Massachusetts | 001-07511 | 04-2456637 | ||
(State of Incorporation) | (Commission File Number) | (IRS Employer Identification Number) | ||
One Lincoln Street Boston, Massachusetts | 02111 | |
(Address of principal executive office) | (Zip Code) |
Registrant’s telephone number, including area code: (617) 786-3000 |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Emerging growth company ¨ |
STATE STREET CORPORATION | |||||
By: | /s/ ELIZABETH M. SCHAEFER | ||||
Name: | Elizabeth M. Schaefer | ||||
Title: | Senior Vice President, Deputy Controller and Interim Chief Accounting Officer | ||||
Date: | October 23, 2017 |
Exhibit No. | Description |
Investor Contact: Ilene Fiszel Bieler | Media Contact: Julie Kane |
+1 617/664-3477 | +1 617/664-3001 |
• | Broad-based business momentum: Asset servicing AUCA increased 10% compared to 3Q16, due to strength in equity markets and new business (4% growth compared to 2Q17). Asset management AUM increased 9% compared to 3Q16, driven by strength in equity markets (3% growth compared to 2Q17). |
• | New business: New asset servicing mandates during 3Q17 totaled approximately $105 billion.(1) Servicing assets remaining to be installed in future periods totaled approximately $390 billion at quarter-end.(1) In our asset management business, we experienced net outflows of $25 billion during 3Q17. |
• | Fee Revenue: Increased from 3Q16, primarily driven by strength in servicing fees, management fees, securities finance revenue, and the impact of the weaker U.S. dollar, partially offset by lower trading services revenue |
◦ | Servicing and Management fees: Benefiting from higher global equity markets and new business, servicing and management fees increased 4% and 14% compared to 3Q16, respectively |
• | Net interest income: Increased from 3Q16, driven by higher market interest rates in the U.S. and continued focus on the optimization of our liability mix |
• | Expenses: Increased compared to 3Q16, primarily reflecting installation of new business, annual merit and performance based incentive compensation increases, and the impact of the weaker U.S. dollar, partially offset by Beacon savings |
◦ | Beacon savings: Beacon remains on track to achieve at least $140 million in pre-tax savings in 2017, including $35 million of pre-tax savings achieved in 3Q17 |
◦ | Restructuring expenses: To achieve future cost savings and efficiencies, GAAP-basis 3Q17 results included $33 million, or $0.06 per share, in restructuring expenses related to Beacon |
• | Key Metrics: Estimated Basel III common equity tier 1 ratio for 3Q17 was 11.6% and our estimated leverage ratio increased to 7.4%, while delivering GAAP and operating-basis ROE of 13.0% and 13.4%, respectively |
(Table presents summary results, dollars in millions, except per share amounts, or where otherwise noted) | 3Q17 | 2Q17 | Increase (Decrease) | 3Q16 | Increase (Decrease) | |||||||||||||||
Total fee revenue | $ | 2,242 | $ | 2,235 | 0.3 | % | $ | 2,079 | 7.8 | % | ||||||||||
Net interest income | 603 | 575 | 4.9 | 537 | 12.3 | |||||||||||||||
Total revenue | 2,846 | 2,810 | 1.3 | 2,620 | 8.6 | |||||||||||||||
Provision for loan losses | 3 | 3 | — | — | nm | |||||||||||||||
Total expenses | 2,021 | 2,031 | (0.5 | ) | 1,984 | 1.9 | ||||||||||||||
Net income available to common shareholders | 629 | 584 | 7.7 | 507 | 24.1 | |||||||||||||||
Earnings per common share: | ||||||||||||||||||||
Diluted earnings per share | 1.66 | 1.53 | 8.5 | 1.29 | 28.7 | |||||||||||||||
Financial ratios: | ||||||||||||||||||||
Quarterly average total assets | 218,369 | 223,917 | (2.5 | ) | 233,017 | (6.3 | ) | |||||||||||||
Fee operating leverage(1) | 80 | bps | 598 | bps | ||||||||||||||||
Operating leverage(1) | 177 | 677 | ||||||||||||||||||
Return on average common equity | 13.0 | % | 12.6 | % | 40 | 10.6 | % | 240 | ||||||||||||
Return on tangible common equity(2) | 18.0 | 17.3 | 70 | 15.8 | 220 | |||||||||||||||
Pre-tax operating margin | 28.9 | 27.6 | 130 | 24.3 | 460 | |||||||||||||||
(Table presents summary results, dollars in millions, except per share amounts, or where otherwise noted) | 3Q17 | 2Q17 | Increase (Decrease) | 3Q16 | Increase (Decrease) | |||||||||||||||
Total fee revenue | $ | 2,321 | $ | 2,324 | (0.1 | )% | $ | 2,213 | 4.9 | % | ||||||||||
Net interest income(1) | 645 | 617 | 4.5 | 537 | 20.1 | |||||||||||||||
Total revenue(1) | 2,967 | 2,941 | 0.9 | 2,754 | 7.7 | |||||||||||||||
Provision for loan losses | 3 | 3 | — | — | nm | |||||||||||||||
Total expenses | 1,988 | 1,960 | 1.4 | 1,909 | 4.1 | |||||||||||||||
Net income available to common shareholders | 648 | 635 | 2.0 | 532 | 21.8 | |||||||||||||||
Earnings per common share: | ||||||||||||||||||||
Diluted earnings per share | 1.71 | 1.67 | 2.4 | 1.35 | 26.7 | |||||||||||||||
Financial ratios: | ||||||||||||||||||||
Fee operating leverage(2) | (156 | ) | bps | 74 | bps | |||||||||||||||
Operating leverage(2) | (55 | ) | 359 | |||||||||||||||||
Return on average common equity | 13.4 | % | 13.7 | % | (30 | ) | 11.1 | % | 230 | |||||||||||
Return on tangible common equity(3) | 19.0 | 18.6 | 40 | 16.9 | 210 | |||||||||||||||
Pre-tax operating margin | 32.9 | 33.3 | (40 | ) | 30.7 | 220 | ||||||||||||||
(In millions, except per share amounts) | Income Before Income Tax Expense | Net Income Available to Common Shareholders | Earnings Per Common Share | |||||||||
GAAP-basis | $ | 822 | $ | 629 | $ | 1.66 | ||||||
Tax-equivalent non-operating adjustments | ||||||||||||
Tax-advantaged investments (processing fees and other revenue) | 79 | |||||||||||
Tax-exempt investment securities (net interest income) | 42 | |||||||||||
Total | 121 | |||||||||||
Other non-operating adjustments | ||||||||||||
Acquisition & restructuring costs (expenses)(1) | 33 | 22 | .06 | |||||||||
Effect on income tax of non-operating adjustments | — | (3 | ) | (.01 | ) | |||||||
Total | 33 | 19 | .05 | |||||||||
Operating-basis | $ | 976 | $ | 648 | $ | 1.71 | ||||||
(Dollars in billions, except market indices and foreign exchange rates) | 3Q17 | 2Q17 | Increase (Decrease) | 3Q16 | Increase (Decrease) | |||||||||||||
Assets under custody and administration(1)(2) | $ | 32,110 | $ | 31,037 | 3.5 | % | $ | 29,178 | 10.0 | % | ||||||||
Assets under management(2) | 2,673 | 2,606 | 2.6 | 2,446 | 9.3 | |||||||||||||
Market Indices(3): | ||||||||||||||||||
S&P 500® daily average | 2,467 | 2,398 | 2.9 | 2,162 | 14.1 | |||||||||||||
MSCI EAFE® daily average | 1,934 | 1,856 | 4.2 | 1,678 | 15.3 | |||||||||||||
MSCI® Emerging Markets daily average | 1,068 | 993 | 7.6 | 887 | 20.4 | |||||||||||||
HFRI Asset Weighted Composite® monthly average | 1,358 | 1,339 | 1.4 | 1,274 | 6.6 | |||||||||||||
Barclays Capital U.S. Aggregate Bond Index® period-end | 2,038 | 2,021 | 0.8 | 2,037 | — | |||||||||||||
Barclays Capital Global Aggregate Bond Index® period-end | 480 | 471 | 1.9 | 486 | (1.2 | ) | ||||||||||||
Average Foreign Exchange Rate (Euro vs. USD) | 1.175 | 1.101 | 6.7 | 1.116 | 5.3 | |||||||||||||
Average Foreign Exchange Rate (GBP vs. USD) | 1.309 | 1.280 | 2.3 | 1.312 | (0.2 | ) | ||||||||||||
(Dollars in billions) | Equity | Fixed-Income | Cash(2) | Multi-Asset-Class Solutions | Alternative Investments(3) | Total | ||||||||||||||||||
Balance as of June 30, 2017 | $ | 1,594 | $ | 398 | $ | 334 | $ | 131 | $ | 149 | $ | 2,606 | ||||||||||||
Long-term institutional inflows(1) | 48 | 20 | — | 9 | 4 | 81 | ||||||||||||||||||
Long-term institutional outflows(1) | (79 | ) | (28 | ) | — | (10 | ) | (3 | ) | (120 | ) | |||||||||||||
Long-term institutional flows, net | (31 | ) | (8 | ) | — | (1 | ) | 1 | (39 | ) | ||||||||||||||
ETF flows, net | (2 | ) | 3 | — | — | 1 | 2 | |||||||||||||||||
Cash fund flows, net | — | — | 12 | — | — | 12 | ||||||||||||||||||
Total flows, net | (33 | ) | (5 | ) | 12 | (1 | ) | 2 | (25 | ) | ||||||||||||||
Market appreciation | 72 | 4 | — | 3 | — | 79 | ||||||||||||||||||
Foreign exchange impact | 7 | 2 | 1 | 1 | 2 | 13 | ||||||||||||||||||
Total market/foreign exchange impact | 79 | 6 | 1 | 4 | 2 | 92 | ||||||||||||||||||
Balance as of September 30, 2017 | $ | 1,640 | $ | 399 | $ | 347 | $ | 134 | $ | 153 | $ | 2,673 | ||||||||||||
(Dollars in billions) | Equity | Fixed-Income | Cash(2) | Multi-Asset-Class Solutions | Alternative Investments(3) | Total | ||||||||||||||||||
Balance as of December 31, 2016 | $ | 1,474 | $ | 378 | $ | 333 | $ | 126 | $ | 157 | $ | 2,468 | ||||||||||||
Long-term institutional inflows(1) | 182 | 65 | — | 30 | 16 | 293 | ||||||||||||||||||
Long-term institutional outflows(1) | (242 | ) | (73 | ) | — | (33 | ) | (32 | ) | (380 | ) | |||||||||||||
Long-term institutional flows, net | (60 | ) | (8 | ) | — | (3 | ) | (16 | ) | (87 | ) | |||||||||||||
ETF flows, net | (1 | ) | 8 | — | — | 3 | 10 | |||||||||||||||||
Cash fund flows, net | — | — | 13 | — | — | 13 | ||||||||||||||||||
Total flows, net | (61 | ) | — | 13 | (3 | ) | (13 | ) | (64 | ) | ||||||||||||||
Market appreciation | 203 | 12 | (2 | ) | 6 | 4 | 223 | |||||||||||||||||
Foreign exchange impact | 24 | 9 | 3 | 5 | 5 | 46 | ||||||||||||||||||
Total market/foreign exchange impact | 227 | 21 | 1 | 11 | 9 | 269 | ||||||||||||||||||
Balance as of September 30, 2017 | $ | 1,640 | $ | 399 | $ | 347 | $ | 134 | $ | 153 | $ | 2,673 | ||||||||||||
(Dollars in millions) | 3Q17 | 2Q17 | Increase (Decrease) | 3Q16 | Increase (Decrease) | |||||||||||||||
Servicing fees | $ | 1,351 | $ | 1,339 | 0.9 | % | $ | 1,303 | 3.7 | % | ||||||||||
Management fees | 419 | 397 | 5.5 | 368 | 13.9 | |||||||||||||||
Trading services revenue: | ||||||||||||||||||||
Foreign exchange trading | 150 | 178 | (15.7 | ) | 159 | (5.7 | ) | |||||||||||||
Brokerage and other fees | 109 | 111 | (1.8 | ) | 108 | 0.9 | ||||||||||||||
Total trading services revenue | 259 | 289 | (10.4 | ) | 267 | (3.0 | ) | |||||||||||||
Securities finance revenue | 147 | 179 | (17.9 | ) | 136 | 8.1 | ||||||||||||||
Processing fees and other revenue | 66 | 31 | 112.9 | 5 | nm | |||||||||||||||
Total fee revenue | 2,242 | 2,235 | 0.3 | 2,079 | 7.8 | |||||||||||||||
Net interest income | 603 | 575 | 4.9 | 537 | 12.3 | |||||||||||||||
Gains (losses) related to investment securities, net | 1 | — | nm | 4 | nm | |||||||||||||||
Total Revenue | $ | 2,846 | $ | 2,810 | 1.3 | $ | 2,620 | 8.6 | ||||||||||||
Net interest margin | 1.35 | % | 1.27 | % | 8 | bps | 1.14 | % | 21 | bps | ||||||||||
(Dollars in millions) | 3Q17 | 2Q17 | Increase (Decrease) | 3Q16 | Increase (Decrease) | |||||||||||||||
Servicing fees | $ | 1,351 | $ | 1,339 | 0.9 | % | $ | 1,303 | 3.7 | % | ||||||||||
Management fees | 419 | 397 | 5.5 | 368 | 13.9 | |||||||||||||||
Trading services revenue: | ||||||||||||||||||||
Foreign exchange trading | 150 | 178 | (15.7 | ) | 159 | (5.7 | ) | |||||||||||||
Brokerage and other fees | 109 | 111 | (1.8 | ) | 108 | 0.9 | ||||||||||||||
Total trading services revenue | 259 | 289 | (10.4 | ) | 267 | (3.0 | ) | |||||||||||||
Securities finance revenue | 147 | 179 | (17.9 | ) | 136 | 8.1 | ||||||||||||||
Processing fees and other revenue | 145 | 120 | 20.8 | 139 | 4.3 | |||||||||||||||
Total fee revenue | 2,321 | 2,324 | (0.1 | ) | 2,213 | 4.9 | ||||||||||||||
Net interest income(1) | 645 | 617 | 4.5 | 537 | 20.1 | |||||||||||||||
Gains (losses) related to investment securities, net | 1 | — | nm | 4 | nm | |||||||||||||||
Total Revenue(1) | $ | 2,967 | $ | 2,941 | 0.9 | $ | 2,754 | 7.7 | ||||||||||||
Net interest margin | 1.35 | % | 1.27 | % | 8 | bps | 1.06 | % | 29 | bps | ||||||||||
(Dollars in millions) | 3Q17 | 2Q17 | Increase (Decrease) | 3Q16 | Increase (Decrease) | |||||||||||||
Compensation and employee benefits | $ | 1,090 | $ | 1,071 | 1.8 | % | $ | 1,013 | 7.6 | % | ||||||||
Information systems and communications | 296 | 283 | 4.6 | 285 | 3.9 | |||||||||||||
Transaction processing services | 215 | 207 | 3.9 | 200 | 7.5 | |||||||||||||
Occupancy | 118 | 116 | 1.7 | 107 | 10.3 | |||||||||||||
Acquisition and restructuring costs(1) | 33 | 71 | (53.5 | ) | 42 | (21.4 | ) | |||||||||||
Other | 269 | 283 | (4.9 | ) | 337 | (20.2 | ) | |||||||||||
Total Expenses | $ | 2,021 | $ | 2,031 | (0.5 | ) | $ | 1,984 | 1.9 | |||||||||
Effective income tax rate | 16.7 | % | 20.1 | % | 11.4 | % | ||||||||||||
(Dollars in millions) | 3Q17 | 2Q17 | Increase (Decrease) | 3Q16 | Increase (Decrease) | |||||||||||||
Compensation and employee benefits | $ | 1,090 | $ | 1,071 | 1.8 | % | $ | 1,022 | 6.7 | % | ||||||||
Information systems and communications | 296 | 283 | 4.6 | 285 | 3.9 | |||||||||||||
Transaction processing services | 215 | 207 | 3.9 | 200 | 7.5 | |||||||||||||
Occupancy | 118 | 116 | 1.7 | 107 | 10.3 | |||||||||||||
Other | 269 | 283 | (4.9 | ) | 295 | (8.8 | ) | |||||||||||
Total Expenses | $ | 1,988 | $ | 1,960 | 1.4 | $ | 1,909 | 4.1 | ||||||||||
Effective income tax rate | 27.9 | % | 31.4 | % | 30.3 | % |
September 30, 2017(1) | Basel III Advanced Approaches(2) | Basel III Standardized Approach | Basel III Fully Phased-In Advanced Approaches (Estimated) Pro-Forma(2)(3) | Basel III Fully Phased-In Standardized Approach (Estimated) Pro-Forma(3) | ||||||||
Common equity tier 1 ratio | 12.6 | % | 11.6 | % | 12.3 | % | 11.3 | % | ||||
Tier 1 capital ratio | 15.7 | 14.5 | 15.5 | 14.3 | ||||||||
Total capital ratio | 16.8 | 15.6 | 16.6 | 15.4 | ||||||||
Tier 1 leverage ratio | 7.4 | 7.4 | 7.3 | 7.3 | ||||||||
June 30, 2017 | ||||||||||||
Common equity tier 1 ratio | 12.0 | % | 11.2 | % | 11.7 | % | 10.9 | % | ||||
Tier 1 capital ratio | 15.1 | 14.2 | 14.8 | 13.9 | ||||||||
Total capital ratio | 16.2 | 15.2 | 15.9 | 15.0 | ||||||||
Tier 1 leverage ratio | 7.0 | 7.0 | 6.9 | 6.9 |
State Street | State Street Bank | |||||||||||||||
As of September 30, 2017 (Dollars in millions)(1) | Transitional SLR | Fully Phased-In SLR(4) | Transitional SLR | Fully Phased-In SLR(4) | ||||||||||||
Tier 1 Capital | $ | 15,606 | $ | 15,339 | $ | 16,324 | $ | 16,070 | ||||||||
Total assets for SLR | 240,666 | 240,366 | 237,579 | 237,319 | ||||||||||||
Supplementary Leverage Ratio | 6.5 | % | 6.4 | % | 6.9 | % | 6.8 | % | ||||||||
As of June 30, 2017 (Dollars in millions) | ||||||||||||||||
Tier 1 Capital | $ | 15,165 | $ | 14,888 | $ | 16,002 | $ | 15,738 | ||||||||
Total assets for SLR | 243,910 | 243,705 | 240,919 | 240,722 | ||||||||||||
Supplementary Leverage Ratio | 6.2 | % | 6.1 | % | 6.6 | % | 6.5 | % | ||||||||
• | 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. |
• | New business in assets to be serviced is reflected in our AUCA after we begin servicing the assets, and new business in assets to be managed is reflected in our AUM after we begin managing the assets. As such, only a portion of any new asset servicing and asset management mandate is reflected in our AUCA and AUM as of September 30, 2017. Distribution fees from the SPDR® Gold ETF and the SPDR® Long Dollar Gold Trust ETF are recorded in brokerage and other fee revenue and not in management fee revenue. |
• | State Street’s common stock and other stock dividends, including the declaration, timing and amount thereof, remain subject to consideration and approval by its Board of Directors at the relevant times. Stock purchases may be made using various types of mechanisms, including open market purchases under our announced common stock purchase program, accelerated share repurchases, or transactions off market, and may be made under Rule 10b5-1 trading programs. The timing of stock purchases, types of transactions and number of shares purchased will depend on several factors, including market conditions and State Street’s capital position, its financial performance and investment opportunities. The |
