8-K
State Street Corp (STT)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 8-K
_________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 20, 2023
______________________
State Street Corporation
(Exact name of registrant as specified in its charter)
____________________
| Massachusetts | 001-07511 | 04-2456637 | ||||
|---|---|---|---|---|---|---|
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification Number) | One Lincoln Street | |||
| --- | --- | --- | ||||
| Boston | Massachusetts | 02111 | ||||
| (Address of principal executive offices, and Zip Code) | Registrant’s telephone number, including area code: | (617) | 786-3000 | |||
| --- | --- | --- |
________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common stock, $1 par value per share | STT | New York Stock Exchange |
| Depositary Shares, each representing a 1/4,000th ownership interest in a share of | STT.PRD | New York Stock Exchange |
| Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D, without par value per share | ||
| Depositary Shares, each representing a 1/4,000th ownership interest in a share of | STT.PRG | New York Stock Exchange |
| Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series G, without par value per share |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging growth company | ☐ |
|---|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02. Results of Operations and Financial Condition.
On January 20, 2023, State Street Corporation issued a news release announcing its results of operations for the fourth-quarter of 2022 and full-year 2022. Copies of that news release and accompanying fourth-quarter of 2022 and full-year 2022 financial information addendum are furnished herewith as Exhibits 99.1 and 99.2, respectively, and are incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
On January 20, 2023, State Street Corporation made available a slide presentation providing highlights of its fourth-quarter of 2022 and full-year 2022 results of operations and related information as of December 31, 2022, which is being made available in connection with a January 20, 2023 investor conference call. A copy of that slide presentation is furnished herewith as Exhibit 99.3 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
State Street Corporation's news release dated January 20, 2023, announcing its fourth-quarter of 2022 and full-year 2022 results of operations and accompanying fourth-quarter of 2022 and full-year 2022 financial information addendum are furnished herewith as Exhibits 99.1 and 99.2, respectively, and are incorporated by reference in Item 2.02 hereof; and a slide presentation providing highlights of State Street's fourth-quarter of 2022 and full-year 2022 results of operations and related information, which is being made available in connection with a January 20, 2023 investor conference call, is furnished herewith as Exhibit 99.3 and is incorporated by reference in Item 7.01 hereof.
| Exhibit No. | Description | ||||
|---|---|---|---|---|---|
| 99.1 | State Street's news release dated January 20, 2023, announcing its fourth-quarter 2022 and full-year 2022 results of operations (this Exhibit 99.1 is furnished, not filed) | ||||
| 99.2 | State Street's fourth-quarter 2022 and full-year 2022 financial information addendum (this Exhibit 99.2 is furnished, not filed) | ||||
| 99.3 | Slide presentation providing highlights of State Street's fourth-quarter 2022 and full-year 2022 results of operations and related information (this Exhibit 99.3 is furnished, not filed) | ||||
| * | 104 | Cover Page Interactive Data File (formatted as Inline XBRL) | * | Submitted electronically herewith | |
| --- | --- |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| STATE STREET CORPORATION | |||
|---|---|---|---|
| By: | /s/ IAN W. APPLEYARD | ||
| Name: | Ian W. Appleyard, | ||
| Title: | Executive Vice President, Global Controller and Chief Accounting Officer | ||
| Date: | January 20, 2023 |
Document
| Exhibit 99.1<br>State Street Corporation <br>One Lincoln Street<br>Boston, MA 02111<br>NYSE: STT <br> www.statestreet.com |
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Boston, MA… January 20, 2023 News Release
| STATE STREET REPORTS FOURTH QUARTER 2022 EPS OF $1.91; $2.07<br><br>EXCLUDING NOTABLE ITEMS(a) |
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| % changes noted below reflect year-over-year 4Q comparisons |
TOTAL REVENUE UP 3%
STRONG NET INTEREST INCOME GROWTH OF 63%
EXPENSES DOWN 3%; FLAT EX-NOTABLES(a)
PRE-TAX MARGIN OF 28.2%; 30.9% EX-NOTABLES(a)
ANNOUNCES NEW AUTHORIZATION TO REPURCHASE UP TO $4.5 BILLION OF COMMON STOCK DURING 2023
| Ron O'Hanley, Chairman and Chief Executive Officer: "Our distinctive value proposition and diversified service offerings enabled us to perform well in 4Q22 and the full year despite a challenging environment that included volatile global markets, geopolitical tensions, rising inflation and significant central bank actions."<br><br><br><br>O'Hanley continued: "We generated positive operating leverage and expanded pre-tax margin as higher net interest income, fee revenue growth in Front office software and data revenue and our higher margin FX franchise, as well as well-controlled expenses, more than offset revenue headwinds from weaker global market levels. Notwithstanding the macro environment, we continued to see business momentum as evidenced by another strong year of AUC/A servicing wins and backlog."<br><br><br><br>O'Hanley concluded: "As we enter 2023, we will continue to execute against our strategic priorities, innovate for our clients, and transform the way we work, driving financial growth and increasing shareholder value. Today's announced authorization to repurchase up to $4.5 billion in common stock during 2023 reinforces our confidence in the earnings generating power of the franchise and demonstrates our focus on returning excess capital to our shareholders. |
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FINANCIAL HIGHLIGHTS
| (Table presents summary results, dollars in millions, except per share amounts, or where otherwise noted) | 4Q22 | 3Q22 | 4Q21 | % QoQ | % YoY | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Income statement: | |||||||||||||||
| Total fee revenue | $ | 2,364 | $ | 2,299 | $ | 2,511 | 3 | % | (6) | % | |||||
| Net interest income | 791 | 660 | 484 | 20 | 63 | ||||||||||
| Total revenue | 3,155 | 2,959 | 3,053 | 7 | 3 | ||||||||||
| Provision for credit losses | 10 | — | (7) | — | nm | ||||||||||
| Total expenses | 2,256 | 2,110 | 2,330 | 7 | (3) | ||||||||||
| Net income | 733 | 690 | 697 | 6 | 5 | ||||||||||
| Financial ratios and other metrics: | |||||||||||||||
| Diluted earnings per share (EPS) | $ | 1.91 | $ | 1.80 | $ | 1.78 | 6 | % | 7 | % | |||||
| Return on average common equity (ROE) | 11.8 | % | 11.2 | % | 10.3 | % | 0.6 | % | pts | 1.5 | % | pts | |||
| Pre-tax margin | 28.2 | 28.7 | 23.9 | (0.5) | % | pts | 4.3 | % | pts | ||||||
| AUC/A ($ billions)(1) | $ | 36,743 | $ | 35,688 | $ | 43,678 | 3 | % | (16) | % | |||||
| AUM ($ billions)(1) | 3,481 | 3,265 | 4,138 | 7 | (16) |
(1) As of period-end.
(a) See "4Q22 Highlights" in this news release for a listing of notable items. Results excluding notable items and/or currency translation impact are non-GAAP measures. Please refer to the Addendum included with this news release for an explanation and reconciliation of non-GAAP measures.
Investor Contact: Ilene Fiszel Bieler +1 617-664-3477 Media Contact: Carolyn Cichon +1 617-664-8672
4Q22 HIGHLIGHTS
(all comparisons are to 4Q21, unless otherwise noted)
AUC/A and AUM
•Investment Servicing AUC/A as of quarter-end decreased 16% to $36.7 trillion, primarily driven by lower quarter-end market levels, a previously disclosed client transition and the impact of currency translation, partially offset by new business installations
•Investment Management AUM as of quarter-end decreased 16% to $3.5 trillion, mainly reflecting lower quarter-end market levels, institutional net outflows and the impact of currency translation, partially offset by ETF net inflows
New business and strategy execution
•Investment Servicing mandates: $434 billion announced in 4Q22; quarter-end servicing assets to be installed in future periods of $3.6 trillion
◦New mandates reflect strong broad-based traditional wins across client segments and regions
•State Street AlphaSM: Reported 2 new mandates
•Investment Management flows: Strong ETF net inflows of $27 billion in 4Q22 and full year ETF net inflows of $22 billion
•Front Office Software and Data: Annual recurring revenue (ARR) increased to $272 million, up 19%(a)
•New products: Launched Venturi, an innovative Global Markets product, supporting peer-to-peer repo by connecting buy-side firms with new sources of liquidity globally
Revenue
•Total revenue increased by 3%, primarily driven by higher NII, partially offset by lower Fee revenue and the impact of currency translation
•Fee revenue decreased 6%, largely reflecting lower average market levels, as well as the impact of currency translation, partially offset by higher FX trading services and Front office software and data revenue
◦Servicing fees decreased 13%, or decreased 10% excluding currency translation(b)
◦Management fees decreased 14%, or decreased 12% excluding currency translation(b)
◦FX trading services increased 22%
◦Securities finance increased 1%
◦Software and processing fees increased 16%
•Net interest income (NII) increased 63%, reflecting rising global interest rates across the yield curve and a well-constructed balance sheet
Expenses
•Total expenses decreased 3%, primarily due to continued productivity savings, footprint optimization, a decrease in notable expense items and the benefit from currency translation, partially offset by continued business investments and higher wages
•Total expenses were flat excluding notable items(b)
◦Compensation and employee benefits decreased 1%, or increased 3% excluding currency translation(b), primarily driven by higher wage rates
◦Non-compensation expense was flat, or increased 3% excluding currency translation(b)
(a) See in the "In This News Release" section for explanations of Front office software and data annual recurring revenue (ARR).
(b) Results excluding notable items and/or currency translation impact are non-GAAP measures. Please refer to the Addendum included with this news release for an explanation and reconciliation of non-GAAP measures as well as the impact of currency translation on the respective line items.
Notable items
| (Dollars in millions, except EPS amounts) | 4Q22 | 3Q22 | 4Q21 | |||
|---|---|---|---|---|---|---|
| Acquisition and restructuring costs | $ | (31) | $ | (13) | $ | (26) |
| Repositioning release / (charge): | ||||||
| Compensation & employee benefits | (50) | — | 32 | |||
| Occupancy | (20) | — | (29) | |||
| Total repositioning release / (charge)(a) | (70) | — | 3 | |||
| Deferred compensation expense acceleration(b) | — | — | (147) | |||
| Gain on sale(c) | — | — | 58 | |||
| Revenue related recovery | 23 | — | — | |||
| Notable items (pre-tax) | $ | (78) | $ | (13) | $ | (112) |
| EPS impact | $ | (0.16) | $ | (0.02) | $ | (0.22) |
•Acquisition and restructuring costs of $31 million in 4Q22 related to the BBH Investor Services acquisition transaction that State Street is no longer pursuing
•Repositioning charges of $70 million in 4Q22 related to streamlining the Investment Services organization and real estate footprint optimization
•Revenue-related recovery of $23 million in 4Q22 related to settlement proceeds from a 2018 FX benchmark litigation resolution, which is reflected in FX trading services revenue
Capital
•Standardized common equity tier 1 (CET1) ratio of 13.6% decreased 0.7% points compared to 4Q21, mainly due to lower accumulated other comprehensive income (AOCI) from higher interest rates and the resumption of share repurchases in 4Q22, partially offset by higher retained earnings and episodically lower risk weighted assets (RWAs). Compared to 3Q22, CET1 ratio increased 0.4% points primarily reflecting episodically lower RWAs and higher retained earnings, partially offset by the resumption of share repurchases
•Tier 1 leverage ratio of 6.0% decreased 0.1% points compared to 4Q21. Compared to 3Q22, tier 1 leverage ratio decreased 0.4% points, mainly due to the resumption of share repurchases and an increase in average balance sheet size, partially offset by higher retained earnings
•ROE of 11.8% increased 1.5% points and 0.6% points compared to 4Q21 and 3Q22, respectively, driven by higher earnings and net capital return
•Capital return:
◦In 4Q22, State Street returned a total of $1.7 billion of capital to shareholders, consisting of $1.5 billion in common stock repurchases and declared common dividends of $0.63 per share
◦New authorization to repurchase up to $4.5 billion of common stock during 2023
(a) Repositioning release of $3 million in 4Q21 reflects a release of $32 million in Compensation and employee benefits and a charge of $29 million in Occupancy.
(b) Deferred compensation expense acceleration of $147 million in 4Q21 associated with an amendment of certain outstanding deferred cash incentive compensation awards; amendment removed continued service requirements for deferred cash incentive compensation, thereby accelerating the future expense that would have been recognized over the remaining term of the awards (1-4 years).
(c) Gain on sale of $58 million in 4Q21, included in Other income, which reflects a one-time sale of Libor and Euribor based securities previously classified as held-to-maturity.
MARKET DATA
The following table provides a summary of selected financial information, including market indices and foreign exchange rates.
| (Dollars in billions, except market indices and foreign exchange rates) | 4Q22 | 3Q22 | 4Q21 | % QoQ | % YoY | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Assets under Custody and/or Administration (AUC/A)(1)(2) | $ | 36,743 | $ | 35,688 | $ | 43,678 | 3.0 | % | (15.9) | % |
| Assets under Management (AUM)(2) | 3,481 | 3,265 | 4,138 | 6.6 | (15.9) | |||||
| Market Indices:(3) | ||||||||||
| S&P 500 Daily Average | 3,852 | 3,980 | 4,602 | (3.2) | (16.3) | |||||
| S&P 500 EOP | 3,840 | 3,586 | 4,766 | 7.1 | (19.4) | |||||
| MSCI EAFE Daily Average | 1,851 | 1,848 | 2,310 | 0.2 | (19.9) | |||||
| MSCI EAFE EOP | 1,944 | 1,661 | 2,336 | 17.0 | (16.8) | |||||
| MSCI Emerging Markets Daily Average | 919 | 975 | 1,252 | (5.7) | (26.6) | |||||
| MSCI Emerging Markets EOP | 956 | 876 | 1,232 | 9.1 | (22.4) | |||||
| Barclays Capital Global Aggregate Bond Index EOP | 446 | 427 | 532 | 4.4 | (16.2) | |||||
| Foreign Exchange Volatility Indices:(3) | ||||||||||
| JPM G7 Volatility Index Daily Average | 11.3 | 11.0 | 6.5 | 2.7 | 73.8 | |||||
| JPM Emerging Market Volatility Index Daily Average | 11.9 | 12.0 | 9.9 | (0.8) | 20.2 | |||||
| Average Foreign Exchange Rate: | ||||||||||
| EUR vs. USD | 1.022 | 1.007 | 1.143 | 1.5 | (10.6) | |||||
| GBP vs. USD | 1.175 | 1.177 | 1.348 | (0.2) | (12.8) |
(1) Includes quarter-end assets under custody of $27,236 billion, $26,478 billion and $32,845 billion, as of 4Q22, 3Q22, and 4Q21, respectively.
(2) As of period-end.
(3) The index names listed in the table are service marks of their respective owners.
INDUSTRY FLOW DATA
The following table represents industry flow data.
| (Dollars in billions) | 4Q22 | 3Q22 | 2Q22 | 1Q22 | 4Q21 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| North America - (US Domiciled) Morningstar Direct Market Data:(1)(2) | ||||||||||
| Long Term Funds | $ | (353) | $ | (193) | $ | (278) | $ | (67) | $ | 102 |
| Money Market | 169 | (26) | (35) | (143) | 201 | |||||
| ETF | 188 | 110 | 93 | 181 | 157 | |||||
| Total Flows(3) | $ | 4 | $ | (109) | $ | (220) | $ | (29) | $ | 459 |
| EMEA - Morningstar Direct Market Data:(1)(4) | ||||||||||
| Long Term Funds | $ | (90) | $ | (94) | $ | (80) | $ | 10 | $ | 155 |
| Money Market | 151 | (11) | (7) | (69) | 110 | |||||
| ETF | 14 | (9) | 16 | 45 | 35 | |||||
| Total Flows(3) | $ | 75 | $ | (114) | $ | (71) | $ | (14) | $ | 299 |
(1) Industry data is provided for illustrative purposes only. It is not intended to reflect State Street or its clients' activity and is indicative of only segments of the entire industry. See endnotes included in the "In This News Release" section.
(2) 4Q22 data for North America includes actuals for October and November 2022 and Morningstar estimates for December 2022.
(3) Line items may not sum to total due to rounding.
(4) 4Q22 data for Europe is on a rolling three month basis for September 2022 through November 2022, sourced by Morningstar.
INVESTMENT SERVICING AUC/A
The following table presents AUC/A information by product and financial instrument.
| (As of period end, dollars in billions) | 4Q22 | 3Q22 | 4Q21 | % QoQ | % YoY | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Assets Under Custody and/or Administration(1) | ||||||||||
| By product classification: | ||||||||||
| Collective funds, including ETFs | $ | 12,261 | $ | 11,649 | $ | 15,722 | 5.3 | % | (22.0) | % |
| Mutual funds | 9,610 | 9,289 | 11,575 | 3.5 | (17.0) | |||||
| Pension products | 7,734 | 7,669 | 8,443 | 0.8 | (8.4) | |||||
| Insurance and other products | 7,138 | 7,081 | 7,938 | 0.8 | (10.1) | |||||
| Total Assets Under Custody and/or Administration | $ | 36,743 | $ | 35,688 | $ | 43,678 | 3.0 | % | (15.9) | % |
| By financial instrument: | ||||||||||
| Equities | $ | 20,575 | $ | 19,889 | $ | 25,974 | 3.4 | % | (20.8) | % |
| Fixed-income | 10,318 | 10,150 | 12,587 | 1.7 | (18.0) | |||||
| Short-term and other investments | 5,850 | 5,649 | 5,117 | 3.6 | 14.3 | |||||
| Total Assets Under Custody and/or Administration | $ | 36,743 | $ | 35,688 | $ | 43,678 | 3.0 | % | (15.9) | % |
(1) AUC/A values for certain asset classes are based on a lag, typically one-month.
INVESTMENT MANAGEMENT AUM
The following tables present 4Q22 activity in AUM by product category.
| (Dollars in billions) | Equity | Fixed- Income | Cash | Multi-Asset Class Solutions | Alternative Investments(1) | Total | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Beginning balance as of September 30, 2022 | $ | 1,943 | $ | 518 | $ | 410 | $ | 192 | $ | 202 | $ | 3,265 |
| Net asset flows: | ||||||||||||
| Long-term institutional(2) | (18) | 11 | — | 3 | — | (4) | ||||||
| ETF | 17 | 10 | — | — | — | 27 | ||||||
| Cash fund | — | — | (40) | — | — | (40) | ||||||
| Total flows, net | $ | (1) | $ | 21 | $ | (40) | $ | 3 | $ | — | $ | (17) |
| Market appreciation/(depreciation) | 156 | 5 | 4 | 12 | 7 | 184 | ||||||
| Foreign exchange impact | 30 | 10 | 2 | 2 | 5 | 49 | ||||||
| Total market and foreign exchange impact | $ | 186 | $ | 15 | $ | 6 | $ | 14 | $ | 12 | $ | 233 |
| Ending balance as of December 31, 2022 | $ | 2,128 | $ | 554 | $ | 376 | $ | 209 | $ | 214 | $ | 3,481 |
(1) Includes real estate investment trusts, currency and commodities, including SPDR® Gold Shares and SPDR® Gold MiniSharesSM Trust, for which we are not the investment manager but act as the marketing agent.
(2) Amounts represent long-term portfolios, excluding ETFs.
| (Dollars in billions) | 4Q22 | 3Q22 | 2Q22 | 1Q22 | 4Q21 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Beginning balance | $ | 3,265 | $ | 3,475 | $ | 4,022 | $ | 4,138 | $ | 3,862 |
| Net asset flows: | ||||||||||
| Long-term institutional(1) | (4) | — | (69) | 14 | 28 | |||||
| ETF | 27 | (14) | (8) | 17 | 50 | |||||
| Cash fund | (40) | 5 | 15 | 20 | 1 | |||||
| Total flows, net | $ | (17) | $ | (9) | $ | (62) | $ | 51 | $ | 79 |
| Market appreciation/(depreciation) | 184 | (155) | (417) | (153) | 208 | |||||
| Foreign exchange impact | 49 | (46) | (68) | (14) | (11) | |||||
| Total market and foreign exchange impact | $ | 233 | $ | (201) | $ | (485) | $ | (167) | $ | 197 |
| Ending balance | $ | 3,481 | $ | 3,265 | $ | 3,475 | $ | 4,022 | $ | 4,138 |
(1) Amounts represent long-term portfolios, excluding ETFs.
REVENUE
| (Dollars in millions) | 4Q22 | 3Q22 | 4Q21 | % QoQ | % YoY | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Back office servicing fees | $ | 1,115 | $ | 1,126 | $ | 1,272 | (1.0) | % | (12.3) | % | |||||
| Middle office services | 88 | 93 | 105 | (5.4) | (16.2) | ||||||||||
| Servicing fees | 1,203 | 1,219 | 1,377 | (1.3) | (12.6) | ||||||||||
| Management fees | 457 | 472 | 530 | (3.2) | (13.8) | ||||||||||
| Foreign exchange trading services | 367 | 319 | 300 | 15.0 | 22.3 | ||||||||||
| Securities finance | 103 | 110 | 102 | (6.4) | 1.0 | ||||||||||
| Front office software and data | 159 | 127 | 124 | 25.2 | 28.2 | ||||||||||
| Lending related and other fees | 57 | 57 | 63 | — | (9.5) | ||||||||||
| Software and processing fees | 216 | 184 | 187 | 17.4 | 15.5 | ||||||||||
| Other fee revenue | 18 | (5) | 15 | nm | 20.0 | ||||||||||
| Total fee revenue | $ | 2,364 | $ | 2,299 | $ | 2,511 | 2.8 | % | (5.9) | % | |||||
| Net interest income | 791 | 660 | 484 | 19.8 | % | 63.4 | % | ||||||||
| Other income | — | — | 58 | — | nm | ||||||||||
| Total Revenue | $ | 3,155 | $ | 2,959 | $ | 3,053 | 6.6 | % | 3.3 | % | |||||
| Net interest margin (FTE)(1) | 1.29 | % | 1.11 | % | 0.73 | % | 18 | bps | 56 | bps |
(1) Net Interest Margin (NIM) is presented on a fully taxable-equivalent (FTE) basis. Refer to the Addendum for reconciliations of our FTE-basis presentation.
Servicing fees decreased 13% compared to 4Q21, primarily driven by lower average market levels, lower client activity/adjustments and flows, normal pricing headwinds and the impact of currency translation, partially offset by net new business. Servicing fees decreased 1% compared to 3Q22, mainly due to lower client activity/adjustments and flows.
•Back office servicing fees decreased 12% and 1% compared to 4Q21 and 3Q22, respectively (generally consistent with total servicing fees above)
•Middle office services decreased 16% and 5% compared to 4Q21 and 3Q22, respectively, largely reflecting lower client AUM and client activity/adjustments
Management fees decreased 14% and 3% compared to 4Q21 and 3Q22, respectively, largely reflecting lower average market levels.
Foreign exchange trading services increased 22% compared to 4Q21, primarily reflecting higher FX spreads and a revenue-related recovery from a 2018 FX benchmark litigation resolution, partially offset by lower client FX volumes. Foreign exchange trading services increased 15% compared to 3Q22, driven by higher Direct and Indirect FX revenue and the aforementioned litigation resolution.
Securities finance increased 1% compared to 4Q21, largely from higher spreads, partially offset by lower balances from lower markets. Securities finance decreased 6% compared to 3Q22, primarily driven by downward pressure on spreads due to lower specials activity and lower balances.
Software and processing fees increased 16% and 17% compared to 4Q21 and 3Q22, respectively, primarily driven by higher front office software and data revenue associated with CRD.
•Front office software and data increased 28% and 25% compared to 4Q21 and 3Q22, respectively, primarily driven by higher on-premises renewals and software-enabled revenue
Other fee revenue increased $3 million and $23 million compared to 4Q21 and 3Q22, respectively, largely due to higher market-related adjustments.
Net interest income (NII) increased 63% compared to 4Q21, primarily driven by higher short-term market rates from global central bank hikes, an increase in long-term interest rates, and balance sheet positioning, partially offset by lower deposits. Compared to 3Q22, NII increased 20%, primarily driven by higher global market rates.
Total revenues were adversely impacted by currency translation by $64 million compared to 4Q21 and positively impacted by $6 million compared to 3Q22.
EXPENSES
| (Dollars in millions) | 4Q22 | 3Q22 | 4Q21 | % QoQ | % YoY | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Compensation and employee benefits | $ | 1,108 | $ | 1,042 | $ | 1,181 | 6.3 | % | (6.2) | % | |||||
| Information systems and communications | 416 | 399 | 436 | 4.3 | (4.6) | ||||||||||
| Transaction processing services | 240 | 227 | 238 | 5.7 | 0.8 | ||||||||||
| Occupancy | 106 | 97 | 133 | 9.3 | (20.3) | ||||||||||
| Acquisition and restructuring costs | 31 | 13 | 26 | 138.5 | 19.2 | ||||||||||
| Amortization of other intangible assets | 59 | 58 | 62 | 1.7 | (4.8) | ||||||||||
| Other | 296 | 274 | 254 | 8.0 | 16.5 | ||||||||||
| Total Expenses | $ | 2,256 | $ | 2,110 | $ | 2,330 | 6.9 | % | (3.2) | % | |||||
| Total expenses, excluding notable items(1) | $ | 2,155 | $ | 2,097 | $ | 2,160 | 2.8 | % | (0.2) | % | |||||
| Effective tax rate | 17.6 | % | 18.7 | % | 4.6 | % | (110) | bps | 1,300 | bps |
(1) See "4Q22 Highlights" in this news release for a listing of notable items. Results excluding notable items and/or currency translation impact are non-GAAP measures. Please refer to the Addendum included with this news release for an explanation and reconciliation of non-GAAP measures.as well as the impact of currency translation on the respective line items.
Compensation and employee benefits decreased 6% compared to 4Q21, mainly due to the impact of currency translation, lower incentive compensation, and a decrease in notable items, partially offset by higher salaries. Compensation and employee benefits increased 6% compared to 3Q22, mainly due to the impact of notable items and higher salaries.
Information systems and communications decreased 5% compared to 4Q21, largely due to productivity and vendor savings initiatives, partially offset by technology and infrastructure investments. Information systems and communications increased 4% compared to 3Q22, primarily due to technology and infrastructure investments.
Transaction processing services increased 1% compared to 4Q21, mainly reflecting higher broker fees and market data costs, partially offset by lower sub-custody costs. Transaction processing services increased 6% compared to 3Q22, largely driven by higher market data costs.
Occupancy decreased 20% compared to 4Q21, mainly reflecting an episodic sale-leaseback transaction and a decrease in notable items. Occupancy increased 9% compared to 3Q22 primarily due to the impact of notable items, partially offset by the aforementioned sale-leaseback transaction.
Acquisition and restructuring costs of $31 million in 4Q22 related to the BBH Investor Services acquisition transaction that State Street is no longer pursuing.
Amortization of other intangible assets decreased 5% compared to 4Q21, mainly due to the impact of currency translation.
Other expenses increased 17% and 8% compared to 4Q21 and 3Q22, respectively, largely reflecting higher professional fees and travel costs.
Total expenses on both a GAAP and excluding notables basis were positively impacted by currency translation by $64 million and $1 million when compared to 4Q21 and 3Q22, respectively.
TAXES
The effective tax rate of 17.6% increased from 4.6% in 4Q21, primarily due to a lower level of discrete
benefits relative to 4Q21, which included the completion of tax audits, foreign tax benefits, and tax return
finalization. Compared to 3Q22, the effective tax rate decreased from 18.7%, primarily due to higher discrete benefits.
CAPITAL AND LIQUIDITY
The following table presents preliminary estimates of regulatory capital and liquidity ratios for State Street Corporation.
| (As of period end) | 4Q22 | 3Q22 | 4Q21 | |||
|---|---|---|---|---|---|---|
| Basel III Standardized Approach: | ||||||
| Common equity tier 1 ratio (CET1) | 13.6 | % | 13.2 | % | 14.3 | % |
| Tier 1 capital ratio | 15.4 | 14.9 | 16.1 | |||
| Total capital ratio | 16.8 | 16.2 | 17.6 | |||
| Basel III Advanced Approaches: | ||||||
| Common equity tier 1 ratio (CET1) | 13.8 | 14.0 | 14.3 | |||
| Tier 1 capital ratio | 15.7 | 15.9 | 16.1 | |||
| Total capital ratio | 17.0 | 17.1 | 17.5 | |||
| Tier 1 leverage ratio | 6.0 | 6.4 | 6.1 | |||
| Supplementary leverage ratio | 7.0 | 7.1 | 7.4 | |||
| Liquidity coverage ratio | 106 | % | 106 | % | 105 | % |
Standardized capital ratios were binding for all periods included above.
