STT 8-K
State Street Corp (STT)
8-K
2022-04-14
For: 2022-04-14
View Original
Added on
April 10, 2026
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): April 14, 2022
______________________
(Exact name of registrant as specified in its charter)
____________________
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification Number) | ||||||||||||
| (Address of principal executive offices, and Zip Code) | |||||||||||
Registrant’s telephone number, including area code: | ||||||||
________________
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:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
| Depositary Shares, each representing a 1/4,000th ownership interest in a share of | ||||||||||||||
| Depositary Shares, each representing a 1/4,000th ownership interest in a share of | ||||||||||||||
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 April 14, 2022, State Street Corporation issued a news release announcing its results of operations for the first-quarter of 2022. Copies of that news release and accompanying first-quarter 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 April 14, 2022, State Street Corporation made available a slide presentation providing highlights of its first-quarter 2022 results of operations and related information as of March 31, 2022, which is being made available in connection with an April 14, 2022 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 April 14, 2022, announcing its first-quarter 2022 results of operations and accompanying first-quarter 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 first-quarter 2022 results of operations and related information, which is being made available in connection with an April 14, 2022 investor conference call, is furnished herewith as Exhibit 99.3 and is incorporated by reference in Item 7.01 hereof.
| Exhibit No. | Description | |||||||
| * | 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: | April 14, 2022 | ||||||||||||||||
 | Exhibit 99.1 State Street Corporation One Lincoln Street Boston, MA 02111 NYSE: STT www.statestreet.com | |||||||
Boston, MA… April 14, 2022 News Release
STATE STREET REPORTS FIRST QUARTER 2022 EPS OF $1.57; $1.59 EXCLUDING NOTABLE ITEMS(a) | ||
% changes noted below reflect year-over-year 1Q comparisons | ||
TOTAL REVENUE AND FEE GROWTH OF 4%
NET INTEREST INCOME GROWTH OF 9%
EXPENSES FLAT; UP 1% EX-NOTABLES(a)
POSITIVE TOTAL AND FEE OPERATING LEVERAGE OF 5% POINTS AND 4% POINTS, RESPECTIVELY
Ron O'Hanley, Chairman and Chief Executive Officer: "While State Street's exposure to Russia and Ukraine is minimal, the war alongside other macroeconomic factors presented new challenges to global markets in the first quarter. Even in this challenging market environment, State Street posted another strong quarter and remains focused on delivering for our shareholders, clients, and employees." O'Hanley continued: "Our first-quarter results demonstrate the strength, diversity and durability of our business model. Year-over-year revenue growth was driven by continued momentum in front office solutions and asset management, as well as a strong quarter in FX trading, while the higher interest rate environment began to benefit net interest income. These revenue results combined with disciplined expense management generated positive operating leverage and year-over-year pre-tax margin expansion and earnings growth." O'Hanley added: "Our distinctive product innovation and solutions continue to make contributions across the franchise as evidenced by another quarter of solid new business wins in our Investment Services business and strong inflows at Global Advisors. We remain committed to being an essential partner to our clients, which creates a strong foundation for future growth." | ||
FINANCIAL HIGHLIGHTS
| (Table presents summary results, dollars in millions, except per share amounts, or where otherwise noted) | 1Q22 | 4Q21 | 1Q21 | % QoQ | % YoY | |||||||||||||||||||||||||||
| Income statement: | ||||||||||||||||||||||||||||||||
| Total fee revenue | $ | 2,573 | $ | 2,511 | $ | 2,483 | 2 | % | 4 | % | ||||||||||||||||||||||
| Net interest income | 509 | 484 | 467 | 5 | 9 | |||||||||||||||||||||||||||
| Other income | (1) | 58 | — | nm | nm | |||||||||||||||||||||||||||
| Total revenue | 3,081 | 3,053 | 2,950 | 1 | 4 | |||||||||||||||||||||||||||
| Provision for credit losses | — | (7) | (9) | nm | nm | |||||||||||||||||||||||||||
| Total expenses | 2,327 | 2,330 | 2,332 | — | — | |||||||||||||||||||||||||||
| Net income | 604 | 697 | 519 | (13) | 16 | |||||||||||||||||||||||||||
| Financial ratios and other metrics: | ||||||||||||||||||||||||||||||||
| Diluted earnings per share (EPS) | $ | 1.57 | $ | 1.78 | $ | 1.37 | (12) | % | 15 | % | ||||||||||||||||||||||
| Return on average common equity (ROE) | 9.5 | % | 10.3 | % | 8.4 | % | (80) | bps | 110 | bps | ||||||||||||||||||||||
| Pre-tax margin | 24.5 | 23.9 | 21.3 | 60 | 320 | |||||||||||||||||||||||||||
AUC/A ($ billions)(1) | $ | 41,724 | $ | 43,678 | $ | 40,263 | (4) | 4 | ||||||||||||||||||||||||
AUM ($ billions)(1) | 4,022 | 4,138 | 3,591 | (3) | 12 | |||||||||||||||||||||||||||
(1) As of period-end.
(a) See "1Q22 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
1
1Q22 HIGHLIGHTS
(all comparisons are to 1Q21, unless otherwise noted)
AUC/A and AUM
•Investment Servicing AUC/A as of quarter-end increased 4% to $41.7 trillion, primarily due to higher equity market levels, client flows and net new business growth
•Investment Management AUM as of quarter-end increased 12% to $4.0 trillion, mainly reflecting higher market levels and net inflows
New business and strategy execution
•Investment Servicing mandates announced in 1Q22 totaled $302 billion, with wins across strategically important premium and preferred client segments; quarter-end servicing assets to be installed in future periods of $2.9 trillion
•Investment Management business generated net inflows of $51 billion, with strength in ETFs and Cash
•Momentum across Front office software and Middle office services, enabled by State Street AlphaSM
◦Front office uninstalled revenue backlog of $93 million, increased 43%(a)
◦Middle office uninstalled revenue backlog more than tripled year-on-year to $63 million(b)
•11 of 19 Alpha client mandates live as of the end of 1Q22
•State Street Digital announced a collaboration with Copper.co to develop an institutional grade digital custody offering
Revenue
•Fee revenue increased 4%, primarily reflecting solid growth in Management fees, Front office software and data, and FX trading services:
◦Servicing fees were flat, or up 2% excluding currency translation(c)
◦Management fees increased 5%
◦FX trading services increased 4%
◦Securities finance decreased (3)%
◦Software and processing fees increased 26%, with Front office software and data up 44%
•Net interest income (NII) increased 9%
Expenses
•Total expenses were flat; Total expenses increased 1%, excluding notable items, with currency translation contributing a 1% benefit(c)
◦Expense growth from targeted business investments was largely offset by productivity savings and ongoing disciplined expense management
(a) Front office uninstalled revenue backlog of $93 million in 1Q22 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.
(b) Middle office uninstalled revenue backlog of $63 million in 1Q22 represents expected annualized recurring revenue from signed client contracts that are scheduled to be largely installed over the next 24 months. It does not include professional services revenue or revenue from affiliates.
(b) Middle office uninstalled revenue backlog of $63 million in 1Q22 represents expected annualized recurring revenue from signed client contracts that are scheduled to be largely installed over the next 24 months. It does not include professional services revenue or revenue from affiliates.
(c) 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.
2
Operating leverage and pre-tax margin
•Generated positive total and fee operating leverage in 1Q22 of 5% points and 4% points, respectively
◦Excluding notable items, total and fee operating leverage in 1Q22 were 3% points and 3% points, respectively(a)
•Pre-tax margin increased 3% points
◦Excluding notable items, pre-tax margin increased 2% points(a)
Notable items
| (Dollars in millions, except EPS amounts) | 1Q22 | 4Q21 | 1Q21 | |||||||||||
| Acquisition and restructuring costs | $ | (9) | $ | (26) | $ | (10) | ||||||||
| Repositioning release / (charge): | ||||||||||||||
| Compensation & employee benefits | — | 32 | — | |||||||||||
| Occupancy | — | (29) | — | |||||||||||
Total Repositioning release / (charge)(b) | — | 3 | — | |||||||||||
Deferred compensation expense acceleration(c) | — | (147) | — | |||||||||||
Gain on sale of investment securities(d) | — | 58 | — | |||||||||||
Legal and other costs (e) | — | — | (29) | |||||||||||
| Notable items (pre-tax) | $ | (9) | $ | (112) | $ | (39) | ||||||||
Preferred securities redemption (after-tax)(f) | — | — | (5) | |||||||||||
| EPS impact | $ | (0.02) | $ | (0.22) | $ | (0.10) | ||||||||
Capital
•Standardized Common Equity Tier 1 (CET1) of 11.9% increased 1.1% points compared to 1Q21. Standardized CET1 decreased (2.4)% points compared to 4Q21 due to lower AOCI and higher RWA
•Tier 1 leverage ratio of 5.9% increased 0.5% point compared to 1Q21, but decreased (0.2)% point compared to 4Q21
•ROE of 9.5% increased 1.1% points compared to 1Q21, but decreased (0.8)% point compared to 4Q21
•In 1Q22, State Street returned a total of $209 million of capital to shareholders through declared common dividends of $0.57 per share
(a) 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.
(b) Repositioning release of $3 million in 4Q21 reflect a release of $32 million in Compensation and employee benefits and a charge of $29 million in Occupancy.
(c) Deferred compensation expense acceleration of $147 million in 4Q21 is related to the acceleration of expenses associated with certain cash settled deferred incentive compensation awards.
(d) Gain on sale of $58 million in 4Q21 included in Other income, reflects a one-time sale of Libor and Euribor based securities previously classified as held-to-maturity.
(e) Legal and other costs of $29 million in 1Q21 included $20 million in Information systems and communications, $8 million in Transaction processing and $1 million in Other expenses.
(f) $5 million in 1Q21 is related to the redemption of $500 million of outstanding Series F preferred stock.
3
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) | 1Q22 | 4Q21 | 1Q21 | % QoQ | % YoY | ||||||||||||
Assets under Custody and/or Administration (AUC/A)(1)(2) | $ | 41,724 | $ | 43,678 | $ | 40,263 | (4.5) | % | 3.6 | % | |||||||
Assets under Management (AUM)(2) | $ | 4,022 | 4,138 | 3,591 | (2.8) | 12.0 | |||||||||||
Market Indices:(3) | |||||||||||||||||
| S&P 500 Daily Average | 4,464 | 4,602 | 3,866 | (3.0) | 15.5 | ||||||||||||
| S&P 500 EOP | 4,530 | 4,766 | 3,973 | (5.0) | 14.0 | ||||||||||||
| MSCI EAFE Daily Average | 2,212 | 2,310 | 2,201 | (4.2) | 0.5 | ||||||||||||
| MSCI EAFE EOP | 2,182 | 2,336 | 2,208 | (6.6) | (1.2) | ||||||||||||
| MSCI Emerging Markets Daily Average | 1,187 | 1,252 | 1,363 | (5.2) | (12.9) | ||||||||||||
| MSCI Emerging Markets EOP | 1,142 | 1,232 | 1,316 | (7.3) | (13.2) | ||||||||||||
| Barclays Capital Global Aggregate Bond Index EOP | 500 | 532 | 534 | (6.0) | (6.4) | ||||||||||||
Foreign Exchange Volatility Indices:(3) | |||||||||||||||||
| JPM G7 Volatility Index Daily Average | 7.2 | 6.5 | 6.8 | 10.8 | 5.9 | ||||||||||||
| JPM Emerging Market Volatility Index Daily Average | 10.7 | 9.9 | 10.4 | 8.1 | 2.9 | ||||||||||||
| Average Foreign Exchange Rate: | |||||||||||||||||
| EUR vs. USD | 1.122 | 1.143 | 1.205 | (1.8) | (6.9) | ||||||||||||
| GBP vs. USD | 1.341 | 1.348 | 1.379 | (0.5) | (2.8) | ||||||||||||
(1) Includes EOP assets under custody of $31,447 billion, $32,845 billion and $30,134 billion, as of 1Q22, 4Q21, and 1Q21, 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) | 1Q22 | 4Q21 | 3Q21 | 2Q21 | 1Q21 | ||||||||||||
North America - (US Domiciled) Morningstar Direct Market Data:(1)(2) | |||||||||||||||||
| Long Term Funds | $ | (66) | $ | 102 | $ | 150 | $ | 196 | $ | 165 | |||||||
| Money Market | (134) | 201 | 15 | 33 | 156 | ||||||||||||
| ETF | 181 | 157 | 77 | 123 | 148 | ||||||||||||
Total Flows(3) | $ | (18) | $ | 459 | $ | 242 | $ | 351 | $ | 470 | |||||||
EMEA - Morningstar Direct Market Data:(1)(4) | |||||||||||||||||
| Long Term Funds | $ | 76 | $ | 155 | $ | 192 | $ | 226 | $ | 237 | |||||||
| Money Market | (71) | 110 | (4) | (10) | (91) | ||||||||||||
| ETF | 47 | 35 | 37 | 51 | 54 | ||||||||||||
Total Flows(3) | $ | 53 | $ | 299 | $ | 225 | $ | 267 | $ | 200 | |||||||
(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) 1Q22 data for North America includes actuals for January and February 2022 and Morningstar estimates for March 2022.
(3) Line items may not sum to total due to rounding.
(4) 1Q22 data for Europe is on a rolling three month basis for December 2021 through February 2022, sourced by Morningstar.
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INVESTMENT SERVICING AUC/A
The following table presents AUC/A information by product and financial instrument.
| (As of period end, dollars in billions) | 1Q22 | 4Q21 | 1Q21 | % QoQ | % YoY | ||||||||||||
Assets Under Custody and/or Administration(1) | |||||||||||||||||
| By Product Classification: | |||||||||||||||||
| Collective funds, including ETFs | $ | 15,140 | $ | 15,722 | $ | 14,052 | (3.7) | % | 7.7 | % | |||||||
| Mutual funds | 10,825 | 11,575 | 10,439 | (6.5) | 3.7 | ||||||||||||
| Pension products | 8,191 | 8,443 | 7,843 | (3.0) | 4.4 | ||||||||||||
| Insurance and other products | 7,568 | 7,938 | 7,929 | (4.7) | (4.6) | ||||||||||||
| Total Assets Under Custody and/or Administration | $ | 41,724 | $ | 43,678 | $ | 40,263 | (4.5) | % | 3.6 | % | |||||||
| By Financial Instrument: | |||||||||||||||||
| Equities | $ | 25,249 | $ | 25,974 | $ | 22,825 | (2.8) | % | 10.6 | % | |||||||
| Fixed-income | 11,303 | 12,587 | 13,022 | (10.2) | (13.2) | ||||||||||||
| Short-term and other investments | 5,172 | 5,117 | 4,416 | 1.1 | 17.1 | ||||||||||||
| Total Assets Under Custody and/or Administration | $ | 41,724 | $ | 43,678 | $ | 40,263 | (4.5) | % | 3.6 | % | |||||||
(1) Consistent with past practice, AUC/A values for certain asset classes are based on a lag, typically one-month.
INVESTMENT MANAGEMENT AUM
The following tables present 1Q22 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 December 31, 2021 | $ | 2,674 | $ | 623 | $ | 368 | $ | 222 | $ | 251 | $ | 4,138 | ||||||||
| Net asset flows: | ||||||||||||||||||||
Long-term institutional(2) | (25) | 11 | 4 | 11 | 13 | 14 | ||||||||||||||
| ETF | 4 | 5 | — | — | 8 | 17 | ||||||||||||||
| Cash fund | — | — | 20 | — | — | 20 | ||||||||||||||
| Total flows, net | $ | (21) | $ | 16 | $ | 24 | $ | 11 | $ | 21 | $ | 51 | ||||||||
| Market appreciation/(depreciation) | (113) | (34) | 1 | (3) | (4) | (153) | ||||||||||||||
| Foreign exchange impact | (10) | (4) | — | (1) | 1 | (14) | ||||||||||||||
| Total market and foreign exchange impact | $ | (123) | $ | (38) | $ | 1 | $ | (4) | $ | (3) | $ | (167) | ||||||||
Ending balance as of March 31, 2022 | $ | 2,530 | $ | 601 | $ | 393 | $ | 229 | $ | 269 | $ | 4,022 | ||||||||
(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) | 1Q22 | 4Q21 | 3Q21 | 2Q21 | 1Q21 | ||||||||||||
| Beginning balance | $ | 4,138 | $ | 3,862 | $ | 3,897 | $ | 3,591 | $ | 3,467 | |||||||
| Net asset flows: | |||||||||||||||||
Long-term institutional(1) | 14 | 28 | (6) | 55 | (8) | ||||||||||||
| ETF | 17 | 50 | 13 | 21 | 23 | ||||||||||||
| Cash fund | 20 | 1 | (12) | 7 | 24 | ||||||||||||
| Total flows, net | $ | 51 | $ | 79 | $ | (5) | $ | 83 | $ | 39 | |||||||
| Market appreciation/(depreciation) | (153) | 208 | (12) | 224 | 116 | ||||||||||||
| Foreign exchange impact | (14) | (11) | (18) | (1) | (31) | ||||||||||||
| Total market and foreign exchange impact | $ | (167) | $ | 197 | $ | (30) | $ | 223 | $ | 85 | |||||||
| Ending balance | $ | 4,022 | $ | 4,138 | $ | 3,862 | $ | 3,897 | $ | 3,591 | |||||||
(1) Amounts represent long-term portfolios, excluding ETFs.
