On an Operating Basis1,
First-Quarter 2014 EPS Was $0.99 on Revenue of $2.56
Billion
Strong Capital Position Enables
Authorization to Purchase up to $1.7 Billion of Common Stock
Through March 31, 2015
In announcing today's financial results, Joseph L. Hooley, State
Street's chairman, president and chief executive officer, said,
"Delivering value to our clients and shareholders is our core
mission. We remain focused on our key priorities - increasing
revenue, controlling expenses, investing in growth opportunities,
and optimizing our capital structure to create long-term value. We
are responding to the challenges presented by low interest rates
and conservative investor risk appetite by realigning our staffing
to support our goal of positive operating leverage for the full
year."
"Client demand for our products, services, and solutions remains
strong. New asset servicing wins totaled $189 billion for the
quarter, which included 25 new mandates in alternative investment
servicing where we hold a leadership position and see additional
opportunities for growth."
"We continue to prioritize returning capital to our
shareholders. During the first quarter of 2014, we completed the
final phase of our $2.1 billion common stock purchase program
announced in March 2013 with the purchase of approximately 6.1
million shares of our common stock at an aggregate cost of
approximately $420 million. The recently completed Federal Reserve
Comprehensive Capital Analysis and Review, or CCAR, process
demonstrated our strong capital position and our Board of Directors
approved a $1.7 billion common stock purchase program effective
through March 31, 2015. Our 2014 capital plan also includes a
proposed increase in our quarterly common stock dividend to $0.30
per share starting in the second quarter of 2014, subject to
consideration and approval by our Board of Directors."
First-Quarter 2014 GAAP Results
- Earnings per common share (EPS)
of $0.81 decreased from $1.22 in the fourth quarter of 2013 and
from $0.98 in the first quarter of 2013. First-quarter 2014 results
included pre-tax severance costs of $72 million, or $0.11 per
share, related to staff reductions to realign our cost base to
support our goal of positive operating leverage for the full year
while continuing to invest in growth opportunities and meet
evolving regulatory requirements. Additionally, compared to the
fourth quarter of 2013, first-quarter 2014 pre-tax expenses and EPS
included an incremental $146 million, or $0.23 per share (up from
$118 million, or $0.18 per share, recorded in the first quarter of
2013), primarily associated with the seasonal deferred incentive
compensation expense for retirement-eligible employees and payroll
taxes.
- Net income available to common
shareholders of $356 million decreased from $545 million in the
fourth quarter of 2013 and from $455 million in the first quarter
of 2013.
- Revenue of $2.49 billion
increased from $2.46 billion in the fourth quarter of 2013 and from
$2.44 billion in the first quarter of 2013.
- Net interest revenue of $555
million decreased from $585 million in the fourth quarter of 2013
and from $576 million in the first quarter of 2013.
- Expenses of $2.03 billion
increased from $1.85 billion in the fourth quarter of 2013 and from
$1.83 billion in the first quarter of 2013.
- Return on average common
shareholders' equity (ROE) of 7.2% decreased from 10.9% in the
fourth quarter of 2013 and from 9.1% in the first quarter of
2013.
First-Quarter 2014 Operating-Basis (Non-GAAP)
Results1
- EPS of $0.99 decreased from
$1.15 in the fourth quarter of 2013 and increased from $0.96 in the
first quarter of 2013. Compared to the fourth quarter of 2013,
first-quarter 2014 pre-tax expenses and EPS included an incremental
$146 million, or $0.23 per share (up from $118 million, or $0.18
per share, recorded in the first quarter of 2013), primarily
associated with the seasonal deferred incentive compensation
expense for retirement-eligible employees and payroll taxes.
- Net income available to common
shareholders of $433 million decreased from $514 million in the
fourth quarter of 2013 and from $443 million in the first quarter
of 2013.
- Revenue of $2.56 billion
increased from $2.53 billion in the fourth quarter of 2013 and from
$2.47 billion in the first quarter of 2013.