• | 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 NII, 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, the valuation of the U.S. dollar relative to other currencies in which we record revenue or accrue expenses and the performance and volatility of securities, credit, currency and other markets in the U.S. and internationally; and the impact of monetary and fiscal policy in the United States and internationally on prevailing rates of interest and currency exchange rates in the markets in which we provide services to our clients; |
• | the credit quality, credit-agency ratings and fair values of the securities in our investment securities portfolio, a deterioration or downgrade of which could lead to other-than-temporary impairment of the respective securities and the recognition of an impairment loss in our consolidated statement of income; |
• | our ability to attract deposits and other low-cost, short-term funding, our ability to manage levels of such deposits and the relative portion of our deposits that are determined to be operational under regulatory guidelines and our ability to deploy deposits in a profitable manner consistent with our liquidity needs, regulatory requirements and risk profile; |
• | the manner and timing with which the Federal Reserve and other U.S. and foreign regulators implement or reevaluate changes to the regulatory framework applicable to our |
• | our resolution plan, submitted to the Federal Reserve and FDIC in June 2017, may not be considered to be sufficient by the Federal Reserve and the FDIC, due to a number of factors, including, but not limited to, challenges we may experience in interpreting and addressing regulatory expectations, failure to implement remediation in a timely manner, the complexities of development of a comprehensive plan to resolve a global custodial bank and related costs and dependencies. If we fail to meet regulatory expectations to the satisfaction of the Federal Reserve and the FDIC in our resolution plan submission filed in June 2017 or any future submission, we could be subject to more stringent capital, leverage or liquidity requirements, or restrictions on our growth, activities or operations; |
• | adverse changes in the regulatory ratios that we are required or will be required to meet, whether arising under the Dodd-Frank Act or the Basel III final rule, 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; |
• | requirements to obtain the prior approval or non-objection of the Federal Reserve or other U.S. and non-U.S. regulators for the use, allocation or distribution of our capital or other specific capital actions or corporate activities, including, without limitation, acquisitions, investments in subsidiaries, dividends and stock purchases, without which our growth plans, distributions to shareholders, share repurchase programs or other capital or corporate 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; |
• | economic or financial market disruptions in the U.S. or internationally, including those which may result from recessions or political instability; for example, the U.K.'s decision to exit from the European Union may continue to disrupt financial markets or economic growth in Europe or, similarly, financial markets may react sharply or abruptly to actions taken by the new administration in the United States; |
• | our ability to develop and execute State Street Beacon, our multi-year transformation program to digitize our business, deliver significant value and innovation for our clients and lower expenses across the organization, any failure of which, in whole or in part, may |
• | our ability to promote a strong culture of risk management, operating controls, compliance oversight, ethical behavior and governance that meets our expectations and those of our clients and our regulators, and the financial, regulatory, reputation and other consequences of our failure to meet such expectations; |
• | the impact on our compliance and controls enhancement programs of the appointment of a monitor under the deferred prosecution agreement with the DOJ and compliance consultant appointed under a settlement with the SEC, including the potential for such monitor and compliance consultant to require changes to our programs or to identify other issues that require substantial expenditures, changes in our operations, or payments to clients or reporting to U.S. authorities; |
• | the results of our review of our billing practices, including additional amounts we may be required to reimburse clients, as well as potential consequences of such review, including damage to our client relationships and adverse actions by governmental authorities; |
• | the results of, and costs associated with, governmental or regulatory inquiries and investigations, litigation and similar claims, disputes; or civil or criminal proceedings; |
• | changes or potential changes in the amount of compensation we receive from clients for our services, and the mix of services provided by us that clients choose; |
• | the large institutional clients on which we focus are often able to exert considerable market influence, and this, combined with strong competitive market forces, subjects us to significant pressure to reduce the fees we charge, to potentially significant changes in our AUCA or our AUM in the event of the acquisition or loss of a client, in whole or in part, and to potentially significant changes in our fee revenue in the event a client re-balances or changes its investment approach or otherwise re-directs assets to lower- or higher-fee asset classes; |
• | 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 depositary 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, 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; |
• | our ability to expand our use of technology to enhance the efficiency, accuracy and reliability of our operations and our dependencies on information technology and our ability to control related risks, including cyber-crime and other threats to our information |
• | our ability to grow revenue, manage expenses, attract and retain highly skilled people and raise the capital necessary to achieve our business goals and comply with regulatory requirements and expectations; |
• | 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; |
• | 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 or liabilities 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 evolving 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. |
STATE STREET CORPORATION | |
EARNINGS RELEASE ADDENDUM | |
September 30, 2017 | |
Table of Contents | |
Page | |
GAAP-Basis Financial Information: | |
Consolidated Financial Highlights | |
Consolidated Results of Operations | |
Consolidated Statement of Condition | |
Average and Period-End Balance Sheet Trends | |
Assets Under Custody and Administration | |
Assets Under Management | |
Investment Portfolio: | |
Investment Portfolio Holdings by Asset Class | |
Investment Portfolio Non-U.S. Investments | |
Operating-Basis (Non-GAAP) Financial Information: | |
Reconciliations of Operating-Basis (Non-GAAP) Financial Information | |
Reconciliations of Constant Currency FX Impacts | |
Capital: | |
Regulatory Capital | |
Reconciliation of Tangible Common Equity Ratio | |
Reconciliations of Fully Phased-In Capital Ratios | |
Reconciliations of Supplementary Leverage Ratios | |
STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS | ||||||||||||||||||||||||||||||||||||||||||||||||
Quarters | % Change | Year-to-Date | % Change | |||||||||||||||||||||||||||||||||||||||||||||
(Dollars in millions, except per share amounts, or where otherwise noted) | 1Q16 | 2Q16 | 3Q16 | 4Q16 | 1Q17 | 2Q17 | 3Q17 | 3Q17 vs. 3Q16 | 3Q17 vs. 2Q17 | 3Q16 | 3Q17 | YTD 3Q17 vs. YTD 3Q16 | ||||||||||||||||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||||||||||||||||||||||||
Fee revenue | $ | 1,970 | $ | 2,053 | $ | 2,079 | $ | 2,014 | $ | 2,198 | $ | 2,235 | $ | 2,242 | 7.8 | % | 0.3 | % | $ | 6,102 | $ | 6,675 | 9.4 | % | ||||||||||||||||||||||||
Net interest income | 512 | 521 | 537 | 514 | 510 | 575 | 603 | 12.3 | 4.9 | 1,570 | 1,688 | 7.5 | ||||||||||||||||||||||||||||||||||||
Gains (losses) from sales of available-for-sale securities, net | 2 | (1 | ) | 6 | 2 | (40 | ) | — | 1 | nm | — | 7 | (39 | ) | nm | |||||||||||||||||||||||||||||||||
Losses from other-than-temporary impairment, net | — | — | (2 | ) | — | — | — | — | nm | — | (2 | ) | — | nm | ||||||||||||||||||||||||||||||||||
Total revenue | 2,484 | 2,573 | 2,620 | 2,530 | 2,668 | 2,810 | 2,846 | 8.6 | 1.3 | 7,677 | 8,324 | 8.4 | ||||||||||||||||||||||||||||||||||||
Provision for loan losses | 4 | 4 | — | 2 | (2 | ) | 3 | 3 | nm | — | 8 | 4 | (50.0 | ) | ||||||||||||||||||||||||||||||||||
Total expenses | 2,050 | 1,860 | 1,984 | 2,183 | 2,086 | 2,031 | 2,021 | 1.9 | (0.5 | ) | 5,894 | 6,138 | 4.1 | |||||||||||||||||||||||||||||||||||
Income before income tax expense | 430 | 709 | 636 | 345 | 584 | 776 | 822 | 29.2 | 5.9 | 1,775 | 2,182 | 22.9 | ||||||||||||||||||||||||||||||||||||
Income tax expense (benefit) | 62 | 92 | 72 | (248 | ) | 82 | 156 | 137 | 90.3 | (12.2 | ) | 226 | 375 | 65.9 | ||||||||||||||||||||||||||||||||||
Net income (loss) from non-controlling interest | — | 2 | (1 | ) | — | — | — | — | nm | — | 1 | — | nm | |||||||||||||||||||||||||||||||||||
Net income | 368 | 619 | 563 | 593 | 502 | 620 | 685 | 21.7 | 10.5 | 1,550 | 1,807 | 16.6 | ||||||||||||||||||||||||||||||||||||
Net income available to common shareholders | $ | 319 | $ | 585 | $ | 507 | $ | 557 | $ | 446 | $ | 584 | $ | 629 | 24.1 | 7.7 | $ | 1,411 | $ | 1,659 | 17.6 | |||||||||||||||||||||||||||
Diluted earnings per common share | $ | .79 | $ | 1.47 | $ | 1.29 | $ | 1.43 | $ | 1.15 | $ | 1.53 | $ | 1.66 | 28.7 | 8.5 | $ | 3.54 | $ | 4.35 | 22.9 | |||||||||||||||||||||||||||
Average diluted common shares outstanding (in thousands) | 403,615 | 398,847 | 393,212 | 389,046 | 386,417 | 380,915 | 378,518 | (3.7 | ) | (0.6 | ) | 398,413 | 381,779 | (4.2 | ) | |||||||||||||||||||||||||||||||||
Cash dividends declared per common share | $ | .34 | $ | .34 | $ | .38 | $ | .38 | $ | .38 | $ | .38 | $ | .42 | 10.5 | 10.5 | $ | 1.06 | $ | 1.18 | 11.3 | |||||||||||||||||||||||||||
Closing price per share of common stock (as of quarter end) | 58.52 | 53.92 | 69.63 | 77.72 | 79.61 | 89.73 | 95.54 | 37.2 | 6.5 | 69.63 | 95.54 | 37.2 | ||||||||||||||||||||||||||||||||||||
Ratios: | ||||||||||||||||||||||||||||||||||||||||||||||||
Return on average common equity | 6.8 | % | 12.4 | % | 10.6 | % | 12.1 | % | 9.9 | % | 12.6 | % | 13.0 | % | 240 | bps | 40 | bps | 9.9 | % | 11.9 | % | 200 | bps | ||||||||||||||||||||||||
Return on tangible common equity(1) | 10.6 | 14.8 | 15.8 | 17.7 | 16.0 | 17.3 | 18.0 | 220 | 70 | 15.8 | 18.0 | 220 | ||||||||||||||||||||||||||||||||||||
Pre-tax operating margin | 17.3 | 27.6 | 24.3 | 13.6 | 21.9 | 27.6 | 28.9 | 460 | 130 | 23.1 | 26.2 | 310 | ||||||||||||||||||||||||||||||||||||
Common equity tier 1 risk-based capital(2) | 12.3 | 12.0 | 12.3 | 11.7 | 11.2 | 12.0 | 12.6 | 30 | 60 | 12.3 | 12.6 | 30 | ||||||||||||||||||||||||||||||||||||
Tier 1 risk-based capital(2) | 14.9 | 15.0 | 15.4 | 14.8 | 14.4 | 15.1 | 15.7 | 30 | 60 | 15.4 | 15.7 | 30 | ||||||||||||||||||||||||||||||||||||
Total risk-based capital(2) | 17.1 | 17.1 | 17.6 | 16.0 | 15.4 | 16.2 | 16.8 | (80 | ) | 60 | 17.6 | 16.8 | (80 | ) | ||||||||||||||||||||||||||||||||||
Tier 1 leverage(2) | 6.9 | 7.0 | 6.8 | 6.5 | 6.8 | 7.0 | 7.4 | 60 | 40 | 6.8 | 7.4 | 60 | ||||||||||||||||||||||||||||||||||||
Tangible common equity(3) | 6.7 | 6.7 | 6.5 | 6.4 | 6.6 | 6.8 | 6.9 | 40 | 10 | 6.5 | 6.9 | 40 | ||||||||||||||||||||||||||||||||||||
At quarter-end: | ||||||||||||||||||||||||||||||||||||||||||||||||
Assets under custody and administration (in trillions)(4) | $ | 26.94 | $ | 27.79 | $ | 29.18 | $ | 28.77 | $ | 29.83 | $ | 31.04 | $ | 32.11 | 10.0 | % | 3.5 | % | $ | 29.18 | $ | 32.11 | 10.0 | % | ||||||||||||||||||||||||
Asset under management (in trillions) | 2.30 | 2.30 | 2.45 | 2.47 | 2.56 | 2.61 | 2.67 | 9.3 | 2.6 | 2.45 | 2.67 | 9.0 | ||||||||||||||||||||||||||||||||||||
Total assets | 243,685 | 255,386 | 256,140 | 242,698 | 236,802 | 238,274 | 235,986 | (7.9 | ) | (1.0 | ) | 256,140 | 235,986 | (7.9 | ) | |||||||||||||||||||||||||||||||||
Investment securities | 102,298 | 103,121 | 99,888 | 97,167 | 94,639 | 95,255 | 93,088 | (6.8 | ) | (2.3 | ) | 99,888 | 93,088 | (6.8 | ) | |||||||||||||||||||||||||||||||||
Deposits | 185,516 | 193,130 | 198,766 | 187,163 | 183,465 | 181,416 | 179,263 | (9.8 | ) | (1.2 | ) | 198,766 | 179,263 | (9.8 | ) | |||||||||||||||||||||||||||||||||
Long-term debt | 10,323 | 11,924 | 11,834 | 11,430 | 11,394 | 11,737 | 11,716 | (1.0 | ) | (0.2 | ) | 11,834 | 11,716 | (1.0 | ) | |||||||||||||||||||||||||||||||||
Total shareholders' equity | 21,496 | 22,073 | 22,150 | 21,219 | 21,294 | 22,068 | 22,497 | 1.6 | 1.9 | 22,150 | 22,497 | 1.6 | ||||||||||||||||||||||||||||||||||||
(1) Return on tangible common equity is calculated by dividing year-to-date annualized net income available to common shareholders (GAAP-basis) by tangible common equity. | ||||||||||||||||||||||||||||||||||||||||||||||||
(2) In early 2014, we announced that we had completed our Basel III qualification period. As a result, our regulatory capital ratios for each period presented in the table above have been calculated under the advanced approaches provisions of the Basel III final rule. Refer to Regulatory Capital within this package for additional information about our regulatory capital ratios for each period. | ||||||||||||||||||||||||||||||||||||||||||||||||
(3) Tangible common equity ratio is a non-GAAP measure. Refer to the Reconciliation of Tangible Common Equity Ratio within this package for additional information. | ||||||||||||||||||||||||||||||||||||||||||||||||
(4) Included assets under custody of $20.79 trillion, $21.35 trillion, $21.91 trillion, $21.73 trillion, $22.51 trillion, $23.36 trillion and $24.24 trillion as of March 31, 2016, June 30, 2016, September 30, 2016, December 31, 2016, March 31, 2017, June 30, 2017 and September 30, 2017, respectively. | ||||||||||||||||||||||||||||||||||||||||||||||||
nm Not meaningful |
STATE STREET CORPORATION | |||||||||||||||||||||||||||||||||||||||||||||
EARNINGS RELEASE ADDENDUM | |||||||||||||||||||||||||||||||||||||||||||||
CONSOLIDATED RESULTS OF OPERATIONS | |||||||||||||||||||||||||||||||||||||||||||||
Quarters | % Change | Year-to-Date | % Change | ||||||||||||||||||||||||||||||||||||||||||
(Dollars in millions, except per share amounts, or where otherwise noted) | 1Q16 | 2Q16 | 3Q16 | 4Q16 | 1Q17 | 2Q17 | 3Q17 | 3Q17 vs. 3Q16 | 3Q17 vs. 2Q17 | 3Q16 | 3Q17 | YTD 3Q17 vs. YTD 3Q16 | |||||||||||||||||||||||||||||||||
Reported Results | |||||||||||||||||||||||||||||||||||||||||||||
Fee revenue: | |||||||||||||||||||||||||||||||||||||||||||||
Servicing fees | $ | 1,242 | $ | 1,239 | $ | 1,303 | $ | 1,289 | $ | 1,296 | $ | 1,339 | $ | 1,351 | 3.7 | % | 0.9 | % | $ | 3,784 | $ | 3,986 | 5.3 | % | |||||||||||||||||||||
Management fees | 270 | 293 | 368 | 361 | 382 | 397 | 419 | 13.9 | 5.5 | 931 | 1,198 | 28.7 | |||||||||||||||||||||||||||||||||
Trading services: | |||||||||||||||||||||||||||||||||||||||||||||
Direct sales and trading | 90 | 87 | 94 | 115 | 98 | 100 | 84 | (10.6 | ) | (16.0 | ) | 271 | 282 | 4.1 | |||||||||||||||||||||||||||||||
Indirect foreign exchange trading(1) | 66 | 70 | 65 | 67 | 66 | 78 | 66 | 1.5 | (15.4 | ) | 201 | 210 | 4.5 | ||||||||||||||||||||||||||||||||