CET1 ratio (standardized) decreased 0.7% points compared to 4Q21, primarily driven by lower AOCI from higher interest rates and the resumption of share repurchases in 4Q22, partially offset by higher retained earnings and episodically lower RWAs. CET1 ratio (standardized) increased 0.4% points compared to 3Q22, primarily reflecting episodically lower RWAs and higher retained earnings, partially offset by the resumption of share repurchases.
Tier 1 leverage ratio decreased 0.1% points compared to 4Q21. Tier 1 leverage ratio decreased 0.4% points compared to 3Q22 primarily due to the resumption of share repurchases and an increase in average balance sheet size, partially offset by higher retained earnings.
Liquidity coverage ratio (LCR) for State Street Corporation was approximately 106%, up 1% point from 4Q21 and flat compared to 3Q22. LCR for State Street Bank and Trust was approximately 122%.
INVESTOR CONFERENCE CALL AND QUARTERLY WEBSITE DISCLOSURE
State Street will webcast an investor conference call today, Friday, January 20, 2023, at 11:00 a.m. ET, available at http://investors.statestreet.com. The conference call will also be available via telephone, at (888) 886-7786. The Conference ID# is 36041552.
Recorded replay of the conference call will be available on the website and by telephone at (877) 674-7070 beginning approximately two hours after the call's completion. The Conference ID# is 36041552 and the Playback Passcode is 041552 #.
The telephone replay will be available for approximately one month following the conference call. This News Release, presentation materials referred to on the conference call and additional financial information are available on State Street's website, at http://investors.statestreet.com under “Investor Relations--Investor News & Events" and under the title “Events and Presentations".
State Street intends to publish updates to its public disclosure regarding regulatory capital, as required by the Basel III final rule, and the liquidity coverage ratio, on a quarterly basis on its website at
http://investors.statestreet.com, under "Filings & Reports". Those updates will be published each quarter, during the period beginning after State Street's public announcement of its quarterly results of operations and ending on or prior to the due date under applicable bank regulatory requirements (i.e., ordinarily, ending no later than 60 days following year-end or 40 to 45 days following each other quarter-end, as applicable). For 4Q22, State Street expects to publish its updates during the period beginning today and ending on or about March 1, 2023 for regulatory capital and the liquidity coverage ratio.
State Street Corporation (NYSE: STT) is one of the world's leading providers of financial services to institutional investors including investment servicing, investment management and investment research and trading. With $36.7 trillion in assets under custody and/or administration and $3.5 trillion* in assets under management as of December 31, 2022, State Street operates globally in more than 100 geographic markets and employs approximately 42,000 worldwide. For more information, visit State Street's website at www.statestreet.com.
* Assets under management as of December 31, 2022 includes approximately $59 billion of assets with respect to SPDR® products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are affiliated.
IN THIS NEWS RELEASE:
•Stock purchases under our common stock repurchase programs may be made using various types of transactions, including open-market purchases, accelerated share repurchases or other transactions off the market, and may be made under Rule 10b5-1 trading programs. The timing and amount of any stock purchases and the type of transaction may not be ratable over the duration of the program, may vary from reporting period to reporting period and will depend on several factors, including our capital position and financial performance, investment opportunities, market conditions, regulatory considerations including the nature and timing of implementation of revisions to the Basel III framework, and the amount of common stock issued as part of employee compensation programs. The common share repurchase programs do not have specific price targets and may be suspended at any time.
•Expenses and other measures are sometimes presented excluding notable items/effects of currency translation. This is a non-GAAP presentation. See the Addendum to this News Release for an explanation and reconciliations of our non-GAAP measures.
•New asset servicing mandates, including announced front-to-back investment servicing clients, may be subject to completion of definitive agreements, approval of applicable boards and shareholders and customary regulatory approvals. New asset servicing mandates and servicing assets remaining to be installed in future periods exclude new business which has been contracted, but for which the client has not yet provided permission to publicly disclose and is not yet installed. These excluded assets, which from time to time may be significant, will be included in new asset servicing mandates and reflected in servicing assets remaining to be installed in the period in which the client provides its permission. Servicing mandates and servicing assets remaining to be installed in future periods are presented on a gross basis and therefore also do not include the impact of clients who have notified us during the period of their intent to terminate or reduce their relationship with State Street, which from time to time may be significant.
•New business in assets to be serviced is reflected in our AUC/A 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 mandates may be reflected in our AUC/A and AUM as of any particular date specified. Consistent with past practice, AUC/A values for certain asset classes are based on a lag, typically one-month. Generally, our servicing fee revenues are affected by several factors, including changes in market valuations, client activity and asset flows, net new business and the manner in which we price our services. We provide a range of services to our clients, including core custody services, accounting, reporting and administration and middle office services, and the nature and mix of services provided affects our servicing fees. The basis for fees will differ across regions and clients. The industry in which we operate has historically faced pricing pressure, and our servicing fee revenues are also affected by such pressures today. Consequently, no assumption should be drawn as to future revenue run rate from announced servicing wins or new servicing business yet to be installed, as the amount of revenue associated with AUC/A can vary materially. Management fees generally are affected by our level of AUM and differ based upon the nature, type and investment strategy of the investment product. Management fee revenue is more sensitive to market valuations than servicing fee revenue, as a higher proportion of the underlying services provided, and the associated management fees earned, are dependent on equity and fixed-income security valuations. Additional factors, such as the relative mix of assets managed, may have a significant effect on our management fee revenue. While certain management fees are directly determined by the values of AUM and the investment strategies employed, management fees may reflect other factors, including performance fee arrangements, as well as our relationship pricing for clients.
•Front office software and data ARR, an operating metric, is calculated by annualizing current quarter revenue for CRD and Mercatus and includes the annualized amount of most software-enabled revenue, including revenue generated from SaaS, maintenance and support revenue, FIX, and value-added services, which are all expected to be recognized ratably over the term of client contracts. ARR does not include software-enabled brokerage revenue and revenue from affiliates. Front office software and data ARR was $229 million, $267 million, and $272 million in 4Q21, 3Q22, and 4Q22, respectively.
•Revenue and pre-tax income reflects the application of ASC 606. Revenue recognition under ASC 606 results in the acceleration of a significant portion of revenues for on-premises software agreements when a client goes live or renews their contract with us. The amount of revenue recognized in any given quarter will be driven in large part by client activity, including agreements that renew or are installed in that quarter.
•Unless otherwise noted, all capital ratios referenced on this News Release and elsewhere in this presentation refer to State Street Corporation, or State Street, and not State Street Bank and Trust Company, or State Street Bank. The lower of capital ratios calculated under the Basel III advanced approaches and under the Basel III standardized approach are applied in the assessment of our capital adequacy for regulatory purposes. Standardized ratios were binding for 4Q22. Refer to the Addendum included with this News Release for additional information. All capital ratios are estimated. Liquidity Coverage Ratio (LCR) is a preliminary estimate based on a quarterly daily average.
•All earnings per share amounts represent fully diluted earnings per common share.
•Return on average common equity is determined by dividing annualized net income available to common shareholders by average common shareholders' equity for the period.
•Quarter-over-quarter (QoQ) is a sequential quarter comparison. Year-on-year (YoY) is the current period compared to the same period a year ago.
•Operating leverage is the rate of growth of total revenue less the rate of growth of total expenses, relative to the corresponding prior year period, as applicable.
•"AUC/A" denotes Assets Under Custody and/or Administration; "AUC" denotes Assets Under Custody; "AUM" denotes Assets Under Management; "SPDR" denotes Standard and Poor's Depository Receipt; "ETF" denotes Exchange-traded fund; "nm" denotes not meaningful; "EOP" denotes end of period.
•"CRD" denotes Charles River Development; "SaaS" denoted Software as a service; "FIX" denotes The Charles River Network's FIX Network Service (CRN); "on-premises" denotes on-premises revenue as recognized in the CRD business.
•"Libor" denotes London Inter-Bank Offered Rate; "Euribor" denotes Euro Inter-Bank Offered Rate.
•"RWA" denotes risk-weighted assets; "AOCI" denotes Accumulated other comprehensive income; "AFS" denotes Available-for-sale; "SA-CCR" denotes Standard Approach for Counterparty Credit Risk.
•"FTE" denotes fully taxable-equivalent basis; NIM is presented on an FTE-basis. Refer to the Addendum for reconciliations of our FTE-basis presentation.
•Industry data is provided for illustrative purposes only. It is not intended to reflect State Street's or its clients' activity and is indicative of only selected segments of the entire industry.
◦Morningstar data includes long-term mutual funds, ETF’s and Money Market funds. Mutual fund data represents estimates of net new cash flow, which is new sales minus redemptions combined with net exchanges, while ETF data represents net issuance, which is gross issuance less gross redemptions. Data for Fund of Funds, Feeder funds and Obsolete funds were excluded from the series to prevent double counting. Data is from the Morningstar Direct Asset Flows database.
◦The long-term fund flows reported by Morningstar in North America are composed of US domiciled Market flows mainly in Equities, Allocation and Fixed Income asset classes. 4Q22 data for North America (US domiciled) includes Morningstar actuals for October and November 2022 and Morningstar estimates for December 2022.
◦The long-term funds flows reported by Morningstar direct in EMEA are composed of the European market flows mainly in Equities, Allocation and Fixed Incomes asset classes. 4Q22 data for Europe is on a rolling three month basis for September 2022 through November 2022, sourced by Morningstar.
FORWARD LOOKING STATEMENTS
This News Release contains forward-looking statements within the meaning of United States securities laws, including statements about our goals and expectations regarding our strategy, growth prospects, capital management, business, financial and capital condition, results of operations, the financial and market outlook and the business environment. Forward-looking statements are often, but not always, identified by such forward-looking terminology as “outlook,” “priority,” “will,” “expect,” "intend," "aim," "outcome," "future," “strategy,” “trajectory,” "target," “guidance,” “objective,” “plan,” “forecast,” “believe,” “anticipate,” “estimate,” “seek,” “may,” “trend,” 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 time subsequent to the time this News Release is first issued.
Important factors that may affect future results and outcomes include, but are not limited to:
•We are subject to intense competition, which could negatively affect our profitability;
•We are subject to significant pricing pressure and variability in our financial results and our AUC/A and AUM;
•Our development and completion of new products and services, including State Street Digital and State Street AlphaSM, and the enhancement of our infrastructure required to meet increased regulatory and client expectations for resiliency and the systems and process re-engineering necessary to achieve improved productivity and reduced operating risk, may take an extended period to implement, involve costs and expose us to increased risk;
•Our business may be negatively affected by our failure to update and maintain our technology infrastructure;
•The COVID-19 pandemic continues to exacerbate certain risks and uncertainties for our business;
•Acquisitions, strategic alliances, joint ventures and divestitures, and the integration, retention and development of the benefits of our acquisitions, pose risks for our business;
•Competition for qualified members of our workforce is intense, and we may not be able to attract and retain the highly skilled people we need to support our business;
•We could be adversely affected by geopolitical, economic and market conditions, including, for example, as a result of the ongoing war in Ukraine, actions taken by central banks to address inflationary pressures, challenging conditions in global equity markets, and disruptions in fixed income markets such as those impacting the UK gilts in the fourth quarter of 2022;
•We have significant International operations, and disruptions in European and Asian economies could have an adverse effect on our consolidated results of operations or financial condition;
•Our investment securities portfolio, consolidated financial condition and consolidated results of operations could be adversely affected by changes in the financial markets;
•Our business activities expose us to interest rate risk;
•We assume significant credit risk to counterparties, who may also have substantial financial dependencies with other financial institutions, and these credit exposures and concentrations could expose us to financial loss;
•Our fee revenue represents a significant portion of our consolidated revenue and is subject to decline based on, among other factors, market conditions, competition, currency valuation and investment activities of our clients and their business mix;
•If we are unable to effectively manage our capital and liquidity, our consolidated financial condition, capital ratios, results of operations and business prospects could be adversely affected;
•We may need to raise additional capital or debt in the future, which may not be available to us or may only be available on unfavorable terms;
•If we experience a downgrade in our credit ratings, or an actual or perceived reduction in our financial strength, our borrowing and capital costs, liquidity and reputation could be adversely affected;
•Our business and capital-related activities, including common share repurchases, may be adversely affected by regulatory capital, credit (counterparty and otherwise) and liquidity standards and considerations;
•We face extensive and changing government regulation in the jurisdictions in which we operate, which may increase our costs and compliance risks;
•We are subject to enhanced external oversight as a result of the resolution of prior regulatory or governmental matters;
•Our businesses may be adversely affected by government enforcement and litigation;
•Any misappropriation of the confidential information we possess could have an adverse impact on our business and could subject us to regulatory actions, litigation and other adverse effects;
•Our calculations of risk exposures, total RWA and capital ratios depend on data inputs, formulae, models, correlations and assumptions that are subject to change, which could materially impact our risk exposures, our total RWA and our capital ratios from period to period;
•Changes in accounting standards may adversely affect our consolidated financial statements;
•Changes in tax laws, rules or regulations, challenges to our tax positions and changes in the composition of our pre-tax earnings may increase our effective tax rate;
•In addition to income tax, we are subject to audit or other examination, and litigation or other dispute resolution proceedings, with U.S. and non-U.S. tax authorities regarding non-income-based tax matters. Our interpretations or application of tax laws and regulations, including with respect to withholding, transfer, wage, use, stamp, service and other non-income taxes, could differ from that of the relevant governmental taxing authority, or we may experience timing or other compliance deficiencies in connection with our efforts to comply with applicable tax laws and regulations, which could result in the requirement to pay additional taxes, penalties and/or interest, which could be material;
•The transition away from LIBOR may result in additional unanticipated costs and increased risk exposure;
•Our control environment may be inadequate, fail or be circumvented, and operational risks could adversely affect our consolidated results of operations;
•Cost shifting to non-U.S. jurisdictions and outsourcing may expose us to increased operational risk, geopolitical risk and reputational harm and may not result in expected cost savings;
•Attacks or unauthorized access to our information technology systems or facilities, or those of the third parties with which we do business, or disruptions to our or their continuous operations, could result in significant costs, reputational damage and impacts on our business activities;
•Long-term contracts expose us to pricing and performance risk;
•Our businesses may be negatively affected by adverse publicity or other reputational harm;
•We may not be able to protect our intellectual property;
•The quantitative models we use to manage our business may contain errors that could result in material harm;
•Our reputation and business prospects may be damaged if our clients incur substantial losses or are restricted in redeeming their interests in investment pools that we sponsor or manage;
•The impacts of climate change, and regulatory responses to such risks, could adversely affect us; and
•We may incur losses as a result of unforeseen events including terrorist attacks, natural disasters, the emergence of a new pandemic or acts of embezzlement.
Other important factors that could cause actual results to differ materially from those indicated by any forward-looking statements are set forth in our 2021 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 should not by relied on as representing our expectations or beliefs as of any time subsequent to the time this News Release is first issued, and we do not undertake efforts to revise those forward-looking statements to reflect events after that time.
13
Document
Exhibit 99.2
| STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||||||
| December 31, 2022 | ||||||||||||||||||||||||||||||||||||||
| Table of Contents | ||||||||||||||||||||||||||||||||||||||
| GAAP-Basis Financial Information: | ||||||||||||||||||||||||||||||||||||||
| 5-Year Summary of Results | 2 | |||||||||||||||||||||||||||||||||||||
| Consolidated Results of Operations | 3 | |||||||||||||||||||||||||||||||||||||
| Consolidated Statement of Condition | 5 | |||||||||||||||||||||||||||||||||||||
| Average Statement of Condition - Rates Earned and Paid - Fully Taxable-Equivalent Basis | 6 | |||||||||||||||||||||||||||||||||||||
| Average Statement of Condition - Rates Earned and Paid - Fully Taxable-Equivalent Basis - Year-to-Date | 7 | |||||||||||||||||||||||||||||||||||||
| Selected Average Balances by Currency - Rates Earned and Paid | 8 | |||||||||||||||||||||||||||||||||||||
| Investment Portfolio Holdings by Asset Class | 9 | |||||||||||||||||||||||||||||||||||||
| Investment Portfolio Non-U.S. Investments | 11 | |||||||||||||||||||||||||||||||||||||
| Assets Under Custody and/or Administration | 12 | |||||||||||||||||||||||||||||||||||||
| Assets Under Management | 13 | |||||||||||||||||||||||||||||||||||||
| Industry Flow Data by Asset Class | 14 | |||||||||||||||||||||||||||||||||||||
| Line of Business Information | 15 | |||||||||||||||||||||||||||||||||||||
| Allowance for Credit Losses | 16 | |||||||||||||||||||||||||||||||||||||
| Non-GAAP Financial Information: | ||||||||||||||||||||||||||||||||||||||
| Reconciliations of Non-GAAP Financial Information | 17 | |||||||||||||||||||||||||||||||||||||
| Reconciliation of Pre-tax Margin Excluding Notable Items | 20 | |||||||||||||||||||||||||||||||||||||
| Reconciliations of Constant Currency FX Impacts | 21 | |||||||||||||||||||||||||||||||||||||
| Capital: | ||||||||||||||||||||||||||||||||||||||
| Reconciliation of Tangible Common Equity Ratio | 22 | |||||||||||||||||||||||||||||||||||||
| Regulatory Capital | 23 | |||||||||||||||||||||||||||||||||||||
| This financial information should be read in conjunction with State Street's news release dated January 20, 2023. | ||||||||||||||||||||||||||||||||||||||
| STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||||||
| 5-YEAR SUMMARY OF RESULTS | ||||||||||||||||||||||||||||||||||||||
| (Dollars in millions, except per share amounts, or where otherwise noted) | 2018 | 2019 | 2020 | 2021 | 2022 | |||||||||||||||||||||||||||||||||
| Year ended December 31: | ||||||||||||||||||||||||||||||||||||||
| Total fee revenue | $ | 9,454 | $ | 9,147 | $ | 9,499 | $ | 10,012 | $ | 9,606 | ||||||||||||||||||||||||||||
| Net interest income | 2,671 | 2,566 | 2,200 | 1,905 | 2,544 | |||||||||||||||||||||||||||||||||
| Other income | 6 | 43 | 4 | 110 | (2) | |||||||||||||||||||||||||||||||||
| Total revenue | 12,131 | 11,756 | 11,703 | 12,027 | 12,148 | |||||||||||||||||||||||||||||||||
| Provision for credit losses | 15 | 10 | 88 | (33) | 20 | |||||||||||||||||||||||||||||||||
| Total expenses | 9,015 | 9,034 | 8,716 | 8,889 | 8,801 | |||||||||||||||||||||||||||||||||
| Income before income tax expense | 3,101 | 2,712 | 2,899 | 3,171 | 3,327 | |||||||||||||||||||||||||||||||||
| Income tax expense | 508 | 470 | 479 | 478 | 553 | |||||||||||||||||||||||||||||||||
| Net income | 2,593 | 2,242 | 2,420 | 2,693 | 2,774 | |||||||||||||||||||||||||||||||||
| Net income available to common shareholders | $ | 2,404 | $ | 2,009 | $ | 2,257 | $ | 2,572 | $ | 2,660 | ||||||||||||||||||||||||||||
| Per common share: | ||||||||||||||||||||||||||||||||||||||
| Diluted earnings per common share | $ | 6.39 | $ | 5.38 | $ | 6.32 | $ | 7.19 | $ | 7.19 | ||||||||||||||||||||||||||||
| Average diluted common shares outstanding (in thousands) | 376,476 | 373,666 | 357,106 | 357,962 | 370,109 | |||||||||||||||||||||||||||||||||
| Cash dividends declared per common share | $ | 1.78 | $ | 1.98 | $ | 2.08 | $ | 2.18 | $ | 2.40 | ||||||||||||||||||||||||||||
| Closing price per share of common stock (at year end) | 63.07 | 79.10 | 72.78 | 93.00 | 77.57 | |||||||||||||||||||||||||||||||||
| Average balance sheet: | ||||||||||||||||||||||||||||||||||||||
| Investment securities | $ | 88,070 | $ | 91,768 | $ | 109,175 | $ | 111,730 | $ | 111,929 | ||||||||||||||||||||||||||||
| Total assets | 223,385 | 223,334 | 269,334 | 299,743 | 286,430 | |||||||||||||||||||||||||||||||||
| Total deposits | 161,408 | 158,262 | 193,225 | 235,404 | 222,874 | |||||||||||||||||||||||||||||||||
| Ratios and other metrics: | ||||||||||||||||||||||||||||||||||||||
| Return on average common equity | 12.1 | % | 9.4 | % | 10.0 | % | 10.7 | % | 11.1 | % | ||||||||||||||||||||||||||||
| Pre-tax margin | 25.6 | 23.1 | 24.8 | 26.4 | 27.4 | |||||||||||||||||||||||||||||||||
| Pre-tax margin, excluding notable items(1) | 28.8 | 25.8 | 26.3 | 27.6 | 28.4 | |||||||||||||||||||||||||||||||||
| Net interest margin, fully taxable-equivalent basis | 1.47 | 1.42 | 0.97 | 0.74 | 1.03 | |||||||||||||||||||||||||||||||||
| Common equity tier 1 ratio(2)(3)(4) | 11.7 | 11.7 | 12.3 | 14.3 | 13.6 | |||||||||||||||||||||||||||||||||
| Tier 1 capital ratio(2)(3)(4) | 15.5 | 14.5 | 14.4 | 16.1 | 15.4 | |||||||||||||||||||||||||||||||||
| Total capital ratio(2)(3)(4) | 16.3 | 15.6 | 15.3 | 17.5 | 16.8 | |||||||||||||||||||||||||||||||||
| Tier 1 leverage ratio(2)(3) | 7.2 | 6.9 | 6.4 | 6.1 | 6.0 | |||||||||||||||||||||||||||||||||
| Supplementary leverage ratio(2)(3) | 6.3 | 6.1 | 8.1 | 7.4 | 7.0 | |||||||||||||||||||||||||||||||||
| Assets under custody and/or administration (in trillions) | $ | 31.62 | $ | 34.36 | $ | 38.79 | $ | 43.68 | $ | 36.74 | ||||||||||||||||||||||||||||
| Assets under management (in trillions) | 2.51 | 3.12 | 3.47 | 4.14 | 3.48 | |||||||||||||||||||||||||||||||||
| (1) Notable items include acquisition and restructuring costs, repositioning charges and legal and other notable items. Refer to Reconciliations of pre-tax margin excluding notable items for details. | ||||||||||||||||||||||||||||||||||||||
| (2) The capital ratios presented are calculated in conformity with the applicable regulatory guidance in effect as of each period end. Effective January 1, 2018, the applicable final rules are in effect and the ratios are calculated based on fully phased-in CET1, tier 1, total capital and supplementary leverage numbers. We did not revise previously-filed reported capital metrics and ratios. | ||||||||||||||||||||||||||||||||||||||
| (3) Under the applicable bank regulatory rules, we are not required to and, accordingly, did not revise previously-filed reported capital metrics and ratios following the change in accounting for LIHTC. | ||||||||||||||||||||||||||||||||||||||
| (4) The reportable ratios represent the lower of each of the risk-based capital ratios under both the Standardized Approach and the Advanced Approaches. | ||||||||||||||||||||||||||||||||||||||
| 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) | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | 4Q22<br> vs. <br>4Q21 | 4Q22<br> vs. <br>3Q22 | 2021 | 2022 | YTD2022<br> vs. <br>YTD2021 | |||||||||||||||||||||||||
| Fee revenue: | ||||||||||||||||||||||||||||||||||||||
