01—Abstract
Summary
Summary of the 10-K filed February 27, 2012. Cited figures are marked; the original filing is the authoritative source.
State Street Corporation's (STT) 2011 10-K filing highlights a year of modest revenue growth, driven by an increase in fee revenues, particularly in servicing and management fees.
The company also saw a rebound in gains related to investment securities after a challenging prior year. However, net interest revenue declined due to lower discount accretion, reflecting strategic portfolio repositioning. Financially, STT reported total revenue of $9.59 billiona and net income of $1.92 billion for 2011, up from $1.56 billion in 2010.
The company successfully repurchased $675 millionb of its common stock and increased its dividend payout, signaling a return of confidence and capital to shareholders. Despite significant restructuring charges of $253 million related to an ongoing IT and business transformation program, the company's capital ratios remained strong, exceeding regulatory requirements.
02—Key points
Key Highlights
- Total revenue increased by 7% to $9.59 billion in 2011, driven by a 10% rise in total fee revenue.
- Net income grew significantly to $1.92 billion in 2011, up from $1.56 billion in 2010, with diluted EPS at $3.79.
- State Street repurchased approximately 16.3 million shares of its common stock for $675 million in 2011.
- The company declared a common stock dividend of $0.72 per share in 2011, the first increase since early 2009.
- Total expenses increased by 3% to $7.06 billion, including $253 million in restructuring charges for business transformation and expense control measures.
- Assets under custody and administration remained stable at $21.81 trillion, while assets under management decreased slightly to $1.86 trillion.
- Regulatory capital ratios, including Tier 1 risk-based capital, remained strong and well above minimum requirements.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2011filed February 27, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $9.59B$8.95B | +7.2% |
| Interest Expense | $613.00M$763.00M | −19.7% |
| Net Income | $1.92B$1.56B | +23.4% |
| EPS (Basic) | $3.82$3.11 | +22.8% |
| EPS (Diluted) | $3.79$3.09 | +22.7% |
| Shares Outstanding (Basic) | 492.60M495.39M | −0.6% |
| Shares Outstanding (Diluted) | 496.07M497.92M | −0.4% |
05—Questions
Frequently Asked Questions
What were State Street's main business segments in 2011?
State Street operated through two main business segments: Investment Servicing, which provides a broad range of financial services to institutional investors worldwide, and Investment Management, conducted through State Street Global Advisors (SSgA), offering investment management strategies.
How did regulatory changes, such as Dodd-Frank and Basel III, impact State Street?
The filing highlights that these regulatory changes were expected to significantly affect the financial markets and impose additional costs on State Street. Changes to capital requirements under Dodd-Frank and Basel III were anticipated to increase minimum regulatory capital levels and alter how regulatory capital ratios are calculated. The company's designation as a systemically important financial institution (SIFI) and global systemically important bank (G-SIB) also mandated incrementally higher regulatory capital.
What were the major legal proceedings or risks mentioned in the filing?
The filing details significant legal proceedings and risks, including litigation and regulatory inquiries related to foreign exchange trading practices, particularly concerning indirect foreign exchange services. Other risks mentioned include counterparty risk, European economic instability, credit risk associated with investment portfolios, liquidity risk, and operational risks related to IT systems and cybersecurity.
What is the significance of the company's restructuring charges?
State Street incurred $253 million in restructuring charges in 2011. This included $133 million for its ongoing business operations and IT transformation program, aimed at improving efficiencies and cost management, and $120 million for expense control measures due to the outlook for capital markets-facing businesses. These programs involved staff reductions and occupancy cost initiatives.
06—Continue