Total foreign exchange trading | 156 | 157 | 159 | 182 | 164 | 178 | 150 | (5.7 | ) | (15.7 | ) | 472 | 492 | 4.2 | |||||||||||||||||||||||||||||||
Electronic foreign exchange services | 44 | 43 | 41 | 41 | 41 | 39 | 39 | (4.9 | ) | — | 128 | 119 | (7.0 | ) | |||||||||||||||||||||||||||||||
Other trading, transition management and brokerage | 72 | 67 | 67 | 70 | 70 | 72 | 70 | 4.5 | (2.8 | ) | 206 | 212 | 2.9 | ||||||||||||||||||||||||||||||||
Total brokerage and other trading services | 116 | 110 | 108 | 111 | 111 | 111 | 109 | 0.9 | (1.8 | ) | 334 | 331 | (0.9 | ) | |||||||||||||||||||||||||||||||
Total trading services | 272 | 267 | 267 | 293 | 275 | 289 | 259 | (3.0 | ) | (10.4 | ) | 806 | 823 | 2.1 | |||||||||||||||||||||||||||||||
Securities finance | 134 | 156 | 136 | 136 | 133 | 179 | 147 | 8.1 | (17.9 | ) | 426 | 459 | 7.7 | ||||||||||||||||||||||||||||||||
Processing fees and other | 52 | 98 | 5 | (65 | ) | 112 | 31 | 66 | nm | 112.9 | 155 | 209 | 34.8 | ||||||||||||||||||||||||||||||||
Total fee revenue | 1,970 | 2,053 | 2,079 | 2,014 | 2,198 | 2,235 | 2,242 | 7.8 | 0.3 | 6,102 | 6,675 | 9.4 | |||||||||||||||||||||||||||||||||
Net interest income: | |||||||||||||||||||||||||||||||||||||||||||||
Interest income | 629 | 620 | 647 | 616 | 650 | 700 | 761 | 17.6 | 8.7 | 1,896 | 2,111 | 11.3 | |||||||||||||||||||||||||||||||||
Interest expense | 117 | 99 | 110 | 102 | 140 | 125 | 158 | 43.6 | 26.4 | 326 | 423 | 29.8 | |||||||||||||||||||||||||||||||||
Net interest income | 512 | 521 | 537 | 514 | 510 | 575 | 603 | 12.3 | 4.9 | 1,570 | 1,688 | 7.5 | |||||||||||||||||||||||||||||||||
Gains (losses) related to investment securities, net: | |||||||||||||||||||||||||||||||||||||||||||||
Gains (losses) from sales of available-for-sale securities, net | 2 | (1 | ) | 6 | 2 | (40 | ) | — | 1 | nm | — | 7 | (39 | ) | nm | ||||||||||||||||||||||||||||||
Losses from other-than-temporary impairment, net | — | — | (2 | ) | — | — | — | — | nm | — | (2 | ) | — | nm | |||||||||||||||||||||||||||||||
Gains (losses) related to investment securities, net | 2 | (1 | ) | 4 | 2 | (40 | ) | — | 1 | nm | nm | 5 | (39 | ) | nm | ||||||||||||||||||||||||||||||
Total revenue | 2,484 | 2,573 | 2,620 | 2,530 | 2,668 | 2,810 | 2,846 | 8.6 | 1.3 | 7,677 | 8,324 | 8.4 | |||||||||||||||||||||||||||||||||
Provision for loan losses | 4 | 4 | — | 2 | (2 | ) | 3 | 3 | nm | — | 8 | 4 | (50.0 | ) | |||||||||||||||||||||||||||||||
Expenses: | |||||||||||||||||||||||||||||||||||||||||||||
Compensation and employee benefits | 1,107 | 989 | 1,013 | 1,244 | 1,166 | 1,071 | 1,090 | 7.6 | 1.8 | 3,109 | 3,327 | 7.0 | |||||||||||||||||||||||||||||||||
Information systems and communications | 272 | 270 | 285 | 278 | 287 | 283 | 296 | 3.9 | 4.6 | 827 | 866 | 4.7 | |||||||||||||||||||||||||||||||||
Transaction processing services | 200 | 201 | 200 | 199 | 197 | 207 | 215 | 7.5 | 3.9 | 601 | 619 | 3.0 | |||||||||||||||||||||||||||||||||
Occupancy | 113 | 111 | 107 | 109 | 110 | 116 | 118 | 10.3 | 1.7 | 331 | 344 | 3.9 | |||||||||||||||||||||||||||||||||
Acquisition and restructuring costs | 104 | 20 | 42 | 43 | 29 | 71 | 33 | (21.4 | ) | (53.5 | ) | 166 | 133 | (19.9 | ) | ||||||||||||||||||||||||||||||
Other | 254 | 269 | 337 | 310 | 297 | 283 | 269 | (20.2 | ) | (4.9 | ) | 860 | 849 | (1.3 | ) | ||||||||||||||||||||||||||||||
Total expenses | 2,050 | 1,860 | 1,984 | 2,183 | 2,086 | 2,031 | 2,021 | 1.9 | (0.5 | ) | 5,894 | 6,138 | 4.1 | ||||||||||||||||||||||||||||||||
Income before income tax expense | 430 | 709 | 636 | 345 | 584 | 776 | 822 | 29.2 | 5.9 | 1,775 | 2,182 | 22.9 | |||||||||||||||||||||||||||||||||
Income tax expense (benefit) | 62 | 92 | 72 | (248 | ) | 82 | 156 | 137 | 90.3 | (12.2 | ) | 226 | 375 | 65.9 | |||||||||||||||||||||||||||||||
Net income (loss) from non-controlling interest | — | 2 | (1 | ) | — | — | — | — | nm | — | 1 | — | nm | ||||||||||||||||||||||||||||||||
Net income | $ | 368 | $ | 619 | $ | 563 | $ | 593 | $ | 502 | $ | 620 | $ | 685 | 21.7 | 10.5 | $ | 1,550 | $ | 1,807 | 16.6 | ||||||||||||||||||||||||
Effective tax rate | 14.4 | % | 12.9 | % | 11.4 | % | (72.3 | )% | 14.0 | % | 20.1 | % | 16.7 | % | 12.7 | % | 17.2 | % |
STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||||||||||||||||
CONSOLIDATED RESULTS OF OPERATIONS (Continued) | ||||||||||||||||||||||||||||||||||||||||||||||||
Quarters | % Change | Year-to-Date | % Change | |||||||||||||||||||||||||||||||||||||||||||||
(Dollars in millions, except per share amounts, or where otherwise noted) | 1Q16 | 2Q16 | 3Q16 | 4Q16 | 1Q17 | 2Q17 | 3Q17 | 3Q17 vs. 3Q16 | 3Q17 vs. 2Q17 | 3Q16 | 3Q17 | YTD 3Q17 vs. YTD 3Q16 | ||||||||||||||||||||||||||||||||||||
Adjustments to net income: | ||||||||||||||||||||||||||||||||||||||||||||||||
Dividends on preferred stock | $ | (49 | ) | $ | (33 | ) | $ | (55 | ) | $ | (36 | ) | $ | (55 | ) | $ | (36 | ) | $ | (55 | ) | — | % | 52.8 | % | $ | (137 | ) | $ | (146 | ) | 6.6 | % | |||||||||||||||
Earnings allocated to participating securities | — | (1 | ) | (1 | ) | — | (1 | ) | — | (1 | ) | — | nm | (2 | ) | (2 | ) | — | ||||||||||||||||||||||||||||||
Net income available to common shareholders | $ | 319 | $ | 585 | $ | 507 | $ | 557 | $ | 446 | $ | 584 | $ | 629 | 24.1 | 7.7 | $ | 1,411 | $ | 1,659 | 17.6 | |||||||||||||||||||||||||||
Earnings per common share: | ||||||||||||||||||||||||||||||||||||||||||||||||
Basic | $ | .80 | $ | 1.48 | $ | 1.31 | $ | 1.45 | $ | 1.17 | $ | 1.56 | $ | 1.69 | 29.0 | 8.3 | $ | 3.58 | $ | 4.41 | 23.2 | |||||||||||||||||||||||||||
Diluted | .79 | 1.47 | 1.29 | 1.43 | 1.15 | 1.53 | 1.66 | 28.7 | 8.5 | 3.54 | 4.35 | 22.9 | ||||||||||||||||||||||||||||||||||||
Average common shares outstanding: | ||||||||||||||||||||||||||||||||||||||||||||||||
Basic | 399,421 | 394,160 | 388,358 | 384,115 | 381,224 | 375,395 | 372,765 | (4.0 | ) | (0.7 | ) | 393,959 | 376,430 | (4.4 | ) | |||||||||||||||||||||||||||||||||
Diluted | 403,615 | 398,847 | 393,212 | 389,046 | 386,417 | 380,915 | 378,518 | (3.7 | ) | (0.6 | ) | 398,413 | 381,779 | (4.2 | ) | |||||||||||||||||||||||||||||||||
Cash dividends declared per common share | $ | .34 | $ | .34 | $ | .38 | $ | .38 | $ | .38 | $ | .38 | $ | .42 | 10.5 | 10.5 | $ | 1.06 | $ | 1.18 | 11.3 | |||||||||||||||||||||||||||
Closing price per share of common stock (as of quarter end) | 58.52 | 53.92 | 69.63 | 77.72 | 79.61 | 89.73 | 95.54 | 37.2 | 6.5 | 69.63 | 95.54 | 37.2 | ||||||||||||||||||||||||||||||||||||
Financial ratios: | ||||||||||||||||||||||||||||||||||||||||||||||||
Return on average common equity | 6.8 | % | 12.4 | % | 10.6 | % | 12.1 | % | 9.9 | % | 12.6 | % | 13.0 | % | 240 | bps | 40 | bps | 9.9 | % | 11.9 | % | 200 | bps | ||||||||||||||||||||||||
Return on tangible common equity (2) | 10.6 | 14.8 | 15.8 | 17.7 | 16.0 | 17.3 | 18.0 | 220 | 70 | 15.8 | 18.0 | 220 | ||||||||||||||||||||||||||||||||||||
Pre-tax operating margin | 17.3 | 27.6 | 24.3 | 13.6 | 21.9 | 27.6 | 28.9 | 460 | 130 | 23.1 | 26.2 | 310 | ||||||||||||||||||||||||||||||||||||
After-tax margin | 12.8 | 22.7 | 19.4 | 22.0 | 16.7 | 20.8 | 22.1 | 270 | 130 | 18.4 | 19.9 | 150 | ||||||||||||||||||||||||||||||||||||
Common dividend payout ratio | 42.5 | 22.7 | 28.9 | 26.1 | 32.1 | 24.4 | 24.8 | (410 | ) | 40 | 29.4 | 26.6 | (280 | ) | ||||||||||||||||||||||||||||||||||
(1) We calculate revenue for indirect foreign exchange using an attribution methodology. This methodology takes into consideration estimated effective mark-ups/downs and observed client volumes. Direct sales and trading revenue is total foreign exchange trading revenue excluding the revenue attributed to indirect foreign exchange. | ||||||||||||||||||||||||||||||||||||||||||||||||
(2) Return on tangible common equity is calculated by dividing year-to-date annualized net income available to common shareholders (GAAP-basis) by tangible common equity. | ||||||||||||||||||||||||||||||||||||||||||||||||
nm Not meaningful |
STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||
EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENT OF CONDITION | ||||||||||||||||||||||||||||||||||
As of Quarter End | % Change | |||||||||||||||||||||||||||||||||
(Dollars in millions, except per share amounts) | 1Q16 | 2Q16 | 3Q16 | 4Q16 | 1Q17 | 2Q17 | 3Q17 | 3Q17 vs. 3Q16 | 3Q17 vs. 2Q17 | |||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||||
Cash and due from banks | $ | 3,735 | $ | 4,673 | $ | 3,490 | $ | 1,314 | $ | 2,909 | $ | 3,156 | $ | 3,939 | 12.9 | % | 24.8 | % | ||||||||||||||||
Interest-bearing deposits with banks | 65,032 | 75,169 | 79,090 | 70,935 | 66,789 | 63,617 | 60,956 | (22.9 | ) | (4.2 | ) | |||||||||||||||||||||||
Securities purchased under resale agreements | 3,722 | 2,010 | 2,442 | 1,956 | 2,181 | 3,172 | 3,465 | 41.9 | 9.2 | |||||||||||||||||||||||||
Trading account assets | 873 | 890 | 1,063 | 1,024 | 945 | 896 | 1,135 | 6.8 | 26.7 | |||||||||||||||||||||||||
Investment securities: | ||||||||||||||||||||||||||||||||||
Investment securities available-for-sale | 71,086 | 72,735 | 71,520 | 61,998 | 58,810 | 59,025 | 56,238 | (21.4 | ) | (4.7 | ) | |||||||||||||||||||||||
Investment securities held-to-maturity(1) | 31,212 | 30,386 | 28,368 | 35,169 | 35,829 | 36,230 | 36,850 | 29.9 | 1.7 | |||||||||||||||||||||||||
Total investment securities | 102,298 | 103,121 | 99,888 | 97,167 | 94,639 | 95,255 | 93,088 | (6.8 | ) | (2.3 | ) | |||||||||||||||||||||||
Loans and leases, net(2) | 19,140 | 19,788 | 21,451 | 19,704 | 22,486 | 24,307 | 23,581 | 9.9 | (3.0 | ) | ||||||||||||||||||||||||
Premises and equipment, net(3) | 1,949 | 1,994 | 2,042 | 2,062 | 2,101 | 2,137 | 2,167 | 6.1 | 1.4 | |||||||||||||||||||||||||
Accrued interest and fees receivable | 2,371 | 2,399 | 2,594 | 2,644 | 2,690 | 2,805 | 3,043 | 17.3 | 8.5 | |||||||||||||||||||||||||
Goodwill | 5,733 | 5,671 | 5,911 | 5,814 | 5,855 | 5,945 | 5,997 | 1.5 | 0.9 | |||||||||||||||||||||||||
Other intangible assets | 1,749 | 1,682 | 1,849 | 1,750 | 1,710 | 1,693 | 1,658 | (10.3 | ) | (2.1 | ) | |||||||||||||||||||||||
Other assets | 37,083 | 37,989 | 36,320 | 38,328 | 34,497 | 35,291 | 36,957 | 1.8 | 4.7 | |||||||||||||||||||||||||
Total assets | $ | 243,685 | $ | 255,386 | $ | 256,140 | $ | 242,698 | $ | 236,802 | $ | 238,274 | $ | 235,986 | (7.9 | ) | (1.0 | ) | ||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||||||||||||
Non-interest-bearing | $ | 54,248 | $ | 57,268 | $ | 60,545 | $ | 59,397 | $ | 56,786 | $ | 50,957 | $ | 49,850 | (17.7 | ) | (2.2 | ) | ||||||||||||||||
Interest-bearing -- U.S. | 31,159 | 33,060 | 33,767 | 30,911 | 26,746 | 24,438 | 33,742 | (0.1 | ) | 38.1 | ||||||||||||||||||||||||
Interest-bearing -- Non-U.S. | 100,109 | 102,802 | 104,454 | 96,855 | 99,933 | 106,021 | 95,671 | (8.4 | ) | (9.8 | ) | |||||||||||||||||||||||
Total deposits | 185,516 | 193,130 | 198,766 | 187,163 | 183,465 | 181,416 | 179,263 | (9.8 | ) | (1.2 | ) | |||||||||||||||||||||||
Securities sold under repurchase agreements | 4,224 | 4,350 | 4,364 | 4,400 | 4,003 | 3,856 | 3,867 | (11.4 | ) | 0.3 | ||||||||||||||||||||||||
Other short-term borrowings | 1,706 | 1,712 | 1,413 | 1,585 | 1,177 | 1,465 | 1,253 | (11.3 | ) | (14.5 | ) | |||||||||||||||||||||||
Accrued expenses and other liabilities | 20,388 | 22,166 | 17,582 | 16,901 | 15,469 | 17,732 | 17,390 | (1.1 | ) | (1.9 | ) | |||||||||||||||||||||||
Long-term debt | 10,323 | 11,924 | 11,834 | 11,430 | 11,394 | 11,737 | 11,716 | (1.0 | ) | (0.2 | ) | |||||||||||||||||||||||
Total liabilities | 222,157 | 233,282 | 233,959 | 221,479 | 215,508 | 216,206 | 213,489 | (8.7 | ) | (1.3 | ) | |||||||||||||||||||||||
Shareholders' equity: | ||||||||||||||||||||||||||||||||||
Preferred stock, no par, 3,500,000 shares authorized: | ||||||||||||||||||||||||||||||||||
Series C, 5,000 shares issued and outstanding | 491 | 491 | 491 | 491 | 491 | 491 | 491 | — | — | |||||||||||||||||||||||||
Series D, 7,500 shares issued and outstanding | 742 | 742 | 742 | 742 | 742 | 742 | 742 | — | — | |||||||||||||||||||||||||
Series E, 7,500 shares issued and outstanding | 728 | 728 | 728 | 728 | 728 | 728 | 728 | — | — | |||||||||||||||||||||||||
Series F, 7,500 shares issued and outstanding | 742 | 742 | 742 | 742 | 742 | 742 | 742 | — | — | |||||||||||||||||||||||||
Series G, 5,000 shares issued and outstanding | — | 493 | 493 | 493 | 493 | 493 | 493 | — | — | |||||||||||||||||||||||||
Common stock, $1 par, 750,000,000 shares authorized(4) | 504 | 504 | 504 | 504 | 504 | 504 | 504 | — | — | |||||||||||||||||||||||||
Surplus | 9,739 | 9,767 | 9,778 | 9,782 | 9,796 | 9,803 | 9,803 | 0.3 | — | |||||||||||||||||||||||||
Retained earnings | 16,233 | 16,686 | 17,047 | 17,459 | 17,762 | 18,202 | 18,675 | 9.6 | 2.6 | |||||||||||||||||||||||||
Accumulated other comprehensive income (loss) | (964 | ) | (997 | ) | (993 | ) | (2,040 | ) | (1,805 | ) | (1,270 | ) | (984 | ) | (0.9 | ) | (22.5 | ) | ||||||||||||||||
Treasury stock, at cost(5) | (6,719 | ) | (7,083 | ) | (7,382 | ) | (7,682 | ) | (8,159 | ) | (8,367 | ) | (8,697 | ) | 17.8 | 3.9 | ||||||||||||||||||
Total shareholders' equity | 21,496 | 22,073 | 22,150 | 21,219 | 21,294 | 22,068 | 22,497 | 1.6 | 1.9 | |||||||||||||||||||||||||
Non-controlling interest-equity | 32 | 31 | 31 | — | — | — | — | (100.0 | ) | — | ||||||||||||||||||||||||
Total equity | 21,528 | 22,104 | 22,181 | 21,219 | 21,294 | 22,068 | 22,497 | 1.4 | 1.9 | |||||||||||||||||||||||||
Total liabilities and equity | $ | 243,685 | $ | 255,386 | $ | 256,140 | $ | 242,698 | $ | 236,802 | $ | 238,274 | $ | 235,986 | (7.9 | ) | (1.0 | ) | ||||||||||||||||
nm Not meaningful | ||||||||||||||||||||||||||||||||||
1Q16 | 2Q16 | 3Q16 | 4Q16 | 1Q17 | 2Q17 | 3Q17 | ||||||||||||||||||||||||||||
(1) Fair value of investment securities held-to-maturity | $ | 31,555 | $ | 30,895 | $ | 28,780 | $ | 34,994 | $ | 35,694 | $ | 36,169 | $ | 36,836 | ||||||||||||||||||||
(2) Allowance for loan losses | 47 | 51 | 51 | 53 | 51 | 54 | 58 | |||||||||||||||||||||||||||
(3) Accumulated depreciation for premises and equipment | 4,929 | 3,164 | 3,271 | 3,333 | 3,463 | 3,611 | 3,750 | |||||||||||||||||||||||||||
(4) Common stock shares issued | 503,879,642 | 503,879,642 | 503,879,642 | 503,879,642 | 503,879,642 | 503,879,642 | 503,879,642 | |||||||||||||||||||||||||||
(5) Treasury stock shares | 108,316,401 | 114,229,535 | 118,309,341 | 121,940,502 | 127,520,264 | 129,773,003 | 133,038,955 |
STATE STREET CORPORATION | |||||||||||||||||||||||||||
EARNINGS RELEASE ADDENDUM | |||||||||||||||||||||||||||
AVERAGE AND PERIOD-END BALANCE SHEET TRENDS | |||||||||||||||||||||||||||
Quarters | % Change | ||||||||||||||||||||||||||
Average Balance Sheet Mix | 1Q16 | 2Q16 | 3Q16 | 4Q16 | 1Q17 | 2Q17 | 3Q17 | 3Q17 vs. 3Q16 | 3Q17 vs. 2Q17 | ||||||||||||||||||
Investment securities and short-duration instruments | 78.5 | % | 78.4 | % | 78.7 | % | 78.2 | % | 78.3 | % | 77.8 | % | 76.5 | % | (2.8 | )% | (1.7 | )% | |||||||||
Loans and leases | 8.3 | 8.1 | 8.0 | 8.6 | 9.2 | 9.4 | 10.5 | 31.3 | 11.7 | ||||||||||||||||||
Non-interest-earning assets | 13.2 | 13.5 | 13.3 | 13.2 | 12.5 | 12.8 | 13.0 | (2.3 | ) | 1.6 | |||||||||||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||
Client funds bearing interest | 59.0 | % | 60.2 | % | 60.3 | % | 58.8 | % | 59.9 | % | 60.7 | % | 60.1 | % | (0.3 | ) | (1.0 | ) | |||||||||
Client funds not bearing interest | 20.1 | 18.3 | 19.1 | 20.5 | 20.2 | 18.9 | 18.2 | (4.7 | ) | (3.7 | ) | ||||||||||||||||
Other non-interest-bearing liabilities | 6.3 | 7.0 | 6.0 | 6.4 | 4.8 | 5.6 | 6.1 | 1.7 | 8.9 | ||||||||||||||||||