| Back office servicing fees | $ | 1,266 | $ | 1,290 | $ | 1,289 | $ | 1,272 | $ | 1,268 | $ | 1,205 | $ | 1,126 | $ | 1,115 | (12.3) | % | (1.0) | % | $ | 5,117 | $ | 4,714 | (7.9) | % | ||||||||||||
| Middle office services | 103 | 104 | 102 | 105 | 100 | 92 | 93 | 88 | (16.2) | (5.4) | 414 | 373 | (9.9) | |||||||||||||||||||||||||
| Servicing fees | 1,369 | 1,394 | 1,391 | 1,377 | 1,368 | 1,297 | 1,219 | 1,203 | (12.6) | (1.3) | 5,531 | 5,087 | (8.0) | |||||||||||||||||||||||||
| Management fees | 493 | 504 | 526 | 530 | 520 | 490 | 472 | 457 | (13.8) | (3.2) | 2,053 | 1,939 | (5.6) | |||||||||||||||||||||||||
| Foreign exchange trading services | 346 | 286 | 279 | 300 | 359 | 331 | 319 | 367 | 22.3 | 15.0 | 1,211 | 1,376 | 13.6 | |||||||||||||||||||||||||
| Securities finance | 99 | 109 | 106 | 102 | 96 | 107 | 110 | 103 | 1.0 | (6.4) | 416 | 416 | — | |||||||||||||||||||||||||
| Front office software and data | 96 | 148 | 116 | 124 | 138 | 126 | 127 | 159 | 28.2 | 25.2 | 484 | 550 | 13.6 | |||||||||||||||||||||||||
| Lending related and other fees | 64 | 63 | 64 | 63 | 63 | 62 | 57 | 57 | (9.5) | — | 254 | 239 | (5.9) | |||||||||||||||||||||||||
| Software and processing fees | 160 | 211 | 180 | 187 | 201 | 188 | 184 | 216 | 15.5 | 17.4 | 738 | 789 | 6.9 | |||||||||||||||||||||||||
| Other fee revenue | 16 | 10 | 22 | 15 | 29 | (43) | (5) | 18 | 20.0 | nm | 63 | (1) | nm | |||||||||||||||||||||||||
| Total fee revenue | 2,483 | 2,514 | 2,504 | 2,511 | 2,573 | 2,370 | 2,299 | 2,364 | (5.9) | 2.8 | 10,012 | 9,606 | (4.1) | |||||||||||||||||||||||||
| Net interest income: | ||||||||||||||||||||||||||||||||||||||
| Interest income | 471 | 467 | 487 | 483 | 521 | 704 | 1,101 | 1,762 | nm | 60.0 | 1,908 | 4,088 | nm | |||||||||||||||||||||||||
| Interest expense | 4 | — | — | (1) | 12 | 120 | 441 | 971 | nm | nm | 3 | 1,544 | nm | |||||||||||||||||||||||||
| Net interest income | 467 | 467 | 487 | 484 | 509 | 584 | 660 | 791 | 63.4 | 19.8 | 1,905 | 2,544 | 33.5 | |||||||||||||||||||||||||
| Other income: | ||||||||||||||||||||||||||||||||||||||
| Gains (losses) related to investment securities, net | — | — | (1) | 58 | (1) | (1) | — | — | nm | — | 57 | (2) | nm | |||||||||||||||||||||||||
| Other income | — | 53 | — | — | — | — | — | — | — | — | 53 | — | nm | |||||||||||||||||||||||||
| Total other income | — | 53 | (1) | 58 | (1) | (1) | — | — | nm | — | 110 | (2) | nm | |||||||||||||||||||||||||
| Total revenue | 2,950 | 3,034 | 2,990 | 3,053 | 3,081 | 2,953 | 2,959 | 3,155 | 3.3 | 6.6 | 12,027 | 12,148 | 1.0 | |||||||||||||||||||||||||
| Provision for credit losses | (9) | (15) | (2) | (7) | — | 10 | — | 10 | nm | — | (33) | 20 | nm | |||||||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||||||||||||||
| Compensation and employee benefits | 1,242 | 1,077 | 1,054 | 1,181 | 1,232 | 1,046 | 1,042 | 1,108 | (6.2) | 6.3 | 4,554 | 4,428 | (2.8) | |||||||||||||||||||||||||
| Information systems and communications | 421 | 398 | 406 | 436 | 423 | 392 | 399 | 416 | (4.6) | 4.3 | 1,661 | 1,630 | (1.9) | |||||||||||||||||||||||||
| Transaction processing services | 270 | 263 | 253 | 238 | 264 | 240 | 227 | 240 | 0.8 | 5.7 | 1,024 | 971 | (5.2) | |||||||||||||||||||||||||
| Occupancy | 109 | 100 | 102 | 133 | 95 | 96 | 97 | 106 | (20.3) | 9.3 | 444 | 394 | (11.3) | |||||||||||||||||||||||||
| Acquisition and restructuring costs | 10 | 11 | 18 | 26 | 9 | 12 | 13 | 31 | 19.2 | nm | 65 | 65 | — | |||||||||||||||||||||||||
| Amortization of other intangible assets | 58 | 63 | 62 | 62 | 61 | 60 | 58 | 59 | (4.8) | 1.7 | 245 | 238 | (2.9) | |||||||||||||||||||||||||
| Other | 222 | 199 | 221 | 254 | 243 | 262 | 274 | 296 | 16.5 | 8.0 | 896 | 1,075 | 20.0 | |||||||||||||||||||||||||
| Total expenses | 2,332 | 2,111 | 2,116 | 2,330 | 2,327 | 2,108 | 2,110 | 2,256 | (3.2) | 6.9 | 8,889 | 8,801 | (1.0) | |||||||||||||||||||||||||
| Income before income tax expense | 627 | 938 | 876 | 730 | 754 | 835 | 849 | 889 | 21.8 | 4.7 | 3,171 | 3,327 | 4.9 | |||||||||||||||||||||||||
| Income tax expense | 108 | 175 | 162 | 33 | 150 | 88 | 159 | 156 | nm | (1.9) | 478 | 553 | 15.7 | |||||||||||||||||||||||||
| Net income | $ | 519 | $ | 763 | $ | 714 | $ | 697 | $ | 604 | $ | 747 | $ | 690 | $ | 733 | 5.2 | 6.2 | $ | 2,693 | $ | 2,774 | 3.0 | |||||||||||||||
| 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) | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | 4Q22<br> vs. <br>4Q21 | 4Q22<br> vs. <br>3Q22 | 2021 | 2022 | YTD2022<br> vs. <br>YTD2021 | |||||||||||||||||||||||||
| Adjustments to net income: | ||||||||||||||||||||||||||||||||||||||
| Dividends on preferred stock(1) | $ | (30) | $ | (34) | $ | (21) | $ | (34) | $ | (20) | $ | (35) | $ | (21) | $ | (36) | (5.9) | % | (71.4) | % | $ | (119) | $ | (112) | 5.9 | % | ||||||||||||
| Earnings allocated to participating securities | — | (1) | — | (1) | (1) | — | — | (1) | — | — | (2) | (2) | — | |||||||||||||||||||||||||
| Net income available to common shareholders | $ | 489 | $ | 728 | $ | 693 | $ | 662 | $ | 583 | $ | 712 | $ | 669 | $ | 696 | 5.1 | 4.0 | $ | 2,572 | $ | 2,660 | 3.4 | |||||||||||||||
| Per common share: | ||||||||||||||||||||||||||||||||||||||
| Basic earnings | $ | 1.39 | $ | 2.11 | $ | 1.99 | $ | 1.81 | $ | 1.59 | $ | 1.94 | $ | 1.82 | $ | 1.94 | 7.2 | 6.6 | $ | 7.30 | $ | 7.28 | (0.3) | |||||||||||||||
| Diluted earnings | 1.37 | 2.07 | 1.96 | 1.78 | 1.57 | 1.91 | 1.80 | 1.91 | 7.3 | 6.1 | 7.19 | 7.19 | — | |||||||||||||||||||||||||
| Average common shares outstanding (in thousands): | ||||||||||||||||||||||||||||||||||||||
| Basic | 350,743 | 345,889 | 347,718 | 365,798 | 366,542 | 367,375 | 367,789 | 359,200 | (1.8) | (2.3) | 352,565 | 365,214 | 3.6 | |||||||||||||||||||||||||
| Diluted | 355,690 | 351,582 | 353,494 | 371,685 | 372,037 | 372,123 | 372,418 | 363,923 | (2.1) | (2.3) | 357,962 | 370,109 | 3.4 | |||||||||||||||||||||||||
| Cash dividends declared per common share | $ | 0.52 | $ | 0.52 | $ | 0.57 | $ | 0.57 | $ | 0.57 | $ | 0.57 | $ | 0.63 | $ | 0.63 | 10.5 | — | $ | 2.18 | $ | 2.40 | 10.1 | |||||||||||||||
| Closing price per share of common stock (as of quarter end) | 84.01 | 82.28 | 84.72 | 93.00 | 87.12 | 61.65 | 60.81 | 77.57 | (16.6) | 27.6 | 93.00 | 77.57 | (16.6) | |||||||||||||||||||||||||
| Balance sheet averages: | ||||||||||||||||||||||||||||||||||||||
| Investment securities | $ | 107,809 | $ | 111,481 | $ | 113,635 | $ | 113,906 | $ | 119,286 | $ | 113,929 | $ | 108,875 | $ | 105,804 | (7.1) | (2.8) | $ | 111,730 | $ | 111,929 | 0.2 | |||||||||||||||
| Total assets | 296,328 | 308,195 | 291,459 | 303,007 | 295,010 | 291,435 | 275,168 | 284,346 | (6.2) | 3.3 | 299,743 | 286,430 | (4.4) | |||||||||||||||||||||||||
| Total deposits | 226,232 | 242,310 | 233,266 | 239,680 | 233,268 | 228,417 | 213,302 | 216,799 | (9.5) | 1.6 | 235,404 | 222,874 | (5.3) | |||||||||||||||||||||||||
| Ratios and other metrics: | ||||||||||||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Effective tax rate | % | 18.6 | % | 18.5 | % | 4.6 | % | 19.9 | % | 10.5 | % | 18.7 | % | 17.6 | % | 1,300 | bps | (110) | bps | 15.1 | % | 16.6 | % | 150 | bps | |||||||||||||
| Return on average common equity | 12.6 | 11.6 | 10.3 | 9.5 | 12.1 | 11.2 | 11.8 | 150 | 60 | 10.7 | 11.1 | 40 | ||||||||||||||||||||||||||
| Return on tangible common equity(2) | 17.3 | 17.3 | 15.7 | 14.7 | 17.3 | 17.3 | 17.7 | 200 | 40 | 17.2 | 17.4 | 20 | ||||||||||||||||||||||||||
| Pre-tax margin | 30.9 | 29.3 | 23.9 | 24.5 | 28.3 | 28.7 | 28.2 | 430 | (50) | 26.4 | 27.4 | 100 | ||||||||||||||||||||||||||
| Pre-tax margin, excluding notable items(3) | 29.7 | 29.9 | 28.1 | 24.8 | 28.7 | 29.1 | 30.9 | 280 | 180 | 27.6 | 28.4 | 80 | ||||||||||||||||||||||||||
| Net interest margin, fully taxable-equivalent basis | 0.71 | 0.76 | 0.73 | 0.80 | 0.94 | 1.11 | 1.29 | 56 | 18 | 0.74 | 1.03 | 29 | ||||||||||||||||||||||||||
| Common equity tier 1 ratio(4)(5) | 11.2 | 13.5 | 14.3 | 11.9 | 12.9 | 13.2 | 13.6 | (70) | 40 | 14.3 | 13.6 | (70) | ||||||||||||||||||||||||||
| Tier 1 capital ratio(4)(5) | 12.9 | 15.2 | 16.1 | 13.4 | 14.6 | 14.9 | 15.4 | (70) | 50 | 16.1 | 15.4 | (70) | ||||||||||||||||||||||||||
| Total capital ratio(4)(5) | 14.3 | 16.6 | 17.5 | 14.8 | 15.9 | 16.2 | 16.8 | (70) | 60 | 17.5 | 16.8 | (70) | ||||||||||||||||||||||||||
| Tier 1 leverage ratio(4) | 5.2 | 6.3 | 6.1 | 5.9 | 6.0 | 6.4 | 6.0 | (10) | (40) | 6.1 | 6.0 | (10) | ||||||||||||||||||||||||||
| Supplementary leverage ratio(4) | 6.7 | 7.5 | 7.4 | 6.7 | 6.6 | 7.1 | 7.0 | (40) | (10) | 7.4 | 7.0 | (40) | ||||||||||||||||||||||||||
| End-of-period securities on loan(6) | 451,913 | $ | 437,094 | $ | 417,142 | $ | 400,940 | $ | 412,162 | $ | 358,972 | $ | 353,108 | $ | 362,395 | (9.6) | % | 2.6 | % | $ | 400,940 | $ | 362,395 | (9.6) | % | |||||||||||||
| Assets under custody and/or administration (in billions) | 42,597 | 43,337 | 43,678 | 41,724 | 38,180 | 35,688 | 36,743 | (15.9) | 3.0 | 43,678 | 36,743 | (15.9) | ||||||||||||||||||||||||||
| Assets under management (in billions) | 3,897 | 3,862 | 4,138 | 4,022 | 3,475 | 3,265 | 3,481 | (15.9) | 6.6 | 4,138 | 3,481 | (15.9) | ||||||||||||||||||||||||||
| (1) We redeemed an aggregate of 500 million, or 5,000 of the 7,500 outstanding shares of our non-cumulative perpetual preferred stock, Series F, for cash at a redemption price of 100,000 per share (equivalent to 1,000 per depositary share) plus all declared and unpaid dividends on March 15, 2021. The difference between the redemption value and the net carrying value of approximately 5 million resulted in an EPS impact of approximately (.02) per share in the first quarter of 2021. | ||||||||||||||||||||||||||||||||||||||
| (2) Return on tangible common equity is calculated by dividing year-to-date annualized net income available to common shareholders (GAAP-basis) by average tangible common equity. | ||||||||||||||||||||||||||||||||||||||
| (3) Notable items include acquisition and restructuring costs, repositioning charges and legal and other notable items. Refer to Reconciliations of non-GAAP Financial Information pages for details. | ||||||||||||||||||||||||||||||||||||||
| (4) The capital ratios presented are calculated in conformity with the applicable regulatory guidance in effect as of each period end. Capital ratios as of December 31, 2022 are estimates. | ||||||||||||||||||||||||||||||||||||||
| (5) The reportable ratios represent the lower of each of the risk-based capital ratios under both the Standardized Approach and the Advanced Approaches. Refer to Regulatory Capital for details on Standardized and Advanced Approaches ratios. | ||||||||||||||||||||||||||||||||||||||
| (6) Average securities on loan were 429,991 million, 457,604 million, 418,111 million and 412,403 million in the first, second, third and fourth quarters of 2021, respectively, and 397,522 million, 386,734 million, 365,883 million and 355,298 million in the first, second, third and fourth quarters of 2022. | ||||||||||||||||||||||||||||||||||||||
| nm Denotes not meaningful |
All values are in US Dollars.
| STATE STREET CORPORATION | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||
| CONSOLIDATED STATEMENT OF CONDITION | ||||||||||||||||||||
| % Change | ||||||||||||||||||||
| (Dollars in millions, except per share amounts) | March 31, 2021 | June 30, 2021 | September 30, 2021 | December 31, 2021 | March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31. 2022 | 4Q22<br> vs. <br>4Q21 | 4Q22<br> vs. <br>3Q22 | ||||||||||
| Assets: | ||||||||||||||||||||
| Cash and due from banks | $ | 4,552 | $ | 4,619 | $ | 4,606 | $ | 3,631 | $ | 2,976 | $ | 3,515 | $ | 2,748 | $ | 3,970 | 9.3 | % | 44.5 | % |
| Interest-bearing deposits with banks | 107,554 | 113,347 | 107,553 | 106,358 | 104,010 | 91,360 | 99,199 | 101,593 | (4.5) | 2.4 | ||||||||||
| Securities purchased under resale agreements | 5,238 | 3,997 | 2,847 | 3,012 | 803 | 5,203 | 1,308 | 5,215 | 73.1 | nm | ||||||||||
| Trading account assets | 786 | 721 | 720 | 758 | 754 | 728 | 685 | 650 | (14.2) | (5.1) | ||||||||||
| Investment securities: | ||||||||||||||||||||
| Investment securities available-for-sale | 60,512 | 67,497 | 70,279 | 73,399 | 74,348 | 45,454 | 40,986 | 40,579 | (44.7) | (1.0) | ||||||||||
| Investment securities held-to-maturity purchased under money market liquidity facility(1) | 201 | — | — | — | — | — | — | — | — | — | ||||||||||
| Investment securities held-to-maturity(2) | 46,261 | 45,182 | 43,346 | 42,430 | 45,203 | 64,261 | 65,232 | 64,700 | 52.5 | (0.8) | ||||||||||
| Total investment securities | 106,974 | 112,679 | 113,625 | 115,829 | 119,551 | 109,715 | 106,218 | 105,279 | (9.1) | (0.9) | ||||||||||
| Loans | 31,585 | 30,704 | 32,797 | 32,532 | 35,141 | 33,565 | 36,113 | 32,150 | (1.2) | (11.0) | ||||||||||
| Allowance for loan losses(3) | 118 | 100 | 95 | 87 | 86 | 95 | 97 | 97 | 11.5 | — | ||||||||||
| Loans, net | 31,467 | 30,604 | 32,702 | 32,445 | 35,055 | 33,470 | 36,016 | 32,053 | (1.2) | (11.0) | ||||||||||
| Premises and equipment, net(4) | 2,143 | 2,169 | 2,191 | 2,261 | 2,229 | 2,240 | 2,283 | 2,315 | 2.4 | 1.4 | ||||||||||
| Accrued interest and fees receivable | 3,302 | 3,358 | 3,407 | 3,278 | 3,446 | 3,403 | 3,526 | 3,434 | 4.8 | (2.6) | ||||||||||
| Goodwill | 7,629 | 7,629 | 7,650 | 7,621 | 7,582 | 7,465 | 7,351 | 7,495 | (1.7) | 2.0 | ||||||||||
| Other intangible assets | 2,007 | 1,933 | 1,887 | 1,816 | 1,744 | 1,654 | 1,568 | 1,544 | (15.0) | (1.5) | ||||||||||
| Other assets | 45,233 | 45,472 | 45,951 | 37,615 | 44,200 | 41,470 | 42,666 | 37,902 | 0.8 | (11.2) | ||||||||||
| Total assets | $ | 316,885 | $ | 326,528 | $ | 323,139 | $ | 314,624 | $ | 322,350 | $ | 300,223 | $ | 303,568 | $ | 301,450 | (4.2) | (0.7) | ||
| Liabilities: | ||||||||||||||||||||
| Deposits: | ||||||||||||||||||||
| Non-interest-bearing | $ | 57,079 | $ | 61,742 | $ | 64,885 | $ | 56,461 | $ | 61,797 | $ | 55,062 | $ | 55,894 | $ | 46,755 | (17.2) | (16.4) | ||
| Interest-bearing - U.S. | 108,372 | 111,291 | 108,909 | 102,985 | 104,962 | 107,262 | 105,021 | 111,384 | 8.2 | 6.1 | ||||||||||
| Interest-bearing - Non-U.S. | 79,442 | 90,936 | 85,579 | 95,589 | 84,284 | 79,589 | 77,321 | 77,325 | (19.1) | — | ||||||||||
| Total deposits(5) | 244,893 | 263,969 | 259,373 | 255,035 | 251,043 | 241,913 | 238,236 | 235,464 | (7.7) | (1.2) | ||||||||||
| Securities sold under repurchase agreements | 587 | 658 | 637 | 1,575 | 4,277 | 951 | 4,250 | 1,177 | (25.3) | (72.3) | ||||||||||
| Short-term borrowings under money market liquidity facility | 200 | — | — | — | — | — | — | — | — | — | ||||||||||
| Other short-term borrowings | 642 | 635 | 549 | 128 | 18 | 73 | 109 | 2,097 | nm | nm | ||||||||||
| Accrued expenses and other liabilities | 31,722 | 23,067 | 22,288 | 17,048 | 26,866 | 17,989 | 21,326 | 22,525 | 32.1 | 5.6 | ||||||||||
| Long-term debt | 13,836 | 13,032 | 12,978 | 13,475 | 13,922 | 13,530 | 13,999 | 14,996 | 11.3 | 7.1 | ||||||||||
| Total liabilities | 291,880 | 301,361 | 295,825 | 287,261 | 296,126 | 274,456 | 277,920 | 276,259 | (3.8) | (0.6) | ||||||||||
| Shareholders' equity: | ||||||||||||||||||||
| Preferred stock, no par, 3,500,000 shares authorized: | ||||||||||||||||||||
| Series D, 7,500 shares issued and outstanding | 742 | 742 | 742 | 742 | 742 | 742 | 742 | 742 | — | — | ||||||||||
| Series F, 2,500 shares issued and outstanding | 247 | 247 | 247 | 247 | 247 | 247 | 247 | 247 | — | — | ||||||||||
| Series G, 5,000 shares issued and outstanding | 493 | 493 | 493 | 493 | 493 | 493 | 493 | 493 | — | — | ||||||||||
| Series H, 5,000 shares issued and outstanding | 494 | 494 | 494 | 494 | 494 | 494 | 494 | 494 | — | — | ||||||||||
| Common stock, 1 par, 750,000,000 shares authorized(6)(7) | 504 | 504 | 504 | 504 | 504 | 504 | 504 | 504 | — | — | ||||||||||
| Surplus | 10,227 | 10,246 | 10,763 | 10,787 | 10,762 | 10,757 | 10,760 | 10,730 | (0.5) | (0.3) | ||||||||||
| Retained earnings | 23,751 | 24,300 | 24,785 | 25,238 | 25,612 | 26,115 | 26,552 | 27,028 | 7.1 | 1.8 | ||||||||||
| Accumulated other comprehensive income (loss) | (418) | (422) | (682) | (1,133) | (2,698) | (3,687) | (4,268) | (3,711) | nm | (13.1) | ||||||||||
| Treasury stock, at cost(8) | (11,035) | (11,437) | (10,032) | (10,009) | (9,932) | (9,898) | (9,876) | (11,336) | 13.3 | 14.8 | ||||||||||
| Total shareholders' equity | 25,005 | 25,167 | 27,314 | 27,363 | 26,224 | 25,767 | 25,648 | 25,191 | (7.9) | (1.8) | ||||||||||
| Total liabilities and equity | $ | 316,885 | $ | 326,528 | $ | 323,139 | $ | 314,624 | $ | 322,350 | $ | 300,223 | $ | 303,568 | $ | 301,450 | (4.2) | (0.7) | ||
| (1) Fair value of Investment securities held-to-maturity purchased under money market liquidity facility | $ | 201 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||
| (2) Fair value of investment securities held-to-maturity | 46,752 | 45,685 | 43,728 | 42,271 | 42,834 | 60,103 | 58,320 | 57,913 | ||||||||||||
| (3) Total allowance for credit losses including off-balance sheet commitments | 135 | 121 | 117 | 108 | 107 | 114 | 114 | 121 | ||||||||||||
| (4) Accumulated depreciation for premises and equipment | 4,960 | 5,108 | 5,235 | 5,391 | 5,530 | 5,652 | 5,772 | 5,745 | ||||||||||||
| (5) Average total deposits | 226,232 | 242,310 | 233,266 | 239,680 | 233,268 | 228,417 | 213,302 | 216,799 | ||||||||||||
| (6) 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 | 503,879,642 | ||||||||||||
| (7) Total common shares outstanding | 348,032,982 | 343,503,114 | 365,629,173 | 365,982,820 | 367,114,788 | 367,619,353 | 367,967,505 | 349,024,167 | ||||||||||||
| (8) Treasury stock shares | 155,846,660 | 160,376,528 | 138,250,469 | 137,896,822 | 136,764,854 | 136,260,289 | 135,912,137 | 154,855,475 |
All values are in US Dollars.
| STATE STREET CORPORATION | |||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EARNINGS RELEASE ADDENDUM | |||||||||||||||||||||||||||||||||||||||||||
| AVERAGE STATEMENT OF CONDITION - RATES EARNED AND PAID - FULLY TAXABLE-EQUIVALENT BASIS(1) | |||||||||||||||||||||||||||||||||||||||||||
| The following table presents average rates earned and paid, on a fully taxable-equivalent basis, on consolidated average interest-earning assets and average interest-bearing liabilities for the quarters indicated. Tax-equivalent adjustments were calculated using a federal income tax rate of 21%, adjusted for applicable state income taxes, net of related federal benefit. | |||||||||||||||||||||||||||||||||||||||||||
| % Change | |||||||||||||||||||||||||||||||||||||||||||
| 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | 4Q22<br> vs. <br>4Q21 | 4Q22<br> vs. <br>3Q22 | |||||||||||||||||||||||||||||||||||
| (Dollars in millions; fully-taxable equivalent basis) | Average rates | Average balance | Average rates | Average balance | Average rates | Average balance | Average rates | Average balance | Average rates | Average balance | Average rates | Average balance | Average rates | Average balance | Average rates | Average balance | Average balance | ||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits with banks | 95,235 | (0.04) | % | $ | 99,438 | (0.02) | % | $ | 79,375 | — | % | $ | 86,154 | (0.01) | % | $ | 76,741 | 0.05 | % | $ | 76,531 | 0.36 | % | $ | 68,918 | 1.16 | % | $ | 83,809 | 2.66 | % | (2.7) | % | 21.6 | % | ||||||||
| Securities purchased under resale agreements(2) | 0.88 | 3,958 | 0.28 | 4,061 | 0.65 | 4,191 | 0.69 | 3,150 | 1.31 | 2,022 | 7.47 | 1,470 | 15.55 | 1,843 | 17.72 | (56.0) | 25.4 | ||||||||||||||||||||||||||
| Trading account assets | — | 729 | — | 733 | 0.02 | 747 | 0.01 | 761 | — | 746 | 0.01 | 701 | — | 677 | — | (9.4) | (3.4) | ||||||||||||||||||||||||||
| Investment securities: | |||||||||||||||||||||||||||||||||||||||||||
| Investment securities available-for-sale | 0.95 | 66,225 | 0.88 | 69,621 | 0.86 | 71,134 | 0.83 | 75,226 | 0.83 | 54,767 | 0.91 | 43,956 | 1.62 | 40,980 | 2.67 | (42.4) | (6.8) | ||||||||||||||||||||||||||
| Investment securities held-to-maturity | 1.54 | 45,243 | 1.47 | 44,014 | 1.47 | 42,772 | 1.45 | 44,060 | 1.56 | 59,162 | 1.55 | 64,919 | 1.67 | 64,824 | 1.89 | 51.6 | (0.1) | ||||||||||||||||||||||||||
| Investment securities held-to-maturity purchased under money market liquidity facility | 1.35 | 13 | 1.28 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Total investment securities | 1.21 | 111,481 | 1.12 | 113,635 | 1.10 | 113,906 | 1.06 | 119,286 | 1.10 | 113,929 | 1.24 | 108,875 | 1.65 | 105,804 | 2.19 | (7.1) | (2.8) | ||||||||||||||||||||||||||
| Loans(3) | 2.05 | 29,471 | 2.14 | 32,035 | 2.08 | 34,425 | 2.00 | 34,407 | 2.03 | 35,826 | 2.23 | 35,069 | 2.90 | 35,159 | 3.90 | 2.1 | 0.3 | ||||||||||||||||||||||||||
| Other interest-earning assets | 0.10 | 20,939 | 0.07 | 24,662 | 0.08 | 25,418 | 0.07 | 23,767 | 0.08 | 22,199 | 0.83 | 20,877 | 2.63 | 16,635 | 4.63 | (34.6) | (20.3) | ||||||||||||||||||||||||||
| Total interest-earning assets | 0.76 | 266,016 | 0.71 | 254,501 | 0.76 | 264,841 | 0.73 | 258,112 | 0.82 | 251,253 | 1.13 | 235,910 | 1.86 | 243,927 | 2.87 | (7.9) | 3.4 | ||||||||||||||||||||||||||
| Cash and due from banks | 5,594 | 5,103 | 4,998 | 4,018 | 3,829 | 3,461 | 3,311 | (33.8) | (4.3) | ||||||||||||||||||||||||||||||||||
| Other assets | 36,585 | 31,855 | 33,168 | 32,880 | 36,353 | 35,797 | 37,108 | 11.9 | 3.7 | ||||||||||||||||||||||||||||||||||
| Total assets | 296,328 | $ | 308,195 | $ | 291,459 | $ | 303,007 | $ | 295,010 | $ | 291,435 | $ | 275,168 | $ | 284,346 | (6.2) | 3.3 | ||||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits: | |||||||||||||||||||||||||||||||||||||||||||
| U.S. | 100,974 | 0.01 | % | $ | 110,269 | — | % | $ | 104,575 | 0.02 | % | $ | 103,547 | — | % | $ | 100,073 | 0.02 | % | $ | 97,273 | 0.26 | % | $ | 94,636 | 1.09 | % | $ | 101,056 | 2.20 | % | (2.4) | 6.8 | ||||||||||
| Non-U.S.(4) | (0.37) | 83,248 | (0.32) | 82,230 | (0.33) | 84,525 | (0.31) | 83,556 | (0.32) | 80,055 | (0.20) | 72,202 | 0.22 | 71,736 | 0.82 | (15.1) | (0.6) | ||||||||||||||||||||||||||
| Total interest-bearing deposits(4) | (0.16) | 193,517 | (0.14) | 186,805 | (0.13) | 188,072 | (0.14) | 183,629 | (0.14) | 177,328 | 0.05 | 166,838 | 0.71 | 172,792 | 1.62 | (8.1) | 3.6 | ||||||||||||||||||||||||||
| Securities sold under repurchase agreements | 0.05 | 477 | (0.02) | 332 | — | 847 | (0.05) | 2,279 | (0.02) | 4,486 | 0.26 | 3,814 | 0.23 | 3,933 | 0.93 | nm | 3.1 | ||||||||||||||||||||||||||
| Short-term borrowings under money market liquidity facility | 1.21 | 13 | 1.25 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Other short-term borrowings | 0.14 | 893 | 0.27 | 837 | 0.17 | 659 | 0.28 | 872 | — | 680 | 0.73 | 430 | 0.01 | 2,756 | 3.54 | nm | nm | ||||||||||||||||||||||||||
| Long-term debt | 1.74 | 13,461 | 1.60 | 13,021 | 1.59 | 13,243 | 1.62 | 14,265 | 1.82 | 13,702 | 2.12 | 13,958 | 2.78 | 14,601 | 3.87 | 10.3 | 4.6 | ||||||||||||||||||||||||||
| Other interest-bearing liabilities | 0.73 | 5,682 | 0.80 | 5,461 | 0.78 | 5,943 | 0.71 | 2,881 | 1.50 | 2,518 | 3.31 | 2,536 | 6.43 | 2,967 | 11.84 | (50.1) | 17.0 | ||||||||||||||||||||||||||
| Total interest-bearing liabilities | 0.01 | 214,043 | — | 206,456 | — | 208,764 | — | 203,926 | 0.02 | 198,714 | 0.24 | 187,576 | 0.93 | 197,049 | 1.95 | (5.6) | 5.1 | ||||||||||||||||||||||||||
| Non-interest bearing deposits(5) | 48,793 | 46,461 | 51,608 | 49,639 | 51,089 | 46,464 | 44,007 | (14.7) | (5.3) | ||||||||||||||||||||||||||||||||||
| Other liabilities | 20,131 | 12,775 | 15,266 | 14,678 | 15,969 | 15,453 | 17,835 | 16.8 | 15.4 | ||||||||||||||||||||||||||||||||||
| Preferred shareholders' equity | 1,976 | 1,976 | 1,976 | 1,976 | 1,976 | 1,976 | 1,976 | — | — | ||||||||||||||||||||||||||||||||||
| Common shareholders' equity | 23,252 | 23,791 | 25,393 | 24,791 | 23,687 | 23,699 | 23,479 | (7.5) | (0.9) | ||||||||||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | 296,328 | $ | 308,195 | $ | 291,459 | $ | 303,007 | $ | 295,010 | $ | 291,435 | $ | 275,168 | $ | 284,346 | (6.2) | 3.3 | ||||||||||||||||||||||||||
| Total deposits | 226,232 | $ | 242,310 | $ | 233,266 | $ | 239,680 | $ | 233,268 | $ | 228,417 | $ | 213,302 | $ | 216,799 | (9.5) | 1.6 | ||||||||||||||||||||||||||
| Excess of rate earned over rate paid | 0.75 | % | 0.71 | % | 0.76 | % | 0.73 | % | 0.80 | % | 0.89 | % | 0.92 | % | 0.91 | % | |||||||||||||||||||||||||||
| Net interest margin | 0.75 | % | 0.71 | % | 0.76 | % | 0.73 | % | 0.80 | % | 0.94 | % | 1.11 | % | 1.29 | % | |||||||||||||||||||||||||||
| Net interest income, fully taxable-equivalent basis | $ | 471 | $ | 470 | $ | 490 | $ | 487 | $ | 512 | $ | 587 | $ | 662 | $ | 793 | |||||||||||||||||||||||||||
| Tax-equivalent adjustment | (4) | (3) | (3) | (3) | (3) | (3) | (2) | (2) | |||||||||||||||||||||||||||||||||||
| Net interest income, GAAP-basis(4) | $ | 467 | $ | 467 | $ | 487 | $ | 484 | $ | 509 | $ | 584 | $ | 660 | $ | 791 | |||||||||||||||||||||||||||
| (1) Average rates earned and paid on interest-earning assets and interest-bearing liabilities include the impact of hedge activities associated with our asset and liability management activities where applicable. | |||||||||||||||||||||||||||||||||||||||||||
| (2) Reflects the impact of balance sheet netting under enforceable netting agreements of approximately 87 billion, 62 billion, 52 billion and 48 billion in the first, second, third and fourth quarters 2021, respectively, and approximately 55 billion, 71 billion, 73 billion and 85 billion in the first, second, third and fourth quarters of 2022. Excluding the impact of netting, the average interest rates would be approximately 0.04%, 0.02%, 0.05% and 0.06% in the first, second, third and fourth quarters of 2021, respectively, and approximately 0.07%, 0.21%, 0.31% and 0.38% in the first, second, third and fourth quarters of 2022. | |||||||||||||||||||||||||||||||||||||||||||
| (3) Average loans are presented on a gross basis. Average loans net of expected credit losses were approximately 27,904 million, 29,352 million, 31,935 million and 34,331 million in the first, second, third and fourth quarters of 2021 and approximately 34,320 million, 35,741 million, 34,974 million and 35,063 million in the first, second, third and fourth quarters of 2022. | |||||||||||||||||||||||||||||||||||||||||||
| (4) Average rates includes the impact of FX swap expense of approximately (21) million, (16) million, (16) million and (14) million in the first, second, third and fourth quarters of 2021, respectively, and approximately (13) million, (3) million, 16 million and 20 million in the first, second, third and fourth quarters of 2022. Average rates for total interest-bearing deposits excluding the impact of FX swap expense were approximately (0.11)%, (0.10)%, (0.10)% and (0.11)% in the first, second, third and fourth quarters of 2021, respectively, and approximately (0.11)%, 0.06%, 0.68% and 1.58% in the first, second, third and fourth quarters of 2022. | |||||||||||||||||||||||||||||||||||||||||||
| (5) Average non-interest bearing deposits are primarily composed of deposit balances denominated in U.S. dollars. |
All values are in US Dollars.
