-year 2013, we purchased approximately
31.2 million shares of our common stock at a total cost of
approximately $2.04 billion and an average price of $65.30 per
share. Since April 1, 2013, we purchased approximately 24.7 million
shares of our common stock at a total cost of approximately $1.68
billion and an average price of $68.05 per share, under our current
$2.1 billion common stock purchase program effective through March
2014. We have approximately $420 million remaining at year end
under the March 2013 program, which extends through March 31, 2014.
In addition, as previously announced, we declared a quarterly
common stock dividend of $0.26 per share during the fourth quarter
of 2013.
(1) Operating basis is a non-GAAP presentation. For an
explanation of operating-basis information and related
reconciliations, refer to the addendum included with this news
release.
(2) 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. Operating leverage comparing the
fourth quarter of 2013 to each of the third quarter of 2013 and the
fourth quarter of 2012, as well as comparing full-year 2013 to
full-year 2012, is presented in the addendum included with this
news release.
(3) New business in assets to be serviced is reflected in our
assets under custody and administration after we begin servicing
the assets. As such, only a portion of these new asset servicing
mandates is reflected in our assets under custody and
administration as of December 31, 2013. Distribution fees from
the SPDR® Gold Exchange-Traded Fund, or ETF, are recorded in
brokerage and other fee revenue and not in management fee
revenue.
(4) Estimated pre-tax expense savings relate only to the
Business Operations and Information Technology Transformation
program and are based on projected improvement from total 2010
operating-basis expenses. Actual total expenses of the Company have
increased since 2010, and may increase or decrease in the future,
due to other factors.
(5) Estimated pro forma Basel III tier 1 common ratios reflect
tier 1 common equity calculated under the July 2013 final rule as
applicable on its January 1, 2014 effective date and are based upon
State Street's interpretation of the final rule. Refer to the
“Capital” section of this news release for important information
about the July 2013 final rule, State Street's calculations of its
tier 1 common ratios thereunder, factors that could influence State
Street's calculations of its tier 1 common ratios and other
information about our capital ratios. Unless otherwise specified,
all capital ratios referenced in this news release refer to State
Street 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 State
Street's tier 1 common ratio.
Non-GAAP Financial Measures
In addition to presenting State Street's financial results in
conformity with U.S. generally accepted accounting principles, or
GAAP, management also presents results on a non-GAAP, or operating
basis, in order to highlight comparable financial trends with
respect to State Street's business operations from period to
period. Summary results presented on a GAAP basis, descriptions of
our non-GAAP, or operating-basis, financial measures, and
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, or 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)
Q4 2013 Q3 2013
% Increase(Decrease)
Q4 2012
% Increase(Decrease)
Total revenue(1)
$ 2,528 $ 2,469 2.4 % $ 2,463 2.6 %
Total expenses(1)
1,760 1,687 4.3 1,714 2.7 Net income
available to common shareholders(1)
514 537 (4.3 ) 521 (1.3
) Earnings per common share(1)
1.15 1.19 (3.4 ) 1.11 3.6
Return on average common equity(1)
10.3 % 11.0 % (70)
bps 10.3 % - Total assets at period-end
$ 243,291 $
217,180 12.0 % $ 222,582 9.3 % Quarterly average total assets
210,915 201,282 4.8 202,051 4.4 Net interest margin(1)
1.30 % 1.27 % 3 bps 1.36 % (6) bps Net unrealized
gain (loss) on investment securities, after-tax at period-end
$ (213 ) $ (79 ) $ 697
(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)
Q4
2013 Q3 2013
% Increase(Decrease)
Q4 2012
% Increase(Decrease)
Assets under custody and administration(1) (2)
$
27,427
$
26,033
5.4 %
$
24,371
12.5 % Assets under management(2)
2,345 2,241 4.6
2,086 12.4 Market Indices: S&P 500® daily average
1,769
1,675 5.6 1,418 24.8 MSCI EAFE® daily average
1,860 1,748
6.4 1,544 20.5 S&P 500® average of month-end
1,804 1,667
8.2 1,418 27.2 MSCI EAFE® average of month-end
1,894 1,747
8.4 1,561 21.3
(1) Includes assets under custody of $20,411 billion, $19,206
billion and $17,806 billion, as of period-end Q4 2013, Q3 2013 and
Q4 2012, respectively.
(2) As of period-end.
