2013-01-18 13:24:10 -
STATE STREET REPORTS FOURTH-QUARTER 2012 GAAP EPS OF $1.00 ON REVENUE OF $2.45
BILLION; FULL-YEAR 2012 GAAP EPS OF $4.20, UP 10.8% COMPARED TO 2011 ON REVENUE
OF $9.65 BILLION
FOURTH-QUARTER OPERATING-BASIS EPS OF $1.11; FULL-YEAR OPERATING-BASIS EPS OF
$3.95
ACHIEVES POSITIVE OPERATING LEVERAGE((2))
Boston, MA ...January 18, 2013
In announcing today's financial results, Joseph L. Hooley, State Street's
chairman, president and chief executive officer, said, "The fourth-quarter and
full-year 2012 results reflect continued resilience across our asset servicing
and asset management businesses. We achieved these results in a constrained
revenue environment, generating positive operating leverage and continuing to
invest in key markets that position us for further growth.
"While equity markets improved in the fourth quarter, our clients remained
cautious for most of the quarter given the uncertainty surrounding the global
economic environment and the U.S. fiscal cliff. We experienced strong demand for
our solutions as evidenced by $649 billion in asset servicing wins and a
continued strong pipeline.
"We remain focused on executing our Business Operations and Information
Technology Transformation program. Additionally, to capture further efficiencies
and cost savings, today we announced a separate reduction in force to align our
expenses with our business outlook for 2013.
"We purchased approximately 11 million shares this quarter for $480 million
under our $1.8 billion common stock purchase plan and declared a $0.24 per share
common stock dividend. Earlier this month, we submitted our 2013 capital plan to
the Federal Reserve Bank. We continue to prioritize the return of capital to our
shareholders.
"As we look ahead, we are encouraged by the recent market strength and early
signs of client re-risking. We remain confident in the long-term growth
prospects of our business and are focused on servicing clients, growing revenues
organically, managing expenses prudently, and returning capital to
shareholders," Hooley concluded.
Fourth-Quarter 2012 GAAP Results
* Earnings per common share (EPS) of $1.00 decreased from $1.36 in the third
quarter of 2012 and increased from $0.76 in the fourth quarter of 2011.
* Net income available to common shareholders of $468 million decreased from
$654 million in the third quarter of 2012 and increased from $371 million in
the fourth quarter of 2011.
* Revenue of $2.45 billion increased 4% from the third quarter of 2012 and
increased 6% from the fourth quarter of 2011.
* Net interest revenue of $622 million increased slightly from $619 million in
the third quarter of 2012 and increased 3% from the fourth quarter of 2011.
* Expenses of $1.86 billion increased from $1.42 billion in the third quarter
of 2012, primarily the result of a non-recurring benefit in the third
quarter, and increased 4% from the fourth quarter of 2011.
* Return on average common shareholders' equity (ROE) of 9.3% decreased from
13.3% in the third quarter of 2012 and increased from 7.8% in the fourth
quarter of 2011.
* Recorded pre-tax acquisition and restructuring costs of $139 million,
primarily related to severance and benefits costs for targeted staff
reductions expected to be substantially completed during 2013. This
additional expense control measure was taken to better align the Company's
expenses to its business outlook for 2013 and will involve the reduction of
approximately 630 positions worldwide.
Full-Year 2012 GAAP Results
* EPS of $4.20, increased 10.8% from $3.79 in 2011. Revenue increased 0.6% to
$9.65 billion from $9.59 billion in 2011. Expenses decreased 2.4% to $6.89
billion from $7.06 billion in 2011. ROE rose to 10.3% in 2012 from 10.0% in
2011.
Fourth-Quarter 2012 Operating-Basis (Non-GAAP) Results((1))
* EPS of $1.11 increased 12% from $0.99 in the third quarter of 2012 and
increased 19% from $0.93 in the fourth quarter of 2011.
* Net income available to common shareholders of $521 million increased 10%
from $473 million in the third quarter of 2012 and increased 15% from $454
million in the fourth quarter of 2011.
* Revenue of $2.46 billion increased 3.2% from the third quarter of 2012 and
increased 7.0% from the fourth quarter of 2011.
* Net interest revenue on a fully taxable-equivalent basis, and excluding
conduit-related discount accretion of $52 million, was $600 million, a
slight decrease from $611 million in the third quarter of 2012, and a 4%
percent increase from $577 million in the fourth quarter of 2011
* Expenses of $1.71 billion increased 3.0% from the third quarter of 2012 and
increased 4.8% from the fourth quarter of 2011.