- Net interest revenue of $572
million decreased from $596 million in the fourth quarter of 2013
and from $577 million in the first quarter of 2013. Operating-basis
net interest revenue excluded discount accretion on former conduit
securities of $27 million, $31 million and $31 million for the
respective quarters and is presented on a fully taxable-equivalent
basis.
- Expenses of $1.92 billion
increased from $1.76 billion in the fourth quarter of 2013 and from
$1.81 billion in the first quarter of 2013.
- ROE of 8.8% decreased from 10.3%
in the fourth quarter of 2013 and from 8.9% in the first quarter of
2013.
First-Quarter 2014 Highlights
- First-quarter 2014 results
reflected $72 million of pre-tax severance costs related to staff
reductions to realign our expense base in response to the current
environment. We expect these staff reductions to generate pre-tax
savings of approximately $40 million on an annualized basis in
2015.
- New business2 New asset
servicing mandates during the first quarter of 2014 totaled $189
billion and net new assets to be managed were $4 billion.
- Business Operations and Information
Technology Transformation program3 Total incremental
pre-tax expense savings for full-year 2014, including the first
quarter, are expected to be approximately $130 million.
- Capital4 Our tier 1
common ratio as of March 31, 2014, calculated under currently
applicable regulatory requirements, was 16.4%. Our estimated pro
forma Basel III tier 1 common ratio as of March 31, 2014 was
11.1% (standardized approach) and 13.2% (advanced approach), each
calculated in conformity with the Basel III final rule.
- Return of capital to
shareholders Purchased approximately $420 million of our common
stock at an average price of $69.14 per share, and declared a
quarterly common stock dividend of $0.26 per share in the first
quarter of 2014.
- Results of recently completed 2014
CCAR Demonstrated our continued strong capital position. After
the annual CCAR process was completed in March 2014, our Board of
Directors approved a new common stock purchase program authorizing
the purchase of up to $1.7 billion of our common stock through
March 31, 2015. Additionally, our 2014 capital plan includes a
proposed quarterly common stock dividend of $0.30 per share
starting in the second quarter of 2014, subject to consideration
and approval by our Board of Directors at its regularly scheduled
meeting in May.
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 New business in assets to be serviced is reflected in our
assets under custody and administration after we begin servicing
the assets, and net new business in assets to be managed is
reflected in our assets under management after we begin managing
the assets. As such, only a portion of these new asset servicing
and asset management mandates is reflected in our assets under
custody and administration and assets under management, as the case
may be, as of March 31, 2014. 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.
3 Estimated pre-tax expense savings relate only to the Business
Operations and Information Technology Transformation program and
are based on projected improvement from our total 2010
operating-basis expenses. Our actual total expenses have increased
since 2010, and may increase or decrease in the future, due to
other factors.
4 Our estimated pro forma Basel III tier 1 common ratios are
preliminary estimates by State Street, calculated in conformity
with the advanced and standardized approaches in the Basel III
final rule. Refer to the “Capital” section of this news release for
important information about the Basel III final rule, our
calculations of our 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 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 our 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 Highlights1 (Dollars in millions)
Q1 2014 Q4 2013
% Increase(Decrease)
Q1 2013
% Increase(Decrease)
Total revenue1
$ 2,559 $ 2,528 1.2 % $ 2,470 3.6 %
Total expenses1
1,917 1,760 8.9 1,812 5.8 Net income
available to common shareholders1
433 514 (15.8 ) 443 (2.3 )
Earnings per common share1
.99 1.15 (13.9 ) .96 3.1 Return
on average common equity1
8.8 % 10.3 % (150) bps 8.9
% (10) bps Total assets as of period-end
$
256,663 $ 243,291 5.5 % $ 218,189 17.6 % Quarterly average
total assets
215,569 210,915 2.2 208,265 3.5 Net interest
margin1
1.24 % 1.30 % (6) bps 1.31 % (7) bps Net
unrealized gains (losses) on investment securities, after-tax, as
of period-end
$ 124 $ (213 ) $ 817
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)
Q1 2014
Q4 2013
% Increase(Decrease)
Q1 2013
% Increase(Decrease)
Assets under custody and administration1, 2
$ 27,477
$ 27,427 0.2 % $ 25,422 8.1 % Assets under management2
2,381
2,345 1.5 2,176 9.4 Market Indices: S&P 500® daily average
1,835 1,769 3.7 1,514 21.2 MSCI EAFE® daily average
1,894 1,860 1.8 1,668 13.5 S&P 500® average of month-end
1,838 1,804 1.9 1,527 20.4 MSCI EAFE® average of month-end
1,896 1,894 0.1 1,676 13.1
1 Includes assets under custody of $20,996 billion, $20,411
billion and $18,588 billion, as of March 31, 2014,
December 31, 2013 and March 31, 2013, respectively.