5
REVENUE
| (Dollars in millions) | 1Q22 | 4Q21 | 1Q21 | % QoQ | % YoY | ||||||||||||||||||
| Back office servicing fees | $ | 1,268 | $ | 1,272 | $ | 1,266 | (0.3) | % | 0.2 | % | |||||||||||||
| Middle office services | 100 | 105 | 103 | (4.8) | (2.9) | ||||||||||||||||||
| Servicing fees | 1,368 | 1,377 | 1,369 | (0.7) | (0.1) | ||||||||||||||||||
| Management fees | 520 | 530 | 493 | (1.9) | 5.5 | ||||||||||||||||||
| Foreign exchange trading services | 359 | 300 | 346 | 19.7 | 3.8 | ||||||||||||||||||
| Securities finance revenue | 96 | 102 | 99 | (5.9) | (3.0) | ||||||||||||||||||
| Front office software and data | 138 | 124 | 96 | 11.3 | 43.8 | ||||||||||||||||||
| Lending related and other fees | 63 | 63 | 64 | — | (1.6) | ||||||||||||||||||
| Software and processing fees | 201 | 187 | 160 | 7.5 | 25.6 | ||||||||||||||||||
| Other fee revenue | 29 | 15 | 16 | 93.3 | 81.3 | ||||||||||||||||||
| Total fee revenue | $ | 2,573 | $ | 2,511 | $ | 2,483 | 2.5 | % | 3.6 | % | |||||||||||||
| Net interest income | 509 | 484 | 467 | 5.2 | % | 9.0 | % | ||||||||||||||||
| Other income | (1) | 58 | — | nm | nm | ||||||||||||||||||
| Total Revenue | $ | 3,081 | $ | 3,053 | $ | 2,950 | 0.9 | % | 4.4 | % | |||||||||||||
Net interest margin (FTE)(a) | 0.80 | % | 0.73 | % | 0.75 | % | 7 | bps | 5 | bps | |||||||||||||
Servicing fees were flat compared to 1Q21, as higher client activity and flows, average equity market levels, and net new business were offset by normal pricing headwinds and the impact of currency translation. Servicing fees decreased (1)% compared to 4Q21, mainly due to seasonal pricing headwinds and lower average equity market levels, partially offset by higher client activity/adjustments.
•Back office servicing fees were flat compared to both 1Q21 and 4Q21 (consistent with total servicing fees above).
•Middle office services fees decreased (3)% and (5)% compared to 1Q21 and 4Q21, respectively, primarily due to a partial transition from a legacy client and lower professional services fees.
Management fees increased 5% compared to 1Q21, primarily reflecting higher average equity market levels and ETF net inflows. Management fees were down (2)% compared to 4Q21, largely reflecting lower average equity market levels, partially offset by lower money market fee waivers and net inflows.
Foreign exchange trading services increased 4% compared to 1Q21, primarily driven by higher FX volatility, partially offset by lower client FX volumes. Foreign exchange trading services increased 20% compared to 4Q21, primarily reflecting higher FX volatility and client FX volumes.
Securities finance decreased (3)% compared to 1Q21, mainly reflecting lower average Agency assets, partially offset by new business wins in Enhanced Custody. Securities finance decreased (6)% compared to 4Q21, primarily driven by lower average Agency assets and Enhanced Custody balances.
Software and processing fees increased 26% and 7% compared to 1Q21 and 4Q21, respectively.
•Front office software and data increased 44% compared to 1Q21, primarily driven by higher CRD revenue from on-premises renewals, as well as higher software-enabled and professional services revenue. Front office software and data increased 11% compared to 4Q21, mainly driven by higher professional services revenue from CRD.
•Lending related and other fees of $63 million, primarily consist of fee revenue associated with State Street's lending business activities.
Other fee revenue increased compared to both 1Q21 and 4Q21, mainly reflecting fair value adjustments on equity investments. Other fee revenue primarily consists of income from equity method investments and certain tax-advantaged investments, as well as other market-related adjustments.
(a) Net Interest Margin (NIM) is presented on a fully taxable-equivalent (FTE) basis. Refer to the Addendum for reconciliations of our FTE-basis presentation.
6
Net interest income (NII) increased 9% compared to 1Q21, primarily driven by growth in investment portfolio and loan balances, as well as higher market interest rates. Compared to 4Q21, NII increased 5%, mainly due to higher market interest rates and growth in the investment portfolio.
Other income decreased compared to 4Q21, reflecting the absence of a gain on sale of investment securities in 4Q21.
Total revenues were adversely impacted by currency translation by $27 million and $5 million when compared to 1Q21 and 4Q21, respectively.
EXPENSES
| (Dollars in millions) | 1Q22 | 4Q21 | 1Q21 | % QoQ | % YoY | ||||||||||||||||||
| Compensation and employee benefits | $ | 1,232 | $ | 1,181 | $ | 1,242 | 4.3 | % | (0.8) | % | |||||||||||||
| Information systems and communications | 423 | 436 | 421 | (3.0) | 0.5 | ||||||||||||||||||
| Transaction processing services | 264 | 238 | 270 | 10.9 | (2.2) | ||||||||||||||||||
| Occupancy | 95 | 133 | 109 | (28.6) | (12.8) | ||||||||||||||||||
| Acquisition and restructuring costs | 9 | 26 | 10 | (65.4) | (10.0) | ||||||||||||||||||
| Amortization of other intangible assets | 61 | 62 | 58 | (1.6) | 5.2 | ||||||||||||||||||
| Other | 243 | 254 | 222 | (4.3) | 9.5 | ||||||||||||||||||
| Total Expenses | $ | 2,327 | $ | 2,330 | $ | 2,332 | (0.1) | % | (0.2) | % | |||||||||||||
Total expenses, excluding notable items(a) | $ | 2,318 | $ | 2,160 | $ | 2,293 | 7.3 | % | 1.1 | % | |||||||||||||
| Effective tax rate | 19.9 | % | 4.6 | % | 17.2 | % | 1,530 | bps | 270 | bps | |||||||||||||
Compensation and employee benefits decreased (1)% compared to 1Q21, primarily driven by lower headcount in high cost locations, partially offset by higher seasonal expenses. Compensation and employee benefits increased 4% compared to 4Q21, primarily driven by seasonal expenses, partially offset by the impact of notable items in 4Q21.(a)
Information systems and communications was largely flat compared to 1Q21. Information systems and communications decreased (3)% compared to 4Q21, mainly reflecting the timing of infrastructure and depreciation costs.
Transaction processing services decreased (2)% compared to 1Q21, primarily reflecting the absence of notable items reported in 1Q21, partially offset by higher sub-custody and broker fees. Transaction processing increased 11% compared to 4Q21, primarily driven by higher sub-custody and broker fees, partially offset by vendor savings initiatives.
Occupancy decreased (13)% compared to 1Q21, mainly due to footprint optimization. Occupancy decreased (29)% compared to 4Q21, mainly reflecting the absence of notable items reported in 4Q21,(a) footprint optimization, as well as one-time maintenance and repair credits.
Acquisition and restructuring costs decreased compared to both 1Q21 and 4Q21, primarily reflecting the absence of costs associated with the CRD acquisition.
Amortization of other intangible assets increased 5% compared to 1Q21, due to a lift-out in 1Q21.(b)
(a) See "1Q22 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.
(b) Related to a lift-out of the depository bank and fund administrator activities of Fideuram Bank Luxembourg, a subsidiary of Intesa Sanpaolo.
7
Other expenses increased 9% compared to 1Q21, largely reflecting higher professional fees, partially offset by lower sub-advisory fees. Other expenses decreased (4)% compared to 4Q21, primarily due to lower marketing spend and sub-advisory fees, partially offset by higher professional fees.
Total expenses were positively impacted by currency translation by $25 million and $7 million when compared to 1Q21 and 4Q21, respectively.
TAXES
The effective tax rate increased to 19.9% from 17.2% in 1Q21, mainly due to the lower impact of tax advantaged investments and discrete benefits in 1Q21. Compared to 4Q21, the effective tax rate increased from 4.6%, primarily due to the absence of discrete benefits reported in 4Q21.
CAPITAL AND LIQUIDITY
The following table presents preliminary estimates of regulatory capital and liquidity ratios for State Street Corporation.
| (As of period end) | 1Q22 | 4Q21 | 1Q21 | |||||||||||
| Basel III Standardized Approach: | ||||||||||||||
| Common Equity Tier 1 ratio | 11.9 | % | 14.3 | % | 10.8 | % | ||||||||
| Tier 1 capital ratio | 13.4 | 16.1 | 12.4 | |||||||||||
| Total capital ratio | 14.8 | 17.6 | 14.0 | |||||||||||
| Basel III Advanced Approaches: | ||||||||||||||
| Common Equity Tier 1 ratio | 13.1 | 14.3 | 11.9 | |||||||||||
| Tier 1 capital ratio | 14.8 | 16.1 | 13.6 | |||||||||||
| Total capital ratio | 16.2 | 17.5 | 15.2 | |||||||||||
| Tier 1 leverage ratio | 5.9 | 6.1 | 5.4 | |||||||||||
| Supplementary leverage ratio | 6.7 | 7.4 | 7.2 | |||||||||||
| Liquidity coverage ratio | 106 | % | 105 | % | 107 | % | ||||||||
Standardized capital ratios were binding for all periods included above.
CET1 ratio (standardized) increased 1.1% points compared to 1Q21, primarily reflecting higher retained earnings and the issuance of $1.9 billion of common stock in 3Q21 to finance the previously announced proposed acquisition of BBH Investor Services, partially offset by lower AOCI related to AFS securities driven by the significant increase in rates across the yield curve and higher RWA largely driven by the implementation of SA-CCR as expected. CET1 ratio (standardized) decreased (2.4)% points compared to 4Q21, primarily reflecting lower AOCI, the implementation of SA-CCR as expected, as well as the temporary deployment of RWA capital for revenue generating activities.
Tier 1 leverage ratio increased 0.5% point compared to 1Q21, primarily reflecting higher retained earnings and the issuance of common stock to finance the previously announced proposed acquisition of BBH Investor Services, partially offset by lower AOCI. Tier 1 leverage ratio decreased (0.2)% point compared to 4Q21, primarily driven by lower AOCI.
Liquidity coverage ratio (LCR) for State Street Corporation was approximately 106%, down (1)% point from 1Q21 but up 1% point compared to 4Q21. LCR for State Street Bank and Trust was approximately 127%.
8
INVESTOR CONFERENCE CALL AND QUARTERLY WEBSITE DISCLOSURE
State Street will webcast an investor conference call today, Thursday, April 14, 2022, at 12:00 p.m. ET, available at http://investors.statestreet.com/. The conference call will also be available via telephone, at (833) 380-0399 or (236) 714-2093. The Conference ID# is 5139576.
Recorded replays of the conference call will be available on the website and by telephone at (800) 585-8367 or (416) 621-4642 beginning approximately two hours after the call's completion. The Conference ID# is 5139576.
The telephone replay will be available for approximately two weeks following the conference call. This News Release, presentation materials referred to on the conference call 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 days following each other quarter-end, as applicable). For 1Q22, State Street expects to publish its updates during the period beginning today and ending on or about May 10, 2022.
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 $41.7 trillion in assets under custody and/or administration and $4.0 trillion* in assets under management as of March 31, 2022, State Street operates globally in more than 100 geographic markets and employs approximately 39,000 worldwide. For more information, visit State Street's website at www.statestreet.com.
* Assets under management as of March 31, 2022 includes approximately $73 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.
9
IN THIS NEWS RELEASE:
•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.
•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 1Q22. 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 shareholders' equity is determined by dividing annualized net income available to common equity 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.
•"AUC/A" denotes Assets Under Custody and/or Administration; "AUC" denotes Assets Under Custody; "AUM" denotes Assets Under Management; "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.
10
•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. 1Q22 data for North America (US domiciled) includes Morningstar actuals for January and February 2022 and Morningstar estimates for March 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. 1Q22 data for Europe is on a rolling three month basis for December 2021 through February 2022, sourced by Morningstar.
11
FORWARD LOOKING STATEMENTS
This News Release (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, proposed acquisition of the Brown Brothers Harriman (BBH) Investor Services business, dividend and stock purchase programs, governmental and regulatory initiatives and developments, expense reduction programs, new client business, and the business environment. Forward-looking statements are often, but not always, identified by such forward-looking terminology as “outlook,” "intend," "target," “guidance,” “expect,” “priority,” “objective,” “plan,” “forecast,” “believe,” “anticipate,” “estimate,” “seek,” “may,” “will,” “trend,” “strategy” and “goal,” or similar statements or variations of such terms. These statements are not guarantees of future performance, are inherently uncertain, are based on current assumptions that are difficult to predict and involve a number of risks and uncertainties. Therefore, actual outcomes and results may differ materially from what is expressed in those statements, and those statements should not be relied upon as representing our expectations or beliefs as of any 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:
•The consummation of our planned acquisition of the BBH Investor Services business is subject to the receipt of regulatory approvals and the satisfaction of other closing conditions, the failure or delay of which may prevent or delay the consummation of the acquisition; while we are evaluating potential modifications to the transaction that are intended to facilitate resolution of the bank regulatory review, there can be no assurance as to the timing or outcome of that review;
•Even if we successfully consummate our planned acquisition of the BBH Investor Services business, we may fail to realize some or all of the anticipated benefits of the transaction or the benefits may take longer to realize than expected;
•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 or State Street Alpha, 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 involve costs and dependencies 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, resulting from the present conflict in Ukraine
•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 and currency declines, 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 capital and liquidity standards required as a result of capital stress testing;
•We face extensive and changing government regulation in the jurisdictions in which we operate, which may increase our costs and compliance risks;
12
•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;
•The transition away from LIBOR may result in additional 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 (and the conference call referenced herein) 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.
