What was the main reason for the decrease in net income and earnings per share compared to the prior year?

The primary reason for the decrease in net income and earnings per share was a $50 million write-off of State Street's investment in Bridge Information Systems, Inc. This charge reduced net income by $32 million and diluted earnings per share by $0.20.

How did the different revenue streams perform in the first quarter of 2001?

Servicing fees showed strong growth, increasing by 12% due to new business wins and increased securities lending revenue. However, management fees declined by 31% reflecting the impact of lower global equity valuations on assets under management. Foreign exchange trading revenue was relatively stable, while other fee revenue was negatively impacted by the Bridge investment write-off.

What is the company's financial condition and capital position?

State Street maintained a strong financial position. Total assets were $67.6 billion and total stockholders' equity increased to $3.48 billion. The company's regulatory capital ratios remain robust, with Tier 1 risk-based capital ratios significantly exceeding regulatory minimums, ensuring its 'well-capitalized' status.

Did State Street make any acquisitions during the quarter?

Yes, in February 2001, State Street completed the purchase of a majority interest in Bel Air Investment Advisors LLC, an investment management firm focused on ultra-high-net-worth individuals.

STT/STT-PG 10-Q Quarterly Report Q1 FY2001

Summary

State Street Corporation (STT) reported its first-quarter 2001 financial results, showing a decrease in diluted earnings per share (EPS) to $0.73 from $0.92 in the prior year quarter. This decline was significantly impacted by a $50 million write-off of its investment in Bridge Information Systems, Inc., which reduced EPS by $0.20. Excluding this one-time charge, adjusted diluted EPS would have been $0.93, reflecting a slight increase compared to the prior year. Total operating revenue saw a modest increase of 2% to $946 million, driven primarily by a 12% rise in servicing fees, which benefited from new business wins and increased securities lending revenue. However, management fees declined by 31% due to lower global equity valuations. The company's balance sheet showed total assets of $67.6 billion, a slight decrease from $69.3 billion at the end of 2000. Total stockholders' equity increased to $3.48 billion from $3.26 billion. State Street maintained strong regulatory capital ratios, with its Tier 1 risk-based capital ratio at 13.3%, well above the regulatory minimums. Liquidity remains a key focus, with liquid assets representing 84% of total assets. The company also announced a 2-for-1 stock split approved by shareholders, to be distributed in May 2001.

Key Highlights

1Diluted EPS decreased by 21% to $0.73, primarily due to a $50 million write-off of an investment in Bridge Information Systems.
2Excluding the Bridge write-off, operating EPS was $0.93, a slight increase from the prior year.
3Total operating revenue grew 2% to $946 million, driven by a 12% increase in servicing fees from new business wins.
4Management fees declined 31% due to lower global equity valuations impacting assets under management.
5Total assets stood at $67.6 billion, and total stockholders' equity increased to $3.48 billion.
6State Street Bank maintained 'well-capitalized' status, with Tier 1 capital ratios significantly exceeding regulatory requirements.
7A 2-for-1 stock split was approved by shareholders and is expected to be distributed in May 2001.

STATE STREET CORP Quarterly Report for Q1 Ended Mar 31, 2001

Summary

Key Highlights

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