* ROE of 10.3% increased from 9.6% in the third quarter of 2012 and increased
from 9.5% in the fourth quarter of 2011.
Full-Year 2012 Operating-Basis (Non-GAAP) Results((1))
* EPS increased 5.9% to $3.95 from $3.73 in 2011. Revenue of $9.73 billion
increased 1.74% from $9.56 billion in 2011, and expenses of $6.91 billion
increased 1.71% from $6.79 billion in 2011. ROE decreased to 9.7% in 2012
from 9.9% in 2011.
Fourth-Quarter 2012 and Full-Year 2012 Operating-Basis (Non-GAAP)
Highlights((1))
* New Business: Awarded $649 billion in asset servicing mandates and $24
billion in net new assets to be managed at SSgA, excluding net outflows in
the securities lending cash collateral pools.
* Operating Leverage((2)): Achieved positive operating leverage of 20 basis
points and 220 basis points compared to the third quarter of 2012 and the
fourth quarter of 2011, respectively. For full-year 2012, the Company
achieved 3 basis points of positive operating leverage.
* Business Operations and Information Technology Transformation program((3)):
Achieved incremental pre-tax expense savings of $112 million in 2012,
resulting in cumulative pre-tax expense savings of $198 million since the
program's inception in 2010 through the end of 2012. The incremental pre-tax
expense savings in 2013 are forecasted to be approximately $220 million.
* Capital((4)): Estimated pro forma tier 1 common ratio under the June 2012
U.S. Basel III Notices of Proposed Rulemaking (NPRs) was 10.8% as of
December 31, 2012.
* Dividend and stock purchases: Purchased $480 million of our common stock at
an average price of $43.99 and declared a quarterly common stock dividend of
$0.24 per share.
* The acquired Goldman Sachs Administration Services (GSAS) business
contributed $24 million to revenues and $13 million to expenses subsequent
to October 15, 2012, when the acquisition was completed.
((1) )Operating basis is a non-GAAP presentation. For an explanation of
operating-basis information and related reconciliations, refer to the addendum
included with this news release.
((2) )Operating leverage is defined as the rate of growth of total revenue less
the rate of growth of total expenses, each as determined on an operating basis.
((3)) Estimated pre-tax expense savings relate only to the Business Operations
and Information Technology Transformation program and are based on projected
improvement from total 2010 operating-basis expenses of $6.18 billion; actual
total expenses of the Company have increased since 2010, and may in the future
increase or decrease, due to other factors.
((4)) Unless otherwise specified, all capital ratios referenced in this news
release refer to State Street Corporation and not State Street Bank and Trust
Company. Refer to the addendum included with this news release for a further
discussion of these ratios and for reconciliations applicable to the tier 1
common ratio. Also, see "Capital" below.
Non-GAAP Financial Measures
In addition to presenting State Street's financial results in conformity with
U.S. generally accepted accounting principles (GAAP), management also presents
results on a non-GAAP, or operating basis, in order to highlight comparable
financial trends and other characteristics with respect to State Street's
business operations from period to period. Descriptions of our non-GAAP, or
operating-basis financial measures, together with reconciliations of operating-
basis information to GAAP-basis information, are provided in the addendum
included with this news release.
The table below provides a summary of selected financial information and key
ratios for the indicated periods, presented on an operating (non-GAAP) basis
where noted. Amounts are presented in millions of dollars, except for per-share
amounts or where otherwise noted.
Financial
Highlights((1))
(Dollars in % Increase % Increase
millions) Q4 2012 Q3 2012 (Decrease) Q4 2011 (Decrease)
------------- ------------- ------------ ------------- -----------
Total $ 2,463 $ 2,387 3.2 % $ 2,301 7.0 %
revenue((1))
Total $ 1,714 $ 1,664 3.0 % $ 1,636 4.8 %
expenses((1))
Net income
available to $ 521 $ 473 10.1 % $ 454 14.8 %
common
shareholders((1))
Earnings per $ 1.11 $ 0.99 12.1 % $ 0.93 19.4 %
common share((1))
Return on average
common 10.3 % 9.6 % 70 bps 9.5 % 80 bps
equity((1))
Total assets at $ 222,582 $ 204,522 8.8 % $ 216,827 2.7 %
period-end
Quarterly average $ 202,051 $ 195,805 3.2 % $ 194,708 3.8 %
total assets
Net interest 1.36 % 1.44 % (8) bps 1.40 % (4) bps
margin((1))
Net unrealized
gain (loss) on
investment $ 698 $ 577 $ (374 )
portfolio, after-
tax at period-end
((1)) Presented on an operating basis, a non-GAAP presentation. Refer to the
addendum included with this news release for explanations of our non-GAAP financial
measures and for reconciliations of our operating-basis financial information.
