Summary
State Street Corporation's (STT) 2009 Form 10-K highlights a challenging year marked by a significant net loss attributed to an extraordinary item related to the consolidation of asset-backed commercial paper conduits. Despite this, the company's core operations, excluding this item, demonstrated resilience with income before the extraordinary loss decreasing by a modest 8% year-over-year. Fee revenue saw a considerable decline, primarily due to market disruptions impacting servicing and management fees, alongside a substantial drop in securities finance revenue. However, net interest revenue remained relatively stable, benefiting from discount accretion related to the conduit consolidation, though lower interest rates and deposit volumes presented headwinds. Financially, the company strengthened its capital position by redeeming its TARP investment and issuing new equity. The report also details significant legal and regulatory matters, including settlements for active fixed-income strategies managed by SSgA and ongoing inquiries into foreign exchange pricing practices. The company is also navigating increased regulatory scrutiny and evolving market conditions, emphasizing robust risk management and capital adequacy as key priorities.
Financial Highlights
38 data points| Revenue | $8.64B |
| Interest Expense | $722.00M |
| Net Income | -$1.88B |
| EPS (Basic) | $-4.32 |
| EPS (Diluted) | $-4.31 |
| Shares Outstanding (Basic) | 470.60M |
| Shares Outstanding (Diluted) | 474.00M |
Key Highlights
- 1State Street reported a net loss of $2.04 billion, or $4.31 per diluted share, for 2009, heavily impacted by a $3.68 billion extraordinary loss from consolidating asset-backed commercial paper conduits.
- 2Excluding the extraordinary loss, income available to common shareholders was $1.64 billion, a decrease of 8% from $1.79 billion in 2008, and diluted EPS declined 20% to $3.46.
- 3Total revenue decreased by 19% to $8.64 billion in 2009, driven by a 23% decline in total fee revenue, particularly in servicing fees and securities finance, reflecting market disruptions.
- 4Net interest revenue decreased slightly by 3% to $2.56 billion, partially offset by $621 million in discount accretion from the conduit consolidation, while net interest margin improved to 2.19%.
- 5Total expenses decreased by 24% to $5.97 billion, largely due to workforce reductions and lower incentive compensation, but included a $250 million provision for legal exposure related to SSgA fixed-income strategies.
- 6The company strengthened its capital by redeeming its $2 billion TARP investment and completing a $2.23 billion public offering of common stock in May 2009.
- 7State Street faced significant legal and regulatory challenges, including settlements for active fixed-income strategies ($313 million fair fund) and ongoing inquiries into foreign exchange pricing, with potential material adverse effects on future results.