Long-term debt and common shareholders' equity | 13.4 | 13.1 | 13.2 | 12.9 | 13.6 | 13.4 | 14.1 | 6.8 | 5.2 | ||||||||||||||||||
Preferred shareholders' equity | 1.2 | 1.4 | 1.4 | 1.4 | 1.5 | 1.4 | 1.5 | 7.1 | 7.1 | ||||||||||||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
(Dollars in millions) | Quarters | % Change | ||||||||||||||||||||||||||||||||
Average Asset Backed Securities | 1Q16 | 2Q16 | 3Q16 | 4Q16 | 1Q17 | 2Q17 | 3Q17 | 3Q17 vs. 3Q16 | 3Q17 vs. 2Q17 | |||||||||||||||||||||||||
Fixed | $ | 2,045 | $ | 2,023 | $ | 1,904 | $ | 1,702 | $ | 1,285 | $ | 1,137 | $ | 1,038 | (45.5 | )% | (8.7 | )% | ||||||||||||||||
Floating | 24,795 | 24,313 | 22,988 | 22,470 | 21,324 | 22,230 | 22,828 | (0.7 | ) | 2.7 | ||||||||||||||||||||||||
Total | $ | 26,840 | $ | 26,336 | $ | 24,892 | $ | 24,172 | $ | 22,609 | $ | 23,367 | $ | 23,866 | (4.1 | ) | 2.1 |
(Dollars in millions) | Quarters | % Change | ||||||||||||||||||||||||||||||||
Investment Securities - Appreciation (Depreciation) | 1Q16 | 2Q16 | 3Q16 | 4Q16 | 1Q17 | 2Q17 | 3Q17 | 3Q17 vs. 3Q16 | 3Q17 vs. 2Q17 | |||||||||||||||||||||||||
Held-to-maturity: | ||||||||||||||||||||||||||||||||||
Amortized cost (book value) | $ | 31,212 | $ | 30,386 | $ | 28,368 | $ | 35,169 | $ | 35,829 | $ | 36,230 | $ | 36,850 | 29.9 | % | 1.7 | % | ||||||||||||||||
Fair value | 31,555 | 30,895 | 28,780 | 34,994 | 35,694 | 36,169 | 36,836 | 28.0 | 1.8 | |||||||||||||||||||||||||
Appreciation (depreciation) | 343 | 509 | 412 | (175 | ) | (135 | ) | (61 | ) | (14 | ) | (103.4 | ) | (77.0 | ) | |||||||||||||||||||
Available-for-sale: | ||||||||||||||||||||||||||||||||||
Amortized cost | 70,366 | 71,720 | 70,795 | 61,912 | 58,658 | 58,714 | 55,882 | (21.1 | ) | (4.8 | ) | |||||||||||||||||||||||
Fair value (book value) | 71,086 | 72,735 | 71,520 | 61,998 | 58,810 | 59,025 | 56,238 | (21.4 | ) | (4.7 | ) | |||||||||||||||||||||||
Appreciation (depreciation) | 720 | 1,015 | 725 | 86 | 152 | 311 | 356 | (50.9 | ) | 14.5 | ||||||||||||||||||||||||
Pre-tax appreciation (depreciation) related to securities available-for-sale transferred to held-to-maturity | (193 | ) | (197 | ) | 35 | (194 | ) | (41 | ) | (35 | ) | (34 | ) | (197.1 | ) | (2.9 | ) | |||||||||||||||||
Net pre-tax appreciation (depreciation) related to investment securities portfolio | 870 | 1,327 | 1,172 | (283 | ) | (24 | ) | 215 | 308 | (73.7 | ) | 43.3 | ||||||||||||||||||||||
Net after-tax appreciation (depreciation) related to investment securities portfolio | 522 | 796 | 703 | (170 | ) | (14 | ) | 129 | 185 | (73.7 | ) | 43.4 |
(Dollars in billions) | Quarters | % Change | ||||||||||||||||||||||||||||||||
Securities on Loan | 1Q16 | 2Q16 | 3Q16 | 4Q16 | 1Q17 | 2Q17 | 3Q17 | 3Q17 vs. 3Q16 | 3Q17 vs. 2Q17 | |||||||||||||||||||||||||
Average securities on loan | $ | 334 | $ | 348 | $ | 347 | $ | 353 | $ | 368 | $ | 384 | $ | 383 | 10.4 | % | (0.3 | )% | ||||||||||||||||
End-of-period securities on loan | 341 | 348 | 348 | 364 | 378 | 376 | 385 | 10.6 | 2.4 |
STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||
EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||
ASSETS UNDER CUSTODY AND ADMINISTRATION | ||||||||||||||||||||||||||||||||||
Quarters | % Change | |||||||||||||||||||||||||||||||||
(Dollars in billions) | 1Q16 | 2Q16 | 3Q16 | 4Q16 | 1Q17 | 2Q17 | 3Q17 | 3Q17 vs. 3Q16 | 3Q17 vs. 2Q17 | |||||||||||||||||||||||||
Assets Under Custody and Administration | ||||||||||||||||||||||||||||||||||
By Product Classification: | ||||||||||||||||||||||||||||||||||
Mutual funds | $ | 6,728 | $ | 6,734 | $ | 6,906 | $ | 6,841 | $ | 7,033 | $ | 7,123 | $ | 7,394 | 7.1 | % | 3.8 | % | ||||||||||||||||
Collective funds, including ETFs | 7,000 | 7,234 | 7,541 | 7,501 | 8,024 | 8,560 | 9,190 | 21.9 | 7.4 | |||||||||||||||||||||||||
Pension products | 5,197 | 5,496 | 5,671 | 5,584 | 5,775 | 5,937 | 6,571 | 15.9 | 10.7 | |||||||||||||||||||||||||
Insurance and other products | 8,018 | 8,322 | 9,060 | 8,845 | 9,001 | 9,417 | 8,955 | (1.2 | ) | (4.9 | ) | |||||||||||||||||||||||
Total Assets Under Custody and Administration | $ | 26,943 | $ | 27,786 | $ | 29,178 | $ | 28,771 | $ | 29,833 | $ | 31,037 | $ | 32,110 | 10.0 | 3.5 | ||||||||||||||||||
By Financial Instrument(1): | ||||||||||||||||||||||||||||||||||
Equities | $ | 14,718 | $ | 15,347 | $ | 16,400 | $ | 16,189 | $ | 17,041 | $ | 17,859 | $ | 18,423 | 12.3 | 3.2 | ||||||||||||||||||
Fixed-income | 8,914 | 9,143 | 9,500 | 9,231 | 9,300 | 9,560 | 9,883 | 4.0 | 3.4 | |||||||||||||||||||||||||
Short-term and other investments | 3,311 | 3,296 | 3,278 | 3,351 | 3,492 | 3,618 | 3,804 | 16.0 | 5.1 | |||||||||||||||||||||||||
Total Assets Under Custody and Administration | $ | 26,943 | $ | 27,786 | $ | 29,178 | $ | 28,771 | $ | 29,833 | $ | 31,037 | $ | 32,110 | 10.0 | 3.5 | ||||||||||||||||||
By Geographic Location(2): | ||||||||||||||||||||||||||||||||||
North America | $ | 20,505 | $ | 21,072 | $ | 21,561 | $ | 21,544 | $ | 22,361 | $ | 23,020 | $ | 23,675 | 9.8 | 2.8 | ||||||||||||||||||
Europe/Middle East/Africa | 5,159 | 5,356 | 6,107 | 5,734 | 5,979 | 6,464 | 6,806 | 11.4 | 5.3 | |||||||||||||||||||||||||
Asia/Pacific | 1,279 | 1,358 | 1,510 | 1,493 | 1,493 | 1,553 | 1,629 | 7.9 | 4.9 | |||||||||||||||||||||||||
Total Assets Under Custody and Administration | $ | 26,943 | $ | 27,786 | $ | 29,178 | $ | 28,771 | $ | 29,833 | $ | 31,037 | $ | 32,110 | 10.0 | 3.5 | ||||||||||||||||||
Assets Under Custody(3) | ||||||||||||||||||||||||||||||||||
By Product Classification: | ||||||||||||||||||||||||||||||||||
Mutual funds | $ | 6,363 | $ | 6,361 | $ | 6,461 | $ | 6,395 | $ | 6,499 | $ | 6,577 | $ | 6,818 | 5.5 | 3.7 | ||||||||||||||||||
Collective funds, including ETFs | 5,589 | 5,788 | 6,080 | 6,100 | 6,601 | 7,107 | 7,638 | 25.6 | 7.5 | |||||||||||||||||||||||||
Pension products | 4,673 | 4,947 | 5,107 | 5,039 | 5,212 | 5,399 | 5,480 | 7.3 | 1.5 | |||||||||||||||||||||||||
Insurance and other products | 4,163 | 4,258 | 4,262 | 4,191 | 4,193 | 4,279 | 4,304 | 1.0 | 0.6 | |||||||||||||||||||||||||
Total Assets Under Custody | $ | 20,788 | $ | 21,354 | $ | 21,910 | $ | 21,725 | $ | 22,505 | $ | 23,362 | $ | 24,240 | 10.6 | 3.8 | ||||||||||||||||||
By Geographic Location(2): | ||||||||||||||||||||||||||||||||||
North America | $ | 16,420 | $ | 16,756 | $ | 17,074 | $ | 17,083 | $ | 17,747 | $ | 18,223 | $ | 18,691 | 9.5 | 2.6 | ||||||||||||||||||
Europe/Middle East/Africa | 3,422 | 3,584 | 3,698 | 3,508 | 3,635 | 3,969 | 4,323 | 16.9 | 8.9 | |||||||||||||||||||||||||
Asia/Pacific | 946 | 1,014 | 1,138 | 1,134 | 1,123 | 1,170 | 1,226 | 7.7 | 4.8 | |||||||||||||||||||||||||
Total Assets Under Custody | $ | 20,788 | $ | 21,354 | $ | 21,910 | $ | 21,725 | $ | 22,505 | $ | 23,362 | $ | 24,240 | 10.6 | 3.8 | ||||||||||||||||||
(1) Certainly previously reported amounts have been reclassified to conform to current period presentation. | ||||||||||||||||||||||||||||||||||
(2) Geographic mix is based on the location at which the assets are serviced. | ||||||||||||||||||||||||||||||||||
(3) Assets under custody are a component of assets under custody and administration presented above. |
STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||
EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||
ASSETS UNDER MANAGEMENT | ||||||||||||||||||||||||||||||||||
Quarters | % Change | |||||||||||||||||||||||||||||||||
(Dollars in billions) | 1Q16 | 2Q16 | 3Q16 | 4Q16 | 1Q17 | 2Q17 | 3Q17 | 3Q17 vs. 3Q16 | 3Q17 vs. 2Q17 | |||||||||||||||||||||||||
Assets Under Management | ||||||||||||||||||||||||||||||||||
By Asset Class and Investment Approach: | ||||||||||||||||||||||||||||||||||
Equity: | ||||||||||||||||||||||||||||||||||
Active | $ | 32 | $ | 32 | $ | 70 | $ | 73 | $ | 77 | $ | 82 | $ | 95 | 35.7 | % | 15.9 | % | ||||||||||||||||
Passive | 1,295 | 1,275 | 1,340 | 1,401 | 1,482 | 1,512 | 1,545 | 15.3 | 2.2 | |||||||||||||||||||||||||
Total Equity | 1,327 | 1,307 | 1,410 | 1,474 | 1,559 | 1,594 | 1,640 | 16.3 | 2.9 | |||||||||||||||||||||||||
Fixed-Income: | ||||||||||||||||||||||||||||||||||
Active | 17 | 17 | 73 | 70 | 69 | 71 | 73 | — | 2.8 | |||||||||||||||||||||||||
Passive | 310 | 318 | 318 | 308 | 312 | 327 | 325 | 2.2 | (0.6 | ) | ||||||||||||||||||||||||
Total Fixed-Income | 327 | 335 | 391 | 378 | 381 | 398 | 398 | 1.8 | — | |||||||||||||||||||||||||
Cash(1) | 381 | 380 | 351 | 333 | 335 | 334 | 347 | (1.1 | ) | 3.9 | ||||||||||||||||||||||||
Multi-Asset-Class Solutions: | ||||||||||||||||||||||||||||||||||
Active | 17 | 17 | 19 | 19 | 19 | 18 | 18 | (5.3 | ) | — | ||||||||||||||||||||||||
Passive | 92 | 100 | 106 | 107 | 113 | 113 | 117 | 10.4 | 3.5 | |||||||||||||||||||||||||
Total Multi-Asset-Class Solutions | 109 | 117 | 125 | 126 | 132 | 131 | 135 | 8.0 | 3.1 | |||||||||||||||||||||||||
Alternative Investments(2): | ||||||||||||||||||||||||||||||||||
Active | 18 | 18 | 29 | 28 | 26 | 27 | 24 | (17.2 | ) | (11.1 | ) | |||||||||||||||||||||||
Passive | 134 | 144 | 140 | 129 | 128 | 122 | 129 | (7.9 | ) | 5.7 | ||||||||||||||||||||||||
Total Alternative Investments | 152 | 162 | 169 | 157 | 154 | 149 | 153 | (9.5 | ) | 2.7 | ||||||||||||||||||||||||
Total Assets Under Management | $ | 2,296 | $ | 2,301 | $ | 2,446 | $ | 2,468 | $ | 2,561 | $ | 2,606 | $ | 2,673 | 9.3 | 2.6 | ||||||||||||||||||
By Geographic Location(3): | ||||||||||||||||||||||||||||||||||
North America | $ | 1,491 | $ | 1,501 | $ | 1,641 | $ | 1,691 | $ | 1,772 | $ | 1,802 | $ | 1,845 | 12.4 | 2.4 | ||||||||||||||||||
Europe/Middle East/Africa | 496 | 492 | 495 | 482 | 486 | 496 | 510 | 3.0 | 2.8 | |||||||||||||||||||||||||
Asia/Pacific | 309 | 308 | 310 | 295 | 303 | 308 | 318 | 2.6 | 3.2 | |||||||||||||||||||||||||
Total Assets Under Management | $ | 2,296 | $ | 2,301 | $ | 2,446 | $ | 2,468 | $ | 2,561 | $ | 2,606 | $ | 2,673 | 9.3 | 2.6 | ||||||||||||||||||
(1) Includes both floating- and constant-net-asset-value portfolios held in commingled structures or separate accounts. | ||||||||||||||||||||||||||||||||||
(2) Includes real estate investment trusts, currency and commodities, including SPDR® Gold Fund and SPDR® Long Dollar Gold Trust Fund. State Street is not the investment manager for SPDR® Gold Fund and SPDR® Long Dollar Gold Trust Fund, but acts as marketing agent. | ||||||||||||||||||||||||||||||||||
(3) Geographic mix is based on client location or fund management location. | ||||||||||||||||||||||||||||||||||
Exchange-Traded Funds(1) | ||||||||||||||||||||||||||||||||||
By Asset Class: | ||||||||||||||||||||||||||||||||||
Alternative investments | $ | 45 | $ | 54 | $ | 54 | $ | 42 | $ | 46 | $ | 46 | $ | 48 | (11.1 | )% | 4.3 | % | ||||||||||||||||
Cash | 3 | 2 | 2 | 2 | 2 | 2 | 2 | — | — | |||||||||||||||||||||||||
Equity | 349 | 348 | 370 | 426 | 457 | 460 | 478 | 29.2 | 3.9 | |||||||||||||||||||||||||
Fixed-income | 46 | 48 | 52 | 51 | 53 | 58 | 61 | 17.3 | 5.2 | |||||||||||||||||||||||||
Total Exchange-Traded Funds | $ | 443 | $ | 452 | $ | 478 | $ | 521 | $ | 558 | $ | 566 | $ | 589 | 23.2 | 4.1 | ||||||||||||||||||
(1) Exchange-traded funds are a component of assets under management presented above. |
STATE STREET CORPORATION | |||||||||||||||||||||||||||||||||||||||||
EARNINGS RELEASE ADDENDUM | |||||||||||||||||||||||||||||||||||||||||
INVESTMENT PORTFOLIO HOLDINGS BY ASSET CLASS | |||||||||||||||||||||||||||||||||||||||||
September 30, 2017 | Ratings | ||||||||||||||||||||||||||||||||||||||||
(Dollars in billions, or where otherwise noted) | UST/AGY | AAA | AA | A | BBB | <BBB | NR | Book Value(1) | Book Value (% Total) | Net Unrealized After-tax MTM Gain/(Loss) (In millions)(2) | Fixed Rate/ Floating Rate | ||||||||||||||||||||||||||||||
Government & agency securities | 71 | % | 15 | % | 9 | % | 4 | % | 1 | % | — | % | — | % | $ | 25.2 | 27.2 | % | $ | 18 | 98% / 2% | ||||||||||||||||||||
Asset-backed securities | — | 68 | 21 | 2 | 6 | 3 | — | 22.7 | 24.5 | 72 | 4% / 96% | ||||||||||||||||||||||||||||||
Student loans | — | 33 | 43 | 3 | 15 | 6 | — | 7.9 | 34.8 | 15 | |||||||||||||||||||||||||||||||
Credit cards | — | 100 | — | — | — | — | — | 3.1 | 13.7 | (9 | ) | ||||||||||||||||||||||||||||||
Auto & equipment | — | 82 | 12 | 6 | — | — | — | 2.0 | 8.8 | 2 | |||||||||||||||||||||||||||||||
Non-U.S. residential mortgage backed securities | — | 84 | 11 | 3 | 1 | 1 | — | 8.0 | 35.2 | 58 | |||||||||||||||||||||||||||||||
Collateralized loan obligation | — | 100 | — | — | — | — | — | 1.3 | 5.7 | 5 | |||||||||||||||||||||||||||||||
Other | — | 29 | 71 | — | — | — | — | 0.4 | 1.8 | 1 | |||||||||||||||||||||||||||||||
Mortgage-backed securities | 96 | 3 | — | — | — | 1 | — | 22.0 | 23.7 | (100 | ) | 93% / 7% | |||||||||||||||||||||||||||||
Agency MBS | 100 | — | — | — | — | — | — | 21.1 | 95.9 | (118 | ) | ||||||||||||||||||||||||||||||
Non-Agency MBS | — | 71 | — | 1 | 5 | 21 | 2 | 0.9 | 4.1 | 18 | |||||||||||||||||||||||||||||||
CMBS | 56 | 44 | — | — | — | — | — | 4.2 | 4.5 | (9 | ) | 61% / 39% | |||||||||||||||||||||||||||||
Corporate bonds | — | — | 15 | 52 | 33 | — | — | 4.4 | 4.7 | 10 | 93% / 7% | ||||||||||||||||||||||||||||||
Covered bonds | — | 100 | — | — | — | — | — | 3.6 | 3.9 | 14 | 15% / 85% | ||||||||||||||||||||||||||||||
Municipal bonds | — | 32 | 63 | 4 | — | — | 1 | 7.8 | 8.4 | 156 | 100% / 0% | ||||||||||||||||||||||||||||||
Clipper tax-exempt bonds/other | — | 45 | 38 | 15 | 1 | — | 1 | 2.9 | 3.1 | 24 | 23% / 77% | ||||||||||||||||||||||||||||||
Total Portfolio | 45 | % | 31 | % | 15 | % | 5 | % | 3 | % | 1 | % | — | % | $ | 92.8 | 100.0 | % | $ | 185 | 67% / 33% | ||||||||||||||||||||
Book Value | $ | 41.5 | $ | 29.2 | $ | 13.6 | $ | 4.6 | $ | 3.0 | $ | 0.8 | $ | 0.1 | $ | 92.8 | |||||||||||||||||||||||||
(1) Portfolio amounts are expressed at book value; book value includes the amortized cost of transferred securities at the time they were transferred. | |||||||||||||||||||||||||||||||||||||||||
(2) At September 30, 2017 the after-tax unrealized MTM gain/(loss) includes after-tax unrealized gain on securities available-for-sale of $213 million, after-tax unrealized loss on securities held-to-maturity of $(8) million and after-tax unrealized loss primarily related to securities previously transferred from available-for-sale to held to maturity of $(20) million. |
STATE STREET CORPORATION | ||||||||||||||||||||||||||||||
EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||
INVESTMENT PORTFOLIO NON-U.S. INVESTMENTS | ||||||||||||||||||||||||||||||
September 30, 2017 | Book Value | |||||||||||||||||||||||||||||
(In billions) | Book Value | Average Rating | Gov't/Agency(1) | ABS FRMBS | ABS All Other | Corporate Bonds | Covered Bonds | Other | ||||||||||||||||||||||
United Kingdom | $ | 5.8 | AAA | $ | — | $ | 3.4 | $ | 1.5 | $ | 0.3 | $ | 0.6 | $ | — | |||||||||||||||
Australia | 4.7 | AAA | 0.7 | 2.2 | 0.3 | 0.2 | 0.6 | 0.7 | ||||||||||||||||||||||
Canada | 3.7 | AAA | 2.6 | — | — | 0.1 | 1.0 | — | ||||||||||||||||||||||
Netherlands | 1.7 | AAA | — | 1.3 | — | 0.3 | 0.1 | — | ||||||||||||||||||||||
France | 1.7 | AA | 0.8 | 0.1 | 0.2 | 0.3 | 0.3 | — | ||||||||||||||||||||||
Italy | 1.1 | AA | 0.2 | 0.6 | 0.3 | — | — | — | ||||||||||||||||||||||
Japan | 1.0 | A | 1.0 | — | — | — | — | — | ||||||||||||||||||||||
Belgium | 0.8 | AA | 0.5 | 0.1 | — | — | 0.2 | — | ||||||||||||||||||||||
Germany | 0.6 | AAA | 0.1 | — | 0.5 | — | — | — | ||||||||||||||||||||||
Hong Kong | 0.6 | AA | 0.6 | — | — | — | — | — | ||||||||||||||||||||||
Spain | 0.6 | AA | — | 0.3 | 0.3 | — | — | — | ||||||||||||||||||||||
Sweden | 0.5 | AA | — | — | — | 0.2 | 0.3 | — | ||||||||||||||||||||||
Norway | 0.4 | AAA | — | — | — | — | 0.4 | — | ||||||||||||||||||||||