| STATE STREET CORPORATION | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||
| AVERAGE STATEMENT OF CONDITION - RATES EARNED AND PAID - FULLY TAXABLE-EQUIVALENT BASIS - YEAR TO DATE(1) | ||||||||||||||||
| The following table presents consolidated average interest-earning assets, average interest-bearing liabilities and related average rates earned and paid, respectively, for the years indicated, on a fully taxable-equivalent basis, which is a non-GAAP measure. Tax-equivalent adjustments were calculated using a federal income tax rate of 21% for periods ending in 2021 and 2022, adjusted for applicable state income taxes, net of related federal benefit. | ||||||||||||||||
| Year-to-Date | % Change | |||||||||||||||
| 2021 | 2022 | YTD2022 vs YTD2021 | ||||||||||||||
| (Dollars in millions; fully-taxable equivalent basis) | Average rates | Average balance | Average rates | Average balance | ||||||||||||
| Assets: | ||||||||||||||||
| Interest-bearing deposits with banks | 89,996 | (0.02) | % | $ | 76,498 | 1.10 | % | (15.0) | % | |||||||
| Securities purchased under resale agreements(2) | 0.63 | 2,116 | 8.88 | (49.5) | ||||||||||||
| Trading account assets | 0.01 | 721 | 0.01 | (4.1) | ||||||||||||
| Investment securities: | ||||||||||||||||
| Investment securities available-for-sale | 0.88 | 53,613 | 1.37 | (19.5) | ||||||||||||
| Investment securities held-to-maturity | 1.48 | 58,316 | 1.68 | 30.1 | ||||||||||||
| Investment securities held-to-maturity purchased under money market liquidity facility | 1.35 | — | — | nm | ||||||||||||
| Total investment securities | 1.12 | 111,929 | 1.53 | 0.2 | ||||||||||||
| Loans(3) | 2.07 | 35,117 | 2.77 | 13.2 | ||||||||||||
| Other interest-earning assets | 0.08 | 20,850 | 1.84 | (6.7) | ||||||||||||
| Total interest-earning assets | 0.74 | 247,231 | 1.66 | (4.9) | ||||||||||||
| Cash and due from banks | 3,652 | (27.8) | ||||||||||||||
| Other assets | 35,547 | 2.6 | ||||||||||||||
| Total assets | 299,743 | $ | 286,430 | (4.4) | ||||||||||||
| Liabilities: | ||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||
| U.S. | 104,848 | 0.01 | $ | 98,252 | 0.90 | (6.3) | ||||||||||
| Non-U.S.(4) | (0.33) | 76,842 | 0.10 | (6.4) | ||||||||||||
| Total interest-bearing deposits(4) | (0.14) | 175,094 | 0.55 | (6.4) | ||||||||||||
| Securities sold under repurchase agreements | — | 3,633 | 0.39 | nm | ||||||||||||
| Short-term borrowings under money market liquidity facility | 1.21 | — | — | nm | ||||||||||||
| Other short-term borrowings | 0.21 | 1,188 | 2.18 | 50.8 | ||||||||||||
| Long-term debt | 1.64 | 14,132 | 2.66 | 5.6 | ||||||||||||
| Other interest-bearing liabilities | 0.75 | 2,725 | 5.91 | (50.3) | ||||||||||||
| Total interest-bearing liabilities | — | 196,772 | 0.78 | (5.2) | ||||||||||||
| Non-interest bearing deposits(5) | 47,780 | (1.3) | ||||||||||||||
| Other liabilities | 15,992 | (9.2) | ||||||||||||||
| Preferred shareholders' equity | 1,976 | (4.8) | ||||||||||||||
| Common shareholders' equity | 23,910 | (0.4) | ||||||||||||||
| Total liabilities and shareholders' equity | 299,743 | $ | 286,430 | (4.4) | ||||||||||||
| Total deposits | $ | 235,404 | $ | 222,874 | (5.3) | |||||||||||
| Excess of rate earned over rate paid | 0.74 | % | 0.87 | % | ||||||||||||
| Net interest margin | 0.74 | % | 1.03 | % | ||||||||||||
| Net interest income, fully taxable-equivalent basis | $ | 1,918 | $ | 2,554 | ||||||||||||
| Tax-equivalent adjustment | (13) | (10) | ||||||||||||||
| Net interest income, GAAP-basis(4) | $ | 1,905 | $ | 2,544 | ||||||||||||
| (1) Average rates earned and paid on interest-earning assets and interest-bearing liabilities include the impact of hedge activities associated with our asset and liability management activities where applicable. | ||||||||||||||||
| (2) Reflects the impact of balance sheet netting under enforceable netting agreements of approximately 62 billion and 71 billion as of December 31, 2021 and 2022, respectively. Excluding the impact of netting, the average interest rates would be approximately 0.04% and 0.26% for the year ended December 31, 2021 and 2022, respectively. | ||||||||||||||||
| (3) Average loans are presented on a gross basis. Average loans net of expected credit losses as of December 31, 2021 and 2022 was approximately 30,901 million and 35,026 million, respectively. | ||||||||||||||||
| (4) Average rates include the impact of FX swap cost of approximately (68) million and 20 million for the year ended December 31, 2021 and 2022, respectively. Average rates for total interest-bearing deposits excluding the impact of FX swap cost were (0.10)% and 0.54% for the year ended December 31, 2021 and 2022, respectively. | ||||||||||||||||
| (5) Average non-interest bearing deposits are primarily composed of deposit balances denominated in U.S. dollars. |
All values are in US Dollars.
| STATE STREET CORPORATION | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EARNINGS RELEASE ADDENDUM | |||||||||||||||||
| SELECTED AVERAGE BALANCES BY CURRENCY - RATES EARNED AND PAID(1) | |||||||||||||||||
| 4Q22 | |||||||||||||||||
| Other | Total | ||||||||||||||||
| (Dollars in millions, or where otherwise noted) | Average Balance | Average Rates | Average Balance | Average Rates | Average Balance | Average Rates | Average Balance | Average Rates | Average Balance | Average Rates | |||||||
| Interest-bearing deposits with banks | 3.88 | % | 1.31 | % | 2.70 | % | $ | 10,875 | 2.02 | % | $ | 83,809 | 2.66 | % | |||
| Total investment securities | 87,006 | 2.37 | 7,639 | 0.63 | 3,472 | 1.37 | 7,687 | 2.14 | 105,804 | 2.19 | |||||||
| Loans | 28,281 | 4.07 | 4,651 | 2.83 | 1,378 | 3.62 | 849 | 4.40 | 35,159 | 3.90 | |||||||
| Total other interest-earning assets(2) | 17,088 | 6.22 | 541 | (1.74) | 114 | 4.02 | 1,412 | 2.74 | 19,155 | 5.72 | |||||||
| Total interest-earning assets | 3.36 | 1.31 | 2.48 | $ | 20,823 | 2.20 | $ | 243,927 | 2.87 | ||||||||
| Total interest-bearing deposits(3)(4) | 2.39 | 0.43 | 0.44 | $ | 22,938 | 0.85 | $ | 172,792 | 1.62 | ||||||||
| 3Q22 | |||||||||||||||||
| Other | Total | ||||||||||||||||
| (Dollars in millions, or where otherwise noted) | Average Balance | Average Rates | Average Balance | Average Rates | Average Balance | Average Rates | Average Balance | Average Rates | Average Balance | Average Rates | |||||||
| Interest-bearing deposits with banks | 2.33 | % | 0.01 | % | 1.51 | % | $ | 10,919 | 1.16 | % | $ | 68,918 | 1.16 | % | |||
| Total investment securities | 89,212 | 1.80 | 7,836 | 0.31 | 3,674 | 1.13 | 8,153 | 1.53 | 108,875 | 1.65 | |||||||
| Loans | 28,485 | 3.02 | 4,558 | 1.84 | 1,226 | 3.13 | 800 | 4.18 | 35,069 | 2.90 | |||||||
| Total other interest-earning assets(2) | 21,356 | 3.48 | 157 | (0.47) | 13 | 10.64 | 1,522 | 2.35 | 23,048 | 3.38 | |||||||
| Total interest-earning assets | 2.30 | 0.28 | 1.56 | $ | 21,394 | 1.49 | $ | 235,910 | 1.86 | ||||||||
| Total interest-bearing deposits(3)(4) | 1.18 | (0.25) | 0.36 | $ | 23,763 | 0.42 | $ | 166,838 | 0.71 | ||||||||
| 4Q21 | |||||||||||||||||
| Other | Total | ||||||||||||||||
| (Dollars in millions, or where otherwise noted) | Average Balance | Average Rates | Average Balance | Average Rates | Average Balance | Average Rates | Average Balance | Average Rates | Average Balance | Average Rates | |||||||
| Interest-bearing deposits with banks | 0.32 | % | (0.44) | % | 0.09 | % | $ | 25,750 | 0.05 | % | $ | 86,154 | (0.01) | % | |||
| Total investment securities | 87,108 | 1.25 | 13,128 | 0.28 | 4,011 | 0.75 | 9,659 | 0.55 | 113,906 | 1.06 | |||||||
| Loans | 25,989 | 2.10 | 3,921 | 1.93 | 1,492 | 1.71 | 3,023 | 1.40 | 34,425 | 2.00 | |||||||
| Total other interest-earning assets(2) | 28,538 | 0.16 | 64 | (0.87) | 16 | (0.26) | 1,738 | 0.15 | 30,356 | 0.15 | |||||||
| Total interest-earning assets | 1.07 | 0.01 | 0.36 | $ | 40,170 | 0.27 | $ | 264,841 | 0.73 | ||||||||
| Total interest-bearing deposits(3)(4) | 0.09 | (0.56) | — | $ | 30,504 | (0.46) | $ | 188,072 | (0.14) | ||||||||
| (1) Average rates earned and paid on interest-earning assets and interest-bearing liabilities include the impact of hedge activities associated with our asset and liability management activities where applicable. | |||||||||||||||||
| (2) Average total other interest-earning assets include securities purchased under resale agreements, trading account assets and other interest-earning assets. Refer to average statement of condition - rates earned and paid - full taxable-equivalent basis for details. | |||||||||||||||||
| (3) Average rates for interest-bearing deposit balances denominated in U.S. dollars include both client and wholesale deposits. | |||||||||||||||||
| (4) FX swap costs for interest-bearing deposits are included in other currencies. |
All values are in US Dollars.
| STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||
| INVESTMENT PORTFOLIO HOLDINGS BY ASSET CLASS | ||||||||||||||||||||||||||||||||
| Quarters | ||||||||||||||||||||||||||||||||
| 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | |||||||||||||||||||||||||
| (Dollars in billions, or where otherwise noted) | Average Balance | Average Rate | Average Balance | Average Rate | Average Balance | Average Rate | Average Balance | Average Rate | Average Balance | Average Rate | Average Balance | Average Rate | Average Balance | Average Rate | Average Balance | Average Rate | ||||||||||||||||
| Available-for-sale investment securities: | ||||||||||||||||||||||||||||||||
| Government & agency securities | $ | 28.5 | 0.44 | % | $ | 32.5 | 0.53 | % | $ | 36.1 | 0.59 | % | $ | 38.8 | 0.63 | % | $ | 42.9 | 0.72 | % | $ | 30.3 | 0.73 | % | $ | 23.5 | 1.33 | % | $ | 21.9 | 2.16 | % |
| Asset-backed securities | 7.9 | 0.86 | 9.1 | 0.84 | 9.4 | 0.88 | 7.6 | 0.82 | 6.7 | 0.79 | 6.7 | 1.22 | 6.2 | 2.21 | 5.9 | 3.68 | ||||||||||||||||
| Student loans | 0.3 | 0.94 | 0.3 | 1.19 | 0.2 | 1.18 | 0.2 | 1.25 | 0.2 | 1.43 | 0.2 | 2.25 | 0.1 | 3.62 | 0.1 | 5.39 | ||||||||||||||||
| Credit cards | 0.1 | 0.88 | 0.1 | 0.87 | 0.1 | 0.86 | 0.1 | 0.87 | 0.1 | 0.93 | 0.1 | 1.57 | 0.1 | 3.03 | 0.1 | 4.58 | ||||||||||||||||
| Auto & equipment | 1.1 | 0.03 | 1.3 | (0.01) | 1.3 | 0.03 | 1.2 | (0.02) | 1.0 | (0.01) | 0.9 | 0.16 | 0.7 | 0.56 | 0.7 | 1.82 | ||||||||||||||||
| Non-U.S. residential mortgage backed securities | 2.0 | 0.80 | 2.1 | 0.77 | 2.1 | 0.74 | 2.1 | 0.79 | 2.1 | 0.78 | 2.1 | 1.08 | 1.9 | 2.16 | 1.7 | 3.35 | ||||||||||||||||
| Collateralized loan obligation | 4.2 | 1.16 | 5.2 | 1.10 | 5.4 | 1.16 | 3.8 | 1.11 | 3.2 | 1.06 | 3.2 | 1.59 | 3.1 | 2.63 | 3.1 | 4.23 | ||||||||||||||||
| Other | 0.2 | (0.12) | 0.1 | (0.09) | 0.3 | (0.07) | 0.2 | (0.20) | 0.1 | (0.37) | 0.2 | 0.37 | 0.3 | 0.87 | 0.2 | 2.25 | ||||||||||||||||
| Mortgage-backed securities | 10.3 | 1.77 | 10.7 | 1.53 | 9.6 | 1.54 | 9.4 | 1.57 | 9.8 | 1.62 | 3.4 | 1.22 | 1.9 | 1.71 | 1.8 | 3.17 | ||||||||||||||||
| Agency MBS | 10.3 | 1.77 | 10.7 | 1.53 | 9.6 | 1.54 | 9.4 | 1.57 | 9.8 | 1.62 | 3.4 | 1.22 | 1.9 | 1.71 | 1.8 | 3.17 | ||||||||||||||||
| Non-agency MBS | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||
| CMBS | 3.8 | 0.78 | 5.6 | 0.53 | 6.5 | 0.50 | 8.0 | 0.43 | 9.2 | 0.40 | 8.9 | 0.59 | 8.2 | 1.72 | 7.5 | 3.24 | ||||||||||||||||
| Corporate bonds | 5.4 | 1.33 | 5.3 | 1.29 | 5.0 | 1.27 | 4.3 | 1.29 | 3.9 | 1.02 | 2.8 | 1.32 | 2.1 | 1.53 | 2.1 | 1.87 | ||||||||||||||||
| Covered bonds | 0.5 | 0.22 | 0.3 | 0.30 | 0.2 | 0.40 | 0.1 | 0.57 | 0.1 | 0.58 | 0.1 | 0.64 | — | 0.64 | — | 0.66 | ||||||||||||||||
| Municipal bonds | 0.8 | 2.59 | 0.8 | 2.61 | 0.8 | 2.62 | 0.8 | 2.65 | 0.6 | 2.72 | 0.6 | 2.87 | 0.6 | 2.83 | 0.9 | 3.43 | ||||||||||||||||
| Clipper tax-exempt bonds | 0.7 | 3.76 | 0.7 | 3.80 | 0.6 | 3.79 | 0.6 | 3.83 | 0.5 | 4.07 | 0.4 | 4.41 | 0.4 | 4.25 | 0.3 | 4.36 | ||||||||||||||||
| Other | 1.3 | 0.93 | 1.2 | 0.94 | 1.4 | 0.93 | 1.5 | 0.92 | 1.6 | 0.86 | 1.5 | 0.98 | 1.1 | 1.17 | 0.6 | 2.55 | ||||||||||||||||
| Total available-for-sale portfolio | $ | 59.2 | 0.95 | $ | 66.2 | 0.88 | $ | 69.6 | 0.86 | $ | 71.1 | 0.83 | $ | 75.3 | 0.83 | $ | 54.7 | 0.91 | $ | 44.0 | 1.62 | $ | 41.0 | 2.67 | ||||||||
| 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | |||||||||||||||||||||||||
| (Dollars in billions, or where otherwise noted) | Average Balance | Average Rate | Average Balance | Average Rate | Average Balance | Average Rate | Average Balance | Average Rate | Average Balance | Average Rate | Average Balance | Average Rate | Average Balance | Average Rate | Average Balance | Average Rate | ||||||||||||||||
| Held-to-maturity investment securities: | ||||||||||||||||||||||||||||||||
| Government & agency securities | $ | 6.0 | 2.10 | % | $ | 5.8 | 1.97 | % | $ | 5.3 | 1.73 | % | $ | 4.1 | 1.56 | % | $ | 3.5 | 1.24 | % | $ | 13.7 | 0.72 | % | $ | 18.0 | 0.80 | % | $ | 18.0 | 0.84 | % |
| Asset-backed securities | 5.0 | 1.31 | 5.1 | 1.22 | 5.1 | 1.19 | 5.1 | 1.13 | 4.9 | 1.05 | 4.5 | 1.67 | 4.3 | 3.04 | 4.1 | 4.48 | ||||||||||||||||
| Student loans | 4.7 | 1.11 | 4.8 | 1.05 | 4.9 | 1.03 | 5.0 | 0.96 | 4.9 | 1.05 | 4.5 | 1.67 | 4.3 | 3.04 | 4.1 | 4.48 | ||||||||||||||||
| Non-U.S. residential mortgage backed securities | 0.3 | 4.56 | 0.3 | 4.14 | 0.2 | 4.52 | 0.1 | 8.31 | — | — | — | — | — | — | — | — | ||||||||||||||||
| Other | — | 1.13 | — | 1.11 | — | 1.11 | — | 0.65 | — | — | — | — | — | — | — | — | ||||||||||||||||
| Mortgage-backed securities | 31.3 | 1.51 | 29.5 | 1.38 | 28.7 | 1.40 | 28.7 | 1.43 | 30.6 | 1.67 | 35.9 | 1.84 | 37.4 | 1.90 | 37.6 | 2.12 | ||||||||||||||||
| Agency MBS | 31.2 | 1.51 | 29.4 | 1.37 | 28.7 | 1.39 | 28.7 | 1.41 | 30.6 | 1.66 | 35.8 | 1.84 | 37.4 | 1.90 | 37.6 | 2.12 | ||||||||||||||||
| Non-agency MBS | 0.1 | 4.21 | 0.1 | 4.44 | — | 4.93 | — | 5.38 | — | 12.22 | 0.1 | 4.45 | — | 13.21 | — | 14.43 | ||||||||||||||||
| CMBS | 5.0 | 1.54 | 4.9 | 1.61 | 4.9 | 1.57 | 4.9 | 1.52 | 5.0 | 1.53 | 5.1 | 1.71 | 5.2 | 1.80 | 5.1 | 1.87 | ||||||||||||||||
| Held-to-maturity under money market liquidity facility | 1.3 | 1.35 | — | 1.28 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||
| Total held-for-maturity portfolio | $ | 48.6 | 1.54 | $ | 45.3 | 1.47 | $ | 44.0 | 1.47 | $ | 42.8 | 1.45 | $ | 44.0 | 1.56 | $ | 59.2 | 1.55 | $ | 64.9 | 1.67 | $ | 64.8 | 1.89 | ||||||||
| Total investment securities | $ | 107.8 | 1.21 | $ | 111.5 | 1.12 | $ | 113.6 | 1.10 | $ | 113.9 | 1.06 | $ | 119.3 | 1.10 | $ | 113.9 | 1.24 | $ | 108.9 | 1.65 | $ | 105.8 | 2.19 | ||||||||
| STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||
| INVESTMENT PORTFOLIO HOLDINGS BY ASSET CLASS (continued) | ||||||||||||||||||||||||||||||||
| (Dollars in billions, or where otherwise noted) | AAA | AA | A | BBB | <BBB | NR | Fair Value | % Total | Net Unrealized Pre-tax MTM Gain/(Loss)<br><br>(In millions)(1) | Fixed Rate/<br><br>Floating Rate(2) | ||||||||||||||||||||||
| Available-for-sale investment securities: | ||||||||||||||||||||||||||||||||
| Government & agency securities | % | 38 | % | 22 | % | 3 | % | — | % | 1 | % | — | % | $ | 22.1 | 54.4 | % | $ | (673) | 88% / 12% | ||||||||||||
| Asset-backed securities | 92 | 8 | — | — | — | — | 5.9 | 14.4 | (88) | 0% / 100% | ||||||||||||||||||||||
| Student loans | — | 100 | — | — | — | — | 0.1 | 2.0 | (1) | |||||||||||||||||||||||
| Credit cards | 100 | — | — | — | — | — | 0.1 | 1.5 | (2) | |||||||||||||||||||||||
| Auto & equipment | 71 | 29 | — | — | — | — | 0.6 | 10.8 | (4) | |||||||||||||||||||||||
| Non-U.S. residential mortgage backed securities | 93 | 6 | — | — | 1 | — | 1.6 | 27.7 | (19) | |||||||||||||||||||||||
| Collateralized loan obligation | 100 | — | — | — | — | — | 3.2 | 54.9 | (61) | |||||||||||||||||||||||
| Other | 65 | 35 | — | — | — | — | 0.3 | 3.1 | (1) | |||||||||||||||||||||||
| Mortgage-backed securities | — | — | — | — | — | — | 1.7 | 4.3 | (86) | 98% / 2% | ||||||||||||||||||||||
| Agency MBS | — | — | — | — | — | — | 1.7 | 100.0 | (86) | |||||||||||||||||||||||
| Non-agency MBS | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
| CMBS | 3 | — | — | — | — | — | 7.0 | 17.3 | (178) | 0% / 100% | ||||||||||||||||||||||
| Corporate bonds | — | 14 | 49 | 37 | — | — | 2.1 | 5.3 | (131) | 90% / 10% | ||||||||||||||||||||||
| Covered bonds | 100 | — | — | — | — | — | — | — | (1) | 100% / 0% | ||||||||||||||||||||||
| Municipal bonds | 28 | 71 | 1 | — | — | — | 0.6 | 1.4 | (13) | 100% / 0% | ||||||||||||||||||||||
| Clipper tax-exempt bonds | 13 | 68 | 19 | — | — | — | 0.3 | 0.7 | (3) | 0% / 100% | ||||||||||||||||||||||
| Other | 1 | 50 | 49 | — | — | — | 0.9 | 2.2 | (105) | 93% / 7% | ||||||||||||||||||||||
| Total available-for-sale portfolio | % | 35 | % | 16 | % | 6 | % | 2 | % | 1 | % | — | % | $ | 40.6 | 100.0 | % | $ | (1,278) | 60% / 40% | ||||||||||||
| Fair Value | 16.5 | $ | 14.1 | $ | 6.6 | $ | 2.3 | $ | 0.9 | $ | 0.2 | $ | — | |||||||||||||||||||
| AAA | AA | A | BBB | <BBB | NR | Amortized Cost | % Total | Net Unrealized Pre-tax MTM Gain/(Loss)<br><br>(In millions)(1) | Fixed Rate/<br><br>Floating Rate(2) | |||||||||||||||||||||||
| Held-to-maturity investment securities: | ||||||||||||||||||||||||||||||||
| Government & agency securities | % | 16 | % | 14 | % | 2 | % | 4 | % | — | % | — | % | $ | 18.3 | 28.3 | % | $ | (646) | 100% / 0% | ||||||||||||
| Asset-backed securities | 26 | 72 | — | 2 | — | — | 4.0 | 6.1 | (133) | 5% / 95% | ||||||||||||||||||||||
| Student loans | 26 | 72 | — | 2 | — | — | 4.0 | 100.0 | (133) | |||||||||||||||||||||||
| Non-U.S. residential mortgage backed securities | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
| Other | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
| Mortgage-backed securities | — | — | — | — | — | — | 37.3 | 57.7 | (5,203) | 100% / 0% | ||||||||||||||||||||||
| Agency MBS | — | — | — | — | — | — | 37.3 | 100.0 | (5,221) | |||||||||||||||||||||||
| Non-agency MBS | 7 | 2 | — | 32 | 10 | 49 | — | — | 18 | |||||||||||||||||||||||
| CMBS | 3 | — | — | — | — | — | 5.1 | 7.9 | (805) | 94% / 6% | ||||||||||||||||||||||
| Total held-for-maturity portfolio | % | 6 | % | 8 | % | 1 | % | 1 | % | — | % | — | % | $ | 64.7 | 100.0 | % | $ | (6,787) | 94% / 6% | ||||||||||||
| Amortized Cost | 54.0 | $ | 4.0 | $ | 5.4 | $ | 0.4 | $ | 0.9 | $ | — | $ | — | |||||||||||||||||||
| Total investment securities | $ | 105.3 | 81% /19% | |||||||||||||||||||||||||||||
| (1) At December 31, 2022, the after-tax unrealized MTM gain/(loss) includes after-tax unrealized loss on securities available-for-sale of 935 million, after-tax unrealized loss on securities held-to-maturity of 4,963 million and after-tax unrealized loss primarily related to securities previously transferred from available-for-sale to held-to-maturity of 735 million. | ||||||||||||||||||||||||||||||||
| (2) At December 31, 2022, fixed-to-floating rate securities had a book value of approximately 41 million or 0.04% of the total portfolio. |
All values are in US Dollars.
