XLF 8-K
State Street Corp (STT)
8-K
2021-04-16
For: 2021-04-16
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 16, 2021
______________________
(Exact name of registrant as specified in its charter)
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| (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 16, 2021, State Street Corporation issued a news release announcing its results of operations for the first-quarter of 2021. Copies of that news release and accompanying first-quarter 2021 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 16, 2021, State Street Corporation made available a slide presentation providing highlights of its first-quarter 2021 results of operations and related information as of March 31, 2021, which is being made available in connection with an April 16, 2021 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 16, 2021, announcing its first-quarter 2021 results of operations and accompanying first-quarter 2021 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 2021 results of operations and related information as of March 31, 2021, which is being made available in connection with an April 16, 2021 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 16, 2021 | ||||||||||||||||
 | Exhibit 99.1 State Street Corporation One Lincoln Street Boston, MA 02111 NYSE: STT www.statestreet.com | |||||||
Boston, MA… April 16, 2021 News Release
STATE STREET REPORTS FIRST QUARTER 2021 EPS OF $1.37; $1.47 EXCLUDING NOTABLE ITEMS(a) | ||
% changes noted below reflect year-over-year 1Q comparisons | ||
TOTAL FEE REVENUE UP 4%; UP 2% EX-CURRENCY TRANSLATION(a)
SERVICING FEE REVENUE UP 7%; UP 4% EX-CURRENCY TRANSLATION(a)
NEW SERVICING WINS OF $343 BILLION
NET NEW INFLOWS IN ASSET MANAGEMENT OF $39 BILLION
EXPENSES UP 3%; FLAT EX-NOTABLES AND CURRENCY TRANSLATION(a)
Ron O'Hanley, Chairman and Chief Executive Officer: "Our first-quarter results reflect continued total fee revenue growth, enabling us to partially offset NII headwinds. Our product innovation and enhancements of our operating model continue to make contributions across our businesses, as reflected in our strong new business results including demand for Charles River Development and State Street AlphaSM. Our distinctive value proposition continues to resonate with our clients." O'Hanley added: "Core operating expenses continue to be controlled and we remain committed to expense discipline by driving productivity gains through automation and process reengineering, while investing back into our businesses. During the first quarter, we completed the repurchase of approximately $475 million of our common stock and have just announced a common share repurchase program for 2Q21 of up to $425 million, consistent with the limit set by the Federal Reserve." | ||
FINANCIAL HIGHLIGHTS
| (Table presents summary results, dollars in millions, except per share amounts, or where otherwise noted) | 1Q21 | 4Q20 | 1Q20 | % QoQ | % YoY | |||||||||||||||||||||||||||
| Income statement: | ||||||||||||||||||||||||||||||||
| Total fee revenue | $ | 2,483 | $ | 2,416 | $ | 2,399 | 3 | % | 4 | % | ||||||||||||||||||||||
| Net interest income | 467 | 499 | 664 | (6) | (30) | |||||||||||||||||||||||||||
| Other income | — | 2 | 2 | nm | nm | |||||||||||||||||||||||||||
| Total revenue | 2,950 | 2,917 | 3,065 | 1 | (4) | |||||||||||||||||||||||||||
| Provision for credit losses | (9) | — | 36 | nm | nm | |||||||||||||||||||||||||||
| Total expenses | 2,332 | 2,276 | 2,255 | 2 | 3 | |||||||||||||||||||||||||||
| Net income | 519 | 537 | 634 | (3) | (18) | |||||||||||||||||||||||||||
| Financial ratios and other metrics: | ||||||||||||||||||||||||||||||||
| Diluted earnings per share (EPS) | $ | 1.37 | $ | 1.39 | $ | 1.62 | (1) | % | (15) | % | ||||||||||||||||||||||
| Return on average common equity (ROE) | 8.4 | % | 8.4 | % | 10.9 | % | — | bps | (250) | bps | ||||||||||||||||||||||
| Pre-tax margin | 21.3 | 22.0 | 25.3 | (70) | (400) | |||||||||||||||||||||||||||
AUC/A ($ billions)(1) | 40,263 | 38,791 | 31,864 | 4 | % | 26 | % | |||||||||||||||||||||||||
AUM ($ billions)(1) | 3,591 | 3,467 | 2,689 | 4 | 34 | |||||||||||||||||||||||||||
(1) As of period-end.
(a) See "1Q21 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
1Q21 HIGHLIGHTS
(all comparisons are to 1Q20, unless otherwise noted)
AUC/A and AUM
•Investment Servicing AUC/A as of quarter-end increased 26% to $40.3 trillion, primarily due to higher period-end market levels, net new business growth, and client flows.
•Investment Management AUM as of quarter-end increased 34% to $3.6 trillion, mainly reflecting higher period-end market levels and net inflows from ETFs and cash, partially offset by institutional net outflows.
New business
•Investment Servicing mandates announced in 1Q21 totaled $343 billion, with quarter-end servicing assets to be installed in future periods of $463 billion.
◦Strong servicing wins across all regions, with particular area of strength in the Asset Manager client segment.
◦Reported three new Alpha deals in 1Q21.
◦Approximately one-third of assets to be installed at quarter-end attributed to State Street Alpha.
•Cryptocurrency ETF administration servicing pipeline is growing, with our first Bitcoin ETF fund administration and transfer agency appointment announced, pending regulatory approval.
•Charles River Development (CRD) achieved annual recurring revenue (ARR)(a) of $225 million in 1Q21, up 14%.
•Investment Management net inflows in 1Q21 of $39 billion, primarily driven by ETFs and cash.
Revenue
•Fee revenue increased 4%; up 2% excluding currency translation,(b) largely due to higher Servicing, Management, and Software and processing fees, partially offset by lower FX trading revenue.
◦Servicing fees increased 7%; up 4% excluding currency translation.(b)
◦Management fees increased 6%; up 4% excluding currency translation.(b)
◦Securities finance increased 8%.
◦FX trading services decreased (22)%, driven by an absence of 1Q20 volatility associated with the pandemic.
◦Software and processing fees increased 55%, mainly reflecting market-related adjustments.
•Net interest income (NII) decreased (30)%, primarily due to lower global interest rates and the absence of episodic market-related benefits in 1Q20, partially offset by growth in deposits and the investment portfolio.
◦Compared to 4Q20, NII decreased (6)%, driven by the impact from long & short interest rates and day count, partially offset by higher deposit balances.
Expenses
•Total expenses increased 3%, primarily reflecting unfavorable currency translation and higher notable items.
◦Flat total expenses, excluding notable items and the impact of currency translation.(c)
◦Increased productivity savings while making controlled investments to support our clients' needs, operations, and technology innovation.
(a) See the endnotes included in the "In This News Release" section for an explanation of CRD annual recurring revenue (ARR).
(b) Results excluding 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.
(c) Total expenses, ex-notable items and currency translation impact Is a non-GAAP presentation. Please refer to the Addendum included with this news release for an explanation and reconciliation of non-GAAP measures.
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Notable items
| (Dollars in millions, except EPS amounts) | Quarters | ||||||||||
| 1Q21 | 4Q20 | 1Q20 | |||||||||
Repositioning charges(a) | — | (133) | — | ||||||||
| Acquisition and restructuring costs | (10) | (12) | (11) | ||||||||
Legal and other costs(b) | (29) | — | — | ||||||||
| Notable items (pre-tax) | $ | (39) | $ | (145) | $ | (11) | |||||
Preferred securities redemption (after-tax)(c) | (5) | — | (9) | ||||||||
| EPS impact | $ | (0.10) | $ | (0.30) | $ | (0.05) | |||||
Capital
•Common Equity Tier 1 (CET1) of 10.8% (Standardized) was up slightly compared to 1Q20, but down 1.5% points compared to 4Q20, primarily driven by an episodic increase in risk-weighted assets related to FX trading and overdraft activity, as well as lower capital related to accumulated other comprehensive income and intangibles.
•Tier 1 leverage ratio of 5.4% was down 0.7% points compared to 1Q20, primarily driven by higher client deposit levels and down 1% point compared to 4Q20, primarily driven by higher client deposit levels as well as lower accumulated other comprehensive income and the partial call of the Series F preferred equity.
•ROE of 8.4% decreased (2.5)% points compared to 1Q20 and was flat compared to 4Q20.
•In 1Q21, State Street returned $659 million of capital to shareholders, consisting of $475 million of common share repurchases and $184 million in common stock dividends.
•Announced 2Q21 common share repurchase program in April 2021 of up to $425 million,(d) consistent with the limit set by the Federal Reserve.
(a) Repositioning charges of $133 million in 4Q20 included $82 million in Compensation and employee benefits and $51 million in Occupancy expenses.
(b) 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.
(c) $5 million in 1Q21 is related to the redemption of $500 million of outstanding Series F preferred stock. $9 million in 1Q20 is related to the redemption of all outstanding Series C preferred stock.
(d) State Street’s $425 million common stock repurchase authorization covers the period ending June 30, 2021. Stock purchases may be made using various types of transactions, including open-market purchases, accelerated share repurchases or other transactions off the market, and may be made under Rule 10b5-1 trading programs. The timing of stock purchases, type of transaction and number of shares purchased will depend on several factors, including market conditions and State Street’s capital position, its financial performance, the amount of common stock issued as part of employee compensation programs, investment opportunities and the potential for regulatory limitations on capital actions. The common stock purchase program does not have specific price targets and may be suspended at any time.
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) | 1Q21 | 4Q20 | 1Q20 | % QoQ | % YoY | ||||||||||||
Assets under Custody and/or Administration (AUC/A)(1) (2) | $ | 40,263 | $ | 38,791 | $ | 31,864 | 3.8 | % | 26.4 | % | |||||||
Assets under Management (AUM)(2) | 3,591 | 3,467 | 2,689 | 3.6 | 33.5 | ||||||||||||
Market Indices:(3) | |||||||||||||||||
| S&P 500 daily average | 3,866 | 3,555 | 3,056 | 8.7 | 26.5 | ||||||||||||
| S&P 500 EOP | 3,973 | 3,756 | 2,585 | 5.8 | 53.7 | ||||||||||||
| MSCI EAFE daily average | 2,201 | 1,994 | 1,868 | 10.4 | 17.8 | ||||||||||||
| MSCI EAFE EOP | 2,208 | 2,148 | 1,560 | 2.8 | 41.5 | ||||||||||||
| MSCI Emerging Markets daily average | 1,363 | 1,189 | 1,030 | 14.6 | 32.3 | ||||||||||||
| MSCI Emerging Markets EOP | 1,316 | 1,291 | 849 | 1.9 | 55.0 | ||||||||||||
| Barclays Capital Global Aggregate Bond Index EOP | 534 | 559 | 510 | (4.5) | 4.7 | ||||||||||||
Foreign Exchange Volatility Indices:(3) | |||||||||||||||||
| JPM G7 Volatility Index daily average | 6.8 | 7.3 | 7.2 | (6.8) | (5.6) | ||||||||||||
| JPM Emerging Market Volatility Index daily average | 10.2 | 10.8 | 8.3 | (5.6) | 22.9 | ||||||||||||
| Average Foreign Exchange Rate: | |||||||||||||||||
| EUR vs. USD | 1.205 | 1.193 | 1.103 | 1.0 | 9.2 | ||||||||||||
| GBP vs. USD | 1.379 | 1.321 | 1.280 | 4.4 | 7.7 | ||||||||||||
(1) Includes assets under custody of $30,134 billion, $29,052 billion, and $23,812 billion, as of EOP for 1Q21, 4Q20, and 1Q20, 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) | 1Q21 | 4Q20 | 3Q20 | 2Q20 | 1Q20 | ||||||||||||
North America - (US Domiciled) Morningstar Direct Market Data:(1)(2) | |||||||||||||||||
| Long Term Funds | $ | 142 | $ | 74 | $ | 21 | $ | 56 | $ | (240) | |||||||
| Money Market | 176 | (82) | (166) | 259 | 665 | ||||||||||||
| ETF | 180 | 120 | 60 | 70 | 22 | ||||||||||||
Total Flows(3) | $ | 499 | $ | 112 | $ | (84) | $ | 385 | $ | 447 | |||||||
EMEA-Morningstar Direct Market Data:(1)(4) | |||||||||||||||||
| Long Term Funds | $ | 290 | $ | 250 | $ | 134 | $ | 168 | $ | (138) | |||||||
| Money Market | (53) | 59 | 60 | 153 | 12 | ||||||||||||
| ETF | 62 | 48 | 32 | 36 | (3) | ||||||||||||
Total Flows(3) | $ | 299 | $ | 357 | $ | 227 | $ | 357 | $ | (129) | |||||||
(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. Industry flow data presented reflects a change in data providers from previous presentations for all periods presented. See endnotes included in the "In This News Release" section.
(2) The first quarter of 2021 data for North America includes actuals for January and February 2021 and Morningstar estimates for March 2021.
(3) Line items may not sum to total due to rounding.
(4) The first quarter of 2021 data for Europe is on a rolling three month basis for December 2020 through February 2021, sourced by Morningstar.
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INVESTMENT SERVICING AUC/A
The following table presents AUC/A information by product and financial instrument.
| (Dollars in billions) | 1Q21 | 4Q20 | 1Q20 | % QoQ | % YoY | ||||||||||||
Assets Under Custody and/or Administration(1) | |||||||||||||||||
By Product Classification(2): | |||||||||||||||||
| Mutual funds | $ | 10,439 | $ | 9,810 | $ | 7,301 | 6.4 | % | 43.0 | % | |||||||
| Collective funds, including ETFs | 14,052 | 13,387 | 10,529 | 5.0 | 33.5 | ||||||||||||
| Pension products | 7,843 | 7,594 | 6,723 | 3.3 | 16.7 | ||||||||||||
| Insurance and other products | 7,929 | 8,000 | 7,311 | (0.9) | 8.5 | ||||||||||||
| Total Assets Under Custody and/or Administration | $ | 40,263 | $ | 38,791 | $ | 31,864 | 3.8 | % | 26.4 | % | |||||||
| By Financial Instrument: | |||||||||||||||||
| Equities | $ | 22,825 | $ | 21,626 | $ | 16,267 | 5.5 | % | 40.3 | % | |||||||
| Fixed-income | 13,022 | 12,834 | 11,096 | 1.5 | 17.4 | ||||||||||||
| Short-term and other investments | 4,416 | 4,331 | 4,501 | 2.0 | (1.9) | ||||||||||||
| Total Assets Under Custody and/or Administration | $ | 40,263 | $ | 38,791 | $ | 31,864 | 3.8 | % | 26.4 | % | |||||||
(1) As of period-end.
(2) Certain previously reported amounts presented have been reclassified to conform to current-period presentation.
INVESTMENT MANAGEMENT AUM
The following tables present 1Q21 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, 2020(1) | $ | 2,171 | $ | 549 | $ | 349 | $ | 186 | $ | 212 | $ | 3,467 | |||||||||||
| Net asset flows: | |||||||||||||||||||||||
Long-term institutional(2) | (35) | 26 | (1) | 1 | 1 | (8) | |||||||||||||||||
| ETF | 21 | 9 | — | — | (7) | 23 | |||||||||||||||||
| Cash fund | — | — | 24 | — | — | 24 | |||||||||||||||||
| Total flows, net | $ | (14) | $ | 35 | $ | 23 | $ | 1 | $ | (6) | $ | 39 | |||||||||||
| Market appreciation/(depreciation) | 148 | (24) | — | 3 | (11) | 116 | |||||||||||||||||
| Foreign exchange impact | (23) | (6) | — | (1) | (1) | (31) | |||||||||||||||||
| Total market/foreign exchange impact | $ | 125 | $ | (30) | $ | — | $ | 2 | $ | (12) | $ | 85 | |||||||||||
Ending balance as of March 31, 2021 | $ | 2,282 | $ | 554 | $ | 372 | $ | 189 | $ | 194 | $ | 3,591 | |||||||||||
(1) As a result of the implementation of an improved internal data management system for product level data in the first quarter of 2021, asset class categorizations were reassessed resulting in some AUM reclassifications between the categories presented.There was no impact to the total level of reported AUM.
(2) Amounts represent long-term portfolios, excluding ETFs.
| (Dollars in billions) | 1Q21 | 4Q20 | 3Q20 | 2Q20 | 1Q20 | ||||||||||||
| Beginning balance | $ | 3,467 | $ | 3,148 | $ | 3,054 | $ | 2,689 | $ | 3,116 | |||||||
| Net asset flows: | |||||||||||||||||
Long-term institutional(2) | (8) | (71) | (8) | (31) | 10 | ||||||||||||
| ETF | 23 | 20 | 1 | 26 | (3) | ||||||||||||
| Cash fund | 24 | 30 | (58) | 28 | 32 | ||||||||||||
| Total flows, net | $ | 39 | $ | (21) | $ | (65) | $ | 23 | $ | 39 | |||||||
| Market appreciation/(depreciation) | 116 | 306 | 136 | 324 | (436) | ||||||||||||
| Foreign exchange impact | (31) | 34 | 23 | 18 | (30) | ||||||||||||
| Total market and foreign exchange impact | $ | 85 | $ | 340 | $ | 159 | $ | 342 | $ | (466) | |||||||
| Ending balance | $ | 3,591 | $ | 3,467 | $ | 3,148 | $ | 3,054 | $ | 2,689 | |||||||
(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.
5
REVENUE
| (Dollars in millions) | 1Q21 | 4Q20 | 1Q20 | % QoQ | % YoY | ||||||||||||||||||
| Servicing fees | $ | 1,371 | $ | 1,307 | $ | 1,287 | 4.9 | % | 6.5 | % | |||||||||||||
Management fees(a) | 493 | 493 | 464 | — | 6.3 | ||||||||||||||||||
Foreign exchange trading services(a) | 346 | 324 | 444 | 6.8 | (22.1) | ||||||||||||||||||
| Securities finance revenue | 99 | 88 | 92 | 12.5 | 7.6 | ||||||||||||||||||
| Software and processing fees | 174 | 204 | 112 | (14.7) | 55.4 | ||||||||||||||||||
| Total fee revenue | $ | 2,483 | $ | 2,416 | $ | 2,399 | 2.8 | % | 3.5 | % | |||||||||||||
| Net interest income | 467 | 499 | 664 | (6.4) | (29.7) | ||||||||||||||||||
| Other income | — | 2 | 2 | nm | nm | ||||||||||||||||||
| Total Revenue | $ | 2,950 | $ | 2,917 | $ | 3,065 | 1.1 | % | (3.8) | % | |||||||||||||
Net interest margin (FTE)(b) | 0.75 | % | 0.84 | % | 1.30 | % | (9) | bps | (55) | bps | |||||||||||||
Servicing fees increased 7% compared to 1Q20, primarily driven by higher average equity market levels, partially offset by normal pricing headwinds. Servicing fees were up 5% compared to 4Q20, mainly due to higher average equity market levels and client activity/adjustments.
Management fees(a) increased 6% compared to 1Q20 and flat compared to 4Q20, primarily due to higher average equity market levels and net inflows from ETFs and cash, partially offset by an idiosyncratic institutional client asset reallocation and higher money market fee waivers.