Singapore | 0.4 | AAA | 0.4 | — | — | — | — | — | ||||||||||||||||||||||
Other | 0.6 | AA | 0.2 | 0.1 | 0.1 | 0.1 | 0.1 | — | ||||||||||||||||||||||
Total Non-U.S. Investments(2) | $ | 24.2 | $ | 7.1 | $ | 8.1 | $ | 3.2 | $ | 1.5 | $ | 3.6 | $ | 0.7 | ||||||||||||||||
U.S. Investments | 68.6 | |||||||||||||||||||||||||||||
Total Portfolio | $ | 92.8 | ||||||||||||||||||||||||||||
(1) Sovereign debt is reflected in the government agency column. | ||||||||||||||||||||||||||||||
(2) Country of collateral used except for corporates where country of issuer is used. |
STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||||||||||||||||||
RECONCILIATIONS OF OPERATING-BASIS (NON-GAAP) FINANCIAL INFORMATION | ||||||||||||||||||||||||||||||||||||||||||||||||||
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, as it believes that this presentation supports additional meaningful analysis and comparisons of trends with respect to State Street’s business operations from period to period, as well as information (such as capital ratios calculated under regulatory standards scheduled to be effective in the future or other standards) that management also uses in evaluating State Street’s business and activities. | ||||||||||||||||||||||||||||||||||||||||||||||||||
Our operating-basis financial results adjust our GAAP-basis financial results to both: (1) exclude the impact of revenue and expenses outside of State Street’s normal course of business, such as restructuring charges; and (2) present revenue from non-taxable sources, such as interest income from tax-exempt investment securities and processing fees and other revenue associated with tax-advantaged adjustments, on a fully taxable-equivalent basis. Management believes that operating-basis financial information facilitates an investor's further understanding and analysis of State Street's financial performance and trends, including providing additional insight into our underlying margin and profitability, in addition to financial information prepared and reported in conformity with GAAP. The tax-equivalent adjustments allow for more meaningful comparisons of yields and margins on assets and the evaluation of investment opportunities with different tax profiles. | ||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning with the first quarter of 2017, we are simplifying our operating-basis presentation of our financial results and will no longer exclude, as part of the non-ordinary course adjustment, the effects of gains/losses on sales of businesses or the discount accretion associated with former conduit securities. In the first and third quarters of 2017, operating-basis results included a pre-tax gain of approximately $30 million on the sale of our transfer agency joint venture interests and a pre-tax gain of approximately $26 million on the sale of an alternative trading system, respectively. In the first, second and third quarters of 2017, operating-basis results included $5 million, $6 million and $4 million, respectively, of discount accretion. These changes resulted in total increases in operating-basis revenue of $35 million, $6 million and $30 million in the first, second and third quarters of 2017, respectively, relative to our historical operating-basis presentation. Note that in the second quarter of 2016, operating-basis results excluded a pre-tax gain of approximately $53 million on the sale of the WM/Reuters business. We believe that these changes to our operating-basis presentation simplify the overall presentation of our financial results, making them easier to understand, while, overall, continuing to facilitate a useful and helpful additional understanding of our financial results. | ||||||||||||||||||||||||||||||||||||||||||||||||||
We also believe that the use of other non-GAAP financial measures in the calculation of identified capital ratios is useful to understanding State Street's capital position and is of interest to investors. Additionally, management may present revenue and expense measures on a constant currency (non-GAAP) basis to identify the significance of changes in foreign currency exchange rates (which often are variable) in period-to-period comparisons. This presentation represents the effects of applying prior period weighted average foreign currency exchange rates to current period results. | ||||||||||||||||||||||||||||||||||||||||||||||||||
We provide forward-looking financial estimates and expectations on an operating basis (non-GAAP) because information needed to provide corresponding GAAP-basis information is primarily dependent on future events or conditions that may be uncertain and are difficult to predict or estimate. Management is therefore, in general, unable to provide a reconciliation of our operating-basis forward-looking financial estimates and expectations to a GAAP-basis presentation. | ||||||||||||||||||||||||||||||||||||||||||||||||||
Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in conformity with GAAP. | ||||||||||||||||||||||||||||||||||||||||||||||||||
STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||||||||||||||||||
RECONCILIATIONS OF OPERATING-BASIS (NON-GAAP) FINANCIAL INFORMATION (Continued) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Quarters | % Change | Year-to-Date | % Change | |||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in millions, except per share amounts, or where otherwise noted) | 1Q16 | 2Q16 | 3Q16 | 4Q16 | 1Q17 | 2Q17 | 3Q17 | 3Q17 vs. 3Q16 | 3Q17 vs. 2Q17 | 3Q16 | 3Q17 | YTD 3Q17 vs. YTD 3Q16 | ||||||||||||||||||||||||||||||||||||||
Total Revenue(1)(2)(3): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total revenue, GAAP-basis | $ | 2,484 | $ | 2,573 | $ | 2,620 | $ | 2,530 | $ | 2,668 | $ | 2,810 | $ | 2,846 | 8.6 | % | 1.3 | % | $ | 7,677 | $ | 8,324 | 8.4 | % | ||||||||||||||||||||||||||
Adjustment to processing fees and other revenue (see below) | 63 | 34 | 134 | 186 | 70 | 89 | 79 | 231 | 238 | |||||||||||||||||||||||||||||||||||||||||
Adjustment to net interest income (see below) | 27 | 25 | — | 33 | 43 | 42 | 42 | 52 | 127 | |||||||||||||||||||||||||||||||||||||||||
Adjustment to servicing and management fee revenue (see below) | — | 43 | — | — | — | — | — | 43 | — | |||||||||||||||||||||||||||||||||||||||||
Total revenue, operating-basis | $ | 2,574 | $ | 2,675 | $ | 2,754 | $ | 2,749 | $ | 2,781 | $ | 2,941 | $ | 2,967 | 7.7 | 0.9 | $ | 8,003 | $ | 8,689 | 8.6 | |||||||||||||||||||||||||||||
Fee Revenue(1)(3): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total fee revenue, GAAP-basis | $ | 1,970 | $ | 2,053 | $ | 2,079 | $ | 2,014 | $ | 2,198 | $ | 2,235 | $ | 2,242 | 7.8 | 0.3 | $ | 6,102 | $ | 6,675 | 9.4 | |||||||||||||||||||||||||||||
Tax-equivalent adjustment associated with tax-advantaged investments | 63 | 87 | 134 | 186 | 70 | 89 | 79 | 284 | 238 | |||||||||||||||||||||||||||||||||||||||||
Gain on sale of WM/Reuters Business | — | (53 | ) | — | — | — | — | — | (53 | ) | — | |||||||||||||||||||||||||||||||||||||||
Expense billing matter, net | — | 43 | — | — | — | — | — | 43 | — | |||||||||||||||||||||||||||||||||||||||||
Total fee revenue, operating-basis | $ | 2,033 | $ | 2,130 | $ | 2,213 | $ | 2,200 | $ | 2,268 | $ | 2,324 | $ | 2,321 | 4.9 | (0.1 | ) | $ | 6,376 | $ | 6,913 | 8.4 | ||||||||||||||||||||||||||||
Servicing Fees: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total servicing fees, GAAP-basis | $ | 1,242 | $ | 1,239 | $ | 1,303 | $ | 1,289 | $ | 1,296 | $ | 1,339 | $ | 1,351 | 3.7 | 0.9 | $ | 3,784 | $ | 3,986 | 5.3 | |||||||||||||||||||||||||||||
Expense billing matter | — | 48 | — | — | — | — | — | 48 | — | |||||||||||||||||||||||||||||||||||||||||
Total servicing fees, operating-basis | $ | 1,242 | $ | 1,287 | $ | 1,303 | $ | 1,289 | $ | 1,296 | $ | 1,339 | $ | 1,351 | 3.7 | 0.9 | $ | 3,832 | $ | 3,986 | 4.0 | |||||||||||||||||||||||||||||
Management Fees: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total management fees, GAAP-basis | $ | 270 | $ | 293 | $ | 368 | $ | 361 | $ | 382 | $ | 397 | $ | 419 | 13.9 | 5.5 | $ | 931 | $ | 1,198 | 28.7 | |||||||||||||||||||||||||||||
Expense billing matter | — | (5 | ) | — | — | — | — | — | (5 | ) | — | |||||||||||||||||||||||||||||||||||||||
Total management fees, operating-basis | $ | 270 | $ | 288 | $ | 368 | $ | 361 | $ | 382 | $ | 397 | $ | 419 | 13.9 | 5.5 | $ | 926 | $ | 1,198 | 29.4 | |||||||||||||||||||||||||||||
Processing Fees and Other Revenue(1): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total processing fees and other revenue, GAAP-basis | $ | 52 | $ | 98 | $ | 5 | $ | (65 | ) | $ | 112 | $ | 31 | $ | 66 | nm | 112.9 | $ | 155 | $ | 209 | 34.8 | ||||||||||||||||||||||||||||
Tax-equivalent adjustment associated with tax-advantaged investments | 63 | 87 | 134 | 186 | 70 | 89 | 79 | 284 | 238 | |||||||||||||||||||||||||||||||||||||||||
Gain on sale of WM/Reuters Business | — | (53 | ) | — | — | — | — | — | (53 | ) | — | |||||||||||||||||||||||||||||||||||||||
Total processing fees and other revenue, operating-basis | $ | 115 | $ | 132 | $ | 139 | $ | 121 | $ | 182 | $ | 120 | $ | 145 | 4.3 | 20.8 | $ | 386 | $ | 447 | 15.8 | |||||||||||||||||||||||||||||
Net Interest Income & Net Interest Margin(2)(4): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest income, GAAP-basis | $ | 512 | $ | 521 | $ | 537 | $ | 514 | $ | 510 | $ | 575 | $ | 603 | 12.3 | % | 4.9 | % | $ | 1,570 | $ | 1,688 | 7.5 | % | ||||||||||||||||||||||||||
Tax-equivalent adjustment associated with tax-exempt investment securities | 42 | 40 | 42 | 43 | 43 | 42 | 42 | 124 | 127 | |||||||||||||||||||||||||||||||||||||||||
Net interest income, fully taxable-equivalent basis | $ | 554 | $ | 561 | $ | 579 | $ | 557 | $ | 553 | $ | 617 | $ | 645 | $ | 1,694 | $ | 1,815 | ||||||||||||||||||||||||||||||||
Average interest earning assets | 194,081 | 198,243 | 202,155 | 202,194 | 191,840 | 195,287 | 189,916 | 198,175 | 192,340 | |||||||||||||||||||||||||||||||||||||||||
Net interest margin, fully taxable-equivalent basis | 1.15 | % | 1.14 | % | 1.14 | % | 1.09 | % | 1.17 | % | 1.27 | % | 1.35 | % | 21 | bps | 8 | bps | 1.14 | % | 1.26 | % | 12 | bps | ||||||||||||||||||||||||||
Net interest income, fully taxable-equivalent basis | $ | 554 | $ | 561 | $ | 579 | $ | 557 | $ | 553 | $ | 617 | $ | 645 | $ | 1,694 | $ | 1,815 | ||||||||||||||||||||||||||||||||
Discount accretion associated with former conduit securities | (15 | ) | (15 | ) | (42 | ) | (10 | ) | — | — | — | (72 | ) | — | ||||||||||||||||||||||||||||||||||||
Net interest income, operating-basis | $ | 539 | $ | 546 | $ | 537 | $ | 547 | $ | 553 | $ | 617 | $ | 645 | 20.1 | % | 4.5 | % | $ | 1,622 | $ | 1,815 | 11.9 | % | ||||||||||||||||||||||||||
Average interest earning assets | 194,081 | 198,243 | 202,155 | 202,194 | 191,840 | 195,287 | 189,916 | 198,175 | 192,340 | |||||||||||||||||||||||||||||||||||||||||
Net interest margin, operating-basis | 1.12 | % | 1.11 | % | 1.06 | % | 1.08 | % | 1.17 | % | 1.27 | % | 1.35 | % | 29 | bps | 8 | bps | 1.09 | % | 1.26 | % | 17 | bps | ||||||||||||||||||||||||||
Effect of discount accretion | 0.03 | % | 0.03 | % | 0.08 | % | 0.01 | % | — | % | — | % | — | % | 0.05 | % | — | % | ||||||||||||||||||||||||||||||||
STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||||||||||||||||||
RECONCILIATIONS OF OPERATING-BASIS (NON-GAAP) FINANCIAL INFORMATION (Continued) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Quarters | % Change | Year-to-Date | % Change | |||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in millions, except per share amounts, or where otherwise noted) | 1Q16 | 2Q16 | 3Q16 | 4Q16 | 1Q17 | 2Q17 | 3Q17 | 3Q17 vs. 3Q16 | 3Q17 vs. 2Q17 | 3Q16 | 3Q17 | YTD 3Q17 vs. YTD 3Q16 | ||||||||||||||||||||||||||||||||||||||
Expenses(3): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total expenses, GAAP-basis | $ | 2,050 | $ | 1,860 | $ | 1,984 | $ | 2,183 | $ | 2,086 | $ | 2,031 | $ | 2,021 | 1.9 | % | (0.5 | )% | $ | 5,894 | $ | 6,138 | 4.1 | % | ||||||||||||||||||||||||||
Severance costs associated with staffing realignment | (3 | ) | 3 | 9 | 2 | — | — | — | 9 | — | ||||||||||||||||||||||||||||||||||||||||
Provisions for legal contingencies | — | — | (42 | ) | 1 | — | — | — | (42 | ) | — | |||||||||||||||||||||||||||||||||||||||
Expense billing matter, net | — | (15 | ) | — | — | — | — | — | (15 | ) | — | |||||||||||||||||||||||||||||||||||||||
Acquisition costs | (7 | ) | (7 | ) | (33 | ) | (22 | ) | (12 | ) | (9 | ) | — | (47 | ) | (21 | ) | |||||||||||||||||||||||||||||||||
Restructuring charges, net | (97 | ) | (13 | ) | (9 | ) | (21 | ) | (17 | ) | (62 | ) | (33 | ) | (119 | ) | (112 | ) | ||||||||||||||||||||||||||||||||
Total expenses, operating-basis | $ | 1,943 | $ | 1,828 | $ | 1,909 | $ | 2,143 | $ | 2,057 | $ | 1,960 | $ | 1,988 | 4.1 | 1.4 | $ | 5,680 | $ | 6,005 | 5.7 | |||||||||||||||||||||||||||||
Compensation and Employee Benefits Expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total compensation and employee benefits expenses, GAAP-basis | $ | 1,107 | $ | 989 | $ | 1,013 | $ | 1,244 | $ | 1,166 | $ | 1,071 | $ | 1,090 | 7.6 | 1.8 | $ | 3,109 | $ | 3,327 | 7.0 | |||||||||||||||||||||||||||||
Severance costs associated with staffing realignment | (3 | ) | 3 | 9 | 2 | — | — | — | 9 | — | ||||||||||||||||||||||||||||||||||||||||
Total compensation and employee benefits expenses, operating-basis | $ | 1,104 | $ | 992 | $ | 1,022 | $ | 1,246 | $ | 1,166 | $ | 1,071 | $ | 1,090 | 6.7 | 1.8 | $ | 3,118 | $ | 3,327 | 6.7 | |||||||||||||||||||||||||||||
Other Expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total other expenses, GAAP-basis | $ | 254 | $ | 269 | $ | 337 | $ | 310 | $ | 297 | $ | 283 | $ | 269 | (20.2 | ) | (4.9 | ) | $ | 860 | $ | 849 | (1.3 | ) | ||||||||||||||||||||||||||
Provisions for legal contingencies | — | — | (42 | ) | 1 | — | — | — | (42 | ) | — | |||||||||||||||||||||||||||||||||||||||
Expense billing matter, net | — | (15 | ) | — | — | — | — | — | (15 | ) | — | |||||||||||||||||||||||||||||||||||||||
Total other expenses, operating-basis | $ | 254 | $ | 254 | $ | 295 | $ | 311 | $ | 297 | $ | 283 | $ | 269 | (8.8 | ) | (4.9 | ) | $ | 803 | $ | 849 | 5.7 | |||||||||||||||||||||||||||
Income Before Income Tax Expense: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Income before income tax expense, GAAP-basis | $ | 430 | $ | 709 | $ | 636 | $ | 345 | $ | 584 | $ | 776 | $ | 822 | 29.2 | 5.9 | $ | 1,775 | $ | 2,182 | 22.9 | |||||||||||||||||||||||||||||
Net pre-tax effect of non-operating adjustments to revenue and expenses | 197 | 134 | 209 | 259 | 142 | 202 | 154 | 540 | 498 | |||||||||||||||||||||||||||||||||||||||||
Income before income tax expense, operating-basis | $ | 627 | $ | 843 | $ | 845 | $ | 604 | $ | 726 | $ | 978 | $ | 976 | 15.5 | (0.2 | ) | $ | 2,315 | $ | 2,680 | 15.8 | ||||||||||||||||||||||||||||
Pre-tax operating margin(5): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pre-tax operating margin, GAAP-basis | 17.3 | % | 27.6 | % | 24.3 | % | 13.6 | % | 21.9 | % | 27.6 | % | 28.9 | % | 460 | bps | 130 | bps | 23.1 | % | 26.2 | % | 310 | bps | ||||||||||||||||||||||||||
Net effect of non-operating adjustments | 7.1 | 3.9 | 6.4 | 8.4 | 4.2 | 5.7 | 4.0 | 5.8 | 4.6 | |||||||||||||||||||||||||||||||||||||||||
Pre-tax operating margin, operating-basis | 24.4 | % | 31.5 | % | 30.7 | % | 22.0 | % | 26.1 | % | 33.3 | % | 32.9 | % | 220 | bps | (40 | ) | bps | 28.9 | % | 30.8 | % | 190 | bps | |||||||||||||||||||||||||