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Exhibit 99.2
| STATE STREET CORPORATION | |||||
| EARNINGS RELEASE ADDENDUM | |||||
| March 31, 2022 | |||||
| Table of Contents | |||||
| GAAP-Basis Financial Information: | |||||
| 4-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 | ||||
| Investment Portfolio Holdings by Asset Class | 7 | ||||
| Investment Portfolio Non-U.S. Investments | 9 | ||||
| Assets Under Custody and/or Administration | 10 | ||||
| Assets Under Management | 11 | ||||
| Industry Flow Data by Asset Class | 12 | ||||
| Line of Business Information | 13 | ||||
| Allowance for Credit Losses | 14 | ||||
| Non-GAAP Financial Information: | |||||
| Reconciliations of Non-GAAP Financial Information | 15 | ||||
| Reconciliation of Pre-tax Margin Excluding Notable Items | 18 | ||||
| Reconciliations of Constant Currency FX Impacts | 19 | ||||
| Capital: | |||||
| Reconciliation of Tangible Common Equity Ratio | 20 | ||||
| Regulatory Capital | 21 | ||||
| This financial information should be read in conjunction with State Street's news release dated April 14, 2022. | |||||
| STATE STREET CORPORATION | ||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||
| 4-YEAR SUMMARY OF RESULTS | ||||||||||||||||||||||||||
| (Dollars in millions, except per share amounts, or where otherwise noted) | 2018 | 2019 | 2020 | 2021 | ||||||||||||||||||||||
| Year ended December 31: | ||||||||||||||||||||||||||
| Total fee revenue | $ | 9,454 | $ | 9,147 | $ | 9,499 | $ | 10,012 | ||||||||||||||||||
| Net interest income | 2,671 | 2,566 | 2,200 | 1,905 | ||||||||||||||||||||||
| Other income | 6 | 43 | 4 | 110 | ||||||||||||||||||||||
| Total revenue | 12,131 | 11,756 | 11,703 | 12,027 | ||||||||||||||||||||||
| Provision for credit losses | 15 | 10 | 88 | (33) | ||||||||||||||||||||||
| Total expenses | 9,015 | 9,034 | 8,716 | 8,889 | ||||||||||||||||||||||
| Income before income tax expense | 3,101 | 2,712 | 2,899 | 3,171 | ||||||||||||||||||||||
| Income tax expense | 508 | 470 | 479 | 478 | ||||||||||||||||||||||
| Net income | 2,593 | 2,242 | 2,420 | 2,693 | ||||||||||||||||||||||
| Net income available to common shareholders | $ | 2,404 | $ | 2,009 | $ | 2,257 | $ | 2,572 | ||||||||||||||||||
| Per common share: | ||||||||||||||||||||||||||
| Diluted earnings per common share | $ | 6.39 | $ | 5.38 | $ | 6.32 | $ | 7.19 | ||||||||||||||||||
| Average diluted common shares outstanding (in thousands) | 376,476 | 373,666 | 357,106 | 357,962 | ||||||||||||||||||||||
| Cash dividends declared per common share | $ | 1.78 | $ | 1.98 | $ | 2.08 | $ | 2.18 | ||||||||||||||||||
| Closing price per share of common stock (at year end) | 63.07 | 79.10 | 72.78 | 93.00 | ||||||||||||||||||||||
| Average balance sheet: | ||||||||||||||||||||||||||
| Investment securities | $ | 88,070 | $ | 91,768 | $ | 109,175 | $ | 111,730 | ||||||||||||||||||
| Total assets | 223,385 | 223,334 | 269,334 | 299,743 | ||||||||||||||||||||||
| Total deposits | 161,408 | 158,262 | 193,225 | 235,404 | ||||||||||||||||||||||
| Ratios and other metrics: | ||||||||||||||||||||||||||
| Return on average common equity | 12.1 | % | 9.4 | % | 10.0 | % | 10.7 | % | ||||||||||||||||||
| Pre-tax margin | 25.6 | 23.1 | 24.8 | 26.4 | ||||||||||||||||||||||
Pre-tax margin, excluding notable items(1) | 28.8 | 25.8 | 26.3 | 27.6 | ||||||||||||||||||||||
| Net interest margin, fully taxable-equivalent basis | 1.47 | 1.42 | 0.97 | 0.74 | ||||||||||||||||||||||
Common equity tier 1 ratio(2)(3)(4) | 11.7 | 11.7 | 12.3 | 14.3 | ||||||||||||||||||||||
Tier 1 capital ratio(2)(3)(4) | 15.5 | 14.5 | 14.4 | 16.1 | ||||||||||||||||||||||
Total capital ratio(2)(3)(4) | 16.3 | 15.6 | 15.3 | 17.5 | ||||||||||||||||||||||
Tier 1 leverage ratio(2)(3) | 7.2 | 6.9 | 6.4 | 6.1 | ||||||||||||||||||||||
Supplementary leverage ratio(2)(3) | 6.3 | 6.1 | 8.1 | 7.4 | ||||||||||||||||||||||
| Assets under custody and/or administration (in trillions) | $ | 31.62 | $ | 34.36 | $ | 38.79 | $ | 43.68 | ||||||||||||||||||
| Assets under management (in trillions) | 2.51 | 3.12 | 3.47 | 4.14 | ||||||||||||||||||||||
(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. | ||||||||||||||||||||||||||
2
| STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED RESULTS OF OPERATIONS | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarters | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions, except per share amounts, or where otherwise noted) | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 1Q22 vs. 1Q21 | 1Q22 vs. 4Q21 | |||||||||||||||||||||||||||||||||||||||||||
| Fee revenue: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Back office servicing fees | $ | 1,266 | $ | 1,290 | $ | 1,289 | $ | 1,272 | $ | 1,268 | 0.2% | (0.3)% | ||||||||||||||||||||||||||||||||||||||
| Middle office services | 103 | 104 | 102 | 105 | 100 | (2.9) | (4.8) | |||||||||||||||||||||||||||||||||||||||||||
| Servicing fees | 1,369 | 1,394 | 1,391 | 1,377 | 1,368 | (0.1) | (0.7) | |||||||||||||||||||||||||||||||||||||||||||
| Management fees | 493 | 504 | 526 | 530 | 520 | 5.5 | (1.9) | |||||||||||||||||||||||||||||||||||||||||||
| Foreign exchange trading services | 346 | 286 | 279 | 300 | 359 | 3.8 | 19.7 | |||||||||||||||||||||||||||||||||||||||||||
| Securities finance | 99 | 109 | 106 | 102 | 96 | (3.0) | (5.9) | |||||||||||||||||||||||||||||||||||||||||||
| Front office software and data | 96 | 148 | 116 | 124 | 138 | 43.8 | 11.3 | |||||||||||||||||||||||||||||||||||||||||||
| Lending related and other fees | 64 | 63 | 64 | 63 | 63 | (1.6) | — | |||||||||||||||||||||||||||||||||||||||||||
| Software and processing fees | 160 | 211 | 180 | 187 | 201 | 25.6 | 7.5 | |||||||||||||||||||||||||||||||||||||||||||
| Other fee revenue | 16 | 10 | 22 | 15 | 29 | 81.3 | 93.3 | |||||||||||||||||||||||||||||||||||||||||||
| Total fee revenue | 2,483 | 2,514 | 2,504 | 2,511 | 2,573 | 3.6 | 2.5 | |||||||||||||||||||||||||||||||||||||||||||
| Net interest income: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income | 471 | 467 | 487 | 483 | 521 | 10.6 | 7.9 | |||||||||||||||||||||||||||||||||||||||||||
| Interest expense | 4 | — | — | (1) | 12 | nm | nm | |||||||||||||||||||||||||||||||||||||||||||
| Net interest income | 467 | 467 | 487 | 484 | 509 | 9.0 | 5.2 | |||||||||||||||||||||||||||||||||||||||||||
| Other income: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Gains (losses) related to investment securities, net | — | — | (1) | 58 | (1) | nm | nm | |||||||||||||||||||||||||||||||||||||||||||
| Other income | — | 53 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Total other income | — | 53 | (1) | 58 | (1) | nm | nm | |||||||||||||||||||||||||||||||||||||||||||
| Total revenue | 2,950 | 3,034 | 2,990 | 3,053 | 3,081 | 4.4 | 0.9 | |||||||||||||||||||||||||||||||||||||||||||
| Provision for credit losses | (9) | (15) | (2) | (7) | — | nm | nm | |||||||||||||||||||||||||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Compensation and employee benefits | 1,242 | 1,077 | 1,054 | 1,181 | 1,232 | (0.8) | 4.3 | |||||||||||||||||||||||||||||||||||||||||||
| Information systems and communications | 421 | 398 | 406 | 436 | 423 | 0.5 | (3.0) | |||||||||||||||||||||||||||||||||||||||||||
| Transaction processing services | 270 | 263 | 253 | 238 | 264 | (2.2) | 10.9 | |||||||||||||||||||||||||||||||||||||||||||
| Occupancy | 109 | 100 | 102 | 133 | 95 | (12.8) | (28.6) | |||||||||||||||||||||||||||||||||||||||||||
| Acquisition and restructuring costs | 10 | 11 | 18 | 26 | 9 | (10.0) | (65.4) | |||||||||||||||||||||||||||||||||||||||||||
| Amortization of other intangible assets | 58 | 63 | 62 | 62 | 61 | 5.2 | (1.6) | |||||||||||||||||||||||||||||||||||||||||||
| Other | 222 | 199 | 221 | 254 | 243 | 9.5 | (4.3) | |||||||||||||||||||||||||||||||||||||||||||
| Total expenses | 2,332 | 2,111 | 2,116 | 2,330 | 2,327 | (0.2) | (0.1) | |||||||||||||||||||||||||||||||||||||||||||
| Income before income tax expense | 627 | 938 | 876 | 730 | 754 | 20.3 | 3.3 | |||||||||||||||||||||||||||||||||||||||||||
| Income tax expense | 108 | 175 | 162 | 33 | 150 | 38.9 | nm | |||||||||||||||||||||||||||||||||||||||||||
| Net income | $ | 519 | $ | 763 | $ | 714 | $ | 697 | $ | 604 | 16.4 | (13.3) | ||||||||||||||||||||||||||||||||||||||
3
| STATE STREET CORPORATION | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED RESULTS OF OPERATIONS (Continued) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarters | % Change | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions, except per share amounts, or where otherwise noted) | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 1Q22 vs. 1Q21 | 1Q22 vs. 4Q21 | ||||||||||||||||||||||||||||||||||||||||||||||
| Adjustments to net income: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends on preferred stock(1) | $ | (30) | $ | (34) | $ | (21) | $ | (34) | $ | (20) | (33.3) | % | (41.2) | % | |||||||||||||||||||||||||||||||||||||||
| Earnings allocated to participating securities | — | (1) | — | (1) | (1) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Net income available to common shareholders | $ | 489 | $ | 728 | $ | 693 | $ | 662 | $ | 583 | 19.2 | (11.9) | |||||||||||||||||||||||||||||||||||||||||
| Per common share: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basic earnings | $ | 1.39 | $ | 2.11 | $ | 1.99 | $ | 1.81 | $ | 1.59 | 14.4 | (12.2) | |||||||||||||||||||||||||||||||||||||||||
| Diluted earnings | 1.37 | 2.07 | 1.96 | 1.78 | 1.57 | 14.6 | (11.8) | ||||||||||||||||||||||||||||||||||||||||||||||
| Average common shares outstanding (in thousands): | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basic | 350,743 | 345,889 | 347,718 | 365,798 | 366,542 | 4.5 | 0.2 | ||||||||||||||||||||||||||||||||||||||||||||||
| Diluted | 355,690 | 351,582 | 353,494 | 371,685 | 372,037 | 4.6 | 0.1 | ||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared per common share | $ | 0.52 | $ | 0.52 | $ | 0.57 | $ | 0.57 | $ | 0.57 | 9.6 | — | |||||||||||||||||||||||||||||||||||||||||
| Closing price per share of common stock (as of quarter end) | 84.01 | 82.28 | 84.72 | 93.00 | 87.12 | 3.7 | (6.3) | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance sheet averages for the quarter: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment securities | $ | 107,809 | $ | 111,481 | $ | 113,635 | $ | 113,906 | $ | 119,286 | 10.6 | 4.7 | |||||||||||||||||||||||||||||||||||||||||
| Total assets | 296,328 | 308,195 | 291,459 | 303,007 | 295,010 | (0.4) | (2.6) | ||||||||||||||||||||||||||||||||||||||||||||||
| Total deposits | 226,232 | 242,310 | 233,266 | 239,680 | 233,268 | 3.1 | (2.7) | ||||||||||||||||||||||||||||||||||||||||||||||
| Ratios and other metrics: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Effective tax rate | 17.2 | % | 18.6 | % | 18.5 | % | 4.6 | % | 19.9 | % | 270 | bps | 1,530 | bps | |||||||||||||||||||||||||||||||||||||||
| Return on average common equity | 8.4 | 12.6 | 11.6 | 10.3 | 9.5 | 110 | (80) | ||||||||||||||||||||||||||||||||||||||||||||||
Return on tangible common equity(2) | 13.4 | 17.3 | 17.3 | 15.7 | 14.7 | 130 | (100) | ||||||||||||||||||||||||||||||||||||||||||||||
| Pre-tax margin | 21.3 | 30.9 | 29.3 | 23.9 | 24.5 | 320 | 60 | ||||||||||||||||||||||||||||||||||||||||||||||
Pre-tax margin, excluding notable items(3) | 22.6 | 29.7 | 29.9 | 28.1 | 24.8 | 220 | (330) | ||||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin, fully taxable-equivalent basis | 0.75 | 0.71 | 0.76 | 0.73 | 0.80 | 5 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||
Common equity tier 1 ratio(4)(5) | 10.8 | 11.2 | 13.5 | 14.3 | 11.9 | 110 | (240) | ||||||||||||||||||||||||||||||||||||||||||||||
Tier 1 capital ratio(4)(5) | 12.4 | 12.9 | 15.2 | 16.1 | 13.4 | 100 | (270) | ||||||||||||||||||||||||||||||||||||||||||||||
Total capital ratio(4)(5) | 14.0 | 14.3 | 16.6 | 17.5 | 14.8 | 80 | (270) | ||||||||||||||||||||||||||||||||||||||||||||||
Tier 1 leverage ratio(4) | 5.4 | 5.2 | 6.3 | 6.1 | 5.9 | 50 | (20) | ||||||||||||||||||||||||||||||||||||||||||||||
Supplementary leverage ratio(4) | 7.2 | 6.7 | 7.5 | 7.4 | 6.7 | (50) | (70) | ||||||||||||||||||||||||||||||||||||||||||||||
| Average securities on loan | $ | 429,991 | $ | 457,604 | $ | 418,111 | $ | 412,403 | $ | 397,522 | (7.6) | % | (3.6) | % | |||||||||||||||||||||||||||||||||||||||
| End-of-period securities on loan | 451,913 | 437,094 | 417,142 | 400,940 | 412,162 | (8.8) | 2.8 | ||||||||||||||||||||||||||||||||||||||||||||||
| Assets under custody and/or administration (in billions) | 40,263 | 42,597 | 43,337 | 43,678 | 41,724 | 3.6 | (4.5) | ||||||||||||||||||||||||||||||||||||||||||||||
| Assets under management (in billions) | 3,591 | 3,897 | 3,862 | 4,138 | 4,022 | 12.0 | (2.8) | ||||||||||||||||||||||||||||||||||||||||||||||
(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 March 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
nm Denotes not meaningful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
4
| STATE STREET CORPORATION | |||||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | |||||||||||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENT OF CONDITION | |||||||||||||||||||||||||||||||||||||||||||||||
| As of | % Change | ||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions, except per share amounts) | March 31, 2021 | June 30, 2021 | September 30, 2021 | December 31, 2021 | March 31, 2022 | 1Q22 vs. 1Q21 | 1Q22 vs. 4Q21 | ||||||||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash and due from banks | $ | 4,552 | $ | 4,619 | $ | 4,606 | $ | 3,631 | $ | 2,976 | (34.6) | % | (18.0) | % | |||||||||||||||||||||||||||||||||
| Interest-bearing deposits with banks | 107,554 | 113,347 | 107,553 | 106,358 | 104,010 | (3.3) | (2.2) | ||||||||||||||||||||||||||||||||||||||||
| Securities purchased under resale agreements | 5,238 | 3,997 | 2,847 | 3,012 | 803 | (84.7) | (73.3) | ||||||||||||||||||||||||||||||||||||||||
| Trading account assets | 786 | 721 | 720 | 758 | 754 | (4.1) | (0.5) | ||||||||||||||||||||||||||||||||||||||||
| Investment securities: | |||||||||||||||||||||||||||||||||||||||||||||||
| Investment securities available-for-sale | 60,512 | 67,497 | 70,279 | 73,399 | 74,348 | 22.9 | 1.3 | ||||||||||||||||||||||||||||||||||||||||
Investment securities held-to-maturity purchased under money market liquidity facility(1) | 201 | — | — | — | — | (100.0) | — | ||||||||||||||||||||||||||||||||||||||||
Investment securities held-to-maturity(2) | 46,261 | 45,182 | 43,346 | 42,430 | 45,203 | (2.3) | 6.5 | ||||||||||||||||||||||||||||||||||||||||
| Total investment securities | 106,974 | 112,679 | 113,625 | 115,829 | 119,551 | 11.8 | 3.2 | ||||||||||||||||||||||||||||||||||||||||
| Loans | 31,585 | 30,704 | 32,797 | 32,532 | 35,141 | 11.3 | 8.0 | ||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses(3) | 118 | 100 | 95 | 87 | 86 | (27.1) | (1.1) | ||||||||||||||||||||||||||||||||||||||||
| Loans, net | 31,467 | 30,604 | 32,702 | 32,445 | 35,055 | 11.4 | 8.0 | ||||||||||||||||||||||||||||||||||||||||
Premises and equipment, net(4) | 2,143 | 2,169 | 2,191 | 2,261 | 2,229 | 4.0 | (1.4) | ||||||||||||||||||||||||||||||||||||||||
| Accrued interest and fees receivable | 3,302 | 3,358 | 3,407 | 3,278 | 3,446 | 4.4 | 5.1 | ||||||||||||||||||||||||||||||||||||||||
| Goodwill | 7,629 | 7,629 | 7,650 | 7,621 | 7,582 | (0.6) | (0.5) | ||||||||||||||||||||||||||||||||||||||||
| Other intangible assets | 2,007 | 1,933 | 1,887 | 1,816 | 1,744 | (13.1) | (4.0) | ||||||||||||||||||||||||||||||||||||||||
| Other assets | 45,233 | 45,472 | 45,951 | 37,615 | 44,200 | (2.3) | 17.5 | ||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 316,885 | $ | 326,528 | $ | 323,139 | $ | 314,624 | $ | 322,350 | 1.7 | 2.5 | |||||||||||||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest-bearing | $ | 57,079 | $ | 61,742 | $ | 64,885 | $ | 56,461 | $ | 61,797 | 8.3 | 9.5 | |||||||||||||||||||||||||||||||||||
| Interest-bearing - U.S. | 108,372 | 111,291 | 108,909 | 102,985 | 104,962 | (3.1) | 1.9 | ||||||||||||||||||||||||||||||||||||||||
| Interest-bearing - Non-U.S. | 79,442 | 90,936 | 85,579 | 95,589 | 84,284 | 6.1 | (11.8) | ||||||||||||||||||||||||||||||||||||||||
Total deposits(5) | 244,893 | 263,969 | 259,373 | 255,035 | 251,043 | 2.5 | (1.6) | ||||||||||||||||||||||||||||||||||||||||
| Securities sold under repurchase agreements | 587 | 658 | 637 | 1,575 | 4,277 | 628.6 | 171.6 | ||||||||||||||||||||||||||||||||||||||||
| Short-term borrowings under money market liquidity facility | 200 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Other short-term borrowings | 642 | 635 | 549 | 128 | 18 | (97.2) | (85.9) | ||||||||||||||||||||||||||||||||||||||||
| Accrued expenses and other liabilities | 31,722 | 23,067 | 22,288 | 17,048 | 26,866 | (15.3) | 57.6 | ||||||||||||||||||||||||||||||||||||||||
| Long-term debt | 13,836 | 13,032 | 12,978 | 13,475 | 13,922 | 0.6 | 3.3 | ||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 291,880 | 301,361 | 295,825 | 287,261 | 296,126 | 1.5 | 3.1 | ||||||||||||||||||||||||||||||||||||||||
| Shareholders' equity: | |||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock, no par, 3,500,000 shares authorized: | |||||||||||||||||||||||||||||||||||||||||||||||