Foreign exchange trading services(a) decreased (22)% compared to 1Q20, reflecting lower FX volatility, partially offset by higher client FX volumes. Compared to 4Q20, Foreign exchange trading services increased 7%, mainly due to higher client FX volumes.
Securities finance increased 8% and 13% compared to 1Q20 and 4Q20, respectively, primarily driven by higher Agency Lending and Enhanced Custody balances.
Software and processing fees increased 55% compared to 1Q20, primarily reflecting higher market-related adjustments. Software and processing fees decreased (15)% compared to 4Q20, largely driven by lower market-related adjustments and CRD revenue driven by seasonal business activity.
Net interest income (NII) decreased (30)% compared to 1Q20, primarily due to lower global interest rates and the absence of episodic market-related benefits of approximately $20 million, partially offset by growth in deposits and the investment portfolio. NII decreased (6)% compared to 4Q20, mainly driven by the impact from long & short interest rates and day count, partially offset by higher deposit balances.
Total revenues were positively impacted by currency translation when compared to 1Q20 and 4Q20 by $59 million and $14 million, respectively.
(a) Certain fees associated with our GLD ETFs have been reclassified from Foreign exchange trading services to Management fees to better reflect the nature of those fees. Prior periods have been reclassified to conform to current-period presentation. These fees were approximately $15 million, $19 million, $24 million, and $23 million in the first, second, third and fourth quarters of 2020, respectively.
(b) Net Interest Margin (NIM) is presented on a fully taxable-equivalent (FTE) basis. Refer to the Addendum for reconciliations of our FTE-basis presentation.
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PROVISION FOR CREDIT LOSSES
| (Dollars in millions) | 1Q21 | 4Q20 | 1Q20 | % QoQ | % YoY | |||||||||||||||||||||
| Allowance for credit losses: | ||||||||||||||||||||||||||
| Beginning balance | $ | 148 | $ | 153 | $ | 93 | (3.3) | % | 59.1 | % | ||||||||||||||||
| Provision for credit losses | (9) | — | 36 | nm | nm | |||||||||||||||||||||
| Charge-offs | — | (8) | (5) | nm | nm | |||||||||||||||||||||
Other(1) | (4) | 3 | — | nm | nm | |||||||||||||||||||||
| Ending Balance | $ | 135 | $ | 148 | $ | 124 | (8.8) | % | 8.9 | % | ||||||||||||||||
(1) Consists primarily of currency translation | ||||||||||||||||||||||||||
Total provision for credit losses reflects a $9 million reserve release in 1Q21, primarily driven by improved economic conditions.
EXPENSES
| (Dollars in millions) | 1Q21 | 4Q20 | 1Q20 | % QoQ | % YoY | |||||||||||||||||||||
| Compensation and employee benefits | $ | 1,242 | $ | 1,129 | $ | 1,208 | 10.0 | % | 2.8 | % | ||||||||||||||||
| Information systems and communications | 421 | 394 | 385 | 6.9 | 9.4 | |||||||||||||||||||||
| Transaction processing services | 270 | 257 | 254 | 5.1 | 6.3 | |||||||||||||||||||||
| Occupancy | 109 | 162 | 109 | (32.7) | — | |||||||||||||||||||||
| Acquisition and restructuring costs | 10 | 12 | 11 | (16.7) | (9.1) | |||||||||||||||||||||
| Amortization of other intangible assets | 58 | 59 | 58 | (1.7) | — | |||||||||||||||||||||
| Other | 222 | 263 | 230 | (15.6) | (3.5) | |||||||||||||||||||||
| Total Expenses | $ | 2,332 | $ | 2,276 | $ | 2,255 | 2.5 | % | 3.4 | % | ||||||||||||||||
Total expenses, excluding notable items(a) | $ | 2,293 | $ | 2,131 | $ | 2,244 | 7.6 | % | 2.2 | % | ||||||||||||||||
| Effective tax rate | 17.2 | % | 16.1 | % | 18.1 | % | 110 | bps | (90) | bps | ||||||||||||||||
Compensation and employee benefits increased 3% compared to 1Q20, primarily driven by higher seasonal expenses, partially offset by lower headcount in high cost locations. Compensation and employee benefits was up 10% compared to 4Q20, primarily due to seasonal expenses, partially offset by the absence of repositioning charges reported in 4Q20.(b)
Information systems and communications increased 9% and 7% compared to 1Q20 and 4Q20, respectively, mainly reflecting higher software costs and technology infrastructure investments as well as the impact of notable items.
Transaction processing services increased 6% compared to 1Q20, primarily due to higher market-related sub-custody balances and the impact of notable items, partially offset by savings initiatives. Transaction processing increased 5% compared to 4Q20, primarily due to higher market-related sub-custody balances and the impact of notable items.
Occupancy was flat compared to 1Q20. Occupancy decreased (33)% compared to 4Q20, primarily reflecting the absence of repositioning charges reported in 4Q20 and benefits from footprint optimization.
Other expenses decreased (3)% compared to 1Q20, largely driven by lower travel spend. Other expenses were down (16)% compared to 4Q20, mainly due to lower professional fees and marketing spend.
Total expenses were adversely impacted by currency translation when compared to 1Q20 and 4Q20 by $40 million and $11 million, respectively.
(a) See 1Q21 Highlights in this news release for a listing of notable items. Results excluding notable items are non-GAAP measures. Please refer to the Addendum included with this news release for an explanation and reconciliation of non-GAAP measures.
(b) 1Q20 and 1Q21 Compensation and employee benefits expenses include $151 million and $176 million, respectively, of seasonal expenses. The increase in seasonal expenses was primarily driven by timing of deferrals.
7
TAXES
The effective tax rate in 1Q21 decreased to 17.2% from 18.1% in 1Q20, due to an increase in foreign tax credits. Compared to 4Q20, the effective tax rate increased from 16.1%, primarily due to the realization of additional foreign tax benefits in the prior quarter.
CAPITAL AND LIQUIDITY
The following table presents preliminary estimated regulatory capital ratios for State Street Corporation.
| (As of period end) | 1Q21 | 4Q20 | 1Q20 | ||||||||
| Basel III Standardized Approach: | |||||||||||
| Common Equity Tier 1 ratio | 10.8 | % | 12.3 | % | 10.7 | % | |||||
| Tier 1 capital ratio | 12.4 | 14.4 | 12.9 | ||||||||
| Total capital ratio | 14.0 | 15.3 | 14.1 | ||||||||
| Basel III Advanced Approaches: | |||||||||||
| Common Equity Tier 1 ratio | 11.9 | 13.1 | 11.1 | ||||||||
| Tier 1 capital ratio | 13.6 | 15.4 | 13.4 | ||||||||
| Total capital ratio | 15.2 | 16.2 | 14.5 | ||||||||
| Tier 1 leverage ratio | 5.4 | 6.4 | 6.1 | ||||||||
| Supplementary leverage ratio | 7.2 | 8.1 | 5.4 | ||||||||
| Liquidity coverage ratio | 107 | % | 108 | % | 109 | % | |||||
Standardized capital ratios were binding for the period.
CET1 ratio (standardized) was up slightly compared to 1Q20. CET1 ratio decreased 1.5% points compared to 4Q20, primarily driven by an episodic increase in risk-weighted assets related to FX trading and overdraft activity, as well as lower capital related to accumulated other comprehensive income and intangibles.
Tier 1 leverage ratio decreased to 5.4% as compared to 6.1% in 1Q20, mainly reflecting higher client deposit levels. Compared to 4Q20, the Tier 1 leverage ratio decreased 1% point, primarily driven by higher client deposit levels as well as lower accumulated other comprehensive income and the partial call of the Series F preferred equity.
Liquidity coverage ratio (LCR) for State Street Corporation of approximately 107%, slightly lower than prior periods, primarily due to an increase in deposits.
8
INVESTOR CONFERENCE CALL AND QUARTERLY WEBSITE DISCLOSURE
State Street will webcast an investor conference call today, Friday, April 16, 2021, at 10:00 a.m. EDT, 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 4188942.
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 4188942.
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 45 days following each other quarter-end, as applicable). For 1Q21, State Street expects to publish its updates during the period beginning today and ending on or about May 15, 2021.
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 $40.3 trillion in assets under custody and/or administration and $3.6 trillion* in assets under management as of March 31, 2021, 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, 2021 includes approximately $60 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. 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.
•CRD annual recurring revenue (ARR), an operating metric, is calculated by annualizing current quarter revenue and includes annualized amount of most software-enabled revenue, including revenue generated from Software-as-a-service, maintenance and support revenue, revenue from the Charles River Network's FIX Network Service (CRN), and value-added services, which are all expected to be recognized ratably over the term of client contracts. ARR excludes software-enabled brokerage revenue. ARR of $198 million, $223 million, and $225 million in 1Q20, 4Q20, and 1Q21, respectively, includes annualized intercompany revenues of approximately $14 million, $21 million, and $20 million, respectively.
•Revenue and pre-tax income reflects the application of ASC 606. Revenue recognition under ASC 606 results in the acceleration of a significant portion of revenues for on-premises software agreements when a client goes live or renews their contract with us. The amount of revenue recognized in any given quarter will be driven in large part by client activity, including agreements that renew or are installed in that quarter.
•Unless otherwise noted, all capital ratios referenced on this News Release and elsewhere in this presentation refer to State Street Corporation, or State Street, and not State Street Bank and Trust Company, or State Street Bank. The lower of capital ratios calculated under the Basel III advanced approaches and under the Basel III standardized approach are applied in the assessment of our capital adequacy for regulatory purposes. Standardized ratios were binding for 1Q21. 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; "nm" denotes not meaningful; "EOP" denotes end of period.
•"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. 1Q21 data for North America (US domiciled) includes Morningstar actuals January and February and Morningstar estimates for March 2021.
◦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. 1Q21 data for Europe is on a rolling three month basis for December 2020 through February 2021, 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, 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,” “guidance,” “expect,” “priority,” “objective,” “intend,” “plan,” “forecast,” “believe,” “anticipate,” “estimate,” “seek,” “may,” “will,” “trend,” “target,” “strategy” and “goal,” or similar statements or variations of such terms. These statements are not guarantees of future performance, are inherently uncertain, are based on current assumptions that are difficult to predict and involve a number of risks and uncertainties. Therefore, actual outcomes and results may differ materially from what is expressed in those statements, and those statements should not be relied upon as representing our expectations or beliefs as of any time subsequent to the time this News Release is first issued.
Important factors that may affect future results and outcomes include, but are not limited to:
•We are subject to intense competition, which could negatively affect our profitability;
•We are subject to significant pricing pressure and variability in our financial results and our AUC/A and AUM;
•Our development and completion of new products and services, including State Street Alpha, 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 create significant 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;
•The integration of CRD may be more difficult, costly or time consuming than expected, and the anticipated benefits and cost synergies may not be fully realized;
•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;
•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, the investment activities of our clients;
•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;
•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;
•We are subject to various legal proceedings relating to the manner in which we have invoiced certain expenses, and the outcome of which could materially adversely affect our results of operations or harm our business or reputation;
12
•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 and reputational harm and may not result in expected cost savings;
•If we, or the third parties with which we do business, experience failures, attacks or unauthorized access to our or their respective information technology systems or facilities, or disruptions to our continuous operations, this could result in significant costs, reputational damage and limits 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 could adversely affect our business operations;
•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 2020 Annual Report on Form 10-K and our subsequent SEC filings. We encourage investors to read these filings, particularly the sections on risk factors, for additional information with respect to any forward-looking statements and prior to making any investment decision. The forward-looking statements contained in this News Release should not by relied on as representing our expectations or beliefs as of any time subsequent to the time this News Release is first issued, and we do not undertake efforts to revise those forward-looking statements to reflect events after that time.
13
Exhibit 99.2
| STATE STREET CORPORATION | |||||
| EARNINGS RELEASE ADDENDUM | |||||
| March 31, 2021 | |||||
| Table of Contents | |||||
| GAAP-Basis Financial Information: | |||||
| 4-Year Summary of Results | 2 | ||||
| Consolidated Financial Highlights | 3 | ||||
| Consolidated Results of Operations | 4 | ||||
| Consolidated Statement of Condition | 6 | ||||
| Average Statement of Condition - Rates Earned and Paid - Fully Taxable-Equivalent Basis | 7 | ||||
| Investment Portfolio Holdings by Asset Class | 8 | ||||
| Investment Portfolio Non-U.S. Investments | 10 | ||||
| Assets Under Custody and/or Administration | 11 | ||||
| Assets Under Management | 12 | ||||
| Industry Flow Data by Asset Class | 13 | ||||
| Line of Business Information | 14 | ||||
| Allowance for Credit Losses | 15 | ||||
| Non-GAAP Financial Information: | |||||
| Reconciliations of Non-GAAP Financial Information | 16 | ||||
| Reconciliation of Pre-tax Margin Excluding Notable Items | 18 | ||||
| Reconciliation of Notable Items | 19 | ||||
| Reconciliations of Constant Currency FX Impacts | 20 | ||||
| Capital: | |||||
| Reconciliation of Tangible Common Equity Ratio | 21 | ||||
| Regulatory Capital | 22 | ||||
| Reconciliations of Supplementary Leverage Ratios | 23 | ||||
| This financial information should be read in conjunction with State Street's news release dated April 16, 2021. | |||||
| STATE STREET CORPORATION | ||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||
| 4-YEAR SUMMARY OF RESULTS | ||||||||||||||||||||||||||
| (Dollars in millions, except per share amounts, or where otherwise noted) | 2017 | 2018 | 2019 | 2020 | ||||||||||||||||||||||
| Year ended December 31: | ||||||||||||||||||||||||||
| Total fee revenue | $ | 9,001 | $ | 9,454 | $ | 9,147 | $ | 9,499 | ||||||||||||||||||
| Net interest income | 2,304 | 2,671 | 2,566 | 2,200 | ||||||||||||||||||||||
| Other income | (39) | 6 | 43 | 4 | ||||||||||||||||||||||
| Total revenue | 11,266 | 12,131 | 11,756 | 11,703 | ||||||||||||||||||||||
| Provision for credit losses | 2 | 15 | 10 | 88 | ||||||||||||||||||||||
| Total expenses | 8,269 | 9,015 | 9,034 | 8,716 | ||||||||||||||||||||||
| Income before income tax expense | 2,995 | 3,101 | 2,712 | 2,899 | ||||||||||||||||||||||
| Income tax expense | 839 | 508 | 470 | 479 | ||||||||||||||||||||||
| Net income | 2,156 | 2,593 | 2,242 | 2,420 | ||||||||||||||||||||||
| Net income available to common shareholders | $ | 1,972 | $ | 2,404 | $ | 2,009 | $ | 2,257 | ||||||||||||||||||
| Per common share: | ||||||||||||||||||||||||||
| Diluted earnings per common share | $ | 5.19 | $ | 6.39 | $ | 5.38 | $ | 6.32 | ||||||||||||||||||
| Average diluted common shares outstanding (in thousands) | 380,213 | 376,476 | 373,666 | 357,106 | ||||||||||||||||||||||
| Cash dividends declared per common share | $ | 1.60 | $ | 1.78 | $ | 1.98 | $ | 2.08 | ||||||||||||||||||
| Closing price per share of common stock (at year end) | 97.61 | 63.07 | 79.10 | 72.78 | ||||||||||||||||||||||
| Average balance sheet: | ||||||||||||||||||||||||||
| Investment securities | $ | 95,779 | $ | 88,070 | $ | 91,768 | $ | 109,175 | ||||||||||||||||||
| Total assets | 219,450 | 223,385 | 223,334 | 269,334 | ||||||||||||||||||||||
| Total deposits | 163,808 | 161,408 | 158,262 | 193,225 | ||||||||||||||||||||||
| Ratios and other metrics: | ||||||||||||||||||||||||||
| Return on average common equity | 10.5 | % | 12.1 | % | 9.4 | % | 10.0 | % | ||||||||||||||||||
| Pre-tax margin | 26.6 | 25.6 | 23.1 | 24.8 | ||||||||||||||||||||||
Pre-tax margin, excluding notable items(1) | 28.7 | 28.8 | 25.8 | 26.3 | ||||||||||||||||||||||
| Net interest margin, fully taxable-equivalent basis | 1.29 | 1.47 | 1.42 | 0.97 | ||||||||||||||||||||||
Common equity tier 1 ratio(2)(3)(4) | 11.9 | 11.7 | 11.7 | 12.3 | ||||||||||||||||||||||
Tier 1 capital ratio(2)(3)(4) | 15.0 | 15.5 | 14.5 | 14.4 | ||||||||||||||||||||||
Total capital ratio(2)(3)(4) | 16.0 | 16.3 | 15.6 | 15.3 | ||||||||||||||||||||||
Tier 1 leverage ratio(2)(3) | 7.3 | 7.2 | 6.9 | 6.4 | ||||||||||||||||||||||
Supplementary leverage ratio(2)(3) | 6.5 | 6.3 | 6.1 | 8.1 | ||||||||||||||||||||||