Income Tax Expense: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax expense (benefit), GAAP-basis | $ | 62 | $ | 92 | $ | 72 | $ | (248 | ) | $ | 82 | $ | 156 | $ | 137 | 90.3 | % | (12.2 | )% | $ | 226 | $ | 375 | 65.9 | % | |||||||||||||||||||||||||
Aggregate tax-equivalent adjustments | 105 | 127 | 176 | 229 | 113 | 131 | 121 | 408 | 365 | 232 | ||||||||||||||||||||||||||||||||||||||||
Net tax effect of non-operating adjustments | 15 | 10 | 8 | 10 | 7 | 20 | 14 | 33 | 41 | 25 | ||||||||||||||||||||||||||||||||||||||||
Income tax expense (benefit), operating-basis | $ | 182 | $ | 229 | $ | 256 | $ | (9 | ) | $ | 202 | $ | 307 | $ | 272 | 6.3 | (11.4 | ) | $ | 667 | $ | 781 | 17.1 | |||||||||||||||||||||||||||
Effective Tax Rate: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Income before income tax expense, operating-basis | $ | 627 | $ | 843 | $ | 845 | $ | 604 | $ | 726 | $ | 978 | $ | 976 | 15.5 | % | (0.2 | )% | $ | 2,315 | $ | 2,680 | 15.8 | % | ||||||||||||||||||||||||||
Income tax expense, operating-basis | 182 | 229 | 256 | (9 | ) | 202 | 307 | 272 | 667 | 781 | ||||||||||||||||||||||||||||||||||||||||
Effective tax rate, operating-basis | 29.1 | % | 27.0 | % | 30.3 | % | (1.5 | )% | 27.8 | % | 31.4 | % | 27.9 | % | (240 | ) | bps | (350 | ) | bps | 28.8 | % | 29.1 | % | 30 | bps | ||||||||||||||||||||||||
STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||||||||||||||||||
RECONCILIATIONS OF OPERATING-BASIS (NON-GAAP) FINANCIAL INFORMATION (Continued) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Quarters | % Change | Year-to-Date | % Change | |||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in millions, except per share amounts, or where otherwise noted) | 1Q16 | 2Q16 | 3Q16 | 4Q16 | 1Q17 | 2Q17 | 3Q17 | 3Q17 vs. 3Q16 | 3Q17 vs. 2Q17 | 3Q16 | 3Q17 | YTD 3Q17 vs. YTD 3Q16 | ||||||||||||||||||||||||||||||||||||||
Net Income Available to Common Shareholders: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net income available to common shareholders, GAAP-basis | $ | 319 | $ | 585 | $ | 507 | $ | 557 | $ | 446 | $ | 584 | $ | 629 | 24.1 | % | 7.7 | % | $ | 1,411 | $ | 1,659 | 17.6 | % | ||||||||||||||||||||||||||
Net after-tax effect of non-operating adjustments to processing fees and other revenue, net interest income, expenses and income tax expense | 77 | (3 | ) | 25 | 20 | 22 | 51 | 19 | 99 | 92 | ||||||||||||||||||||||||||||||||||||||||
Net income available to common shareholders, operating-basis | $ | 396 | $ | 582 | $ | 532 | $ | 577 | $ | 468 | $ | 635 | $ | 648 | 21.8 | 2.0 | $ | 1,510 | $ | 1,751 | 16.0 | |||||||||||||||||||||||||||||
Diluted Earnings per Common Share(1)(2): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Diluted earnings per common share, GAAP-basis | $ | .79 | $ | 1.47 | $ | 1.29 | $ | 1.43 | $ | 1.15 | $ | 1.53 | $ | 1.66 | 28.7 | 8.5 | $ | 3.54 | $ | 4.35 | 22.9 | |||||||||||||||||||||||||||||
Severance costs associated with staffing realignment | .01 | (.01 | ) | (.01 | ) | — | — | — | — | (.01 | ) | — | ||||||||||||||||||||||||||||||||||||||
Provisions for legal contingencies | — | — | .11 | .02 | — | — | — | .11 | — | |||||||||||||||||||||||||||||||||||||||||
Expense billing matter, net | — | .10 | — | — | — | — | — | .10 | — | |||||||||||||||||||||||||||||||||||||||||
Acquisition costs | .01 | .01 | .05 | .03 | .02 | .02 | — | .07 | .03 | |||||||||||||||||||||||||||||||||||||||||
Restructuring charges, net | .15 | .02 | .01 | .02 | .03 | .11 | .06 | .18 | .20 | |||||||||||||||||||||||||||||||||||||||||
Effect on income tax of non-operating adjustments | .04 | (.01 | ) | (.03 | ) | (.01 | ) | .01 | .01 | (.01 | ) | .01 | .01 | |||||||||||||||||||||||||||||||||||||
Discount accretion associated with former conduit securities | (.02 | ) | (.02 | ) | (.07 | ) | (.01 | ) | — | — | — | (.11 | ) | — | ||||||||||||||||||||||||||||||||||||
Gain on sale of WM/Reuters Business | — | (.10 | ) | — | — | — | — | — | (.10 | ) | — | |||||||||||||||||||||||||||||||||||||||
Diluted earnings per common share, operating-basis | $ | .98 | $ | 1.46 | $ | 1.35 | $ | 1.48 | $ | 1.21 | $ | 1.67 | $ | 1.71 | 26.7 | 2.4 | $ | 3.79 | $ | 4.59 | 21.1 | |||||||||||||||||||||||||||||
Return on Average Common Equity(1)(2): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Return on average common equity, GAAP-basis | 6.8 | % | 12.4 | % | 10.6 | % | 12.1 | % | 9.9 | % | 12.6 | % | 13.0 | % | 240 | bps | 40 | bps | 9.9 | % | 11.9 | % | 200 | bps | ||||||||||||||||||||||||||
Severance costs associated with staffing realignment | — | (.1 | ) | (.1 | ) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Provisions for legal contingencies | — | — | .9 | .2 | — | — | — | .3 | — | |||||||||||||||||||||||||||||||||||||||||
Expense billing matter, net | — | .8 | — | — | — | — | — | .3 | — | |||||||||||||||||||||||||||||||||||||||||
Acquisition costs | .1 | .1 | .3 | .3 | .2 | .1 | — | .2 | .1 | |||||||||||||||||||||||||||||||||||||||||
Restructuring charges, net | 1.3 | .2 | .1 | .1 | .2 | .9 | .5 | .5 | .5 | |||||||||||||||||||||||||||||||||||||||||
Effect on income tax of non-operating adjustments | .4 | (.1 | ) | (.2 | ) | (.1 | ) | .1 | .1 | (.1 | ) | — | — | |||||||||||||||||||||||||||||||||||||
Discount accretion associated with former conduit securities | (.2 | ) | (.2 | ) | (.5 | ) | (.1 | ) | — | — | — | (.3 | ) | — | ||||||||||||||||||||||||||||||||||||
Gain on sale of WM/Reuters Business | — | (.8 | ) | — | — | — | — | — | (0.3 | ) | — | |||||||||||||||||||||||||||||||||||||||
Return on average common equity, operating-basis | 8.4 | % | 12.3 | % | 11.1 | % | 12.5 | % | 10.4 | % | 13.7 | % | 13.4 | % | 230 | bps | (30 | ) | bps | 10.6 | % | 12.5 | % | 190 | bps | |||||||||||||||||||||||||
Fee Operating Leverage, GAAP-Basis: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total fee revenue, GAAP-basis (as reconciled above) | $ | 1,970 | $ | 2,053 | $ | 2,079 | $ | 2,014 | $ | 2,198 | $ | 2,235 | $ | 2,242 | 7.84 | % | 0.31 | % | $ | 6,102 | $ | 6,675 | 9.39 | % | ||||||||||||||||||||||||||
Total expenses, GAAP-basis (as reconciled above) | 2,050 | 1,860 | 1,984 | 2,183 | 2,086 | 2,031 | 2,021 | 1.86 | (0.49 | ) | 5,894 | 6,138 | 4.14 | |||||||||||||||||||||||||||||||||||||
Fee operating leverage, GAAP-basis | 598 | bps | 80 | bps | 525 | bps | ||||||||||||||||||||||||||||||||||||||||||||
Fee Operating Leverage, Operating-Basis(1): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total fee revenue, operating-basis (as reconciled above) | $ | 2,033 | $ | 2,130 | $ | 2,213 | $ | 2,200 | $ | 2,268 | $ | 2,324 | $ | 2,321 | 4.88 | % | (0.13 | )% | $ | 6,376 | $ | 6,913 | 8.42 | % | ||||||||||||||||||||||||||
Total expenses, operating-basis (as reconciled above) | 1,943 | 1,828 | 1,909 | 2,143 | 2,057 | 1,960 | 1,988 | 4.14 | 1.43 | 5,680 | 6,005 | 5.72 | ||||||||||||||||||||||||||||||||||||||
Fee operating leverage, operating-basis | 74 | bps | (156 | ) | bps | 270 | bps | |||||||||||||||||||||||||||||||||||||||||||
STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||||||||||||||||||
RECONCILIATIONS OF OPERATING-BASIS (NON-GAAP) FINANCIAL INFORMATION (Continued) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Quarters | % Change | Year-to-Date | % Change | |||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in millions, except per share amounts, or where otherwise noted) | 1Q16 | 2Q16 | 3Q16 | 4Q16 | 1Q17 | 2Q17 | 3Q17 | 3Q17 vs. 3Q16 | 3Q17 vs. 2Q17 | 3Q16 | 3Q17 | YTD 3Q17 vs. YTD 3Q16 | ||||||||||||||||||||||||||||||||||||||
Operating Leverage, GAAP-Basis: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total revenue, GAAP-basis (as reconciled above) | $ | 2,484 | $ | 2,573 | $ | 2,620 | $ | 2,530 | $ | 2,668 | $ | 2,810 | $ | 2,846 | 8.63 | % | 1.28 | % | $ | 7,677 | $ | 8,324 | 8.43 | % | ||||||||||||||||||||||||||
Total expenses, GAAP-basis (as reconciled above) | 2,050 | 1,860 | 1,984 | 2,183 | 2,086 | 2,031 | 2,021 | 1.86 | (0.49 | ) | 5,894 | 6,138 | 4.14 | |||||||||||||||||||||||||||||||||||||
Operating leverage, GAAP-basis | 677 | bps | 177 | bps | 429 | bps | ||||||||||||||||||||||||||||||||||||||||||||
Operating Leverage, Operating-Basis(1)(2): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total revenue, operating-basis (as reconciled above) | $ | 2,574 | $ | 2,675 | $ | 2,754 | $ | 2,749 | $ | 2,781 | $ | 2,941 | $ | 2,967 | 7.73 | % | 0.88 | % | $ | 8,003 | $ | 8,689 | 8.57 | % | ||||||||||||||||||||||||||
Total expenses, operating-basis (as reconciled above) | 1,943 | 1,828 | 1,909 | 2,143 | 2,057 | 1,960 | 1,988 | 4.14 | 1.43 | 5,680 | 6,005 | 5.72 | ||||||||||||||||||||||||||||||||||||||
Operating leverage, operating-basis | 359 | bps | (55 | ) | bps | 285 | bps | |||||||||||||||||||||||||||||||||||||||||||
(1) The first and third quarters of 2017 GAAP and operating-basis results included a pre-tax gain of approximately $30 million on the sale of our transfer agency joint venture interests and a pre-tax gain of approximately $26 million on the sale of an alternative trading system, respectively, reflecting a change in our operating-basis presentation effective the first quarter of 2017 to include gains/losses on sales of businesses. In the second quarter of 2016, under our historical presentation, operating-basis results excluded a $53 million pre-tax gain on the sale of WM/Reuters business, and such results have not been revised. | ||||||||||||||||||||||||||||||||||||||||||||||||||
(2) Beginning in the first quarter of 2017, management no longer presents discount accretion associated with former conduit securities as an operating-basis adjustment. Therefore, the first, second and third quarters of 2017 GAAP and operating-basis results included $5 million, $6 million and $4 million, respectively, of discount accretion. In the first, second, third and fourth quarters of 2016, operating-basis net interest income excluded $15 million, $15 million, $42 million and $10 million of discount accretion, respectively, and such results have not been revised. | ||||||||||||||||||||||||||||||||||||||||||||||||||
(3) The impact of acquired operations on total revenue and fee revenue contributed approximately $65 million, $64 million, $71 million, and $72 million for the third and fourth quarters of 2016 and first and second quarters of 2017, respectively. The impact of acquired operations on expenses contributed approximately $57 million, $58 million, $51 million, and $51 million for the third and fourth quarters of 2016 and first and second quarters of 2017, respectively, excluding merger and integration charges and financing costs. | ||||||||||||||||||||||||||||||||||||||||||||||||||
(4) Fully taxable-equivalent net interest margin for the periods presented above represented fully taxable-equivalent net interest income composed of GAAP-basis net interest income plus tax-equivalent adjustments, on an annualized basis, as a percentage of average total interest-earning assets for the quarters presented. | ||||||||||||||||||||||||||||||||||||||||||||||||||
(5) Pre-tax operating margin was calculated by dividing income before income tax expense by total revenue. |
STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||
EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||
RECONCILIATION OF CONSTANT CURRENCY FX IMPACTS | ||||||||||||||||||||||||||||||||||
GAAP-Basis Quarter Comparison | Reported | Currency Translation Impact | Excluding Currency Impact | % Change Constant Currency | ||||||||||||||||||||||||||||||
(Dollars in millions) | 3Q16 | 2Q17 | 3Q17 | 3Q17 vs. 3Q16 | 3Q17 vs. 2Q17 | 3Q17 vs. 3Q16 | 3Q17 vs. 2Q17 | 3Q17 vs. 3Q16 | 3Q17 vs. 2Q17 | |||||||||||||||||||||||||
Fee revenue: | ||||||||||||||||||||||||||||||||||
Servicing fees | $ | 1,303 | $ | 1,339 | $ | 1,351 | $ | 19 | $ | 25 | $ | 1,332 | $ | 1,326 | 2.2 | % | (1.0 | )% | ||||||||||||||||
Management fees | 368 | 397 | 419 | 1 | 3 | 418 | 416 | 13.6 | 4.8 | |||||||||||||||||||||||||
Trading services | 267 | 289 | 259 | 1 | 2 | 258 | 257 | (3.4 | ) | (11.1 | ) | |||||||||||||||||||||||
Securities finance | 136 | 179 | 147 | — | — | 147 | 147 | 8.1 | (17.9 | ) | ||||||||||||||||||||||||
Processing fees and other | 5 | 31 | 66 | 3 | 2 | 63 | 64 | nm | 106.5 | |||||||||||||||||||||||||
Total fee revenue | 2,079 | 2,235 | 2,242 | 24 | 32 | 2,218 | 2,210 | 6.7 | (1.1 | ) | ||||||||||||||||||||||||
Net interest income | 537 | 575 | 603 | 3 | 4 | 600 | 599 | 11.7 | 4.2 | |||||||||||||||||||||||||
Gains (losses) related to investment securities, net | 4 | — | 1 | — | — | 1 | 1 | nm | nm | |||||||||||||||||||||||||
Total revenue | $ | 2,620 | $ | 2,810 | $ | 2,846 | $ | 27 | $ | 36 | $ | 2,819 | $ | 2,810 | 7.6 | — | ||||||||||||||||||
Expenses: | ||||||||||||||||||||||||||||||||||
Compensation and employee benefits | $ | 1,013 | $ | 1,071 | $ | 1,090 | $ | 9 | $ | 15 | $ | 1,081 | $ | 1,075 | 6.7 | 0.4 | ||||||||||||||||||
Information systems and communications | 285 | 283 | 296 | 1 | 1 | 295 | 295 | 3.5 | 4.2 | |||||||||||||||||||||||||
Transaction processing services | 200 | 207 | 215 | 1 | 2 | 214 | 213 | 7.0 | 2.9 | |||||||||||||||||||||||||
Occupancy | 107 | 116 | 118 | 1 | 2 | 117 | 116 | 9.3 | — | |||||||||||||||||||||||||
Acquisition and restructuring costs | 42 | 71 | 33 | — | 1 | 33 | 32 | (21.4 | ) | (54.9 | ) | |||||||||||||||||||||||
Other | 337 | 283 | 269 | 3 | 4 | 266 | 265 | (21.1 | ) | (6.4 | ) | |||||||||||||||||||||||
Total expenses | $ | 1,984 | $ | 2,031 | $ | 2,021 | $ | 15 | $ | 25 | $ | 2,006 | $ | 1,996 | 1.1 | (1.7 | ) |
GAAP-Basis YTD Comparison | Reported | Currency Translation Impact | Excluding Currency Impact | % Change Constant Currency | |||||||||||||||
(Dollars in millions) | 2016 | 2017 | YTD 2017 vs. YTD 2016 | 2017 | YTD 2017 vs. YTD 2016 | ||||||||||||||
Fee revenue: | |||||||||||||||||||
Servicing fees | $ | 3,784 | $ | 3,986 | $ | (6 | ) | $ | 3,992 | 5.5 | % | ||||||||
Management fees | 931 | 1,198 | (6 | ) | 1,204 | 29.3 | |||||||||||||
Trading services | 806 | 823 | (3 | ) | 826 | 2.5 | |||||||||||||
Securities finance | 426 | 459 | (1 | ) | 460 | 8.0 | |||||||||||||
Processing fees and other | 155 | 209 | — | 209 | 34.8 | ||||||||||||||
Total fee revenue | 6,102 | 6,675 | (16 | ) | 6,691 | 9.7 | |||||||||||||
Net interest income | 1,570 | 1,688 | (12 | ) | 1,700 | 8.3 | |||||||||||||
Gains (losses) related to investment securities, net | 5 | (39 | ) | — | (39 | ) | nm | ||||||||||||
Total revenue | $ | 7,677 | $ | 8,324 | $ | (28 | ) | $ | 8,352 | 8.8 | |||||||||
Expenses: | |||||||||||||||||||
Compensation and employee benefits | $ | 3,109 | $ | 3,327 | $ | (18 | ) | $ | 3,345 | 7.6 | |||||||||
Information systems and communications | 827 | 866 | (2 | ) | 868 | 5.0 | |||||||||||||
Transaction processing services | 601 | 619 | (3 | ) | 622 | 3.5 | |||||||||||||
Occupancy | 331 | 344 | (3 | ) | 347 | 4.8 | |||||||||||||
Acquisition and restructuring costs | 166 | 133 | — | 133 | (19.9 | ) | |||||||||||||
Other | 860 | 982 | (3 | ) | 852 | (0.9 | ) | ||||||||||||
Total expenses | $ | 5,894 | $ | 6,138 | $ | (29 | ) | $ | 6,167 | 4.6 | |||||||||
nm Not meaningful |
STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||
EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||
RECONCILIATION OF CONSTANT CURRENCY FX IMPACTS (Continued) | ||||||||||||||||||||||||||||||||||
Operating-Basis Quarter Comparison | Reported | Currency Translation Impact | Excluding Currency Impact | % Change Constant Currency | ||||||||||||||||||||||||||||||
(Dollars in millions) | 3Q16 | 2Q17 | 3Q17 | 3Q17 vs. 3Q16 | 3Q17 vs. 2Q17 | 3Q17 vs. 3Q16 | 3Q17 vs. 2Q17 | 3Q17 vs. 3Q16 | 3Q17 vs. 2Q17 | |||||||||||||||||||||||||
Fee revenue: | ||||||||||||||||||||||||||||||||||
