10-KPeriod: FY2011

STATE STREET CORP Annual Report, Year Ended Dec 31, 2011

Filed February 27, 2012For Securities:STTSTT-PG

Summary

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 billion and net income of $1.92 billion for 2011, up from $1.56 billion in 2010. The company successfully repurchased $675 million 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.

Financial Highlights

38 data points
Beta

Revenue

$9.59B

Net Income

$1.92B

20.0% Net Margin

EPS (Diluted)

$3.79

Total Assets

$216.83B

Free Cash Flow

$3.08B

Financial Statements
Beta
Revenue$9.59B
Interest Expense$613.00M
Net Income$1.92B
EPS (Basic)$3.82
EPS (Diluted)$3.79
Shares Outstanding (Basic)492.60M
Shares Outstanding (Diluted)496.07M

Key Highlights

  • 1Total revenue increased by 7% to $9.59 billion in 2011, driven by a 10% rise in total fee revenue.
  • 2Net income grew significantly to $1.92 billion in 2011, up from $1.56 billion in 2010, with diluted EPS at $3.79.
  • 3State Street repurchased approximately 16.3 million shares of its common stock for $675 million in 2011.
  • 4The company declared a common stock dividend of $0.72 per share in 2011, the first increase since early 2009.
  • 5Total expenses increased by 3% to $7.06 billion, including $253 million in restructuring charges for business transformation and expense control measures.
  • 6Assets under custody and administration remained stable at $21.81 trillion, while assets under management decreased slightly to $1.86 trillion.
  • 7Regulatory capital ratios, including Tier 1 risk-based capital, remained strong and well above minimum requirements.

Frequently Asked Questions

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.

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.

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.

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.