| Assets under custody and/or administration (in trillions) | $ | 33.12 | $ | 31.62 | $ | 34.36 | $ | 38.79 | ||||||||||||||||||
| Assets under management (in trillions) | 2.78 | 2.51 | 3.12 | 3.47 | ||||||||||||||||||||||
(1) Notable items include acquisition and restructuring costs, repositioning charges, 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 FINANCIAL HIGHLIGHTS | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarters | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions, except per share amounts, or where otherwise noted) | 1Q20 | 2Q20 | 3Q20 | 4Q20 | 1Q21 | 1Q21 vs. 1Q20 | 1Q21 vs. 4Q20 | |||||||||||||||||||||||||||||||||||||||||||
| Income statement | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Fee revenue | $ | 2,399 | $ | 2,378 | $ | 2,306 | $ | 2,416 | $ | 2,483 | 3.5 | % | 2.8 | % | ||||||||||||||||||||||||||||||||||||
| Net interest income | 664 | 559 | 478 | 499 | 467 | (29.7) | (6.4) | |||||||||||||||||||||||||||||||||||||||||||
| Other income | 2 | — | — | 2 | — | nm | nm | |||||||||||||||||||||||||||||||||||||||||||
| Total revenue | 3,065 | 2,937 | 2,784 | 2,917 | 2,950 | (3.8) | 1.1 | |||||||||||||||||||||||||||||||||||||||||||
Provision for credit losses(1) | 36 | 52 | — | — | (9) | nm | nm | |||||||||||||||||||||||||||||||||||||||||||
| Total expenses | 2,255 | 2,082 | 2,103 | 2,276 | 2,332 | 3.4 | 2.5 | |||||||||||||||||||||||||||||||||||||||||||
| Income before income tax expense | 774 | 803 | 681 | 641 | 627 | (19.0) | (2.2) | |||||||||||||||||||||||||||||||||||||||||||
| Income tax expense | 140 | 109 | 126 | 104 | 108 | (22.9) | 3.8 | |||||||||||||||||||||||||||||||||||||||||||
| Net income | 634 | 694 | 555 | 537 | 519 | (18.1) | (3.4) | |||||||||||||||||||||||||||||||||||||||||||
| Net income available to common shareholders | $ | 580 | $ | 662 | $ | 517 | $ | 498 | $ | 489 | (15.7) | (1.8) | ||||||||||||||||||||||||||||||||||||||
| Per common share: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Diluted earnings per common share | $ | 1.62 | $ | 1.86 | $ | 1.45 | $ | 1.39 | $ | 1.37 | (15.4) | (1.4) | ||||||||||||||||||||||||||||||||||||||
| Average diluted common shares outstanding (in thousands) | 357,993 | 356,413 | 357,168 | 357,719 | 355,690 | (0.6) | (0.6) | |||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared per common share | $ | .52 | $ | .52 | $ | .52 | $ | .52 | $ | .52 | — | — | ||||||||||||||||||||||||||||||||||||||
| Closing price per share of common stock (as of quarter end) | 53.27 | 63.55 | 59.33 | 72.78 | 84.01 | 57.7 | 15.4 | |||||||||||||||||||||||||||||||||||||||||||
| Average for the quarter: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment securities | $ | 97,560 | $ | 116,626 | $ | 110,448 | $ | 112,018 | $ | 107,809 | 10.5 | (3.8) | ||||||||||||||||||||||||||||||||||||||
| Total assets | 251,181 | 284,688 | 264,384 | 277,055 | 296,328 | 18.0 | 7.0 | |||||||||||||||||||||||||||||||||||||||||||
| Total deposits | 180,160 | 197,069 | 189,226 | 206,343 | 226,232 | 25.6 | 9.6 | |||||||||||||||||||||||||||||||||||||||||||
| Securities on loan: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Average securities on loan | $ | 378,200 | $ | 377,344 | $ | 375,296 | $ | 404,022 | $ | 429,991 | 13.7 | 6.4 | ||||||||||||||||||||||||||||||||||||||
| End-of-period securities on loan | 387,580 | 381,232 | 395,075 | 457,985 | 451,913 | 16.6 | (1.3) | |||||||||||||||||||||||||||||||||||||||||||
| Ratios and other metrics: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Return on average common equity | 10.9 | % | 12.1 | % | 8.9 | % | 8.4 | % | 8.4 | % | (250) | bps | — | bps | ||||||||||||||||||||||||||||||||||||
| Pre-tax margin | 25.3 | 27.3 | 24.5 | 22.0 | 21.3 | (400) | (70) | |||||||||||||||||||||||||||||||||||||||||||
Pre-tax margin, excluding notable items(2) | 25.6 | 27.7 | 24.7 | 26.9 | 22.6 | (300) | (430) | |||||||||||||||||||||||||||||||||||||||||||
| Net interest margin, fully taxable-equivalent basis | 1.30 | 0.93 | 0.85 | 0.84 | 0.75 | (55) | (9) | |||||||||||||||||||||||||||||||||||||||||||
Common equity tier 1 ratio(3)(4) | 10.7 | 12.3 | 12.4 | 12.3 | 10.8 | 10 | (150) | |||||||||||||||||||||||||||||||||||||||||||
Tier 1 capital ratio(3)(4) | 12.9 | 14.6 | 14.7 | 14.4 | 12.4 | (50) | (200) | |||||||||||||||||||||||||||||||||||||||||||
Total capital ratio(3)(4) | 14.1 | 15.7 | 15.7 | 15.3 | 14.0 | (10) | (130) | |||||||||||||||||||||||||||||||||||||||||||
Tier 1 leverage ratio(3) | 6.1 | 6.1 | 6.6 | 6.4 | 5.4 | (70) | (100) | |||||||||||||||||||||||||||||||||||||||||||
Supplementary leverage ratio(3) | 5.4 | 8.3 | 8.2 | 8.1 | 7.2 | 180 | (90) | |||||||||||||||||||||||||||||||||||||||||||
| Assets under custody and/or administration (in billions) | $ | 31,864 | $ | 33,515 | $ | 36,643 | $ | 38,791 | $ | 40,263 | 26.4 | % | 3.8 | % | ||||||||||||||||||||||||||||||||||||
| Assets under management (in billions) | 2,689 | 3,054 | 3,148 | 3,467 | 3,591 | 33.5 | 3.6 | |||||||||||||||||||||||||||||||||||||||||||
(1) In accordance with ASU 2016-13, the provision for credit losses for 1Q20, 2Q20,3Q20 and 4Q20 includes the provision on funded and unfunded commitments as well as HTM securities. | ||||||||||||||||||||||||||||||||||||||||||||||||||
(2) Notable items include acquisition and restructuring costs, repositioning charges, and other notable items. Refer to Reconciliations of pre-tax margin excluding notable items for details. | ||||||||||||||||||||||||||||||||||||||||||||||||||
(3) 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||
(4) 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 | ||||||||||||||||||||||||||||||||||||||||||||||||||
3
| STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED RESULTS OF OPERATIONS | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarters | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions, except per share amounts, or where otherwise noted) | 1Q20 | 2Q20 | 3Q20 | 4Q20 | 1Q21 | 1Q21 vs. 1Q20 | 1Q21 vs. 4Q20 | |||||||||||||||||||||||||||||||||||||||||||
| Fee revenue: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Servicing fees | $ | 1,287 | $ | 1,272 | $ | 1,301 | $ | 1,307 | $ | 1,371 | 6.5 | % | 4.9 | % | ||||||||||||||||||||||||||||||||||||
Management fees(1) | 464 | 444 | 479 | 493 | 493 | 6.3 | — | |||||||||||||||||||||||||||||||||||||||||||
Foreign exchange trading services(1) | 444 | 325 | 270 | 324 | 346 | (22.1) | 6.8 | |||||||||||||||||||||||||||||||||||||||||||
| Securities finance | 92 | 92 | 84 | 88 | 99 | 7.6 | 12.5 | |||||||||||||||||||||||||||||||||||||||||||
| Software and processing fees | 112 | 245 | 172 | 204 | 174 | 55.4 | (14.7) | |||||||||||||||||||||||||||||||||||||||||||
| Total fee revenue | 2,399 | 2,378 | 2,306 | 2,416 | 2,483 | 3.5 | 2.8 | |||||||||||||||||||||||||||||||||||||||||||
| Net interest income: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income | 868 | 674 | 520 | 513 | 471 | (45.7) | (8.2) | |||||||||||||||||||||||||||||||||||||||||||
| Interest expense | 204 | 115 | 42 | 14 | 4 | (98.0) | (71.4) | |||||||||||||||||||||||||||||||||||||||||||
| Net interest income | 664 | 559 | 478 | 499 | 467 | (29.7) | (6.4) | |||||||||||||||||||||||||||||||||||||||||||
| Other income: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Gains (losses) related to investment securities, net | 2 | — | — | 2 | — | nm | nm | |||||||||||||||||||||||||||||||||||||||||||
| Other income | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Total other income | 2 | — | — | 2 | — | nm | nm | |||||||||||||||||||||||||||||||||||||||||||
| Total revenue | 3,065 | 2,937 | 2,784 | 2,917 | 2,950 | (3.8) | 1.1 | |||||||||||||||||||||||||||||||||||||||||||
| Provision for credit losses | 36 | 52 | — | — | (9) | nm | nm | |||||||||||||||||||||||||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Compensation and employee benefits | 1,208 | 1,051 | 1,062 | 1,129 | 1,242 | 2.8 | 10.0 | |||||||||||||||||||||||||||||||||||||||||||
| Information systems and communications | 385 | 376 | 395 | 394 | 421 | 9.4 | 6.9 | |||||||||||||||||||||||||||||||||||||||||||
| Transaction processing services | 254 | 233 | 234 | 257 | 270 | 6.3 | 5.1 | |||||||||||||||||||||||||||||||||||||||||||
| Occupancy | 109 | 109 | 109 | 162 | 109 | — | (32.7) | |||||||||||||||||||||||||||||||||||||||||||
| Acquisition and restructuring costs | 11 | 12 | 15 | 12 | 10 | (9.1) | (16.7) | |||||||||||||||||||||||||||||||||||||||||||
| Amortization of other intangible assets | 58 | 58 | 59 | 59 | 58 | — | (1.7) | |||||||||||||||||||||||||||||||||||||||||||
| Other | 230 | 243 | 229 | 263 | 222 | (3.5) | (15.6) | |||||||||||||||||||||||||||||||||||||||||||
| Total expenses | 2,255 | 2,082 | 2,103 | 2,276 | 2,332 | 3.4 | 2.5 | |||||||||||||||||||||||||||||||||||||||||||
| Income before income tax expense | 774 | 803 | 681 | 641 | 627 | (19.0) | (2.2) | |||||||||||||||||||||||||||||||||||||||||||
| Income tax expense | 140 | 109 | 126 | 104 | 108 | (22.9) | 3.8 | |||||||||||||||||||||||||||||||||||||||||||
| Net income | $ | 634 | $ | 694 | $ | 555 | $ | 537 | $ | 519 | (18.1) | (3.4) | ||||||||||||||||||||||||||||||||||||||
4
| STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED RESULTS OF OPERATIONS (Continued) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarters | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions, except per share amounts, or where otherwise noted) | 1Q20 | 2Q20 | 3Q20 | 4Q20 | 1Q21 | 1Q21 vs. 1Q20 | 1Q21 vs. 4Q20 | |||||||||||||||||||||||||||||||||||||||||||
| Adjustments to net income: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends on preferred stock(2)(3) | $ | (53) | $ | (32) | $ | (38) | $ | (39) | $ | (30) | (43.4) | % | (23.1) | % | ||||||||||||||||||||||||||||||||||||
| Earnings allocated to participating securities | (1) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Net income available to common shareholders | $ | 580 | $ | 662 | $ | 517 | $ | 498 | $ | 489 | (15.7) | (1.8) | ||||||||||||||||||||||||||||||||||||||
| Per common share: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Basic earnings | $ | 1.64 | $ | 1.88 | $ | 1.47 | $ | 1.41 | $ | 1.39 | (15.2) | (1.4) | ||||||||||||||||||||||||||||||||||||||
| Diluted earnings | 1.62 | 1.86 | 1.45 | 1.39 | 1.37 | (15.4) | (1.4) | |||||||||||||||||||||||||||||||||||||||||||
| Average common shares outstanding (in thousands): | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Basic | 353,746 | 352,157 | 352,586 | 352,974 | 350,743 | (0.8) | (0.6) | |||||||||||||||||||||||||||||||||||||||||||
| Diluted | 357,993 | 356,413 | 357,168 | 357,719 | 355,690 | (0.6) | (0.6) | |||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared per common share | $ | .52 | $ | .52 | $ | .52 | $ | .52 | $ | .52 | — | — | ||||||||||||||||||||||||||||||||||||||
| Closing price per share of common stock (as of quarter end) | 53.27 | 63.55 | 59.33 | 72.78 | 84.01 | 57.7 | 15.4 | |||||||||||||||||||||||||||||||||||||||||||
| Financial ratios: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Effective tax rate | 18.1 | % | 13.6 | % | 18.5 | % | 16.1 | % | 17.2 | % | (90) | bps | 110 | bps | ||||||||||||||||||||||||||||||||||||
| Return on average common equity | 10.9 | 12.1 | 8.9 | 8.4 | 8.4 | (250) | — | |||||||||||||||||||||||||||||||||||||||||||
Return on tangible common equity(4) | 18.7 | 19.2 | 16.8 | 15.6 | 13.4 | (530) | (220) | |||||||||||||||||||||||||||||||||||||||||||
| Pre-tax margin | 25.3 | 27.3 | 24.5 | 22.0 | 21.3 | (400) | (70) | |||||||||||||||||||||||||||||||||||||||||||
Pre-tax margin, excluding notable items(5) | 25.6 | 27.7 | 24.7 | 26.9 | 22.6 | (300) | (430) | |||||||||||||||||||||||||||||||||||||||||||
(1) Certain fees associated with our GLD ETFs have been reclassified from Foreign exchange trading services to Management fees to better reflect the nature of those fees. Prior periods have been reclassified to conform to current-period presentation. These fees were approximately $15 million, $19 million, $24 million and $23 million in the first, second, third and fourth quarters of 2020, respectively. | ||||||||||||||||||||||||||||||||||||||||||||||||||
(2) We redeemed all outstanding Series C noncumulative perpetual preferred stock on March 15, 2020 at a redemption price of $500 million ($100,000 per share equivalent to $25.00 per depositary share) plus accrued and unpaid dividends. The difference between the redemption value and the net carrying value of approximately $9 million resulted in an EPS impact of approximately ($.03) per share in the first quarter of 2020. | ||||||||||||||||||||||||||||||||||||||||||||||||||
(3) 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||
(4) 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||
(5) Notable items include acquisition and restructuring costs and other notable items. Refer to Reconciliations of non-GAAP Financial Information pages for details. | ||||||||||||||||||||||||||||||||||||||||||||||||||
nm Denotes not meaningful | ||||||||||||||||||||||||||||||||||||||||||||||||||
5
| STATE STREET CORPORATION | |||||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | |||||||||||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENT OF CONDITION | |||||||||||||||||||||||||||||||||||||||||||||||
| As of | % Change | ||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions, except per share amounts) | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | March 31, 2021 | 1Q21 vs. 1Q20 | 1Q21 vs. 4Q20 | ||||||||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash and due from banks | $ | 4,932 | $ | 3,685 | $ | 4,848 | $ | 3,467 | $ | 4,552 | (7.7) | % | 31.3 | % | |||||||||||||||||||||||||||||||||
| Interest-bearing deposits with banks | 147,735 | 90,199 | 75,967 | 116,960 | 107,554 | (27.2) | (8.0) | ||||||||||||||||||||||||||||||||||||||||
| Securities purchased under resale agreements | 1,037 | 4,026 | 4,499 | 3,106 | 5,238 | nm | 68.6 | ||||||||||||||||||||||||||||||||||||||||
| Trading account assets | 872 | 883 | 840 | 815 | 786 | (9.9) | (3.6) | ||||||||||||||||||||||||||||||||||||||||
| Investment securities: | |||||||||||||||||||||||||||||||||||||||||||||||
| Investment securities available-for-sale | 55,843 | 56,231 | 61,780 | 59,048 | 60,512 | 8.4 | 2.5 | ||||||||||||||||||||||||||||||||||||||||
Investment securities held-to-maturity purchased under money market liquidity facility(1) | 26,808 | 11,257 | 4,824 | 3,299 | 201 | (99.3) | (93.9) | ||||||||||||||||||||||||||||||||||||||||
Investment securities held-to-maturity(2) | 41,150 | 41,848 | 45,394 | 48,929 | 46,261 | 12.4 | (5.5) | ||||||||||||||||||||||||||||||||||||||||
| Total investment securities | 123,801 | 109,336 | 111,998 | 111,276 | 106,974 | (13.6) | (3.9) | ||||||||||||||||||||||||||||||||||||||||
| Loans | 32,379 | 26,860 | 27,035 | 27,925 | 31,585 | (2.5) | 13.1 | ||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses(3) | 97 | 141 | 134 | 122 | 118 | 21.6 | (3.3) | ||||||||||||||||||||||||||||||||||||||||
| Loans, net | 32,282 | 26,719 | 26,901 | 27,803 | 31,467 | (2.5) | 13.2 | ||||||||||||||||||||||||||||||||||||||||
Premises and equipment, net(4) | 2,225 | 2,212 | 2,193 | 2,154 | 2,143 | (3.7) | (0.5) | ||||||||||||||||||||||||||||||||||||||||
| Accrued interest and fees receivable | 3,274 | 3,235 | 3,291 | 3,105 | 3,302 | 0.9 | 6.3 | ||||||||||||||||||||||||||||||||||||||||
| Goodwill | 7,506 | 7,538 | 7,607 | 7,683 | 7,629 | 1.6 | (0.7) | ||||||||||||||||||||||||||||||||||||||||
| Other intangible assets | 1,963 | 1,914 | 1,870 | 1,827 | 2,007 | 2.2 | 9.9 | ||||||||||||||||||||||||||||||||||||||||
| Other assets | 36,900 | 30,495 | 32,061 | 36,510 | 45,233 | 22.6 | 23.9 | ||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 362,527 | $ | 280,242 | $ | 272,075 | $ | 314,706 | $ | 316,885 | (12.6) | 0.7 | |||||||||||||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest-bearing | $ | 69,404 | $ | 42,132 | $ | 41,183 | $ | 49,439 | $ | 57,079 | (17.8) | 15.5 | |||||||||||||||||||||||||||||||||||
| Interest-bearing -- U.S. | 110,106 | 87,197 | 85,434 | 102,331 | 108,372 | (1.6) | 5.9 | ||||||||||||||||||||||||||||||||||||||||
| Interest-bearing -- Non-U.S. | 77,594 | 71,133 | 70,896 | 88,028 | 79,442 | 2.4 | (9.8) | ||||||||||||||||||||||||||||||||||||||||
Total deposits(5) | 257,104 | 200,462 | 197,513 | 239,798 | 244,893 | (4.7) | 2.1 | ||||||||||||||||||||||||||||||||||||||||
| Securities sold under repurchase agreements | 5,373 | 3,513 | 2,430 | 3,413 | 587 | (89.1) | (82.8) | ||||||||||||||||||||||||||||||||||||||||
| Short-term borrowings under money market liquidity facility | 25,665 | 11,261 | 4,819 | 3,302 | 200 | (99.2) | (93.9) | ||||||||||||||||||||||||||||||||||||||||
| Other short-term borrowings | 4,835 | 912 | 5,838 | 685 | 642 | (86.7) | (6.3) | ||||||||||||||||||||||||||||||||||||||||
| Accrued expenses and other liabilities | 30,151 | 23,634 | 22,064 | 27,503 | 31,722 | 5.2 | 15.3 | ||||||||||||||||||||||||||||||||||||||||
| Long-term debt | 15,538 | 15,587 | 13,853 | 13,805 | 13,836 | (11.0) | 0.2 | ||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 338,666 | 255,369 | 246,517 | 288,506 | 291,880 | (13.8) | 1.2 | ||||||||||||||||||||||||||||||||||||||||
| 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 | 742 | 742 | 742 | 742 | 247 | (66.7) | (66.7) | ||||||||||||||||||||||||||||||||||||||||
| 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 | 10,155 | 10,179 | 10,192 | 10,205 | 10,227 | 0.7 | 0.2 | ||||||||||||||||||||||||||||||||||||||||
| Retained earnings | 22,315 | 22,794 | 23,128 | 23,442 | 23,751 | 6.4 | 1.3 | ||||||||||||||||||||||||||||||||||||||||
| Accumulated other comprehensive income (loss) | (920) | (430) | (111) | 187 | (418) | (54.6) | nm | ||||||||||||||||||||||||||||||||||||||||
Treasury stock, at cost(8) | (10,664) | (10,645) | (10,626) | (10,609) | (11,035) | 3.5 | 4.0 | ||||||||||||||||||||||||||||||||||||||||