Servicing fees | $ | 1,303 | $ | 1,339 | $ | 1,351 | $ | 19 | $ | 25 | $ | 1,332 | $ | 1,326 | 2.2 | % | (1.0 | )% | ||||||||||||||||
Management fees | 368 | 397 | 419 | 1 | 3 | 418 | 416 | 13.6 | 4.8 | |||||||||||||||||||||||||
Trading services | 267 | 289 | 259 | 1 | 2 | 258 | 257 | (3.4 | ) | (11.1 | ) | |||||||||||||||||||||||
Securities finance | 136 | 179 | 147 | — | — | 147 | 147 | 8.1 | (17.9 | ) | ||||||||||||||||||||||||
Processing fees and other | 139 | 120 | 145 | 3 | 2 | 142 | 143 | 2.2 | 19.2 | |||||||||||||||||||||||||
Total fee revenue | 2,213 | 2,324 | 2,321 | 24 | 32 | 2,297 | 2,289 | 3.8 | (1.5 | ) | ||||||||||||||||||||||||
Net interest income | 537 | 617 | 645 | 3 | 4 | 642 | 641 | 19.6 | 3.9 | |||||||||||||||||||||||||
Gains (losses) related to investment securities, net | 4 | — | 1 | — | — | 1 | 1 | nm | nm | |||||||||||||||||||||||||
Total revenue | $ | 2,754 | $ | 2,941 | $ | 2,967 | $ | 27 | $ | 36 | $ | 2,940 | $ | 2,931 | 6.8 | (0.3 | ) | |||||||||||||||||
Expenses: | ||||||||||||||||||||||||||||||||||
Compensation and employee benefits | $ | 1,022 | $ | 1,071 | $ | 1,090 | $ | 9 | $ | 15 | $ | 1,081 | $ | 1,075 | 5.8 | 0.4 | ||||||||||||||||||
Information systems and communications | 285 | 283 | 296 | 1 | 1 | 295 | 295 | 3.5 | 4.2 | |||||||||||||||||||||||||
Transaction processing services | 200 | 207 | 215 | 1 | 2 | 214 | 213 | 7.0 | 2.9 | |||||||||||||||||||||||||
Occupancy | 107 | 116 | 118 | 1 | 2 | 117 | 116 | 9.3 | — | |||||||||||||||||||||||||
Other | 295 | 283 | 269 | 3 | 4 | 266 | 265 | (9.8 | ) | (6.4 | ) | |||||||||||||||||||||||
Total expenses | $ | 1,909 | $ | 1,960 | $ | 1,988 | $ | 15 | $ | 24 | $ | 1,973 | $ | 1,964 | 3.4 | 0.2 |
Operating-Basis YTD Comparison | Reported | Currency Translation Impact | Excluding Currency Impact | % Change Constant Currency | |||||||||||||||
(Dollars in millions) | 2016 | 2017 | YTD 2017 vs. YTD 2016 | 2017 | YTD 2017 vs. YTD 2016 | ||||||||||||||
Fee revenue: | |||||||||||||||||||
Servicing fees | $ | 3,832 | $ | 3,986 | $ | (6 | ) | $ | 3,992 | 4.2 | % | ||||||||
Management fees | 926 | 1,198 | (6 | ) | 1,204 | 30.0 | |||||||||||||
Trading services | 806 | 823 | (3 | ) | 826 | 2.5 | |||||||||||||
Securities finance | 426 | 459 | (1 | ) | 460 | 8.0 | |||||||||||||
Processing fees and other | 386 | 447 | — | 447 | 15.8 | ||||||||||||||
Total fee revenue | 6,376 | 6,913 | (16 | ) | 6,929 | 8.7 | |||||||||||||
Net interest income | 1,622 | 1,815 | (12 | ) | 1,827 | 12.6 | |||||||||||||
Gains (losses) related to investment securities, net | 5 | (39 | ) | — | (39 | ) | nm | ||||||||||||
Total revenue | $ | 8,003 | $ | 8,689 | $ | (28 | ) | $ | 8,717 | 8.9 | |||||||||
Expenses: | |||||||||||||||||||
Compensation and employee benefits | $ | 3,118 | $ | 3,327 | $ | (18 | ) | $ | 3,345 | 7.3 | |||||||||
Information systems and communications | 827 | 866 | (2 | ) | 868 | 5.0 | |||||||||||||
Transaction processing services | 601 | 619 | (3 | ) | 622 | 3.5 | |||||||||||||
Occupancy | 331 | 344 | (3 | ) | 347 | 4.8 | |||||||||||||
Other | 803 | 849 | (3 | ) | 852 | 6.1 | |||||||||||||
Total expenses | $ | 5,680 | $ | 6,005 | $ | (29 | ) | $ | 6,034 | 6.2 | |||||||||
nm Not meaningful |
STATE STREET CORPORATION |
EARNINGS RELEASE ADDENDUM |
REGULATORY CAPITAL |
The accompanying materials present capital ratios in addition to, or adjusted from, those calculated in conformity with applicable regulatory requirements. These include capital ratios based on tangible common equity, as well as capital ratios adjusted to reflect our estimate of the impact of the relevant Basel III requirements, as specified in the July 2013 final rule issued by the Board of Governors of the Federal Reserve System, referred to as the Basel III final rule. These non-regulatory and adjusted capital measures are non-GAAP financial measures. Management currently calculates the non-GAAP capital ratios presented in the news release to aid in its understanding of State Street’s capital position under a variety of standards, including currently applicable and transitioning regulatory requirements. Management believes that the use of the non-GAAP capital ratios presented in the accompanying materials similarly aids in an investor's understanding of State Street's capital position and therefore is of interest to investors. |
The common equity tier 1 risk-based capital, or CET1, tier 1 risk-based capital, total risk-based capital and tier 1 leverage ratios have each been calculated in conformity with applicable regulatory requirements as of the dates that each was first publicly disclosed. The capital component, or numerator, of these ratios was calculated in conformity with the provisions of the Basel III final rule. For the periods below the total risk-weighted assets component, or denominator, used in the calculation of the CET1, tier 1 risk-based capital and total risk-based capital ratios were each calculated in conformity with the advanced approaches and standardized approach provisions of Basel III, as the case may be. |
The advanced approaches-based ratios (actual and estimated) included in this presentation reflect calculations and determinations with respect to our capital and related matters, based on State Street and external data, quantitative formula, 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 ratio’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, individually or collectively, precisely 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 that 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. |
The tangible common equity, or TCE, ratio is an additional capital ratio that management believes provides context useful in understanding and assessing State Street's capital adequacy. The TCE ratio is calculated by dividing consolidated total common shareholders’ equity by consolidated total assets, after reducing both amounts by goodwill and other intangible assets net of related deferred taxes. Total assets reflected in the TCE ratio also exclude cash balances on deposit at the Federal Reserve Bank and other central banks in excess of required reserves. The TCE ratio is not required by GAAP or by banking regulations, but is a metric used by management to evaluate the adequacy of State Street’s capital levels. Since there is no authoritative requirement to calculate the TCE ratio, our TCE ratio is not necessarily comparable to similar capital measures disclosed or used by other companies in the financial services industry. Tangible common equity and adjusted tangible assets are non-GAAP financial measures and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP or other applicable requirements. Reconciliations with respect to the calculation of the TCE ratios are provided within the Reconciliation of Tangible Common Equity Ratio within this package. |
The following table presents State Street's regulatory capital ratios and underlying components, calculated in conformity with applicable regulatory requirements as described above. |
Quarters | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1Q16 | 2Q16 | 3Q16 | 4Q16 | 1Q17 | 2Q17 | 3Q17 | ||||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in millions) | Basel III Advanced Approaches(1) | Basel III Standardized Approach(2) | Basel III Advanced Approaches(1) | Basel III Standardized Approach(2) | Basel III Advanced Approaches(1) | Basel III Standardized Approach(2) | Basel III Advanced Approaches(1) | Basel III Standardized Approach(2) | Basel III Advanced Approaches(1) | Basel III Standardized Approach(2) | Basel III Advanced Approaches(1) | Basel III Standardized Approach(2) | Basel III Advanced Approaches(1) | Basel III Standardized Approach(2) | ||||||||||||||||||||||||||||||||||||||||||
RATIOS: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common equity tier 1 capital | 12.3 | % | 12.5 | % | 12.0 | % | 12.0 | % | 12.3 | % | 12.5 | % | 11.7 | % | 11.6 | % | 11.2 | % | 11.5 | % | 12.0 | % | 11.2 | % | 12.6 | % | 11.6 | % | ||||||||||||||||||||||||||||
Tier 1 capital | 14.9 | 15.1 | 15.0 | 15.0 | 15.4 | 15.7 | 14.8 | 14.7 | 14.4 | 14.7 | 15.1 | 14.2 | 15.7 | 14.5 | ||||||||||||||||||||||||||||||||||||||||||
Total capital | 17.1 | 17.3 | 17.1 | 17.1 | 17.6 | 17.9 | 16.0 | 16.0 | 15.4 | 15.9 | 16.2 | 15.2 | 16.8 | 15.6 | ||||||||||||||||||||||||||||||||||||||||||
Tier 1 leverage | 6.9 | 6.9 | 7.0 | 7.0 | 6.8 | 6.8 | 6.5 | 6.5 | 6.8 | 6.8 | 7.0 | 7.0 | 7.4 | 7.4 | ||||||||||||||||||||||||||||||||||||||||||
Supporting Calculations: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common equity tier 1 capital | $ | 12,404 | $ | 12,404 | $ | 12,518 | $ | 12,518 | $ | 12,269 | $ | 12,269 | $ | 11,624 | $ | 11,624 | $ | 11,319 | $ | 11,319 | $ | 12,007 | $ | 12,007 | $ | 12,439 | $ | 12,439 | ||||||||||||||||||||||||||||
Total risk-weighted assets | 100,633 | 99,617 | 104,012 | 104,492 | 99,736 | 98,374 | 99,301 | 99,876 | 100,843 | 98,494 | 100,265 | 107,069 | 99,099 | 107,370 | ||||||||||||||||||||||||||||||||||||||||||
Common equity tier 1 risk-based capital | 12.3 | % | 12.5 | % | 12.0 | % | 12.0 | % | 12.3 | % | 12.5 | % | 11.7 | % | 11.6 | % | 11.2 | % | 11.5 | % | 12.0 | % | 11.2 | % | 12.6 | % | 11.6 | % | ||||||||||||||||||||||||||||
Tier 1 capital | $ | 15,032 | $ | 15,032 | $ | 15,642 | $ | 15,642 | $ | 15,407 | $ | 15,407 | $ | 14,717 | $ | 14,717 | $ | 14,475 | $ | 14,475 | $ | 15,165 | $ | 15,165 | $ | 15,606 | $ | 15,606 | ||||||||||||||||||||||||||||
Total risk-weighted assets | 100,633 | 99,617 | 104,012 | 104,492 | 99,736 | 98,374 | 99,301 | 99,876 | 100,843 | 98,494 | 100,265 | 107,069 | 99,099 | 107,370 | ||||||||||||||||||||||||||||||||||||||||||
Tier 1 risk-based capital ratio | 14.9 | % | 15.1 | % | 15.0 | % | 15.0 | % | 15.4 | % | 15.7 | % | 14.8 | % | 14.7 | % | 14.4 | % | 14.7 | % | 15.1 | % | 14.2 | % | 15.7 | % | 14.5 | % | ||||||||||||||||||||||||||||
Total capital | $ | 17,191 | $ | 17,248 | $ | 17,794 | $ | 17,869 | $ | 17,560 | $ | 17,632 | $ | 15,909 | $ | 15,967 | $ | 15,542 | $ | 15,617 | $ | 16,243 | $ | 16,314 | $ | 16,684 | $ | 16,758 | ||||||||||||||||||||||||||||
Total risk-weighted assets | 100,633 | 99,617 | 104,012 | 104,492 | 99,736 | 98,374 | 99,301 | 99,876 | 100,843 | 98,494 | 100,265 | 107,069 | 99,099 | 107,370 | ||||||||||||||||||||||||||||||||||||||||||
Total risk-based capital ratio | 17.1 | % | 17.3 | % | 17.1 | % | 17.1 | % | 17.6 | % | 17.9 | % | 16.0 | % | 16.0 | % | 15.4 | % | 15.9 | % | 16.2 | % | 15.2 | % | 16.8 | % | 15.6 | % | ||||||||||||||||||||||||||||
Tier 1 capital | $ | 15,032 | $ | 15,032 | $ | 15,642 | $ | 15,642 | $ | 15,407 | $ | 15,407 | $ | 14,717 | $ | 14,717 | $ | 14,475 | $ | 14,475 | $ | 15,165 | $ | 15,165 | $ | 15,606 | $ | 15,606 | ||||||||||||||||||||||||||||
Adjusted quarterly average assets | 217,029 | 217,029 | 222,666 | 222,666 | 226,093 | 226,093 | 226,310 | 226,310 | 212,361 | 212,361 | 216,940 | 216,940 | 211,396 | 211,396 | ||||||||||||||||||||||||||||||||||||||||||
Tier 1 leverage ratio | 6.9 | % | 6.9 | % | 7.0 | % | 7.0 | % | 6.8 | % | 6.8 | % | 6.5 | % | 6.5 | % | 6.8 | % | 6.8 | % | 7.0 | % | 7.0 | % | 7.4 | % | 7.4 | % | ||||||||||||||||||||||||||||
(1) CET1, tier 1 capital, total capital and tier 1 leverage ratios for each period above were calculated in conformity with the advanced approaches provisions of the Basel III final rule. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) CET1, tier 1 capital, total capital, and tier 1 leverage ratios for each period above were calculated in conformity with the standardized approach provisions of the Basel III final rule. |
STATE STREET CORPORATION | ||||||||||||||||||||||||||||
EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||
RECONCILIATION OF TANGIBLE COMMON EQUITY RATIO | ||||||||||||||||||||||||||||
The following table presents the calculation of State Street's ratios of tangible common equity to total tangible assets. | ||||||||||||||||||||||||||||
Quarters | ||||||||||||||||||||||||||||
(Dollars in millions) | 1Q16 | 2Q16 | 3Q16 | 4Q16 | 1Q17 | 2Q17 | 3Q17 | |||||||||||||||||||||
Consolidated total assets | $ | 243,685 | $ | 255,386 | $ | 256,140 | $ | 242,698 | $ | 236,802 | $ | 238,274 | $ | 235,986 | ||||||||||||||
Less: | ||||||||||||||||||||||||||||
Goodwill | 5,733 | 5,671 | 5,911 | 5,814 | 5,855 | 5,945 | 5,997 | |||||||||||||||||||||
Other intangible assets | 1,749 | 1,682 | 1,849 | 1,750 | 1,710 | 1,693 | 1,658 | |||||||||||||||||||||
Cash balances held at central banks in excess of required reserves | 58,639 | 67,710 | 67,571 | 62,037 | 59,780 | 56,326 | 51,965 | |||||||||||||||||||||
Adjusted assets | 177,564 | 180,323 | 180,809 | 173,097 | 169,457 | 174,310 | 176,366 | |||||||||||||||||||||
Plus related deferred tax liabilities | 698 | 688 | 685 | 655 | 649 | 651 | 647 | |||||||||||||||||||||
Total tangible assets | A | $ | 178,262 | $ | 181,011 | $ | 181,494 | $ | 173,752 | $ | 170,106 | $ | 174,961 | $ | 177,013 | |||||||||||||
Consolidated total common shareholders' equity | $ | 18,793 | $ | 18,877 | $ | 18,954 | $ | 18,023 | $ | 18,098 | $ | 18,872 | $ | 19,301 | ||||||||||||||
Less: | ||||||||||||||||||||||||||||
Goodwill | 5,733 | 5,671 | 5,911 | 5,814 | 5,855 | 5,945 | 5,997 | |||||||||||||||||||||
Other intangible assets | 1,749 | 1,682 | 1,849 | 1,750 | 1,710 | 1,693 | 1,658 | |||||||||||||||||||||
Adjusted equity | 11,311 | 11,524 | 11,194 | 10,459 | 10,533 | 11,234 | 11,646 | |||||||||||||||||||||
Plus related deferred tax liabilities | 698 | 688 | 685 | 655 | 649 | 651 | 647 | |||||||||||||||||||||
Total tangible common equity | B | $ | 12,009 | $ | 12,212 | $ | 11,879 | $ | 11,114 | $ | 11,182 | $ | 11,885 | $ | 12,293 | |||||||||||||
Tangible common equity ratio | B/A | 6.7 | % | 6.7 | % | 6.5 | % | 6.4 | % | 6.6 | % | 6.8 | % | 6.9 | % | |||||||||||||
GAAP Basis: | ||||||||||||||||||||||||||||
Year-to-date annualized net income available to common shareholders | $ | 319 | $ | 585 | $ | 507 | $ | 557 | $ | 446 | $ | 584 | $ | 629 | ||||||||||||||
Return on tangible common equity | 10.6 | % | 14.8 | % | 15.8 | % | 17.7 | % | 16.0 | % | 17.3 | % | 18.0 | % | ||||||||||||||
Operating Basis: | ||||||||||||||||||||||||||||
Year-to-date annualized net income available to common shareholders | $ | 396 | $ | 582 | $ | 532 | $ | 577 | $ | 468 | $ | 635 | $ | 648 | ||||||||||||||
Return on tangible common equity(1) | 13.2 | % | 16.0 | % | 16.9 | % | 18.8 | % | 16.7 | % | 18.6 | % | 19.0 | % | ||||||||||||||
(1) This ratio is dividing annualized net income available to common shareholders on an operating basis by the tangible equity calculated on a GAAP basis. | ||||||||||||||||||||||||||||
STATE STREET CORPORATION | ||||||||||||||||||||||||
EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||
RECONCILIATION OF FULLY PHASED-IN CAPITAL RATIOS | ||||||||||||||||||||||||
Fully phased-in pro-forma estimates of common equity tier 1 capital include 100% of the accumulated other comprehensive income component of common shareholder’s equity, including accumulated other comprehensive income attributable to available-for-sale securities, cash flow hedges and defined benefit pension plans, as well as 100% of applicable deductions, including but not limited to, intangible assets net of deferred tax liabilities. Fully phased-in pro-forma estimates of tier 1 and total capital both reflect the transition of trust preferred capital securities from tier 1 capital to total capital. For both Basel III advanced and standardized approaches, fully phased-in pro-forma estimates of risk-weighted assets reflect the exclusion of intangible assets, offset by additions related to non-significant equity exposures and deferred tax assets related to temporary differences. All fully phased-in ratios are preliminary estimates, based on our interpretations of the Basel III final rule as of the date each such ratio was first announced publicly and as applied to our businesses and operations as of the date of such ratio. | ||||||||||||||||||||||||