2 As of period-end.
Revenue
The following table provides the components of our
operating-basis (non-GAAP) revenue1 for the periods noted:
(Dollars in millions)
Q1 2014 Q4 2013
% Increase(Decrease)
Q1 2013
% Increase(Decrease)
Servicing fees
$ 1,238 $ 1,232 0.5 % $ 1,175 5.4 %
Management fees
292 290 0.7 263 11.0 Trading services
revenue: Foreign-exchange trading
134 125 7.2 146 (8.2 )
Brokerage and other fees
105 103 1.9
135 (22.2 ) Total trading services revenue
239 228
4.8 281 (14.9 ) Securities finance revenue
85 76 11.8 78 9.0
Processing fees and other revenue1, 2
127 106
19.8 94 35.1 Total fee revenue
1,981
1,932 2.5 1,891 4.8 Net interest revenue1, 3
572 596 (4.0 )
577 (0.9 ) Gains (losses) related to investment securities, net
6 — — 2 200.0
Total
Operating-Basis Revenue1 $ 2,559 $
2,528 1.2 % $ 2,470 3.6 %
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 first quarter of
2014, fourth quarter of 2013 and first quarter of 2013, presented
in the table, included tax-equivalent adjustments of $57 million,
$53 million and $34 million, respectively, related to tax credits
generated by tax-advantaged investments. GAAP-basis processing fees
and other revenue for these periods was $70 million, $53 million
and $60 million, respectively.
3 Net interest revenue for the first quarter of 2014, fourth
quarter of 2013 and first quarter of 2013, presented in the table,
included tax-equivalent adjustments of $44 million, $42 million and
$32 million, respectively, and excluded conduit-related discount
accretion of $27 million, $31 million and $31 million,
respectively. GAAP-basis net interest revenue for these periods was
$555 million, $585 million and $576 million, respectively. The
Company expects to record aggregate pre-tax conduit-related
accretion of approximately $548 million in interest revenue from
April 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 $1.24 billion in the first quarter of
2014 increased 0.5% from the fourth quarter of 2013, primarily due
to stronger global equity markets and net new business, partially
offset by lower transaction-related revenue. Compared to the first
quarter of 2013, servicing fees increased 5.4%, due to stronger
global equity markets and net new business.
Management fees of $292 million in the first quarter of
2014 increased 0.7% from the fourth quarter of 2013, primarily due
to net new business and stronger global equity markets, partially
offset by lower performance fees. Compared to the first quarter of
2013, management fees increased 11.0%, primarily due to stronger
global equity markets.
Foreign-exchange trading revenue increased 7.2% from the
fourth quarter of 2013 due to higher volumes and volatility.
Compared to the first quarter of 2013, foreign exchange trading
revenue decreased 8.2% due to lower volatility, partially offset by
higher volumes. Brokerage and other fees increased 1.9% from
the fourth quarter of 2013 to $105 million. Compared to the first
quarter of 2013, brokerage and other fees decreased 22.2%,
primarily due to lower electronic trading and lower distribution
fees associated with the SPDR® Gold ETF.