| Total shareholders' equity | 23,861 | 24,873 | 25,558 | 26,200 | 25,005 | 4.8 | (4.6) | ||||||||||||||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 362,527 | $ | 280,242 | $ | 272,075 | $ | 314,706 | $ | 316,885 | (12.6) | 0.7 | |||||||||||||||||||||||||||||||||||
(1)Fair value of Investment securities held-to-maturity purchased under money market liquidity facility | $ | 26,808 | $ | 11,294 | $ | 4,841 | $ | 3,304 | $ | 201 | |||||||||||||||||||||||||||||||||||||
(2) Fair value of investment securities held-to-maturity | 42,201 | 43,037 | 46,510 | 50,003 | 46,752 | ||||||||||||||||||||||||||||||||||||||||||
(3) Total allowance for credit losses including off-balance sheet commitments | 124 | 163 | 153 | 148 | 135 | ||||||||||||||||||||||||||||||||||||||||||
(4) Accumulated depreciation for premises and equipment | 4,459 | 4,591 | 4,744 | 4,825 | 4,960 | ||||||||||||||||||||||||||||||||||||||||||
(5) Average total deposits | 180,160 | 197,069 | 189,226 | 206,343 | 226,232 | ||||||||||||||||||||||||||||||||||||||||||
(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 | 351,943,858 | 352,383,250 | 352,797,695 | 353,156,279 | 348,032,982 | ||||||||||||||||||||||||||||||||||||||||||
(8) Treasury stock shares | 151,935,784 | 151,496,392 | 151,081,947 | 150,723,363 | 155,846,660 | ||||||||||||||||||||||||||||||||||||||||||
6
| 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 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1Q20 | 2Q20 | 3Q20 | 4Q20 | 1Q21 | 1Q21 vs. 1Q20 | 1Q21 vs. 4Q20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (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 | $ | 67,120 | 0.49 | % | $ | 86,744 | 0.01 | % | $ | 72,717 | (0.03) | % | $ | 79,779 | (0.02) | % | $ | 95,235 | (0.04) | % | 41.9 | % | 19.4 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities purchased under resale agreements(2) | 1,805 | 14.38 | 3,342 | 2.95 | 4,181 | 1.91 | 4,459 | 1.47 | 4,568 | 0.88 | 153.1 | 2.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Trading account assets | 915 | — | 877 | — | 900 | — | 820 | — | 800 | — | (12.6) | (2.4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment securities available-for-sale | 54,242 | 1.59 | 57,462 | 1.31 | 59,593 | 1.02 | 60,799 | 1.00 | 59,191 | 0.95 | 9.1 | (2.6) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment securities held-to-maturity | 41,273 | 2.62 | 40,127 | 2.32 | 43,367 | 1.77 | 47,007 | 1.60 | 47,356 | 1.54 | 14.7 | 0.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment securities held-to-maturity purchased under money market liquidity facility | 2,045 | 1.57 | 19,037 | 1.49 | 7,488 | 1.32 | 4,212 | 1.35 | 1,262 | 1.35 | (38.3) | (70.0) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total investment securities | 97,560 | 2.03 | 116,626 | 1.69 | 110,448 | 1.33 | 112,018 | 1.27 | 107,809 | 1.21 | 10.5 | (3.8) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans (3) | 28,468 | 2.62 | 27,369 | 2.30 | 25,974 | 2.13 | 28,298 | 2.05 | 28,025 | 2.05 | (1.6) | (1.0) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other interest-earning assets | 10,764 | 1.70 | 9,831 | 0.13 | 11,586 | 0.10 | 12,824 | 0.10 | 18,296 | 0.10 | 70.0 | 42.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | 206,632 | 1.70 | 244,789 | 1.12 | 225,806 | 0.92 | 238,198 | 0.86 | 254,733 | 0.76 | 23.3 | 6.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and due from banks | 3,856 | 3,480 | 3,652 | 4,403 | 4,529 | 17.5 | 2.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other assets | 40,693 | 36,419 | 34,926 | 34,454 | 37,066 | (8.9) | 7.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 251,181 | $ | 284,688 | $ | 264,384 | $ | 277,055 | $ | 296,328 | 18.0 | 7.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | $ | 80,247 | 0.50 | % | $ | 91,097 | 0.03 | % | $ | 85,432 | 0.02 | % | $ | 92,962 | 0.01 | % | $ | 100,974 | 0.01 | % | 25.8 | 8.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-U.S.(4) | 64,340 | (0.20) | 66,977 | (0.36) | 69,514 | (0.37) | 74,324 | (0.40) | 78,433 | (0.37) | 21.9 | 5.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total interest-bearing deposits(4) | 144,587 | 0.19 | 158,074 | (0.13) | 154,946 | (0.16) | 167,286 | (0.17) | 179,407 | (0.16) | 24.1 | 7.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Securities sold under repurchase agreements | 1,773 | 0.55 | 3,394 | 0.03 | 2,891 | 0.08 | 2,402 | 0.07 | 1,017 | 0.05 | (42.6) | (57.7) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Short-term borrowings under money market liquidity facility | 2,187 | 1.11 | 19,036 | 1.23 | 7,449 | 1.24 | 4,209 | 1.23 | 1,264 | 1.21 | (42.2) | (70.0) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other short-term borrowings | 2,960 | 1.32 | 3,073 | 0.66 | 1,724 | 0.44 | 1,164 | 0.25 | 764 | 0.14 | (74.2) | (34.4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-term debt | 13,288 | 2.64 | 15,574 | 2.45 | 14,794 | 1.86 | 13,830 | 1.75 | 13,819 | 1.74 | 4.0 | (0.1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other interest-bearing liabilities | 3,434 | 3.55 | 3,461 | 1.07 | 2,764 | 1.28 | 3,050 | 1.20 | 4,848 | 0.73 | 41.2 | 59.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 168,229 | 0.49 | 202,612 | 0.23 | 184,568 | 0.09 | 191,941 | 0.03 | 201,119 | 0.01 | 19.6 | 4.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest bearing deposits | 35,573 | 38,995 | 34,280 | 39,057 | 46,825 | 31.6 | 19.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other liabilities | 23,052 | 18,678 | 20,050 | 20,087 | 22,423 | (2.7) | 11.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred shareholders' equity | 2,861 | 2,472 | 2,472 | 2,472 | 2,378 | (16.9) | (3.8) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common shareholders' equity | 21,466 | 21,931 | 23,014 | 23,498 | 23,583 | 9.9 | 0.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 251,181 | $ | 284,688 | $ | 264,384 | $ | 277,055 | $ | 296,328 | 18.0 | 7.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Excess of rate earned over rate paid | 1.21 | % | 0.89 | % | 0.83 | % | 0.84 | % | 0.75 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin | 1.30 | % | 0.93 | % | 0.85 | % | 0.84 | % | 0.75 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income, fully taxable-equivalent basis | $ | 668 | $ | 564 | $ | 482 | $ | 503 | $ | 471 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tax-equivalent adjustment | (4) | (5) | (4) | (4) | (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest income, GAAP-basis(4) | $ | 664 | $ | 559 | $ | 478 | $ | 499 | $ | 467 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(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 $124 billion, $103 billion, $83 billion and $91 billion in the first, second, third and fourth quarters of 2020, respectively, and approximately $87 billion in the first quarter of 2021. Excluding the impact of netting, the average interest rates would be approximately 0.21%, 0.09%, 0.09% and 0.07% in the first, second, third and fourth quarters of 2020, respectively, and approximately 0.04% in the first quarter of 2021. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(3) Average loans are presented on a gross basis. We adopted ASU 2016-13 on January 1, 2020, Allowance for Credit Losses. Average loans net of expected credit losses of approximately $28,398 million, $27,277 million, $25,839 million and $28,168 million in the first, second, third and fourth quarters of 2020, respectively, and approximately $27,904 million in the first quarter of 2021. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(4) Average rates includes the impact of FX swap expense of approximately ($2) million, ($17) million, ($19) million and ($25) million in the first, second, third and fourth quarters of 2020, respectively, and approximately ($21) million in the first quarter of 2021. Average rates for total interest-bearing deposits excluding the impact of FX swap expense were approximately 0.19%, (0.09)%, (0.11)% and (0.11)% for the first, second, third and fourth quarters of 2020, respectively, and approximately (0.11)% for the first quarter of 2021. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7
| STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INVESTMENT PORTFOLIO HOLDINGS BY ASSET CLASS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarters | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1Q20 | 2Q20 | 3Q20 | 4Q20 | 1Q21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (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 | $ | 21.6 | 0.8 % | $ | 24.9 | 0.6 % | $ | 27.5 | 0.5 | % | $ | 28.7 | 0.5 % | $ | 28.5 | 0.4 | % | |||||||||||||||||||||||||||||||||||||||||||||
| Asset-backed securities | 6.4 | 1.5 | 5.9 | 1.3 | 6.5 | 1.0 | 7.4 | 0.9 | 7.9 | 0.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Student loans | 0.5 | 2.6 | 0.4 | 2.3 | 0.4 | 1.3 | 0.3 | 1.2 | 0.3 | 0.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit cards | 0.2 | 1.6 | 0.1 | 1.3 | 0.1 | 1.0 | 0.1 | 0.9 | 0.1 | 0.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Auto & equipment | 1.0 | 0.2 | 0.9 | 0.1 | 0.9 | 0.1 | 1.1 | — | 1.1 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-U.S. residential mortgage backed securities | 1.8 | 1.2 | 1.7 | 0.9 | 1.8 | 0.8 | 1.9 | 0.8 | 2.0 | 0.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Collateralized loan obligation | 2.7 | 2.0 | 2.7 | 1.8 | 3.1 | 1.3 | 3.7 | 1.2 | 4.2 | 1.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 0.2 | 0.2 | 0.1 | 0.2 | 0.2 | 0.1 | 0.3 | — | 0.2 | (0.1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage-backed securities | 15.3 | 2.8 | 16.1 | 2.3 | 14.4 | 1.9 | 13.1 | 1.8 | 10.3 | 1.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Agency MBS | 15.3 | 2.8 | 16.1 | 2.3 | 14.4 | 1.9 | 13.1 | 1.8 | 10.3 | 1.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-agency MBS | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| CMBS | 2.8 | 2.3 | 2.8 | 1.6 | 3.0 | 1.1 | 3.4 | 0.9 | 3.8 | 0.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Corporate bonds | 4.7 | 1.9 | 4.4 | 1.8 | 5.0 | 1.5 | 5.4 | 1.4 | 5.4 | 1.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Covered bonds | 0.6 | 0.5 | 0.5 | 0.3 | 0.5 | 0.3 | 0.5 | 0.2 | 0.5 | 0.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Municipal bonds | 0.8 | 2.7 | 0.8 | 2.7 | 0.9 | 2.6 | 0.8 | 2.6 | 0.8 | 2.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Clipper tax-exempt bonds | 0.9 | 3.9 | 0.9 | 3.9 | 0.9 | 3.8 | 0.8 | 3.8 | 0.7 | 3.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 1.1 | 1.5 | 1.2 | 1.1 | 0.9 | 0.8 | 0.7 | 1.0 | 1.3 | 0.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total available-for-sale portfolio | $ | 54.2 | 1.6 | $ | 57.5 | 1.3 | $ | 59.6 | 1.0 | $ | 60.8 | 1.0 | $ | 59.2 | 0.9 | |||||||||||||||||||||||||||||||||||||||||||||||
| 1Q20 | 2Q20 | 3Q20 | 4Q20 | 1Q21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (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 | $ | 10.3 | 2.0 % | $ | 8.9 | 2.0 % | $ | 8.1 | 2.0 % | $ | 6.5 | 2.2 % | 6.0 | 2.1 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Asset-backed securities | 4.2 | 2.7 | 4.4 | 1.8 | 4.5 | 1.3 | 5.0 | 1.3 | 5.0 | 1.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Student loans | 3.8 | 2.6 | 4.1 | 1.6 | 4.2 | 1.1 | 4.7 | 1.1 | 4.7 | 1.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-U.S. residential mortgage backed securities | 0.4 | 4.0 | 0.3 | 3.3 | 0.3 | 3.1 | 0.3 | 4.0 | 0.3 | 4.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | — | 2.7 | — | 1.5 | — | 1.2 | — | 1.2 | — | 1.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage-backed securities | 24.1 | 2.8 | 23.3 | 2.4 | 26.7 | 1.9 | 30.7 | 1.6 | 31.3 | 1.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Agency MBS | 24.0 | 2.7 | 23.2 | 2.4 | 26.6 | 1.9 | 30.6 | 1.6 | 31.2 | 1.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-agency MBS | 0.1 | 6.3 | 0.1 | 4.2 | 0.1 | 4.4 | 0.1 | 4.7 | 0.1 | 4.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| CMBS | 2.7 | 2.3 | 3.5 | 1.9 | 4.1 | 1.7 | 4.8 | 1.6 | 5.0 | 1.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Held-to-maturity under money market liquidity facility | 2.0 | 1.6 | 19.0 | 1.5 | 7.5 | 1.3 | 4.2 | 1.4 | 1.3 | 1.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total held-for-maturity portfolio | $ | 43.3 | 2.5 | $ | 59.1 | 2.0 | $ | 50.9 | 1.7 | $ | 51.2 | 1.6 | $ | 48.6 | 1.5 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total investment securities | $ | 97.6 | 2.0 | $ | 116.6 | 1.7 | $ | 110.5 | 1.3 | $ | 112.0 | 1.3 | $ | 107.8 | 1.2 | |||||||||||||||||||||||||||||||||||||||||||||||
8
| 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 | 31 % | 31 | % | 26 | % | 4 | % | 6 | % | 1 | % | 1 | % | $ | 29.0 | 47.9 | % | $ | 141 | 97% / 3% | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Asset-backed securities | — | 94 | 6 | — | — | — | — | 8.5 | 14.0 | 23 | 0% / 100% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Student loans | — | 37 | 63 | — | — | — | — | 0.3 | 3.4 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit cards | — | 100 | — | — | — | — | — | 0.1 | 1.1 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Auto & equipment | — | 83 | 17 | — | — | — | — | 1.2 | 13.9 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-U.S. residential mortgage backed securities | — | 96 | 4 | — | — | — | — | 2.0 | 24.0 | 11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Collateralized loan obligation | — | 100 | — | — | — | — | — | 4.7 | 55.3 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | — | 62 | 38 | — | — | — | — | 0.2 | 2.3 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage-backed securities | 100 | — | — | — | — | — | — | 10.0 | 16.5 | 216 | 99% / 1% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Agency MBS | 100 | — | — | — | — | — | — | 10.0 | 100.0 | 216 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-agency MBS | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CMBS | 98 | 2 | — | — | — | — | — | 4.5 | 7.5 | 29 | 10% / 90% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Corporate bonds | — | — | 10 | 36 | 54 | — | — | 5.4 | 8.9 | 69 | 98% / 2% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Covered bonds | — | 100 | — | — | — | — | — | 0.4 | 0.7 | 4 | 16% / 84% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Municipal bonds | — | 25 | 71 | 4 | — | — | — | 0.8 | 1.3 | 53 | 100% / 0% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Clipper tax-exempt bonds | — | 14 | 61 | 18 | 7 | — | — | 0.7 | 1.1 | 14 | 0% / 100% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | — | 8 | 59 | 33 | — | — | — | 1.3 | 2.1 | (16) | 88% / 12% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total available-for-sale portfolio | 39 | % | 30 | % | 17 | % | 6 | % | 8 | % | — | % | — | % | $ | 60.5 | 100.0 | % | $ | 533 | 75% / 25% | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value | $ | 23.4 | $ | 18.0 | $ | 10.4 | $ | 3.8 | $ | 4.6 | $ | 0.2 | $ | 0.2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | 96 | % | 4 | % | — | % | — | % | — | % | — | % | — | % | $ | 5.8 | 12.5 | % | $ | 62 | 100% / 0% | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Asset-backed securities | — | 32 | 63 | 1 | 3 | 1 | — | 5.0 | 10.8 | 81 | 6% / 94% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Student loans | — | 32 | 65 | — | 3 | — | — | 4.7 | 94.2 | 21 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-U.S. residential mortgage backed securities | — | 24 | 28 | 17 | 12 | 17 | 2 | 0.3 | 5.8 | 60 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | — | — | — | 100 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage-backed securities | 100 | — | — | — | — | — | — | 30.3 | 65.1 | 500 | 99% / 1% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Agency MBS | 100 | — | — | — | — | — | — | 30.2 | 99.7 | 472 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-agency MBS | — | 1 | 7 | 9 | 20 | 42 | 21 | 0.1 | 0.3 | 28 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CMBS | 91 | 9 | — | — | — | — | — | 5.2 | 11.2 | (88) | 87% / 13% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Held-to-maturity under money market liquidity facility | — | — | — | — | — | — | 100 | 0.2 | 0.4 | — | 100% / 0% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total held-for-maturity portfolio | 88 | % | 5 | % | 7 | % | — | % | — | % | — | % | — | % | $ | 46.5 | 100.0 | % | $ | 555 | 88% / 12% | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Amortized Cost | $ | 40.4 | $ | 2.3 | $ | 3.2 | $ | 0.1 | $ | 0.2 | $ | 0.1 | $ | 0.2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total investment securities | $ | 107.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) At March 31, 2021, the after-tax unrealized MTM gain/(loss) includes after-tax unrealized gain on securities available-for-sale of $394 million, after-tax unrealized gain on securities held-to-maturity of $362 million and after-tax unrealized loss primarily related to securities previously transferred from available-for-sale to held-to-maturity of $49 million. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) At March 31, 2021, fixed-to-floating rate securities had a book value of approximately $150 million or 0.14% of the total portfolio. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9
| 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 | MMLF | |||||||||||||||||||||||||||||||||||||||||||||||
| Available-for-sale: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| United Kingdom | $ | 3.8 | AAA | $ | 2.6 | $ | 0.5 | $ | 0.3 | $ | 0.4 | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||||||||||