The following tables reconcile our fully phased-in estimated pro-forma common equity tier 1 capital, tier 1 capital, total capital and tier 1 leverage ratios, calculated in conformity with the Basel III final rule, as of the dates indicated, to those same ratios calculated in conformity with the applicable regulatory requirements as of such dates. | ||||||||||||||||||||||||
As of September 30, 2017 (Dollars in millions) | Basel III Advanced Approaches | Phase-In Provisions | Basel III Advanced Approaches Fully Phased-In Pro-Forma Estimate | Basel III Standardized Approach | Phase-In Provisions | Basel III Standardized Approach Fully Phased-In Pro-Forma Estimate | ||||||||||||||||||
Common equity tier 1 capital | $ | 12,439 | $ | (297 | ) | $ | 12,142 | $ | 12,439 | $ | (297 | ) | $ | 12,142 | ||||||||||
Tier 1 capital | 15,606 | (267 | ) | 15,339 | 15,606 | (267 | ) | 15,339 | ||||||||||||||||
Total capital | 16,684 | (267 | ) | 16,417 | 16,758 | (267 | ) | 16,491 | ||||||||||||||||
Risk weighted assets | 99,099 | (58 | ) | 99,041 | 107,370 | (54 | ) | 107,316 | ||||||||||||||||
Adjusted quarterly average assets | 211,396 | (184 | ) | 211,212 | 211,396 | (184 | ) | 211,212 | ||||||||||||||||
Capital ratios: | ||||||||||||||||||||||||
Common equity tier 1 capital | 12.6 | % | 12.3 | % | 11.6 | % | 11.3 | % | ||||||||||||||||
Tier 1 capital | 15.7 | 15.5 | 14.5 | 14.3 | ||||||||||||||||||||
Total capital | 16.8 | 16.6 | 15.6 | 15.4 | ||||||||||||||||||||
Tier 1 leverage | 7.4 | 7.3 | 7.4 | 7.3 | ||||||||||||||||||||
As of June 30, 2017 (Dollars in millions) | Basel III Advanced Approaches | Phase-In Provisions | Basel III Advanced Approaches Fully Phased-In Pro-Forma Estimate | Basel III Standardized Approach | Phase-In Provisions | Basel III Standardized Approach Fully Phased-In Pro-Forma Estimate | ||||||||||||||||||
Common equity tier 1 capital | $ | 12,007 | $ | (315 | ) | $ | 11,692 | $ | 12,007 | $ | (315 | ) | $ | 11,692 | ||||||||||
Tier 1 capital | 15,165 | (277 | ) | 14,888 | 15,165 | (277 | ) | 14,888 | ||||||||||||||||
Total capital | 16,243 | (277 | ) | 15,966 | 16,314 | (277 | ) | 16,037 | ||||||||||||||||
Risk weighted assets | 100,265 | 66 | 100,331 | 107,069 | 62 | 107,131 | ||||||||||||||||||
Adjusted quarterly average assets | 216,940 | (205 | ) | 216,735 | 216,940 | (205 | ) | 216,735 | ||||||||||||||||
Capital ratios: | ||||||||||||||||||||||||
Common equity tier 1 capital | 12.0 | % | 11.7 | % | 11.2 | % | 10.9 | % | ||||||||||||||||
Tier 1 capital | 15.1 | 14.8 | 14.2 | 13.9 | ||||||||||||||||||||
Total capital | 16.2 | 15.9 | 15.2 | 15.0 | ||||||||||||||||||||
Tier 1 leverage | 7.0 | 6.9 | 7.0 | 6.9 | ||||||||||||||||||||
STATE STREET CORPORATION | ||||||||||||||||||||||||
EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||
RECONCILIATION OF FULLY PHASED-IN CAPITAL RATIOS (Continued) | ||||||||||||||||||||||||
As of March 31, 2017 (Dollars in millions) | Basel III Advanced Approaches | Phase-In Provisions | Basel III Advanced Approaches Fully Phased-In Pro-Forma Estimate | Basel III Standardized Approach | Phase-In Provisions | Basel III Standardized Approach Fully Phased-In Pro-Forma Estimate | ||||||||||||||||||
Common equity tier 1 capital | $ | 11,319 | $ | (339 | ) | $ | 10,980 | $ | 11,319 | $ | (339 | ) | $ | 10,980 | ||||||||||
Tier 1 capital | 14,475 | (299 | ) | 14,176 | 14,475 | (299 | ) | 14,176 | ||||||||||||||||
Total capital | 15,542 | (299 | ) | 15,243 | 15,617 | (299 | ) | 15,318 | ||||||||||||||||
Risk weighted assets | 100,843 | 134 | 100,977 | 98,494 | 127 | 98,621 | ||||||||||||||||||
Adjusted quarterly average assets | 212,361 | (270 | ) | 212,091 | 212,361 | (270 | ) | 212,091 | ||||||||||||||||
Capital ratios: | ||||||||||||||||||||||||
Common equity tier 1 capital | 11.2 | % | 10.9 | % | 11.5 | % | 11.1 | % | ||||||||||||||||
Tier 1 capital | 14.4 | 14.0 | 14.7 | 14.4 | ||||||||||||||||||||
Total capital | 15.4 | 15.1 | 15.9 | 15.5 | ||||||||||||||||||||
Tier 1 leverage | 6.8 | 6.7 | 6.8 | 6.7 | ||||||||||||||||||||
As of December 31, 2016 (Dollars in millions) | Basel III Advanced Approaches | Phase-In Provisions | Basel III Advanced Approaches Fully Phased-In Pro-Forma Estimate | Basel III Standardized Approach | Phase-In Provisions | Basel III Standardized Approach Fully Phased-In Pro-Forma Estimate | ||||||||||||||||||
Common equity tier 1 capital | $ | 11,624 | $ | (769 | ) | $ | 10,855 | $ | 11,624 | $ | (769 | ) | $ | 10,855 | ||||||||||
Tier 1 capital | 14,717 | (666 | ) | 14,051 | 14,717 | (666 | ) | 14,051 | ||||||||||||||||
Total capital | 15,909 | (667 | ) | 15,242 | 15,967 | (667 | ) | 15,300 | ||||||||||||||||
Risk weighted assets | 99,301 | 33 | 99,334 | 99,876 | 31 | 99,907 | ||||||||||||||||||
Adjusted quarterly average assets | 226,310 | (474 | ) | 225,836 | 226,310 | (474 | ) | 225,836 | ||||||||||||||||
Capital ratios: | ||||||||||||||||||||||||
Common equity tier 1 capital | 11.7 | % | 10.9 | % | 11.6 | % | 10.9 | % | ||||||||||||||||
Tier 1 capital | 14.8 | 14.1 | 14.7 | 14.1 | ||||||||||||||||||||
Total capital | 16.0 | 15.3 | 16.0 | 15.3 | ||||||||||||||||||||
Tier 1 leverage | 6.5 | 6.2 | 6.5 | 6.2 | ||||||||||||||||||||
STATE STREET CORPORATION | ||||||||||||||||||||||||
EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||
RECONCILIATION OF FULLY PHASED-IN CAPITAL RATIOS (Continued) | ||||||||||||||||||||||||
As of September 30, 2016 (Dollars in millions) | Basel III Advanced Approaches | Phase-In Provisions | Basel III Advanced Approaches Fully Phased-In Pro-Forma Estimate | Basel III Standardized Approach | Phase-In Provisions | Basel III Standardized Approach Fully Phased-In Pro-Forma Estimate | ||||||||||||||||||
Common equity tier 1 capital | $ | 12,269 | $ | (537 | ) | $ | 11,732 | $ | 12,269 | $ | (537 | ) | $ | 11,732 | ||||||||||
Tier 1 capital | 15,407 | (479 | ) | 14,928 | 15,407 | (479 | ) | 14,928 | ||||||||||||||||
Total capital | 17,560 | (525 | ) | 17,035 | 17,632 | (525 | ) | 17,107 | ||||||||||||||||
Risk weighted assets | 99,736 | (528 | ) | 99,208 | 98,374 | (497 | ) | 97,877 | ||||||||||||||||
Adjusted quarterly average assets | 226,093 | (297 | ) | 225,796 | 226,093 | (297 | ) | 225,796 | ||||||||||||||||
Capital ratios: | ||||||||||||||||||||||||
Common equity tier 1 capital | 12.3 | % | 11.8 | % | 12.5 | % | 12.0 | % | ||||||||||||||||
Tier 1 capital | 15.4 | 15.0 | 15.7 | 15.3 | ||||||||||||||||||||
Total capital | 17.6 | 17.2 | 17.9 | 17.5 | ||||||||||||||||||||
Tier 1 leverage | 6.8 | 6.6 | 6.8 | 6.6 | ||||||||||||||||||||
As of June 30, 2016 (Dollars in millions) | Basel III Advanced Approaches | Phase-In Provisions | Basel III Advanced Approaches Fully Phased-In Pro-Forma Estimate | Basel III Standardized Approach | Phase-In Provisions | Basel III Standardized Approach Fully Phased-In Pro-Forma Estimate | ||||||||||||||||||
Common equity tier 1 capital | $ | 12,518 | $ | (452 | ) | $ | 12,066 | $ | 12,518 | $ | (452 | ) | $ | 12,066 | ||||||||||
Tier 1 capital | 15,642 | (393 | ) | 15,249 | 15,642 | (393 | ) | 15,249 | ||||||||||||||||
Total capital | 17,794 | (438 | ) | 17,356 | 17,869 | (438 | ) | 17,431 | ||||||||||||||||
Risk weighted assets | 104,012 | 65 | 104,077 | 104,492 | 62 | 104,554 | ||||||||||||||||||
Adjusted quarterly average assets | 222,666 | (283 | ) | 222,383 | 222,666 | (283 | ) | 222,383 | ||||||||||||||||
Capital ratios: | ||||||||||||||||||||||||
Common equity tier 1 capital | 12.0 | % | 11.6 | % | 12.0 | % | 11.5 | % | ||||||||||||||||
Tier 1 capital | 15.0 | 14.7 | 15.0 | 14.6 | ||||||||||||||||||||
Total capital | 17.1 | 16.7 | 17.1 | 16.7 | ||||||||||||||||||||
Tier 1 leverage | 7.0 | 6.9 | 7.0 | 6.9 | ||||||||||||||||||||
STATE STREET CORPORATION | ||||||||||||||||||||||||
EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||
RECONCILIATION OF FULLY PHASED-IN CAPITAL RATIOS (Continued) | ||||||||||||||||||||||||
As of March 31, 2016 (Dollars in millions) | Basel III Advanced Approaches | Phase-In Provisions | Basel III Advanced Approaches Fully Phased-In Pro-Forma Estimate | Basel III Standardized Approach | Phase-In Provisions | Basel III Standardized Approach Fully Phased-In Pro-Forma Estimate | ||||||||||||||||||
Common equity tier 1 capital | $ | 12,404 | $ | (547 | ) | $ | 11,857 | $ | 12,404 | $ | (547 | ) | $ | 11,857 | ||||||||||
Tier 1 capital | 15,032 | (486 | ) | 14,546 | 15,032 | (486 | ) | 14,546 | ||||||||||||||||
Total capital | 17,191 | (532 | ) | 16,659 | 17,248 | (532 | ) | 16,716 | ||||||||||||||||
Risk weighted assets | 100,633 | 95 | 100,728 | 99,617 | 89 | 99,706 | ||||||||||||||||||
Adjusted quarterly average assets | 217,029 | (357 | ) | 216,672 | 217,029 | (357 | ) | 216,672 | ||||||||||||||||
Capital ratios: | ||||||||||||||||||||||||
Common equity tier 1 capital | 12.3 | % | 11.8 | % | 12.5 | % | 11.9 | % | ||||||||||||||||
Tier 1 capital | 14.9 | 14.4 | 15.1 | 14.6 | ||||||||||||||||||||
Total capital | 17.1 | 16.5 | 17.3 | 16.8 | ||||||||||||||||||||
Tier 1 leverage | 6.9 | 6.7 | 6.9 | 6.7 | ||||||||||||||||||||
STATE STREET CORPORATION | ||||||||||||||||
EARNINGS RELEASE ADDENDUM | ||||||||||||||||
RECONCILIATIONS OF SUPPLEMENTARY LEVERAGE RATIOS | ||||||||||||||||
In 2014, U.S. banking regulators issued final rules implementing a supplementary leverage ratio, or SLR, for certain bank holding companies, like State Street, and their insured depository institution subsidiaries, like State Street Bank. We refer to these final rules as the SLR final rule. Under the SLR final rule, upon implementation as of January 1, 2018, (i) State Street Bank must maintain an SLR of at least 6% to be well capitalized under the U.S. banking regulators’ Prompt Corrective Action framework and (ii) if State Street maintains an SLR of at least 5%, it is not subject to limitations on distribution and discretionary bonus payments under the SLR final rule. Beginning with reporting for March 31, 2015, State Street was required to include SLR disclosures with its other Basel disclosures. | ||||||||||||||||
Estimated pro forma fully phased-in SLR ratios for the periods below are preliminary estimates by State Street (in each case, fully phased-in as of January 1, 2018, as per the phase-in requirements of the SLR final rule), calculated based on our interpretations of the SLR final rule as of October 23, 2017 and as applied to our businesses and operations for the periods below. | ||||||||||||||||
The following tables reconcile our estimated pro forma fully-phased in SLR ratios for the periods below calculated in conformity with the SLR final rule, as described, to our SLR ratios calculated in conformity with applicable regulatory requirements as of the dates indicated. | ||||||||||||||||
State Street | State Street Bank | |||||||||||||||
As of September 30, 2017 (Dollars in millions) | Transitional SLR | Fully Phased-In SLR | Transitional SLR | Fully Phased-In SLR | ||||||||||||
Tier 1 Capital | $ | 15,606 | A | $ | 15,339 | $ | 16,324 | $ | 16,070 | |||||||
On-and off-balance sheet leverage exposure | 247,527 | 247,527 | 244,114 | 244,114 | ||||||||||||
Less: regulatory deductions | (6,861 | ) | (7,161 | ) | (6,535 | ) | (6,795 | ) | ||||||||
Total assets for SLR | 240,666 | B | 240,366 | 237,579 | 237,319 | |||||||||||
Supplementary Leverage Ratio | 6.5 | % | A/B | 6.4 | % | 6.9 | % | 6.8 | % | |||||||
State Street | State Street Bank | |||||||||||||||
As of June 30, 2017 (Dollars in millions) | Transitional SLR | Fully Phased-In SLR | Transitional SLR | Fully Phased-In SLR | ||||||||||||
Tier 1 Capital | $ | 15,165 | C | $ | 14,888 | $ | 16,002 | $ | 15,738 | |||||||
On-and off-balance sheet leverage exposure | 250,543 | 250,543 | 247,156 | 247,156 | ||||||||||||
Less: regulatory deductions | (6,633 | ) | (6,838 | ) | (6,237 | ) | (6,434 | ) | ||||||||
Total assets for SLR | 243,910 | D | 243,705 | 240,919 | 240,722 | |||||||||||
Supplementary Leverage Ratio | 6.2 | % | C/D | 6.1 | % | 6.6 | % | 6.5 | % | |||||||
State Street | State Street Bank | |||||||||||||||
As of March 31, 2017 (Dollars in millions) | Transitional SLR | Fully Phased-In SLR | Transitional SLR | Fully Phased-In SLR | ||||||||||||
Tier 1 Capital | $ | 14,475 | E | $ | 14,176 | $ | 15,492 | $ | 15,206 | |||||||
On-and off-balance sheet leverage exposure | 244,964 | 244,964 | 241,563 | 241,563 | ||||||||||||
Less: regulatory deductions | (6,818 | ) | (7,087 | ) | (6,422 | ) | (6,683 | ) | ||||||||
Total assets for SLR | 238,146 | F | 237,877 | 235,141 | 234,880 | |||||||||||
Supplementary Leverage Ratio | 6.1 | % | E/F | 6.0 | % | 6.6 | % | 6.5 | % | |||||||
State Street | State Street Bank | |||||||||||||||
As of December 31, 2016 (Dollars in millions) | Transitional SLR | Fully Phased-In SLR | Transitional SLR | Fully Phased-In SLR | ||||||||||||
Tier 1 Capital | $ | 14,717 | G | $ | 14,051 | $ | 15,805 | $ | 15,169 | |||||||
On-and off-balance sheet leverage exposure | 257,509 | 257,509 | 253,487 | 253,487 | ||||||||||||
Less: regulatory deductions | (6,476 | ) | (6,950 | ) | (6,078 | ) | (6,532 | ) | ||||||||
Total assets for SLR | 251,033 | H | 250,559 | 247,409 | 246,955 | |||||||||||
Supplementary Leverage Ratio | 5.9 | % | G/H | 5.6 | % | 6.4 | % | 6.1 | % | |||||||
STATE STREET CORPORATION | ||||||||||||||||
EARNINGS RELEASE ADDENDUM | ||||||||||||||||
RECONCILIATIONS OF SUPPLEMENTARY LEVERAGE RATIOS (Continued) | ||||||||||||||||
State Street | State Street Bank | |||||||||||||||
As of September 30, 2016 (Dollars in millions) | Transitional SLR | Fully Phased-In SLR | Transitional SLR | Fully Phased-In SLR | ||||||||||||
Tier 1 Capital | $ | 15,407 | I | $ | 14,928 | $ | 15,817 | $ | 15,374 | |||||||
On-and off-balance sheet leverage exposure | 257,179 | 257,179 | 252,104 | 252,104 | ||||||||||||
Less: regulatory deductions | (6,188 | ) | (6,485 | ) | (5,798 | ) | (6,072 | ) | ||||||||
Total assets for SLR | 250,991 | J | 250,694 | 246,306 | 246,032 | |||||||||||
Supplementary Leverage Ratio | 6.1 | % | I/J | 6.0 | % | 6.4 | % | 6.2 | % | |||||||
State Street | State Street Bank | |||||||||||||||
As of June 30, 2016 (Dollars in millions) | Transitional SLR | Fully Phased-In SLR | Transitional SLR | Fully Phased-In SLR | ||||||||||||
Tier 1 Capital | $ | 15,642 | K | $ | 15,249 | $ | 15,742 | $ | 15,385 | |||||||
On-and off-balance sheet leverage exposure | 254,999 | 254,999 | 250,061 | 250,061 | ||||||||||||
Less: regulatory deductions | (5,949 | ) | (6,232 | ) | (5,578 | ) | (5,835 | ) | ||||||||
Total assets for SLR | 249,050 | L | 248,767 | 244,483 | 244,226 | |||||||||||
Supplementary Leverage Ratio | 6.3 | % | K/L | 6.1 | % | 6.4 | % | 6.3 | % | |||||||
State Street | State Street Bank | |||||||||||||||
As of March 31, 2016 (Dollars in millions) | Transitional SLR | Fully Phased-In SLR | Transitional SLR | Fully Phased-In SLR | ||||||||||||
Tier 1 Capital | $ | 15,032 | M | $ | 14,546 | $ | 15,071 | $ | 14,628 | |||||||
On-and off-balance sheet leverage exposure | 247,923 | 247,923 | 243,043 | 243,043 | ||||||||||||
Less: regulatory deductions | (6,130 | ) | (6,487 | ) | (5,751 | ) | (6,073 | ) | ||||||||
Total assets for SLR | 241,793 | N | 241,436 | 237,292 | 236,970 | |||||||||||
Supplementary Leverage Ratio | 6.2 | % | M/N | 6.0 | % | 6.4 | % | 6.2 | % | |||||||
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