| Series D, 7,500 shares issued and outstanding | 742 | 742 | 742 | 742 | 742 | — | — | ||||||||||||||||||||||||||||||||||||||||
| Series F, 2,500 shares issued and outstanding | 247 | 247 | 247 | 247 | 247 | — | — | ||||||||||||||||||||||||||||||||||||||||
| Series G, 5,000 shares issued and outstanding | 493 | 493 | 493 | 493 | 493 | — | — | ||||||||||||||||||||||||||||||||||||||||
| Series H, 5,000 shares issued and outstanding | 494 | 494 | 494 | 494 | 494 | — | — | ||||||||||||||||||||||||||||||||||||||||
Common stock, $1 par, 750,000,000 shares authorized(6)(7) | 504 | 504 | 504 | 504 | 504 | — | — | ||||||||||||||||||||||||||||||||||||||||
| Surplus | 10,227 | 10,246 | 10,763 | 10,787 | 10,762 | 5.2 | (0.2) | ||||||||||||||||||||||||||||||||||||||||
| Retained earnings | 23,751 | 24,300 | 24,785 | 25,238 | 25,612 | 7.8 | 1.5 | ||||||||||||||||||||||||||||||||||||||||
| Accumulated other comprehensive income (loss) | (418) | (422) | (682) | (1,133) | (2,698) | 545.5 | 138.1 | ||||||||||||||||||||||||||||||||||||||||
Treasury stock, at cost(8) | (11,035) | (11,437) | (10,032) | (10,009) | (9,932) | (10.0) | (0.8) | ||||||||||||||||||||||||||||||||||||||||
| Total shareholders' equity | 25,005 | 25,167 | 27,314 | 27,363 | 26,224 | 4.9 | (4.2) | ||||||||||||||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 316,885 | $ | 326,528 | $ | 323,139 | $ | 314,624 | $ | 322,350 | 1.7 | 2.5 | |||||||||||||||||||||||||||||||||||
(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 | ||||||||||||||||||||||||||||||||||||||||||
(3) Total allowance for credit losses including off-balance sheet commitments | 135 | 121 | 117 | 108 | 107 | ||||||||||||||||||||||||||||||||||||||||||
(4) Accumulated depreciation for premises and equipment | 4,960 | 5,108 | 5,235 | 5,391 | 5,530 | ||||||||||||||||||||||||||||||||||||||||||
(5) Average total deposits | 226,232 | 242,310 | 233,266 | 239,680 | 233,268 | ||||||||||||||||||||||||||||||||||||||||||
(6) Common stock shares issued | 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 | ||||||||||||||||||||||||||||||||||||||||||
(8) Treasury stock shares | 155,846,660 | 160,376,528 | 138,250,469 | 137,896,822 | 136,764,854 | ||||||||||||||||||||||||||||||||||||||||||
5
| 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarters | % Change | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 1Q22 vs. 1Q21 | 1Q22 vs. 4Q21 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions; fully-taxable equivalent basis) | 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 | % | (19.4) | % | (10.9) | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities purchased under resale agreements(2) | 4,568 | 0.88 | 3,958 | 0.28 | 4,061 | 0.65 | 4,191 | 0.69 | 3,150 | 1.31 | (31.0) | (24.8) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Trading account assets | 800 | — | 729 | — | 733 | 0.02 | 747 | 0.01 | 761 | — | (4.9) | 1.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment securities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment securities available-for-sale | 59,191 | 0.95 | 66,225 | 0.88 | 69,621 | 0.86 | 71,134 | 0.83 | 75,226 | 0.83 | 27.1 | 5.8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment securities held-to-maturity | 47,356 | 1.54 | 45,243 | 1.47 | 44,014 | 1.47 | 42,772 | 1.45 | 44,060 | 1.56 | (7.0) | 3.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment securities held-to-maturity purchased under money market liquidity facility | 1,262 | 1.35 | 13 | 1.28 | — | — | — | — | — | — | (100.0) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total investment securities | 107,809 | 1.21 | 111,481 | 1.12 | 113,635 | 1.10 | 113,906 | 1.06 | 119,286 | 1.10 | 10.6 | 4.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans(3) | 28,025 | 2.05 | 29,471 | 2.14 | 32,035 | 2.08 | 34,425 | 2.00 | 34,407 | 2.03 | 22.8 | (0.1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other interest-earning assets | 18,296 | 0.10 | 20,939 | 0.07 | 24,662 | 0.08 | 25,418 | 0.07 | 23,767 | 0.08 | 29.9 | (6.5) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | 254,733 | 0.76 | 266,016 | 0.71 | 254,501 | 0.76 | 264,841 | 0.73 | 258,112 | 0.82 | 1.3 | (2.5) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and due from banks | 4,529 | 5,594 | 5,103 | 4,998 | 4,018 | (11.3) | (19.6) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other assets | 37,066 | 36,585 | 31,855 | 33,168 | 32,880 | (11.3) | (0.9) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 296,328 | $ | 308,195 | $ | 291,459 | $ | 303,007 | $ | 295,010 | (0.4) | (2.6) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | $ | 100,974 | 0.01 | % | $ | 110,269 | — | % | $ | 104,575 | 0.02 | % | $ | 103,547 | — | % | $ | 100,073 | 0.02 | % | (0.9) | (3.4) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-U.S.(4) | 78,433 | (0.37) | 83,248 | (0.32) | 82,230 | (0.33) | 84,525 | (0.31) | 83,556 | (0.32) | 6.5 | (1.1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total interest-bearing deposits(4) | 179,407 | (0.16) | 193,517 | (0.14) | 186,805 | (0.13) | 188,072 | (0.14) | 183,629 | (0.14) | 2.4 | (2.4) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Securities sold under repurchase agreements | 1,017 | 0.05 | 477 | (0.02) | 332 | — | 847 | (0.05) | 2,279 | (0.02) | 124.1 | 169.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Short-term borrowings under money market liquidity facility | 1,264 | 1.21 | 13 | 1.25 | — | — | — | — | — | — | (100.0) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other short-term borrowings | 764 | 0.14 | 893 | 0.27 | 837 | 0.17 | 659 | 0.28 | 872 | — | 14.1 | 32.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-term debt | 13,819 | 1.74 | 13,461 | 1.60 | 13,021 | 1.59 | 13,243 | 1.62 | 14,265 | 1.82 | 3.2 | 7.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other interest-bearing liabilities | 4,848 | 0.73 | 5,682 | 0.80 | 5,461 | 0.78 | 5,943 | 0.71 | 2,881 | 1.50 | (40.6) | (51.5) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 201,119 | 0.01 | 214,043 | — | 206,456 | — | 208,764 | — | 203,926 | 0.02 | 1.4 | (2.3) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest bearing deposits | 46,825 | 48,793 | 46,461 | 51,608 | 49,639 | 6.0 | (3.8) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other liabilities | 22,423 | 20,131 | 12,775 | 15,266 | 14,678 | (34.5) | (3.9) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred shareholders' equity | 2,378 | 1,976 | 1,976 | 1,976 | 1,976 | (16.9) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common shareholders' equity | 23,583 | 23,252 | 23,791 | 25,393 | 24,791 | 5.1 | (2.4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 296,328 | $ | 308,195 | $ | 291,459 | $ | 303,007 | $ | 295,010 | (0.4) | (2.6) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total deposits | $ | 226,232 | $ | 242,310 | $ | 233,266 | $ | 239,680 | $ | 233,268 | 3.1 | (2.7) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Excess of rate earned over rate paid | 0.75 | % | 0.71 | % | 0.76 | % | 0.73 | % | 0.80 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin | 0.75 | % | 0.71 | % | 0.76 | % | 0.73 | % | 0.80 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income, fully taxable-equivalent basis | $ | 471 | $ | 470 | $ | 490 | $ | 487 | $ | 512 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tax-equivalent adjustment | (4) | (3) | (3) | (3) | (3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest income, GAAP-basis(4) | $ | 467 | $ | 467 | $ | 487 | $ | 484 | $ | 509 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(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 in the first quarter 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% in the first quarter 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 in the first quarter 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 in the first quarter 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)% in the first quarter of 2022. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6
| STATE STREET CORPORATION | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INVESTMENT PORTFOLIO HOLDINGS BY ASSET CLASS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarters | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (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 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | % | |||||||||||||||||||||||||||||||||||||||||||||
| Asset-backed securities | 7.9 | 0.86 | 9.1 | 0.84 | 9.4 | 0.88 | 7.6 | 0.82 | 6.7 | 0.79 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Student loans | 0.3 | 0.94 | 0.3 | 1.19 | 0.2 | 1.18 | 0.2 | 1.25 | 0.2 | 1.43 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit cards | 0.1 | 0.88 | 0.1 | 0.87 | 0.1 | 0.86 | 0.1 | 0.87 | 0.1 | 0.93 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Auto & equipment | 1.1 | 0.03 | 1.3 | (0.01) | 1.3 | 0.03 | 1.2 | (0.02) | 1.0 | (0.01) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Collateralized loan obligation | 4.2 | 1.16 | 5.2 | 1.10 | 5.4 | 1.16 | 3.8 | 1.11 | 3.2 | 1.06 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 0.2 | (0.12) | 0.1 | (0.09) | 0.3 | (0.07) | 0.2 | (0.20) | 0.1 | (0.37) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage-backed securities | 10.3 | 1.77 | 10.7 | 1.53 | 9.6 | 1.54 | 9.4 | 1.57 | 9.8 | 1.62 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Agency MBS | 10.3 | 1.77 | 10.7 | 1.53 | 9.6 | 1.54 | 9.4 | 1.57 | 9.8 | 1.62 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-agency MBS | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CMBS | 3.8 | 0.78 | 5.6 | 0.53 | 6.5 | 0.50 | 8.0 | 0.43 | 9.2 | 0.40 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Corporate bonds | 5.4 | 1.33 | 5.3 | 1.29 | 5.0 | 1.27 | 4.3 | 1.29 | 3.9 | 1.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Covered bonds | 0.5 | 0.22 | 0.3 | 0.30 | 0.2 | 0.40 | 0.1 | 0.57 | 0.1 | 0.58 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Municipal bonds | 0.8 | 2.59 | 0.8 | 2.61 | 0.8 | 2.62 | 0.8 | 2.65 | 0.6 | 2.72 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Clipper tax-exempt bonds | 0.7 | 3.76 | 0.7 | 3.80 | 0.6 | 3.79 | 0.6 | 3.83 | 0.5 | 4.07 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 1.3 | 0.93 | 1.2 | 0.94 | 1.4 | 0.93 | 1.5 | 0.92 | 1.6 | 0.86 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (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 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | % | |||||||||||||||||||||||||||||||||||||||||||||
| Asset-backed securities | 5.0 | 1.31 | 5.1 | 1.22 | 5.1 | 1.19 | 5.1 | 1.13 | 4.9 | 1.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Student loans | 4.7 | 1.11 | 4.8 | 1.05 | 4.9 | 1.03 | 5.0 | 0.96 | 4.9 | 1.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Agency MBS | 31.2 | 1.51 | 29.4 | 1.37 | 28.7 | 1.39 | 28.7 | 1.41 | 30.6 | 1.66 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-agency MBS | 0.1 | 4.21 | 0.1 | 4.44 | — | 4.93 | — | 5.38 | — | 12.22 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CMBS | 5.0 | 1.54 | 4.9 | 1.61 | 4.9 | 1.57 | 4.9 | 1.52 | 5.0 | 1.53 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total investment securities | $ | 107.8 | 1.21 | $ | 111.5 | 1.12 | $ | 113.6 | 1.10 | $ | 113.9 | 1.06 | $ | 119.3 | 1.10 | ||||||||||||||||||||||||||||||||||||||||||||||||||
7
| STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INVESTMENT PORTFOLIO HOLDINGS BY ASSET CLASS (continued) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ratings | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in billions, or where otherwise noted) | UST/AGY | AAA | AA | A | BBB | <BBB | NR | Fair Value | % Total | Net Unrealized Pre-tax MTM Gain/(Loss) (In millions)(1) | Fixed Rate/ Floating Rate(2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Available-for-sale investment securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Government & agency securities | 50 | % | 25 | % | 18 | % | 4 | % | 2 | % | 1 | % | — | % | $ | 41.7 | 56.0 | % | $ | (1,139) | 94% / 6% | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Asset-backed securities | — | 92 | 8 | — | — | — | — | 7.0 | 9.4 | (26) | 0% / 100% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Student loans | — | 17 | 83 | — | — | — | — | 0.2 | 2.7 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit cards | — | 100 | — | — | — | — | — | 0.1 | 1.3 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Auto & equipment | — | 76 | 24 | — | — | — | — | 1.0 | 13.7 | (2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-U.S. residential mortgage backed securities | — | 93 | 6 | — | — | 1 | — | 2.3 | 32.3 | (10) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Collateralized loan obligation | — | 100 | — | — | — | — | — | 3.3 | 47.4 | (15) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | — | 85 | 15 | — | — | — | — | 0.1 | 2.6 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage-backed securities | 100 | — | — | — | — | — | — | 9.6 | 13.0 | (425) | 99% / 1% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Agency MBS | 100 | — | — | — | — | — | — | 9.6 | 100.0 | (425) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-agency MBS | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CMBS | 98 | 2 | — | — | — | — | — | 9.3 | 12.5 | (39) | 3% / 97% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Corporate bonds | — | — | 13 | 41 | 46 | — | — | 3.8 | 5.1 | (75) | 93% / 7% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Covered bonds | — | 100 | — | — | — | — | — | 0.1 | 0.1 | (1) | 100% / 0% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Municipal bonds | — | 26 | 73 | 1 | — | — | — | 0.7 | 1.0 | 5 | 100% / 0% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Clipper tax-exempt bonds | — | 11 | 61 | 18 | 10 | — | — | 0.5 | 0.7 | — | 0% / 100% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | — | 1 | 41 | 43 | 15 | — | — | 1.6 | 2.2 | (75) | 96% / 4% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total available-for-sale portfolio | 53 | % | 24 | % | 13 | % | 6 | % | 4 | % | — | % | — | % | $ | 74.3 | 100.0 | % | $ | (1,775) | 74% / 26% | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value | $ | 39.7 | $ | 17.5 | $ | 9.9 | $ | 4.2 | $ | 2.7 | $ | 0.2 | $ | 0.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| UST/AGY | AAA | AA | A | BBB | <BBB | NR | Amortized Cost | % Total | Net Unrealized Pre-tax MTM Gain/(Loss) (In millions)(1) | Fixed Rate/ Floating Rate(2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Held-to-maturity investment securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Government & agency securities | 16 | % | 34 | % | 31 | % | — | % | 19 | % | — | % | — | % | $ | 4.4 | 9.8 | % | $ | (25) | 100% / 0% | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Asset-backed securities | — | 25 | 73 | — | 2 | — | — | 4.7 | 10.3 | (31) | 5% / 95% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Student loans | — | 25 | 73 | — | 2 | — | — | 4.7 | 100.0 | (31) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-U.S. residential mortgage backed securities | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage-backed securities | 100 | — | — | — | — | — | — | 31.1 | 68.9 | (1,846) | 100% / 0% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Agency MBS | 100 | — | — | — | — | — | — | 31.1 | 100.0 | (1,866) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-agency MBS | — | — | 12 | — | 19 | 22 | 47 | — | — | 20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CMBS | 94 | 6 | — | — | — | — | — | 5.0 | 11.0 | (383) | 92% / 8% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total held-for-maturity portfolio | 81 | % | 7 | % | 10 | % | — | % | 2 | % | — | % | — | % | $ | 45.2 | 100.0 | % | $ | (2,285) | 89% / 11% | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Amortized Cost | $ | 36.5 | $ | 3.0 | $ | 4.8 | $ | — | $ | 0.9 | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total investment securities | $ | 119.5 | 80% / 20% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) At March 31, 2022, the after-tax unrealized MTM gain/(loss) includes after-tax unrealized loss on securities available-for-sale of $1,294 million, after-tax unrealized loss on securities held-to-maturity of $1,733 million and after-tax unrealized gain primarily related to securities previously transferred from available-for-sale to held-to-maturity of $56 million. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) At March 31, 2022, fixed-to-floating rate securities had a book value of approximately $150 million or 0.12% of the total portfolio. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8
| STATE STREET CORPORATION | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| INVESTMENT PORTFOLIO NON-U.S. INVESTMENTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment Securities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in billions) | Fair Value | Average Rating | Gov't/Agency(1)(2) | ABS FRMBS | ABS All Other | Corporate Bonds | Covered Bonds | Other | |||||||||||||||||||||||||||||||||||||||||||||