Revenue
The following table provides the components of operating-basis
(non-GAAP) revenue(1) for the periods noted:
(Dollars in millions)
Q4 2013 Q3 2013
% Increase(Decrease)
Q4 2012
% Increase(Decrease)
Servicing fees
$ 1,232 $ 1,211 1.7 % $ 1,150 7.1 %
Management fees
290 276 5.1 260 11.5 Trading services
revenue: Foreign-exchange trading
125 147 (15.0 ) 118 5.9
Brokerage and other fees
103 109 (5.5 )
125 (17.6 ) Total trading services revenue
228 256
(10.9 ) 243 (6.2 ) Securities finance revenue
76 74 2.7 74
2.7 Processing fees and other revenue(1) (2)
106
103 2.9 115 (7.8 ) Total fee revenue
1,932 1,920 0.6 1,842 4.9 Net interest revenue(1) (3)
596 553 7.8 600 (0.7 ) Gains (losses) related to investment
securities, net
— (4 )
100.0 21 (100.0 )
Total Operating-Basis
Revenue(1) $ 2,528 $ 2,469 2.4 % $
2,463 2.6 %
(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.
(2) Processing fees and other revenue for the fourth quarter of
2013, third quarter of 2013 and fourth quarter of 2012, presented
in the table, included tax-equivalent adjustments of $53 million,
$37 million and $36 million, respectively, related to tax credits
generated by tax-advantaged investments. GAAP-basis processing fees
and other revenue for these periods was $53 million, $66 million
and $79 million, respectively.
(3) Net interest revenue for the fourth quarter of 2013, third
quarter of 2013 and fourth quarter of 2012, presented in the table,
included tax-equivalent adjustments of $42 million, $35 million and
$30 million, respectively, and excluded conduit-related discount
accretion of $31 million, $28 million and $52 million,
respectively. GAAP-basis net interest revenue for these periods was
$585 million, $546 million and $622 million, respectively. The
Company expects to record aggregate pre-tax conduit-related
accretion of approximately $572 million in interest revenue from
January 1, 2014 through the remaining lives of the former conduit
securities. This expectation is based on numerous assumptions,
including holding the securities to maturity, anticipated
pre-payment speeds and credit quality.
Servicing fees of $1.23 billion in the fourth quarter of
2013 increased 1.7% and 7.1% from the third quarter of 2013 and
fourth quarter of 2012, respectively. The increase in both periods
was primarily due to stronger global equity markets and net new
business.
Management fees of $290 million in the fourth quarter of
2013 increased 5.1% and 11.5% from the third quarter of 2013 and
fourth quarter of 2012, respectively. The increase in both periods
primarily reflected stronger global equity markets.
Foreign-exchange trading revenue decreased 15.0% from the
third quarter of 2013 primarily due to lower volatility. Compared
to the fourth quarter of 2012, foreign exchange trading revenue
increased 5.9% due to higher volumes and volatility. Brokerage
and other fees decreased 5.5% from the third quarter of 2013 to
$103 million, primarily due to lower transition management revenue.
Compared to the fourth quarter of 2012, brokerage and other fees
decreased 17.6% primarily due to a decrease in distribution fees
associated with the SPDR® Gold ETF.
Securities finance revenue of $76 million in the fourth
quarter of 2013 increased 2.7% from the third quarter of 2013 and
fourth quarter of 2012, respectively.
Operating-basis processing fees and other revenue of $106
million in the fourth quarter of 2013 increased 2.9% from the third
quarter of 2013, primarily due an increase in revenue associated
with tax-advantaged investments. Compared to the fourth quarter of
2012, processing fees and other revenue decreased 7.8%, primarily
due to the sale of a Lehman Brothers-related asset and a gain on
the sale of an investment related to one of our joint ventures,
both recorded in the fourth quarter of 2012, partially offset by an
increase in fee revenue associated with our investment in
bank-owned life insurance recorded in the fourth quarter of 2013.
See note (2) to the table above for a description of the
presentation of operating-basis processing fees and other
revenue.