Securities finance revenue of $85 million in the first
quarter of 2014 increased 11.8% from the fourth quarter of 2013,
primarily due to higher spreads and volumes. Compared to the first
quarter of 2013, securities finance revenue increased 9.0%,
primarily due to new business in enhanced custody.
Processing fees and other revenue of $127 million in the
first quarter of 2014 increased 19.8% from the fourth quarter of
2013, primarily due to an increase in revenue from joint ventures,
tax-advantaged investments and certain portfolio transition
services. Compared to the first quarter of 2013, processing fees
and other revenue increased 35.1%, primarily due to higher fee
revenue associated with our investment in bank-owned life
insurance, a more favorable counterparty valuation adjustment in
the first quarter of 2014, and higher revenue from tax-advantaged
investments. See notes (1) and (2) to the table above for a
description of the presentation of operating-basis processing fees
and other revenue.
Net interest revenue of $572 million in the first quarter
of 2014 decreased 4.0% from the fourth quarter of 2013, primarily
due to $19 million of interest revenue recorded in the fourth
quarter of 2013 associated with a municipal security that had been
previously impaired and lower yields on interest-earning assets.
Compared to the first quarter of 2013, net interest revenue
decreased 0.9%, primarily due to lower yields on interest-earning
assets, partially offset by lower interest expense. See notes (1)
and (3) to the table above for a description of the presentation of
operating-basis net interest revenue.
Net interest margin, including balances held at the
Federal Reserve and other central banks, decreased to 124 basis
points in the first quarter of 2014 from 130 basis points in the
fourth quarter of 2013 and 131 basis points in the first quarter of
2013. Refer to the addendum included with this news release for
reconciliations of our net interest margin.
Expenses
The following table provides the components of our
operating-basis (non-GAAP)1 expenses for the periods noted:
(Dollars in millions)
Q1 2014 Q4 2013
% Increase(Decrease)
Q1 2013
% Increase(Decrease)
Compensation and employee benefits1, 2
$ 1,085 $ 934
16.2 % $ 1,035 4.8 % Information systems and communications
244 228 7.0 237 3.0 Transaction processing services
191 182 4.9 180 6.1 Occupancy
114 124 (8.1 ) 116 (1.7
) Other1, 3
283 292 (3.1 ) 244 16.0
Total Operating-Basis Expenses1 $
1,917 $ 1,760 8.9 % $ 1,812 5.8 %
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 Compensation and employee benefits expenses for the first
quarter of 2014 and the fourth quarter of 2013, presented in the
table, excluded severance costs of $72 million and $11 million,
respectively, related to staff realignment and the reorganization
of certain non-U.S. operations, respectively. GAAP-basis
compensation and employee benefits expenses for the first quarter
of 2014, fourth quarter of 2013 and first quarter of 2013 were
$1,157 million, $945 million and $1,035 million, respectively.
3 GAAP-basis other expenses for the first quarter of 2014,
fourth quarter of 2013 and first quarter of 2013 were $289 million,
$337 million and $244 million, respectively.
Compensation and employee benefits expenses increased
16.2% in the first quarter of 2014 from the fourth quarter of 2013,
primarily due to an incremental $146 million, or $0.23 per share,
primarily associated with the seasonal deferred incentive
compensation expense for retirement-eligible employees and payroll
taxes. Compared to the first quarter of 2013, compensation and
employee benefits expenses increased 4.8%, primarily due to higher
incentive compensation and increased costs associated with
installing new business, implementing additional regulatory and
compliance requirements, and investing in growth opportunities. See
notes (1) and (2) to the table above for a description of the
presentation of operating-basis compensation and employee benefits
expenses for the relevant periods.
Information systems and communications expenses increased
7.0% and 3.0% from the fourth quarter of 2013 and first quarter of
2013, respectively. The increase over both periods primarily
reflects the planned transition of certain functions to external
service providers as well as higher maintenance costs associated
with the new technology implemented as part of the Business
Operations and Information Technology Transformation program.