Total revenue for the third quarter of 2012 and fourth quarter of 2011, presented
in the table, has been adjusted for comparative purposes from amounts previously
reported to include tax-equivalent adjustments to processing fees and other revenue
related to tax credits generated by tax-advantaged investments.
Assets Under Custody and Administration and Assets Under Management
(Dollars in % Increase % Increase
billions) Q4 2012 Q3 2012 (Decrease) Q4 2011 (Decrease)
------------ ---------- ------------ ---------- -----------
Assets under
custody and $ 24,371 $ 23,441 4.0 % $ 21,807 11.8 %
administration((1)
(2))
Assets under $ 2,089 $ 2,065 1.2 % $ 1,845 13.2 %
management((2))
Market Indices
S&P 500(® )daily 1,418 1,401 1.2 % 1,226 15.7 %
average
MSCI EAFE(®) daily 1,544 1,468 5.2 % 1,420 8.7 %
average
S&P
500(®) average of 1,418 1,409 0.6 % 1,253 13.2 %
month end
MSCI
EAFE(®) average of 1,561 1,474 5.9 % 1,448 7.8 %
month end
((1) )Includes assets under custody of $17.806 trillion, $17.287 trillion and
$15.863 trillion, as of period-end Q4 2012, Q3 2012 and Q4 2011, respectively.
((2) )At period-end.
The following table provides the components of operating-basis (non-GAAP)
revenue((1) )for the periods noted:
(Dollars in % Increase % Increase
millions) Q4 2012 Q3 2012 (Decrease) Q4 2011 (Decrease)
----------- ----------- -------------- ----------- -------------
Servicing fees $ 1,150 $ 1,100 4.5 % $ 1,057 8.8 %
Investment
management 260 251 3.6 202 28.7
fees
Trading
services
revenue:
Foreign
exchange 118 115 2.6 150 (21.3 )
trading
Brokerage 125 117 6.8 123 1.6
and other fees
----------- ----------- -------------- ----------- -------------
Total
trading 243 232 4.7 273 (11.0 )
services
revenue
Securities
finance 74 91 (18.7 ) 90 (17.8 )
revenue
Processing
fees and other 115 84 36.9 60 91.7
revenue((1)
(2))
Net interest
revenue, fully
taxable- 600 611 (1.8 ) 577 4.0
equivalent
basis((1) (3))
Gains (Losses)
related to
investment 21 18 16.7 42 (50.0 )
securities,
net
----------- ----------- -------------- ----------- -------------
Total
Operating- $ 2,463 $ 2,387 3.2 % $ 2,301 7.0 %
Basis
Revenue((1))
----------- ----------- -------------- ----------- -------------
((1)) Refer to the addendum included with this news release for explanations
of our non-GAAP financial measures and for reconciliations of our operating-
basis financial information.
((2)) Processing fees and other revenue for the fourth and third quarters of
2012 and fourth quarter of 2011, presented in the table, included tax-
equivalent adjustments of $36 million, $39 million and $15 million,
respectively, related to tax credits generated by tax-advantaged investments.
GAAP-basis processing fees and other revenue for these periods was $79
million, $45 million and $45 million, respectively. Amounts previously
reported for the third quarter of 2012 and fourth quarter of 2011 have been
adjusted for comparative purposes.
((3)) Net interest revenue for the fourth and third quarters of 2012 and
fourth quarter of 2011, presented in the table, included tax-equivalent
adjustments of $30 million, $32 million and $32 million, respectively, and
excluded conduit related discount accretion of $52 million, $40 million and
$61 million, respectively. GAAP-basis net interest revenue for these periods
was $622 million, $619 million and $606 million, respectively. The Company
continues to expect to record aggregate pre-tax conduit-related accretion of
approximately $770 million in interest revenue from January 1, 2013 through
the remaining terms of the former conduit securities. This expectation is
based on numerous assumptions, including holding the securities to maturity,
anticipated pre-payment speeds, credit quality and sales.