| Canada | 3.6 | AA | 2.8 | — | — | 0.2 | — | 0.6 | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Germany | 3.2 | AA | 2.4 | — | 0.7 | 0.1 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Australia | 2.8 | AAA | 0.8 | 1.1 | — | 0.2 | — | 0.7 | — | |||||||||||||||||||||||||||||||||||||||||||||||
| France | 2.5 | AA | 1.2 | — | 0.8 | 0.3 | 0.2 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Netherlands | 1.4 | AA | 0.5 | 0.3 | 0.1 | 0.5 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Austria | 1.3 | AA | 1.3 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Spain | 1.2 | BBB | 1.2 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Belgium | 1.2 | AA | 1.1 | — | — | — | 0.1 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Italy | 0.9 | A | 0.6 | 0.1 | 0.2 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Finland | 0.8 | AA | 0.8 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Ireland | 0.8 | A | 0.8 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Japan | 0.5 | A | 0.5 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Luxembourg | 0.4 | AA | 0.3 | — | — | 0.1 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Other | 0.7 | AA | 0.4 | — | — | 0.2 | 0.1 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Total Non-U.S. Investments(3) | $ | 25.1 | $ | 17.3 | $ | 2.0 | $ | 2.1 | $ | 2.0 | $ | 0.4 | $ | 1.3 | $ | — | ||||||||||||||||||||||||||||||||||||||||
| U.S. Investments | 35.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total available-for-sale | $ | 60.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment Securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in billions) | Amortized Cost | Average Rating | Gov't/Agency(1)(2) | ABS FRMBS | ABS All Other | Corporate Bonds | Covered Bonds | Other | MMLF | |||||||||||||||||||||||||||||||||||||||||||||||
| Held-to-maturity: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Singapore | $ | 0.3 | AAA | $ | 0.3 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||||||||||
| Australia | 0.1 | A | — | 0.1 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| United Kingdom | 0.1 | AA | — | 0.1 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Spain | 0.1 | BBB | — | 0.1 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Total Non-U.S. Investments(3) | $ | 0.6 | $ | 0.3 | $ | 0.3 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||
| U.S. Investments | 45.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total held-for-maturity | $ | 46.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Portfolio | $ | 107.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) Sovereign debt is reflected in the government / agency column. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) As of March 31, 2021, the fair value included $10.1 billion of supranational and non-U.S. agency bonds. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(3) Country of collateral used except for corporates where country of issuer is used. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10
| STATE STREET CORPORATION | |||||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | |||||||||||||||||||||||||||||||||||||||||||||||
| ASSETS UNDER CUSTODY AND/OR ADMINISTRATION | |||||||||||||||||||||||||||||||||||||||||||||||
| Quarters | % Change | ||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in billions) | 1Q20 | 2Q20 | 3Q20 | 4Q20 | 1Q21 | 1Q21 vs. 1Q20 | 1Q21 vs. 4Q20 | ||||||||||||||||||||||||||||||||||||||||
| Assets Under Custody and/or Administration | |||||||||||||||||||||||||||||||||||||||||||||||
By Product Classification(1): | |||||||||||||||||||||||||||||||||||||||||||||||
| Mutual funds | $ | 7,301 | $ | 8,265 | $ | 9,183 | $ | 9,810 | $ | 10,439 | 43.0 | % | 6.4 | % | |||||||||||||||||||||||||||||||||
| Collective funds, including ETFs | 10,529 | 11,230 | 12,204 | 13,387 | 14,052 | 33.5 | 5.0 | ||||||||||||||||||||||||||||||||||||||||
| Pension products | 6,723 | 6,689 | 7,317 | 7,594 | 7,843 | 16.7 | 3.3 | ||||||||||||||||||||||||||||||||||||||||
| Insurance and other products | 7,311 | 7,331 | 7,939 | 8,000 | 7,929 | 8.5 | (0.9) | ||||||||||||||||||||||||||||||||||||||||
| Total Assets Under Custody and/or Administration | $ | 31,864 | $ | 33,515 | $ | 36,643 | $ | 38,791 | $ | 40,263 | 26.4 | 3.8 | |||||||||||||||||||||||||||||||||||
| By Financial Instrument: | |||||||||||||||||||||||||||||||||||||||||||||||
Equities | $ | 16,267 | $ | 18,190 | $ | 20,094 | $ | 21,626 | $ | 22,825 | 40.3 | 5.5 | |||||||||||||||||||||||||||||||||||
Fixed-income | 11,096 | 11,342 | 12,403 | 12,834 | 13,022 | 17.4 | 1.5 | ||||||||||||||||||||||||||||||||||||||||
Short-term and other investments | 4,501 | 3,983 | 4,146 | 4,331 | 4,416 | (1.9) | 2.0 | ||||||||||||||||||||||||||||||||||||||||
| Total Assets Under Custody and/or Administration | $ | 31,864 | $ | 33,515 | $ | 36,643 | $ | 38,791 | $ | 40,263 | 26.4 | 3.8 | |||||||||||||||||||||||||||||||||||
By Geographic Location(2): | |||||||||||||||||||||||||||||||||||||||||||||||
| Americas | $ | 22,787 | $ | 24,375 | $ | 26,666 | $ | 28,245 | $ | 29,530 | 29.6 | 4.5 | |||||||||||||||||||||||||||||||||||
| Europe/Middle East/Africa | 7,112 | 7,155 | 7,675 | 8,101 | 8,256 | 16.1 | 1.9 | ||||||||||||||||||||||||||||||||||||||||
| Asia/Pacific | 1,965 | 1,985 | 2,302 | 2,445 | 2,477 | 26.1 | 1.3 | ||||||||||||||||||||||||||||||||||||||||
| Total Assets Under Custody and/or Administration | $ | 31,864 | $ | 33,515 | $ | 36,643 | $ | 38,791 | $ | 40,263 | 26.4 | 3.8 | |||||||||||||||||||||||||||||||||||
Assets Under Custody(3) | |||||||||||||||||||||||||||||||||||||||||||||||
By Product Classification(1): | |||||||||||||||||||||||||||||||||||||||||||||||
| Mutual funds | $ | 6,659 | $ | 7,532 | $ | 7,838 | $ | 8,410 | $ | 8,811 | 32.3 | 4.8 | |||||||||||||||||||||||||||||||||||
| Collective funds, including ETFs | 8,784 | 9,460 | 10,210 | 11,230 | 11,895 | 35.4 | 5.9 | ||||||||||||||||||||||||||||||||||||||||
| Pension products | 5,386 | 5,354 | 5,852 | 6,085 | 6,283 | 16.7 | 3.3 | ||||||||||||||||||||||||||||||||||||||||
| Insurance and other products | 2,983 | 3,053 | 3,433 | 3,327 | 3,145 | 5.4 | (5.5) | ||||||||||||||||||||||||||||||||||||||||
| Total Assets Under Custody | $ | 23,812 | $ | 25,399 | $ | 27,333 | $ | 29,052 | $ | 30,134 | 26.5 | 3.7 | |||||||||||||||||||||||||||||||||||
By Geographic Location(2): | |||||||||||||||||||||||||||||||||||||||||||||||
| Americas | $ | 17,701 | $ | 19,226 | $ | 20,450 | $ | 21,822 | $ | 22,715 | 28.3 | 4.1 | |||||||||||||||||||||||||||||||||||
| Europe/Middle East/Africa | 4,666 | 4,714 | 5,212 | 5,465 | 5,564 | 19.2 | 1.8 | ||||||||||||||||||||||||||||||||||||||||
| Asia/Pacific | 1,445 | 1,459 | 1,671 | 1,765 | 1,855 | 28.4 | 5.1 | ||||||||||||||||||||||||||||||||||||||||
| Total Assets Under Custody | $ | 23,812 | $ | 25,399 | $ | 27,333 | $ | 29,052 | $ | 30,134 | 26.5 | 3.7 | |||||||||||||||||||||||||||||||||||
(1) Certain previously reported amounts presented have been reclassified to conform to current-period presentation. | |||||||||||||||||||||||||||||||||||||||||||||||
(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. | |||||||||||||||||||||||||||||||||||||||||||||||
11
| STATE STREET CORPORATION | |||||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | |||||||||||||||||||||||||||||||||||||||||||||||
| ASSETS UNDER MANAGEMENT | |||||||||||||||||||||||||||||||||||||||||||||||
| Quarters | % Change | ||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in billions) | 1Q20 | 2Q20 | 3Q20 | 4Q20 | 1Q21 | 1Q21 vs. 1Q20 | 1Q21 vs. 4Q20 | ||||||||||||||||||||||||||||||||||||||||
| Assets Under Management | |||||||||||||||||||||||||||||||||||||||||||||||
| By Asset Class and Investment Approach: | |||||||||||||||||||||||||||||||||||||||||||||||
| Equity: | |||||||||||||||||||||||||||||||||||||||||||||||
| Active | $ | 69 | $ | 77 | $ | 82 | $ | 85 | $ | 84 | 21.7 | % | (1.2) | % | |||||||||||||||||||||||||||||||||
| Passive | 1,492 | 1,768 | 1,876 | 2,086 | 2,198 | 47.3 | 5.4 | ||||||||||||||||||||||||||||||||||||||||
Total Equity(1) | 1,561 | 1,845 | 1,958 | 2,171 | 2,282 | 46.2 | 5.1 | ||||||||||||||||||||||||||||||||||||||||
| Fixed-Income: | |||||||||||||||||||||||||||||||||||||||||||||||
| Active | 86 | 88 | 85 | 90 | 91 | 5.8 | 1.1 | ||||||||||||||||||||||||||||||||||||||||
| Passive | 392 | 405 | 424 | 459 | 463 | 18.1 | 0.9 | ||||||||||||||||||||||||||||||||||||||||
Total Fixed-Income(1) | 478 | 493 | 509 | 549 | 554 | 15.9 | 0.9 | ||||||||||||||||||||||||||||||||||||||||
Cash(1)(2) | 348 | 376 | 321 | 349 | 372 | 6.9 | 6.6 | ||||||||||||||||||||||||||||||||||||||||
| Multi-Asset-Class Solutions: | |||||||||||||||||||||||||||||||||||||||||||||||
| Active | 39 | 41 | 40 | 40 | 34 | (12.8) | (15.0) | ||||||||||||||||||||||||||||||||||||||||
| Passive | 101 | 116 | 124 | 146 | 155 | 53.5 | 6.2 | ||||||||||||||||||||||||||||||||||||||||
Total Multi-Asset-Class Solutions(1) | 140 | 157 | 164 | 186 | 189 | 35.0 | 1.6 | ||||||||||||||||||||||||||||||||||||||||
Alternative Investments(3): | |||||||||||||||||||||||||||||||||||||||||||||||
| Active | 28 | 28 | 28 | 39 | 27 | (3.6) | (30.8) | ||||||||||||||||||||||||||||||||||||||||
| Passive | 134 | 155 | 168 | 173 | 167 | 24.6 | (3.5) | ||||||||||||||||||||||||||||||||||||||||
Total Alternative Investments(1) | 162 | 183 | 196 | 212 | 194 | 19.8 | (8.5) | ||||||||||||||||||||||||||||||||||||||||
| Total Assets Under Management | $ | 2,689 | $ | 3,054 | $ | 3,148 | $ | 3,467 | $ | 3,591 | 33.5 | 3.6 | |||||||||||||||||||||||||||||||||||
| By Geographic Location: | |||||||||||||||||||||||||||||||||||||||||||||||
| North America | $ | 1,843 | $ | 2,102 | $ | 2,163 | $ | 2,411 | $ | 2,512 | 36.3 | 4.2 | |||||||||||||||||||||||||||||||||||
| Europe/Middle East/Africa | 418 | 464 | 483 | 512 | 530 | 26.8 | 3.5 | ||||||||||||||||||||||||||||||||||||||||
| Asia/Pacific | 428 | 488 | 502 | 544 | 549 | 28.3 | 0.9 | ||||||||||||||||||||||||||||||||||||||||
| Total Assets Under Management | $ | 2,689 | $ | 3,054 | $ | 3,148 | $ | 3,467 | $ | 3,591 | 33.5 | 3.6 | |||||||||||||||||||||||||||||||||||
(1) As a result of the implementation of an improved internal data management system for product level data in the first quarter of 2021, asset class categorizations were reassessed resulting in some AUM reclasses between the categories presented. There was no impact to the total level of reported AUM. | |||||||||||||||||||||||||||||||||||||||||||||||
(2) Includes both floating- and constant-net-asset-value portfolios held in commingled structures or separate accounts. | |||||||||||||||||||||||||||||||||||||||||||||||
(3) 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) | $ | 58 | $ | 77 | $ | 88 | $ | 83 | $ | 69 | 19.0 | % | (16.9) | % | |||||||||||||||||||||||||||||||||
Equity(2) | 473 | 570 | 605 | 708 | 777 | 64.3 | 9.7 | ||||||||||||||||||||||||||||||||||||||||
Fixed-Income(2) | 98 | 107 | 108 | 115 | 122 | 24.5 | 6.1 | ||||||||||||||||||||||||||||||||||||||||
| Total Exchange-Traded Funds | $ | 629 | $ | 754 | $ | 801 | $ | 906 | $ | 968 | 53.9 | 6.8 | |||||||||||||||||||||||||||||||||||
(1) Exchange-traded funds are a component of assets under management presented above. | |||||||||||||||||||||||||||||||||||||||||||||||
(2) As a result of the implementation of an improved internal data management system for product level data in the first quarter of 2021, asset class categorizations were reassessed resulting in some AUM reclasses between the categories presented. There was no impact to the total level of reported AUM. | |||||||||||||||||||||||||||||||||||||||||||||||
12
| STATE STREET CORPORATION | |||||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | |||||||||||||||||||||||||||||||||||||||||
| INDUSTRY FLOW DATA BY ASSET CLASS | |||||||||||||||||||||||||||||||||||||||||
| (Dollars in billions) | Quarters | ||||||||||||||||||||||||||||||||||||||||
| 1Q20 | 2Q20 | 3Q20 | 4Q20 | 1Q21 | |||||||||||||||||||||||||||||||||||||
North America - (US Domiciled) Morningstar Direct Market Data(1)(2)(3) | |||||||||||||||||||||||||||||||||||||||||
Long Term Funds(4) | $ | (240.1) | $ | 56.3 | $ | 21.4 | $ | 74.1 | $ | 142.0 | |||||||||||||||||||||||||||||||
| Money Market | 664.8 | 259.4 | (165.8) | (82.3) | 176.2 | ||||||||||||||||||||||||||||||||||||
| ETF | 22.1 | 69.6 | 60.1 | 119.7 | 180.3 | ||||||||||||||||||||||||||||||||||||
| Total Flows | $ | 446.8 | $ | 385.3 | $ | (84.3) | $ | 111.5 | $ | 498.5 | |||||||||||||||||||||||||||||||
EMEA-Morningstar Direct Market Data(1)(2)(5) | |||||||||||||||||||||||||||||||||||||||||
Long Term Funds(4) | $ | (137.6) | $ | 167.6 | $ | 134.4 | $ | 249.9 | $ | 290.1 | |||||||||||||||||||||||||||||||
| Money Market | 11.6 | 152.8 | 60.0 | 58.6 | (52.8) | ||||||||||||||||||||||||||||||||||||
| ETF | (2.9) | 36.2 | 32.4 | 48.0 | 61.7 | ||||||||||||||||||||||||||||||||||||
| Total Flows | $ | (128.9) | $ | 356.6 | $ | 226.8 | $ | 356.5 | $ | 299.0 | |||||||||||||||||||||||||||||||
(1) Data providers for North America and EMEA industry flows were changed to Morningstar from other providers in 3Q20 for consistency across regions and other efficiency considerations. Data collection and tabulation methodologies among data providers differ. All periods presented reflect data sourced from Morningstar. Prior period data therefore differs from data previously presented, which was sourced from other data providers. Industry data is provided for illustrative purposes only. It is not intended to reflect State Street’s activity or its clients’ activity and is indicative of only segments of the entire industry. | |||||||||||||||||||||||||||||||||||||||||
(2) 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. | |||||||||||||||||||||||||||||||||||||||||
(3) The first quarter of 2021 data for North America (US domiciled) includes Morningstar actuals January and February 2021 and Morningstar estimates for March 2021. | |||||||||||||||||||||||||||||||||||||||||
(4) 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. | |||||||||||||||||||||||||||||||||||||||||
(5) The first quarter of 2021 data for Europe is on a rolling three month basis for December 2020 through February 2021, sourced by Morningstar. | |||||||||||||||||||||||||||||||||||||||||
13
| 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 | 4Q20 | 1Q20 | 1Q21 vs. 4Q20 | 1Q21 vs. 1Q20 | 1Q21 | 4Q20 | 1Q20 | 1Q21 vs. 4Q20 | 1Q21 vs. 1Q20 | 1Q21 | 4Q20 | 1Q20 | 1Q21 vs. 4Q20 | 1Q21 vs. 1Q20 | 1Q21 | 4Q20 | 1Q20 | 1Q21 vs. 4Q20 | 1Q21 vs. 1Q20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Servicing fees | $ | 1,371 | $ | 1,307 | $ | 1,287 | 4.9 | % | 6.5 | % | $ | — | $ | — | $ | — | — | % | — | % | $ | — | $ | — | $ | — | — | % | — | % | $ | 1,371 | $ | 1,307 | $ | 1,287 | 4.9 | % | 6.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Management fees | — | — | — | — | — | 493 | 493 | 464 | — | 6.3 | — | — | — | — | — | 493 | 493 | 464 | — | 6.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign exchange trading services | 333 | 301 | 434 | 10.6 | (23.3) | 13 | 23 | 10 | (43.5) | 30.0 | — | — | — | — | — | 346 | 324 | 444 | 6.8 | (22.1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Securities finance | 95 | 84 | 89 | 13.1 | 6.7 | 4 | 4 | 3 | — | 33.3 | — | — | — | — | — | 99 | 88 | 92 | 12.5 | 7.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Software and processing fees | 172 | 178 | 137 | (3.4) | 25.5 | 2 | 26 | (25) | (92.3) | nm | — | — | — | — | — | 174 | 204 | 112 | (14.7) | 55.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total fee revenue | 1,971 | 1,870 | 1,947 | 5.4 | 1.2 | 512 | 546 | 452 | (6.2) | 13.3 | — | — | — | — | — | 2,483 | 2,416 | 2,399 | 2.8 | 3.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | 473 | 495 | 663 | (4.4) | (28.7) | (6) | 4 | 1 | nm | nm | — | — | — | — | — | 467 | 499 | 664 | (6.4) | (29.7) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total other income | — | 2 | 2 | nm | nm | — | — | — | — | — | — | — | — | — | — | — | 2 | 2 | nm | nm | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | 2,444 | 2,367 | 2,612 | 3.3 | (6.4) | 506 | 550 | 453 | (8.0) | 11.7 | — | — | — | — | — | 2,950 | 2,917 | 3,065 | 1.1 | (3.8) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Provision for loan losses | (9) | — | 36 | nm | nm | — | — | — | — | — | — | — | — | — | — | (9) | — | 36 | — | nm | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total expenses | 1,879 | 1,756 | 1,859 | 7.0 | 1.1 | 397 | 375 | 385 | 5.9 | 3.1 | 56 | 145 | 11 | (61.4) | nm | 2,332 | 2,276 | 2,255 | 2.5 | 3.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income before income tax expense | $ | 574 | $ | 611 | $ | 717 | (6.1) | (19.9) | $ | 109 | $ | 175 | $ | 68 | (37.7) | 60.3 | $ | (56) | $ | (145) | $ | (11) | (61.4) | nm | $ | 627 | $ | 641 | $ | 774 | (2.2) | (19.0) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pre-tax margin | 23.5 | % | 25.8 | % | 27.5 | % | (230) | (400) | bps | 21.5 | % | 31.8 | % | 15.0 | % | (1,030) | 650 | bps | 21.3 | % | 22.0 | % | 25.3 | % | (70) | (400) | 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DM Denotes not meaningful | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
14
| STATE STREET CORPORATION | |||||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | |||||||||||||||||||||||||||||||||||||||||||||||
| ALLOWANCE FOR CREDIT LOSSES | |||||||||||||||||||||||||||||||||||||||||||||||
| Quarters | % Change | ||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 1Q20 | 2Q20 | 3Q20 | 4Q20 | 1Q21 | 1Q21 vs. 1Q20 | 1Q21 vs. 4Q20 | ||||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses: | |||||||||||||||||||||||||||||||||||||||||||||||
| Beginning balance | $ | 93 | $ | 124 | $ | 163 | $ | 153 | $ | 148 | 59.1 | % | (3.3) | % | |||||||||||||||||||||||||||||||||
Provision for credit losses (funded commitments) | 29 | 57 | 3 | (6) | — | nm | nm | ||||||||||||||||||||||||||||||||||||||||