| Available-for-sale: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Canada | $ | 4.4 | AA | $ | 3.1 | $ | — | $ | 0.1 | $ | 0.3 | $ | — | $ | 0.9 | ||||||||||||||||||||||||||||||||||||||
| Australia | 3.1 | AAA | 1.2 | 1.3 | — | 0.3 | — | 0.3 | |||||||||||||||||||||||||||||||||||||||||||||
| Germany | 2.0 | AAA | 1.2 | — | 0.5 | 0.1 | — | 0.2 | |||||||||||||||||||||||||||||||||||||||||||||
| United Kingdom | 1.9 | AA | 0.8 | 0.6 | 0.2 | 0.3 | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| France | 1.7 | AA | 0.5 | — | 0.8 | 0.2 | 0.1 | 0.1 | |||||||||||||||||||||||||||||||||||||||||||||
| Japan | 1.3 | A | 1.3 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Austria | 1.2 | AAA | 1.2 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Netherlands | 0.9 | AA | 0.2 | 0.3 | 0.1 | 0.3 | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Italy | 0.8 | AA | 0.6 | 0.1 | 0.1 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Finland | 0.8 | A | 0.7 | — | 0.1 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Belgium | 0.5 | AA | 0.5 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Ireland | 0.5 | A | 0.5 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Hong Kong | 0.4 | AA | 0.4 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Spain | 0.3 | A | 0.2 | — | 0.1 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Other | 8.6 | AAA | 8.3 | — | — | 0.3 | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Total Non-U.S. Investments(3) | $ | 28.4 | $ | 20.7 | $ | 2.3 | $ | 2.0 | $ | 1.8 | $ | 0.1 | $ | 1.5 | |||||||||||||||||||||||||||||||||||||||
| U.S. Investments | 45.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total available-for-sale | $ | 74.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment Securities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in billions) | Amortized Cost | Average Rating | Gov't/Agency(1)(2) | ABS FRMBS | ABS All Other | Corporate Bonds | Covered Bonds | Other | |||||||||||||||||||||||||||||||||||||||||||||
| Held-to-maturity: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Spain | $ | 0.9 | A | $ | 0.9 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||
| France | 0.5 | AA | 0.5 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Belgium | 0.2 | AA | 0.2 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Singapore | 0.2 | AAA | 0.2 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Austria | 0.2 | AA | 0.2 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Netherlands | 0.2 | AAA | 0.2 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Germany | 0.1 | AA | 0.1 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Other | 1.5 | AAA | 1.5 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Total Non-U.S. Investments(3) | $ | 3.8 | $ | 3.8 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||||||||||
| U.S. Investments | 41.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total held-for-maturity | $ | 45.2 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Investment Portfolio | $ | 119.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(1) Sovereign debt is reflected in the government / agency column. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) As of March 31, 2022, other non-U.S. investments include $7.7 billion supranational bonds in AFS securities and $1.4 billion supranational bonds in HTM securities. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(3) Country of collateral used except for corporates where country of issuer is used. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
9
| STATE STREET CORPORATION | |||||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | |||||||||||||||||||||||||||||||||||||||||||||||
| ASSETS UNDER CUSTODY AND/OR ADMINISTRATION | |||||||||||||||||||||||||||||||||||||||||||||||
| Quarters | % Change | ||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in billions) | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 1Q22 vs. 1Q21 | 1Q22 vs. 4Q21 | ||||||||||||||||||||||||||||||||||||||||
Assets Under Custody and/or Administration(1) | |||||||||||||||||||||||||||||||||||||||||||||||
| By Product Classification: | |||||||||||||||||||||||||||||||||||||||||||||||
| Collective funds, including ETFs | $ | 14,052 | $ | 15,048 | $ | 15,159 | $ | 15,722 | $ | 15,140 | 7.7 | % | (3.7) | % | |||||||||||||||||||||||||||||||||
| Mutual funds | 10,439 | 10,873 | 11,505 | 11,575 | 10,825 | 3.7 | (6.5) | ||||||||||||||||||||||||||||||||||||||||
| Pension products | 7,843 | 8,291 | 8,497 | 8,443 | 8,191 | 4.4 | (3.0) | ||||||||||||||||||||||||||||||||||||||||
| Insurance and other products | 7,929 | 8,385 | 8,176 | 7,938 | 7,568 | (4.6) | (4.7) | ||||||||||||||||||||||||||||||||||||||||
| Total Assets Under Custody and/or Administration | $ | 40,263 | $ | 42,597 | $ | 43,337 | $ | 43,678 | $ | 41,724 | 3.6 | (4.5) | |||||||||||||||||||||||||||||||||||
| By Financial Instrument: | |||||||||||||||||||||||||||||||||||||||||||||||
Equities | $ | 22,825 | $ | 24,792 | $ | 25,350 | $ | 25,974 | $ | 25,249 | 10.6 | (2.8) | |||||||||||||||||||||||||||||||||||
Fixed-income | 13,022 | 13,079 | 12,808 | 12,587 | 11,303 | (13.2) | (10.2) | ||||||||||||||||||||||||||||||||||||||||
Short-term and other investments | 4,416 | 4,726 | 5,179 | 5,117 | 5,172 | 17.1 | 1.1 | ||||||||||||||||||||||||||||||||||||||||
| Total Assets Under Custody and/or Administration | $ | 40,263 | $ | 42,597 | $ | 43,337 | $ | 43,678 | $ | 41,724 | 3.6 | (4.5) | |||||||||||||||||||||||||||||||||||
By Geographic Location(2): | |||||||||||||||||||||||||||||||||||||||||||||||
| Americas | $ | 29,530 | $ | 31,280 | $ | 31,934 | $ | 32,427 | $ | 31,027 | 5.1 | (4.3) | |||||||||||||||||||||||||||||||||||
| Europe/Middle East/Africa | 8,256 | 8,716 | 8,748 | 8,599 | 8,103 | (1.9) | (5.8) | ||||||||||||||||||||||||||||||||||||||||
| Asia/Pacific | 2,477 | 2,601 | 2,655 | 2,652 | 2,594 | 4.7 | (2.2) | ||||||||||||||||||||||||||||||||||||||||
| Total Assets Under Custody and/or Administration | $ | 40,263 | $ | 42,597 | $ | 43,337 | $ | 43,678 | $ | 41,724 | 3.6 | (4.5) | |||||||||||||||||||||||||||||||||||
Assets Under Custody(3) | |||||||||||||||||||||||||||||||||||||||||||||||
| By Product Classification: | |||||||||||||||||||||||||||||||||||||||||||||||
| Collective funds, including ETFs | $ | 11,895 | $ | 12,785 | $ | 12,881 | $ | 13,448 | $ | 13,107 | 10.2 | (2.5) | |||||||||||||||||||||||||||||||||||
| Mutual funds | 8,811 | 9,188 | 9,369 | 9,491 | 8,833 | 0.2 | (6.9) | ||||||||||||||||||||||||||||||||||||||||
| Pension products | 6,283 | 6,671 | 6,798 | 6,733 | 6,576 | 4.7 | (2.3) | ||||||||||||||||||||||||||||||||||||||||
| Insurance and other products | 3,145 | 3,303 | 3,316 | 3,173 | 2,931 | (6.8) | (7.6) | ||||||||||||||||||||||||||||||||||||||||
| Total Assets Under Custody | $ | 30,134 | $ | 31,947 | $ | 32,364 | $ | 32,845 | $ | 31,447 | 4.4 | (4.3) | |||||||||||||||||||||||||||||||||||
By Geographic Location(2): | |||||||||||||||||||||||||||||||||||||||||||||||
| Americas | $ | 22,715 | $ | 24,015 | $ | 24,380 | $ | 24,864 | $ | 23,655 | 4.1 | (4.9) | |||||||||||||||||||||||||||||||||||
| Europe/Middle East/Africa | 5,564 | 5,957 | 5,994 | 5,988 | 5,786 | 4.0 | (3.4) | ||||||||||||||||||||||||||||||||||||||||
| Asia/Pacific | 1,855 | 1,975 | 1,990 | 1,993 | 2,006 | 8.1 | 0.7 | ||||||||||||||||||||||||||||||||||||||||
| Total Assets Under Custody | $ | 30,134 | $ | 31,947 | $ | 32,364 | $ | 32,845 | $ | 31,447 | 4.4 | (4.3) | |||||||||||||||||||||||||||||||||||
(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. | |||||||||||||||||||||||||||||||||||||||||||||||
10
| STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||||||||||||
| ASSETS UNDER MANAGEMENT | ||||||||||||||||||||||||||||||||||||||||||||
| Quarters | % Change | |||||||||||||||||||||||||||||||||||||||||||
| (Dollars in billions) | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 1Q22 vs. 1Q21 | 1Q22 vs. 4Q21 | |||||||||||||||||||||||||||||||||||||
| Assets Under Management | ||||||||||||||||||||||||||||||||||||||||||||
| By Asset Class and Investment Approach: | ||||||||||||||||||||||||||||||||||||||||||||
| Equity: | ||||||||||||||||||||||||||||||||||||||||||||
| Active | $ | 84 | $ | 83 | $ | 79 | $ | 80 | $ | 67 | (20.2) | % | (16.3) | % | ||||||||||||||||||||||||||||||
| Passive | 2,198 | 2,378 | 2,361 | 2,594 | 2,463 | 12.1 | (5.1) | |||||||||||||||||||||||||||||||||||||
| Total Equity | 2,282 | 2,461 | 2,440 | 2,674 | 2,530 | 10.9 | (5.4) | |||||||||||||||||||||||||||||||||||||
| Fixed-Income: | ||||||||||||||||||||||||||||||||||||||||||||
| Active | 91 | 100 | 101 | 103 | 98 | 7.7 | (4.9) | |||||||||||||||||||||||||||||||||||||
| Passive | 463 | 510 | 509 | 520 | 503 | 8.6 | (3.3) | |||||||||||||||||||||||||||||||||||||
| Total Fixed-Income | 554 | 610 | 610 | 623 | 601 | 8.5 | (3.5) | |||||||||||||||||||||||||||||||||||||
Cash(1) | 372 | 381 | 367 | 368 | 393 | 5.6 | 6.8 | |||||||||||||||||||||||||||||||||||||
| Multi-Asset-Class Solutions: | ||||||||||||||||||||||||||||||||||||||||||||
| Active | 34 | 35 | 35 | 34 | 33 | (2.9) | (2.9) | |||||||||||||||||||||||||||||||||||||
| Passive | 155 | 172 | 174 | 188 | 196 | 26.5 | 4.3 | |||||||||||||||||||||||||||||||||||||
| Total Multi-Asset-Class Solutions | 189 | 207 | 209 | 222 | 229 | 21.2 | 3.2 | |||||||||||||||||||||||||||||||||||||
Alternative Investments(2): | ||||||||||||||||||||||||||||||||||||||||||||
| Active | 27 | 63 | 58 | 56 | 51 | 88.9 | (8.9) | |||||||||||||||||||||||||||||||||||||
| Passive | 167 | 175 | 178 | 195 | 218 | 30.5 | 11.8 | |||||||||||||||||||||||||||||||||||||
| Total Alternative Investments | 194 | 238 | 236 | 251 | 269 | 38.7 | 7.2 | |||||||||||||||||||||||||||||||||||||
| Total Assets Under Management | $ | 3,591 | $ | 3,897 | $ | 3,862 | $ | 4,138 | $ | 4,022 | 12.0 | (2.8) | ||||||||||||||||||||||||||||||||
| By Geographic Location: | ||||||||||||||||||||||||||||||||||||||||||||
| North America | $ | 2,512 | $ | 2,749 | $ | 2,732 | $ | 2,931 | $ | 2,878 | 14.6 | (1.8) | ||||||||||||||||||||||||||||||||
| Europe/Middle East/Africa | 530 | 570 | 558 | 592 | 593 | 11.9 | 0.2 | |||||||||||||||||||||||||||||||||||||
| Asia/Pacific | 549 | 578 | 572 | 615 | 551 | 0.4 | (10.4) | |||||||||||||||||||||||||||||||||||||
| Total Assets Under Management | $ | 3,591 | $ | 3,897 | $ | 3,862 | $ | 4,138 | $ | 4,022 | 12.0 | (2.8) | ||||||||||||||||||||||||||||||||
(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 | 21.7 | % | 16.7 | % | ||||||||||||||||||||||||||||||
| Equity | 777 | 844 | 849 | 970 | 940 | 21.0 | (3.1) | |||||||||||||||||||||||||||||||||||||
| Fixed-Income | 122 | 128 | 131 | 135 | 134 | 9.8 | (0.7) | |||||||||||||||||||||||||||||||||||||
| Multi-Asset | — | 1 | 1 | 1 | 1 | nm | nm | |||||||||||||||||||||||||||||||||||||
| Total Exchange-Traded Funds | $ | 968 | $ | 1,046 | $ | 1,050 | $ | 1,178 | $ | 1,159 | 19.7 | (1.6) | ||||||||||||||||||||||||||||||||
(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. | ||||||||||||||||||||||||||||||||||||||||||||
nm Denotes not meaningful | ||||||||||||||||||||||||||||||||||||||||||||
11
| STATE STREET CORPORATION | |||||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | |||||||||||||||||||||||||||||||||||||||||
| INDUSTRY FLOW DATA BY ASSET CLASS | |||||||||||||||||||||||||||||||||||||||||
| (Dollars in billions) | Quarters | ||||||||||||||||||||||||||||||||||||||||
| 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | |||||||||||||||||||||||||||||||||||||
North America - (US Domiciled) Morningstar Direct Market Data(1)(2) | |||||||||||||||||||||||||||||||||||||||||
Long Term Funds(3) | $ | 165.2 | $ | 195.7 | $ | 149.8 | $ | 101.7 | $ | (65.6) | |||||||||||||||||||||||||||||||
| Money Market | 156.4 | 33.1 | 15.2 | 200.8 | (133.7) | ||||||||||||||||||||||||||||||||||||
| ETF | 148.4 | 122.6 | 77.1 | 156.5 | 181.2 | ||||||||||||||||||||||||||||||||||||
| Total Flows | $ | 470.0 | $ | 351.4 | $ | 242.1 | $ | 459.0 | $ | (18.1) | |||||||||||||||||||||||||||||||
EMEA-Morningstar Direct Market Data(1)(4) | |||||||||||||||||||||||||||||||||||||||||
Long Term Funds(3) | $ | 237.0 | $ | 225.8 | $ | 192.1 | $ | 154.6 | $ | 76.1 | |||||||||||||||||||||||||||||||
| Money Market | (91.0) | (9.8) | (4.3) | 109.7 | (70.6) | ||||||||||||||||||||||||||||||||||||
| ETF | 54.2 | 51.1 | 36.8 | 34.7 | 47.0 | ||||||||||||||||||||||||||||||||||||
| Total Flows | $ | 200.2 | $ | 267.1 | $ | 224.6 | $ | 299.0 | $ | 52.5 | |||||||||||||||||||||||||||||||
(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 first quarter of 2022 data for North America (US domiciled) includes Morningstar actuals for January and February 2022 and Morningstar estimates for March 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 first quarter of 2022 data for Europe is on a rolling three month basis for December 2021 through February 2022, sourced by Morningstar. | |||||||||||||||||||||||||||||||||||||||||
12
| 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) | 1Q21 | 4Q21 | 1Q22 | 1Q22 vs. 1Q21 | 1Q22 vs. 4Q21 | 1Q21 | 4Q21 | 1Q22 | 1Q22 vs. 1Q21 | 1Q22 vs. 4Q21 | 1Q21 | 4Q21 | 1Q22 | 1Q22 vs. 1Q21 | 1Q22 vs. 4Q21 | 1Q21 | 4Q21 | 1Q22 | 1Q22 vs. 1Q21 | 1Q22 vs. 4Q21 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Servicing fees | $ | 1,369 | $ | 1,377 | $ | 1,368 | (0.1) | % | (0.7) | % | $ | — | $ | — | $ | — | — | % | — | % | $ | — | $ | — | $ | — | — | % | — | % | $ | 1,369 | $ | 1,377 | $ | 1,368 | (0.1) | % | (0.7) | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Management fees | — | — | — | — | — | 493 | 530 | 520 | 5.5 | (1.9) | — | — | — | — | — | 493 | 530 | 520 | 5.5 | (1.9) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign exchange trading services | 333 | 280 | 342 | 2.7 | 22.1 | 13 | 20 | 17 | 30.8 | (15.0) | — | — | — | — | — | 346 | 300 | 359 | 3.8 | 19.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Securities finance | 95 | 98 | 93 | (2.1) | (5.1) | 4 | 4 | 3 | (25.0) | (25.0) | — | — | — | — | — | 99 | 102 | 96 | (3.0) | (5.9) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Software and processing fees | 160 | 187 | 201 | 25.6 | 7.5 | — | — | — | nm | nm | — | — | — | — | — | 160 | 187 | 201 | 25.6 | 7.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other fee revenue | 14 | 14 | 46 | nm | nm | 2 | 1 | (17) | nm | nm | — | — | — | — | — | 16 | 15 | 29 | 81.3 | 93.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total fee revenue | 1,971 | 1,956 | 2,050 | 4.0 | 4.8 | 512 | 555 | 523 | 2.1 | (5.8) | — | — | — | — | — | 2,483 | 2,511 | 2,573 | 3.6 | 2.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | 473 | 487 | 509 | 7.6 | 4.5 | (6) | (3) | — | nm | nm | — | — | — | — | — | 467 | 484 | 509 | 9.0 | 5.2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total other income | — | — | (1) | nm | nm | — | — | — | — | — | — | 58 | — | — | nm | — | 58 | (1) | nm | nm | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | 2,444 | 2,443 | 2,558 | 4.7 | 4.7 | 506 | 552 | 523 | 3.4 | (5.3) | — | 58 | — | — | nm | 2,950 | 3,053 | 3,081 | 4.4 | 0.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Provision for credit losses | (9) | (7) | — | nm | nm | — | — | — | — | — | — | — | — | — | — | (9) | (7) | — | nm | nm | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total expenses | 1,879 | 1,793 | 1,925 | 2.4 | 7.4 | 397 | 363 | 389 | (2.0) | 7.2 | 56 | 174 | 13 | nm | nm | 2,332 | 2,330 | 2,327 | (0.2) | (0.1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income before income tax expense | $ | 574 | $ | 657 | $ | 633 | 10.3 | (3.7) | $ | 109 | $ | 189 | $ | 134 | 22.9 | (29.1) | $ | (56) | $ | (116) | $ | (13) | nm | nm | $ | 627 | $ | 730 | $ | 754 | 20.3 | 3.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pre-tax margin | 23.5 | % | 26.9 | % | 24.7 | % | 120 | (220) | bps | 21.5 | % | 34.2 | % | 25.6 | % | 410 | (860) | bps | 21.3 | % | 23.9 | % | 24.5 | % | 320 | 60 | bps | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) Represents costs incurred that are not allocated to a specific line of business, including certain severance and restructuring costs, employee costs, acquisition costs and certain provisions for legal contingencies. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
nm Denotes not meaningful | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
13
| STATE STREET CORPORATION | |||||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | |||||||||||||||||||||||||||||||||||||||||||||||
| ALLOWANCE FOR CREDIT LOSSES | |||||||||||||||||||||||||||||||||||||||||||||||
| Quarters | % Change | ||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 1Q22 vs. 1Q21 | 1Q22 vs. 4Q21 | ||||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses: | |||||||||||||||||||||||||||||||||||||||||||||||
| Beginning balance | $ | 148 | $ | 135 | $ | 121 | $ | 117 | $ | 108 | (27.0) | % | (7.7) | % | |||||||||||||||||||||||||||||||||
Provision for credit losses (funded commitments) | — | (19) | (3) | (7) | — | — | nm | ||||||||||||||||||||||||||||||||||||||||
Provision for credit losses (unfunded commitments) | (7) | 4 | 1 | — | — | nm | — | ||||||||||||||||||||||||||||||||||||||||
Provision for credit losses (investment securities and all other) | (2) | — | — | — | — | nm | — | ||||||||||||||||||||||||||||||||||||||||