Operating-basis net interest revenue of $596 million in
the fourth quarter of 2013 increased 7.8% from $553 million in the
third quarter of 2013, primarily due to $19 million in interest
revenue associated with a municipal security that was previously
impaired, higher interest earning assets and lower mortgage
prepayments. Compared to the fourth quarter of 2012,
operating-basis net interest revenue decreased 0.7% primarily due
to lower yields on earning assets, partially offset by the $19
million in interest revenue associated with a municipal security
recorded in the fourth quarter of 2013 and lower yields on interest
bearing liabilities. See note (3) to the table above for a
description of the presentation of operating-basis net interest
revenue.
Operating-basis net interest margin, including balances
held at the Federal Reserve and other central banks, increased to
130 basis points in the fourth quarter of 2013 from 127 basis
points in the third quarter of 2013. Excluding the $19 million in
interest revenue associated with a municipal security that was
previously impaired, operating-basis net interest margin in the
fourth quarter of 2013 was 125 basis points. Refer to the addendum
included with this news release for reconciliations of our
operating-basis net interest margin.
Expenses
The following table provides the components of operating-basis
(non-GAAP)(1) expenses for the periods noted:
(Dollars in millions)
Q4 2013 Q3 2013
% Increase(Decrease)
Q4 2012
% Increase(Decrease)
Compensation and employee benefits(1) (2)
$
934
$903 3.4 %
$
915
2.1 % Information systems and communications
228 235 (3.0 )
234 (2.6 ) Transaction processing services
182 185 (1.6 )
179 1.7 Occupancy
124 113 9.7 121 2.5 Other(1) (3)
292 251 16.3 265 10.2
Total
Operating-Basis Expenses(1)
$
1,760
$1,687 4.3 %
$
1,714
2.7 %
(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.
(2) GAAP-basis compensation and employee benefits expenses for
the fourth quarter of 2013, third quarter of 2013 and fourth
quarter of 2012 were $945 million, $903 million and $915 million,
respectively.
(3) GAAP-basis other expenses for the fourth quarter of 2013,
third quarter of 2013 and fourth quarter of 2012 were $337 million,
$256 million and $276 million, respectively.
Operating-basis compensation and employee benefits
expenses increased 3.4% in the fourth quarter of 2013 from the
third quarter of 2013, primarily due to lower benefit costs
resulting from plan changes in the third quarter, as well as
increased costs to support new business. Compared to the fourth
quarter of 2012, compensation and employee benefits expenses
increased 2.1%, primarily due to higher incentive compensation and
increased costs to support new business, partially offset by
savings associated with the execution of cost reduction programs.
See note (2) to the table above for a description of GAAP-basis
compensation and employee benefits expenses for the relevant
periods.
Information systems and communications expenses of $228
million in the fourth quarter of 2013 decreased 3.0% and 2.6% from
the third quarter of 2013 and fourth quarter of 2012,
respectively.
Transaction processing services expenses of $182
million in the fourth quarter of 2013 declined 1.6% compared to the
third quarter of 2013 and were up 1.7% compared to the fourth
quarter of 2012.
Occupancy expenses of $124 million in the fourth quarter
of 2013 increased 9.7% and 2.5% from the third quarter of 2013 and
fourth quarter of 2012, respectively. The increase in both
comparisons reflected the effect of a sublease renegotiation in the
fourth quarter of 2013.
Operating-basis other expenses increased 16.3% to $292
million in the fourth quarter of 2013 from $251 million in the
third quarter of 2013, primarily due to higher securities
processing costs, professional services fees and sales promotion
costs. Fourth-quarter 2013 operating-basis other expenses included
$28 million of securities processing costs offset by Lehman
Brothers-related gains and recoveries. Compared to the fourth
quarter of 2012, operating-basis other expenses increased 10.2%,
primarily due to higher securities processing costs. See note (3)
to the table above for a description of GAAP-basis other expenses
for the relevant periods.
Income Taxes
The fourth-quarter 2013 GAAP- and operating-basis effective tax
rates were 9.7% and 21.9%, respectively, down from 23.2% and 23.0%,
respectively, in the third quarter of 2013 and from 19.9% and
23.5%, respectively, in the fourth quarter of 2012. The decrease in
the fourth-quarter 2013 GAAP-basis effective tax rate was primarily
attributable to the completion of a multi-year data enhancement
process related to our deferred income tax accounts, which resulted
in an out-of-period income tax benefit of $71 million.
Capital
The following table presents the Company's capital ratios as of
December 31, 2013, September 30, 2013 and
December 31, 2012.