Provision for credit losses (unfunded commitments) | 3 | (4) | (2) | 6 | (7) | nm | nm | ||||||||||||||||||||||||||||||||||||||||
Provision for credit losses (held-to-maturity securities and all other) | 4 | (1) | (1) | — | (2) | nm | nm | ||||||||||||||||||||||||||||||||||||||||
| Total provision | 36 | 52 | — | — | (9) | nm | nm | ||||||||||||||||||||||||||||||||||||||||
| Charge-offs | (5) | (14) | (14) | (8) | — | nm | nm | ||||||||||||||||||||||||||||||||||||||||
Other(1) | — | 1 | 4 | 3 | (4) | — | nm | ||||||||||||||||||||||||||||||||||||||||
Ending balance(2) | $ | 124 | $ | 163 | $ | 153 | $ | 148 | $ | 135 | 8.9 | (8.8) | |||||||||||||||||||||||||||||||||||
| Allowance for credit losses: | |||||||||||||||||||||||||||||||||||||||||||||||
| Loans | $ | 97 | $ | 141 | $ | 134 | $ | 122 | $ | 118 | 21.6 | (3.3) | |||||||||||||||||||||||||||||||||||
| Held-to-maturity securities | 4 | 4 | 3 | 3 | 2 | (50.0) | (33.3) | ||||||||||||||||||||||||||||||||||||||||
| Unfunded (off-balance sheet) commitments | 22 | 18 | 15 | 22 | 15 | (31.8) | (31.8) | ||||||||||||||||||||||||||||||||||||||||
| All other | 1 | — | 1 | 1 | — | nm | nm | ||||||||||||||||||||||||||||||||||||||||
Ending balance(2) | $ | 124 | $ | 163 | $ | 153 | $ | 148 | $ | 135 | 8.9 | (8.8) | |||||||||||||||||||||||||||||||||||
(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 | |||||||||||||||||||||||||||||||||||||||||||||||
15
| 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) | 1Q20 | 2Q20 | 3Q20 | 4Q20 | 1Q21 | 1Q21 vs. 1Q20 | 1Q21 vs. 4Q20 | ||||||||||||||||||||||||||||||||||||||||||||||
| Fee Revenue: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total fee revenue, GAAP-basis | $ | 2,399 | $ | 2,378 | $ | 2,306 | $ | 2,416 | $ | 2,483 | 3.5 | % | 2.8 | % | |||||||||||||||||||||||||||||||||||||||
| Total fee revenue, excluding notable items | $ | 2,399 | $ | 2,378 | $ | 2,306 | $ | 2,416 | $ | 2,483 | 3.5 | 2.8 | |||||||||||||||||||||||||||||||||||||||||
| Total Revenue: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue, GAAP-basis | $ | 3,065 | $ | 2,937 | $ | 2,784 | $ | 2,917 | $ | 2,950 | (3.8) | % | 1.1 | % | |||||||||||||||||||||||||||||||||||||||
| Total revenue, excluding notable items | $ | 3,065 | $ | 2,937 | $ | 2,784 | $ | 2,917 | $ | 2,950 | (3.8) | 1.1 | |||||||||||||||||||||||||||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total expenses, GAAP-basis | $ | 2,255 | $ | 2,082 | $ | 2,103 | $ | 2,276 | $ | 2,332 | 3.4 | % | 2.5 | % | |||||||||||||||||||||||||||||||||||||||
| Less: Notable expense items: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition and restructuring costs(1) | (11) | (12) | (15) | (12) | (10) | (9.1) | (16.7) | ||||||||||||||||||||||||||||||||||||||||||||||
| Repositioning charges | — | — | — | (133) | — | — | nm | ||||||||||||||||||||||||||||||||||||||||||||||
| Legal and other | — | — | 9 | — | (29) | nm | nm | ||||||||||||||||||||||||||||||||||||||||||||||
| Total expenses, excluding notable items | $ | 2,244 | $ | 2,070 | $ | 2,097 | $ | 2,131 | $ | 2,293 | 2.2 | 7.6 | |||||||||||||||||||||||||||||||||||||||||
Fee Operating Leverage, GAAP-Basis: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total fee revenue, GAAP-basis | $ | 2,399 | $ | 2,378 | $ | 2,306 | $ | 2,416 | $ | 2,483 | 3.5 | % | 2.8 | % | |||||||||||||||||||||||||||||||||||||||
Total expenses, GAAP-basis | 2,255 | 2,082 | 2,103 | 2,276 | 2,332 | 3.4 | 2.5 | ||||||||||||||||||||||||||||||||||||||||||||||
| Fee operating leverage, GAAP-basis | 10 | bps | 30 | bps | |||||||||||||||||||||||||||||||||||||||||||||||||
Fee Operating Leverage, excluding notable items: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total fee revenue, excluding notable items (as reconciled above) | $ | 2,399 | $ | 2,378 | $ | 2,306 | $ | 2,416 | $ | 2,483 | 3.5 | % | 2.8 | % | |||||||||||||||||||||||||||||||||||||||
| Total expenses, excluding notable items (as reconciled above) | 2,244 | 2,070 | 2,097 | 2,131 | 2,293 | 2.2 | 7.6 | ||||||||||||||||||||||||||||||||||||||||||||||
| Fee operating leverage, excluding notable items | 130 | bps | (480) | bps | |||||||||||||||||||||||||||||||||||||||||||||||||
Operating Leverage, GAAP-Basis: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total revenue, GAAP-basis | $ | 3,065 | $ | 2,937 | $ | 2,784 | $ | 2,917 | $ | 2,950 | (3.8) | % | 1.1 | % | |||||||||||||||||||||||||||||||||||||||
Total expenses, GAAP-basis | 2,255 | 2,082 | 2,103 | 2,276 | 2,332 | 3.4 | 2.5 | ||||||||||||||||||||||||||||||||||||||||||||||
| Operating leverage, GAAP-basis | (720) | bps | (140) | bps | |||||||||||||||||||||||||||||||||||||||||||||||||
Operating Leverage, excluding notable items: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue, excluding notable items (as reconciled above) | $ | 3,065 | $ | 2,937 | $ | 2,784 | $ | 2,917 | $ | 2,950 | (3.8) | % | 1.1 | % | |||||||||||||||||||||||||||||||||||||||
| Total expenses, excluding notable items (as reconciled above) | 2,244 | 2,070 | 2,097 | 2,131 | 2,293 | 2.2 | 7.6 | ||||||||||||||||||||||||||||||||||||||||||||||
| Operating leverage, excluding notable items | (600) | bps | (650) | bps | |||||||||||||||||||||||||||||||||||||||||||||||||
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) | 1Q20 | 2Q20 | 3Q20 | 4Q20 | 1Q21 | 1Q21 vs. 1Q20 | 1Q21 vs. 4Q20 | ||||||||||||||||||||||||||||||||||||||||||||||
Net Income Available to Common Shareholders: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Available to Common Shareholders, GAAP-basis | $ | 580 | $ | 662 | $ | 517 | $ | 498 | $ | 489 | (15.7) | % | (1.8) | % | |||||||||||||||||||||||||||||||||||||||
| Less: Notable items | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition and restructuring costs(1) | 11 | 12 | 15 | 12 | 10 | ||||||||||||||||||||||||||||||||||||||||||||||||
Repositioning charges | — | — | — | 133 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Legal and other | — | — | (9) | — | 29 | ||||||||||||||||||||||||||||||||||||||||||||||||
Preferred securities redemption(2)(3) | 9 | — | — | — | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||
Tax impact of notable items | (3) | (3) | (4) | (37) | (10) | ||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Available to Common Shareholders, excluding notable items | $ | 597 | $ | 671 | $ | 519 | $ | 606 | $ | 523 | (12.4) | (13.7) | |||||||||||||||||||||||||||||||||||||||||
Diluted Earnings per Share: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Diluted earnings per share, GAAP-basis | $ | 1.62 | $ | 1.86 | $ | 1.45 | $ | 1.39 | $ | 1.37 | (15.4) | % | (1.4) | % | |||||||||||||||||||||||||||||||||||||||
| Less: Notable items | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition and restructuring costs(1) | 0.02 | 0.02 | 0.03 | 0.03 | 0.02 | ||||||||||||||||||||||||||||||||||||||||||||||||
Repositioning charges | — | — | — | 0.27 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Legal and other | — | — | (0.03) | — | 0.06 | ||||||||||||||||||||||||||||||||||||||||||||||||
Preferred securities redemption(2)(3) | 0.03 | — | — | — | 0.02 | ||||||||||||||||||||||||||||||||||||||||||||||||
Diluted earnings per share, excluding notable items | $ | 1.67 | $ | 1.88 | $ | 1.45 | $ | 1.69 | $ | 1.47 | (12.0) | (13.0) | |||||||||||||||||||||||||||||||||||||||||
Pre-tax Margin: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pre-tax margin, GAAP-basis | 25.3 | % | 27.3 | % | 24.5 | % | 22.0 | % | 21.3% | (400) | bps | (70) | bps | ||||||||||||||||||||||||||||||||||||||||
| Less: Notable items | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition and restructuring costs(1) | 0.3 | 0.4 | 0.5 | 0.4 | 0.3 | ||||||||||||||||||||||||||||||||||||||||||||||||
Repositioning charges | — | — | — | 4.5 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Legal and other | — | — | (0.3) | — | 1.0 | ||||||||||||||||||||||||||||||||||||||||||||||||
Pre-tax margin, excluding notable items | 25.6% | 27.7% | 24.7% | 26.9% | 22.6% | (300) | (430) | ||||||||||||||||||||||||||||||||||||||||||||||
Return on Average Common Equity: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Return on average common equity, GAAP-basis | 10.9 | % | 12.1 | % | 8.9 | % | 8.4 | % | 8.4 | % | (250) | bps | — | bps | |||||||||||||||||||||||||||||||||||||||
| Less: Notable items | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition and restructuring costs(1) | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | ||||||||||||||||||||||||||||||||||||||||||||||||
Repositioning charges | — | — | — | 2.4 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Legal and other | — | — | (0.1) | — | 0.5 | ||||||||||||||||||||||||||||||||||||||||||||||||
Preferred securities redemption(2)(3) | 0.2 | — | — | — | 0.1 | ||||||||||||||||||||||||||||||||||||||||||||||||
Tax impact of notable items | (0.1) | — | — | (0.7) | (0.2) | ||||||||||||||||||||||||||||||||||||||||||||||||
Return on average common equity, excluding notable items | 11.2% | 12.3% | 9.0% | 10.3% | 9.0% | (220) | (130) | ||||||||||||||||||||||||||||||||||||||||||||||
(1) Acquisition and restructuring costs of approximately $10 million in 1Q21, consisting of acquisition costs primarily related to CRD. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) We redeemed all outstanding Series C noncumulative perpetual preferred stock on March 15, 2020 at a redemption price of $500 million ($100,000 per share equivalent to $25.00 per depositary share) plus accrued and unpaid dividends. The difference between the redemption value and the net carrying value of approximately $9 million resulted in an EPS impact of approximately ($.03) per share in the first quarter of 2020. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(3) 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
17
| STATE STREET CORPORATION | ||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | ||||||||||||||||||||||||||||||||
| RECONCILIATION OF PRE-TAX MARGIN EXCLUDING NOTABLE ITEMS | ||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2017 | 2018(1) | 2019 | 2020 | ||||||||||||||||||||||||||||
| Total revenue: | ||||||||||||||||||||||||||||||||
| Total revenue, GAAP-basis | $ | 11,266 | $ | 12,131 | $ | 11,756 | $ | 11,703 | ||||||||||||||||||||||||
| Less: Gain on sale | (56) | — | — | — | ||||||||||||||||||||||||||||
| Add: Impact of tax legislation | 20 | — | — | — | ||||||||||||||||||||||||||||
| Add: Legal and other | — | 8 | — | — | ||||||||||||||||||||||||||||
| Less: Other income | — | — | (44) | — | ||||||||||||||||||||||||||||
| Total revenue, excluding notable items | 11,230 | 12,139 | 11,712 | 11,703 | ||||||||||||||||||||||||||||
| Provision for credit losses | 2 | 15 | 10 | 88 | ||||||||||||||||||||||||||||
| Total expenses: | ||||||||||||||||||||||||||||||||
| Total expenses, GAAP-basis | 8,269 | 9,015 | 9,034 | 8,716 | ||||||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||
| Acquisition and restructuring costs | (266) | (24) | (77) | (50) | ||||||||||||||||||||||||||||
| Legal and other | — | (42) | (172) | 9 | ||||||||||||||||||||||||||||
Repositioning charges(1) | — | (324) | (110) | (133) | ||||||||||||||||||||||||||||
| Total expenses, excluding notable items | 8,003 | 8,625 | 8,675 | 8,542 | ||||||||||||||||||||||||||||
| Income before income tax expense, excluding notable items | $ | 3,225 | $ | 3,499 | $ | 3,027 | $ | 3,073 | ||||||||||||||||||||||||
| Income before income tax expense, GAAP-basis | $ | 2,995 | $ | 3,101 | $ | 2,712 | $ | 2,899 | ||||||||||||||||||||||||
| Pre-tax margin, excluding notable items | 28.7 | % | 28.8 | % | 25.8 | % | 26.3 | % | ||||||||||||||||||||||||
| Pre-tax margin, GAAP-basis | 26.6 | 25.6 | 23.1 | 24.8 | ||||||||||||||||||||||||||||
(1) Includes charges in 2018 that were previously disclosed as "Business exit: Channel Islands". | ||||||||||||||||||||||||||||||||
18
| STATE STREET CORPORATION | |||||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | |||||||||||||||||||||||||||||||||||||||||||||||
| RECONCILIATION OF NOTABLE ITEMS | |||||||||||||||||||||||||||||||||||||||||||||||
| % Change | |||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 1Q20 | 2Q20 | 3Q20 | 4Q20 | 1Q21 | 1Q21 vs. 1Q20 | 1Q21 vs. 4Q20 | ||||||||||||||||||||||||||||||||||||||||
| Total revenue: | |||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue, GAAP-basis | $ | 3,065 | $ | 2,937 | $ | 2,784 | $ | 2,917 | $ | 2,950 | (3.8) | % | 1.1 | % | |||||||||||||||||||||||||||||||||
| Total revenue, excluding notable items | 3,065 | 2,937 | 2,784 | 2,917 | 2,950 | (3.8) | 1.1 | ||||||||||||||||||||||||||||||||||||||||
| Total expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
| Total expenses, GAAP basis | $ | 2,255 | $ | 2,082 | $ | 2,103 | $ | 2,276 | $ | 2,332 | 3.4 | 2.5 | |||||||||||||||||||||||||||||||||||
| Less: Notable expense items: | |||||||||||||||||||||||||||||||||||||||||||||||
| Repositioning charges: | |||||||||||||||||||||||||||||||||||||||||||||||
| Compensation and employee benefits | — | — | — | (82) | — | — | nm | ||||||||||||||||||||||||||||||||||||||||
| Occupancy | — | — | — | (51) | — | — | nm | ||||||||||||||||||||||||||||||||||||||||
| Repositioning charges | — | — | — | (133) | — | — | nm | ||||||||||||||||||||||||||||||||||||||||
| Acquisition and restructuring costs | (11) | (12) | (15) | (12) | (10) | (9.1) | (16.7) | ||||||||||||||||||||||||||||||||||||||||
| Legal and other | — | — | 9 | — | (29) | nm | nm | ||||||||||||||||||||||||||||||||||||||||
Total expenses, excluding notable items(1) | 2,244 | 2,070 | 2,097 | 2,131 | 2,293 | 2.2 | 7.6 | ||||||||||||||||||||||||||||||||||||||||
| Seasonal expenses | (151) | — | — | — | (176) | 16.6 | nm | ||||||||||||||||||||||||||||||||||||||||
Total expenses excluding notable items and seasonal expenses(1) | 2,093 | 2,070 | 2,097 | 2,131 | 2,117 | 1.1 | (0.7) | ||||||||||||||||||||||||||||||||||||||||
| CRD expenses | (58) | (61) | (62) | (67) | (67) | 15.5 | — | ||||||||||||||||||||||||||||||||||||||||
| CRD related expenses: intangible asset amortization costs | (17) | (16) | (17) | (16) | (17) | — | 6.3 | ||||||||||||||||||||||||||||||||||||||||
| Total expenses, excluding notable items, seasonal items, CRD and CRD related expenses | 2,018 | 1,993 | 2,018 | 2,048 | 2,033 | 0.7 | (0.7) | ||||||||||||||||||||||||||||||||||||||||
| Net Income Available to Common Shareholders, GAAP-basis | $ | 580 | $ | 662 | $ | 517 | $ | 498 | $ | 489 | (15.7) | (1.8) | |||||||||||||||||||||||||||||||||||
| Notable items as reconciled above: pre-tax | 11 | 12 | 6 | 145 | 39 | ||||||||||||||||||||||||||||||||||||||||||
| Tax impact on notable items as reconciled above | (3) | (3) | (4) | (37) | (10) | ||||||||||||||||||||||||||||||||||||||||||
| Preferred security cost | 9 | — | — | — | 5 | ||||||||||||||||||||||||||||||||||||||||||
| Net Income Available to Common Shareholders, excluding notable items | $ | 597 | $ | 671 | $ | 519 | $ | 606 | $ | 523 | (12.4) | (13.7) | |||||||||||||||||||||||||||||||||||
(1)Please refer to Reconciliations of Constant Currency FX Impact within this addendum for FX impact on this line item. | |||||||||||||||||||||||||||||||||||||||||||||||
nm Denotes not meaningful | |||||||||||||||||||||||||||||||||||||||||||||||
19
| 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) | 1Q20 | 4Q20 | 1Q21 | 1Q21 vs. 1Q20 | 1Q21 vs. 4Q20 | 1Q21 vs. 1Q20 | 1Q21 vs. 4Q20 | 1Q21 vs. 1Q20 | 1Q21 vs. 4Q20 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| GAAP-Basis Results: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fee revenue: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Servicing fees | $ | 1,287 | $ | 1,307 | $ | 1,371 | $ | 32 | $ | 8 | $ | 1,339 | $ | 1,363 | 4.0 | % | 4.3 | % | |||||||||||||||||||||||||||||||||||||||||
| Management fees | 464 | 493 | 493 | 9 | 3 | 484 | 490 | 4.3 | (0.6) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign exchange trading services | 444 | 324 | 346 | — | — | 346 | 346 | (22.1) | 6.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Securities finance | 92 | 88 | 99 | — | — | 99 | 99 | 7.6 | 12.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Software and processing fees | 112 | 204 | 174 | 2 | 1 | 172 | 173 | 53.6 | (15.2) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total fee revenue | 2,399 | 2,416 | 2,483 | 43 | 12 | 2,440 | 2,471 | 1.7 | 2.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | 664 | 499 | 467 | 16 | 2 | 451 | 465 | (32.1) | (6.8) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total other income | 2 | 2 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | $ | 3,065 | $ | 2,917 | $ | 2,950 | $ | 59 | $ | 14 | $ | 2,891 | $ | 2,936 | (5.7) | 0.7 | |||||||||||||||||||||||||||||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Compensation and employee benefits | $ | 1,208 | $ | 1,129 | $ | 1,242 | $ | 24 | $ | 6 | $ | 1,218 | $ | 1,236 | 0.8 | 9.5 | |||||||||||||||||||||||||||||||||||||||||||
| Information systems and communications | 385 | 394 | 421 | 3 | 1 | 418 | 420 | 8.6 | 6.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Transaction processing services | 254 | 257 | 270 | 6 | 1 | 264 | 269 | 3.9 | 4.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Occupancy | 109 | 162 | 109 | 2 | — | 107 | 109 | (1.8) | (32.7) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition and restructuring costs | 11 | 12 | 10 | — | — | 10 | 10 | (9.1) | (16.7) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of other intangible assets | 58 | 59 | 58 | 1 | — | 57 | 58 | (1.7) | (1.7) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 230 | 263 | 222 | 4 | 3 | 218 | 219 | (5.2) | (16.7) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total expenses | $ | 2,255 | $ | 2,276 | $ | 2,332 | $ | 40 | $ | 11 | $ | 2,292 | $ | 2,321 | 1.6 | 2.0 | |||||||||||||||||||||||||||||||||||||||||||