| Total provision | (9) | (15) | (2) | (7) | — | nm | nm | ||||||||||||||||||||||||||||||||||||||||
| Charge-offs | — | (1) | (1) | — | (1) | nm | nm | ||||||||||||||||||||||||||||||||||||||||
Other(1) | (4) | 2 | (1) | (2) | — | nm | nm | ||||||||||||||||||||||||||||||||||||||||
Ending balance(2) | $ | 135 | $ | 121 | $ | 117 | $ | 108 | $ | 107 | (20.7) | (0.9) | |||||||||||||||||||||||||||||||||||
| Allowance for credit losses: | |||||||||||||||||||||||||||||||||||||||||||||||
| Loans | $ | 118 | $ | 100 | $ | 95 | $ | 87 | $ | 86 | (27.1) | (1.1) | |||||||||||||||||||||||||||||||||||
| Investment securities | 2 | 2 | 2 | 2 | 2 | — | — | ||||||||||||||||||||||||||||||||||||||||
| Unfunded (off-balance sheet) commitments | 15 | 19 | 20 | 19 | 19 | 26.7 | — | ||||||||||||||||||||||||||||||||||||||||
| All other | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Ending balance(2) | $ | 135 | $ | 121 | $ | 117 | $ | 108 | $ | 107 | (20.7) | (0.9) | |||||||||||||||||||||||||||||||||||
(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 | |||||||||||||||||||||||||||||||||||||||||||||||
14
| 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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 1Q22 vs. 1Q21 | 1Q22 vs. 4Q21 | ||||||||||||||||||||||||||||||||||||||||||||||
| Fee Revenue: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total fee revenue, GAAP-basis | $ | 2,483 | $ | 2,514 | $ | 2,504 | $ | 2,511 | $ | 2,573 | 3.6 | % | 2.5 | % | |||||||||||||||||||||||||||||||||||||||
| Total fee revenue, excluding notable items | $ | 2,483 | $ | 2,514 | $ | 2,504 | $ | 2,511 | $ | 2,573 | 3.6 | 2.5 | |||||||||||||||||||||||||||||||||||||||||
| Total Revenue: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue, GAAP-basis | $ | 2,950 | $ | 3,034 | $ | 2,990 | $ | 3,053 | $ | 3,081 | 4.4 | % | 0.9 | % | |||||||||||||||||||||||||||||||||||||||
Less: total other income(1) | — | (53) | — | (58) | — | — | nm | ||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue, excluding notable items | $ | 2,950 | $ | 2,981 | $ | 2,990 | $ | 2,995 | $ | 3,081 | 4.4 | 2.9 | |||||||||||||||||||||||||||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total expenses, GAAP-basis | $ | 2,332 | $ | 2,111 | $ | 2,116 | $ | 2,330 | $ | 2,327 | (0.2) | % | (0.1) | % | |||||||||||||||||||||||||||||||||||||||
| Less: Notable expense items: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition and restructuring costs(2) | (10) | (11) | (18) | (26) | (9) | (10.0) | (65.4) | ||||||||||||||||||||||||||||||||||||||||||||||
| Compensation and employee benefits | — | — | — | 32 | — | — | nm | ||||||||||||||||||||||||||||||||||||||||||||||
| Occupancy | — | — | — | (29) | — | — | nm | ||||||||||||||||||||||||||||||||||||||||||||||
| Repositioning (charges) / release | — | — | — | 3 | — | — | nm | ||||||||||||||||||||||||||||||||||||||||||||||
Deferred incentive compensation expense acceleration(3) | — | — | — | (147) | — | — | nm | ||||||||||||||||||||||||||||||||||||||||||||||
| Legal and other | (29) | 11 | — | — | — | nm | — | ||||||||||||||||||||||||||||||||||||||||||||||
Total expenses, excluding notable items | 2,293 | $ | 2,111 | $ | 2,098 | $ | 2,160 | $ | 2,318 | 1.1 | 7.3 | ||||||||||||||||||||||||||||||||||||||||||
| Seasonal expenses | (176) | — | — | — | (208) | 18.2 | nm | ||||||||||||||||||||||||||||||||||||||||||||||
| Total expenses, excluding notable items and seasonal expenses | $ | 2,117 | $ | 2,111 | $ | 2,098 | $ | 2,160 | $ | 2,110 | (0.3) | (2.3) | |||||||||||||||||||||||||||||||||||||||||
| Fee Operating Leverage, GAAP-Basis: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total fee revenue, GAAP-basis | $ | 2,483 | $ | 2,514 | $ | 2,504 | $ | 2,511 | $ | 2,573 | 3.6 | % | 2.5 | % | |||||||||||||||||||||||||||||||||||||||
| Total expenses, GAAP-basis | 2,332 | 2,111 | 2,116 | 2,330 | 2,327 | (0.2) | (0.1) | ||||||||||||||||||||||||||||||||||||||||||||||
| Fee operating leverage, GAAP-basis | 380 | bps | 260 | 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 | 3.6 | % | 2.5 | % | |||||||||||||||||||||||||||||||||||||||
| Total expenses, excluding notable items (as reconciled above) | 2,293 | 2,111 | 2,098 | 2,160 | 2,318 | 1.1 | 7.3 | ||||||||||||||||||||||||||||||||||||||||||||||
| Fee operating leverage, excluding notable items | 250 | bps | (480) | bps | |||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Leverage, GAAP-Basis: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue, GAAP-basis | $ | 2,950 | $ | 3,034 | $ | 2,990 | $ | 3,053 | $ | 3,081 | 4.4 | % | 0.9 | % | |||||||||||||||||||||||||||||||||||||||
| Total expenses, GAAP-basis | 2,332 | 2,111 | 2,116 | 2,330 | 2,327 | (0.2) | (0.1) | ||||||||||||||||||||||||||||||||||||||||||||||
| Operating leverage, GAAP-basis | 460 | bps | 100 | bps | |||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Leverage, excluding notable items: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue, excluding notable items (as reconciled above) | $ | 2,950 | $ | 2,981 | $ | 2,990 | $ | 2,995 | $ | 3,081 | 4.4 | % | 2.9 | % | |||||||||||||||||||||||||||||||||||||||
| Total expenses, excluding notable items (as reconciled above) | 2,293 | 2,111 | 2,098 | 2,160 | 2,318 | 1.1 | 7.3 | ||||||||||||||||||||||||||||||||||||||||||||||
| Operating leverage, excluding notable items | 330 | bps | (440) | bps | |||||||||||||||||||||||||||||||||||||||||||||||||
15
| STATE STREET CORPORATION | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| RECONCILIATIONS OF NON-GAAP FINANCIAL INFORMATION (Continued) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarters | % Change | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions, except earnings per share, or where otherwise noted) | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 1Q22 vs. 1Q21 | 1Q22 vs. 4Q21 | ||||||||||||||||||||||||||||||||||||||||||||||
| Net Income : | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Income GAAP-basis | $ | 519 | $ | 763 | $ | 714 | $ | 697 | $ | 604 | 16.4 | % | (13.3) | % | |||||||||||||||||||||||||||||||||||||||
| Less: Notable items | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total other income(1) | — | (53) | — | (58) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition and restructuring costs(2) | 10 | 11 | 18 | 26 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Repositioning charges / (release) | — | — | — | (3) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Deferred incentive compensation expense acceleration(3) | — | — | — | 147 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Legal and other | 29 | (11) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Tax impact of notable items | (10) | 16 | (5) | (29) | (2) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net Income, excluding notable items | $ | 548 | $ | 726 | $ | 727 | $ | 780 | $ | 611 | 11.5 | (21.7) | |||||||||||||||||||||||||||||||||||||||||
| Net Income Available to Common Shareholders: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Income Available to Common Shareholders, GAAP-basis | $ | 489 | $ | 728 | $ | 693 | $ | 662 | $ | 583 | 19.2 | % | (11.9) | % | |||||||||||||||||||||||||||||||||||||||
| Less: Notable items | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total other income(1) | — | (53) | — | (58) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition and restructuring costs(2) | 10 | 11 | 18 | 26 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Repositioning charges / (release) | — | — | — | (3) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Deferred incentive compensation expense acceleration(3) | — | — | — | 147 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Legal and other | 29 | (11) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Preferred securities redemption(4) | 5 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Tax impact of notable items | (10) | 16 | (5) | (29) | (2) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net Income Available to Common Shareholders, excluding notable items | $ | 523 | $ | 691 | $ | 706 | $ | 745 | $ | 590 | 12.8 | (20.8) | |||||||||||||||||||||||||||||||||||||||||
| Diluted Earnings per Share: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Diluted earnings per share, GAAP-basis | $ | 1.37 | $ | 2.07 | $ | 1.96 | $ | 1.78 | $ | 1.57 | 14.6 | % | (11.8) | % | |||||||||||||||||||||||||||||||||||||||
| Less: Notable items | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total other income(1) | — | (0.10) | — | (0.11) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition and restructuring costs(2) | 0.02 | 0.02 | 0.04 | 0.05 | 0.02 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Repositioning charges / (release) | — | — | — | (0.01) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Deferred incentive compensation expense acceleration(3) | — | — | — | 0.29 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Legal and other | 0.06 | (0.02) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Preferred securities redemption(4) | 0.02 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Diluted earnings per share, excluding notable items | $ | 1.47 | $ | 1.97 | $ | 2.00 | $ | 2.00 | $ | 1.59 | 8.2 | (20.5) | |||||||||||||||||||||||||||||||||||||||||
| Pre-tax Margin: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pre-tax margin, GAAP-basis | 21.3 | % | 30.9 | % | 29.3 | % | 23.9 | % | 24.5% | 320 | bps | 60 | bps | ||||||||||||||||||||||||||||||||||||||||
| Less: Notable items | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total other income(1) | — | (1.2) | — | (1.4) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition and restructuring costs(2) | 0.3 | 0.4 | 0.6 | 0.8 | 0.3 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Repositioning charges | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Deferred incentive compensation expense acceleration(3) | — | — | — | 4.8 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Legal and other | 1.0 | (0.4) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Pre-tax margin, excluding notable items | 22.6% | 29.7% | 29.9% | 28.1% | 24.8% | 220 | (330) | ||||||||||||||||||||||||||||||||||||||||||||||
16
| STATE STREET CORPORATION | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| RECONCILIATIONS OF NON-GAAP FINANCIAL INFORMATION (Continued) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarters | % Change | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions, except earnings per share, or where otherwise noted) | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 1Q22 vs. 1Q21 | 1Q22 vs. 4Q21 | ||||||||||||||||||||||||||||||||||||||||||||||
| Return on Average Common Equity: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Return on average common equity, GAAP-basis | 8.4 | % | 12.6 | % | 11.6 | % | 10.3 | % | 9.5 | % | 110 | bps | (80) | bps | |||||||||||||||||||||||||||||||||||||||
| Less: Notable items | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total other income(1) | — | (1.0) | — | (0.9) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition and restructuring costs(2) | 0.2 | 0.2 | 0.3 | 0.4 | 0.2 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Repositioning charges | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Deferred incentive compensation expense acceleration(3) | — | — | — | 2.3 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Legal and other | 0.5 | (0.2) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Preferred securities redemption(4) | 0.1 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Tax impact of notable items | (0.2) | 0.3 | (0.1) | (0.5) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Return on average common equity, excluding notable items | 9.0% | 11.9% | 11.8% | 11.6% | 9.7% | 70 | (190) | ||||||||||||||||||||||||||||||||||||||||||||||
(1) 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) Acquisition and restructuring costs of approximately $9 million in 1Q22, consisting of acquisition costs primarily related to BBH Investor Services. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(3) 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(4) 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 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
17
| STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||
| RECONCILIATION OF PRE-TAX MARGIN EXCLUDING NOTABLE ITEMS | ||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2018(1) | 2019 | 2020 | 2021 | ||||||||||||||||||||||||||||
| Total revenue: | ||||||||||||||||||||||||||||||||
| Total revenue, GAAP-basis | $ | 12,131 | $ | 11,756 | $ | 11,703 | $ | 12,027 | ||||||||||||||||||||||||
| Less: Total other income | — | (44) | — | (111) | ||||||||||||||||||||||||||||
| Add: Legal and other | 8 | — | — | — | ||||||||||||||||||||||||||||
| Total revenue, excluding notable items | 12,139 | 11,712 | 11,703 | 11,916 | ||||||||||||||||||||||||||||
| Provision for credit losses | 15 | 10 | 88 | (33) | ||||||||||||||||||||||||||||
| Total expenses: | ||||||||||||||||||||||||||||||||
| Total expenses, GAAP-basis | 9,015 | 9,034 | 8,716 | 8,889 | ||||||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||
| Acquisition and restructuring costs | (24) | (77) | (50) | (65) | ||||||||||||||||||||||||||||
| Deferred incentive compensation expense acceleration | — | — | — | (147) | ||||||||||||||||||||||||||||
| Legal and other | (42) | (172) | 9 | (18) | ||||||||||||||||||||||||||||
Repositioning (charges) / release(1) | (324) | (110) | (133) | 3 | ||||||||||||||||||||||||||||
| Total expenses, excluding notable items | 8,625 | 8,675 | 8,542 | 8,662 | ||||||||||||||||||||||||||||
| Income before income tax expense, excluding notable items | $ | 3,499 | $ | 3,027 | $ | 3,073 | $ | 3,287 | ||||||||||||||||||||||||
| Income before income tax expense, GAAP-basis | $ | 3,101 | $ | 2,712 | $ | 2,899 | $ | 3,171 | ||||||||||||||||||||||||
| Pre-tax margin, excluding notable items | 28.8 | % | 25.8 | % | 26.3 | % | 27.6 | % | ||||||||||||||||||||||||
| Pre-tax margin, GAAP-basis | 25.6 | 23.1 | 24.8 | 26.4 | ||||||||||||||||||||||||||||
(1) Includes charges in 2018 that were previously disclosed as "Business exit: Channel Islands". | ||||||||||||||||||||||||||||||||
18
| STATE STREET CORPORATION | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RECONCILIATIONS OF CONSTANT CURRENCY FX IMPACTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reported | Currency Translation Impact | Excluding Currency Impact | % Change Constant Currency | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 1Q21 | 4Q21 | 1Q22 | 1Q22 vs. 1Q21 | 1Q22 vs. 4Q21 | 1Q22 vs. 1Q21 | 1Q22 vs. 4Q21 | 1Q22 vs. 1Q21 | 1Q22 vs. 4Q21 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| GAAP-Basis Results: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fee revenue: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Back office servicing fees | $ | 1,266 | $ | 1,272 | $ | 1,268 | $ | (21) | $ | (4) | $ | 1,289 | $ | 1,272 | 1.8 | % | — | % | |||||||||||||||||||||||||||||||||||||||||
| Middle office services | 103 | 105 | 100 | (1) | — | 101 | 100 | (1.9) | (4.8) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Servicing fees | 1,369 | 1,377 | 1,368 | (22) | (4) | 1,390 | 1,372 | 1.5 | (0.4) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Management fees | 493 | 530 | 520 | (5) | (2) | 525 | 522 | 6.5 | (1.5) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign exchange trading services | 346 | 300 | 359 | — | — | 359 | 359 | 3.8 | 19.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Securities finance | 99 | 102 | 96 | — | — | 96 | 96 | (3.0) | (5.9) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Front office software and data | 96 | 124 | 138 | (1) | — | 139 | 138 | 44.8 | 11.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Lending related and other fees | 64 | 63 | 63 | — | — | 63 | 63 | (1.6) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Software and processing fees | 160 | 187 | 201 | (1) | — | 202 | 201 | 26.3 | 7.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other fee revenue | 16 | 15 | 29 | — | — | 29 | 29 | 81.3 | 93.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total fee revenue | 2,483 | 2,511 | 2,573 | (28) | (6) | 2,601 | 2,579 | 4.8 | 2.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | 467 | 484 | 509 | 1 | 1 | 508 | 508 | 8.8 | 5.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total other income | — | 58 | (1) | — | — | (1) | (1) | nm | nm | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | $ | 2,950 | $ | 3,053 | $ | 3,081 | $ | (27) | $ | (5) | $ | 3,108 | $ | 3,086 | 5.4 | 1.1 | |||||||||||||||||||||||||||||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Compensation and employee benefits | $ | 1,242 | $ | 1,181 | $ | 1,232 | $ | (15) | $ | (4) | $ | 1,247 | $ | 1,236 | 0.4 | 4.7 | |||||||||||||||||||||||||||||||||||||||||||