Capital ratios(1)
December 31,2013
September 30,2013
bps Increase(Decrease)
December 31,2012
bps Increase(Decrease)
Total capital ratio
19.7 % 19.8 % (10) bps 20.6 %
(90) bps Tier 1 capital ratio
17.3 17.3 — 19.1 (180) Tier 1
leverage ratio
6.9 7.2 (30 ) 7.1 (20) Tier 1 common ratio
15.5 15.5 — 17.1 (160) Estimated pro forma Basel III tier 1
common ratio:(2) Advanced
11.8 11.3 50 10.8 NA Standardized
10.1 10.2 (10 ) NA NA TCE ratio
6.6 6.8 (20 ) 7.2
(60)
NA Not applicable.
(1) Unless otherwise specified, all capital ratios referenced in
the table above and elsewhere in this news release refer to State
Street 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 State
Street's tier 1 common and tangible common equity, or TCE, ratios
presented in the table.
(2) On July 2, 2013, the Federal Reserve issued a rule intended
to implement the Basel III framework in the U.S. The final rule
consolidated, with revisions, three separate Notices of Proposed
Rulemaking, or NPRs, originally issued by the Federal Reserve in
June 2012. Provisions of the Basel III final rule become effective
under a transition timetable which began on January 1, 2014. The
timing of the provisions of the final rule related to the
calculation of risk-weighted assets will depend on State Street's
completion of a required qualification period. Under the final
rule, the lower of State Street’s tier 1 common ratio calculated
under the Basel III advanced approach, referred to as the advanced
approach, and under the Basel III standardized approach, referred
to as the standardized approach, will be State Street’s effective
tier 1 common ratio used in connection with the assessment of its
capital adequacy for regulatory purposes. These calculations differ
from calculations done in conformity with the June 2012 NPRs.
The estimated pro forma Basel III tier 1 common ratios presented
in the table above as of December 31, 2013 and
September 30, 2013 are preliminary estimates by State Street,
calculated in conformity with the advanced and standardized
approaches in the July 2013 final rule. Each of these calculations
reflects tier 1 common equity calculated under the final rule as
applicable on its January 1, 2014 effective date and is based on
State Street's present interpretations, expectations and
understanding of the final rule as of the respective date of each
estimate’s first public announcement. The estimated pro forma Basel
III tier 1 common ratio presented in the table as of
December 31, 2012 was a preliminary estimate by State Street,
calculated in conformity with the advanced approach in the June
2012 NPRs, and was based on State Street's interpretations,
expectations and understanding of the June 2012 NPRs as of the date
of the estimate’s first public announcement. This calculation
differs from the calculation of the estimated pro forma Basel III
tier 1 common ratio done in conformity with the July 2013 final
rule, and State Street has not revised its calculation done in
conformity with the June 2012 NPRs. State Street did not announce
its estimated pro forma Basel III tier 1 common ratio calculated in
conformity with the standardized approach as of December 31,
2012.
The estimated pro forma Basel III tier 1 common ratios as of
December 31, 2013, September 30, 2013 and
December 31, 2012, calculated in conformity with the advanced
approach in the July 2013 final rule (or, with respect to the
December 31, 2012 estimate, in the June 2012 NPRs), reflect
calculations and determinations with respect to State Street's
capital and related matters as of December 31, 2013
September 30, 2013 and December 31, 2012, respectively,
based on State Street and external data, quantitative formulae,
statistical models, historical correlations and assumptions,
collectively referred to as “advanced systems”, in effect and used
by State Street for those purposes as of the respective date of
each estimate’s first public announcement. Significant components
of these advanced systems involve the exercise of judgment by State
Street and its regulators, and these advanced systems may not
accurately represent or calculate the scenarios, circumstances,
outputs or other results for which they are designed or intended.
Due to the influence of changes in these advanced systems, whether
resulting from changes in data inputs, regulation or regulatory
supervision or interpretation, State Street-specific or market
activities or experiences or other updates or factors, State Street
expects that its advanced systems and its capital ratios calculated
in conformity with the Basel III framework will change and may be
volatile over time, and that those latter changes or volatility
could be material as calculated and measured from period to period.
Refer to the addendum included with this news release for
information concerning the specified capital ratios and for
reconciliations of State Street's estimated pro forma Basel III
tier 1 common ratios to the tier 1 common ratio calculated using
currently applicable regulatory requirements under Basel I
rules.
Additional Information
All earnings 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.
