10-KPeriod: FY2014

STATE STREET CORP Annual Report, Year Ended Dec 31, 2014

Filed February 20, 2015For Securities:STTSTT-PG

Summary

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 billion, 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 billion of its common stock in 2014, demonstrating a commitment to shareholder returns.

Financial Highlights

40 data points
Beta

Revenue

$10.27B

Net Income

$2.02B

19.7% Net Margin

EPS (Diluted)

$4.53

Total Assets

$274.12B

Free Cash Flow

-$988.00M

Financial Statements
Beta
Revenue$10.27B
Interest Expense$392.00M
Net Income$2.02B
EPS (Basic)$4.62
EPS (Diluted)$4.53
Shares Outstanding (Basic)424.22M
Shares Outstanding (Diluted)432.01M

Key Highlights

  • 1Total 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.
  • 2Diluted 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.
  • 3State Street completed its multi-year Business Operations and Information Technology Transformation program, achieving over $625 million in annual pre-tax savings.
  • 4The company repurchased approximately $1.65 billion of its common stock in 2014, with $470 million remaining under its authorized purchase program.
  • 5Assets 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.
  • 6The company maintained strong regulatory capital ratios, exceeding minimum requirements under Basel III.

Frequently Asked Questions

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.

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.

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).

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.