| Information systems and communications | 421 | 436 | 423 | (2) | (1) | 425 | 424 | 1.0 | (2.8) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Transaction processing services | 270 | 238 | 264 | (3) | (1) | 267 | 265 | (1.1) | 11.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Occupancy | 109 | 133 | 95 | (1) | — | 96 | 95 | (11.9) | (28.6) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition and restructuring costs | 10 | 26 | 9 | (1) | — | 10 | 9 | — | (65.4) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of other intangible assets | 58 | 62 | 61 | — | — | 61 | 61 | 5.2 | (1.6) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 222 | 254 | 243 | (3) | (1) | 246 | 244 | 10.8 | (3.9) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total expenses | $ | 2,332 | $ | 2,330 | $ | 2,327 | $ | (25) | $ | (7) | $ | 2,352 | $ | 2,334 | 0.9 | 0.2 | |||||||||||||||||||||||||||||||||||||||||||
| Total expenses, excluding notable items - Non-GAAP | $ | 2,293 | $ | 2,160 | $ | 2,318 | $ | (24) | $ | (7) | $ | 2,342 | $ | 2,325 | 2.1 | 7.6 | |||||||||||||||||||||||||||||||||||||||||||
nm Denotes not meaningful | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
19
| 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 | |||||||||||||||||||||||||||||||||
| Average consolidated total assets | $ | 296,328 | $ | 308,195 | $ | 291,459 | $ | 303,007 | $ | 295,010 | ||||||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||||||||
| Average goodwill | 7,662 | 7,652 | 7,621 | 7,628 | 7,599 | |||||||||||||||||||||||||||||||||
| Average other intangible assets | 1,798 | 1,987 | 1,901 | 1,850 | 1,782 | |||||||||||||||||||||||||||||||||
| Average cash balances held at central banks in excess of required reserves | 92,207 | 97,257 | 77,207 | 83,931 | 73,339 | |||||||||||||||||||||||||||||||||
| Plus related deferred tax liabilities | 489 | 490 | 495 | 499 | 499 | |||||||||||||||||||||||||||||||||
| Average tangible assets | A | $ | 195,150 | $ | 201,789 | $ | 205,225 | $ | 210,097 | $ | 212,789 | |||||||||||||||||||||||||||
| Consolidated average common shareholders' equity | $ | 23,583 | $ | 23,252 | $ | 23,791 | $ | 25,393 | $ | 24,791 | ||||||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||||||||
| Average goodwill | 7,662 | 7,652 | 7,621 | 7,628 | 7,599 | |||||||||||||||||||||||||||||||||
| Average other intangible assets | 1,798 | 1,987 | 1,901 | 1,850 | 1,782 | |||||||||||||||||||||||||||||||||
| Adjusted average equity | 14,123 | 13,613 | 14,269 | 15,915 | 15,410 | |||||||||||||||||||||||||||||||||
| Plus related deferred tax liabilities | 489 | 490 | 495 | 499 | 499 | |||||||||||||||||||||||||||||||||
| Average tangible common equity | B | $ | 14,612 | $ | 14,103 | $ | 14,764 | $ | 16,414 | $ | 15,909 | |||||||||||||||||||||||||||
| Average tangible common equity ratio | B/A | 7.5 | % | 7.0 | % | 7.2 | % | 7.8 | % | 7.5 | % | |||||||||||||||||||||||||||
| GAAP-basis: | ||||||||||||||||||||||||||||||||||||||
| Net income available to common shareholders | $ | 489 | $ | 728 | $ | 693 | $ | 662 | $ | 583 | ||||||||||||||||||||||||||||
| Return on tangible common equity - Non-GAAP | 13.4 | % | 17.3 | % | 17.3 | % | 15.7 | % | 14.7 | % | ||||||||||||||||||||||||||||
20
| 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 | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RATIOS: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common equity tier 1 capital | 11.9 | % | 11.8 | % | 13.8 | % | 14.3 | % | 13.1 | % | 10.8 | % | 11.2 | % | 13.5 | % | 14.3 | % | 11.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 capital | 13.6 | 13.5 | 15.5 | 16.1 | 14.8 | 12.4 | 12.9 | 15.2 | 16.1 | 13.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total capital | 15.2 | 14.8 | 16.9 | 17.5 | 16.2 | 14.0 | 14.3 | 16.6 | 17.6 | 14.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 leverage | 5.4 | 5.2 | 6.3 | 6.1 | 5.9 | 5.4 | 5.2 | 6.3 | 6.1 | 5.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Supplementary leverage ratio | 7.2 | 6.7 | 7.5 | 7.4 | 6.7 | 7.2 | 6.7 | 7.5 | 7.4 | 6.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Supporting Calculations: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common equity tier 1 capital | $ | 13,443 | $ | 13,691 | $ | 15,831 | $ | 15,947 | $ | 15,026 | $ | 13,443 | $ | 13,691 | $ | 15,831 | $ | 15,947 | $ | 15,026 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total risk-weighted assets | 113,051 | 116,458 | 114,878 | 111,398 | 115,029 | 124,324 | 121,922 | 117,229 | 111,667 | 126,725 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common equity tier 1 risk-based capital ratio | 11.9 | % | 11.8 | % | 13.8 | % | 14.3 | % | 13.1 | % | 10.8 | % | 11.2 | % | 13.5 | % | 14.3 | % | 11.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 capital | $ | 15,419 | $ | 15,667 | $ | 17,807 | $ | 17,923 | $ | 17,002 | $ | 15,419 | $ | 15,667 | $ | 17,807 | $ | 17,923 | $ | 17,002 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total risk-weighted assets | 113,051 | 116,458 | 114,878 | 111,398 | 115,029 | 124,324 | 121,922 | 117,229 | 111,667 | 126,725 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 risk-based capital ratio | 13.6 | % | 13.5 | % | 15.5 | % | 16.1 | % | 14.8 | % | 12.4 | % | 12.9 | % | 15.2 | % | 16.1 | % | 13.4 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total capital | $ | 17,220 | $ | 17,259 | $ | 19,397 | $ | 19,511 | $ | 18,588 | $ | 17,355 | $ | 17,379 | $ | 19,514 | $ | 19,619 | $ | 18,696 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total risk-weighted assets | 113,051 | 116,458 | 114,878 | 111,398 | 115,029 | 124,324 | 121,922 | 117,229 | 111,667 | 126,725 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total risk-based capital ratio | 15.2 | % | 14.8 | % | 16.9 | % | 17.5 | % | 16.2 | % | 14.0 | % | 14.3 | % | 16.6 | % | 17.6 | % | 14.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 capital | $ | 15,419 | $ | 15,667 | $ | 17,807 | $ | 17,923 | $ | 17,002 | $ | 15,419 | $ | 15,667 | $ | 17,807 | $ | 17,923 | $ | 17,002 | ||||||||||||||||||||||||||||||||||||||||||||||||
Leverage exposure(3) | 285,480 | 298,682 | 281,952 | 293,567 | 285,788 | 285,480 | 298,682 | 281,952 | 293,567 | 285,788 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 leverage ratio | 5.4 | % | 5.2 | % | 6.3 | % | 6.1 | % | 5.9 | % | 5.4 | % | 5.2 | % | 6.3 | % | 6.1 | % | 5.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 capital | $ | 15,419 | $ | 15,667 | $ | 17,807 | $ | 17,923 | $ | 17,002 | $ | 15,419 | $ | 15,667 | $ | 17,807 | $ | 17,923 | $ | 17,002 | ||||||||||||||||||||||||||||||||||||||||||||||||
| On-and off-balance sheet leverage exposure | 223,451 | 241,743 | 246,609 | 251,879 | 264,616 | 223,451 | 241,743 | 246,609 | 251,879 | 264,616 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Less: regulatory deductions | (9,586) | (9,500) | (9,507) | (9,440) | (9,222) | (9,586) | (9,500) | (9,507) | (9,440) | (9,222) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total leverage exposure for SLR | 213,865 | 232,243 | 237,102 | 242,439 | 255,394 | 213,865 | 232,243 | 237,102 | 242,439 | 255,394 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplementary leverage ratio(4) | 7.2 | % | 6.7 | % | 7.5 | % | 7.4 | % | 6.7 | % | 7.2 | % | 6.7 | % | 7.5 | % | 7.4 | % | 6.7 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
(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 March 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 March 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
21
April 14, 2022 (NYSE: STT) 1Q 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 first quarter 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 Financial performance 1Q22 highlights All comparisons are to corresponding prior year periods unless noted otherwise • ROE of 9.5% and a CET1 ratio of 11.9% at quarter end2 • Returned $209M to shareholders through declared common dividends of $0.57 per share • Previously announced BBH Investment Services acquisition regulatory review is ongoing Balance sheet and capital • EPS of $1.57, up 15%; $1.59 ex-notable items, up 8%A • Total revenue of $3.1B, up 4% ‒ Fee revenue up 4%, driven by higher Management fees, FX trading, and Front office software ‒ NII up 9% reflecting growth in investment portfolio and loan balances, as well as rising interest rates across the curve • Total expenses of $2.3B, flat YoY; up 1% ex-notablesA ‒ Pre-tax margin up 3%pts; 2%pts ex-notablesA ‒ Positive total and fee operating leverage of 5%pts and 4%pts, respectively • AUC/A of $41.7T at quarter-end; Servicing wins of $302B and business yet to be installed of $2.9T at quarter-end1 • Momentum across Front office software and Middle office services • AUM of $4.0T at quarter-end, with strong quarterly net inflows of $51B1 • State Street Digital announced a collaboration with Copper.co to develop an institutional grade digital custody offering Business momentum 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 16. • Global inflationary environment driven by supply chain disruptions, broad-based pent-up demand, and pandemic related fiscal policies • Heightened equity market volatility reflecting inflation, interest rates, the war in Ukraine and other macro factors • Significantly higher interest rates, particularly in the belly of the curve with 5-Year Treasuries up ~120bps QoQ, driven by actual and anticipated central bank actions Macro environment
4 1Q21 4Q21 1Q22 4Q21 1Q21 Revenue: Back office servicing fees $1,266 $1,272 $1,268 (0)% 0% 2% Middle office services 103 105 100 (5) (3) (2) Servicing fees 1,369 1,377 1,368 (1) (0) 2 Management fees 493 530 520 (2) 5 6 Foreign exchange trading services 346 300 359 20 4 4 Securities finance 99 102 96 (6) (3) (3) Front office software and data 96 124 138 11 44 45 Lending related and other fees 64 63 63 - (2) (2) Software and processing fees 160 187 201 7 26 26 Other fee revenue 16 15 29 93 81 81 Total fee revenue 2,483 2,511 2,573 2 4 5 Net interest income 467 484 509 5 9 9 Other income - 58 (1) nm nm Total revenue $2,950 $3,053 $3,081 1% 4% 5% Provision for credit losses ($9) ($7) - nm nm Total expenses $2,332 $2,330 $2,327 (0)% (0)% 1% Net income $519 $697 $604 (13)% 16% Diluted earnings per share $1.37 $1.78 $1.57 (12)% 15% Return on average common equity 8.4% 10.3% 9.5% (0.8)%pts 1.1%pts Pre-tax margin 21.3% 23.9% 24.5% 0.6%pts 3.2%pts Tax rate 17.2% 4.6% 19.9% 15.3%pts 2.7%pts Ex-notable items, non-GAAP A: Total revenue $2,950 $2,995 $3,081 3% 4% 5% Total expenses $2,293 $2,160 $2,318 7% 1% 2% EPS $1.47 $2.00 $1.59 (21)% 8% Pre-tax margin 22.6% 28.1% 24.8% (3.3)%pts 2.2%pts (GAAP, $M, except EPS data, or where otherwise noted) Quarters %∆ 1Q21 %∆ ex-currency translationA Summary of 1Q22 financial results A These are non-GAAP presentations; ex-currency translation percentage changes are in reference to the YoY quarterly comparison between 1Q22 and 1Q21 which excludes the impact of foreign currency translation; refer to the Appendix for a reconciliation of ex-notable items/currency translation and further explanations of non-GAAP measures. B Net repositioning release of $3M in 4Q21 included $32M in Compensation and employee benefits partially offset by Occupancy cost of $(29)M related to real estate footprint rationalization. C Gain on sale of $58M in 4Q21 included in Other income a one-time sale of Libor and Euribor based securities previously classified as HTM. D Legal and other costs of $29M in 1Q21 included $20M in Information systems and communications, $8M in Transaction processing and $1M in Other expenses. Notable Items 1Q21 4Q21 1Q22 Acquisition and restructuring costs ($10) ($26) ($9) Repositioning release / (charges) B - 3 - Deferred compensation expense acceleration - (147) - Gain on sale C - 58 - Legal and Other D (29) - - Total notable items (pre-tax) ($39) ($112) ($9) Preferred securities redemption (after-tax) (5) - - EPS impact ($0.10) ($0.22) ($0.02) ($M, except EPS data) Quarters
5 AUC/A and AUM levels, markets and flows performance AUC/A and AUM A Market indices3 • 4% increase from 1Q21 largely driven by: – Higher equity market levels, client flows, and net new business growth • (4)% decrease from 4Q21 primarily due to: – Lower market levels • 12% increase from 1Q21 mainly reflecting: – Higher market levels and net inflows • (3)% decrease from 4Q21 primarily due to: – Lower market levels partially offset by net inflows of $51B AUC/A ($T, as of period-end)1 AUM ($B, as of period-end)1 Select industry flows4 -3% -4% $40.3 $43.7 $41.7 1Q221Q21 4Q21 4Q21 $4,022 1Q21 1Q22 $4,138 $3,591 +4% +12% A Changes to AUC/A and AUM also reflect currency translation. B Line items may not sum to total due to rounding. Refer to the Appendix included with this presentation for endnotes 1 to 16. 4Q21 1Q21 EOP (5)% 14% Daily Avg (3) 15 EOP (7) (1) Daily Avg (4) 1 EOP (7) (13) Daily Avg (5) (13) (% change) 1Q22 vs S&P 500 MSCI EAFE MSCI EM Barclays Global Agg EOP (6) (6) 1Q21 4Q21 1Q22 Long Term Funds $165 $102 ($66) Money Market 156 201 (134) ETF 148 157 181 North America Total 470 459 (18) EMEA Total 200 299 53 ($B) Total flowsB
6 Servicing fees of $1,368M flat YoY and down (1)% QoQ; up 2% YoY and flat QoQ ex-FXA • Flat YoY as higher client activity and flows, average equity market levels, and net new business were offset by normal pricing headwinds and the impact of currency translation • Down (1)% QoQ mainly due to seasonal pricing headwinds and lower average equity market levels, partially offset by higher client activity/adjustments Back office servicing fees of $1,268M flat YoY and QoQ (consistent with total servicing fees above); Middle office services of $100M down (3)% YoY and (5)% QoQ primarily due to a partial transition from a legacy client and lower professional services fees Revenue: Servicing fees Servicing fees ($M) 1Q22 performance 1,266 1,290 1,289 1,272 1,268 3Q21 100103 1Q21 104 2Q21 105102 4Q21 1Q22 $1,369 $1,394 $1,391 $1,377 $1,368 $2,950 $3,034 $2,990 $3,053 $3,081 YoY +4% QoQ +1% Total revenue AUC/A wins $343 $1,187 $1,657 $332 $302 463 1,236 2,733 2,795 2,909 AUC/A to be installed AUC/A sales performance indicators ($B) 1 • Servicing fees were negatively impacted by currency translation when compared to 1Q21 and 4Q21 by $22M and $4M, respectively Investment Services business momentum 1 • 1Q22 net new business revenue growth YoY across key client segments including Asset Managers, Insurance and Private Markets • 1Q22 AUC/A wins of $302B driven by strategically important premium and preferred client segments – Includes $2.9T AUC/A of won but not yet installed AUC/A as of 1Q22 A This is a non-GAAP presentation; refer to the Appendix for a reconciliation of ex-notable items/currency translation and further explanations of non-GAAP measures. Refer to the Appendix included with this presentation for endnotes 1 to 16. Flat +2% ex-FX A -1% Back office servicing fees Middle office services Flat +2% ex-FX -3% -2% ex-FX YoY %
7 Revenue: Management fees Management fees ($M) 1Q22 performance Management fees of $520M up 5% YoY; down (2)% QoQ • Up 5% YoY primarily reflecting higher average equity market levels and ETF net inflows • Down (2)% QoQ largely due to lower average equity market levels, partially offset by lower fee waivers and net inflows AUM $3,591 $3,897 $3,862 $4,138 $4,022 39 83 (5) 79 51Net flows Performance indicators ($B) 1 • Management fees were negatively impacted by currency translation when compared to 1Q21 and 4Q21 by $5M and $2M, respectively -2% $520 2Q21 $504 4Q211Q21 3Q21 1Q22 $493 $526 $530 Investment Management business momentum • ETFs: 1Q22 Net inflows of $17B primarily from equity ETFs, including SPDR Low-Cost suite and US Sectors, as well as solid inflows into Gold ETF • Institutional: 1Q22 Net inflows of $14B driven by Fixed Income Index and continued momentum in our Target Date franchise • Cash: 1Q22 Net inflows of $20B; Fed rate hike in March 2022 mitigated the majority of Money Market fee waiver headwinds +5% $2,950 $3,034 $2,990 $3,053 $3,081 YoY +4% QoQ +1% Total revenue Refer to the Appendix included with this presentation for endnotes 1 to 16.
8 Revenue: Markets, Software and processing, and Other fee revenue Markets, Software & processing, and Other fees ($M) 1Q22 performance 160 211 180 187 201 99 109 106 102 96 346 286 279 300 359 4Q212Q21 16 1Q21 1510 22 3Q21 1Q22 $621 $616 $587 $604 $685 29 FX trading Securities finance Software & processing +4% -3% +26% YoY % • FX trading services of $359M – Up 4% YoY primarily reflecting higher FX volatility, partially offset by lower client FX volumes – Up 20% QoQ primarily reflecting higher FX volatility and client FX volumes • Securities finance of $96M – Down (3)% YoY mainly reflecting lower average Agency assets, partially offset by new business wins in Enhanced Custody – Down (6)% QoQ primarily driven by lower average Agency and Enhanced Custody balances • Software and processing fees of $201M – Up 26% YoY and 7% QoQ primarily driven by higher Front office software and data revenue associated with CRD Front office software and data of $138M up 44% YoY and 11% QoQ; Lending related and other fees of $63M down (2)% YoY and flat QoQ • Other fee revenue of $29M A – Up 81% YoY and 93% QoQ mainly reflecting fair value adjustments on equity investmentsOther fees +81% $2,950 $3,034 $2,990 $3,053 $3,081 Total revenue YoY +4% QoQ +1% A Other fee revenue primarily consists of income from equity method investments and certain tax-advantaged investments, as well as market-related adjustments.