| STATE STREET CORPORATION | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EARNINGS RELEASE ADDENDUM | ||||||||||||||
| INVESTMENT PORTFOLIO NON-U.S. INVESTMENTS | ||||||||||||||
| Investment Securities | ||||||||||||||
| (Dollars in billions) | Average Rating | Gov't/Agency(1)(2) | ABS<br>FRMBS | ABS<br>All Other | Corporate Bonds | Covered Bonds | Other | |||||||
| Available-for-sale: | ||||||||||||||
| Canada | 3.7 | AA | $ | 2.7 | $ | — | $ | — | $ | 0.2 | $ | — | $ | 0.8 |
| Australia | AAA | 1.0 | 0.9 | — | 0.2 | — | 0.1 | |||||||
| United Kingdom | AA | 0.7 | 0.4 | 0.1 | 0.2 | — | — | |||||||
| France | AAA | 0.2 | — | 0.7 | 0.1 | — | — | |||||||
| Germany | AA | 0.8 | — | 0.3 | — | — | — | |||||||
| Austria | AA | 0.8 | — | — | — | — | — | |||||||
| Japan | A | 0.8 | — | — | — | — | — | |||||||
| Hong Kong | AA | 0.7 | — | — | — | — | — | |||||||
| Netherlands | AA | 0.1 | 0.2 | 0.1 | 0.1 | — | — | |||||||
| Italy | AA | 0.1 | 0.1 | 0.1 | — | — | — | |||||||
| Spain | AA | 0.2 | — | 0.1 | — | — | — | |||||||
| Finland | AA | 0.1 | — | 0.1 | — | — | — | |||||||
| Republic of Korea | AA | 0.1 | — | 0.1 | — | — | — | |||||||
| Brazil | BB | 0.2 | — | — | — | — | — | |||||||
| Other | AAA | 5.7 | — | 0.1 | 0.3 | — | — | |||||||
| Total Non-U.S. Investments(3) | 19.5 | $ | 14.2 | $ | 1.6 | $ | 1.7 | $ | 1.1 | $ | — | $ | 0.9 | |
| U.S. Investments | ||||||||||||||
| Total available-for-sale | 40.6 | |||||||||||||
| Investment Securities | ||||||||||||||
| (Dollars in billions) | Average Rating | Gov't/Agency(1)(2) | ABS<br>FRMBS | ABS<br>All Other | Corporate Bonds | Covered Bonds | Other | |||||||
| Held-to-maturity: | ||||||||||||||
| Spain | 0.8 | BBB | $ | 0.8 | $ | — | $ | — | $ | — | $ | — | $ | — |
| Belgium | AA | 0.7 | — | — | — | — | — | |||||||
| France | AA | 0.6 | — | — | — | — | — | |||||||
| Austria | AA | 0.4 | — | — | — | — | — | |||||||
| Ireland | A | 0.4 | — | — | — | — | — | |||||||
| Singapore | AAA | 0.3 | — | — | — | — | — | |||||||
| Netherlands | AAA | 0.2 | — | — | — | — | — | |||||||
| Finland | AA | 0.2 | — | — | — | — | — | |||||||
| Germany | AA | 0.1 | — | — | — | — | — | |||||||
| Other | AAA | 2.9 | — | — | — | — | — | |||||||
| Total Non-U.S. Investments(3) | 6.6 | $ | 6.6 | $ | — | $ | — | $ | — | $ | — | $ | — | |
| U.S. Investments | ||||||||||||||
| Total held-for-maturity | 64.7 | |||||||||||||
| Total Investment Portfolio | 105.3 | |||||||||||||
| (1) Sovereign debt is reflected in the government / agency column. | ||||||||||||||
| (2) As of December 31, 2022, other non-U.S. investments include 5.7 billion supranational bonds in AFS securities and 2.9 billion supranational bonds in HTM securities. | ||||||||||||||
| (3) Country of collateral used except for corporates where country of issuer is used. |
All values are in US Dollars.
| STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ASSETS UNDER CUSTODY AND/OR ADMINISTRATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarters | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in billions) | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | 4Q22<br> vs. <br>4Q21 | 4Q22<br> vs. <br>3Q22 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets Under Custody and/or Administration(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| By Product Classification: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Collective funds, including ETFs | $ | 14,052 | $ | 15,048 | $ | 15,159 | $ | 15,722 | $ | 15,140 | $ | 13,609 | $ | 11,649 | $ | 12,261 | (22.0) | % | 5.3 | % | ||||||||||||||||||||||||||||||||||||||||
| Mutual funds | 10,439 | 10,873 | 11,505 | 11,575 | 10,825 | 9,642 | 9,289 | 9,610 | (17.0) | 3.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Pension products | 7,843 | 8,291 | 8,497 | 8,443 | 8,191 | 7,764 | 7,669 | 7,734 | (8.4) | 0.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Insurance and other products | 7,929 | 8,385 | 8,176 | 7,938 | 7,568 | 7,165 | 7,081 | 7,138 | (10.1) | 0.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Assets Under Custody and/or Administration | $ | 40,263 | $ | 42,597 | $ | 43,337 | $ | 43,678 | $ | 41,724 | $ | 38,180 | $ | 35,688 | $ | 36,743 | (15.9) | 3.0 | ||||||||||||||||||||||||||||||||||||||||||
| By Asset Class: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equities | $ | 22,825 | $ | 24,792 | $ | 25,350 | $ | 25,974 | $ | 25,249 | $ | 21,953 | $ | 19,889 | $ | 20,575 | (20.8) | 3.4 | ||||||||||||||||||||||||||||||||||||||||||
| Fixed-income | 13,022 | 13,079 | 12,808 | 12,587 | 11,303 | 10,716 | 10,150 | 10,318 | (18.0) | 1.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Short-term and other investments | 4,416 | 4,726 | 5,179 | 5,117 | 5,172 | 5,511 | 5,649 | 5,850 | 14.3 | 3.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Assets Under Custody and/or Administration | $ | 40,263 | $ | 42,597 | $ | 43,337 | $ | 43,678 | $ | 41,724 | $ | 38,180 | $ | 35,688 | $ | 36,743 | (15.9) | 3.0 | ||||||||||||||||||||||||||||||||||||||||||
| By Geographic Location(2): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Americas | $ | 29,530 | $ | 31,280 | $ | 31,934 | $ | 32,427 | $ | 31,027 | $ | 28,207 | $ | 26,051 | $ | 26,981 | (16.8) | 3.6 | ||||||||||||||||||||||||||||||||||||||||||
| Europe/Middle East/Africa | 8,256 | 8,716 | 8,748 | 8,599 | 8,103 | 7,498 | 6,990 | 7,136 | (17.0) | 2.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Asia/Pacific | 2,477 | 2,601 | 2,655 | 2,652 | 2,594 | 2,475 | 2,647 | 2,626 | (1.0) | (0.8) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Assets Under Custody and/or Administration | $ | 40,263 | $ | 42,597 | $ | 43,337 | $ | 43,678 | $ | 41,724 | $ | 38,180 | $ | 35,688 | $ | 36,743 | (15.9) | 3.0 | ||||||||||||||||||||||||||||||||||||||||||
| Assets Under Custody(3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| By Product Classification: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Collective funds, including ETFs | $ | 11,895 | $ | 12,785 | $ | 12,881 | $ | 13,448 | $ | 13,107 | $ | 11,669 | $ | 9,932 | $ | 10,464 | (22.2) | 5.4 | ||||||||||||||||||||||||||||||||||||||||||
| Mutual funds | 8,811 | 9,188 | 9,369 | 9,491 | 8,833 | 7,869 | 7,594 | 7,811 | (17.7) | 2.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Pension products | 6,283 | 6,671 | 6,798 | 6,733 | 6,576 | 6,215 | 6,204 | 6,247 | (7.2) | 0.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Insurance and other products | 3,145 | 3,303 | 3,316 | 3,173 | 2,931 | 2,856 | 2,748 | 2,714 | (14.5) | (1.2) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Assets Under Custody | $ | 30,134 | $ | 31,947 | $ | 32,364 | $ | 32,845 | $ | 31,447 | $ | 28,609 | $ | 26,478 | $ | 27,236 | (17.1) | 2.9 | ||||||||||||||||||||||||||||||||||||||||||
| By Geographic Location(2): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Americas | $ | 22,715 | $ | 24,015 | $ | 24,380 | $ | 24,864 | $ | 23,655 | $ | 21,389 | $ | 19,581 | $ | 20,246 | (18.6) | 3.4 | ||||||||||||||||||||||||||||||||||||||||||
| Europe/Middle East/Africa | 5,564 | 5,957 | 5,994 | 5,988 | 5,786 | 5,309 | 4,818 | 4,931 | (17.7) | 2.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Asia/Pacific | 1,855 | 1,975 | 1,990 | 1,993 | 2,006 | 1,911 | 2,079 | 2,059 | 3.3 | (1.0) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Assets Under Custody | $ | 30,134 | $ | 31,947 | $ | 32,364 | $ | 32,845 | $ | 31,447 | $ | 28,609 | $ | 26,478 | $ | 27,236 | (17.1) | 2.9 | ||||||||||||||||||||||||||||||||||||||||||
| (1) Consistent with past practice, AUC/A values for certain asset classes are based on a lag, typically one-month. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (2) Geographic mix is generally based on the domicile of the entity servicing the funds and is not necessarily representative of the underlying asset mix. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (3) Assets under custody are a component of assets under custody and/or administration presented above. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ASSETS UNDER MANAGEMENT | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarters | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in billions) | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | 4Q22<br> vs. <br>4Q21 | 4Q22<br> vs. <br>3Q22 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets Under Management | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| By Asset Class and Investment Approach: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Active | $ | 84 | $ | 83 | $ | 79 | $ | 80 | $ | 67 | $ | 62 | $ | 53 | $ | 54 | (32.5) | % | 1.9 | % | ||||||||||||||||||||||||||||||||||||||||
| Passive | 2,198 | 2,378 | 2,361 | 2,594 | 2,463 | 2,024 | 1,890 | 2,074 | (20.0) | 9.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Equity | 2,282 | 2,461 | 2,440 | 2,674 | 2,530 | 2,086 | 1,943 | 2,128 | (20.4) | 9.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Fixed-Income: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Active | 91 | 100 | 101 | 103 | 98 | 89 | 79 | 83 | (19.4) | 5.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Passive | 463 | 510 | 509 | 520 | 503 | 461 | 439 | 471 | (9.4) | 7.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Fixed-Income | 554 | 610 | 610 | 623 | 601 | 550 | 518 | 554 | (11.1) | 6.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash(1) | 372 | 381 | 367 | 368 | 393 | 403 | 410 | 376 | 2.2 | (8.3) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Multi-Asset-Class Solutions: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Active | 34 | 35 | 35 | 34 | 33 | 29 | 25 | 28 | (17.6) | 12.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Passive | 155 | 172 | 174 | 188 | 196 | 173 | 167 | 181 | (3.7) | 8.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Multi-Asset-Class Solutions | 189 | 207 | 209 | 222 | 229 | 202 | 192 | 209 | (5.9) | 8.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Alternative Investments(2): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Active | 27 | 63 | 58 | 56 | 51 | 42 | 35 | 35 | (37.5) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Passive | 167 | 175 | 178 | 195 | 218 | 192 | 167 | 179 | (8.2) | 7.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Alternative Investments | 194 | 238 | 236 | 251 | 269 | 234 | 202 | 214 | (14.7) | 5.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Assets Under Management | $ | 3,591 | $ | 3,897 | $ | 3,862 | $ | 4,138 | $ | 4,022 | $ | 3,475 | $ | 3,265 | $ | 3,481 | (15.9) | 6.6 | ||||||||||||||||||||||||||||||||||||||||||
| By Geographic Location: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| North America | $ | 2,512 | $ | 2,749 | $ | 2,732 | $ | 2,931 | $ | 2,878 | $ | 2,525 | $ | 2,396 | $ | 2,544 | (13.2) | 6.2 | ||||||||||||||||||||||||||||||||||||||||||
| Europe/Middle East/Africa | 530 | 570 | 558 | 592 | 593 | 521 | 474 | 511 | (13.7) | 7.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Asia/Pacific | 549 | 578 | 572 | 615 | 551 | 429 | 395 | 426 | (30.7) | 7.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Assets Under Management | $ | 3,591 | $ | 3,897 | $ | 3,862 | $ | 4,138 | $ | 4,022 | $ | 3,475 | $ | 3,265 | $ | 3,481 | (15.9) | 6.6 | ||||||||||||||||||||||||||||||||||||||||||
| (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 Shares and SPDR® Gold MiniSharesSM Trust. We are not the investment manager for the SPDR® Gold Shares and SPDR®Gold MiniSharesSM Trust, but act as the marketing agent. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exchange-Traded Funds(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| By Asset Class: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Alternative Investments(2) | $ | 69 | $ | 73 | $ | 69 | $ | 72 | $ | 84 | $ | 77 | $ | 63 | $ | 67 | (6.9) | % | 6.3 | % | ||||||||||||||||||||||||||||||||||||||||
| Equity | 777 | 844 | 849 | 970 | 940 | 791 | 734 | 817 | (15.8) | 11.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Fixed-Income | 122 | 128 | 131 | 135 | 134 | 130 | 121 | 134 | (0.7) | 10.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Multi-Asset | — | 1 | 1 | 1 | 1 | 1 | 1 | 1 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Exchange-Traded Funds | $ | 968 | $ | 1,046 | $ | 1,050 | $ | 1,178 | $ | 1,159 | $ | 999 | $ | 919 | $ | 1,019 | (13.5) | 10.9 | ||||||||||||||||||||||||||||||||||||||||||
| (1) Exchange-traded funds are a component of assets under management presented above. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (2) Includes real estate investment trusts, currency and commodities, including SPDR® Gold Shares and SPDR® Gold MiniSharesSM Trust. We are not the investment manager for the SPDR® Gold Shares and SPDR®Gold MiniSharesSM Trust, but act as the marketing agent. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INDUSTRY FLOW DATA BY ASSET CLASS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in billions) | Quarters | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| North America - (US Domiciled) Morningstar Direct Market Data(1)(2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long Term Funds(3) | $ | 165.2 | $ | 195.7 | $ | 149.8 | $ | 101.7 | $ | (66.7) | $ | (277.9) | $ | (193.0) | $ | (353.2) | ||||||||||||||||||||||||||||||||||||||||||||
| Money Market | 156.4 | 33.1 | 15.2 | 200.8 | (143.4) | (35.1) | (26.0) | 169.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| ETF | 148.4 | 122.6 | 77.1 | 156.5 | 181.2 | 93.2 | 109.9 | 188.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Flows | $ | 470.0 | $ | 351.4 | $ | 242.1 | $ | 459.0 | $ | (28.9) | $ | (219.8) | $ | (109.1) | $ | 4.1 | ||||||||||||||||||||||||||||||||||||||||||||
| EMEA-Morningstar Direct Market Data(1)(4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long Term Funds(3) | $ | 237.0 | $ | 225.8 | $ | 192.1 | $ | 154.6 | $ | 9.7 | $ | (79.5) | $ | (94.1) | $ | (90.2) | ||||||||||||||||||||||||||||||||||||||||||||
| Money Market | (91.0) | (9.8) | (4.3) | 109.7 | (68.9) | (7.3) | (11.0) | 150.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| ETF | 54.2 | 51.1 | 36.8 | 34.7 | 45.4 | 16.0 | (8.6) | 14.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Flows | $ | 200.2 | $ | 267.1 | $ | 224.6 | $ | 299.0 | $ | (13.8) | $ | (70.8) | $ | (113.7) | $ | 74.9 | ||||||||||||||||||||||||||||||||||||||||||||
| (1) Source: Morningstar Direct. The data includes long-term mutual funds, ETF’s and Money Market funds. Mutual fund data represents estimates of net new cash flow, which is new sales minus redemptions combined with net exchanges, while ETF data represents net issuance, which is gross issuance less gross redemptions. Data for Fund of Funds, Feeder funds and Obsolete funds were excluded from the series to prevent double counting. Data is from the Morningstar Direct Asset Flows database. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (2) The fourth quarter of 2022 data for North America (US domiciled) includes Morningstar actuals for October and November 2022 and Morningstar estimates for December 2022. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (3) The long-term fund flows reported by Morningstar in North America are composed of US domiciled Market flows mainly in Equities, Allocation and Fixed Income asset classes. The long-term funds flows reported by Morningstar direct in EMEA are composed of the European market flows mainly in Equities, Allocation and Fixed Incomes asset classes. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (4) The fourth quarter of 2022 data for Europe is on a rolling three month basis for September 2022 through November 2022, sourced by Morningstar. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LINE OF BUSINESS INFORMATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment Servicing | % Change | Investment Management | % Change | Other(1) | % Change | Total | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 4Q21 | 3Q22 | 4Q22 | 4Q22<br> vs. <br>4Q21 | 4Q22<br> vs. <br>3Q22 | 4Q21 | 3Q22 | 4Q22 | 4Q22<br> vs. <br>4Q21 | 4Q22<br> vs. <br>3Q22 | 4Q21 | 3Q22 | 4Q22 | 4Q22<br> vs. <br>4Q21 | 4Q22<br> vs. <br>3Q22 | 4Q21 | 3Q22 | 4Q22 | 4Q22<br> vs. <br>4Q21 | 4Q22<br> vs. <br>3Q22 | ||||||||||||||||||||||||||||||||||||||||
| Servicing fees | $ | 1,377 | $ | 1,219 | $ | 1,203 | (12.6) | % | (1.3) | % | $ | — | $ | — | $ | — | — | % | — | % | $ | — | $ | — | $ | — | — | % | — | % | $ | 1,377 | $ | 1,219 | $ | 1,203 | (12.6) | % | (1.3) | % | ||||||||||||||||||||
| Management fees | — | — | — | — | — | 530 | 472 | 457 | (13.8) | (3.2) | — | — | — | — | — | 530 | 472 | 457 | (13.8) | (3.2) | ||||||||||||||||||||||||||||||||||||||||
| Foreign exchange trading services | 280 | 293 | 323 | 15.4 | 10.2 | 20 | 26 | 21 | 5.0 | (19.2) | — | — | 23 | nm | nm | 300 | 319 | 367 | 22.3 | 15.0 | ||||||||||||||||||||||||||||||||||||||||
| Securities finance | 98 | 105 | 97 | (1.0) | (7.6) | 4 | 5 | 6 | 50.0 | 20.0 | — | — | — | — | — | 102 | 110 | 103 | 1.0 | (6.4) | ||||||||||||||||||||||||||||||||||||||||
| Software and processing fees | 187 | 184 | 216 | 15.5 | 17.4 | — | — | — | — | — | — | — | — | — | — | 187 | 184 | 216 | 15.5 | 17.4 | ||||||||||||||||||||||||||||||||||||||||
| Other fee revenue | 14 | 12 | — | nm | nm | 1 | (17) | 18 | nm | nm | — | — | — | — | — | 15 | (5) | 18 | 20.0 | nm | ||||||||||||||||||||||||||||||||||||||||
| Total fee revenue | 1,956 | 1,813 | 1,839 | (6.0) | 1.4 | 555 | 486 | 502 | (9.5) | 3.3 | — | — | 23 | nm | nm | 2,511 | 2,299 | 2,364 | (5.9) | 2.8 | ||||||||||||||||||||||||||||||||||||||||
| Net interest income | 487 | 663 | 791 | 62.4 | 19.3 | (3) | (3) | — | nm | nm | — | — | — | — | — | 484 | 660 | 791 | 63.4 | 19.8 | ||||||||||||||||||||||||||||||||||||||||
| Total other income | — | — | — | — | nm | — | — | — | — | — | 58 | — | — | nm | — | 58 | — | — | nm | — | ||||||||||||||||||||||||||||||||||||||||
| Total revenue | 2,443 | 2,476 | 2,630 | 7.7 | 6.2 | 552 | 483 | 502 | (9.1) | 3.9 | 58 | — | 23 | (60.3) | nm | 3,053 | 2,959 | 3,155 | 3.3 | 6.6 | ||||||||||||||||||||||||||||||||||||||||
| Provision for credit losses | (7) | — | 10 | nm | nm | — | — | — | — | — | — | — | — | — | — | (7) | — | 10 | nm | nm | ||||||||||||||||||||||||||||||||||||||||
| Total expenses | 1,793 | 1,760 | 1,808 | 0.8 | 2.7 | 363 | 335 | 345 | (5.0) | 3.0 | 174 | 15 | 103 | (40.8) | nm | 2,330 | 2,110 | 2,256 | (3.2) | 6.9 | ||||||||||||||||||||||||||||||||||||||||
| Income before income tax expense | $ | 657 | $ | 716 | $ | 812 | 23.6 | 13.4 | $ | 189 | $ | 148 | $ | 157 | (16.9) | 6.1 | $ | (116) | $ | (15) | $ | (80) | (31.0) | nm | $ | 730 | $ | 849 | $ | 889 | 21.8 | 4.7 | ||||||||||||||||||||||||||||
| Pre-tax margin | 26.9 | % | 28.9 | % | 30.9 | % | 400 | 200 | bps | 34.2 | % | 30.6 | % | 31.3 | % | (290) | 70 | bps | 23.9 | % | 28.7 | % | 28.2 | % | 430 | (50) | bps | |||||||||||||||||||||||||||||||||
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment Servicing | % Change | Investment Management | % Change | Other(1) | % Change | Total | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2021 | 2022 | YTD2022<br>vs.<br>YTD2021 | 2021 | 2022 | YTD2022<br>vs.<br>YTD2021 | 2021 | 2022 | YTD2022<br>vs.<br>YTD2021 | 2021 | 2022 | YTD2022<br>vs.<br>YTD2021 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Servicing fees | $ | 5,531 | $ | 5,087 | (8.0) | % | $ | — | $ | — | — | % | $ | — | $ | — | — | % | $ | 5,531 | $ | 5,087 | (8.0) | % | ||||||||||||||||||||||||||||||||||||
| Management fees | — | — | — | 2,053 | 1,939 | (5.6) | — | — | — | 2,053 | 1,939 | (5.6) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign exchange trading services | 1,149 | 1,271 | 10.6 | 62 | 82 | 32.3 | — | 23 | nm | 1,211 | 1,376 | 13.6 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Securities finance | 402 | 397 | (1.2) | 14 | 19 | 35.7 | — | — | — | 416 | 416 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Software and processing fees | 738 | 789 | 6.9 | — | — | — | — | — | — | 738 | 789 | 6.9 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Other fee revenue | 59 | 46 | (22.0) | 4 | (47) | nm | — | — | — | 63 | (1) | nm | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total fee revenue | 7,879 | 7,590 | (3.7) | 2,133 | 1,993 | (6.6) | — | 23 | nm | 10,012 | 9,606 | (4.1) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | 1,919 | 2,551 | 32.9 | (14) | (7) | (50.0) | — | — | — | 1,905 | 2,544 | 33.5 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total other income | (1) | (2) | nm | — | — | — | 111 | — | nm | 110 | (2) | nm | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | 9,797 | 10,139 | 3.5 | 2,119 | 1,986 | (6.3) | 111 | 23 | (79.3) | 12,027 | 12,148 | 1.0 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Provision for loan losses | (33) | 20 | nm | — | — | — | — | — | — | (33) | 20 | nm | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total expenses | 7,182 | 7,260 | 1.1 | 1,445 | 1,396 | (3.4) | 262 | 145 | (44.7) | 8,889 | 8,801 | (1.0) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Income before income tax expense | $ | 2,648 | $ | 2,859 | 8.0 | $ | 674 | $ | 590 | (12.5) | $ | (151) | $ | (122) | (19.2) | $ | 3,171 | $ | 3,327 | 4.9 | ||||||||||||||||||||||||||||||||||||||||
| Pre-tax margin | 27.0 | % | 28.2 | % | 120 | bps | 31.8 | % | 29.7 | % | (210) | bps | 26.4 | % | 27.4 | % | 100 | bps | ||||||||||||||||||||||||||||||||||||||||||
| (1) Represents amounts that are not allocated to a specific line of business, including certain severance and restructuring charges, employee costs, acquisition costs, revenue-related recoveries and certain provisions for legal contingencies. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| nm Denotes not meaningful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ALLOWANCE FOR CREDIT LOSSES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarters | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | 4Q22<br> vs. <br>4Q21 | 4Q22<br> vs. <br>3Q22 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Beginning balance | $ | 148 | $ | 135 | $ | 121 | $ | 117 | $ | 108 | $ | 107 | $ | 114 | $ | 114 | (2.6) | % | — | % | ||||||||||||||||||||||||||||||||||||||||
| Provision for credit losses (funded commitments) | — | (19) | (3) | (7) | — | 11 | 2 | 2 | nm | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Provision for credit losses (unfunded commitments) | (7) | 4 | 1 | — | — | (1) | (2) | 8 | nm | nm | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Provision for credit losses (investment securities and all other) | (2) | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total provision | (9) | (15) | (2) | (7) | — | 10 | — | 10 | nm | nm | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Charge-offs | — | (1) | (1) | — | (1) | (3) | — | (3) | nm | nm | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other(1) | (4) | 2 | (1) | (2) | — | — | — | — | nm | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Ending balance(2) | $ | 135 | $ | 121 | $ | 117 | $ | 108 | $ | 107 | $ | 114 | $ | 114 | $ | 121 | 12.0 | 6.1 | ||||||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans | $ | 118 | $ | 100 | $ | 95 | $ | 87 | $ | 86 | $ | 95 | $ | 97 | $ | 97 | 11.5 | — | ||||||||||||||||||||||||||||||||||||||||||
| Investment securities | 2 | 2 | 2 | 2 | 2 | 1 | 1 | 1 | (50.0) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Unfunded (off-balance sheet) commitments | 15 | 19 | 20 | 19 | 19 | 18 | 16 | 23 | 21.1 | 43.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| All other | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Ending balance(2) | $ | 135 | $ | 121 | $ | 117 | $ | 108 | $ | 107 | $ | 114 | $ | 114 | $ | 121 | 12.0 | 6.1 | ||||||||||||||||||||||||||||||||||||||||||
| (1) Consists primarily of FX translation. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (2) The allowance for credit losses on unfunded commitments is included within Other liabilities in the Consolidated Statement of Condition. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| nm Not meaningful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RECONCILIATIONS OF 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 certain financial information on a basis that excludes or adjusts one or more items from GAAP. This latter basis is a non-GAAP presentation. In general, our non-GAAP financial results adjust selected GAAP-basis financial results to exclude the impact of revenue and expenses outside of State Street’s normal course of business or other notable items, such as acquisition and restructuring charges, repositioning charges, gains/losses on sales, as well as, for selected comparisons, seasonal items. For example, we sometimes present expenses on a basis we may refer to as "expenses ex-notable items", which exclude notable items and, to provide additional perspective on both prior year quarter and sequential quarter comparisons, also exclude seasonal items. Management believes that this presentation of financial information facilitates an investor's further understanding and analysis of State Street's financial performance and trends with respect to State Street’s business operations from period-to-period, including providing additional insight into our underlying margin and profitability. In addition, Management may also provide additional non-GAAP measures. For example, we present capital ratios, calculated under regulatory standards scheduled to be effective in the future or other standards, that management uses in evaluating State Street’s business and activities and believes may similarly be useful to investors. Additionally, we may present revenue and expense measures on a constant currency 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarters | % Change | Year-to-Date | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | 4Q22<br> vs. <br>4Q21 | 4Q22<br> vs. <br>3Q22 | 2021 | 2022 | YTD2022<br> vs. <br>YTD2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Fee Revenue: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total fee revenue, GAAP-basis | $ | 2,483 | $ | 2,514 | $ | 2,504 | $ | 2,511 | $ | 2,573 | $ | 2,370 | $ | 2,299 | $ | 2,364 | (5.9) | % | 2.8 | % | $ | 10,012 | $ | 9,606 | (4.1) | % | ||||||||||||||||||||||||||||||||||
| Less: Fee revenue(1) | — | — | — | — | — | — | — | (23) | nm | nm | — | (23) | nm | |||||||||||||||||||||||||||||||||||||||||||||||
| Total fee revenue, excluding notable items | $ | 2,483 | $ | 2,514 | $ | 2,504 | $ | 2,511 | $ | 2,573 | $ | 2,370 | $ | 2,299 | $ | 2,341 | (6.8) | 1.8 | $ | 10,012 | $ | 9,583 | (4.3) | |||||||||||||||||||||||||||||||||||||
| Total Revenue: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue, GAAP-basis | $ | 2,950 | $ | 3,034 | $ | 2,990 | $ | 3,053 | $ | 3,081 | $ | 2,953 | $ | 2,959 | $ | 3,155 | 3.3 | % | 6.6 | % | $ | 12,027 | $ | 12,148 | 1.0 | % | ||||||||||||||||||||||||||||||||||
| Less: Fee revenue(1) | — | — | — | — | — | — | — | (23) | nm | nm | — | (23) | nm | |||||||||||||||||||||||||||||||||||||||||||||||
| Less: total other income(2) | — | (53) | — | (58) | — | — | — | — | nm | — | (111) | — | nm | |||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue, excluding notable items | $ | 2,950 | $ | 2,981 | $ | 2,990 | $ | 2,995 | $ | 3,081 | $ | 2,953 | $ | 2,959 | $ | 3,132 | 4.6 | 5.8 | $ | 11,916 | $ | 12,125 | 1.8 | |||||||||||||||||||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total expenses, GAAP-basis | $ | 2,332 | $ | 2,111 | $ | 2,116 | $ | 2,330 | $ | 2,327 | $ | 2,108 | $ | 2,110 | $ | 2,256 | (3.2) | % | 6.9 | % | $ | 8,889 | $ | 8,801 | (1.0) | % | ||||||||||||||||||||||||||||||||||
| Less: Notable expense items: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition and restructuring costs(3) | (10) | (11) | (18) | (26) | (9) | (12) | (13) | (31) | 19.2 | nm | (65) | (65) | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Repositioning (charges) / release | — | — | — | 3 | — | — | — | (70) | nm | nm | 3 | (70) | nm | |||||||||||||||||||||||||||||||||||||||||||||||
| Deferred incentive compensation expense acceleration(4) | — | — | — | (147) | — | — | — | — | nm | — | (147) | — | nm | |||||||||||||||||||||||||||||||||||||||||||||||
| Legal and other | (29) | 11 | — | — | — | — | — | — | — | — | (18) | — | nm | |||||||||||||||||||||||||||||||||||||||||||||||
| Total expenses, excluding notable items | 2,293 | 2,111 | 2,098 | 2,160 | 2,318 | 2,096 | 2,097 | 2,155 | (0.2) | 2.8 | 8,662 | 8,666 | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Seasonal expenses | (176) | — | — | — | (208) | — | — | — | — | — | (176) | (208) | 18.2 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total expenses, excluding notable items and seasonal expenses | $ | 2,117 | $ | 2,111 | $ | 2,098 | $ | 2,160 | $ | 2,110 | $ | 2,096 | $ | 2,097 | $ | 2,155 | (0.2) | 2.8 | $ | 8,486 | $ | 8,458 | (0.3) | |||||||||||||||||||||||||||||||||||||
| Fee Operating Leverage, GAAP-Basis: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total fee revenue, GAAP-basis | $ | 2,483 | $ | 2,514 | $ | 2,504 | $ | 2,511 | $ | 2,573 | $ | 2,370 | $ | 2,299 | $ | 2,364 | (5.9) | % | 2.8 | % | $ | 10,012 | $ | 9,606 | (4.1) | % | ||||||||||||||||||||||||||||||||||
| Total expenses, GAAP-basis | 2,332 | 2,111 | 2,116 | 2,330 | 2,327 | 2,108 | 2,110 | 2,256 | (3.2) | 6.9 | 8,889 | 8,801 | (1.0) | |||||||||||||||||||||||||||||||||||||||||||||||