Servicing fees increased 4.5% to $1.2 billion in the fourth quarter of 2012 from
the third quarter of 2012, due to revenue contributions from the acquired GSAS
business, net new business, and stronger global equity markets. Compared to the
fourth quarter of 2011, servicing fees increased 8.8%, due to stronger global
equity markets, the impact of net new business, and revenue contributions from
acquisitions.
Investment management fees increased 3.6% to $260 million in the fourth quarter
of 2012 from the third quarter of 2012, due to higher performance fees and
stronger global equity markets. Compared to the fourth quarter of 2011,
investment management fees increased 28.7%, primarily due to stronger equity
markets, net new business, and higher performance fees.
Trading services revenue, which includes foreign-exchange trading revenue and
brokerage and other fees, was $243 million in the fourth quarter of 2012, up
4.7% from the third quarter of 2012 due to strength in both brokerage and other
fee revenue and foreign-exchange trading. Trading services revenue decreased
11.0% from the fourth quarter of 2011, primarily due to weakness in foreign-
exchange trading, partially offset by stronger brokerage and other fees.
Foreign-exchange revenue increased 2.6% from the third quarter of 2012 due to
higher revenue from direct foreign exchange trading, partially offset by lower
volatility. Foreign-exchange revenue decreased 21.3% from the fourth quarter of
2011 due to lower volatility. Brokerage and other fees increased 6.8% to $125
million from the third quarter of 2012 due to growth in transition management.
Securities finance revenue was $74 million in the fourth quarter of 2012, a
decline of 18.7% and 17.8% from the third quarter of 2012 and fourth quarter of
2011, respectively. The decrease from both periods reflects lower spreads and
volumes.
Processing fees and other revenue in the fourth quarter of 2012 increased 36.9%
from the third quarter of 2012, primarily due to higher revenue from joint
ventures as well as a gain of $10 million from the sale of a Lehman Brothers-
related asset. Processing fees and other revenue reflects a tax-equivalent
adjustment of $36 million related to tax credits generated by tax-advantaged
investments. This non-GAAP presentation is similar to adjustments to net
interest revenue generated by tax-exempt investment securities. These
adjustments enable management to compare revenue from all investments on an
equivalent (pre-tax) basis. Processing fees and other revenue presented for all
prior periods has been adjusted to conform to this new presentation.
Processing fees and other revenue in the fourth quarter of 2012 increased 91.7%
from the fourth quarter of 2011, primarily due to a $25 million negative fair-
value adjustment in the fourth quarter of 2011 related to positions in the
fixed-income trading initiative, a business State Street exited in the fourth
quarter of 2011, as well as an increase in revenue associated with tax-
advantaged investments.
Fully taxable-equivalent net interest revenue in the fourth quarter of 2012 was
$600 million, a decrease of 1.8% from $611 million in the third quarter of
2012, primarily due to lower yields on earning assets. Compared to the fourth
quarter of 2011, fully taxable-equivalent net interest revenue was up 4.0% from
$577 million, largely driven by higher earning assets and lower funding costs,
partially offset by lower asset yields.
Net interest margin, including excess deposits held at the Federal Reserve and
other central banks, was 136 basis points in the fourth quarter of 2012 compared
to 144 basis points in the third quarter of 2012 and 140 basis points in the
fourth quarter of 2011.
Net gains from sales of available-for-sale securities of $26 million were
recorded in the fourth quarter of 2012, and separately, $5 million of net losses
from other-than-temporary impairment were recorded, resulting in $21 million of
net gains related to investment securities.
The following table provides the components of operating-basis (non-GAAP)((1))
expenses for the periods noted:
(Dollars in % Increase % Increase
millions) Q4 2012 Q3 2012 (Decrease) Q4 2011 (Decrease)
----------- ----------- ------------- ----------- ------------
Compensation and
employee $ 915 $ 916 (0.1 )% $ 872 4.9 %
benefits
Information
systems and 234 211 10.9 195 20.0
communications
Transaction
processing 179 170 5.3 179 -
services
Occupancy 121 115 5.2 116 4.3
Other 265 252 5.2 274 (3.3 )
----------- ----------- ------------- ----------- ------------
Total Operating-
Basis $ 1,714 $ 1,664 3.0 % $ 1,636 4.8 %
Expenses((1))
----------- ----------- ------------- ----------- ------------
((1) )Refer to the addendum included with this news release for explanations of
our non-GAAP financial measures and for reconciliations of our operating-basis
financial information.