Investor Conference Call
State Street will webcast an investor conference call today,
Friday, January 24, 2014, 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 inside the U.S. or at
+1 706/679-5594 outside of the U.S. The Conference ID is #
23882085.
Recorded replays of the conference call will be available on the
website, 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 # 23882085.
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 $27.43 trillion in assets under custody and
administration and $2.35 trillion* in assets under management as of
December 31, 2013, State Street operates globally in more than
100 geographic markets and employs 29,430 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.
* Assets under management include the assets of the SPDR® Gold
ETF (approximately $31 billion as of December 31, 2013), for
which State Street Global Markets, LLC, an affiliate of SSgA,
serves as the distribution agent.
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, 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," "intend," "forecast," "outlook," "believe," "anticipate,"
"estimate," "seek," "may," "will," "trend," "target," "strategy"
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
January 24, 2014.
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 the U.S.,
Europe and other regions;
- financial market disruptions or
economic recession, whether in the U.S., Europe, Asia or other
regions;
- increases in the volatility of, or
declines in the level of, our net interest revenue, changes in the
composition or valuation of the assets recorded in our consolidated
statement of condition (and our ability to measure the fair value
of investment securities) and the possibility that we may 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 and timing with which the
Board of Governors of the Federal Reserve System (the “Federal
Reserve”) and other U.S. and foreign regulators implement the
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
(the “Dodd-Frank Act”), the capital adequacy framework released by
the Basel Committee in 2004 (“Basel II”), changes to the Basel
Committee capital framework released beginning in 2010 (“Basel
III”), and European legislation with respect to the levels of
regulatory capital we must maintain, our credit exposure to third
parties, margin requirements applicable to derivatives, banking and
financial activities and other regulatory initiatives in the U.S.
and internationally, including regulatory developments that result
in changes to our structure or operating model, increased costs or
other changes to how we provide services;
- adverse changes in the regulatory
capital ratios that we are required to meet, whether arising under
the Dodd-Frank Act, the Basel II or Basel III capital and liquidity
standards or due to changes in regulatory positions, practices or
regulations in jurisdictions in which we engage in banking
activities, including changes in internal or external data,
formulae, models, assumptions or other advanced systems used in
calculating our capital ratios that cause changes in those ratios
as they are measured from period to period;
- increasing requirements to obtain the
prior approval of the Federal Reserve or our other regulators for
the use, allocation or distribution of our capital or other
specific capital actions or programs, including acquisitions,
dividends and equity purchases, 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 business activities or those of our clients or
our counterparties, and the products or services that we sell,
including additional or increased taxes or assessments thereon,
capital adequacy requirements, margin requirements and changes that
expose us to risks related to the adequacy of our controls or
compliance programs;
- our ability to promote a strong culture
of risk management, operating controls, compliance oversight and
governance that meet our expectations or those of our clients and
our regulators;
- the credit agency ratings of our debt
and depository obligations and investor and client perceptions of
our financial strength;
- 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 and may cause 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 for which we act as
agent, and the possibility of significant reductions in the
liquidity or valuation of assets underlying those pools;
- 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, control
expenses, attract and retain highly skilled people and raise 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 industry consolidation, and perceptions of
State Street as a suitable service provider or counterparty;
- potential changes in how and in what
amounts clients compensate us for our services, and the mix of
services provided by us that clients choose;
- the ability to complete acquisitions,
joint ventures and divestitures, including the ability to obtain
regulatory approvals, the ability to arrange financing as required
and the ability to satisfy closing conditions;
- 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 negative
synergies 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 our relationships with our clients, our
employees or regulators;
- our ability to recognize emerging needs
of our clients and to develop products that are responsive to such
trends and profitable to us, the performance of and demand for the
products and services we offer, and the potential for new products
and services to impose additional costs on us and expose us to
increased operational risk;
- our ability to anticipate and manage
the level and timing of redemptions and withdrawals from our
collateral pools and other collective investment products;
- our ability to control operational
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 2012 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, January 24, 2014, and we do not undertake efforts to
revise those forward-looking statements to reflect events after
that date.
Photos/Multimedia Gallery Available:
http://www.businesswire.com/multimedia/home/20140124005226/en/
State Street CorporationInvestors:Valerie Haertel,
+1-617-664-3477orMedia:Hannah Grove, +1-617-664-3377
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