| Fee operating leverage, GAAP-basis | (270) | bps | (410) | bps | (310) | bps | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fee Operating Leverage, excluding notable items: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total fee revenue, excluding notable items (as reconciled above) | $ | 2,483 | $ | 2,514 | $ | 2,504 | $ | 2,511 | $ | 2,573 | $ | 2,370 | $ | 2,299 | $ | 2,341 | (6.8) | % | 1.8 | % | $ | 10,012 | $ | 9,583 | (4.3) | % | ||||||||||||||||||||||||||||||||||
| Total expenses, excluding notable items (as reconciled above) | 2,293 | 2,111 | 2,098 | 2,160 | 2,318 | 2,096 | 2,097 | 2,155 | (0.2) | 2.8 | 8,662 | 8,666 | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Fee operating leverage, excluding notable items | (660) | bps | (100) | bps | (430) | bps | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Leverage, GAAP-Basis: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue, GAAP-basis | $ | 2,950 | $ | 3,034 | $ | 2,990 | $ | 3,053 | $ | 3,081 | $ | 2,953 | $ | 2,959 | $ | 3,155 | 3.3 | % | 6.6 | % | $ | 12,027 | $ | 12,148 | 1.0 | % | ||||||||||||||||||||||||||||||||||
| Total expenses, GAAP-basis | 2,332 | 2,111 | 2,116 | 2,330 | 2,327 | 2,108 | 2,110 | 2,256 | (3.2) | 6.9 | 8,889 | 8,801 | (1.0) | |||||||||||||||||||||||||||||||||||||||||||||||
| Operating leverage, GAAP-basis | 650 | bps | (30) | bps | 200 | bps | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Leverage, excluding notable items: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue, excluding notable items (as reconciled above) | $ | 2,950 | $ | 2,981 | $ | 2,990 | $ | 2,995 | $ | 3,081 | $ | 2,953 | $ | 2,959 | $ | 3,132 | 4.6 | % | 5.8 | % | $ | 11,916 | $ | 12,125 | 1.8 | % | ||||||||||||||||||||||||||||||||||
| Total expenses, excluding notable items (as reconciled above) | 2,293 | 2,111 | 2,098 | 2,160 | 2,318 | 2,096 | 2,097 | 2,155 | (0.2) | 2.8 | 8,662 | 8,666 | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Operating leverage, excluding notable items | 480 | bps | 300 | bps | 180 | bps | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RECONCILIATIONS OF NON-GAAP FINANCIAL INFORMATION (Continued) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarters | % Change | Year-to-Date | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions, except earnings per share, or where otherwise noted) | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | 4Q22<br> vs. <br>4Q21 | 4Q22<br> vs. <br>3Q22 | 2021 | 2022 | YTD2022<br> vs. <br>YTD2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net Income : | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Income GAAP-basis | $ | 519 | $ | 763 | $ | 714 | $ | 697 | $ | 604 | $ | 747 | $ | 690 | $ | 733 | 5.2 | % | 6.2 | % | $ | 2,693 | $ | 2,774 | 3.0 | % | ||||||||||||||||||||||||||||||||||
| Less: Notable items | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fee revenue(1) | — | — | — | — | — | — | — | (23) | — | (23) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total other income(2) | — | (53) | — | (58) | — | — | — | — | (111) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition and restructuring costs(3) | 10 | 11 | 18 | 26 | 9 | 12 | 13 | 31 | 65 | 65 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Repositioning charges / (release) | — | — | — | (3) | — | — | — | 70 | (3) | 70 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred incentive compensation expense acceleration (4) | — | — | — | 147 | — | — | — | — | 147 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Legal and other | 29 | (11) | — | — | — | — | — | — | 18 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Tax impact of notable items | (10) | 16 | (5) | (29) | (2) | (3) | (3) | (21) | (28) | (29) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Income, excluding notable items | $ | 548 | $ | 726 | $ | 727 | $ | 780 | $ | 611 | $ | 756 | $ | 700 | $ | 790 | 1.3 | 12.9 | $ | 2,781 | $ | 2,857 | 2.7 | |||||||||||||||||||||||||||||||||||||
| Net Income Available to Common Shareholders: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Income Available to Common Shareholders, GAAP-basis | $ | 489 | $ | 728 | $ | 693 | $ | 662 | $ | 583 | $ | 712 | $ | 669 | $ | 696 | 5.1 | % | 4.0 | % | $ | 2,572 | $ | 2,660 | 3.4 | % | ||||||||||||||||||||||||||||||||||
| Less: Notable items | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fee revenue(1) | — | — | — | — | — | — | — | (23) | — | (23) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total other income(2) | — | (53) | — | (58) | — | — | — | — | (111) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition and restructuring costs(3) | 10 | 11 | 18 | 26 | 9 | 12 | 13 | 31 | 65 | 65 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Repositioning charges / (release) | — | — | — | (3) | — | — | — | 70 | (3) | 70 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred incentive compensation expense acceleration(4) | — | — | — | 147 | — | — | — | — | 147 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Legal and other | 29 | (11) | — | — | — | — | — | — | 18 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred securities redemption(5) | 5 | — | — | — | — | — | — | — | 5 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Tax impact of notable items | (10) | 16 | (5) | (29) | (2) | (3) | (3) | (21) | (28) | (29) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Income Available to Common Shareholders, excluding notable items | $ | 523 | $ | 691 | $ | 706 | $ | 745 | $ | 590 | $ | 721 | $ | 679 | $ | 753 | 1.1 | 10.9 | $ | 2,665 | $ | 2,743 | 2.9 | |||||||||||||||||||||||||||||||||||||
| Diluted Earnings per Share: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Diluted earnings per share, GAAP-basis | $ | 1.37 | $ | 2.07 | $ | 1.96 | $ | 1.78 | $ | 1.57 | $ | 1.91 | $ | 1.80 | $ | 1.91 | 7.3 | % | 6.1 | % | $ | 7.19 | $ | 7.19 | — | % | ||||||||||||||||||||||||||||||||||
| Less: Notable items | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fee revenue(1) | — | — | — | — | — | — | — | (0.05) | — | (0.05) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total other income(2) | — | (0.10) | — | (0.11) | — | — | — | — | (0.23) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition and restructuring costs(3) | 0.02 | 0.02 | 0.04 | 0.05 | 0.02 | 0.03 | 0.02 | 0.07 | 0.14 | 0.13 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Repositioning charges / (release) | — | — | — | (0.01) | — | — | — | 0.14 | (0.01) | 0.14 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred incentive compensation expense acceleration(4) | — | — | — | 0.29 | — | — | — | — | 0.30 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Legal and other | 0.06 | (0.02) | — | — | — | — | — | — | 0.04 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred securities redemption(5) | 0.02 | — | — | — | — | — | — | — | 0.01 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Diluted earnings per share, excluding notable items | $ | 1.47 | $ | 1.97 | $ | 2.00 | $ | 2.00 | $ | 1.59 | $ | 1.94 | $ | 1.82 | $ | 2.07 | 3.5 | 13.7 | $ | 7.44 | $ | 7.41 | (0.4) | |||||||||||||||||||||||||||||||||||||
| Pre-tax Margin: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pre-tax margin, GAAP-basis | 21.3 | % | 30.9 | % | 29.3 | % | 23.9 | % | 24.5% | 28.3% | 28.7 | % | 28.2% | 430 | bps | (50) | bps | 26.4% | 27.4% | 100 | bps | |||||||||||||||||||||||||||||||||||||||
| Less: Notable items | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fee revenue(1) | — | — | — | — | — | — | — | (0.5) | — | (0.1) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total other income(2) | — | (1.2) | — | (1.4) | — | — | — | — | (0.7) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition and restructuring costs(3) | 0.3 | 0.4 | 0.6 | 0.8 | 0.3 | 0.4 | 0.4 | 1.0 | 0.5 | 0.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Repositioning charges | — | — | — | — | — | — | — | 2.2 | — | 0.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred incentive compensation expense acceleration(4) | — | — | — | 4.8 | — | — | — | — | 1.2 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Legal and other | 1.0 | (0.4) | — | — | — | — | — | — | 0.2 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Pre-tax margin, excluding notable items | 22.6% | 29.7% | 29.9% | 28.1% | 24.8% | 28.7% | 29.1% | 30.9% | 280 | 180 | 27.6% | 28.4% | 80 | |||||||||||||||||||||||||||||||||||||||||||||||
| STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RECONCILIATIONS OF NON-GAAP FINANCIAL INFORMATION (Continued) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| % Change | Year-to-Date | % Change | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions, except earnings per share, or where otherwise noted) | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | 4Q22<br> vs. <br>4Q21 | 4Q22<br> vs. <br>3Q22 | 2021 | 2022 | YTD2022<br> vs. <br>YTD2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Return on Average Common Equity: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Return on average common equity, GAAP-basis | 8.4 | % | 12.6 | % | 11.6 | % | 10.3 | % | 9.5 | % | 12.1% | 11.2% | 11.8% | 150 | bps | 60 | bps | 10.7% | 11.1% | 40 | bps | |||||||||||||||||||||||||||||||||||||||
| Less: Notable items | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fee revenue(1) | — | — | — | — | — | — | — | (0.4) | — | (0.1) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total other income(2) | — | (1.0) | — | (0.9) | — | — | — | — | (0.5) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition and restructuring costs(3) | 0.2 | 0.2 | 0.3 | 0.4 | 0.2 | 0.1 | 0.2 | 0.5 | 0.3 | 0.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Repositioning charges | — | — | — | — | — | — | — | 1.1 | — | 0.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred incentive compensation expense acceleration(4) | — | — | — | 2.3 | — | — | — | — | 0.6 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Legal and other | 0.5 | (0.2) | — | — | — | — | — | — | 0.1 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred securities redemption(5) | 0.1 | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Tax impact of notable items | (0.2) | 0.3 | (0.1) | (0.5) | — | — | — | (0.3) | (0.1) | (0.1) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Return on average common equity, excluding notable items | 9.0% | 11.9% | 11.8% | 11.6% | 9.7% | 12.2% | 11.4% | 12.7% | 110 | 130 | 11.1% | 11.5% | 40 | |||||||||||||||||||||||||||||||||||||||||||||||
| (1) Amount in 2022 consists of a 23 million revenue-related recovery related to settlement proceeds from a 2018 foreign exchange benchmark litigation resolution, which is reflected in foreign exchange trading services revenue. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (2) Amount in 2021 consists of 58 million related to the sale of investment securities and 53 million gain on the sale of a majority share of our WMS business. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (3) Acquisition and restructuring costs of approximately 31 million in 4Q22 related to the BBH Investor Services acquisition transaction that State Street is no longer pursuing. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (4) Amount in 2021 reflects 142 million related to the acceleration of expenses associated with certain cash settled deferred incentive compensation awards and 5 million related to employee benefits. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (5) We redeemed an aggregate of 500 million, or 5,000 of the 7,500 outstanding shares of our non-cumulative perpetual preferred stock, Series F, for cash at a redemption price of 100,000 per share (equivalent to 1,000 per depositary share) plus all declared and unpaid dividends on March 15, 2021.The difference between the redemption value and the net carrying value of approximately 5 million resulted in an EPS impact of approximately (.02) per share in the first quarter of 2021. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| nm Denotes not meaningful |
All values are in US Dollars.
| STATE STREET CORPORATION | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||
| RECONCILIATION OF PRE-TAX MARGIN EXCLUDING NOTABLE ITEMS | ||||||||||||||||||
| (Dollars in millions) | 2018(1) | 2019 | 2020 | 2021 | 2022 | |||||||||||||
| Total revenue: | ||||||||||||||||||
| Total revenue, GAAP-basis | $ | 12,131 | $ | 11,756 | $ | 11,703 | $ | 12,027 | $ | 12,148 | ||||||||
| Less: Fees revenue | — | — | — | — | (23) | |||||||||||||
| Less: Total other income | — | (44) | — | (111) | — | |||||||||||||
| Add: Legal and other | 8 | — | — | — | — | |||||||||||||
| Total revenue, excluding notable items | 12,139 | 11,712 | 11,703 | 11,916 | 12,125 | |||||||||||||
| Provision for credit losses | 15 | 10 | 88 | (33) | 20 | |||||||||||||
| Total expenses: | ||||||||||||||||||
| Total expenses, GAAP-basis | 9,015 | 9,034 | 8,716 | 8,889 | 8,801 | |||||||||||||
| Less: | ||||||||||||||||||
| Acquisition and restructuring costs | (24) | (77) | (50) | (65) | (65) | |||||||||||||
| Deferred incentive compensation expense acceleration | — | — | — | (147) | — | |||||||||||||
| Legal and other | (42) | (172) | 9 | (18) | — | |||||||||||||
| Repositioning (charges) / release(1) | (324) | (110) | (133) | 3 | (70) | |||||||||||||
| Total expenses, excluding notable items | 8,625 | 8,675 | 8,542 | 8,662 | 8,666 | |||||||||||||
| Income before income tax expense, excluding notable items | $ | 3,499 | $ | 3,027 | $ | 3,073 | $ | 3,287 | $ | 3,439 | ||||||||
| Income before income tax expense, GAAP-basis | $ | 3,101 | $ | 2,712 | $ | 2,899 | $ | 3,171 | $ | 3,327 | ||||||||
| Pre-tax margin, excluding notable items | 28.8 | % | 25.8 | % | 26.3 | % | 27.6 | % | 28.4 | % | ||||||||
| Pre-tax margin, GAAP-basis | 25.6 | 23.1 | 24.8 | 26.4 | 27.4 | |||||||||||||
| (1) Includes charges in 2018 that were previously disclosed as "Business exit: Channel Islands". | ||||||||||||||||||
| STATE STREET CORPORATION | ||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||
| RECONCILIATIONS OF CONSTANT CURRENCY FX IMPACTS | ||||||||||||||||||
| Currency Translation Impact | Excluding Currency Impact | % Change Constant Currency | ||||||||||||||||
| (Dollars in millions) | 3Q22 | 4Q22 | 4Q22 vs. 4Q21 | 4Q22 vs. 3Q22 | 4Q22 vs. 4Q21 | 4Q22 vs. 3Q22 | 4Q22 vs. 4Q21 | 4Q22 vs. 3Q22 | ||||||||||
| GAAP-Basis Results: | ||||||||||||||||||
| Fee revenue: | ||||||||||||||||||
| Back office servicing fees | 1,272 | $ | 1,126 | $ | 1,115 | $ | (37) | $ | 1 | $ | 1,152 | $ | 1,114 | (9.4) | % | (1.1) | % | |
| Middle office services | 93 | 88 | (2) | — | 90 | 88 | (14.3) | (5.4) | ||||||||||
| Servicing fees | 1,219 | 1,203 | (39) | 1 | 1,242 | 1,202 | (9.8) | (1.4) | ||||||||||
| Management fees | 472 | 457 | (11) | 2 | 468 | 455 | (11.7) | (3.6) | ||||||||||
| Foreign exchange trading services | 319 | 367 | — | — | 367 | 367 | 22.3 | 15.0 | ||||||||||
| Securities finance | 110 | 103 | (1) | — | 104 | 103 | 2.0 | (6.4) | ||||||||||
| Front office software and data | 127 | 159 | (1) | — | 160 | 159 | 29.0 | 25.2 | ||||||||||
| Lending related and other fees | 57 | 57 | — | — | 57 | 57 | (9.5) | — | ||||||||||
| Software and processing fees | 184 | 216 | (1) | — | 217 | 216 | 16.0 | 17.4 | ||||||||||
| Other fee revenue | (5) | 18 | 1 | 1 | 17 | 17 | 13.3 | nm | ||||||||||
| Total fee revenue | 2,299 | 2,364 | (51) | 4 | 2,415 | 2,360 | (3.8) | 2.7 | ||||||||||
| Net interest income | 660 | 791 | (13) | 2 | 804 | 789 | 66.1 | 19.5 | ||||||||||
| Total other income | — | — | — | — | — | — | nm | nm | ||||||||||
| Total revenue | 3,053 | $ | 2,959 | $ | 3,155 | $ | (64) | $ | 6 | $ | 3,219 | $ | 3,149 | 5.4 | 6.4 | |||
| Expenses: | ||||||||||||||||||
| Compensation and employee benefits | 1,181 | $ | 1,042 | $ | 1,108 | $ | (37) | $ | (1) | $ | 1,145 | $ | 1,109 | (3.0) | 6.4 | |||
| Information systems and communications | 399 | 416 | (4) | — | 420 | 416 | (3.7) | 4.3 | ||||||||||
| Transaction processing services | 227 | 240 | (7) | — | 247 | 240 | 3.8 | 5.7 | ||||||||||
| Occupancy | 97 | 106 | (6) | — | 112 | 106 | (15.8) | 9.3 | ||||||||||
| Acquisition and restructuring costs | 13 | 31 | — | — | 31 | 31 | 19.2 | 138.5 | ||||||||||
| Amortization of other intangible assets | 58 | 59 | (2) | — | 61 | 59 | (1.6) | 1.7 | ||||||||||
| Other | 274 | 296 | (8) | — | 304 | 296 | 19.7 | 8.0 | ||||||||||
| Total expenses | 2,330 | $ | 2,110 | $ | 2,256 | $ | (64) | $ | (1) | $ | 2,320 | $ | 2,257 | (0.4) | 7.0 | |||
| Total expenses, excluding notable items - Non-GAAP | 2,160 | $ | 2,097 | $ | 2,155 | $ | (64) | $ | (1) | $ | 2,219 | $ | 2,156 | 2.7 | 2.8 | |||
| Total non-compensation expenses, excluding notable items - Non-GAAP(1) | 1,055 | 1,097 | (27) | — | 1,124 | 1,097 | 2.7 | 4.0 | ||||||||||
| GAAP-Basis YTD Comparison | Currency Translation Impact | Excluding Currency Impact | % Change Constant Currency | |||||||||||||||
| (Dollars in millions) | 2022 | YTD2022 vs.YTD2021 | 2022 | YTD2022 vs. YTD2021 | ||||||||||||||
| GAAP-Basis Results: | ||||||||||||||||||
| Fee revenue: | ||||||||||||||||||
| Back office servicing fees | 5,117 | $ | 4,714 | $ | (139) | $ | 4,853 | (5.2) | % | |||||||||
| Middle office services | 373 | (8) | 381 | (8.0) | ||||||||||||||
| Servicing fees | 5,087 | (147) | 5,234 | (5.4) | ||||||||||||||
| Management fees | 1,939 | (38) | 1,977 | (3.7) | ||||||||||||||
| Foreign exchange trading services | 1,376 | — | 1,376 | 13.6 | ||||||||||||||
| Securities finance | 416 | (4) | 420 | 1.0 | ||||||||||||||
| Front office software and data | 550 | (2) | 552 | 14.0 | ||||||||||||||
| Lending related and other fees | 239 | (4) | 243 | (4.3) | ||||||||||||||
| Software and processing fees | 789 | (6) | 795 | 7.7 | ||||||||||||||
| Other fee revenue | (1) | (2) | 1 | (98.4) | ||||||||||||||
| Total fee revenue | 9,606 | (197) | 9,803 | (2.1) | ||||||||||||||
| Net interest income | 2,544 | (47) | 2,591 | 36.0 | ||||||||||||||
| Total other income | (2) | — | (2) | nm | ||||||||||||||
| Total revenue | 12,027 | $ | 12,148 | $ | (244) | $ | 12,392 | 3.0 | ||||||||||
| Expenses: | ||||||||||||||||||
| Compensation and employee benefits | 4,554 | $ | 4,428 | $ | (135) | $ | 4,563 | 0.2 | ||||||||||
| Information systems and communications | 1,630 | (15) | 1,645 | (1.0) | ||||||||||||||
| Transaction processing services | 971 | (23) | 994 | (2.9) | ||||||||||||||
| Occupancy | 394 | (16) | 410 | (7.7) | ||||||||||||||
| Acquisition and restructuring costs | 65 | — | 65 | — | ||||||||||||||
| Amortization of other intangible assets | 238 | (8) | 246 | 0.4 | ||||||||||||||
| Other | 1,075 | (25) | 1,100 | 22.8 | ||||||||||||||
| Total expenses | 8,889 | $ | 8,801 | $ | (222) | $ | 9,023 | 1.5 | ||||||||||
| Total expenses, excluding notable items - Non-GAAP | 8,662 | $ | 8,666 | $ | (222) | $ | 8,888 | 2.6 | ||||||||||
| Total non-compensation expenses, excluding notable items - Non-GAAP(1) | 4,288 | (87) | 4,375 | 3.6 | ||||||||||||||
| (1) Total non-compensation expenses, excluding notable items is comprised of total expenses, excluding notable items - Non-GAAP, less compensation and employee benefits, excluding notable items. Compensation and benefits, excluding notable items was 1,058 million in 4Q22, 1,042 million in 3Q22 and 1,066 million in 4Q21, and 4,378 million and 4,439 million for full year 2022 and 2021, respectively. | ||||||||||||||||||
| nm Denotes not meaningful |
All values are in US Dollars.
| STATE STREET CORPORATION | |||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EARNINGS RELEASE ADDENDUM | |||||||||||||||||||||||||||||||||||||||||||||||||
| RECONCILIATION OF TANGIBLE COMMON EQUITY RATIO | |||||||||||||||||||||||||||||||||||||||||||||||||
| The tangible common equity, or TCE, ratio is a 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 average common shareholders’ equity by average consolidated total assets, after reducing both amounts by average goodwill and average other intangible assets net of related deferred taxes. Total assets reflected in the TCE ratio also exclude average 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. Average tangible common equity and adjusted average 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 the calculation of State Street's ratios of tangible common equity to total tangible assets. | |||||||||||||||||||||||||||||||||||||||||||||||||
| Quarters | |||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | |||||||||||||||||||||||||||||||||||||||||
| Average consolidated total assets | $ | 296,328 | $ | 308,195 | $ | 291,459 | $ | 303,007 | $ | 295,010 | $ | 291,435 | $ | 275,168 | $ | 284,346 | |||||||||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||||||||||||||||
| Average goodwill | 7,662 | 7,652 | 7,621 | 7,628 | 7,599 | 7,501 | 7,405 | 7,422 | |||||||||||||||||||||||||||||||||||||||||
| Average other intangible assets | 1,798 | 1,987 | 1,901 | 1,850 | 1,782 | 1,693 | 1,607 | 1,553 | |||||||||||||||||||||||||||||||||||||||||
| Average cash balances held at central banks in excess of required reserves | 92,207 | 97,257 | 77,207 | 83,931 | 73,339 | 71,714 | 63,407 | 77,739 | |||||||||||||||||||||||||||||||||||||||||
| Plus related deferred tax liabilities | 489 | 490 | 495 | 499 | 499 | 494 | 488 | 490 | |||||||||||||||||||||||||||||||||||||||||
| Average tangible assets | A | $ | 195,150 | $ | 201,789 | $ | 205,225 | $ | 210,097 | $ | 212,789 | $ | 211,021 | $ | 203,237 | $ | 198,122 | ||||||||||||||||||||||||||||||||
| Average consolidated common shareholders' equity | $ | 23,583 | $ | 23,252 | $ | 23,791 | $ | 25,393 | $ | 24,791 | $ | 23,687 | $ | 23,699 | $ | 23,479 | |||||||||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||||||||||||||||
| Average goodwill | 7,662 | 7,652 | 7,621 | 7,628 | 7,599 | 7,501 | 7,405 | 7,422 | |||||||||||||||||||||||||||||||||||||||||
| Average other intangible assets | 1,798 | 1,987 | 1,901 | 1,850 | 1,782 | 1,693 | 1,607 | 1,553 | |||||||||||||||||||||||||||||||||||||||||
| Plus related deferred tax liabilities | 489 | 490 | 495 | 499 | 499 | 494 | 488 | 490 | |||||||||||||||||||||||||||||||||||||||||
| Average tangible common equity | B | $ | 14,612 | $ | 14,103 | $ | 14,764 | $ | 16,414 | $ | 15,909 | $ | 14,987 | $ | 15,175 | $ | 14,994 | ||||||||||||||||||||||||||||||||
| Average tangible common equity ratio | B/A | 7.5 | % | 7.0 | % | 7.2 | % | 7.8 | % | 7.5 | % | 7.1 | % | 7.5 | % | 7.6 | % | ||||||||||||||||||||||||||||||||
| GAAP-basis: | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net income available to common shareholders | $ | 489 | $ | 728 | $ | 693 | $ | 662 | $ | 583 | $ | 712 | $ | 669 | $ | 696 | |||||||||||||||||||||||||||||||||
| Return on tangible common equity - Non-GAAP | 13.4 | % | 17.3 | % | 17.3 | % | 15.7 | % | 14.7 | % | 17.3 | % | 17.3 | % | 17.7 | % | |||||||||||||||||||||||||||||||||
| STATE STREET CORPORATION | |||||||||||||||||||||||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| EARNINGS RELEASE ADDENDUM | |||||||||||||||||||||||||||||||||||||||||||||||||
| REGULATORY CAPITAL | |||||||||||||||||||||||||||||||||||||||||||||||||
| Basel III Advanced Approaches(1) | Basel III Standardized Approach(2) | ||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | |||||||||||||||||||||||||||||||||
| Ratios and Supporting Calculations: | |||||||||||||||||||||||||||||||||||||||||||||||||
| Common equity tier 1 capital | A | $ | 13,443 | $ | 13,691 | $ | 15,831 | $ | 15,947 | $ | 15,026 | $ | 14,882 | $ | 15,126 | $ | 14,547 | $ | 13,443 | $ | 13,691 | $ | 15,831 | $ | 15,947 | $ | 15,026 | $ | 14,882 | $ | 15,126 | $ | 14,547 | ||||||||||||||||
| Total risk-weighted assets | B | 113,051 | 116,458 | 114,878 | 111,398 | 114,969 | 110,447 | 107,771 | 105,385 | 124,324 | 121,922 | 117,229 | 111,667 | 126,725 | 115,404 | 114,682 | 107,227 | ||||||||||||||||||||||||||||||||
| Common equity tier 1 risk-based capital ratio | A/B | 11.9 | % | 11.8 | % | 13.8 | % | 14.3 | % | 13.1 | % | 13.5 | % | 14.0 | % | 13.8 | % | 10.8 | % | 11.2 | % | 13.5 | % | 14.3 | % | 11.9 | % | 12.9 | % | 13.2 | % | 13.6 | % | ||||||||||||||||
| Tier 1 capital | C | $ | 15,419 | $ | 15,667 | $ | 17,807 | $ | 17,923 | $ | 17,002 | $ | 16,858 | $ | 17,102 | $ | 16,523 | $ | 15,419 | $ | 15,667 | $ | 17,807 | $ | 17,923 | $ | 17,002 | $ | 16,858 | $ | 17,102 | $ | 16,523 | ||||||||||||||||
| Tier 1 risk-based capital ratio | C/B | 13.6 | % | 13.5 | % | 15.5 | % | 16.1 | % | 14.8 | % | 15.3 | % | 15.9 | % | 15.7 | % | 12.4 | % | 12.9 | % | 15.2 | % | 16.1 | % | 13.4 | % | 14.6 | % | 14.9 | % | 15.4 | % | ||||||||||||||||
| Total capital | D | $ | 17,220 | $ | 17,259 | $ | 19,397 | $ | 19,511 | $ | 18,588 | $ | 18,239 | $ | 18,482 | $ | 17,899 | $ | 17,355 | $ | 17,379 | $ | 19,514 | $ | 19,619 | $ | 18,693 | $ | 18,352 | $ | 18,594 | $ | 18,019 | ||||||||||||||||
| Total risk-based capital ratio | D/B | 15.2 | % | 14.8 | % | 16.9 | % | 17.5 | % | 16.2 | % | 16.5 | % | 17.1 | % | 17.0 | % | 14.0 | % | 14.3 | % | 16.6 | % | 17.6 | % | 14.8 | % | 15.9 | % | 16.2 | % | 16.8 | % | ||||||||||||||||
| Tier 1 capital | E | $ | 15,419 | $ | 15,667 | $ | 17,807 | $ | 17,923 | $ | 17,002 | $ | 16,858 | $ | 17,102 | $ | 16,523 | $ | 15,419 | $ | 15,667 | $ | 17,807 | $ | 17,923 | $ | 17,002 | $ | 16,858 | $ | 17,102 | $ | 16,523 | ||||||||||||||||
| Leverage exposure(3) | F | 285,480 | 298,682 | 281,952 | 293,567 | 285,788 | 282,526 | 266,622 | 275,678 | 285,480 | 298,682 | 281,952 | 293,567 | 285,788 | 282,526 | 266,622 | 275,678 | ||||||||||||||||||||||||||||||||
| Tier 1 leverage ratio | E/F | 5.4 | % | 5.2 | % | 6.3 | % | 6.1 | % | 5.9 | % | 6.0 | % | 6.4 | % | 6.0 | % | 5.4 | % | 5.2 | % | 6.3 | % | 6.1 | % | 5.9 | % | 6.0 | % | 6.4 | % | 6.0 | % | ||||||||||||||||
| On-and off-balance sheet leverage exposure | $ | 223,451 | $ | 241,743 | $ | 246,609 | $ | 251,879 | $ | 264,616 | $ | 263,538 | $ | 250,070 | $ | 246,017 | $ | 223,451 | $ | 241,743 | $ | 246,609 | $ | 251,879 | $ | 264,616 | $ | 263,538 | $ | 250,070 | $ | 246,017 | |||||||||||||||||
| Less: regulatory deductions | (9,586) | (9,500) | (9,507) | (9,440) | (9,222) | (8,909) | (8,546) | (8,668) | (9,586) | (9,500) | (9,507) | (9,440) | (9,222) | (8,909) | (8,546) | (8,668) | |||||||||||||||||||||||||||||||||
| Total leverage exposure for SLR | G | 213,865 | 232,243 | 237,102 | 242,439 | 255,394 | 254,394 | 241,524 | 237,349 | 213,865 | 232,243 | 237,102 | 242,439 | 255,394 | 254,394 | 241,524 | 237,349 | ||||||||||||||||||||||||||||||||
| Supplementary leverage ratio(4) | E/G | 7.2 | % | 6.7 | % | 7.5 | % | 7.4 | % | 6.7 | % | 6.6 | % | 7.1 | % | 7.0 | % | 7.2 | % | 6.7 | % | 7.5 | % | 7.4 | % | 6.7 | % | 6.6 | % | 7.1 | % | 7.0 | % | ||||||||||||||||
| (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. Capital ratios as of December 31, 2022 are estimates. | |||||||||||||||||||||||||||||||||||||||||||||||||
| (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. Capital ratios as of December 31, 2022 are estimates. | |||||||||||||||||||||||||||||||||||||||||||||||||
| (3) Leverage exposure is equal to average consolidated total assets less applicable Tier 1 capital deductions. | |||||||||||||||||||||||||||||||||||||||||||||||||
| (4) We are subject to a minimum Supplementary Leverage Ratio or SLR of 3%, and as a U.S. G-SIB, we must maintain a 2% SLR buffer in order to avoid any limitations on distributions to shareholders and discretionary bonus payments to certain executives. |
23
stt4q22earningspresentat
January 20, 2023 NYSE: STT 4Q and FY 2022 Financial Highlights Exhibit 99.3
2 Preface and forward-looking statements This presentation includes certain highlights of, and also material supplemental to, State Street Corporation’s news release announcing its fourth quarter and full year 2022 financial results. That news release contains a more detailed discussion of many of the matters described in this presentation and is accompanied by an Addendum with detailed financial tables. This presentation is designed to be reviewed together with that news release and that Addendum, which are available on State Street’s website, at http://investors.statestreet.com, and are incorporated herein by reference. This presentation (and the conference call accompanying it) contains forward-looking statements as defined by United States securities laws. These statements are not guarantees of future performance, are inherently uncertain, are based on assumptions that are difficult to predict and have a number of risks and uncertainties. The forward-looking statements in this presentation speak only as of the time this presentation is first furnished to the SEC on a Current Report on Form 8-K, and State Street does not undertake efforts to revise forward-looking statements. See “Forward-looking statements” in the Appendix for more information, including a description of certain factors that could affect future results and outcomes. Certain financial information in this presentation is presented on both a GAAP basis and on a basis that excludes or adjusts one or more items from GAAP. The latter basis is a non-GAAP presentation. Refer to the Appendix for explanations of our non-GAAP financial measures and to the Addendum for reconciliations of our non-GAAP financial information.