Compensation and employee benefits expenses in the fourth quarter of 2012 were
essentially flat compared to the third quarter of 2012. Additional costs from
the acquired GSAS business were offset by savings associated with the execution
of the Business Operations and Information Technology Transformation program.
Compensation and employee benefits increased 4.9% from the fourth quarter of
2011, primarily due to higher benefit and incentive compensation costs, merit
increases, and acquisitions, partially offset by the savings associated with the
execution of the Business Operations and Information Technology Transformation
program.
Information systems and communications expenses were $234 million in the fourth
quarter of 2012, up 10.9% from the third quarter of 2012 and up 20.0% from the
fourth quarter of 2011. The increase in both periods is primarily due to costs
related to transition activities in connection with the Business Operations and
Information Technology Transformation program.
Transaction processing services expenses increased 5.3% to $179 million in the
fourth quarter of 2012 from the third quarter of 2012, primarily due to higher
volumes in the asset servicing business.
Other expenses increased 5.2% to $265 million in the fourth quarter of 2012 from
$252 million in the third quarter of 2012; the increase was primarily due to
higher legal and regulatory costs.
Income Taxes
The effective tax rate on fourth-quarter 2012 GAAP earnings is 19.9%, down from
28.3% in the third quarter of 2012, due to the net tax impact of settling
Italian tax audits and recoveries associated with the 2008 Lehman Brothers
bankruptcy. The effective tax rate on operating-basis earnings for the fourth
quarter of 2012 was 23.5%, down from 24.5% in the third quarter of 2012, due to
deferred tax liability adjustments, and down from 25.0% in the fourth quarter of
2011 due to additional investments in renewable energy projects in 2012.
Capital
Capital bps bps
ratios((1)): December 31, September 30, Increase December 31, Increase
2012 2012 (Decrease) 2011 (Decrease)
-------------- --------------- ------------ -------------- -----------
Total
capital 20.6 % 21.3 % (70) bps 20.5 % 10 bps
ratio
Tier 1
capital 19.1 % 19.8 % (70) bps 18.8 % 30 bps
ratio
Tier 1
leverage 7.1 % 7.6 % (50) bps 7.3 % (20) bps
ratio
Tier 1 17.1 % 17.8 % (70) bps 16.8 % 30 bps
common ratio
Estimated
pro
forma tier
1 common
ratio under 10.8 % 11.3 % (50) bps N/A N/A
Basel III
NPRs,
including
impact of
SSFA((2))
TCE ratio 7.2 % 7.6 % (40) bps 7.2 % -
((1)) Unless otherwise specified, all capital ratios referenced in the table
above and elsewhere in this news release refer to State Street Corporation and
not State Street Bank and Trust Company. Refer to the addendum included with
this news release for a further description of these ratios, and for
reconciliations applicable to the tier 1 common and tangible common equity, or
TCE, ratios presented in this table. All ratios are presented at period-end.
Total capital, tier 1 capital and tier 1 leverage ratios as of December 31,
2012 presented in the table above were down from September 30, 2012, primarily
due to slightly lower capital.
((2)) Basel III capital ratios reflect the impact estimated by State Street of
the Notices of Proposed Rulemaking (NPRs) issued by federal banking regulators
in June 2012 regarding capital, primarily the application of the Simplified
Supervisory Formula Approach (SSFA) to the investment portfolio. The capital
rules in the NPR are not final. This estimate is subject to change based on
regulatory clarifications, further analysis, the results of industry comment on
the NPRs and other factors. Refer to the addendum included with this news
release for information concerning the specified capital ratios and for
reconciliations of the Basel III tier 1 common ratio to the tier 1 common ratio
calculated under currently applicable regulatory guidelines.
(N/A) Not applicable.
The estimated pro forma Basel III tier 1 common ratio as of December 31, 2012
was 10.8%. As noted above, this includes the estimated impact of the NPRs on the
risk-weightings of the investment portfolio. This estimate would be 11.9% as of
December 31, 2012, if adjusted on a pro forma basis to hypothetically give
effect as of that date to all of the projected run-off and reinvestment through
January 1, 2015 of our investment portfolio assets affected by the SSFA. Refer
to the addendum included with this news release for a reconciliation of this
ratio.