Transaction processing services expenses increased
4.9% and 6.1% from the fourth quarter of 2013 and the first quarter
of 2013, respectively. The increase over both periods primarily
reflects higher volumes and higher equity values in the investment
servicing business.
Occupancy expenses of $114 million in the first quarter
of 2014 decreased 8.1% from the fourth quarter of 2013 primarily
due to the effect of a sublease renegotiation recorded in the
fourth quarter of 2013. Occupancy expenses decreased 1.7% from the
first quarter of 2013.
Other expenses decreased 3.1% to $283 million in the
first quarter of 2014 from $292 million in the fourth quarter of
2013, primarily due to lower securities processing, sales
promotion, and professional services costs. Fourth-quarter 2013
other expenses included $28 million of Lehman Brothers-related
gains and recoveries. Compared to the first quarter of 2013, other
expenses increased 16.0%, primarily due to higher professional
services associated with regulatory compliance costs and sales
promotion costs. See notes (1) and (3) to the table above for a
description of GAAP-basis other expenses for the relevant
periods.
Income Taxes
Our first-quarter 2014 GAAP-basis effective tax rate was 20.3%,
up from 9.7% in the fourth quarter of 2013, due to the $71 million
out-of-period income tax benefit recorded in the fourth quarter of
2013 to adjust deferred taxes, and down from 23.8% in the first
quarter of 2013, due primarily to an increase in tax-advantaged
investments. Our first-quarter 2014 operating-basis tax rate was
31.2%, compared with 31.6% and 31.3%, respectively, in the fourth
and first quarters of 2013.
Beginning with the first quarter of 2014, we are presenting our
operating-basis effective tax rate to reflect the tax-equivalent
adjustments associated with our investments in tax-exempt
securities, low-income housing and alternative energy
(“tax-advantaged investments”). Accordingly, the operating-basis
effective tax rate includes the amount of the tax-equivalent
adjustment for tax-advantaged investments as revenue and as
additional income tax expense. This change has no effect on
operating-basis revenue, pre-tax income, or after-tax earnings, and
affects only the stated operating-basis effective tax rate. It will
result in a more informative presentation of the ordinary rate of
tax generated by State Street’s business activity. Refer to the
addendum that accompanies this news release for a presentation of
this new calculation.
Capital
The following table presents our capital ratios as of
March 31, 2014, December 31, 2013 and March 31,
2013.
Capital ratios1
March 31,2014
December 31,2013
bps Increase(Decrease)
March 31,2013
bps Increase(Decrease)
Total capital ratio
20.9 % 19.7 % 120 bps 19.2 % 170
bps Tier 1 capital ratio
18.2 17.3
90
18.0
20
Tier 1 leverage ratio
7.4 6.9
50
6.9
50
Tier 1 common ratio
16.4 15.5
90
16.1
30
Estimated pro forma Basel III tier 1 common ratios2,3: Advanced
13.2 11.8
140
10.6
NA
Standardized
11.1 10.1
100
NA
NA
TCE ratio
6.7 6.6
10
7.1
(40)
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 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
State Street's tier 1 common and tangible common equity, or TCE,
ratios presented in the table.
2 The estimated pro forma Basel III tier 1 common ratios as of
March 31, 2014, December 31, 2013 and March 31,
2013, calculated in conformity with the advanced approach in the
Basel III final rule (or, with respect to the March 31, 2013
estimate, in the June 2012 NPRs described below), reflect
calculations and determinations with respect to our capital and
related matters as of March 31, 2014, December 31, 2013
and March 31, 2013, 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 us 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 us and our 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, we expect our advanced systems and our 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 our estimated pro forma Basel III tier 1
common ratios to our tier 1 common ratio calculated under currently
applicable regulatory requirements.