3 FY2022 highlights All comparisons are to FY2021, unless otherwise noted Key financial performance A,B Business momentum • New wins 1 : Achieved servicing wins of $1.9T, with $3.6T of new business yet to be installed at year-end Won 3 new Alpha mandates, while expanding services to 17 existing Alpha clients; Generated ETF net inflows of $22B • Regional business expansion: Expanded Latin America presence, including opening a new office in Chile to support institutional clients, with a focus on custody, fund administration and securities lending, as well as expanded our products and capabilities in Mexico with the launch of an integrated fund trading solution • Product launches: Continued ETF product expansion in SSGA including the launch of 2 Active and 12 ESG ETFs Launched Venturi, an innovative Global Markets product, supporting peer-to-peer repo by connecting buy-side firms with new sources of liquidity globally • Recognition: Named #1 FX provider to asset managers in the 2022 Euromoney Survey, up from #2 last year Recognized in APAC as Best Global Custodian, Middle-and-Back Office Services Provider and Funds Administrator across client segments including Asset Managers, Asset Owners and Hedge Funds 2 Revenue generation • Total revenue up 1%; 2% ex-notables despite weaker equity and fixed income market levels during a challenging economic environment B ‒ NII up 34% as a result of higher rates and effective deposit and balance sheet management ‒ FX trading services revenue ex-notables up 12% mainly from higher spreads 3 ‒ Front office software and data revenue up 14% largely driven by CRD Expense management • Expenses down (1)%; flat ex-notables B • Firm-wide productivity efforts achieved gross savings of ~$320M, partially self funding investments and offsetting inflationary headwinds 4 ‒ Gained efficiencies through operations, automation, IT, and vendor and real estate management • Reinvested in the business to drive growth and further productivity, with incremental investments of ~470M 4 27.6% 28.4% 2021 2022 10.7% 11.1% 2021 2022 Pre-tax margin (ex-notables) Pre-tax income $3,287M $3,439M +5% Return on equity Capital returned D $1.7B $2.4B +41% +0.8%pts +0.4%pts +1.8%pts 2021 2022 +0.4%pts Revenue +1.8% +1.8% Operating leverage C (ex-notables) Expense +1.4% +0.0% A All key financial metrics except ROE are presented on an ex-notables basis. B Ex-notables is a non-GAAP presentation; refer to the Appendix for a reconciliation of ex-notable items/currency translation and further explanations of non-GAAP measures. C Operating leverage on a GAAP basis for FY2022 and FY2021 was 2.0%pts and 0.8%pts, respectively. D Capital returned represents common stock repurchases and dividends declared during the period. Refer to the Appendix included with this presentation for endnotes 1 to 21.
4 4Q22 highlights All comparisons are to corresponding prior year period unless noted otherwise A Financial metrics ex-notable items are non-GAAP measures; refer to the Appendix for explanations and reconciliations of our non-GAAP measures. Refer to the Appendix included with this presentation for endnotes 1 to 21. Business momentum • AUC/A of $36.7T at quarter-end; Servicing wins of $434B and business yet to be installed of $3.6T at quarter-end 1 ‒ New mandates reflect strong broad-based traditional wins across client segments and regions ‒ Reported 2 new Alpha mandates in 4Q22 • AUM of $3.5T at quarter-end, with ETF net inflows1 • Momentum across Front office software and data services, with ARR of $272M, up 19% 5 Financial performance • EPS of $1.91, up 7%; $2.07 ex-notable items, up 4% A • Total revenue of $3.2B, up 3%; up 5% ex-notables A ‒ Fee revenue down (6)%; down (7)% ex-notables largely due to lower equity and fixed income market levels, as well as the impact of currency translation, partially offset by higher FX trading services revenue and Software and processing fees ‒ NII up 63% reflecting higher global interest rates across the yield curve • Total expenses of $2.3B, down (3)%; flat ex-notables as continued productivity savings, footprint optimization and the impact of currency translation were offset by continued business investments and higher wages A • Pre-tax margin of 28.2%, up 4.3%pts; 30.9% ex-notables, up 2.8%pts A ‒ Generated positive operating leverage of 6.5%pts; 4.8%pts ex-notables Balance sheet and capital • ROE of 11.8% and CET1 ratio of 13.6% at quarter end 6 • Returned $1.7B to shareholders, consisting of $1.5B in common stock repurchases and $220M of declared common stock dividends • New authorization to repurchase common stock of up to $4.5B during 2023 7
5 4Q22 notable items Acquisition and restructuring costs of $31M • Acquisition and restructuring costs related to the BBH Investor Services acquisition transaction that State Street is no longer pursuing Repositioning charge of $70M • $50M related to compensation and benefits primarily from streamlining the Investment Services organization • $20M related to occupancy costs associated with real estate footprint optimization Revenue-related recovery of $23M • $23M related to settlement proceeds from a 2018 FX benchmark litigation resolution, which is reflected in FX trading services revenue A Refer to the Addendum for further details on notable items for FY2021 and FY2022. B 4Q21 repositioning release represents repositioning release of $32M related to compensation and benefits, partially offset by occupancy costs of $29M related to real estate footprint optimization. C Deferred compensation expense acceleration associated with an amendment of certain outstanding deferred cash incentive compensation awards; amendment removed continued service requirements for deferred cash incentive compensation, thereby accelerating the future expense that would have been recognized over the remaining term of the awards (1-4 years). D 4Q21 reflected a one-time gain on sale of Libor and Euribor based securities previously classified as HTM. 4Q21 3Q22 4Q22 Acquisition and restructuring costs ($26) ($13) ($31) Repositioning release / (charges)B 3 - (70) Deferred compensation expense accelerationC (147) - - Gain on saleD 58 - - Revenue-related recovery - - 23 Total notable items (pre-tax) ($112) ($13) ($78) EPS impact ($0.22) ($0.02) ($0.16) ($M, except EPS data) QuartersA
6 Summary of 4Q22 and FY2022 financial results A This is a non-GAAP presentation; refer to the Appendix for a reconciliation of ex-notable items/currency translation and further explanations of non-GAAP measures. 4Q21 3Q22 4Q22 3Q22 4Q21 2021 2022 %∆ Revenue: Back office servicing fees $1,272 $1,126 $1,115 (1)% (12)% (9)% $5,117 $4,714 (8)% (5)% Middle office services 105 93 88 (5) (16) (14) 414 373 (10) (8) Servicing fees 1,377 1,219 1,203 (1) (13) (10) 5,531 5,087 (8) (5) Management fees 530 472 457 (3) (14) (12) 2,053 1,939 (6) (4) Foreign exchange trading services 300 319 367 15 22 22 1,211 1,376 14 14 Securities finance 102 110 103 (6) 1 2 416 416 - 1 Front office software and data 124 127 159 25 28 29 484 550 14 14 Lending related and other fees 63 57 57 - (10) (10) 254 239 (6) (4) Software and processing fees 187 184 216 17 16 16 738 789 7 8 Other fee revenue 15 (5) 18 nm 20 13 63 (1) nm nm Total fee revenue 2,511 2,299 2,364 3 (6) (4) 10,012 9,606 (4) (2) Net interest income 484 660 791 20 63 66 1,905 2,544 34 36 Other income 58 - - nm nm nm 110 (2) nm nm Total revenue $3,053 $2,959 $3,155 7% 3% 5% $12,027 $12,148 1% 3% Provision for credit losses ($7) - $10 nm nm ($33) $20 nm Total expenses $2,330 $2,110 $2,256 7% (3)% (0)% $8,889 $8,801 (1)% 2% Net income $697 $690 $733 6% 5% $2,693 $2,774 3% Diluted earnings per share $1.78 $1.80 $1.91 6% 7% $7.19 $7.19 - Return on average common equity 10.3% 11.2% 11.8% 0.6%pts 1.5%pts 10.7% 11.1% 0.4%pts Pre-tax margin 23.9% 28.7% 28.2% (0.5)%pts 4.3%pts 26.4% 27.4% 1.0%pts Tax rate 4.6% 18.7% 17.6% (1.1)%pts 13.0%pts 15.1% 16.6% 1.5%pts Ex-notable items, non-GAAP A : Total revenue $2,995 $2,959 $3,132 6% 5% 7% $11,916 $12,125 2% 4% Total expenses $2,160 $2,097 $2,155 3% (0)% 3% $8,662 $8,666 0% 3% EPS $2.00 $1.82 $2.07 14% 4% $7.44 $7.41 (0)% Pre-tax margin 28.1% 29.1% 30.9% 1.8%pts 2.8%pts 27.6% 28.4% 0.8%pts FY21 %∆ ex-currency translation A (GAAP; $M, except EPS data, or where otherwise noted) Quarters %∆ 4Q21 %∆ ex-currency translation A Full Year
7 AUC/A and AUM levels, markets and flows performance AUC/A ($T, as of period-end) 1 Market indices 8 • Down (16)% YoY largely driven by lower quarter-end market levels, a previously disclosed client transition and the impact of currency translation, partially offset by new business installations • Up 3% QoQ primarily due to higher quarter- end equity market levels and the impact of currency translation • Down (16)% YoY mainly reflecting lower quarter-end market levels, institutional net outflows and the impact of currency translation, partially offset by ETF net inflows • Up 7% QoQ primarily due to higher quarter- end market levels, ETF net inflows and the impact of currency translation, partially offset by Cash net outflows AUM ($B, as of period-end) 1 Select industry flows 9 +7% +3% $43.7 $35.7 $36.7 4Q21 3Q22 4Q22 4Q21 3Q22 4Q22 $4,138 $3,481$3,265 -16% -16% A Line items may not sum to total due to rounding. Refer to the Appendix included with this presentation for endnotes 1 to 21. 4Q21 3Q22 4Q22 Long Term Funds $102 $(193) $(353) Money Market 201 (26) 169 ETF 157 110 188 North America Total 459 (109) 4 EMEA Total 299 (114) 75 ($B) Total flowsA 3Q22 4Q21 EOP 7% (19)% Daily Avg (3) (16) EOP 17 (17) Daily Avg 0 (20) EOP 9 (22) Daily Avg (6) (27) (% change) 4Q22 vs S&P 500 MSCI EAFE MSCI EM Barclays Global Agg EOP 5 (16)
8 Servicing fees of $1,203M down (13)% YoY and (1)% QoQ; down (10)% YoY ex-FX • Down (13)% YoY primarily driven by lower average market levels, lower client activity/adjustments and flows, normal pricing headwinds, and the impact of currency translation, partially offset by net new business • Down (1)% QoQ mainly due to client activity/adjustments and flows Back office servicing fees of $1,115M down (12)% YoY and (1)% QoQ (generally consistent with total servicing fees above); Middle office services of $88M down (16)% YoY and (5)% QoQ reflecting lower client AUM and client activity/adjustments Revenue: Servicing fees Servicing fees ($M) 4Q22 performance 1,272 1,268 1,205 1,126 1,115 105 1Q224Q21 100 2Q22 92 93 3Q22 88 4Q22 $1,377 $1,368 $1,297 $1,219 $1,203 $3,053 $3,081 $2,953 $2,959 $3,155 YoY +3% QoQ +7% Total revenue • Servicing fees were negatively impacted by currency translation YoY by $39M and positively impacted QoQ by $1M Investment Services business momentum1 • Deepening existing client relationships and winning new business across client segments and geographies – New mandates in 4Q22 driven by strong broad based traditional wins across client segments and regions – Strong year for Alternatives AUC/A wins, growing over 2x in FY2022 – Record year for Asia Pacific AUC/A wins, driven by large mandates in Australia and Japan B A This is a non-GAAP presentation; refer to the Appendix for a reconciliation of ex-notable items/currency translation and further explanations of non-GAAP measures. B Record year for Asia Pacific AUC/A wins based on latest data set available from FY2017 onwards. Refer to the Appendix included with this presentation for endnotes 1 to 21. -13% -10% ex-FX A -1% Back office servicing fees Middle office services -12% -9% ex-FX -16% -14% ex-FX YoY % $332 $302 $972 $233 $434 2,795 2,909 3,632 3,413 3,608 AUC/A sales performance indicators ($B) 1 AUC/A wins AUC/A to be installed
9 • ETFs: Solid FY2022 net inflows in US, with continued momentum in SPDR ® Portfolio Low-Cost suite and Fixed Income • Institutional: Continued momentum in Defined Contribution with $48B of inflows in FY2022, including Target Date franchise net inflows of $21B • Cash: Gained market share in FY2022 by achieving strong investment performance and broad distribution reach in Money Market Funds 10 Revenue: Management fees Management fees ($M) 4Q22 performance Management fees of $457M down (14)% YoY and (3)% QoQ; down (12)% YoY ex-FX • Down (14)% YoY and (3)% QoQ mainly due to lower average market levels Performance indicators ($B) 1 • Management fees were negatively impacted by currency translation YoY by $11M and positively impacted QoQ by $2M 4Q221Q22 3Q224Q21 2Q22 $530 $520 $490 $472 $457 Investment Management business momentum1 A This is a non-GAAP presentation; refer to the Appendix for a reconciliation of ex-notable items/currency translation and further explanations of non-GAAP measures. Refer to the Appendix included with this presentation for endnotes 1 to 21. $3,053 $3,081 $2,953 $2,959 $3,155 Total revenue -14% -12% ex-FX A -3% YoY +3% QoQ +7% AUM $4,138 $4,022 $3,475 $3,265 $3,481 Net flows (QoQ) 79 51 (62) (9) (17)
10 Revenue: Markets, Software and processing, and Other fee revenue $3,053 $3,081 $2,953 $2,959 $3,155 Total revenue A These are non-GAAP presentations; refer to the Appendix for a reconciliation of ex-notable items/currency translation and further explanations of non-GAAP measures. B Other fee revenue primarily consists of income from equity method investments and certain tax-advantaged investments, as well as market-related adjustments. YoY +3% QoQ +7% Markets, Software & processing, and Other fees (Ex-notable items, non-GAAP, $M) A 4Q22 performance (Ex-notable items, non-GAAP, $M) A 184 187 201 110 216 102 96 319 103 300 359 344 2915 18 188 107 4Q21 1Q22 331 (43) 2Q22 (5) 3Q22 4Q22 $604 $685 $583 $608 $681 FX trading Securities finance Software & processing +15% +1% +16% YoY % Other fees B +20% • FX trading services of $344M3 – Up 15% YoY primarily reflecting higher FX spreads, partially offset by lower client FX volumes – Up 8% QoQ driven by higher Direct and Indirect FX revenue • Securities finance of $103M – Up 1% YoY largely from higher spreads, partially offset by lower balances from lower markets – Down (6)% QoQ primarily driven by downward pressure on spreads due to lower specials activity and lower balances • Software and processing fees of $216M – Up 16% YoY and up 17% QoQ Front office software and data of $159M up 28% YoY and 25% QoQ Lending related and other of $57M down (10)% YoY and flat QoQ • Other fee revenue of $18M B – Increased $3M YoY and $23M QoQ largely due to higher market-related adjustments
11 • Front office new bookings increased 91% YoY and 50% QoQ • ARR increased 19% YoY • Reported 2 new Alpha mandates associated with Insurance and Asset Owner clients Enterprise solutions enabled by State Street Alpha 70 70 74 78 81 16 29 24 20 16 35 36 25 26 59 1Q224Q21 4Q22 $138 $124 2Q22 $126 3Q22 $127 $159 A Front office software and data revenue primarily includes revenue from CRD, Alpha Data Platform and Alpha Data Services. Includes Other revenue of $2M in 4Q21 and $3M in each of 1Q22 through 4Q22. Revenue line items may not sum to total due to rounding. Refer to the Appendix included with this presentation for endnotes 1 to 21. +25% +28% $3,053 $3,081 $2,953 $2,959 $3,155 Total revenue • Up 28% YoY and 25% QoQ primarily driven by higher on-premises renewals and software-enabled revenue ($M) 4Q21 3Q22 4Q22 Front office metrics New bookings 12 $11 $14 $21 ARR 5 229 267 272 Uninstalled revenue backlog 13 98 90 97 Middle office metric Uninstalled revenue backlog 14 61 101 104 Alpha metrics # of mandate wins 1 0 2 Live mandates to-date 10 12 12 Professional services Software- enabled (incl. SaaS) 11 On-premises 11 13% YoY Growth YoY +3% QoQ +7% Business momentum Front office software and data ($M) A Future growth driven by Front, Middle and Alpha 4Q22 performance
12 Revenue: Net interest income NII and NIM ($M) 15 Average balance sheet highlights ($B) A A Line items are rounded. Refer to the Appendix included with this presentation for endnotes 1 to 21. 4Q21 1Q22 2Q22 3Q22 4Q22 Total assets $303 $295 $291 $275 $284 Loans 34 34 36 35 35 Investment portfolio 114 119 114 109 106 HTM % (EOP) 37% 38% 59% 61% 61% Duration (EOP) 16 2.9 2.8 2.8 2.7 2.6 Total deposits $240 $233 $228 $213 $217 $3,053 $3,081 $2,953 $2,959 $3,155 Total revenue NIM 15 (FTE, %) 0.73% 0.80% 0.94% 1.11% 1.29% $509 4Q21 2Q22 $584 1Q22 $484 3Q22 4Q22 $660 $791 +20% +63% YoY +3% QoQ +7% • Average assets declined (6)% YoY primarily due to lower deposit balances amidst aggressive central bank tightening, and lower AUC/A levels, as well as currency translation impact • Average assets increased 3% QoQ primarily due to deposit growth – Interest-bearing deposits increased 4% while non-interest bearing deposits decreased (5)% • Up 63% YoY largely due to higher short-term market rates from global central bank hikes, an increase in long-term interest rates, and balance sheet positioning, partially offset by lower deposits • Up 20% QoQ primarily driven by higher global market rates Average assets4Q22 performance
13 $2,330 $2,110 $2,256 38,784 41,354 42,226 Expenses of $2,155M flat YoY and up 3% QoQ; up 3% YoY ex-FXA • Compensation and employee benefits of $1,058M 18 – Down (1)% YoY mainly due to the impact of currency translation and lower incentive compensation, partially offset by higher salaries – Up 2% QoQ largely driven by higher salaries • Information systems and communications of $416M – Down (5)% YoY largely due to productivity and vendor savings initiatives, partially offset by technology and infrastructure investments – Up 4% QoQ primarily due to technology and infrastructure investments • Transaction processing services of $240M – Up 1% YoY mainly reflecting higher broker fees and market data costs, partially offset by lower sub-custody costs – Up 6% QoQ largely reflecting higher market data costs • Occupancy of $86M 18 – Down (17)% YoY and (11)% QoQ primarily due to an episodic sale- leaseback transaction • Other of $355M 18 – Up 12% YoY and 7% QoQ largely reflecting higher professional fees and travel costs Expenses GAAP Expenses Headcount 316 332 355 238 227 240 436 399 416 1,066 1,042 1,058 4Q21 3Q22 4Q22 $2,160 $2,097 $2,155 A These are non-GAAP presentations; refer to the Appendix for a reconciliation of ex-notable items/currency translation and further explanations of non-GAAP measures. Refer to the Appendix included with this presentation for endnotes 1 to 21. Comp. & benefits Info. sys. Tran. processing Other 17 Occupancy • Total expenses on both a GAAP and ex-notables basis were positively impacted by currency translation YoY and QoQ by $64M and $1M, respectively • Headcount up 9% YoY primarily in global hubs driven by operational support for new business growth segments, as well as technology investments and in-sourcing 8697104 YoY (3)% QoQ +7% Flat +3% ex-FX A +3% YoY +9% QoQ +2% Expenses (Ex-notable items, non-GAAP, $M) A 4Q22 performance (Ex-notable items, non-GAAP, $M) A
14 Highlights Capital ($B unless noted otherwise, capital metrics as of period-end) Capital ratios 4Q21 3Q22 4Q22 Standardized CET1 CET1 capital $15.9 $15.1 $14.5 Risk weighted assets 112 115 107 Tier 1 leverage Tier 1 capital 17.9 17.1 16.5 Leverage exposure 21 294 267 276 OCI impact of investment portfolio on regulatory capital A (0.3) (0.2) 0.2 Tier 1 leverage 6.1% 5.9% 6.0% 6.4% 6.0% 4Q21 4Q221Q22 2Q22 3Q22 Target state Minimum ratio4.0% STT Target5.25-5.75% • 4Q22 standardized CET1 ratio at quarter-end of 13.6% increased 0.4%pts QoQ primarily driven by episodically lower RWAs and higher retained earnings, partially offset by the resumption of share repurchases in 4Q22 • 4Q22 Tier 1 leverage ratio of 6.0% at quarter-end down (0.4)%pts QoQ mainly due to the resumption of share repurchases in 4Q22 and an increase in average balance sheet size, partially offset by higher retained earnings • Returned $1.7B to shareholders in 4Q22 consisting of $1.5B of common share repurchases and $220M in common stock dividends • New authorization to repurchase common stock of up to $4.5B during 2023 A OCI impact of investment portfolio on regulatory capital is a sub-component within GAAP AOCI. Refer to the Appendix included with this presentation for endnotes 1 to 21. CET1 (Standardized) 14.3% 11.9% 12.9% 13.2% 13.6% 4.5% 2.5% 4Q21 1Q22 4Q222Q22 3Q22 SCB20 Minimum ratio 8 .0 % Target state 10-11% G-SIB surcharge19 STT Target 1.0% Ratios (%, as of period-end) 6
15 FY2023 outlook: Macro assumptions and revenue growth A Fee revenue and NII growth are dependent on macroeconomic factors, including, but not limited to, the impacts from changes in interest rates, as well as equity and fixed income markets (which are highly uncertain). Outlook does not reflect items outside of the normal course of business. B Average USD appreciation is based on DXY index. C Financial metrics ex-notable items are non- GAAP measures; refer to the Appendix for a reconciliation of ex-notable items/currency translation and further explanations of non-GAAP measures. D Fee revenue ex-notables decreased (2)% excluding FX impact. E Fee revenue and NII outlook includes a shift of management fees into NII due to an increase in the portion of management fees that is recognized as NII for certain U.S. ETFs with unique structures. The actual amount may vary as it corresponds to average short-term rate movements. FY2022 review FY2023 Outlook A Operating Environment • Equity market EOP MSCI ACWI down (20)% YoY; Average MSCI ACWI down (10)% • Fed Funds rate reached 4.50%, ECB rate reached 2.00%, BOE rate reached 3.50% • 10Y U.S. Treasury rate ended at 3.87% • U.S. dollar appreciation of 12% on average B • Expect global equity markets EOP growth of 10% YoY, which translates to average global equity markets down (2)% YoY • Interest rates outlook largely aligns with current forward curve; expect rate peaks at 5.00% for Fed Funds, 3.25% for ECB and 4.50% for BOE • Path of 10Y U.S. Treasury rate uncertain Fee Revenue (ex-notables) C • (4)% YoY D ▼ Weaker servicing and management fee revenues primarily from lower equity and fixed income market levels ▲ Front office and data revenue of 14% growth ▲ FX trading services growth of 12% reflecting FX volatility • Flat to up 1% YoY E ▲ Strong growth in Front office software and data revenue ▲ Continued volatility supports modestly higher FX trading services revenue ► Expect Servicing fees to be relatively flat and Management fees to be slightly lower E NIIE • 34% YoY ▲ Central bank rate hikes ▲ Loan growth ▼ Decline in deposits due to quantitative tightening • ~20% YoY ▲ Central bank rates continue higher, but begin to peak mid-2023 ▲ Loan growth ▼ Deposit rotation continues out of non-interest bearing, tapering off towards end of 2023 ► Total deposits stable
16 $8,666M FY2023 outlook: Expense management and tax rate A Financial metrics ex-notable items are non-GAAP measures; refer to the Appendix for a reconciliation of ex-notable items/currency translation and further explanations of non-GAAP measures. B Outlook does not reflect items outside of the normal course of business. C Includes benefits. Ex-notables, non-GAAP A Expense outlook B Expense outlook drivers ~2% ~5-5.5% Investments & variable costs ~(0.5)% ~(3)% FY2022 FY2023EMerit / Wage inflation Optimization savings Currency translation +3.5-4% • Optimization savings of ~3% – Continued focus on process automation and optimization – Vendor management and consolidation – Organizational simplification • Merit / Wage inflation of ~2% (of total expense base)C – Upward pressure on salary and benefits continues • Investments & variable costs of 5-5.5% – Expand and further build out Alpha and Private Markets – Drive product innovation in areas including Wealth Services – Continued technology investment Effective tax rate outlook • 19-20% c
17 FY2023 priorities Grow our business profitably • Continue to drive core growth in traditional Investment Services globally • Advance build-out of Alpha as an industry-leading platform with growth in Front, Middle and Back Office • Enhance Private Markets enterprise outsourcing platform to continue to efficiently deliver double digit growth • Extend our leadership in Global Markets and Global Advisors through product and geographic expansions • Pursue new growth and innovative opportunities in Wealth Services and Digital Assets Transform the way we work • Lead with service excellence and continuously improve productivity as a differentiator • Continue to build scale and efficiency by simplifying and automating the end-to-end operating model Build a higher performing organization • Strengthen execution skills, mindset, and results-oriented culture • Advance our 10 Actions to address racial inequality • Measure what matters Achieve our financial goals and improve shareholder valueA • Generate positive operating leverage • Expand pre-tax margin • Return capital and drive higher ROE A Does not reflect items outside of the normal course of business. Our strategic priorities are intended to deliver growth, drive innovation and enhance shareholder value
18 Appendix 4Q22 and FY2022 line of business performance 19-20 FY2022 fee revenue, NII, expenses 21 Reconciliation of notable items 22 Reconciliation of constant currency impacts 23 Endnotes 24 Forward-looking statements 25 Non-GAAP measures 26 Definitions 27
19 1,839 State StreetA 4Q22 line of business performance Investment Servicing Total revenue 487 791 1,956 1,839 4Q224Q21 $2,630M $2,443M Pre-tax income Fee revenue NII Pre-tax margin 26.9% 30.9% +4.0%pts YoY % ∆ -6% +62% +8% +24% Investment Management Total revenue $502M $552M 4Q224Q21 Pre-tax income Pre-tax margin 34.2% 31.3% -2.9%pts $157M $189M 4Q224Q21 YoY % ∆ -9% -17% Total revenue ex-notable itemsB 484 791 2,511 2,341 $3,132M $2,995M 4Q21 4Q22 Pre-tax income ex-notable itemsB Fee revenue NII Pre-tax margin ex-notable itemsB 28.1% 30.9% +2.8%pts YoY % ∆ -7% +63% +5% +15% A State Street includes line of business results from Investment Servicing, Investment Management, and Other. Refer to the Addendum for further line of business information. B This is a non- GAAP presentation; refer to the Appendix for a reconciliation of ex-notable items and further explanations of non-GAAP measures. 4Q21 4Q22 $657M $812M $842M 4Q224Q21 $967M
20 7,590 FY2022 line of business performance Total revenueA 1,919 2,551 7,879 7,590 2021 2022 $10,139M$9,797M Pre-tax income Fee revenue NII Pre-tax margin 27.0% 28.2% +1.2%pts YoY % ∆ -4% +33% +4% +8% Total revenue $2,119M $1,986M 2021 2022 Pre-tax income Pre-tax margin 31.8% 29.7% -2.1%pts $590M 2021 2022 $674M YoY % ∆ -6% -13% Total revenue ex-notable itemsA, C 1,905 2,544 10,012 9,583 $11,916M 2021 2022 $12,125M Pre-tax income ex-notable itemsC Fee revenue NII Pre-tax margin ex-notable itemsC 27.6% 28.4% +0.8%pts YoY % ∆ -4% +34% +2% +5% A Total revenue also includes Other income of $(1)M and $(2)M in FY2021 and FY2022, respectively. B State Street includes line of business results from Investment Servicing, Investment Management, and Other. Refer to the Addendum for further line of business information. C This is a non-GAAP presentation; refer to the Appendix for a reconciliation of ex-notable items and further explanations of non-GAAP measures. 20222021 $2,859M $2,648M 20222021 $3,287M $3,439M State StreetBInvestment Servicing Investment Management