9 Enterprise solutions enabled by State Street Alpha SM 60 66 66 70 70 18 19 21 16 2916 62 27 35 36 1Q22 $96 2Q211Q21 $148 3Q21 4Q21 $116 $124 $138 A Front office software and data revenue primarily includes revenue from CRD, Alpha Data Platform and Alpha Data Services. Includes Other revenue of $2M for each quarter from 1Q21 to 4Q21 and $3M in 1Q22; revenue line items may not sum to total due to rounding. Refer to the Appendix included with this presentation for endnotes 1 to 16. +11% +44% Front office software and data ($M)A Future growth driven by Front office, Middle office, and Alpha $2,950 $3,034 $2,990 $3,053 $3,081 Total revenue YoY +4% QoQ +1% Front office software and data of $138M up 44% YoY and 11% QoQ • Up 44% YoY primarily driven by higher CRD revenue from On-premises renewals, as well as higher software-enabled and professional services revenue • Up 11% QoQ largely driven by higher professional services revenue from CRD ($M) 1Q21 4Q21 1Q22 Front office metrics New bookings 6 $4 $11 $5 ARR 7 205 229 235 Uninstalled revenue backlog 8 65 98 93 Middle office metric Uninstalled revenue backlog 9 20 61 63 Alpha metrics # of mandate wins 3 1 - Live mandates to-date 4 10 11 • Middle office uninstalled revenue backlog more than tripled to $63M YoY • 11 out of 19 Alpha clients live as of the end of 1Q22 Professional services Software- enabled (incl. SaaS) 5 On-premises 5 27% YoY Growth
10 Revenue: Net interest income NII and NIM ($M)10 Average balance sheet highlights ($B)A Total average assets of $295B flat YoY and (3)% QoQ • Flat YoY as higher client deposits were offset by lower other liabilities • Down (3)% QoQ, largely driven by seasonally lower deposit balances A Line items are rounded. Refer to the Appendix included with this presentation for endnotes 1 to 16. NII of $509M up 9% YoY and 5% QoQ • Up 9% YoY primarily driven by growth in the investment portfolio and higher loan balances, as well as higher market interest rates • Up 5% QoQ mainly due to higher market interest rates and growth in the investment portfolio 1Q21 4Q21 1Q22 Total assets $296 $303 $295 Interest-earning assets 255 265 258 Loans 28 34 34 Investment portfolio 108 114 119 Duration 11 3.1 2.9 2.8 Total deposits $226 $240 $233 $2,950 $3,034 $2,990 $3,053 $3,081 YoY +4% QoQ +1% Total revenue NIM 10 (FTE, %) 0.75% 0.71% 0.76% 0.73% 0.80% $467 4Q21 $467 1Q21 2Q21 $487 3Q21 1Q22 $484 $509 +5% +9%
11 Expenses Expenses (Ex-notable items, non-GAAP, $M) A 1Q22 performance (Ex-notable items, non-GAAP)A $2,332 $2,330 $2,327 39,318 38,784 39,335 GAAP Expense Head- count 279 316 304 262 238 264 401 436 423 1,242 1,066 1,232 $2,160 $2,318$2,293 4Q211Q21 1Q22 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 1Q21 and 1Q22 include $176M and $208M, respectively, of seasonal expenses. Increase in seasonal expenses primarily driven by timing of deferrals. Refer to the Appendix included with this presentation for endnotes 1 to 16. Comp. & benefitsB Info. sys. Tran. processing Other 12 Occupancy • Total GAAP expenses were positively impacted by currency translation when compared to 1Q21 and 4Q21 by $25M and $7M, respectively Expenses of $2,318M up 1% YoY and up 7% QoQ; up 2% YoY and 8% QoQ ex-FXA • Compensation and employee benefits of $1,232M 13 – Down (1)% YoY primarily driven by lower headcount in high cost locations, partially offset by higher seasonal expenses B – Up 16% QoQ, primarily driven by seasonal expenses • Information systems and communications of $423M 13 – Up 5% YoY due to higher technology infrastructure investments – Down (3)% QoQ mainly reflecting timing of infrastructure and depreciation costs • Transaction processing services of $264M 13 – Up 1% YoY and 11% QoQ mainly due to higher sub-custody and broker fees, partially offset by vendor savings initiatives • Occupancy of $95M13 – Down (13)% YoY mainly due to footprint optimization – Down (9)% QoQ primarily due to footprint optimization as well as one- time maintenance and repair credits • Other of $304M13 – Up 9% YoY largely reflecting higher professional fees, partially offset by lower sub-advisory fees – Down (4)% QoQ primarily due to lower marketing spend and sub- advisory fees, partially offset by higher professional fees 95104109 YoY flat QoQ flat +1% +2% ex-FX A +7% YoY flat QoQ +1%
12 Capital ratios Capital ratios 2 (%, as of period-end) Capital highlights Capital ($B unless noted otherwise, capital metrics as of period-end) 1Q21 4Q21 1Q22 Standardized CET1 CET1 capital $13.4 $15.9 $15.0 Risk weighted assets 124 112 127 Tier 1 leverage Tier 1 capital 15.4 17.9 17.0 Leverage exposure 16 285 294 286 AOCI impact on Regulatory Capital A (0.5) (1.1) (2.4) CET1 (Standardized) Tier 1 Leverage 5.4% 5.2% 6.3% 6.1% 5.9% 2Q21 4Q211Q21 3Q21 1Q22 Target state Minimum ratio4.0% STT Target5.25-5.75% • 1Q22 quarter end standardized CET1 ratio of 11.9% decreased (2.4)%pts QoQ primarily reflecting lower AOCI due to the significant increase in rates across the curve, the implementation of SA-CCR as expected, as well as the temporary deployment of RWA capital for revenue generating activities • 1Q22 quarter end Tier 1 leverage ratio of 5.9% decreased (0.2)%pts QoQ primarily driven by lower AOCI • Returned $209M to shareholders in 1Q22 through declared common dividends of $0.57 per share 10.8% 11.2% 13.5% 14.3% 11.9% 4.5% 2.5% 1Q21 2Q21 3Q21 4Q21 1Q22 A AOCI impact on regulatory capital reflects GAAP AOCI of $(0.4)B, $(1.1)B and $(2.7)B as of March 31, 2021, December 31, 2021 and March 31, 2022, respectively, less $(0.06)B, $0.03B and $0.26B as of those same dates, respectively, related to unrealized (gains)/losses on cash flow hedges in which the hedged item is not reported at fair value. Refer to the Appendix included with this presentation for endnotes 1 to 16. SCB 15 Minimum ratio 8 .0 % Target state 10-11% G-SIB surcharge 14 STT Target 1.0%
13 Summary 1Q22 financial review • EPS of $1.57, up 15%; pre-tax margin of 24.5%, up 3%pts; ROE of 9.5%; generated positive total and fee operating leverage of 5%pts and 4%pts, respectively • EPS ex-notable items of $1.59, up 8%A – Fee revenue of $2.6B, up 4% primarily driven by higher Management fees, FX trading, and Front office software – NII of $0.5B, up 9% reflecting growth in investment portfolio and loan balances, as well as rising interest rates across the curve – Expenses ex-notables of $2.3B, up 1% as higher seasonal expenses and targeted business investments were partially offset by footprint optimization and productivity savingsA • Business momentum – Robust new business AUC/A wins of $302B; AUC/A yet to be installed of $2.9T at quarter-end1 – Continued momentum across Front office software and middle office services, with uninstalled revenue backlog at quarter-end of $93M8 and $63M9, respectively – $4.0T of AUM in 1Q22, with strong net inflows of $51B • Capital return – Returned $209M to shareholders through declared common dividends of $0.57 per share – Expect to delay restart of share repurchases due to AOCI marks related to higher interest rates 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 16. All comparisons are to corresponding prior year periods unless noted otherwise
14 Appendix 1Q22 line of business performance 15 Reconciliation of notable items 16 Reconciliation of constant currency impacts 17 Endnotes 18 Forward-looking statements 19 Non-GAAP measures 20 Definitions 21
15 2,050 State StreetB 1Q22 line of business performance Investment Servicing Total revenueA 473 509 1,971 , $2,558M 1Q21 1Q22 $2,444M Pre-tax income Fee revenue NII Pre-tax margin 23.5% 24.7% +1.2%pts YoY % ∆ +4% +8% +5% +10% Investment Management Total revenue 1Q221Q21 $506M $523M Pre-tax income Pre-tax margin 21.5% 25.6% +4.1%pts $134M 1Q21 1Q22 $109M YoY % ∆ +3% +23% Total revenue ex-notable itemsA, C 467 509 2,483 2,573 $2,950M 1Q221Q21 $3,081M Pre-tax income ex-notable itemsC Fee revenue NII Pre-tax margin ex-notable itemsC 22.6% 24.8% +2.2%pts YoY % ∆ +4% +9% +4% +15% A Total revenue also includes Other income of $(1)M in 1Q22. 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. $633M 1Q21 1Q22 $574M $763M 1Q221Q21 $666M
16 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 (Dollars in millions, unless noted otherwise) 1Q21 2Q21 3Q21 4Q21 1Q22 1Q22 vs. 1Q21 1Q22 vs. 4Q21 Total revenue, GAAP-basis 2,950 3,034 2,990 3,053 3,081 4.4% 0.9% Less: Other income (53) (58) Total revenue, excluding notable items 2,950 2,981 2,990 2,995 3,081 4.4% 2.9% Total expenses, GAAP basis 2,332 2,111 2,116 2,330 2,327 (0.2)% (0.1)% Less: Notable expense items: Repositioning charges: Compensation and employee benefits 32 Occupancy (29) Repositioning (charges) / release 3 Acquisition and restructuring costs (10) (11) (18) (26) (9) DVA Acceleration (147) Legal and other: Information systems and communications (20) Transaction processing services (8) Other (1) 11 Legal and other (29) 11 Total expenses, excluding notable items 2,293 2,111 2,098 2,160 2,318 1.1% 7.3% Seasonal expenses (176) (208) Total expenses, excluding notable items and seasonal expense items 2,117 2,111 2,098 2,160 2,110 (0.3)% (2.3)% Operating leverage, GAAP-basis (%pts)A 460 bps 100 bps Operating leverage, excluding notable items (%pts)B 330 (440) Pre-tax margin, GAAP-basis (%) 21.3% 30.9% 29.3% 23.9% 24.5% 320 60 Notable items as reconciled above (%) 1.3% (1.2%) 0.6% 4.2% 0.3% Pre-tax margin, excluding notable items (%) 22.6% 29.7% 29.9% 28.1% 24.8% 220 (330) Net income available to common shareholders, GAAP-basis 489 728 693 662 583 19.2% (11.9)% Notable items as reconciled above: pre-tax 39 (53) 18 112 9 Tax impact on notable items as reconciled above (10) 16 (5) (29) (2) Preferred securities cost 5 Net income available to common shareholders, excluding notable items 523 691 706 745 590 12.8% (20.8)% Diluted EPS, GAAP-basis 1.37 2.07 1.96 1.78 1.57 14.6% (11.8)% Notable items as reconciled above 0.10 (0.10) 0.04 0.22 0.02 Diluted EPS, excluding notable items 1.47 1.97 2.00 2.00 1.59 8.2% (20.5)% % Change
17 Reconciliation of constant currency impacts A Other includes Other expenses and Amortization of intangible assets. Reconciliation of Constant Currency FX Impacts (Dollars in millions) 1Q21 4Q21 1Q22 1Q22 vs. 1Q21 1Q22 vs. 4Q21 1Q22 vs. 1Q21 1Q22 vs. 4Q21 1Q22 vs. 1Q21 1Q22 vs. 4Q21 Non-GAAP basis Total revenue, excluding notable items $ 2,950 $ 2,995 $ 3,081 $ (27) $ (5) $ 3,108 $ 3,086 5.4% 3.0% Compensation and employee benefits, excluding notable items $ 1,242 $ 1,066 $ 1,232 $ (15) $ (4) $ 1,247 $ 1,236 0.4% 15.9% Information systems and communications, excluding notable items 401 436 423 (2) (1) 425 424 6.0% (2.8)% Transaction processing services, excluding notable items 262 238 264 (3) (1) 267 265 1.9% 11.3% Occupancy, excluding notable items 109 104 95 (1) - 96 95 (11.9)% (8.7)% Other expenses, excluding notable itemsA 279 316 304 (3) (1) 307 305 10.0% (3.5)% Total expenses, excluding notable items $ 2,293 $ 2,160 $ 2,318 $ (24) $ (7) $ 2,342 $ 2,325 2.1% 7.6% Reported Currency Translation Impact Excluding Currency Impact % Change Constant Currency
18 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. 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 1Q21 to 1Q22. Refer to the Addendum for descriptions of these ratios. March 31, 2022 capital ratios are presented as of quarter-end and are estimates. 3. The index names listed are service marks of their respective owners. 4. 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. 1Q22 data for North America (U.S. domiciled) includes Morningstar actuals for January and February 2022 and Morningstar estimates for March 2022. 1Q22 data for EMEA is on a rolling three month basis for December 2021 through February 2022. 5. 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. 6. Front office bookings represent signed annual recurring revenue contract values for CRD and Mercatus excluding bookings with affiliates, including SSGA. Front office revenue derived from affiliate agreements is eliminated in consolidation for financial reporting purposes. 7. Front office 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. 8. 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. 9. Represents expected annualized recurring revenue from signed client contracts that are scheduled to be largely installed over the next 24 months. It does not include professional services revenue or revenue from affiliates. 10. 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. 11. Duration as of period end and based on total investment portfolio. 12. Other includes Other expenses and Amortization of intangible assets. 13. Compensation and benefits expenses in 4Q21 included notable items related to repositioning benefits of $32M. 4Q21 also included notable items related to a deferred compensation expense acceleration of $147M. Excluding these notable items, 1Q22 adjusted Compensation and benefits of $1,232M was up 16% compared to 4Q21 adjusted Compensation and benefits of $1,066M. Information systems and communications expenses in 1Q21 included a notable item from legal and other costs of $20M. Excluding this notable item, 1Q22 adjusted Information systems and communications of $423M is up 5% compared to 1Q21 Information systems and communications of $401M. Transaction processing services expenses in 1Q21 included a notable item from legal and other costs of $8M. Excluding this notable item, 1Q22 adjusted Transaction processing services of $264M was up 1% compared to 1Q21 Transaction processing services of $262M. Occupancy expenses in 4Q21 included notable items related to repositioning charges of $29M. Excluding the notable item, 1Q22 adjusted Occupancy of $95 was down (9)% compared to 4Q21 adjusted Occupancy of $104M. Other expenses in 1Q22, 4Q21, and 1Q21 included notable items related to acquisition and restructuring costs of $9M, $26M, and $10M, respectively. Other expenses in 1Q21 also included a notable item from legal and other costs of $1M. Excluding all these notable items, 1Q22 Other expenses of $304M was down (4)% compared to 4Q21 adjusted Other expenses of $316M and up 9% compared to 1Q21 adjusted Other expenses of $279M. 14. Based on a calculation date of December 31, 2019, our G-SIB surcharge for 2021 is 1.0%. 15. The preliminary SCB of 2.5% effective on October 1, 2021 is calculated based upon the results of the CCAR 2021 exam. 16. Leverage exposure is equal to average consolidated assets less applicable Tier 1 leverage capital reductions.
19 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, proposed acquisition of Brown Brothers Harriman’s Investor Services business, dividend and stock purchase programs, governmental and regulatory initiatives and developments, expense reduction programs, new client business, and the business environment. Forward-looking statements are often, but not always, identified by such forward-looking terminology as “plan,” “expect,” “intend,” “objective,” “forecast,” “outlook,” “believe,” “priority,” “anticipate,” “estimate,” “seek,” “may,” “will,” “trend,” “target,” “strategy” and “goal,” or similar statements or variations of such terms. These statements are not guarantees of future performance, are inherently uncertain, are based on current assumptions that are difficult to predict and involve a number of risks and uncertainties. Therefore, actual outcomes and results may differ materially from what is expressed in those statements, and those statements should not be relied upon as representing our expectations or beliefs as of any 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: The consummation of our planned acquisition of the BBH Investor Services business is subject to the receipt of regulatory approvals and the satisfaction of other closing conditions, the failure or delay of which may prevent or delay the consummation of the acquisition; while we are evaluating potential modifications to the transaction that are intended to facilitate resolution of the bank regulatory review, there can be no assurance as to the timing or outcome of that review; Even if we successfully consummate our planned acquisition of the BBH Investor Services business, we may fail to realize some or all of the anticipated benefits of the transaction or the benefits may take longer to realize than expected; 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 or State Street Alpha, 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 involve costs and dependencies 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; and 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, resulting from the present conflict in Ukraine; 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 and currency declines, 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; and 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 capital and liquidity standards required as a result of capital stress testing; 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; and The transition away from LIBOR may result in additional 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 (and the conference call referenced herein) 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.
20 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”.
21 Definitions 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 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 EAFE Europe, Australia, and Far East EM Emerging markets EMEA Europe, Middle East and Africa EOP End of period EPS Earnings per share ETF Exchange-traded fund Fee operating leverage Rate of growth of total fee revenue less the rate of growth of total expenses, relative to the successive prior year period, as applicable 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 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 On-premises On-premises revenue as recognized in Front office software and data Total operating leverage Rate of growth of total revenue less the rate of growth of total expenses, relative to the successive 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 Seasonal expenses Seasonal deferred incentive compensation expenses for retirement-eligible employees and payroll taxes 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