Common Stock Dividend and Share Repurchase Program
The Company purchased approximately 10.9 million shares of its common stock at a
total cost of $480 million at an average price of $43.99 per share in the fourth
quarter of 2012 and declared a quarterly common stock dividend of $0.24 per
share. For full-year 2012, the Company purchased a total of 33.4 million shares
of its common stock at an average price of $43.11 per share for approximately
$1.4 billion. Approximately $360 million remains available for purchase under
its $1.8 billion stock purchase program authorization, effective through March
2013. The Company has submitted its 2013 capital distribution plan to the
Federal Reserve and expects a response from the Federal Reserve in mid- to late-
March.
Additional Information
All per share amounts represent fully diluted earnings per common share. Return
on average common shareholders' equity is determined by dividing annualized net
income available to common equity by average common shareholders' equity for the
period. Operating-basis return on average common equity utilizes annualized
operating-basis net income available to common equity in the calculation.
Investor Conference Call
State Street will webcast an investor conference call today, Friday, January 18,
2013, at 9:00 a.m. EST, available at www.statestreet.com/stockholder. The
conference call will also be available via telephone, at +1 888/391-4233 in the
U.S. or at +1 706/679-5594 outside of the U.S. The Conference ID is #80960325.
Recorded replays of the conference call will be available on the web site, and
by telephone at +1 855/859-2056 inside the U.S. or at +1 404/537-3406 outside
the U.S. beginning approximately two hours after the call's completion. The
Conference ID is #80960325. The telephone replay will be available for
approximately two weeks following the conference call. This news release,
presentation materials referred to on the conference call (including those
concerning our investment portfolio), and additional financial information are
available on State Street's website, at www.statestreet.com/stockholder under
"Investor Relations--Investor News & Events" and under the title "Events
and
Presentations."
State Street Corporation (NYSE: STT) is the world's leading provider of
financial services to institutional investors including investment servicing,
investment management and investment research and trading. With $24.37 trillion
in assets under custody and administration and $2.09 trillion in assets under
management at December 31, 2012, State Street operates in 29 countries and more
than 100 geographic markets and employs 29,660 worldwide. For more information,
visit State Street's website at www.statestreet.com or call +1 877/639-7788
[NEWS STT] toll-free in the United States and Canada, or +1 678/999-4577 outside
those countries.
Forward-Looking Statements
This news release contains forward-looking statements as defined by United
States securities laws, including statements relating to our goals and
expectations regarding our business, financial and capital condition (including
without limitation, our capital ratios under Basel III), results of operations,
investment portfolio performance and strategies, the financial and market
outlook, governmental and regulatory initiatives and developments, and the
business environment. Forward-looking statements are often, but not always,
identified by such forward-looking terminology as "plan," "expect,"
"look,"
"believe," "anticipate," "estimate," "seek,"
"may," "will," "trend," "target,"
and "goal," or similar statements or variations of such terms. These statements
are not guarantees of future performance, are inherently uncertain, are based on
current assumptions that are difficult to predict and involve a number of risks
and uncertainties. Therefore, actual outcomes and results may differ materially
from what is expressed in those statements, and those statements should not be
relied upon as representing our expectations or beliefs as of any date
subsequent to January 18, 2013.
