01—Abstract
Summary
Summary of the 10-K filed February 20, 2015. Cited figures are marked; the original filing is the authoritative source.
State Street Corporation's (STT) 2015 10-K filing highlights a stable year in 2014, with growth in fee revenue driven by strong global equity markets and net new business.
The company reported total revenue of $10.3 billiona, a 4% increase from the prior year, primarily fueled by a 6% rise in servicing fees and a 9% increase in management fees. Diluted earnings per share saw a slight decrease of 1% to $4.57, largely attributed to increased expenses, including a significant legal accrual related to foreign exchange matters. The company is navigating a complex regulatory environment, with ongoing implementation of Basel III and the Dodd-Frank Act impacting capital requirements and liquidity standards.
State Street remains well-capitalized and continues to focus on operational efficiency, completing its IT transformation program which is expected to yield substantial cost savings. The company also repurchased approximately $1.65 billionb of its common stock in 2014, demonstrating a commitment to shareholder returns.
02—Key points
Key Highlights
- Total revenue increased by 4% to $10.3 billion in 2014, driven by a 6% rise in servicing fees and a 9% increase in management fees.
- Diluted earnings per share decreased by 1% to $4.57 in 2014, impacted by higher expenses, including a $185 million legal accrual for indirect foreign exchange matters.
- State Street completed its multi-year Business Operations and Information Technology Transformation program, achieving over $625 million in annual pre-tax savings.
- The company repurchased approximately $1.65 billion of its common stock in 2014, with $470 million remaining under its authorized purchase program.
- Assets under custody and administration grew by 3% to $28.2 trillion, and assets under management increased by 4% to $2.45 trillion as of December 31, 2014.
- The company maintained strong regulatory capital ratios, exceeding minimum requirements under Basel III.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 20, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $10.27B$9.86B | +4.2% |
| Interest Expense | $392.00M$411.00M | −4.6% |
| Net Income | $2.02B$2.05B | −1.4% |
| EPS (Basic) | $4.62$4.52 | +2.2% |
| EPS (Diluted) | $4.53$4.43 | +2.3% |
| Shares Outstanding (Basic) | 424.22M446.25M | −4.9% |
| Shares Outstanding (Diluted) | 432.01M455.15M | −5.1% |
05—Questions
Frequently Asked Questions
What were State Street's main revenue drivers in 2014?
State Street's primary revenue drivers were servicing fees and management fees, which collectively accounted for approximately 79% of its total fee revenue in 2014. Servicing fees increased by 6% and management fees by 9%, reflecting growth from net new business and stronger global equity markets.
What is the impact of the legal accrual for foreign exchange matters on State Street's financials?
State Street recorded a total legal accrual of $185 million for indirect foreign exchange matters as of December 31, 2014. This accrual, announced in part during the fourth quarter of 2014 and revised in early 2015, impacted expenses and consequently reduced net income and earnings per share for the year. The company is actively engaged in discussions to resolve these claims.
How is State Street positioned regarding regulatory capital requirements?
State Street continues to be well-capitalized and exceeded all applicable minimum regulatory capital requirements under Basel III as of December 31, 2014. The company is actively managing its capital in line with evolving regulatory standards, including those related to global systemically important banks (G-SIBs) and the Supplementary Leverage Ratio (SLR).
What is the company's strategy for returning capital to shareholders?
In 2014, State Street actively returned capital to shareholders through share repurchases, totaling approximately $1.65 billion, and dividends declared of $1.16 per share, totaling approximately $490 million. These actions are subject to regulatory review, particularly through the Federal Reserve's Comprehensive Capital Analysis and Review (CCAR) process.
06—Continue