| Total expenses, excluding notable items - Non-GAAP | $ | 2,244 | $ | 2,131 | $ | 2,293 | $ | 40 | $ | 11 | $ | 2,253 | $ | 2,282 | 0.4 | % | 7.1 | % | |||||||||||||||||||||||||||||||||||||||||
20
| 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) | 1Q20 | 2Q20 | 3Q20 | 4Q20 | 1Q21 | |||||||||||||||||||||||||||||||||
| Average consolidated total assets | $ | 251,181 | $ | 284,688 | $ | 264,383 | $ | 277,055 | $ | 296,328 | ||||||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||||||||
| Average goodwill | 7,522 | 7,512 | 7,603 | 7,637 | 7,662 | |||||||||||||||||||||||||||||||||
| Average other intangible assets | 1,996 | 1,938 | 1,902 | 1,849 | 1,798 | |||||||||||||||||||||||||||||||||
| Average cash balances held at central banks in excess of required reserves | 64,383 | 83,801 | 69,072 | 76,086 | 92,207 | |||||||||||||||||||||||||||||||||
| Plus related deferred tax liabilities | 476 | 478 | 483 | 489 | 489 | |||||||||||||||||||||||||||||||||
| Average tangible assets | A | $ | 177,756 | $ | 191,915 | $ | 186,289 | $ | 191,972 | $ | 195,150 | |||||||||||||||||||||||||||
| Consolidated average common shareholders' equity | $ | 21,466 | $ | 21,931 | $ | 23,014 | $ | 23,498 | $ | 23,583 | ||||||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||||||||
| Average goodwill | 7,522 | 7,512 | 7,603 | 7,637 | 7,662 | |||||||||||||||||||||||||||||||||
| Average other intangible assets | 1,996 | 1,938 | 1,902 | 1,849 | 1,798 | |||||||||||||||||||||||||||||||||
| Adjusted average equity | 11,948 | 12,481 | 13,509 | 14,012 | 14,123 | |||||||||||||||||||||||||||||||||
| Plus related deferred tax liabilities | 476 | 478 | 483 | 489 | 489 | |||||||||||||||||||||||||||||||||
| Average tangible common equity | B | $ | 12,424 | $ | 12,959 | $ | 13,992 | $ | 14,501 | $ | 14,612 | |||||||||||||||||||||||||||
| Average tangible common equity ratio | B/A | 7.0 | % | 6.8 | % | 7.5 | % | 7.6 | % | 7.5 | % | |||||||||||||||||||||||||||
| GAAP-basis: | ||||||||||||||||||||||||||||||||||||||
| Net income available to common shareholders | $ | 580 | $ | 662 | $ | 517 | $ | 498 | $ | 489 | ||||||||||||||||||||||||||||
| Return on tangible common equity - Non-GAAP | 18.7 | % | 19.2 | % | 16.8 | % | 15.6 | % | 13.4 | % | ||||||||||||||||||||||||||||
21
| STATE STREET CORPORATION | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| REGULATORY CAPITAL | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarters | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1Q20 | 2Q20 | 3Q20 | 4Q20 | 1Q21 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Basel III Advanced Approaches(1) | Basel III Standardized Approach(2) | Basel III Advanced Approaches(1) | Basel III Standardized Approach(2) | Basel III Advanced Approaches(1) | Basel III Standardized Approach(2) | Basel III Advanced Approaches(1) | Basel III Standardized Approach(2) | Basel III Advanced Approaches(1) | Basel III Standardized Approach(2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RATIOS: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common equity tier 1 capital | 11.1 | % | 10.7 | % | 12.7 | % | 12.3 | % | 12.8 | % | 12.4 | % | 13.1 | % | 12.3 | % | 11.9 | % | 10.8 | % | |||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 capital | 13.4 | 12.9 | 15.1 | 14.6 | 15.1 | 14.7 | 15.4 | 14.4 | 13.6 | 12.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total capital | 14.5 | 14.1 | 16.0 | 15.7 | 16.0 | 15.7 | 16.2 | 15.3 | 15.2 | 14.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 leverage | 6.1 | 6.1 | 6.1 | 6.1 | 6.6 | 6.6 | 6.4 | 6.4 | 5.4 | 5.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Supporting Calculations: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common equity tier 1 capital | $ | 12,115 | $ | 12,115 | $ | 13,168 | $ | 13,168 | $ | 13,825 | $ | 13,825 | $ | 14,377 | $ | 14,377 | $ | 13,443 | $ | 13,443 | |||||||||||||||||||||||||||||||||||||||||||||
| Total risk-weighted assets | 109,056 | 112,763 | 103,763 | 106,839 | 108,112 | 111,159 | 109,705 | 117,080 | 113,025 | 124,174 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common equity tier 1 risk-based capital ratio | 11.1 | % | 10.7 | % | 12.7 | % | 12.3 | % | 12.8 | % | 12.4 | % | 13.1 | % | 12.3 | % | 11.9 | % | 10.8 | % | |||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 capital | $ | 14,586 | $ | 14,586 | $ | 15,639 | $ | 15,639 | $ | 16,296 | $ | 16,296 | $ | 16,848 | $ | 16,848 | $ | 15,419 | $ | 15,419 | |||||||||||||||||||||||||||||||||||||||||||||
| Total risk-weighted assets | 109,056 | 112,763 | 103,763 | 106,839 | 108,112 | 111,159 | 109,705 | 117,080 | 113,025 | 124,174 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 risk-based capital ratio | 13.4 | % | 12.9 | % | 15.1 | % | 14.6 | % | 15.1 | % | 14.7 | % | 15.4 | % | 14.4 | % | 13.6 | % | 12.4 | % | |||||||||||||||||||||||||||||||||||||||||||||
| Total capital | $ | 15,771 | $ | 15,877 | $ | 16,650 | $ | 16,766 | $ | 17,290 | $ | 17,413 | $ | 17,810 | $ | 17,957 | $ | 17,220 | $ | 17,355 | |||||||||||||||||||||||||||||||||||||||||||||
| Total risk-weighted assets | 109,056 | 112,763 | 103,763 | 106,839 | 108,112 | 111,159 | 109,705 | 117,080 | 113,025 | 124,174 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total risk-based capital ratio | 14.5 | % | 14.1 | % | 16.0 | % | 15.7 | % | 16.0 | % | 15.7 | % | 16.2 | % | 15.3 | % | 15.2 | % | 14.0 | % | |||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 capital | $ | 14,586 | $ | 14,586 | $ | 15,639 | $ | 15,639 | $ | 16,296 | $ | 16,296 | $ | 16,848 | $ | 16,848 | $ | 15,419 | $ | 15,419 | |||||||||||||||||||||||||||||||||||||||||||||
Leverage exposure(3) | 239,861 | 239,861 | 256,418 | 256,418 | 247,762 | 247,762 | 263,490 | 263,490 | 285,480 | 285,480 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 leverage ratio | 6.1 | % | 6.1 | % | 6.1 | % | 6.1 | % | 6.6 | % | 6.6 | % | 6.4 | % | 6.4 | % | 5.4 | % | 5.4 | % | |||||||||||||||||||||||||||||||||||||||||||||
(1) CET1, tier 1 capital, total capital and tier 1 leverage ratios for each period above were calculated in conformity with the advanced approaches provisions of the Basel III final rule. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) CET1, tier 1 capital, total capital and tier 1 leverage ratios for each period above were calculated in conformity with the standardized approach provisions of the Basel III final rule. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(3) Leverage exposure is equal to average consolidated total assets less applicable Tier 1 capital deductions. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
22
| STATE STREET CORPORATION | |||||||||||||||||||||||||||||||||||
| EARNINGS RELEASE ADDENDUM | |||||||||||||||||||||||||||||||||||
| RECONCILIATIONS OF SUPPLEMENTARY LEVERAGE RATIOS | |||||||||||||||||||||||||||||||||||
| 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. | |||||||||||||||||||||||||||||||||||
| The following table reconciles our estimated pro forma fully-phased in SLR ratios in conformity with the SLR final rule, as described, to our SLR ratios calculated in conformity with applicable regulatory requirements as of the dates indicated. | |||||||||||||||||||||||||||||||||||
| (Dollars in millions) | As of March 31, 2020 | As of June 30, 2020 | As of September 30, 2020 | As of December 31, 2020 | As of March 31, 2021 | ||||||||||||||||||||||||||||||
| Tier 1 Capital | A | $ | 14,586 | $ | 15,639 | $ | 16,296 | $ | 16,848 | $ | 15,419 | ||||||||||||||||||||||||
| On-and off-balance sheet leverage exposure | 279,537 | 198,266 | 206,985 | 216,900 | 223,451 | ||||||||||||||||||||||||||||||
| Less: regulatory deductions | (9,275) | (9,234) | (9,261) | (9,353) | (9,586) | ||||||||||||||||||||||||||||||
| Total leverage exposure for SLR | B | 270,262 | 189,032 | 197,724 | 207,547 | 213,865 | |||||||||||||||||||||||||||||
| Supplementary Leverage Ratio | A/B | 5.4 | % | 8.3 | % | 8.2 | % | 8.1 | % | 7.2 | % | ||||||||||||||||||||||||
23
April 16, 2021 (NYSE: STT) 1Q 2021 Financial Highlights
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 2021 financial results. That news release contains a more detailed discussion of many of the matters described in this presentation and is accompanied by detailed financial tables. This presentation is designed to be reviewed together with that news release, which is available on State Street’s website, at http://investors.statestreet.com, and is 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 1Q21 highlights All comparisons are to corresponding prior year periods unless noted otherwise A Financial metrics ex-notable items/currency translation 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 15. • Total average assets of $296B, up 18%, as client deposit levels remain elevated with 26% growth • ROE of 8.4%; CET1 ratio of 10.8%3 • Returned $659M to shareholders in 1Q21, consisting of $475M of common share repurchases and $184M in common share dividends • Announced 2Q21 common share repurchase program in April 2021 of up to $425M, consistent with the limit set by the Federal Reserve4 Balance sheet and capital strength • EPS of $1.37, down (15)%; $1.47 excluding notable items, down (12)%A • Total revenue of $3.0B – Fee revenue of $2.5B, up 4%; up 2% ex-currency translationA reflecting higher servicing, management and software and processing fees, partially offset by lower FX trading revenue – Net interest income of $0.5B, down (30)% primarily driven by lower global interest rates • Expenses ex-notable items of $2.3B, up 2%A – Flat expenses ex-notable items and currency translationA Financial performance • AUC/A of $40.3T, with servicing wins of $343B and new business yet to be installed of $463B at quarter-end1 – Strong servicing wins across all regions, with particular area of strength in the Asset Manager client segment – Reported 3 new State Street AlphaSM clients in 1Q21 – ~1/3 of new servicing business yet to be installed attributed to Alpha • AUM of $3.6T at quarter-end, primarily reflecting higher market levels and quarterly net inflows of $39B, driven by ETFs and cash1 • CRD annual recurring revenue (ARR) of $225M, up 14%2 Business metrics
4 1Q20 4Q20 1Q21 4Q20 1Q20 Revenue: Servicing fees $1,287 $1,307 $1,371 5% 7% 4% Management fees 464 493 493 - 6 4 Foreign exchange trading services 444 324 346 7 (22) (22) Securities finance 92 88 99 13 8 8 Software and processing fees 112 204 174 (15) 55 54 Total fee revenue5 2,399 2,416 2,483 2.8 3.5 1.7 Net interest income 664 499 467 (6) (30) (32) Total revenueA $3,065 $2,917 $2,950 1.1% (3.8)% (5.7)% Provision for credit losses6 $36 - ($9) - - - Total expenses $2,255 $2,276 $2,332 2.5% 3.4% 1.6% Net income $634 $537 $519 (3.4)% (18.1)% Diluted earnings per share $1.62 $1.39 $1.37 (1.4)% (15.4)% Return on average common equity 10.9% 8.4% 8.4% - (2.5)%pts Pre-tax margin 25.3% 22.0% 21.3% (0.7)%pts (4.0)%pts Tax rate 18.1% 16.1% 17.2% 1.1%pts (0.9)%pts Ex-notable items, non-GAAP B: Total expenses $2,244 $2,131 $2,293 7.6% 2.2% 0.4% EPS $1.67 $1.69 $1.47 (13.0)% (12.0)% Pre-tax margin 25.6% 26.9% 22.6% (4.3)%pts (3.0)%pts (GAAP, $M, except EPS data, or where otherwise noted) Quarters %∆ 1Q20 %∆ ex-currency translationB Summary of 1Q21 financial results A Total revenue also includes Other income of $2M, $2M and $0M in 1Q20, 4Q20 and 1Q21, respectively. B This is a non-GAAP presentation; ex-currency translation percentage changes are in reference to the YoY quarterly comparison between 1Q21 and 1Q20 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. C Refer to the Addendum for further details on notable items. D Repositioning charges of $133M in 4Q20 included $82M in Compensation and employee benefits and $51M in Occupancy. E 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 1Q20 4Q20 1Q21 Repositioning chargesD - (133) - Acquisition and restructuring costs (11) (12) (10) Legal and otherE - - (29) Total Notable items (pre-tax) ($11) ($145) ($39) Preferred securities redemption (after-tax) (9) - (5) EPS Impact ($0.05) ($0.30) ($0.10) ($M, except EPS data) QuartersC
5 AUC/A and AUM levels, markets and flows performance AUC/A and AUMA Market indices7 • 26% increase from 1Q20 primarily driven by: – Higher period-end market levels, net new business growth, and client flows • 4% increase from 4Q20 largely reflecting: – Higher period-end equity market levels, net new business growth, and client flows, partially offset by lower period-end fixed income market levels • 34% increase from 1Q20 reflecting: – Higher period-end market levels and net inflows from ETFs and cash, partially offset by institutional net outflows • 4% increase from 4Q20 due to: – Higher period-end market levels and net inflows from ETFs and cash AUC/A ($T, as of period-end) AUM ($B, as of period-end) Select industry flows8 +4% +4% 1Q21 $38.8 1Q20 $31.9 4Q20 $40.3 1Q20 4Q20 1Q21 $3,467 $3,591 $2,689 +26% +34% 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 15. 1Q20 4Q20 1Q21 Long Term Funds ($240) $74 $142 Money Market 665 (82) 176 ETF 22 120 180 North America Total 447 112 499 EMEA Total (129) 357 299 ($B) Total flowsB 4Q20 1Q20 EOP 6% 54% Daily Avg 9 27 EOP 3 42 Daily Avg 10 18 EOP 2 55 Daily Avg 15 32 (% change) 1Q21 vs S&P 500 MSCI EAFE MSCI EM Barclays Global Agg EOP (4) 5
6 Revenue: Servicing fees Servicing fees ($M) 1Q21 performance $1,287 $1,272 $1,301 $1,307 $1,371 2Q201Q20 3Q20 4Q20 1Q21 $3,065 $2,937 $2,784 $2,917 $2,950 YoY -4% QoQ +1% Total revenue Servicing fees of $1,371M up 7% YoY and up 5% QoQ; ex-FX, up 4% YoY and QoQA 1Q21 performance included growth in the large Asset Manager client segment particularly in North America and EMEA, as well as Alternatives and Official Institutions client segments • Up 7% YoY primarily driven by higher average equity market levels, partially offset by normal pricing headwinds • Up 5% QoQ mainly due to higher average equity market levels and client activity/adjustments +7% +4% ex-FXA AUC/A wins $171 $162 $249 $205 $343 1,063 1,037 486 436 463 AUC/A to be installed AUC/A sales performance indicators ($B)1 • Servicing fees were positively impacted by currency translation when compared to 1Q20 and 4Q20 by $32M and $8M, respectively Institutional Services revenue growth action plan Enhancing our strategy to drive future growth • Strong 1Q21 new business wins reflecting larger wins across all regions, with continued support from the Alpha value proposition • Implementation of our enhanced client coverage model to the top 350 clients near completion • Progressing on key large deals across client segments and regions A This is a non-GAAP presentation; refer to the Appendix for a reconciliation of ex-notable items/currency translation and further explanations of non-GAAP measures. Refer to the Appendix included with this presentation for endnotes 1 to 15. +5% +4% ex-FXA
7 Revenue: Management, Markets, Software and processing fee revenue Management, Markets, Software & processing fees ($M) 1Q21 performance 112 245 172 204 174 92 92 84 88 99 444 325 270 324 346 464 444 479 493 493 $1,109 3Q201Q20 $1,106 1Q212Q20 4Q20 $1,112 $1,005 $1,112 Mgmt. Fees FX Trading Securities Finance Software & processing 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. • Management fees of $493M – Up 6% YoY (up 4% ex-FXA) and flat QoQ reflecting higher average equity market levels and net inflows from ETFs and cash, partially offset by an idiosyncratic institutional client asset reallocation and higher money market fee waivers • FX trading services of $346M – Down (22)% YoY reflecting lower FX volatility, partially offset by higher client FX volumes – Up 7% QoQ mainly due to higher client FX volumes • Securities finance of $99M – Up 8% YoY and 13% QoQ primarily driven by higher Agency Lending and Enhanced Custody balances • Software and processing fees of $174M – Up 55% YoY and down (15)% QoQ mainly reflecting market-related adjustments $3,065 $2,937 $2,784 $2,917 $2,950 Total revenue YoY -4% QoQ +1% +6% -22% +8% +55% YoY % Business momentum • Management fees: Generated record annualized net new Management fee revenue in 1Q21 • FX trading services: Record quarterly FX trading volumes with increases in both direct and indirect activity • Securities finance: Balance growth in Enhanced Custody and increased U.S. specials in Agency Lending • CRD: New SaaS clients driving CRD ARR higher
8 53 57 57 59 60 19 26 22 20 27 28 63 20 36 17 $99$100 1Q214Q201Q20 3Q202Q20 $145 $115 $104 Professional services Software- enabled (including SaaS)9 On-prem9 CRD and State Street Alpha +4% 21% YoY growth CRD financial performance (Standalone basis, $M)A CRD 1Q21 highlights • 1Q21 revenue of $104MA – Up 4% YoY primarily due to higher software-enabled revenue – Down (10)% QoQ largely driven by the absence of seasonal on-prem activity • New SaaS clients increased ~15% YoY12 • 13 CRD clients now live on Microsoft® Azure’s cloud-based computing platform • Continue to add capabilities across the platform in the areas of trading and portfolio management Alpha 1Q21 highlights • Reported 3 new Alpha clients in 1Q211 – 13 total Alpha clients signed since inception • ~1/3 of new servicing business yet to be installed attributed to Alpha deals at quarter-end1 -10% Pre-tax income 10 $42 $84 $37 $48 $37 5 3 17 5 4 198 207 213 223 225 105 77 92 98 103 New bookings 11 ARR 2 Uninstalled revenue backlog A For 1Q21, CRD standalone results include revenue of $104M and pre-tax income of $37M, which includes $14M of revenue associated with affiliates, including SSGA, that is eliminated in consolidation for financial reporting purposes. On a consolidated basis, CRD revenue contributed $90M, including $87M in Software and processing fees and $3M in FX trading services. Revenue line items may not sum to total due to rounding. Refer to the Appendix included with this presentation for endnotes 1 to 15.