21 Fee revenue ex- notables ($M)A FY2022 fee revenue, NII and expenses 416416 1,3761,211 1,9392,053 5,087 5,531 63 2021 (1) 2022 $10,012 $9,606 -4% 1,141 1,313 444 394 1,024 971 1,661 1,630 4,554 4,428 2021 2022 $8,889 $8,801 -1% $1,905 $2,544 2021 2022 +34% Fee revenue NII Expenses 738 789 Servicing fees Management fees FX trading Securities Finance Software & proc. Other fee income YoY % (8)% (6)% +14% Flat +7% nm $10,012 $9,583 (4)% A These are non-GAAP presentations; refer to the Appendix for a reconciliation of ex-notable items/currency translation and further explanations of non-GAAP measures. $8,662 $8,666 Flat Expenses ex- notables ($M)A Comp. & benefits Info. sys. Tran. processing Other 14 Occupancy YoY % (3)% (2)% (5)% (11)% +15% Acq. & rest. Flat65 65
22 Reconciliation of notable items A Calculated as the period-over-period change in total revenue less the period-over-period change in total expenses. B Calculated as the period-over-period change in total revenue, excluding notable items less the period-over-period change in total expenses, excluding notable items. Quarterly reconciliation % Change (Dollars in millions, unless noted otherwise) 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 4Q22 vs. 4Q21 4Q22 vs. 3Q22 2021 2022 YTD 2022 vs. YTD 2021 Total revenue, GAAP-basis 2,950$ 3,034$ 2,990$ 3,053$ 3,081$ 2,953$ 2,959$ 3,155$ 3.3% 6.6% # 12,027$ 12,148$ 1.0% Less: Fee revenue (23) - (23) Less: Other income (53) (58) (111) - Total revenue, excluding notable items 2,950 2,981 2,990 2,995 3,081 2,953 2,959 3,132 4.6% 5.8% # 11,916 12,125 1.8% Total expenses, GAAP basis 2,332 2,111 2,116 2,330 2,327 2,108 2,110 2,256 (3.2)% 6.9% # 8,889 8,801 (1.0)% Less: Notable expense items: Acquisition and restructuring costs (10) (11) (18) (26) (9) (12) (13) (31) 0 (65) (65) Repositioning charges: 0 Compensation and employee benefits 32 (50) # 32 (50) Occupancy (29) (20) # (29) (20) Repositioning (charges) / release 3 (70) # 3 (70) Deferred compensation expense acceleration (147) (147) - Legal and other (29) 11 0 (18) - Total expenses, excluding notable items 2,293 2,111 2,098 2,160 2,318 2,096 2,097 2,155 (0.2)% 2.8% # 8,662 8,666 - Seasonal expenses (176) (208) (176) (208) Total expenses, excluding notable items and seasonal expense items 2,117$ 2,111$ 2,098$ 2,160$ 2,110$ 2,096$ 2,097$ 2,155$ (0.2)% 2.8% 8,486$ 8,458$ (0.3)% Operating leverage, GAAP-basis (%pts)A 650 bps (30) bps bps 200 bps Operating leverage, excluding notable items (%pts)B 480 300 180 Pre-tax margin, GAAP-basis (%) 21.3% 30.9% 29.3% 23.9% 24.5% 28.3% 28.7% 28.2% 430 (50) 26.4% 27.4% 100 Notable items as reconciled above (%) 1.3% (1.2%) 0.6% 4.2% 0.3% 0.4% 0.4% 2.7% 1.2% 1.0% Pre-tax margin, excluding notable items (%) 22.6% 29.7% 29.9% 28.1% 24.8% 28.7% 29.1% 30.9% 280 180 27.6% 28.4% 80 Net income available to common shareholders, GAAP-basis 489$ 728$ 693$ 662$ 583$ 712$ 669$ 696$ 5.1% 4.0% 2,572$ 2,660$ 3.4% Notable items as reconciled above: pre-tax 39 (53) 18 112 9 12 13 78 116 112 Tax impact on notable items as reconciled above (10) 16 (5) (29) (2) (3) (3) (21) (28) (29) Preferred securities cost 5 5 - Net income available to common shareholders, excluding notable items 523$ 691$ 706$ 745$ 590$ 721$ 679$ 753$ 1.1% 10.9% 2,665$ 2,743$ 2.9% Diluted EPS, GAAP-basis 1.37$ 2.07$ 1.96$ 1.78$ 1.57$ 1.91$ 1.80$ 1.91$ 7.3% 6.1% 7.19$ 7.19$ - Notable items as reconciled above 0.10 (0.10) 0.04 0.22 0.02 0.03 0.02 0.16 0.25 0.22 Diluted EPS, excluding notable items 1.47$ 1.97$ 2.00$ 2.00$ 1.59$ 1.94$ 1.82$ 2.07$ 3.5% 13.7% 7.44$ 7.41$ (0.4)% % Change Year-to-Date
23 Reconciliation of constant currency impacts A Other includes Other expenses and Amortization of intangible assets. Reconciliation of Constant Currency FX Impacts (Dollars in millions) 4Q21 3Q22 4Q22 4Q22 vs. 4Q21 4Q22 vs. 3Q22 4Q22 vs. 4Q21 4Q22 vs. 3Q22 4Q22 vs. 4Q21 4Q22 vs. 3Q22 Non-GAAP basis Total revenue, excluding notable items $ 2,995 $ 2,959 $ 3,132 $ (64) $ 6 $ 3,196 $ 3,126 6.7% 5.6% Compensation and employee benefits, excluding notable items $ 1,066 $ 1,042 $ 1,058 $ (37) $ (1) $ 1,095 $ 1,059 2.7% 1.6% Information systems and communications, excluding notable items 436 399 416 (4) - 420 416 (3.7)% 4.3% Transaction processing services, excluding notable items 238 227 240 (7) - 247 240 3.8% 5.7% Occupancy, excluding notable items 104 97 86 (6) - 92 86 (11.5)% (11.3)% Other expenses, excluding notable items 316 332 355 (10) - 365 355 15.5% 6.9% Total expenses, excluding notable items $ 2,160 $ 2,097 $ 2,155 $ (64) $ (1) $ 2,219 $ 2,156 2.7% 2.8% Reported Currency Translation Impact Excluding Currency Impact % Change Constant Currency
24 Endnotes 1. New asset servicing mandates, including announced front-to-back investment servicing clients, may be subject to completion of definitive agreements, approval of applicable boards and shareholders and customary regulatory approvals. New asset servicing mandates and servicing assets remaining to be installed in future periods exclude new business which has been contracted, but for which the client has not yet provided permission to publicly disclose and is not yet installed. These excluded assets, which from time to time may be significant, will be included in new asset servicing mandates and reflected in servicing assets remaining to be installed in the period in which the client provides its permission. Servicing mandates and servicing assets remaining to be installed in future periods are presented on a gross basis and therefore also do not include the impact of clients who have notified us during the period of their intent to terminate or reduce their relationship with State Street, which from time to time may be significant. New business in assets to be serviced is reflected in our AUC/A 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 mandates may be reflected in our AUC/A and AUM as of any particular date specified. Consistent with past practice, AUC/A values for certain asset classes are based on a lag, typically one-month. Generally, our servicing fee revenues are affected by several factors including changes in market valuations, client activity and asset flows, net new business and the manner in which we price our services. We provide a range of services to our clients, including core custody services, accounting, reporting and administration and middle office services, and the nature and mix of services provided affects our servicing fees. The basis for fees will differ across regions and clients. The industry in which we operate has historically faced pricing pressure, and our servicing fee revenues are also affected by such pressures today. Consequently, no assumption should be drawn as to future revenue run rate from announced servicing wins or new servicing business yet to be installed, as the amount of revenue associated with AUC/A can vary materially. Management fees generally are affected by our level of AUM and differ based upon the nature, type and investment strategy of the investment product. Management fee revenue is more sensitive to market valuations than servicing fee revenue, as a higher proportion of the underlying services provided, and the associated management fees earned, are dependent on equity and fixed-income security valuations. Additional factors, such as the relative mix of assets managed, may have a significant effect on our management fee revenue. While certain management fees are directly determined by the values of AUM and the investment strategies employed, management fees may reflect other factors, including performance fee arrangements, as well as our relationship pricing for clients. 2. Best Global Custodian in APAC (25 Years) and Best Middle- and Back-Office Services Provider based on Asia Asset Management 2022 Best of the Best Awards; Best Custodian for Asset Owners based on AsianInvestor Asset Management Awards; Best Hedge Funds Administrator (Over $30BN Single Manager) based on HFM Awards. Recognized Global Markets as the #1 FX provider to asset managers in the 2022 Euromoney (Real Money) FX Survey. 3. FX trading services in 4Q22 included notable items related to a revenue-related recovery of $23M. Excluding the notable item, 4Q22 FX trading services of $344M was up 15% compared to 4Q21 FX trading services of $300M and up 8% compared to 3Q22 FX trading services of $319M. Excluding the notable item, FY2022 FX trading services of $1,353M was up 12% compared to FY2021 FX trading services of $1,211M. 4. Company-wide productivity achieved gross savings of ~$320M based on an expenses ex-notable items basis for the comparison between FY2022 and FY2021. FY2022 expenses ex-notable items of $8,666M was flat compared to FY2021 expenses ex-notable items of $8,662M. The change is primarily driven by incremental investments of ~$470M and variable costs of ~$80M, offset by gross savings worth ~$320M and the impact of currency translation worth ~$220M. Financial metrics ex-notable items are non-GAAP measures. For further details on explanations and reconciliations of our non-GAAP measures, refer to Reconciliation of notable items and Non-GAAP measures included in the Appendix. 5. Front office software and data ARR, an operating metric, is calculated by annualizing current quarter revenue for CRD and Mercatus and includes the annualized amount of most software-enabled revenue, including revenue generated from SaaS, maintenance and support revenue, FIX, and value-added services, which are all expected to be recognized ratably over the term of client contracts. Front office software and data ARR does not include software-enabled brokerage revenue and revenue from affiliates. 6. Unless otherwise noted, all capital ratios referenced on this slide and elsewhere in this presentation refer to State Street Corporation, or State Street, and not State Street Bank and Trust Company, or State Street Bank. All capital ratios are as of quarter end. The lower of capital ratios calculated under the Basel III advanced approaches and under the Basel III standardized approach are applied in the assessment of our capital adequacy for regulatory purposes. Standardized approach ratios were binding for 4Q21 to 4Q22. Refer to the Addendum for descriptions of these ratios. December 31, 2022 capital ratios are presented as of quarter-end and are estimates. 7. Stock purchases under our common stock repurchase programs may be made using various types of transactions, including open-market purchases, accelerated share repurchases or other transactions off the market, and may be made under Rule 10b5-1 trading programs. The timing and amount of any stock purchases and the type of transaction may not be ratable over the duration of the program, may vary from reporting period to reporting period and will depend on several factors, including our capital position and financial performance, investment opportunities, market conditions, regulatory considerations including the nature and timing of implementation of revisions to the Basel III framework, and the amount of common stock issued as part of employee compensation programs. The common share repurchase programs do not have specific price targets and may be suspended at any time. The amount and timing of each dividend declared on our common stock is subject to the approval of our Board of Directors. 8. The index names listed are service marks of their respective owners. 9. Morningstar data includes long-term mutual funds, ETF’s and Money Market funds. Mutual fund data represents estimates of net new cash flow, which is new sales minus redemptions combined with net exchanges, while ETF data represents net issuance, which is gross issuance less gross redemptions. Data for Fund of Funds, Feeder funds and Obsolete funds were excluded from the series to prevent double counting. Data is from the Morningstar Direct Asset Flows database. The long-term fund flows reported by Morningstar in North America are composed of U.S. domiciled Market flows mainly in Equities, Allocation and Fixed Income asset classes. 4Q22 data for North America (U.S. domiciled) includes Morningstar actuals for October and November 2022 and Morningstar estimates for December 2022. 4Q22 data for EMEA is on a rolling three month basis for September 2022 through November 2022. 10. Market share based on Global Institutional Money Market Funds and sourced from Money Fund Analyzer, a service provided by iMoneyNet as of the end of December 2022. 11. On-premises revenue is revenue derived from locally installed software. Software-enabled revenue includes SaaS, maintenance and support revenue, FIX, brokerage, and value-add services. The revenue recognition pattern for on-premises installations differs from software-enabled revenue. 12. Front office bookings represent signed annual recurring revenue contract values for CRD, Mercatus, Alpha Data Platform, and Alpha Data Services excluding bookings with affiliates, including SSGA. Front office revenue derived from affiliate agreements is eliminated in consolidation for financial reporting purposes. 13. Represents expected annualized recurring revenue from signed client contracts that are scheduled to be largely installed over the next 24 months for CRD, Mercatus and Alpha Data Services. It includes SaaS revenue as well as maintenance and support revenue and excludes the one-time impact of on-premises license revenue, revenue generated from FIX, brokerage, value-add services, and professional services as well as revenue from affiliates. 14. Represents expected annualized recurring revenue from signed client contracts that are scheduled to be largely installed over the next 24 months. This amount of expected revenue is estimated based on factors present on or about the time the contract was signed (and is not updated based on subsequent developments, including changes in assets or market valuations). It does not include professional services revenue or revenue from affiliates. 15. NII is presented on a GAAP-basis. NIM is presented on an FTE-basis. Refer to the Addendum for reconciliations of NII FTE-basis to NII GAAP-basis on the Average Statement of Condition. 16. Duration as of period end and based on total investment portfolio. 17. Other includes Other expenses and Amortization of intangible assets. 18. Compensation and benefits expenses in 4Q22 and 4Q21 included notable items related to repositioning charges of $50M and release of $32M, respectively. 4Q21 also included notable items related to a deferred compensation expense acceleration of $147M. Excluding these notable items, 4Q22 adjusted Compensation and benefits of $1,058M was down (1)% compared to 4Q21 adjusted Compensation and benefits of $1,066M and up 2% compared to 3Q22 Compensation and benefits of $1,042M. Occupancy expenses in 4Q22 and 4Q21 included notable items related to repositioning charges of $20M and $29M, respectively. Excluding these notable items, 4Q22 adjusted Occupancy of $86M was down (17)% compared to 4Q21 adjusted Occupancy of $104M and down (11)% compared to 3Q22 Occupancy expenses of $97M. Other expenses in 4Q22, 3Q22, and 4Q21 included notable items related to acquisition and restructuring costs of $31M, $13M, and $26M, respectively. Excluding all these notable items, 4Q22 Other expenses of $355M was up 12% compared to 4Q21 adjusted Other expenses of $316M and up 7% compared to 3Q22 adjusted Other expenses of $332M. 19. State Street received a regulatory exemption to maintain its 1.0% G-SIB capital surcharge until January 1, 2024. 20. The SCB of 2.5% effective on October 1, 2022 is calculated based upon the results of the CCAR 2022 exam. 21. Leverage exposure is equal to average consolidated assets less applicable Tier 1 leverage capital reductions.
25 Forward-looking statements This Presentation (and the conference call referenced herein) contains forward-looking statements within the meaning of United States securities laws, including statements about our goals and expectations regarding our business, financial and capital condition, results of operations, strategies, the financial and market outlook, and the business environment. Forward-looking statements are often, but not always, identified by such forward-looking terminology as “outlook,” “priority,” “will,” “expect,” “intend,” “aim,” “outcome,” “future,” “strategy,” “trajectory,” "target," “guidance,” “objective,” “plan,” “forecast,” “believe,” “anticipate,” “estimate,” “seek,” “may,” “trend,” 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 time subsequent to the time this Presentation is first issued. Important factors that may affect future results and outcomes include, but are not limited to: We are subject to intense competition, which could negatively affect our profitability; we are subject to significant pricing pressure and variability in our financial results and our AUC/A and AUM; our development and completion of new products and services, including State Street Digital and State Street AlphaSM, and the enhancement of our infrastructure required to meet increased regulatory and client expectations for resiliency and the systems and process re-engineering necessary to achieve improved productivity and reduced operating risk, may take an extended period to implement, involve costs and expose us to increased risk; our business may be negatively affected by our failure to update and maintain our technology infrastructure; The COVID-19 pandemic continues to exacerbate certain risks and uncertainties for our business; Acquisitions, strategic alliances, joint ventures and divestitures, and the integration, retention and development of the benefits of our acquisitions, pose risks for our business; Competition for qualified members of our workforce is intense, and we may not be able to attract and retain the highly skilled people we need to support our business; We could be adversely affected by geopolitical, economic and market conditions, including, for example, as a result of the ongoing war in Ukraine, actions taken by central banks to address inflationary pressures, challenging conditions in global equity markets, and disruptions in fixed income markets such as those impacting the UK gilts in the fourth quarter of 2022; We have significant International operations, and disruptions in European and Asian economies could have an adverse effect on our consolidated results of operations or financial condition; Our investment securities portfolio, consolidated financial condition and consolidated results of operations could be adversely affected by changes in the financial markets; Our business activities expose us to interest rate risk; We assume significant credit risk to counterparties, who may also have substantial financial dependencies with other financial institutions, and these credit exposures and concentrations could expose us to financial loss; Our fee revenue represents a significant portion of our consolidated revenue and is subject to decline based on, among other factors, market conditions, competition, currency valuation and investment activities of our clients and their business mix; If we are unable to effectively manage our capital and liquidity, our consolidated financial condition, capital ratios, results of operations and business prospects could be adversely affected; We may need to raise additional capital or debt in the future, which may not be available to us or may only be available on unfavorable terms; If we experience a downgrade in our credit ratings, or an actual or perceived reduction in our financial strength, our borrowing and capital costs, liquidity and reputation could be adversely affected; Our business and capital-related activities, including common share repurchases, may be adversely affected by regulatory capital, credit (counterparty and otherwise) and liquidity standards and considerations; We face extensive and changing government regulation in the jurisdictions in which we operate, which may increase our costs and compliance risks; We are subject to enhanced external oversight as a result of the resolution of prior regulatory or governmental matters; Our businesses may be adversely affected by government enforcement and litigation; Any misappropriation of the confidential information we possess could have an adverse impact on our business and could subject us to regulatory actions, litigation and other adverse effects; Our calculations of risk exposures, total RWA and capital ratios depend on data inputs, formulae, models, correlations and assumptions that are subject to change, which could materially impact our risk exposures, our total RWA and our capital ratios from period to period; Changes in accounting standards may adversely affect our consolidated financial statements; Changes in tax laws, rules or regulations, challenges to our tax positions and changes in the composition of our pre-tax earnings may increase our effective tax rate; In addition to income tax, we are subject to audit or other examination, and litigation or other dispute resolution proceedings, with U.S. and non-U.S. tax authorities regarding non- income-based tax matters. Our interpretations or application of tax laws and regulations, including with respect to withholding, transfer, wage, use, stamp, service and other non-income taxes, could differ from that of the relevant governmental taxing authority, or we may experience timing or other compliance deficiencies in connection with our efforts to comply with applicable tax laws and regulations, which could result in the requirement to pay additional taxes, penalties and/or interest, which could be material; The transition away from LIBOR may result in additional unanticipated costs and increased risk exposure; Our control environment may be inadequate, fail or be circumvented, and operational risks could adversely affect our consolidated results of operations; Cost shifting to non-U.S. jurisdictions and outsourcing may expose us to increased operational risk, geopolitical risk and reputational harm and may not result in expected cost savings; Attacks or unauthorized access to our information technology systems or facilities, or those of the third parties with which we do business, or disruptions to our or their continuous operations, could result in significant costs, reputational damage and impacts on our business activities; Long-term contracts expose us to pricing and performance risk; Our businesses may be negatively affected by adverse publicity or other reputational harm; We may not be able to protect our intellectual property; The quantitative models we use to manage our business may contain errors that could result in material harm; Our reputation and business prospects may be damaged if our clients incur substantial losses or are restricted in redeeming their interests in investment pools that we sponsor or manage; The impacts of climate change, and regulatory responses to such risks, could adversely affect us; and We may incur losses as a result of unforeseen events including terrorist attacks, natural disasters, the emergence of a new pandemic or acts of embezzlement. Other important factors that could cause actual results to differ materially from those indicated by any forward-looking statements are set forth in our 2021 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 Presentation should not by relied on as representing our expectations or beliefs as of any time subsequent to the time this Presentation is first issued, and we do not undertake efforts to revise those forward-looking statements to reflect events after that time.
26 Non-GAAP measures In addition to presenting State Street's financial results in conformity with U.S. generally accepted accounting principles, or GAAP, management also presents certain financial information on a basis that excludes or adjusts one or more items from GAAP. This latter basis is a non-GAAP presentation. In general, our non- GAAP financial results adjust selected GAAP-basis financial results to exclude the impact of revenue and expenses outside of State Street’s normal course of business or other notable items, such as acquisition and restructuring charges, repositioning charges, gains/losses on sales, as well as, for selected comparisons, seasonal items. For example, we sometimes present expenses on a basis we may refer to as “expenses ex-notable items", which exclude notable items and, to provide additional perspective on both prior year quarter and sequential quarter comparisons, may also exclude seasonal items. Management believes that this presentation of financial information facilitates an investor's further understanding and analysis of State Street's financial performance and trends with respect to State Street’s business operations from period-to-period, including providing additional insight into our underlying margin and profitability. In addition, Management may also provide additional non-GAAP measures. For example, we may present revenue and expense measures on a constant currency 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. 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. Refer to the Addendum for reconciliations of our non-GAAP financial information. To access the Addendum go to http://investors.statestreet.com and click on “Filings & Reports – Quarterly Earnings”.
27 Definitions ACWI All Country World Index AOCI Accumulated other comprehensive income APAC Asia-Pacific ARR Annual recurring revenue AUC/A Assets under custody and/or administration AUM Assets under management Barclays Global Agg Barclays Global Agg represents Barclays Global Aggregate Bond Index BBH Brown Brothers Harriman BOE Bank of England Bps Basis points, with one basis point representing one hundredth of one percent CET1 ratio Common equity tier 1 ratio CRD Charles River Development Diluted earnings per share (EPS) Net income available to common shareholders divided by diluted average common shares outstanding for the noted period DXY U.S. Dollar Index ECB European Central Bank EAFE Europe, Australia, and Far East EM Emerging markets EMEA Europe, Middle East and Africa EOP End of period EPS Earnings per share ESG Environmental, Social, and Governance EURIBOR Euro Interbank Offered Rate ETF Exchange-traded fund Fed The Federal Reserve System FTE Fully taxable equivalent FX Foreign exchange FY Full-year GAAP Generally accepted accounting principles in the United States G-SIB Global systemically important bank HTM Held-to-maturity IT Information technology LIBOR London Inter-Bank Offered Rate Lending related and other Lending related and other fees primarily consist of fee revenue associated with State Street’s fund finance, leveraged loans, municipal finance, insurance and stable value wrap businesses Net interest income (NII) Income earned on interest bearing assets less interest paid on interest bearing liabilities Net interest margin (NIM) Net interest income divided by average interest-earning assets nm Not meaningful OCI Other comprehensive income On-premises On-premises revenue as recognized in Front office software and data Operating leverage Rate of growth of total revenue less the rate of growth of total expenses, relative to the corresponding prior year period, as applicable Pre-tax margin Income before income tax expense divided by total revenue %Pts Percentage points is the difference from one percentage value subtracted from another Quarter-over-quarter (QoQ) Sequential quarter comparison Return on equity (ROE) Net income less dividends on preferred stock divided by average common equity RWA Risk weighted assets SaaS Software as a service SCB Stress capital buffer SEC Securities Exchange Commission SPDR Standard and Poor's Depository Receipt SSGA State Street Global Advisors Year-over-year (YoY) Current period compared to the same period a year ago YTD Year-to-date