3 The increases in the estimated pro forma Basel III tier 1
common ratios calculated under both the advanced and standardized
approaches as of March 31, 2014, compared to December 31, 2013,
resulted primarily from an increase in tier 1 common equity as of
March 31, 2014. This increase was due, in principal part, to a
temporary reduction in the deduction of other intangible assets,
net of related deferred tax liabilities permitted under the Basel
III final rule. Under the Basel III final rule, the deduction is
phased in at 20% per year beginning on January 1, 2014 through full
implementation of the final rule on January 1, 2018. Tier 1 common
equity calculated as of March 31, 2014 reflected a 20% deduction of
other intangible assets, net of related deferred tax liabilities.
Tier 1 common equity calculated as of December 31, 2013 reflected
the full deduction.
In July 2013, the Federal Reserve issued a final rule intended
to implement the Basel III framework in the U.S, referred to as the
Basel III final rule. The Basel III 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.
On February 21, 2014, we were notified by the Federal Reserve
that we have completed our parallel run period and will be required
to begin using the advanced approaches framework as provided in the
Basel III final rule in the determination of our risk-based capital
requirements. Pursuant to this notification, we will use the
advanced approaches framework to calculate and publicly disclose
our risk-based capital ratios beginning with the second quarter of
2014. Once the provisions of the Basel III final rule affecting
capital are fully implemented effective January 1, 2015, the lower
of the Basel III tier I common ratio calculated by us under the
Basel III advanced approach or standardized approach will apply in
the assessment of our capital adequacy for regulatory purposes.
The estimated pro forma Basel III tier 1 common ratios presented
in the table above as of March 31, 2014 and December 31,
2013 are preliminary estimates by State Street, calculated in
conformity with the advanced and standardized approaches in the
Basel III final rule. Each of these calculations is based on State
Street's present interpretations of the Basel III 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 March 31, 2013 was a preliminary estimate by
State Street, calculated in conformity with the advanced approach
in the June 2012 NPRs, and has not been restated to conform to the
Basel III final rule. We did not announce our estimated pro forma
Basel III tier 1 common ratio calculated in conformity with the
standardized approach as of March 31, 2013.
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. 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,
Friday, April 25, 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 #
18206022.
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 # 18206022.
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 $27.48 trillion in assets under custody and
administration and $2.38 trillion* in assets under management as of
March 31, 2014, State Street operates globally in more than
100 geographic markets and employs 29,530 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 $34 billion as of March 31, 2014), 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,
dividend and stock purchase programs, 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 “expect,” “objective,”
“intend,” “plan,” “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 April 25,
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 sovereign-debt risks in the U.S., Europe
and 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
Federal Reserve and other U.S. and foreign regulators implement the
Dodd-Frank Act changes to the Basel III capital framework and
European legislation, such as the Alternative Investment Fund
Managers Directive and Undertakings for Collective Investment in
Transferable Securities Directives, 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 or will be required to meet,
whether arising under the Dodd-Frank Act or the 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 the
calculation of 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, or the
enforcement of 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;
- financial market disruptions or
economic recession, whether in the U.S., Europe, Asia or other
regions;
- our ability to promote a strong culture
of risk management, operating controls, compliance oversight and
governance that meet our expectations and those of our clients and
our regulators;
- the results of, and costs associated
with, government investigations, litigation and similar claims,
disputes, or proceedings;
- 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 potential for losses arising from
our investments in sponsored investment funds;
- 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;
- our ability to anticipate and manage
the level and timing of redemptions and withdrawals from our
collateral pools and other collective investment products;
- the credit agency ratings of our debt
and depository obligations and investor and client perceptions of
our financial strength;
- adverse publicity, whether specific to
State Street or regarding other industry participants or
industry-wide factors, or other reputational harm;
- our ability to control operational
risks, data security breach 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;
- dependencies on information technology
and our ability to control related risks, including cyber-crime and
other threats to our information technology infrastructure and
systems and their effective operation both independently and with
external systems, and complexities and costs of protecting the
security of our systems and data;
- 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;
- changes or 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;
- changes or 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;
- our 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 our 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;
- 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 2013 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, April 25, 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/20140425005292/en/
State Street CorporationInvestor Contact:Valerie Haertel, +1
617-664-3477orMedia Contact:Hannah Grove, +1 617-664-3377
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