9 1.30% 0.84% 0.75% Revenue: Net interest income NII and NIM ($M)13 Average balance sheet highlights ($B) 1Q20 $664 4Q20 1Q21 $467$499 Total average assets of $296B up 18% YoY and 7% QoQ • Up 18% YoY and 7% QoQ largely driven by higher total average deposits, which remain elevated due to U.S. monetary policy A Average Money Market Mutual Fund Liquidity Facility (MMLF) balances contributed ~$1.3B to the average investment portfolio in 1Q21. B Duration as of period end and based on the total investment portfolio, including MMLF. Refer to the Appendix included with this presentation for endnotes 1 to 15. -30% NIM12 (FTE, %) $3,065 $2,917 $2,950 Total revenue NII of $467M down (30)% YoY and (6)% QoQ • Down (30)% YoY primarily due to lower global interest rates and the absence of episodic market-related benefits of ~$20M, partially offset by growth in deposits and the investment portfolio • Down (6)% QoQ mainly driven by the impact from long & short interest rates and day count, partially offset by higher deposit balances 1Q20 4Q20 1Q21 Total assets $251 $277 $296 Interest-earning assets 207 238 255 Loans 28 28 28 Investment portfolio (ex. MMLF)A 96 108 107 HTM % (ex. MMLF) 43% 44% 44% DurationB 2.2 3.0 3.1 Total deposits $180 $206 $226 YoY -4% QoQ +1% -6%
10 Expenses Expenses (Ex-notable items, non-GAAP, $M)A 1Q21 performance (Ex-notable items, non-GAAP)A $2,255 $2,276 $2,332 39,318 39,439 39,318 GAAP Expense Head- count 288 322 279 254 257 262 385 394 401 1,208 1,047 1,242 $2,131 1Q20 1Q214Q20 $2,244 $2,293 +8% +7% ex-FXA +2% Flat ex-FXA A This is a non-GAAP presentation; refer to the Appendix for a reconciliation of ex-notable items/currency translation and further explanations of non-GAAP measures. B 1Q20 and 1Q21 include $151M and $176M, 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 15. Comp. & benefitsB Info. sys. Tran. processing Other14 Occupancy • Total GAAP expenses were adversely impacted by currency translation when compared to 1Q20 and 4Q20 by $40M and $11M, respectively • Headcount flat YoY and down slightly QoQ Expenses of $2,293M up 2% YoY and 8% QoQ; ex-FX, flat YoY and up 7% QoQA Compensation and employee benefits of $1,242M15 – Up 3% YoY (up 1% ex-FX) primarily driven by higher seasonal expenses, partially offset by lower headcount in high cost locationsB – Up 19% QoQ mainly due to seasonal expensesB • Information systems and communications of $401M15 – Up 4% YoY (up 3% ex-FX) and 2% QoQ mainly reflecting higher software costs and technology infrastructure investments • Transaction processing services of $262M15 – Up 3% YoY (up 1% ex-FX) primarily due to higher market related sub- custody balances, partially offset by savings initiatives – Up 2% QoQ mainly due to higher market related sub-custody balances • Occupancy of $109M15 – Flat YoY (down (2)% ex-FX) – Down (2)% QoQ primarily due to benefits from footprint optimization • Other of $279M15 – Down (3)% YoY (down (5)% ex-FX) largely driven by lower travel – Down (13)% QoQ mainly due to lower professional fees and marketing 109111109
11 Capital ratios Capital ratios3 (%, as of period-end) Capital highlights Capital ($B, capital metrics as of period-end) 1Q20 4Q20 1Q21 CET1 (standardized) CET1 capital $12.1 $14.4 $13.4 Risk weighted assets 112.8 117.1 124.2 Tier 1 leverage Tier 1 capital 14.6 16.8 15.4 Leverage exposureC 239.9 263.5 285.5 A Based on a calculation date of December 31, 2019, our G-SIB surcharge for 2021 is 1.0%. B SCB of 2.5% effective as of October 1, 2020. C Leverage exposure is equal to average consolidated assets less applicable Tier 1 leverage capital reductions; refer to the Addendum for reconciliation of adjusted average assets. Refer to the Appendix included with this presentation for endnotes 1 to 15. CET1 (Standardized) Tier 1 Leverage SCBB Minimum ratio4.5% 2.5% 12.3% 10.7% 1Q20 4Q20 10.8% 1Q21 8.0% 1.0% Target state 10-11% G-SIB surchargeA 6.4% 1Q20 5.4% 4Q20 1Q21 6.1% Target state Minimum ratio4.0% STT Target5.25-5.75% STT Target • 1Q21 standardized CET1 ratio decreased (1.5)%pts QoQ primarily driven by an episodic increase in RWA related to FX trading and overdraft activity, as well as lower AOCI and an increase in other intangible assets • 1Q21 Tier 1 leverage ratio decreased (1.0)%pt QoQ mainly driven by higher client deposit levels, as well as lower AOCI and the partial call of our Series F preferred equity • Returned a total of $659M to shareholders in 1Q21, consisting of $475M of common share repurchases and $184M in common stock dividends • Announced 2Q21 common share repurchase program of up to $425M, consistent with the limit set by the Federal Reserve4
12 Summary 1Q21 financial review • EPS of $1.37, down (15)%; Pre-tax margin of 21.3%, down (4.0)%pts; ROE of 8.4% • EPS ex-notable items of $1.47, down (12)%A – Fee revenue of $2.5B, up 4%; up 2% ex-currency translationA, primarily driven by higher servicing, management, and software and processing fees from higher average equity market levels, partially offset by lower FX trading revenue – NII of $0.5B, down (30)%, largely reflecting lower global interest rates – Expenses ex-notables of $2.3B, up 2%; flat expenses ex-currency translation, as productivity savings and footprint optimization were offset by higher software and transaction processing costsA • Returned $659M to shareholders in 1Q21, consisting of $475M of common share repurchases and $184M in common share dividends • Announced 2Q21 common share repurchase program of up to $425M, consistent with the limit set by the Federal Reserve4 A Financial metrics ex-notable items/currency translation 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 15. All comparisons are to corresponding prior year periods unless noted otherwise
13 Appendix 1Q21 line of business performance 14 Reconciliation of notable items 15 Reconciliation of constant currency impacts 16 Endnotes 17 Forward-looking statements 18 Non-GAAP measures 19 Definitions 20
14 State Street 1Q21 line of business performance Investment Servicing Total revenueA 663 473 1,947 1,971 1Q20 1Q21 $2,612M $2,444M Pre-tax income Fee revenue NII Pre-tax margin 27.5% 23.5% -4.0%pts $717M 1Q20 1Q21 $574M YoY % ∆ +1.2% -28.7% -6.4% -19.9% Investment Management Total revenue $506M 1Q20 1Q21 $453M Pre-tax income Pre-tax margin 15.0% 21.5% +6.5%pts 1Q211Q20 $68M $109M YoY % ∆ +11.7% +60.3% Total revenueA 664 467 2,399 2,483 1Q20 $2,950M$3,065M 1Q21 Pre-tax incomeB Fee revenue NII Pre-tax margin 25.3% 25.6% 21.3% 22.6% -4.0%pts -3.0%pts ex-notablesC 774 627 1Q20 39 11 1Q21 $785M $666M YoY % ∆ +3.5% -29.7% -3.8% -19.0% GAAP -15.2% ex-notablesC Notable items A Total revenue also includes Other income of $2M and $0M in 1Q20 and 1Q21, respectively. B Pre-tax income and pre-tax margin also include expenses from the Other line of business segment, which had total expenses of $11M and $56M in 1Q20 and 1Q21, respectively. C Pre-tax income and pre-tax margin ex-notable items are non-GAAP measures; refer to the Appendix for explanations and reconciliations of our non-GAAP measures.
15 Reconciliation of notable items A Calculated as the period-over-period change in total revenue less the period-over-period change in total expenses. B Calculated as the period-over-period change in total revenue, excluding notable items less the period-over-period change in total expenses, excluding notable items. Quarterly reconciliation (Dollars in millions, unless noted otherwise) 1Q20 2Q20 3Q20 4Q20 1Q21 Total expenses, GAAP basis 2,255$ 2,082$ 2,103$ 2,276$ 2,332$ 3.4% 2.5% Less: Notable expense items: Repositioning charges: Compensation and employee benefits (82) Occupancy (51) Repositioning charges (133) Acquisition and restructuring costs (11) (12) (15) (12) (10) Legal and other: Information systems and communications (20) Transaction processing services (8) Other 9 (1) Legal and other 9 (29) Total expenses, excluding notable items 2,244 2,070 2,097 2,131 2,293 2.2% 7.6% Seasonal expenses (151) (176) Total expenses, excluding notable items and seasonal expense items 2,093 2,070 2,097 2,131 2,117 1.1% (0.7)% Operating leverage, GAAP-basis (%pts)A (720) bps (140) bps Operating leverage, excluding notable items (%pts)B (600) (650) Pre-tax margin, GAAP-basis (%) 25.3% 27.3% 24.5% 22.0% 21.3% (400) (70) Notable items as reconciled above (%) 0.3% 0.4% 0.2% 4.9% 1.3% Pre-tax margin, excluding notable items (%) 25.6% 27.7% 24.7% 26.9% 22.6% (300) (430) Net income available to common shareholders, GAAP-basis 580$ 662$ 517$ 498$ 489$ (15.7)% (1.8)% Notable items as reconciled above: pre-tax 11 12 6 145 39 Tax impact on notable items as reconciled above (3) (3) (4) (37) (10) Preferred securities cost 9 5 Net income available to common shareholders, excluding notable items 597 671 519 606 523 (12.4)% (13.7)% Diluted EPS, GAAP-basis 1.62$ 1.86$ 1.45$ 1.39$ 1.37$ (15.4)% (1.4)% Notable items as reconciled above 0.05 0.02 - 0.30 0.10 Diluted EPS, excluding notable items 1.67 1.88 1.45 1.69 1.47 (12.0)% (13.0)% 1Q21 vs. 1Q20 1Q21 vs. 4Q20 % Change
16 Reconciliation of constant currency impacts (Dollars in millions, except earnings per share or where otherwise noted) 1Q20 4Q20 1Q21 1Q21 vs. 1Q20 1Q21 vs. 4Q20 1Q21 vs. 1Q20 1Q21 vs. 4Q20 Non-GAAP basis Compensation and employee benefits, excluding notable items $1,208 $1,047 $1,242 $ 24 $ 6 $ 1,218 $ 1,236 0.8% 18.1% Information systems and communications, excluding notable items 385 394 401 3 1 398 400 3.4% 1.5% Transaction processing services, excluding notable items 254 257 262 6 1 256 261 0.8% 1.6% Occupancy, excluding notable items 109 111 109 2 - 107 109 (1.8)% (1.8)% Other expenses, excluding notable items 288 322 279 5 3 274 276 (4.9)% (14.3)% Total expenses excluding notable items 2,244 2,131 2,293 40 11 2,253 2,282 0.4% 7.1% Reported Currency Translation Impact Excluding Currency Impact % Change Constant Currency 1Q21 vs. 1Q20 1Q21 vs. 4Q20
17 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. 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. CRD ARR, an operating metric, is calculated by annualizing current quarter revenue and includes annualized amount of most software-enabled revenue, including revenue generated from Software-as-a-service, maintenance and support revenue, revenue from the Charles River Network’s FIX Network Service (CRN), and value-added services, which are all expected to be recognized ratably over the term of client contracts. ARR excludes software-enabled brokerage revenue. ARR of $198M, $223M and $225M in 1Q20, 4Q20 and 1Q21, respectively, include annualized intercompany revenue of ~$14M, ~$21M and ~$20M, respectively. 3. 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, 4Q20 and 1Q20. Refer to the Addendum included with description of these ratios. March 31, 2021 capital ratios are presented as of quarter-end and are estimates. 4. State Street’s $425M common stock repurchase authorization covers the period ending June 30, 2021. Stock purchases may be made using various types of transactions, including open-market purchases, accelerated share repurchases or other transactions off the market, and may be made under Rule 10b5-1 trading programs. The timing of stock purchases, type of transaction and number of shares purchased will depend on several factors, including market conditions and State Street’s capital position, its financial performance, the amount of common stock issued as part of employee compensation programs, investment opportunities and the potential for regulatory limitations on capital actions. The common stock purchase program does not have specific price targets and may be suspended at any time. 5. Excluding FX trading services of $346M, fee revenue was $2,137M in 1Q21, up 9% compared to $1,955M in 1Q20. Excluding FX trading services and currency translation of $346M, fee revenue was $2,094M in 1Q21, up 7% compared to $1,955M in 1Q20. 6. In accordance with ASU 2016-13, the Provision for credit losses for 1Q20, 4Q20, and 1Q21 includes the provision on funded and unfunded commitments as well as HTM securities. 7. The index names listed are service marks of their respective owners. 8. 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. 1Q21 data for North America (U.S. domiciled) includes Morningstar actuals January and February 2021 and Morningstar estimates for March 2021. 1Q21 data for EMEA is on a rolling three month basis for December 2020 through February 2021. 9. On-prem revenue is revenue derived from locally installed software. Software-enabled revenue includes software as a service, maintenance and support revenue, FIX, brokerage, and value-add services. Revenue recognition pattern for on-prem installations differs from software-enabled revenue. 10. 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-prem 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. 11. CRD bookings, as presented in this presentation, represent signed annual recurring revenue contract value excluding bookings with affiliates, including SSGA. CRD revenue derived from affiliate agreements is eliminated in consolidation for financial reporting purposes. 12. New SaaS client comparison based on the number of SaaS clients at March 31, 2021 as compared to March 31, 2020. 13. 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. 14. Other includes Other expenses and Amortization of intangible assets. 15. Compensation and benefits expenses in 4Q20 included a notable item related to repositioning charges of $82M. Excluding this notable item, 1Q21 Compensation and benefits of $1,242M was up 19% compared to 4Q20 adjusted Compensation and benefits of $1,047M. Information systems and communications expenses in 1Q21 included a notable item from legal and other costs of $20M. Excluding this notable item, 1Q21 adjusted Information systems and communications of $401M was up 4% compared to 1Q20 Information systems and communications of $385M and was up 2% compared to 4Q20 Information systems and communications of $394M. Transaction processing services expenses in 1Q21 included a notable item from legal and other costs of $8M. Excluding this notable item, 1Q21 adjusted Transaction processing services of $262M was up 3% compared to 1Q20 Transaction processing services of $254M and was up 2% compared to 4Q20 Transaction processing services of $257M. Occupancy in 4Q20 included a notable item related to repositioning charges of $51M. Excluding this notable item, 1Q21 Occupancy of $109M was down (2)% compared to 4Q20 adjusted Occupancy of $111M. Other expenses in 1Q21, 4Q20 and 1Q20 included notable items related to acquisition and restructuring costs of $10M, $12M, $11M, respectively. Other expenses in 1Q21 also included a notable item from legal and other costs of $1M. Excluding all these notable items, 1Q21 adjusted Other expenses of $279M was down (3)% compared to 1Q20 adjusted Other expenses of $288M and down (13)% compared to 4Q20 adjusted Other expenses of $322M.
18 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, 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,” “guidance,” “expect,” “priority,” “objective,” “intend,” “plan,” “forecast,” “believe,” “anticipate,” “estimate,” “seek,” “may,” “will,” “trend,” “target,” “strategy” and “goal,” or similar statements or variations of such terms. These statements are not guarantees of future performance, are inherently uncertain, are based on current assumptions that are difficult to predict and involve a number of risks and uncertainties. Therefore, actual outcomes and results may differ materially from what is expressed in those statements, and those statements should not be relied upon as representing our expectations or beliefs as of any time subsequent to the time this presentation is first issued. Important factors that may affect future results and outcomes include, but are not limited to: We are subject to intense competition, which could negatively affect our profitability; We are subject to significant pricing pressure and variability in our financial results and our AUC/A and AUM; Our development and completion of new products and services, including State Street Alpha, 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 create significant 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; The integration of CRD may be more difficult, costly or time consuming than expected, and the anticipated benefits and cost synergies may not be fully realized; 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; 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, the investment activities of our clients; 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; 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; We are subject to various legal proceedings relating to the manner in which we have invoiced certain expenses, and the outcome of which could materially adversely affect our results of operations or harm our business or reputation; 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 and reputational harm and may not result in expected cost savings; If we, or the third parties with which we do business, experience failures, attacks or unauthorized access to our or their respective information technology systems or facilities, or disruptions to our continuous operations, this could result in significant costs, reputational damage and limits 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 could adversely affect our business operations; 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 2020 Annual Report on Form 10-K and our subsequent SEC filings. We encourage investors to read these filings, particularly the sections on risk factors, for additional information with respect to any forward-looking statements and prior to making any investment decision. The forward-looking statements contained in this presentation should not by relied on as representing our expectations or beliefs as of any time subsequent to the time this presentation is first issued, and we do not undertake efforts to revise those forward-looking statements to reflect events after that time.
19 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”.
20 Definitions AOCI Accumulated other comprehensive income 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 Bps Basis points, with one basis point representing one hundredth of one percent CCAR Comprehensive Capital Analysis and Review CET1 ratio Common equity tier 1 ratio CRD Charles River Development CRD uninstalled backlog Uninstalled revenue backlog reflects terms currently in effect. It includes SaaS and on-prem license revenue, as well as maintenance and support revenue, and excludes revenue generated from FIX, value-add services, brokerage, and professional services. Diluted earnings per share (EPS) Net income available to common shareholders divided by diluted average common shares outstanding for the noted period EC Enhanced custody EM Emerging markets EMEA Europe, Middle East and Africa EOP End of period EPS Earnings per share ETF Exchange-traded fund FTE Fully taxable equivalent FX Foreign exchange FY Full-year GAAP Generally accepted accounting principles in the United States G-SIB Global systemically important bank HTM Held-to-maturity IT Information technology MMLF Money Market Mutual Fund Liquidity Facility 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-prem On-premises revenue as recognized in the CRD business 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 Payout ratio Total payout ratio is equal to common stock dividends and common stock purchases as a percentage of net income available to common shareholders Pre-tax operating 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 Seasonal expenses Seasonal deferred incentive compensation expenses for retirement-eligible employees and payroll taxes SCB Stress capital buffer SSGA State Street Global Advisors T1L Tier 1 leverage ratio Year-over-year (YoY) Current period compared to the same period a year ago