Important factors that may affect future results and outcomes include, but are
not limited to:
* the financial strength and continuing viability of the counterparties with
which we or our clients do business and to which we have investment, credit
or financial exposure, including, for example, the direct and indirect
effects on counterparties to the current sovereign debt risks in Europe and
other regions;
* financial market disruptions or economic recession, whether in the U.S.,
Europe or other regions internationally;
* increases in the volatility of, or declines in the level of, our net
interest revenue, changes in the composition of the assets recorded in our
consolidated statement of condition and the possibility that we may be
required to change the manner in which we fund those assets;
* the liquidity of the U.S. and international securities markets, particularly
the markets for fixed-income securities and inter-bank credits, and the
liquidity requirements of our clients;
* the level and volatility of interest rates and the performance and
volatility of securities, credit, currency and other markets in the U.S. and
internationally;
* the credit quality, credit agency ratings, and fair values of the securities
in our investment securities portfolio, a deterioration or downgrade of
which could lead to other-than-temporary impairment of the respective
securities and the recognition of an impairment loss in our consolidated
statement of income;
* our ability to attract deposits and other low-cost, short-term funding, and
our ability to deploy deposits in a profitable manner consistent with our
liquidity requirements and risk profile;
* the manner in which the Federal Reserve and other regulators implement the
Dodd-Frank Act, Basel III, European legislation with respect to banking and
financial activities and other regulatory initiatives in the U.S. and
internationally, including regulatory developments that result in changes to
our structure or operating model, increased costs or other changes to the
provision of our services;
* adverse changes in required regulatory capital ratios, whether arising under
the Dodd-Frank Act, Basel II or Basel III, or due to changes in regulatory
positions or regulations in jurisdictions in which we engage in banking
activities;
* increasing requirements to obtain necessary approvals of the Federal Reserve
and our other regulators for the use, allocation or distribution of our
capital or for other specific capital actions or programs, including
acquisitions, dividends and equity repurchases, without which our growth
plans, distributions to shareholders, equity purchase programs or other
capital initiatives may be restricted;
* changes in law or regulation that may adversely affect our, our clients' or
our counterparties' business activities and the products or services that we
sell, including additional or increased taxes or assessments thereon,
capital adequacy requirements and changes that expose us to risks related to
compliance;
* the maintenance of credit agency ratings for our debt and depository
obligations as well as the level of credibility of credit agency ratings;
* delays or difficulties in the execution of our previously announced Business
Operations and Information Technology Transformation program, which could
lead to changes in our estimates of the charges, expenses or savings
associated with the planned program, resulting in increased volatility of
our earnings;
* the results of, and costs associated with, government investigations,
litigation, and similar claims, disputes, or proceedings;
* the possibility that our clients will incur substantial losses in investment
pools for which we act as agent, and the possibility of significant
reductions in the valuation of assets;
* adverse publicity or other reputational harm;
* dependencies on information technology, complexities and costs of protecting
the security of our systems and difficulties with protecting our
intellectual property rights;
* our ability to grow revenue, attract and/or retain and compensate highly
skilled people, control expenses and attract the capital necessary to
achieve our business goals and comply with regulatory requirements;
* potential changes to the competitive environment, including changes due to
regulatory and technological changes, the effects of consolidation, and
perceptions of State Street as a suitable service provider or counterparty;
* potential changes in how clients compensate us for our services, and the mix
of services that clients choose from us;
* the risks that acquired businesses and joint ventures will not achieve their
anticipated financial and operational benefits or will not be integrated
successfully, or that the integration will take longer than anticipated,
that expected synergies will not be achieved or unexpected disynergies will
be experienced, that client and deposit retention goals will not be met,
that other regulatory or operational challenges will be experienced and that
disruptions from the transaction will harm relationships with clients,
employees or regulators;
* the ability to complete acquisitions, divestitures and joint ventures,
including the ability to obtain regulatory approvals, the ability to arrange
financing as required and the ability to satisfy closing conditions;
* our ability to recognize emerging needs of clients and to develop products
that are responsive to such trends and profitable to the company; the
performance of and demand for the products and services we offer, including
the level and timing of redemptions and withdrawals from our collateral
pools and other collective investment products; and the potential for new
products and services to impose additional costs on us and expose us to
increased operational risk;
* our ability to measure the fair value of the investment securities recorded
in our consolidated statement of condition;
* our ability to control operating risks, data security breach risks,
information technology systems risks and outsourcing risks, and our ability
to protect our intellectual property rights, the possibility of errors in
the quantitative models we use to manage our business and the possibility
that our controls will prove insufficient, fail or be circumvented;
* changes in accounting standards and practices; and
* changes in tax legislation and in the interpretation of existing tax laws by
U.S. and non-U.S. tax authorities that affect the amount of taxes due.
Other important factors that could cause actual results to differ materially
from those indicated by any forward-looking statements are set forth in our
2011 Annual Report on Form 10-K and our subsequent SEC filings. We encourage
investors to read these filings, particularly the sections on risk factors, for
additional information with respect to any forward-looking statements and prior
to making any investment decision. The forward-looking statements contained in
this news release speak only as of the date hereof, January 18, 2013, and we do
not undertake efforts to revise those forward-looking statements to reflect
events after that date.
Investor Relations Contact: Valerie Haertel
Telephone: +1 617/664-3477
Media Contact: Hannah Grove
Telephone: +1 617/664-3377
Q4 2012 Financial HIghlights Presentation:
hugin.info/152939/R/1671364/543357.pdf
Press Release Addendum:
hugin.info/152939/R/1671364/543358.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: State Street Corporation via Thomson Reuters ONE
[HUG#1671364]
